EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "AGREEMENT") is dated as of June
19, 2002, and among Bergamo Acquisition Corp., a Delaware corporation
("BERGAMO"), and Clothing Source of California, Inc., a California corporation
("CSC");
RECITALS:
A. The Boards of Directors of CSC and Bergamo have determined that it
is in the best interests of such corporations and their respective stockholders
to consummate the merger of CSC with and into a Delaware corporation to be
formed as a wholly-owned subsidiary of Bergamo ("Merger Sub"), with Merger Sub
as the surviving corporation (the "Merger"); and
B., the parties desire that the Merger be made on the terms and subject
to the conditions set forth in this Agreement and qualify as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended.
NOW, THEREFORE, in consideration of the representations, warranties and
covenants contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used herein, the following terms shall have the following meanings
(such meaning to be equally applicable to both the singular and plural forms of
the terms defined):
"AFFILIATE" has the meaning as defined in Regulation 12b-2 promulgated
under the Exchange Act, as such regulation is in effect on the date hereof.
"CERTIFICATE" with respect to any corporation shall mean those
instruments that at that time constitute its articles or certificate of
incorporation as filed or recorded under the general corporation or other
applicable law of the jurisdiction of its incorporation or organization,
including the articles or certificate of incorporation and any and all
amendments thereto
"CERTIFICATE OF MERGER" shall mean the certificate of merger in
substantially the form attached hereto as Exhibit A.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, or any
successor legislation.
"DELAWARE GENERAL CORPORATION LAW" shall mean Title 8, Sections 101 to
398 of the Delaware Code, as amended.
"EFFECTIVE DATE" shall have the meaning ascribed thereto in Section
2.1(e).
"EFFECTIVE TIME" shall have the meaning ascribed thereto in Section
2.1(e).
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"BERGAMO BOARD" shall mean the Board of Directors of Bergamo
immediately prior to the Effective Date.
"BERGAMO 10-K REPORTS" shall have the meaning ascribed thereto in
Section 4.4.
"BERGAMO 10-Q REPORTS" shall have the meaning ascribed thereto in
Section 4.4.
"BERGAMO COMMON STOCK" shall mean the common stock, par value $.001 per
share, of Bergamo.
"EXCHANGE ACT" shall mean the Exchange Act of 1934, as amended.
"EXCHANGE RATIO" shall have the meaning ascribed thereto in Section
2.2(a).
"GAAP" shall mean Generally Accepted Accounting Principles as in effect
from time to time.
"IRS" shall mean the Internal Revenue Service of the United States.
"LIABILITIES" shall mean any and all debts, liabilities, accounts
payable, Taxes, claims and other obligations, absolute or contingent, mature or
not mature, liquidated or unliquidated, accrued or unaccrued, known or unknown,
whenever arising (unless otherwise specified in this Agreement), including all
costs and expenses relating thereto, and including, without limitation, those
debts, liabilities and obligations arising under any law, rule, regulation, or
any actual or threatened action, suit, proceeding or investigation by or before
any court, any governmental or other regulatory or administrative agency or
commission or any arbitration tribunal, any order or consent decrees of any
governmental entity or any award of any arbitrator of any kind, and those
arising under any contract, commitment or undertaking.
"MATERIAL ADVERSE EFFECT" shall, with respect to an entity, mean any
condition, event, change or occurrence, individually or collectively, that has
had or may reasonably be expected to have a material adverse effect on the
business, operations, results of operations or financial condition of such
entity on a consolidated basis.
"MERGER" shall have the meaning ascribed thereto in the preambles of
this Agreement.
"MERGER SUB" shall mean a Delaware corporation to be organized after
the date of this Agreement as a wholly-owned subsidiary of Bergamo, and which
shall be named "Bergamo Subsidiary, Inc.," or such other name as the parties may
agree. All references herein to Merger Sub shall refer to such corporation when
formed.
"REQUISITE CSC STOCKHOLDER VOTE" shall have the meaning ascribed
thereto in Section 3.2.
"SEC" shall mean the United States Securities and Exchange Commission.
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"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SUBSIDIARY" shall, with respect to any entity, mean each corporation
in which such entity owns directly or indirectly fifty percent (50%) or more of
the voting securities of such corporation and shall, unless otherwise indicated,
be deemed to refer to both direct and indirect subsidiaries of such entity.
"SURVIVING COMPANY" shall have the meaning ascribed thereto in Article
II.
"TAX OR TAXES" shall mean any federal, state, local or foreign income,
gross receipts, license, payroll, employment, excise, severance taxes,
environmental taxes, customs duties, capital stock, franchise, employees' income
withholding, foreign or domestic withholding, social security, unemployment,
disability, workers' compensation, employment-related insurance, real property,
personal property, sales, use, transfer, value added, alternative or add-on
minimum or other governmental tax, fee, assessment or charge of any kind
whatsoever including any interest, penalties or additions to any Tax or
additional amounts in respect of the foregoing.
ARTICLE II
MERGER
Subject to the satisfaction or waiver of the conditions set forth in
Article VII, at the Effective Time, (i) CSC will merge with and into Merger Sub,
and (ii) CSC shall cease to exist, with all of CSC's rights and obligations to
be the rights and obligations of Merger Sub. Merger Sub, as a wholly-owned
subsidiary of Bergamo after giving effect to the Merger, shall be defined herein
as the "Surviving Company." The Merger will be effected pursuant to the
Certificate of Merger in accordance with the provisions of, and with the effect
provided in, Section 251 of the Delaware General Corporation Law.
2.1 EFFECT OF MERGER.
(a) From and after the Effective Time and until further amended in
accordance with law, (i) the Certificate of Incorporation of Merger Sub as in
effect immediately prior to the Effective Time shall be the Certificate of
Incorporation of the Surviving Company, and (ii) the Bylaws of Merger Sub as in
effect immediately prior to the Effective Time shall be the Bylaws of the
Surviving Company. From and after the Effective Time, the directors and officers
of the Surviving Company shall be the persons who were directors of Merger Sub
immediately prior to the Effective Time and the officers of Merger Sub
immediately prior to the Effective Time. These directors and officers of the
Surviving Company shall hold office for the term specified in, and subject to
the provisions contained in, the Certificate of Incorporation and Bylaws of the
Surviving Company and applicable law. If, at or after the Effective Time, a
vacancy shall exist on the board of directors or in any of the offices of the
Surviving Company, such xxxx ncy shall be filled in the manner provided in the
Certificate of Incorporation and Bylaws of the Surviving Company.
The initial board of directors of Bergamo immediately after the
Effective Time will consist of three (3) persons as set forth in Schedule
2.1(a). Immediately after the Effective Time, the Bergamo Board will elect the
officers of Bergamo as set forth in Schedule 2.1(a). The initial directors and
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officers of Bergamo shall hold office for the term specified in, and subject to
the provisions contained in, the articles and bylaws of Bergamo and applicable
law. If, at or after the Effective Time, a vacancy shall exist on the board of
directors or in any of the offices of Bergamo, such vacancy shall be filled in
the manner provided in the Articles of Incorporation and Bylaws of Bergamo.
(b) At the Effective Time, the Surviving Company shall thereupon and
thereafter be responsible and liable for all the liabilities, debts, duties,
restrictions, disabilities and obligations of each of CSC and the Merger Sub,
all without further action.
(c) At the Effective Time, the Surviving Company shall thereupon and
thereafter possess all the rights, privileges, immunities and franchises, of a
public as well as of a private nature, of each of CSC and the Merger Sub; all
property, real, personal and mixed, and all debts due on whatever account, and
all and every other interest, of or belonging to or due to each of CSC and the
Merger Sub, shall be taken and deemed to be transferred to and vested in the
Surviving Company without further act or deed; and the title to any real estate
or any interest therein, vested in CSC and the Merger Sub shall not revert or be
in any way impaired by reason of the Merger.
(d) Bergamo, CSC and Merger Sub, respectively, shall each use its best
efforts to take all such action as may be necessary or appropriate to effectuate
the Merger under the Delaware General Corporation Law at the Effective Time. If,
at any time after the Effective Time, any further action is necessary or
desirable to carry out the purposes of this Agreement and to vest the Surviving
Company with full right, title and possession to all properties, rights,
privileges, immunities, powers and franchises of either CSC or Merger Sub, the
officers of the Surviving Company are fully authorized in the name of Bergamo,
CSC and Merger Sub or otherwise to take, and shall take, all such lawful and
necessary action.
(e) Subject to the provisions of Articles VII and VIII hereof, the
closing (the "CLOSING") of the transactions contemplated hereby shall take place
at such location, on such date (the "CLOSING DATE") and at such time as CSC and
Bergamo mutually agree at the earliest practicable time after the satisfaction
or waiver of the conditions in Article VII, but in no event later than ten (10)
business days after all such conditions have been satisfied or waived, or on
such other date as may be mutually agreed by the parties hereto. On the Closing
Date, to effect the Merger, the parties hereto will cause the Certificate of
Merger to be filed with the Delaware Secretary of State in accordance with the
Delaware General Corporation Law. The Merger shall be effective when the
Certificate of Merger is filed with the Delaware Secretary of State (the
"EFFECTIVE TIME"). As used herein, the term "EFFECTIVE DATE" shall mean the date
on which the Certificate of Merger is filed with the Delaware Secretary of
State.
2.2 EFFECT ON CSC CAPITAL STOCK AND MERGER SUB CAPITAL STOCK. To
effectuate the Merger, and subject to the terms and conditions of this
Agreement, at the Effective Time, each issued and outstanding share of CSC
Common Stock (the "CSC Stock") shall be converted into and exchangeable for .20
fully paid, validly issued and nonassessable shares of Bergamo Common Stock. The
Capital Stock of Merger Sub shall be unaffected.
2.3 RIGHTS OF HOLDERS OF CSC CAPITAL STOCK.
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(a) On and after the Effective Date and until surrendered for exchange,
each outstanding stock certificate that immediately prior to the Effective Date
represented shares of CSC Stock (except Dissenting Shares) shall be deemed for
all purposes, to evidence ownership of and to represent the number of shares of
Bergamo Common Stock into which such shares of CSC Stock shall have been
converted pursuant to Section 2.2 above. The record holder of each such
outstanding certificate representing shares of CSC Stock, shall, after the
Effective Date, be entitled to vote the shares of Bergamo Common Stock into
which such shares of CSC Stock shall have been converted on any matters on which
the holders of record of the Bergamo Common Stock, as of any date subsequent to
the Effective Date, shall be entitled to vote. In any matters relating to such
certificates of CSC Stock, Bergamo may rely conclusively upon the record of
stockholders maintained by CSC containing the names and addresses of the holders
of record of CSC S tock on the Effective Date.
2.4 PROCEDURE FOR EXCHANGE OF CSC STOCK.
(a) After the Effective Date, holders of certificates theretofore
evidencing outstanding shares of CSC Stock (except Dissenting Shares), upon
surrender of such certificates to the registrar or transfer agent for Bergamo
Common Stock, shall be entitled to receive certificates representing the number
of whole shares of Bergamo Common Stock into which shares of CSC Stock
theretofore represented by the certificates so surrendered shall have been
converted as provided in Section 2.2 hereof. Bergamo shall not be obligated to
deliver the consideration to which any former holder of shares of CSC Stock is
entitled as a result of the Merger until such holder surrenders the certificate
or certificates representing such shares. Upon surrender, each certificate
evidencing CSC Stock shall be canceled. If there is a transfer of CSC Stock
ownership which is not registered in the transfer records of CSC, a certificate
representing the proper number of shares of Bergamo Common Stock may be issued
to a person other than the person in whose name the certificate so surrendered
is registered if: (x) upon presentation to the Secretary of the Surviving
Company, such certificate shall be properly endorsed or otherwise be in proper
form for transfer, (y) the person requesting such payment shall pay any transfer
or other taxes required by reason of the issuance of shares of Bergamo Common
Stock to a person other than the registered holder of such certificate or
establish to the reasonable satisfaction of the Surviving Company that such tax
has been paid or is not applicable, and (z) the issuance of such Bergamo Common
Stock shall not, in the sole discretion of Bergamo, violate the requirements of
the Regulation D "safe harbor" of the Securities Act with respect to the private
placement of Bergamo Common Stock that will result from the Merger.
(b) All shares of Bergamo Common Stock issued upon the surrender for
exchange of CSC Stock in accordance with the above terms and conditions shall be
deemed to have been issued and paid in full satisfaction of all rights
pertaining to such shares of CSC Stock.
(c) In the event any certificate for CSC Stock shall have been lost,
stolen or destroyed, Bergamo shall issue and pay in exchange for such lost,
stolen or destroyed certificate, upon the making of an affidavit of that fact by
the holder thereof, such shares of Bergamo Common Stock and cash for fractional
shares, if any, as may be required pursuant to this Agreement; provided,
however, that Bergamo, in its discretion and as a condition precedent to the
issuance and payment thereof, may require the owner of such lost, stolen or
destroyed certificate to deliver a bond in such sum as it may direct as
indemnity against any claim that may be made against Bergamo or any other party
with respect to the certificate alleged to have been lost, stolen or destroyed.
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2.5 DISSENTING SHARES.
(a) Notwithstanding anything in this Agreement to the contrary, if
Chapter 13 of the California General Corporation Law shall be applicable to the
Merger, shares of CSC Stock that are issued and outstanding immediately prior to
the Effective Time and which are held by stockholders who have not voted such
shares in favor of the Merger, who shall have delivered, prior to any vote on
the Merger, a written demand for the fair value of such shares in the manner
provided in Section 1301 of the California General Corporation Law and who, as
of the Effective Time, shall not have effectively withdrawn or lost such right
to dissenters' rights ("DISSENTING SHARES") shall not be converted into or
represent a right to receive shares of Bergamo Common Stock pursuant to Section
2.2 above, but the holders thereof shall be entitled only to such rights as are
granted by Chapter 13 of the California General Corporation Law. Each holder of
Dissenting Shares who becomes entitled to payment for such shares pursuant to
Chapter 13 of the California General Corporation Law shall receive payment
therefor from the Surviving Company in accordance with such laws; provided,
however, that if any such holder of Dissenting Shares shall have effectively
withdrawn such holder's demand for appraisal of such shares or lost such
holder's right to appraisal and payment of such shares under Chapter 13 of the
California General Corporation Law, such holder or holders (as the case may be)
shall forfeit the right to appraisal of such shares and each such share shall
thereupon be deemed to have been canceled, extinguished and converted, as of the
Effective Time, into and represent the right to receive payment from Bergamo of
shares of Bergamo Common Stock as provided in Section 2.2 above.
(b) If the holder of any shares of CSC Stock shall become entitled to
receive payment for such shares pursuant to Chapter 13 of the California General
Corporation Law and this Section 2.5, such payment shall be made by the
Surviving Company in accordance with this Section 2.5.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CSC
CSC hereby represents and warrants as follows:
3.1 ORGANIZATION AND QUALIFICATION. CSC is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California, and has the requisite corporate power to carry on its business as
now conducted. The copies of the Articles of Incorporation and Bylaws of CSC,
which have been made available to Bergamo prior to the date of this Agreement,
are correct and complete copies of such documents as in effect as of the date of
this Agreement. CSC is licensed or qualified to do business in every
jurisdiction in which the nature of its business or its ownership of property
requires it to be licensed or qualified, except where the failure to be so
licensed or qualified would not have a Material Adverse Effect on CSC.
3.2 AUTHORITY RELATIVE TO THIS AGREEMENT; NON-CONTRAVENTION. Except for
the Requisite CSC Stockholder Vote, CSC has the requisite corporate power and
authority to enter into this Agreement and the Certificate of Merger and to
carry out its obligations hereunder and thereunder. The execution and delivery
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of this Agreement and the Certificate of Merger by CSC and the consummation by
CSC of the transactions contemplated hereby and thereby have been duly
authorized by the Board of Directors of CSC and, except for approval of this
Agreement and the Merger by the Requisite CSC Stockholders Vote, no other
corporate proceedings on the part of CSC are necessary to authorize the
execution and delivery of this Agreement, the Certificate of Merger and the
consummation of the transactions contemplated hereby and thereby. This Agreement
has been duly executed and delivered by CSC and, assuming it is a valid and
binding obligation of Bergamo, constitutes a valid and binding obligation of CSC
enforceable in accordance with its terms except as enforcement may be limited by
general principles of equity whether applied in a court of law or a court of
equity and by bankruptcy, insolvency and similar laws affecting creditors'
rights and remedies generally. The Certificate of Merger, when executed and
delivered by CSC, will constitute the valid and binding obligation of CSC,
enforceable in accordance with its terms. CSC is not subject to, or obligated
under, any provision of (a) its Certificate or Bylaws, (b) any agreement,
arrangement or understanding, (c) any license, franchise or permit or (d)
subject to obtaining the approvals referred to in the next sentence, any law,
regulation, order, judgment or decree, which would conflict with, be breached or
violated, or in respect of which a right of termination or acceleration or any
security interest, charge or encumbrance on any of its assets would be created,
by the execution, delivery or performance of this Agreement, the Certificate of
Merger, or the consummation of the transacti ons contemplated hereby or thereby,
other than any such conflicts, breaches, violations, rights of termination or
acceleration or security interests, charges or encumbrances which, in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect on CSC. Except for (a) the approval of the Merger, the Certificate of
Merger and this Agreement by a requisite vote of the stockholders of CSC (the
"REQUISITE CSC STOCKHOLDER VOTE"), and (b) the filing of the Certificate of
Merger with the Delaware Secretary of State in accordance with the Delaware
General Corporation Law and the filing of the Certificate of Merger with the
California Secretary of State under the California General Corporation Law, no
authorization, consent or approval of, or filing with, any public body, court or
authority is necessary on the part of CSC for the consummation by CSC of the
transactions contemplated by this Agreement, except for such authorizations,
consents, approvals and filings as to which the failure to ob tain or make the
same will not, in the aggregate, have a Material Adverse Effect on CSC or
adversely affect the consummation of the transactions contemplated hereby.
3.3 CAPITALIZATION. At the Closing, the authorized capital stock of CSC
shall be 10,000,000 shares, of which 10,000,000 shares shall be issued and
outstanding. The issued and outstanding shares of capital stock of CSC are duly
authorized, validly issued, fully paid and nonassessable and have not been
issued in violation of any preemptive rights. CSC has no other equity securities
or securities containing any equity features authorized, issued or outstanding.
There are no agreements or other rights or arrangements existing which provide
for the sale or issuance of capital stock by CSC and there are no rights,
subscriptions, warrants, options, conversion rights or agreements of any kind
outstanding to purchase or otherwise acquire from CSC any shares of capital
stock or other securities of CSC of any kind. There are no agreements or other
obligations (contingent or otherwise) which may require CSC to repurchase or
otherwise acquire any shares of its capital stock.
3.4 FINANCIAL STATEMENTS. Prior to the execution of this Agreement, CSC
has delivered or made available to Bergamo complete and accurate copies of CSC's
financial statements for the year ended December 31, 2001 (the "CSC FINANCIAL
STATEMENTS"). As of their respective date, or as subsequently amended prior to
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the date hereof, such documents (i) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The CSC Financial Statements are based
upon the information contained in the books and records of CSC and fairly
present the financial condition of CSC as of the dates thereof and results of
operations for the periods referred to therein.
3.5 LITIGATION. There are no actions, suits, proceedings, orders or
investigations pending or, to the knowledge of CSC, threatened against CSC, at
law or in equity, or before or by any federal, state or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign which challenges or seeks to make illegal or to delay or otherwise
directly or indirectly to restrain or prohibit the consummation of the
transactions contemplated hereby or seeks to obtain material damages in
connection with the transactions contemplated hereby. As used in this Agreement,
the phrase "to the knowledge of," or words of similar import, with respect to an
entity means to the knowledge of management officials of such entity having
responsibility for the matter in question.
3.6 NO BROKERS OR FINDERS. There are no claims for brokerage
commissions, finders' fees, investment advisory fees or similar compensation in
connection with the transactions contemplated by this Agreement based on any
arrangement, understanding, commitment or agreement made by or on behalf of CSC.
3.7 ABSENCE OF UNDISCLOSED LIABILITIES. Except as reflected in the CSC
Financial Statements, CSC has no liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise, whether due or to become due, whether
known or unknown, and regardless of when asserted) arising out of transactions
or events heretofore entered into, or any action or inaction, or any state of
facts existing, with respect to or based upon transactions or events heretofore
occurring, except liabilities which have arisen after the date of the CSC
Financial Statements in the ordinary course of business (none of which is a
material uninsured liability for breach of contract, breach of warranty, tort,
infringement, claim or lawsuit).
3.8 NO MATERIAL ADVERSE CHANGE. Since the date of the CSC Financial
Statements, there has been no material adverse change in the assets, financial
condition, operating results, customer, employee or supplier relations, or
business condition of CSC.
3.9 TAX MATTERS.
(a) To CSC's knowledge, CSC has: (i) timely filed (or has had timely
filed on its behalf) all returns, declarations, reports, estimates, information
returns, and statements ("CSC RETURNS") required to be filed or sent by it in
respect of any Taxes or required to be filed or sent by it by any taxing
authority having jurisdiction; (ii) timely and properly paid (or has had paid on
its behalf) all Taxes shown to be due and payable on such CSC Returns; (iii)
established on the CSC Financial Statements reserves that are adequate for the
payment of any Taxes not yet due and payable; (iv) complied with all applicable
laws, rules, and regulations relating to the withholding of Taxes and the
payment thereof, and (iv) timely and properly withheld from individual employee
wages and paid over to the proper governmental authorities all amounts required
to be so withheld and paid over under all applicable laws.
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(b) To CSC's knowledge, there are no liens for Taxes upon any assets of
CSC, except liens for Taxes not yet due.
(c) No deficiency for any Taxes has been proposed, asserted or assessed
against CSC that has not been resolved and paid in full or is hereby contested
in good faith. No waiver, extension or comparable consent given by CSC regarding
the application of the statute of limitations with respect to any Taxes or CSC
Returns is outstanding, nor is any request for any such waiver or consent
pending. There has been no Tax audit or other administrative proceeding or court
proceeding with regard to any Taxes or CSC Returns, nor is any such Tax audit or
other proceeding pending, nor has there been any notice to CSC by any Taxing
authority regarding any such Tax, audit or other proceeding, or, to the
knowledge of CSC, is any such Tax audit or other proceeding threatened with
regard to any Taxes or CSC Returns. CSC does not expect the assessment of any
additional Taxes of CSC for any period prior to the date hereof and is not aware
of any unresolved questions, claims or disputes concerning the liability for
Taxes of CSC wh ich would exceed the estimated reserves established on their
respective books and records.
3.10 COMPLIANCE WITH LAWS; PERMITS.
(a) To the knowledge of CSC, CSC, and its officers, directors, agents
and employees have complied in all material respects with all applicable laws,
regulations and other requirements, and no claims have been filed against CSC
alleging a violation of any such laws, regulations or other requirements.
(b) CSC has, in full force and effect, all licenses, permits and
certificates, from federal, state, local and foreign authorities (including,
without limitation, federal and state agencies regulating occupational health
and safety) necessary to conduct its business and operate its properties
(collectively, the "CSC PERMITS"). To the knowledge of CSC, CSC has conducted
its business in compliance with all material terms and conditions of the
Permits.
3.11 DISCLOSURE. The representations and warranties of CSC contained in
this Agreement are true and correct in all material respects, and such
representations and warranties do not omit any material fact necessary to make
the statements contained therein, in light of the circumstances under which they
were made, not misleading. There is no fact known to CSC which has not been
disclosed to Bergamo pursuant to this Agreement and the Schedules hereto, all
taken together as a whole, which has had or could reasonably be expected to have
a Material Adverse Effect on CSC or materially adversely affect the ability of
CSC to consummate in a timely manner the transactions contemplated hereby.
3.12 VOTE REQUIRED. The affirmative vote of a majority of the
outstanding shares of CSC Common Stock is the only vote of the holders of any
class or series of CSC capital stock necessary to approve the Merger.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BERGAMO
Bergamo hereby represent and warrant to CSC as follows:
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4.1 ORGANIZATION AND QUALIFICATION. Bergamo is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has the requisite corporate power to carry on its business as now
conducted. When organized, Bergamo Sub will be a corporation duly organized,
validly existing and in good standing under the laws of the state of its
incorporation. The copies of the Articles of Incorporation and Bylaws of Bergamo
which have been made available to CSC on or prior to the date of this Agreement
are correct and complete copies of such documents as in effect as of the date of
this Agreement. Bergamo is licensed or qualified to do business in every
jurisdiction which the nature of its business or its ownership of property
requires it to be licensed or qualified, except where the failure to be so
licensed or qualified would not have a Material Adverse Effect on Bergamo.
4.2 AUTHORITY RELATIVE TO THIS AGREEMENT; NON-CONTRAVENTION. Except for
the Requisite Merger Sub Stockholder Vote, each of Bergamo and Merger Sub has or
will have the requisite corporate power and authority to enter into this
Agreement, the Certificate of Merger and the other agreements described herein
to which it is or will be a party and to carry out its obligations hereunder and
thereunder. The execution and delivery of this Agreement, the Certificate of
Merger by Bergamo and Merger Sub and the other agreements described herein, and
the consummation by Bergamo and Merger Sub of the transactions contemplated
hereby and thereby have been duly authorized by the Board of Directors of
Bergamo. Except for approval of this Agreement and the Merger by the Requisite
Merger Sub Stockholder Vote, no other corporate proceedings on the part of
Bergamo or Merger Sub are necessary to authorize the execution and delivery of
this Agreement and the Certificate of Merger and the consummation of the
transactions contemplat ed hereby. This Agreement has been duly executed and
delivered by Bergamo and, assuming it is a valid and binding obligation of CSC,
constitutes a valid and binding obligation of Bergamo enforceable in accordance
with its terms except as enforcement may be limited by general principles of
equity whether applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies generally.
The Certificate of Merger, when executed and delivered by Merger Sub, will
constitute the valid and binding obligation of Merger Sub enforceable in
accordance with its terms. Bergamo is not subject to, nor obligated under, any
provision of (a) its Certificate of Incorporation, its Articles of Incorporation
or Bylaws, (b) any agreement, arrangement or understanding, (c) any license,
franchise or permit, nor (d) subject to obtaining the approvals referred to in
the next sentence, any law, regulation, order, judgment or decree, which would
conflict with, be breached or violated, or in respect of which a right of
termination or acceleration or any security interest, charge or encumbrance on
any of its assets would be created, by the execution, delivery or performance of
this Agreement and the Certificate of Merger, or the consummation of the
transactions contemplated hereby or thereby, other than any such conflicts,
breaches, violations, rights of termination or acceleration or security
interests, charges or encumbrances which, in the aggregate, could not reasonably
be expected to have a Material Adverse Effect on Bergamo. Except for (a)
approval of the Merger and this Agreement by the requisite vote of the
stockholders of Merger Sub (the "Requisite Merger Sub Stockholder Vote"), and
(b) the filing of the Certificate of Merger with the Delaware Secretary of State
and the California Secretary of State, no authorization, consent or approval of,
or filing with, any public body, court or authority is necessary on the part of
Bergamo or any Bergamo Subsidiary for the consummati on by Bergamo or Merger Sub
of the transactions contemplated by this Agreement, except for such
authorizations, consents, approvals and filings as to which the failure to
obtain or make the same will not, in the aggregate, have a Material Adverse
Effect on Bergamo or Merger Sub.
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4.3 CAPITALIZATION. The authorized, capitalization of Bergamo is
10,000,000 shares of Preferred Stock, par value $.001 per share, none of which
are issued or outstanding, and 20,000,000 shares of Common Stock, par value
$.001 per share, of which 500,000 shares are issued and outstanding.. The issued
and outstanding shares of capital stock of Bergamo are duly authorized, validly
issued, fully paid and nonassessable and have not been issued in violation of
any preemptive rights. There are no options, warrants, conversion privileges or
other rights, agreements, arrangements or commitments obligating Bergamo or
Merger Sub to issue, sell, purchase or redeem any shares of its capital stock or
securities or obligations of any kind convertible into or exchangeable for any
shares of its capital stock. There are no agreements or other obligations
(contingent or otherwise) which may require Bergamo to repurchase or otherwise
acquire any shares of its capital stock.
4.4 EXCHANGE ACT REPORTS. Prior to the Closing Date, Bergamo has
delivered or made available to CSC complete and accurate copies of (a) Bergamo's
Annual Reports on Form 10-KSB for the years ended December 31, 2001 and December
31, 2000 (the "Bergamo 10-K Reports") as filed with the SEC, and (b) Bergamo's
Quarterly Report on Form 10-QSB for the quarter ended March 31, 2002, (the
"Bergamo 10-QSB Report") as filed with the SEC. As of their respective dates or
as subsequently amended prior to the date hereof, such documents (i) did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading and (ii)
complied as to form in all material respects with the applicable rules and
regulations of the SEC. Since December 31, 2001, Bergamo has filed in a timely
manner all reports that it was required to file with the SEC pursuant to Section
13(a), 14( a), 14(c) and 15(d) of the Exchange Act. The financial statements
(including footnotes thereto) contained in the Bergamo 10-KSB Reports were
prepared in accordance with GAAP applied on a consistent basis during the
periods involved (except as otherwise noted therein) are based upon the
information contained in the books and records of Bergamo and fairly present the
financial condition of Bergamo as of the dates thereof and results of operations
for the periods referred to therein Bergamo's unaudited financial statements as
set forth in the Bergamo 10-QSB have been prepared in accordance with GAAP
applicable to unaudited interim financial statements (and thus may not contain
all notes and may not contain prior period comparative data which are required
to be prepared in accordance with GAAP), consistently with Bergamo's audited
financial statements as described above and reflect all adjustments necessary to
a fair statement of the results for the interim periods presented. 4.5 Absence
of Undisclosed Liabilities. Except as reflected in the unaudited consolidated
balance sheet of Bergamo dated March 31, 2002 (the "Bergamo Latest Balance
Sheet"), Bergamo has no liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise, whether due or to become due, whether known or
unknown, and regardless of when asserted) arising out of transactions or events
heretofore entered into, or any action or inaction, or any state of facts
existing, with respect to or based upon transactions or events heretofore
occurring, except liabilities which have arisen after the date of the Bergamo
Latest Balance Sheet in the ordinary course of business (none of which is a
material uninsured liability for breach of contract, breach of warranty, tort,
infringement, claim or lawsuit)
4.6 LITIGATION. As of the date hereof, there are no actions, suits,
proceedings, orders or investigations pending or, to the knowledge of Bergamo,
threatened against Bergamo, at law or in equity, or before or by any federal,
11
state or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign which challenges or seeks to make illegal
or to delay or otherwise directly or indirectly to restrain or prohibit the
consummation of the transactions contemplated hereby or seeks to obtain material
damages in connection with the transactions contemplated hereby.
4.7 NO BROKERS OR FINDERS. There are no claims for brokerage
commissions, finders' fees, investment advisory fees or similar compensation in
connection with the transactions contemplated by this Agreement based on any
arrangement, understanding, commitment or agreement made by or on behalf of
Bergamo.
4.8 TAX MATTERS.
(a) To Bergamo's knowledge, Bergamo has: (i) timely filed (or has had
timely filed on its behalf) all returns, declarations, reports, estimates,
information returns, and statements ("Bergamo Returns") required to be filed or
sent by it in respect of any Taxes or required to be filed or sent by it by any
taxing authority having jurisdiction; (ii) timely and properly paid (or has had
paid on its behalf) all Taxes shown to be due and payable on such Bergamo
Returns; (iii) established on the Bergamo Latest Balance Sheet, reserves that
are adequate for the payment of any Taxes not yet due and payable; (iv) complied
with all applicable laws, rules, and regulations relating to the withholding of
Taxes and the payment thereof (including, without limitation, withholding of
Taxes under Sections 1441 and 1442 of the Code or similar provisions under any
foreign laws), and timely and properly withheld from individual employee wages
and paid over to the proper governmental authorities all amounts required to be
so withhel d and paid over under all applicable laws.
(b) To Bergamo's knowledge, there are no liens for Taxes upon any
assets of Bergamo or any Bergamo Subsidiary, except liens for Taxes not yet due.
(c) No deficiency for any Taxes has been proposed, asserted or assessed
against Bergamo or any Bergamo Subsidiary that has not been resolved and paid in
full. No waiver, extension or comparable consent given by Bergamo or any Bergamo
Subsidiary regarding the application of the statute of limitations with respect
to any Taxes or Bergamo Returns is outstanding, nor is any request for any such
waiver or consent pending. There has been no Tax audit or other administrative
proceeding or court proceeding with regard to any Taxes or Bergamo Returns, nor
is any such Tax audit or other proceeding pending, nor has there been any notice
to Bergamo by any Taxing authority regarding any such Tax, audit or other
proceeding, or, to the knowledge of Bergamo, is any such Tax audit or other
proceeding threatened with regard to any Taxes or Bergamo Returns.
4.9 COMPLIANCE WITH LAWS; PERMITS.
(a) To Bergamo's knowledge, Bergamo, and its officers, directors,
agents and employees, have complied in all material respects with all applicable
laws, regulations and other requirements, including, but not limited to,
federal, state, local and foreign laws, ordinances, rules, regulations and other
requirements which materially affect the business of Bergamo and to which
Bergamo may be subject, and no claims have been filed against Bergamo alleging a
violation of any such laws, regulations or other requirements.
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(b) Bergamo has in full force and effect, all licenses, permits and
certificates, from federal, state, local and foreign authorities (including,
without limitation, federal and state agencies regulating occupational health
and safety) necessary to conduct its business and own and operate its properties
(collectively, the "PERMITS"). Bergamo has conducted its business in compliance
with all material terms and conditions of the Permits.
4.10 DISCLOSURE. The representations and warranties of Bergamo
contained in this Agreement are true and correct in all material respects, and
such representations and warranties do not omit any material fact necessary to
make the statements contained therein, in light of the circumstances under which
they were made, not misleading. There is no fact known to Bergamo which has not
been disclosed to CSC pursuant to this Agreement, the Schedules hereto, the
Bergamo 10-K Reports, the Bergamo 10-Q Reports, the Bergamo 8-K Reports and the
Bergamo Proxy Statements, all taken together as a whole, which has had or could
reasonably be expected to have a Material Adverse Effect on Bergamo or any
Bergamo Subsidiary or materially adversely affect the ability of Bergamo or
Merger Sub to consummate in a timely manner the transactions contemplated
hereby.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
5.1 CONDUCT OF BUSINESS BY BERGAMO. From the date of this Agreement to
the Effective Date, unless CSC shall otherwise agree in writing or as otherwise
expressly contemplated or permitted by other provisions of this Agreement,
including but not limited to, this Section 5.1, Bergamo shall not, directly or
indirectly, (a) amend or propose to amend its Articles of Incorporation or
Bylaws, (b) issue, sell or grant any of its equity securities convertible into
or exchangeable for its equity securities, or grants, warrants, options or other
rights to acquire its equity securities, (c) reclassify, subdivide or otherwise
change outstanding shares of capital stock of Bergamo whether by stock dividend,
reverse stock split, distribution of securities convertible into Bergamo capital
stock or otherwise, (d) acquire (by merger, exchange, consolidation, acquisition
of stock or assets or otherwise) any corporation, partnership, joint venture or
other business organization or division or assets thereof, (e) default in its o
bligations under any material debt, contract or commitment which default results
in the acceleration of obligations due thereunder, (f) enter into or propose to
enter into, or modify or propose to modify, any agreement, arrangement, or
understanding with respect to any of the foregoing matters; or (g) conduct its
business other than in the ordinary course on an arm's length basis and in
accordance in all material respects with all applicable laws, rules and
regulations and Bergamo's past custom and practice.
5.2 CONDUCT OF BUSINESS BY CSC. From the date of this Agreement to the
Effective Date, unless Bergamo shall otherwise agree in writing or as otherwise
expressly contemplated or permitted by other provisions of this Agreement,
including but not limited to, this Section 5.2, CSC shall not, directly or
indirectly, (a) amend its Certificate or Bylaws, (b) split, combine or
reclassify any outstanding shares of capital stock of CSC, (c) declare, set
aside, make or pay any dividend or distribution in cash, stock, property or
otherwise with respect to the capital stock of CSC, (d) default in its
obligations under any material debt, contract or commitment which default
results in the acceleration of obligations due thereunder, except for such
defaults arising out of this Agreement for which consents, waivers or
modifications are required to be obtained as set forth on Schedule 3.2, (e)
13
conduct its business other than in the ordinary course on an arms length basis
and in accordance in all material respects with all a pplicable laws, rules and
regulations and CSC's past custom and practice, (f) issue or sell any additional
shares of, or options, warrants, conversions, privileges or rights of any kind
to acquire any shares of, any of its capital stock, except as otherwise set
forth in Schedule 5.2 hereto, or (g) acquire (by merger, exchange,
consolidation, acquisition of stock or assets or otherwise) any corporation,
partnership, joint venture or other business organization or division or
material assets thereof.
ARTICLE VI
ADDITIONAL COVENANTS AND AGREEMENTS
6.1 GOVERNMENTAL FILINGS. Each party will use all reasonable efforts
and will cooperate with the other party in the preparation and filing, as soon
as practicable, of all filings, applications or other documents required under
applicable laws, to consummate the transactions contemplated by this Agreement.
Prior to submitting each filing, application, registration statement or other
document with the applicable regulatory authority, each party will, to the
extent practicable, provide the other party with an opportunity to review and
comment on each such application, registration statement or other document to
the extent permitted by applicable law. Each party will use all reasonable
efforts and will cooperate with the other party in taking any other actions
necessary to obtain such regulatory or other approvals and consents at the
earliest practicable time, including participating in any required hearings or
proceedings. Subject to the terms and conditions herein provided, each party
will use all reasonable efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary, proper or advisable to
consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement.
6.2 EXPENSES. Except as otherwise provided in this Agreement, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses.
6.3 DUE DILIGENCE; ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) CSC and Bergamo shall afford to the other party and their
authorized representatives the opportunity to conduct and complete a due
diligence investigation of the other party as described herein. In light of the
foregoing, each party shall permit the other party full access on reasonable
notice and at reasonable hours to its properties and shall disclose and make
available (together with the right to copy) to the other party and its officers,
employees, attorneys, accountants and other representatives, all books, papers
and records relating to the assets, stock, properties, operations, obligations
and liabilities of such party and its subsidiaries, including, without
limitation, all books of account, tax records, minute books of directors' and
stockholders' meetings, organizational documents, bylaws, contracts and
agreements, filings with any regulatory authority, accountants' work papers,
litigation files (including, without limitation, legal research memoranda),
attorney's audit response letters, docume nts relating to assets and title
thereto, plans affecting employees, securities transfer records and stockholder
lists, and any books, papers and records relating to other assets or business
activities in which such party may have a reasonable interest, and otherwise
provide such assistance as is reasonably requested in order that each party may
have a full opportunity to make such investigation and evaluation as it shall
14
reasonably desire to make of the business and affairs of the other party;
provided, however, that the foregoing rights granted to each party shall,
whether or not and regardless of the extent to which the same are exercised, in
no way affect the nature or scope of the representations, warranties and
covenants of the respective party set forth herein. In addition, each party and
its officers and directors shall cooperate fully (including providing
introductions, where necessary) with such other party to enable the party to
contact third parties, including customers, prospective customers, sp ecified
agencies or others as the party deems reasonably necessary to complete its due
diligence; provided that such party agrees not to initiate such contacts without
the prior approval of the other party, which approval will not be unreasonably
withheld.
(b) Prior to Closing and if, for any reason, the transactions
contemplated by this Agreement are not consummated, neither Bergamo nor CSC nor
any of their officers, employees, attorneys, accountants and other
representatives, shall disclose to third parties or otherwise use any
confidential information received from the other party in the course of
investigating, negotiating, and performing the transactions contemplated by this
Agreement; provided, however, that nothing shall be deemed to be confidential
information which:
(i) is known to the party receiving the information at the
time of disclosure;
(ii) becomes publicly known or available without the
disclosure thereof by the party receiving the information in violation
of this Agreement; or
(iii) is rightfully received by the party receiving the
information from a third party.
This provision shall not prohibit the disclosure of information required to be
made under federal or state securities laws. If any disclosure is so required,
the party making such disclosure shall consult with the other party prior to
making such disclosure, and the parties shall use all reasonable efforts, acting
in good faith, to agree upon a text for such disclosure which is satisfactory to
both parties.
(c) If Bergamo or CSC elects not to proceed with the Merger under this
Section, this Agreement shall terminate in accordance with the terms of Article
VIII below.
6.4 TAX TREATMENT. Neither Bergamo nor CSC, nor Surviving Company after
the Effective Date, shall knowingly take any action which would disqualify the
Merger as a "reorganization" that would be tax free to the stockholders of
Bergamo and CSC pursuant to Section 368(a) of the Code.
6.5. PRESS RELEASES. CSC and Bergamo shall agree with each other as to
the form and substance of any press release or public announcement related to
this Agreement or the transactions contemplated hereby; provided, however, that
nothing contained herein shall prohibit either party, following notification to
the other party, from making any disclosure which is required by law or
regulation. If any such press release or public announcement is so required, the
party making such disclosure shall consult with the other party prior to making
such disclosure, and the parties shall use all reasonable efforts, acting in
good faith, to agree upon a text for such disclosure which is satisfactory to
both parties.
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6.6 SECURITIES REPORTS. Bergamo agrees to provide to CSC copies of all
reports and other documents filed under the Securities Act or Exchange Act with
the SEC by it between the date hereof and the Effective Date within two (2) days
after the date such reports or other documents are filed with the SEC.
6.7 STOCK LISTING. Bergamo and CSC shall use all reasonable efforts to
list on the NASDAQ Over the Counter Bulletin Board market system the shares of
Bergamo Common Stock to be issued in connection with the Merger as soon as
reasonably possible after the Effective Date.
6.8 STOCKHOLDER APPROVALS. CSC shall solicit a vote of its stockholders
for the purpose of approving this Agreement and the Merger. The Board of
Directors of CSC shall recommend approval of this Agreement, the Merger, and use
all reasonable efforts (including, without limitation, soliciting proxies or
consents for such approvals) to obtain approvals thereof from its stockholders,
provided, however, the Board of Directors may fail to make such recommendation,
and/or to seek to obtain the stockholder approval referred to in this sentence,
or withdraw, modify or change any such recommendation, if such Board of
Directors determines, in good faith, after consultation with counsel, that the
making of such recommendation, the seeking to obtain such stockholder approval,
or the failure to so withdraw, modify or change its recommendation, may
constitute a breach of the fiduciary or legal obligations of such Board of
Directors.
6.9 NO SOLICITATION.
(a) Unless and until this Agreement shall have been terminated pursuant
to Section 8.1, neither Bergamo nor its officers, directors or agents shall,
directly or indirectly, encourage, solicit or initiate discussions or
negotiations with, or engage in negotiations or discussions with, or provide
non-public information to, any corporation, partnership, person or other entity
or groups concerning any merger, sale of capital stock, sale of substantial
assets or other business combination; provided that Bergamo may engage in such
discussion in response to an unsolicited proposal from an unrelated party if the
Board of Directors of Bergamo determines, in good faith, after consultation with
counsel, that the failure to engage in such discussions may constitute a breach
of the fiduciary or legal obligations of the Board of Directors of Bergamo.
Bergamo will promptly advise CSC if it receives a proposal or inquiry with
respect to the matters described above.
(b) Unless and until this Agreement shall have been terminated pursuant
to Section 8.1, neither CSC nor its officers, directors or agents shall,
directly or indirectly, encourage, solicit or initiate discussions or
negotiations with, or engage in negotiations or discussions with, or provide
non-public information to, any corporation, partnership, person or other entity
or groups concerning any merger, sale of capital stock, sale of substantial
assets or other business combination; provided that CSC may engage in such
discussion in response to an unsolicited proposal from an unrelated party if the
Board of Directors of CSC determines, in good faith, after consultation with
counsel, that the failure to engage in such discussions may constitute a breach
of the fiduciary or legal obligations of the Board of Directors of CSC. CSC will
promptly advise Bergamo if it receives a proposal or inquiry with respect to the
matters described above.
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6.10 FAILURE TO FULFILL CONDITIONS. In the event that either of the
parties hereto determines that a condition to its respective obligations to
consummate the transactions contemplated hereby cannot be fulfilled on or prior
to the termination of this Agreement, it will promptly notify the other party.
6.11 RESIGNATIONS AND ELECTION OF DIRECTORS OF MERGER SUB. At the
Effective Time, Merger Sub shall deliver the voluntary resignations of each
officer and director of Merger Sub who will not be an officer or director after
the consummation of the Merger.
6.12 RESIGNATIONS AND ELECTION OF DIRECTORS OF BERGAMO. At the
Effective Time, Bergamo shall deliver the voluntary resignations of each officer
and director of Bergamo who is not designated to be an officer or director of
Bergamo in accordance with Section 2.1(a) and the continuing Bergamo directors
shall appoint the other persons who shall be officers and directors of Bergamo
in accordance with Section 2.1(a) to be officers and directors of Bergamo upon
the consummation of the Merger.
6.14 NOTIFICATION OF CERTAIN MATTERS. On or prior to the Effective
Date, each party shall give prompt notice to the other party of (i) the
occurrence or failure to occur of any event or the discovery of any information,
which occurrence, failure or discovery would be likely to cause any
representation or warranty on its part contained in this Agreement to be untrue,
inaccurate or incomplete after the date hereof in any material respect or, in
the case of any representation or warranty given as of a specific date, would be
likely to cause any such representation or warranty on its part contained in
this Agreement to be untrue, inaccurate or incomplete in any material respect as
of such specific date, and (ii) any material failure of such party to comply
with or satisfy any covenant or agreement to be complied with or satisfied by it
hereunder.
ARTICLE VII
CONDITIONS
7.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective obligations
of each party to effect the transactions contemplated hereby shall be subject to
the fulfillment or waiver at or prior to the Effective Date of the following
conditions:
(a) NO INJUNCTION. No injunction or other order entered by a state or
federal court of competent jurisdiction shall have been issued and remain in
effect which would prohibit or make illegal the consummation of the transactions
contemplated hereby.
(b) NO PROHIBITIVE CHANGE OF LAW. There shall have been no law,
statute, rule or regulation, domestic or foreign, enacted or promulgated which
would prohibit or make illegal the consummation of the transactions contemplated
hereby.
(c) CONSENTS AND APPROVALS. All consents and approvals necessary to
consummate the transactions contemplated by this Agreement shall have been
obtained, including, but not limited to, those set forth on Schedules 3.2 and
4.2 as well as any and all approvals required in order that the transactions
contemplated herein not constitute a breach or violation of, or result in a
right of termination or acceleration of, or creation of any encumbrance on any
of CSC's assets pursuant to the provisions of, any agreement arrangement or
undertaking of or affecting CSC or any CSC Subsidiary or any license, franchise
or permit of or affecting CSC or any CSC Subsidiary.
17
(d) ADVERSE PROCEEDINGS. There shall not be threatened, instituted or
pending any action or proceeding before any court or governmental authority or
agency, domestic or foreign, (i) challenging or seeking to make illegal, or to
delay or otherwise directly or indirectly to restrain or prohibit, the
consummation of the transactions contemplated hereby or seeking to obtain
material damages in connection with the transactions contemplated hereby, (ii)
seeking to prohibit direct or indirect ownership or operation by Bergamo or
Merger Sub of all or a material portion of the business and assets of CSC or to
Bergamo or Merger Sub or to CSC to dispose of or to hold separately all or a
material portion of the business or assets of Bergamo, Merger Sub or CSC, as a
result of the transactions contemplated hereby, (iii) seeking to invalidate or
render unenforceable any material provision of this Agreement, the Certificate
of Merger or any of the other agreements attached as exhibits hereto, or (iv)
otherwise relating to a nd materially adversely affecting the transactions
contemplated hereby.
(e) GOVERNMENTAL ACTION. There shall not be any action taken, or any
statute, rule, regulation, judgment, order or injunction proposed, enacted,
entered, enforced, promulgated, issued or deemed applicable to the transactions
contemplated hereby by any federal, state or other court, government or
governmental authority or agency, which could reasonably be expected to result,
directly or indirectly, in any of the consequences referred to in Section
7.1(e).
(f) INVESTMENT LETTER. Each of the CSC stockholders shall have executed
and delivered to Bergamo a letter of investment intent in substantially the form
attached hereto as Exhibit B.
7.2 ADDITIONAL CONDITIONS TO OBLIGATION OF BERGAMO. The obligation of
Bergamo to consummate the transactions contemplated hereby in accordance with
the terms of this Agreement is also subject to the fulfillment or waiver of the
following conditions:
(a) REPRESENTATIONS AND COMPLIANCE. The representations and warranties
of CSC set forth in Article III shall have been true and correct as of the date
hereof, and, except to the extent such representations and warranties are made
as of a specified date, shall be true and correct as of the Effective Date as if
made at and as of the Effective Date, except where the failure to be true and
correct would not have, or would not reasonably be expected to have, a Material
Adverse Effect on CSC. CSC shall in all material respects have performed each
obligation and agreement and complied with each covenant to be performed and
complied with by it hereunder at or prior to the Effective Date.
(b) STOCKHOLDER APPROVAL. This Agreement and the Merger shall have been
approved by the Requisite CSC Stockholder Vote.
7.3 ADDITIONAL CONDITIONS TO OBLIGATION OF CSC. The obligation of CSC
to consummate the transactions contemplated hereby in accordance with the terms
of this Agreement is also subject to the fulfillment or waiver of the following
conditions:
(a) LOCKUP AGREEMENTS Xxxxxx Xxxxxxxxxxx, Templemore Partners and
Xxxxxxx Xxxx shall have each executed and delivered to CSC a lockup agreement in
substantially the form of Exhibit C attached hereto.
(b) REPRESENTATIONS AND COMPLIANCE. The representations and warranties
of Bergamo set forth in Article IV shall have been true and correct as of the
date hereof, and, except to the extent such representations and warranties are
18
made as of a specified date, shall be true and correct as of the Effective Date
as if made at and as of the Effective Date, except where the failure to be true
and correct would not have, or would not reasonably be expected to have, a
Material Adverse Effect on Bergamo. Bergamo shall in all material respects have
performed each obligation and agreement and complied with each covenant to be
performed and complied with by it hereunder at or prior to the Effective Date.
(c) OTHER AGREEMENTS AND RESIGNATIONS. Each of the officers and
non-continuing directors of Bergamo immediately prior to the Effective Time
shall deliver duly executed resignations from their positions with Bergamo
effective immediately after the Effective Time.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1. TERMINATION. This Agreement may be terminated prior to the
Effective Date:
(a) by mutual consent of CSC and Bergamo, if the Board of Directors of
each so determines by vote of a majority of the members of its entire board;
(b) by either CSC or Bergamo, if there has been a material
misrepresentation, breach of warranty or breach of covenant on the part of the
other in the representations, warranties and covenants set forth in this
Agreement, or if any of the conditions to such party's obligation to consummate
the transactions contemplated in this Agreement shall have become impossible to
satisfy as a result of no negligent or willful action by such party;
(c) by either CSC or Bergamo, if the Merger and this Agreement is not
duly approved by the stockholders of each of CSC and Merger Sub, including if a
stockholder meeting is not held as contemplated by the first sentence of Section
6.10;
(d) by either CSC or Bergamo if the number of Dissenting Shares is
equal to 5 percent or more of the total number of shares of CSC Stock issued and
outstanding at the time of meeting of stockholders of CSC contemplated by
Section 6.10;
(e) by either CSC or Bergamo if the Effective Date is not on or before
December 31, 2002, or such later date as CSC and Bergamo may mutually agree
(unless the failure to consummate the Merger by such date shall be due to the
action or failure to act of the party seeking to terminate this Agreement in
breach of such party's obligations under this Agreement);
(f) by either Bergamo or CSC pursuant to Section 6.4 above;
(g) by Bergamo or CSC if, after the date hereof, there shall have been
a material adverse change in the financial condition or business of the other
party or if an event shall have occurred which, so far as reasonably can be
foreseen, would result in any such change, except to the extent such change is
directly caused by the party so terminating; or
Any party desiring to terminate this Agreement shall give prior written
notice of such termination and the reasons therefor to the other party.
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8.2 AMENDMENT.
This Agreement may not be amended or modified except by an instrument
in writing approved by the parties to this Agreement and signed on behalf of
each of the parties hereto.
8.3 WAIVER.
At any time prior to the Effective Date, any party hereto may (a)
extend the time for the performance of any of the obligations or other acts of
the other party hereto or (b) waive compliance with any of the agreements of the
other party or with any conditions to its own obligations, in each case only to
the extent such obligations, agreements and conditions are intended for its
benefit. Any such extension or waiver shall only be effective if made in writing
and duly executed by the party giving such extension or waiver.
ARTICLE IX
GENERAL PROVISIONS
9.1 NOTICES. All notices and other communications hereunder shall be in
writing and shall be sufficiently given if made by hand delivery, by fax, by
telecopier, by overnight delivery service, or by registered or certified mail
(postage prepaid and return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by it by
like notice):
If to Bergamo or Bergamo Acquisition Corp.
Merger Sub: 0000 Xxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, XX 00000
If to CSC: Clothing Source of California, Inc.
00000 Xxxxxxxxxx Xxxx.
Xxxxx 000
Xxx Xxxxxxx, XX 00000
With copies to: Xxxxxx & Zepfel LLP
0000 XxxXxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Attn:Xxxxxx X. Xxxxxx
Facsimile: 000-000-0000
All such notices and other communications shall be deemed to have been
duly given as follows: when delivered by hand, if personally delivered, when
received; if delivered by registered or certified mail (postage prepaid and
return receipt requested), when receipt acknowledged; if faxed or telecopied,
when received, and the next day delivery after being timely delivered to a
recognized overnight delivery service.
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9.2 INTERPRETATION. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. References to Sections and Articles refer to
Sections and Articles of this Agreement unless otherwise stated. Words such as
"herein," "hereinafter," "hereof," "hereto," "hereby" and "hereunder," and words
of like import, unless the context requires otherwise, refer to this Agreement
(including the Exhibits and Schedules hereto). As used in this Agreement, the
masculine, feminine and neuter genders shall be deemed to include the others if
the context requires.
9.3 SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated, and the parties shall negotiate
in good faith to modify this Agreement and to preserve each party's anticipated
benefits under this Agreement.
9.4 MISCELLANEOUS. This Agreement (together with all other documents
and instruments referred to herein): (a) constitutes the entire agreement, and
supersedes all other prior agreements and undertakings, both written and oral,
among the parties, with respect to the subject matter hereof; (b) shall be
governed in all respects, including validity, interpretation and effect, by the
internal laws of the State of Minnesota, without giving effect to the principles
of conflict of laws thereof; and (c) shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns, but
shall not be assignable by either party hereto without the prior written consent
of the other party hereto.
9.5 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations and warranties of the parties set forth herein shall not survive
the consummation of the Merger, but covenants that specifically relate to
periods, activities or obligations subsequent to the Merger shall survive the
Merger. In addition, if this Agreement is terminated pursuant to Section 8.1,
the covenants contained in Section 6.4(c) shall survive such termination.
9.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
9.7 THIRD PARTY BENEFICIARIES. Except as provided in the next following
sentence, each party hereto intends that this Agreement shall not benefit or
create any right or cause of action in or on behalf of any person other than the
parties hereto. The provisions of Section 6.15 are intended for the benefit of
Affiliates of Bergamo and CSC.
9.8 GOVERNING LAW. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of California, excluding
the provisions on conflicts of laws.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
on the date first written above by their respective officers.
Bergamo Acquisition Corp.
By: /s/ Xxxxxx Xxxxxxxxxxx
---------------------------
Xxxxxx Xxxxxxxxxxx
Its Chief Executive Officer
Clothing Source of California, Inc.
By: /s/ Xxxxxxx Xxxxxx
---------------------------
Xxxxxxx Xxxxxx
Its Chief Executive Officer
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