AMENDED AND RESTATED
AGREEMENT AND
PLAN OF MERGER
This AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (the "Agreement") is
made and entered into as of December 3, 2004, by and between ARROW ACQUISITION
LP, a Texas limited partnership ("AALP"), and ARROW-MAGNOLIA INTERNATIONAL,
INC., a Texas corporation ("AMI").
RECITALS
A. On or about October 7, 2004 (the "Execution Date"), AALP and AMI
entered into that certain Agreement and Plan of Merger (the "Original
Agreement") whereby AALP was to acquire all of the issued and outstanding
capital stock of AMI and AMI was to cause all such stock to be sold to AALP;
B. The parties hereto desire to amend and restate such Original Agreement
in its entirety as set forth herein; such Original Agreement, as so amended
herein, being hereby ratified and reaffirmed by the parties hereto and to be
considered as in full force and effect from the Execution Date and continuing
in full force and effect, notwithstanding any previous asserted termination
(any such termination being completely disregarded), through the date hereof.
STATEMENT OF AGREEMENT
NOW, THEREFORE, for good consideration, the parties, intending to be legally
bound, agree as follows:
ARTICLE I
THE MERGER
Section 1.1. The Merger. Subject to the terms and conditions of this
Agreement and in accordance with the Texas Business Corporation Act ("TBCA")
and Art. 6132a-1 Sec.2.11 of the Texas Revised Limited Partnership Act
("TRLPA"), at the "Effective Time," as hereinafter defined, AALP shall merge
with and into AMI. Upon consummation of such merger (the "Merger"), the
separate existence of AALP shall cease. AMI shall be the surviving entity
(the "Surviving Entity") in the Merger and, immediately after the Merger, AMI
shall be converted into a limited partnership under the laws of the State of
Texas, pursuant to Art. 5.17 of the TBCA.
Section 1.2. Effective Date and Time of the Merger. The Merger shall become
effective when a Certificate of Merger, complying with the TBCA and Art.
6132a-1 Sec.2.11 of the TRLPA, in the form attached hereto as Exhibit A, has
been filed with the Secretary of State of the State of Texas. The terms
"Effective Date" and "Effective Time" shall be the date and time,
respectively, when the Merger becomes effective.
Section 1.3. Effects of the Merger. At and after the Effective Time, the
Merger shall have the effects set forth in Art. 6132a-1 Sec.2.11 of the
TRLPA. All rights, title and interests to all real estate and other
property, tangible and intangible, owned by AALP and AMI shall be allocated
to and completely vested in the Surviving Entity, without further act or
deed. All liabilities and obligations of AALP and AMI shall be allocated to
the Surviving Entity and the Surviving Entity shall become the primary
obligor as to all such liabilities and obligations. All rights of creditors
and other obligees and all liens and other encumbrances on property of either
AALP or AMI shall be preserved unimpaired.
Section 1.4. Conversion. Immediately after the Merger, the Surviving Entity
shall file with the Secretary of State of the State of Texas Articles of
Conversion in the form attached hereto as Exhibit B, causing conversion (the
"Conversion") of the Surviving Entity into a limited partnership under the
laws of the State of Texas.
Section 1.5. Regulatory Approvals and Notices. AALP and AMI shall proceed
expeditiously and cooperate fully in obtaining any consents and approvals and
the taking of any other actions in satisfaction of all other requirements
prescribed by law or otherwise necessary for consummation of the Merger on
the terms provided herein, including, without limitation, the preparation and
submission of all necessary filings, certificates and notices to all
appropriate governmental agencies.
ARTICLE II
AALP STOCK OPTION
Section 2.1. Issuance of Stock Option. Contemporaneously with the execution
and delivery of this Agreement, AMI has granted to AALP an option (the "AALP
Stock Option") to purchase 850,000 shares of AMI common stock, which will
represent, upon exercise, approximately 19.9% of all issued and outstanding
shares of AMI common stock. The AALP Stock Option shall be evidenced by that
certain Stock Option Agreement in the form attached hereto as Exhibit C.
ARTICLE III
CONVERSION AND EXCHANGE OF SHARES
Section 3.1. Conversion of AMI Stock. At the Effective Time, by virtue of the
Merger and without any action on the part of AMI, AALP or the holder of any
of the securities thereof, the following shall occur:
(a) Subject to the provisions of Sections 3.5 and 3.6 below, each share
of the AMI common stock ("AMI Stock") issued and outstanding immediately
prior to the Effective Time, except for shares of AMI Stock owned by AMI
as treasury stock or owned, directly or indirectly, by AMI or any of AMI's
wholly-owned subsidiaries (other than shares of AMI Stock held, directly
or indirectly, in trust accounts, managed accounts or otherwise held in a
fiduciary capacity, that are beneficially owned by third parties) and
shares of AMI Stock as to which the holders have perfected their rights as
dissenting shareholders in accordance with the provisions of Art. 6132a-1
Sec.2.11 of the TBCA (the "Dissenting Shares"), shall be converted into
and represent the right to receive cash in the amount of the "Merger
Consideration," as hereinafter defined;
(b) All shares of AMI Stock that are owned, directly or indirectly, by
AMI or any wholly-owned subsidiary of AMI shall be canceled and shall
cease to exist and no consideration shall be delivered in exchange
therefor; and
(c) All of the shares of AMI Stock converted into the right to receive
the Merger Consideration pursuant to this ARTICLE III shall no longer be
outstanding and shall automatically be canceled and shall cease to exist.
Section 3.2. Merger Consideration. As used herein, the term "Merger
Consideration" shall mean the sum of $1.60 per share of AMI Stock; provided,
however, $200,000 of the Merger Consideration payable to Xx. Xxxxxxx Xxxxxx
("Xxxxxx") shall be in the form of a $200,000 promissory note from the
Surviving Entity, in a form acceptable to both the Surviving Entity and
Shwiff, with interest at a rate of 6% per annum. The principal and accrued
interest will be repaid as follows: (i) $50,000 on the second anniversary of
the Effective Date and (ii) $150,000 on the third anniversary of the
Effective Date.
Section 3.3. AALP Partnership Interests. At and after the Effective Time and
the Conversion, all partnership interests of AALP issued and outstanding
immediately prior to the Effective Time shall be converted into partnership
interests of the Surviving Entity, in the same percentages and class as
existed in AALP prior to the Effective Time.
Section 3.4. Cancellation of Employee Stock Options. Contemporaneously with
the execution of this Agreement, the holder of each outstanding and
unexercised option/warrant, previously granted by AMI, to purchase shares of
AMI Stock (other than the AALP Stock Option) has executed and delivered to
AMI an option cancellation agreement (collectively, the "Option Cancellation
Agreements") and surrendered to AMI all original option agreements. Pursuant
to the terms of the Option Cancellation Agreements, immediately prior to the
Effective Time each "in-the-money" option/warrant subject to an Option
Cancellation Agreement (a) shall be canceled in exchange for a cash payment
by AMI, without interest, equal to the product obtained by multiplying (i)
the difference between the Merger Consideration per share and the exercise
price of each respective option/warrant by (ii) the number of shares of AMI
Stock purchasable upon exercise of such options/warrants, and (b) shall cease
to represent a right to acquire shares of AMI Stock. AALP consents and
agrees that AMI may grant waivers or consents of the provisions of the Option
Cancellation Agreements prohibiting exercise to permit holders of
options/warrants to exercise "in-the-money" options; provided such holder
agrees to exchange such shares for the Merger Consideration and agrees that
unexercised options shall be canceled under the Option Cancellation Agreement
without additional consideration. The maximum amount payable pursuant to
this Section 3.4 for cancellation of all "out of the money" options shall be
$10,000. As of the Effective Time, there shall be no options or warrants to
purchase shares of AMI Stock outstanding other than the AALP Stock Option.
Section 3.5. Exchange Procedure. On or immediately prior to the Effective
Date, AALP and AMI shall deposit in trust with, or otherwise make available
to, an exchange agent (the "Exchange Agent") to be selected by AALP, for
exchange in accordance with this Agreement, cash sufficient to pay the Merger
Consideration (excluding any Dissenting Shares). As soon as practicable
after the Effective Time, and in no event later than five business days
thereafter, the Exchange Agent shall mail to each holder of record of AMI
Stock a letter of transmittal (the "Letter of Transmittal") in substantially
the form attached to this Agreement as Exhibit D and instructions for use in
effecting the surrender of the certificates representing AMI Stock in
exchange for the Merger Consideration. Each holder of AMI Stock, upon
surrender of the certificates therefor to the Exchange Agent, accompanied by
duly executed Letters of Transmittal, shall be entitled to receive a check
representing the amount of Merger Consideration which such holder has the
right to receive hereunder. Each certificate representing shares of AMI Stock
so surrendered shall be canceled. Until so surrendered, each certificate
representing AMI Stock will be deemed for all corporate purposes to represent
and evidence solely the right to receive the Merger Consideration to be paid
therefor pursuant to this Agreement. Notwithstanding the foregoing, neither
the Exchange Agent nor any other party hereto shall be liable to any holder
of certificates representing AMI Stock for any amount paid to a public
official pursuant to any applicable abandoned property, escheat or similar
law. Except as required by law, no interest shall be payable with respect to
the Merger Consideration or the cash payable for Dissenting Shares. If any
shareholder of record of AMI is unable to locate any certificate evidencing
shares of AMI Stock to be surrendered for exchange, the Exchange Agent shall
deliver the corresponding share of the Merger Consideration to the registered
shareholder upon receipt of a lost certificate affidavit and an indemnity
agreement in a form reasonably acceptable to AALP. The delivery of the
Merger Consideration by the Exchange Agent shall be as soon as practicable
following the receipt by the Exchange Agent of the certificates and the duly
executed Letters of Transmittal, and in any event no later than five business
days thereafter.
Section 3.6. Dissenting Shares. Each share of AMI Stock issued and outstanding
immediately prior to the Effective Time, the holder of which has not voted in
favor of the Merger and who has properly perfected his dissenter's rights of
appraisal by following the procedures set forth in Section 5.12 of the Texas
Business Corporation Act (the "TBCA"), is referred to herein as a "Dissenting
Share." Dissenting Shares owned by each holder thereof who has not exchanged
his certificates representing shares of AMI Stock for the corresponding share
of the Merger Consideration or otherwise has not effectively withdrawn or
lost his dissenter's rights shall not be converted into or represent the
right to receive the corresponding share of the Merger Consideration pursuant
to Section 3.1 hereof and shall be entitled only to such rights as are
available to such holder pursuant to the applicable provisions of the TBCA.
Each holder of Dissenting Shares shall be entitled to receive the value of
such Dissenting Shares held by him in accordance with the applicable
provisions of the TBCA; provided, such holder complies with the procedures
contemplated by and set forth in the applicable provisions of the TBCA. If
any holder of Dissenting Shares shall effectively withdraw or lose his
dissenter's rights under the applicable provisions of the TBCA, such
Dissenting Shares shall be converted into the right to receive the
corresponding share of the Merger Consideration in accordance with the
provisions of this ARTICLE III.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF AMI
In order to induce AALP to enter into this Agreement, AMI represents and
warrants to AALP that the statements contained in this ARTICLE IV are true and
correct.
Section 4.1. Organization.
(a) AMI is a corporation duly organized, validly existing and in good
standing under the laws of the State of Texas. AMI has the corporate
power and authority to own, lease and operate its properties, to engage in
the business and activities now conducted by it and to enter into this
Agreement. AMI is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it
makes such licensing or qualification necessary, except where the failure
to be so licensed or qualified would not, either individually or in the
aggregate, have a "Material Adverse Effect," as hereinafter defined, on
AMI.
(b) AMI has no subsidiaries.
(c) AMI is not a general partner or owner of an equity or membership
interest in any joint venture, general partnership, limited partnership,
limited liability company, trust or other non-corporate entity.
(d) There exists no arrangement pursuant to which the stock or other
membership or equity interests of any corporation, joint venture, general
partnership, limited partnership, limited liability company, trust or
other non-corporate entity is or has been held in trust (whether express,
constructive, resulting or otherwise) for the benefit of AMI or all of the
shareholders of AMI.
(e) True and complete copies of the Articles of Incorporation and Bylaws
of AMI, as amended to date, are included in Schedule 4.1 of the Disclosure
Schedule, including disclosures dated November 9, 2004 in e-mail from
Xxxxxx to Tippeconnic, et. al., (the "Disclosure Schedule") delivered by
AMI to AALP together with this Agreement.
Section 4.2. Capitalization. The authorized capital stock of AMI consists of
(a) 10,000,000 shares of AMI Stock, 3,401,448 of which are issued and
outstanding and 13,500 of which are held in treasury, and (b) 500,000 shares
of preferred stock, $0.10 par value per share, none of which are issued and
outstanding. All of the issued and outstanding shares of AMI Stock are
validly issued, fully paid and nonassessable, and were not issued in
violation of the preemptive rights of any person or in violation of any
applicable federal or state securities laws. Except for the AALP Stock
Option and as described on Schedule 4.2 of the Disclosure Schedule, there are
no existing options, warrants, calls, convertible securities or commitments
of any kind obligating AMI to issue any authorized and unissued AMI Stock,
nor does AMI have any outstanding commitment or obligation to repurchase,
reacquire or redeem any of its outstanding capital stock. Except for the
AALP Stock Option, there are no stock appreciation or similar rights to
receive cash payment in respect or in lieu of options to purchase shares of
AMI Stock or otherwise. Except as described on Schedule 4.2 of the
Disclosure Schedule and as contemplated by this Agreement, to the knowledge
of AMI, there are no voting trusts, voting agreements, buy-sell agreements or
other agreements or arrangements affecting the AMI Stock.
Section 4.3. Approvals; Authority.
(a) The Board of Directors has approved this Agreement, the AALP Stock
Option and the transactions contemplated hereby and thereby and no further
corporate proceedings of AMI are needed to execute and deliver this
Agreement and the AALP Stock Option and consummate the transactions
contemplated hereby and thereby other than the approval of this Agreement
by the shareholders of AMI as required by law. As of the date hereof,
Xxxxxx, Xxxx X. Xxxxxx and Xxxx Xxxxxx (collectively hereinafter referred
to as the "Majority Shareholders"), as a group, own a number of the shares
of issued and outstanding AMI Stock that is sufficient for AMI shareholder
approval of the Merger pursuant to AMI's Articles of Incorporation and
Bylaws and pursuant to the TBCA. This Agreement and the AALP Stock Option
have been duly authorized, executed and delivered by AMI and each is a
legal, valid, and binding agreement of AMI enforceable against AMI in
accordance with its terms, subject to the effect of bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to
creditors' rights generally and general equitable principles.
(b) At the Closing, all other agreements, documents and instruments to be
executed and delivered by AMI which are referred to herein or contemplated
hereby will have been duly executed and delivered by AMI, and will
constitute the legal, valid and binding obligation of AMI, enforceable
against AMI in accordance with their respective terms, subject to the
effect of bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to creditors' rights generally and general equitable
principles.
Section 4.4. Securities Law Filings. AMI is subject to the registration
provisions of Section 12 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") and the rules and regulations of the SEC promulgated
under Section 12 of the Exchange Act, including the anti-fraud provisions of
such Exchange Act. All issuances of securities by AMI have been registered
under the Securities Act, the Securities Act of the State of Texas and all
other applicable laws, or were exempt from any such registration requirements
or the applicable statute of limitations has run. AMI has made all filings
required to be made under the Exchange Act within the preceding two years.
None of the information contained in the filings by AMI since January 1,
2002, and to the best knowledge of AMI in the filings prior to January 1,
2002, under the Exchange Act or the Securities Act is false or misleading
with respect to any material fact, or omits to state any material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Section 4.5. Financial Statements.
(a) Schedule 4.5(a) of the Disclosure Schedule contains true and complete
copies of AMI's (i) unaudited statement of financial condition as of June
30, 2004 and related statement of income as of and for the 6 months ended
June 30, 2004, reviewed by Xxxxxx Xxxxx & Co, PC as of August 12, 2004
(the "Interim Financial Statements"), and (ii) audited statements of
financial condition and related statements of income, changes in
shareholders' equity and cash flows, as of and for the year ended December
31, 2003, accompanied by the report thereon of Xxxxxx Xxxxx & Co, PC
dated February 18, 2004 (the "Annual Financial Statements"). The Interim
Financial Statements and the Annual Financial Statements are collectively
referred to herein as the "AMI Financial Statements." The AMI Financial
Statements fairly present the financial position of AMI and the results of
its operations at the dates and for the periods indicated in conformity
with generally accepted accounting principles ("GAAP") consistently
applied during the periods covered thereby.
(b) Except as set forth in Schedule 4.5(b) of the Disclosure Schedule, as
of the dates of the AMI Financial Statements referred to above and as of
the date of this Agreement, AMI did not have any liabilities, fixed or
contingent, which are material and are not fully reflected or provided for
in the AMI Financial Statements or otherwise disclosed in this Agreement.
Except as set forth in Schedule 4.5(b) of the Disclosure Schedule, since
June 30, 2004, (i) the business of AMI has been conducted only in the
ordinary course, consistent with prior practices, and (ii) no event,
condition or circumstance has occurred which, individually or in the
aggregate, has had a Material Adverse Effect on AMI.
(c) Except as set forth in Schedule 4.5(c) of the Disclosure Schedule,
all of the notes and accounts receivable reflected on the most recent AMI
Financial Statements reflect receivables resulting from bona fide
transactions with third parties, net of applicable reserves for doubtful
accounts. No representation or warranty is made concerning collectibility
of any such notes or accounts.
(d) Except as set forth in Schedule 4.5(d) of the Disclosure Schedule,
the inventories of AMI reflected on the most recent AMI Financial
Statements are of a quantity and quality usable and saleable in the
ordinary course of business, subject to adequate provision for loss or
obsolescence in accordance with GAAP, consistent with historical
experience of AMI as reflected in the AMI Financial Statements.
Section 4.6. Title. A true and complete copy of a commitment for title
insurance for all real property owned by AMI reflecting all mortgages, deeds
of trust and security agreements to which such property is subject has been
delivered to AALP and is attached hereto in Schedule 4.6 of the Disclosure
Schedule. Except as set forth on Schedule 4.6 of the Disclosure Schedule,
AMI has good and marketable title to all of its assets and properties
including, without limitation, all real property and all improvements
thereon, and all personal properties, tangible and intangible, reflected in
the Interim Financial Statements or acquired subsequent thereto, subject to
no deeds of trust, liens, mortgages, security interests, encumbrances or
charges of any kind except (a) as noted in the AMI Financial Statements or as
set forth on Schedule 4.6 of the Disclosure Schedule, (b) statutory liens not
yet delinquent, (c) minor defects and irregularities in title and
encumbrances which do not materially impair the use thereof for the purposes
for which they are held, and (d) those assets and properties disposed of for
fair market value in the ordinary course of business since the dates of the
AMI Financial Statements. AMI is not a party to any lease or sublease of
real property.
Section 4.7. Environmental Laws. Except as set forth in Schedule 4.7 of the
Disclosure Schedule, to the best knowledge of AMI:
(a) AMI is and has been in substantial compliance with all terms and
conditions of all applicable federal and state "Environmental Laws," as
hereinafter defined, and permits thereunder.
(b) AMI (i) has not received any notice of or inquiry relating to any
alleged violation of or liability under any Environmental Laws that has
not been settled, closed or reached a final determination, (ii) has not
generated, stored or disposed of any "Hazardous Materials," as hereinafter
defined, under the Environmental Laws except in compliance with
Environmental Laws and (iii) is not subject to any claim or lien under any
Environmental Laws.
(c) No release (as defined at CERCLA, 42 U.S.C. 9601(22), without regard
for the exclusions therein mentioned) of Hazardous Materials has occurred
at or from any real property during the term of the ownership, lease or
operation thereof by AMI for which the Environmental Laws required or
require notice to any third party, further investigation or response
action of any kind.
(d) No condition exists at any real property currently owned, leased or
operated by AMI for which the Environmental Laws required or require
notice to any third party, further investigation or response action of any
kind.
(e) No asbestos is now or has been contained in any facility owned by
AMI.
(f) No real property currently owned, leased or operated by AMI is, or
has been, an industrial site (excluding the Xxxxxx Xxxx property) or a
landfill at any time.
AMI has furnished AALP true and complete copies of all environmental
assessments, reports, studies and other related information in its possession
or control relating to each real property presently or formerly owned, leased
or operated by AMI. The charges, accruals and reserves on the AMI Financial
Statements with respect to all items ("Existing Environmental Matters")
disclosed on Schedule 4.7 of the Disclosure Schedule are adequate and are and
will be at least equal to or exceed AMI's liability for such Existing
Environmental Matters. As used herein, the term "Environmental Laws," means
any federal, state or local statute, law, rule, regulation, ordinance, code
or rule of common law, and any judicial or administrative interpretation
thereof, including any judicial or administrative order, consent decree, or
judgment, relating to the environment, human health or safety, or Hazardous
Materials, including without limitation the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C.
Sec.Sec. 9601, et seq. ("CERCLA"); the Hazardous Materials Transportation
Act, as amended, 49 U.S.C. Sec.Sec. 1801, et seq.; the Resource Conservation
and Recovery Act of 1976, as amended, 42 U.S.C. Sec.Sec. 6901, et seq.; the
Federal Water Pollution Control Act, as amended, 33 U.S.C. Sec.Sec. 1201, et
seq.; the Toxic Substances Control Act, 15 U.S.C. Sec.Sec. 2601, et seq.; the
Clean Air Act, 42 U.S.C. Sec.Sec. 7401, et seq.; and the Safe Drinking Water
Act, 42 U.S.C. Sec.Sec. 3808, et seq. As used herein, the term "Hazardous
Materials" means (I) any petroleum or petroleum products, natural gas, or
natural gas products, radioactive materials, asbestos, mold, urea
formaldehyde foam insulation, transformers or other equipment that contains
dielectric fluid containing levels of polychlorinated biphenyls (PCBs), and
radon gas; (II) any chemicals, materials, waste or substances defined as or
included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous wastes," "restricted hazardous
wastes," "toxic substances," "toxic pollutants," "contaminants," or
"pollutants," or words of similar import, under any Environmental Laws; and
(III) any other chemical, material, waste or substance which is in any way
regulated by any federal, state or local government authority, agency or
instrumentality, including mixtures thereof with other materials, and
including any regulated building materials such as asbestos and lead.
Section 4.8. Litigation and Other Proceedings. Except as set forth in Schedule
4.8 of the Disclosure Schedule, there are no legal, quasi-judicial or
administrative proceedings of any kind or nature now pending or, to the
knowledge of AMI, threatened before any court or administrative body in any
manner against AMI or any of its properties or capital stock. Except as set
forth in Schedule 4.8 of the Disclosure Schedule, AMI does not know of any
basis on which any litigation or proceeding could be brought which could have
a Material Adverse Effect on AMI or which could question the validity of any
action taken or to be taken in connection with this Agreement and the
transactions contemplated hereby. AMI is not in default with respect to any
judgment, order, writ, injunction, decree, award, rule or regulation of any
court, arbitrator or governmental agency or instrumentality.
Section 4.9. Taxes. Except as set forth in Schedule 4.9 of the Disclosure
Schedule:
(a) All "Returns," as hereinafter defined, required to be filed by or on
behalf of AMI, or any affiliated, consolidated, combined, unitary or
similar group of which AMI is or was a member, have been duly filed on a
timely basis and such Returns are true, complete and correct. All
"Taxes," as hereinafter defined, shown to be payable on the Returns or on
subsequent assessments with respect thereto have been paid in full on a
timely basis or have otherwise been resolved, and all Taxes owed by AMI
which are or have become due have been timely paid in full or have
otherwise been resolved (whether or not shown on or reportable on such
Returns). AMI has withheld and paid over all Taxes required to have been
withheld and paid over, and complied with all information reporting and
backup withholding requirements, including maintenance of required records
with respect thereto, in connection with amounts paid or owing to any
employee, creditor, independent contractor or other third party. There
are no liens on any of the assets of AMI with respect to Taxes, other than
liens for Taxes not yet due and payable. The charges, accruals and
reserves with respect to Taxes on the AMI Financial Statements are
adequate (determined in accordance with GAAP) and are at least equal to
AMI's liability for Taxes.
(b) No deficiencies for Taxes have been claimed, proposed or assessed by
any taxing or other governmental authority against AMI that have not been
settled, closed or reached a final determination. There are no pending
audits, actions, proceedings, investigations, claims or assessments
relating to any Tax liability of AMI to which AMI has received notice.
AMI is not a party to any action or proceeding for assessment or
collection of Taxes, nor have such events been asserted or, to the
knowledge of AMI, threatened against AMI or any of its assets. No waiver
or extension of any statute of limitations relating to Taxes is in effect
with respect to AMI. No power of attorney has been executed by AMI with
respect to any Tax matter that is currently in force.
(c) AMI has disclosed on its federal income tax Returns all positions
taken therein that could give rise to a substantial understatement penalty
within the meaning of Section 6662 of the Code.
(d) AMI has not agreed to make, nor is it required to make, any
adjustment under Code Section 481(a) by reason of a change in accounting
method or otherwise.
(e) None of the property of AMI is subject to a safe-harbor lease
(pursuant to Section 168(f)(8) of the Internal Revenue Code of 1954 as in
effect after the Economic Recovery Tax Act of 1981 and before the Tax
Reform Act of 1986) or is "tax-exempt use property" (within the meaning of
Section 168(h) of the Code) or "tax-exempt bond financed property" (within
the meaning of Section 168(g)(5) of the Code.
(f) AMI is not a party to any Tax sharing agreement or has any continuing
obligations under any prior Tax sharing agreement.
(g) AMI is not, and has not been, a member of any other affiliated,
consolidated, combined, unitary or similar group for Tax purposes.
(h) True and complete copies of the federal income tax returns of AMI as
filed with the Internal Revenue Service (the "IRS") for the years ended
December 31, 1999, 2000, 2001, 2002 and 2003 have been furnished to AALP.
True and complete copies of the Texas Franchise Tax returns of AMI as
filed with the State of Texas for the years ended December 31, 1999, 2000,
2001 and 2002 have been furnished to AALP.
As used in this Agreement, the term "Returns" shall mean all reports,
estimates, declarations of estimated tax, information statements and returns
relating to, or required to be filed in connection with, any Taxes, including
information returns or reports with respect to backup withholding and other
payments to third parties. As used herein, the term "Taxes" shall mean all
taxes, however denominated, including any interest, penalties or other
additions to tax that may become payable in respect thereof, imposed by any
federal, territorial, state, local or foreign government or any agency or
political subdivision of any such government, which taxes shall include,
without limiting the generality of the foregoing, all income or profits taxes
(including, but not limited to, federal income taxes and state income taxes),
real property taxes, payroll and employee withholding taxes, unemployment
insurance taxes, social security taxes, sales and use taxes, ad valorem
taxes, excise taxes, franchise taxes, gross receipts taxes, business license
taxes, occupation taxes, real and personal property taxes, stamp taxes,
environmental taxes, transfer taxes, workers' compensation, Pension Benefit
Guaranty Corporation premiums and other governmental charges, and other
obligations of the same or of a similar nature to any of the foregoing, which
AMI is required to pay, withhold or collect.
Section 4.10. Contracts. Except as otherwise noted in Schedule 4.10 of the
Disclosure Schedule, AMI is not a party to or bound by any of the following:
(a) Employment contract (including without limitation any collective
bargaining contract or union agreement or agreement with an independent
contractor);
(b) Bonus, stock option, deferred compensation or profit-sharing, pension
or retirement plan or other employee benefit arrangement;
(c) Lease or license with respect to any property, real or personal,
whether as landlord, tenant, licensor or licensee involving annual
payments in excess of $10,000;
(d) Contract or commitment for capital expenditures in excess of $10,000
for any one project;
(e) Contract or commitment whereby another person or entity is granted
the right to sell goods, products or services on behalf of AMI.
(f) Contract or commitment made in the ordinary course of business for
the purchase of materials or supplies or for the performance of services
over a period of more than 60 days from the date of this Agreement
involving an annual expenditure in excess of $10,000;
(g) Contract or option to purchase or sell any real or personal property
other than in the ordinary course of business;
(h) Contract, agreement or letter with respect to the management or
operations of AMI imposed by any regulatory authority having supervisory
jurisdiction over AMI;
(i) Agreement, contract or indenture related to the borrowing by AMI of
money other than those entered into in the ordinary course of business;
(j) Guaranty of any obligation for the borrowing of money, excluding
endorsements made for collection, repurchase or resell agreements, letters
of credit and guaranties made in the ordinary course of business;
(k) Agreement with or extension of credit to any executive officer or
director of AMI or a holder of more than 5% of the AMI Stock, or any
affiliate of such person;
(l) Agreement or arrangement with any executive officer, director, holder
of 5% or more of the AMI Stock or affiliate of such persons for the
provision of services or lease of property or any similar matter that is
essential to their operations or on terms which are preferential to them
or such persons; or
(m) Other than the foregoing, contracts involving more than $10,000
which are not made in the ordinary course of business and not otherwise
disclosed in this Agreement or in a schedule attached hereto.
Since January 1, 2002, AMI has performed all obligations required to be
performed by it to date and is not in default under any indenture, mortgage,
contract, lease or other agreement (collectively hereinafter referred to as
"AMI Contracts") to which AMI is a party or by which it is bound or under any
provision of its Articles of Incorporation or Bylaws (such Articles of
Incorporation and Bylaws being hereinafter referred to as the "AMI Governing
Documents"). To the knowledge of AMI, prior to January 1, 2002, AMI performed
all obligations required to be performed by it and did not breach any of the
AMI Contracts. To the knowledge of AMI, no event has occurred which, with
the lapse of time or action by a third party, could result in default under
any of the AMI Contracts or under any provision of the AMI Governing
Documents.
Section 4.11. Insurance. True and complete copies of all insurance policies
owned or held by, or issued in favor of, AMI covering the current period have
been provided to AALP and are listed in Schedule 4.11 of the Disclosure
Schedule. The risks, amounts and retention levels of such insurance policies
are reasonable for the business conducted by AMI.
Section 4.12. Intellectual Property. AMI owns or possesses licenses or other
valid rights to use, all patents, patent rights, trademarks, trademark
rights, trade names, trade name rights, copyrights, servicemarks, trade
secrets, applications for trademarks and for servicemarks, know-how and other
proprietary rights and information, all of which are listed on Schedule 4.12
of the Disclosure Schedule, that are material to the business of AMI as
currently conducted. AMI is unaware of any assertion or claim challenging
the validity of any of the foregoing. To the knowledge of AMI, the conduct
of the business of AMI as currently conducted does not conflict with any
patent, patent right, license, trademark, trademark right, trade name, trade
name right, service xxxx or copyright of any third party, and there are no
infringements by any third party of any proprietary rights owned or licensed
by or to AMI.
Section 4.13. No Conflict with Other Instruments. Except as otherwise noted
in Schedule 4.13 of the Disclosure Schedule:
(a) The execution and delivery of this Agreement, the AALP Stock Option
and the "Voting Agreements," as hereinafter defined, the performance by
AMI and the parties thereto of the obligations thereunder and the
consummation of the Merger, subject to obtaining approval of the AMI
shareholders, will not conflict with or result in a breach of any
provision of the Articles of Incorporation or Bylaws of AMI.
(b) The execution and delivery of this Agreement, the AALP Stock Option
and the Voting Agreements, the performance by AMI and the parties thereto
of the obligations thereunder and the consummation of the Merger, subject
to obtaining approval of the AMI shareholders and all regulatory
approvals, will not violate any provision of, or constitute a default or
require any consent or approval under, any law, or any order, writ,
injunction or decree of any court or other governmental agency applicable
to AMI, or any contract, agreement or instrument to which AMI is a party
or by which it is bound or constitute an event which, with the lapse of
time or action by a third party, could result in any default under any of
the foregoing or result in the creation of any lien, charge or encumbrance
upon the assets or properties of AMI or upon the AMI Stock.
Section 4.14. Compliance with Laws. Except as set forth in Schedule 4.14 of
the Disclosure Schedule, to the knowledge of AMI-
(a) AMI has been and is currently in compliance with all applicable
federal, state and local laws, rules, regulations and orders, the failure
to comply with which would reasonably be anticipated to have a Material
Adverse Effect and AMI has filed all reports, notices, registrations and
statements, together with any amendments required to be made thereto, that
are required to be filed with all regulatory authorities having
jurisdiction over AMI, and such reports, notices, registrations and
statements were, as of their respective dates, true and correct and did
not contain any untrue statement of a material fact or omit to state any
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.
(b) No regulatory agency has ever initiated any proceeding or, to the
knowledge of AMI, investigation into the business or operations of AMI.
(c) There is no unresolved violation, criticism or exception by any
regulatory agency with respect to any report or statement relating to any
examinations of AMI.
(d) Except for approval of the AMI shareholders and approvals of
regulatory authorities having jurisdiction over AMI, no prior consent,
approval or authorization of, or declaration, filing or registrations
with, any person is required to be obtained by AMI in connection with the
execution, delivery and performance by AMI of this Agreement, the AALP
Stock Option, the Voting Agreements or the Merger.
Section 4.15. Conduct. Except as listed in Schedule 4.15 of the Disclosure
Schedule, since June 30, 2004, AMI has not done any of the following:
(a) Issued or sold any capital stock or corporate debt obligations,
except pursuant to outstanding options identified in Schedule 4.2 of the
Disclosure Schedule;
(b) Declared or set aside or paid any dividend or made any other
distribution in respect of or, directly or indirectly, purchased, redeemed
or otherwise acquired any shares of its capital stock;
(c) Incurred any obligations or liabilities (fixed or contingent), except
obligations or liabilities incurred in the ordinary course of business, or
mortgaged, pledged or subjected any of its assets to a lien or encumbrance
(other than in the ordinary course of business and other than statutory
liens not yet delinquent);
(d) Discharged or satisfied any lien or encumbrance or paid any
obligation or liability (fixed or contingent), other than accruals,
accounts and notes payable included in the AMI Financial Statements, or
incurred since June 30, 2004 in the ordinary course of business and
liabilities disclosed herein;
(e) Sold, exchanged or otherwise disposed of any of its capital assets
other than in the ordinary course of business;
(f) Made any general or individual wage or salary increase (including
increases in directors' or consultants' fees), paid any bonus, granted or
paid any perquisites such as automobile allowances, club memberships or
dues or other similar benefits, or instituted any employee welfare,
retirement or similar plan or arrangement;
(g) Suffered any physical damage, destruction or casualty loss, whether
or not covered by insurance, materially and adversely affecting its
business, properties or assets;
(h) Made any or acquiesced in any change in accounting methods,
principles or practices;
(i) Entered into any contract, agreement or commitment which obligates
AMI for an amount in excess of $10,000 over the term of any such contract,
agreement or commitment; or
(j) Except in the ordinary course of business, entered or agreed to enter
into any agreement or arrangement granting any preferential rights to
purchase any of their assets, properties or rights or requiring the
consent of any party to the transfer and assignment of any such assets,
properties or rights.
Section 4.16. Employment Relations. The relations of AMI with its employees
are satisfactory. AMI has not received any formal notice of any
controversies with, or organizational efforts or other pending actions by,
representatives of their employees or any informal indication of the
foregoing occurring. To the knowledge of AMI, AMI has complied with all laws
relating to the employment of labor with respect to its employees, including
any provisions thereof relating to wages, hours, collective bargaining and
the payment of worker's compensation insurance and social security and
similar taxes and no person has asserted that AMI is liable for any
arrearages of wages, worker's compensation insurance premiums or any taxes or
penalties for failure to comply with any of the foregoing.
Section 4.17. Employee Benefit Plans.
(a) Schedule 4.17(a) of the Disclosure Schedule contains a complete and
accurate list of all employee benefit plans and programs, and bonus,
incentive, deferred compensation, pension, retirement, profit-sharing,
thrift, savings, employee stock ownership, stock bonus, stock purchase,
restricted stock, stock option, stock appreciation, phantom stock,
severance, medical and/or life insurance, welfare and fringe benefit
plans, contracts, employment, collective bargaining, or severance
agreements, written and unwritten, and all similar practices, policies and
arrangements (collectively hereinafter referred to as the "Compensation
and Benefit Plans") in which AMI has any liability, obligation to, or
which is maintained or contributed to by AMI or which covers any
employees, or former employees, consultants or former consultants,
officers or former officers, directors or former directors of them, which
are now in force or which have been in force during the last three years.
AMI has no commitment to create any additional Compensation and Benefit
Plan or to modify or change any existing Compensation and Benefit Plan.
(b) Each Compensation and Benefit Plan is in material compliance, in form
and in administration, with the plan documents and, to the knowledge of
AMI, with all applicable laws, including, the extent applicable, the
Employee Retirement Income Security Act of 1974 ("ERISA"), the Code, the
federal securities laws, the Age Discrimination in Employment Act, and any
regulations or rules promulgated thereunder, and all material filings,
disclosures and notices required by ERISA, the Code, the federal
securities laws, the Age Discrimination in Employment Act and any other
applicable law have been timely made.
(c) Each Compensation and Benefit Plan sponsored by AMI that is subject
to Section 401(k) of the Code is an "employee pension benefit plan" within
the meaning of Section 3(2) of ERISA (a "Pension Plan") that is intended
to be qualified under Section 401(a) of the Code.
(d) AMI has no knowledge of any events or circumstances that could
adversely affect the tax-qualified status of any Compensation and Benefit
Plan or the related trust.
(e) Each such Compensation and Benefit Plan is in the form of a prototype
plan that has received a prior favorable determination letter from the
IRS, where applicable.
(f) Each such Compensation and Benefit Plan has been timely amended in
accordance with the aforesaid statutes and AMI has no knowledge of any
reason why any previously received determination letter would be revoked
or why any new application for determination letter would not result in a
favorable qualification determination letter from the IRS.
(g) There is no pending or, to the knowledge of AMI, threatened legal
action, suit or claim relating to the Compensation and Benefit Plans. No
transaction or omission with respect to any Compensation and Benefit Plan
exists that would be a violation of Section 4975 of the Code or
Section 502 of ERISA that is not exempt under Code Section 4975 or ERISA
Section 502.
(h) Neither AMI nor any entity which is a member of a controlled group or
affiliated service group with AMI under ERISA Section 4001 or Section 414
of the Code ("ERISA Affiliate") maintains or has ever maintained or
contributed to a Pension Plan subject to Title IV of ERISA or Section 412
of the Code. There is no pending investigation or enforcement action by
the Department of Labor or the IRS or any other governmental authority
with respect to any Compensation and Benefit Plan, nor is there any
indication of any such investigation or enforcement action occurring.
(i) All contributions or insurance premiums required to be made under the
terms of any Compensation and Benefit Plan or any employee benefit
arrangements under any collective bargaining agreement to which AMI or an
ERISA Affiliate of AMI is a party have been timely made or will be timely
made prior to the Effective Time.
(j) AMI does not have any obligation to provide retiree health and life
insurance or other retiree death benefits under any Compensation and
Benefit Plan, other than benefits mandated by Section 4980B of the Code
and Sections 601-609 of ERISA. There has been no written or oral
communication to employees by AMI that promises or guarantees such
employees retiree health or life insurance or other retiree death benefits
on a permanent basis.
(k) AMI may terminate or amend any Compensation and Benefit Plan in which
AMI's or its affiliates' employees or former employees participate at any
time without incurring any liability thereunder.
(l) The plan administrator of each Compensation and Benefit Plan in which
such employees or former employees participate has the sole discretion to
construe and interpret the terms of the plan.
(m) AMI does not maintain any Compensation and Benefit Plans covering
foreign employees.
(n) With respect to each Compensation and Benefit Plan, if applicable,
AMI has delivered to AALP true and complete copies of (i) Compensation and
Benefit Plan documents and all amendments thereto, (ii) trust instruments
and insurance contracts, (iii) Forms 5500 filed with the IRS for the last
three plan years, (iv) the most recent summary plan description and any
other communication to employees regarding such benefits, including
employee booklets, and (v) the most recent determination letter issued by
the IRS.
(o) Except as set forth in Schedule 4.17(o) of the Disclosure Schedule,
the consummation of the Merger as contemplated by this Agreement will not,
directly or indirectly (including, without limitation, as a result of any
termination of employment prior to or following the Effective Time) (i)
result in the vesting or acceleration of the payment of any benefits under
any Compensation and Benefit Plan, (ii) result in any increase in benefits
payable or compensation payable to a participant or service provider under
any Compensation and Benefit Plan, (iii) result in the payment of any
severance or separation benefit or (iv) result in a breach or violation of
any Compensation and Benefit Plan.
(p) As a result, directly or indirectly, of the Merger as contemplated by
this Agreement (including, without limitation, as a result of any
termination of employment prior to or following the Effective Time),
neither AALP nor AMI will be obligated to make a payment that would be
characterized as an "parachute payment" to an individual who is a
"disqualified individual" (as such terms are defined in Section 280G of
the Code), without regard to whether such payment is reasonable
compensation for personal services performed or to be performed in the
future.
(q) Neither AMI nor any ERISA Affiliate is a party to, or has made any
contribution to or otherwise incurred or could incur any obligation under
any "multiemployer plan," as defined in Section 3(37) of ERISA.
(r) Except as set forth in Schedule 4.17(r) of the Disclosure Schedule,
there has been no written or oral communication or amendment to a
Compensation and Benefit Plan by AMI or any ERISA Affiliate relating to or
changing the participation or coverage under any such plan in which any of
their employees or former employees participate which would increase the
expense of maintaining such plan above the level of expense incurred with
respect to that plan for the most recent fiscal year included in the AMI
Financial Statements.
(s) There are no voluntary employee benefit associations related to any
Compensation and Benefit Plan under Section 501(c)(9) of the Code.
(t) There are no guaranteed investment contracts or other funding
contracts with any insurance company that are held by a Compensation and
Benefit Plan of AMI.
Section 4.18. Brokers and Finders. Neither AMI nor any of its officers,
directors or employees has employed any broker, finder or financial advisor
or incurred any liability for any brokerage fees, finders', financial
advisory or other fees or commissions in connection with the Merger, other
than a success fee in the amount of $179,673 to Trinity Advisors, LP.
Section 4.19. Zoning and Related Laws. AMI has not received any notice that
any of the real property owned or operated by AMI or the use thereof does not
comply with all applicable laws, ordinances, regulations, orders or
requirements, including without limitation, building, zoning and other laws.
Section 4.20. Regulatory Approvals. AMI has no reason to believe that it will
not be able to obtain all requisite regulatory and other approvals or
consents that it is required to obtain in order to consummate the Merger.
Section 4.21. Shareholders' List. Schedule 4.22 of the Disclosure Schedule
contains a list of the holders of shares of AMI Stock as of June 30, 2004,
containing their names, addresses and number of shares held of record, which
shareholders' list is in all respects complete and accurate as of the date
hereof.
Section 4.22. Books and Records. The minute books and stock ledgers of AMI
that have been made available to AALP, its representatives or affiliates,
constitute all of the minute books and stock ledgers of AMI known to AMI and
contain a complete and accurate record of all actions of the shareholders and
directors (and any committees thereof) thereof during the periods covered.
All known personnel files, reports, feasibility studies, environmental
reports, strategic planning documents, financial forecasts, deeds, leases,
lease files, land files, accounting and tax records and all of the records of
every type and description in whatever form or medium that relate to the
business and properties of AMI have been made available to AALP, its
representatives or affiliates, and are located at the offices of AMI in
Dallas, Texas.
Section 4.23. Proxy Statement. None of the information relating to AMI
contained in the "Proxy Statement," as hereinafter defined, as of the date
the Proxy Statement is mailed to holders of AMI Stock or at the time of the
"AMI Shareholder Meeting," as hereinafter defined, will contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading.
Section 4.24. TBCA Part Thirteen. Prior to the date of this Agreement, the
Board of Directors of AMI has taken all action necessary with respect to -
(a) The execution of this Agreement, the AALP Stock Option and the Voting
Agreement,
(b) The Merger, and
(c) The transactions contemplated by this Agreement, the AALP Stock
Option and the Voting Agreements
so that all such actions will be exempt under and not subject to the
provisions of Part Thirteen of the TBCA and any other applicable state
takeover law or state law that purports to limit or restrict business
combinations or the ability to acquire or vote shares..
Section 4.25. Disclosure. Except as expressly set forth in this ARTICLE IV and
as and to the extent set forth in other sections of this Agreement or in the
other agreements and instruments delivered or to be delivered pursuant to
this Agreement, AMI makes no representations or warranties, express or
implied. The representations and warranties of AMI contained in this
Agreement and the other agreements and instruments delivered or to be
delivered pursuant to this Agreement do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make
the statements and information contained in this Agreement, in light of the
circumstances under which they were made, not misleading. The Disclosure
Schedule delivered pursuant to this ARTICLE IV and elsewhere in this Agreement,
which have been delivered concurrently with the execution and delivery of
this Agreement, contains no untrue statements of material fact or omit any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF AALP
In order to induce AMI to enter into this Agreement, AALP represents and
warrants to AMI that the statements contained in this ARTICLE V are true and
correct.
Section 5.1. Organization. AALP is a limited partnership duly organized,
validly existing and in good standing under the laws of the State of Texas.
AALP has the power and authority to own, lease and operate its properties, to
engage in the business and activities now conducted by it and to enter into
this Agreement. AALP is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it
makes such licensing or qualification necessary, except where the failure to
be so licensed or qualified would not, either individually or in the
aggregate, have a Material Adverse Effect on AALP.
Section 5.2. Approvals; Authority.
(a) The partners of AALP have approved this Agreement and the matters
contemplated herein. No further proceedings of AALP are needed to execute
and deliver this Agreement and consummate the Merger. This Agreement has
been authorized, duly executed and delivered by AALP and is a legal, valid
and binding agreement of AALP enforceable against AALP in accordance with
its terms, subject to the effect of bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to creditors'
rights generally and general equitable principles.
(b) At the Closing, all other agreements, documents and instruments to be
executed and delivered by AALP which are referred to herein or
contemplated hereby will have been duly executed and delivered by AALP and
will constitute the legal, valid and binding obligation of such entity,
enforceable against such entity in accordance with their respective terms,
subject to the effect of bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to creditors' rights generally
and general equitable principles.
Section 5.3. No Conflict With Other Instruments. Neither the execution and
delivery of this Agreement nor the consummation of the transactions
contemplated hereby, subject to obtaining all required regulatory approvals,
will conflict with or result in a breach of any provision of the Certificate
of Limited Partnership or Limited Partnership Agreement of AALP. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, will not violate any provision of, or
constitute a default or require any consent or approval under, any law, or
any order, writ, injunction or decree of any court or other governmental
agency, or any contract, agreement or instrument to which AALP is a party or
by which it is bound or constitute an event which, with the lapse of time or
action by a third party, could result in any default under any of the
foregoing or result in the creation of any lien, charge or encumbrance upon
the assets or properties of AALP.
Section 5.4. Shareholder Notices. None of the information supplied or to be
supplied in writing by AALP for inclusion in the Proxy Statement, as of the
date the Proxy Statement is mailed to holders of AMI Stock, will contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
Section 5.5. Investment Intent; Compliance with Securities Laws. Each partner
in AALP is acquiring shares or interests in the Surviving Entity for its own
account, for investment purposes and not with a view to, or for sale in
connection with, any resale or other distribution thereof, nor with any
present intention of distributing or selling such shares or interests. All
issuances of any securities by AALP have been exempt from any registration or
qualification requirements under the Securities Act, all applicable state
securities or blue sky laws and all other applicable laws. No registration
or qualification under such laws will be required in connection with the
execution and delivery of this Agreement or the consummation of the
transactions contemplated by this Agreement. AALP agrees to deliver such
further documents as AMI shall reasonably request to evidence its compliance
with the Securities Act, applicable state securities or blue sky laws and all
other applicable laws.
Section 5.6. Brokers and Finders. Neither AALP nor any of its officers,
directors or employees has employed any broker, finder or financial advisor
or incurred any liability for any brokerage fees, finders', financial
advisory or other fees or commissions in connection with the Merger.
ARTICLE VI
COVENANTS OF AMI PENDING THE EFFECTIVE TIME
From the date hereof until the Effective Time, AMI covenants and agrees
with AALP as follows:
Section 6.1. Shareholder Approval and Best Efforts. Subject to the
provisions of Section 12.1(c)(iii) of this Agreement:
(a) AMI shall take all action in accordance with the federal and state
securities laws, Art. 6132a-1 Sec.2.11 of the TRLPA, the TBCA, the
Articles of Incorporation and Bylaws of AMI (including without limitation
the preparation, printing and mailing of a proxy statement (the "Proxy
Statement") for use in soliciting the approval of the Merger, this
Agreement and the transactions contemplated hereby by the holders of the
AMI Stock) necessary to duly call, give notice of, convene and hold a
special meeting (the "AMI Shareholder Meeting") of the holders of AMI
Stock to be held on the earliest practicable date determined in
consultation with AALP to consider and vote upon approval of the Merger,
this Agreement and the transactions contemplated by this Agreement. AMI
shall take all lawful actions to solicit the approval of the Merger, this
Agreement and the transactions contemplated by this Agreement, by the
holders of AMI Stock. AMI shall, through the Board of Directors of AMI,
recommend to the holders of AMI Stock the approval and adoption of this
Agreement, and the approval of the Merger and the transactions
contemplated by this Agreement, and shall not withdraw, amend or modify in
a manner adverse to AALP the recommendation of the Board of Directors of
AMI. AMI shall ensure that, in compliance with all applicable laws, the
AMI Shareholder Meeting is properly called, noticed, convened, held and
conducted. Without limiting the generality of the foregoing, AMI agrees
that its obligation to duly call, give notice of, convene and hold the AMI
Shareholder Meeting, as required by this Section 6.1, shall not be
affected by the commencement, public proposal, public disclosure or
communication to AMI of any "Acquisition Proposal," as hereinafter
defined.
(b) AMI will use its best efforts to take or cause to be taken all other
actions necessary, proper or advisable to consummate the matters
contemplated by this Agreement, including such actions as AALP reasonably
considers necessary, proper or advisable in connection with filing
applications with, or obtaining approvals from, all regulatory authorities
having jurisdiction over the transactions contemplated by this Agreement.
Section 6.2. Information for Applications.
(a) AMI will use its best efforts to take or cause to be taken all other
actions necessary, proper or advisable to consummate the matters
contemplated by this Agreement, including such actions which are
necessary, proper or advisable in connection with filing applications
with, or obtaining approvals from, all regulatory authorities having
jurisdiction over the matters contemplated by this Agreement and the
Merger. AMI shall use its best efforts to obtain or cause to be obtained
consents of all third parties necessary to permit AMI to consummate the
transactions contemplated herein.
(b) AMI will furnish AALP with all information concerning AMI required
for inclusion in any application, statement, document or notice to be made
or filed by AALP with any federal or state regulatory or supervisory
authority in connection with the matters contemplated by this Agreement.
Any financial statement for any fiscal year furnished pursuant to this
Section will include the audit report thereon of Xxxxxx Xxxxx & Co, PC and
the consent of such firm to use such opinion. Any interim quarterly
financial information furnished pursuant to this Section 6.2 will have
been reviewed by Xxxxxx Xxxxx & Co, PC in accordance with generally
accepted auditing standards and AMI will furnish AALP with a copy of such
review report. All information concerning AMI contained in the AALP
applications shall, to the knowledge of AMI, at the time such information
is furnished, contain no untrue statements of material fact and will not
omit any material fact necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading;
provided, that information as of a later date shall be deemed to modify
information as of an earlier date.
AMI will indemnify and hold harmless AALP from and against any and all
losses, claims, damages, expenses or liabilities to which it may become
subject under applicable laws, rules and regulations or otherwise, including
expenses incurred in enforcing the rights granted under this Section 6.2
against AMI, and will reimburse AALP for any legal or other expenses
reasonably incurred by it in connection with investigating, defending or
prosecuting any actions whether or not resulting in liability, insofar as
such losses, claims, damages, expenses, liabilities or actions arise out of
or are based upon any untrue statement or alleged untrue statement of a
material fact contained in any application filed by AALP or arise out of or
are based upon the omission or alleged omission to state therein a material
fact required to be stated therein, or necessary in order to make the
statements therein not misleading, but only insofar as such statement or
omission was made in reliance upon and in conformity with information
furnished in writing by AMI expressly for use therein.
Section 6.3. Confidentiality. AMI shall not, and shall instruct its officers,
directors, employees, agents and other representatives of AMI not to, before
or after the consummation or termination of this Agreement, directly or
indirectly disclose any confidential information acquired from AALP, either
before or after this Agreement, to any person, firm, corporation, association
or other entity for any reason or purpose whatsoever, other than in
connection with the regulatory notice and application process or, after
termination of this Agreement pursuant to Section 12.1 hereof, use such
information for their own purposes or for the benefit of any person, firm,
corporation, association, or other entity under any circumstances. All
information furnished previously or currently by AALP in connection with the
transactions contemplated by this Agreement or pursuant hereto shall be
treated as the sole property of AALP whether or not the transactions
contemplated hereby are consummated. If the transactions contemplated hereby
shall not occur, AMI shall, and shall instruct all officers, directors,
employees, agents and other representatives of AMI to, either destroy or
return to AALP all documents or other materials containing, reflecting or
referring to such information, use their best efforts to keep confidential
all such information, and not directly or indirectly use such information for
any competitive or other commercial purposes. The obligation to keep such
information confidential shall continue for one year from the date the
proposed transactions are abandoned.
Section 6.4. Operations.
(a) From and after the date of this Agreement to the Effective Date,
unless earlier terminated as provided in Section 12.1, AMI shall: (i)
conduct business in substantially the same manner as it has been
previously conducted and in accordance with prudent business practices,
(ii) maintain and keep its properties in as good repair and condition as
at present, except for deterioration due to ordinary wear and tear and
damage due to casualty, (iii) maintain in full force and effect insurance
and fidelity bonds comparable in amount and scope of coverage to that
currently maintained, (iv) perform all of its material obligations under
contracts, leases and documents relating to or affecting its assets,
properties and business except such obligations as they may in good faith
reasonably dispute, (v) use its best efforts to maintain and preserve its
business organizations and present employees and maintain all
relationships with suppliers and customers, (vi) comply with and perform
all material obligations and duties imposed by all federal, state and
local laws, rules, regulations and orders imposed by federal, state or
local governmental authorities according to prior practice, (vii) take any
and all actions, on or simultaneously with the Closing, necessary to amend
its Articles of Incorporation or Bylaws in any manner which AALP, in its
reasonable discretion, shall deem necessary, proper or advisable, (viii)
make no material alteration in the manner of maintaining its books,
accounts or records, or in the accounting practices relating to their
business, properties or assets, except with the prior written approval of
AALP, (ix) notify AALP immediately upon commencement of any compliance,
safety or other examination conducted by any governmental body, and (x)
promptly give written notice to AALP upon obtaining knowledge of the
occurrence of any event or the failure of any event to occur or the
existence of any circumstance that would cause (A) a breach of any
covenant, condition or agreement contained herein or (B) any of its
representations or warranties to be untrue or misleading in any material
respect.
(b) From and after the date of this Agreement to the Effective Date,
unless earlier terminated as provided in Section 12.1, AMI will not,
without the prior written consent of AALP, (i) permit any amendment or
change to be made in its Articles of Incorporation or Bylaws, (ii) take
any action described or do any of the things listed in Section 4.15
hereof, (iii) enter into or amend any contract, agreement or other
instrument of any of the types listed in Section 4.10 hereof, (iv)
undertake any additional borrowings, except as required in the ordinary
course of business, consistent with past practices, (v) make any material
change in its accounting methods or practices without the prior written
consent of AALP, (vi) take any action that would result in any of its
representations and warranties contained in ARTICLE IV of this Agreement not
being true and correct at the Effective Time, (vii) make any changes in
the titles, salaries, bonuses or other compensation of any employee,
officer or director, (viii) issue any shares of capital stock, except
pursuant to outstanding options identified in Schedule 4.2 of the
Disclosure Schedule (ix) adjust, split, combine or reclassify any capital
stock, (x) make, declare or pay any dividend, or make any other
distribution on, or directly or indirectly redeem, purchase or otherwise
acquire, any shares of its capital stock or any securities or obligations
convertible (whether currently convertible or convertible only after the
passage of time or the occurrence of certain events) into or exchangeable
for any shares of its capital stock; (xi) issue any options to purchase
shares of capital stock or (xii) agree to do any of the foregoing.
(c) In order to facilitate the continuing interaction of AALP and AMI,
and in order to keep AALP fully advised of all ongoing activities of AMI,
AALP may designate one or more representatives, any one of whom will be
allowed to attend as an invited guest and fully monitor all regular and
special meetings of the Board of Directors of AMI and all committees of
AMI. The AALP representative may be excluded from sessions of the Boards
of Directors or committees during which there is being discussed (i)
matters involving this Agreement or an unsolicited Acquisition Proposal,
(ii) information or material which is required to be kept confidential
under applicable laws or regulations or (iii) pending or threatened
litigation or investigations if, in the opinion of counsel to AMI, the
presence of such representative would or might adversely affect the
confidential nature of or any privilege relating to any matters to be
discussed. No attendance by representatives of AALP at any meetings
pursuant hereto or knowledge gained or deemed to have been gained by
virtue of such attendance will affect any of the representations and
warranties of AMI made in this Agreement. AALP agrees that all
information obtained from AMI pursuant hereto will be held in accordance
with the provisions of Section 7.3 of this Agreement.
Section 6.5. Access to Properties and Records. To the extent permitted by law,
AMI will afford the executive officers and authorized representatives
(including legal counsel, accountants and consultants) of AALP full access to
the properties, personnel, books and records of AMI in order that AALP may
have full opportunity to make such reasonable investigation as it shall
desire to make of the affairs of AMI; provided, that such investigations
shall be conducted in a manner so as not to unreasonably interfere with the
operations of AMI, and the officers of AMI will furnish AALP with such
additional financial and operating data and other information as to the
business and properties of AMI as AALP shall, from time to time, reasonably
request; and provided further, that no such investigation or the knowledge
obtained as a result of such investigation shall affect in any way the
representations and warranties of AMI contained in this Agreement. As soon
as practicable after they become available, AMI will, and will cause AMI to,
deliver or make available to AALP (a) all Tax Returns, (b) all audited
financial statements and (c) all unaudited financial statements prepared for
the internal use of AMI after the date of this Agreement. All such financial
statements shall be prepared in accordance with GAAP (excluding the notes
thereto) applied on a basis consistent with previous accounting periods. In
the event of the termination of this Agreement, AALP will return to AMI all
documents and other information obtained pursuant hereto, including all
copies thereof, and will keep any information obtained pursuant to this
Agreement confidential in accordance with Section 7.3 of this Agreement.
Section 6.6. Voting Agreements. AMI acknowledges that (a) each of the Majority
Shareholders has agreed, pursuant to a Voting Agreement and Irrevocable Proxy
substantially in the form of Exhibit E to this Agreement (each a "Voting
Agreement") which has been executed as of the date of this Agreement, to vote
their shares of AMI Stock in favor of approval of this Agreement, the Merger
and the transactions contemplated hereby, and against any transaction which
may be proposed with any entity other than AALP, and (b) such persons have
granted to AALP or its designee an irrevocable proxy and power of attorney to
vote such shares with respect to approval of this Agreement, the Merger and
the transactions contemplated hereby by executing a written consent of
shareholders of AMI or by attending any meeting of the shareholders of AMI
called to approve the Merger and voting at the meeting.
Section 6.7. Standstill Provision. Neither AMI nor any of its directors,
officers, agents or representatives shall directly or indirectly solicit or
encourage any inquiries with respect to any proposal (each, an "Acquisition
Proposal") which could reasonably be expected to lead to, the merger,
consolidation, acquisition, or sale of all or substantially all of the assets
or any shares of capital stock of AMI, but AMI and/or any of its directors,
officers, agents or representatives may provide information and negotiate
with respect to any unsolicited Acquisition Proposal. AMI agrees to notify
AALP immediately of any unsolicited proposal which could reasonably be
expected to lead to, the merger, consolidation, acquisition, or sale of all
or substantially all of the assets or any shares of capital stock of AMI and
provide reasonable detail as to the identity of the proposed acquiror and the
nature of the proposed transaction.
Section 6.8. Press Releases. AMI will not, directly or indirectly, without the
prior approval of AALP, issue any press release or written statement for
general circulation relating to the Agreement or the Mergers except as
otherwise required by applicable law or regulation, and then only after
making reasonable efforts to notify AALP in advance.
Section 6.9. Supplements to Disclosure Schedules. From time to time prior to
the Effective Date, AMI shall promptly supplement the Disclosure Schedule
pursuant to ARTICLE IV of this Agreement to reflect any matter hereafter
arising that would make any representation or warranty set forth in ARTICLE IV
inaccurate. However, for purposes of determining (a) the fulfillment of the
condition set forth in Section 9.1 as of the Closing Date and (b) the
accuracy of the representations and warranties contained in ARTICLE IV if the
Merger is not consummated, the Disclosure Schedule shall be deemed to include
only the information contained therein on the date of this Agreement and
shall be deemed to exclude any information contained in any supplement
thereto. If the Merger is not consummated, delivery of any supplement will
not affect the rights and remedies of the parties hereunder. If any
supplement to the Disclosure Schedule shall be delivered within five days of
the Closing Date, at the option of AALP the Closing Date may be delayed to
permit AALP to have a period of at least five days to consider such
supplement.
Section 6.10. Title Commitment and Survey. No later than twenty (20) days
after the date hereof, at AMI's sole cost and expense, AMI shall furnish AALP
with the following:
(a) A current commitment (the "Title Commitment") for the issuance of an
ALTA Owner's Policy of Title Insurance (the "Title Policy") from a title
company (the "Title Company") acceptable to AALP, reflecting the title in
AMI to all real property (the "AMI Real Property") owned by AMI; and
(b) A survey (the "Survey") of the AMI Real Property, dated not earlier
than the date hereof, by a licensed surveyor or registered professional
engineer acceptable to AALP, together with two (2) copies of the survey
plat prepared by such surveyor or engineer. The survey plats furnished to
AALP shall contain provisions certifying as to and including the
following:
(i) That the corners of the AMI Real Property have been properly
monumented;
(ii) The perimeter boundaries of the AMI Real Property;
(iii) The location of any improvements upon or bounding the AMI Real
Property;
(iv) The location of all easements within or traversing the AMI Real
Property, if any;
(v) The location of all roadways traversing, adjoining or bounding the
AMI Real Property;
(vi) The number of square feet of land within the AMI Real Property;
and
(vii) That portion of the AMI Real Property, if any, situated within a
flood hazardous or flood prone area as designated by applicable
governing authority.
The Survey shall be sufficient to permit the Title Company to modify the
standard printed exception in the Owner's Policy of Title Insurance
pertaining to discrepancies in area or boundary lines, encroachments,
overlapping of improvements, or similar matters. The survey plats
furnished to AALP shall contain provisions certifying as to and including
the "Minimum Standard Detail Requirements for ALTA/ACSM Land Title
Surveys" jointly established and adopted by ALTA and ACSM in 1992 covering
items 1, 2, 3, 4, 6, 7(a), 7(b), 7(c), 8, 9, 10, 11 and 13 of Table A
thereto.
(c) On or before the date which is twenty (20) days after delivery of
both the Title Commitment and Survey, AALP shall give written notice to
AMI of any objections ("Written Objections") that AALP may have with
respect to any matter reflected in the Title Commitment or Survey.
Section 6.11. Collections Pending Closing. After the date hereof and up until
Closing, AMI shall use AMI's best efforts to collect all delinquent AMI notes
receivable and accounts receivable. Each of Xxxx Xxxxxx and Xxxx X Xxxxxx
shall be instructed to expediently pursue such collections with their best
efforts.
ARTICLE VII
COVENANTS OF AALP PENDING THE EFFECTIVE TIME
From the date hereof through the Effective Time, AALP covenants and agrees
with AMI as follows:
Section 7.1. Best Efforts. AALP will use its best efforts to aid and assist in
the consummation of the Merger and the transactions contemplated hereby, and
will use its best efforts to take or cause to be taken all other actions
necessary, proper or advisable to consummate the matters contemplated by this
Agreement, including such actions which are necessary, proper or advisable in
connection with filing applications or notices with, or obtaining approvals
from, all regulatory authorities having jurisdiction over the matters
contemplated by this Agreement and the Merger. AALP will deliver to AMI,
prior to filing, drafts of such governmental applications and notices and
will promptly deliver, after such filing, a complete copy of such filings.
AALP shall use its best efforts to obtain or cause to be obtained consents of
all third parties necessary to permit AALP to consummate the transactions
contemplated herein. All documents that AALP is responsible for filing with
any regulatory or governmental agency in connection with the Merger will
comply in all material respects with the provisions of applicable law.
Section 7.2. Information for Applications. To the extent permitted by law,
AALP will furnish AMI with all information concerning AALP and its directors
and officers required for inclusion in any application, statement or document
to be made or filed by AMI with any federal or state regulatory or
supervisory authority in connection with the matters contemplated by this
Agreement. All information concerning AALP contained in the AMI applications
shall, to the knowledge of AALP, at the time such information is furnished,
be true and correct in all material respects and will not omit any material
fact necessary in order to make its statements therein, in light of the
circumstances in which they were made, not misleading; provided, that
information as of a later date shall be deemed to modify information as of an
earlier date. AALP will indemnify and hold harmless AMI from and against any
and all losses, claims, damages, expenses or liabilities to which AMI may
become subject under applicable laws, rules and regulations or otherwise,
including expenses incurred in enforcing the rights granted under this
Section 7.2, and will reimburse AMI for any legal or other expenses
reasonably incurred by them in connection with investigating, defending or
prosecuting any actions whether or not resulting in liability, insofar as
such losses, claims, damages, expenses, liabilities or actions arise out of
or are based on any untrue statement or alleged untrue statement of a
material fact contained in any application filed by AMI or arise out of or
are based upon the omission or alleged omission to state therein a material
fact required to be stated therein, or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, but only insofar as such statement or omission was made in
reliance upon and in conformity with information furnished by AALP in writing
expressly for use therein.
Section 7.3. Confidentiality; Non-Solicitation.
(a) AALP shall not (i) before or after the consummation or termination of
this Agreement, directly or indirectly disclose any confidential
information acquired from AMI, either before or after the date of this
Agreement, to any person, firm, corporation, association or other entity
for any reason or purpose whatsoever, other than in connection with the
regulatory notice and application process, or (ii) after termination of
this Agreement pursuant to Section 12.1 hereof, use such information for
its own purposes or for the benefit of any person, firm, corporation,
association, or other entity under any circumstances. All information
furnished previously or currently by AMI in connection with the
transactions contemplated by this Agreement or pursuant hereto shall be
treated as the sole property of AMI until consummation of the transactions
contemplated hereby and, if such transactions shall not occur, AALP shall
either destroy or return to AMI all documents or other materials
containing, reflecting or referring to such information, shall use its
best efforts to keep confidential all such information, and shall not
directly or indirectly use such information for any competitive or other
commercial purposes. The obligation to keep such information confidential
shall continue for one year from the date the proposed transactions are
abandoned.
(b) In the event that this Agreement is terminated and the Merger is not
consummated, for a period of one year from the date the Agreement is
terminated, AALP agrees that it will not, without the prior approval of
AMI, directly or indirectly solicit any individual who is an employee of
AMI on the date the Agreement is terminated to terminate his or her
relationship with such entity in order to become employed by AALP;
provided, however, that the foregoing shall not apply to (i) the use of an
independent employment agency (so long as the agency was not directed to
solicit a particular individual or class of individuals that could only be
satisfied by employees of AMI as of the date the Agreement is terminated)
or (ii) the use of a general solicitation (such as an advertisement) not
specifically directed to employees of AMI.
Section 7.4. Press Releases. AALP agrees that it will not, directly or
indirectly, without the prior approval of AMI, issue any press release or
written statement for public release relating to the Agreement or the Merger,
except as otherwise required by applicable law or regulation, and then only
after making reasonable efforts to notify AMI in advance.
Section 7.5. Notice of Certain Events. AALP will promptly give notice to AMI
of the occurrence of any event or the failure of any event to occur that
results in a breach of any representation or warranty by AALP contained
herein or a failure by AALP to comply with any covenant, condition or
agreement contained herein.
Section 7.6. Additional Covenants. AALP will not, without the prior written
consent of AMI, take any action that would result in any of its
representations and warranties contained in ARTICLE V of this Agreement not
being true and correct at the Effective Time.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF AMI
The obligations of AMI under this Agreement are subject to the
satisfaction, at or prior to the Closing Date, of the following conditions,
which may be waived by AMI in its sole discretion:
Section 8.1. Compliance with Representations and Covenants.
(a) The representations and warranties of AALP contained in this
Agreement shall have been true and correct when made and (except for those
representations and warranties specifically stated to be made only as of a
specified date) shall be true and correct in all material respects as of
the Closing Date as though made on and as of the Closing Date, without
regard to any materiality qualifiers contained therein. AMI shall have
received a certificate of the general partner of AALP to such effect.
(b) AALP shall have performed or complied in all material respects with
all agreements and covenants required by this Agreement to be performed or
complied with by AALP on or prior to the Closing Date. AMI shall have
received a certificate of the general partner of AALP to such effect.
Section 8.2. Legal Opinion. AMI shall have received an opinion of XXXXXXXX,
XXXXXX & XXXXXXXXXX, a Professional Corporation, counsel to AALP, dated as of
the Closing Date and substantially in the form attached hereto as Exhibit F.
Section 8.3. TCEQ Response. AMI shall not have received after the date of
this Agreement from the Texas Commission on Environmental Quality any
communication related to its Affected Property Assessment Report or its
Response Action Plan which is unsatisfactory to AMI in the exercise of its
reasonable judgment.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF AALP
The obligations of AALP under this Agreement are subject to the
satisfaction, at or prior to the Closing Date, of the following conditions,
which may be waived by AALP in its sole discretion:
Section 9.1. Compliance with Representations and Covenants.
(a) The representations and warranties of AMI contained in this Agreement
shall have been true and correct when made and (except for those
representations and warranties specifically stated to be made only as of a
specific date) shall be true and correct in all material respects as of
the Closing Date as though made on and as of the Closing Date, without
regard to any materiality qualifiers contained therein and without regard
to whether or not AMI had knowledge of any fact or circumstance which
would or might make such representation or warranty inaccurate or untrue.
AALP shall have received a certificate of each appropriate officer of AMI
to such effect.
(b) AMI shall have performed or complied in all materials respects with
all agreements and covenants required by this Agreement to be performed or
complied with by AMI on or prior to the Closing Date. AALP shall have
received a certificate of each appropriate officer of AMI to such effect.
Section 9.2. Material Adverse Effect. Prior to the Closing Date, there shall
not have occurred any Material Adverse Effect with respect to AMI, nor shall
any event have occurred which, with the lapse of time, may cause or create
any Material Adverse Effect with respect to AMI. AALP shall have received a
certificate to the foregoing effect executed by AMI and an appropriate
representative of AMI and dated as of the Closing Date. Without limiting any
other circumstance that might constitute a Material Adverse Effect under this
Section 9.2, and notwithstanding any other provision of this Agreement, a
decrease by ten percent (10%)or more in the amount of AMI's assets or
shareholders' equity on the Closing Date from the amount of such items on
June 30, 2004, shall each conclusively be deemed to constitute a Material
Adverse Effect under this Section 9.2.
Section 9.3. Legal Opinion. AALP shall have received an opinion of counsel to
AMI which is reasonably satisfactory to AALP and Bank One, dated as of the
Closing Date. A recommended form is attached hereto as Exhibit G.
Section 9.4. Releases; Resignations. AMI and the directors and executive
officers of AMI shall have executed and delivered an instrument in the form
of Exhibit H attached hereto dated the Effective Date releasing AMI from any
and all claims of such directors and officers (except as to their deposits
and accounts and any rights of indemnification pursuant to the applicable
Articles of Incorporation and employment agreements executed and delivered by
Xxxx X. Xxxxxx and Xxxx Xxxxxx at Closing) and releasing such directors and
officers from claims by AMI (except as to indebtedness owed to AMI), and all
directors and officers of AMI shall have delivered to AALP their resignations
as directors/officers of AMI..
Section 9.5. Dissenters' Rights. Holders of shares representing no more than
five percent (5%) of the issued and outstanding AMI Stock shall have demanded
or shall be entitled to demand payment of the fair value of their shares as
dissenting shareholders. The shareholders of AMI shall have complied in all
respects with their obligations under the Voting Agreements.
Section 9.6. Consents and Approvals. All consents, approvals, waivers and
other assurances from all non-governmental third parties which are required
to be obtained under the terms of any contract, agreement or instrument to
which AMI is a party or by which any of its properties are bound in order to
prevent the consummation of the transactions contemplated by this Agreement
from constituting a default under such contract, agreement or instrument or
creating any lien, claim or charge upon any of the assets of AMI shall have
been obtained and AALP shall have received evidence thereof in form and
substance satisfactory to AALP.
Section 9.7. Title Policy. AALP shall have received the Title Policy
reflecting good and marketable title in AMI to the AMI Real Property, free
and clear of any liens, claims or other encumbrances of any nature whatsoever
other than those listed in the Title Commitment with respect to which AALP
did not specifically object in writing to AMI on or before the date which is
twenty (20) days after receipt of both the Title Commitment and Survey
required pursuant to Section 6.10 above.
Section 9.8. TCEQ Response. AMI shall not have received after the date of
this Agreement from the Texas Commission on Environmental Quality any
communication related to its Affected Property Assessment Report or its
Response Action Plan which is unsatisfactory to AALP in the exercise of its
reasonable judgment.
Section 9.9. Average Net Cash Balance at Closing. At Closing, the "Average Net
Cash Balance, as hereinafter defined, of AMI shall be not less than
$2,650,000. As used herein, the term "Average Net Cash Balance" shall mean
(a) the average, for the 30 day period prior to Closing, of AMI's daily cash
totals, less (b) the sum of (i) the total costs incurred by AMI in connection
the preparation of this Agreement and the performance of the transactions
contemplated hereby that remain unpaid as of Closing and (ii) an amount equal
to 66% of the net increases in reserves contained in the AMI Financial
Statements from the amounts set forth for such reserves as of April 30, 2004,
excluding however increases in reserves for uncollectible accounts and notes
receivable.
Section 9.10. Financing. AALP's lender, Bank One, N.A., shall have (a)
conducted and completed to its satisfaction all due diligence reviews and
examinations as to title to the AMI Real Property, condition of the other
properties of AMI, the financial condition of AMI and other matters and (b)
shall have provided to AALP such financing, on terms and conditions which are
satisfactory to AALP, in its sole discretion, as is necessary for AALP to
consummate the transactions contemplated hereby.
ARTICLE X
CONDITIONS TO RESPECTIVE OBLIGATIONS OF AALP AND AMI
The respective obligations of AALP and AMI under this Agreement are
subject to the satisfaction of the following conditions that may be waived by
AALP or AMI in their sole discretion:
Section 10.1. Government Approvals. AALP and AMI shall (a) have received the
approval of the transactions contemplated by this Agreement from all
necessary governmental agencies and authorities whose approval must be
received in order to consummate the Merger and (b) any statutory or
regulatory waiting period necessary to effect the Merger shall have expired.
Section 10.2. No Injunction. No court of competent jurisdiction shall have
issued any order or ruling which is in effect and which prohibits the
consummation of the Merger.
Section 10.3. Shareholder Vote. The Merger, this Agreement and the
transactions contemplated by this Agreement shall have been approved by the
affirmative vote of AMI shareholders having not less than the minimum number
of votes that would be necessary to authorize or take such actions.
ARTICLE XI
CLOSING
Section 11.1. Closing.
(a) Subject to the other provisions of this Agreement, the closing (the
"Closing") of the Merger will take place at a mutually acceptable time, on
a mutually acceptable date (the "Closing Date") as soon as practicable
within a ten-day period commencing with the latest of the following dates:
(i) The receipt of shareholder approval and the last approval from any
requisite regulatory or supervisory authority and the expiration of any
statutory or regulatory waiting period which is necessary to effect the
Merger; or
(ii) If the matters contemplated by this Agreement are being contested
in any legal proceeding and AALP has elected to contest the same, then
the date that such proceeding has been brought to a conclusion
favorable, in the reasonable judgment of AALP, to the consummation of
the Merger, or such prior date as AALP shall elect whether or not such
proceeding has been brought to a conclusion.
At the Closing, the parties to this Agreement will exchange certificates,
opinions, letters and other documents provided for under this Agreement in
order to effect the Merger and to determine whether any condition exists
which would permit the parties hereto to terminate this Agreement. If no
such condition then exists or if no party elects to exercise any right it
may have to terminate this Agreement, then and thereupon the appropriate
parties shall execute such documents and instruments as may be necessary
or appropriate to effect the Merger contemplated by this Agreement.
(b) The Closing shall take place at the offices of AMI or at such other
place to which the parties hereto may mutually agree.
Section 11.2. Effective Date of the Merger. Subject to the terms and upon
satisfaction of all requirements of law and the conditions specified in this
Agreement including, among other conditions, the receipt of requisite
approval of the shareholders of AMI and any federal or state regulatory
agency whose approval must be received in order to consummate the Merger, the
Merger shall become effective, and the Effective Date of the Merger shall
occur, at the date and time specified in Section 1.2 hereof. It is
anticipated by AALP and AMI that the Closing and the Effective Date will
occur on the same day.
ARTICLE XII
TERMINATION; REMEDIES
Section 12.1. Termination.
(a) This Agreement may be terminated at any time prior to the Effective
Time (whether before or after the adoption of this Agreement by the AMI
shareholders) upon the mutual consent of AALP and AMI.
(b) This Agreement may be terminated by action of the general partner of
AALP or the Board of Directors of AMI (whether before or after the
adoption of this Agreement by the AMI shareholders) at any time prior to
the Effective Time if:
(i) Any court of competent jurisdiction in the United States or other
United States (federal or state) governmental body shall have issued an
order, decree or ruling or taken any other action restraining,
enjoining, or otherwise prohibiting the Merger and such order, decree,
ruling or other action shall be final and non-appealable; or
(ii) The Effective Date shall not have occurred on or before February
28, 2005 or such later date as shall have been approved in writing by
the general partner of AALP and the Board of Directors of AMI;
provided, that the right to terminate under this Section 12.1(b)(ii)
shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or has resulted
in, the failure of the Effective Date to occur on or before such date.
(c) This Agreement may be terminated at any time prior to the Effective
Time by the Board of Directors of AMI (whether before or after the
adoption of this Agreement by the AMI shareholders) if (i) AALP shall fail
to comply in any material respect with any of its covenants or agreements
contained in this Agreement or (ii) any of the representations or
warranties of AALP contained herein shall be untrue in any material
respect or (iii) if AMI has entered into an agreement with respect to an
unsolicited Acquisition Proposal or has approved or recommended an
unsolicited Acquisition Proposal, provided AMI has given notice under
Section 6.7 and simultaneously terminates this Agreement and makes payment
of the expenses and the fee contemplated by Section 12.2(a). In the event
that the Board of Directors of AMI desires to terminate this Agreement as
provided in this Section 12.1(c)(i) or (ii) above, the Board of Directors
must notify AALP in writing of their intent to terminate stating the
reason therefor. AALP shall have fifteen (15) days from the receipt of
such notice to cure the alleged breach, inaccuracy or change, subject to
the approval of AMI (which approval shall not be unreasonably delayed,
conditioned or withheld).
(d) This Agreement may be terminated at any time prior to the Effective
Time by the general partner of AALP if:
(i) (A) AMI shall fail to comply in any material respect with any of
its covenants or agreements contained in this Agreement, (B) any of the
representations or warranties of AMI contained herein shall be untrue
in any material respect, (C) there shall have occurred after June 30,
2004 any event, condition or circumstance which individually or in the
aggregate has a Material Adverse Effect with respect to AMI, (D) any of
the transactions contemplated by this Agreement are disapproved by any
regulatory authority or other person whose approval is required to
consummate the Merger, (E) any approval required to be obtained from
any governmental authority or agency is obtained subject to
restrictions or conditions on the operations of AMI or AALP that are
unacceptable to AALP, or (F) any required approval shall be contested
or challenged by any federal or state governmental authority or third
party by formal proceeding, and AALP shall not elect to contest any
such proceeding; or
(ii) At any time after (A) a breach of any of the provisions of
Sections 6.1, 6.6 or 6.7 of this Agreement, (B) the Board of Directors
of AMI withdraws or modifies in any manner adverse to AALP its
recommendation or approval of this Agreement or the Merger, (C) the
Board of Directors of AMI shall fail to reaffirm such approval or
recommendation promptly on request by AALP, (D) the Board of Directors
of AMI shall approve or recommend, or shall sign any letter of intent,
agreement or similar document contemplating, any Acquisition Proposal,
or (E) any shareholder of AMI shall have failed to comply in any
respect with the obligations under a Voting Agreement.
In the event AALP desires to terminate this Agreement because of an
alleged breach or change as provided in Sections 12.1(d)(i)(A), (B) or (C)
above, AALP must notify AMI in writing of its intent to terminate stating
the cause therefor. AMI shall have fifteen (15) days from the receipt of
such notice to cure the alleged breach, inaccuracy or change, subject to
the approval of AALP (which approval shall not be unreasonably delayed,
conditioned or withheld).
Section 12.2. Effect of Termination. In the event of termination of this
Agreement and the abandonment of the Merger prior to the Effective Time, this
Agreement shall become void and have no effect, without any liability on the
part of any party or the directors, officers or shareholders of any corporate
party, except that (a) upon termination by AALP pursuant to
Section 12.1(d)(i)(A) or (B) or Section 12.1(d)(ii) or by AMI pursuant to
Section 12.1(c)(iii), AMI shall pay to AALP, within 10 days of receiving
notice of termination from AALP, the amount of $200,000, plus all reasonable
and customary expenses of AALP (such expenses not to exceed $200,000 in the
aggregate), (b) upon termination by AMI pursuant to Section 12.1(c)(i) or
(ii), AALP shall pay to AMI, within 10 days of receiving notice of
termination from AMI, the amount of $200,000, plus all reasonable and
customary expenses of AMI in connection with this Agreement and the Merger,
and (c) Sections 6.2, 6.3, 7.2, 7.3, 12.2, 13.2 and Section 13.3 shall
survive the termination of the Agreement. The parties hereto specifically
acknowledge and agree that the amounts described in this Sections 12.2(a) and
12.2(b) shall be treated as liquidated damages, due to the difficulty and
inconvenience of ascertaining and measuring actual damages, and the
uncertainty thereof; and no other damages, rights or remedies shall in any
case be collectible, enforceable or available in connection with the
termination of this Agreement, but the parties shall accept such amounts as
their exclusive remedy in such events. Notwithstanding any termination of
this Agreement, the AALP Stock Option shall remain in full force and effect.
ARTICLE XIII
GENERAL PROVISIONS
Section 13.1. Survival of Representations and Warranties. The representations
and warranties made in this Agreement by the parties shall not survive the
Closing.
Section 13.2. Expenses. Whether or not the transactions provided for herein
are consummated, each party to this Agreement will pay its respective
expenses incurred in connection with the preparation and performance of its
obligations under this Agreement. Each party agrees to indemnify the other
parties against any cost, expense or liability (including reasonable
attorneys' fees and including those costs of any party's enforcement of the
rights afforded under this Section 13.2) in respect of any claim made by any
party for a broker's or finder's fee in connection with this transaction
other than one based on communications between the party and the claimant
seeking indemnification. AALP shall be responsible for and shall pay all
Exchange Agent fees and expenses. AALP and AMI further agree that all legal
fees and expenses incurred by AMI in connection with this Agreement incurred
from the date of the Agreement through Closing shall not exceed $75,000 and,
if such sum exceeds $75,000, the amount of such excess will be deducted from
the Merger Consideration to be paid by AALP under ARTICLE III above. All
legal, accounting or other fees and expenses will be expensed and fully
accrued on the books of AMI prior to the Effective Date.
Section 13.3. Notices. Any notice given hereunder shall be in writing and
shall be delivered in person or mailed by first class mail, postage prepaid
or sent by facsimile, courier or personal delivery to the parties at the
following addresses unless by such notice a different address shall have been
designated:
If to AALP:
ARROW ACQUISITION LP
0000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxx Xxxx
Facsimile: (000) 000-0000
With a copy to:
XXXXXXXX, XXXXXX & XXXXXXXXXX
2600 Bank of America Center
00 Xxxx 0xx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
If to AMI:
ARROW-MAGNOLIA INTERNATIONAL, INC.
0000 Xxxxxx Xxxx
Xxxxxx, Xxxxx 00000
Attention: Xx. Xxxx X. Xxxxxx
Facsimile: (000) 000-0000
All notices sent by mail as provided above shall be deemed delivered five (5)
days after deposit in the mail. All notices sent by facsimile or courier as
provided above shall be deemed delivered one day after being sent. All other
notices shall be deemed delivered when actually received. Any party to this
Agreement may change its address for the giving of notice specified above by
giving notice as herein provided.
Section 13.4. Controlling Law. All questions concerning the validity,
operation and interpretation of this Agreement and the performance of the
obligations imposed upon the parties hereunder shall be governed by the laws
of the State of Texas and, to the extent applicable, by the laws of the
United States.
Section 13.5. Headings. The table of contents, headings and titles to the
sections of this Agreement are inserted for convenience only and shall not be
deemed a part hereof or affect the construction or interpretation of any
provision hereof.
Section 13.6. Amendment. Subject to the foregoing provisions of this
Agreement, this Agreement may be amended by the parties hereto; provided,
however, that there may not be, without further approval by the shareholders
of AMI, any amendment of this Agreement that changes the amount or the form
of the consideration to be delivered hereunder to the holders of AMI Stock,
other than as contemplated by this Agreement. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
Section 13.7. Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective governing
bodies, may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto, (b) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (c) waive
compliance with any of the agreements or conditions contained herein;
provided, however, that after any approval of the transactions contemplated
by this Agreement by the shareholders of AMI, there may not be, without
further approval of such shareholders, any extension or waiver of this
Agreement or any portion thereof which reduces the amount or changes the form
of the consideration to be delivered to the holders of AMI Stock hereunder,
other than as contemplated by this Agreement. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid only if set forth
in a written instrument signed on behalf of such party, but such extension or
waiver or failure to insist on strict compliance with an obligation,
covenant, agreement or condition shall not operate as a waiver of, or
estoppel with respect to, any subsequent or other failure.
Section 13.8. Severability. Any provision hereof prohibited by or unlawful or
unenforceable under any applicable law or any jurisdiction shall as to such
jurisdiction be ineffective, without affecting any other provision of this
Agreement, or shall be deemed to be severed or modified to conform with such
law, and the remaining provisions of this Agreement shall remain in force,
provided that the purpose of the Agreement can be effected. To the full
extent, however, that the provisions of such applicable law may be waived,
they are hereby waived, to the end that this Agreement be deemed to be a
valid and binding agreement enforceable in accordance with its terms.
Section 13.9. Consolidation of Agreements. All understandings and agreements
heretofore made between the parties hereto are merged in this Agreement that
(together with any agreements executed by the parties hereto
contemporaneously with or, if contemplated hereby, subsequent to the
execution of this Agreement) shall be the sole expression of the agreement of
the parties respecting the Merger, except that that certain Nondisclosure and
Standstill Agreement dated February 10, 2004, shall continue in effect. Each
party to this Agreement acknowledges that, in executing and delivering this
Agreement, it has relied only on the written representations, warranties and
promises of the other parties hereto that are contained herein or in the
other agreements executed by the parties contemporaneously with or, if
contemplated hereby, subsequent to the execution of this Agreement, and has
not relied on the oral statements of any other party or its representatives.
Section 13.10. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which
shall be deemed to constitute one and the same instrument.
Section 13.11. Assignment; Binding on Successors. Except as otherwise provided
herein, this Agreement shall be binding upon, and shall inure to the benefit
of, the parties hereto and their respective heirs, executors, trustees,
administrators, guardians, successors and permitted assigns, but shall not be
assigned by any party without the prior written consent of the other parties.
Section 13.12. Gender; Plurals. Any pronoun used herein shall refer to any
gender, either masculine, feminine or neuter, as the context requires.
Defined terms may be used in either the singular or plural form as indicated
by the applicable syntax, but the meaning of which shall not be affected
thereby.
Section 13.13. Publicity. Subject to written advice of counsel with respect to
legal requirements relating to public disclosure of matters related to the
matters contemplated by this Agreement, the timing and content of any
announcements, press releases or other public statements (whether written or
oral) concerning this Agreement or the Merger will occur upon, and be
determined by, the mutual consent of AALP and AMI.
Section 13.14. No Third Party Beneficiaries. Except as set forth in Sections
2.2 and 6.11 and in Article III, nothing contained in this Agreement, express
or implied, is intended to confer upon any persons, other than the parties
hereto or their respective successors, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement.
Section 13.15. Interpretation; Effect. When a reference is made in this
Agreement to Sections, Exhibits or Schedules, such reference shall be to a
Section of, or Exhibit or Schedule to, this Agreement unless otherwise
indicated. Whenever the words "include", "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation." No provision of this Agreement shall be construed to require
any party hereto or their respective affiliates to take any action that would
violate applicable law, (whether statutory or common law), rule or
regulation.
Section 13.16. Certain Definitions. The following terms shall have the
meanings ascribed to them for all purposes of this Agreement:
(a) "Best efforts" means the taking of all commercially reasonable steps
to cause or prevent any event or condition which would have been taken in
similar circumstances by a reasonably prudent business person engaged in a
similar business for the advancement or protection of his own economic
interest in light of the consequences of failure to cause or prevent the
occurrence of such event or condition, but excludes the initiation of
legal proceedings.
(b) "Knowledge" or "known" An individual shall be deemed to have
"knowledge" of or to have "known" a particular fact or other matter if (i)
such individual is actually aware of such fact or other matter or (ii) a
prudent individual possessing the requisite knowledge and experience would
reasonably be expected to discover or otherwise become aware of such fact
or other matter in the course of the performance of his ordinary duties
or, taking into account that individual's position or relationship with an
entity and access to information, in the course of conducting a reasonably
comprehensive investigation concerning the truth or existence of such fact
or other matter. No individual may deny having actual knowledge of a fact
or other matter by reason of such person having failed to review or obtain
information which would generally have been provided to such individual,
taking into account that individual's position or relationship with an
entity, in the ordinary course of business. A party to this Agreement
shall be deemed to have "knowledge" of or to have "known" a particular
fact or other matter if any individual who is serving, or who has at any
time served, as a director or officer (or in any similar capacity) of the
party has, or at any time had, knowledge of such fact or other matter.
(c) "Material Adverse Effect" shall mean, with respect to any party, any
effect that is material and adverse to (i) the consolidated financial
condition, assets, results of operations, earnings, business, prospects or
cash flows of that party, taken as a whole, or that materially impairs the
ability of any party to consummate the Merger, or (ii) any of the
transactions contemplated by this Agreement. Material Adverse Effect
shall not, however, be deemed to include any effect on the referenced
party which is caused by (A) changes in laws and regulations or
interpretations thereof that are generally applicable to the chemical
industry, (B) changes in GAAP that are generally applicable to the
chemical industries, (C) expenses incurred in connection with the
transactions contemplated hereby, except that if legal expenses of AMI
exceed $75,000, the amount of such excess will be deducted from the Merger
Consideration as provided in Section 13.2, or (D) actions or omissions of
a party taken with the prior informed written consent of the other party
or parties in contemplation of the transactions contemplated hereby.
Section 13.17. Incorporation by Reference. Any and all schedules, exhibits,
annexes, statements, reports, certificates or other documents or instruments
referred to herein or attached hereto are incorporated herein by reference
hereto as though fully set forth at the point referred to in the Agreement.
Section 13.18. Venue. The parties hereto irrevocably and unconditionally
consent to and submit themselves to the exclusive jurisdiction of the courts
of the State of Texas located in Dallas County, Texas and the courts of the
United States of America located in the Northern District of Texas
(collectively, the "Agreed Courts") with respect to any actions, suits or
proceedings arising out of or in connection with this Agreement and the
transactions contemplated hereby and the parties hereto agree not to commence
any action, suit or proceeding relating thereto except in such Agreed Courts.
The parties hereto further agree that service of any process, summons,
notice, or documents in accordance with Section 13.3 hereof shall be
effective service of process for any action, suit or proceeding brought. The
parties hereto irrevocably and unconditionally waive any objection to the
laying of venue of any action, suit or proceeding arising out of this
Agreement or the transactions contemplated hereby in the Agreed Courts and
hereby further irrevocably and unconditionally waive and agree not to plead
or claim that any such action, suit or proceeding brought in any of the
Agreed Courts has been brought in an inconvenient forum.
Section 13.19. Construction. Every covenant, term and provision of this
Agreement shall be construed simply according to its fair meaning and not
strictly for or against any party.
Section 13.20. Attorneys' Fees. In the event any action is brought to
enforce, or for the breach of, this Agreement, the prevailing party shall be
entitled to recover all of its costs and expenses, including reasonable
attorneys' fees and expert witness fees.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as
of the date first above written.
ARROW-MAGNOLIA INTERNATIONAL, INC.
By
_____________________________________
Xxxx X. Xxxxxx, Chief Executive
Officer
ARROW ACQUISITION L P
By AM MANAGEMENT LLC, General Partner
By
____________________________________
Xxxxx Xxxx, Manager
The undersigned does hereby unconditionally guaranty and promise to pay to
AMI, immediately upon demand, all amounts owed by AALP to AMI pursuant to
Section 12.2(b) of this Agreement.
________________________________________
Xxxxx X. Xxxxxxxxxxx
