EXHIBIT 10.1
ACQUISITION AGREEMENT
AMONG
PRODUCTION RESOURCE GROUP, L.L.C.
Buyer
AND
BASH THEATRICAL LIGHTING, INC.
BASH THEATRICAL LIGHTING SERVICES, INC.
BASH LIGHTING SERVICES, INC.
BASH LIGHTING SERVICES MID-ATLANTIC, INC.
BASH EXPOSITION SERVICES, INC.
Sellers
AND
XXXXXX XXXXX
AND
XXXXXX XXXXXX
Shareholders
July 3, 1997
TABLE OF CONTENTS
RECITALS ......................................................................1
ARTICLE I -- PURCHASE AND SALE.................................................2
1.1 Agreement to Sell................................................2
1.2 Agreement to Purchase............................................5
1.3 Purchase Price...................................................5
1.4 Allocation of Purchase Price.....................................5
1.5 Assumption of Liabilities........................................6
1.6 Closing Financial Statements.....................................8
1.7 Holdback........................................................11
ARTICLE II -- CLOSING, ITEMS TO BE DELIVERED, THIRD PARTY CONSENTS,
CHANGE IN NAME AND FURTHER ASSURANCES......................................11
2.1 Closing.........................................................11
2.2 Items to be Delivered at Closing................................11
2.3 Third Party Consents............................................12
2.4 Change in Name..................................................12
2.5 Further Assurances..............................................12
ARTICLE III -- REPRESENTATIONS AND WARRANTIES.................................13
3.1 Representations and Warranties of the Sellers...................13
3.2 Representations and Warranties of PRG...........................26
3.3 Survival of Representations and Warranties......................26
ARTICLE IV -- AGREEMENTS PENDING CLOSING......................................27
4.1 Agreements of Seller Pending the Closing........................27
4.2 Agreements of PRG Pending the Closing...........................29
ARTICLE V -- CONDITIONS PRECEDENT TO THE CLOSING..............................30
5.1 Conditions Precedent to PRG's Obligations.......................30
5.2 Conditions Precedent to the Obligations of Seller...............33
ARTICLE VI -- INDEMNIFICATION.................................................34
6.1 General Indemnification Obligation of Seller....................34
6.2 General Indemnification Obligation of PRG.......................35
6.3 Limit on Indemnification Liability..............................35
6.4 Method of Asserting Claims, etc.................................36
6.5 Payment.........................................................37
6.7 Compliance with Bulk Sales Laws.................................37
6.8 Exclusive Remedy................................................37
ARTICLE VII -- POST CLOSING MATTERS...........................................37
7.1 Offers of Employment............................................37
7.2 Employee Benefits...............................................38
7.3 Maintenance of Books and Records................................38
7.4 Payments Received. ............................................39
7.5 Use of Name.....................................................39
7.6 UCC Matters.....................................................39
7.7 Covenant Not To Compete.........................................39
ARTICLE VIII -- MISCELLANEOUS.................................................40
8.1 Termination.....................................................40
8.2 Brokers' and Finders' Fees......................................40
8.3 Sales, Transfer and Documentary Taxes, etc......................41
8.4 Expenses........................................................41
8.5 Contents of Agreement; Parties in Interest; etc.................41
8.6 Assignment and Binding Effect...................................41
8.7 Waiver..........................................................41
8.8 Notices.........................................................41
8.9 Choice of Law...................................................42
8.10 No Benefit to Others............................................42
8.11 Headings, Gender and "Person"...................................43
8.12 Schedules and Exhibits..........................................43
8.13 Severability....................................................43
8.14 Counterparts....................................................43
Exhibit A Inventory Schedule
Exhibit B Form of Employment Agreement -- X. Xxxxx
Exhibit C Form of Employment Agreement -- X. Xxxxxx
Exhibit D Form of Lease
Exhibit E Form of Option
Exhibit F Form of Escrow Agreement
Exhibit G Form of Shareholder Release
Exhibit H Form of Assignment and Assumption Agreement
ACQUISITION AGREEMENT
ACQUISITION AGREEMENT, dated as of July 3, 1997, by and among BASH
THEATRICAL LIGHTING, INC., a New Jersey corporation ("BTLI"), BASH THEATRICAL
LIGHTING SERVICES, INC., a Nevada corporation ("BTLS"), BASH LIGHTING SERVICES,
INC., a Florida corporation ("BLSI"), BASH LIGHTING SERVICES MID-ATLANTIC, INC.,
a Maryland corporation ("BLSMA"), and BASH EXPOSITION SERVICES, INC., a Nevada
corporation ("BES") (each a "Seller" and collectively, the "Sellers"), and
XXXXXX XXXXX ("Xxxxx") and XXXXXX XXXXXX ("Xxxxxx"; Xxxxx and Xxxxxx each
sometimes being referred to herein as a "Shareholder" and collectively as the
"Shareholders") and PRODUCTION RESOURCE GROUP, L.L.C., a Delaware limited
liability company ("PRG").
RECITALS
A. Sellers are engaged in the business of providing, renting and selling
specialized lighting equipment and payroll and labor services (the "Business").
Such business operations of Sellers have been carried on under the respective
names of "Bash Theatrical Lighting, Inc.", "Bash Theatrical Lighting Services,
Inc.", "Bash Lighting Services, Inc.", "Bash Lighting Services Mid-Atlantic,
Inc." and "Bash Exposition Services, Inc.". Each of the Sellers has a principal
place of business as specified on Schedule A-1 hereto. Shareholders are the sole
owners, of record and beneficially, of all of Sellers' issued and outstanding
capital stock, except for the persons on Schedule A-2 hereto, who hold options
to acquire stock in BTLI.
B. PRG is engaged in business as an integrated provider of goods and
services in a variety of related markets, including production management,
theatrical rental, scenery, rigging, supply of physical production elements
(including lighting, scenery, sound and costumes), promotion, themed
attractions, Broadway and touring shows, special events and exhibits and film
and television production, and desires to acquire all of the above-described
business operations of Sellers, except for certain Excluded Assets (as
hereinafter defined).
C. Subject only to the limitations and exclusions contained in this
Agreement and on the terms and conditions hereinafter set forth, Sellers desire
to sell and PRG desires to purchase all of the assets associated with the
Business and its operations, and, on the terms and conditions hereinafter set
forth, PRG desires to assume certain of the liabilities associated with the
Business.
NOW, THEREFORE, in consideration of the recitals and of the respective
covenants, representations, warranties and agreements herein contained, and
intending to be legally bound hereby, the parties hereto hereby agree as
follows:
ARTICLE 1. -- PURCHASE AND SALE
1.1 Agreement to Sell. At the Closing (as defined in Section 2.1 hereof),
except as otherwise specifically provided in this Section 1.1, Sellers shall
sell, convey, assign, transfer and deliver to PRG, upon and subject to the terms
and conditions of this Agreement, all of their respective rights, titles and
interests in and to the Assets (as defined in Section 1.1.1 below), free and
clear of all mortgages, liens, pledges, security interests, charges, claims,
restrictions and encumbrances of any nature whatsoever (except for Permitted
Liens as defined in subsection 3.1.12 hereof).
1.1.1 Included Assets. Except as otherwise expressly set forth in
subsection 1.1.3 hereof, the "Assets" shall mean the following assets,
properties and rights of Sellers to the extent owned by Sellers on the Closing
Date and used directly or indirectly in the conduct of, or generated by or
constituting, the Business and, except, as expressly set forth in such
subsection 1.1.3, shall constitute all of the assets other than cash reasonably
required to conduct the Business as heretofore conducted:
(1) all machinery, equipment, tools, vehicles, furniture, furnishings,
goods, and other tangible personal property;
(2) all prepaid items, utility and similar deposits, insurance return
premiums, if any to the extent shown on the Interim Balance Sheet, unbilled
costs and fees, and all accounts receivable, notes and other receivables;
(3) all supplies and inventories and office and other supplies;
(4) subject to subsection 1.1.3(c), all rights under any written or
oral contract, agreement, lease, plan, instrument, registration, license,
other permit or approval of any nature, or other document, commitment,
arrangement, undertaking, practice or authorization;
(5) all rights under any patent, trademark, service xxxx, trade name
or copyright, whether registered or unregistered, and any applications
therefor including, without limitation, the names "Bash Theatrical
Lighting," "Bash Theatrical Lighting Services," Bash Lighting Services,"
"Bash Lighting Services Mid Atlantic," and "Bash Exposition Services" along
with all goodwill associated therewith;
(6) all technologies, methods, formulations, data bases, trade
secrets, know-how, inventions and other intellectual property used in the
Business or under development, if any;
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(7) all rights or choses in action arising out of occurrences before
or after the Closing, including without limitation all rights under express
or implied warranties relating to the Assets;
(8) all assets and properties reflected on the Closing Balance Sheet
(as defined in Section 1.6.5) including, without limitation, all equipment
used in the Business other than assets described in Section 1.1.1 (i)
hereof;
(9) all rental and sales inventory reflected on the Inventory Schedule
attached as Exhibit A hereof (or which would be so reflected if the
Inventory Schedule reflected all of Sellers' rental and sales inventory),
except for assets sold in the ordinary course of business consistent with
past practice or with the prior written consent of PRG or the disposition
of damaged or obsolete inventory and equipment no longer useful in the
business ("Inventory").
(10) all information, files, records, data, plans, copies of written
contracts and recorded knowledge, including customer and supplier lists,
related to the foregoing, provided that the Sellers may retain for their
respective records copies of any of the foregoing; and
(11) all other assets, including all tangible and intangible property
used in the conduct of the Business and not specifically excluded pursuant
to Section 1.1.3 hereof.
1.1.2 The Facility. BTLI and PRG shall enter into a lease agreement for the
premises located at 0000 Xxxx Xxxxxx, (the "Facility") substantially in the form
of Exhibit D hereof. Such lease will be effective as of the Closing Date and
shall have no force or effect if the Closing does not occur on or before August
30, 1997. BTLI agrees to grant PRG the option (the "Facility Purchase Option")
to offer to purchase the land and improvements, and all fixtures thereon located
at the Facility at a purchase price and on the terms and conditions contained in
the Option Agreement substantially in the form of Exhibit E hereof. Such Option
Agreement will be executed simultaneously with the execution of this Agreement
but will not be exercisable unless the Closing of the transactions contemplated
by this Agreement has occurred.
1.1.3 Excluded Assets. Notwithstanding the foregoing, the Assets shall not
include any of the following (collectively, the "Excluded Assets"):
(1) the corporate seals, certificates of incorporation, minute books,
stock books, tax returns, books of account or other records having to do
with corporate organizations of Sellers;
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(2) the rights which accrue or will accrue to Sellers under this
Agreement;
(3) any rights under any written or oral contract, agreement, lease,
plan, instrument, registration, license other permit or approval of any
nature, or other document, commitment, arrangement, undertaking, practice
or authorization (other than rights accruing solely to the owner of the
Facility) to the extent the transfer of such rights is prohibited by
applicable law or requires the consent of a third party, which consent has
not been obtained; provided, however, that Section 2.3 hereof shall apply
to any such contract rights;
(4) intercompany receivables or obligations owed by one or more
Sellers to one or more other Sellers, and rights of any Seller against any
other Seller under any agreements between two or more Sellers;
(5) the rights to any claims of each and any Seller for any federal,
state, local, or foreign tax refunds or prepayments of taxes; or
(6) all cash and cash equivalents, whether in transit, on hand or in
bank accounts, money market accounts, brokerage accounts or wherever
located;
(7) the Facility, including all real property, improvements and
fixtures constituting the Facility and all registrations, licenses,
permits, approvals and authorizations related solely to the Facility;
(8) any and all claims asserted by any Seller in any litigation
involving such Seller except to the extent such claim relates to an Asset
or Assets acquired by PRG or to a liability assumed by PRG hereunder;
(9) all insurance policies of any Seller and all proceeds thereof and
claims thereunder except that PRG shall be entitled to receive the proceeds
of any claim to the extent related to Assets acquired by PRG which are
included in the Closing Balance Sheet at values not reflecting the loss or
damage giving rise to such claim;
(10) rights in and to any software licenses which are not assignable
without consent and rights in the related software; provided, however, that
a minimum of four site licenses for the HITS software package will be
assigned to PRG and included in the Assets acquired by PRG;
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(11) any contract rights of any Seller with respect to which PRG has
not assumed all of the liabilities and obligations of such Seller
thereunder (other than liabilities and obligations arising out of a breach
by any Seller prior to the Closing Date);
(12) amounts owed to any Seller by officers and employees of any
Seller and set forth on Schedule 1.1.3.; and
(13) the assets, properties or rights set forth on Schedule 1.1.3.
1.2 Agreement to Purchase. At the Closing, PRG shall purchase the Assets
(other than the Excluded Assets) from Sellers, upon and subject to the terms and
conditions of this Agreement and in reliance on the representations, warranties
and covenants of Sellers contained herein, in exchange for the Purchase Price
(as defined in Section 1.3 hereof). In addition, PRG shall assume at the Closing
and agree to pay, discharge or perform when due or when required, certain
liabilities and obligations of Sellers only to the extent and as provided in
Section 1.5 of this Agreement. Except as specifically provided in Section 1.5
hereof, PRG shall not assume or be responsible for any of the respective
liabilities or obligations of Sellers, whether related to or arising under or
with respect to the Business, or otherwise.
1.3 Purchase Price.
1.3.1 Subject to the payment of any Adjustment Amount determined to be
payable pursuant to Section 1.6.4 hereof, the "Purchase Price" shall be an
amount equal to Twenty Million Dollars ($20,000,000.00).
1.3.2 In exchange for sale of the Assets and the assumption by PRG of the
Assumed Liabilities, PRG shall on the Closing Date (as defined in Section 2.1)
pay to Sellers, on account of the Purchase Price, Eighteen Million Seven Hundred
Thousand ($18,700,000) (the "Closing Payment"). The One Million Three Hundred
Thousand Dollars ($1,300,000.00) balance of the Purchase Price (the "Holdback")
shall be deposited in escrow for application pursuant to Section 1.7. The escrow
account shall be established with an escrow agent mutually acceptable to PRG and
Sellers. The escrow agreement shall be substantially in the form of Exhibit F
hereof. On January 2, 1998 PRG shall pay to the Sellers, on account of the
Purchase Price, the Adjusted Holdback (as defined in Section 1.7). The Closing
Payment and the payment of the Adjusted Holdback shall be payable by wire
transfer of immediately available funds to such accounts as Sellers shall
designate or by bank or certified check.
1.4 Allocation of Purchase Price. The parties agree upon the allocation
among the Assets of the Purchase Price, the Assumed Liabilities and any
liabilities to which any Asset is subject (together, the "Total Consideration")
set forth in Schedule 1.4 hereof with such
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adjustments as the parties reasonably agree consistent with the principles set
forth in such Schedule. Each Seller and PRG hereby covenant and agree that it
will not take a position on any tax return, before any governmental agency
charged with the collection of any income tax or sales tax, or in any judicial
proceeding that is in any way inconsistent with the terms of this Section 1.4.
Any adjustment to the Purchase Price resulting from the application of Sections
1.6.4 or 1.7 hereof shall adjust the asset or class of assets giving rise to
such adjustment or, if no such asset or class of assets is readily determinable,
shall reduce goodwill. 1.1
1.5 Assumption of Liabilities. At the Closing hereunder and except as
otherwise specifically provided in this Section 1.5, PRG shall assume and agree
to pay, discharge or perform promptly when due or required, solely the following
liabilities and obligations of Sellers (collectively, the Assumed Liabilities):
1.5.1 all liabilities and obligations of Sellers in respect of the
Business existing as of the Interim Balance Sheet Date (as defined in
subsection 3.1.6(a)), but only if and to the extent that the same arose in
the regular and ordinary course of the Business and are accrued or reserved
for on the Interim Balance Sheet and remain unpaid and undischarged on the
Closing Date;
1.5.2 all liabilities and obligations of Sellers arising in the
regular and ordinary course of the Business between the Interim Balance
Sheet Date and the Closing Date, to the extent that the same remain unpaid
and undischarged on the Closing Date;
1.5.3 all liabilities and obligations of Sellers for any taxes
(including, without limitation, gross receipts, sales, use, personal
property, real estate and stamp taxes, levies, imposts, duties, assessments
and withholdings of any nature whatsoever) imposed by any government or
taxing authority other than taxes based upon or measured by net or gross
income or receipts (including capital gains and withholding taxes)
franchise taxes, taxes based on capital, net worth or conduct of business,
minimum taxes, taxes measured by items of tax preference and similar taxes
that can increase in amount as items of deduction or credit increase in
amount or nature, withholding taxes of similar nature and including
estimated payments of such taxes (collectively "Assumed Taxes");
1.5.4 all liabilities and obligations of Sellers in respect of the
agreements, contracts, commitments and leases which are included in the
Assets, and which are either (i) identified in any schedule attached to
this Agreement or (ii) incurred in the ordinary course and which, in the
case of any agreement, do not involve the payment by Sellers, individually
or in a series of related payments, of an amount in excess of $50,000 per
year except that notwithstanding anything to the contrary contained in this
Section 1.5 but subject to Section 2.3, PRG shall not assume or agree to
pay, discharge or perform any:
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(1) liabilities or obligations accrued prior to the Interim
Balance Sheet Date which under generally accepted accounting
principles should have been accrued or reserved for on a balance sheet
or the notes thereto as a liability or obligation, if and to the
extent that the same were not accrued or reserved for on the Interim
Balance Sheet; or
(2) liabilities or obligations arising out of any breach by any
Seller of any provision of any agreement, contract, commitment or
lease, including but not limited to liabilities or obligations arising
out of a Seller's failure to perform any agreement, contract,
commitment or lease in accordance with its terms prior to the Closing,
but excluding however any liability arising out of the assignment to
PRG of such agreements, contracts, commitments or leases in violation
of the terms thereof; or
(3) liabilities or obligations relating to capital expenditures
made or incurred by any Seller after the Interim Balance Sheet Date
without the prior written consent of PRG, except for those disclosed
on Schedule 1.5.4;
1.5.5 all liabilities and obligations of Sellers for indebtedness of
the Sellers incurred by any Sellers to finance the purchase of trucks and
equipment (other than lighting equipment) included in the Assets acquired
by PRG and disclosed on Schedule 1.5.5; and
1.5.6 all liabilities and obligations of Sellers for accrued unused
vacation days to their employees who accept employment with PRG to the
extent in existence on the Interim Balance Sheet Date as set forth in
Schedule 1.5.6 or accrued at the same rates utilized in preparing Schedule
1.5.6 for the period between the Interim Balance Sheet Date and the Closing
Date.
1.5.7 In no event, however, shall PRG assume or incur any liability or
obligation under this Section 1.5 or otherwise in respect of any of the
following:
(1) except as expressly provided in subsections 1.5.4 or 1.5.5
any indebtedness for borrowed money, including without limitation, any
indebtedness arising under any note, debenture, bond, equipment trust
agreement, letter of credit agreement, loan agreement or other
contract or commitment for the borrowing or lending of money relating
to the Business or agreement or arrangement for a line of credit, or
any guaranties, in any manner, whether directly or indirectly, of any
indebtedness, dividend or other obligation of any other person or
entity relating to the Business (other than endorsements in the
ordinary course of business of negotiable instruments for deposit or
collection);
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(2) any product liability or similar claim for injury to person
or property, regardless of when made or asserted, which arises out of
or is based upon any express or implied representation, warranty,
agreement or guarantee made by any Seller, or alleged to have been
made by any Seller, or which is imposed or asserted to be imposed by
operation of law, in each of the foregoing cases only to the extent in
connection with any service performed or product sold or leased by or
on behalf of any Seller on or prior to the Closing, including without
limitation any claim relating to any product delivered in connection
with the performance of such service and any claim seeking recovery
for consequential damage, lost revenue or income; provided, however,
that PRG shall assume such liabilities to the extent substantially all
the events (other than the making of such representation, warranty,
agreement or guarantee) giving rise to such liability occur on or
after the Closing Date;
(3) any tax payable with respect to the business, assets,
properties or operations of any Seller or any Shareholder or any
member of any affiliated group of which any Seller or any Shareholder
is a member for any period prior to the Closing Date other than
Assumed Taxes;
(4) subject to section 2.3 hereof, any liability or obligation
under or in connection with the Excluded Assets;
(5) any liability or obligation of any Seller arising prior to or
as a result of the Closing to any employees, agents or independent
contractors of any Seller, whether or not employed by PRG after the
Closing, except for obligations incurred in the ordinary course of the
Business and set forth in the Interim Balance Sheet or incurred
between the Interim Balance Sheet Date and the Closing Date, provided,
however, that in no event shall PRG assume any liability or obligation
for any multi-employer or pension liability; any liability or
obligation of any Seller relating to any employee benefit plan, fund,
program or arrangement, including without limitation any liability or
obligation arising under or relating to any multi-employer pension
plan, except for liabilities related to accrued unused vacation days
as specifically provided herein.
(6) any liability or obligation of any Seller or any Shareholder
arising or incurred in connection with the negotiation, preparation
and execution of this Agreement and the consummation of the
transactions contemplated hereby (including without limitation fees
and expenses of counsel, accountants and other experts); or
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(7) any liability or obligation of any Seller or Shareholder to
any other Seller or Shareholder.
1.6 Closing Financial Statements.
1.6.1 Not later than 45 days after the Closing Date, Sellers shall cause to
be prepared by Sellers' Accountants (as defined below) the balance sheet of the
Business at the Closing Date and accompanying notes, in accordance with
generally accepted accounting principles consistently applied by Seller in
accordance with past practice for the financial statements described in
subsection 3.1.6 hereto. Such balance sheet shall specifically identify all
assets reflected thereon which are not included in the Assets and all
liabilities reflected thereon which are not assumed by Purchaser hereunder.
1.6.2 Ernst & Young (the "Auditors"), shall review the financial statements
described in subsection 1.6.1, above as well as the December 31, 1996 financial
statements of the Sellers (collectively the "Financial Statements"), in
accordance with AICPA review provisions, and shall use reasonable efforts to
issue, within 60 days of the closing date but in any event not later than 90
days after the Closing Date, its report thereon to Sellers and PRG to the effect
that such balance sheets present fairly the financial position of the Business
as of the dates thereof in conformity with generally accepted accounting
principles applied on a consistent basis. Such report shall also include a
detailed schedule setting forth the calculation of the Adjustment Amount, if
any, calculated in accordance with subsection 1.6.4.
1.6.3 In rendering the review and report described in subsection 1.6.2, the
Auditors shall consult with Xxxxxx & Xxxxxxxx, Sellers' independent accountants
("Sellers' Accountants") and permit Sellers' Accountants at the earliest
practicable date to review the report of the Auditors, including all work
papers, schedules and calculations related thereto, prior to the issuance
thereof. Sellers' Accountants shall commence its review of said work papers,
schedules and calculations as soon as practicable after the Auditors have
completed the field work phase of its review. Any dispute which may arise
between Seller and PRG as to the determination of the Adjustment Amount shall be
resolved in the following manner:
(1) if the Sellers dispute the Adjustment Amount or any adjustments to
the Closing Balance Sheet or December 31, 1996 Balance Sheet prepared by
Seller's Accountants which result from the Auditors' review thereof, the
Sellers shall notify PRG in writing within 30 days after the delivery to
Sellers of the report of the Auditors pursuant hereto of such dispute; such
notice shall specify in reasonable detail the nature of the dispute;
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(2) during the 15 day period following the date of such notice,
Sellers and PRG shall attempt to resolve such dispute and to determine the
appropriateness of the Closing Balance Sheet, Financial Statements or the
Adjustment Amount; and
(3) if at the end of the 15 day period specified in subsection (b)
above, Seller and PRG shall have failed to reach a written agreement with
respect to such dispute, the matter shall be referred to, an independent
firm of certified public accountants mutually acceptable to Sellers and PRG
(the "Arbitrator"), which shall act as an arbitrator and shall issue its
report as to the Closing Balance Sheet and Adjustment Amount within thirty
(30) days after such dispute is referred to the Arbitrator. Each of the
parties hereto shall bear all costs and expenses incurred by it in
connection with such arbitration, except that the fees and expenses of the
Arbitrator hereunder shall be borne equally by Seller and PRG. This
provision for arbitration shall be specifically enforceable by the parties
and the decision of the Arbitrator in accordance with the provision hereof
shall be final and binding and there shall be no right of appeal therefrom.
1.6.4 Purchase Price Adjustment.
(1) If the Net Book Value of the Business (as defined in subsection
1.6.5) on the Closing Balance Sheet is less than eight million five hundred
thirteen thousand seven hundred thirteen dollars ($8,513,713) then the
Purchase Price shall be reduced by an amount equal to the difference
between $8,513,713 and the Net Book Value of the Business on the Closing
Balance Sheet.
(2) If the Net Book Value of the Business on the December 31, 0000
Xxxxx & Young Balance Sheet is in excess of nine million five hundred
thirteen thousand seven hundred thirteen dollars ($9,513,713), then the
Purchase Price shall be increased by an amount equal to thirty percent
(30%) of such excess up to a maximum additional payment of one million five
hundred thousand dollars ($1,500,000) pursuant to this Section 1.6.4(b).
(3) If the Net Book Value of the Business on the Closing Balance
Sheet, as adjusted to use the same inventory and capitalization methods
used in the December 31, 0000 Xxxxx & Young balance sheet, exceeds the Net
Book Value on the December 31, 0000 Xxxxx & Young Balance Sheet, then the
Purchase Price shall be increased by an amount equal to forty-five percent
(45%) of such excess up to a maximum additional payment of one million two
hundred fifty thousand dollars ($1,250,000) pursuant to this Section
1.6.4(c).
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(4) Any net increase or decrease in the Purchase Price, as the case
may be, pursuant to Sections 1.6.4(a), (b) and (c) is referred to herein as
the "Adjustment Amount" and shall be payable to PRG, if the amount payable
pursuant to Section 1.6.4(a) exceeds the amounts payable pursuant to
Sections 1.6.4(b) and (c), or to Sellers, if the sum of the amounts payable
pursuant to Section 1.6.4(b) and (c) exceeds the amount payable pursuant to
Section 1.6.4(a) in either case within five (5) business days following the
Adjustment Date (as defined in subsection 1.6.5) by wire transfer of
immediately available funds to such account as PRG or Sellers as the case
may be shall designate or by bank or certified check.
1.6.5 References in this Agreement to (a) "Net Book Value of the Business"
shall mean an amount equal to the book value of the Assets acquired by PRG
pursuant to this Agreement, less the book value of the Assumed Liabilities, (b)
the "Closing Balance Sheet" shall mean the balance sheet of the Business at the
Closing Date, prepared and reviewed as described in this Section 1.6, (c) the
"Adjustment Date" shall mean the later of the 15th day after delivery of the
report of the Auditors pursuant hereto, or the date upon which any dispute
concerning the Financial Statements, the Closing Balance Sheet, the Adjustment
Amount or the amount of the Purchase Price is resolved, and (d) the December
31,1996 Ernst & Young Balance Sheet shall mean the balance sheet of the Sellers
as of December 31,1996 as reviewed by Ernst & Young.
1.7 Holdback. Subject to mediation as provided in Section 6.6 hereof, and
to the payment terms and claims procedures of the Escrow Agreement attached as
Exhibit F, PRG shall be entitled to make claims payable from all or any portion
of the Holdback, and any interest earned thereon from time to time towards any
and all Damages. For purposes of this Agreement "Damages" shall mean damages,
losses, deficiencies, liabilities, costs and expenses actually incurred or
suffered by one or more Indemnified PRG Parties (as such terms are defined in
Section 6.1), that result from, relate to or arise out of one or more of those
matters described in subsections 6.1.1 and 6.1.2 (collectively, the "Seller
Obligations"). Except in the case of fraud, PRG's and all other Indemnified PRG
Parties' right to recovery or indemnification under Section 6.1, in the
aggregate, is expressly limited to the amount of the Holdback. As provided in
subsection 1.3.2, on January 2, 1998, PRG shall pay to the Seller an amount (the
"Adjusted Holdback") equal to (a) the Holdback, less (b) all amounts applied to
Seller Obligations, plus (c) interest actually earned on the Holdback. In the
event that the foregoing calculation results in a negative number, the Adjusted
Holdback shall be deemed to be zero.
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ARTICLE 2. -- CLOSING, ITEMS TO BE DELIVERED, THIRD PARTY CONSENTS, CHANGE IN
NAME AND FURTHER ASSURANCES
0.1 Closing. The closing (the "Closing") of the sale and purchase of the
Assets shall take place at 10:00 A.M., local time, on such date as may be
mutually agreed upon in writing by PRG and Sellers which date shall be within
ten (10) business days of the date on which all of the closing conditions set
forth in Article V and required to be completed prior to the Closing have
occurred. The date of the Closing is sometimes herein referred to as the
"Closing Date." The closing shall take place at the New York, New York offices
of Sellers' counsel, Kronish, Lieb, Weiner & Xxxxxxx LLP, or at such other
location as the parties shall mutually agree.
0.2 Items to be Delivered at Closing. At the Closing and subject to the
terms and conditions herein contained:
2.1.1 Except for Assets set forth on Schedule 2.2.1 which, by their
terms are not assignable and which will be handled pursuant to the
provisions of Section 2.3, Sellers shall deliver to PRG such bills of sale,
assignments, endorsements, and other good and sufficient instruments and
documents of conveyance and transfer, substantially in the form of Exhibit
H, as shall be necessary and effective to transfer and assign to, and vest
in, PRG all of Sellers' respective rights, titles and interests in and to
the Assets, including without limitation, (a) good and valid title in and
to all of the Assets owned by each Seller, (b) assignments of all leasehold
interests in and to all of the Assets leased by Seller as lessee, and (c)
all of Sellers' respective rights under all agreements, contracts,
commitments, leases, plans, bids, quotations, proposals, instruments and
other documents included in the Assets to which any Seller is party or by
which it has rights on the Closing Date, and simultaneously with such
delivery, all such actions will be taken as may be reasonably required to
put PRG in actual possession and operating control of the Assets.
2.1.2 PRG shall deliver to the Sellers the Closing Payment and a
written undertaking substantially in the form of Exhibit H whereby PRG will
assume and agree to pay, discharge or perform, as appropriate, the Assumed
Liabilities to the extent and as provided in Section 1.5 hereof.
2.1.3 PRG and Xxxxx shall mutually execute and deliver an employment
agreement substantially in the form of Exhibit B, attached hereto, PRG and
Xxxxxx shall mutually execute and deliver an employment agreement
substantially in the form of Exhibit C attached hereto and PRG shall pay
each of Xxxxx and Xxxxxx a $1,000,000 non-refundable "signing-on" bonus by
wire transfer.
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2.1.4 At or prior to the Closing, the parties hereto shall also
deliver to each other the agreements, opinions, certificates and other
documents and instruments referred to in Article V hereof.
2.2 Third Party Consents. To the extent that any Seller's rights under any
agreement, contract or lease, to be assigned to PRG hereunder may not be
assigned without the consent of another person which has not been obtained, this
Agreement shall not constitute an agreement to assign the same if an attempted
assignment would constitute a breach thereof or be unlawful, and such Seller, at
its expense, shall use its reasonable efforts to obtain any such required
consent(s) as promptly as possible. If any such consent shall not be obtained or
if any attempted assignment would be ineffective or would impair PRG's rights
under the asset in question so that PRG would not in effect acquire the benefit
of all such rights, such Seller, to the maximum extent permitted by law, shall
act after the Closing as PRG's agent in order to obtain for it the benefits
thereunder and shall cooperate, to the maximum extent permitted by law, with PRG
in any other reasonable arrangement designed to provide such benefits to PRG;
and PRG shall, at its expense, perform such services or provide such facilities,
personnel, equipment and inventory (with reasonable diligence and in accordance
with the terms of the original contract and/or purchase order) to enable such
Seller to fulfill its obligations with respect to any such asset, provided that
the full economic benefit of any such asset shall accrue solely to PRG and the
full economic burdens of such asset shall be borne by PRG.
2.3 Change in Name. On the Closing Date, each Seller and the Shareholders
shall deliver to PRG all such executed documents as may be required to change
each Seller's name on that date to another name bearing no similarity to "Bash
Theatrical Lighting, Inc.", "Bash Theatrical Lighting Services, Inc.", "Bash
Lighting Services, Inc.", "Bash Lighting Services Mid-Atlantic, Inc." and "Bash
Exposition Services, Inc.", including but not limited to a name change amendment
with the Secretary of State of each state in which a Seller is organized and an
appropriate name change notice for each state where a Seller is qualified to do
business.
2.4 Further Assurances. Each of the Sellers and the Shareholders from time
to time after the Closing, at PRG's reasonable request, will execute,
acknowledge and deliver to PRG such other instruments of conveyance and transfer
and will take such other actions and execute and deliver such other documents,
certifications and further assurances as PRG may reasonably require in order to
vest more effectively in PRG, or to put PRG more fully in possession of, any of
the Assets, or to better enable PRG to complete, perform or discharge any of the
Assumed Liabilities. Each of the parties hereto will cooperate with the other
parties hereto and take other actions as may be reasonably requested from time
to time by any other party hereto as reasonably necessary to carry out, evidence
and confirm the intended purposes of this Agreement.
ARTICLE 3. -- REPRESENTATIONS AND WARRANTIES
13
3.1 Representations and Warranties of the Sellers. Each Seller hereby
represents and warrants to PRG that, except as set forth on the Schedules
attached hereto (each of which exceptions shall specifically identify the
relevant section or subsection hereof to which it relates and shall be deemed to
be a representation and warranty as if made hereunder):
3.1.1 Corporate Existence. Each Seller is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. Such Seller is duly qualified to do
business and is in good standing as a foreign corporation in each
jurisdiction where the conduct of the Business by it requires it to be so
qualified, except where the failure to be so qualified does not have a
material adverse effect on the Business or operations of the Seller.
Schedule 3.1.1 contains a list of all jurisdictions in which each Seller is
presently qualified.
3.1.2 Corporate Power; Authorization; Enforceable Obligations. Each
Shareholder and each Seller has the power (corporate or otherwise),
authority and legal right to execute, deliver and perform this Agreement.
The execution, delivery and performance of this Agreement by each Seller
has been duly authorized by all necessary corporate and shareholder action.
This Agreement has been, and the other agreements, documents and
instruments required to be delivered by the Seller in accordance with the
provisions hereof (the "Sellers' Documents") will be, duly executed and
delivered by the appropriate Seller by duly authorized officers of such
Seller, and this Agreement constitutes, and the Sellers' Documents when
executed and delivered will constitute, the legal, valid and binding
obligations of the Sellers, enforceable against each Seller in accordance
with their respective terms.
3.1.3 No Interest in Other Entities. Other than mutual funds, money
market accounts or similar cash equivalents, no Seller owns any shares of
any corporation or any ownership or other investment interest, either of
record, beneficially or equitably, in any association, partnership, joint
venture, limited liability company or other legal entity. No Shareholder
owns any ownership or other investment interest, either of record,
beneficially or equitably, in any association, partnership, joint venture,
limited liability company or other legal entity engaged in any business
competitive with the Business other than the Seller and other than up to
five percent (5%) of the stock of any publicly traded company which may be
engaged in such business.
3.1.4 Validity of Contemplated Transactions, etc. Except as set forth
in Schedule 3.1.4, the execution, delivery and performance of this
Agreement by each Seller does not and will not violate, conflict with or
result in the breach of any term, condition or provision of, or require the
consent of, any other person under, (a) any existing law, ordinance, or
governmental rule or regulation to which any Seller is subject, (b) any
judgment, order, writ, injunction, decree or award of any court, arbitrator
or governmental or regulatory official, body or authority which is
14
applicable to any Seller, (c) the charter documents of any Seller or any
securities issued by any Seller, or (d) any mortgage, indenture, agreement,
contract, commitment, lease, plan, authorization, or other instrument,
document or understanding, oral or written, to which any Seller is a party,
by which any Seller may have rights or by which any of the Assets may be
bound or affected, or give any party with rights thereunder the right to
terminate, modify, accelerate or otherwise change the existing rights or
obligations of any Seller thereunder, except in the cases of clauses (a),
(b) and (d), as would not materially adversely impair the Assets or
otherwise materially affect the Assets or the conduct of the Business.
Except as would not materially adversely impair the Assets or otherwise
materially adversely affect the conduct of the Business, no authorization,
approval or consent of, and no registration or filing with, any
governmental or regulatory official, body or authority is required in
connection with the execution, delivery or performance of this Agreement by
any Seller. Solely for purposes of this Section 3.1.4, any diminution in
the value of the Assets which is reasonably anticipated to exceed $175,000
and any other breach of this Section 3.1.4 which would reasonably be
anticipated to cost in excess of $175,000 to cure, will be deemed material.
3.1.5 No Third Party Options. There are no existing agreements,
options, commitments, or rights with, of or to any person to acquire any of
any Seller's assets, properties or rights included in the Assets or any
interest therein, except for those contracts entered into in the normal
course of business consistent with past practice for the sale of inventory
of a Seller, except for employee stock options as set forth on Schedule A-2
hereof.
3.1.6 Financial Statements; Customer and Vendor List.
15
(1) Sellers have delivered to PRG true and complete copies of the
unaudited respective balance sheets of the Sellers at December 31,
1996 and December 31, 1995, and related statements of income and cash
flow for the periods then ended (together with the balance sheets and
the related statements of income, cash flow and changes in
shareholders equity described in clause (i) of this subsection
3.1.6(a), the "Historical Financial Statements"); all of which have
been prepared in accordance with generally accepted accounting
principles consistently applied through the periods involved. The
Historical Financial Statements, including the related notes present
the respective financial positions, assets and liabilities (whether
accrued, absolute, contingent or otherwise) of Sellers at the dates
indicated and such statements of income, cash flow and changes in
shareholders equity, do not overstate the revenues of the Sellers or
overstate the inventory of Sellers for the periods indicated. The
unaudited financial statements as and for the periods ending December
31, 1995 and 1996 contain (or will contain) all adjustments, which are
of a normal recurring nature, necessary to present the respective
financial positions of the Sellers for the periods then ended. The
interim balance sheet dated June 30, 1997 will be prepared on the same
basis used by Sellers for their December 31, 1996 balance sheet (the
"Interim Balance Sheet") and will separately identify the assets and
liabilities which, if the Closing had been held on the Interim Balance
Sheet Date, would have been transferred to or assumed by PRG in
accordance herewith. References in this Agreement to the "Interim
Balance Sheet Date" shall be deemed to refer to June 30, 1997 except
with respect to the physical inventory, in which case it shall be
deemed to refer to the date set forth on Exhibit A.
(2) All data provided by Sellers to Ernst & Young is true and
complete in all material respects. PRG acknowledges that because it,
and not Sellers, has retained Ernst & Young, Sellers make no
representations regarding the compilation of the raw data provided by
Ernst &Young or the proper accounting treatment thereof.
3.1.7 Inventory. Except for damaged or obsolete inventory which is
retained for spare parts or pending disposal and which, in the aggregate,
does not exceed one percent 1% of the inventory value shown on Exhibit A,
all inventory of each Seller including resale inventory and rental
inventory used in the conduct of the Business, including without limitation
raw materials, work-in process and finished goods, reflected on Exhibit A
or acquired since the date thereof was acquired and has been maintained in
the ordinary course of the Business; is of good and merchantable quality;
consists substantially of a quality, quantity and condition usable,
leasable or saleable in the ordinary course of the Business. No Seller is
under any liability or obligation with respect to the return of any
material amount of inventory in the possession of wholesalers, retailers or
other customers. All inventory values reflected on Exhibit A have been
16
calculated using values existing in Sellers' HITS as of the date indicated
thereof. Exhibit A will be updated to reflect the physical inventory to be
conducted by PRG shortly preceding the Closing Date system. Exhibit A is
and will be materially accurate and complete and fairly presents the
inventory position of the Company as of each of the dates thereof. Solely
for purposes of this Section 3.1.7, any breach of this Section 3.1.7 which
would reasonably be anticipated to cost in excess of $175,000 to cure, will
be deemed material.
3.1.8 Absence of Undisclosed Liabilities. No Seller has liabilities or
obligations with respect to the Business which are being assumed by PRG,
either direct or indirect, matured or unmatured or absolute, contingent or
otherwise, except:
(1) Assumed Liabilities; and
(2) liabilities to the extent secured by Permitted Liens.
For purposes of this Section 3.1.8, the term "liabilities" shall
include, without limitation, any indebtedness, guaranty, endorsement,
claim, loss damage, deficiency, cost, expense, obligation or
responsibility, fixed or unfixed, known or unknown asserted or unasserted,
liquidated or unliquidated, secured or unsecured.
3.1.9 Taxes. All tax returns required to be filed by each and any
Seller ("Tax Returns") in any jurisdiction with respect to Assumed Taxes
have been filed and all taxes, assessments, fees and other governmental
charges upon each and any Seller or upon any of such Seller's properties,
income or franchises, which are shown to be due and payable in such Tax
Returns have been paid except for such Assumed Taxes the payment of which
is being contested by a Seller in good faith by appropriate proceedings and
with respect to which such Seller has set aside on its books reserves
deemed by it to be adequate. There are not pending tax examinations of or
tax claims asserted against any Seller or any assets or properties of any
Seller which could adversely affect PRG. There are no tax liens (other than
any lien for current taxes not yet due and payable) on any of the assets or
properties of any Seller. Each Seller has made all deposits and payments
required by law to be made with respect to employees' withholding and other
employment taxes.
3.1.10 Books of Account. The books, records and accounts of each
Seller maintained with respect to the Business accurately and fairly
reflect, in reasonable detail, the transactions and the assets and
liabilities of such Seller with respect to the Business. No Seller has
engaged in any transaction with respect to the Business, except for
transactions reflected in the normally maintained books and records of the
Business.
3.1.11 Existing Condition. Since the Interim Balance Sheet Date,
except as set forth in Schedule 3.1.11, no Seller has:
17
(1) incurred any liabilities, other than liabilities incurred in
the ordinary course of business consistent with past practice or
failed to pay or discharge when due any liabilities of which the
failure to pay or discharge has caused or will cause any material
damage or risk of material loss to it or any of its assets or
properties other than with the prior written consent of PRG;
(2) sold, encumbered, assigned or transferred any assets or
properties which would have been included in the Assets if the Closing
had been held on the Interim Balance Sheet Date or on any date since
then, except (i) for the sale of property in the ordinary course of
business consistent with past practice or with the prior written
consent of PRG or (ii) the disposition of damaged or obsolete
inventory and equipment no longer useful in the business in an amount
not exceeding $100,000;
(3) mortgaged, pledged or subjected any of its Assets (other than
any Excluded Assets) to any mortgage, lien, pledge, security interest,
conditional sales contract or other encumbrance of any nature
whatsoever, except for Permitted Liens (as defined in subsection
3.1.12), other than with the prior written consent of PRG;
(4) agreed to any amendment or received notice of termination of
any material agreement, contract, commitment, lease or plan to which
it is a party or by which it is bound (not including any rental
agreement with aggregate rentals after the date hereof reasonably
expected not to exceed $2500 per week), or canceled, modified or
waived any substantial debts or claims held by it or waived any rights
of substantial value, whether or not in the ordinary course of
business, other than with the prior written consent of PRG;
(5) suffered any damage, destruction or loss, whether or not
covered by insurance, (i) materially and adversely affecting its
business, operations, assets or properties or (ii) of any item or
items carried on its books of account individually or in the aggregate
at more than $50,000 or suffered any repeated, recurring or prolonged
shortage, cessation or interruption of supplies or utility or other
services required to conduct its business and operations;
(6) suffered any material adverse change in its business,
operations, assets, prospects, properties or financial condition;
(7) received notice or had knowledge of any actual or threatened
labor trouble, strike or other occurrence, event or condition of any
similar character
18
which has had or could reasonably be expected to have a material
adverse effect on its business, operations, assets or properties;
(8) made commitments or agreements for capital expenditures or
capital additions or betterments involving expenditures of more than
$100,000 in the aggregate except such as may be involved in ordinary
repair, maintenance or replacement of its assets, other than with the
prior written consent of PRG;
(9) increased the salaries or other compensation of, or made any
advance (excluding advances for ordinary and necessary business
expenses) or loan to, any of its employees other than Xxxxxx Xxxxx or
Xxxxxx Xxxxxx or made any increase in, or any addition to, other
benefits to which any of its employees other than Xxxxxx Xxxxx or
Xxxxxx Xxxxxx may be entitled, other than with the prior written
consent of PRG;
(10) changed any of the accounting principles followed by it or
the methods of applying such principles other than with the prior
written consent of PRG; or
(11) entered into any transaction other than in the ordinary
course of business consistent with past practice, other than with the
prior written consent of PRG.
3.1.12 Title to Properties. Except as set forth in Schedule 3.1.12 or
otherwise in any schedule attached hereto , each Seller has good, valid and
marketable title to all of its properties and assets which would be
included in the Assets if the Closing took place on the date hereof, which
it purports to own, including without limitation all properties and assets
reflected in the Interim Balance Sheet (except for property sold for fair
value since the date thereof in the ordinary course of business consistent
with past practice), and all assets physically on the Business premises on
the date hereof (other than incidental personal property and furnishings),
free and clear of all mortgages, liens, pledges, security interest,
charges, claims, restrictions and other encumbrances and defects of title
of any nature whatsoever, except for the following ("Permitted Liens"): (i)
liens for current real or personal property taxes not yet due and payable,
(ii) liens disclosed in the Schedule 3.1.12, (iii) worker's, carrier's and
materialman's liens, (iv) liens that individually and in the aggregate are
immaterial in character, amount, and extent, and which do not materially
detract from the value or materially interfere with the present or proposed
use of the properties they affect (v) any lien securing indebtedness that
is assumed hereunder and identified on Schedule 3.1.12, and (vi) and lien
which arises from the failures of Sellers to comply with bulk sales laws in
any jurisdiction.
19
3.1.13 Condition for Tangible Assets. All buildings, structures,
facilities, equipment and other material items of tangible property and
assets which would be included in the Assets if the Closing took place on
the date hereof other than damaged or obsolete inventory and equipment
retained for spare parts or pending disposal with an aggregate value of
less than one percent (1%) of the inventory value shown on Exhibit A are in
reasonable operating condition and repair, subject to normal wear and
maintenance, are usable in the regular and ordinary course of business, and
conform, in all material respects, to all applicable laws, ordinances,
codes, rules and regulations, and Authorizations (as defined in subsection
3.1.14) relating to their construction, use and operation. No person other
than a Seller owns any equipment or other tangible assets or properties
(other than incidental personal property and furnishings) situated on the
premises of a Seller or necessary for the operation of the Business, except
for leased items disclosed in Schedule 3.1.13 and for items that,
individually and in the aggregate, are of immaterial value. All
customer-owned equipment stored at Sellers' facilities is set forth on
Schedule 3.1.13.
3.1.14 Compliance with Law; Authorizations. Each Seller has complied
with each, and is not in violation of any, law, ordinance, or governmental
or regulatory rule or regulation, whether federal, state, local or foreign,
to which such Seller's business, operations, assets or properties is
subject ("Regulations"), except for such violations as could not reasonably
be expected to have a material adverse effect on PRG. The Schedule 3.1.14
contains a list, prepared to the knowledge of Sellers, of all material
franchises, licenses, permits, rights, applications, filings, registrations
and other authorizations ("Authorizations") held by each Seller. Sellers
have no knowledge of any impediment to PRG obtaining all such permits
material to the conduct of the Business as presently conducted by Sellers.
3.1.15 Related Party Transactions. No officer or director of any
Seller, or member of the immediate family of any officer or director of any
Seller presently has, or during the past three years has had, any direct or
indirect ownership interest in (a) any firm or corporation (other than the
Sellers) with which a Seller is or was affiliated or with which a Seller
presently has, or during the past three years has had, a business
relationship, or (b) any firm or corporation (other than the Sellers) that
competes or during the past three years has competed with a Seller, or (c)
any property which is, or during the past three years was, the subject of
any material contract, agreement, understanding or business relationship.
No officer or director of any Seller, or member of the immediate family of
any officer or director of any Seller presently has, or during the past
three years has had, any direct or indirect interest in any material
contract with any Seller except for option agreements and employment
relationships all of which will be terminated no later than the Closing
Date.
3.1.16 Litigation. Except as disclosed on Schedule 3.1.16, no
litigation, including any arbitration, investigation or other proceeding of
or before any court, arbitrator or governmental or regulatory official,
body or authority is pending or, to the best knowledge of Seller is
threatened which relates to the assets of any Seller or the transactions
contemplated by
20
this Agreement, nor does any Seller know of any reasonable basis for any
such litigation, arbitration, investigation or proceeding, the result of
which could reasonably be expected to have a material adverse affect on
PRG, the Assets or the transactions contemplated hereby.
3.1.17 Contracts and Commitments.
(1) The agreements listed on Schedule 3.1.17 constitute all written
and oral agreements to which any Seller is a party that are material to the
Business as currently conducted, except that rental agreements with
aggregate rentals after the date hereof reasonably expected not to exceed
$2500 per week need not be listed on Schedule 3.1.17 and provided further
that customer identifying information will not be provided until the
Closing, including, without limitation:
.1 any agreements relating to the construction or purchase of
capital improvements, or the purchase of any materials, supplies, or
equipment, involving the expenditure by Sellers of more than $ 50,000
after the date hereof;
.2 any employment, consulting, management, or noncompetition
agreement not terminable at will by Seller without liability on less
than 30 days notice;
.3 any indemnification agreement relating to infringement of
proprietary rights;
.4 any agreement, contract, or commitment that is expected by
such Seller to be performed at or result in a loss, or which has or
would have material adverse effect upon the Business;
.5 any lease of personal property material to the operations of
such Seller;
.6 any agreement with any broker, finder, investment banker or
underwriter;
.7 any note, debenture, bond, equipment trust agreement, letter
of credit agreement, loan agreement or other contract or commitment
for the borrowing or lending of money relating to the Business or
agreement or arrangement for a line of credit or any guaranties, in
any manner, whether directly or indirectly, or any indebtedness,
dividend or other obligation of any other person or entity relating to
the Business (other than
21
endorsements in the ordinary course of business of negotiable
instruments for deposit or collection) but only to the extent that PRG
has assumed any obligation with respect thereto;
.8 agreements with sales representatives and distributors (the
identities of which will not be disclosed prior to Closing),
and including each amendment, modification, renewal or extension or other
material ancillary document pertaining thereto (the "Seller Agreements").
Prior to the Closing Date, the Sellers will have delivered or made
available to PRG correct and complete copies of each of the Seller
Agreements that are in writing.
(2) No Seller has received notice of cancellation or termination
(written or otherwise) under any option or right reserved to the other
party to any Seller Agreement or any notice of default (written or
otherwise) under such agreement. Except as otherwise disclosed on Schedule
3.1.17, no Seller, nor to the knowledge of any Seller, any other party, is
in breach or default of any Seller Agreement that would cause a material
adverse effect on the Business and, to the knowledge of each Seller, no
event has occurred that, with notice or lapse of time or both, would
constitute such a breach or default or permit termination, modification or
acceleration under such Seller Agreement that would cause a material
adverse effect on the Business except for the assignment of any Asset to
PRG without the consent of any third party, which will be handled pursuant
to Section 2.3 hereof. Except as separately identified in Schedule 3.1.17,
no approval or consent of any person is needed in order that the Seller
Agreements continue in full force and effect following the assignment of
such agreements to PRG. Furthermore, to the best knowledge of each Seller,
no material Seller Agreement, in the reasonable opinion of such Seller,
contains any contractual requirement with which there is a reasonable
likelihood PRG or any other party thereto will be unable to comply.
3.1.18 Additional Information. Schedule 3.1.18 contains accurate lists
and summary descriptions of the following:
(1) the names and titles of and current annual base salary or
hourly rates and date and amount of most recent raise for all
employees of each Seller engaged in the conduct of the Business,
together with a statement of the full amount and nature of any other
remuneration, whether in cash or kind, paid to each such person during
the past or current fiscal year or payable to each such person in the
future and the bonuses accrued for, the vacation and severance
benefits to which, each such person is entitled; and
22
(2) all names under which each Seller has conducted any business
or which it has otherwise used during the last five years.
3.1.19 Labor Matters. Schedule 3.1.19 contains a complete list of all
written contracts, commitments or arrangements with any labor union, and no
labor union has requested in writing to any Seller or, to the best of each
Seller's knowledge, has sought to represent any of the employees,
representatives or agents of any Seller, other than as disclosed in
Schedule 3.1.19. There are no oral agreements with any labor union. There
is no strike or other labor dispute involving any Seller pending, and no
Seller has reason to believe any labor dispute to be threatened, that could
have a material adverse effect on the Business, nor is any Seller aware of
any labor organization activity involving its employees, other than as
disclosed in Schedule 3.1.19.
3.1.20 Employees and Related Matters.
(1) Schedule 3.1.20 contains a complete list of all written
employee benefit plans, whether covering one person or more than one
person, sponsored or maintained by each Seller. Schedule 3.1.20 also
contains a list of any other agreements with employees under which any
employee of any Seller is entitled to receive a percentage of profits
or revenues of all or any portion of Sellers. For the purposes hereof,
the term "employee benefit plan" includes all written plans, funds,
programs and policies, providing benefits of economic value to any
employee, former employee, or present or former beneficiary, dependent
or assignee of any such employee or former employee other than regular
salary, wages or commissions paid substantially concurrently with the
performance of the services for which paid. Without limitation, the
term "employee benefit plan" includes all employee welfare benefit
plans within the meaning of section 3(1) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and all employee
pension benefit plans within the meaning of section 3(2) of ERISA.
Each plan providing benefits which are funded through a policy of
insurance is indicated by the word "insured" placed by the listing of
the plan in Schedule 3.1.20. Except as provided in Schedule 3.1.20, no
Seller nor any trade or business (whether or not incorporated) which,
together with any Seller, would be treated as a single employer under
Section 4001 of the Employee Retirement Income Security Act of 1974
(an "ERISA Affiliate") is a contributing employer to a multi-employer
plan as defined in Section 3(37) of ERISA. With respect to employee
benefit plans subject to Title IV of ERISA other than multi-employer
plans, each Seller has made full and timely payment of all
contributions required under the terms of each such plan and Section
412(m) of the Internal Revenue Code of 1986, as amended (the "Code")
and Section 302(e) of ERISA; the present fair market value of all
assets of each such plan exceeds the present value of all vested
benefits
23
under each such plan, as determined on the most recent valuation date
of such plan and in accordance with the provisions of ERISA and the
regulations thereunder for calculating the potential liability of each
Seller or any ERISA Affiliate under Title IV of ERISA; and no
accumulated funding deficiency (as defined in Section 412 of the Code
and Section 302 of ERISA) exists with respect to any such plan. No
Seller nor any ERISA Affiliate has incurred any liability to the
Pension Benefit Guaranty Corporation under ERISA, nor is there a
reasonable basis to believe that any such liability will be incurred.
(2) No Seller has any obligation to provide medical, life
insurance, disability or other benefits to its or any of its
predecessors retired employees formerly engaged in the Business.
(3) Except as provided in Schedule 3.1.20, no Seller is a party
to any collective bargaining agreement.
(4) Upon execution of this Agreement, PRG shall have no liability
for any withdrawal liability with respect to any present or former
employee of any Seller under any employee benefit or pension plan.
3.1.21 Intellectual Property Matters. No Seller in the conduct of the
Business utilizes any patent, trademark, tradename, service xxxx,
copyright, software (other than mass market software sold through standard
retail distribution channels) except for those listed on Schedule 3.1.21
(the "Intellectual Property") under such Seller's name, all of which are
owned by such Seller free and clear of any liens, claims, charges or
encumbrances, except for software for which Seller has adequate valid
licenses. No Seller has knowledge that it infringes upon or unlawfully or
wrongfully uses any patent, trademark, tradename, service xxxx, copyright
or trade secret owned or claimed by another. No Seller is in default under,
and no Seller has received any notice of any claim of infringement or any
other claim or process relating to any such patent, trademark, tradename,
service xxxx, copyright or trade secret. No present or former employee of
any Seller and no other person owns or has any proprietary, financial or
other interest, direct or indirect, in whole or in part, in any patent,
trademark, tradename, service xxxx or copyright, or in any application
therefor, or in any trade secret, which any Seller owns, possesses or uses
in its operations as now or heretofore conducted. Schedule 3.1.21 lists all
confidentiality or non-disclosure agreements to which each Seller or any of
such Seller's employees engaged in the Business is a party which relates to
the Business which would be binding on PRG or enforceable by PRG.
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3.1.22 Environmental Matters. Except as set forth in Schedule 3.1.22:
(1) No Seller is required to obtain any permits, licenses and
other authorizations which are required in connection with the conduct
of the Business under Regulations relating to pollution or protection
of the environment.
(2) Each Seller is, to its knowledge, in material compliance with
all limitations, restrictions, conditions, standards, prohibitions,
requirements, and obligations, contained in Regulations relating to
pollution or protection of the environment or contained in any code,
plan, order, decree, judgment, injunction, notice or demand letter
issued, entered, promulgated or approved thereunder.
(3) No Seller is aware of, nor has any Seller received notice of,
any past or present events, conditions, circumstances, activities,
practices, incidents, actions or plans which is reasonably likely to
interfere with or prevent compliance or continued compliance by
Sellers with those laws or any regulations, code, plan, order, decree,
judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder, or which may give rise to any
common law or legal liability, or otherwise form the basis of any
claim, action, demand, suit, proceeding relating to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport, or handling, or the emission, discharge, release or
threatened release into the environment, of any pollutant,
contaminant, chemical, or industrial, toxic or hazardous substance or
waste.
(4) There is no civil, criminal or administrative action, suit,
demand, claim, hearing, notice or demand letter, notice or violation,
investigation, or proceeding pending or, to the Sellers' knowledge,
threatened against any Seller in connection with the conduct of the
Business relating in any way to those laws relating to pollution or
protection of the environment or any regulation, code, plan, order,
decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder except for environmental matters
which, in the aggregate, could reasonably be expected to be cured for
less than $25,000.
(5) Except as set forth in Schedule 3.1.22, no filing is required
to be made in connection with the transaction contemplated by this
Agreement pursuant to the New Jersey Industrial Site Recovery Act or
any similar statute in any state in which Sellers operate.
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3.1.23 Real Property.
(1) Real Property Defined. All real property (including, without
limitation, all interests in and rights to real property) and
improvements located thereon which are owned or leased by any Seller
and used in connection with the Business or included in the Assets are
listed on Schedule 3.1.23 in response to this subsection
(collectively, the "Real Property").
(2) Title to Owned Real Property. With the exception of the
Facility, no Seller owns any Real Property.
(3) Leased Real Property. With respect to the Real Property that
is leased by Seller:
.1 Sellers have delivered to PRG a true and complete copy of
every lease and sublease to which each Seller is a tenant or
subtenant (each a "Lease" and collectively, the "Leases");
Schedule 3.1.23 describes each Lease by setting forth the name of
the Seller, the name of the landlord or sublandlord, a
description of the leased premises, the commencement and
expiration dates of the current term, the security deposited by
the applicable Seller with the landlord or sublandlord, if any,
the monthly rental (including base and all additional rents), and
whether the assignment of such Lease by such Seller to PRG
requires the consent of the landlord or sublandlord; and
.2 each Lease is, and at Closing shall be, in full force and
effect, has not been assigned, modified, supplemented or amended
except as listed on Schedule 3.1.23, and except as set forth in
Schedule 3.1.23 no Seller nor, to any Seller's knowledge, the
landlord or sublandlord under any Lease is in material default
under any of the Leases, and no circumstances or state of facts
presently exists which, with the giving of notice or passage of
time, or both, would permit the landlord or sublandlord under any
Lease to terminate any Lease.
(4) Utility Services. There is no condition known to Seller which
will result in the termination of the present access from the Real
Property or to the knowledge of Sellers which would materially
adversely affect the ability of PRG to obtain water, electric, gas,
sewer and utility services and storm drainage facilities adequate for
the present use of the Real Property by Seller in conducting the
Business.
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(5) Access. There are currently no restrictions known to any
Seller on entrance to or exit from the Real Property to adjacent
public streets and no conditions or threat of any conditions known to
any Seller which will result in the termination of the present access
from the Real Property owned or leased by it to existing highways and
roads.
(6) Absence of Notice. Except as set forth in Schedule 3.1.23, no
Seller has received notices, oral or written, with respect to matters
which would materially adversely affect the use of the Real Property
or which would require the expenditure of more than $10,000 to cure
breaches, violations or like matters relating to such Real Property
other than matters covered in Section 3.1.22 hereof.
(7) No Violations. To each Seller's knowledge, the Real Property
owned or leased by it and the present uses thereof comply in all
material respects with all Regulations of all governmental bodies
having jurisdiction over the Real Property, and Seller has received no
written notices, from any governmental body, and has no reason to
believe, that the Real Property or any improvements erected or situate
thereon, or the uses conducted thereon or therein, violate any
Regulations of any governmental body having jurisdiction over the Real
Property.
(8) No Encumbrances. Between the date of this Agreement and
Closing Seller shall not sell, mortgage or encumber the Leases.
(9) Executory Contracts. Set forth on the Schedule 3.1.23 is a
description of all executory contracts made by or on behalf of each
and any Seller, or by which any Seller is bound, with respect to the
Real Property ("Executory Contracts"), including, without limitation,
operation, management, maintenance, utility, and construction
contracts. At Closing, the Sellers shall deliver to PRG a true and
complete copy (the original execution copy, if available) of each of
the Executory Contracts.
3.1.24 Availability of Documents. Sellers have made available to PRG
copies of all documents, including, without limitation, all agreements,
contracts, commitments, insurance policies, leases, plans, instruments,
undertakings, authorizations, permits, licenses, patents, trademarks, trade
names, service marks, copyrights and applications therefor listed in the
Schedule 3.1.24 hereto or referred to herein. All such copies are true and
complete and include all amendments, supplements and modifications thereto
or waivers currently in effect thereunder.
3.1.25 Completeness of Disclosure. The representations of Sellers set
forth in this Agreement together with all information provided or made
available by Sellers to PRG in connection with this Agreement and the
transactions contemplated hereby, all taken as a whole,
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do not contain any untrue statement of a material fact or omit any fact
necessary to make the representations of Sellers set forth herein not
misleading in light of the circumstances in which they were made, except as
could not reasonably be expected to have a material adverse affect on the
value of the Business taken as a whole.
3.2 Representations and Warranties of PRG. PRG represents and warrants to
the Sellers as follows:
3.2.1 Legal Existence. PRG is a limited liability company duly
organized, validly existing and in good standing under the laws of the
State of Delaware.
3.2.2 Power and Authorization. PRG has the power, authority and legal
right to execute, deliver and perform this Agreement. The execution,
delivery and performance of this Agreement by PRG have been duly authorized
by all necessary action of PRG and its members and managers. This Agreement
has been duly executed and delivered by PRG and constitutes the legal,
valid and binding obligation of PRG enforceable against PRG in accordance
with its terms.
3.2.3 Validity of Contemplated Transactions, etc. The execution,
delivery and performance of this Agreement by PRG does not and will not
violate, conflict with or result in the breach of any term, condition or
provision of, or require the consent of any other party to, (a) any
existing law, ordinance, or governmental rule or regulation to which PRG is
subject, (b) any judgment, order, writ, injunction, decree or award of any
court, arbitrator or governmental or regulatory official, body or authority
which is applicable to PRG, (c) the certificate of formation, limited
liability company agreement, other charter documents or by-laws of, or any
securities issued by, PRG, or (d) any mortgage, indenture, agreement,
contract, commitment, lease, plan or other instrument, document or
understanding, oral or written, to which PRG is a party or by which PRG is
otherwise bound. No authorization, approval or consent of, and no
registration or filing with, any governmental or regulatory official, body
or authority is required in connection with the execution, delivery and
performance of this Agreement by PRG. Neither PRG or its "ultimate parent
entities" constitute persons with assets or annual net sales (determined as
provided in 16 C.F.R. ss. 801.1.11) greater than or equal to $100 million
for purposes of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended.
3.2.4 PRG is not a party to any agreement which could reasonably be
expected to hinder, delay or prevent it from timely making any payment to
Sellers which may be required pursuant to Section 1.6.4. PRG currently has,
and has no reason to believe that it will not have at any time after the
Closing, the liquid assets or available financing necessary to enable it
make the maximum required payment to Sellers pursuant to Section 1.6.4.
3.3 Survival of Representations and Warranties. All representations and
warranties made by the parties in this Agreement or in any certificate,
schedule, statement, document or
28
instrument furnished hereunder or in connection with negotiation, execution and
performance of this Agreement shall survive the Closing for a period ending on
January 2, 1998. Notwithstanding any investigation or audit conducted before or
after the Closing Date or the decision of any party to complete the Closing,
each party shall be entitled to rely upon the representations and warranties set
forth herein and therein
3.4 Disclaimer of Representations and Warranties. Except for the
representations and warranties set forth in this Agreement, PRG has not relied
upon any representations or warranties of the Sellers or any other person or
entity in connection with this Agreement or the transactions contemplated
hereby. It is expressly understood and agreed by PRG that, except as
specifically provided in this Agreement, the transfer by the Sellers of the
Assets as contemplated hereby shall be made on an "as is, where is" basis,
regardless of the condition of the Assets and whether PRG will have had a
reasonable opportunity to inspect and examine the condition thereof. EXCEPT AS
OTHERWISE EXPRESSLY PROVIDED HEREIN, ALL WARRANTIES (WHETHER WRITTEN OR ORAL,
EXPRESS OR IMPLIED) IN REGARD TO MERCHANTABILITY, FITNESS FOR A PARTICULAR USE,
CONDITION, DESIGN, OPERATION, MAINTENANCE, VALUE OR OTHERWISE WITH RESPECT TO
THE ASSETS ARE EXPRESSLY EXCLUDED, AND PRG AGREES TO ACCEPT THE ASSETS IN THEIR
"AS IS, WHERE IS" CONDITION, WITH ANY AND ALL DEFECTS AND FAULTS.
ARTICLE 4. -- AGREEMENTS PENDING CLOSING
4.1 Agreements of Seller Pending the Closing. Each Seller covenants and
agrees that, until the earlier of the Closing or the termination of this
Agreement, and except as otherwise agreed to in writing by PRG:
4.1.1 Business in the Ordinary Course. The Business shall be conducted
solely in the ordinary course consistent with past practice, except that
there shall be no restriction on any Seller's payment, through dividends,
distributions or otherwise, of cash or cash equivalents to shareholders or
others and there shall be no restriction on the payment or prepayment of
any obligations or liabilities of the Sellers; provided, however, that
Schedule 4.1.1 contains a complete list of all amounts distributed to or
paid on behalf of (regardless of whether designated as salary, bonus,
dividends, loans, or otherwise) Messrs Xxxxx and Xxxxxx by any of the
Sellers during 1996 and 1997 through the Interim Balance Sheet Date which
Schedule shall be updated and delivered in final form at the Closing.
4.1.2 Maintenance of Physical Assets. The Sellers shall continue to
maintain and service the physical assets used in the conduct of the
Business in the same manner as has been consistent with past practice.
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4.1.3 Employees and Business Relations. The Sellers shall use
commercially reasonable efforts to keep available the services of the
present employees and agents of the Business and to maintain the relations
and goodwill with the suppliers, customers, distributors and any others
having business relations with the Business consistent with past practice;
provided, however, that the inability of PRG to obtain the services of any
employee or agent or maintain relations with and the goodwill of any
supplier, customer, distributor or other person shall not constitute a
breach hereunder. None of the Sellers shall make any changes in its
vacation policies.
4.1.4 Maintenance of Franchises, etc. The Sellers shall use their
commercially reasonable efforts to maintain in full force and effect all
franchises currently in effect used in the conduct of the business of the
Business and shall notify PRG of any changes to any material franchise
agreement.
4.1.5 Compliance with Laws, etc. The Sellers shall continue to comply
with all laws, ordinances, rules, regulations and orders applicable to the
Business, and to each Seller's operations, assets or properties in respect
thereof, the noncompliance with which could reasonably be expected to
materially adversely affect the Business or the Assets.
4.1.6 Schedules and Interim Balance Sheet. As soon as practicable, but
in no event later than August 15, 1997 Sellers shall deliver all schedules
which are referenced in this Agreement and the Interim Balance Sheet. PRG
shall have ten business days to review such schedules and the Interim
Balance Sheet. After delivery of the schedules, the Sellers shall promptly
disclose to PRG any information contained in their representations and
warranties or the Schedules which, because of an event occurring after the
date hereof would materially adversely affect the Business and shall
disclose, prior to closing, any other information which is materially
incomplete or is no longer substantially correct as of all times after the
date hereof until the Closing Date, provided, however, that to the extent
any information is disclosed to PRG prior to closing in a schedule or
otherwise pursuant to this Section 4.1.6, the representations and
warranties contained herein shall be deemed modified to reflect such new
information and PRG shall, after the Closing Date, have no claim for a
breach with respect thereto.
4.1.7 Conduct of Business. Each Seller shall cooperate with PRG and
use its commercially reasonable efforts to cause all of the conditions to
the obligations of PRG and the Sellers under this Agreement to be satisfied
on or prior to the Closing Date.
4.1.8 Sale of Assets; Negotiations. No Seller and no Shareholder will
enter into any agreement, discussion, or negotiation with, or provide
information to, any other corporation, firm or other person, or solicit,
encourage, entertain or consider any inquiries or proposals, with respect
to (a) the possible disposition of a material portion of any Seller or any
assets of any Seller, (b) any business combination involving any Seller,
whether by way of merger, consolidation, share
30
exchange or other transaction or (c) the purchase of any equity security
(including without limitation any options, warrants, rights, or convertible
security) issued or to be issued by any Seller, except for the purchase or
redemption of outstanding employee stock options as set forth on Schedule
A-2. No Seller shall provide any confidential information concerning the
Business or its properties or assets to any third party other than (i) in
the ordinary course of business or (ii) in connection with the transactions
contemplated by this Agreement. No Shareholder shall, directly or
indirectly, sell or encumber all or any part of the capital stock of any
Seller.
4.1.9 Access; Audits. Upon reasonable prior notice to Seller in each
instance, each Seller shall give to PRG's officers, employees, counsel,
accountants and other representatives, including without limitation the
Auditors (collectively, the "Agents"), reasonable access to and the right
to inspect, during normal business hours (or at such other times as the
parties may agree), all of the premises, properties, assets, financial and
other records, contracts and other documents relating to the Business and
shall permit them to consult with the officers, accountants and counsel of
such Seller for the purpose of (a) making such investigation of the
Business, including, without limitation, the Interim Balance Sheet, as PRG
shall desire to make and (b) auditing the financial statements and
financial and operational condition of each such Seller, and preparing
audited financial statements with respect to, each of the fiscal years of
such Seller in the two-year period ending on December 31, 1996.
Furthermore, each Seller shall furnish to PRG and the Agents all such
documents and copies of documents and records and information with respect
to the affairs of the Business and copies of any working papers relating
thereto as PRG or such Agents shall from time to time reasonably request
and shall permit PRG and the Agents to make such physical inventories and
inspections of the Assets as PRG or such Agents may request from time to
time. PRG shall be liable for the fees, costs and out-of-pocket expenses of
the Auditors incurred in connection with the audit and the preparation of
the audited financial statements described in this subsection 4.1.11.
4.2 Agreements of PRG Pending the Closing. PRG covenants and agrees that,
pending the Closing and except as otherwise agreed to in writing by Seller:
4.2.1 Actions of PRG. PRG will not knowingly take any action which
would result in a breach of any of its representations and warranties
hereunder. Furthermore, PRG shall cooperate with each Seller and use its
commercially reasonable efforts to cause all of the conditions to the
obligations of PRG and the Sellers under this Agreement to be satisfied on
or prior to the Closing Date.
4.2.2 Ernst & Young Audit. Promptly after its receipt thereof, PRG
will provide Sellers with a copy of all financial statements of Sellers
prepared by Ernst & Young. PRG will use reasonable efforts to deliver such
financial statements within 60 days of the Closing Date and will, in all
events, deliver such statements within 90 days of the Closing Date.
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4.2.3 Confidentiality. Unless and until the Closing has been
consummated, except as specifically provided herein, PRG will hold, and
shall cause its counsel, independent certified public accountants,
appraisers and investment bankers to hold in confidence any confidential
data or information made available to PRG in connection with this Agreement
with respect to the Business, using the same standard of care to protect
such confidential data or information as is used to protect PRG's
confidential information. If the transactions contemplated by this
Agreement are not consummated, PRG agrees that it shall return or cause to
be returned to the Sellers all written materials and all copies thereof
that were supplied to PRG by the Sellers that contain any such confidential
data or information. Nothing herein is intended to or shall be deemed to
terminate, modify or limit in any way paragraph 3 of that certain letter
from PRG addressed to Xxxxx, Xxxxxx and BTLI dated April 16, 1997 or the
confidentiality agreement, dated as of April 16, 1997 between PRG and BTLI
(the "Confidentiality Agreement"). Sellers acknowledge that PRG may provide
information regarding the Business to The Bank of New York in connection
with the financing of the transactions contemplated by this Agreement
provided that it agrees to be bound by the terms of the Confidentiality
Agreement.
4.2.4 PRG will use reasonable efforts not to enter into or be a party
to any instrument or agreement which could hinder, delay or prevent it from
timely making any payment to Sellers required pursuant to Section 1.6.4.
Until it is determined that PRG is not required to make any payments to
Sellers pursuant to Section 1.6.4 or PRG has made all such payments which
may be required, PRG shall at all times from and after the date hereof use
reasonable efforts to maintain sufficient liquid assets or lines of credit
in amounts sufficient to enable it make the maximum required payment to
Sellers pursuant to Section 1.6.4.
4.3 Sales Taxes.
4.3.1 PRG will not make, and has not made, any election with respect
to sales and use taxes which would materially adversely affect any Seller
or any Seller's right to claim an exemption from the payment of sales or
use tax in any state in connection with the sale of Assets pursuant to this
Agreement.
4.3.2 On or prior to the Closing, PRG will provide each Seller with
resale certificates for the states of New York, New Jersey, Florida,
Maryland, Nevada, California and Arizona with respect to those Assets
consisting of rental equipment and sales inventory sold to PRG pursuant to
this Agreement and shall cooperate with each Seller in complying with any
filing or other requirements related to such Seller's claim for exemption
from the payment of sales and use tax in connection with the sale of Assets
pursuant to this Agreement, including but not limited to, providing such
information as may be necessary for any Sellers to make any required
filings in connection with such exemption.
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ARTICLE 5. -- CONDITIONS PRECEDENT TO THE CLOSING
5.1 Conditions Precedent to PRG's Obligations. All obligations of PRG under
this Agreement are subject to the fulfillment or satisfaction, prior to or at
the Closing, of each of the following conditions precedent:
5.1.1 Representations and Warranties True as of the Closing Date. The
representations and warranties of each Seller contained in this Agreement
or in any schedule, certificate or document delivered by each Seller to PRG
pursuant to the provisions hereof shall have been true in all material
respects on the date hereof and shall be true in all material respects on
the Closing Date with the same effect as though such representations and
warranties were made as of such date, except for those representations and
warranties which were made solely as of another date, which shall be true
in all material respects as of such other date.
5.1.2 Delivery of Schedules. Sellers shall have delivered each of the
schedules required to be attached hereto and such schedules shall have been
reviewed by PRG and determined in PRG's reasonable discretion not to
contain information which materially adversely affects the financial
condition, value or prospects of the Business.
5.1.3 Compliance with this Agreement. Each Seller shall have performed
and complied in all material respects with all agreements required by this
Agreement to be performed or complied with by it prior to or at the
Closing.
5.1.4 Delivery of Employment Agreements. Xxxxx shall have executed and
delivered an employment agreement substantially identical to that set forth
as Exhibit B hereof and Xxxxxx shall have executed and delivered an
employment agreement substantially identical to that set forth as Exhibit C
hereof.
5.1.5 Closing Certificate. PRG shall have received a certificate from
each Seller dated the Closing Date, certifying that the conditions
specified in subsections 5.1.1 and 5.1.3 hereof have been fulfilled
("Seller Closing Certificates").
5.1.6 No Threatened or Pending Litigation. On the Closing Date, no
suit, action or other proceeding, or injunction or judgment relating
thereto, shall be threatened or pending before any court or governmental or
regulatory official, body or authority in which it is sought to restrain or
prohibit or to obtain damages or other relief in connection with this
Agreement or the consummation of the transactions contemplated hereby, and
no investigation by any governmental authority that might result in any
such suit, action or proceeding shall be pending.
5.1.7 Consents and Approvals. Except for consents required by the
terms of the contracts, commitments, agreements or franchises listed in
Schedule 5.1.7 hereto, the holders of
33
any indebtedness of any Seller, the lessors or lessees of any real or
personal property or assets leased by any Seller, the parties (other than a
Seller) to any contract, commitment or agreement to which a Seller is a
party or subject, any governmental or regulatory official, body or
authority or any other person which owns or has authority to grant any
franchise and any governmental, judicial or regulatory official, body or
authority having jurisdiction over any Shareholder, any Seller or PRG to
the extent that their consent or approval is required or necessary under
the pertinent debt, lease, contract, commitment or agreement or other
document or instrument or under applicable orders, laws, rules or
regulations, for the consummation of the transactions contemplated hereby
in the manner herein provided, shall have granted such consent or approval.
5.1.8 Leases. BTLI, as landlord, shall, on the Closing Date, execute
and deliver to PRG, as tenant, a lease agreement substantially in the form
of Exhibit E with respect to the Facility. In addition, on the Closing
Date, each Seller shall assign to PRG all right, title and interest of such
Seller in and to all Leases (and shall deliver to PRG original copies of
all consents required for such assignments) and all security deposits made
by such Seller pursuant to any of the Leases, including, but not limited
to, the security deposits listed on Schedule 5.1.8, together with all
interest earned on such deposits.
5.1.9 Material Adverse Changes. The business, operations, assets or
prospects of the Business shall not have been and shall not reasonably be
threatened to be materially adversely affected in any way as a result of
any event or occurrence.
5.1.10 Legal Opinion. Kronish, Lieb, Weiner & Xxxxxxx LLP, counsel for
Sellers, shall have delivered to PRG a written opinion, dated the Closing
Date, in form and substance reasonably satisfactory to PRG and its counsel.
Such opinion may, to the extent reasonably necessary, rely on the opinions
of other counsel reasonably acceptable to PRG.
5.1.11 Approval of Counsel; Corporate Matters. All actions,
proceedings, resolutions, instruments and documents on the part of Sellers
required to carry out this Agreement or incidental hereto and all other
related legal matters shall have been approved on the Closing Date by Pepe
& Hazard, LLP, counsel for PRG, in the exercise of their reasonable
judgment. Each Shareholder and each Seller shall also have delivered to PRG
such other documents, instruments, certifications and further assurances as
such counsel may reasonably require.
5.1.12 Shareholder Releases. PRG shall have been provided with copies
of releases, substantially in the form of Exhibit G hereof, from all
shareholders and option holders of Sellers other than Messrs. Xxxxx and
Xxxxxx. Such releases shall provide that PRG shall be a third-party
beneficiary thereof.
5.1.13 Customer and Vendor Lists. At Closing each Seller will deliver
to PRG true and complete copies of all customer and vendor lists and all
historic data in its possession
34
with respect to prior sales to customers and purchases from vendors. The
customer and vendor concentration lists provided by each Seller to PRG are
true and correct in all material respects. At Closing, such lists will be
reproduced with customer and vendor names and identifying information.
5.1.14 Contracts Prior to the Closing Date, the Sellers will have
delivered or made available to PRG correct and complete copies of each of
the Seller Agreements that are in writing.
5.1.15 Multiemployer Plans Sellers shall have provided PRG with a
letter from an authorized representative of each multi-employer plan to
which Sellers are required to make contributions confirming that there is
no unfunded pension liability with respect to such plan.
5.2 Conditions Precedent to the Obligations of Seller. All obligations of
each Seller under this Agreement are subject to the fulfillment or satisfaction,
prior to or at the Closing, of each of the following conditions precedent:
5.2.1 Representations and Warranties True as of the Closing Date. The
representations and warranties of PRG contained in this Agreement or in any
schedule, certificate or document delivered by PRG to Sellers pursuant to
the provisions hereof shall have been true in all material respects on the
date hereof and shall be true in all material respects on the Closing Date
with the same effect as though such representations and warranties were
made as of such date, except for those representations and warranties which
were made solely as of another date, which shall be true in all material
respects as of such other date.
5.2.2 Compliance with this Agreement. PRG shall have performed and
complied in all material respects with all agreements required by this
Agreement to be performed or complied with by it prior to or at the
Closing.
5.2.3 Delivery of Employment Agreements. PRG shall have executed and
delivered an employment agreement substantially identical to that set forth
in Exhibit B hereof, an employment agreement substantially identical to
that set forth as Exhibit C hereof, and an Investment Option Agreement
substantially identical to Exhibit A of such employment Agreements.
5.2.4 Delivery of LLC Agreement, Etc. PRG shall have delivered copies
of its current limited liability company agreement and Owners' Agreement
and the provisions of such agreements which could reasonably be expected to
materially affect the rights of the Shareholders if they exercise their
option to purchase Units in PRG, shall be reasonably satisfactory to the
Shareholders.
35
5.2.5 Payment of Purchase Price. PRG shall have paid the Purchase
Price as provided in Section 1.3.2 and shall have paid the signing-on
bonuses to Messrs. Xxxxx and Xxxxxx as provided in Section 2.2.3.
5.2.6 Closing Certificates. The Sellers shall have received a
certificate from PRG dated the Closing Date certifying that the conditions
specified in subsections 5.2.1 and 5.2.2 hereof have been fulfilled.
5.2.7 No Threatened or Pending Litigation. On the Closing Date, no
suit, action or other proceeding, or injunction or judgment relating
thereto, shall be threatened or pending before any court or governmental or
regulatory official, body or authority in which it is sought to restrain or
prohibit or to obtain damages or other relief in connection with this
Agreement or the consummation of the transactions contemplated hereby, and
no investigation by any governmental authority that might result in any
such suit, action or proceeding shall be pending.
5.2.8 Consents and Approvals. The holders of any indebtedness of any
Seller, the lessors or lessees of any real or personal property or assets
leased by any Seller, the parties (other than a Seller) to any contract,
commitment or agreement to which a Seller is a party or subject, any
governmental or regulatory official, body or authority or any other person
which owns or has authority to grant any franchise and any governmental,
judicial or regulatory official, body or authority having jurisdiction over
any Shareholder, any Seller or PRG to the extent that their consent or
approval is required or necessary under the pertinent debt, lease,
contract, commitment or agreement or other document or instrument or under
applicable orders, laws, rules or regulations, for the consummation of the
transactions contemplated hereby in the manner herein provided, shall have
granted such consent or approval.
5.2.9 Leases. PRG, as tenant, shall, on the Closing Date, execute and
deliver to BTLI, as landlord, a lease agreement substantially in the form
of Exhibit E with respect to the Facility. In addition, on the Closing
Date, PRG shall assume all obligations of each Seller under all Leases.
5.2.10 Legal Opinion. Pepe & Hazard LLP, counsel for PRG, shall have
delivered to BTLI a written opinion, dated the Closing Date, in form and
substance reasonably satisfactory to BTLI and its counsel. Such opinion
may, to the extent reasonably necessary, rely on the opinions of other
counsel reasonably acceptable to BTLI.
5.2.11 Approval of Counsel; Corporate Matters. All actions,
proceedings, resolutions, instruments and documents on the part of PRG
required to carry out this Agreement or incidental hereto and all other
related legal matters shall have been approved on the Closing
36
Date by Kronish, Lieb, Weiner & Xxxxxxx LLP, counsel for BTLI, in the
exercise of their reasonable judgment.
ARTICLE 6. -- INDEMNIFICATION
6.1 General Indemnification Obligation of Seller. From and after the
Closing, each of the Sellers and the Shareholders, jointly and severally, will
reimburse, indemnify and hold harmless PRG, its officers, directors, employees,
agents, successors and assigns (each an "Indemnified PRG Party") against and in
respect of:
6.1.1 any and all damages, losses, deficiencies, liabilities, costs
and expenses incurred or suffered by any Indemnified PRG Party that result
from, relate to or arise out of:
(1) any and all liabilities and obligations of any Seller of any
nature whatsoever, except for the Assumed Liabilities;
(2) any and all actions, suits, claims, or legal, administrative,
arbitration, governmental or other proceedings or investigations
against any Indemnified PRG Party that relate to any Seller or the
Business in which the principal event giving rise thereto occurred
prior to the Closing Date or which result from or arise out of any
action or inaction prior to the Closing Date of any Seller or any
director, officer, employee, agent, representative or subcontractor of
any Seller, except for the Assumed Liabilities;
(3) any breach of any representation, warranty, agreement or
covenant on the part of any Seller under this Agreement to the extent
affirmed in a Seller Closing Certificate;
(4) any sales or use or similar tax liability of Sellers for
which PRG would not be responsible if Sellers and PRG had complied
fully with applicable bulk sales laws providing notice of the sale of
the Assets to state and local taxing authorities; or
(5) any and all actions, suits, claims, proceedings,
investigations, demands, assessments, audits, fines, judgments costs
and other expenses (including, without limitation, reasonable legal
fees and expenses) incident to any of the foregoing.
6.2 General Indemnification Obligation of PRG. From and after the Closing,
PRG will reimburse, indemnify and hold harmless the Sellers and their respective
officers, directors,
37
employees, agents, successors and assigns (each an "Indemnified Seller Party")
against and in respect of:
6.2.1 Any and all damages, losses, deficiencies, liabilities costs and
expenses incurred or suffered by any Indemnified Seller Party that result
from, relate to or arise out of:
(1) the Assumed Liabilities;
(2) any breach of any representation, warranty, agreement or
covenant on the part of PRG under this Agreement;
(3) the conduct of the Business by PRG after the Closing Date;
(4) any and all actions, suits, claims, proceeding,
investigations, demands, assessments, audits, fines, judgments, costs
and other expenses (including, without limitation, reasonable legal
fees and expenses) incident to any of the foregoing.
6.3 Limit on Indemnification Liability. Notwithstanding anything contained
in Section 6.1 to the contrary, the aggregate liability of the Sellers under
Section 6.1 shall be limited to the funds held in escrow pursuant to Section 1.7
except that such limitation shall not apply to indemnification pursuant to
Section 6.1.1(d). Any funds released from escrow shall no longer be subject to
claims for indemnity by any Indemnified PRG Party. In addition, Sellers shall
not have any liability to pay any claims for indemnification under Section 6.1
to the extent the aggregate of the losses sustained by the Indemnified PRG
Parties does not exceed $50,000 and such indemnity obligation shall exclude the
amount of all such losses not in excess of $50,000; provided that sales taxes
indemnified pursuant to Section 6.1.1(d) shall be indemnified fully.
6.4 Method of Asserting Claims, etc.
6.4.1 Promptly after receipt by an Indemnified PRG Party or an
Indemnified Seller Party (the "Indemnified Party") of notice of a claim or
demand (an "Asserted Liability") that may result in indemnification
pursuant to Sections 6.1 or 6.2 of this Agreement, the Indemnified Party
shall give written notice thereof (the "Claims Notice") to the party or
parties against whom indemnification is or may be claimed (individually an
"Indemnifying Party", and collectively the "Indemnifying Parties"). The
Claims Notice shall describe the Asserted Liability in reasonably
sufficient detail, based on the information then available, to allow the
Indemnifying Party to evaluate the Asserted Liability. The failure of the
Indemnified Party to deliver a Claims Notice to the Indemnifying Party
shall not relieve the Indemnifying Party from its obligation to indemnify
the Indemnified Party except to the extent the Indemnifying Party is
materially prejudiced by the failure to receive such Claims Notice. The
Indemnifying Party may elect to
38
compromise or defend, at its own expense and by its own counsel, reasonably
acceptable to the Indemnified Party, any Asserted Liability; provided,
however, that the Indemnifying Party may not compromise or settle any
Asserted Liability without the consent of the Indemnified Party or Parties
unless such compromise or settlement requires no more than a monetary
payment for which the Indemnified Party or Indemnified Parties hereunder
are fully indemnified or involves other matters not binding upon the
Indemnified Party or Indemnified Parties. If the Indemnifying Party elects
to compromise or defend such Asserted Liability, it shall within thirty
(30) calendar days of notice of the Asserted Liability provided to it under
this Subsection (or sooner, if the nature of the Asserted Liability so
requires) notify the Indemnified Party or Indemnified Parties in writing of
its intent to do so, and the Indemnified Party or Indemnified Parties shall
cooperate, at the expense of the Indemnifying Party with respect to
out-of-pocket expenses of the Indemnified Party or Indemnified Parties, in
the compromise of, or defense against, such Asserted Liability. If the
Indemnifying Party elects not to compromise or defend the Asserted
Liability, fails to notify the Indemnified Party or Indemnified Parties of
its election as herein provided or contests its obligation to indemnify
under this Section, the Indemnified Party or Indemnified Parties may pay,
compromise or defend such Asserted Liability in respect of any Asserted
Liability for which the Indemnifying Party may have an indemnification
obligation under this Agreement. Notwithstanding the foregoing, the
Indemnified Party or Indemnified Parties and the Indemnifying Party may
participate, at its/their own expense, in the defense of such Asserted
Liability in respect of any Asserted Liability for which the Indemnifying
Party may have an indemnification obligation under this Agreement.
Notwithstanding anything in the foregoing to the contrary, the party that
would be responsible under the terms of this Agreement for paying the
underlying claim in connection with any Asserted Liability (should that
claim ultimately prevail) shall bear the cost of the defense of the claim
(with the exception of the costs incurred by any party that voluntarily
participates in such defense) regardless of which party actually provides
the defense.
6.5 Payment. Upon the determination of the liability hereunder, if any
party (a "Paying Party") is required to make a payment to another party (the
"Receiving Party"), the Paying Party shall make such payment within ten (10)
business days after such determination of the amount of any claim for
indemnification made hereunder.
6.6 Mediation. If a dispute arises out of or relates to this Agreement, and
if such dispute cannot be settled within 20 days through direct discussions
between PRG and Sellers, the parties agree to first endeavor to settle the
dispute in an amicable manner by mediation administered by the American
Arbitration Association under the Commercial Mediation Rules. The parties will
use their reasonable best efforts to have such mediation concluded within 90
days of the date on which the parties have written knowledge of such dispute.
Unless the parties agree otherwise, or unless such mediation is not concluded
within 90 days of the date on which the parties have written knowledge of such
dispute, such mediation shall be required prior to a party commencing any action
hereunder. The mediation shall be
39
conducted in New York City. Nothing in this paragraph shall preclude the parties
from agreeing to settle any dispute through binding arbitration.
6.7 Compliance with Bulk Sales Laws. PRG and each Seller hereby waive
compliance by PRG and such Seller with the bulk sales law and any other similar
laws in any applicable jurisdiction in respect of the transactions contemplated
by this Agreement.
6.8 Exclusive Remedy. Absent fraud, PRG acknowledges that indemnification
as provided herein is the exclusive remedy for breach of any representation or
warranty made herein or affirmed in Seller Closing Certificates or failure to
fulfill any agreement or covenant hereunder on the part of Sellers.
ARTICLE 7. -- POST CLOSING MATTERS
7.1 Offers of Employment. As of the Closing Date, PRG shall offer
employment to, and Seller shall use its best efforts to assist PRG in employing
as new employees of PRG, all senior executives and substantially all other
persons presently engaged in the Business prior to the Closing Date (the
"Employees"). Each Seller shall agree to terminate effective as of the Closing
Date all employment agreements it has with any of the Employees who accept
employment with PRG. Until the third anniversary of the Closing Date, no Seller
will directly or indirectly solicit or offer employment to any Employee;
provided that Messrs. Xxxxx and Xxxxxx may remain as officers and directors of
Sellers provided that Sellers cease active business operations (it being
understood that ownership and operation of the Facility and any other actions
specifically contemplated herein including compliance with Section 2.3 hereof
shall not constitute an active business operation for this purpose). 1.1
7.2 Employee Benefits. Except for accrued vacation pay as otherwise
provided in this Agreement, Sellers shall pay directly to each employee of the
Business that portion of all benefits (including the arrangements, plans and
programs set forth in Schedule 3.1.20 which has been accrued on behalf of that
employee (or is attributable to expenses properly incurred by that employee) as
of the Closing Date to the extent legally required to pay it, and PRG shall
assume no liability therefor. Except with respect to accrued vacation pay for
former employees of Seller who become employees of PRG, as set forth in Section
1.5.6, no portion of the assets of any plan, fund, program or arrangement,
written or unwritten, heretofore sponsored or maintained by any Seller (and no
amount attributable to any such plan, fund, program or arrangement) shall be
transferred to PRG, and PRG shall not be required to continue any such plan,
fund, program or arrangement after the Closing Date. The amounts payable on
account of all benefit arrangements (other than as specified in the following
subsections) shall be determined with reference to the date of the event by
reason of which such amounts become payable, without regard to conditions
subsequent, and PRG shall not be liable for any claim for insurance
reimbursement or other
40
benefits payable by reason of any event which occurs prior to the Closing Date.
All amounts payable directly to employees, or to any fund, program, arrangement
or plan maintained by any Seller therefor shall be paid by such Seller within 30
days after the Closing Date to the extent that such payment is not inconsistent
with the terms of such fund, program, arrangement or plan. PRG shall not assume
any obligation to any former employees of Sellers without its express consent or
as otherwise expressly set forth herein.
7.3 Maintenance of Books and Records. Each of the Sellers and PRG shall
preserve until the seventh anniversary of the Closing Date all records possessed
or to be possessed by such party relating to any of the assets, liabilities or
business of the Business prior to the Closing Date. After the Closing Date,
where there is a legitimate purpose, such party shall provide the other parties,
and their respective agents, with access, upon prior reasonable written request
specifying the need therefor, during regular business hours, to (i) the officers
and employees of such party and (ii) the books of account and records of such
party, but, in each case, only to the extent relating to the assets, liabilities
or business of the Business prior to the Closing Date, and the other parties and
their representatives shall have the right, at their own expense, to make copies
of such books and records; provided, however, that the foregoing right of access
shall not be exercisable in such a manner as to interfere unreasonably with the
normal operations and business of such party; and further, provided, that, as to
so much of such information as constitutes trade secrets or confidential
business information of such party, the requesting party and its officers,
directors and representatives will use due care to not disclose such information
except (i) as required by law, (ii) with the prior written consent of such
party, which consent shall not be unreasonably withheld, or (iii) where such
information becomes available to the public generally, or becomes generally
known to competitors of such party, through sources other than the requesting
party, its affiliates or its officers, directors or representatives. Such
records may nevertheless be destroyed by a party after the third anniversary of
the Closing Date if such party sends to the other parties written notice of its
intent to destroy records, specifying with particularly the contents of the
records to be destroyed. Such records may then be destroyed after the 30th day
after such notice is given unless another party objects to the destruction in
which case the party seeking to destroy the records shall deliver such records
to the objecting party.
7.4 Payments Received. Sellers and PRG each agree that after the Closing
they will hold and will promptly transfer and deliver to the other, from time to
time as and when received by them, any cash, checks with appropriate
endorsements (using their best efforts not to convert such checks into cash), or
other property that they may receive on or after the Closing which properly
belongs to the other party and will account to the other for all such receipts.
From and after the Closing, PRG shall have the right and authority to endorse
without recourse the name of each Seller on any check or any other evidences of
indebtedness received by PRG on account of the Business and the Assets
transferred to PRG hereunder.
41
7.5 Use of Name. From and after the Closing Date, each Seller will sign
such consents and take such other action as PRG shall reasonably request in
order to permit PRG to use the names "Bash Theatrical Lighting, Inc.", "Bash
Theatrical Lighting Services, Inc.", "Bash Lighting Services, Inc.", "Bash
Lighting Services Mid-Atlantic, Inc." and "Bash Exposition Services, Inc." and
variants thereof. From and after the Closing Date, no Seller will itself use any
such names or any names similar thereto or variants thereof in connection with
any ongoing business.
7.6 UCC Matters. From and after the Closing Date, Seller will promptly
refer all inquiries with respect to ownership of the Assets or the Business to
PRG. In addition, Seller will execute such documents and financing statements as
PRG may request from time to time to evidence transfer of the Assets to PRG,
including any necessary assignments of financing statements.
7.7 Covenant Not To Compete. Each Seller and Messrs. Xxxxx and Xxxxxx
agrees that for a period of five years after the Closing Date, it or he will
not, directly or indirectly, own, manage, operate, join, control or participate
in the ownership, management, operation or control of any business, whether in
corporate, proprietorship or partnership form or otherwise where such business
is competitive with the Business, including, without limitation, any business
which provides trade show exhibit products and services. The parties hereto
specifically acknowledge and agree that the remedy at law for any breach of the
foregoing will be inadequate and that the PRG, in addition to any other relief
available to it, shall be entitled to temporary and permanent injunctive relief
without the necessity of proving actual damage. In the event that the provisions
of this Section 7.7 should ever be deemed to exceed the limitation provided by
applicable law, then the parties hereto agree that such provisions shall be
reformed to set forth the maximum limitations permitted.
ARTICLE 8. -- MISCELLANEOUS
8.1 Termination. (a) Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated by written notice of
termination at any time before the Closing Date only as follows:
8.1.1 by mutual consent of the Sellers and PRG;
8.1.2 by PRG, (a) at any time if the representations and warranties of
any Seller contained in Section 3.1 hereof were incorrect in any material
respect when made or (b) upon written notice to the Sellers given at any
time after August 30, 1997 (or such later date as shall have been specified
in a writing authorized on behalf of the Sellers and PRG) if for any reason
the Closing shall not have occurred by that date; or
42
8.1.3 by the Sellers, (a) at any time if the representations and
warranties of PRG contained in Section 3.2 hereof were incorrect in any
material respect when made, or (b) upon written notice to PRG given at any
time after August 30, 1997 (or such later date as shall have been specified
in a writing authorized on behalf of each Seller and PRG) if for any reason
the Closing shall not have occurred by that date.
8.1.4 In the event of the termination and abandonment hereof pursuant
to the provisions of this Section 8.1, this Agreement (except for Section
4.2.3 which shall continue) shall become void and have no effect, without
any liability on the part of any of the parties or their directors or
officers or stockholders in respect of this Agreement. In the event of such
termination, the confidentiality agreement, dated as of April 16, 1997,
between BTLI and PRG shall continue in full force and effect.
8.2 Brokers' and Finders' Fees.
8.2.1 Each Seller represents and warrants to PRG that all negotiations
relative to this Agreement have been carried on by it directly without the
intervention of any person, who may be entitled to any brokerage or
finder's fee or other commission in respect of this Agreement or the
consummation of the transactions contemplated hereby and each Seller
jointly and severally agrees to indemnify and hold harmless PRG against any
and all claims, losses, liabilities and expenses which may be asserted
against or incurred by it as a result of any Seller's dealings,
arrangements or agreements with any such person.
8.2.2 PRG represents and warrants that all negotiations relative to
this Agreement have been carried on by it directly without the intervention
of any person who may be entitled to any brokerage or finder's fee or other
commission in respect of this Agreement or the consummation of the
transactions contemplated hereby, and PRG agrees to indemnify and hold
harmless the Sellers against any and all claims, losses, liabilities and
expenses which may be asserted against or incurred by it as a result of
PRG's dealings, arrangements or agreements with any such person.
8.3 Sales, Transfer and Documentary Taxes, etc. The Sellers shall pay all
federal, state and local sales, documentary and other transfer taxes, if any,
due as a result of the purchase, sale or transfer of the Assets and the
assumption of the Assumed Liabilities in accordance herewith whether imposed by
law on Seller or PRG and the Sellers, jointly and severally, shall indemnify,
reimburse and hold harmless PRG in respect of the liability for payment of or
failure to pay any taxes or the filing of or failure to file any reports
required in connection therewith. No Sellers' obligation to pay sales tax shall
include any taxes which PRG must collect from its customers as a consequence of
having provided such Seller with a resale certificate.
43
8.4 Expenses. Except as otherwise provided in this Agreement, each party
hereto shall pay its own expenses incidental to the negotiation and preparation
of this Agreement, the carrying out of the provisions of this Agreement and the
consummation of the transactions contemplated hereby. PRG shall be liable for
Sellers' filing fees and reasonable legal and accounting fees and costs incurred
in connection with any Xxxx-Xxxxx-Xxxxxx filing relating to the transactions
contemplated in this Agreement.
8.5 Contents of Agreement; Parties in Interest; etc. Except for the
confidentiality agreement, dated as of April 16, 1997, between BTLI and PRG (the
"Confidentiality Agreement"), this Agreement sets forth the entire understanding
of the parties hereto with respect to the transactions contemplated hereby. It
shall not be amended or modified except by written instrument duly executed by
each of the parties hereto. Any and all previous agreements and understandings
between or among the parties regarding the subject matter hereof, whether
written or oral, are superseded by this Agreement, except for the
Confidentiality Agreement.
8.6 Assignment and Binding Effect. This Agreement may not be assigned prior
to the Closing by any party hereto without the prior written consent of the
other parties. Subject to the foregoing, all of the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the successors and assigns of each Shareholder, each Seller and PRG.
8.7 Waiver. Any term or provision of this Agreement may be waived at any
time by the party entitled to the benefit thereof by a written instrument duly
executed by such party.
8.8 Notices. Any notice, request, demand, waiver, consent, approval or
other communication which is required or permitted hereunder shall be in writing
and shall be deemed given only if delivered personally or sent by telegram or by
registered or certified mail, postage prepaid, as follows:
If to PRG, to:
Production Resource Group, L.L.C.
000 Xxxxxx Xxxx Xxxx
Xxx Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
fax (000) 000-0000
With a required copy to:
Pepe & Hazard LLP
Xxxxxxx Xxxxxx
00
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxx X. Manners, Esq.
fax (000) 000-0000
If to a Seller or a Shareholder, to:
c/o Bash Theatrical Lighting, Inc.
0000 Xxxx Xxxxxx
Xxxxx Xxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxx Xxxxx
fax (000) 000-0000
With a required copy to:
Kronish, Lieb, Weiner & Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxx X. Xxxxxx, Esq.
fax (000) 000-0000
or to such other address as the addressee may have specified in a notice duly
given to the sender as provided herein. Such notice, request, demand, waiver,
consent, approval or other communication will be deemed to have been given as of
the date so delivered, telegraphed or mailed.
8.9 Choice of Law. This Agreement shall be governed by and interpreted and
enforced in accordance with the laws of the State of New York as applied to
agreements among New York residents entered into and to be performed entirely
within the State of New York.
8.10 No Benefit to Others. The representations, warranties, covenants and
agreements contained in this Agreement are for the sole benefit of the parties
hereto and, in the case of Article VI hereof, the other Indemnified Parties, and
their heirs, executors, administrators, legal representatives, successors and
assigns, and they shall not be construed as conferring any rights on any other
persons.
8.11 Headings, Gender and "Person". All section headings contained in this
Agreement are for convenience of reference only, do not form a part of this
Agreement and shall not affect in any way the meaning or interpretation of this
Agreement. Words used herein, regardless of the number and gender specifically
used, shall be deemed and construed to include any other number, singular or
plural, and any other gender, masculine, feminine, or neuter, as the context
requires. Any reference to a "person" herein shall include an individual, firm,
corporation,
45
partnership, trust, governmental authority or body, association, unincorporated
organization or any other entity.
8.12 Schedules and Exhibits. All Exhibits and Schedules referred to herein
are intended to be and hereby are specifically made a part of this Agreement.
8.13 Severability. Any provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall be ineffective to the extent of such
invalidity or unenforceability without invalidating or rendering unenforceable
the remaining provisions hereof, and any such invalidity or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
8.14 Counterparts. This Agreement may be executed in any number of
counterparts and any party hereto may execute any such counterpart, each of
which when executed and delivered shall be deemed to be an original and all of
which counterparts taken together shall constitute but one and the same
instrument notwithstanding that not all parties hereto are signatories to the
same counterpart. This Agreement shall become binding when one or more
counterparts taken together shall have been executed and delivered by the
parties. It shall not be necessary in making proof of this Agreement or any
counterpart hereof to produce or account for any of the other counterparts.
8.15 Effect of Shareholder Signatures. PRG acknowledges that Messrs. Xxxxx
and Xxxxxx are signing this Agreement solely with respect to the second sentence
of Section 3.1.3 and Sections 4.1.8 and 7.7 hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
46
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on
the date first written.
BUYER:
PRODUCTION RESOURCE GROUP, L.L.C.
By: ____________________________________
Name: __________________________________
Its: ___________________________________
SELLERS:
BASH THEATRICAL LIGHTING, INC.
By: ____________________________________
Name: __________________________________
Its: ___________________________________
BASH THEATRICAL LIGHTING SERVICES, INC.
By: ____________________________________
Name: __________________________________
Its: ___________________________________
BASH LIGHTING SERVICES, INC.
By: ____________________________________
Name: __________________________________
Its: ___________________________________
47
BASH LIGHTING SERVICES MID-ATLANTIC, INC.
By: ____________________________________
Name: __________________________________
Its: ___________________________________
BASH EXPOSITION SERVICES, INC.
By: ____________________________________
Name: __________________________________
Its: ___________________________________
SHAREHOLDERS:
________________________________________
XXXXXX XXXXX
________________________________________
XXXXXX XXXXXX
48
Schedule 1.4
The amount of the Purchase Price and Assumed Liabilities shall be allocated
among the Assets as follows:
(a) an amount equal to the aggregate historical cost net of depreciation of all
of the Assets consisting of tangible property as shown by Ernst & Young on the
Closing Balance Sheet shall be allocated to the tangible property of the Sellers
(with each item thereof being allocated its historical cost net of
depreciation);
(b) an amount equal to the book value, as shown by Ernst & Young on the Closing
Balance Sheet, of all Assets other than tangible property and goodwill shall be
allocated to all such Assets (with each item thereof being allocated an amount
proportionate to its book value, as shown by Ernst & Young on the Closing
Balance Sheet);
(c) up to $500,000 of the balance shall be allocated to the covenant not to
compete contained in the Agreement, and divided among the Sellers in the ratio
of 50% to BTLI, 20% to BTLS, 20% to BLSI, 5% to BLSMA and 5% to BES; and
(d) the balance shall be allocated to goodwill, and divided among the Sellers in
the ratio of 50% to BTLI, 20% to BTLS, 20% to BLSI, 5% to BLSMA and 5% to BES.
The Purchase Price shall be divided among the Sellers in proportion to the
excess of (i) the amount of Purchase Price and Assumed Liabilities allocated to
each Seller's Assets as set forth above over (ii) the amount of liabilities of
each Seller included in the Assumed Liabilities.
49
EXHIBIT A
INVENTORY SCHEDULE
50
