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EXHIBIT 10.37
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STOCK ACQUISITION AGREEMENT AND PLAN OF MERGER
BY AND AMONG
MACHINERY, INC.
XXXXX X. XXXX
XXXXXX X. XXXXXXX
OKLAHOMA MACHINERY, INC.
CRESCENT MACHINERY COMPANY
AND
CRESCENT OPERATING, INC.
JUNE 4, 1998
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TABLE OF CONTENTS
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ARTICLE I -- THE MERGER..................................................................1
1.1 The Merger.................................................................1
1.2 Effective Time of the Merger...............................................1
1.3 Closing ..................................................................2
1.4 Effects of the Merger......................................................2
1.5 Articles of Incorporation..................................................2
1.6 Bylaws ..................................................................2
1.7 Directors..................................................................2
1.8 Officers ..................................................................2
1.9 Taking of Necessary Action.................................................2
ARTICLE II -- CONVERSION OF SECURITIES; MERGER CONSIDERATION.............................3
2.1 Conversion of Securities...................................................3
2.2 Merger Consideration.......................................................3
2.3 Adjustment of Merger Consideration.........................................3
2.4 No Dissenting Shares.......................................................5
2.5 Exchange of Certificates...................................................5
2.6 Pledge Agreement...........................................................5
ARTICLE III -- REPRESENTATIONS AND WARRANTIES OF
SELLERS AND THE COMPANY.........................................................5
3.1 Corporate Organization.....................................................5
3.2 Qualification..............................................................5
3.3 Charter and Bylaws.........................................................5
3.4 Capitalization of the Company..............................................5
3.5 Authority Relative to This Agreement.......................................6
3.6 Noncontravention...........................................................7
3.7 Governmental Approvals.....................................................7
3.8 No Subsidiaries............................................................7
3.9 Shares ..................................................................7
3.10 Financial Statements......................................................7
3.11 Absence of Undisclosed Liabilities........................................8
3.12 Absence of Certain Changes................................................8
3.13 Tax Matters...............................................................8
3.14 Compliance With Laws......................................................9
3.15 Legal Proceedings.........................................................9
3.16 Title to Properties.......................................................9
3.17 Sufficiency and Condition of Properties..................................10
3.18 Real Property............................................................10
3.19 Tangible Personal Property...............................................11
3.20 Leased Property..........................................................11
3.21 Inventory................................................................12
3.22 Receivables..............................................................12
3.23 Intellectual Property....................................................12
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3.24 Permits .................................................................13
3.25 Agreements...............................................................13
3.26 ERISA .................................................................14
3.27 Environmental Matters....................................................15
3.28 Labor Relations..........................................................16
3.29 Employees................................................................17
3.30 Insider Interests........................................................17
3.31 Insurance................................................................17
3.32 Financial Requirements...................................................18
3.33 Bank Accounts and Powers of Attorney.....................................18
3.34 Books and Records........................................................18
3.35 Illegal Payments.........................................................18
3.36 Offerings of Securities..................................................18
3.37 Investment Intent........................................................18
3.38 Disclosure of Information................................................19
3.39 Investment Experience....................................................19
3.40 Restricted Securities....................................................19
3.41 Legend .................................................................19
3.42 Brokerage Fees...........................................................19
3.43 Disclosure...............................................................20
3.44 Representations and Warranties on Closing Date...........................20
ARTICLE IV -- REPRESENTATIONS AND WARRANTIES
OF CRESCENT AND PARENT.........................................................20
4.1 Corporate Organization....................................................20
4.2 Qualification.............................................................20
4.3 Charter and Bylaws........................................................20
4.4 Capitalization of Crescent................................................21
4.5 Authority Relative to This Agreement......................................21
4.6 Noncontravention..........................................................21
4.7 Governmental Approvals....................................................21
4.8 Crescent Shares...........................................................21
4.9 Brokerage Fees............................................................22
4.10 Financial Statements.....................................................22
4.11 Representations and Warranties on Closing Date...........................22
ARTICLE V -- CONDUCT OF COMPANY PENDING CLOSING.........................................22
5.1 Conduct and Preservation of Business......................................22
5.2 Restrictions on Certain Actions...........................................22
ARTICLE VI -- ADDITIONAL AGREEMENTS.....................................................24
6.1 Access to Information.....................................................24
6.2 Third Party Consents......................................................25
6.3 Employment and Noncompetition Agreement...................................25
6.4 Employee and Employee Benefit Plan Matters................................25
6.5 Title Insurance and Surveys...............................................25
6.6 Uncollected Receivables...................................................26
6.7 Public Announcements......................................................27
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6.8 Notice of Litigation......................................................27
6.9 Notification of Certain Matters...........................................27
6.10 Fees and Expenses........................................................27
6.11 Transfer Taxes...........................................................27
6.12 Survival of Covenants....................................................28
ARTICLE VII -- CONDITIONS TO OBLIGATIONS OF SELLERS.....................................28
7.1 Representations and Warranties True.......................................28
7.2 Covenants and Agreements Performed........................................28
7.3 Legal Proceedings.........................................................28
7.4 Other Documents...........................................................28
ARTICLE VIII -- CONDITIONS TO OBLIGATIONS OF CRESCENT AND PARENT........................29
8.1 Representations and Warranties True.......................................29
8.2 Covenants and Agreements Performed........................................29
8.3 Certificate...............................................................29
8.4 Opinion of Counsel........................................................29
8.5 Legal Proceedings.........................................................29
8.6 Consents .................................................................29
8.7 No Material Adverse Change................................................29
8.8 Employment Agreement......................................................29
8.9 Unacceptable Encumbrances; Title Insurance................................30
8.10 Due Diligence............................................................30
8.11 Other Documents..........................................................30
ARTICLE IX -- TERMINATION, AMENDMENT AND WAIVER.........................................31
9.1 Termination...............................................................31
9.2 Effect of Termination.....................................................31
9.3 Amendment.................................................................31
9.4 Waiver .................................................................32
9.5 Remedies Not Exclusive....................................................32
ARTICLE X -- SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION...............................32
10.1 Survival.................................................................32
10.2 Indemnification by Sellers...............................................32
10.3 Indemnification by Crescent..............................................32
10.4 Threshold for Crescent Claims............................................33
10.5 Limitations on Crescent Claims...........................................33
10.6 Procedure for Indemnification............................................33
ARTICLE XI -- MISCELLANEOUS.............................................................34
11.1 Notices .................................................................34
11.2 Entire Agreement.........................................................34
11.3 Binding Effect; Assignment; No Third Party Benefit.......................34
11.4 Severability.............................................................34
11.5 GOVERNING LAW............................................................35
11.6 Further Assurances.......................................................35
11.7 Descriptive Headings.....................................................35
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11.8 Gender .................................................................35
11.9 References...............................................................35
11.10 Counterparts............................................................35
11.11 Injunctive Relief.......................................................35
11.12 Jurisdiction and Venue..................................................36
ARTICLE XII -- DEFINITIONS..............................................................36
12.1 Certain Defined Terms....................................................36
12.2 Certain Additional Defined Terms.........................................37
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STOCK ACQUISITION AGREEMENT AND PLAN OF MERGER
THIS STOCK ACQUISITION AGREEMENT AND PLAN OF MERGER (this "Agreement"),
dated as of June 4, 1998, is made by and among Machinery, Inc., an Oklahoma
corporation (the "Company"), Xxxxx X. Xxxx, an individual ("King"), Xxxxxx X.
Xxxxxxx ("Greener"), (King and Greener being referred to herein individually as
a "Seller" and collectively as "Sellers"), Crescent Operating, Inc., a Delaware
corporation ("Crescent"), Crescent Machinery Company, a Texas corporation and a
wholly-owned subsidiary of Crescent ("Parent"), and Oklahoma Machinery, Inc., a
Texas corporation and a wholly owned subsidiary of Parent ("Sub").
WHEREAS, Sellers own in the aggregate all the outstanding shares of
common stock, par value $1.00 per share, of the Company (the "Shares"); and
WHEREAS, the respective Boards of Directors of Crescent, Parent, Sub,
and the Company have determined that the acquisition of the Company by Parent is
desirable and in the best interests of the shareholders of the respective
companies; and
WHEREAS, the respective Boards of Directors of Crescent, Parent, Sub,
and the Company, and Parent, acting as the sole shareholder of Sub, and Sellers,
acting as the sole shareholders of the Company, have approved the merger of the
Company with and into Sub upon the terms and subject to the conditions set forth
herein; and
WHEREAS, the Company desires to join in the execution of this Agreement
for the purpose of evidencing its consent to the consummation of the foregoing
transaction and for the purpose of making certain representations and warranties
to and covenants and agreements with Crescent and Parent;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the Company, Sellers, and Crescent, Parent and Sub hereby agree as
follows:
ARTICLE I -- THE MERGER
1.1 The Merger. At the Effective Time, and on the terms and subject to
the conditions set forth in this Agreement, the Company shall be merged with and
into Sub (the "Merger"), Sub shall continue its corporate existence under the
Texas Business Corporation Act ("State Law") as the surviving corporation in the
Merger (the "Surviving Corporation"), and the separate corporate existence of
the Company shall cease. Articles I and II constitute a plan of merger pursuant
to Article 5.01 of State Law and an agreement of merger pursuant to Section 1082
of the Oklahoma General Corporation Act (the "OGCA").
1.2 Effective Time of the Merger. At the Closing, the parties hereto
will cause the Merger to be consummated by filing with the Secretary of State of
Texas articles of merger in such form as required by, and executed in accordance
with, the relevant provisions of State Law, as well as filing a certificate of
merger with the Secretary of State of Oklahoma in such form as required by, and
executed in accordance with, the relevant provisions of the OGCA. The Merger
shall become effective at such time as the Secretary of State of Texas and the
Secretary of State of Oklahoma each issues a certificate of merger with respect
thereto or at such later time (not to
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exceed fifteen (15) days after the date the articles of merger, or certificate
of merger, as the case may be, are filed) as is specified in the articles of
merger, or certificate of merger, as the case may be, pursuant to the mutual
agreement of Parent and the Company (the "Effective Time").
1.3 Closing. The closing of the Merger (the "Closing") shall take place
(i) at the offices of Xxxxxxxx & Xxxxxx, P.C. in Dallas, Texas, at 11:00 a.m.
local time on June 5, 1998, as soon as practicable after the satisfaction or, if
permissible, waiver of the conditions to the obligations of the parties set
forth in Articles VII and VIII or (ii) at such other time or place or on such
other date as the parties hereto shall agree, provided that the closing
conditions set forth in Articles VII and VIII have been satisfied or waived at
or prior to such other time and date. The date on which the Closing occurs is
herein referred to as the "Closing Date." All Closing transactions shall be
deemed to have occurred simultaneously.
1.4 Effects of the Merger. At the Effective Time, the separate
existence of the Company shall cease; all rights, title, and interest to all
real estate and other property owned by the Company and Sub shall be allocated
to and vested in the Surviving Corporation without reversion or impairment,
without further act or deed, and without any transfer or assignment having
occurred, but subject to any existing liens or other encumbrances thereon; all
liabilities and obligations of the Company and Sub shall be allocated to the
Surviving Corporation, and the Surviving Corporation shall be the primary
obligor therefor; a proceeding pending by or against the Company or Sub may be
continued as if the Merger did not occur, or the Surviving Corporation may be
substituted in the proceeding; and all other effects of the Merger specified in
Article 5.06 of State Law shall result therefrom.
1.5 Articles of Incorporation. The Articles of Incorporation of Sub, as
in effect immediately prior to the Effective Time, shall, as amended and
restated at the Effective Time as set forth in Exhibit 1.5, be the Articles of
Incorporation of the Surviving Corporation, until thereafter amended in
accordance with its terms and as provided by State Law.
1.6 Bylaws. The Bylaws of Sub, as in effect immediately prior to the
Effective Time, shall be the Bylaws of the Surviving Corporation, until
thereafter amended in accordance with its terms and as provided by State Law.
1.7 Directors. The directors of Sub at the Effective Time shall be the
initial directors of the Surviving Corporation, each to hold office in
accordance with the Articles of Incorporation and Bylaws of the Surviving
Corporation and until his or her successor is duly elected and qualified in
accordance with State Law or until his or her earlier death, resignation or
removal.
1.8 Officers. The officers of Sub at the Effective Time shall be the
initial officers of the Surviving Corporation, each to hold office in accordance
with the Articles of Incorporation and Bylaws of the Surviving Corporation and
until his or her successor is duly elected and qualified in accordance with
State Law or until his or her earlier death, resignation or removal.
1.9 Taking of Necessary Action. Each of the parties hereto shall use
its reasonable best efforts to take all such action as may be necessary or
appropriate in order to effectuate the Merger under State Law and the OGCA as
promptly as possible.
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ARTICLE II -- CONVERSION OF SECURITIES;
MERGER CONSIDERATION
2.1 Conversion of Securities. At the Effective Time, by virtue of the
Merger and without any action on the part of Crescent, Parent, Sub, the Company,
or any holder of any of the following securities:
(a) Each share of common stock, par value $1.00 per share, of the
Company ("Company Stock") held in the treasury of the Company shall be canceled
and extinguished without any conversion thereof and no payment shall be made
with respect thereto.
(c) Each outstanding share of Company Stock held by Sellers shall be
converted into the right to receive a portion of the "Merger Consideration" (as
defined in Section 2.2 and as adjusted pursuant to Section 2.3 below) determined
by dividing the total of amount of all Merger Consideration by the total number
of outstanding shares of Company Stock.
(d) Each outstanding share of common stock, par value $.01 per share,
of Sub shall be and remain outstanding and no payment shall be made with respect
thereto.
2.2 Merger Consideration. The total amount of the merger consideration
payable to the Sellers as the holders of all of the Company Stock shall, subject
to adjustment pursuant to Section 2.3 below, be One Million Three Hundred
Seventy Thousand Five Hundred Seventy-Three and No/100 Dollars ($1,370,573.00)
(the "Merger Consideration"). The Merger Consideration shall be payable (a) by
paying Six Hundred Fifteen Thousand Nine Hundred Fifty-Two and No/100 Dollars
($615,952.00) in immediately available funds by confirmed wire transfer to a
bank account to be designated by each of the Sellers (such designation to occur
no later than the three (3) business day prior to the Closing Date) (such cash
portion of the Merger Consideration, the "Cash Portion of the Merger
Consideration"), and (b) the remaining Seven Hundred Fifty-Four Thousand Six
Hundred Twenty-One and No/100 Dollars ($754,621.00) of the Merger Consideration
shall be paid by Crescent's delivery to Sellers of shares of Crescent's common
stock, par value $0.01 per share ("Crescent's Common Stock"), the number of
which shares (the "Crescent Shares") shall be the quotient of 751,621 divided by
the "Current Market Price" of Crescent's Common Stock. For purposes of the
foregoing, (i) the "Current Market Price" of Crescent's Common Stock shall mean
the average of daily closing prices of Crescent's Common Stock for the ten
consecutive trading days ending on (and including) the trading day immediately
preceding the Closing Date, and (ii) the "closing price" shall mean the last
sales price, regular way, per share of Crescent's Common Stock on a trading day,
or if no sale takes place on such day, the average of the closing bid and ask
prices, regular way, for such day, all as reported by the NASDAQ National Market
System. In the event the foregoing formula would result in the issuance of a
fractional share of Crescent's Common Stock to a Seller, Parent shall pay such
Seller cash at the Closing in lieu of such fractional share.
2.3 Adjustment of Merger Consideration.
(a) The Merger Consideration will be adjusted (either up or down) based
on the aggregate net change in the asset and liability accounts of the Company
set forth on Schedule 2.3(a) hereto (the aggregate balance of such accounts, the
"Net Worth of the Company") as of the Closing Date, as
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compared to the Net Worth of the Company as of February 28, 1998 as shown on
Schedule 2.3(a). If, upon completion of the procedures set forth in Section
2.3(b) below, it is finally determined that (i) the Net Worth of the Company as
of the Closing Date is greater than the Net Worth of the Company as of February
28, 1998, then the Merger Consideration shall be increased by the amount of such
difference in cash, and Crescent shall pay to Sellers the amount of such
difference within ten (10) days after such final determination, or (ii) the Net
Worth of the Company as of the Closing Date is less than the Net Worth of the
Company as of February 28, 1998, then the Merger Consideration shall be
decreased by the amount of such difference, and Sellers shall pay to Parent the
amount of such difference in cash within ten (10) days after such final
determination. All payments to or by Sellers required by this Section 2.3 shall
be made by or to each of the Sellers, pro rata, based on the percentages set
forth on Annex I attached hereto. Notwithstanding the foregoing, in the event
the adjustment to be paid to Sellers under clause (i) above is in excess of five
percent (5%) of the Merger Consideration, then such adjustment shall be made in
shares of Crescent Common Stock, the number of such shares equally the quotient
of the upward adjustment divided by the "Current Market Price" as determined
under Section 2.2 above.
(b) Within sixty (60) days after the Closing, Parent will prepare and
deliver to each of Sellers a statement of the Net Worth of the Company as of the
close of business on the Closing Date (the "Closing Statement"), which statement
shall be prepared in accordance with GAAP and the instructions provided in
Schedule 2.3(b) hereto. If, within thirty (30) days following delivery of the
Closing Statement to each of the Sellers, neither of Sellers has given Parent
notice of its objection to the Closing Statement (such notice must contain a
detailed statement of the basis of such Seller's objection), then the Net Worth
of the Company reflected in the Closing Statement will be used in computing the
adjustment to the Merger Consideration. If either of Sellers gives Parent such
notice of objection and the parties are unable to resolve the subject of such
objection within fifteen (15) days after such notice, then the issues in dispute
will be submitted to Coopers & Xxxxxxx, LLP, certified public accounts (the
"Accountants"), for resolution with instructions to the Accountants to resolve
such dispute within forty-five (45) days. If issues in dispute are submitted to
the Accountants for resolution (i) each party will furnish to the Accountants
such work papers and other documents and information relating to the disputed
issues as the Accountants may request and are available to that party; (ii) the
determination by the Accountants, as set forth in a notice delivered to both
parties by the Accountants, will be binding and conclusive on the parties; and
(iii) Parent and Sellers will each bear 50% of the fees and expenses of the
Accountants for such determination, unless the Net Worth of the Company as
computed by the Accountant is more that ten percent (10%) greater than or less
than the vale computed by Parent, in which case such fees and expenses shall be
borne by Parent ( so long as the Accountants determine that the basis for such
erroneous calculation was not due to the failure of the Sellers' disclosure of
all reasonably necessary information to properly calculate the Net Worth of the
Company, in which case all the fees and expenses of the Accountants shall be
borne by the Sellers). The final determination of the Net Worth of the Company
as of the close of business on the Closing Date shall occur on the earliest of
(A) thirty (30) days after delivery of the Closing Statement to Sellers without
objection, (B) written agreement of the Sellers and Parent to the Closing
Statement or any modification thereof or (C) written determination by the
Accountants.
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2.4 No Dissenting Shares. Subject to the terms and conditions hereof,
Sellers and Parent each agree to vote for the Merger and hereby waive any
dissenters rights any such parties may have with respect to the Merger.
2.5 Exchange of Certificates. At the Closing, Crescent and Parent shall
effect the exchange for the Merger Consideration of certificates that,
immediately prior to the Effective Time, represented shares of Company Stock
entitled to receive the Merger Consideration pursuant to Section 2.1
("Certificates"). Upon the surrender to Parent of each Certificate, Crescent and
Parent shall pay the holder of such Certificate the applicable Merger
Consideration multiplied by the number of shares of Company Stock formerly
represented by such Certificate, in exchange therefor, and such Certificate
shall forthwith be canceled.
2.6 Pledge Agreement. In order to secure the indemnity obligations of
Sellers under Article X, Sellers shall, at the Closing, deliver or cause to be
delivered to Parent a stock pledge agreement (the "Pledge Agreement") in favor
of Parent, together with the certificates representing the Crescent Shares and
stock powers executed in blank. The Pledge Agreement shall be in substantially
the form set forth as Exhibit 2.6.
ARTICLE III -- REPRESENTATIONS
AND WARRANTIES OF SELLERS AND THE COMPANY
King and the Company, and Greener to the best of his knowledge, jointly
and severally represent and warrant to Crescent and Parent that:
3.1 Corporate Organization. The Company is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
corporate authority to own, lease, and operate its properties and to carry on
its business as now being conducted. No actions or proceedings to dissolve the
Company are pending.
3.2 Qualification. The Company is duly qualified or licensed to do
business and is in good standing in each of the jurisdictions set forth on
Schedule 3.2, which are all the jurisdictions in which it owns, leases, or
operates property or in which such qualification or licensing is required for
the conduct of its business.
3.3 Charter and Bylaws. The Company has made available to Parent
accurate and complete copies of (i) the Articles of Incorporation and Bylaws of
the Company (certified by the Secretary of State of the Company's jurisdiction
of incorporation and the secretary or an assistant secretary of the Company,
respectively) as currently in effect, (ii) the stock records of the Company, and
(iii) the minutes of all meetings of the Company's Board of Directors, any
committees of such Board, and the Company's shareholders (and all consents in
lieu of such meetings). Such records, minutes, and consents accurately reflect
the stock ownership of the Company and all actions taken by the Company's Board,
any committees of such Board, and the Company's shareholders. The Company is not
in violation of any provision of its Articles of Incorporation or Bylaws.
3.4 Capitalization of the Company. The authorized capital stock of the
Company consists of 10,000 shares of common stock, par value $1.00 per share, of
which 6,522 shares are outstanding
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and 3,478 shares are held in the Company's treasury. All outstanding shares of
capital stock of the Company have been validly issued and are fully paid and
nonassessable, and no shares of capital stock of the Company are subject to, nor
have any been issued in violation of, preemptive or similar rights. All
issuances, sales, and repurchases by the Company of shares of its capital stock
have been effected in compliance with all Applicable Laws, including without
limitation applicable federal and state securities laws. The Shares constitute
(and at the Closing will constitute) all the outstanding shares of capital stock
of the Company. Except as set forth above in this Section 3.4, there are (and as
of the Closing Date there will be) outstanding (i) no shares of capital stock or
other voting securities of the Company, (ii) no securities of the Company
convertible into or exchangeable for shares of capital stock or other voting
securities of the Company, (iii) no options, warrants or other rights to acquire
from the Company, and no obligation of the Company to issue or sell, any shares
of capital stock or other voting securities of the Company or any securities of
the Company convertible into or exchangeable for such capital stock or voting
securities, and (iv) no equity equivalents, interests in the ownership or
earnings, or other similar rights of or with respect to the Company. There are
(and as of the Closing Date there will be) no outstanding obligations of the
Company to repurchase, redeem or otherwise acquire any of the foregoing shares,
securities, options, warrants, equity equivalents, interests or rights.
3.5 Authority Relative to This Agreement.
(a) The Company has full corporate power and corporate authority to
execute, deliver and perform this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery, and performance by the Company of
this Agreement, and the consummation by it of the transactions contemplated
hereby, have been duly authorized by all necessary corporate action of the
Company. This Agreement has been duly executed and delivered by the Company and
constitutes, and each other agreement, instrument, or document executed or to be
executed by the Company in connection with the transactions contemplated hereby
has been, or when executed will be, duly executed and delivered by the Company
and constitutes, or when executed and delivered will constitute, a valid and
legally binding obligation of the Company, enforceable against the Company in
accordance with their respective terms, except that such enforceability may be
limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors' rights generally and (ii) equitable principals
which may limit the availability of certain equitable remedies (such as specific
performance) in certain instances.
(b) Each Seller has full legal right, power and authority to execute,
deliver and perform this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by each
Seller and constitutes, and each other agreement, instrument or document
executed or to be executed by a Seller in connection with the transactions
contemplated hereby has been, or when executed will be, duly executed and
delivered by such Seller and constitutes, or when executed and delivered will
constitute, a valid and legally binding obligation of such Seller, enforceable
against such Seller in accordance with their respective terms, except that such
enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium, and similar laws affecting creditors' rights
generally, (ii) equitable principals which may limit the availability of certain
equitable remedies (such as specific performance) in certain instances and (iii)
public policy considerations with respect to the enforceability rights of
indemnification.
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3.6 Noncontravention.
(a) Except as described in Schedule 3.6 hereto, the execution, delivery
and performance by Sellers and the Company of this Agreement and the
consummation by them of the transactions contemplated hereby do not and will not
(i) conflict with or result in a violation of any provision of the charter or
bylaws of the Company, (ii) conflict with or result in a violation of any
provision of, or constitute (with or without the giving of notice or the passage
of time or both) a default under, or give rise (with or without the giving of
notice or the passage of time or both) to any right of termination,
cancellation, or acceleration under, any bond, debenture, note, mortgage,
indenture, lease, contract, agreement, or other instrument or obligation to
which the Company is a party or by which the Company or any of its properties
may be bound, (iii) result in the creation or imposition of any Encumbrance upon
the properties of the Company or (iv) assuming compliance with the matters
referred to in Section 3.7, violate any Applicable Law binding upon the Company.
(b) The execution, delivery, and performance by each Seller of this
Agreement and the consummation by each Seller of the transactions contemplated
hereby do not and will not (i) conflict with or result in a violation of any
provision of, or constitute (with or without the giving of notice or the passage
of time or both) a default under, or give rise (with or without the giving of
notice or the passage of time or both) to any right of termination,
cancellation, or acceleration under, any contract, agreement, instrument, or
obligation to which such Seller is a party or by which such Seller or any of
such Seller's properties may be bound, (ii) result in the creation or imposition
of any Encumbrance upon the properties of such Seller or (iii) assuming
compliance with the matters referred to in Section 3.7, violate any Applicable
Law binding upon such Seller.
3.7 Governmental Approvals. No consent, approval, order or
authorization of, or declaration, filing, or registration with, any Governmental
Entity is required to be obtained or made by any Seller or the Company in
connection with the execution, delivery, or performance by Sellers and the
Company of this Agreement or the consummation by them of the transactions
contemplated hereby.
3.8 No Subsidiaries. The Company has no subsidiaries. In addition, the
Company does not own, directly or indirectly, any capital stock or other
securities of any corporation or have any direct or indirect equity or ownership
interest in any other person.
3.9 Shares. Each Seller is (and at the Closing will be) the record and
beneficial owner of, and upon consummation of the transactions contemplated
hereby Parent will acquire good, valid and marketable title to, the number of
Shares set forth opposite the name of such Seller on Annex I, free and clear of
all Encumbrances, other than (i) those that may arise by virtue of any actions
taken by or on behalf of Parent or its affiliates or (ii) restrictions on
transfer that may be imposed by federal or state securities laws.
3.10 Financial Statements. The Company has delivered to Parent accurate
and complete copies of (i) the Company's unaudited balance sheet as of October
31, 1997 and the related unaudited statements of income, stockholders' equity
and cash flows for the year then ended as compiled by Xxxxxx X. Xxxxxxxxx, P.C.,
an independent certified public accountant (the "Annual Financial Statements"),
and (ii) the Company's unaudited balance sheet as of March 31, 1988 (the "Latest
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Balance Sheet"), and the related unaudited statements of income, stockholders'
equity and cash flows for the five-month period then ended (the "Interim
Financial Statements"), certified by the Company's president (collectively, the
"Financial Statements"). The Financial Statements (i) represent actual bona fide
transactions, (ii) except as disclosed on Schedule 3.10 hereto, have been
prepared from the books and records of the Company in conformity with generally
accepted accounting principles applied on a basis consistent with preceding
years throughout the periods involved and (iii) accurately, completely and
fairly present the Company's financial position as of the respective dates
thereof and its results of operations and cash flows for the periods then ended.
The statements of income included in the Financial Statements do not contain any
items of special or nonrecurring income, and the balance sheets included in the
Financial Statements do not reflect any write-up or revaluation increasing the
book value of any assets, nor have there been any transactions since October 31,
1997 giving rise to special or nonrecurring income or any such write-up or
revaluation.
3.11 Absence of Undisclosed Liabilities. The Company has no liabilities
or obligations (whether accrued, absolute, contingent, unliquidated, or
otherwise, whether or not known to the Company, and whether due or to become
due), except (i) liabilities reflected on the Latest Balance Sheet, (ii)
liabilities which have arisen since the date of the Latest Balance Sheet in the
ordinary course of business (none of which is a material liability for breach of
contract, breach of warranty, tort, or infringement), (iii) liabilities arising
under executory contracts entered into in the ordinary course of business (none
of which is a liability for breach of contract).
3.12 Absence of Certain Changes. Since March 31, 1998, (i) there has
not been any material adverse change in, or any event or condition that might
reasonably be expected to result in any material adverse change in, the
business, assets, results of operations, condition (financial or otherwise), or
prospects of the Company; (ii) the business of the Company has been conducted
only in the ordinary course consistent with past practice; (iii) the Company has
not incurred any material liability, engaged in any material transaction, or
entered into any material agreement outside the ordinary course of business
consistent with past practice; (iv) the Company has not suffered any material
loss, damage, destruction, or other casualty to any of its assets (whether or
not covered by insurance); and (v) the Company has not taken any of the actions
set forth in Section 5.2 except as permitted thereunder.
3.13 Tax Matters.
(a) the Company has (and as of the Closing Date will have) duly filed
all federal, state, local, and foreign Tax Returns required to be filed by or
with respect to it with the IRS or other applicable taxing authority, and,
except as set forth in Schedule 3.13(a), no extensions with respect to such Tax
Returns have (or as of the Closing Date will have) been requested or granted;
(b) the Company has (and as of the Closing Date will have) paid, or
adequately reserved against in the Financial Statements, all Taxes due, or
claimed by any taxing authority to be due, from or with respect to it, except
Taxes that are being contested in good faith by appropriate legal proceedings
and for which adequate reserves have been set aside;
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(c) there has been no issue raised or adjustment proposed (and none is
pending) by the IRS or any other taxing authority in connection with any of the
Tax Returns, except as set forth on Schedule 3.13(c);
(d) the Company has (and as of the Closing Date will have) made all
deposits required with respect to Taxes;
(e) the federal income Tax Returns of the Company have not been audited
by the IRS, except as set forth on Schedule 3.13(e), or any other taxing
authority;
(f) no waiver or extension of any statute of limitations as to any
federal, state, local or foreign Tax matter has been given by or requested from
the Company; and
(g) the Company has not filed a consent under Section 341(f) of the
Code.
3.14 Compliance With Laws. The Company has complied with all Applicable
Laws (including without limitation Applicable Laws relating to securities,
properties, business products, manufacturing processes, advertising and sales
practices, employment practices, terms and conditions of employment, wages and
hours, safety, occupational safety, health, environmental protection, product
safety and civil rights). Neither Sellers nor the Company has received any
written notice, which has not been dismissed or otherwise disposed of, that the
Company has not so complied. The Company is not charged or, to the best
knowledge of Sellers and the Company, threatened with, or, to the best knowledge
of Sellers and the Company, under investigation with respect to, any violation
of any Applicable Law relating to any aspect of the business of the Company.
3.15 Legal Proceedings. Except as disclosed on Schedule 3.15, there are
no Proceedings pending or, to the best knowledge of Sellers and the Company,
threatened against or involving the Company (or any of its directors or officers
in connection with the business or affairs of the Company) or any properties or
rights of the. Except as disclosed on Schedule 3.15, any and all potential
liability of the Company under such Proceedings is adequately covered (except
for standard deductible amounts) by the existing insurance maintained by the
Company described in Section 3.32. No judgment, order, writ, injunction or
decree of any Governmental Entity has been issued or entered against the Company
which continues to be in effect. There are no Proceedings pending or, to the
best knowledge of Sellers and the Company, threatened seeking to restrain,
prohibit, or obtain damages or other relief in connection with this Agreement or
the transactions contemplated hereby.
3.16 Title to Properties. The Company has good, marketable and (in the
case of real property) insurable title to all properties (real, personal, and
mixed, tangible and intangible) it owns or purports to own, including without
limitation the properties reflected in its books and records and in the Latest
Balance Sheet, other than those disposed of after the date of such balance sheet
in the ordinary course of business consistent with past practice, free and clear
of all Encumbrances, except (a) as disclosed on Schedule 3.16, (b) as set forth
in the Latest Balance Sheet as securing specific liabilities, (c) liens for
Taxes not yet due and payable or the validity of which is being contested in
good faith by appropriate legal proceedings and for which adequate reserves have
been set aside, (d) statutory liens (including materialmen's, mechanic's,
repairmen's, landlord's, and other similar
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liens) arising in connection with the ordinary course of business securing
payments not yet due and payable or, if due and payable, the validity of which
is being contested in good faith by appropriate legal proceedings and for which
adequate reserves have been set aside, and (e) such imperfections or
irregularities of title, if any, as (A) are not substantial in character,
amount, or extent and do not materially detract from the value of the property
subject thereto, (B) do not materially interfere with either the present or
intended use of such property and (C) do not, individually or in the aggregate,
materially interfere with the conduct of the Company's normal operations.
3.17 Sufficiency and Condition of Properties. The properties owned,
leased or used by the Company are in good operating condition and repair
(ordinary wear and tear excepted), are suitable for the purposes used, and are
adequate and sufficient for the normal operation of the Company's business. Such
properties and their uses conform to all Applicable Laws, and Sellers and the
Company have not received any notice to the contrary. All such tangible
properties are in the Company's possession or under its control.
3.18 Real Property.
(a) Set forth on Schedule 3.18 is a list, by street address and (in the
case of owned real property) deed reference, of all real property owned or
leased by the Company (for purposes of this Section, the "Real Property"), a
list of all rights-of-way, easements, and other Encumbrances of any kind to
which the Real Property is subject, a brief description of the principal
facilities and structures (if any) located thereon, and, with respect to leased
Real Property, a brief description of the applicable leases and the material
terms thereof. There are no persons (other than the Company) in possession of
any portion of the Real Property as lessees, tenants at sufferance, or
trespassers, nor does any person (other than the Company) have a lease, tenancy,
or other right of occupancy or use of any portion of the Real Property. The Real
Property has full and free access to and from public highways, streets, and
roads, and Sellers and the Company have no knowledge of any pending or
threatened Proceeding or any other fact or condition which would limit or result
in the termination of such access. There exists no Proceeding or court order, or
building code provision, deed restriction, or restrictive covenant (recorded or
otherwise), or other private or public limitation, which might in any way impede
or adversely affect the continued use of the Real Property by the Company in the
manner it is currently used.
(b) All buildings, improvements, and fixtures situated on the Real
Property conform to all Applicable Laws. All the Real Property is zoned for the
various purposes for which such Real Property is being used, and there exists no
pending or, to the best knowledge of Sellers and the Company, threatened
Proceeding which might adversely affect the validity of such zoning.
(c) The Real Property is connected to and serviced by water, sewage
disposal, gas, telephone and electric facilities which are adequate for the
current use of the Real Property and, to the best knowledge of Sellers and the
Company, are in compliance with all Applicable Laws. All public utilities
required for the operation of the Real Property enter the Real Property through
adjoining public streets or, if they pass through adjoining private land, do so
in accordance with valid public easements, and all utility lines and mains
located on the Real Property have been properly dedicated to, and are serviced
and maintained by, the appropriate public or quasi-public entity.
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(d) The buildings, improvements and fixtures situated on the Real
Property are in good condition and repair (excepting ordinary wear and tear and
minor maintenance and repair problems which would normally be associated with
such assets when used in connection with the operation of the Company's
business), free of any latent or patent structural defects.
(e) Neither the whole nor any part of the Real Property is subject to
any pending Proceeding for condemnation or other taking by any Governmental
Entity, and, to the best knowledge of Sellers and the Company, no such
condemnation or other taking is contemplated or threatened.
(f) There are no unpaid charges, debts, liabilities, claims or
obligations arising from the construction, occupancy, ownership, use or
operation of the Real Property, or the buildings, improvements or fixtures
situated thereon, or the business operated thereon, which could give rise
to any mechanic's or materialmen's or other statutory lien against the Real
Property, or the buildings, improvements or fixtures situated thereon, or any
part thereof, or for which the Company will be responsible.
(g) The Real Property is not within any area determined by the
Department of Housing and Urban Development to be flood prone under the Federal
Flood Disaster Protection Act of 1973.
(h) The Company has delivered to Parent, accurate and complete copies
of all title insurance policies, title reports, other title documents, surveys,
certificates of occupancy and Permits in the possession of the Company relating
to the Real Property or the buildings, improvements or fixtures situated
thereon.
(i) No Seller is a "foreign person" within the meaning of Sections 1445
and 7701 of the Code.
3.19 Tangible Personal Property. Set forth on Schedule 3.19 is a list,
as of March 31, 1998, of all furniture, equipment, machinery, materials, motor
vehicles, rolling stock, apparatus, tools, implements, appliances and other
tangible personal property (other than spare parts, supplies, and inventory)
owned, leased or used by the Company, except for items having a value
individually of less than $1,000 which do not, in the aggregate, have a value
exceeding $10,000. All tangible personal property owned, leased or used by the
Company is in good operating condition and repair (ordinary wear and tear
excepted), is suitable for the purposes used, and is adequate and sufficient for
the normal operation of the Company's business. The motor vehicles and rolling
stock owned or leased by the Company are utilized solely for the transportation
by the Company, for its own account and not for the account of others, of
inventories, supplies and other items relating to the operation of the Company's
business, and such activities do not require the obtainment of any Permit.
3.20 Leased Property. Set forth on Schedule 3.20 is a description of
all leases under which the Company is the lessee of real or personal property
used in connection with the Company's business. The Company has good and valid
leasehold interests in all properties held by it under lease. The lessee under
each such lease and its predecessor under each such lease, if any, has been in
peaceable possession (or remedied any claims relating thereto) of the property
covered thereby since the commencement of the original term of such lease. No
waiver, indulgence, or postponement
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of the lessee's obligations under any such lease has been granted by the lessor
or of the lessor's obligations thereunder by the lessee. The lessee under each
such lease is not in breach of or in default under such lease, nor has any event
occurred which (with or without the giving of notice or the passage of time or
both) would constitute a default by the lessee under such lease, and the lessee
has not received any notice from, or given any notice to, the lessor indicating
that the lessee or the lessor is in breach of or in default under such lease. To
the best knowledge of Sellers and the Company, none of the lessors under such
leases is in breach thereof or in default thereunder. The lessee under each such
lease has full right and power to occupy or possess, as the case may be, all the
property covered by such lease.
3.21 Inventory. All inventory (including raw materials,
work-in-progress, and finished goods) and related supplies reflected on the
Latest Balance Sheet or thereafter acquired and not disposed of in the ordinary
course of business is in good condition and is merchantable, or suitable
and usable for the production or completion of merchantable products, for sale
in the Company's ordinary course of business as first quality goods at normal
xxxx-ups. None of such items is obsolete, discontinued, returned, damaged,
overage, or of below standard quality or merchantability, except for items that
have been written down to realizable market value or for which adequate reserves
have been provided in the Latest Balance Sheet. Each item of inventory reflected
on the Latest Balance Sheet or in the Company's books and records is so
reflected on the basis of a complete physical count and is valued at the lower
of cost, on a first-in, first-out basis, or market in accordance with generally
accepted accounting principles consistently applied, except as described on
Schedule 3.21 hereto. The present quantities of all inventories of the Company
are sufficient to serve adequately its customers in the ordinary course.
Finished goods in such inventories conform to the applicable specifications of
the Company, including all applicable warranties, whether express or implied,
given in connection with the sales of such goods and under Applicable Laws, and
are free from defects in design, workmanship, and material. The Company also
maintains sufficient inventories of spare and replacement parts to meet any
repair and replacement obligations in the ordinary course, under applicable
warranties or otherwise.
3.22 Receivables. Except as described on Schedule 3.22, all receivables
(including accounts and notes receivable, employee advances, and accrued
interest receivables) of the Company as reflected on the Latest Balance Sheet or
arising since the date thereof are valid obligations of the respective makers
thereof, have arisen in the ordinary course of business for goods or services
delivered or rendered, are not subject to any valid defenses, counterclaims or
set offs, and are collectible in full at their recorded amounts in the ordinary
course of business without resort to litigation, net of all cash discounts and
doubtful accounts as reflected on the Latest Balance Sheet (in the case of
receivables so reflected) or on the books of the Company (in the case of
receivables arising since the date thereof). The allowances for doubtful
accounts reflected on the Latest Balance Sheet and on the books of the Company
were determined in accordance with generally accepted accounting principles and
were and are reasonable in light of historical data and other relevant
information.
3.23 Intellectual Property.
(a) Set forth on Schedule 3.23 is a list of all Intellectual Property
owned by the Company or which it is licensed to use. Schedule 3.23 specifies, as
applicable: (i) the nature of such
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Intellectual Property; (ii) the owner of such Intellectual Property; (iii) the
jurisdictions by or in which such Intellectual Property is recognized without
regard to registration or has been issued or registered or in which an
application for such issuance or registration has been filed, including the
respective registration or application numbers; and (iv) all material licenses,
sublicenses, and other agreements to which the Company is a party and pursuant
to which any person is authorized to use such Intellectual Property, including
the identity of all parties thereto, a description of the nature and subject
matter thereof, the applicable royalty, and the term thereof.
(b) The listed Intellectual Property constitutes all Intellectual
Property necessary for the conduct of the Company's business on a basis
consistent with past practice for at least the past five years. The Company has
good and marketable title to or is validly licensed to use all such Intellectual
Property. Each item of such Intellectual Property is in full force and effect,
the Company is in compliance with all its obligations with respect thereto, and,
to the best knowledge of Sellers and the Company, no event has occurred which
permits, or upon the giving of notice or the passage of time or otherwise would
permit, revocation or termination of any thereof. There are no Proceedings
pending or, to the best knowledge of Sellers and the Company, threatened against
the Company asserting that the use by the Company of any of such Intellectual
Property infringes the rights of any other person or seeking revocation,
termination, or concurrent use of any of such Intellectual Property, and there
is, to the best knowledge of Sellers and the Company, no basis for any such
Proceeding. To the best knowledge of Sellers and the Company, none of such
Intellectual Property is being infringed upon by any other person. None of such
Intellectual Property is subject to any outstanding judgment, order, writ,
injunction, or decree of any Governmental Entity, or any agreement, arrangement,
or understanding, written or oral, restricting the scope or use thereof. To the
best knowledge of Sellers and the Company, the conduct of the Company's business
at any time prior to the Closing Date did not, and the conduct of such business
on a basis consistent with past practice as of the Closing Date will not,
infringe upon or otherwise misappropriate any Intellectual Property of any other
person.
3.24 Permits. Set forth on Schedule 3.24 is a list of all Permits held
by the Company, which are all the Permits necessary or required for the conduct
of the business of the Company as currently conducted. Each of such Permits is
in full force and effect, the Company is in compliance with all its obligations
with respect thereto, and, to the best knowledge of Sellers and the Company, no
event has occurred which permits, or with or without the giving of notice or the
passage of time or both would permit, the revocation or termination of any
thereof. Except as disclosed on Schedule 3.24, no notice has been issued by any
Governmental Entity and no Proceeding is pending or, to the best knowledge of
Sellers and the Company, threatened with respect to any alleged failure by the
Company to have any Permit.
3.25 Agreements.
(a) All agreements, arrangements, and understandings of any nature
(written or oral, formal or informal) (collectively, for purposes of this
Section 3.25, "agreements") to which the Company is a party or by which the
Company or any of its properties is otherwise bound, regardless of amount or
subject matter, that are material to the business, assets, results of
operations, condition (financial or otherwise), or prospects of the Company as
of May 15, 1998 are listed on Schedule 3.25.
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(b) The Company has delivered to Parent accurate and complete copies of
the agreements listed on Schedule 3.25. Each of such agreements is a valid and
binding agreement of the parties thereto enforceable against them in accordance
with its terms. No breach or default exists with respect to any of such
agreements, and no event has occurred which, after the giving of notice or the
passage of time or otherwise, will result in any such breach or default.
3.26 ERISA.
(a) Set forth on Schedule 3.26(a)(1) is a list identifying each
"employee benefit plan," as defined in Section 3(3) of ERISA, (i) which is
subject to any provision of ERISA, (ii) which is maintained, administered, or
contributed to by the Company or any affiliate of the Company and (iii) which
covers any employee or former employee of the Company or any affiliate of the
Company or under which the Company or any affiliate of the Company has any
liability. Except as otherwise disclosed on Schedule 3.26(a)(2), the Company has
delivered to Parent accurate and complete copies of such plans (and, if
applicable, the related trust agreements) and all amendments thereto and
written interpretations thereof, together with (i) the three most recent annual
reports (Form 5500 including, if applicable, Schedule B thereto) prepared in
connection with any such plan and (ii) the most recent actuarial valuation
report prepared in connection with any such plan. Such plans are referred to in
this Section as the "Employee Plans." For purposes of this Section only, an
"affiliate" of any person means any other person which, together with such
person, would be treated as a single employer under Section 414 of the Code. The
only Employee Plans which individually or collectively would constitute an
"employee pension benefit plan" as defined in Section 3(2) of ERISA are
identified as such on Schedule 3.26(a)(1).
(b) Except as otherwise identified on Schedule 3.26(b), (i) no Employee
Plan constitutes a "multiemployer plan", as defined in Section 3(37) of ERISA
(for purposes of this Section 3.26, a "Multiemployer Plan"), (ii) no Employee
Plan is maintained in connection with any trust described in Section 501(c)(9)
of the Code, (iii) no Employee Plan is subject to Title IV of ERISA or to the
minimum funding standards of ERISA and the Code and (iv) during the past five
(5) years, neither the Company nor any of its affiliates have made or been
required to make contributions to any Multiemployer Plan. There are no
accumulated funding deficiencies as defined in Section 412 of the Code (whether
or not waived) with respect to any Employee Plan. The fair market value of the
assets held with respect to each Employee Plan which is an employee pension
benefit plan, as defined in Section 3(2) of ERISA, exceeds the actuarially
determined present value of all benefit liabilities accrued under such Employee
Plan (whether or not vested) determined using reasonable actuarial assumptions.
Neither the Company nor any affiliate of the Company has incurred any liability
under Title IV of ERISA arising in connection with the termination of, or
complete or partial withdrawal from, any plan covered or previously covered by
Title IV of ERISA. The Company and all of the affiliates of the Company have
paid and discharged promptly when due all liabilities and obligations arising
under ERISA or the Code of a character which if unpaid or unperformed might
result in the imposition of a lien against any of the assets of the Company.
Nothing done or omitted to be done and no transaction or holding of any asset
under or in connection with any Employee Plan has or will make the Company or
any director or officer of the Company subject to any liability under Title I of
ERISA or liable for any Tax pursuant to Section 4975 of the Code. There are no
threatened or pending claims by or on behalf of the Employee Plans, or by any
participant therein, alleging a breach or breaches of fiduciary duties or
violations of Applicable Laws which could result
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in liability on the part of the Company, its officers or directors, or such
Employee Plans, under ERISA or any other Applicable Law and there is no basis
for any such claim.
(c) Each Employee Plan which is intended to be qualified under Section
401(a) of the Code is so qualified and has been so qualified since the date of
its adoption, and each trust forming a part thereof is exempt from Tax pursuant
to Section 501(a) of the Code. Set forth on Schedule 3.26(c) is a list of the
most recent IRS determination letters with respect to any such Plans, accurate
and complete copies of which letters have been delivered to Parent. Each
Employee Plan has been maintained in compliance with its terms and with the
requirements prescribed by all Applicable Laws, including but not limited to
ERISA and the Code, which are applicable to such Plans.
(d) To the extent not listed on Schedule 3.25, there is set forth on
Schedule 3.26(d) a list of each employment, severance, or other similar
contract, arrangement, or policy and each plan or arrangement (written or oral)
providing for insurance coverage (including any self-insured arrangements),
workers' compensation, disability benefits, supplemental unemployment benefits,
vacation benefits, retirement benefits, deferred compensation, profit-sharing,
bonuses, stock options, stock appreciation rights, or other forms of incentive
compensation or post-retirement insurance, compensation, or benefits which (i)
is not an Employee Plan, (ii) is entered into, maintained, or contributed to, as
the case may be, by the Company or any affiliate of the Company and (iii) covers
any employee or former employee of the Company or any affiliate of the Company
or under which the Company or any affiliate of the Company has any liability.
Such contracts, plans, and arrangements as are described in the preceding
sentence are referred to for purposes of this Section 3.26 as the "Benefit
Arrangements." Each Benefit Arrangement has been maintained in substantial
compliance with its terms and with the requirements prescribed by Applicable
Laws.
(e) Neither the Company nor any affiliate of the Company has performed
any act or failed to perform any act, and there is no contract, agreement, plan,
or arrangement covering any employee or former employee of the Company or any
affiliate of the Company, that, individually or collectively, could give rise to
the payment of any amount that would not be deductible pursuant to the terms of
Section 162(a)(1) or 280G of the Code or Section 162(i)(2) of the Code prior to
its amendment by the Technical and Miscellaneous Revenue Act of 1988, or could
give rise to any penalty or excise Tax pursuant to Section 4980B or 4999 of the
Code.
(f) Except as disclosed on Schedule 3.26(f), there has been no
amendment, written interpretation or announcement (whether or not written) by
the Company or any affiliate of the Company of or relating to, or change in
employee participation or coverage under, any Employee Plan or Benefit
Arrangement which would increase materially the expense of maintaining such
Employee Plan or Benefit Arrangement above the level of the expense incurred in
respect thereof for the fiscal year ended October 31, 1997.
3.27 Environmental Matters.
(a) Neither the Company nor any property owned or leased by the Company
(for purposes of this Section 3.27, the "Property") is in violation of, or
subject to any pending or, to the best knowledge of Sellers and the Company,
threatened Proceeding under, or subject to any remedial obligations under, any
Applicable Laws pertaining to health, safety, the environment, Hazardous
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Substances, or Solid Wastes (such Applicable Laws as they now exist or are
hereafter enacted and/or amended are collectively, for purposes of this Section
3.27, called "Applicable Environmental Laws"), including without limitation the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended by the Superfund Amendments and Reauthorization Act of 1986 (as
amended, for purposes of this Section, called "CERCLA"), the Resource
Conservation and Recovery Act of 1976, as amended by the Used Oil Recycling Act
of 1980, the Solid Waste Disposal Act Amendments of 1980, and the Hazardous and
Solid Waste Amendments of 1984 (as amended, for purposes of this Section, called
"RCRA"), and other applicable federal or state environmental conservation or
protection laws. No asbestos, material containing asbestos that is or may become
friable or material containing asbestos deemed hazardous by Applicable Laws, has
been installed in any Property. The representations and warranties set forth in
the preceding sentences of this Section would continue to be true and correct
following disclosure to the applicable Governmental Entities of all relevant
facts, conditions and circumstances, if any, pertaining to the Property.
(b) The Company has not obtained and is not required to obtain any
Permits to construct, occupy, operate or use any buildings, improvements,
fixtures, equipment or other tangible property forming a part of the Property by
reason of any Applicable Environmental Laws. The Company undertook, at the time
of acquisition of the Property, all appropriate inquiry into the previous
ownership and uses of the Property consistent with good commercial or customary
practice. The Company has taken all steps necessary to determine and has
determined that no Hazardous Substances or Solid Wastes have been Disposed of or
otherwise Released on or to the Property.
(c) The terms "Hazardous Substance" and "Release" shall have the
meanings specified in CERCLA, and the terms "Solid Waste" and "Disposal" (or
"Disposed") shall have the meanings specified in RCRA; provided that in the
event either CERCLA or RCRA is amended so as to broaden the meaning of any term
defined thereby, such broader meaning shall apply subsequent to the effective
date of such amendment; and provided further, that to the extent the laws of the
jurisdiction in which the Property is located establish a meaning for "Hazardous
Substance," "Release," "Solid Waste" or "Disposal" (or "Disposed") which is
broader than that specified in either CERCLA or RCRA, such broader meaning shall
apply.
3.28 Labor Relations.
(a) Except as disclosed on Schedule 3.28, (i) there are no collective
bargaining agreements or other similar agreements, arrangements, or
understandings, written or oral, with employees as a group to or by which the
Company is a party or is bound; (ii) no employees of the Company are represented
by any labor organization, collective bargaining representative, or group of
employees; (iii) no labor organization, collective bargaining representative, or
group of employees claims to represent a majority of the employees of the
Company in an appropriate unit of the Company; (iv) the Company has not been
involved with any representational campaign by any union or other organization
or group seeking to become the collective bargaining representative of any of
its employees or been subject to or, to the best knowledge of Sellers and the
Company, threatened with any strike or other concerted labor activity or
dispute; and (v) the Company is not obligated to bargain collectively with
respect to wages, hours, and other terms and conditions of employment with any
recognized or certified labor organization, collective bargaining
representative, or group of employees.
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(b) The Company is in compliance with all Applicable Laws pertaining to
employment and employment practices and wages, hours, and other terms and
conditions of employment in respect of its employees and is not engaged in any
unfair labor practices or unlawful employment practices. There is no pending or,
to the best knowledge of Sellers and the Company, threatened Proceeding by or
before, and the Company is not subject to any judgment, order, writ, injunction,
or decree of or inquiry from, the National Labor Relations Board, the Equal
Employment Opportunity Commission, the Department of Labor, or any other
Governmental Entity in connection with any current, former, or prospective
employee of the Company.
(c) Sellers and the Company believe that relations with the employees
of the Company are satisfactory.
3.29 Employees. Set forth on Schedule 3.29 is a list of (a) all
directors and officers of the Company, and (b) the name, social security number
and dates of employment by the Company of each employee, agent and consultant of
the Company as of May 15, 1998, together with the total amounts of salary,
bonuses and other compensation paid or payable by the Company to each such
person for the current fiscal year and the immediately preceding fiscal year.
The consummation of the transactions contemplated by this Agreement will not
result in the incurring of any severance pay obligations to any person employed
by the Company. No Seller and no affiliate of any Seller has entered into any
type of employment or consulting agreement, written or oral, with any employee
of the Company, nor has any Seller or any affiliate of any Seller engaged in
discussions with any such employee relating thereto.
3.30 Insider Interests. No shareholder, director, officer or employee
of the Company or any associate of any such shareholder, director, officer or
employee is presently, directly or indirectly, a party to any transaction with
the Company, including, without limitation, any agreement, arrangement or
understanding, written or oral, providing for the employment of, furnishing of
services by, rental of real or personal property from, or otherwise requiring
payments to any such shareholder, director, officer, employee or associate. To
the best knowledge of Sellers and the Company, no shareholder, director, officer
or employee of the Company any associate of any such shareholder, director,
officer or employee owns, directly or indirectly, any interest in, or serves as
a director, officer or employee of, any customer, supplier or competitor of the
Company. For purposes of this Section 3.30 only, an "associate" of any
shareholder, director, officer or employee means any member of the immediate
family of such shareholder, director, officer or employee or any corporation,
partnership, trust or other entity in which such shareholder, director, officer
or employee has a substantial ownership or beneficial interest (other than an
interest in a public corporation which does not exceed three percent of its
outstanding securities) or is a director, officer, partner or trustee or person
holding a similar position.
3.31 Insurance. Set forth on Schedule 3.31 is a list of all policies of
fire, liability, casualty, life and other insurance owned or held by the
Company. Such policies are in full force and effect, are sufficient to satisfy
all requirements of Applicable Laws and any agreements, arrangements, or
understandings to which the Company is a party, and provide adequate insurance
coverage for the assets and operations of the Company. No event has occurred nor
does any fact or condition exist which would render any of such policies void or
voidable or subject any of such policies to cancellation or termination. The
Company has given timely notice to the appropriate insurance
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carrier of all pending or threatened claims against it that are insured.
Schedule 3.31 also lists all pending and threatened insured claims that are not
listed on Schedule 3.15.
3.32 Financial Requirements. Set forth on Schedule 3.32 is a list and
brief description of all bonds, deposits, financial assurance requirements, and
insurance coverage required to be submitted to Governmental Entities for the
continued ownership and operation of the business and assets of the Company.
3.33 Bank Accounts and Powers of Attorney. Set forth on Schedule 3.33
are (i) the name and address of each bank or other financial institution in
which the Company has an account or a safe deposit box, the account and safe
deposit box numbers thereof, and the names of all persons authorized to draw
thereon or to have access thereto, (ii) the names of all persons authorized to
borrow funds on behalf of the Company and the names of all entities from which
they are authorized to borrow funds and (iii) the names of all persons, if any,
holding powers of attorney from the Company.
3.34 Books and Records. All the books and records of the Company,
including all personnel files, employee data, and other materials relating to
employees, are substantially complete and correct, have been maintained in
accordance with good business practice and all Applicable Laws, and, in the case
of the books of account have been prepared and maintained in accordance with
generally accepted accounting principles consistently applied. Such books and
records accurately and fairly reflect, in reasonable detail, all transactions,
assets and liabilities of the Company.
3.35 Illegal Payments. To the best knowledge of Sellers and the
Company, none of Sellers or the Company or any director, officer, employee or
agent of any Seller or the Company has, directly or indirectly, paid or
delivered any fee, commission or other sum of money or item of property however
characterized to any broker, finder, agent, government official, or other
person, in the United States or any other country, in any manner related to the
business or operations of the Company, which such Seller or the Company or any
such director, officer, employee or agent knows or has reason to believe to have
been illegal under any Applicable Law.
3.36 Offerings of Securities. All securities which have been offered or
sold by the Company have been registered pursuant to the Securities Act and
applicable state securities laws or were offered and sold pursuant to valid
exemptions therefrom. No registration statement, prospectus, private offering
memorandum, or other information furnished (whether in writing or orally) to any
offeree or purchaser of such securities, at the time such registration statement
became effective (in the case of a registered offering) or at the time of
delivery of such registration statement, prospectus, private offering
memorandum, or other information, contained any untrue statement of a material
fact or omitted to state any material fact required to be stated therein or
necessary in order to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
3.37 Investment Intent. Each Seller is acquiring the Crescent Shares
for his own account for investment and not with a view to, or for sale or other
disposition in connection with, any distribution of all or any part thereof,
except (i) in an offering covered by a registration statement filed with the
Securities and Exchange Commission under the Securities Act covering the
Crescent
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Shares or (ii) pursuant to an applicable exemption under the Securities Act. In
acquiring the Crescent Shares, no Seller is offering or selling, and will not
offer or sell, for Crescent in connection with any distribution of Crescent, and
Seller does not have a participation and will not participate in any such
undertaking or in any underwriting of such an undertaking except in compliance
with applicable federal and state securities laws.
3.38 Disclosure of Information. Each Seller acknowledges that he or his
representatives have been furnished with substantially the same kind of
information regarding Crescent and its business, assets, results of operation
and financial condition as would be contained in a registration statement
prepared in connection with a public sale of the Crescent Shares. Each Seller
further represents that he has had an opportunity to ask questions of and
receive answers from Crescent regarding Crescent and its business, assets,
results of operation and financial condition and the terms and conditions of the
issuance of the Crescent Shares.
3.39 Investment Experience. Each Seller acknowledges that he is able to
fend for itself, can bear the economic risk of his investment in the Crescent
Shares, and has such knowledge and experience in financial and business matters
that he is capable of evaluating the merits and risks of an investment in the
Crescent Shares. Each Seller is an "accredited investor" as such term is defined
in Regulation D under the Securities Act.
3.40 Restricted Securities. Each Seller understands that the Crescent
Shares will not have been registered pursuant to the Securities Act or any
applicable state securities laws, that the Crescent Shares will be characterized
as "restricted securities" under federal securities laws, and that under such
laws and applicable regulations the Crescent Shares cannot be sold or otherwise
disposed of without registration under the Securities Act or an exemption
therefrom. In this connection, each Seller represents that it is familiar with
Rule 144 promulgated under the Securities Act, as currently in effect, and
understands the resale limitations imposed thereby and by the Securities Act.
Stop transfer instructions may be issued to the transfer agent for securities of
Crescent (or a notation may be made in the appropriate records of Crescent) in
connection with the Crescent Shares.
3.41 Legend. It is agreed and understood by each Seller that, so long
as the Crescent Shares remain unregistered, the certificates representing the
Crescent Shares shall each conspicuously set forth on the face or back thereof,
in addition to any legends required by Applicable Law or other agreement, a
legend in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. SUCH SHARES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED
UNLESS THEY ARE FIRST REGISTERED PURSUANT TO THAT ACT AND APPLICABLE
STATE SECURITIES LAWS OR UNLESS THE CORPORATION RECEIVES A WRITTEN
OPINION OF COUNSEL, WHICH OPINION AND COUNSEL ARE SATISFACTORY TO THE
CORPORATION, TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.
3.42 Brokerage Fees. Neither Sellers nor any of their affiliates has
retained any financial advisor, broker, agent, or finder
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or paid or agreed to pay any financial advisor, broker, agent, or finder on
account of this Agreement or any transaction contemplated hereby. Sellers
jointly and severally shall indemnify and hold harmless Parent from and against
any and all losses, claims, damages, and liabilities (including legal and other
expenses reasonably incurred in connection with investigating or defending any
claims or actions) with respect to any finder's fee, brokerage commission, or
similar payment in connection with any transaction contemplated hereby asserted
by any person on the basis of any act or statement made or alleged to have been
made by any Seller or any of such Seller's affiliates.
3.43 Disclosure. No representation or warranty made by Sellers or the
Company in this Agreement, and no statement of any Seller or the Company
contained in any document, certificate, or other writing furnished or to be
furnished by Sellers or the Company pursuant hereto or in connection herewith,
contains or will contain, at the time of delivery, any untrue statement of a
material fact or omits or will omit, at the time of delivery, to state any
material fact necessary in order to make the statements contained therein, in
light of the circumstances under which they are made, not misleading. Sellers
and the Company know of no matter (other than matters of a general economic
character not relating solely to the Company in any specific manner) which has
not been disclosed to Parent pursuant to this Agreement which materially and
adversely affects, or will materially and adversely affect, the business,
assets, results of operations, condition (financial or otherwise), or prospects
of the Company or the ability of Sellers to consummate the transactions
contemplated hereby.
3.44 Representations and Warranties on Closing Date. The
representations and warranties made in this Article III will be true and correct
on and as of the Closing Date with the same force and effect as if such
representations and warranties had been made on and as of the Closing Date,
except that any such representations and warranties which expressly relate only
to an earlier date shall be true and correct on the Closing Date as of such
earlier date.
ARTICLE IV -- REPRESENTATIONS
AND WARRANTIES OF CRESCENT AND PARENT
Crescent and Parent represents and warrants to Sellers and the Company
that:
4.1 Corporate Organization. Crescent and Parent are corporations duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of their respective incorporation and each has all requisite
corporate power and corporate authority to own, lease, and operate their
respective properties and to carry on their respective business as now being
conducted.
4.2 Qualification. Crescent and Parent are each qualified or licensed
to do business and each are in good standing in each of the jurisdictions set
forth on Schedule 4.2, which are all the jurisdictions in which each owns,
leases or operates property or in which such qualification or licensing is
required for the conduct of their respective businesses.
4.3 Charter and Bylaws. Crescent has made available to Sellers accurate
and complete copies of the Certificate of Incorporation and Bylaws of Crescent
(certified by the secretary or an assistant secretary of Crescent, respectively)
as currently in effect and Crescent is not in violation of any provision of its
Certificate of Incorporation or Bylaws.
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4.4 Capitalization of Crescent. The authorized capital stock of
Crescent consists of (i) 22,500,000 shares of common stock, par value $.01 per
share, of which 11,231,350 shares are outstanding and no shares are held in
Crescent's treasury.
4.5 Authority Relative to This Agreement. Crescent, Parent and Sub each
has full corporate power and corporate authority to execute, deliver, and
perform this Agreement and to consummate the transactions contemplated hereby.
The execution, delivery, and performance by each of Crescent, Parent and Sub of
this Agreement, and the consummation by it of the transactions contemplated
hereby, have been duly authorized by all necessary corporate action of each of
Crescent, Parent and Sub. This Agreement has been duly executed and delivered by
each of Crescent, Parent and Sub and constitutes, and each other agreement,
instrument, or document executed or to be executed by Crescent, Parent and Sub
in connection with the transactions contemplated hereby has been, or when
executed will be, duly executed and delivered by each of Crescent, Parent and
Sub and constitutes, or when executed and delivered will constitute, a valid and
legally binding obligation of each of Crescent, Parent and Sub, enforceable
against each of Crescent, Parent and Sub in accordance with their respective
terms, except that such enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting
creditors' rights generally and (ii) equitable principles which may limit the
availability of certain equitable remedies (such as specific performance) in
certain instances.
4.6 Noncontravention. The execution, delivery, and performance by each
of Crescent, Parent and Sub of this Agreement and the consummation by each of
them of the transactions contemplated hereby do not and will not (i) conflict
with or result in a violation of any provision of the charter or bylaws of each
of Crescent, Parent and Sub, (ii) conflict with or result in a violation of any
provision of, or constitute (with or without the giving of notice or the passage
of time or both) a default under, or give rise (with or without the giving of
notice or the passage of time or both) to any right of termination,
cancellation, or acceleration under, any bond, debenture, note, mortgage,
indenture, lease, contract, agreement, or other instrument or obligation to
which Crescent, Parent or Sub is a party or by which Crescent, Parent, Sub or
any of their respective properties may be bound, (iii) result in the creation or
imposition of any Encumbrance upon the properties of either of Crescent, Parent
or Sub, or (iv) assuming compliance with the matters referred to in Section 4.7,
violate any Applicable Law binding upon Crescent, Parent or Sub.
4.7 Governmental Approvals. No consent, approval, order, or
authorization of, or declaration, filing, or registration with, any Governmental
Entity is required to be obtained or made by Crescent, Parent or Sub in
connection with the execution, delivery, or performance by each of Crescent,
Parent or Sub of this Agreement or the consummation by each of them of the
transactions contemplated hereby, other than (i) compliance with any applicable
requirements of the Securities Act; (ii) compliance with any applicable
requirements of the Exchange Act; (iii) compliance with any applicable state
securities laws; and (iv) filings with Governmental Entities to occur in the
ordinary course following the consummation of the transactions contemplated
hereby.
4.8 Crescent Shares. The Crescent Shares to be issued by Crescent at
the Closing have been duly authorized for such issuance and, when issued and
delivered by Crescent in accordance with the provisions of this Agreement, will
be validly issued, fully paid, and nonassessable. The issuance of the Crescent
Shares under this Agreement is not subject to any preemptive or similar rights.
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4.9 Brokerage Fees. Neither Crescent, Parent, Sub nor any of their
respective affiliates has retained any financial advisor, broker, agent, or
finder or paid or agreed to pay any financial advisor, broker, agent, or finder
on account of this Agreement or any transaction contemplated hereby. Crescent
and Parent shall indemnify and hold harmless Sellers from and against any and
all losses, claims, damages, and liabilities (including legal and other expenses
reasonably incurred in connection with investigating or defending any claims or
actions) with respect to any finder's fee, brokerage commission or similar
payment in connection with any transaction contemplated hereby asserted by any
person on the basis of any act or statement made or alleged to have been made by
Crescent, Parent, Sub or any of their respective affiliates.
4.10 Financial Statements. The unaudited interim consolidated balance
sheet of Crescent and related unaudited interim statements of operations,
stockholders' equity and cash flows for the three-month period ended March 31,
1998, as set forth in the most recent Form 10-Q as filed with the Securities and
Exchange Commission, a copy of which has been provided to each of the Sellers,
(i) represent actual bona fide transactions, (ii) have been prepared from the
books and records of Crescent in conformity with generally accepted accounting
principles applied on a basis consistent with preceding years throughout the
periods involved and (iii) accurately, completely, and fairly present Crescent's
financial position as of the respective dates thereof and its results of
operations and cash flows for the period then ended.
4.11 Representations and Warranties on Closing Date. The
representations and warranties made in this Article IV will be true and correct
on and as of the Closing Date with the same force and effect as if such
representations and warranties had been made on and as of the Closing Date,
except that any such representations and warranties which expressly relate only
to an earlier date shall be true and correct on the Closing Date as of such
earlier date.
ARTICLE V -- CONDUCT OF COMPANY PENDING CLOSING
Sellers and the Company hereby covenant and agree with Crescent and
Parent as follows:
5.1 Conduct and Preservation of Business. Except as contemplated by
this Agreement, during the period from the date hereof to the Closing, the
Company (i) shall conduct its operations according to its ordinary course of
business consistent with past practice and in compliance with all Applicable
Laws; (ii) shall use its reasonable best efforts to preserve, maintain, and
protect its properties; and (iii) shall use its reasonable best efforts to
preserve intact its business organization, to keep available the services of its
officers and employees, and to maintain existing relationships with licensors,
licensees, suppliers, contractors, distributors, customers and others having
business relationships with it.
5.2 Restrictions on Certain Actions. Without limiting the generality of
the foregoing, and except as otherwise expressly provided in this Agreement,
prior to the Closing, the Company shall not, without the prior written consent
of Parent:
(a) amend its charter or bylaws;
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(b) (i) issue, sell or deliver (whether through the issuance or
granting of options, warrants, commitments, subscriptions, rights to purchase,
or otherwise) any shares of its capital stock of any class or any other
securities or equity equivalents; or (ii) amend in any respect any of the terms
of any such securities outstanding as of the date hereof;
(c) (i) split, combine or reclassify any shares of its capital stock;
(ii) declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its capital
stock; (iii) repurchase, redeem or otherwise acquire any of its securities; or
(iv) adopt a plan of complete or partial liquidation or resolutions providing
for or authorizing a liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the Company;
(d) (i) except in the ordinary course of business consistent with past
practice, create, incur, guarantee or assume any indebtedness for borrowed money
or otherwise become liable or responsible for the obligations of any other
person; (ii) make any loans, advances or capital contributions to, or
investments in, any other person; (iii) pledge or otherwise encumber shares of
capital stock of the Company; or (iv) except in the ordinary course of business
consistent with past practice, mortgage or pledge any of its assets, tangible or
intangible, or create or suffer to exist any lien thereupon;
(e) (i) enter into, adopt or (except as may be required by law) amend
or terminate any bonus, profit sharing, compensation, severance, termination,
stock option, stock appreciation right, restricted stock, performance unit,
stock equivalent, stock purchase, pension, retirement, deferred compensation,
employment, severance or other employee benefit agreement, trust, plan, fund or
other arrangement for the benefit or welfare of any director, officer or
employee; (ii) except for normal increases in the ordinary course of business
consistent with past practice that, in the aggregate, do not result in a
material increase in benefits or compensation expense to the Company, increase
in any manner the compensation or fringe benefits of any director, officer or
employee; or (iii) pay to any director, officer or employee any benefit not
required by any employee benefit agreement, trust, plan, fund or other
arrangement as in effect on the date hereof;
(f) acquire, sell, lease, transfer or otherwise dispose of, directly or
indirectly, any assets outside the ordinary course of business consistent with
past practice or any assets that in the aggregate are material to the Company;
(g) acquire (by merger, consolidation, or acquisition of stock or
assets or otherwise) any corporation, partnership or other business organization
or division thereof;
(h) make any capital expenditure or expenditures which, individually,
is in excess of $25,000 or, in the aggregate, are in excess of $250,000;
(i) make any Tax election or settle or compromise any federal, state,
local or foreign Tax liability;
(j) pay, discharge or satisfy any claims, liabilities or obligations
(whether accrued, absolute, contingent, unliquidated or otherwise, and whether
asserted or unasserted), other than the payment,
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discharge or satisfaction in the ordinary course of business consistent with
past practice, or in accordance with their terms, of liabilities reflected or
reserved against in the Latest Balance Sheet or incurred since March 31, 1998 in
the ordinary course of business consistent with past practice; provided,
however, that in no event shall the Company repay any long-term indebtedness
except to the extent required by the terms thereof;
(k) enter into any lease, contract, agreement, commitment, arrangement
or transaction outside the ordinary course of business consistent with past
practice;
(l) amend, modify, or change any existing lease, contract or agreement,
other than in the ordinary course of business consistent with past practice;
(m) waive, release, grant or transfer any rights of value, other than
in the ordinary course of business consistent with past practice;
(n) lay off any of its employees;
(o) change any of its banking or safe deposit arrangements;
(p) change any of the accounting principles or practices used by it,
except for any change required by reason of a concurrent change in generally
accepted accounting principles and notice of which is given in writing by the
Company to Parent;
(q) take any action which would or might make any of the
representations or warranties of Sellers or the Company contained in this
Agreement untrue or inaccurate as of any time from the date of this Agreement to
the Closing or would or might result in any of the conditions set forth in this
Agreement not being satisfied; or
(r) authorize or propose, or agree in writing or otherwise to take, any
of the actions described in this Section 5.2.
ARTICLE VI -- ADDITIONAL AGREEMENTS
6.1 Access to Information. Between the date hereof and the Closing,
Sellers and the Company (i) shall give Parent and its authorized representatives
reasonable access to all employees, all plants, offices, warehouses and other
facilities, and all books and records, including work papers and other materials
prepared by the Company's independent public accountants, of the Company, (ii)
shall permit Parent and its authorized representatives to make such inspections
as they may reasonably require, and (iii) shall cause the Company's officers to
furnish Parent and its authorized representatives with such financial and
operating data and other information with respect to the Company as Parent may
from time to time reasonably request; provided, however, that no investigation
pursuant to this Section 6.1 shall affect any representation or warranty of
Sellers or the Company contained in this Agreement or in any agreement,
instrument or document delivered pursuant hereto or in connection herewith; and
provided further that Sellers and the Company shall have the right to have a
representative present at all times.
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6.2 Third Party Consents. Each Seller and the Company shall use its
reasonable best efforts to obtain all consents, approvals, orders,
authorizations and waivers of, and to effect all declarations, filings, and
registrations with, all third parties (including Governmental Entities) that are
necessary, required, or deemed by Parent to be desirable to enable Sellers to
transfer the Crescent Shares to Parent as contemplated by this Agreement and to
otherwise consummate the transactions contemplated hereby. All costs and
expenses of obtaining or effecting any and all of the consents, approvals,
orders, authorizations, waivers, declarations, filings and registrations
referred to in this Section 6.2 shall be borne by Sellers.
6.3 Employment and Noncompetition Agreement. King and the Surviving
Corporation shall enter into an employment and noncompetition agreement (the
"Employment Agreement") at (and subject to the occurrence of) the Closing
pursuant to which the Company shall agree to employ King as a Branch Manager of
the Surviving Corporation for the period and on the terms set forth therein. The
Employment Agreement shall be in substantially the form set forth as Exhibit
6.3.
6.4 Employee and Employee Benefit Plan Matters. Prior to the Closing,
the Company shall terminate its Employee Benefit Plans including but not limited
to any 401(k) plans and cafeteria plans.
6.5 Title Insurance and Surveys.
(a) The Company shall obtain and furnish to Parent at the Closing an
owner's policy of title insurance ("Title Insurance") from First American Title
Insurance Company or one or more other title insurance companies reasonably
acceptable to Parent (the "Title Company") relating to each parcel of owned Real
Property (as defined in Section 3.19) described on Schedule 6.5, which Title
Insurance shall insure at regular rates, in an amount reasonably determined
sufficient by Parent (or as otherwise required by Applicable Laws), the
Company's title to such Real Property, free and clear of all Encumbrances except
for the Encumbrances described on Schedule 6.5 (the "Permitted Encumbrances"),
and providing by way of appropriate endorsements and supplemental coverages,
insurance which is available under the title insurance regulations of the State
of Oklahoma for other estates, rights, privileges, and risks which may be
ancillary or appurtenant to or affect or burden such Real Property or which may
be necessary or convenient for its use, enjoyment, or protection, including
without limitation affirmative coverage of all material rights-of-way,
easements, access rights and other servient estates and against all
restrictions, restrictive covenants and dominant estates, including affirmative
coverage against loss of use or reversion in the event of a violation of
restrictions, restrictive covenants, or easements if available.
(b) Within one (1) day after the execution and delivery of this
Agreement, the Company shall obtain and furnish to Parent a commitment for Title
Insurance from the Title Company with respect to each parcel of owned Real
Property described on Schedule 6.5 ("Title Binders") showing fee or leasehold
title to such Real Property in the Company, as appropriate, and committing to
issue the Title Insurance with respect to such Real Property, such Title Binders
to show all Encumbrances with respect to such Real Property, and shall also
deliver to Parent legible copies of all documents referred to as exceptions to
title in the Title Binders.
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(c) Within one (1) day after the execution and delivery of this
Agreement, the Company shall deliver to Parent currently dated surveys (the
"Surveys") of each parcel of owned Real Property described on Schedule 6.5, each
of which Surveys shall be prepared by a licensed professional engineer or
surveyor acceptable to Parent and to the Title Company. The Surveys (including
specifically the certificate of the engineer or surveyor forming a part thereof)
shall be in form and substance acceptable to Parent and to the Title Company and
shall locate all existing improvements, easements and rights-of-way (which shall
show applicable recording data where possible), encroachments, conflicts and
protrusions affecting the Real Property, and water, sewer, gas and electric
lines and the size and capacity thereof, shall set forth the outside perimeters
of the Real Property, shall contain a metes and bounds description of the Real
Property, and shall set forth the acres included within the Real Property. The
Surveys shall contain a statement on the face thereof certifying that no part of
the Real Property lies within a flood plain or flood prone area or a flood way
of any body of water. The Surveys shall also show the zoning classifications of
the Real Property under local zoning ordinances, and with the Surveys the
Company shall deliver to Parent copies of the provisions of the local zoning
ordinances which govern the use of property so classified.
(d) Within two (2) days after the receipt of the Title Binders and
copies of all exceptions shown therein and of the Surveys and copies of all
applicable provisions of the local zoning ordinances, Parent shall deliver to
Sellers a notice (the "Objection Notice") if it reasonably believes that the
Company's title to any Real Property is not as represented herein or that any of
the Encumbrances reflected in the Title Binders or Surveys are not Permitted
Encumbrances and the reasons for such belief (any such Encumbrances specified in
the Objection Notice being referred to herein as "Unacceptable Encumbrances").
The Company may, but shall not be obligated to, take such steps as shall be
necessary to eliminate or modify the Unacceptable Encumbrances in a manner
reasonably acceptable to Parent. The Company shall notify Parent within one day
after their receipt of the Objection Notice whether they intend to so eliminate
or modify the Unacceptable Encumbrances. In the event Parent shall not deliver
an Objection Notice within such time period, all Encumbrances reflected in the
Title Binders and Surveys shall be deemed to be Permitted Encumbrances. Any and
all matters disclosed in the Title Binders or the Surveys as to which Parent
objects by timely delivery of the Objection Notice which are thereafter cured to
the satisfaction of Parent or waived by Parent in writing shall also be deemed
to be Permitted Encumbrances; provided, however, that no matter shall be a valid
objection to title or an Unacceptable Encumbrance except in accordance with the
"Real Estate Title Examination Standards" of the Oklahoma Bar Administration,
where applicable.
(e) Within one (1) day after the execution and delivery of this
Agreement, Sellers shall deliver or make available to Parent all maps, surveys,
drawings and plot plans in the possession of Sellers depicting the owned Real
Property or any portion thereof.
(f) The cost of obtaining Title Binders, Title Insurance, and Surveys
shall be borne by the Company.
6.6 Uncollected Receivables. If, on or prior to November 30, 1998, the
Surviving Corporation has been unable to collect the account receivables owned
by it as of Closing Date hereunder in full, subject to the allowance for
doubtful accounts as reflected on the Latest Balance
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Sheet, Parent shall have the option to cause the Surviving Corporation to sell
and, upon exercise of such option, Sellers, jointly and severally, shall have
the obligation to buy, such uncollected receivables, for cash, at the aggregate
face value thereof less an amount equal to the allowance for doubtful accounts
as reflected on the Latest Balance Sheet. Sellers, jointly and severally, shall
be obligated to consummate such repurchase within ten (10) days after written
notice from Parent of Parent's election to require such repurchase.
6.7 Public Announcements. Except as may be required by Applicable Law
or the NASDAQ National Market Marketplace Rules, neither Crescent, on the one
hand, nor Sellers and the Company, on the other, shall issue any press release
or otherwise make any public statement with respect to this Agreement or the
transactions contemplated hereby without the prior written consent of the other
party.
6.8 Notice of Litigation. Until the Closing, (i) Parent, upon learning
of the same, shall promptly notify Sellers of any Proceeding which is commenced
or threatened against Parent and which affects this Agreement or the
transactions contemplated hereby and (ii) Sellers and the Company, upon learning
of the same, shall promptly notify Parent of any Proceeding which is commenced
or threatened against any Seller or the Company and which affects this Agreement
or the transactions contemplated hereby and any Proceeding which is commenced or
threatened against any Seller or the Company and which would have been listed on
Schedule 3.15 if such Proceeding had arisen prior to the date hereof.
6.9 Notification of Certain Matters. Sellers and the Company shall give
prompt notice to Parent of (i) the occurrence or nonoccurrence of any event the
occurrence or nonoccurrence of which would be likely to cause any representation
or warranty contained in Article III to be untrue or inaccurate at or prior to
the Closing and (ii) any failure of any Seller or the Company to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
such person hereunder. Crescent, Parent and Sub shall each give prompt notice to
Sellers of (i) the occurrence or nonoccurrence of any event the occurrence or
nonoccurrence of which would be likely to cause any representation or warranty
contained in Article IV to be untrue or inaccurate at or prior to the Closing
and (ii) any failure of Crescent, Parent or Sub to comply with or satisfy any
covenant, condition, or agreement to be complied with or satisfied by each such
person hereunder. The delivery of any notice pursuant to this Section 6.9 shall
not be deemed to (i) modify the representations or warranties hereunder of the
party delivering such notice, (ii) modify the conditions set forth in Articles
VII and VIII or (iii) limit or otherwise affect the remedies available hereunder
to the party receiving such notice.
6.10 Fees and Expenses. Except as otherwise expressly provided in this
Agreement, all fees and expenses, including fees and expenses of counsel,
financial advisors, and accountants, incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such fee or expense, whether or not the Closing shall have occurred.
6.11 Transfer Taxes. All sales and transfer Taxes and fees (including
all real estate transfer and closing Taxes and recording fees, if any) incurred
in connection with this Agreement and the transactions contemplated hereby shall
be borne by the Company, and the Company shall file all
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necessary documentation with respect to, and make all payments of, such Taxes
and fees on a timely basis.
6.12 Survival of Covenants. Except for any covenant or agreement which
by its terms expressly terminates as of a specific date, the covenants and
agreements of the parties hereto contained in this Agreement shall survive the
Closing without contractual limitation, subject to the provisions of Section
10.1.
ARTICLE VII -- CONDITIONS TO
OBLIGATIONS OF SELLERS
The obligations of the Sellers to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment on or prior
to the Closing Date of each of the following conditions:
7.1 Representations and Warranties True. All the representations and
warranties of Crescent and Parent contained in this Agreement, and in any
agreement, instrument, or document delivered pursuant hereto or in connection
herewith on or prior to the Closing Date, shall be true and correct on and as of
the Closing Date as if made on and as of such date, except as affected by
transactions contemplated or permitted by this Agreement and except to the
extent that any such representation or warranty is made as of a specified date,
in which case such representation or warranty shall have been true and correct
as of such specified date.
7.2 Covenants and Agreements Performed. Crescent and Parent shall each
have performed and complied with all covenants and agreements required by this
Agreement to be performed or complied with by each of them on or prior to the
Closing Date.
7.3 Legal Proceedings. No Proceeding shall, on the Closing Date, be
pending or threatened seeking to restrain, prohibit or obtain damages or other
relief in connection with this Agreement or the consummation of the transactions
contemplated hereby.
7.4 Other Documents. Sellers shall have received the certificates,
instruments and documents listed below:
(a) The Cash Portion of the Merger Consideration to be delivered to
each Seller pursuant to Section 1.2.
(b) A stock certificate or certificates in definitive form representing
the Crescent Shares to be delivered to each Seller pursuant to Section 1.2,
registered in the name of such Seller and duly executed by Crescent. Sellers
agree that, in the event the certificates representing the Crescent Shares are
still being processed at time of Closing, Buyer may deliver the foregoing
certificates after the Closing, but no later than June 12, 1998.
(c) Such other certificates, instruments and documents as may be
reasonably requested by Sellers prior to the Closing Date to carry out the
intent and purposes of this Agreement.
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ARTICLE VIII -- CONDITIONS TO
OBLIGATIONS OF CRESCENT AND PARENT
The obligations of Crescent and Parent to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment on or prior
to the Closing Date of each of the following conditions:
8.1 Representations and Warranties True. All the representations and
warranties of Sellers and the Company contained in this Agreement, and in any
agreement, instrument, or document delivered pursuant hereto or in connection
herewith on or prior to the Closing Date, shall be true and correct on and as of
the Closing Date as if made on and as of such date, except as affected by
transactions contemplated or permitted by this Agreement and except to the
extent that any such representation or warranty is made as of a specified date,
in which case such representation or warranty shall have been true and correct
as of such specified date.
8.2 Covenants and Agreements Performed. Sellers and the Company shall
have performed and complied with all covenants and agreements required by this
Agreement to be performed or complied with by them on or prior to the Closing
Date.
8.3 Certificate. Parent shall have received a certificate executed by
each Seller and on behalf of the Company by the president of the Company, dated
the Closing Date, representing and certifying, in such detail as Parent may
reasonably request, that the conditions set forth in this Article VIII have been
fulfilled and that Sellers and the Company are not in breach of any provision of
this Agreement.
8.4 Opinion of Counsel. Parent shall have received an opinion of Xxxxxx
& Xxxxx, a Professional Corporation, legal counsel to Sellers and the Company,
dated the Closing Date, with respect to the matters as may be reasonably
requested by Parent.
8.5 Legal Proceedings. No Proceeding shall, on the Closing Date, be
pending or threatened seeking to restrain, prohibit or obtain damages or other
relief in connection with this Agreement or the consummation of the transactions
contemplated hereby.
8.6 Consents. All consents and approvals of third parties (including
Governmental Entities) required to be obtained by or on the part of the parties
hereto or otherwise necessary for the consummation of the transactions
contemplated hereby shall have been obtained, and all thereof shall be in full
force and effect at the time of Closing.
8.7 No Material Adverse Change. Since March 31, 1998, there shall not
have been any material adverse change in the business, assets, results of
operations, condition (financial or otherwise), or prospects of the Company.
8.8 Employment Agreement. King shall have entered into the Employment
Agreement.
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8.9 Unacceptable Encumbrances; Title Insurance.
(a) Parent shall not have delivered to Sellers within the time period
specified in Section 6.5 an Objection Notice describing an Unacceptable
Encumbrance, or if it has so delivered an Objection Notice describing an
Unacceptable Encumbrance, such Unacceptable Encumbrance shall have been
eliminated or modified to the reasonable satisfaction of Parent.
(b) Parent shall have received the Title Insurance described in Section
6.6.
8.10 Due Diligence. The due diligence conducted by Parent and its
representatives in connection with the proposed transactions contemplated hereby
shall not have caused Parent or its representatives to become aware of any facts
relating to the business, assets, results of operations, condition (financial or
otherwise), or prospects of the Company which, in the good faith judgment of
Parent, make it inadvisable for Parent to proceed with the consummation of the
transactions contemplated hereby.
8.11 Other Documents. Parent shall have received the certificates,
instruments and documents listed below:
(a) The stock certificates representing the Shares duly endorsed in
blank, or accompanied by stock powers duly executed in blank, and otherwise in
form acceptable to Parent for transfer on the books of the Company.
(b) The minute books, stock records and corporate seal of the Company,
certified as complete and correct as of the Closing Date by the secretary or an
assistant secretary of the Company.
(c) All the Company's books and records, including without limitation
minute books, corporate charter, bylaws, stock records, bank account records,
accounting records, computer records and all contracts with third parties.
(d) A copy of the resolutions of the Board of Directors of the Company
authorizing the execution, delivery and performance by the Company of this
Agreement, certified by the secretary or an assistant secretary of the Company.
(e) A certificate from the Secretary of State of Oklahoma dated not
more than ten (10) days prior to the Closing Date, as to the legal existence and
good standing, respectively, of the Company under the laws of such state.
(f) Lien search reports, each dated not more than ten (10) days prior
to the Closing Date, showing that no financing statements or other liens (or
notices with respect to liens) naming the Company as debtor are on file in the
Uniform Commercial Code or other relevant records of the county clerk's office
of Oklahoma County.
(g) Such other certificates, instruments and documents as may be
reasonably requested by Parent prior to the Closing Date to carry out the intent
and purposes of this Agreement.
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ARTICLE IX -- TERMINATION, AMENDMENT AND WAIVER
9.1 Termination. This Agreement may be terminated and the transactions
contemplated hereby abandoned at any time prior to the Closing in the following
manner:
(a) by mutual written consent of Sellers and Parent; or
(b) by either Sellers or Parent, if:
(i) the Closing shall not have occurred on or before June 30,
1998, unless such failure to close shall be due to a breach of this
Agreement by the party seeking to terminate this Agreement pursuant to
this clause (i); or
(ii) there shall be any statute, rule, or regulation that
makes consummation of the transactions contemplated hereby illegal or
otherwise prohibited or a Governmental Entity shall have issued an
order, decree, or ruling or taken any other action permanently
restraining, enjoining, or otherwise prohibiting the consummation of
the transactions contemplated hereby, and such order, decree, ruling,
or other action shall have become final and nonappealable; or
(c) by Sellers, if (i) any of the representations and warranties of
Crescent, Parent or Sub contained in this Agreement shall not be true and
correct, when made or at any time prior to the Closing as if made at and as of
such time or (ii) Crescent, Parent or Sub shall have failed to fulfill any of
its obligations under this Agreement, and, in the case of each of clauses (i)
and (ii), such misrepresentation, breach of warranty, or failure (provided it
can be cured) has not been cured within thirty (30) days of actual knowledge
thereof by Crescent or Parent; or
(d) by Crescent or Parent, if (i) any of the representations and
warranties of Sellers or the Company contained in this Agreement shall not be
true and correct, when made or at any time prior to the Closing as if made at
and as of such time, or (ii) Sellers or the Company shall have failed to fulfill
any of their obligations under this Agreement, and, in the case of each of
clauses (i) and (ii), such misrepresentation, breach of warranty, or failure
(provided it can be cured) has not been cured within 30 days of actual knowledge
thereof by Sellers.
9.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 9.1 by Sellers, on the one hand, or Crescent and
Parent, on the other, written notice thereof shall forthwith be given to the
other party specifying the provision hereof pursuant to which such termination
is made, and this Agreement shall become void and have no effect, except that
the agreements contained in this Section 9.2 and in Section 6.7 shall survive
the termination hereof. Nothing contained in this Section 9.2 shall relieve any
party from liability for damages as a result of any breach of this Agreement.
9.3 Amendment. This Agreement may not be amended except by an
instrument in writing signed by or on behalf of all the parties hereto.
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9.4 Waiver. Each of Sellers and the Company, on the one hand, and
Crescent and Parent, on the other, may (i) waive any inaccuracies in the
representations and warranties of the other contained herein or in any document,
certificate, or writing delivered pursuant hereto or (ii) waive compliance by
the other with any of the other's agreements or fulfillment of any conditions to
its own obligations contained herein. Any agreement on the part of a party
hereto to any such waiver shall be valid only if set forth in an instrument in
writing signed by or on behalf of such party. No failure or delay by a party
hereto in exercising any right, power or privilege hereunder shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege.
9.5 Remedies Not Exclusive. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.
The rights and remedies of any party based upon, arising out of, or otherwise in
respect of any inaccuracy in or breach of any representation, warranty,
covenant, or agreement contained in this Agreement shall in no way be limited by
the fact that the act, omission, occurrence, or other state of facts upon which
any claim of any such inaccuracy or breach is based may also be the subject
matter of any other representation, warranty, covenant, or agreement contained
in this Agreement (or in any other agreement between the parties) as to which
there is no inaccuracy or breach.
ARTICLE X -- SURVIVAL OF
REPRESENTATIONS; INDEMNIFICATION
10.1 Survival. The representations and warranties of the parties hereto
contained in this Agreement or in any certificate, instrument, or document
delivered pursuant hereto and the related indemnity provisions shall survive the
Closing and for the three (3) year period thereafter, regardless of any
investigation made by or on behalf of any party.
10.2 Indemnification by Sellers. Subject to the terms and conditions of
this Article X, Sellers jointly and severally shall indemnify, defend and hold
harmless Crescent, the subsidiaries and parent corporations of Crescent, each
director and officer of Crescent or any of its subsidiaries or parent
corporations, and each affiliate thereof, and their respective heirs, legal
representatives, successors and assigns (collectively, the "Crescent Group"),
from and against any and all claims, actions, causes of action, demands,
assessments, losses, damages, liabilities, judgments, settlements, penalties,
costs and expenses (including reasonable attorneys' fees and expenses), of any
nature whatsoever, whether actual or consequential (collectively, "Damages"),
asserted against, resulting to, imposed upon, or incurred by any member of the
Crescent Group, directly or indirectly, by reason of or resulting from any
breach by Sellers of any of their representations, warranties, covenants or
agreements contained in this Agreement or in any certificate, instrument or
document delivered pursuant hereto (collectively, "Crescent Claims").
10.3 Indemnification by Crescent. Subject to the terms and conditions
of this Article X, Crescent shall indemnify, defend, and hold harmless each
Seller, the subsidiaries and parent corporations, if any, of such Seller, each
director and officer, if any, of such Seller or any of its subsidiaries or
parent corporations, and each affiliate thereof, and their respective heirs,
legal representatives, successors and assigns (collectively, the "Seller
Group"), from and against any and all Damages asserted against, resulting to,
imposed upon, or incurred by any member of the Seller
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Group, directly or indirectly, by reason of or resulting from any breach by
Crescent of any of its representations, warranties, covenants or agreements
contained in this Agreement or in any certificate, instrument or document
delivered pursuant hereto (collectively, "Seller Claims").
10.4 Threshold for Crescent Claims. No indemnification shall be
required to be made by the Sellers pursuant to this Article X with respect to
any Crescent Claims unless and until the aggregate amount of Damages incurred by
Sellers with respect to all Crescent Claims (whether asserted, resulting,
imposed or incurred before, on or after the Closing Date) exceeds ten thousand
dollars ($10,000), it being agreed and understood that, if such amount is
exceeded, Sellers shall be jointly and severally liable to the fullest extent of
such Damages, including those not in excess of ten thousand dollars ($10,000).
10.5 Limitations on Crescent Claims. No indemnification shall be
required to be made by Sellers pursuant to this Article X with respect to any
Crescent Claims to the extent that the aggregate amount of damages incurred by
the Crescent Group with respect to all Crescent Claims (whether asserted,
resulting, imposed, or incurred before, on, or after the Closing Date) exceeds
the Merger Consideration.
10.6 Procedure for Indemnification. Promptly after receipt by an
indemnified party under Section 10.2 or 10.3 of notice of the commencement of
any action, such indemnified party shall, if a claim in respect thereof is to be
made against an indemnifying party under such Section, give written notice to
the indemnifying party of the commencement thereof, but the failure so to notify
the indemnifying party shall not relieve it of any liability that it may have to
any indemnified party except to the extent the indemnifying party demonstrates
that the defense of such action is prejudiced thereby. In case any such action
shall be brought against an indemnified party and it shall give written notice
to the indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate therein and, to the extent that it may wish, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party. If the indemnifying party elects to assume the defense of
such action, the indemnified party shall have the right to employ separate
counsel at its own expense and to participate in the defense thereof. If the
indemnifying party elects not to assume (or fails to assume) the defense of such
action, the indemnified party shall be entitled to assume the defense of such
action with counsel of its own choice, at the expense of the indemnifying party.
If the action is asserted against both the indemnifying party and the
indemnified party and there is a conflict of interests which renders it
inappropriate for the same counsel to represent both the indemnifying party and
the indemnified party, the indemnifying party shall be responsible for paying
for separate counsel for the indemnified party; provided, however, that if there
is more than one indemnified party, the indemnifying party shall not be
responsible for paying for more than one separate firm of attorneys to represent
the indemnified parties, regardless of the number of indemnified parties. If the
indemnifying party elects to assume the defense of such action, (a) no
compromise or settlement thereof may be effected by the indemnifying party
without the indemnified party's written consent (which shall not be unreasonably
withheld) unless the sole relief provided is monetary damages that are paid in
full by the indemnifying party and (b) the indemnifying party shall have no
liability with respect to any compromise or settlement thereof effected without
its written consent (which shall not be unreasonably withheld).
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ARTICLE XI -- MISCELLANEOUS
11.1 Notices. All notices, requests, demands and other communications
required or permitted to be given or made hereunder by any party hereto shall be
in writing and shall be deemed to have been duly given or made if delivered
personally or transmitted by first class registered or certified mail, postage
prepaid, return receipt requested or sent by prepaid overnight delivery service,
or sent by cable, telegram, telefax or telex, to the parties at the following
addresses (or at such other addresses as shall be specified by the parties by
like notice):
If to Crescent: 000 Xxxx 0xx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Attention: Xxxxxxx Xxxxxxx
Telefax: (000) 000-0000
If to Parent or Sub: 0000 Xxxxxx Xxxx.
Xxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxxxxx
Telefax: (000) 000-0000
If to Sellers: 0000 X. 00xx Xxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxx and Xxxxxx Xxxxxxx
Telefax: (000) 000-0000
11.2 Entire Agreement. This Agreement, together with the Schedules,
Exhibits, Annexes, and other writings referred to herein or delivered pursuant
hereto, constitutes the entire agreement between the parties hereto with respect
to the subject matter hereof and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof.
11.3 Binding Effect; Assignment; No Third Party Benefit. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective heirs, legal representatives, successors, and permitted assigns.
Except as otherwise expressly provided in this Agreement, neither this Agreement
nor any of the rights, interests, or obligations hereunder shall be assigned by
any of the parties hereto without the prior written consent of the other
parties, except that Parent may assign to any wholly owned subsidiary of Parent
any of Parent's rights, interests, or obligations hereunder, upon notice to the
other party or parties, provided that no such assignment shall relieve Parent of
its obligations hereunder. Except as provided in Article X, nothing in this
Agreement, express or implied, is intended to or shall confer upon any person
other than the parties hereto, and their respective heirs, legal
representatives, successors, and permitted assigns, any rights, benefits, or
remedies of any nature whatsoever under or by reason of this Agreement.
11.4 Severability. If any provision of this Agreement is held to be
unenforceable, this Agreement shall be considered divisible and such provision
shall be deemed inoperative to the extent it is deemed unenforceable, and in all
other respects this Agreement shall remain in full force and effect; provided,
however, that if any such provision may be made enforceable by limitation
thereof,
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then such provision shall be deemed to be so limited and shall be
enforceable to the maximum extent permitted by Applicable Law.
11.5 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
11.6 Further Assurances. From time to time following the Closing, at
the request of any party hereto and without further consideration, the other
party or parties hereto shall execute and deliver to such requesting party such
instruments and documents and take such other action (but without incurring any
material financial obligation) as such requesting party may reasonably request
in order to consummate more fully and effectively the transactions contemplated
hereby.
11.7 Descriptive Headings. The descriptive headings herein are inserted
for convenience of reference only, do not constitute a part of this Agreement,
and shall not affect in any manner the meaning or interpretation of this
Agreement.
11.8 Gender. Pronouns in masculine, feminine, and neuter genders shall
be construed to include any other gender, and words in the singular form shall
be construed to include the plural and vice versa, unless the context otherwise
requires.
11.9 References. All references in this Agreement to Articles, Sections
and other subdivisions refer to the Articles, Sections, and other subdivisions
of this Agreement unless expressly provided otherwise. The words "this
Agreement," "herein," "hereof," "hereby," "hereunder" and words of similar
import refer to this Agreement as a whole and not to any particular subdivision
unless expressly so limited. Whenever the words "include," "includes" and
"including" are used in this Agreement, such words shall be deemed to be
followed by the words "without limitation." Each reference herein to a Schedule,
Exhibit, or Annex refers to the item identified separately in writing by the
parties hereto as the described Schedule, Exhibit or Annex to this Agreement.
All Schedules, Exhibits and Annexes are hereby incorporated in and made a part
of this Agreement as if set forth in full herein.
11.10 Counterparts. This Agreement may be executed by the parties
hereto in any number of counterparts, each of which shall be deemed an original,
but all of which shall constitute one and the same agreement. Each counterpart
may consist of a number of copies hereof each signed by less than all, but
together signed by all, the parties hereto.
11.11 Injunctive Relief. The parties hereto acknowledge and agree that
irreparable damage would occur in the event any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of the provisions of this
Agreement, and shall be entitled to enforce specifically the provisions of this
Agreement, in any court of the United States or any state thereof having
jurisdiction, in addition to any other remedy to which the parties may be
entitled under this Agreement or at law or in equity.
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11.12 Jurisdiction and Venue. In respect of any action or proceeding
arising out of or relating to this Agreement or the transactions contemplated
hereby, each of the parties hereto consents to the jurisdiction and venue of any
federal or state court located within Tarrant County, Texas, waives personal
service of any and all process upon it, consents that all such service of
process may be made by first class registered or certified mail, postage
prepaid, return receipt requested, directed to it at the address specified in
Section 11.1, agrees that service so made shall be deemed to be completed upon
actual receipt thereof, and waives any objection to jurisdiction or venue of,
and waives any motion to transfer venue from, any of the aforesaid courts.
ARTICLE XII -- DEFINITIONS
12.1 Certain Defined Terms. As used in this Agreement, each of the
following terms has the meaning given it below:
"affiliate" has the meaning specified in Rule 12b-2
promulgated under the Exchange Act.
"affiliate" means, with respect to any person, any other
person that, directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control
with, such person.
"Affiliated Group" has the meaning set forth in Section 1504
of the Code.
"Applicable Law" means any statute, law, rule, or regulation
or any judgment, order, writ, injunction, or decree of any Governmental
Entity to which a specified person or property is subject.
"Code" means the Internal Revenue Code of 1986, as amended.
"Encumbrances" means liens, charges, pledges, options,
mortgages, deeds of trust, security interests, claims, restrictions
(whether on voting, sale, transfer, disposition or otherwise),
easements and other encumbrances of every type and description, whether
imposed by law, agreement, understanding or otherwise.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Governmental Entity" means any court or tribunal in any
jurisdiction (domestic or foreign) or any public, governmental, or
regulatory body, agency, department, commission, board, bureau or other
authority or instrumentality (domestic or foreign).
"Intellectual Property" means patents, trademarks, service
marks, trade names, copyrights, trade secrets, know-how, inventions and
similar rights, and all registrations, applications, licenses and
rights with respect to any of the foregoing.
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"IRS" means the Internal Revenue Service.
"Permits" means licenses, permits, franchises, consents,
approvals and other authorizations of or from Governmental Entities.
"person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, enterprise,
unincorporated organization or Governmental Entity.
"Proceedings" means all proceedings, actions, claims, suits,
investigations and inquiries by or before any arbitrator or
Governmental Entity.
"reasonable best efforts" means a party's reasonable best
efforts in accordance with reasonable commercial practice and without
the incurrence of unreasonable expense.
"Securities Act" means the Securities Act of 1933, as amended.
"Taxes" means any income taxes or similar assessments or any
sales, excise, occupation, use, ad valorem, property, production,
severance, transportation, employment, payroll, franchise or other tax
imposed by any United States federal, state or local (or any foreign or
provincial) taxing authority, including any interest, penalties or
additions attributable thereto.
"Tax Return" means any return or report, including any related
or supporting information, with respect to Taxes.
"to the best knowledge of Sellers and the Company" (or similar
references to Sellers and the Company's knowledge) means the knowledge
of or receipt of notice (oral or written) by any of Sellers or the
Company's executive officers, as such knowledge has been obtained in
the normal conduct of the business of the Company or in connection with
the preparation of the Schedules to this Agreement and the furnishing
of information to Parent as contemplated by this Agreement, after
having made a reasonable investigation of the accuracy of the
representations and warranties made by Sellers and the Company in this
Agreement or in any document, certificate or other writing furnished by
Sellers or the Company to Parent pursuant hereto or in connection
herewith.
"Transaction Costs" means investment banking, legal,
accounting and other fees or costs not deductible for federal income
Tax purposes but incurred as a result of the transactions contemplated
by this Agreement.
"Treasury Regulations" means one or more treasury regulations
promulgated under the Code by the Treasury Department of the United
States.
12.2 Certain Additional Defined Terms. In addition to such terms as are
defined in the opening paragraph of and the recitals to this Agreement and in
Section 12.1, the following terms are used in this Agreement as defined in the
Sections set forth opposite such terms:
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Defined Term Section Reference
------------ -----------------
agreements 3.25
Applicable Environmental Laws 3.27
Annual Financial Statements 3.10
associate 3.30
Benefit Arrangements 3.26
Cash Portion of Merger Consideration 2.1
CERCLA 3.27
Closing 3.44
Closing Date 3.44
Common Stock 2.1
Crescent Claims 10.4
Crescent Group 10.2
Crescent Shares 4.8
Current Market Price 2.2
Damages 3.15
Disposal 3.18
Effective Time 1.1
Employee Plans 3.26
Employment Agreement 8.8
Financial Statements 3.10
Hazardous Substance 3.27
Latest Balance Sheet 3.10
Merger 1.1
Merger Consideration 2.2
Multiemployer Plan 3.26
Objection Notice 6.5
Permitted Encumbrances 6.2
Pledge Agreement 2.6
Property 3.1
Merger Consideration 2.2
RCRA 3.27
Real Property 3.18
Release 3.27
Rule 144 3.40
Seller Claims 10.3
Seller Group 10.3
Shares 3.9
Solid Waste 3.27
State Law 1.1
Surveys 6.5
Surviving Corporation 1.1
Title Binders 6.5
Title Company 6.5
Title Insurance 6.5
Unacceptable Encumbrances 8.9
[Signature page to follow]
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IN WITNESS WHEREOF, the parties have executed this Agreement, or caused
this Agreement to be executed by their duly authorized representatives, all as
of the day and year first above written.
Machinery, Inc.
By: /s/ XXXXX X. XXXX
-----------------------------------------
Xxxxx X. Xxxx, President
/s/ XXXXX X. XXXX
--------------------------------------------
Xxxxx X. Xxxx
/s/ XXXXXX X. GREENERS
--------------------------------------------
Xxxxxx X. Xxxxxxx
Crescent Operating, Inc.
By: /s/ XXXX XXXXXX
-----------------------------------------
Name: Xxxx Xxxxxx
------------------------------------
Title: CFO
-----------------------------------
Crescent Machinery Company
By: /s/ XXXX XXXXXXXX
-----------------------------------------
Name: Xxxx Xxxxxxxx
------------------------------------
Title: President
-----------------------------------
Oklahoma Machinery, Inc.
By: /s/ XXXX XXXXXXXX
-----------------------------------------
Name: Xxxx Xxxxxxxx
------------------------------------
Title: President
-----------------------------------
39
