TRANSACTION AGREEMENT
dated as of
July 27, 1998
among
TENACQCO BRIDGE PARTNERSHIP,
DLJ CAPITAL CORPORATION,
PHEMUS CORPORATION,
THE HARVARD UNIVERSITY MASTER TRUST FUND,
HARVARD YENCHING INSTITUTE,
EVANSVILLE LIMITED,
RICHEMONT FINANCE S.A.,
INTERCONTINENTAL MINING &
RESOURCES INCORPORATED,
EBC TEXAS ACQUISITION CORP.,
EBC MERGER SUB CORP.
and
E-Z SERVE CORPORATION
relating to the purchase and sale
of
Common Stock
of
E-Z Serve Corporation
and
the merger
of
EBC Merger Sub Corp.
with and into
E-Z Serve Corporation
TABLE OF CONTENTS
PAGE
ARTICLE 1 DEFINITIONS
SECTION 1.01. Definitions 1
ARTICLE 2 PURCHASE AND SALE; THE MERGER
SECTION 2.01. Purchase and Sale 3
SECTION 2.02. Closing 4
SECTION 2.03. The Merger 4
ARTICLE 3REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND
SELLERS
SECTION 3.01. Organization 7
SECTION 3.02. Capitalization 8
SECTION 3.03. Authority 9
SECTION 3.04. Consents and Approvals; No
Violations 10
SECTION 3.05. Commission Reports and Financial
Statements 11
SECTION 3.06. Company Action 12
SECTION 3.07. Litigation 12
SECTION 3.08. No Material Adverse Change;
Material Agreements 13
SECTION 3.09. Taxes 14
SECTION 3.10. Opinion of Financial Advisor 17
SECTION 3.11. Inventory 17
SECTION 3.12. Employee Benefits 17
SECTION 3.13. Environmental Matters 19
SECTION 3.14. Intellectual Property 23
SECTION 3.15. Insurance 24
SECTION 3.16. Properties 24
SECTION 3.17. Labor Matters 26
SECTION 3.18. State Takeover Laws; Etc 26
SECTION 3.19. No Other Agreements and Options 26
SECTION 3.20. Corporate Name; Prior Transactions 26
SECTION 3.21. Undisclosed Liabilities 27
SECTION 3.22. Material Contracts 27
SECTION 3.23. Powers of Attorney and Certain
Authorized Persons 29
SECTION 3.24. Limitation of Representations and
Warranties 29
SECTION 3.25. Existence of Sellers;
Authorization 30
SECTION 3.26. Valid and Binding Agreement 30
SECTION 3.27. Non-contravention 30
SECTION 3.28. Ownership 30
SECTION 3.29. Finders= Fees 31
SECTION 3.30. Litigation 31
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER
SECTION 4.01. Organization and Qualification 31
SECTION 4.02. Authority Relative to
This Agreement 31
SECTION 4.03. Consents and Approvals;
No Violation 32
SECTION 4.04. Financing 32
SECTION 4.05. Status as an Interested
Stockholder or an Acquiring Person 32
SECTION 4.06. Interim Operations of Buyer 33
SECTION 4.07. Finders= Fees 33
SECTION 4.08. Litigation 33
SECTION 4.09. Due Diligence 33
ARTICLE 5 COVENANTS
SECTION 5.01. Conduct of the Company 33
SECTION 5.02. Access 37
SECTION 5.03. Reasonable Best Efforts 38
SECTION 5.04. Indemnification and Insurance 38
SECTION 5.05. Certain Agreements, Employee
Benefits, Etc 39
SECTION 5.06. Public Announcements 40
SECTION 5.07. Exclusivity 40
SECTION 5.08. Brokers and Finders 40
SECTION 5.09. Notification of Certain Matters 41
ARTICLE 6 CONDITIONS TO CLOSING
SECTION 6.01. Conditions to Obligations
of Buyer and Sellers 41
SECTION 6.02. Conditions to Obligation of Buyer 41
SECTION 6.03. Conditions to Obligation of
Sellers 42
ARTICLE 7 SURVIVAL; INDEMNIFICATION
SECTION 7.01. Survival 43
SECTION 7.02. Indemnification 43
SECTION 7.03. Procedures 44
SECTION 7.04. Exclusive Remedy 45
ARTICLE 8 TERMINATION
SECTION 8.01. Grounds for Termination 45
SECTION 8.02. Effect of Termination 46
ARTICLE 9 MISCELLANEOUS
SECTION 9.01. Notices 46
SECTION 9.02. Amendments; No Waivers 48
SECTION 9.03. Expenses 48
SECTION 9.04. Successors and Assigns 48
SECTION 9.05. Governing Law 49
SECTION 9.06. Counterparts; Effectiveness 49
SECTION 9.07. Entire Agreement 49
SECTION 9.08. Captions 49
SECTION 9.09. Extension; Waiver 49
SECTION 9.10. Specific Performance 49
SECTION 9.11. Arbitration 49
SECTION 9.12. Jurisdiction; Waiver of Jury
Trial 51
TRANSACTION AGREEMENT
AGREEMENT dated as of July 27, 1998 among EBC Texas
Acquisition Corp., a Delaware
corporation ("Parent"), EBC Merger Sub Corp., a Delaware
corporation ("Buyer"),
Tenacqco Bridge Partnership, a New York general partnership, DLJ
Capital Corporation.,
a Delaware corporation, Evansville Limited, a British Virgin
Islands corporation,
Richemont Finance S.A., a Luxembourg corporation,
Intercontinental Mining & Resources
Incorporated, a British Virgin Islands corporation, Phemus
Corporation, a Massachusetts
corporation, The Harvard University Master Trust Fund, a trust
governed by the laws of
Massachusetts, Harvard Yenching Institute, a Massachusetts
corporation (collectively,
the "Sellers") and E-Z Serve Corporation, a Delaware corporation
(the "Company").
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
TC \L1 "ARTICLE 1DEFINITIONS SECTION 1.1. Definitions tc \l2
"SECTION 1.1. Definitions .
(a) The following terms, as used herein, have the following
meanings:
AAudit Completion Date@ means the earlier of (x) five days after
the date on which the
annual audit of the consolidated financial statements of the
Company (or its successor)
and its Subsidiaries as of December 27, 1998 and for the fiscal
year then ended is
completed and the audit report of the Company's (or its
successor's) independent
auditors is issued and (y) July 31, 1999.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly
controlling, controlled by, or under common control with such
Person, provided that the
Company or its Subsidiaries shall not be considered Affiliates of
any Seller.
"Closing Date" means the date of the Closing.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means the common stock, par value $0.01 per share,
of the Company.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security
interest, encumbrance or other adverse claim of any kind in
respect of such asset. For
the purposes of this Agreement, a Person shall be deemed to own
subject to a Lien any
asset which it has acquired or holds subject to the interest of a
vendor or lessor
under any conditional sale agreement, capital lease or other
title retention agreement
relating to such asset.
"Person" means an individual, corporation, partnership,
association, trust or other
entity or organization, including a government or political
subdivision or an agency or
instrumentality thereof.
"Shares" means the shares of Common Stock listed on Exhibit A
hereto.
(b) Each of the following terms is defined in the Section set
forth opposite such term:
Term
Section
Asset Transfer 3.04(a)
Cash Payment 2.03
Certificate of Merger 2.03
Claim 5.04
Cleanup 3.05
Closing 2.02
Commission 3.05
Confidentiality Agreement 5.02(b)
Credit Documents 3.19
Damages 7.02(a)
DGCL 2.03
Disclosure Schedule 3.02
Effective Time 2.03
Employee Contracts 5.05
Employee Plans 3.12(a)
Environmental Claim 3.12(o)
Environmental Laws 3.13(p)
ERISA 3.12(a)
ERISA Affiliate 3.12(a)
Exchange Agent 2.03
Exchange Fund 2.03
E-Z Serve Sub 3.22
FFCA Notes 3.22
Governmental Entity 3.04(a)
Hazardous Material 3.13(p)
HSR Act 3.04(a)
Indemnified Officers 5.04
Indemnified Party 7.03
Indemnifying Party 7.03
Intellectual Property 3.14(b)
IRS 3.09(a)
Liabilities 3.21
material adverse effect 3.01
Material Contracts 3.22
Merger 2.03
Options 2.03
Purchased Shares 2.03
Purchase Price 2.01
Release 3.13(p)
Remaining Stockholders 2.03
SEC Documents 3.05
Securities 2.01
Securities Act 3.05
Seller Warrants 2.01
Special Committee 3.06
Subsidiary 3.01(a)
Surviving Corporation 2.03
Tax Return 3.09(f)
Taxes 3.09(f)
USTs 3.13(f)
Voting Debt 3.02
Warrants 2.03
ARTICLE 2
PURCHASE AND SALE; THE MERGER
TC \L1 "ARTICLE 2PURCHASE AND SALE; THE MERGER SECTION 2.1.
Purchase and Sale tc \l2
"SECTION 2.1. Purchase and Sale . (a) Upon the terms and
subject to the conditions of
this Agreement, at the Closing each Seller agrees to sell to
Buyer, and Buyer agrees to
purchase from each Seller, the number of shares of Common Stock
and the number of
warrants to purchase shares of Common Stock (the "Seller
Warrants") listed opposite
such Seller's name on Exhibit A hereto, at a price of $.60 per
share in cash for each
share of Common Stock and, with respect to each Seller Warrant,
an amount equal to the
difference between the exercise price in respect of each share of
Common Stock for
which such Seller Warrant is exercisable and $.60. The aggregate
purchase price for the
Shares and the Seller Warrants (the APurchase Price@) is
$37,144,639.20 in cash, which
shall be paid as provided in Section 2.02.
(b) At the Closing each outstanding option to acquire shares of
Common Stock granted to
employees and directors, whether vested or not (the AOptions@ and
together with the
Shares and the Seller Warrants, the ASecurities@) shall be
canceled and, in lieu
thereof, the holders of such Options shall receive, with respect
to each Option, a cash
payment in an amount equal to the product of (x) the excess, if
any, of $.60 over the
exercise price of such Option multiplied by (y) the number of
shares of Common Stock
subject to such Option which amounts are set forth on Exhibit A.
The aggregate
purchase price for the Options is $928,666.60 in cash, which
shall be paid as provided
in Section 2.02.
SECTION 2.2. Closing tc \l2 "SECTION 2.2. Closing . The
closing (the AClosing@) of the
purchase and sale of the Securities hereunder shall take place at
the offices of Xxxxx
Xxxx & Xxxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
on August 26, 1998, or,
if the conditions set forth in Article 6 have not been satisfied
or waived on such
date, as soon as possible thereafter, but in no event later than
5 business days, after
satisfaction of the conditions set forth in Article 6 or at such
other time or place as
Buyer and Sellers may agree. At the Closing:
(a) Buyer shall deliver to each Seller and each Option holder
the amount listed
opposite such Seller=s or Option holder=s name, as the case may
be, on Exhibit A hereto
in immediately available funds by wire transfer to an account of
such Person designated
by such Person, by notice to Buyer, not later than two business
days prior to the
Closing Date, subject to such withholding as Buyer believes is
reasonably required
under the Code.
(b) Each Seller and Option holder shall deliver to Buyer
certificates or other
appropriate documentation for the number of Securities listed
opposite such Person=s
name on Exhibit A hereto, free and clear of all Liens, duly
endorsed or accompanied by
stock powers duly endorsed in blank, if necessary, with any
required transfer stamps
affixed thereto.
SECTION 2.3. The Merger tc \l2 "SECTION 2.3. The Merger . (a)
Immediately after the
Closing, the Buyer will take all action reasonably required to
merge the Buyer with and
into the Company (the AMerger@), which the parties expect to
occur on the same day as
the Closing. Following the Merger, the Company shall continue as
the surviving
corporation (the ASurviving Corporation@) initially under the
name AE-Z Serve
Corporation@ and shall continue its existence under the laws of
Delaware, and the
separate corporate existence of the Buyer shall cease. Buyer
shall file a Certificate
of Ownership and Merger (the ACertificate of Merger@) in
accordance with Section 253 of
the Delaware General Corporation Law (the ADGCL@) with the
Secretary of State of
Delaware and make all other filings or recordings required by
local, state or federal
law in connection with the Merger. The Merger shall become
effective at such time as
the Certificate of Merger is so filed (the AEffective Time@).
The Merger shall have
the effects set forth in Section 259 of the DGCL. Without
limiting the generality of
the foregoing, and subject thereto, at the Effective Time, all
the properties, rights,
privileges, powers and franchises of the Company and the Buyer
shall vest in the
Surviving Corporation, and all debts, liabilities and duties of
the Company and the
Buyer shall become the debts, liabilities and duties of the
Surviving Corporation.
(b) Immediately following the Merger, each of Xxxx X. Xxxxxx,
Xxxx X. Xxxxxxxx, Xxxxx
X. Xxxxxx and Xxxx Xxxxxxxx III will resign from their positions
as directors of the
Company, and Xxxx X. XxXxxxxx will execute and deliver a consent
of sole remaining
director, to be effective immediately upon the resignation of the
foregoing directors,
nominating any persons designated by Buyer to fill the vacancies
created by such
resignations.
(c) [Intentionally Omitted]
(d) At the Effective Time each share of Common Stock held by
the Company as treasury
stock or owned by Buyer immediately prior to the Effective Time
(the APurchased
Shares@) shall be canceled, and no payment shall be made with
respect thereto and each
share of Common Stock outstanding immediately prior to the
Effective Time, other than
the Purchased Shares shall be converted into the right to receive
$.60 in cash from
Buyer (the ACash Payment@).
(e) Prior to the Effective Time, Buyer shall cause the Company
to (and the Company
shall) appoint Continental Stock Transfer & Trust Company, the
Company=s current
transfer agent, or other similar entity as the exchange agent
(the AExchange Agent@)
for the payment of the Cash Payment. At or prior to the
Effective Time, Buyer shall,
or shall cause the Company to, deposit with the Exchange Agent,
for the benefit of the
stockholders of record of the Common Stock other than the Buyer
at the Effective Time
(the ARemaining Stockholders@) the estimated aggregate Cash
Payment (the AExchange
Fund@) and Buyer will authorize the Exchange Agent to issue the
Cash Payment for
exchange in accordance with this Section 2.03. The Surviving
Corporation shall deposit
with the Exchange Agent any additional funds in excess of the
Exchange Fund as and when
necessary to pay any Cash Payment required to be paid under this
Agreement. Any
remaining amount of the Exchange Fund or other funds deposited,
after the earlier to
occur of (i) payment in full of all amounts due to the Remaining
Stockholders or (ii)
the expiration of one year from the Effective Time, shall be
returned to the Surviving
Corporation.
(f) On the next business day after the Effective Time, the
Surviving Corporation shall
mail to each Remaining Stockholder, a Letter of Transmittal and
instructions for use in
effecting the surrender of certificates representing shares of
Common Stock held by
Remaining Stockholders in exchange for the Cash Payment therefor.
Upon surrender to
the Exchange Agent of such certificates, together with such
properly completed and duly
executed Letter of Transmittal, a Remaining Stockholder shall be
entitled to the Cash
Payment for each share of Common Stock thereby delivered. The
instructions for
effecting the surrender of such certificates shall set forth
procedures that must be
taken by a Remaining Stockholder if any certificate has been
lost, destroyed or stolen.
It shall be a condition to the right of such Remaining
Stockholder to receive the Cash
Payment that the Exchange Agent shall have received, along with
the Letter of
Transmittal, a duly executed lost certificate affidavit,
including an agreement to
indemnify the Surviving Corporation, signed exactly as the name
or names of the
registered holder or holders appeared on the books of the Company
immediately prior to
the Effective Time, together with a customary bond and such other
documents as the
Surviving Corporation may reasonably require in connection
therewith. After the
Effective Time, there shall be no further transfer on the records
of the Company or its
transfer agent of certificates representing Common Stock. If any
Cash Payment is to be
made to a person or entity other than the registered holder of a
certificate of Common
Stock surrendered for exchange, it shall be condition of such
exchange that the
certificate so surrendered shall be properly endorsed, with
signature guaranteed, or
otherwise in proper form for transfer. Until surrendered as
contemplated by this
Section 2.03(f), each certificate held by a Remaining Stockholder
shall be deemed at
any time after the Effective Time to represent only the right to
receive upon such
surrender the Cash Payment (without interest thereon).
(g) Such Letter of Transmittal shall include notification of
appraisal rights as
required by Section 262 of the DGCL, including a copy of such
section. Buyer shall
cause the Surviving Corporation to comply with the terms of
Section 262 of the DGCL
with respect to any request by a Remaining Stockholder for their
appraisal rights with
respect to such Remaining Stockholders= shares of Common Stock.
To the extent any
Remaining Stockholder exercises their respective appraisal rights
in accordance with
Section 262 of the DGCL, the Common Stock held by such Remaining
Stockholder shall not
be exchangeable for the right to receive the Cash Payment and
such Remaining
Stockholder shall be entitled to receive payment of the appraised
value of such shares
unless and until such Remaining Stockholders fail to perfect or
effectively withdraw or
lose their rights to appraisal and payment under the DGCL. If
any Remaining
Stockholder fails to perfect or effectively withdraws or loses
such right, such
Remaining Stockholders= shares of Common Stock will thereupon be
treated as if they had
been exchangeable for, at the Effective Time, the right to
receive the Cash Payment as
detailed above to which such Remaining Stockholder is entitled.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND SELLERS
TC \L1 "ARTICLE 3REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND SELLERS A. Representation and
Warranties Relating to the Company. Solely for the purpose of
providing representations
of the Company to Parent and Buyer and subject to Section 3.24
and Section 7.01, the
Company hereby represents and warrants to each of Parent and
Buyer as of the date
hereof and as of the Closing Date that:
SECTION 3.1. Organization tc \l2 "SECTION 3.1. Organization .
(a) Each of the Company
and its Subsidiaries (as defined in this Section 3.01(a)) is a
corporation duly
organized, validly existing and in good standing under the laws
of the jurisdiction of
its incorporation and has all requisite corporate power and
authority to own, lease and
operate its properties and to carry on its business as now being
conducted, except
where the failure to be so organized, existing or in good
standing or to have such
power and authority would not, individually or in the aggregate,
have a material
adverse effect on the Company and its Subsidiaries. As used in
this Agreement, the
word ASubsidiary@ means, with respect to the Company or the
Buyer, any corporation or
other organization, whether incorporated or unincorporated, of
which (i) such party or
any other Subsidiary of such party is a general partner
(excluding partnerships, the
general partnership interests of which held by such party or any
Subsidiary of such
party do not have a majority of the voting interest in such
partnership) or (ii) at
least a majority of the securities or other interests having by
their terms ordinary
voting power to elect a majority of the Board of Directors or
others performing similar
functions with respect to such corporation or other organization
is directly or
indirectly owned or controlled by such party, by any one or more
of its Subsidiaries,
or by such party and one or more of its Subsidiaries. References
to a wholly owned
Subsidiary of an entity include a Subsidiary all of the common
equity of which is owned
directly or through Awholly owned@ Subsidiaries by such entity.
As used in this
Agreement, any reference to any Amaterial adverse effect@ on or
with respect to an
entity (or such entity and its Subsidiaries) means a materially
adverse effect on (i)
the business, assets, results of operations or condition
(financial or otherwise) or
prospects of such entity (or, if with respect to such entity and
its Subsidiaries, such
group of entities taken as a whole) or (ii) the legality,
validity or enforceability of
this Agreement or any of the transactions contemplated hereunder.
Each of the Company
and its Subsidiaries is duly qualified or licensed to do business
and in good standing
in each jurisdiction in which the property owned, leased or
operated by it or the
nature of the business conducted by it makes such qualification
or licensing necessary,
except where the failure to be so duly qualified or licensed and
in good standing would
not, individually or in the aggregate, have a material adverse
effect on the Company
and its Subsidiaries.
(b) The Company has heretofore delivered to Buyer a complete
and correct copy of the
charter and by-laws, each as amended to date, of the Company and
each of its
Subsidiaries. Such charters and by-laws are in full force and
effect. Neither the
Company nor any of its Subsidiaries is in violation of any
provision of its charter or
by-laws.
(c) The Company has heretofore delivered to Buyer a complete
and correct list (set
forth in Section 3.01(c) of the Disclosure Schedule) of all
entities in which the
Company owns, directly or indirectly, any equity or voting
interest, which list sets
forth the amount of capital stock of or other equity interests in
such entities,
directly or indirectly. No entity in which the Company owns,
directly or indirectly,
less than a 50% equity interest is, individually or when taken
together with all other
such entities, material to the business of the Company and its
Subsidiaries, taken as a
whole. Neither the Company, nor any of its Subsidiaries, is
subject to any outstanding
material obligation or has made any commitment to purchase any
additional equity
interests, make any capital contributions to or invest any funds
in any business or
entity other than any wholly-owned Subsidiary of the Company.
SECTION 3.2. Capitalization tc \l2 "SECTION 3.2. Capitalization
. The authorized
capital stock of the Company consists of (i) 100,000,000 shares
of Common Stock of
which, as of June 1, 1998, 69,351,530 shares were issued and
outstanding and no shares
were held in the Company=s treasury and (ii) 3,000,000 shares of
Preferred Stock, par
value $0.01 per share, of which, as the date of the Agreement,
none were issued and
outstanding. Also, as of June 1, 1998, the Company had reserved
for issuance (a)
9,188,333 shares of Common Stock upon exercise of then
outstanding Options under the
Option Plans, (b) 2,013,667 shares of Common Stock in respect of
future grants of
Options pursuant to the Option Plans, and (c) 960,000 shares of
Common Stock in respect
of issuances of Common Stock pursuant to the Warrants. Since
January 1, 1998, the
Company has not issued any shares of its capital stock, except
for issuances of Common
Stock upon the exercise of Options granted prior to such date
under the Option Plans,
and has not repurchased, redeemed or otherwise retired any shares
of its capital stock.
All the outstanding shares of the Company=s capital stock are,
and all shares which
may be issued pursuant to the exercise of the Options or Warrants
will be, when issued
and paid for in accordance with the respective terms thereof,
duly authorized, validly
issued, fully paid and nonassessable and not subject to any
preemptive rights of third
parties in respect thereto. Except as set forth above, and
except as a result of the
exercise of Options or Warrants outstanding as of the date of
this Agreement, there are
outstanding as of the date of this Agreement (i) no shares of
capital stock or other
voting securities of the Company, (ii) no securities of the
Company convertible into or
exchangeable for shares of capital stock or voting securities of
the Company, and (iii)
no equity equivalents, interest in the ownership or earnings of
the Company or other
similar rights. As of the date of this Agreement, no bonds,
debentures, notes or other
indebtedness having the right to vote under ordinary
circumstances (or convertible into
securities having such right to vote) (AVoting Debt@) of the
Company or any of its
Subsidiaries are issued or outstanding. Except as set forth
above, as of the date of
this Agreement, there are no existing options, warrants, calls,
subscriptions, rights,
commitments or other agreements of any character obligating the
Company or any of its
Subsidiaries to issue, transfer or sell or cause to be issued,
transferred or sold any
shares of capital stock, Voting Debt or other interests of the
Company or of any of its
Subsidiaries or securities convertible into or exchangeable for
such shares, other
securities or interests or obligating the Company or any of its
Subsidiaries to grant,
extend or enter into any such option, warrant, call,
subscription, right, agreement or
commitment. Except as set forth in Section 3.02 of the
Disclosure Schedule, as of the
date of this Agreement, there are no outstanding contractual
obligations of the Company
or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any shares of
capital stock of the Company or any of its Subsidiaries. Each of
the outstanding
shares of capital stock of each of the Company=s Subsidiaries is
duly authorized,
validly issued, fully paid, nonassessable and free of any
preemptive rights in respect
thereto, and except as set forth in Section 3.02 of the
Disclosure Schedule delivered
by the Company to Buyer pursuant to this Agreement (the
ADisclosure Schedule@), such
shares are owned by the Company or by a Subsidiary of the Company
free and clear of any
lien, claim, option, charge, security interest, limitation on
voting rights and
encumbrance of any kind, except as would not have a material
adverse effect on the
Company and its Subsidiaries.
SECTION 3.3. Authority tc \l2 "SECTION 3.3. Authority . The
Company has the requisite
corporate power and authority to execute and deliver this
Agreement and to consummate
the transactions contemplated hereby. The execution, delivery
and performance of this
Agreement by the Company and of the other transactions
contemplated hereby have been
duly authorized by all necessary corporate action on the part of
the Company and each
of its Subsidiaries and no other corporate proceedings on the
part of the Company or
any of its Subsidiaries are necessary to authorize this Agreement
or to consummate the
transactions so contemplated other than, with respect to the
Merger, any required
stockholder approval as may be required by applicable law, and
the filing and
recordation of the Certificate of Merger with the Secretary of
State of the State of
Delaware. This Agreement has been duly executed and delivered by
the Company and,
assuming this Agreement constitutes a valid and binding
obligation of Buyer and
Sellers, constitutes a valid and binding obligation of the
Company, enforceable against
the Company in accordance with its terms, except as (i) the
enforceability hereof and
thereof may be limited by bankruptcy, insolvency, moratorium or
other similar laws
affecting the enforcement of creditors= rights generally and (ii)
the availability of
equitable remedies may be limited by equitable principles of
general applicability.
SECTION 3.4. Consents and Approvals; No Violations tc \l2
"SECTION 3.4. Consents and
Approvals; No Violations . (a) Neither the execution, delivery
or performance of this
Agreement or any of the documents, instruments and agreements
provided for herein by
the Company or the Sellers nor the consummation by the Company or
the Sellers of the
transactions contemplated hereby and compliance by the Company
and the Sellers with any
of the provisions hereof or thereof will (i) conflict with or
result in any breach of
any provisions of the charter or by-laws of the Company or any of
its Subsidiaries,
(ii) except as set forth in Section 3.04(ii) of the Disclosure
Schedule and except for
filings and consents required by state and local authorities
concerning liquor
licenses, lottery concessions and similar store-level matters
that are routinely
obtained after a closing, require any filing with, or permit,
license (including liquor
licenses), authorization, consent or approval of, any court,
arbitral tribunal,
administrative agency or commission or other governmental or
other regulatory authority
or agency (a AGovernmental Entity@), other than (w) the filing of
the Certificate of
Merger in accordance with the DGCL; (x) compliance with any
applicable requirements of
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the AHSR Act@);
(y) compliance with any applicable requirements of the Exchange
Act and state
securities, takeover and Blue Sky laws; and (z) such actions or
filings which, if not
taken or made, would not, individually or in the aggregate, have
a material adverse
effect or materially interfere with the consummation of the
transactions contemplated
by this Agreement, (iii) result in a violation or breach of, or
constitute (with or
without due notice or lapse of time or both) a default (or give
rise to any right of
termination, amendment, cancellation or acceleration) under, or
result in the creation
of any lien or other encumbrance on any property or asset of the
Company or any of its
Subsidiaries pursuant to, or require any consent or give rise to
any right to purchase
under, any of the terms, conditions or provisions of any note,
bond, mortgage,
indenture, lease, license, contract, agreement or other
instrument or obligation to
which the Company or any of its Subsidiaries is a party or by
which any of them or any
of their properties or assets may be bound (iv) result in a
violation or breach of, or
constitute (with or without due notice or lapse of time or both)
a default (or give
rise to any right of termination , amendment, cancellation or
acceleration of vesting,
or trigger any payment or other obligation) under, any terms,
conditions or other
provisions of any employee benefit plans or any grant or award
thereunder or any
employment agreement, to which the Company or any Subsidiary is a
party or by which it
or its property or assets may be bound, or (v) violate any order,
writ, injunction,
decree, statute, rule or regulation applicable to the Company or
any of its
Subsidiaries or by which any property or asset of the Company or
any of its
Subsidiaries is bound, except, in the case of clauses (iii), (iv)
and (v), as set forth
in Section 3.04 of the Disclosure Schedule and for violations,
breaches, defaults or
other occurrences which would not prevent consummation of the
purchase of Securities or
the Merger and would not, individually or in the aggregate, have
a material adverse
effect on the Company and its Subsidiaries.
(b) Except as disclosed in the SEC Documents (as defined in
Section 3.05) or as set
forth in Section 3.04 of the Disclosure Schedule, neither the
Company nor any of its
Subsidiaries is in default under or in breach or violation of (i)
any order, writ,
injunction, decree, statute, rule or regulation of any
Governmental Entity applicable
to the Company or any of its Subsidiaries or by which any of them
or any of their
properties or assets may be bound or (ii) any note, bond,
mortgage, indenture, lease,
license, contract, agreement or other instrument or obligation to
which the Company or
any of its Subsidiaries is a party or by which any of them or any
of their properties
or assets may be bound, except in each case for any such defaults
or violations which
would not have a material adverse effect on the Company and its
Subsidiaries.
SECTION 3.5. Commission Reports and Financial Statements tc \l2
"SECTION 3.5.
Commission Reports and Financial Statements . All forms, reports
and documents
required to be filed by the Company under the Exchange Act or the
Securities Act of
1933, as amended (the ASecurities Act@) from December 31, 1995 to
the date of this
Agreement (as such documents have been amended since the time of
their filing and prior
to the date hereof, collectively, the ASEC Documents@), have been
filed with the
Securities and Exchange Commission (the ACommission@) and have
been delivered to Buyer.
The SEC Documents, including without limitation any financial
statements or schedules
included therein, at the time filed, and any forms, reports or
other documents filed by
the Company with the Commission after the date of this Agreement,
(i) did not at the
time they were filed, or will not at the time they are filed,
contain any untrue
statement of a material fact or omit to state a material fact
required to be stated
therein or necessary in order to make the statements therein, in
light of the
circumstances under which they were made, not misleading and (ii)
complied or will be
prepared in compliance, in each case in all material respects,
with the applicable
requirements of the Exchange Act or the Securities Act, as the
case may be. The
financial statements of the Company included in the SEC Documents
have been prepared in
accordance with United States generally accepted accounting
principles applied on a
consistent basis during the periods involved (except as may be
indicated in the notes
thereto or, in the case of the unaudited statements, to normal
audit adjustments) and
fairly present (subject, in the case of the unaudited statements,
to normal audit
adjustments) the consolidated financial position of the Company
and its consolidated
Subsidiaries as at the dates thereof and the consolidated results
of their operations
and cash flows for the periods then ended. Except as reflected,
reserved against or
otherwise disclosed in the financial statements of the Company
included in the SEC
Documents or as otherwise disclosed in the SEC Documents, in each
case filed prior to
the date of this Agreement, or as set forth in Section 3.05 of
the Disclosure Schedule,
to the best knowledge of the Company, as of the date hereof,
neither the Company nor
any of its Subsidiaries have any liabilities or obligations
(absolute, accrued, fixed,
contingent or otherwise) that would be required to be reflected
on a balance sheet, or
the notes thereto, prepared in accordance with generally accepted
accounting
principles, other than liabilities incurred in the ordinary
course of business
consistent with past practice since December 28, 1997. Except as
set forth in Section
3.05 of the Disclosure Schedule, neither the Company nor any of
its Subsidiaries is
liable as an indemnitor, guarantor, surety or endorser, and no
person has the power to
confess judgment against the Company or any of its Subsidiaries,
assets, properties or
business except as would not, individually or in the aggregate,
result in or reasonably
be likely to result in a material adverse effect on the Company
and its Subsidiaries.
SECTION 3.6. Company Action tc \l2 "SECTION 3.6. Company Action
. The Company hereby
consents to the Merger and represents that its Board of
Directors, at a meeting duly
called and held, has (i) unanimously determined that this
Agreement and the
transactions contemplated hereby, including the Merger are fair
to and in the best
interest of the Company=s stockholders and (ii) unanimously
approved this Agreement and
the transactions contemplated hereby, including the purchase of
Securities and the
Merger, which approval satisfies in full the requirements of the
DGCL.
SECTION 3.7. Litigation tc \l2 "SECTION 3.7. Litigation .
Except as disclosed in the
SEC Documents or in Section 3.07 of the Disclosure Schedule,
there is as of the date
hereof no suit, claim, action, proceeding or investigation
pending or, to the best
knowledge of the Company, threatened, against the Company or any
of its Subsidiaries or
the Sellers before any Governmental Entity or any arbitrator
which, individually or in
the aggregate, would if adversely determined have a material
adverse effect on the
Company and its Subsidiaries, or a material adverse effect on the
ability of the
Company or the Sellers to consummate the transactions
contemplated by this Agreement or
which in any manner challenges or seeks to prevent, enjoin, alter
or delay the
transactions contemplated by this Agreement. Except as disclosed
in the SEC Documents
filed prior to the date hereof or in Section 3.07 of the
Disclosure Schedule, neither
the Company nor any of its Subsidiaries is subject to any
outstanding order, writ,
injunction or decree which, individually or in the aggregate,
would have a material
adverse effect on the Company and its Subsidiaries or a material
adverse effect on the
ability of the Company or the Sellers to consummate the
transactions contemplated
hereby.
SECTION 3.8. No Material Adverse Change; Material Agreements tc
\l2 "SECTION 3.8. No
Material Adverse Change; Material Agreements . (a) Except as
disclosed in the SEC
Documents or as set forth in Section 3.08(a) of the Disclosure
Schedule, (i) since
December 31, 1997, there has not been (x) any action which would
be prohibited under
Section 5.01 were it to occur after the date of this Agreement
nor (y) any material
adverse change in the assets, business, results of operations,
condition (financial or
otherwise) or prospects of the Company and its Subsidiaries,
provided that changes in
general economic or industry conditions shall not in and of
themselves be considered a
material adverse change, (ii) since December 31, 1997, neither
the Company nor any of
its Subsidiaries has entered into any transactions, or conducted
its business or
operations, other than in the ordinary course of business
consistent with past
practice, and (iii) as of the date of this Agreement, neither the
Company nor any of
its Subsidiaries has become a party to any agreement or amendment
to an existing
agreement which would be required to be filed by the Company as
an exhibit to its next
Annual Report on Form 10-K other than this Agreement. Except as
disclosed in the SEC
Documents or as set forth in Section 3.08 of the Disclosure
Schedule, the transactions
contemplated by this Agreement will not constitute a Achange of
control@ under, require
the consent from or the giving of notice to a third party
pursuant to, or accelerate
vesting or repurchase rights under the terms, conditions or
provisions of any note,
bond, mortgage, indenture, license, lease, contract, agreement or
other instrument or
obligation to which the Company or any of its Subsidiaries is a
party or by which any
of them or any of its properties or assets may be bound, except
where the adverse
consequences resulting from such change of control or where the
failure to obtain such
consents or provide such notices would not, individually or in
the aggregate, have a
material adverse effect on the Company and its Subsidiaries;
provided, that the
immediately preceding exception will not be applicable to any
employment, compensation,
termination or severance agreement, or other instrument or
obligation of the Company or
any of its Subsidiaries listed in Section 3.08 of the Disclosure
Schedule.
(b) As of the date hereof, neither the Company nor any of its
Subsidiaries is a party
to, or has any potential liability under, any futures, forward,
swap, option or
swaption contract, or any other financial instrument with similar
characteristics
and/or generally characterized as a Aderivative@ security except
as would not,
individually or in the aggregate, result in or reasonably be
likely to result in a
material adverse effect on the Company and its Subsidiaries.
(c) The Company has delivered, or in the case of clauses (v)
and (vi) below made
available for review in Houston, Texas, to the Parent (or Buyer=s
counsel) true and
complete copies of all of the following to which the Company or
any of its Subsidiaries
is a party, or by which any of their respective assets may be
bound:
(i) any joint venture, partnership or other similar agreement,
(ii) any non-competition or other similar agreement;
(iii) any Employee Contract;
(iv) any Employee Benefit Plan, as described in Section 3.12;
(v) any lease of real property (a list of which is set forth in
Section 3.08(c)(v) of
the Disclosure Schedule);
(vi) (A) any lease (or similar arrangement) of equipment,
vehicles, trade fixtures,
appliances or other personal property requiring payments in
excess of $50,000 per year
(a list of which is set forth in Section 3.08(c)(vi) of the
Disclosure Schedule) or (B)
any lease (or similar arrangement) which requires termination
payments or similar
repayment obligations (other than scheduled lease payments) other
than such leases (or
similar obligations) not exceeding $250,000 in the aggregate;
(vii) any indenture, loan agreement, guaranty, mortgage,
security agreement or other
document evidencing or securing any indebtedness; or
(viii) any other contract or agreement (x) that is material
to the Company and its
Subsidiaries, taken as a whole or (y) which otherwise requires
payments in excess of
$150,000 per year (or $50,000 per store) (a list of which is set
forth in Section
3.08(c)(viii) of the Disclosure Schedule).
The Company has delivered to Buyer=s counsel a
true and correct index of the documents
made available for review in respect of clauses (v) and (vi)
above.
SECTION 3.9. Taxes tc \l2 "SECTION 3.9. Taxes . (a) The
Company and its Subsidiaries
each has duly filed all federal, state, local and foreign income
Tax Returns (as
defined in Section 3.09(f)) required to be filed by it, and all
other Tax Returns
required to be filed by it, except in the case of such other Tax
Returns where the
failure to so file will not have a material adverse effect on the
Company and its
Subsidiaries; all such Tax Returns are true, correct and complete
in all material
respects; and except as set forth in Section 3.09 of the
Disclosure Schedule, the
Company has duly paid or caused to be paid all Taxes (as defined
in Section 3.09(f))
shown to be due in respect of the taxable periods covered by such
returns and has made
adequate provision in the Company=s financial statements,
applying generally accepted
accounting principles, for payment of all Taxes required to be
paid in respect of all
taxable periods or portions thereof ending on or before the date
hereof. Section 3.09
of the Disclosure Schedule lists the periods through which the
Tax Returns required to
be filed by the Company have been examined by the Internal
Revenue Service (the AIRS@)
or other appropriate taxing authority, or the period for which
any assessments may be
made by the IRS or other appropriate taxing authority has
expired. Except as set forth
in Section 3.09 of the Disclosure Schedule, all deficiencies and
assessments asserted
as a result of such examinations or other audits by federal,
state, local or foreign
taxing authorities have been paid, fully settled or adequately
provided for in the
Company=s financial statements, and no issue, dispute,
controversy or claim has been
raised or asserted in writing for Taxes by any taxing authority
for any prior period,
and no officer of the Company and its Subsidiaries (or employees
responsible for Taxes)
has knowledge of the intention of any Governmental Entity to
assess any material
deficiency for any prior period, the adverse determination of any
of which would have a
material adverse effect on the Company and its Subsidiaries.
Except as set forth in
Section 3.09 of the Disclosure Schedule, there are no outstanding
agreements or waivers
extending the statutory period of limitation applicable to any
Tax Return of the
Company or its Subsidiaries. Neither the Company nor any of its
Subsidiaries has filed
a consent pursuant to Section 341(f) of the Code or agreed to
have Section 341(f)(2)
of the Code apply to any disposition of a subsection (f) asset
(as such term is defined
in Section 341(f)(4) of the Code) owned by the Company or any of
its Subsidiaries.
Except as set forth in Section 3.09 of the Disclosure Schedule,
neither the Company nor
any of its Subsidiaries (i) has been a member of a group filing
consolidated federal
returns (or state or local equivalents) for income tax purposes
(other than the current
consolidated group consisting of the Company and its
Subsidiaries), or (ii) is or, to
the knowledge of the Company, has been a party to a tax sharing
or tax indemnity
agreement or any other agreement of a similar nature that remains
in effect. To the
best of the Company=s knowledge, as of the date hereof, except as
set forth in Section
3.09 of the Disclosure Schedule, no person who holds 5% or more
of the Common Stock is
a Aforeign person@ as defined in Section 1445(f)(3) of the Code.
Neither the Company
nor any of its Subsidiaries has agreed to nor is any of them
required, to make any
adjustment under Section 481 of the Code by reason of a change in
accounting methods or
otherwise.
(b) There are no Tax liens or other security interests or
encumbrances of any type
resulting from Tax liabilities on any of the assets of the
Company or its Subsidiaries,
other than liens for Taxes not yet due and liens that can be
cleared without an expense
to the Company that would have a material adverse effect.
(c) The Company has withheld and paid all Taxes required to be
withheld and paid in
connection with amounts paid or owing to any employee, creditors,
independent
contractor or any other party, except for failures to withhold or
pay which, in the
aggregate, would not have a material adverse effect.
(d) Except as set forth in Section 3.09 of the Disclosure
Schedule, the Company has not
waived any statute of limitations with respect to federal or
state Taxes or agreed to
any extension of time with respect to a Tax assessment or
deficiency, except for such
waivers or extensions which, by their terms, have elapsed as of
the date of this
Agreement.
(e) None of the Company or its Subsidiaries:
(i) has made any payments, is obligated to make any payments,
or is a party to any
agreement that will render it (or the payor of compensation under
the agreement)
subject to the provisions of Section 280G of the Code regarding
payments as a result of
a change in control, except as set forth on Section 3.09 of the
Disclosure Schedule;
(ii) has been a United States real property holding company
within the meaning of
Section 897(c)(2) (it being understood that this representation
is based on the
Company=s interpretation of the Code and its regulations, which
the Company believes is
reasonable and has been disclosed to Buyer);
(iii) has failed to disclose on its federal income tax
returns any positions taken
therein that could give rise to a substantial understatement of
Federal Income Tax
liability within the meaning of Section 6662 of the Code; or
(iv) to the knowledge of the Company, has any material liability
for unpaid Taxes
because it once was a member of an affiliated group (within the
meaning of Section
1504(a) of the Code or any similar group defined under a similar
provision of state,
local or foreign law) during any part of any tax year within any
part of which any
entity other than the Company was also a member of the affiliated
group.
(f) For purposes of this Agreement, the term ATaxes@ means all
taxes, charges, fees,
levies or other assessments, including, without limitation,
income, gross receipts,
excise, fuel, property, sales, use, transfer, real estate gains,
personal property,
registration, alternative or add-on minimum, estimated, license,
payroll, stamp,
unemployment, severance, occupation, windfall profits,
environmental, customs, duties,
withholding, capital stock and franchise taxes, Pension Benefit
Guaranty Corporation
premiums or charges, imposed by the United States or any state,
local or foreign
government or subdivision or agency thereof which the Company or
any of its
Subsidiaries is required to pay, withhold or collect, including
any interest, penalties
or additions thereto. For purposes of this Agreement, the term
ATax Return@ means any
report, return or other information or document required to be
supplied to a taxing
authority in connection with Taxes.
SECTION 3.10. Opinion of Financial Advisor tc \l2 "SECTION 3.10.
Opinion of Financial
Advisor . The Company has received the opinion of Xxxxxx Xxxx &
Xxxxxxxx, Inc., its
financial advisor, to the effect that, as of the date of such
opinion, the cash
consideration to be received in the Merger by the holders of the
Common Stock is fair
to such holders from a financial point of view.
SECTION 3.11. Inventory tc \l2 "SECTION 3.11. Inventory . The
inventories of the
Company and its Subsidiaries reflected in the Company's unaudited
balance sheet for the
quarter ended March 31, 1998 consist of inventories generally of
the kind, amount and
quality usable in the ordinary course of business of the Company
and its Subsidiaries.
SECTION 3.12. Employee Benefits tc \l2 "SECTION 3.12. Employee
Benefits . (a) Schedule
3.12 of the Disclosure Schedule lists all employee pension
benefit plans (as defined in
Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended
(AERISA@)), all employee welfare benefit plans (as defined in
Section 3(1) of ERISA),
and all other bonus, stock option, stock purchase, incentive,
deferred compensation,
supplemental retirement, severance or termination and other
similar fringe or employee
benefit plans, programs or arrangements, and any current
employment, executive
compensation or severance contracts or agreements, written or
otherwise, for the
benefit of, or relating to, any employee of the Company or any
Subsidiary, any trade or
business (whether or not incorporated) which is a member of a
Acontrolled group@
including the Company or which is under common control with the
Company (an AERISA
Affiliate@) within the meaning of Section 414 of the Code, or
Section 4001 of ERISA or
any Subsidiary of the Company, as well as each plan with respect
to which the Company
or an ERISA Affiliate could incur liability under Section 4068,
Section 4069 (if such
plan has been or were terminated) or Subtitle E of Title IV of
ERISA or any other
provision of applicable law (together, all of the foregoing
plans, programs,
arrangements, contracts or agreements referred to as the
AEmployee Plans@). There have
been delivered to Buyer copies of (i) each such written Employee
Plan (other than those
referred to in Section 4(b)(4) of ERISA), and (ii) the most
recent summary plan
description and annual report on Form 5500 series, with
accompanying schedules and
attachments, filed with respect to each Employee Plan required to
make such a filing.
(bi Except to the extent that the breach of any of the
following representations could
not, individually or in the aggregate, result in obligations or
liabilities of the
Company or any of its Subsidiaries in an amount exceeding
$150,000, none of the
Employee Plans promises or provides retiree medical or other
retiree welfare benefits
to any person, and none of the Employee Plans is a Amultiemployer
plan@ as such terms
is defined in Section 3(37) of ERISA; (ii) there has been no
Aprohibited transaction,@
as such term is defined in Section 406 of ERISA and Section 4975
of the Code, with
respect to any Employee Plan, which could result in any liability
of the Company or any
of its Subsidiaries; (iii) all Employee Plans, to the Company=s
knowledge, are in
compliance in all respects with the requirements prescribed by
any and all statutes
(including ERISA and the Code), orders or governmental rules and
regulations currently
in effect with respect thereto (including all applicable
requirements for notification
to participants of the Department of Labor, the IRS or Secretary
of the Treasury) and
the Company and each of its Subsidiaries have performed all
obligations required to be
performed by them under, are not in any respect in default under
or violation of, and
have no knowledge of any default or violation by any other party
with respect to, any
of the Employee Plans, (iv) each Employee Plan intended to
qualify under Section 401(a)
of the Code and each trust intended to qualify under Section
501(a) of the Code is the
subject of a favorable determination letter from the IRS and
nothing has occurred which
may reasonably be expected to impair such determination, (v) all
contributions required
to be made to any Employee Plan pursuant to Section 412 of the
Code, or the terms of
the Employee Plan have been made on or before their due dates;
and (vi) none of the
Employee Plans are subject to Title IV of ERISA and none is
intended to be a VEBA under
Section 501(c)(9) of the Code.
(ci Except as set forth in Section 3.12 of the Disclosure
Schedule, no amounts payable
under any Employee Plan or pursuant to this Agreement (including
but not limited to
payments pursuant to Sections 2.01(b) and 3.12 hereof) will fail
to be deductible for
federal income tax purposes by virtue of Section 280G or 162(m)
of the Code.
(di Except as set forth in Section 3.12 of the Disclosure
Schedule, the consummation of
the transactions contemplated by this Agreement will not under
any Employee Plans (i)
entitle any current or former employee or officer of the Company
or any ERISA Affiliate
to severance pay, unemployment compensation or any other payment,
(except as expressly
provided in this Agreement) or (ii) accelerate the time of
payment or vesting (except
in the case of stock options), or increase the amount of
compensation due any such
employee or officer.
(ei There are no material pending or, to the Company=s
knowledge, threatened or
anticipated claims with respect to any Employee Plan, by any
employee or beneficiary
covered under any such Employee Plan or otherwise involving any
such Employee Plan
(other than routine claims for benefits).
(fi Except as set forth in Section 3.12 of the Disclosure
Schedule, the Company has the
right to terminate any Employee Plan which is a welfare benefit
plan, as that term is
defined in Section 3(1) of ERISA.
SECTION 3.13. Environmental Matters tc \l2 "SECTION 3.13.
Environmental Matters . (ai
Except as disclosed in Section 3.13(a) of the Disclosure
Schedule, the Company and its
Subsidiaries are in compliance with all applicable Environmental
Laws (as defined
below) (which compliance includes, but is not limited to, the
possession by the Company
and its Subsidiaries of all permits and other governmental
authorizations required
under applicable Environmental Laws, and compliance with the
terms and conditions
thereof), except for any noncompliance (including without
limitation, any failure to
possess) that, individually or in the aggregate, would not
reasonably be expected to
have a material adverse effect on the Company and its
Subsidiaries. Neither the
Company nor any of its Subsidiaries has received any written
communication, whether
from a governmental authority, citizens group, employee or
otherwise, that alleges that
the Company or any of its Subsidiaries is not in such compliance.
Except as set forth
in Section 3.13(a) of the Disclosure Schedule, there are no
actions, activities,
circumstances, conditions (excluding the Company=s inability to
provide funding),
events or incidents that may prevent or interfere with the
Company and its Subsidiaries
being in compliance with all applicable Environmental Laws in the
future, with
exceptions that, individually or in the aggregate, would not
reasonably be likely to
have a material adverse effect on the Company and its
Subsidiaries.
(bi Except as described in Section 3.13(b) of the Disclosure
Schedule, there is no
Environmental Claim (as defined below) pending or, to the
knowledge of the Company,
threatened against the Company, any of its Subsidiaries or to the
Company=s knowledge,
any former Subsidiary or other person or entity whose liability
for any Environmental
Claim the Company or any of its Subsidiaries has or may have
retained or assumed either
contractually or by operation of law, in each case which,
individually or in the
aggregate, would reasonably be likely to have a material adverse
effect on the Company
and its Subsidiaries.
(ci Except as described in Section 3.13(c) of the Disclosure
Schedule, there are no
actions, activities, circumstances, conditions (excluding the
Company=s inability to
provide funding), events or incidents (including, without
limitation, the release,
emission, discharge, presence or disposal of any Hazardous
Material (as defined
below)) which are reasonably likely to form the basis of any
Environmental Claim
against the Company, any of its Subsidiaries, or to the knowledge
of the Company, any
person or entity whose liability for any Environmental Claim the
Company or any of its
Subsidiaries has or may have retained or assumed either
contractually or by operation
of law, in each case which, individually or in the aggregate,
would reasonably be
likely to have a material adverse effect on the Company and its
Subsidiaries.
(di Except as described in Section 3.13(d) of the Disclosure
Schedule, neither the
Company nor any of its Subsidiaries has received any written
request for information
regarding the contamination or release or threatened release of
any Hazardous Material
at, or written notice or is otherwise actually aware that it is a
Apotentially
responsible party@ under any Environmental Law for the Cleanup
(as defined below) of,
any property, whether or not owned or operated by the Company or
any of its
Subsidiaries, which individually or in the aggregate would
reasonably be likely to have
a material adverse effect on the Company and its Subsidiaries.
(ei Except as set forth in Section 3.13(e) of the Disclosure
Schedule, no transfers of
permits or other governmental authorizations under Environmental
Laws, and no
additional permits or other governmental authorizations under
Environmental Laws, will
be required to permit the Company and its Subsidiaries or the
Surviving Corporation
and its Subsidiaries, as the case may be, to be in material
compliance with all
applicable Environmental Laws immediately following the
transactions contemplated
hereby, and to continue to conduct their operations as conducted
by the Company and its
Subsidiaries immediately prior to the date hereof, except for any
routine filings or
governmental authorizations required to be filed or obtained in
the ordinary course of
business after the Closing. To the extent that such transfers or
additional permits and
other governmental authorizations are required, the Company and
its Subsidiaries agree
to use their reasonable best efforts to effect such transfers and
obtain such permits
and other governmental authorizations as promptly as practicable
after the date hereof.
(fi Section 3.13(f) of the Disclosure Schedule sets forth a
true and complete listing
of all Underground Storage Tanks (AUSTs@) currently present at
any property currently
owned or operated by the Company or any of its Subsidiaries,
including, with respect to
each UST, its location, capacity, contents, registration number,
the presence or
suspected presence of soil or, surface water, or groundwater
contamination associated
therewith, whether the applicable regulatory authority has
certified closure, and any
ongoing remedial, closure or post closure requirements.
(gi Except as set forth in Section 3.13(g) of the Disclosure
Schedule, neither the
Company nor any of its Subsidiaries knows of, or has any reason
to suspect that there
has been, any Release(s) from any UST identified in Section
3.13(f) of the Disclosure
Schedule or from any UST formerly present at any property owned,
leased or operated by
the Company or any of its Subsidiaries or any property formerly
owned, leased or
operated by the Company or its Subsidiaries (including former
Subsidiaries) which,
individually or in the aggregate, would reasonably be expected to
have a material
adverse effect on the Company and its Subsidiaries.
(hi Section 3.13(h) of the Disclosure Schedule identifies any
Release listed in Section
3.13(g) of the Disclosure Schedule, and sets forth the nature and
extent of each known
or suspected Release, the approximate date upon which the
applicable regulatory
authority was notified thereof, the incident number, the
reasonably expected cost of
any Cleanup (calculated in a manner consistent with the Company=s
past practices and
standards), and whether and to what extent such costs are or are
expected to be subject
to reimbursement from applicable UST trust funds.
(ii Except as set forth in Section 3.13(i) of the Disclosure
Schedule, to the knowledge
of the Company or any of its Subsidiaries, (x) no Hazardous
Material has migrated or
threatens to migrate from any property currently owned, leased or
operated by the
Company or any of its Subsidiaries to any other property and (y)
no Hazardous Material
has migrated or threatens to migrate to any property currently
owned, leased or
operated by the Company or any of its Subsidiaries from any other
property except for
any migration, which individually or in the aggregate, would not
reasonably be expected
to have a material adverse effect on the Company and its
Subsidiaries.
(ji To the Company=s or any of its Subsidiaries knowledge,
except as set forth in
Section 3.13(j) of the Disclosure Schedule, neither the Company
nor any of its
Subsidiaries (including to its knowledge any former Subsidiary)
has disposed of,
transported, or arranged for the disposal or transportation of,
any Hazardous Material
at any property listed or proposed for listing on the National
Priorities List, the
Comprehensive Environmental Response, Compensation and Liability
Information System or
any comparable state list.
(ki Except as described in Section 3.13(k) of the Disclosure
Schedule, with respect to
each UST listed on Schedule 3.13(f) the Company and its
Subsidiaries have materially
satisfied, and are in material compliance with, all requirements
of Environmental Laws
relating to the availability of trust or other funds for Cleanup
or Environmental
Claims except for such instances of noncompliance which have been
cured and which will
not jeopardize eligibility for or availability of trust or other
funds for Cleanup or
Environmental Claims; without limiting the generality of the
foregoing, the Company and
its Subsidiaries have taken timely actions to identify and cure
any noncompliance or
suspected noncompliance indicated in any statistical inventory
reconciliation report or
datum prepared by, or on behalf of, the Company.
(li To the knowledge of the Company, the Environmental
Review of the Company dated
December 31, 1997 (a loose-leaf binder) delivered to Buyer=s
environmental counsel and
prepared by the Company in consultation with Xxxx Environmental
reasonably describes
and reasonably quantifies the expenditures of the Company and its
Subsidiaries
necessary, as of the date of such Environmental Report, to comply
with Environmental
Laws, and whether and to what extent such expenditures are or are
expected to be
subject to reimbursement from applicable UST trust funds, and
such estimated
expenditures were calculated in a manner consistent with the
Company=s past standards
and practices (which the Company has no reason to believe are not
consistent with
industry practice).
(mi Any representations relating to properties or
Subsidiaries formerly owned or
operated shall be deemed to be made only to the knowledge of the
Company with respect
to any period preceding the time at which the Company or its
Subsidiaries first owned
or operated such properties or Subsidiaries.
(ni To the knowledge of the Company, there is no friable
asbestos at any property
currently owned, leased or operated by the Company or any of its
Subsidiaries which
currently requires, or is reasonably expected to require,
remediation under
Environmental Laws.
(oi Neither the Company nor any of its Subsidiaries is
participating in, or relying
on reimbursement or funding assistance through, the State of
Florida Petroleum Cleanup
Participation Program, Fla. Stat. Xxx. Section 376.3071(13) et.
seq.
(pi The following terms as used in this section shall have the
following meanings:
ACleanup@ means all actions required to: (1) cleanup, remove,
treat or remediate
Hazardous Material in the outdoor environment; (2) prevent the
Release of Hazardous
Materials so that they do not migrate, endanger or threaten to
endanger public health
or welfare of the outdoor environment; (3) perform pre-remedial
studies and
investigations and post-remedial monitoring and care; or (4)
respond to any government
requests for information or documents in any way relating to
cleanup, removal,
treatment or remediation or potential cleanup, removal, treatment
or remediation of
Hazardous Materials in the outdoor environment.
AEnvironmental Claim@ means any claim, action, cause of action,
investigation or
written notice by any person or entity alleging potential
liability (including, without
limitation, potential liability for investigatory costs, cleanup
costs, governmental
response costs, natural resources damages, property damages,
personal injuries, or
penalties) arising out of, based on or resulting from (a) the
presence, or Release into
the outdoor environment, of any Hazardous Materials at any
location, whether or not
owned or operated by the Company or any of its Subsidiaries or
(b) circumstances
forming the basis of any violation, or alleged violation, of any
Environmental Law.
AEnvironmental Laws@ means all federal, state, local and foreign
laws and regulations,
rules, permits, licenses, approvals and orders relating to
pollution or protection of
human health or the environment, including without limitation,
laws relating to
Releases or threatened Releases of Hazardous Materials into the
outdoor environment or
otherwise relating to the manufacture, processing, distribution,
use, treatment,
storage, Release, disposal, transport or handling of Hazardous
Materials and all laws
and regulations with regard to recordkeeping, notification,
disclosure and reporting
requirements respecting Hazardous Materials.
AHazardous Materials@ means all substances listed or identified
as Hazardous Substances
pursuant to the Comprehensive Environmental Response Compensation
and Liability Act, as
amended (ACERCLA@) and petroleum, fractions of petroleum,
petroleum products, gasoline,
diesel fuel, natural gas, natural gas liquids, liquefied natural
gas, synthetic gas,
mixtures of any of the above, and constituents of any of the
above which are themselves
considered hazardous or toxic. The term shall also include any
material which is
regulated or identified as a hazardous, toxic or otherwise
dangerous substance, waste
material, pollutant or contaminant by other applicable
Environmental Laws.
ARelease@ means any release, spill, emission, discharge, leaking,
pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration
into the outdoor
environment, including the movement of Hazardous Materials
through or in the air, soil,
surface water or groundwater.
For purposes of this Section 3.13, references to Aoutdoor
environment@ shall include,
without limitation, ambient air, surface water, groundwater, land
surface or subsurface
strata.
SECTION 3.14. Intellectual Property tc \l2 "SECTION 3.14.
Intellectual Property . (ai
Section 3.14 of the Disclosure Schedule sets forth a complete
list of all patents,
trademarks and service marks issued in the United States and
other material patents
owned by the Company.
(bi Except as would not result in a material adverse effect:
(i) the Company and each
of its Subsidiaries owns and has the exclusive right to make,
have made, use, sell,
import and offer for sale (in each case, free and clear of any
liens), all Intellectual
Property (as defined below) used in the conduct of their
respective business as
currently conducted; (ii) the manufacture, use, sale, import or
offer for sale of any
Intellectual Property by the Company and its Subsidiaries does
not, to the Company=s
knowledge, infringe on or otherwise violate the rights of any
person; (iii) no product
(or component thereof or process) used, sold, imported or
manufactured by and/or for,
or supplied to, the Company or any of its Subsidiaries infringes
or otherwise violates
the Intellectual Property of any other person; (iv) to the
Company=s knowledge, no
person is challenging, infringing on or otherwise violating any
right of the Company or
any of its Subsidiaries with respect to any Intellectual Property
owned by and/or
licensed to the Company and its Subsidiaries; and (v) the Company
is not obligated to
pay royalties in respect of any Intellectual Property. For
purposes of this
Agreement, AIntellectual Property@ shall mean trademarks, service
marks, brand names,
service marks, certification marks, trade dress, assumed names,
trade names and other
indications of origin, the goodwill associated with the foregoing
and registrations in
any jurisdiction of, and applications in any jurisdiction to
register, the foregoing,
including any extension, modification or renewal of any such
registration or
application; inventions, discoveries and ideas, whether
patentable or not in any
jurisdiction; patents, applications for patents (including,
without limitation,
division, continuations, continuations in part and renewal
applications), and any
renewals, extensions or reissues thereof, in any jurisdiction;
nonpublic information,
trade secrets and confidential information and rights in any
jurisdiction to limit the
use or disclosure thereof by any person; writings and other
works, whether
copyrightable or not in any jurisdiction, including, without
limitation, products being
researched or developed; registrations or applications for
registration of copyrights
in any jurisdiction, and any renewals or extensions thereof; any
similar intellectual
property or proprietary rights; and any claims or causes of
action arising out of or
related to any infringement or misappropriation of any of the
foregoing.
SECTION 3.15. Insurance tc \l2 "SECTION 3.15. Insurance .
Section 3.15 of the
Disclosure Schedule sets forth a true and complete list of all
current insurance
policies to which the Company or any of its Subsidiaries is a
party (and true and
complete copies thereof have been provided to Buyer=s counsel).
Except as described in
Section 3.15 of the Disclosure Schedule, there are no claims
pending which would have a
material adverse effect on the Company and its Subsidiaries
(after giving effect to any
reasonably anticipated insurance coverage).
SECTION 3.16. Properties tc \l2 "SECTION 3.16. Properties .
(ai Except as set forth
in Section 3.16 of the Disclosure Schedule, the Company and each
of its Subsidiaries
has title to all of its respective properties and assets whether
tangible or
intangible, real, personal or mixed, reflected in the Company=s
audited consolidated
financial statements for the year ended December 28, 1997 and
unaudited consolidated
financial statements for the quarter ended March 29, 1998, free
and clear of all liens,
claims and encumbrances, other than liens reflected in such
audited consolidated
financial statements and other than liens, claims and
encumbrances that would not have
a material adverse effect on the Company and its Subsidiaries and
would not materially
adversely affect the use or title to such property. Subject to
the last sentence of
this Section 3.16, all leases, marketing agreements and other
agreements under which
the Company or any of its Subsidiaries has or grants the right to
use any property are
listed on Section 3.16 of the Disclosure Schedule and are valid
and subsisting leases,
enforceable against the Company or any of its Subsidiaries in
accordance with their
terms, and no material default (or event which, with the passing
of time or the giving
of notice, or both, would constitute a default) has occurred by
the Company or any of
its Subsidiaries thereunder. Except as disclosed in Section 3.16
of the Disclosure
Schedule, the Company has no knowledge of any material default or
claimed, threatened
or alleged material default by any other party under any term or
provision of such
leases and agreements.
(bi Section 3.16(b) of the Disclosure Schedule sets forth a
true and complete list of
each store owned or leased by the Company or any Subsidiary.
(ci The Company has delivered to Buyer=s counsel a true and
correct copy of the fixed
asset list that was used to generate the Company=s balance sheet
at March 29, 1998 and
such list is a representative list of the Company=s fixed assets
in all material
respects as of such date.
(di The aggregate future minimum rental payments required under
all real property
leases and all personal property leases, respectively, other than
any such leases which
did not have primary or remaining noncancellable terms in excess
of one year as of
December 28, 1997 (and other than leases with future maximum
rental payments which do
not exceed $250,000 in the aggregate) are as follows:
Year 1998 1999 2000 2001 2002 Thereafter
---- ---- ---- ---- ---- ----------
Real
Prop-
erty $7,381,321 $6,529,934 $5,271,197 $4,057,110 $2,872,517 $4,478,675
Personal
Property
Leases $101,034 $ 58,819 $ 36,263 $ 32,169 $ 14,086 $ --
Total$7,482,355 $6,588,753 $5,307,460 $4,089,279 $2,886,603 $4,478,675
SECTION 3.17. Labor Matters tc \l2 "SECTION 3.17. Labor Matters
. Neither the Company
nor any of its Subsidiaries is a party to any collective
bargaining agreement or other
labor union contract applicable to persons employed by the
Company or any of its
Subsidiaries; no collective bargaining agreement is being
negotiated by the Company or
any of its Subsidiaries and there are no activities or
proceedings of any labor union
to organize any of their respective employees. There is no labor
dispute, strike or
work stoppage against the Company or any of its Subsidiaries,
pending or, to the
knowledge of the Company, threatened.
SECTION 3.18. State Takeover Laws; Etc tc \l2 "SECTION 3.18.
State Takeover Laws; Etc .
The provisions of Section 203 of the DGCL are inapplicable to
the Company, the
purchase of Securities, and the Merger and the purchase of
Securities and the Merger
are exempt from the requirements of any other Amoratorium,@
Acontrol share,@ Afair
price,@ or other anti-takeover laws or regulations of any state.
The Company has taken
all steps necessary irrevocably to exempt the transactions
contemplated by this
Agreement from any applicable provisions of the Company=s Amended
and Restated Articles
of Organization and By-Laws which would have the effect of
delaying, preventing or
materially reducing the expected benefits to Buyer of the
transactions contemplated by
this Agreement.
SECTION 3.19. No Other Agreements and Options tc \l2 "SECTION
3.19. No Other Agreements
and Options . Other than (i) the Loan Agreement and the
Equipment Loan Agreement, each
dated as of December 24, 1997, between E-Z Serve Convenience
Stores, Inc. and FFCA
Acquisition Corporation and (ii) the Loan and Security Agreement
by and among E-Z Serve
Convenience Stores, Inc., the Company and Xxxxxxxxx L.L.C., as
Administrative Agent,
and Congress Financial Corporation (Southwest), as Collateral
Agent (the agreements in
clauses (i) and (ii), together with all related documentation
thereto, herein referred
to as the ACredit Documents@), neither the Company, any of its
Subsidiaries, nor any
owned or leased property is subject to any commitment, obligation
or agreement,
including, without limitation, any right of first refusal, option
to purchase or lease
granted to a third party, which could or would prevent or hinder
the Company or any of
its Subsidiaries from fulfilling its obligations under this
Agreement or any agreement
or transaction contemplated hereunder.
SECTION 3.20. Corporate Name; Prior Transactions tc \l2 "SECTION
3.20. Corporate Name;
Prior Transactions . Neither the Company nor any of its
Subsidiaries has, during the
past five years, been known by or used any other corporate or
fictitious name or been a
party to any merger or consolidation, or acquired or sold all or
substantially all of
the stock or assets from or of any Person, or acquired or sold
any substantial amounts
of it or their property or assets out of the ordinary course of
business, except as set
forth in Section 3.20 of the Disclosure Schedule.
SECTION 3.21. Undisclosed Liabilities tc \l2 "SECTION 3.21.
Undisclosed Liabilities .
Since December 29, 1996, neither the Company nor any of its
Subsidiaries has incurred
or otherwise become liable for any direct or indirect liability,
indebtedness,
obligation, expense, claim, deficiency, guaranty or endorsement,
including those of or
by any other person (collectively, the ALiabilities@) except (i)
in the ordinary course
of business consistent with past practice, (ii) as reflected in
or referred to in the
SEC Documents or in a schedule hereto, or (iii) in connection
with the transactions
contemplated by this Agreement. The Company neither knows nor
has any reasonable
ground to know of any basis for assertion against the Company or
any of its
Subsidiaries of any Liabilities not adequately reflected,
reserved against or given
effect to in the SEC Documents, except for Liabilities which, in
the aggregate, would
not have a material adverse effect.
SECTION 3.22. Material Contracts tc \l2 "SECTION 3.22.
Material Contracts . (ai
Subject to the last sentence of this Section 3.22(a), all
agreements, leases,
contracts, notes, mortgages, indentures, arrangements or other
obligations of the
Company and its Subsidiaries material to its or their business
(AMaterial Contracts@)
are valid, binding and enforceable in accordance with their terms
except to the extent
limited by bankruptcy or other laws affecting creditors= rights
generally and except in
such respects as would not have a material adverse effect. The
Company and its
Subsidiaries have fulfilled all of their obligations under the
Material Contracts
required to be performed by them prior to the date hereof, except
for failures to
fulfill their obligations which, in the aggregate, would not have
a material adverse
effect. No default by the Company or any Subsidiary under any
Material Contracts has
occurred and is continuing, except for any default which would
not give another person
the right, with or without giving of notice or lapse of time, or
both, to terminate or
materially modify the terms of such contract. The Company has no
knowledge of any
material default or claimed, threatened or alleged material
default by any other party
under any term or provision of any Material Contract.
(bi Section 3.22(b) of the Disclosure Schedule sets forth a
true and complete list of
all stores currently operated by the Company or any of its
Subsidiaries. None of the
stores so listed that has been designated under the column
labeled AGas Brand@ with the
symbol AU@, ADS@, ARD@, ATR@ or ADR@ has any contractual
commitment or arrangement of
any kind or nature relating to the purchase of gasoline,
petroleum, diesel or other
motor fuel, with exceptions that are not material (it being
understood that the Company
makes no representation as to the accuracy of the symbol
designations themselves).
(ci Section 3.22(c) of the Disclosure Schedule sets forth a
true and complete list of
all written contracts or other agreements or arrangements to
which the Company or any
of its Subsidiaries is a party relating to the purchase by the
Company or any of its
Subsidiaries of gasoline, petroleum, diesel or other motor fuel
and involving payment
by the Company or such Subsidiary, but excluding contracts,
agreements and arrangements
that are terminable without penalty on less than 90 days notice
or that have
termination penalties of less than $150,000 in the aggregate.
(di Section 3.22(d) of the Disclosure Schedule sets forth a
true and complete list of
written contracts to which the Company or one of its Subsidiaries
is a party relating
to the purchase by the Company or one of its Subsidiaries of
food, grocery or household
products involving payment by the Company or such Subsidiary, but
excluding contracts
that are terminable without penalty on less than 90 days notice
or that have
termination penalties of less than $250,000 in the aggregate.
(ei Section 3.22(e) of the Disclosure Schedule sets forth a
true and complete list of
written contracts to which the Company or one of its Subsidiaries
is a party relating
to the transportation of gasoline, petroleum, diesel, other motor
fuels, food, grocery,
household or other products or merchandise sold by the Company or
one of its
Subsidiaries, but excluding contracts that are terminable with 60
days notice (or less)
without penalty.
(fi Each of the promissory notes (the AFFCA Notes@) executed
and delivered by E-Z Serve
Convenience Stores, Inc. (AE-Z Serve Sub@) pursuant to the Loan
Agreement dated as of
December 24, 1997 between E-Z Serve Sub and FFCA Acquisition
Corporation are
substantially identical to (i) the promissory note in the
original amount of
$535,000.00 relating to Unit No. 4008 in Panama City, Florida
(which provides for
payment of interest at a fixed rate) or (ii) the promissory note
in the original amount
of $245,000 relating to Unit No. 4064 in Montgomery, Alabama
(which provides for
payment of interest at a floating rate), provided that pursuant
to such Loan Agreement
E-Z Serve Sub also issued to FFCA a Equipment Promissory Note in
the original amount of
$8,088,000.00, which note has a seven-year maturity, pays
interest at a floating rate
and is secured by the equipment at E-Z Serve store locations
referenced in the loan
documents. True and complete copies of the foregoing three notes
have been provided to
Buyer=s counsel.
(gi The Company has delivered to Buyer=s counsel each franchise
agreement to which the
Company or any of its Subsidiaries is a party. Such franchise
agreements are set forth
in Section 3.22(f) of the Disclosure Schedule.
(h) True and complete copies of the documents listed on
Sections 3.22(c), (d) and
(e) have been provided to Buyer or Buyer=s counsel.
SECTION 3.23. Powers of Attorney and Certain Authorized Persons
tc \l2 "SECTION 3.23.
Powers of Attorney and Certain Authorized Persons . Except as
set forth on Section
3.23 of the Disclosure Schedule, no person holds a power of
attorney from the Company
or any of its Subsidiaries. No person other than the executive
officers of the Company
is authorized to borrow money or incur or guarantee indebtedness
on behalf of the
Company or any of its Subsidiaries.
SECTION 3.24. Limitation of Representations and Warranties tc
\l2 "SECTION 3.24.
Limitation of Representations and Warranties . BUYER
ACKNOWLEDGES THAT IF THE CLOSING
IS CONSUMMATED THE BUSINESS, ASSETS AND LIABILITIES OF THE
COMPANY AND ITS SUBSIDIARIES
ARE BEING INDIRECTLY PURCHASED BY BUYER ON AN AAS IS, WHERE IS@
BASIS, WITHOUT ANY
WARRANTIES OR REPRESENTATIONS, EITHER EXPRESS OR IMPLIED, OF ANY
NATURE WHATSOEVER,
OTHER THAN THOSE WHICH ARE EXPRESSLY STATED TO BE SUBJECT OF THE
INDEMNIFICATION SET
FORTH IN SECTION 7.02(a) AND SUBJECT TO CLAIMS FOR FRAUD AND
SIMILAR ACTIONS. WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING , AND EXCEPT AS SET
FORTH IN SECTIONS 3.01 TO
3.23 HEREOF, THE COMPANY MAKES NO REPRESENTATIONS OR WARRANTY
WITH RESPECT TO (A) ANY
PROJECTIONS, ESTIMATES OR BUDGETS DELIVERED TO OR MADE AVAILABLE
TO BUYER OF FUTURE
REVENUES, FUTURE RESULTS OF OPERATIONS (OR ANY COMPONENT
THEREOF), FUTURE CASH FLOWS OR
FUTURE FINANCIAL CONDITION (OR ANY COMPONENT THEREOF) OF THE
COMPANY AND ITS
SUBSIDIARIES OR THE FUTURE BUSINESS AND OPERATIONS OF THE COMPANY
AND ITS SUBSIDIARIES
OR (B) ANY OTHER INFORMATION OR DOCUMENTS MADE AVAILABLE TO BUYER
OR ITS COUNSEL,
ACCOUNTANTS OR ADVISORS WITH RESPECT TO THE COMPANY OR ITS
SUBSIDIARIES OR THEIR
RESPECTIVE BUSINESSES OR OPERATIONS.
B. Representations and Warranties Relating to Sellers. Each
Seller, severally but not
jointly, hereby makes the following representations and
warranties to Parent and Buyer
as of the date hereof and as of the Closing Date, but only
insofar as such
representations and warranties relate to such Seller:
SECTION 3.25. Existence of Sellers; Authorization tc \l2
"SECTION 3.25. Existence of
Sellers; Authorization . Each Seller is duly organized and
validly existing and, if a
corporation, in good standing under the laws of the jurisdiction
of its incorporation
and has all corporate or partnership powers, as the case may be,
and all material
governmental licenses, authorizations, permits, consents and
approvals required to
carry on its business as now conducted. The execution, delivery
and performance by
each Seller of this Agreement and the consummation by each Seller
of the transactions
contemplated hereby are within each Seller=s powers (corporate,
partnership or
otherwise) and have been duly authorized by all necessary action
on the part of each
Seller.
SECTION 3.26. Valid and Binding Agreement tc \l2 "SECTION 3.26.
Valid and Binding
Agreement . This Agreement constitutes a valid and binding
agreement of each Seller,
enforceable in accordance with its terms, except as (i) the
enforceability hereof and
thereof may be limited by bankruptcy, insolvency, moratorium or
other similar laws
affecting the enforcement of creditors= rights generally and (ii)
the availability of
equitable remedies may be limited by equitable principles of
general applicability.
SECTION 3.27. Non-contravention tc \l2 "SECTION 3.27. Non-
contravention . The
execution, delivery and performance by each Seller of this
Agreement and any other
documents required to be executed by the Sellers pursuant to this
Agreement do not and
will not (i) contravene or conflict with its agreement of general
partnership or
articles of incorporation or by-laws, as the case may be, or (ii)
assuming compliance
with the matters referred to in Section 3.04, contravene or
conflict with or constitute
a violation of any provision of any law, regulation, judgment,
injunction, order or
decree binding upon or applicable to such Seller or to the
knowledge of each Seller
require any filing with, or permit, license (including liquor
licenses), authorization,
consent or approval of, any Governmental Agency, other than (w)
the filing of the
Certificate of Merger in accordance with the DGCL; (x) compliance
with any applicable
requirements of the HSR Act; (y) compliance with any applicable
requirements of the
Exchange Act and state securities, takeover and Blue Sky laws;
and (z) such actions or
filings which, if not taken or made, would not, individually or
in the aggregate, have
a material adverse effect or materially interfere with the
consummation of the
transactions contemplated by this Agreement.
SECTION 3.28. Ownership tc \l2 "SECTION 3.28. Ownership . Each
Seller is and will be
at the Closing the record and beneficial owner of the Shares and
Seller Warrants set
forth opposite such Seller=s name on Exhibit A, free and clear of
any Lien and free of
any other limitation or restriction (including any restriction on
the right to vote,
sell or otherwise dispose of such Shares or Seller Warrants, as
the case may be), and
will transfer and deliver to Buyer at the Closing valid title to
such Shares and Seller
Warrants free and clear of any Lien and free of any such
limitation or restriction.
SECTION 3.29. Finders= Fees tc \l2 "SECTION 3.29. Finders= Fees
. Except for
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation and Xxxxxx,
Xxxx & Xxxxxxxx, Inc.,
each of whose fees in the amount set forth in Section 3.29 of the
Disclosure Schedule
will be paid by the Company prior to or at Closing, there is no
investment banker,
broker, finder or other intermediary which has been retained by
or is authorized to
prepare any fairness or similar type of opinion in connection
with the transactions
contemplated hereunder or to act on behalf of Sellers or the
Company or its
Subsidiaries who might be entitled to any fee or commission from
Buyer, the Company or
any Subsidiary or any of their respective Affiliates upon
consummation of or in
connection with the transactions contemplated by this Agreement.
SECTION 3.30. Litigation tc \l2 "SECTION 3.30. Litigation .
There is no action, suit,
investigation or proceeding pending against, or to the knowledge
of each Seller,
threatened against or affecting, such Seller before any court or
arbitrator or any
governmental body, agency or official which in any manner
challenges or seeks to
prevent, enjoin, alter or materially delay the transactions
contemplated by this
Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
TC \L1 "ARTICLE 4REPRESENTATIONS AND WARRANTIES OF BUYER Buyer
hereby represents and warrants
to Sellers as of the date hereof and as of the Closing Date that:
SECTION 4.1. Organization and Qualification tc \l2 "SECTION 4.1.
Organization and
Qualification . Buyer is a corporation duly incorporated,
validly existing and in good
standing under the laws of Delaware and has the requisite
corporate power to carry on
its business as it is now being conducted, except where the
failure to be so qualified,
existing or in good standing or to have such power and authority
would not,
individually or in the aggregate, have a material adverse effect
on the Buyer.
SECTION 4.2. Authority Relative to This Agreement tc \l2
"SECTION 4.2. Authority
Relative to This Agreement . Buyer has full corporate power and
authority to execute
and deliver this Agreement and to consummate the transactions
contemplated thereby.
The execution and delivery of this Agreement and the consummation
of the transactions
contemplated hereby have been duly and validly authorized by the
Board of Directors of
Buyer, and no other corporate proceedings on the part of Buyer
are necessary to
authorize this Agreement or to consummate the transactions so
contemplated by this
Agreement (including the Merger). This Agreement has been duly
and validly executed
and delivered by Buyer and, assuming this Agreement constitutes a
valid and binding
obligation of the Company and Sellers, this Agreement constitutes
a valid and binding
agreement of Buyer, enforceable against Buyer in accordance with
its terms.
SECTION 4.3. Consents and Approvals; No Violation tc \l2
"SECTION 4.3. Consents and
Approvals; No Violation . Neither the execution, delivery or
performance of this
Agreement by Buyer nor the consummation by Buyer of the
transactions contemplated
hereby and compliance by Buyer with any of the provisions hereof
will (i) conflict with
or result in any breach of any provisions of the charter or by-
laws of Buyer,
(ii) require any filing with, or permit, authorization, consent
or approval of, any
Governmental Entity, other than (w) the filing of the Certificate
of Merger in
accordance with the DGCL; (x) compliance with any applicable
requirements of the HSR
Act; (y) compliance with any applicable requirements of the
Exchange Act and state
securities, takeover and Blue Sky laws; and (z) such actions or
filings which, if not
taken or made, would not, individually or in the aggregate, have
a material adverse
effect or materially interfere with the consummation of the
transactions contemplated
by this Agreement, (iii) result in a violation or breach of, or
constitute (with or
without due notice or lapse of time or both) a default (or give
rise to any right of
termination, amendment, cancellation or acceleration) under, or
result in the creation
of any lien or other encumbrance on any property or asset of
Buyer pursuant to, any of
the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease,
license, contract, agreement or other instrument or obligation to
which Buyer is a
party or by which any of them or any of their properties or
assets may be bound or
(iv) violate any order, writ, injunction, decree, statute, rule
or regulation
applicable to Buyer or by which any property or asset of Buyer is
bound, except, in the
case of clauses (iii) and (iv), for violations, breaches,
defaults or other occurrences
which would not prevent consummation of the transactions
contemplated by this Agreement
or the Merger and would not, individually or in the aggregate,
have a material adverse
effect on Buyer.
SECTION 4.4. Financing tc \l2 "SECTION 4.4. Financing . The
Buyer has received, and
delivered true and correct copies to the Company of, firm written
commitments from
financially responsible third parties to obtain the funds
necessary to consummate the
transactions contemplated by this Agreement and the Merger and to
pay related fees and
expenses.
SECTION 4.5. Status as an Interested Stockholder or an Acquiring
Person tc \l2 "SECTION
4.5. Status as an Interested Stockholder or an Acquiring Person
. Assuming that the
Board of Directors of the Company has duly authorized the
Company's execution and
delivery of this Agreement and the consummation by it of the
transactions contemplated
hereunder, as of the date of this Agreement, neither Buyer nor,
to the best knowledge
of Buyer, any of the Buyer=s affiliates is an AInterested
Stockholder@ as such term is
defined in Section 203 of the DGCL.
SECTION 4.6. Interim Operations of Buyer tc \l2 "SECTION 4.6.
Interim Operations of
Buyer . Buyer has engaged in no business activities prior to the
date hereof and has
conducted its operations only as contemplated hereby.
SECTION 4.7. Finders= Fees tc \l2 "SECTION 4.7. Finders= Fees .
There is no investment
banker, broker, finder or other intermediary which has been
retained by or is
authorized to act on behalf of Buyer who might be entitled to any
fee or commission
from Sellers or any of its Affiliates upon consummation of the
transactions
contemplated by this Agreement.
SECTION 4.8. Litigation tc \l2 "SECTION 4.8. Litigation .
There is no action, suit,
investigation or proceeding pending against, or to the knowledge
of Buyer threatened
against or affecting, Buyer before any court or arbitrator or any
governmental body,
agency or official which in any manner challenges or seeks to
prevent, enjoin, alter or
materially delay the transactions contemplated by this Agreement.
SECTION 4.9. Due Diligence tc \l2 "SECTION 4.9. Due Diligence .
(a) Buyer is an
informed and sophisticated purchaser and is experienced in the
evaluation and purchase
of companies such as the Company. In making the decision to enter
into this Agreement
and consummate the transactions contemplated hereby, Buyer has
relied solely on its own
independent investigation of the Company and its Subsidiaries as
of this date and upon
the representations and warranties and covenants in this
Agreement (as limited by
Sections 3.24, 7.01 and 7.04).
If the Closing occurs, Buyer agrees to accept the Company as it
exists on the Closing
Date based upon its own inspection, examination and determination
with respect thereto
as to all matters and without reliance upon any express or
implied representations or
warranties of any nature made by or on behalf of or imputed to
Sellers except as
expressly set forth in this Agreement.
ARTICLE 5
COVENANTS
TC \L1 "ARTICLE 5COVENANTS SECTION 5.1. Conduct of the Company
tc \l2 "SECTION 5.1.
Conduct of the Company . Except as otherwise expressly provided
in this Agreement or
with the prior written consent of Buyer, during the period from
the date of this
Agreement to the Closing, the Company will, and will cause each
of its Subsidiaries to,
conduct its operations only in the ordinary and usual course of
business consistent
with past practice and will use its reasonable best efforts, and
will cause each of its
Subsidiaries to use its reasonable best efforts, to preserve
intact its present
business organization, keep available the services of its present
officers and
employees and preserve its material relationships with licensors,
licensees,
franchisees, customers, suppliers, employees and any others
having business dealings
with it. Without limiting the generality of the foregoing, and
except as otherwise
expressly provided in this Agreement, without the prior written
consent of Buyer, the
Company will not, and will not permit any of its Subsidiaries to,
prior to the Closing:
(a) adopt or propose any amendment to its charter or by-laws or
comparable
organizational documents or increase or propose to increase the
size of the Board or a
Subsidiary=s Board of Directors;
(b) issue, reissue, sell or pledge or authorize or propose the
issuance, reissuance,
sale or pledge of any shares of capital stock of any class, or
securities convertible
into capital stock of any class, or any rights, warrants or
options to acquire any
convertible securities or capital stock, other than the issuance
of shares of Common
Stock upon the exercise of Options issued pursuant to the Option
Plans or Warrants
outstanding on the date of this Agreement, in each case in
accordance with their
present terms;
(c) declare, set aside or pay any dividend or other
distribution (whether in cash,
securities or property or any combination thereof) in respect of
any class or series of
its capital stock, except that any wholly owned Subsidiary of the
Company may pay
dividends and make distributions to the Company or any of the
Company=s wholly owned
Subsidiaries;
(d) adjust, split, combine, subdivide, reclassify or redeem,
purchase or otherwise
acquire, or propose to redeem or purchase or otherwise acquire,
any shares of its
capital stock;
(e) (i) incur, assume or pre-pay indebtedness, except that The
Company and its
Subsidiaries may incur or pre-pay indebtedness in the ordinary
course of business
consistent with past practice under existing lines of credit,
(ii) assume, guarantee,
endorse or otherwise become liable or responsible (whether
directly, contingently or
otherwise) for the obligations of any other person or entity
other than the Company or
any of its Subsidiaries, (iii) make any loans, advances or
capital contributions to, or
investments in, any other person or entity except for loans,
advances, capital
contributions or investments between the Company and any of its
wholly owned
Subsidiaries or between wholly owned Subsidiaries of the Company,
(iv) pledge or
otherwise encumber shares of capital stock of the Company or any
of its Subsidiaries;
or (v) mortgage or pledge any of its assets, tangible or
intangible, or, except in the
ordinary course of business consistent with past practice, create
or suffer to exist
any lien thereupon.
(f) settle or compromise any suit or claim or threatened suit
or claim resulting in any
nonmonetary agreement of the Company or a payment in excess of
$50,000;
(g) except for (i) increases in salary, wages and benefits of
employees of the Company
or its Subsidiaries (other than officers or directors of the
Company) in accordance
with past practice and (ii) increases in salary, wages and
benefits granted to
employees of the Company or its Subsidiaries (other than officers
or directors of the
Company) in conjunction with promotions or other changes in job
status consistent with
past practice or required under existing agreements that, in
either case, do not in the
aggregate have the effect of materially increasing the benefit or
compensation expense
of the Company, increase the compensation or fringe benefits
payable or to become
payable to its directors, officers or employees (whether from the
Company or any of its
Subsidiaries), or pay any benefit not required by any existing
plan or arrangement
(including, the granting of, or waiver of performance or other
vesting criteria under,
stock options, or grant any severance or termination pay to
(except pursuant to
existing agreements or policies), or enter into any employment or
severance agreement
with, any director, officer or other key employee of the Company
or any of its
Subsidiaries) or establish, adopt, enter into, terminate or amend
any bonus, profit
sharing, thrift, compensation, stock option, pension, retirement,
welfare, deferred
compensation, employment, termination, severance or other
employee benefit plan,
agreement, trust, fund, policy or arrangement for the benefit or
welfare of any
directors, officers or current or former employees, except to the
extent such
termination or amendment is required by applicable law; provided,
however, that nothing
herein will be deemed to prohibit the payment of benefits as they
become payable under
existing plans, agreements, trusts, funds, policies or
arrangements in accordance with
their respective terms;
(h) acquire (except as otherwise permitted by clause (j)
below), sell, lease, license,
encumber or dispose of any assets or securities outside the
ordinary course of
business, or any assets or securities which are material to the
Company and its
Subsidiaries, taken as a whole, or enter into any material
commitment or transaction
outside the ordinary course of business consistent with past
practice other than
transactions between a wholly owned Subsidiary of the Company and
the Company or
between wholly owned Subsidiaries of the Company or enter into
any new lines of
business;
(i) (i) modify, amend or terminate any contract listed in or
otherwise covered by
either Section 3.08 or Section 3.22 of this Agreement, (ii)
waive, release, cancel,
relinquish or assign any contract listed in or otherwise covered
by either Section 3.08
or Section 3.22 of this Agreement, (including any insurance
policy) or other right or
claim, or (iii) cancel or forgive any indebtedness owed to the
Company or its
Subsidiaries, other than in the case of this clause (iii) in the
ordinary course of
business consistent with past practice and which is not material
to the business of the
Company and its Subsidiaries;
(j) authorize, commit to or make any capital expenditures
except pursuant to and in
accordance with the Company=s capital budget, a copy of which has
been delivered to
Buyer or in accordance with past practice;
(k) make any tax election not required by law, or settle or
compromise any tax
liability that is material to the Company and its Subsidiaries;
(l) change any of the accounting principles or practices used
by it except as required
by the Commission or the Financial Accounting Standards Board and
after written notice
to the Buyer;
(m) acquire (by merger, consolidation, or acquisition of stock
or assets) or make any
investment in any corporation, partnership or other business
organization or division
thereof;
(n) pay, discharge or satisfy any claims, liabilities or
obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), other
than the payment,
discharge or satisfaction, in the ordinary course of business
consistent with past
practice or in accordance with their terms, of liabilities
reflected or reserved
against in the consolidated financial statements (or the notes
thereto) of the Company
and its consolidated Subsidiaries or incurred since December 31,
1997 in the ordinary
course of business consistent with past practice;
(o) enter into any agreement providing for the acceleration of
payment or performance
or other consequences as a result of a change in control of the
Company or any
agreement or transaction with any Seller or affiliate thereof;
(p) enter into any agreement providing for any license, sale,
assignment or otherwise
transfer any patent rights or grant any covenant not to xxx with
respect to any of its
patent rights, or enter into any agreements providing for any
license, sale or
assignment or otherwise transfer any Intellectual Property or
grant any covenant not to
xxx with respect to its Intellectual Property;
(q) extend, renew, revise, amend or enter into any vendor
contract (including, without
limitation, contracts for the supply of gasoline, oil, tobacco
products, food products,
transportation and/or beverages) or any lease (or similar
contract) of personal
property, unless such extension or renewal is for 30 days or
month-to-month;
(r) enter into any agreement or transaction with any affiliate
of the Company upon
terms and conditions less favorable to the Company or such
Subsidiary than could be
obtained on an arm's-length basis; or
(s) agree in writing or otherwise to take any of the foregoing
actions or take or agree
in writing or otherwise to take, any action which would make any
representation or
warranty in this Agreement untrue or incorrect in any material
respect.
Notwithstanding the foregoing, nothing contained in this
Agreement shall give Buyer,
directly or indirectly, the right to exert any unlawful control
or unlawfully direct
the Company=s operations prior to Closing.
Notwithstanding the foregoing, Buyer acknowledges and understands
that immediately
prior to, or simultaneous with, the Closing, the Company will pay
all amounts due under
(i) the Bonus Program adopted by the Board of Directors on June
2, 1998 (which is
included in Section 3.04(a)(iv) of the Disclosure Schedule) and
(ii) the letter
agreement dated May 22, 1998, between the Company and Xxxx X.
Xxxxxxx.
SECTION 5.2. Access tc \l2 "SECTION 5.2. Access . (a) Between
the date of this
Agreement and the Closing, the Company will (i) give Buyer and
its authorized
representatives full access as soon as possible following
reasonable notice (it being
understood that 18 hours verbal advance notice shall be deemed
reasonable) to all
employees, stores, offices, warehouses and other facilities and
to all books, records,
contracts, commitments and other documents of the Company and its
Subsidiaries, (ii)
permit Buyer and its consultants and agents to make such
inspections as it may
reasonably require, (iii) cause its officers and employees and
those of its
Subsidiaries to furnish Buyer with such financial and operating
data and other
information with respect to the business and properties of the
Company and its
Subsidiaries as the Buyer may from time to time reasonably
request, including, without
limitation, all projections and workpapers, all technical and
operating data and all
other information of a like nature and (vi) use its reasonable
best efforts to cause
its lawyers, accountants, lenders, consultants and agents meet
with representatives of
Buyer and to provide information (including workpapers in the
case of accountants).
(b) Information obtained by Buyer pursuant to this Section 5.02
shall be subject to the
provisions of the Confidentiality Agreement between Buyer and the
Company dated April
24, 1998 (the AConfidentiality Agreement@), which Confidentiality
Agreement remains in
full force and effect.
(c) No investigation pursuant to this Section 5.02 shall affect
any representations or
warranties of the parties herein or the conditions to the
obligations of the parties
hereunder.
SECTION 5.3. Reasonable Best Efforts tc \l2 "SECTION 5.3.
Reasonable Best Efforts .
Subject to the terms and conditions of this Agreement, each of
the parties hereto
agrees to use its reasonable best efforts to take, or cause to be
taken, all
appropriate action and to do, or cause to be done, all things
necessary, proper or
advisable under applicable laws and regulations to consummate and
make effective the
transactions contemplated by this Agreement, including taking all
action reasonably
required under the HSR Act and pursuant to the Exchange Act. In
that regard, the
applicable parties hereto shall make an initial filing under the
HSR Act within five
business days after the execution of this Agreement and shall use
their reasonable best
efforts to reply promptly to all requests for additional
information that may be made
in connection therewith and to seek early termination of the
waiting period thereunder.
In case at any time after the Closing any further action is
necessary or desirable to
carry out the purposes of this Agreement, the proper officers and
directors of each
party to this Agreement shall take all such necessary action.
Notwithstanding the
foregoing, no party shall be obligated to waive any of its rights
under this Agreement.
SECTION 5.4. Indemnification and Insurance tc \l2 "SECTION 5.4.
Indemnification and
Insurance . It is understood and agreed that the Company shall
defend, indemnify and
hold harmless, and after the Effective Time, the Surviving
Corporation and the Buyer
shall, jointly and severally, defend, indemnify and hold
harmless, each present and
former employee, agent, director and officer of the Company and
its Subsidiaries (each,
an AIndemnified Party@) to the full extent required or permitted
(a) under Delaware
law, (b) as provided in their respective charters and by-laws,
and (c) under such
agreements or arrangements as are listed on Section 5.04 of the
Disclosure Schedule
(true and complete copies of which have been delivered to Buyer=s
counsel), which
rights to be defended, indemnified and held harmless shall
survive the Merger and shall
continue in full force and effect without time limitation from
and after the Effective
Time and notwithstanding any amendment or modification of the
terms of any of the
charters, bylaws and agreements referred to in clause (b) above
or listed in Section
5.04 of the Disclosure Schedule except as may be otherwise
expressly provided for under
such agreement. Without limiting the foregoing, the Company, the
Surviving Corporation
and the Buyer, will periodically advance expenses (including, but
not limited to,
attorney=s fees) as incurred with respect to the foregoing, to
the fullest extent
permitted by applicable law; provided the person to whom the
expenses are advanced
provides an undertaking to repay such advances if it is
ultimately determined that such
person is not entitled to indemnification. The Company shall
purchase (in consultation
with Buyer concerning the lowest cost policy), as promptly as
practicable and in any
event within thirty days after the date hereof and without any
lapse in coverage,
policies of directors= and officers= Arun-off@ liability
insurance previously notified
to Buyer prior to the date hereof, which insurance shall remain
in effect for a period
of not less than six years from and after the Effective Time;
provided that, in the
event that any claim or claims (a AClaim@ or AClaims@) are
asserted or made within such
six-year period, the Buyer and the Surviving Corporation shall
cause such insurance to
be continued in respect of any such Claim or Claims until final
disposition of any and
all such Claims. This Section 5.04 is intended to benefit each
of the indemnified
directors, officers and employees of the Company described above,
is enforceable by
each of them, and shall be binding on the Company, the Surviving
Corporation, and the
Buyer, and their respective successors and assignors.
Notwithstanding anything in this
Section 5.04 to the contrary, Buyer shall not be obligated under
this Section 5.04 to
indemnify any Indemnified Party for losses or damages resulting
from or caused by fraud
or any similar action by the Company or any Indemnified Officer.
SECTION 5.5. Certain Agreements, Employee Benefits, Etc tc \l2
"SECTION 5.5. Certain
Agreements, Employee Benefits, Etc . (a) The Buyer hereby agrees
to honor, and to
cause the Surviving Corporation and its Subsidiaries to honor,
all contracts,
agreements, arrangements, policies, plans and commitments of the
Company (or any of its
Subsidiaries) in effect as of the date hereof that are applicable
to any officer or
employee or former officer or employee or any director or former
director of the
Company (or any of its Subsidiaries or former Subsidiaries) and
described in Section
5.05 of the Disclosure Schedule (the AEmployee Contracts@) (true
and complete copies of
which have been provided to Buyer=s counsel) to the extent
required by the terms of
such Employee Contracts. Without limiting the generality of the
foregoing, Buyer
hereby unconditionally agrees to perform and pay, or cause the
Surviving Corporation
and its Subsidiaries to perform and pay, when due any and all
amounts payable pursuant
to the terms of the Employee Contracts (as may be amended
subsequent to the Effective
Date as permitted thereunder).
(b) Buyer hereby agrees that for a period of one year
immediately following the
Effective Time, it shall, or shall cause the Surviving
Corporation and its Subsidiaries
to, continue to maintain the employee benefit plans for employees
and former employees
of the Company and its Subsidiaries listed under Section 5.05 of
the Disclosure
Schedule, or other plans that, on a plan-by-plan basis, provide
benefits that are no
less favorable to such employees than the benefits currently in
effect with respect to
such employees under the plans listed under Section 5.05 of the
Disclosure Schedule.
(c) If any employee of the Company or any of its Subsidiaries
becomes a participant in
any employee benefit plan, practice or policy of Buyer or the
Surviving Corporation,
such employee shall be given credit under such plan for all
service prior to the
Effective Time with the Company and its Subsidiaries, or any
predecessor employer (to
the extent such credit was given under comparable benefit plans
maintained by the
Company), for purposes of eligibility and vesting and for all
other purposes for which
such service is either taken into account or recognized.
SECTION 5.6. Public Announcements tc \l2 "SECTION 5.6. Public
Announcements . Buyer,
Sellers and the Company will consult with each other before
issuing any press release
or otherwise making any public statements with respect to this
Agreement or the Merger
and shall not issue any such press release or make any such
public statement prior to
such consultation, except as may be required by law (including,
without limitation, the
DGCL and Rule 13e-3 and Regulation 14C under the Exchange Act) or
by obligations
pursuant to any listing agreement with any national securities
exchange.
SECTION 5.7. Exclusivity tc \l2 "SECTION 5.7. Exclusivity .
The Company and each
Seller will immediately cease any existing discussions or
negotiations with any third
parties conducted prior to the date hereof with respect to any
Acquisition Proposal (as
defined below). Until the earlier of the termination of this
Agreement pursuant to
Section 6.01 or the Effective Time, the Company and each Seller
will not, nor will it
permit its officers, directors, Subsidiaries, representatives or
agents, directly or
indirectly, to do any of the following: (i) solicit, initiate,
continue or encourage
any inquiries, continue or encourage any inquiries, proposals or
offers that
constitute, or could reasonably be expected to lead to, a
proposal or offer for a
merger, consolidation, business combination, sale of substantial
assets, sale of shares
of capital stock (including, without limitation, by way of a
tender offer) or similar
transactions involving the Company or any of its Subsidiaries,
other than the
transactions contemplated by this Agreement (any of the foregoing
inquiries or
proposals being referred to in this Agreement as an AAcquisition
Proposal@), (ii)
solicit, initiate, continue or engage in negotiations or
discussions concerning, or
provide any non-public information or data to any person or
entity relating to, any
Acquisition Proposal, or (iii) agree, approve or recommend any
Acquisition Proposal.
The Company and each Seller shall notify Buyer immediately (and
in no event later than
24 hours) after receipt by the Company or any Seller of any
Acquisition Proposal
(including the renewal of any Acquisition Proposal made prior to
the date hereof) or
any request for non-public information in connection with such an
Acquisition Proposal
or for access to the properties, books or records of the Company
by any person or
entity that informs the Company or any Seller that it is
considering making, or has
made, such an Acquisition Proposal.
SECTION 5.8. Brokers and Finders tc \l2 "SECTION 5.8. Brokers
and Finders . Each party
to this Agreement represents and warrants, as to itself, and, if
applicable, its
Subsidiaries and its affiliates, that no agent, broker,
investment banker, financial
advisor or other firm or person is or will be entitled to any
brokers= or finders= fee
or any other commission or similar fee in connection with any of
the transactions
contemplated by this Agreement except Xxxxxxxxx, Xxxxxx &
Xxxxxxxx Securities
Corporation, whose fees and expenses will be paid by the Company
in accordance with the
Company=s agreement with such firm, a copy of which has been
provided to Buyer.
SECTION 5.9. Notification of Certain Matters tc \l2 "SECTION
5.9. Notification of
Certain Matters . Each party to this Agreement will give prompt
notice to each other
party to this Agreement of (a) the occurrence, or non-occurrence,
of any event the
occurrence, or non-occurrence, of which would be likely to cause
(i) any representation
or warranty made by it contained in this Agreement to be untrue
or inaccurate (ii) any
covenant, condition or agreement contained in this Agreement not
to be complied with or
satisfied by it and (b) any failure of such party to comply with
or satisfy any
covenant, condition or agreement to be complied with or satisfied
by it hereunder;
provided, however, that the delivery of any notice pursuant to
this Section 5.09 will
not limit or otherwise affect the remedies available hereunder to
the party receiving
such notice.
ARTICLE 6
CONDITIONS TO CLOSING
TC \L1 "ARTICLE 6CONDITIONS TO CLOSING SECTION 6.1. Conditions
to Obligations of Buyer and
Sellers tc \l2 "SECTION 6.1. Conditions to Obligations of Buyer
and Sellers . The
obligations of Buyer and Sellers to consummate the Closing are
subject to the
satisfaction of the following conditions:
(i) Any applicable waiting period under the HSR Act relating to
the transactions
contemplated hereby shall have expired or been terminated.
(ii) No provision of any applicable law or regulation and no
judgment, injunction,
order or decree shall prohibit the consummation of the Closing.
(iii) All actions by or in respect of or filings with any
governmental body, agency,
official or authority required to permit the consummation of the
Closing shall have
been taken, made or obtained.
SECTION 6.2. Conditions to Obligation of Buyer tc \l2 "SECTION
6.2. Conditions to
Obligation of Buyer . The obligation of Buyer to consummate the
Closing is subject to
the satisfaction of the following further conditions:
(i) (A) The Company shall have performed in all material
respects all of its
obligations hereunder required to be performed by it at or prior
to the Closing Date,
(B) the representations and warranties contained in Sections 3.01
through 3.23 of this
Agreement and in any certificate or other writing delivered by
the Company pursuant
hereto shall be true and correct in all material respects (except
for those
representations and warranties qualified by materiality, which
shall be true and
correct) at and as of the Closing Date, as if made at and as of
such date and (C) Buyer
shall have received a certificate to the best knowledge of the
Chief Executive Officer
of the Company to the foregoing effect.
(ii) (A) Sellers shall have performed in all material respects
all of their obligations
hereunder required to be performed by them on or prior to the
Closing Date, (B) the
representations and warranties of Sellers contained in Sections
3.25 through 3.30 of
this Agreement and in any certificate or other writing delivered
by Sellers pursuant
hereto shall be true and correct at and as of the Closing Date,
as if made at and as of
such date and (C) Buyer shall have received a certificate signed
by each Seller to the
foregoing effect.
(iii) Buyer shall have received (x) the Shares and Seller
Warrants and (y) a number of
other shares of Common Stock such that after consummation of the
Closing Buyer will own
more than 90% of the outstanding shares of Common Stock, in each
case duly endorsed and
with any required transfer stamps affixed thereto.
(iv) Buyer shall have received all documents it may reasonably
request relating to the
existence of Sellers or the Company or its Subsidiaries and the
authority of Sellers
and the Company for this Agreement, all in form and substance
reasonably satisfactory
to Buyer.
(v) Buyer shall have received certification signed by the
Sellers to the effect that
none of the Sellers, other than Evansville Limited, Richemont
Finance S.A. and
Intercontinental Mining & Resources Incorporated, is a Aforeign
person@ as defined in
Section 1445 of the Code.
(vi) All Options and Warrants shall have been exercised,
purchased or canceled
(excluding Options that will be converted into the right to
receive the amounts set
forth on Exhibit A in connection with the Merger and Options
whose exercise price
exceeds $.60 per share).
SECTION 6.3. Conditions to Obligation of Sellers tc \l2 "SECTION
6.3. Conditions to
Obligation of Sellers . The obligation of Sellers to consummate
the Closing is subject
to the satisfaction of the following further conditions:
(i) (A) Buyer shall have performed in all material respects all
of its obligations
hereunder required to be performed by it at or prior to the
Closing Date, (B) the
representations and warranties of Buyer contained in this
Agreement and in any
certificate or other writing delivered by Buyer pursuant hereto
shall be true at and as
of the Closing Date, as if made at and as of such date, and (C)
Sellers shall have
received a certificate to the best knowledge of an Executive
Officer of Buyer to the
foregoing effect.
(ii) Sellers shall have received the Purchase Price and the
Option holders shall have
received the amount listed opposite such holder=s name in Exhibit
A hereto.
(iii) Sellers shall have received all documents they may
reasonably request relating to
the existence of Buyer and the authority of Buyer for this
Agreement, all in form and
substance reasonably satisfactory to Sellers.
ARTICLE 7
SURVIVAL; INDEMNIFICATION
TC \L1 "ARTICLE 7SURVIVAL; INDEMNIFICATION SECTION 7.1.
Survival tc \l2 "SECTION 7.1.
Survival . The agreements, representations and warranties of the
parties hereto
contained in this Agreement or in any certificate or other
writing delivered pursuant
hereto or in connection herewith shall not survive the Closing
and shall have no
further force or effect thereafter, provided that (i) the
representations and
warranties made by the Company in Sections 3.05, 3.09 and 3.13
shall survive the
Closing, but claims for breach of such representations and
warranties must be made in
writing on or prior to the Audit Completion Date, (ii) the
representations and
warranties made by Sellers in Sections 3.25 through 3.30 and by
Buyer in Article 4
shall survive the Closing, but claims for breach of such
representations and warranties
must be made in writing prior to the third anniversary of the
Closing Date and (iii)
the agreements contained in Sections 2.03, 5.02, 5.03, 5.04,
5.05, 7.02 and 7.03 shall
survive indefinitely.
SECTION 7.2. Indemnification tc \l2 "SECTION 7.2.
Indemnification . (a) Subject to the
provisions of this paragraph, each Seller hereby severally (but
not jointly)
indemnifies Parent, the Company and their respective affiliates
against and agrees to
hold them harmless from any and all damage (including any
governmental penalty or
punitive damage), loss, liability and expense (including without
limitation reasonable
expenses of investigation and reasonable attorneys= fees and
expenses in connection
with any investigation, action, suit or proceeding) (ADamages@)
incurred or suffered by
any of them arising out of any misrepresentation or breach of
warranty made by (i) the
Company pursuant to Sections 3.05, 3.09 or 3.13 (other than 3.09
(e)(ii)) (provided
that such claims are made on or prior to the Audit Completion
Date) or (ii) such Seller
pursuant to Sections 3.25 through 3.30 of this Agreement
(provided such claims are made
before the third anniversary of the Closing Date); provided that
in no event shall a
Seller be liable for any Damages in excess of (x) with respect to
any misrepresentation
of any statement or statements contained in Section 3.05, 3.09 or
3.13, an amount equal
to $0.10 for each Share sold by such Seller hereunder and (y) in
all events the portion
of the Purchase Price received by such Seller, provided further,
that, with respect to
any misrepresentation of any statement or statements contained in
Section 3.05, 3.09 or
3.13, such Seller shall be liable for an amount equal to the
product of (1) 50% of the
excess, if any, of (A) the aggregate dollar amount of all
successful claims made by
Buyer pursuant to clause (i) over (B) $1,000,000, and (2) a
fraction, the numerator of
which shall be the portion of the Purchase Price paid to such
Seller, and the
denominator of which shall be the total Purchase Price and
provided further, that
neither The Harvard University Master Trust Fund nor Harvard
Yenching Institute will be
liable for any misrepresentations or breach of warranties of the
Company pursuant to
clause (i) above.
(b) Buyer hereby indemnifies each Seller and their respective
affiliates, the Company,
and the officers and directors of the Company against and agrees
to hold them harmless
from any and all Damages incurred or suffered by such Seller
arising out of any
misrepresentation or breach of warranty made by Buyer pursuant to
Article 4 of this
Agreement (provided such claims are made before the third
anniversary of this
Agreement) or any breach of Section 2.03 of this Agreement.
SECTION 7.3. Procedures tc \l2 "SECTION 7.3. Procedures . The
party seeking
indemnification under Section 7.02 (the AIndemnified Party@)
agrees to give prompt
notice to the party against whom indemnity is sought (the
AIndemnifying Party@) of the
assertion of any claim, or the commencement of any suit, action
or proceeding in
respect of which indemnity may be sought under such Section;
provided, however, that
failure to give such notice shall not relieve the Indemnifying
Party of its indemnity
obligation, except to the extent the Indemnifying Party is
actually prejudiced in its
defense of the action by such failure. The Indemnifying Party
may, and at the request
of the Indemnified Party shall, participate in and control the
defense of any such
suit, action or proceeding at its own expense, provided that the
Indemnifying Party
will not be entitled to control any such defense unless (i) the
Indemnifying Party
acknowledges in writing the obligation of the Indemnifying Party
to indemnify the
Indemnified Party pursuant to Section 7.02 in respect of all
claims covered by such
suit, action or proceeding and (ii) the claims involved seek (and
continue to seek)
solely monetary damages. The Indemnifying Party shall not be
liable under Section 7.02
for any settlement effected without its consent (which may not be
unreasonably
withheld) of any claim, litigation or proceeding in respect of
which indemnity may be
sought hereunder.
SECTION 7.4. Exclusive Remedy tc \l2 "SECTION 7.4. Exclusive
Remedy . Except as
specifically set forth in this Article 7, if the Closing occurs,
Buyer and each Seller
hereby waive any rights or claims it may have against the other
parties, whether in law
or in equity, relating in any way to the Company or its
Subsidiaries or to the
transactions contemplated by this Agreement (but excluding claims
for fraud or similar
actions). The rights and claims waived by Buyer and each Seller
under this Section 7.04
include, but are not limited to, claims for breach of contract,
breach of warranty,
contribution and negligent misrepresentation.
ARTICLE 8
TERMINATION
TC \L1 "ARTICLE 8TERMINATION SECTION 8.1. Grounds for
Termination tc \l2 "SECTION 8.1.
Grounds for Termination . This Agreement may be terminated at
any time prior to the
Closing:
(i) by mutual written agreement of Sellers and Buyer;
(ii) by either Sellers or Buyer if the Closing shall not have
been consummated on or
before September 24, 1998 for any reason other than the breach of
this Agreement by the
party seeking to terminate this Agreement;
(iii) by Sellers or Buyer if consummation of the
transactions contemplated hereby would
violate any nonappealable final order, decree or judgment of any
court or governmental
body having competent jurisdiction; or
(iv) by either Sellers or Buyer if, prior to the Closing, any
Seller or the Company (in
the case of termination by the Buyer) or the Buyer (in the case
of termination by the
Sellers) has failed to comply in all material respects with any
of its covenants or
agreements contained in this Agreement required to be complied
with prior to the date
of such termination and such non-compliance has not been cured
(subject to the
limitations contained in Section 5.01 hereof) or waived within
ten days of the non-
complying party receiving written notice of such non-compliance
or otherwise becoming
actually aware of such non-compliance.
The party desiring to terminate this Agreement shall give notice
of such termination to
the other party.
SECTION 8.2. Effect of Termination tc \l2 "SECTION 8.2. Effect
of Termination . If
this Agreement is terminated as permitted by Section 8.01,
termination shall be without
liability of any party (or any stockholder, director, officer,
employee, partner,
affiliate, agent, consultant or representative of such party) to
any other party to
this Agreement ; provided, however, that if this Agreement is
terminated by Buyer
pursuant to clause (iv) of Section 8.01 due to a willful breach
of any representation,
warranty, agreement or covenant of the Company or any Seller
contained herein, the
Company shall promptly (and in any event within three business
days after a documented
request by Buyer) reimburse the Buyer for all out-of-pocket
expenses incurred by Buyer
in connection with this Agreement, including fees and expenses of
Buyer's counsel,
accountants and consultants, up to an aggregate of $1,000,000 of
such expenses; and,
provided, further that no termination of this Agreement pursuant
to Section 8.01 shall
relieve any party of liability for a breach of any provision of
this Agreement
occurring upon or before such termination. The provisions of
Sections 5.02(b), 8.02
and 9.03 shall survive any termination hereof pursuant to Section
8.01.
ARTICLE 9
MISCELLANEOUS
TC \L1 "ARTICLE 9MISCELLANEOUS SECTION 9.1. Notices tc \l2
"SECTION 9.1. Notices . All
notices, requests and other communications to either party
hereunder shall be in
writing (including telex, telecopy or similar writing) and shall
be given,
if to Buyer, to:
EBC Texas Acquisition Corp.
x/x Xxxxxxx, Xxxxx & Xxxxxxx
Xxxxx 0000
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Attn: Xxxxx Xxxx
Telecopy: (000) 000-0000
with a copy to:
Xxxxxxx Xxxx & Xxxxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxxx
Telecopy: (000) 000-0000
if to the Company, to:
E-Z Serve Corporation
0000 Xxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Xxxx XxXxxxxx
Telecopy: (000) 000-0000
with a copy to:
Xxxx X. Xxxxxx
Bracewell & Xxxxxxxxx LLP
000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx XX 00000
Telecopy: (000) 000-0000
if to any Seller, to such Seller at the address specified
by such Seller on the signature pages to this Agreement or
in a notice given by such Seller to Buyer with a copy to:
in the case of DLJ Capital Corporation or Tenacqco Bridge
Partnership:
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxxxxx
Telecopy: 000-000-0000
in the case of Evansville Limited, Richemont Finance S.A.
and Intercontinental Mining & Resources Incorporated:
Quadrant Management, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxx, General Counsel
Telecopy: 000-000-0000
in the case of Phemus Corporation, The Harvard University
Master Trust Fund, and Harvard Yenching Institute:
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxx
Telecopy: 000-000-0000
SECTION 9.2. Amendments; No Waivers tc \l2 "SECTION 9.2.
Amendments; No Waivers . (a)
Any provision of this Agreement may be amended or waived prior to
the Closing Date if,
and only if, such amendment or waiver is in writing and signed,
in the case of an
amendment, by Buyer and Sellers or in the case of a waiver, by
the party against whom
the waiver is to be effective.
(b) No failure or delay by either party in exercising any
right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single
or partial exercise
thereof preclude any other or further exercise thereof or the
exercise of any other
right, power or privilege. The rights and remedies herein
provided shall be cumulative
and not exclusive of any rights or remedies provided by law.
SECTION 9.3. Expenses tc \l2 "SECTION 9.3. Expenses . Except
as provided in Section
8.02, all costs and expenses incurred in connection with this
Agreement shall be paid
by the party incurring such cost or expense, provided that if the
Closing occurs, the
Company will pay at Closing the reasonable fees and expenses in
connection with the
preparation and negotiation of this Agreement of Xxxxx Xxxx &
Xxxxxxxx, counsel to
Sellers, such fees and expenses not to exceed $145,000.
SECTION 9.4. Successors and Assigns tc \l2 "SECTION 9.4.
Successors and Assigns . The
provisions of this Agreement shall be binding upon and inure to
the benefit of the
parties hereto and their respective successors and assigns,
provided that, by written
notice to Sellers and the Company, Buyer may assign its rights
(but not its
obligations) hereunder to (i) a Subsidiary of Buyer or Parent of
which Buyer or Parent,
as applicable, owns at least 80% of the outstanding capital
stock, and the remaining
portion of such capital stock is owned by one or more of the
investors (or their
affiliates) delivering commitment letters to the Buyer pursuant
to Section 4.04 hereof
or another investor reasonably acceptable to the Company, (ii) ES
& ES Acquisition
Corporation, a Delaware corporation or (iii) a wholly owned
Subsidiary of ES & ES
Acquisition Corporation.
SECTION 9.5. Governing Law tc \l2 "SECTION 9.5. Governing Law .
This Agreement shall
be construed in accordance with and governed by the law of the
State of New York,
without regard to the conflicts of law rules of such state
(except with respect to the
Merger, which will be governed by the DGCL).
SECTION 9.6. Counterparts; Effectiveness tc \l2 "SECTION 9.6.
Counterparts;
Effectiveness . This Agreement may be signed in any number of
counterparts, each of
which shall be an original, with the same effect as if the
signatures thereto and
hereto were upon the same instrument. This Agreement shall become
effective when each
party hereto shall have received a counterpart hereof signed by
the other party hereto.
SECTION 9.7. Entire Agreement tc \l2 "SECTION 9.7. Entire
Agreement . This Agreement
and the Confidentiality Agreement constitute the entire agreement
between the parties
with respect to the subject matter hereof and supersede all prior
agreements,
understandings and negotiations, both written and oral, between
the parties with
respect to the subject matter of this Agreement. Neither this
Agreement nor any
provision hereof is intended to confer upon any Person other than
the parties hereto
any rights or remedies hereunder except as provided in the second
to last sentence of
Section 5.04.
SECTION 9.8. Captions tc \l2 "SECTION 9.8. Captions . The
captions herein are included
for convenience of reference only and shall be ignored in the
construction or
interpretation hereof.
SECTION 9.9. Extension; Waiver tc \l2 "SECTION 9.9. Extension;
Waiver . At any time
prior to the Effective Time, the parties hereto may, to the
extent legally allowed, (a)
extend the time for the performance of any of the obligations or
other acts of the
other parties hereto, (b) waive any inaccuracies in the
representations and warranties
of the other parties hereto contained herein or in any document
delivered pursuant
hereto and (c) waive compliance with any of the agreements of the
other parties hereto
or conditions to their own obligations contained herein. Any
agreement on the part of
a party hereto to any such extension or waiver will be valid only
if set forth in a
written instrument signed on behalf of such party.
SECTION 9.10. Specific Performance tc \l2 "SECTION 9.10.
Specific Performance . The
parties hereto agree that if, prior to Closing, any provision of
this Agreement is not
performed in accordance with its specific terms or is otherwise
breached, irreparable
damage would occur, no adequate remedy at law would exist and
damages would be
difficult to determine, and that, subject to Article VIII, the
parties will be entitled
to specific performance of the terms hereof, in addition to any
other remedy at law or
equity.
SECTION 9.11. Arbitration tc \l2 "SECTION 9.11. Arbitration .
All disputes,
controversies claims, actions or proceedings arising out of or
relating to this
Agreement or the transactions contemplated hereby that arise
after the Effective Time
(each, a ADispute@) shall be submitted to binding arbitration in
accordance with the
provisions of this Section 9.11. This Section 9.11 shall not
apply to claims arising
after the Effective Time that seek injunctive relief, which will
be covered by Section
9.12 (and such claims will not be considered to be a ADispute@).
The parties shall
initially attempt to resolve any Dispute by direct negotiation.
If the parties are not
able to settle the Dispute by direct negotiations within 30 days
after written notice
by one party to the other party or parties of the Dispute, any
party may initiate an
arbitration to resolve the Dispute. Such arbitration shall be
initiated by the
initiating party providing written notice (such notice, the
AArbitration Notice@) to
the other party or parties to the Dispute. Such arbitration shall
be conducted as
follows:
(a) The parties to the Dispute each shall have 20 business days
after receipt of an
Arbitration Notice to appoint an arbitrator who is on the
approved panel of arbitrators
of the American Arbitration Association, provided that if the
dispute involves Buyer,
on the one hand, and one or more Sellers, on the other hand, then
the Sellers will be
treated as one party for purposes of choosing an arbitrator and
DLJ Capital Corporation
(or the Seller selling the largest number of Shares pursuant to
this Agreement or such
other Seller as shall be designated by the Sellers representing a
majority of the
Shares sold by Sellers) shall be designated to act on behalf of
the Sellers. The
arbitrators so chosen shall be certified public accountants,
attorneys or other
persons, in each case, who are experienced in the buying and
selling of businesses.
Each party shall promptly notify the other party or parties of
such appointment. If a
party shall fail to so appoint such an arbitrator within such
five business day period,
the other party (or parties) may appoint such arbitrator and
shall so notify the party
failing to appoint an arbitrator. The two arbitrators so
appointed shall then select
a third arbitrator within five business days after the
appointment of the second
arbitrator. Such arbitrators so chosen shall constitute the
board of arbitration.
If the two arbitrators fail to agree upon the appointment of a
third arbitrator, the
third arbitrator shall be appointed in accordance with the rules
of the American
Arbitration Association. The Board of Arbitration shall then
proceed under the
Commercial Arbitration Rules of the American Arbitration
Association (subject to the
provisions of this Section 9.11), except that the parties
expressly do not constitute
the American Arbitration Association as administrator of the
arbitration as provided in
Rule 3 of such Rules.
(b) Following the designation of such Board of Arbitration, the
parties hereto,
together with the members of the Board of Arbitrators, shall
promptly undertake
appropriate informal efforts to mediate and negotiate a solution
to the matter covered
by the original notice.
(c) If a negotiated solution cannot be achieved within 30 days
after the date on which
the Board of Arbitration is constituted, the proceeding shall
then become a compulsory
arbitration to be conducted under the Commercial Arbitration
Rules of the American
Arbitration Association by the Board of Arbitration. These
rules shall be subject to
the following modifications:
(i) discovery shall be permitted under the same standards
provided for in the Federal
Rules of Civil Procedure;
(ii) the members of the Board of Arbitration shall interpret and
apply the provisions
of this Agreement;
(iii) the arbitration costs may be charged to the losing
party or allocated between the
parties as may be determined by the Board of Arbitration;
(iv) the Board of Arbitration shall complete proceedings within
90 days of the date of
receipt of the Arbitration Notice by the non-initiating party;
and
(v) the proceedings will be held in the State of New York,
unless the parties shall
otherwise agree in writing.
(d) In connection with the enforcement of the mediation and
arbitration provisions of
this Section 9.11, any agreement, decision or award shall be
final and conclusive as to
any such claim.
(e) Judgment upon any award rendered by the arbitrators may be
entered in any court
having jurisdiction. The statute of limitations, estoppel,
waiver, laches, and similar
doctrines, which would otherwise be applicable in any action
brought by a party shall
be applicable in any arbitration proceeding and the commencement
of an arbitration
proceeding shall be deemed the commencement of an action for
those purposes.
SECTION 9.12. Jurisdiction; Waiver of Jury Trial tc \l2 "SECTION
9.12. Jurisdiction;
Waiver of Jury Trial . (a) All disputes, controversies, claims,
actions or proceedings
arising out of or related to this Agreement or the transactions
contemplated hereby
that arise prior to the Effective Time (or that arise after the
Effective Time in the
case of claims for injunctive relief) shall be brought only in
the United States
District Court for the Southern District of New York. If such
court is unavailable,
proceedings must be brought in the Supreme Court of the State of
New York, County of
New York.
(b) EACH SELLER, THE COMPANY AND BUYER HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED
TO THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement or have caused
this Agreement to be duly executed by their respective authorized
officers as of the
day and year first above written.
E-Z SERVE CORPORATION
By: /s/ Xxxx XxXxxxxx
Name: Xxxx XxXxxxxx
Title: Chairman and Chief Executive
Officer
TENACQCO BRIDGE PARTNERSHIP
By: DLJ Capital Corporation, its general
partner
By: /s/ Xxx Xxxxx
Name: Xxx Xxxxx
Title: Authorized Signatory
Address: 000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
DLJ CAPITAL CORPORATION
By: /s/ Xxx Xxxxx
Name: Xxx Xxxxx
Title: Authorized Signatory
Address: 000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
PHEMUS CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxx
Name: Xxxxxxx X. Xxxxxxxx
Title: Authorized Signatory
Address: c/o Charlesbank Capital
Partners, LLC
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx
00000-0000
By: /s/ Xxxxxxx Xxxxxx
Name: Xxxxxxx Xxxxxx
Title: Authorized Signatory
EVANSVILLE LIMITED
By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Attorney-in-Fact
Address: P.O. Box 438
Road Town,
Tortola, British
Virgin Islands
RICHEMONT FINANCE S.A.
By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Attorney-in-Fact
Address: 00 Xxxxxxxxx Xxxxxx Xxxxx
X 0000 Xxxxxxxxxx
THE HARVARD UNIVERSITY
MASTER TRUST FUND
By: /s/ Xxxx X. Xxxxxxxx
Name: Xxxx X. Xxxxxxxx
Title: Authorized Signatory
Address: c/o Harvard Management Company,
Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx
00000-0000
By: /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Authorized Signatory
HARVARD YENCHING INSTITUTE
By: /s/ Xxxx X. Xxxxxxxx
Name: Xxxx X. Xxxxxxxx
Title: Authorized Signatory
Address: c/o Harvard Management Company,
Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx
00000-0000
By: /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Authorized Signatory
INTERCONTINENTAL MINING & RESOURCES
INCORPORATED
By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Attorney-in-Fact
Address: P.O. Box 438
Road Town,
Tortola, British
Virgin Islands
EBC TEXAS ACQUISITION CORP.
By: /s/ Xxxxx Xxxxxx
Name: Xxxxx Xxxxxx
Title: President
Address: x/x Xxxxxxx, Xxxxx & Xxxxxxx
Xxxxx 0000
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Attn: Xxxxx Xxxx
EBC MERGER SUB CORP.
By: /s/ Xxxxx Xxxxxx
Name: Xxxxx Xxxxxx
Title: President
Address: x/x Xxxxxxx, Xxxxx & Xxxxxxx
Xxxxx 0000
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Attn: Xxxxx Xxxx
EXHIBIT A
E-Z Serve Corporation
Securities Ownership Schedule
Shares of Common
Entity Stock Warrants Purchase Price
Tenacqco Bridge
Partnership 11,398,364 0 6,839,018.40
DLJ Capital Corp. 18,317,000 0 10,990,200.00
Phemus Corporation1 6,434,406 729,600 10,291,107.60
The Harvard University Master
Trust Fund 124,000 0 74,400.00
Harvard Yenching
Institute 62,000 0 37,200.00
Evansville Limited 7,262,422 0 4,357,453.20
Richemont
Finance S.A. 7,365,540 0 4,419,324.00
Intercontinental Mining &
Resources
Incorporated 0 230,400 135,936.00
Totals 60,963,732 960,000 $ 37,144,639.20
Stock Options
Name Outstanding Options Purchase Price
Xxx Xxxxxxxx 100,000 $20,000
Xxx Xxxxxx 75,000 15,000
Xxxxxx Xxxxxxxx* 1,000,000 200,000
Xxx Xxxx 100,000 20,000
Xx Xxxxxxx 150,000 30,000
Xxxx XxXxxxxx 2,700,000 540,000
Xxxxxxx Xxxxxxxx 75,000 15,000
Xxxx Xxxxxxxx* 93,333 18,666.60
Xxx Xxxxxxx 100,000 20,000
Xxx Xxxxxx 150,000 30,000
Xxxx Xxxxxx 100,000 20,000
Totals 4,643,633 $928,666.60
? Purchase Price is gross amount. At Closing, Purchase Price may
be subject to
adjustment to take into account such employee=s outstanding
indebtedness owed to the
Company as set forth on Section 3.02 of the Disclosure Schedules.
July 27, 1998
Board of Directors
E-Z Serve Corporation
0000 Xxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000
Members of the Board:
You have requested the opinion of Xxxxxx Xxxx & Xxxxxxxx, Inc. ("HWG")
as investment bankers as to the fairness, from a financial point of
view, to the holders of the outstanding shares of common stock, par
value $0.01 per share (the "Common Stock") of E-Z Serve Corporation
(the "Company") of the consideration to be received by such
stockholders in the proposed acquisition (the "Proposed Transaction")
of the Company by EBC Merger Sub Corp. ("Sub"), a wholly-owned
subsidiary of EBC Texas Acquisition Corp. ("Parent").
We understand that the Proposed Transaction is to be effected, pursuant
to a Transaction Agreement (the "Agreement"), dated as of July 27,
1998, among Tenacqco Bridge Partnership, DJC Capital Corp., Phemus
Corporation, The Harvard University Master Trust Fund, Harvard Yenching
Institute, Evansville Limited, Richemont Finance S.A., Intercontinental
Mining and Resources Incorporated, Parent, Sub and the Company through
the purchase by Sub for approximatley 92% of the issued and outstanding
shares of Common Stock at a per share price of $0.60 in cash. We
understand further that any shares of Common Stock not acquired by Sub
will be converted into the right to receive $0.60 per share in cash,
pursuant to a merger between Sub and the Company.
As a continuing part of its investment banking services, HWG is engaged
in the valuation of businesses and their securities in connection with
mergers and acquisitions, the underwriting of securities, private
placements of debt and equity securities and other financial advisory
services. Certain professionals at HWG are familiar with the
convenience store industry through previous transactions with and the
publishing of securities research on certain convenience store
companies.
In connection with rendering its opinion, HWG has reviewed and
analyzed, among other things, the following: (i) the Agreement, (ii)
the financial statements and other information concerning the Company,
including Annual Reports on Form 10-K of the Company for the last five
fiscal years, Quarterly Reports on Form 10-Q of the Company for the
last eight quarters, current Form 8-K of the Company, annual and
quarterly reports to stockholders, and proxy statements, and (iii)
certain other internal information concerning the operations of the
Company. HWG has also met with certain officers and employees of the
Company to discuss the Proposed Transaction and made such other
analyses as deemed appropriate.
In rendering our opinion, HWG has relied, without independent
verification, upon the accuracy and completeness of the financial and
other information provided by the Company and have assumed such
information is correct and complete in all material aspects. HWG has
not attempted to independently verify public or private information
considered in our evaluation and have assumed that the matter in which
the transaction will be effected complies with all applicable State and
Federal laws.
In conducting our analysis and opinion, HWG has considered such
financial and other factors as deemed appropriate under the
circumstances including, among other things, the following: (i) the
historical and current financial position and results of operations of
the Company; (ii) the business outlook and certain financial
projections for the Company; (iii) the historical and current trading
market for the Common Stock of the Company and the equity securities of
certain other publicly-traded companies believed to be comparable to
the Company; (iv) certain publicly available information regarding the
nature and terms of certain other transactions considered to be
relevant. HWG has also taken into account general economic, market and
financial conditions.
Based upon and subject to the foregoing and such other factors as HWG
considers relevant, it is our opinion, as of the date hereof, that the
consideration to be received by the holders of the Common Stock of the
Company in the Proposed Transaction is fair to such holders from a
financial point of view.
Sincerely,
XXXXXX XXXX & XXXXXXXX, INC.
NEWS RELEASE FOR ADDITIONAL INFORMATION:
Xxxx X. Xxxxxxx,
Interim CFO
000-000-0000
FOR IMMEDIATE RELEASE
E-Z SERVE ANNOUNCES TRANSACTION AGREEMENT,
SECOND QUARTER AND YEAR TO DATE RESULTS
Houston (July 29, 1998) - E-Z Serve Corporation (AMEX:
`EZS') ("Company") today announced the signing of a definitive
Transaction Agreement ("Agreement") with EBC Texas Acquisition
Corp. ("EBC") and certain major shareholders of the Company.
The Agreement calls for the acquisition of all of the outstanding
shares of the Company by EBC. EBC is a combination of
institutional investors including Xxxxxxx, Xxxxx & Company,
Electra Xxxxxxx Inc., Bay Harbour Management L.C. and certain
investment funds controlled by Xxxxx Xxxxxx or affiliates of these
entities.
Under the terms of the Agreement, which has been approved
unanimously by the Board of Directors of the Company, a subsidiary
of EBC will acquire all of the outstanding shares of the Company
for $0.60 per share, for an aggregate purchase price of
approximately $42 million, in cash. Pursuant to the Agreement,
shareholders of the Company who own in excess of 90% of the
Company?s outstanding common shares have agreed to sell their
shares directly to EBC. Following the purchase of shares from
such major shareholders, which is expected to occur in the last
week of August, EBC will immediately thereafter consummate a
second step merger in which remaining stockholders will also
receive $0.60 per share, in cash. The Agreement to acquire the
Company includes arrangements that prohibit the major shareholders
from accepting an alternative proposal and is subject to customary
conditions, including regulatory approvals under U.S. antitrust
laws.
Xxxx XxXxxxxx, Chairman and Chief Executive Officer, stated,
"We believe the transaction is in the best interests of our
stockholders and will provide significant remodel capital for our
stores."
(Xxxxxxxxx, Xxxxxx and Xxxxxxxx Securities Corporation is
acting as advisor to the Company. Xxxxxx, Xxxx and Xxxxxxxx has
provided a fairness opinion in connection with the transaction.)
-more-
E-Z Serve Announces Transaction Agreement,
Second Quarter and Year to Date Results
July 29, 1998
Page 2
The Company also reported financial results for the second
quarter and six month period ended June 28, 1998:
Revenues for the second quarter ended June 28, 1998 were
$132.6 million compared to $200.6 million for the second quarter
of 1997, a 33.9% decrease. The decline was attributable to the
previously announced store divestiture program, which resulted in
the Company operating 483 stores at June 28, 1998 compared to 665
stores at June 29, 1997. Net income for the quarter was $0.4
million compared to $2.3 million in 1997. The 1997 results
include approximately $4.5 million in pre-tax gains, primarily
related to the divestiture program. Net income per share for the
quarter was $0.01 compared to $0.02 in 1997*.
On a comparable store basis, total merchandise revenues
increased 7.4% in the three month period ended June 28, 1998.
Merchandise gross profit dollars for these stores improved 13.3%
in the second quarter of 1998 as compared to the same period for
1997. This resulted in 1998 average gross margin on merchandise
sold for these stores of 32.11%, up from the 1997 margin of
30.45%. These increases reflect the remerchandising of every
store to provide a better shopping experience and meet the product
needs of convenience oriented customers. The remerchandising
included adding several hundred new products, allocating more
space to top selling items, and introducing a fresh brewed coffee
program marketed under the "E-Z Street Cafe" trademark.
As a result of unfavorable market conditions, average
gasoline margins decreased on a comparable store basis to $0.1105
for the quarter compared to $0.1125 for the same period in 1997.
Revenues for the six months ended June 28, 1998 were $255.7
million compared to $402.4 million for the same period in 1997, a
36.5% decrease. The decline resulted from the divestiture program
discussed above. For the same period, comparable store
merchandise revenues increased 3.8%. Net loss for the period was
$1.7 million compared to net income of $1.2 million in 1997. The
1997 results include approximately $5.1 million in pre-tax gains,
primarily from the divestiture of stores. Net loss per share was
$0.02 compared to break even per share earnings in 1997*.
* 1997 per share amounts are after accruing for preferred stock
dividends.
-more-
E-Z Serve Announces Transaction Agreement,
Second Quarter and Year to Date Results
July 29, 1998
Page 3
"We are very pleased with the improved results of our core
stores", said Xxxx XxXxxxxx, Chairman and Chief Executive
Officer. "The divestiture program, along with the Company's
recent efforts to improve product mix and in-store presentation
has proven to be successful. After adjusting for non-recurring
gains, the 1998 results indicate significant improvement", Xx.
XxXxxxxx continued. "We are encouraged by this trend and expect
it to continue."
E-Z Serve sells gasoline, food service, beverage and related
consumer items through 483 stores in Louisiana, Mississippi,
Alabama, Florida, Georgia, North and South Carolina.
(In thousands except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
------------------ ----------------
6/28/98 6/29/97 6/28/98 6/29/97
-------- ------- ------- --------
Retail gallons sold 66,561 99,334 132,631 202,503
Total revenues $132,567 $200,602 $255,691 $402,362
Income (loss) before
taxes 265 3,922 (2,109) (1,752)
Net income (loss) 352 2,299 (1,671) 1,160
Net income (loss) attributable
to common stock 352 1,725 (1,671) 192
Basic income (loss)
per share $ 0.01 $ 0.02** $(0.02) $ --**
Average common shares
outstanding 69,352 69,320 69,352 69,239
**Per share amounts are after accruing for preferred stock
dividends.
NOTE: This News Release includes forward looking statements
within the meaning of Section 27A of the Securities Act of 1933,
as amended, and Section 21E of the Securities Exchange Act of
1934, as amended. Although the Company believes that the
expectations reflected in such forward looking statements are
based upon reasonable assumptions, the Company can give no
assurance that these expectations will be achieved. Important
factors that could cause actual results to differ materially from
the Company?s expectations include general economic, business and
market conditions, the volatility of the price of oil,
competition, development and operating costs and the factors that
are disclosed in conjunction with the forward looking statements
included in the Company?s most recent 10-K and 10-Q reports filed
with the Securities and Exchange Commission.
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