EXHIBIT 10.1
AGREEMENT AND PLAN OF MERGER
by and among
JRC/CONCORD TECHNOLOGIES, INC.,
XXXXX X. XXXX, XX.,
OYO GEOSPACE CORPORATION
and
BUBBLES MERGE CO.
Dated February 3, 1998
TABLE OF CONTENTS
PAGE
ARTICLE 1
THE MERGER AND RELATED MATTERS..................... 1
1.1 MERGER................................................... 1
1.2 CLOSING AND EFFECTIVE TIME............................... 2
1.3 CONVERSION OF STOCK...................................... 2
1.4 EXCHANGE................................................. 3
1.5 CANCELLATION OF TREASURY STOCK........................... 4
1.6 CLOSING OF THE COMPANY TRANSFER BOOKS.................... 4
1.7 NET EQUITY ADJUSTMENT.................................... 4
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND XXXX......... 5
2.1 CORPORATE ORGANIZATION................................... 5
2.2 CAPITALIZATION........................................... 5
2.3 AFFILIATES AND SUBSIDIARIES.............................. 5
2.4 POWER AND AUTHORITY; EXECUTION AND DELIVERY; EFFECT OF
AGREEMENT................................................ 6
2.5 NO CONSENTS; NO VIOLATIONS; NO LOSS OF RIGHTS............ 7
2.6 FINANCIAL STATEMENTS..................................... 8
2.7 ABSENCE OF MATERIAL ADVERSE CHANGES...................... 8
2.8 COMPENSATION AND BENEFIT PLANS........................... 9
2.9 PROPERTIES, TITLE AND RELATED MATTERS.................... 10
2.10 LEGAL PROCEEDINGS........................................ 11
2.11 INSURANCE................................................ 12
2.12 RECORDS.................................................. 12
2.13 MATERIAL CONTRACTS....................................... 12
2.14 BROKERAGE................................................ 14
2.15 INTELLECTUAL PROPERTY.................................... 14
2.16 ENVIRONMENTAL MATTERS.................................... 14
2.17 GOVERNMENTAL LICENSES AND PERMITS........................ 15
2.18 TAXES AND TAX MATTERS.................................... 16
2.19 LABOR MATTERS............................................ 17
2.20 WARRANTIES AND PRODUCT LIABILITY......................... 17
2.21 NO MISLEADING STATEMENTS................................. 18
2.22 SECURITIES LAW MATTERS................................... 18
2.23 INDEBTEDNESS AND AGREEMENTS.............................. 19
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF OYO AND SUB............. 19
3.1 CORPORATE ORGANIZATION................................... 19
3.2 DUE AUTHORIZATION, EXECUTION AND DELIVERY; EFFECT OF
AGREEMENT................................................ 19
3.3 CONSENTS................................................. 20
3.4 AUTHORIZATION FOR OYO COMMON STOCK....................... 20
3.5 BROKERAGE................................................ 20
3.6 SEC DOCUMENTS............................................ 20
3.7 MATTERS RELATED TO SUB................................... 21
3.8 SOPHISTICATION OF OYO.................................... 21
ARTICLE 4
COVENANTS AND AGREEMENTS........................ 21
4.1 SHAREHOLDER APPROVAL..................................... 21
4.2 FURTHER ASSURANCES....................................... 21
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4.3 RELEASE.................................................. 22
4.4 COVENANTS OF OYO......................................... 22
ARTICLE 5
CONDITIONS TO OYO'S AND SUB'S OBLIGATIONS............... 22
5.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES............... 22
5.2 PERFORMANCE OF COVENANTS AND AGREEMENTS.................. 22
5.3 CONSENTS................................................. 23
5.4 GOVERNMENTAL APPROVALS................................... 23
5.5 RESIGNATION OF DIRECTORS................................. 23
5.6 COMPANY SECRETARY'S CERTIFICATE.......................... 23
5.7 COMPANY OFFICER'S CERTIFICATE............................ 23
5.8 STATE CERTIFICATES....................................... 23
5.9 INTELLECTUAL PROPERTY RIGHTS RELEASES.................... 23
5.10 OPINION OF COUNSEL....................................... 24
ARTICLE 6
CONDITIONS TO XXXX'X AND THE COMPANY'S OBLIGATIONS........... 24
6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES............... 24
6.2 PERFORMANCE OF COVENANTS AND AGREEMENTS.................. 24
6.3 GOVERNMENTAL APPROVALS................................... 24
6.4 OYO SECRETARY'S CERTIFICATE.............................. 24
6.5 SUB SECRETARY'S CERTIFICATE.............................. 24
6.6 OYO OFFICER'S CERTIFICATE................................ 24
6.7 OPINION OF COUNSEL....................................... 25
ARTICLE 7
NATURE OF STATEMENTS AND SURVIVAL OF COVENANTS,
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
............................................................... 25
ARTICLE 8
INDEMNIFICATION AND REIMBURSEMENT................... 25
8.1 XXXX INDEMNITIES......................................... 25
8.2 OYO INDEMNITIES.......................................... 26
8.3 NOTICE OF CLAIM.......................................... 26
8.4 INDEMNIFICATION PROCEDURES............................... 27
8.5 SUBROGATION RIGHTS....................................... 29
8.6 INSURANCE PROCEEDS; INTEREST............................. 29
8.7 INDEPENDENT INDEMNITIES.................................. 29
8.8 INVESTIGATION AND DUE DILIGENCE.......................... 29
8.9 NO IMPLIED REPRESENTATIONS OR WARRANTIES................. 29
ARTICLE 9
DEFINITIONS
............................................................... 30
ARTICLE 10
MISCELLANEOUS............................. 34
10.1 ENTIRE AGREEMENT......................................... 34
10.2 SUCCESSORS AND ASSIGNS................................... 34
10.3 EXPENSES................................................. 34
10.4 INVALIDITY............................................... 34
10.5 COUNTERPARTS............................................. 34
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10.6 HEADINGS................................................. 35
10.7 CONSTRUCTION AND REFERENCES.............................. 35
10.8 MODIFICATION AND WAIVER.................................. 35
10.9 KNOWLEDGE................................................ 35
10.10 NOTICES.................................................. 35
10.11 GOVERNING LAW; INTERPRETATION............................ 36
10.12 RESOLUTION OF DISPUTES................................... 36
EXHIBITS AND SCHEDULES
Exhibit 1.2 Articles of Merger
Exhibit 5.9 (a) Acknowledgement of Assignment and Release of Intellectual
Property Rights (Retriever Patent)
Exhibit 5.9 (b) Acknowledgement of Assignment and Release of Intellectual
Property Rights (Latching Patent)
Exhibit 5.10 Form of Opinion of Dow, Xxxxxxx & Xxxxxxxx, P.C.
Exhibit 6.7 Form of Opinion of Fulbright & Xxxxxxxx L.L.P.
Schedule 2.3 Subsidiaries
Schedule 2.5 Required Consents
Schedule 2.6 Material Liabilities Not Shown in Financial Statements
Schedule 2.7 Certain Transactions Since December 31, 1997
Schedule 2.8 Compensation and Benefit Plans
Schedule 2.9 (a) Encumbrances on Personal Property
Schedule 2.9 (c) Real Property Owned
Schedule 2.9 (d) Real Property Leased
Schedule 2.10 Legal Matters
Schedule 2.11 Insurance
Schedule 2.13(a) Material Contracts
Schedule 2.13(b) Balances of Outstanding Debt
Schedule 2.15 Encumbrances on Intellectual Property
Schedule 2.16 Environmental Matters
Schedule 2.17 Governmental Licenses and Permits
Schedule 2.18 Taxes and Tax Matters
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") is dated as of
February 3, 1998, and is by and among JRC/Concord Technologies, Inc., a Texas
corporation (the "COMPANY"), Xxxxx X. Xxxx, Xx., an individual residing in
Houston, Texas and the sole shareholder of the Company ("XXXX"), OYO Geospace
Corporation, a Delaware corporation ("OYO"), and Bubbles Merge Co., a Texas
corporation and wholly-owned subsidiary of OYO ("SUB").
Capitalized terms used in this Agreement shall have the meanings given to
them in Article hereof, unless defined elsewhere in this Agreement.
W I T N E S S E T H:
WHEREAS OYO is interested in acquiring the Company through a merger of the
Company with and into Sub pursuant to which the issued and outstanding shares of
the common stock, par value $.01 per share, of the Company ("COMMON STOCK")
would be converted into the common stock, par value $.01 per share, of OYO ("OYO
COMMON STOCK") on the terms and conditions set forth herein;
WHEREAS Xxxx owns all of the issued and outstanding Common Stock; and
WHEREAS the parties hereto wish to set forth the representations,
warranties, agreements and conditions under which a merger (the "MERGER") of the
Comapny with and into Sub will occur;
NOW, THEREFORE, in consideration of the premises, the representations,
warranties and agreements herein contained and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
ARTICLE 1
THE MERGER AND RELATED MATTERS
1.1 MERGER.
(a) Upon the terms and subject to the conditions of this Agreement,
the Company shall be merged with and into Sub in accordance with the TBCA. Sub
shall be the surviving corporation in the Merger (the "SURVIVING CORPORATION").
The Surviving Corporation shall at the Effective Time change its corporate name
to "Concord Technologies, Inc.", continue its corporate existence under and be
organized under and be governed by the TBCA and possess all the rights and
assets of the Company and Sub and be subject to all of the liabilities and
obligations of the Company and Sub in accordance with the provisions of the
TBCA.
(b) The Articles of Incorporation and the Bylaws of Sub, as in
effect immediately prior to the Effective Time, shall be the Articles of
Incorporation and Bylaws, respectively, of the Surviving Corporation until
thereafter amended, except that the Articles of Incorporation of Sub shall be
amended as provided in the Articles of Merger.
(c) At the Effective Time, the authorized and issued capital stock
of the Surviving Corporation shall consist of 1,000 shares of common stock, $.01
par value.
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(d) The director of the Company immediately prior to the Effective
Time, together with the director of Sub immediately prior to the Effective Time,
shall be the directors of the Surviving Corporation and shall hold office in
accordance with the Articles of Incorporation and By-laws of the Surviving
Corporation from the Effective Time until the earlier of their resignation or
removal or until their respective successors are duly elected and qualified, as
the case may be. The officers of the Company immediately prior to the Effective
Time shall be the officers of the Surviving Corporation and shall hold office in
accordance with the Articles of Incorporation and By-laws of the Surviving
Corporation from the Effective Time until the earlier of their resignation or
removal or until their respective successors are duly elected and qualified, as
the case may be.
(e) The Merger shall have the effects set forth in the TBCA. If at
any time after the Effective Time, the Surviving Corporation shall consider or
be advised that any further assignments or assurances in law or otherwise are
necessary or desirable to vest, perfect or confirm, of record or otherwise, in
the Surviving Corporation, all rights, title and interests in all real estate
and other property and all privileges, powers and franchises of the Company and
Sub, the Surviving Corporation and its proper officers and directors, in the
name and on behalf of the Company and Sub, shall execute and deliver all such
proper deeds, assignments and assurances in law and do all things necessary and
proper to vest, perfect or confirm title to such property or rights in the
Surviving Corporation and otherwise to carry out the purpose of this Agreement,
and the proper officers and directors of the Surviving Corporation are fully
authorized in the name and on behalf of the Company and Sub or otherwise to take
any and all such action.
1.2 CLOSING AND EFFECTIVE TIME. Subject to the provisions of Article 5 and
Article 6 hereof, the closing (the "CLOSING") of the Merger shall take place at
10:00 a.m., Houston time, on February 3, 1998, at the offices of Fulbright &
Xxxxxxxx L.L.P., 0000 XxXxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx, or if any of the
conditions set forth in Article 5 or Article 6 hereof have not been satisfied or
waived, then as soon as practicable thereafter, or at such other time and place
or such other date as OYO and the Company shall agree. The Merger shall be
effective at such time (the "EFFECTIVE TIME") as a properly executed Articles of
Merger in substantially the form attached as EXHIBIT (together with any other
documents required by law to effectuate the Merger) shall have been filed with
the Secretary of State of the State of Texas in accordance with the provisions
of the TBCA, which filing shall be made as soon as practical after the Closing,
and the Secretary of State of the State of Texas shall have issued a Certificate
of Merger relating to the Merger.
1.3 CONVERSION OF STOCK.
(a) Except as provided in this Section or in Section hereof, at the
Effective Time, by virtue of the Merger and without any action on the part of
any holder of any shares of Common Stock, each share of Common Stock outstanding
immediately prior to the Effective Time shall be converted into the right to
receive, upon the surrender, pursuant to Section 1.4 hereof, of the certificates
formerly representing such shares, 1.872 shares of OYO Common Stock for each
share of Common Stock (the number of shares of OYO Common Stock issuable in
exchange for a share of Common Stock in the Merger is referred to herein as the
"COMMON STOCK CONVERSION RATE" with respect to any such shares). The number of
shares of OYO Common Stock issued pursuant to this Section is herein called the
"CONSIDERATION".
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(b) No fractional shares of OYO Common Stock shall be issued in the
Merger. To the extent the application of the Common Stock Conversion Rate to all
shares of Common Stock would result in a fractional number of shares of OYO
Common Stock being issued, the number of shares of OYO Common Stock issuable to
such holder in respect of all such shares in the Merger shall be rounded up to
the next whole number of shares of OYO Common Stock.
(c) Each share of the common stock, par value $.01 per share ("SUB
COMMON STOCK"), of Sub outstanding immediately prior to the Effective Time shall
continue to be outstanding without change.
(d) As of and after the Effective Time, no holder of any certificate
that immediately prior to the Effective Time represented shares of Common Stock
shall have any rights as a holder of Common Stock other than to receive the
Consideration.
(e) The Common Stock Conversion Rate is based on the assumption that
100,000 shares of Common Stock will be issued and outstanding immediately prior
to the Effective Time and that there will be no options, warrants or other
rights to acquire shares of Common Stock outstanding as of the Effective Time.
To the extent there are more than 100,000 shares of Common Stock issued and
outstanding immediately prior to the Effective Time, or any options, warrants or
other rights to acquire shares of Common Stock outstanding immediately prior to
the Effective Time, the Common Stock Conversion Rate shall be reduced by
multiplying the Common Stock Conversion Rate by a fraction the numerator of
which shall be 100,000 and the denominator of which shall be the sum of the
issued and outstanding shares of Common Stock and the number of shares of Common
Stock which can be issued pursuant to options, warrants or other rights to
acquire shares of Common Stock immediately prior to the Effective Time.
1.4 EXCHANGE.
(a) At the Closing, the certificates for Common Stock owned by Xxxx
shall be surrendered to OYO for delivery to the Surviving Corporation. Until so
surrendered, certificates for shares of Common Stock shall represent, after the
Effective Time, solely the right to receive the Consideration. Share
certificates representing the Common Stock that are surrendered shall be
canceled.
(b) At the Closing, certificates representing 85% of the shares of
OYO Common Stock, rounded to the nearest whole share, that are issuable to Xxxx
in accordance with Section shall be delivered to Xxxx by OYO and certificates
representing the remainder of the shares of OYO Common Stock that are issuable
to Xxxx by OYO in accordance with Section shall be retained by OYO in escrow
(together with any dividends and distributions issued in respect of such shares
held in escrow, collectively, the "ESCROW SHARES") to be held pursuant to this
Section .
(c) Until such time as the Escrow Shares shall have been released to
Xxxx, Xxxx covenants and agrees with OYO and Sub that Xxxx will not sell,
transfer, pledge, assign, hypothecate or otherwise dispose of, or enter into any
contract, option or other agreement or understanding (either written or oral)
with respect to the sale, transfer, pledge, assignment, hypothecation or other
disposition of any Escrow Shares or any dividends or distributions that may be
declared or paid in respect thereof. Until such time as the Escrow Shares shall
have been released to Xxxx or retained and cancelled by OYO pursuant to Section
, Xxxx shall be entitled to vote the Escrow Shares and any other voting
securities of Xxxx held in escrow. No interest shall be payable with respect to
the Escrow Shares and any dividends or distributions received in respect thereof
held by OYO as part of the Escrow Shares.
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1.5 CANCELLATION OF TREASURY STOCK. At the Effective Time, all shares of
Common Stock that are owned directly or indirectly by the Company as treasury
stock shall be canceled without any consideration being payable therefor.
1.6 CLOSING OF THE COMPANY TRANSFER BOOKS. At the Effective Time, the
share transfer books of the Company shall be closed and no transfers of shares
of Common Stock shall thereafter be made.
1.7 NET EQUITY ADJUSTMENT.
(a) If the Net Equity of the Company immediately prior to the
Effective Time is less than $3,300,000 or greater than $3,300,000, the number of
shares of OYO Common Stock issuable in the Merger shall be adjusted as follows
to give effect to such decrease or increase. To the extent the Net Equity of the
Company is less than $3,300,000, the aggregate number of shares of OYO Common
Stock to be received by Xxxx shall be decreased by an amount equal to such
deficiency, up to a maximum of $495,000 (the "DEFICIENCY") divided by $17.625.
To the extent Net Equity of the Company is greater than $3,300,000, OYO shall
pay Xxxx an amount in cash equal to such excess, up to a maximum of $495,000
(the "EXCESS"). No fractional shares will be issued and all issuances shall be
rounded up to the nearest whole share. The Net Equity of the Company shall be
based upon the consolidated balance sheet of Company as of the opening of
business on February 2, 1998 (the "EFFECTIVE DATE BALANCE SHEET"), prepared in
accordance with this Section.
(b) Within 30 days of the Effective Date, or as promptly as
practicable thereafter, OYO and the Company shall cause to be prepared and
delivered to Xxxx the Effective Date Balance Sheet. The Effective Date Balance
Sheet shall be prepared in accordance with generally accepted accounting
principles. OYO shall provide Xxxx with access to copies of all work papers and
other relevant documents to verify the entries contained in the Effective Date
Balance Sheet. Xxxx shall have a period of 30 calendar days after delivery of
the Effective Date Balance Sheet to review it and to make any objections in
writing to OYO. If written objections to the Effective Date Balance Sheet are
delivered by Xxxx to OYO within such 30 day period, then OYO and Xxxx shall
attempt to resolve the matter or matters in dispute. If no written objections
are made by Xxxx within the time period provided above, the Effective Date
Balance Sheet shall be deemed accepted by Xxxx and shall be final and binding.
(c) If disputes with respect to the Effective Date Balance Sheet
cannot be resolved by OYO and Xxxx within 15 calendar days after the delivery of
the objections to the Effective Date Balance Sheet, then the specific matters in
dispute shall be submitted to Coopers & Xxxxxxx L.L.P. or such other independent
accounting firm as may be approved by OYO and Xxxx, which firm shall render its
opinion as to such matters. Based on such opinion, that accounting firm will
send to OYO and Xxxx its determination on the specific matters in dispute, and
its calculation of the Net Equity of the Company, which determination shall be
final and binding on the parties. Any fees and expenses of the independent
accounting firm appointed pursuant to this Section shall be borne 50% by OYO and
50% by Xxxx.
(d) Within ten Business Days following the final determination of
the Effective Date Balance Sheet, the adjustment to the number of shares of OYO
Common Stock issuable in the Merger to Xxxx as a result of the provisions of
Section , shall be made either through the payment of cash to the extent the
adjustment is an upward adjustment or through the retention and cancellation by
OYO of some or all of the Escrow Shares. If the Escrow Shares are not sufficient
to effect such reduction, Xxxx shall be required to promptly return the excess
shares received by him to OYO. OYO may stop transfer with respect to such shares
and effect a cancellation of such Shares. To the extent that an adjustment under
this
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Section 1.7 would result in the issuance of a fractional share, the adjustment
shall be rounded to the nearest whole share of OYO Common Stock.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND XXXX
The Company and Xxxx hereby jointly and severally represent and
warrant to and covenant and agree with OYO and Sub as follows:
2.1 CORPORATE ORGANIZATION.
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Texas and has all requisite
corporate power and authority to conduct its business as currently conducted and
to own, operate and lease the Assets it now owns, operates or holds under lease.
The Company is duly qualified or licensed to do business and is in good standing
as a foreign corporation in every jurisdiction in which the conduct of its
business or the ownership or leasing of its Assets requires it to be so
qualified or licensed, except where the failure to be so qualified or licensed
would not have a Material adverse effect on the Company Condition.
(b) The Company has previously delivered to OYO and Sub true and
correct copies of the Articles of Incorporation and By-laws of the Company as in
effect on the date hereof. The minute books of the Company previously made
available to OYO and Sub are complete and accurately reflect all action taken
prior to the date of this Agreement by its board of directors and shareholders,
in their capacities as such.
2.2 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of
10,000,000 authorized shares of Common Stock, 100,000 shares of which are issued
and outstanding. All of the outstanding shares of Common Stock have been duly
authorized and validly issued and are fully paid and non-assessable and were not
issued in violation of any preemptive rights or other preferential rights of
subscription or purchase of any Person.
(b) Xxxx (along with his wife, Xxxxxxxx Xxxx, who has consented to
the disposition of Xxxx'x Common Stock) owns all of the Common Stock,
beneficially and of record, free and clear of all Encumbrances and restrictive
agreements, including voting trust or shareholders agreements, and has full
authority to vote all of such shares as contemplated by this Agreement. Xxxx has
full authority to transfer pursuant to the Merger all of the shares of Common
Stock.
(c) There are no outstanding options, warrants, convertible
securities, calls, rights, commitments, preemptive rights, agreements,
arrangements or understandings of any character obligating the Company (i) to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock of the Company or any securities or obligations
convertible into or exchangeable for such shares or (ii) to grant, extend or
enter into any such option, warrant, convertible security, call, right,
commitment, preemptive right, agreement, arrangement or understanding described
in clause (i) above.
2.3 AFFILIATES AND SUBSIDIARIES.
(a) Set forth in SCHEDULE is the name and description of each Person
in which the Company owns any direct or indirect equity or other similar
ownership interests (each, a "SUBSIDIARY", and collectively, the "SUBSIDIARIES")
and a description, including amount
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and percentage, of such interests. The interests set forth on SCHEDULE are owned
by the Company or a wholly owned Subsidiary free and clear of all Encumbrances
and restrictive agreements, including, voting trusts or shareholders agreements.
(b) With respect to each Subsidiary:
(i) such Subsidiary that is a corporation is a corporation
duly organized, validly existing and in good standing under the laws of
its jurisdiction of incorporation and has the requisite corporate power
and authority to carry on its business as it is now being conducted, and
to own, operate and lease the assets it now owns, operates or holds under
lease. Each such Subsidiary that is not a corporation is duly organized
under the laws of its jurisdiction of organization and has all requisite
power and authority to carry on its business as it is now being conducted,
and to own, operate and lease the Assets that it now owns, operates or
holds under lease;
(ii) such Subsidiary is duly qualified to do business and is
in good standing in each jurisdiction in which the conduct of its business
or the ownership or leasing of its assets requires it to be so qualified,
except where the failure to be so qualified or in good standing would not
have a Material adverse effect;
(iii) the Company has previously delivered to OYO true and
correct copies of the Articles or Certificate of Incorporation and
By-laws, or other similar organizational or constituent documents, of each
such Subsidiary as in effect on the date hereof. The minute books of such
Subsidiary previously made available to OYO are complete and accurately
reflect all action taken prior to the date of this Agreement by their
board of directors or other governing bodies and shareholders or equity
owners, in their capacities as such;
(iv) all the outstanding shares of capital stock of each such
Subsidiary that is a corporation have been duly authorized and validly
issued and are fully paid and non-assessable and were not issued in
violation of any preemptive rights or other preferential rights of
subscription or purchase of any Person. All of the Company's direct or
indirect ownership interests in each such Subsidiary that is not a
corporation have been duly authorized and validly issued or vested, were
not issued in violation of any preemptive rights or other preferential
rights of subscription or purchase of any Person, are fully paid and are
non-assessable. All such stock and ownership interests are owned of record
and beneficially by the Company, either directly or indirectly through a
wholly owned Subsidiary, free and clear of all Encumbrances and
restrictive agreements, including, voting trusts or shareholder
agreements; and
(v) there are no outstanding options, warrants, convertible
securities, calls, rights, commitments, preemptive rights, agreements,
arrangements or understandings of any character obligating such Subsidiary
(A) to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or other equity interests of such
Subsidiary or any securities or obligations convertible into or
exchangeable for such shares or equity interests or (B) to grant, extend
or enter into any such option, warrant, convertible security, call, right,
commitment, preemptive right, agreement, arrangement or understanding
described in clause (A) of this Section .
2.4 POWER AND AUTHORITY; EXECUTION AND DELIVERY; EFFECT OF AGREEMENT.
(a) The Company has all requisite corporate power and authority to
execute and deliver this Agreement and, subject to the approval by the Company's
sole shareholder,
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to perform its obligations hereunder. Subject to obtaining the approval of the
Company's sole shareholder as required under the TBCA, the execution and
delivery of this Agreement by the Company and the performance of its obligations
hereunder have been duly authorized by all necessary corporate action on its
part. This Agreement has been duly executed and delivered by the Company and
constitutes a legal, valid and binding obligation of the Company, enforceable
against it in accordance with its terms, except as such enforceability may be
limited by or subject to (a) any bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to creditors' rights generally and (b)
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law). The Board of Directors of the
Company has adopted a resolution directing that this Agreement and the Merger be
submitted to the sole shareholder of the Company for his approval and
unconditionally recommending that this Agreement and the Merger be approved by
the sole shareholder of the Company.
(b) Xxxx has the requisite legal capacity and full power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. Xxxx has duly executed and delivered this Agreement. This
Agreement constitutes a legal, valid and binding obligation of Xxxx, enforceable
against him in accordance with its terms, except as such enforceability may be
limited by or subject to (a) any bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to creditors' rights generally and (b)
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
2.5 NO CONSENTS; NO VIOLATIONS; NO LOSS OF RIGHTS.
(a) Except for the filing and recordation of Articles of Merger as
required by the TBCA and as set forth in SCHEDULE , the execution, delivery and
performance of this Agreement by the Company and the consummation by the Company
of the transactions contemplated hereby (i) do not require the consent,
approval, clearance, waiver, order or authorization of any Person, (ii) do not
violate any provision of the Articles of Incorporation or By-laws of the Company
or organizational or governing documents of any Subsidiary, (iii) do not
conflict with or violate any permit, concession, grant, franchise, statute, law,
rule or regulation of any Governmental Entity or any order, judgment, award or
decree of any court or other Governmental Entity to which the Company or any
Subsidiary is subject or any of its Assets is bound and (iv) do not conflict
with, or result in any breach of, or default or loss of any right under (or an
event or circumstance that, with notice or the lapse of time, or both, would
result in a default), or the creation of an Encumbrance pursuant to, or cause or
permit the acceleration prior to maturity or "put" right with respect to, any
obligation under, any indenture, mortgage, deed of trust, lease, loan agreement
or other agreement or instrument to which the Company or any Subsidiary is a
party or to which any of the Assets are subject.
(b) Except as set forth in SCHEDULE , no consents, approvals or
authorizations of any Person (other than those which have been obtained) are
required on the part of Xxxx in connection with the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby.
Except as set forth in SCHEDULE , the execution, delivery and performance by
Xxxx of this Agreement, the consummation by Xxxx of the transactions
contemplated hereby and the compliance by Xxxx with the provisions hereof will
not conflict with, or result in any violation of or default by Xxxx (with or
without notice or lapse of time, or both) under any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which Xxxx is a party
or by which Xxxx or any of Xxxx'x assets or properties may be bound, or any
statute or any judgment, decree, order, rule or regulation of any Governmental
Entity to which Xxxx is a party or by which Xxxx or any of Xxxx'x assets or
properties may be bound.
7
(c) Except as set forth on SCHEDULE 2.5, the execution, delivery and
performance of this Agreement by the Company will not result in the loss of any
governmental license, franchise or permit possessed by the Company or any
Subsidiary or give a right of acceleration or termination to any Person in
respect of any Material agreement or other instrument to which the Company or
any of its Subsidiaries is a party or by which any of the Assets are bound, or
result in the loss of any right or benefit under such agreement or instrument.
2.6 FINANCIAL STATEMENTS.
(a) True and correct copies of the consolidated balance sheet of the
Company as of December 31, 1996 and 1997, and the statement of income for each
of the years ended December 31, 1996 and 1997 (collectively, the "FINANCIAL
STATEMENTS"), have been previously delivered to OYO and Sub. The Financial
Statements fairly present in all Material respects the financial position of the
Company and its Subsidiaries as at the dates thereof and the results of
operations for the periods covered thereby. OYO and Sub understand that the
Financial Statements are prepared on a cash basis and not in accordance with
generally accepted accounting principles and such Financial Statements do not
contain appropriate notes typically prepared in connection with audited
financial statements. OYO and Sub also understand that the Financial Statements
are not audited.
(b) Except as set forth on SCHEDULE , as of December 31, 1997, to
the best knowledge of Xxxx and the Company the Company and its Subsidiaries did
not have any Material liability of any kind or manner, either direct, accrued,
absolute or otherwise, that is not reflected or disclosed in the Financial
Statements. The accounts receivable of the Company and its Subsidiaries at
December 31, 1997, shown on the Financial Statements, arose from valid
transactions in the ordinary course of business of the Company and its
Subsidiaries and have been collected in full or are believed to be collectible
at their full aggregate amounts (net of allowance for doubtful accounts), except
to the extent the uncollectibility of any such accounts, individually or in the
aggregate, would not have a Material adverse effect on the Company Condition.
Accounts receivable created by the Company and its Subsidiaries after December
31, 1997, and through the Effective Time have arisen or will arise only from
valid transactions in the ordinary course of business of the Company and its
Subsidiaries.
2.7 ABSENCE OF MATERIAL ADVERSE CHANGES. Except as set forth on SCHEDULE ,
since December 31, 1997, there has not been (a) any Material adverse change in
the Company Condition, (b) any declaration, setting aside or payment of any
dividend (whether in cash, stock or property) with respect to any of the
Company's capital stock, (c) (i) any granting by the Company or any Subsidiary
to any executive officer of the Company or any Subsidiary of any increase in
compensation, (ii) any granting by the Company or any Subsidiary to any such
executive officer of the Company or any Subsidiary of any increase in severance
or termination pay, or (iii) any entry by the Company or any Subsidiary into any
employment, severance or termination agreement with any such executive officer,
(d) any damage, destruction or loss, whether or not covered by insurance, that
has or could have a Material adverse change on the Company Condition, (e) any
change in accounting methods, principles or practices by the Company or any
Subsidiary Materially affecting the Company's assets, liabilities or business,
(f) any incurrence by the Company or any Subsidiary of or entry into any
Material liability, mortgage, lien or transaction, including capital
expenditures or capital financing (or assumption or guarantee thereof), (g) any
condition, event or occurrence which, individually or in the aggregate, could
reasonably be expected to prevent, hinder or Materially delay the ability of the
Company to consummate the transactions contemplated by this Agreement or (h) any
agreement, in writing or otherwise, or any corporate action with respect to the
foregoing. Except as set forth on SCHEDULE , the Company is not aware of any
event or
8
condition that has occurred since December 31, 1997 or now exists that would be
likely to result in a Material adverse change in the Company Condition.
2.8 COMPENSATION AND BENEFIT PLANS.
(a) SCHEDULE contains a complete and correct list of (1) all
employee welfare benefit and employee pension benefit plans as defined in
sections 3(1) and 3(2) of ERISA, including plans that provide retirement income
or result in a deferral of income by employees for periods extending to
termination of employment or beyond, and plans that provide medical, surgical,
or hospital care benefits or benefits in the event of sickness, accident,
disability, death or unemployment ("PLANS") and (2) all other Material employee
benefit agreements or arrangements that are not Plans ("BENEFIT ARRANGEMENTS"),
including without limitation deferred compensation plans, incentive plans, bonus
plans or arrangements, stock option plans, stock purchase plans, stock award
plans, golden parachute agreements, severance pay plans, dependent care plans,
cafeteria plans, employee assistance programs, scholarship programs, employment
contracts, retention incentive agreements, noncompetition agreements, consulting
agreements, confidentiality agreements, vacation policies, and other similar
plans, agreements and arrangements that are currently in effect or were
maintained within three years of the date of this Agreement, or have been
approved before this date but are not yet effective, for the benefit of
directors, officers, employees or former employees (or their beneficiaries) of
the Company (Plans and Benefit Arrangements being collectively referred to as
"DESIGNATED PLANS").
(b) With respect to each Designated Plan, Xxxx or the Company has
heretofore delivered to OYO complete and correct copies of each of the following
documents, where applicable:
(i) the Designated Plan and any amendments thereto (or if the
Designated Plan is not a written agreement, a description thereof);
(ii) the three most recent annual Form 5500 reports filed with
the Internal Revenue Service, or all such Forms 5500 filed since inception
of such Designated Plan;
(iii) a written summary of the legal basis for an exemption
from the obligation to file annual Form 5500 reports;
(iv) the three most recent annual Form 990 and 1041 reports
filed with the Internal Revenue Service;
(v) the most recent summary plan description and summaries of
material modifications thereto;
(vi) the trust agreement, group annuity contract or other
funding agreement that provides for the funding of the Designated Plan;
(vii) the most recent financial statement;
(viii) the most recent determination letter received from the
Internal Revenue Service with respect to each Designated Plan that is
intended to qualify under section 401 of the Code; and
(ix) any agreement pursuant to which the Company is obligated
to indemnify any person.
9
(c) Neither the Company nor any entity (whether or not incorporated)
that was at any time during the six year period ending on the date of this
Agreement treated as a single employer together with the Company under section
414 of the Code has ever maintained, had an obligation to contribute to,
contributed to, or incurred any liability with respect to, a pension plan that
is or was subject to Title IV of ERISA or section 412 of the Code.
(d) Neither the Company nor any other entity has engaged in a
transaction that could result in the imposition upon the Company of a civil
penalty under section 409 or 502(i) of ERISA or a tax under section 4972, 4975,
4976, 4980B or 6652 of the Code with respect to any Designated Plan, and no fact
or event exists that could give rise to any such liability.
(e) Each Designated Plan has been operated and administered in all
respects in accordance with its terms and applicable laws, including but not
limited to ERISA and the Code.
(f) The terms of all Designated Plans that are intended to qualify
under section 401(a) of the Code (i) have been determined by the IRS to qualify
under section 401(a) of the Code or (ii) the applicable remedial amendment
periods under section 401(b) of the Code will not have expired prior to the
Effective Date. No event or circumstance has occurred that could cause the IRS
to disqualify any Designated Plan that is intended to qualify under section
401(a) of the Code. Each Designated Plan that is intended to satisfy the
requirements of section 501(c)(9) of the Code has satisfied such requirements.
(g) No Designated Plan that provides medical, surgical,
hospitalization, or life insurance benefits (whether or not insured by a third
party) for employees or former employees of the Company for periods extending
beyond their retirements or other terminations of service, other than (i)
coverage mandated by applicable law, (ii) death benefits under any pension
benefit plan as defined in section 3(1) of ERISA, or (iii) benefits the full
cost of which is borne by the current or former employee (or his beneficiary).
(h) The consummation of the transactions contemplated by this
Agreement, either alone or in conjunction with another event (such as a
termination of employment), will not (i) entitle any current or former employee
or officer of the Company, to severance pay, or any other payment under a
Designated Plan, (ii) accelerate the time of payment or vesting of benefits
under a Designated Plan, or (iii) increase the amount of compensation due any
such employee or officer.
(i) There is no litigation, action, proceeding, audit, examination
or claim pending, or to Xxxx'x knowledge, threatened or contemplated relating to
any Designated Plan (other than routine claims for benefits).
2.9 PROPERTIES, TITLE AND RELATED MATTERS.
(a) The Company and its Subsidiaries have good and marketable title
to all of their respective personal property free and clear of all Encumbrances,
except for Permitted Encumbrances and those Encumbrances set forth on SCHEDULE .
The Encumbrances set forth on SCHEDULE relate solely to the indebtedness listed
on SCHEDULE .
(b) The Company and its Subsidiaries have good title to all the
leasehold estates pursuant to which all of the personal property leased by them
is leased, free and clear and all Encumbrances, except for Permitted
Encumbrances and those Encumbrances set forth on SCHEDULE . Neither the Company
nor any Subsidiary has breached any provision of or is in default (and no event
or circumstance exists that with notice, or the lapse of time or
10
both, would constitute a default by the Company or any Subsidiary) under the
terms of any lease or other agreement pursuant to which the personal property
leased by the Company or any Subsidiary is leased, except for a default or
breach that would not have a Material adverse effect on the Company Condition.
To the best knowledge of the Company and Xxxx, all of such leases or other
agreements are in full force and effect. There are no pending or, to the best
knowledge of the Company and Xxxx, threatened disputes with respect to any lease
or other agreement pursuant to which the personal property leased by the Company
or any Subsidiary is leased and, to the best knowledge of the Company and Xxxx,
the lessor thereunder has not breached any provision of and is not in default
(and no event or circumstance exists that with notice, or the lapse or time or
both, would constitute a default by the lessor) under the terms of any such
lease or other agreement.
(c) There is set forth on SCHEDULE the legal description of all real
property owned by the Company or any Subsidiary. The Company or its Subsidiaries
has good and indefeasible title to all of the real property set forth on
SCHEDULE , in fee simple absolute, free and clear of all Encumbrances, except
for Permitted Encumbrances and those Encumbrances set forth on SCHEDULE . The
Encumbrances set forth on SCHEDULE relate solely to the indebtedness listed on
SCHEDULE No parcel of the real property set forth on SCHEDULE is subject to any
governmental decree or is being condemned, expropriated or otherwise taken by
any public authority, with or without payment of compensation therefor, and, to
the best knowledge of the Company and Xxxx, no such condemnation, expropriation
or taking has been proposed.
(d) There is set forth on SCHEDULE a description of all real
property leased by the Company or any Subsidiary. The Company and its
Subsidiaries have good title to all the leasehold estates pursuant to which the
real property set forth on SCHEDULE is leased, free and clear of all
Encumbrances, except for Permitted Encumbrances. To the best knowledge of Xxxx
and the Company, neither the Company nor any Subsidiary has breached any
provision of or is in default (and no event or circumstance exists that with
notice, or the lapse of time or both, would constitute a default by the Company
or any Subsidiary) under the terms of any lease or other agreement pursuant to
which the real property set forth on SCHEDULE is leased. To the best knowledge
of the Company and Xxxx, all of such leases or other agreements are in full
force and effect. There are no pending or, to the best knowledge of the Company
or Xxxx, threatened disputes with respect to any lease or other agreement
pursuant to which the real property set forth on SCHEDULE is leased and, to the
best knowledge of the Company and Xxxx, the lessor thereunder has not breached
any provision of and is not in default (and no event or circumstance exists that
with notice, or the lapse of time or both, would constitute a default by the
lessor) under the terms of any such lease or other agreement.
2.10 LEGAL PROCEEDINGS.
(a) There is no legal, judicial, administrative, governmental,
arbitration or other action or proceeding or governmental investigation pending,
or except as set out on SCHEDULE , threatened against the Company, any
Subsidiary or any director, officer or employee of the Company or any
Subsidiary, or Materially affecting any of its Assets or that would prevent,
hinder or Materially delay the ability of the Company to consummate the
transactions contemplated by this Agreement (and the Company is not aware of any
basis for any such action, proceeding or investigation), nor is there any
judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against the Company or any Subsidiary having, or which,
insofar as reasonably can be foreseen, in the future could have, any such
Material effect. The Company has fully accrued for any payments that it believes
are reasonably likely to be made in connection with such matters. Neither the
Company nor any Subsidiary is in violation of or default under any laws,
ordinances,
11
regulations, judgments, injunctions, orders or decrees (including any
immigration laws or regulations) of any court or other Governmental Entity
applicable to its business, except where such violation or default would not
have a Material adverse effect on the Company Condition. There are no judgments,
orders, injunctions or decrees of any Governmental Entity in which the Company
or any Subsidiary is a named party or any of its Assets are identified and
subject.
(b) There is no legal, judicial, administrative, governmental,
arbitration or other action or proceeding pending or, to the best knowledge of
Xxxx, threatened against Xxxx that could reasonably be expected to affect the
ability of Xxxx to perform Xxxx'x obligations under this Agreement.
2.11 INSURANCE. SCHEDULE sets forth all existing insurance policies held
by the Company or any of its Subsidiaries relating to the business, Assets,
employees or agents of the Company and its Subsidiaries. Each such policy is in
full force and effect, is with responsible insurance carriers and is in an
amount and scope customary for Persons engaged in businesses and having assets
similar to those of the Company. There is no dispute with respect to such
policies and all claims arising from events or circumstances occurring prior to
the date hereof have been paid in full or adequate reserves therefor are
recorded in the Financial Statements. There have been no retroactive premium
adjustments for any period ended on or before December 31, 1997, under any
worker's compensation policy or any other insurance policies of the Company or
any of its Subsidiaries. None of such policies will terminate as a result of the
transactions contemplated by this Agreement.
2.12 RECORDS. The Company and its Subsidiaries have records that
accurately reflect their respective transactions in all Material respects and
has accounting controls sufficient to insure that such transactions are in all
Material respects (a) executed in accordance with its management's general and
specific authorization and (b) recorded in conformity with good business
practices.
2.13 MATERIAL CONTRACTS.
(a) Except as set forth in SCHEDULE and except for this Agreement,
neither the Company nor any Subsidiary is a party to or is bound by:
(i) any agreement, indenture or other instrument which
contains restrictions with respect to the payment of dividends or any
other distribution in respect of its capital stock or the purchase,
redemption or other acquisition of capital stock;
(ii) any agreement, contract or commitment relating to any
expenditure or a series of related expenditures in excess of $30,000;
(iii) any outstanding loan or advance by the Company or any
Subsidiary to, or investment by the Company or any Subsidiary in, any
Person, or any agreement, contract, commitment or understanding relating
to the making of any such loan, advance or investment (excluding trade
receivables arising in the ordinary course of business);
(iv) any contract, agreement, indenture, note or other
instrument relating to (A) the borrowing of money by the Company or any
Subsidiary or the granting of any Encumbrance or (B) any guarantee or
other contingent liability (identifying the primary contract or agreement
to which such guarantee or contingent liability relates or the agreement
pursuant to which such guarantee was delivered) in respect of any
indebtedness, commitment, liability or obligation of any Person (other
12
than the endorsement of negotiable instruments for deposit or collection
in the ordinary course of business);
(v) any management service, consulting or any other similar
type of contract or agreement;
(vi) any agreement, contract or commitment limiting the
freedom of the Company, any Subsidiary or any Affiliate of the Company to
engage in any line of business, to own, operate, sell, transfer, pledge or
otherwise dispose of or encumber any Asset or to compete with any Person
or to engage in any business or activity in any geographic area;
(vii) any agreement, lease, contract or commitment or series
of related agreements, leases, contracts or commitments not entered into
in the ordinary course of business that is not cancelable without penalty
to the Company or any Subsidiary within 30 days;
(viii) any agreement, contract or commitment requiring the
payment for goods or services whether or not such goods or services are
actually provided or the provision of goods or services at a price less
than the Company's or any of its Subsidiaries' cost of producing such
goods or providing such services;
(ix) any agreement or contract obligating the Company or any
Subsidiary or that would obligate or require any subsequent owner of the
business currently conducted by the Company or any Subsidiary or any of
the Assets to provide for indemnification or contribution with respect to
any matter, other than customary indemnification obligations contained in
master service contracts and sales and servicing agreements entered into
in the ordinary course of business;
(x) any sales, distributorship or similar agreement relating
to the products sold or services provided by the Company or any
Subsidiary;
(xi) any license, royalty or similar agreement; or
(xii) any agreement, contract or commitment that the Company
expects, or with the exercise of reasonable business judgment would
expect, to have a Material adverse effect on the Company Condition.
SCHEDULE sets forth with respect to each mortgage, security agreement, letter of
credit or guaranty, a cross reference to the principal agreement, instrument or
document referred to in SCHEDULE pursuant to which such mortgage, security
agreement, letter of credit or guaranty was executed or to which such mortgage,
security agreement, letter of credit or guaranty relates. Except as set forth in
SCHEDULE , neither the Company nor any Subsidiary is a party to or bound by a
Material contract, lease or agreement.
(b) SCHEDULE sets forth (i) the aggregate outstanding principal as
of the date hereof, with respect to each loan, credit or other agreement,
instrument or document listed in SCHEDULE relating to the borrowing of money by
the Company or any Subsidiary and (ii) the amount of available borrowings as of
the date hereof, with respect to each such loan, credit or other agreement,
instrument or document.
(c) None of the Company, any Subsidiary or, to the best knowledge of
the Company and Xxxx, the other contracting parties thereto have breached any
provision of or are in default (and no event or circumstance exists, to the best
knowledge of the Company and
13
Xxxx with respect to other parties, that with notice, or the lapse of time or
both, would constitute a default) under the terms of any agreement listed in
SCHEDULE . To the best knowledge of Xxxx and Company, all contracts, agreements,
indentures, leases and other instruments listed in SCHEDULE are in full force
and effect. There are no pending or, to the best knowledge of the Company and
Xxxx, threatened disputes with respect to the contracts, agreements, indentures,
leases or instruments described in SCHEDULE . To the best knowledge of Xxxx and
Company, neither the Company nor any Subsidiary is obligated to pay any
liquidated damages under any of the contracts, agreements, indentures, leases or
other instruments described in SCHEDULE and the Company is not aware of any
facts or circumstances that could reasonably be expected to result in an
obligation of the Company or any Subsidiary to pay any such liquidated damages.
2.14 BROKERAGE. No investment banker, broker or finder has acted directly
or indirectly for the Company, any Subsidiary or Xxxx in connection with this
Agreement or the transactions contemplated hereby. No investment banker, broker,
finder or other Person is entitled to any brokerage or finder's fee or similar
commission in respect thereof based in any way on agreements, arrangements or
understandings made by or on behalf of the Company, any Subsidiary or Xxxx.
2.15 INTELLECTUAL PROPERTY. The Company or a Subsidiary owns, or is
licensed or otherwise has the right to use all Intellectual Property that is
Material to the condition (financial or otherwise) or conduct of the business
and operations of the Company and its Subsidiaries (including U.S. Patents No.
5,404,339 and 5,709,497). To the best knowledge of the Company and Xxxx, (a) the
use of Intellectual Property by the Company and its Subsidiaries does not
infringe on the rights of any person, subject to such claims and infringements
as do not, in the aggregate, give rise to any liability on the part of the
Company or any Subsidiary which could have a Material adverse effect on the
Company Condition and (b) no Person is infringing on any right of the Company or
any Subsidiary with respect to any Intellectual Property owned or used by the
Company or any Subsidiary (including U.S. Patents No. 5,404,339 and 5,709,497).
No claims are pending or, to the best knowledge of Xxxx and the Company,
threatened that the Company or any Subsidiary is infringing or otherwise
adversely affecting the rights of any person with regard to any Intellectual
Property. Except as set forth in SCHEDULE , all of the Material Intellectual
Property owned or used by the Company or any Subsidiary (including U.S. Patents
No. 5,404,339 and 5,709,497) is owned by the Company or a wholly owned
Subsidiary free and clear of all Encumbrances (including any obligation to pay
any royalties or other sums) and was not misappropriated from any Person. The
consummation of the transactions contemplated by this Agreement will not result
in the loss of any Intellectual Property that is Material the Company. To the
best knowledge of Xxxx and the Company and its Subsidiaries have taken all
reasonable and appropriate actions in the best judgment of the Company and its
Subsidiaries to protect its trade secrets. There are no licensees or
sublicensees of the Intellectual Property owned or used by the Company. Neither
the Company nor any Subsidiary has given any indemnification for patent,
trademark, service xxxx or copyright infringements to any Person.
2.16 ENVIRONMENTAL MATTERS. Except as set forth in SCHEDULE to the best
knowledge of Xxxx and the Company:
(a) the Company and each of its Subsidiaries has at all times
operated in compliance with all applicable limitations, restrictions,
conditions, standards, prohibitions, requirements and obligations of
Environmental Laws and related orders of any court or other Governmental Entity,
except where the failure to so operate in compliance would not have a Material
adverse effect on the Company Condition;
14
(b) there are no existing, pending or, to the best knowledge of the
Company and Xxxx, threatened actions, suits, claims, investigations, inquiries
or proceedings by or before any court or any other Governmental Entity directed
against the Company, any Subsidiary or any of their respective Assets which
pertain or relate to (i) any remedial obligations under any applicable
Environmental Law, (ii) violations of any Environmental Law, (iii) personal
injury or property damage claims relating to the release of Waste Materials or
(iv) response, removal or remedial costs under CERCLA or any similar state law;
(c) all notices, permits, licenses or similar authorizations
required to be obtained or filed by the Company or any Subsidiary under all
applicable Environmental Laws in connection with its current and previous
operation or use of the Assets, any other assets or properties currently or
previously leased or owned by the Company or any Subsidiary or the current and
previous conduct of its business have been duly obtained or filed and are in
full force and effect, except where the failure to do so would not have a
Material adverse effect on the Company Condition;
(d) neither the Company nor any Subsidiary has received notice that
any permit, license or similar authorization is to be revoked or suspended by
any Governmental Entity;
(e) neither the Company nor any Subsidiary owns or operates any
underground storage tanks;
(f) no portion of the Assets or any other assets or properties
currently or previously leased or owned by the Company or any of its
Subsidiaries is part of a Superfund site under CERCLA or any similar ranking or
listing under any similar state law;
(g) all Waste Materials generated by the Company or any Subsidiary
that are stored or that require treatment or disposal have been transported,
stored, treated and disposed of by carriers, and by storage, treatment and
disposal facilities authorized and maintaining valid permits under all
applicable Environmental Laws;
(h) no Person has disposed or released any Waste Materials on or
under the Assets or any other asset or property currently or previously leased
or owned by the Company or any Subsidiary and neither the Company nor any
Subsidiary has disposed or released Waste Materials on or under the Assets or
any other asset or property currently or previously leased or owned by the
Company or any Subsidiary, except in compliance with all applicable
Environmental Laws; and
(i) no facts or circumstances exist that could reasonably be
expected to result in any Material liability to any Person with respect to the
current or past business and operations of the Company, any Subsidiary, the
Assets or any other assets or properties currently or previously leased or owned
by the Company or any Subsidiary in connection with (i) any release,
transportation or disposal of any Waste Materials, hazardous substance or solid
waste or (ii) action taken or omitted that was not in full compliance with or
was in violation of any applicable Environmental Law.
2.17 GOVERNMENTAL LICENSES AND PERMITS. The Company and each of its
Subsidiaries has all Material federal, state, local and foreign governmental
licenses and permits necessary to the conduct of its operations of business as
currently conducted, such licenses and permits are in full force and effect, no
Material violations are or have been recorded in respect of any thereof and no
proceeding is pending or, to the best knowledge of the Company and Xxxx,
threatened to revoke or limit any thereof. SCHEDULE contains a true, complete
and accurate list of (a) all such Material governmental licenses and permits,
(b) all Material
15
consents, orders, decrees and other compliance agreements under which the
Company or any Subsidiary is operating or bound, copies of all of which have
been furnished to OYO and Sub, and (c) all Material governmental licenses and
permits applied for but not yet received by the Company or any Subsidiary.
Neither the Company nor any Subsidiary has received or is aware of any reports
of inspections under the United States Occupational Safety and Health Act, or
under any other applicable federal, state or local health and safety laws and
regulations relating to the Company, any Subsidiary, the Assets or the operation
of the Company's or any of its Subsidiaries' business. As of the date hereof,
there are no safety, health, anti-competitive or discrimination claims that have
been made or are pending or, to the best knowledge of the Company and Xxxx, that
are threatened relating to the business or employment practices of the Company
or any of its Subsidiaries.
2.18 TAXES AND TAX MATTERS. Except as set forth in SCHEDULE :
(a) all returns (including income, franchise, sales and use,
unemployment compensation, excise, severance, property, gross receipts, profits,
payroll and withholding tax returns and information returns) and reports
(collectively, the "TAX RETURNS") of or relating to any foreign, federal, state
or local tax, assessment, levy, impost, duty, withholding, estimated payment or
other similar governmental charge (collectively, together with any penalties,
additions to Tax, fines, interest and similar charges thereon or related
thereto, the "TAXES") that are required to be filed on or before the Effective
Date, subject to any allowable extension periods, for, by, on behalf of or with
respect to the Company or any of its Subsidiaries, including, but not limited
to, those relating to the income, business, operations or property of the
Company or any of its Subsidiaries (whether on a separate, consolidated,
affiliated, combined, unitary or any other basis), have been or will be timely
filed with the appropriate foreign, federal, state and local authorities, and
all Taxes shown to be due and payable on such Tax Returns or related to such Tax
Returns have been or will be paid in full on or before the Effective Date,
except where the failure to file Tax Returns and to pay Taxes would not have a
Material adverse effect on the Company Condition;
(b) all such Tax Returns and the information and data contained
therein have been or will be properly and accurately compiled and completed,
fairly present or will fairly present the information purported to be shown
therein, and reflect or will reflect all liabilities for Taxes for the periods
covered by such Tax Returns;
(c) none of such Tax Returns are under audit or examination by any
foreign, federal, state or local authority and there are no agreements, waivers
or other arrangements providing for an extension of time with respect to the
assessment or collection of any Tax or deficiency of any nature against the
Company or any Subsidiary or with respect to any such Tax Return, or any suits
or other actions, proceedings, investigations or claims now pending or, to the
best knowledge of the Company and Xxxx, threatened against the Company or any
Subsidiary with respect to any Tax, or any matters under discussion with any
foreign, federal, state or local authority relating to any Tax, or any claims
for any additional Tax asserted by any such authority;
(d) all Taxes assessed and due and owing from or against the Company
or any Subsidiary on or before the Effective Date (including, but not limited
to, ad valorem Taxes relating to any property of the Company or any Subsidiary)
have been or will be timely paid in full on or before the Effective Date;
(e) all withholding Tax, Tax deposit and estimated Tax payment
requirements imposed on the Company or any Subsidiary for any and all periods
ending on or before the Effective Date, or through and including the Effective
Date for periods that have not ended on or before the Effective Date, have been
or will be timely satisfied in full on or
16
before the Effective Date or reserves adequate for the payment of such
withholding, deposit and estimated Taxes have been or will be established in the
financial statements of the Company on or before the Effective Date; and
(f) the Financial Statements reflect and include adequate charges,
accruals, reserves and provisions for the payment in full of any and all Taxes
payable with respect to any and all periods ending on or before the respective
dates thereof.
(g) Xxxx has no present plan or intention to engage in a sale,
exchange, transfer, reduction of risk of ownership or other direct or indirect
disposition of (i) shares of OYO Common Stock to be issued to Xxxx in the
Merger, which shares have an aggregate fair market value, as of the Effective
Time, in excess of 50% of the aggregate fair market value, immediately prior to
the Effective Time, of the outstanding Common Stock or (ii) more than 50% of the
shares of OYO Common Stock to be received by Xxxx in the Merger.
(h) Other than sales for a fair consideration and other matters in
the ordinary course of its business and the events listed on SCHEDULE , the
Company has made (and will make) no transfer of any of its assets in
contemplation of the Merger or during the period ending at the Effective Time
and beginning with the commencement of negotiations (whether formal or informal)
with OYO regarding the Merger (or any other form of disposition of the assets or
stock of the Company other than in the ordinary course of business). For the
purposes of this Section, a transfer of assets includes any distribution of
assets with respect to stock or in redemption of stock.
(i) Pursuant to the Merger, at least 90% of the fair market value of
the net assets and at least 70% of the fair market value of the gross assets
held by the Company immediately prior to the Merger will continue to be held by
the Surviving Corporation immediately subsequent to the Merger.
2.19 LABOR MATTERS. There are no collective bargaining or other labor
union agreements to which the Company or any Subsidiary is a party or by which
it is bound. There are no labor disputes to which the Company or any Subsidiary
is a party. There are no strikes, slowdowns or picketing against the Company or
any Subsidiary (or any supplier of goods or services to the Company or any
Subsidiary) pending or, to the best knowledge of the Company and Xxxx,
threatened. Neither the Company nor any Subsidiary has received notice from any
union or employees setting forth demands for representation, elections or for
present or future changes in wages, terms of employment or working conditions.
2.20 WARRANTIES AND PRODUCT LIABILITY.
(a) Except for warranties implied by law, neither the Company nor
any Subsidiary has given or made any warranties in connection with the sale or
rental of goods or services, including warranties covering the customer's
consequential damages. The Company is not aware of any state of facts or the
occurrence of any event forming the basis of any present claim in an amount in
excess of $10,000 for all such claims against the Company or any Subsidiary with
respect to warranties relating to products manufactured, sold or distributed by
the Company or any Subsidiary or services performed by or on behalf of the
Company or any Subsidiary.
(b) There is no state of facts or any event forming the basis of any
present claim against the Company or any Subsidiary not fully covered by
insurance, except for deductibles and self-insurance retentions, for personal
injury or property damage alleged to be caused by products shipped or services
rendered by or on behalf of the Company or any
17
Subsidiary, other than matters arising in the ordinary course of business of the
Company where any such claim would not have a Material adverse effect on the
Company Condition.
(c) It is understood and agreed that product warranties honored
after the Closing Date in the ordinary course of business shall not impose any
indemnification or other liability on Xxxx or affect calculation of the
Consideration).
2.21 NO MISLEADING STATEMENTS. This Agreement, the schedules hereto and
the information referred to herein, when taken as a whole, do not include any
untrue statement of a Material fact and do not omit to state any Material fact
necessary to make the statements contained herein or therein not misleading.
2.22 SECURITIES LAW MATTERS.
(a) Xxxx recognizes and understands that the OYO Common Stock to be
issued to him pursuant to the Merger (the "SECURITIES") will not be registered
under the Securities Act, or under the securities laws of any state (the
"SECURITIES LAWS"). The Securities are not being so registered in reliance upon
exemptions from the Securities Act and the Securities Laws which are predicated,
in part, on the representations, warranties and agreements of Xxxx contained
herein.
(b) Xxxx represents and warrants that (i) he has such knowledge and
experience in financial and business matters that he is capable of evaluating
the merits and risks of an investment in the OYO Common Stock and the
suitability thereof as an investment for him, (ii) Xxxx is an "accredited
investor" within the meaning of Regulation D promulgated by the Commission
pursuant to the Securities Act, (iii) the OYO Common Stock to be acquired by him
in connection with the Merger will be acquired solely for investment and not
with a view toward resale or redistribution in violation of the Securities Laws,
(iv) his residence and domicile is in the State of Texas and (v) in connection
with the transactions contemplated hereby, no assurances have been made
concerning the future results of the Company or OYO or as to the value of the
OYO Common Stock. Xxxx understands that none of OYO, Sub or the Company is under
any obligation to file a registration statement or to take any other action
under the securities laws with respect to the Securities.
(c) Xxxx has consulted with his own counsel in regard to the
Securities Laws and is fully aware (i) of the circumstances under which he is
required to hold the Securities, (ii) of the limitations on the transfer or
disposition of the Securities, (iii) that the Securities must be held
indefinitely unless the transfer thereof is registered under the Securities Laws
or an exemption from registration is available and (iv) that no exemption from
registration is likely to become available for at least one year from the date
of acquisition of the Securities. Xxxx has been advised by his counsel as to the
provisions of Rules 144 and 145 as promulgated by the Commission under the
Securities Act and has been advised of the applicable limitations thereof. Xxxx
acknowledges that OYO, Sub and the Company are relying upon the truth and
accuracy of the representations and warranties made by Xxxx in this Section in
consummating the transactions contemplated by this Agreement without registering
the Securities under the Securities Laws.
(d) Xxxx has been furnished with the SEC Documents. OYO and Sub have
made available to Xxxx the opportunity to ask questions and receive answers
concerning the terms and conditions of the transactions contemplated by this
Agreement and to obtain any additional information which they possess or could
reasonably acquire for the purpose of verifying the accuracy of information
furnished to Xxxx as set forth herein or for the purpose of considering the
transactions contemplated hereby. OYO has offered to make available to
18
Xxxx upon request at any time all exhibits filed by OYO with the Commission as
part of any of the reports filed therewith.
(e) Xxxx agrees that the certificates representing his OYO Common
Stock to be acquired pursuant to the Merger will be imprinted with the following
legend, the terms of which are specifically agreed to:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OR THE SECURITIES LAWS OF ANY STATE, IN RELIANCE UPON EXEMPTIONS FROM
REGISTRATION REQUIREMENTS. WITHOUT SUCH REGISTRATION, SUCH SHARES MAY NOT
BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED, EXCEPT UPON
DELIVERY TO THE COMPANY OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY
TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED FOR SUCH SALE, PLEDGE,
HYPOTHECATION OR TRANSFER OR THE SUBMISSION TO THE COMPANY OF SUCH OTHER
EVIDENCE AS MAY BE SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH
SALE, PLEDGE, HYPOTHECATION OR TRANSFER SHALL NOT BE IN VIOLATION OF THE
SECURITIES ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS OR ANY RULE OR
REGULATION PROMULGATED THEREUNDER.
Xxxx understands and agrees that appropriate stop transfer notations will be
placed in the records of OYO and with its transfer agents in respect of the
Securities which are to be issued to him in the Merger.
2.23 INDEBTEDNESS AND AGREEMENTS. Immediately subsequent to the Effective
Time, the Surviving Corporation will have no indebtedness outstanding that is
payable to Xxxx or any of his Affiliates, except for benefits pursuant to
Benefit Plans listed on the schedules hereto. Immediately subsequent to the
Effective Time, except for this Agreement, there will be no agreements,
contracts, leases, arrangements or other understandings (either written or oral)
between Xxxx and the Surviving Corporation, except for benefits pursuant to
Benefit Plans listed on the schedules hereto.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF OYO AND SUB
OYO and Sub hereby jointly and severally represent and warrant to and
covenant and agree with the Company as follows:
3.1 CORPORATE ORGANIZATION. OYO is a corporation duly organized, validly
existing and in good standing under the laws of Delaware and Sub is a
corporation duly organized, validly existing and in good standing under the laws
of Texas. Each of OYO and Sub has all requisite corporate power and authority to
carry on its business as it is now being conducted and to execute, deliver and
perform this Agreement and to consummate the transactions contemplated hereby.
3.2 DUE AUTHORIZATION, EXECUTION AND DELIVERY; EFFECT OF AGREEMENT.
(a) The execution, delivery and performance by OYO and Sub of this
Agreement and the consummation by OYO and Sub of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of OYO and Sub. This Agreement has been duly and validly executed and delivered
by OYO and Sub and constitutes the legal, valid and binding obligation of OYO
and Sub, enforceable against each of them in accordance with its terms, except
to the extent that such enforceability (a) may be limited by
19
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to creditors' rights generally and (b) is subject to general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law). The Board of Directors of Sub has adopted a
resolution directing that this Agreement and the Merger be submitted to the sole
shareholder of Sub for its approval and unconditionally recommending that this
Agreement and the Merger be approved by the sole shareholder of Sub.
(b) The consummation by OYO and Sub of the transactions contemplated
hereby will not violate any provision of, or constitute a default under, any
contract or other agreement to which OYO or Sub is a party or by which either of
them is bound, or conflict with its charter or by-laws, other than violations,
defaults or conflicts that would not materially and adversely affect the ability
of OYO or Sub to consummate the transactions contemplated by this Agreement.
3.3 CONSENTS. Except for the filing and recordation of Articles of Merger
as required by the TBCA and those consents, approvals, authorizations,
exemptions and filings, the failure to obtain or make would not materially and
adversely affect the ability of OYO and Sub to consummate the transactions
contemplated by this Agreement, there is no consent, approval clearance, waiver,
order or authorization of, or exemption by, or filing with, any Governmental
Entity required in connection with the execution, delivery or performance by OYO
and Sub of this Agreement or the taking of any other action contemplated hereby
that has not heretofore been made and obtained. The consummation of the
transaction (i) does not conflict with or violate any permit, concession, grant,
franchise, statute, law, rule or regulation of any Governmental Entity or any
order, judgment, award or decree of any court or other Governmental Entity to
which Sub is subject or any of its assets is bound, and (ii) does not conflict
with, or result in any breach of, or default or loss of any right under (or an
event or circumstance that, with notice or the lapse of time, or both, would
result in a default), or the creation of an Encumbrance pursuant to, or cause or
permit the acceleration prior to maturity or "put" right with respect to, any
obligation under, any indenture, mortgage, deed of trust, lease, loan agreement
or other agreement or instrument to which Sub is a party or to which any of the
assets are subject.
3.4 AUTHORIZATION FOR OYO COMMON STOCK. OYO has taken all necessary action
to permit it to issue the number of shares of OYO Common Stock required to be
issued pursuant to the terms of this Agreement. The shares of OYO Common Stock
issued pursuant to the terms of this Agreement will, when issued, be validly
issued, fully paid and nonassessable and not subject to preemptive rights.
3.5 BROKERAGE. No investment banker, broker, finder or other Person is
entitled to any brokerage or finder's fee or similar commission in respect of
this Agreement or the transactions contemplated hereby based in any way on
agreements, arrangements or understandings made by or on behalf of Sub or any
Affiliate of Sub.
3.6 SEC DOCUMENTS. OYO has provided to the Company and Xxxx a copy of the
Prospectus, dated November 20, 1997, of OYO filed by OYO with the Commission
pursuant to Rule 424(b) under the Securities Act and copies of all documents
filed by OYO with the Commission since the filing of such Prospectus, (such
documents collectively referred to herein as the "SEC DOCUMENTS"). As of their
respective dates, the SEC Documents complied in all material respects with the
applicable requirements of the Securities Act and the Securities Exchange Act of
1934, and the rules and regulations of the Commission promulgated thereunder
applicable to such SEC Documents, and none of the SEC Documents contained any
untrue statement of a material fact or omitted 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. The
consolidated financial statements of OYO
20
included in the SEC Documents comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the Commission with respect thereto, have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto) and
fairly present the consolidated financial position of OYO and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended.
3.7 MATTERS RELATED TO SUB. Pursuant to the Merger, 100% of the net assets
of Sub held immediately prior to the Merger will be held by the Surviving
Corporation immediately subsequent to the Merger.
3.8 SOPHISTICATION OF OYO.
(a) Oyo and Sub acknowledge that (i) they have had the opportunity
to visit with Xxxx and Company and meet with the respective officers and other
representatives of Company to discuss the business and the assets, liabilities,
financial condition, cash flow and operations of Company, and (ii), to the
actual knowledge of OYO and Sub, all materials and information requested by Oyo
and Sub have been provided to Oyo and Sub to their reasonable satisfaction.
(b) Oyo and Sub acknowledge that they have made their own
independent examination, investigation, analysis and evaluation of Company,
including their own estimate of the value of Company.
(c) Nothing in this Section nor any investigation, examination,
analysis or evaluation of Company made by or on behalf of Oyo and Sub shall in
any way modify any representation or warranty made by Xxxx and Company in
Article 2 hereof, or elsewhere in this Agreement or the Disclosure Schedule, or
release or discharge Xxxx and Company from their representations under the terms
of this Agreement.
ARTICLE 4
COVENANTS AND AGREEMENTS
The parties covenant and agree as follows:
4.1 SHAREHOLDER APPROVAL. Each of the Company and Sub shall, in accordance
with the TBCA, submit this Agreement and the Merger to their respective
shareholders for approval. Each of Xxxx and OYO agrees to vote in favor of
approval of this Agreement and the Merger and not to dissent or seek any
appraisal rights on account of the Merger.
4.2 FURTHER ASSURANCES. If at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any further assignments
or assurances in law or otherwise are necessary or desirable to vest, perfect or
confirm, of record or otherwise, in the Surviving Corporation, all rights, title
and interests in all real estate and other property and all privileges, powers
and franchises of the Company and Sub, the Surviving Corporation and its proper
officers and directors, in the name and on behalf of the Company and Sub, shall
execute and deliver all such proper deeds, assignments and assurances in law and
do all things necessary and proper to vest, perfect or confirm title to such
property or rights in the Surviving Corporation and otherwise to carry out the
purpose of this Agreement, and the proper officers and directors of the
Surviving Corporation are fully authorized in the name of the Company or
otherwise to take any and all such action.
21
4.3 RELEASE.
(a) AS OF THE EFFECTIVE TIME, XXXX DOES HEREBY FOR HIMSELF AND HIS
HEIRS, EXECUTORS, ADMINISTRATORS AND LEGAL REPRESENTATIVES REMISE, RELEASE,
ACQUIT AND FOREVER DISCHARGE THE COMPANY AND ITS RESPECTIVE CONTROLLED
AFFILIATES, PARTNERS, OFFICERS, DIRECTORS AND EMPLOYEES, IN THEIR CAPACITIES AS
SUCH, AND SUCCESSORS AND ASSIGNS OF AND FROM ANY AND ALL CLAIMS, DEMANDS,
LIABILITIES, RESPONSIBILITIES, DISPUTES, CAUSES OF ACTION AND OBLIGATIONS OF
EVERY NATURE WHATSOEVER, LIQUIDATED OR UNLIQUIDATED, KNOWN OR UNKNOWN, MATURED
OR UNMATURED, FIXED OR CONTINGENT, WHICH HE NOW HAS, OWNS OR HOLDS OR HAS AT ANY
TIME PREVIOUSLY HAD, OWNED OR HELD AGAINST THE COMPANY, OR SUCH PERSON IN SUCH
CAPACITY, INCLUDING ALL LIABILITIES CREATED AS A RESULT OF THE NEGLIGENCE, GROSS
NEGLIGENCE AND WILLFUL ACTS OF THE COMPANY AND ITS EMPLOYEES AND AGENTS,
EXISTING AS OF THE EFFECTIVE TIME OR RELATING TO ANY MATTER THAT OCCURRED ON OR
PRIOR TO THE EFFECTIVE TIME; PROVIDED, HOWEVER, THAT ANY CLAIMS, LIABILITIES,
DEBTS OR CAUSES OF ACTION THAT MAY ARISE IN CONNECTION WITH THE FAILURE OF ANY
OF THE PARTIES HERETO TO PERFORM ANY OF THEIR OBLIGATIONS (I) HEREUNDER OR UNDER
ANY OTHER AGREEMENT RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY OR (II)
FROM ANY BREACHES BY ANY OF THEM OF THIS AGREEMENT OR ANY OTHER AGREEMENT SHALL
NOT BE RELEASED OR DISCHARGED PURSUANT TO THIS AGREEMENT.
(b) XXXX REPRESENTS AND WARRANTS THAT HE HAS NOT PREVIOUSLY ASSIGNED
OR TRANSFERRED, OR PURPORTED TO ASSIGN OR TRANSFER, TO ANY PERSON OR ENTITY
WHATSOEVER ALL OR ANY PART OF THE CLAIMS, DEMANDS, LIABILITIES,
RESPONSIBILITIES, DISPUTES, CAUSES OF ACTION OR OBLIGATIONS RELEASED HEREIN.
XXXX COVENANTS AND AGREES THAT HE WILL NOT ASSIGN OR TRANSFER TO ANY PERSON OR
ENTITY WHATSOEVER ALL OR ANY PART OF THE CLAIMS, DEMANDS, LIABILITIES,
RESPONSIBILITIES, DISPUTES, CAUSES OF ACTION OR OBLIGATIONS TO BE RELEASED
HEREIN. XXXX REPRESENTS AND WARRANTS THAT HE HAS READ AND UNDERSTANDS ALL OF THE
PROVISIONS OF THIS SECTION AND THAT HE HAS BEEN REPRESENTED BY LEGAL COUNSEL OF
HIS OWN CHOOSING IN CONNECTION WITH THE NEGOTIATION, EXECUTION AND DELIVERY OF
THIS AGREEMENT.
4.4 COVENANTS OF OYO. After the Closing, OYO covenants to cause the
Company to have Xxxx released from all guarantees of any indebtedness of the
Company to the extent that such indebtedness is set forth on SCHEDULE . After
the Closing, OYO covenants to cause the Company to file all Tax Returns relating
to the Company for 1997 on or before the date that such Returns are due, after
giving effect to any extensions for such Tax Returns, which Returns shall take
into account: (i) the adjustments referred to in SCHEDULE 2.18 (to the extent
applicable through December 31, 1997) and (ii) any change of accounting election
required to reflect a proper inventory valuation. Further, OYO covenants not to
file any reports that are inconsistent with reporting or otherwise treating the
Merger as reflected in this Agreement (I.E., a merger under Section 368(a)(1)(A)
and (a)(2)(D) of the Code).
ARTICLE 5
CONDITIONS TO OYO'S AND SUB'S OBLIGATIONS
The obligations of OYO and Sub to consummate the transactions contemplated
by this Agreement shall be subject to the satisfaction (or waiver by OYO and
Sub) on or prior to the Closing of all of the following conditions:
5.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company and Xxxx set forth in this Agreement shall be true and
correct in all respects as of the date when made and at and as of the Closing.
5.2 PERFORMANCE OF COVENANTS AND AGREEMENTS. The Company and its
Subsidiaries shall have duly performed and complied in all material respects
with the covenants, agreements
22
and conditions required by this Agreement to be performed by or complied with by
them prior to or at the Effective Time.
5.3 CONSENTS. Any consent required for the consummation of the Merger
under any agreement, contract, license or other instrument described in any
exhibit hereto or referred to herein, or for the continued enjoyment by the
Surviving Corporation of the benefits of any such agreement, contract, license
or other instrument after the Merger, shall have been obtained and be effective.
5.4 GOVERNMENTAL APPROVALS. All necessary actions or nonactions, waivers,
consents and approvals from Governmental Entities and the making of all
necessary registrations and filings (including filings with Governmental
Entities, if any) and the taking of all reasonable steps as may be necessary to
obtain an approval or waiver from, or to avoid an action or proceeding by, any
Governmental Entity shall have been obtained, made or lapsed and shall be in
full force and effect.
5.5 RESIGNATION OF DIRECTORS. OYO and Sub shall have received from the
Company letters of resignation effective as of the Effective Date from such of
the directors and officers of the Company and its Subsidiaries as OYO and Sub
may have requested.
5.6 COMPANY SECRETARY'S CERTIFICATE. OYO and Sub shall have received a
certificate of the Company, dated as of the Closing Date and satisfactory in
form and substance to OYO and Sub, executed on behalf of the Company by the duly
authorized Secretary or a duly authorized Assistant Secretary of the Company
certifying (a) that the copy of the articles of incorporation of the Company
provided pursuant to Section is a true, complete and correct copy of the
articles of incorporation of the Company, and no action has been taken with
respect to any amendment thereof other than as provided by this Agreement, (b)
that attached to such certificate is a true, complete and correct copy of the
Bylaws of the Company, as amended and no action has been taken with respect to
any amendment thereof, and (c) that attached to such certificate is a true,
complete and correct copy of resolutions of the Board of Directors of the
Company approving this Agreement, the Merger and the transactions contemplated
hereby, and recommending that the sole shareholder of the Company approve this
Agreement and the Merger, and that such resolutions are in full force and effect
and have not been amended, modified or revoked.
5.7 COMPANY OFFICER'S CERTIFICATE. OYO and Sub shall have received a
certificate of each of the Company and Xxxx, dated as of the Closing Date and
satisfactory in form and substance to OYO and Sub, executed on behalf of the
Company by Xxxx and the President of the Company, as to the matters set forth in
Sections , , and .
5.8 STATE CERTIFICATES. OYO and Sub shall have received a Certificate of
Existence with respect to each of the Company and its Subsidiaries certified by
the Secretary of State of the State of Texas and dated within two days of
Closing and containing a copy of the articles of incorporation of the Company
and all amendments thereto. OYO and Sub shall have received a Certificate of
Account Status with respect to each of the Company and its Subsidiaries
certified by the Comptroller of Public Accounts of the State of Texas reflecting
that the Company is in good standing and has no franchise tax reports or
payments due, and such certificate shall be valid through the Closing.
5.9 INTELLECTUAL PROPERTY RIGHTS RELEASES. OYO and Sub shall have received
the releases, in the form attached as EXHIBITS (A) AND (B), from each of Xxxx
and Xxxxx X. Xxxx, dated and effective as of the Closing Date.
23
5.10 OPINION OF COUNSEL. OYO and Sub shall have received an opinion of
Dow, Xxxxxxx & Xxxxxxxx, P.C., counsel to the Company and Xxxx, in substantially
the form attached hereto as EXHIBIT .
ARTICLE 6
CONDITIONS TO XXXX'X AND THE COMPANY'S OBLIGATIONS
The obligations of Xxxx and the Company to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction (or waiver
by Xxxx and the Company) on or prior to the Closing of all of the following
conditions:
6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of OYO and Sub set forth in this Agreement shall be true and correct
in all respects as of the date when made and at and as of the Closing.
6.2 PERFORMANCE OF COVENANTS AND AGREEMENTS. OYO and Sub shall have duly
performed and complied in all material respects with the covenants, agreements
and conditions required by this Agreement to be performed by or complied with by
it prior to or at the Effective Time.
6.3 GOVERNMENTAL APPROVALS. All necessary actions or nonactions, waivers,
consents and approvals from Governmental Entities and the making of all
necessary registrations and filings (including filings with Governmental
Entities, if any) and the taking of all reasonable steps as may be necessary to
obtain an approval or waiver from, or to avoid an action or proceeding by, any
Governmental Entity shall have been obtained, made or lapsed and shall be in
full force and effect.
6.4 OYO SECRETARY'S CERTIFICATE. Xxxx and the Company shall have received
a certificate of OYO, dated as of the Closing Date and satisfactory in form and
substance to Xxxx and the Company, executed on behalf of OYO by the duly
authorized Secretary or a duly authorized Assistant Secretary of OYO certifying
(a) that attached to such certificate is a true, complete and correct copy of
the certificate of incorporation of OYO, and no action has been taken with
respect to any amendment thereof, (b) that attached to such certificate is a
true, complete and correct copy of the Bylaws of OYO, and no action has been
taken with respect to any amendment thereof, and (c) that attached to such
certificate is a true, complete and correct copy of resolutions of the Board of
Directors of OYO approving the transactions contemplated by the Agreement, and
that such resolutions are in full force and effect and have not been amended,
modified or revoked.
6.5 SUB SECRETARY'S CERTIFICATE. Xxxx and the Company shall have received
a certificate of Sub, dated as of the Closing Date and satisfactory in form and
substance to Xxxx and the Company, executed on behalf of Sub by the duly
authorized Secretary or a duly authorized Assistant Secretary of Sub certifying
that attached to such certificate is a true, complete and correct copy of
resolutions of the Board of Directors of Sub approving this Agreement, the
Merger and the transactions contemplated hereby, and recommending that the sole
shareholder of Sub approve this Agreement and the Merger, and that such
resolutions are in full force and effect and have not been amended, modified or
revoked.
6.6 OYO OFFICER'S CERTIFICATE. Xxxx and the Company shall have received a
certificate of OYO and Sub, dated as of the Closing Date and satisfactory in
form and substance to Xxxx and the Company, executed on behalf of OYO and Sub by
the President of OYO and Sub, as to the matters set forth in Sections , and .
24
6.7 OPINION OF COUNSEL. Xxxx and the Company shall have received an
opinion of Fulbright & Xxxxxxxx L.L.P., counsel to OYO and Sub in substantially
the form attached hereto as EXHIBIT .
ARTICLE 7
NATURE OF STATEMENTS AND SURVIVAL OF COVENANTS,
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
The representations and warranties made and the covenants and agreements
entered into pursuant to this Agreement shall survive the Closing without
limitation, except as follows:
(a) The representations and warranties made or contained in Sections
and shall survive for a period of ninety days beyond the expiration of the
period provided by applicable statue of limitations, including any extensions or
renewals thereof; and
(b) The representations and warranties made or contained in Sections
2.6, 2.7, 2.9, 2.10, 2.11, 2.12, 2.13, 2.14, 2.15, 2.17, 2.19, 2.20, 2.21, 3.5
and 3.6 shall survive for a period of one year following the Effective Date.
ARTICLE 8
INDEMNIFICATION AND REIMBURSEMENT
8.1 XXXX INDEMNITIES. From and after the Closing Date, Xxxx shall
absolutely and irrevocably indemnify, defend and hold harmless OYO and every
Affiliate of OYO (including Sub and the Company) and their respective directors,
stockholders, officers, employees, agents, consultants, representatives,
successors, transferees and assignees (collectively, the "PARTIES TO BE
INDEMNIFIED BY XXXX") from, against and in respect of any and all Claims that
arise or result from or relate to the matters described in clauses (a) through
(f) in this Section (herein collectively referred to as the "LIABILITIES TO BE
INDEMNIFIED BY XXXX"); PROVIDED that Xxxx shall not be obligated to indemnify
OYO or Sub for any liability that also constitutes a Liability to be Indemnified
by OYO to the extent that such liability is a Liability to be Indemnified by
OYO; and PROVIDED FURTHER, that Xxxx shall not be obligated to indemnify the
Parties to be Indemnified by Xxxx until the Liabilities to be Indemnified by
Xxxx (other than those pursuant to clause (c) below, which shall not be subject
to this limitation) exceed on a cumulative basis $225,000 (the "THRESHOLD
AMOUNT"), and then only to the extent of any such Liabilities to be Indemnified
by Xxxx sustained by the Parties to be Indemnified by Xxxx in excess of such
Threshold Amount; and PROVIDED, FURTHER, that Xxxx shall not be obligated to pay
in excess of an amount equal to $3.0 million (the "Cap") for all Liabilities to
be Indemnified by Xxxx:
(a) the breach of any representation or warranty made by Xxxx or the
Company contained in this Agreement or in any certificate, exhibit, schedule or
other document furnished or delivered to OYO and Sub by Xxxx or the Company in
connection with this Agreement;
(b) Xxxx'x failure to perform any of his covenants or agreements
under or contained in this Agreement or in any certificate, exhibit, schedule or
other document furnished or delivered to OYO and Sub by Xxxx or the Company in
connection with this Agreement;
(c) excluding any Claim for federal income taxes imposed as a result
of the transactions contemplated by this Agreement, any Claim for Taxes relating
to a period ending
25
on or before the Closing Date or an event occurring on or before the Closing
Date, including for any additional Taxes assessed as a result of or arising from
an audit or examination of Tax Returns filed on or before the Closing Date or a
recharacterization of any revenues, deductions or expenses reported or claimed
thereon; PROVIDED that indemnities under this clause (c) shall not be subject to
the Threshold Amount;
(d) any Environmental Liability arising from any event, condition,
activity, incident, action or omission existing or occurring (i) prior to the
Closing Date relating in any way to the Assets or the Company (including the
ownership, operation or use of the Assets and the conduct of the Company prior
to the Closing Date) and (ii) prior to, on or after the Closing Date relating in
any way to the conduct of any business of Xxxx other than the Company; PROVIDED
that Xxxx shall not be required to indemnify the Parties to be Indemnified by
Xxxx with respect to this Section for any Environmental Liability asserted more
than ten years after the Effective Date.
8.2 OYO INDEMNITIES. From and after the Closing Date, OYO shall absolutely
and irrevocably indemnify, defend and hold harmless Xxxx and every Affiliate of
Xxxx (excluding the Company) and their respective directors, stockholders,
officers, employees, agents, consultants, representatives, heirs, successors,
transferees and assignees (collectively, the "PARTIES TO BE INDEMNIFIED BY OYO")
from, against and in respect of any and all Claims that arise or result from or
relate to the matters described in clauses (a) and (b) of this Section (herein
collectively referred to as the "LIABILITIES TO BE INDEMNIFIED BY OYO");
PROVIDED, that OYO shall not be obligated to indemnify Xxxx for any liability
that also constitutes a Liability to be Indemnified by Xxxx to the extent that
such liability is a Liability to be Indemnified by Xxxx; and PROVIDED, FURTHER,
that OYO shall not be obligated to indemnify the Parties to be Indemnified by
OYO until the Liabilities to be Indemnified by OYO (other than those pursuant to
a breach of the covenants set forth in Section , which shall not be subject to
this limitation) exceed on a cumulative basis Threshold Amount, and then only to
the extent of any such Liabilities to be Indemnified by OYO sustained by the
Parties to by Indemnified by OYO in excess of such Threshold Amount; and
PROVIDED, FURTHER, that OYO shall not be obligated to pay in excess of an amount
equal to the Cap for all Liabilities to be Indemnified by OYO hereunder;
(a) the breach of any representation or warranty made by OYO or Sub
contained in this Agreement or in any certificate, exhibit, schedule or other
document furnished or delivered to Xxxx by OYO or Sub in connection with this
Agreement; and
(b) OYO or Sub's failure to perform any of its respective covenants
or agreements under or contained in this Agreement or in any certificate,
exhibit, schedule or other document furnished or delivered to Xxxx by OYO or Sub
in connection with this Agreement.
8.3 NOTICE OF CLAIM.
(a) For purposes of this Article , the term "INDEMNIFYING PARTY"
when used in connection with a particular Claim shall mean the party having an
obligation to indemnify the other party with respect to the Claim pursuant to
this Article , and the term "INDEMNIFIED PARTY" when used in connection with a
particular Claim shall mean the party having the right to be indemnified with
respect to the Claim by the other party pursuant to this Article .
(b) Each party agrees that promptly after it becomes aware of facts
giving rise to a Claim by it for indemnification pursuant to this Article , the
party will provide notice thereof in writing to the other party (a "CLAIM
NOTICE") specifying the nature and specific basis for such Claim, and to the
extent feasible the estimated amount of damages attributable
26
thereto, and a copy of all papers served with respect to the Claim (if any). For
purposes of this Section , receipt by a party of written notice of any demand,
assertion, claim, action or proceeding (judicial, administrative or otherwise)
by or from any Person other than a party to this Agreement that gives rise to a
Claim on behalf of the party shall constitute the discovery of facts giving rise
to a Claim by it and shall require prompt notice of the receipt of such matter.
The failure of an Indemnified Party to send a Claim Notice shall not relieve the
Indemnifying Party from liability hereunder with respect to the Claim except to
the extent, and only to the extent, the failure prejudiced the Indemnifying
Party.
8.4 INDEMNIFICATION PROCEDURES. All claims for indemnification under this
Agreement shall be asserted and resolved as follows:
(a) FIRST PARTY CLAIMS. If any Indemnified Party should have a Claim
against any Indemnifying Party hereunder that does not involve a third party
claim asserted against an Indemnified Party that could give rise to a right of
indemnification under this Agreement ("THIRD PARTY CLAIM"), the Indemnified
Party shall transmit to the Indemnifying Party a Claim Notice with respect to
the Claim. If the Indemnifying Party does not notify the Indemnified Party
within 30 days from its receipt of the Claim Notice (the "ELECTION PERIOD") that
the Indemnifying Party disputes the Claim, the Claim specified by the
Indemnifying Party in the Claim Notice shall be deemed a liability of the
Indemnifying Party hereunder and shall be paid as provided in Section . If the
Indemnifying Party has timely disputed the Claim within the Election Period, as
provided above, such dispute shall be resolved by arbitration as set forth in
Section .
(b) THIRD PARTY CLAIMS. If an Indemnified Party shall have a Third
Party Claim asserted against it, the Indemnified Party shall transmit to the
Indemnifying Party a Claim Notice relating to the Third Party Claim. During the
Election Period, an Indemnifying Party shall notify an Indemnified Party (y)
whether the Indemnifying Party disputes its potential liability to the
Indemnified Party under this Article with respect to the Third Party Claim and
(z) whether an Indemnifying Party desires, at the sole cost and expense of such
Indemnifying Party, to defend the Indemnified Party against the Third Party
Claim. If the Indemnifying Party does not notify the Indemnified Party within
the Election Period that the Indemnifying Party disputes its potential liability
Third Party Claim, the potential liability of the Third Party Claim specified by
the Indemnifying Party in the Claim Notice shall be deemed a liability of the
Indemnifying Party hereunder and shall be paid as provided in Section . If the
Indemnifying Party has timely disputed its potential liability under the Third
Party Claim within the Election Period, as provided above, such dispute shall be
resolved by arbitration as set forth in Section .
(i) If an Indemnifying Party notifies an Indemnified Party
within the Election Period that the Indemnifying Party does not dispute
its potential liability to the Indemnified Party under this Article and
that the Indemnifying Party elects to assume the defense of the Third
Party Claim, then the Indemnifying Party shall have the right to defend,
at its sole cost and expense, the Third Party Claim by all appropriate
proceedings, which proceedings shall be prosecuted diligently by the
Indemnifying Party to a final conclusion or settled at the discretion of
the Indemnifying Party in accordance with this Section ; PROVIDED that
such settlement shall not impose any obligations upon the Indemnified
Party or deprive the Indemnified Party of any rights without its consent.
The Indemnifying Party shall have full control of such defense and
proceedings, including, subject to the preceding sentence, any compromise
or settlement thereof. The Indemnified Party is hereby authorized, (at the
sole cost and expense of the Indemnifying Party but only if the
Indemnified Party is actually entitled to indemnification hereunder or if
the Indemnifying Party assumes the defense with respect to the Third Party
Claim), to file, during the Election Period, any
27
motion, answer or other pleadings that the Indemnified Party shall deem
necessary or appropriate to protect its interest or those of the
Indemnifying Party and not prejudicial to the Indemnifying Party (it being
understood and agreed that if an Indemnified Party takes any such action
that is prejudicial and conclusively causes a final adjudication adverse
to the Indemnifying Party, the Indemnifying Party shall be relieved of its
obligations hereunder with respect to the Third Party Claim to the extent
so adjudicated). If requested by the Indemnifying Party, the Indemnified
Party agrees, at the sole cost and expense of the Indemnifying Party, to
cooperate with the Indemnifying Party and its counsel in contesting any
Third Party Claims, including by making of any related counterclaim
against the Person asserting the Third Party Claim or any cross-complaint
against any Person. The Indemnified Party shall have the right to
participate in, but not control, any defense or settlement of any Third
Party Claim controlled by the Indemnifying Party pursuant to this Section
, and shall bear its own costs and expenses with respect to any such
participation.
(ii) If an Indemnifying Party timely disputes its potential
liability for the Third Party Claim within the Election Period, or if the
Indemnifying Party fails to notify an Indemnified Party within the
Election Period that the Indemnifying Party elects to defend the
Indemnified Party pursuant to Section (or notifies the Indemnified Party
that it elects not to defend the Indemnified Party), or if the
Indemnifying Party elects to defend the Indemnified Party pursuant to
Section but fails to diligently and promptly prosecute or settle the Third
Party Claim, then the Indemnified Party shall have the right but not the
obligation to defend, at the sole cost and expense of the Indemnifying
Party (but only if the Indemnified Party is actually entitled to
indemnification hereunder or if the Indemnifying Party assumes the defense
with respect to the Third Party Claim), the Third Party Claim by such
proceedings deemed reasonably appropriate by the Indemnified Party and its
counsel. The Indemnified Party shall have full control of such defense and
proceedings, including any compromise or settlement of such Third Party
Claim; PROVIDED, that if the Indemnifying Party agrees to indemnify the
Indemnified Party under this Article , the Indemnified Party shall not
enter into any compromise or settlement of such Third Party Claim without
the Indemnifying Party's consent, which shall not be unreasonably withheld
or delayed. If requested by the Indemnified Party, the Indemnifying Party
shall, at the sole cost and expense of the Indemnifying Party, cooperate
with the Indemnified Party and its counsel in contesting any Third Party
Claim that the Indemnified Party is contesting, or, if appropriate and
related to the Third Party Claim in questions, in making any counterclaim
against the Person asserting the Third Party Claim or any cross-complaint
against any Person. Notwithstanding the foregoing in this Section , if the
Indemnifying Party has delivered a written notice to the Indemnified Party
to the effect that the Indemnifying Party disputes its potential liability
to the Indemnified Party under this Article and if such dispute is
resolved in favor of the Indemnifying Party pursuant to Section , the
Indemnifying Party shall not be required to bear the costs and expenses of
the Indemnified Party's defense pursuant to this Article or of the
Indemnifying Party's participation therein at the Indemnified Party's
request, and the Indemnified Party shall reimburse the Indemnifying Party
in full for all reasonable costs and expenses of the Indemnifying Party in
connection with the Third Party Claims, excluding however any litigation
with respect to its indemnify obligation hereunder. The Indemnifying Party
shall have the right to participate in, but not control, any defense or
settlement controlled by the Indemnified Party pursuant to this Section ,
and the Indemnifying Party shall bear its own costs and expenses with
respect to any such participation.
(c) PAYMENTS. Payments of all amounts owing by an Indemnifying Party
as a result of a Third Party Claim shall be made within five Business Days after
the earlier of
28
(i) the settlement of the Third Party Claim and (ii) the expiration of the
period of appeal of a final adjudication of the Third Party Claim. Payments of
all amounts owing by an Indemnifying Party other than as a result of a Third
Party Claim shall be made within five Business Days after the later of (y) 30
days after the expiration of the Election Period or (z) if contested through
dispute resolution proceedings, the expiration of the period for appeal of a
final adjudication of the Indemnifying Party's liability to the Indemnified
Party under this Agreement. Notwithstanding the above, if the Indemnifying Party
has not contested its indemnity obligations hereunder and has not elected to
assume the defense of a Third Party Claim, the Indemnifying Party shall
reimburse (promptly after the receipt of each invoice therefor) the Indemnified
Party for the reasonable costs and expenses incurred by the Indemnified Party in
contesting the Third Party Claim together with reasonable support for such
expenditures.
8.5 SUBROGATION RIGHTS. If the Indemnified Party is one of the Parties to
be Indemnified by OYO and the Indemnified Party has a right against a Person
(other than one of the other Parties to be Indemnified by OYO) with respect to
any damages or other amounts paid to the Indemnified Party by OYO, then OYO
shall, to the extent of such payment, be subrogated to the right of such
Indemnified Party. If the Indemnified Party is one of the Parties to be
Indemnified by Xxxx and the Indemnified Party has a right against a Person
(other than one of the other Parties to be Indemnified by Xxxx) with respect to
any damages or other amounts paid to such Indemnified Party by Xxxx, then Xxxx
shall, to the extent of such payment, be subrogated to the right of such
Indemnified Party.
8.6 INSURANCE PROCEEDS; INTEREST. In determining the amount of any loss,
liability or expense for which any party is entitled to indemnification under
this Article , the gross amount thereof (a) will be reduced by any insurance
proceeds realized or to be realized by such party, and such correlative
insurance benefit of such claim and further reduced (without duplication) by any
reserves set out in the Effective Date Balance Sheet, and (b) will be increased
by (i) to the extent such payment is based on amounts paid by the Indemnified
Party, interest on such amount at the rate quoted from time to time on London
Interbank Market for 30-day borrowings, plus 1-1/2% from the date such payment
is made until payment is made as required hereunder and (ii) to the extent such
payment is based on losses incurred by the Indemnified Party, interest on such
amount at the rate quoted from time to time on London Interbank Market for
30-day borrowings, plus 1-1/2% from the date of such loss until payment is made
as required hereunder. Any payment for indemnification by Xxxx may be treated by
Xxxx as an adjustment to the Consideration. No indemnity or other obligation
hereunder in favor of the Company or OYO or Sub, on the one hand, or Xxxx on the
other hand, shall be construed so as to permit double recovery.
8.7 INDEPENDENT INDEMNITIES. The parties acknowledge and agree that each
of the indemnities under Section and each of the indemnities under Section may
be relied upon independently.
8.8 INVESTIGATION AND DUE DILIGENCE. No investigation, examination, audit,
inspection or other due diligence prior to the Closing shall affect the parties'
respective rights to indemnity pursuant to this Agreement; PROVIDED, that the
foregoing is not intended to affect the representations, warranties and other
agreements as modified by the Disclosure Schedule.
8.9 NO IMPLIED REPRESENTATIONS OR WARRANTIES. The parties hereto
acknowledge that no party hereto has made any representation or warranty,
express or implied, to any other party other than the express representations
and warranties set forth herein.
29
ARTICLE 9
DEFINITIONS
Capitalized terms used in this Agreement shall have the meanings given to
them in this Article unless defined elsewhere in this Agreement.
9.1 "AAA" shall have the meaning such term is given in Section
9.2 "AFFILIATE" means, with respect to any Person, any Person that,
directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, the Person specified. With
respect to a natural person, the term "Affiliate" includes such person's
immediate family.
9.3 "AGREEMENT" shall have the meaning such term is given in the
introductory paragraph to this Agreement.
9.4 "ASSETS" means all the assets and properties owned by the Company,
tangible and intangible, real, personal and mixed.
9.5 "BENEFIT PLAN" means any collective bargaining agreement or any bonus,
pension, profit sharing, deferred compensation, incentive compensation, stock
ownership, stock purchase, stock option, phantom stock, retirement, vacation,
severance, disability, death benefit, hospitalization, medical dependent care,
cafeteria, employee assistance, scholarship program or other plan, arrangement
or understanding (whether or not legally binding) providing benefits to any
current or former employee or director of the Company.
9.6 "BUSINESS DAY" means any day other than Saturday, Sunday or other day
on which federally chartered commercial banks in Houston, Texas are authorized
or required by law to close.
9.7 "CERCLA" means the Comprehensive Environmental, Response,
Compensation, and Liability Act of 1980, as amended.
9.8 "CLAIM" means any and all judgments, claims, causes of action,
demands, lawsuits, suits, proceedings, governmental investigations or audits,
losses, assessments, Encumbrances, impositions, fines, penalties, administrative
orders, deficiencies, levies, duties, obligations, costs, expenses, liabilities,
actual damages (and, only with respect to Third Party Claims, consequential and
punitive damages), including in each case, interest, penalties, reasonable
attorneys' fees, disbursements and reasonable costs of investigations and
litigation, including a reasonable allocation of the time spent by management of
the Company or OYO in investigating the facts and circumstances relating to the
Claim or responding to an audit or investigation.
9.9 "CLAIM NOTICE" shall have the meaning such term is given in Section .
9.10 "CLOSING" shall have the meaning such term is given in Section .
9.11 "CODE" means the Internal Revenue Code of 1986, as amended.
9.12 "COMMISSION" means the United States Securities and Exchange
Commission.
30
9.13 "COMMON STOCK" shall have the meaning such term is given in the
recitals to this Agreement.
9.14 "COMMON STOCK CONVERSION RATE" shall have the meaning such term is
given in Section (a).
9.15 "COMPANY" shall have the meaning such term is given in the
introductory paragraph to this Agreement.
9.16 An event, matter or circumstance shall be deemed to affect the
"COMPANY CONDITION" if it would affect the business, results of operations,
financial condition, Assets or prospects of the Company and its Subsidiaries,
taken as a whole.
9.17 "CONSIDERATION" shall have the meaning such term is given in Section
(a).
9.18 "DEFICIENCY" shall have the meaning given such term in Section .
9.19 "EFFECTIVE DATE" means the date on which the Effective Time occurs.
9.20 "EFFECTIVE DATE BALANCE SHEET" shall have the meaning such term is
given in Section .
9.21 "EFFECTIVE TIME" means the date and time when the Merger shall become
effective.
9.22 "ELECTION PERIOD" shall have the meaning such term is given in
Section .
9.23 "ENCUMBRANCE" means any security interest, mortgage, pledge, trust,
claim, lien, charge, option, defect, restriction, encumbrance or other right or
interest of any third Person of any nature whatsoever.
9.24 "ENVIRONMENTAL LAWS" means any and all laws, statutes, ordinances,
rules, regulations, orders, or determinations of any Governmental Entity
pertaining to the environment heretofore or currently in effect in any and all
jurisdictions in which the Company is conducting or at any time has conducted
business, or where any of the Assets are located, or where any hazardous
substances generated by or disposed of by the Company are located.
"Environmental Laws" shall include, but not be limited to, the Clean Air Act, as
amended, CERCLA, the Federal Water Pollution Control Act, as amended, RCRA, the
Safe Drinking Water Act, as amended, the Toxic Substances Control Act, as
amended, and all other laws, statutes, ordinances, rules, regulations, orders
and determinations of any Governmental Entity relating to (a) the control of any
potential pollutant or protection of the air, water or land, (b) solid, gaseous
or liquid waste generation, handling, treatment, storage, disposal or
transportation and (c) exposure to hazardous, toxic or other harmful substances.
The terms "hazardous substance", "release" and "threatened release" have the
meanings specified in CERCLA, and the terms "solid waste" and "disposal" (or
"disposed") have the meanings specified in RCRA; provided, however, that, to the
extent the laws of the state in which any Assets are or were located currently
provide for a meaning for "hazardous substance", "release", "solid waste" or
"disposal" which is broader than that specified in either CERCLA or RCRA, such
broader meaning shall apply.
9.25 "ENVIRONMENTAL LIABILITIES" means any and all Claims (including any
remedial, removal, response, abatement, clean-up, investigative and/or
monitoring costs) incurred or imposed (a) pursuant to any agreement, order,
notice of responsibility, directive (including directives embodied in
Environmental Laws), injunctions, judgments or similar documents
31
(including settlements) arising out of, in connection with, or under
Environmental Laws, (b) pursuant to any claim by a Governmental Entity or other
Person for personal injury, property damage, damage to natural resources,
remediation, or payment or reimbursement of response costs incurred or expended
by such Governmental Entity or Person pursuant to common law or statute and
related to the use or release of materials or (c) resulting from or arising out
of conditions with respect to which obligations may be imposed under
Environmental Laws.
9.26 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
9.27 "ESCROW SHARES" shall have the meaning such term is given in Section
1.4.
9.28 "EXCESS" shall have the meaning such term is given in Section 1.7(a).
9.29 "FINANCIAL STATEMENTS" shall have the meaning such term is given in
Section 2.6.
9.30 "GOVERNMENTAL ENTITY" means the United States of America, any state,
province, territory, county, city, municipality and any subdivision thereof, any
court, administrative or regulatory agency, commission, department or body or
other governmental authority or instrumentality or any entity or Person
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
9.31 "INDEMNIFIED PARTY" shall have the meaning such term is given in
Section 8.3(a).
9.32 "INDEMNIFYING PARTY" shall have the meaning such term is given in
Section 8.3(a).
9.33 "INTELLECTUAL PROPERTY" means patents, patent rights, trademarks,
trademark rights, trade names, trade name rights, service marks, service xxxx
rights, copyrights, technology, know how, trade secrets, designs, plans,
manuals, processes and other proprietary intellectual property rights and
computer programs, and all registrations for, and applications for registration
of, any of the foregoing.
9.34 "IRS" means the United States Internal Revenue Service.
9.35 "LIABILITIES TO BE INDEMNIFIED BY XXXX" shall have the meaning such
term is given in Section 8.1.
9.36 "LIABILITIES TO BE INDEMNIFIED BY OYO" shall have the meaning such
term is given in Section 8.2.
9.37 A single event, occurrence, fact or matter will be deemed to be
"MATERIAL", to have a "MATERIAL" adverse effect, to cause a "MATERIAL" change or
to be "MATERIALLY" affected if such event, occurrence, fact or matter, together
with all other events, occurrences, facts or matters that could reasonably be
expected to result in a material loss to the Company and its Subsidiaries, taken
as a whole, would have, or might reasonably be expected to have, a material
adverse effect on the Company Condition, or that would constitute a criminal
violation of law involving a felony.
9.38 "MERGER" shall have the meaning such term is given in the recitals to
this Agreement.
9.39 MULTIEMPLOYER PENSION PLANS" shall have the meaning such term is
given in Section 2.8(g).
32
9.40 "NET EQUITY" means, in accordance with generally accepted accounting
principles and with reference to the Company's consolidated balance sheet, the
difference between total assets and total liabilities (including deferred income
tax liabilities and capital lease obligations).
9.41 "OYO" shall have the meaning such term is given in the introductory
paragraph to this Agreement.
9.42 "OYO COMMON STOCK" shall have the meaning such term is given in the
recitals to this Agreement.
9.43 "PARTIES TO BE INDEMNIFIED BY XXXX" shall have the meaning such term
is given in Section 8.1.
9.44 "PARTIES TO BE INDEMNIFIED BY OYO" shall have the meaning such term
is given in Section 8.2.
9.45 "PBGC" means the Pension Benefit Guaranty Corporation.
9.46 "PENSION PLANS" shall have the meaning such term is given in Section
(a).
9.47 "PERMITTED ENCUMBRANCES" means (a) Encumbrances for current taxes and
assessments not yet past due or which are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves are
reflected in the Financial Statements, (b) mechanics and materialmen
Encumbrances for construction in progress to the extent not perfected by filing,
recording, giving of notice or other appropriate action in the relevant
jurisdiction, (c) workmen, repairmen, warehousemen, carriers, lessors and
operators Encumbrances arising in the ordinary course of business to the extent
not perfected by filing, recording, giving of notice or other appropriate action
in the relevant jurisdiction and (d) easements, including agreements and deeds
of easement, restrictions, set-back lines, mineral reservations and exceptions,
landlord's liens, and other minor imperfections of title.
9.48 "PERSON" means any individual, corporation, association, partnership,
joint venture, trust, estate or unincorporated organization or Governmental
Entity.
9.49 "RCRA" means the Resource Conservation and Recovery Act of 1976, as
amended.
9.50 "SEC DOCUMENTS" shall have the meaning such term is given in Section
3.6.
9.51 "SECURITIES ACT" means the Securities Exchange Act of 1933.
9.52 "SUB" shall have the meaning such term is given in the introductory
paragraph to this Agreement.
9.53 "SUB COMMON STOCK" shall have the meaning such term is given in
Section 1.3(c).
9.54 "SUBSIDIARY" shall have the meaning such term is given in Section
hereof.
9.55 "SURVIVING CORPORATION" shall have the meaning such term is given in
Section 1.1(a).
9.56 "TAXES" shall have the meaning such term is given in Section 2.18.
9.57 "TAX RETURNS" shall have the meaning such term is given in Section
2.18.
33
9.58 "TBCA" means the Texas Business Corporation Act.
9.59 "THIRD PARTY CLAIM" shall have the meaning such term is given in
Section 8.4(a).
9.60 "THRESHOLD AMOUNT" shall have the meaning such term is given in
Section 8.1.
9.61 "WASTE MATERIALS" means any toxic or hazardous materials or
substances, or solid wastes, including asbestos, buried contaminants, chemicals,
flammable or explosive materials, radioactive materials, petroleum and petroleum
products, and any other chemical, pollutant, contaminant, substance or waste
that is regulated by any Governmental Entity under any Environmental Law. "Waste
Materials" does not include useful products that are stored or maintained in
authorized containers.
ARTICLE 10
MISCELLANEOUS
10.1 ENTIRE AGREEMENT. This Agreement constitutes the sole understanding
of the parties with respect to the matters provided for herein and supersede any
previous agreements and understandings between the parties with respect to the
subject matter hereof. No amendment, modification or alteration of the terms or
provisions of this Agreement shall be binding unless the same shall be in
writing and duly executed by the parties hereto.
10.2 SUCCESSORS AND ASSIGNS. This Agreement will inure to the benefit of
and be binding upon OYO, Sub, the Company and Xxxx and their respective heirs,
successors and permitted assigns. Neither this Agreement nor any of the rights,
interest or obligations hereunder shall be assigned by any of the parties hereto
without the prior written consent of the other parties hereto. Notwithstanding
the foregoing, Sub may assign its rights in this Agreement to an Affiliate;
provided, however, that any such assignment by Sub shall not release OYO or Sub
from any of their obligations or agreements under this Agreement.
10.3 EXPENSES. Whether or not the transactions contemplated by this
Agreement are consummated, other than as expressly provided for herein, each of
the parties hereto shall pay the fees and expenses of its respective counsel,
accountants and other experts, and all other expenses incurred by such party
incident to the negotiation, preparation and execution of this Agreement and the
consummation of the transactions contemplated hereby; PROVIDED that the
reasonable and customary legal fees and expenses of the Company and Xxxx shall
be paid by the Company.
10.4 INVALIDITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic and legal substance of
the transactions contemplated hereby is not affected in any manner Materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.
10.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.
34
10.6 HEADINGS. The headings of the Sections and paragraphs of this
Agreement and of the Schedules hereto are included for convenience only and
shall not be deemed to constitute part of this Agreement or to affect the
construction or interpretation hereof or thereof.
10.7 CONSTRUCTION AND REFERENCES. Words used in this Agreement, regardless
of the number or gender specifically used, shall be deemed and construed to
include any other number, singular or plural, and any other gender, masculine,
feminine or neuter, as the context shall require. Unless otherwise specified,
all references in this Agreement to Sections, paragraphs or clauses are deemed
references to the corresponding Sections, paragraphs or clauses in this
Agreement, and all references in this Agreement to Schedules or Exhibits are
references to the corresponding Schedules and Exhibits attached to this
Agreement. Unless otherwise specified, the words "including" and "include", and
similar words, as used in this Agreement are not to be construed as limiting.
10.8 MODIFICATION AND WAIVER. Any of the terms or conditions of this
Agreement may be waived in writing at any time by the party which is entitled to
the benefits thereof. No waiver of any of the provisions of this Agreement shall
be deemed to or shall constitute a waiver of any other provisions hereof
(whether or not similar).
10.9 KNOWLEDGE. Whenever set forth in this Agreement, the phrase "to the
best of Xxxx'x and Company's knowledge" (or any similar phrase which contains
the words "Xxxx'x and Company's knowledge" or "known to Xxxx and Company") shall
be deemed to mean only the actual knowledge of Xxxx and Company after good faith
inquiry into the relevant subject matter. With reference to warranties and
representations made subject to "Xxxx'x and Company's knowledge" (or words of
similar import), in no event shall Xxxx or Company be liable for the inaccuracy
of the underlying warranty or representation if Xxxx or Company had no actual
knowledge of the inaccuracy at the time of making the warranty or
representation; PROVIDED that the Company and Xxxx made good faith inquiry into
the relevant subject matter of such representation or warranty.
10.10 NOTICES. Any notice, request, instruction or other document to be
given hereunder by any party hereto to any other party shall be in writing and
delivered personally, by facsimile (with receipt confirmed) or by registered or
certified mail, postage prepaid:
if to the Company or Xxxx, to:
JRC/Concord Technologies, Inc.
0000 Xxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxx, President
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
with a copy to:
Dow, Xxxxxxx & Xxxxxxxx, P.C.
0000 Xxxxxxx Xxxxx
Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxx X. XxXxxxxxx
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
35
if to OYO or Sub, to:
OYO Geospace Corporation
0000 X. Xxxx Xxxx Xxxx, Xxxxx 0
Xxxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxx, President
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
with a copy to:
Fulbright & Xxxxxxxx L.L.P.
0000 XxXxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Still
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
or at such other address for a party as shall be specified by like notice. Any
notice which is delivered personally in the manner provided herein shall be
deemed to have been duly given to the party to whom it is directed upon actual
receipt by such party (or its agent for notices hereunder). Any notice which is
addressed and mailed in the manner herein provided shall be conclusively
presumed to have been duly given to the party to which it is addressed at the
close of business, local time of the recipient, on the third day after the day
it is so placed in the mail. Any notice which is sent by facsimile shall be
deemed to have been duly given to the party to which it is addressed upon
telephonic confirmation of the same as provided herein. A copy of any notices
delivered by facsimile shall promptly be mailed in the manner herein provided to
the party to which such notice was given.
10.11 GOVERNING LAW; INTERPRETATION. This Agreement shall be construed in
accordance with and governed by the laws of the State of Texas, without regard
to the conflicts or choice of law rules of the State of Texas.
10.12 RESOLUTION OF DISPUTES.
(a) NEGOTIATION. Except for disputes relating to Section , which
disputes shall be resolved pursuant to Section , the parties shall attempt in
good faith to resolve any dispute arising out of or relating to this Agreement
promptly by negotiations between executives or other persons who have authority
to settle the controversy. Any party may give the other disputing party written
notice of any dispute not resolved in the normal course of business. Within five
days after the effective date of that notice, executives of the disputing
parties shall agree upon a mutually acceptable time and place to meet and shall
meet at that time and place, and thereafter as often as they reasonably deem
necessary, to exchange relevant information and to attempt to resolve the
dispute. The first of those meetings shall take place within 30 days of the
effective date of the disputing party's notice. If the matter has not been
resolved within 60 days of the disputing party's notice, or if the parties fail
to agree on a time and place for an initial meeting within five days of that
notice, any party may initiate arbitration of the controversy or claim as
provided hereinafter. If a negotiator intends to be accompanied at a meeting by
an attorney, the other negotiators shall be given at least three Business Days'
notice of that intention and may also be accompanied by an attorney. All
negotiations pursuant to this Section shall be treated as compromise and
settlement negotiations for the purposes of applicable rules of evidence and
procedure.
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(b) ARBITRATION. Any dispute arising out of, relating to or in any
way touching upon this Agreement or the breach, termination or validity hereof,
that has not been resolved by non-binding procedures as provided in Section
within 60 days of the initiation of that procedure, shall be finally settled by
arbitration conducted expeditiously in accordance with the American Arbitration
Association ("AAA") arbitration rules for commercial disputes, as in effect on
the date hereof (the "RULES"); PROVIDED that if one party has requested the
other to participate in a non-binding procedure and the other has failed to
participate, the requesting party may initiate arbitration before the expiration
of the period. With respect to an arbitral proceeding, the parties agree as
follows:
(i) The arbitration shall be conducted by three independent
and impartial arbitrators, none of whom shall be an officer, director or
employee of any party hereto or its Affiliates. The Seller and the Buyer
shall each choose one arbitrator. The two chosen arbitrators shall choose
the third arbitrator.
(ii) The parties acknowledge that this Agreement affects
interstate commerce; thus the arbitration shall be governed by the United
States Arbitration Act and any judgment upon the award decided upon by the
arbitrators may be entered by any court having jurisdiction thereof.
(iii) Damages recoverable by any party are limited to
compensatory damages. Each party hereby irrevocably waives for the
purposes of this Agreement any damages in excess of compensatory damages,
including punitive, exemplary, consequential and special damages and lost
profits. The arbitrators shall be empowered to award only compensatory
damages.
(iv) Any arbitration conducted pursuant to this Section shall
be held at a mutually acceptable location in the City of Houston, the
State of Texas.
(v) Unless the parties subject to the arbitration otherwise
agree, no dispute among them shall be included in the arbitration unless
it arises out of, relates to, or in any way touches upon, this Agreement
or the breach, termination or validity hereof. This agreement to
arbitrate, however, includes each party's willingness and desire to
arbitrate matters that arise out of, relate to, or in any way touch upon
this Agreement or the breach, termination or validity hereof, including
claims or actions sounding or cast in terms of tort law or tortious
conduct.
(vi) The arbitrators may make interim awards and may award
equitable and declaratory relief.
(vii) The costs and expenses of the arbitration shall be
allocated equally between the parties, PROVIDED, that each party's own
attorney's fees shall be borne by the party incurring the same.
(viii) In resolving any dispute, the arbitrators shall apply
the provisions of this Agreement, without varying therefrom in any
respect. The arbitrators shall not have the power to add to, modify,
change or terminate this Agreement.
(ix) It shall not be inconsistent with this Section for any
party to seek from any court of competent jurisdiction interim relief in
aid of arbitration or to protect the rights of either party pending the
establishment of the arbitral tribunal.
37
IN WITNESS WHEREOF, each of the parties hereto have caused this Agreement
to be executed on its behalf as of the date first above written.
OYO GEOSPACE CORPORATION
by: /s/XXXX X. XXXXX
Xxxx X. Xxxxx, Chairman, President
and Chief Executive Officer
BUBBLES MERGE CO.
by: /s/ XXXX X. XXXXX
Xxxx X. Xxxxx, President
JRC/CONCORD TECHNOLOGIES, INC.
by: /s/ XXXXX X. XXXX, XX.
Xxxxx X. Xxxx, Xx., President
XXXXX X. XXXX, XX.
/s/ XXXXX X. COLR, JR.
As wife of Xxxxx X. Xxxx, Xx., I hereby consent to the disposition by my
husband pursuant to this Agreement of the securities disposed of by him hereby.
XXXXXXXX XXXXX XXXX (AS WIFE OF XXXXX X. XXXX, XX.)
/s/ XXXXXXXX XXXXX XXXX
38
