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EXHIBIT 10.29
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as
of April 3, 1997, by and among Bristol Technology Systems, Inc., a Delaware
corporation ("Bristol"), Xxxxx Systems, Inc., a Delaware corporation (the
"Company"), Xxxxxx X. Xxxxx, Xxxxx X. Xxxxx and Xxxxxxx X. Xxxxx (the "Managing
Stockholders"), and Xxxxx Merger Corp., a Delaware corporation and a
newly-formed, wholly-owned subsidiary of Bristol ("Newco").
RECITALS
A. The respective Boards of Directors of Newco and the Company (which
together are sometimes referred to as the "Constituent Corporations") deem it
advisable and in the best interests of the Constituent Corporations and their
respective stockholders that Newco merge with and into the Company (the
"Merger") pursuant to this Agreement, the Articles of Merger substantially in
the form attached as Annex I (the "Articles of Merger") and the applicable
provisions of the law of the State of Delaware.
B. The parties hereto expect that the Merger will further certain of
their business objectives, including, without limitation, increased market
share, reduced administrative costs and volume efficiencies.
C. The Boards of Directors of each of the Constituent Corporations have
approved and adopted this Agreement as a plan of reorganization within the
provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended
(the "Code").
D. The parties hereto intend that the Merger be accounted for as a
pooling of interests.
NOW, THEREFORE, in consideration of the premises and of the
representations, warranties, covenants and agreements herein contained, the
parties hereto, intending to be legally bound, agree as follows:
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1. PLAN OF REORGANIZATION
1.1 The Merger.
(a) The Merger. At the Effective Time (as defined in Section 2 below),
Newco shall be merged with and into the Company pursuant to this Agreement and
the Articles of Merger, and the separate corporate existence of Newco shall
cease, all in accordance with the Delaware General Corporation Law (the
"Delaware Statute"). The Company, as it exists from and after the Effective
Time, is sometimes referred to herein as the "Surviving Corporation."
(b) Effects of the Merger. Subject to the terms and conditions of this
Agreement and the Articles of Merger, at the Effective Time (i) the separate
existence of Newco shall cease and Newco shall be merged with and into the
Company and (ii) the Merger shall have all the effects provided by the Delaware
Statute, this Agreement and the Articles of Merger.
(c) Articles of Incorporation; Bylaws; Directors and Officers. The
Articles of Incorporation of the Surviving Corporation from and after the
Effective Time shall be the Articles of Incorporation of the Company until
thereafter amended in accordance with the provisions therein and as provided by
the Delaware Statute. The Bylaws of the Surviving Corporation from and after the
Effective Time shall be the Bylaws of the Company as in effect immediately prior
to the Effective Time, continuing until thereafter amended in accordance with
their terms and the Articles of Incorporation of the Surviving Corporation and
as provided by the Delaware Statute. The initial directors of the Surviving
Corporation shall be the individuals referred to in Section 6.12 below, in each
case until their successors are elected and qualified, and the initial officers
of the Surviving Corporation shall be the officers of the Company immediately
prior to the Effective Time and the officer referred to in Section 6.12 below,
in each case until their successors are duly elected and qualified.
1.2 Conversion of Securities. At the Effective Time, by virtue of the
Merger and without any action on the part of Bristol, Newco, the Company or any
of the Company's stockholders (the "Stockholders"), the shares of capital stock
of each of the Constituent Corporations shall be converted as follows:
(a) Capital Stock of Newco. Each issued and outstanding share of
capital stock of Newco shall continue to be issued and outstanding and shall be
converted into one (1) share of validly issued, fully paid and non-assessable
Common Stock of the Surviving Corporation. Each stock certificate of Newco
evidencing ownership of any such shares shall continue to evidence ownership of
such shares of capital stock of the Surviving Corporation.
(b) Cancellation of Certain Shares of Capital Stock of the Company. All
shares of capital stock of the Company that are owned directly or indirectly by
the Company shall be canceled and no stock of Bristol or other consideration
shall be delivered in exchange therefore.
(c) Conversion of Capital Stock of the Company. Subject to Sections
1.2(d), (e) and (f), and 1.3, below, each issued and outstanding share of common
stock of the Company, no par value ("Company Common Stock") (other than shares
to be canceled pursuant to Section 1.2(b)), that is issued and outstanding
immediately prior to the Effective Time shall automatically be canceled,
extinguished and converted, without any action on the part of the holder
thereof, into the right to receive that number of shares of Bristol
non-registered, restricted common stock, $.001 par value ("Bristol Common
Stock"), that is equal to the Adjusted Consideration (as defined in Section
1.2(e) below) divided by the number of shares of Company Common Stock issued and
outstanding immediately prior to the Effective Time, rounded down to the nearest
whole share. All such shares of Company Common Stock, when so converted, shall
no longer be outstanding and shall automatically be canceled and retired and
shall cease to exist, and each holder of a certificate representing any such
shares shall cease to have any rights with respect thereto, except the right to
receive the shares of Bristol Common Stock to be issued or paid in consideration
therefor upon the surrender of such certificate in accordance with Section 1.3
of this Agreement.
(d) Consideration. The aggregate consideration to be paid by Bristol
pursuant to the Merger is Five Million Three Hundred Thirty-Eight Thousand Two
Hundred Dollars ($5,338,200) worth of Bristol Common Stock, each share of which
shall be valued based upon the sum of (A)(I) the closing price per share of
Bristol's publicly traded Common Stock ("Bristol Public Stock") on the date of
this Agreement (or, if
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such date is not a trading day, the last trading day prior to such day), plus
(II) the closing price per share of Bristol Public Stock on the Closing Date
(or, if such date is not a trading day, the last trading date prior to such
day), plus (III) the Interim Period Average (as defined below), divided by (B)
three (3) (the "Effective Bristol Share Price"). The term "Interim Period
Average" means the sum of the closing prices of Bristol Public Stock on every
trading day from and including the date referenced in clause (I) above and
through and including the date referenced in clause (II) above, divided by the
number of trading days included in such period. The closing price of Bristol
Public Stock on a trading day, for purposes of this calculation, shall be the
day's last trade price as reported by NASDAQ. Notwithstanding the above, if the
closing price of Bristol Public Stock on the Closing Date is less than the
Effective Bristol Share Price, then the value of each share of Bristol Common
Stock shall be based entirely on the closing price of Bristol Public Stock on
the Closing Date. The number of shares of Bristol Common Stock, as calculated
above, shall be referred to herein as the "Aggregate Consideration."
The parties acknowledge that the Aggregate Consideration is based upon a
presumed Company net worth, as of December 31, 1996, equal to $1,310,000 (the
"Presumed Company Net Worth"). The Aggregate Consideration shall be subject to
potential adjustments as set forth in Section 1.2(e) below.
(e) Potential Adjustment. As promptly as possible following the date of
this Agreement, Deloitte & Touche, LLP ("D&T") shall commence and, prior to the
Closing Date, complete an audit of the Company's balance sheet at December 31,
1996. This balance sheet shall be presented in accordance with generally
accepted accounting principles ("GAAP"), consistently applied, and the net worth
of the Company shall be stated therein (the "December 31, 1996 Net Worth"). The
December 31, 1996 Net Worth, as adjusted by D&T in connection with the audit
shall be referred to as the "Audited Net Worth." In determining the Audited Net
Worth, D&T may (I) make reasonable adjustment to or establish reasonable
reserves for uncollectible accounts receivable, (II) adjust the book value of
the Company's inventory, other assets or liabilities to account for under- or
over-valued inventory, other assets or liabilities, as the case may be, and/or
(III) make any other adjustments that the auditors deem necessary or appropriate
in order to state the Audited Net Worth in accordance with GAAP.
Following completion of such audit, the Company shall deliver
a written notice to Bristol setting forth the Audited Net Worth. If the Audited
Net Worth is less than the Presumed Company Net Worth, then the Aggregate
Consideration shall be decreased by the number of shares of Bristol Common Stock
equal to (A) the Presumed Net Worth less the Audited Net Worth, times (B) four
(4), divided by (C) the Effective Bristol Share Price (the "Adjusted
Consideration").
(f) Pledged Shares.
(i) As collateral security for the payment of any
indemnification obligations of the Managing Stockholders pursuant to Section 8
of this Agreement, at the Closing each Managing Stockholder shall, and by
execution hereof does hereby, transfer, pledge and assign to Bristol, for the
benefit of Bristol, a security interest in the following assets:
(A) such Managing Stockholder's "Pledged Shares" (as defined
below), the certificates and instruments representing or evidencing the Pledged
Shares, and all cash and non-cash dividends and other property at any time
received or otherwise distributed in respect of or in exchange or substitution
for any or all of the Pledged Shares; and in the event that a Managing
Stockholder receives any such property, such Managing Stockholder shall
immediately deliver such property to Bristol to be held hereunder as part of the
Pledged Shares. For each Managing Stockholder, "Pledged Shares" shall mean (1)
for Xxxxxx X. Xxxxx, shares of Bristol Common Stock equal to 1.664% of the
Adjusted Consideration, (2) for Xxxxx X. Xxxxx, shares of Bristol Common Stock
equal to 1.783% of the Adjusted Consideration, and (3) for Xxxxxxx X. Xxxxx,
shares of Bristol Common Stock equal to 1.553% of the Adjusted Consideration;
and
(B) all rights, titles, interests, privileges and
preferences appertaining or incident to the foregoing property, except as
provided for in Section 1.2(f)(iii) .
(ii) Each certificate evidencing the Pledged Shares issued in
the Managing Stockholder's names in the Merger, shall, at the Closing, be
delivered to Bristol, together with an undated stock power duly signed in blank
by such Managing Stockholder, such certificate bearing no restrictive or
cautionary legend other than those imprinted by Bristol's transfer agent at
Bristol's request.
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(iii) The Managing Stockholders shall be entitled to exercise
any voting powers incident to the Pledged Shares until such time, if ever, as
they are transferred to Bristol pursuant to the indemnification obligations of
the Managing Stockholders pursuant to Section 8 hereof.
(iv) Each Managing Stockholder hereby acknowledges that each
pledge under this Section 1.2(f) is independent of the pledge by the other
Managing Stockholders hereunder and that Bristol may take any and all actions
against a Managing Stockholder's Pledged Shares under this Agreement without
taking any action against any other Managing Stockholder's Pledged Shares.
1.3 Exchange of Certificates.
(a) Bristol to Provide Common Stock. Promptly after the Effective Time,
Bristol shall cause to be made available the to the Stockholders that number of
shares of Bristol Common Stock equal to the Adjusted Consideration, which shares
shall be allocated in accordance with Section 1.2(c) above.
(b) Certificate Delivery Requirements. At the Effective Time, the
Managing Stockholders shall cause the Stockholders to deliver to Bristol the
certificates (the "Certificates") representing the Company Common Stock, duly
endorsed in blank by the Stockholders, or accompanied by blank stock powers, and
with all necessary transfer tax and other revenue stamps, acquired at the
Stockholders' expense, affixed and canceled. The Managing Stockholders shall
cause the Stockholders to promptly cure any deficiencies with respect to the
endorsement of the Certificates or other documents of conveyance with respect to
the stock powers accompanying such Certificates. The Certificates so delivered
shall forthwith be canceled. Until delivered as contemplated by this Section
1.3(b), each Certificate shall be deemed at any time after the Effective Time to
represent the right to receive upon such surrender the number of shares of
Bristol Common Stock as provided by this Section 1 and the provisions of the
Delaware Statute.
(c) No Further Ownership Rights in Capital Stock of the Company. All
Bristol Common Stock delivered upon the surrender for exchange of shares of
Company Common Stock in accordance with the terms hereof shall be deemed to have
been delivered in full satisfaction of all rights pertaining to such shares of
Company Common Stock, and following the Effective Time, the Certificates shall
have no further rights to, or ownership in, shares of capital stock of the
Company or the Surviving Corporation. There shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of the shares
of Company Common Stock which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation for any reason, they shall be canceled and exchanged as
provided in this Section 1.3.
(d) Lost, Stolen or Destroyed Certificates. In the event any
certificates evidencing shares of Company Common Stock shall have been lost,
stolen or destroyed, Bristol shall cause the issuance of Bristol Common Stock to
be made in exchange for such lost, stolen or destroyed certificates, upon the
making of an affidavit of that fact by the holder thereof, provided, however,
that Bristol may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificates to
deliver a bond in such sum as it may reasonably direct as indemnity against any
claim that may be made against Bristol with respect to the certificates alleged
to have been lost, stolen or destroyed.
2. CLOSING
The consummation of the Merger and the other transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Bristol, 00000
Xxx Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxxxx 00000 at 10:00 a.m. on May 31,
1997 (the "Closing Date"), provided that all conditions to Closing shall have
been satisfied or waived, or at such other time or in such other manner as the
parties may mutually agree.
On the Closing Date, the Articles of Merger and any required officers'
certificates, shall be filed with the Secretary of State of the State of
Delaware in accordance with the provisions of the Delaware Statute. The Merger
shall become effective upon such filing or at such later time on the Closing
Date as may be specified in the filing with the Secretary of State of the State
of Delaware (the "Effective Time").
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3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE MANAGING
STOCKHOLDERS.
Each of the Company and the Managing Stockholders, jointly and severally,
represents and warrants to Bristol, Newco and Surviving Corporation that (except
for changes contemplated by this Agreement), each of the following statements is
true, correct and complete as of the date of this Agreement and will be true,
correct and complete as of the Closing Date (each such statement to be made
again by the Company and the Managing Stockholders on that date with the Closing
Date being substituted for the date of this Agreement throughout this Section
3):
3.1 Due Organization. The Company is a corporation duly organized, validly
existing and is in good standing under the laws of the State of Delaware, and
has all requisite power and authority to own, operate and lease its properties
and to carry on its business as now being conducted and as proposed to be
conducted. The Company is qualified as a foreign corporation and is in good
standing in each jurisdiction in which the failure to be so qualified would have
a Material Adverse Effect (as defined below). Schedule 3.l hereto contains a
list of all jurisdictions in which the Company is qualified to do business as a
foreign corporation. Prior to the Closing Date, the Company will deliver to
Bristol true, complete and correct copies of its Articles of Incorporation and
Bylaws, each as amended to date. Such Articles of Incorporation and Bylaws, as
amended to date, are collectively referred to as the "Charter Documents." Prior
to the Closing Date, the Company will make available to Bristol true, correct
and complete copies of (i) its corporate minute books which include copies of
all minutes of the Company's Board of Director's and stockholders' meetings; and
(ii) its stock ledger setting forth the record ownership of all outstanding
shares of the Company's capital stock. The term "Material Adverse Effect" means
any change, event or effect (other than general economic factors and business
conditions affecting the U.S. point of sale systems, the Company's software
sales and services and the electronic cash register business in general) that is
materially adverse to the business, assets (including intangible assets),
liabilities, financial condition, results of operations, insurability or
prospects of the Company.
3.2 Authorization; Validity. The Company has the full legal right,
corporate power and authority to enter into this Agreement including, without
limitation, all Annexes attached hereto (the "Annexes") and the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Annexes by the Company and the performance by the Company of the
transactions contemplated herein and therein will be duly and validly authorized
by all necessary corporate action on the part of the Company, including approval
by its Board of Directors and the Managing Stockholders. The Managing
Stockholders have full power and authority to execute and deliver this Agreement
and the Annexes, to perform their obligations under this Agreement and the
Annexes, and to consummate the transactions contemplated by this Agreement and
the Annexes. The Managing Stockholders have full power and authority to vote
their portion of the outstanding shares of the Company Common Stock to approve
this Agreement and the Annexes, and will vote all of such shares to approve this
Agreement, the Annexes and the transactions contemplated hereby and thereby in
compliance with all applicable laws and the Charter Documents. This Agreement is
a legal, valid and binding obligation of the Company and the Managing
Stockholders, enforceable against the Company and the Managing Stockholders in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency, or other similar laws affecting the enforcement of creditors
generally and except that the availability of equitable remedies is subject to
the discretion of the court before which any proceeding therefor may be brought.
Each of the Annexes, when executed and delivered by the Company and the Managing
Stockholders, when applicable, will be a legal, valid and binding obligation of
the Company and/or the Managing Stockholders, as the case may be, enforceable
against the Company or the Managing Stockholders, as the case may be, in
accordance with their terms, except as enforcement may be limited by bankruptcy,
insolvency, or other similar laws affecting the enforcement of creditors
generally and except that the availability of equitable remedies is subject to
the discretion of the court before which any proceeding therefor may be brought.
3.3 Capital Stock of the Company. The authorized capital stock of the
Company consists of 100,000 shares of Common Stock, no par value, of which
71,176 shares are issued and outstanding. All of the issued and outstanding
shares of Company Common Stock have been duly authorized and validly issued, are
fully paid and non-assessable and are owned of record and beneficially by each
Stockholder in the amounts set forth in Schedule 3.3 free and clear of all
liens, encumbrances and claims of every kind. All of the issued and outstanding
shares of Company Common Stock were offered, issued, sold and delivered by the
Company in compliance with all applicable state and federal laws concerning the
issuance of securities. None of such shares was issued in violation of any
preemptive rights created by statute, or by the Charter
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Documents or by any agreement to which the Company may be bound. Except as set
forth on Schedule 3.3, none of the shares of Company Common Stock were issued
pursuant to awards, grants or bonuses. No shares of the Company Common Stock are
subject to repurchase upon termination of employment. Schedule 3.3 contains a
complete and accurate list of, and the number of shares owned of record by, the
holders of outstanding Company Common Stock.
Other than as described in this Section 3.3, there are no outstanding
shares of the Company Common Stock, preferred stock or any other equity
securities of the Company, and there are no options, warrants, calls, conversion
rights, commitments or agreements of any character to which the Company or any
of the Managing Stockholders is a party or by which the Company or any of the
Managing Stockholders may be bound that do or may obligate the Company to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
the Company Common Stock, preferred stock or other equity securities or that do
or may obligate the Company to grant, extend or enter into any such option,
warrant, call, conversion right, commitment or agreement. There are no
outstanding arrangements, agreements, commitments or understandings of any kind
affecting or relating to the voting, issuance, purchase, redemption, repurchase
or transfer of any capital stock of the Company or any other securities of the
Company. Other than as provided in or contemplated by this Agreement, neither
the Company nor the Managing Stockholders have, or prior to the Effective Time
will have, become party to or subject to any contract or obligation wherein any
person has a right or option to purchase or acquire any rights in any additional
capital stock or securities of the Company. Neither the voting stock structure
of the Company nor the relative ownership of the Company Common Stock has been
altered or changed in contemplation of the Merger. As a result of the Merger,
Bristol will be the record and beneficial owner of all outstanding capital stock
of the Company and rights to acquire capital stock of the Company.
3.4 Subsidiaries. Except as set forth on Schedule 3.4, the Company has no
subsidiaries and does not presently own, of record or beneficially, or control,
directly or indirectly, any capital stock, securities convertible into capital
stock or any other equity interest in any corporation, association or business
entity, nor is the Company, directly or indirectly, a participant in any joint
venture, partnership or other entity.
3.5 Predecessor Status; Spin-off by the Company. Schedule 3.5 sets forth a
listing of all names of all predecessor companies of the Company, if any,
including without limitation the names of any entities from whom the Company has
acquired material assets. The Company has not at any time been a subsidiary or
division of another corporation or a part of an acquisition, which was later
rescinded. There has not been any sale or spin-off of material assets of the
Company, or any other person or entity that directly, or indirectly through one
or more intermediaries, controls, is controlled by or is under common control
with the Company within the preceding two (2) years.
3.6 No Conflicts. The execution, delivery and performance of this Agreement
and Annexes I, II-A, II-B, and II-C, and the consummation of the transactions
contemplated hereby and thereby, will not:
(a) conflict with, or violate any provision of the Charter Documents;
(b) Except as set forth on Schedule 3.6(b), conflict with, or result in
any material breach or default (or would constitute a default but for any
requirement of notice or lapse of time or both) under, or give rise to a right
of termination, cancellation or acceleration of any obligation or to a loss of a
benefit under, or result in the creation or imposition of any lien, charge or
encumbrance on any of the Company's properties pursuant to any agreement,
contract, note, mortgage, indenture, lease, sublease, instrument, permit,
concession, franchise or license to which the Company is a party or by which the
Company or any of its property or assets may be bound or affected; or
(c) conflict with or result in a violation of any law, statute, order,
judgment, rule, regulation, decree or ordinance applicable to the Company or by
which any of its properties or assets is bound or affected, or applicable to any
of the Managing Stockholders.
3.7 No Defaults. Except as set forth on Schedule 3.7, the Company is not,
nor has it or any of the Managing Stockholders received notice that it is or
would be with the passage of time, (a) in violation of any
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provision of its Charter Documents or (b) in default or violation of any term,
condition or provision of (i) any judgment, decree, order, injunction or
stipulation applicable to the Company or (ii) any agreement, note, mortgage,
indenture, contract, lease, sublease or instrument, permit, concession,
franchise or license to which the Company is a party or by which the Company or
its properties or assets may be bound.
3.8 Required Governmental Filings and Consents. The execution, delivery
and performance of this Agreement and the Articles of Merger, and the
consummation of the transactions contemplated hereby and thereby, will not
require any consent, approval, authorization or permit of, or filing with or
notification to, any United States, federal, state or local or any foreign
government, governmental, regulatory or administrative authority, agency or
commission or any court, tribunal or judicial or arbitral body ("Governmental
Entity") except (a) for applicable requirements, if any, of the Securities Act
of 1933, as amended, the Securities Exchange Act of 1934, as amended, state
securities or Blue Sky laws, the Bylaws of the National Association of
Securities Dealers, Inc., and the filing and recordation of the Articles of
Merger as required by the Delaware Statute and (b) where the failure to obtain
such consents, approvals, authorization or permits, or to make such filings or
notifications, would not prevent or delay consummation of the Merger or
otherwise prevent the Company from performing its obligations under this
Agreement and could not reasonably be expected to have a Material Adverse
Effect.
3.9 Financial Statements. Schedule 3.9 includes (a) true, complete and
correct copies of the Company's unaudited Balance Sheet as of December 31, 1996
(the end of its most recently completed fiscal year); reviewed Balance Sheets at
December 31, 1995 and December 31, 1994, and the related Statements of Income,
Cash Flows and Retained Earnings for such years (collectively, the "Year-End
Financials") and (b) true, complete and correct copies of the Company's Balance
Sheet (the "Interim Balance Sheet") as of March 31, 1997 (the "Interim Balance
Sheet Date") and Statements of Income, Cash Flows and Retained Earnings for the
period then ended (collectively, the "Interim Financials;" and together with the
Year-End Financials, the "Company Financial Statements"). Except as set forth on
Schedule 3.9, the Company Financial Statements have been prepared in accordance
with GAAP consistently applied and fairly present the financial position of the
Company as of the dates thereof and the results of its operations and cash flows
for the periods then ended, subject, in the case of the Interim Financials to
normal year-end audit adjustments and the omission of complete footnote
information. Since the Interim Balance Sheet Date, there have been no material
changes in the Company's accounting policies.
3.10 Liabilities and Obligations.
(a) The Company has no material liabilities, except for liabilities:
(i) reflected on the Interim Balance Sheet and not
previously paid or discharged;
(ii) incurred since the Interim Balance Sheet Date in the
ordinary course of business consistent with past practice, which liabilities are
not, individually or in the aggregate, material;
(iii) set forth on Schedule 3.10; and
(iv) set forth in the Company's sales agreements entered
into in the ordinary course of business.
For purposes of this Section 3.10, the term "liabilities" shall include without
limitation any direct or indirect liability, indebtedness, guaranty,
endorsement, claim, loss, damage, deficiency, cost, expense, obligation or
responsibility, either accrued, absolute, contingent, mature, unmature or
otherwise and whether known or unknown, fixed or unfixed, inchoate or not,
liquidated or unliquidated, secured or unsecured.
(b) In the case of those liabilities which are not fixed or contested,
a reasonable estimate of the maximum amount which may be payable (exclusive of
liabilities arising under the Company's sales agreements entered into in the
ordinary course of business) is attached hereto as Schedule 3.10.
(c) Schedule 3.10 sets forth all outstanding liabilities as of the
Interim Balance Sheet Date.
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3.11 Accounts and Notes Receivable. The receivables shown on the Interim
Balance Sheet arose in the ordinary course of business and have been collected
or are collectible in the book amounts thereof, less an amount not in excess of
the allowance for doubtful accounts provided for in such balance sheet.
Allowances for doubtful accounts and warranty returns are adequate and have been
prepared in accordance with GAAP consistently applied and in accordance with the
past practices of the Company. The receivables of the Company arising after the
Interim Balance Sheet Date and prior to the Closing Date arose or will arise in
the ordinary course of business and have been collected or are collectible in
the book amounts thereof, less allowances for doubtful accounts and warranty
returns determined in accordance with the past practices of the Company. Except
as set forth on Schedule 3.11 and other than receivables in connection with the
Company's sales and service agreements entered into in the ordinary course of
business, (i) none of the receivables of the Company are subject to any claim of
offset, recoupment, set off or counterclaim and neither the Company nor any of
the Managing Stockholders has any knowledge of any facts or circumstances
(whether asserted or unasserted) that could give rise to any such claim; (ii) no
amount of receivables are contingent upon the performance by the Company of any
obligation or contract; and (iii) no person has any lien on any of such
receivables and no agreement for deduction or discount has been made with
respect to any of such receivables. Schedule 3.11 sets forth an aging of
accounts receivable of the Company as of the Interim Balance Sheet Date in the
aggregate and by customer (0-30 days, 31-60 days, 60-90 days and greater than 90
days), and indicates for each category the respective amounts of allowances for
doubtful accounts. Schedule 3.11 also lists all amounts of accounts receivable
which are subject to warranty claims asserted by any customer, including
detailed information regarding warranty claims made within the last year, the
type and amounts of such claims, and all pending authorized product returns.
3.12 Inventories. The inventories of the Company shown on the Interim
Balance Sheet ("Inventories") were valued at cost or market, whichever is lower,
with adequate allowances for excess and obsolete materials and materials below
standard quality, in accordance with GAAP consistently applied. The quality and
quantity of the Inventories are such that the Inventories are readily usable and
salable in the normal course of business of the Company, except such amounts as
are reserved on the Interim Balance Sheet in accordance with GAAP consistently
applied. All items included in such Inventories are owned by the Company, except
for sales made subsequent to the Interim Balance Sheet Date in the ordinary
course of business, for all of which either the purchaser has made full payment
or the purchaser is obligated to make payment and such obligation is an asset of
the Company in accordance with GAAP consistently applied. Schedule 3.12 (a)
lists by category the dollar amounts for both new and used Inventories and (b)
lists the part number and dollar amount of all new Inventories materially in
excess of reasonable estimated requirements for the Company based on current
operations for the next six (6) months.
3.13 Governmental Permits and Licenses. The Company owns or holds all
material licenses, franchises, permits and other governmental authorizations,
including without limitation permits (including, without limitation, all permits
and approvals of governmental authorities necessary for the continued occupancy,
use and operation of each of the Leased Premises as defined in Section 3.15(a)),
titles (including, without limitation, motor vehicle titles and current
registrations), fuel permits, licenses, franchises, certificates required to
conduct its business as currently being conducted or as proposed to be conducted
(the "Material Permits"). The Material Permits are valid and in full force and
effect, and the Company has not received any notice that any governmental
authority intends to modify, cancel, terminate or not renew any Material Permit.
The Company has conducted and is conducting its business in compliance with the
requirements, standards, criteria and conditions set forth in the Material
Permits and other applicable orders, approvals, variances, rules and regulations
and is not in violation of any of the foregoing except where such non-compliance
or violation would not have a Material Adverse Effect. The transactions
contemplated by this Agreement will not result in a default under or a breach or
violation of, or adversely affect the rights and benefits afforded to the
Company by any Material Permit.
3.14 Environmental Matters.
(a) No substance that is regulated by any Governmental Entity or that
has been designated by any Governmental Entity to be radioactive, toxic,
hazardous or otherwise a danger to health or the environment (a "Hazardous
Material") is present in, on, under or, to the knowledge of the Company and the
Managing Stockholders, adjacent to any property that the Company has at any time
owned, operated, occupied or leased (including both the land and improvements
thereon) and no reasonable likelihood exists
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that any Hazardous Material will come to be present in, on, under or adjacent to
any properties leased or used at any time (including both land and improvements
thereon) by the Company.
(b) The Company does not and has not transported, stored, used,
manufactured, released or exposed its employees or any other person to any
Hazardous Material, or arranged for the disposal, discharge, storage or release
of any Hazardous Material, in violation of any applicable statute, rule,
regulation, order or law.
(c) No permits, consents, waivers, exemptions, licenses, approvals and
other authorizations are required to be obtained by the Company under the laws
of any Governmental Entity relating to land use, public and employee health and
safety, pollution or protection of the environment (collectively, "Environmental
Laws"). The Company has been and is in compliance in all material respects with
all other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in the
Environmental Laws or contained in any regulation, code, plan, order, decree,
judgment, notice or demand letter issued, entered, promulgated or approved
thereunder. Neither the Company nor any of the Managing Stockholders has
received any notice or is aware of any past or present condition or practice of
the businesses conducted by the Company which forms or could be reasonably
expected to form the basis of any material claim, action, suit, proceeding,
hearing or investigation (collectively "Environmental Claims") against the
Company (or against any person or entity whose liability for any Environmental
Claims the Company has retained or assumed either contractually or by operation
of law), arising out of the manufacture, processing, distribution, use,
treatment, storage, spill, disposal, transport, or handling, or the emission,
discharge, release or threatened release into the environment, of any Hazardous
Material by the Company.
(d) The Company does not own, operate or maintain any underground
storage tanks on any property owned, operated, occupied or leased by the
Company, and to the Company's and Managing Stockholders' best knowledge, no
underground storage tanks are present at any property owned, operated, occupied
or leased at any time by the Company.
3.15 Real and Personal Property.
(a) The Company does not own any real property. Schedule 3.15(a) sets
forth a list of all real property leases, subleases, licenses or similar
agreements ("Leases") to which the Company is a party (copies of which will be
furnished to Bristol prior to the Closing), in each case setting forth (i) the
landlord and tenant or sublessor and sublessee, as applicable, thereof and the
date and term of each of the Leases, (ii) the legal description or street
address of each property covered thereby, and (iii) a brief description
(including size and function) of the principal improvements and buildings
thereon (the "Leased Premises"). The Leases are in full force and effect and
have not been amended except as set forth on Schedule 3.15(a), and no party
thereto is in default or breach under any such Lease. No event has occurred
which, with the passage of time or the giving of notice or both, would cause a
material breach of or default by the Company or to the Company's and the
Managing Stockholders' best knowledge, by the landlord under any of such Leases.
To the Company's and Managing Stockholders' best knowledge, there is no breach
or anticipated breach by any other party to such Leases. With respect to each of
the Leased Premises:
(i) The Company has valid leasehold interests in the Leased
Premises, which leasehold interests are free and clear of any liens, covenants
and easements or title defects of any nature whatsoever;
(ii) To the best knowledge of the Company and the Managing
Stockholders, the portions of the buildings located on the Leased Premises that
are used in the business of the Company are each in good repair and condition
(including, without limitation, the electrical, mechanical, HVAC, plumbing,
elevator, other building systems and structural components serving such
premises, and the roofs are water-tight), and are in the aggregate sufficient to
satisfy the Company's current and reasonably anticipated normal business
activities as conducted thereat;
(iii) Each of the Leased Premises (A) has direct access to
public roads or access to public roads by means of a perpetual access easement;
and (B) is served by all utilities in such quantity and quality as are
sufficient to satisfy the current normal business activities as conducted at
such premises;
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(iv) The Company and the Managing Stockholders have not
received notice of (A) any condemnation proceeding with respect to any portion
of the Leased Premises or any access thereto, and, to the best knowledge of the
Company and the Managing Stockholders, no such proceeding is contemplated by any
governmental authority; or (B) any special assessment which may affect any of
the Leased Premises, and, to the knowledge of the Company and the Managing
Stockholders, no such special assessment is contemplated by any governmental
authority;
(v) To the knowledge of the Company and the Managing
Stockholders, each of the Leased Premises, including all buildings located
thereon, conform to all requirements of any underlying covenants, conditions,
restrictions and encumbrances, all insurance underwriter's requirements, all
applicable rules, regulations, statutes, ordinances, laws and building codes,
(collectively, "Laws");
(vi) To the knowledge of the Company and the Managing
Stockholders, there are no Laws under active consideration by any governmental
authority which could require the Company to make any expenditure in excess of
$5,000 to modify or improve the Leased Premises to bring them into compliance
therewith; and
(vii) Neither the Company nor any of the Managing Stockholders
has received any notice from any insurance company of any defects or
inadequacies in the Leased Premises or any part thereof which could adversely
affect the insurability of the Leased Premises or the premiums for the insurance
thereof.
(b) Schedule 3.15(b) sets forth an accurate list of all personal
property owned or leased by the Company with a value in excess of $10,000 (i) as
of the Interim Balance Sheet Date and (ii) acquired since the Interim Balance
Sheet Date, including in each case true, complete and correct copies of leases
for material equipment and all real properties on which are situated in
buildings, warehouses, workshops, garages and other structures used in the
operation of the business of the Company. Except as set forth in Schedule
3.15(b), none of the Company's owned or leased real property, or personal
property is currently owned, or were formerly owned, by any of the Managing
Stockholders or business or personal affiliates of the Company or any of the
Managing Stockholders. All of the vehicles and material machinery and equipment
of the Company are in good working order and condition, ordinary wear and tear
excepted. All leases to which the Company is a party are in full force and
effect and constitute valid and binding agreements of the Company and, to the
knowledge of the Company and the Managing Stockholders, the other parties
thereto in accordance with their respective terms. All fixed assets used by the
Company that are material to the operation of its business are either owned by
the Company or leased under an agreement listed on Schedule 3.15(b). Schedule
3.15(b) includes without limitation true, complete and correct copies of all
title reports and title insurance policies received or owned by the Company that
are still in effect. Schedule 3.15(b) also includes a summary description of all
plans or projects involving the opening of new operations, expansion of any
existing operations or the acquisition of any real property or existing
business, which if pursued by the Company or the Surviving Corporation would
require additional material expenditures of capital.
3.16 Material Contracts. Schedule 3.16 lists and describes:
(a) Any union contract, the Company's standard employment agreement, or
any consulting contract or arrangement providing for future compensation,
written or oral, with any officer, consultant, director or employee which is not
terminable by the Company on 30 days' notice or less without penalty or
obligation to make payments related to such termination;
(b) Any plan, contract or arrangement, whether written or oral,
providing for bonuses, pensions, deferred compensation, severance pay or
benefits, retirement payments, profit-sharing or the like;
(c) Any joint venture contract or arrangement or any other agreement
which has involved or is expected to involve a sharing of profits with other
persons;
(d) Any existing distribution agreement, volume purchase agreement, or
other similar agreement (but excluding individual customer purchase orders) in
which the annual amount involved in fiscal 1997 exceeded or is expected to
exceed in fiscal 1997 $25,000 in aggregate amount or pursuant to which the
Company has granted or received most favored nation pricing provisions or
exclusive marketing rights related to any product, group of products or
territory;
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(e) Any individual customer purchase order for the sale of goods or
services in excess of $25,000;
(f) Except for trade indebtedness incurred in the ordinary course of
business, any instrument evidencing or related in any way to indebtedness
incurred in the acquisition of companies or other entities or indebtedness for
borrowed money by way of direct loan, sale of debt securities, purchase money
obligation, conditional sale, guarantee, leasehold obligations or otherwise;
(g) Any contract containing covenants purporting to limit in any way
the freedom of the Company to compete in any line of business or in any
geographic area;
(h) Any agreement of indemnification other than those entered in
connection with the sale of the Company's products in the ordinary course of
business;
(i) Any agreement, contract or commitment relating to capital
expenditures and which involve future payments individually in excess of $5,000
or in the aggregate in excess of $10,000 by the Company;
(j) Any agreements, contracts or commitments relating to the
disposition or acquisition of any assets, including any intangible assets or
intellectual property rights (other than Inventory), which involve payments
individually in excess of $5,000 or in the aggregate in excess of $10,000 by the
Company;
(k) Any purchase orders or contracts for the purchase of raw materials,
which involve payments individually in excess of $5,000 or in the aggregate in
excess of $10,000 by the Company;
(l) Any governmental contracts subject to price redetermination or
renegotiation; and
(m) Any other agreement, contract or commitment which is material to
the Company.
The agreements set forth on Schedule 3.16 are sometimes referred to herein
as the "Material Contracts." Each Material Contract is valid and binding on the
Company and is in full force and effect and, to the knowledge of the Company and
the Managing Stockholders, is not subject to any default thereunder by any party
obligated to the Company pursuant thereto. Other than the Company's sales
agreements entered into in the ordinary course of business, no Material Contract
contains any material liquidated damages, penalty or similar provision. The
Company does not intend to cancel, withdraw, modify or amend any such Material
Contract and, to the knowledge of the Company and the Managing Stockholders, no
party to any such contract, agreement or instrument intends to cancel, withdraw,
modify or amend any Material Contract.
Except as set forth on Schedule 3.16, the Company has obtained, or will
obtain prior to the Effective Time, all necessary consents, waivers and
approvals of parties to any Material Contracts required in connection with any
of the transactions contemplated hereby, or as are advisable or required by any
governmental agency or other third party in order that any such Material
Contract remain in effect without modification after the Merger and without
giving rise to any right to termination, cancellation or acceleration or loss of
any right or benefit ("Company Third-Party Consents"). All Company Third-Party
Consents are listed on Schedule 3.16.
3.17 Intellectual Property. The company owns, licenses or otherwise has the
full right to use all patents, trademarks, trade names, service marks,
copyrights, technology, know-how and processes, and confidential information
used in the conduct of its business. Schedule 3.17 contains a list of all
registered and unregistered patents, trademarks, trade names, service marks and
copyrights used by the Company, all applications therefore and all licenses and
other agreements relating thereto, which are owned by the Company or used in the
business of the Company. No consent of any third party will be required for the
use thereof upon completion of the transactions contemplated by this Agreement.
No claims are currently being asserted by any person or entity with respect to
the use of any such patents, trademarks, service marks, trade names, copyrights,
technology, know-how or processes or confidential information or challenging or
questioning the validity or effectiveness of any such license or agreement, nor
to the knowledge of the Company and any of the Managing Stockholders, is there
any basis for any such claims. The perpetual use of such patents, trademarks,
trade names, service marks, copyrights, technology, know-how or processes, or
confidential information by the Company does not infringe on the rights of any
person
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or entity, and, to the knowledge of the Company and any of the Managing
Stockholders, there is no infringing use of the Company's patents, trademarks,
trade names, service marks, or copyrights by others.
3.18 Insurance. Schedule 3.18 sets forth an accurate list, as of the
Interim Balance Sheet Date, of all insurance policies carried by the Company and
all insurance loss runs or workmen's compensation claims received for the past
two (2) policy years. Attached to Schedule 3.18 are true, complete and correct
copies of the summaries from the insurance company of all current insurance
policies, all of which are in full force and effect. All premiums payable under
all such policies have been paid and the Company is otherwise in full compliance
with the terms of such policies (or other policies providing substantially
similar insurance coverage). To the Company's or any Managing Stockholder's
knowledge, such policies of insurance are of the type and in amounts customarily
carried by persons conducting businesses similar to that of the Company. Neither
the Company nor any of the Managing Stockholders knows of any threatened
termination of or material premium increase with respect to, any of such
policies.
3.19 Compensation; Employment Agreements. Schedule 3.19 sets forth an
accurate list, as of the date hereof, of all officers, directors and key
employees of the Company listing the standard employment agreement entered into
with such officers, directors and key employees and the rate of compensation
(and the portions thereof attributable to salary, bonus and other compensation,
respectively) of each such person as of (a) the Interim Balance Sheet Date and
(b) the date hereof. The Company will provide to Bristol prior to the Closing
Date true, complete and correct copies of all employment contracts, commitments
and arrangements with persons listed on Schedule 3.19.
3.20 Employee Benefit Plans.
(a) All employee compensation, incentive, fringe or benefit plans,
programs, policies, commitments or other arrangements (whether or not set forth
in a written document) covering any active, former or retired employee or
consultant of the Company, any subsidiary of the Company or any trade or
business (whether or not incorporated) which is a member of a controlled group
or which is under common control with the Company within the meaning of Section
414 of the Code, or with respect to which the Company has or may in the future
have liability, are listed on Schedule 3.20 (the "Plans"). Except as set forth
on Schedule 3.20 and to the extent applicable, the Plans comply with the
requirements of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") and the Code, and any Plan intended to be qualified under Section
401(a) of the Code and each trust intended to qualify under Section 501(a) of
the Code (i) has obtained a favorable determination letter as to its qualified
status from the Internal Revenue Service, and (ii) incorporates or has been
amended to incorporate all provisions required to comply with the Tax Reform Act
of 1986 and subsequent legislation. The Company has furnished or made available
to Bristol copies of the most recent Forms 5500 with respect to any such Plan.
No Plan is covered by Title IV of ERISA or Section 412 of the Code. Neither the
Company nor any officer or director of the Company has incurred any liability or
penalty with respect to the Plans under Section 4975 through 4980B of the Code
or Title 1 of ERISA. None of the Plans promises or provides retiree medical or
other retiree welfare benefits to any person except as required by applicable
law, including but not limited to, the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended. Except as set forth on Schedule 3.20,
each Plan has been maintained and administered in all material respects in
compliance with its terms and with the requirements prescribed by any and all
statutes, orders, rules and regulations, including but not limited to ERISA and
the Code, which are applicable to such Plans. No suit, action or other
litigation (excluding claims for benefits incurred in the ordinary course of
Plan activities) has been brought, or to the knowledge of the Company and the
Managing Stockholders is threatened, against or with respect to any such Plan.
All contributions, reserves or premium payments required to be made or accrued
as of the date hereof to the Plans have been made or accrued. Schedule 3.20
includes a listing of the accrued vacation liability of the Company as of the
Interim Balance Sheet Date.
(b) The Company is not bound by or subject to (and none of its
respective assets or properties is bound by or subject to) any arrangement with
any labor union. No employee of the Company is represented by any labor union or
covered by any collective bargaining agreement and, to the knowledge of the
Company and the Managing Stockholders, no campaign to establish such
representation is in progress. There is no pending or, to the knowledge of the
Company and the Managing Stockholders, threatened labor dispute involving the
Company and any group of its employees nor has the Company experienced any labor
interruptions over the past three years, and the Company considers its
relationship with its employees to be good.
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(c) Neither the execution and delivery of this Agreement or the
Articles of Merger nor the consummation of the transactions contemplated hereby
or thereby will (i) result in any payment (including severance, unemployment
compensation, golden parachute, bonus or otherwise) becoming due to any director
or employee of the Company under any Plan or otherwise, (ii) materially increase
any benefits otherwise payable under any Plan, or (iii) result in the
acceleration of the time of payment or vesting of any such benefits.
3.21 Conformity with Law; Litigation.
(a) The Company is in compliance and has conducted its business so as
to comply with all laws, rules and regulations, judgments, decrees or orders of
any Governmental Entity applicable to its operations or with respect to which
compliance is a condition of engaging in the business thereof. There are no
judgments or orders, injunctions, decrees, stipulations or awards (whether
rendered by a court or administrative agency or by arbitration) against the
Company or against any of its properties or businesses or against any of the
Managing Stockholders. Without limiting the generality of the foregoing, the
Company has not violated any United States or foreign import and export control
laws and regulations, export licensing laws and regulations and customs
regulations (including its obligations under the Foreign Corrupt Practices Act)
applicable to the Company. The Company has not been cited by the United States
Department of Commerce, the United States Customs Service or any other relevant
Governmental Entity for any violation of United States laws or regulations
relating to importing or exporting of products, materials or services. Schedule
3.21 contains a summary of any violation of, or conflict with, any applicable
statute, law, rule, regulation, ruling, order, judgment or decree of which such
Governmental Entity has notified the Company, including any of the foregoing
relating to Environmental Laws.
(b) There is no action, suit, proceeding, claim, arbitration or
investigation pending or, to the knowledge of the Company or the Managing
Stockholders, threatened, against the Company or its assets or operations, and
which in any manner challenges or seeks to prevent, enjoin, alter or delay any
of the transactions contemplated hereby. Schedule 3.21 sets forth with respect
to each pending action, suit, proceeding, claim, arbitration or investigation to
which the Company is a party, the forum, the parties thereto, a brief
description of the subject matter thereof and the amount of damages claimed.
Except as stated in Schedule 3.21, neither the Company nor the Managing
Stockholders has any knowledge of any reasonable basis for any other such
litigation. The Company will deliver or make available to Bristol prior to
Closing correct and complete copies of all correspondence prepared by its
counsel for the Company's independent public accountants in connection with all
completed audits or reviews of the Company's financial statements and any such
correspondence since the date of the last such audit or review. Schedule 3.21
accurately summarizes all product liability claims made against the Company
since inception.
3.22 Taxes.
(a) All Tax (as defined below in Section 3.22(e)) returns, statements,
reports and forms (including estimated Tax returns and reports and information
returns and reports) required to be filed with any Taxing Authority (as defined
below) with respect to any Taxable period ending on or before the Effective
Time, by or on behalf of the Company (collectively, the "Company Returns"), have
been or will be filed when due (including any extensions of such due date), and
all such Company Returns are true and correct. The Interim Balance Sheet fully
accrues all actual and probable contingent liabilities for Taxes with respect to
all periods through the Interim Balance Sheet Date and the Company has not and
will not incur any Tax liability in excess of the amount reflected on the
Interim Balance Sheet with respect to such periods. All information set forth in
the notes to the Company Financial Statements relating to Tax matters is true,
complete and accurate in all material respects.
(b) No material Tax liability has been incurred since the Interim
Balance Sheet Date other than in the ordinary course of business and adequate
provision has been or will be made for all Tax liabilities incurred since that
date in accordance with GAAP on at least a quarterly basis. Except as set forth
on Schedule 3.22, the Company has withheld and paid to the applicable financial
institution or Taxing Authority all amounts required to be withheld.
(c) Except as set forth on Schedule 3.22, there is no claim, audit,
action, suit, proceeding, or investigation now pending or, to the knowledge of
the Company and the Managing Stockholders, threatened against or with respect to
the Company in respect of any Tax or assessment. Neither the
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Company, nor any person on behalf of the Company, has entered into nor will it
enter into any agreement or consent pursuant to Section 341(f) of the Code.
There are no liens for Taxes upon the assets of the Company except liens for
current Taxes not yet due. Except as may be required as a result of the Merger,
the Company has not been or will not be required to include any material
adjustment in Taxable income for any Tax period (or portion thereof) ending on
or after the Closing pursuant to Section 481 or 263A of the Code or any
comparable provision under state or foreign Tax laws as a result of
transactions, events or accounting methods employed prior to the Closing.
(d) There is no contract, agreement, plan or arrangement, including,
but not limited to, the provisions of this Agreement, covering any employee or
independent contractor or former employee or independent contractor of the
Company that, individually or collectively, could give rise to the payment of
any amount that would not be deductible pursuant to Section 280G, 162 or 404 of
the Code. Other than pursuant to this Agreement, the Company is not a party to
or bound by (or will prior to the Effective Time become a party to or bound by)
any Tax indemnity, Tax sharing or Tax allocation agreement (whether written,
unwritten or arising under operation of federal law as a result of being a
member of a group filing consolidated tax returns, under operation of certain
state laws as a result of being a member of a unitary group, or under comparable
laws of other states or foreign jurisdictions) which includes a party other than
the Company. None of the assets of the Company (i) is property that the Company
is required to treat as owned by any other person pursuant to the so-called
"safe harbor lease" provisions of former Section 168(f)(8) of the Code, (ii)
directly or indirectly secures any debt the interest on which is tax exempt
under Section 103(a) of the Code or (iii) is "tax exempt use property" within
the meaning of Section 168(h) of the Code. The Company has not participated in
(nor will it prior to the Effective Time participate in) an international
boycott within the meaning of Section 999 of the Code. The Company will provide
or make available to Bristol prior to the Closing Date true and correct copies
of all material Tax Returns, and, as reasonably requested by Bristol, prior to
or following the date hereof, information statements, reports, work papers, Tax
opinions and memoranda and other Tax data and documents.
(e) For purposes of this Agreement, the term "Tax" (and, with
correlative meaning, "Taxes" and "Taxable") means (i) any net income,
alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad
valorem, transfer, franchise, profits, license, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, property,
environmental or windfall profit tax, custom, duty or other tax governmental fee
or other like assessment or charge of any kind whatsoever, together with any
interest or any penalty, addition to tax or additional amount imposed by any
Governmental Entity (a "Taxing Authority") responsible for the imposition of any
such tax (domestic or foreign), (ii) any liability for the payment of any
amounts of the type described in clause (i) as a result of being a member of an
affiliated, consolidated, combined or unitary group for any Taxable period and
(iii) any liability for the payment of any amounts of the type described in
clause (i) or (ii) as a result of any express or implied obligation to indemnify
any other person.
3.23 Absence of Changes. Since the Interim Balance Sheet Date, except as
contemplated herein or as set forth on Schedule 3.23 there has not been:
(a) any change that by itself or together with other changes, has had a
Material Adverse Effect;
(b) any damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting the properties or business of the
Company;
(c) any change in the authorized capital of the Company or in its
outstanding securities or any change in its ownership interests or any grant of
any options, warrants, calls, conversion rights or commitments;
(d) any declaration or payment of any dividend or distribution in
respect of the capital stock or any direct or indirect redemption, purchase or
other acquisition of any of the capital stock of the Company;
(e) any increase in the compensation, bonus, sales commissions or fee
arrangements payable or to become payable by the Company to any of its officers,
directors, stockholders, employees, consultants or agents, except for ordinary
and customary bonuses and salary increases for employees in accordance with past
practice;
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(f) any work interruptions, labor grievances or claims filed, or any
similar event or condition of any character, materially adversely affecting the
business or future prospects of the Company;
(g) any cancellation, or agreement to cancel, any indebtedness or other
obligation owing to the Company, including without limitation any indebtedness
or obligation of any of the Managing Stockholders or any affiliate thereof;
(h) any plan, agreement or arrangement granting any preferential rights
to purchase or acquire any interest in any of the assets, property or rights of
the Company or requiring consent of any party to the transfer and assignment of
any such assets, property or rights;
(i) any waiver of any material rights or claims of the Company;
(j) any breach, amendment or termination of any material contract,
agreement, lease, sublease, license, permit or other right to which the Company
is a party;
(k) any transaction by the Company outside the ordinary course of
business;
(l) any change in accounting methods or practices (including any change
in depreciation or amortization policies or rates) by the Company or the
revaluation by the Company of any of its assets;
(m) any creation or assumption by the Company of any mortgage, pledge,
security interest or lien or other encumbrance on any asset (other than liens
arising under existing lease financing arrangements which are not material and
liens for taxes not yet due and payable);
(n) any entry into, amendment of, relinquishment, termination or
non-renewal by the Company of any contract, lease or sublease transaction,
commitment or other right or obligation requiring aggregate payments by the
Company in excess of $25,000;
(o) any violation of or conflict with any applicable laws, statutes,
orders, rules and regulations promulgated or judgment entered by any
Governmental Entity which, individually or in the aggregate, would have a
Material Adverse Effect (or, insofar as the Company or any of the Managing
Stockholders knows, might reasonably be expected to have a Material Adverse
Effect);
(p) the commencement or notice or, to the knowledge of the Company and
the Managing Stockholders, threat of commencement of any lawsuit or proceeding
against or investigation of the Company or any of its affairs;
(q) any agreement or arrangement made by the Company or any of the
Managing Stockholders to take any action which, if taken prior to the date
hereof, would have made any representation or warranty set forth in this
Agreement untrue or incorrect as of the date when made; or
(r) any negotiation or agreement by the Company or any officer or
employee thereof to do any of the things described in the preceding clauses (a)
through (q) (other than negotiations with Bristol and its representatives
regarding the transactions contemplated by this Agreement).
3.24 Bank Accounts; Powers of Attorney. Schedule 3.24 sets forth an
accurate list, as of the date of this Agreement, of the following: (a) the name
of each financial institution in which the Company has any account or safe
deposit box; (b) the names in which the accounts or boxes are held; (c) the type
of account; and (d) the name of each person authorized to draw thereon or have
access thereto. Schedule 3.24 also sets forth the name of each person,
corporation, firm or other entity holding a general or special power of attorney
from the Company and a description of the terms of such power.
3.25 Customers; Backlog; Returns and Complaints. Schedule 3.25 sets forth
the customers of the Company, which represented 5% or more of the Company's
revenues for the Company's last fiscal year ("Significant Customers"). Neither
the Company nor any of the Managing Stockholders has any reason to believe that
the Company is at risk of losing any of its Significant Customers. As of the
date hereof, the Company has no material backlog of customer orders. The Company
has not received any customer complaints concerning its products which
complaints it has not been able to address to the satisfaction of the
complainant within a commercially reasonable length of time after the Company
received notice of such
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complaint, nor has it had any of its products returned by a purchaser thereof
except for normal warranty returns consistent with past history and those
returns that would not result in a reversal of any revenue by the Company.
3.26 Product Warranty. Except for liability arising under the guaranty,
warranty and indemnity provisions contained in the Company's standard terms and
conditions of sale, each product manufactured, sold, or delivered by the Company
has been in conformity with all applicable contractual commitments and all
express and implied warranties, and the Company has no liability of any nature
whatsoever (and there is no basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
any of them giving rise to any such liability) for replacement or repair thereof
or other damages in connection therewith, subject only to the reserve for
product warranty claims set forth on the face of the balance sheet of the
Interim Financial Statements (rather than in any notes thereto) as adjusted for
the passage of time through the Closing Date in accordance with the past custom
and practice of the Company. No product manufactured, sold, or delivered by the
Company is subject to any guaranty, warranty, or other indemnity beyond the
applicable standard terms and conditions of sale. Schedule 3.26 includes copies
of the standard terms and conditions of sale for the Company (containing
applicable guaranty, warranty, and indemnity provisions).
3.27 Product Liability. The Company has no liability of any nature
whatsoever (and there is no basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
Company giving rise to any such liability) arising out of any injury to
individuals or property as a result of the ownership, possession, or use of any
product manufactured, sold, or delivered by the Company.
3.28 Brokers; Finders. Except as set forth on Schedule 3.28, the Company
has made no commitments to pay any broker's or finder's fee or any similar
commission or fee in connection with any of the transactions contemplated by
this Agreement or the Articles of Merger ("Broker's or Finder's Fee") to any
agent, broker, investment banker or other firm or person. The Managing
Stockholders will pay or cause to be paid any and all Broker's or Finder's Fees
incurred by them and/or the Company. If such fees are paid in the form of
Bristol Common Stock, such Bristol Common Stock shall be transferred in
compliance with all pooling of interests requirements and applicable securities
laws.
3.29 Interests of Officers. None of the Managing Stockholders nor any of
the Company's other officers or directors have any interest, either directly or
indirectly, in any property, real or personal, tangible or intangible, used in
or pertaining to the Company's business, including any interest in the Company's
intellectual property rights, except for (a) rights as a stockholder, (b) rights
under any Plan, and (c) rights to amounts earned as salary in the ordinary
course of business. No employee, Managing Stockholder, officer or director of
the Company, or their spouses or children, is indebted to the Company, nor is
the Company indebted to any of them.
3.30 Bristol Prospectus; Securities Representations. The Managing
Stockholders have received and reviewed a copy of the prospectus dated November
12, 1996 ("Bristol Prospectus"). Each Managing Stockholder (a) has such
knowledge, sophistication and experience in business and financial matters that
they are capable of evaluating the merits and risks of an investment in the
shares of Bristol Common Stock, (b) fully understands the nature, scope and
duration of the limitations on transfer contained in this Agreement and (c) can
bear the economic risk of any investment in the shares of Bristol Common Stock
and can afford a complete loss of such investment. Each Managing Stockholder has
had an adequate opportunity to ask questions and receive answers (and has asked
such questions and received answers to its satisfaction) from the officers of
Bristol concerning the business, operations and financial condition of Bristol.
No Managing Stockholder has any contract, undertaking, agreement or arrangement,
written or oral, with any other person to sell, transfer or grant
participation's in any shares of Bristol Common Stock to be acquired by such
Managing Stockholder in the Merger. Each Managing Stockholder acknowledges that
such Managing Stockholder is acquiring the shares of Bristol Common Stock for
investment in such Managing Stockholder's own account and not with a view to or
for sale in connection with any distribution of the Bristol Common Stock. Each
Managing Stockholder acknowledges and agrees that Bristol will not provide such
Managing Stockholder with a prospectus for such Managing Stockholder's use in
selling Bristol Common Stock.
3.31 Absence of Claims Against Company. None of the Managing
Stockholders has any claims against the Company.
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3.32 Company Net Worth, Company Profits, Company Sales.
(a) The annual earnings before interest and taxes of the Company for
the twelve (12) months ended December 31, 1996, and the two (2) months ended
February 28, 1997, were at least $524,000 and at least $85,000, respectively.
(b) The annual sales of the Company for the twelve (12) months ended
December 31, 1996, and the two (2) months ended February 28, 1997, were at least
$12,100,000 and at least $2,100,000, respectively. The sales of the Company for
the month of March 1997, were approximately $800,000.
3.33 Pooling. Neither the Company, the Managing Stockholders nor their
respective affiliates is aware of any event or condition or has taken any action
that would adversely affect the ability of Bristol to account for the business
combination to be effected by the Merger as a pooling of interests.
3.34 Government Contracts.
(a) Except as set forth on Schedule 3.34, the Company is not a party to
any governmental contracts.
(b) The Company has not been suspended or debarred from bidding on
contracts or subcontracts for any agency or instrumentality of the United States
Government, nor, to the knowledge of the Company or the Managing Stockholders,
has any suspension or debarment action been threatened or
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commenced. To the knowledge of the Company and the Managing Stockholders, there
is no valid basis for the Company's suspension or debarment from bidding on
contracts or subcontracts for any agency of the United States Government.
(c) Except as set forth in Schedule 3.34, the Company has not been, nor
is it now being, audited, or investigated by any government agency, or the
inspector general or auditor general or similar functionary of any agency or
instrumentality, nor, to the knowledge of the Company and the Managing
Stockholders, has such audit or investigation been threatened.
(d) Except as set forth on Schedule 3.34, the Company has no dispute
pending before a contracting office of, nor any current claim (other than the
Accounts Receivable) pending against, any agency or instrumentality of the
United States Government, relating to a contract.
(e) The Company has not, with respect to any contract, received a cure
notice advising the Company that it is or was in default or would, if it failed
to take remedial action, be in default under such contract.
(f) The Company has not submitted any inaccurate, incomplete or
non-current cost or pricing data, certification, bid, proposal, report, claim,
or any other information relating to a contract to any agency or instrumentality
of the United States Government that would be contrary to any current rules and
regulations.
(g) To the knowledge of the Company and the Managing Stockholders, no
employee, agent, consultant, representative, or affiliate of the Company is in
receipt or possession of any competitor or government proprietary or procurement
sensitive information related to the Company's business under circumstances
where there is reason to believe that such receipt or possession is unlawful or
unauthorized.
(h) Each of the Company's contracts has been issued, awarded or novated
to the Company in the Company's name.
(i) No novation is required under any governmental contract set
forth on Schedule 3.34.
3.35 Disclosure. No representation or warranty made by the Company or the
Managing Stockholders in this Agreement, nor any financial statement,
certificate, schedule or exhibit prepared and furnished or to be prepared and
furnished by the Company, the Managing Stockholders or its representatives
pursuant hereto or in connection with the transactions contemplated hereby,
contains or will contain any untrue statement of a material fact, or omits or
will omit to state a material fact necessary to make the statements or facts
contained herein or therein not misleading in the light of the circumstances
under which they were furnished. There is no event, fact or condition that has
caused, or that reasonably could be expected to cause, a Material Adverse
Effect, that has not been set forth in this Agreement.
4. REPRESENTATIONS OF BRISTOL AND NEWCO
Each of Bristol and Newco represents and warrants to the Company and the
Managing Stockholders that (except for changes contemplated by this Agreement)
each of the following statements is true, correct and complete as of the date of
this Agreement and will be true, correct and complete as of the Closing Date
(each such statement to be made again by Bristol and Newco on that date with the
Closing Date being substituted for the date of this Agreement throughout this
Section 4):
4.1 Due Organization. Bristol and Newco are each corporations duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Each of Bristol and Newco has all requisite power and authority to
own, operate and lease its properties and to carry on its business as now being
conducted. Each of Bristol and Newco is qualified as foreign corporation and is
in good standing in each jurisdiction in which the failure to be so qualified
would have a Bristol Material Adverse Effect (as defined below). The term
"Bristol Material Adverse Effect" means any change, event or effect (other than
general economic factors and conditions affecting the U.S. point of sale systems
and electronic cash register business in general) that is materially adverse to
the business, assets (including intangible assets), liabilities, financial
condition, results of operations or prospects of Bristol and its subsidiaries
(including Newco) taken as a whole.
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4.2 Bristol Common Stock. The Bristol Common Stock to be delivered to the
Stockholders at the Closing Date will be duly authorized, validly issued shares
of non-registered, restricted Common Stock of Bristol, fully paid and
non-assessable.
4.3 Authorization; Validity of Obligations. The representatives of Bristol
and Newco executing this Agreement have all requisite corporate power and
authority to enter into and bind Bristol and Newco to the terms of this
Agreement. Each of Bristol and Newco has the corporate power and authority to
enter into this Agreement and the transactions contemplated hereby. The
execution and delivery of this Agreement by Bristol and Newco and the
performance by each of Bristol and Newco of the transactions contemplated herein
will be duly and validly authorized by all necessary corporate action on the
part of each of Bristol and Newco, including approval by the respective Boards
of Directors and stockholders (if required) of Bristol and Newco. This Agreement
is a legal, valid and binding obligation of each of Bristol and Newco
enforceable in accordance with its terms except as such enforceability may be
limited by principles of public policy and subject to the laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
rules of law governing specific performance, injunctive relief or other
equitable remedies.
4.4 No Conflicts. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby, will
not:
(a) conflict with, or violate any provision of the Bristol Certificate
of Incorporation or Bylaws as now in effect;
(b) result in termination or any impairment of any permit, license,
franchise, contractual right or other authorization of Bristol or Newco
("Bristol Third-Party Consents"), which termination or impairment would be
reasonably likely to have an Bristol Material Adverse Effect; or
(c) violate any law, order, judgment, rule or regulation to which
Bristol or Newco is subject or by which Bristol or Newco or any of their
properties or assets is bound or affected.
4.5 Capitalization of Bristol and Ownership of Bristol Stock. The
authorized capital stock of Bristol is as set forth in the Bristol Prospectus.
The authorized capital stock of Newco consists of 10,000 shares of Common Stock,
of which 1000 shares are outstanding. All of the issued and outstanding shares
of Newco are owned beneficially and of record by Bristol. All of the shares of
Bristol Common Stock to be issued to the Stockholders in accordance herewith
will be offered, issued, sold and delivered by Bristol in compliance with all
applicable state and federal laws concerning the issuance of securities and none
of such shares were or will be issued in violation of the preemptive rights of
any stockholder of Bristol.
5. COVENANTS
5.1 Access to Information; Confidentiality.
(a) Between the date of this Agreement and the Closing Date, the
Company will afford to the officers and authorized representatives of Bristol
reasonable access during business hours to (i) all of the sites, properties,
books and records of the Company and (ii) such additional financial and
operating data and other information as to the business and properties of the
Company as Bristol may from time to time reasonably request, including without
limitation access upon reasonable request to the Company's employees, certain
mutually agreed upon customers and vendors for due diligence inquiry. The
Managing Stockholders and the Company will cooperate with Bristol, its
representatives, auditors and counsel in the preparation of any documents or
other material, which may be required in connection with this Agreement. No
information or knowledge obtained in any investigation pursuant to this Section
5.1 shall affect or be deemed to modify any representation or warranty contained
herein or the conditions to the obligations of the parties to consummate the
Merger.
(b) Each of the Company and the Managing Stockholders recognizes and
acknowledges that it has had in the past, currently has, and in the future may
possibly have, access to certain confidential information of the Company and
Bristol, such as lists of customers, operational policies, and pricing and cost
policies that are valuable, special and unique assets of the Company's and
Bristol's respective businesses. Each of the Company and the Managing
Stockholders agrees that it will not disclose confidential information with
respect to the Company or Bristol to any person, firm, corporation, association
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or other entity for any purpose or reason whatsoever, except to authorized
representatives of Bristol and to counsel and other advisers, provided that such
advisors (other than counsel) agree to the confidentiality provisions of this
Section 5.1(b), unless (i) such information becomes known to the public
generally through no fault of the Company or the Managing Stockholders, (ii)
disclosure is required by law or the order of any governmental authority under
color of law, or (iii) the disclosing party reasonably believes that such
disclosure is required in connection with the defense of a lawsuit against the
disclosing party, provided, that prior to disclosing any information pursuant to
clause (i), (ii) or (iii) above, the Company or the Managing Stockholders (as
applicable) shall, if possible, give prior written notice thereof to Bristol and
provide Bristol with the opportunity to contest such disclosure.
(c) Each of Bristol and Newco recognizes and acknowledges that it has
had in the past, currently has, and in the future may possibly have, access to
certain confidential information of the Company, such as lists of customers,
operational policies, and pricing and cost policies that are valuable, special
and unique assets of the Company's business. Each of Bristol and Newco agree
that, prior to the Closing, they will not disclose confidential information with
respect to the Company to any person, firm, corporation, association or other
entity for any purpose or reason whatsoever, except to authorized
representatives of the Company and to counsel and other advisers, provided that
such advisers (other than counsel) agree to the confidentiality provisions of
this Section 5.1(c), unless (i) such information becomes known to the public
generally through no fault of Bristol or Newco, (ii) disclosure is required by
law or the order of any governmental authority under color of law, or (iii) the
disclosing party reasonably believes that such disclosure is required in
connection with the defense of a lawsuit against the disclosing party, provided,
that prior to disclosing any information pursuant to clause (i), (ii) or (iii)
above, Bristol shall, if possible, give prior written notice thereof to the
Company and provide the Company with the opportunity to contest such disclosure.
5.2 Conduct of Business Pending Closing. Between the date hereof and
the Effective Time, the Company will:
(a) Except as set forth on Schedule 5.2(a), carry on its business in
substantially the same manner as it has heretofore and not introduce any
material new method of management, operation or accounting;
(b) maintain its properties and facilities, including those held under
leases, in as good working order and condition as at present, ordinary wear and
tear excepted;
(c) perform all of its obligations under agreements relating to or
affecting its respective assets, properties or rights, and operate, manage and
maintain the Leased Premises in the usual and customary manner for similar
properties;
(d) keep in full force and effect present insurance policies or other
comparable insurance coverage;
(e) use all commercially reasonable efforts to maintain and preserve
its business organization intact, retain its present officers and key employees
and maintain its relationships with vendors, suppliers, customers and others
having business relations with it;
(f) maintain compliance with all permits, laws, rules and regulations,
consent orders, and all other orders of applicable courts, regulatory agencies
and similar governmental authorities;
(g) Except for the extension of the Company's line of credit with
United National Bank & Trust Co. up to $1,000,000, maintain present debt and
lease instruments and not enter into new or amended debt or lease instruments;
(h) maintain present salaries and commission levels for all officers,
directors, employees and agents, except for ordinary and customary bonuses and
salary increases for employees in accordance with past practice; and
(i) promptly notify Bristol in writing if any material change occurs in
the occupancy or conditions of or affecting any Leased Premises.
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5.3 Prohibited Activities. Between the date hereof and the Effective Time,
the Company will not, without the prior written consent of Bristol, which
consent shall not be unreasonably withheld:
(a) make any change in its Articles of Incorporation or Bylaws, or
authorize or propose the same;
(b) issue, deliver or sell, authorize or propose the issuance, delivery
or sale of any securities, options, warrants, calls, conversion rights or
commitments relating to its securities of any kind, or authorize or propose any
change in its equity capitalization, or issue or authorize the issuance of any
debt securities;
(c) declare or pay any dividend, or make any distribution (whether in
cash, stock or property) in respect of its stock whether now or hereafter
outstanding, or split, combine or reclassify any of its capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for shares of its capital stock, or purchase, redeem or
otherwise acquire or retire for value any shares of its stock;
(d) enter into any contract or commitment or incur or agree to incur
any liability or make any capital expenditures, or guarantee any indebtedness,
except in the ordinary course of business (consistent with past practice) in an
amount not in excess of $10,000, including contracts to provide services to
customers;
(e) Except for ordinary and customary bonuses and salary increases,
increase the compensation payable or to become payable to any officer, director,
Managing Stockholder, employee or agent; make any bonus or management fee
payment to any such person; make any loans or advances; adopt or amend any
employee benefit plan; or grant any severance or termination pay;
(f) create or assume any mortgage, pledge or other lien or encumbrance
upon any assets or properties whether now owned or hereafter acquired;
(g) sell, assign, lease, sublease, pledge or otherwise transfer or
dispose of any property or equipment except in the ordinary course of business
consistent with past practice;
(h) acquire or negotiate for the acquisition of (by merger,
consolidation, purchase of a substantial portion of assets or otherwise) any
business or the start-up of any new business, or otherwise acquire or agree to
acquire any assets that are material, individually or in the aggregate, to the
Company;
(i) merge or consolidate or agree to merge or consolidate with or into
any other corporation;
(j) waive any material rights or claims of the Company, provided that
the Company may negotiate and adjust bills in the course of good faith disputes
with customers in a manner consistent with past practice;
(k) commit a breach of or amend or terminate any material agreement
(including a Material Contract), permit, license or other right;
(l) enter into any other transaction (i) that is not negotiated at
arm's length with a third party not affiliated with the Company or any officer,
director or stockholder of the Company or (ii) outside the ordinary course of
business consistent with past practice or (iii) prohibited hereunder;
(m) commence a lawsuit other than for routine collection of bills;
(n) re-value any of its assets, including without limitation, writing
down the value of inventory or writing off notes or accounts receivable other
than in the ordinary course of business consistent with past practice;
(o) make any material tax election other than in the ordinary course of
business and consistent with past practice, change any material tax election,
adopt any material tax accounting method other than in the ordinary course of
business and consistent with past practice, change any material tax accounting
method, file any material tax return (other than any estimated tax returns,
payroll tax returns or sale tax returns) or any amendment to a material tax
return, enter into any closing agreement, settle any tax claim or assessment, or
consent to any tax claim or assessment, without the prior written consent of
Bristol;
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(p) convey, sublease or assign all or any portion of any Leased
Premises or any interest or rights therein, commit any waste or nuisance on any
Leased Premises, make any material changes in the construction or condition of
any Leased Premises, or modify, terminate or exercise any option or right to
extend the term of, or expand the Leased Premises under, any Lease;
(q) permit any of the registrations for any of the Company's
intellectual property rights to lapse or go abandoned including by failing to
pay any renewal or maintenance fees required to maintain such intellectual
property rights;
(r) fail to take any action necessary in the ordinary course to
preserve or acquire rights in any intellectual property rights used in, or
necessary to the business of the Company, including by failing to make the
timely application for a patent, copyright or trademark with respect to such
intellectual property rights;
(s) Other than in accordance with the Company's standard software sales
agreements entered into in the ordinary course of business, license or otherwise
grant to any person any rights in the intellectual property rights of the
Company; or
(t) take, or agree (in writing or otherwise) to take, any of the
actions described in Sections 5.3(a) through (s), above, or any action which
would make any of the representations and warranties of the Company and the
Managing Stockholders contained in this Agreement untrue or result in any of the
conditions set forth in Sections 6 and 7 not being satisfied.
5.4 No Shop. The Managing Stockholders, the Company, or any agent, officer,
director or any representative of the Company or the Managing Stockholders will
not, during the period commencing on the date of this Agreement and ending with
the earlier to occur of the Closing or the termination of this Agreement in
accordance with its terms, directly or indirectly: (a) solicit, encourage or
initiate the submission of proposals or offers from any person for, (b)
participate in any discussions pertaining to, or (c) furnish any information to
any person other than Bristol relating to, any acquisition or purchase of all or
a material amount of the assets of, or any equity interest in, the Company or a
merger, consolidation or business combination of the Company. In addition to the
foregoing, if the Company or any of the Managing Stockholders receives any
unsolicited offer or proposal relating to any of the above, the Company or such
Managing Stockholder shall immediately notify Bristol thereof, including the
identity of the party making such offer or proposal and the specific terms of
such offer or proposal.
5.5 Notice to Bargaining Agents. Prior to the Closing Date, the Company
shall satisfy any requirement for notice of the transactions contemplated by
this Agreement under applicable collective bargaining agreements, and shall
provide Bristol with proof that any required notice has been sent.
5.6 Notification of Certain Matters. Bristol and Newco, on the one hand,
and the Company and the Managing Stockholders, on the other hand, shall give
prompt notice to the other parties hereto of (a) the occurrence or nonoccurrence
of any event the occurrence or nonoccurrence of which would be likely to cause
any representation or warranty of it contained herein to be untrue or inaccurate
in any material respect at or prior to the Closing and (b) any material failure
of such party to comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by such party hereunder. The delivery of any
notice pursuant to this Section 5.6 shall not, without the express written
consent of the other parties, be deemed to (x) modify the representations or
warranties hereunder of the party delivering such notice, (y) modify the
conditions set forth in Sections 6 and 7, or (z) limit or otherwise affect the
remedies available hereunder to the party receiving such notice.
5.7 Cooperation in Obtaining Required Consents and Approvals. Bristol and
Newco, on the one hand, and the Company and the Managing Stockholders, on the
other hand, shall cooperate in obtaining all consents and approvals required by
Section 6.5 (which shall nonetheless continue to be the responsibility of the
Company and the Managing Stockholders), including, without limitation, any
novation agreements that may be required with respect to any of the Company's
government contracts, which novation agreements shall be substantially as set
forth in 48 C.F.R. 42.1204, and including without limitation Company Third-Party
Consents set forth on Schedule 3.16 (which shall continue to be the
responsibility of the Company and the Managing Stockholders).
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5.8 Pooling Accounting. Bristol, the Managing Stockholders and the Company
shall each use its reasonable efforts to cause the business combination to be
effected by the Merger to be accounted for as a pooling of interests. Each of
Bristol, the Managing Stockholders and the Company shall use its reasonable
efforts to cause its affiliates not to take any action that would adversely
affect the ability of Bristol to account for the business combination to be
effected by the Merger as a pooling of interests. Except as expressly set forth
in this Section 5.8, no party hereto shall have any obligation or liability in
connection with whether the Merger is accounted for as a pooling of interests.
5.9 Tax Returns. The Company shall timely (including allowable extensions)
file all federal and state income tax returns for taxable periods ending on or
prior to the Effective Time and have paid or will pay all Taxes (as defined in
Section 3.22) attributable to such periods. Such returns will be prepared and
filed in accordance with applicable law and in a manner consistent with past
practices and shall be subject to review and approval by Bristol. After the
Effective Time, Bristol and the Company, on the one hand, and the Managing
Stockholders, on the other hand, will make available to the other, as reasonably
requested, all information, records or documents relating to the liability for
Taxes of the Company for all periods prior to or including the Effective Time
and will preserve such information, records or documents until the expiration of
any applicable statute of limitations or extensions thereof.
5.10 Continuity of Business. The Surviving Corporation shall continue at
least one significant historical business line of Company, or use at least a
significant portion of Company's historical business assets in a business, in
each case in accordance with Treasury Regulation Section 1.368-1.
5.11 Tax-Free Reorganization. None of Bristol, Newco, Surviving
Corporation, nor any of their respective officers, directors, employees,
stockholders, assigns, successors and affiliates, shall be liable for any income
and/or capital gains Tax liability incurred by any Stockholder resulting from
the failure of the Merger to qualify as a Code Section 368(a) tax-free
reorganization.
No Managing Stockholder, nor any of his assigns, successors and affiliates,
shall be liable for any income and/or capital gains Tax liability incurred by
any Stockholder other than such Managing Stockholder resulting from the failure
of the Merger to qualify as a Code Section 368(a) tax-free reorganization.
5.12 Registration and Listing of Bristol Common Stock. As promptly as
possible following the execution of this Agreement, Bristol shall file with the
Securities Exchange Commission ("SEC") a registration statement on form SB-2 (or
such other appropriate form as determined by Bristol in its sole discretion),
one of the purposes for which shall be the registration with the SEC of the
Bristol Common Stock. Subsequent to the Closing Date, Bristol shall use its best
efforts to take all actions necessary and appropriate in order for the
registration statement to go effective as soon as possible following the Closing
Date, and to obtain the requisite approvals for the listing and transfer of the
Bristol Common Stock on the NASDAQ stock exchange or on such other stock
exchange as Bristol's publicly traded securities are then listed.
5.13 Delivery of Schedules. Not later than fifteen (15) days prior to the
Closing Date, the Stockholders' Representative shall cause the Company to
deliver to Bristol the completed Schedules to this Agreement.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF BRISTOL AND
NEWCO
The obligation of Bristol and Newco to effect the Merger is subject to the
satisfaction or waiver, at or before the Effective Time, of the following
conditions:
6.1 Representations and Warranties; Performance of Obligations. All of the
representations and warranties of the Managing Stockholders and the Company
contained in this Agreement shall be substantially true, correct and complete on
and as of the date of this Agreement and the Closing Date with the same effect
as though such representations and warranties had been made on and as of such
date; all of the terms, covenants, agreements and conditions of this Agreement
to be complied with, performed or satisfied by the Company and the Managing
Stockholders on or before the Closing Date shall have been substantially
complied with, performed or satisfied; and a certificate to the foregoing
effects dated the Closing Date and signed on behalf of the Company and by the
Stockholders' Representative shall have been delivered to Bristol.
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6.2 No Litigation. No temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or other
legal or regulatory restraint or provision challenging Bristol's proposed
acquisition of the Company, or limiting or restricting Bristol's conduct or
operation of the business of the Company (or its own business) following the
Merger shall be in effect, nor shall any proceeding brought by an administrative
agency or commission or other governmental authority or instrumentality,
domestic or foreign, seeking any of the foregoing be pending. There shall be no
action, suit, claim or proceeding of any nature pending or threatened, against
Bristol, Newco or the Company, their respective properties or any of their
officers or directors, that could materially and adversely affect the business,
assets, liabilities, financial condition, results of operations or prospects of
the Company.
6.3 Employment Agreements. Xxxxxx X. Xxxxx, Xxxxx X. Xxxxx, and Xxxxxxx X.
Xxxxx shall have entered into an employment agreement with the Company
substantially in the form attached hereto as Annex II-A, Annex II-B, and Annex
II-C, respectively (the "Employment Agreements"). All prior employment
agreements with the Managing Stockholders shall have been terminated as of the
Closing Date and be of no further force or effect.
6.4 Opinion of Counsel. Bristol shall have received an opinion from counsel
to the Company and the Managing Stockholders, dated the Closing Date, in a form
reasonably acceptable to Bristol, the Company and the Managing Stockholders,
which form, when approved, will be attached as Annex III.
6.5 Consents and Approvals. All necessary consents of and filings with any
governmental authority or agency or third party (with respect to Material
Contracts, including without limitation any Company Third-Party Consents),
relating to the consummation by the Company and the Managing Stockholders of the
transactions contemplated hereby shall have been obtained and made by the
Company.
6.6 Charter Documents. The Company shall have delivered to Bristol (a) a
copy of the Articles of Incorporation of the Company certified by an appropriate
authority in the State of Delaware; (b) a copy of the Bylaws of the Company
certified by the Secretary of the Company; and (c) copies of good standing
certificates for the Company dated as of or within fifteen (15) days of the
Closing Date for each jurisdiction set forth in Schedule 3.1.
6.7 Accountant's Letter With Respect to Pooling of Interest Accounting
Treatment. The Company shall have caused a letter to be delivered to Bristol
from D&T stating its concurrence, as of the Closing Date, as to the
appropriateness of the Company qualifying for pooling of interests accounting
treatment in accordance with GAAP.
6.8 Due Diligence Review. Bristol's due diligence investigation shall not
have revealed any fact or circumstance that is not expressly disclosed in this
Agreement or in the Schedules to this Agreement and which would have a Material
Adverse Effect on the Company.
6.9 Review of Schedules. Bristol shall be reasonably satisfied that the
content of the Schedules delivered by the Company in accordance with Section
5.13 do not contain any unanticipated facts or circumstances that would have a
Material Adverse Effect on the Company.
6.10 No Material Adverse Change. No material adverse change in the
business, operations, affairs, prospects, properties, assets, existing and
potential liabilities, obligations, insurability, profits or condition
(financial or otherwise) of the Company shall have occurred; and Bristol shall
have received a certificate signed on behalf of the Company and by the Managing
Stockholders dated the Closing Date to such effect.
6.11 Stock Powers. The Managing Stockholders shall have delivered
undated stock powers with respect to the Pledged Shares.
6.12 Election of Officers and Directors. Xxxxxxx X. Xxxxxx shall have been
elected as the Vice President of the Company effective upon the Closing and
Xxxxxxx X. Xxxxxx and Xxxx Xxxxxxxx shall have been elected directors of the
Company effective upon Closing. In addition, if, prior to the Closing, Xxxxxx X.
Xxxxx is reasonably satisfied with the Surviving Corporation's directors' and
officers' insurance, then Xxxxxx X. Xxxxx shall have been elected a director of
the Company effective upon the Closing.
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6.13 Resignations. Bristol shall have received the resignation of each
director of the company effective on the Closing Date.
6.14 Approvals. This Agreement, the Articles of Merger and the transactions
contemplated thereby shall have been approved by (a) the Board of Directors of
Bristol; (b) the Board of Directors and the stockholders of Newco; and (c) the
Board of Directors of the Company and by stockholders of the Company owning at
least ninety percent (90%) of the Company Common Stock.
6.15 D&T Audit. Prior to the Closing Date, D&T shall have completed the
audit of the Company's balance sheet at December 31, 1996, in accordance with
Section 1.2(e) above.
6.16 No Public Offering. Bristol shall be satisfied that the issuance of
Bristol Common at the Closing will not constitute a public offering of
securities under the Securities Act of 1933.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE STOCKHOLDERS AND THE
COMPANY
The obligation of the Stockholders and the Company to effect the Merger is
subject to the satisfaction or waiver, at or before the Effective Time, of the
following conditions:
7.1 Representations and Warranties; Performance of Obligations. All of the
representations and warranties of Bristol and Newco contained in this Agreement
shall be true, correct and complete on and as of the Closing Date as though such
representations and warranties had been made as of such date; all of the terms,
covenants, agreements and conditions of this Agreement to be complied with,
performed or satisfied by Bristol and Newco on or before the Closing Date shall
have been duly complied with, performed or satisfied; and a certificate to the
foregoing effects dated the Closing Date and signed by the President or any Vice
President of Bristol shall have been delivered to the Company.
7.2 Litigation. No temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or other
legal or regulatory restraint or provision challenging Bristol's proposed
acquisition of the Company, or limiting or restricting Bristol's conduct or
operation of the business of the Company (or its own business) following the
Merger shall be in effect, nor shall any proceeding brought by an administrative
agency or commission or other governmental authority or instrumentality,
domestic or foreign, seeking any of the foregoing be pending. There shall be no
action, suit, claim or proceeding of any nature pending or threatened, against
Bristol, Newco or the Company, their respective properties or any of their
officers or directors, that could materially and adversely affect the business,
assets, liabilities, financial condition, results of operations, insurability or
prospects of Bristol and its subsidiaries taken as a whole.
7.3 Employment Agreement. The Company shall have afforded each of the
Managing Stockholders the opportunity to enter into the Employment Agreements.
7.4 Consents and Approvals. All necessary consents of and filings with any
governmental authority or agency or third party relating to the consummation by
Bristol and Newco of the transactions contemplated herein shall have been
obtained and made.
7.5 Approvals. This Agreement, the Articles of Merger and the transactions
contemplated thereby shall have been approved by (a) the Board of Directors of
Bristol; and (b) the Boards of Directors and the stockholders of the Company and
Newco.
7.6 Opinion of Counsel. The Company and the Managing Stockholders shall
have received an opinion from counsel to Bristol and Newco, dated the Closing
Date, in a form reasonably acceptable to Bristol, the Company and the Managing
Stockholders, which form, when approved, will be attached as Annex IV.
8. INDEMNIFICATION
8.1 General Indemnification. Each Managing Stockholder, jointly and
severally, covenants and agrees to indemnify, defend, protect and hold harmless
Bristol, Newco and the Surviving Corporation and their
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respective officers, directors, employees, stockholders, assigns, successors and
affiliates (individually, a "Bristol Indemnified Party" and collectively, the
"Bristol Indemnified Parties") from, against and in respect of:
(a) all liabilities, losses, claims, damages, punitive damages, causes
of actions, lawsuits, administrative proceedings (including informal
proceedings), investigations, audits, demands, assessments, adjustments,
judgments, settlement payments, deficiencies, penalties, fines, interest
(including interest from the date of such damages) and costs and expenses
(including without limitation reasonable attorneys' fees and disbursements of
every kind, nature and description) (collectively, "Claims") suffered,
sustained, incurred or paid by any Bristol Indemnified Party (collectively,
"Bristol Damages") in connection with, resulting from or arising out of,
directly or indirectly:
(i) any breach of any representation or warranty of the
Managing Stockholders or the Company set forth in this Agreement or any
certificate, document or instrument delivered by or on behalf of any Managing
Stockholder or the Company in connection herewith;
(ii) any non-fulfillment of any covenant or agreement on the
part of the Managing Stockholders or the Company in this Agreement; or
(iii) the business, operations or assets of the Company prior
to the Closing Date, except as otherwise disclosed in the Company Financial
Statements or the schedules to this Agreement; and
(b) any and all Bristol Damages incident to any of the foregoing or to
the enforcement of this Section 8.1.
Payment shall not be a condition precedent to recovery under the above
indemnities.
8.2 Indemnification by Bristol. Bristol covenants and agrees to indemnify,
defend, protect and hold harmless each of the Managing Stockholders and their
respective heirs, successors and assigns (individually, a "Stockholder
Indemnified Party" and collectively, the "Stockholder Indemnified Parties")
from, against and in respect of:
(a) all Claims suffered, sustained, incurred or paid by any Stockholder
Indemnified Party (collectively, "Stockholder Damages") in connection with,
resulting from or arising out of:
(i) any breach of any representation or warranty of Bristol or
Newco set forth in this Agreement or any certificate or other writing delivered
by Bristol or Newco in connection herewith; or
(ii) any non-fulfillment of any covenant or agreement on the
part of Bristol or Newco set forth in this Agreement; and
(b) any and all Stockholder Damages incident to any of the foregoing or
to the enforcement of this Section 8.2.
Payment shall not be a condition precedent to recovery under the above
indemnities.
8.3 Limitation and Expiration. Notwithstanding anything contained in
this Agreement to the contrary:
(a) The total liability of each of the Managing Stockholders under this
Section 8 shall be limited to his Pledged Shares; and
(b) the right of any Bristol Indemnified Party to make recourse to the
Pledged Shares to satisfy the indemnification obligations under this Section 8
shall terminate as follows: (i) with respect to Claims of a nature and of
sufficient materiality typically expected to be encountered in the audit
process, on the later of (A) the date of completion of the first independent
audit of financial statements containing combined operations of Bristol and the
Company (the "First Audit") or (B) the final resolution of any Claims pending on
the First Audit; and (ii) with respect to all Claims other than those referred
to in clause (i), on the later of (X) the completion of the first audit of
financial statements that contain the combined results of Bristol and the
Company (the "First Audit Date") or (Y) the final resolution of any and all
Claims under this Agreement pending as of the First Audit Date. The term
"Indemnification Deadline Date" refers to the dates specified in clauses (A) and
(X) above, and the term "Pending Claims" refers to the Claims referred to in
clauses (B)
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and (Y) above. From and after the applicable Indemnification Deadline Date, the
indemnification obligations under this Section 8 shall survive only to the
extent of Pending Claims.
8.4 Indemnification Procedures. All Claims for indemnification under this
Section 8 shall be asserted and resolved as follows:
(a) In the event that any Claim for which the Managing Stockholders on
the one hand, or Bristol on the other hand, as the case may be (the
"Indemnifying Party"), would be liable to a Stockholder Indemnified Party or a
Bristol Indemnified Party, as the case may be (the "Indemnified Party")
hereunder is asserted, which Claim does not involve a Claim being asserted
against or sought to be collected by a third party, the Indemnified Party shall
with reasonable promptness send a Claim Notice (as defined in Section 8.4(b)
below) with respect to such Claim to the Indemnifying Party. If Indemnifying
Party does not notify the Indemnified Party within thirty (30) days from the
date of receipt of such Claim Notice that the Indemnifying Party disputes such
Claim, the amount of such Claim shall be conclusively deemed a liability of the
Indemnifying Party hereunder. In case the Indemnifying Party shall object in
writing to any Claim made in accordance with this Section 8.4(a), the
Indemnified Party shall have fifteen (15) days to respond in a written statement
to the objection of the Indemnifying Party. If after such fifteen (15) day
period there remains a dispute as to any Claims, the parties shall attempt in
good faith for sixty (60) days to agree upon the rights of the respective
parties with respect to each of such Claims. If the parties should so agree, a
memorandum setting forth such agreement shall be prepared and signed by both
parties.
(b) In the event that any Claim for which an Indemnifying Party would
be liable to an Indemnified Party hereunder is asserted against an Indemnified
Party by a third party, the Indemnified Party shall with reasonable promptness
notify the Indemnifying Party of such Claim, including a copy of the Claim made
if the Claim was made in writing, specifying the nature of such claim and the
amount or the estimated amount thereof to the extent then feasible (which
estimate shall not be conclusive of the final amount of such Claim) (the "Claim
Notice"). The Indemnifying Party shall have 30 days from the receipt of the
Claim Notice (the "Notice Period") to notify the Indemnified Party (i) whether
or not the Indemnifying Party disputes the Indemnifying Party's liability to the
Indemnified Party hereunder with respect to such Claim and (ii) if the
Indemnifying Party does not dispute such liability, whether or not the
Indemnifying Party desires, at the sole cost and expense of the Indemnifying
Party, to defend against such Claim, provided that the Indemnifying Party is
hereby authorized (but not obligated) prior to and during the Notice Period to
file any motion, answer or other pleading and to take any other action which the
Indemnifying Party shall deem necessary or appropriate to protect the
Indemnifying Party's interests. In the event that the Indemnifying Party
notifies the Indemnified Party within the Notice Period that the Indemnifying
Party does not dispute the Indemnifying Party's obligation to indemnify
hereunder and desires to defend the Indemnified Party against such Claim and
except as hereinafter provided, the Indemnifying Party shall have the right to
defend by appropriate proceedings, which proceedings shall be diligently settled
or prosecuted by the Indemnifying Party to a final conclusion; provided that,
unless the Indemnified Party otherwise agrees in writing, the Indemnifying Party
may not settle any matter (in whole or in part) unless such settlement includes
a complete and unconditional release of the Indemnified Party. If the
Indemnified Party desires to participate in, but not control, any such defense
or settlement the Indemnified Party may do so at the Indemnified Party's sole
cost and expense. If the Indemnifying Party elects not to defend the Indemnified
Party against such Claim, whether by failure of the Indemnifying Party to give
the Indemnified Party timely notice as provided above or otherwise, then the
Indemnified Party, without waiving any rights against the Indemnifying Party,
may settle or defend against any such Claim in the Indemnified Party's sole
discretion and the Indemnified Party shall be entitled to recover from the
Indemnifying Party the amount of any settlement or judgment and, on an ongoing
basis, all indemnifiable costs and expenses of the Indemnified Party with
respect thereto, including interest from the date such costs and expenses were
incurred.
(c) If at any time, in the reasonable opinion of a Bristol Indemnified
Party, notice of which shall be given in writing to the Stockholders'
Representative (as defined in Section 8.4(f)), any such Claim seeks material
prospective relief which could have a materially adverse effect on the assets,
liabilities, financial condition, results of operations or business prospects of
any Bristol Indemnified Party, the Surviving Corporation or any subsidiary, then
the Bristol Indemnified Party shall have the right to control or assume (as the
case may be) the defense of any such Claim and the amount of any judgment or
settlement and the reasonable costs and expenses of defense shall be included as
part of the indemnification obligations of the Managing Stockholders hereunder.
If the Bristol Indemnified Party should elect to exercise such right, the
Stockholders' Representative shall have the right to participate in, but not
control, the defense of such claim or demand at the sole cost and expense of the
Managing Stockholders.
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(d) Nothing herein shall be deemed to prevent an Indemnified Party from
making a Claim, and an Indemnified Party may make a Claim hereunder, for
potential or contingent claims or demands provided the Claim Notice sets forth
the specific basis for any such potential or contingent claim or demand to the
extent then feasible and an Indemnified Party has reasonable grounds to believe
that such a claim or demand may be made.
(e) The Indemnified Party's failure to give reasonably prompt notice to
the Indemnifying Party of any actual, threatened or possible claim or demand
which may give rise to a right of indemnification hereunder shall not relieve
the Indemnifying Party of any liability which the Indemnifying Party may have to
the Indemnified Party unless the failure to give such notice materially and
adversely prejudiced the Indemnifying Party.
(f) Any notices provided to or provided by, consents required by or any
action to be taken by any Managing Stockholder or the Managing Stockholders as a
group (as an Indemnified Party or an Indemnifying Party) pursuant to this
Section 8 shall be so provided to or provided by or taken by Xxxxxx X. Xxxxx
(the "Stockholders' Representative") and the actions and decisions of the
Stockholders' Representative shall be binding upon all Managing Stockholders and
Bristol shall be entitled to rely on such Stockholders' Representative.
(g) The parties will make appropriate adjustments for any available Tax
benefits, Tax detriments or insurance proceeds in determining the amount of any
indemnification obligation under Section 8, provided that no Indemnified Party
shall be obligated to seek any payment pursuant to the terms of any insurance
policy.
(h) The Pledged Shares shall be available to satisfy the
indemnification obligations of the Managing Stockholders pursuant to this
Section 8 through the Indemnification Deadline Date. The Pledged Shares shall
bear a restrictive legend preventing their transfer pending expiration of such
indemnification obligations in substantially the form set forth below:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN PLEDGED AS
COLLATERAL PURSUANT TO THAT CERTAIN AGREEMENT AND PLAN OF
REORGANIZATION DATED APRIL 1, 1997 BY AND AMONG BRISTOL TECHNOLOGY
SYSTEMS, INC., XXXXX SYSTEMS, INC., THE MANAGING STOCKHOLDERS OF XXXXX
SYSTEMS, INC., AND XXXXX MERGER CORP. PRIOR TO THE EXPIRATION OF THE
PLEDGE AS SET FORTH IN SUCH AGREEMENT, SUCH SHARES MAY NOT BE OFFERED,
SOLD, EXCHANGED, TRANSFERRED OR OTHERWISE DISPOSED OF."
8.5 Distribution Upon Termination of the Indemnification Obligations.
Promptly following the Indemnification Deadline Date, Bristol shall remove any
stop transfer orders made to the transfer agent, shall authorize its transfer
agent to remove the restrictive legend relating to the obligations of this
Section 8 and shall release the number of Pledged Shares equal to (a) the total
number of Pledged Shares held by Bristol pursuant to Section 1.2(f) minus (b)
the number of Pledged Shares having a Value (as defined below) equal to the
amount of all indemnification obligations of the Managing Stockholders through
the Indemnification Deadline Date plus any amount necessary to satisfy any
Pending Claims as of the Indemnification Deadline Date. Upon final resolution of
all Pending Claims, Bristol shall remove any stop transfer orders made to the
transfer agent, shall authorize its transfer agent to remove the restrictive
legend relating to the indemnification obligations of this Section 8 and shall
release the number of Pledged Shares equal to (x) the number of Pledged Shares
that were retained by Bristol on the Indemnification Deadline Date pursuant to
the foregoing sentence minus (y) the number of Pledged Shares having a Value
equal to the amount of the indemnification obligations of the Managing
Stockholders under this Section 8 as determined upon the resolution of the
Pending Claims. For purposes of this Agreement, the term "Value" per Pledged
Share shall mean the Effective Bristol Share Price.
8.6 Survival of Representations, Warranties and Covenants. All
representations and warranties made by the Company and the Managing Stockholders
in or pursuant to this Agreement or in any document delivered pursuant hereto
will survive the Closing and will remain in effect until, and will expire on the
Indemnification Deadline Date, provided, however, that the indemnification
obligations with respect to any Pending Claim (and the related representations
and warranties) will survive until the final resolution of such
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Pending Claim. All covenants made by the Company and the Managing Stockholders
in or pursuant to this Agreement or in any document delivered pursuant hereto
will survive the Closing and will remain in effect.
9. GENERAL
9.1 Termination. This Agreement may be terminated at any time prior to
the Closing Date solely:
(a) by mutual consent of the Boards of Directors of Bristol and the
Company; or
(b) by the Managing Stockholders and the Company as a group, on the one
hand, or by Bristol, on the other hand, if the Closing shall not have occurred
on or before May 31, 1997; provided that the right to terminate this Agreement
under this Section 9.1(b) shall not be available to either party (with the
Managing Stockholders and the Company deemed to be a single party for this
purpose) whose material misrepresentation, breach of warranty or failure to
fulfill any obligation under this Agreement has been the cause of, or resulted
in, the failure of the Closing to occur on or before such date; or
(c) by the Managing Stockholders and the Company as a group, on the one
hand, or by Bristol, on the other hand, if there is or has been a material
breach, failure to fulfill or default on the part of the other party (with the
Managing Stockholders and the Company deemed to be a single party for this
purpose) of any of the representations and warranties contained herein or in the
due and timely performance and satisfaction of any of the covenants, agreements
or conditions contained herein, and the curing of such default shall not have
been made or shall not reasonably be expected to occur before the Closing Date;
or
(d) by the Managing Stockholders and the Company as a group, on the one
hand, or by Bristol, on the other hand, if there shall be a final non-appealable
order of a federal or state court in effect preventing consummation of the
Merger; or there shall be any action taken, or any statute, rule, regulation or
order enacted, promulgated or issued or deemed applicable to the Merger by any
governmental entity which would make the consummation of the Merger illegal.
9.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 9.1, this Agreement shall forthwith become void,
and there shall be no liability or obligation on the part of any party hereto or
its officers, directors or stockholders. Notwithstanding the foregoing sentence,
(a) the provisions of this Section 9.2, Section 5.1(b) and (c) (confidentiality)
and the other provisions of Section 9 (including without limitation brokers and
expenses), shall remain in full force and effect and survive any termination of
this Agreement; (b) each party shall remain liable for any breach of this
Agreement prior to its termination; and (c) in the event of termination of this
Agreement pursuant to Section 9.1(c) above, then notwithstanding the provisions
of Section 9.8 below, the breaching party (with the Managing Stockholders and
the Company deemed to be a single party for purposes of this Section 9.2), shall
be liable to the other party to the extent of the expenses incurred by such
other party in connection with this Agreement and the transactions contemplated
hereby, as well as any damages in accordance with applicable law.
9.3 Cooperation. The Company, the Managing Stockholders, Bristol and Newco
shall each deliver or cause to be delivered to the other on the Closing Date,
and at such other times and places as shall be reasonably agreed to, such
additional instruments as the other may reasonably request for the purpose of
carrying out this Agreement. In connection therewith, if required, the President
or Chief Financial Officer of the Company will execute any documentation
reasonably required by the independent public accountants (in connection with
such accountant's audit of the Company) or Bristol's legal counsel (in
connection with the registration of the Bristol Common Stock with the SEC and
the listing of such stock on NASDAQ). The Managing Stockholders and the Company
will also cooperate and use their reasonable efforts to have the present
officers, directors and employees of the Company cooperate with Bristol on and
after the Date of this Agreement in furnishing information, evidence, testimony
and other assistance in connection with any Tax Return filing obligations,
actions, proceedings, arrangements or disputes of any nature with respect to
matters pertaining to all periods prior to the Closing Date.
9.4 Successors and Assigns. This Agreement and the rights of the parties
hereunder may not be assigned (except by operation of law) and shall be binding
upon and shall inure to the benefit of the parties hereto, the successors of
Bristol, and the heirs and legal representatives of the Managing Stockholders.
9.5 Entire Agreement. This Agreement (which includes the Schedules and
Annexes hereto) sets forth the entire understanding of the parties hereto with
respect to the transactions contemplated hereby. It
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shall not be amended or modified except by a 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.
9.6 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. This Agreement shall become binding when one or more counterparts
taken together shall have been executed and delivered (which deliveries may be
by telefax) by the parties.
9.7 Brokers and Agents. Bristol and Newco (as a group) and the Company and
the Managing Stockholders each represents and warrants to the other that it has
not employed any broker or agent in connection with the transactions
contemplated by this Agreement. Each party agrees to indemnify the other against
all loss, damages or expense relating to or arising out of claims for fees or
commission of any broker or agent employed or alleged to have been employed by
such indemnifying party.
9.8 Expenses. Bristol has and will pay the fees, expenses and disbursements
of Bristol and Newco and their agents, representatives, accountants and counsel
incurred in connection with the subject matter of this Agreement. The Company
has and will pay the fees, expenses and disbursements of the Managing
Stockholders, the Company, and their agents, representatives, financial
advisors, brokers, accountants and counsel incurred in connection with the
subject matter of this Agreement.
9.9 Notices. Any notice, request, claim, demand, waiver, consent, approval
or other communication which is required or permitted hereunder shall be in
writing and shall be deemed given if delivered personally or sent by telefax
(with confirmation of receipt), by registered or certified mail, postage
prepaid, or by recognized courier service, as follows:
If to Bristol, Newco or the Surviving Corporation, to:
Bristol Technology Systems, Inc.
00000 Xxx Xxxxxx Xxx., Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxx, Esq.
with a required copy to:
Smith, Silbar, Xxxxx, Xxxxxx & Xxxxxxxxx, LLP
00000 Xxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx, Xx.
If to the Company prior to the Merger, to:
Xxxxx Systems, Inc.
0000 Xxxxxxx Xxxxxx, X.X.
X.X. Xxx 0000
Xxxxxx, Xxxx 00000
Attn: Xxxxxx X. Xxxxx
with a required copy to:
Black, McCuskey, Souers, & Xxxxxxx, LPA
1000 United Bank Plaza
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxx Xxxx 00000
Attn: Xxxxxx Xxxxxxxxxx, Esq.
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If to the Managing Stockholders, to Stockholders' Representative at:
Xxxxx Systems, Inc.
0000 Xxxxxxx Xxxxxx, X.X.
X.X. Xxx 0000
Xxxxxx, Xxxx 00000
Attn: Xxxxxx X. Xxxxx
with a required copy to:
Black, McCuskey, Souers, & Xxxxxxx, LPA
1000 United Bank Plaza
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxx Xxxx 00000
Attn: Xxxxxx Xxxxxxxxxx, Esq.
or to such other address as the person to whom notice is to be given may have
specified in a notice duly given to the sender as provided herein. Such notice,
request, claim, demand, waiver, consent, approval or other communication shall
be deemed to have been given as of the date so delivered, telefaxed, mailed or
dispatched and, if given by any other means, shall be deemed given only when
actually received by the addressees.
9.10 Severability. If any provision of this Agreement or the application
thereof to any person or circumstances is held invalid or unenforceable in any
jurisdiction, the remainder hereof, and the application of such provision to
such person or circumstances in any jurisdiction, shall not be affected thereby,
and to this end the provisions of this Agreement shall be severable.
9.11 Governing Law; Jurisdiction. This Agreement, the respective rights,
obligations and remedies of the parties hereunder, the interpretation hereof and
all disputes, controversies and Liabilities arising out of or related to this
Agreement or the relationship between the parties created hereby shall be
governed by and construed in accordance with the internal laws of the State of
Delaware without reference to its principles of conflict of laws.
9.12 Rules of Construction. The Article and Section headings in this
Agreement are inserted only as a matter of convenience, and in no way define,
limit, or interpret the scope of this Agreement or of any particular Article or
Section. Throughout this Agreement, as the context may require, the singular
tense and number includes the plural, and the plural tense and number includes
the singular. Any reference to any federal, state, local, or foreign statute or
law shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the content requires otherwise. The word "including" shall
mean including without limitation. The word "knowledge" means that the Company
and Managing Stockholders are actually or reasonably should be aware of the fact
or matter in question after a reasonable investigation concerning the existence
of such fact or matter. The parties intend that each representation, warranty,
or covenant contained herein shall have independent significance.
9.13 Absence of Third-Party Beneficiary Rights. No provision of this
Agreement is intended, nor will be interpreted, to provide or to create any
third-party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, stockholder, employee, partner of any party hereto or any
other person or entity; provided, however, that Bristol shall be a third-party
beneficiary of all rights of Newco and Surviving Corporation hereunder.
9.14 Mutual Drafting. This Agreement and each provision hereof has been
subject to the mutual consultation, negotiation and agreement of each of the
parties, and shall not be construed for or against any party hereto.
9.15 Further Representations. Bristol and Newco, on the one hand, and the
Company and the Managing Stockholders, on the other hand, each acknowledges and
represents that it has been represented by its own legal counsel in connection
with the transactions contemplated by this Agreement, with the opportunity to
seek advice as to its legal rights from such counsel. Other than the right of
Bristol to
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rely on the letter from D&T (described in Section 6.7, above), such parties
further represent that they are being independently advised as to the tax
consequences of the transactions contemplated by this Agreement and is not
relying on any representation or statements made by the other party as to such
tax consequences.
9.16 Amendment; Waiver. This Agreement may be amended by the parties hereto
at any time prior to the Closing by execution of an instrument in writing signed
on behalf of each of the parties hereto. Any extension or waiver by any party of
any provision hereto shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
9.17 Public Disclosure. Prior to the Effective Time, neither the Company
nor the Managing Stockholders shall make any disclosure (whether or not in
response to an inquiry) of the subject matter of this Agreement unless
previously approved by Bristol in writing. Bristol agrees to keep the Company
and the Managing Stockholders apprised in advance of any disclosure of the
subject matter of this Agreement by Bristol. Nothing contained in this Section
9.18 shall prohibit, restrict or in any way impair the Company and the Managing
Stockholders from notifying and discussing the Merger with the Stockholders, the
Company's employees, the Company's vendors, the Company's customers or any other
debtor or creditor of the Company.
9.18 Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[SIGNATURES SET FORTH ON FOLLOWING PAGES]
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IN WITNESS WHEREOF, THE PARTIES HERETO HAVE EXECUTED THIS AGREEMENT AS OF THE
DAY AND YEAR FIRST ABOVE WRITTEN.
"BRISTOL"
BRISTOL TECHNOLOGY SYSTEMS, INC.,
A DELAWARE CORPORATION
-----------------------------------------
BY: XXXXXXX X. XXXX, VICE PRESIDENT AND
GENERAL COUNSEL
"COMPANY"
XXXXX SYSTEMS, INC, A DELAWARE CORPORATION
-----------------------------------------
BY: XXXXXX X. XXXXX, PRESIDENT
"NEWCO"
XXXXX ACQUISITION CORP., A DELAWARE
CORPORATION
-----------------------------------------
BY: XXXXXXX X. XXXX, VICE PRESIDENT
"MANAGING STOCKHOLDERS"
-----------------------------------------
XXXXXX X. XXXXX
-----------------------------------------
XXXXX X. XXXXX
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-----------------------------------------
XXXXXXX X. XXXXX
34
