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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
XXXXXX COMMUNICATIONS, INC.
AND
XXXXXX ACQUISITION CORP.
AND
SAMPLING CORPORATION OF AMERICA
AND
THE STOCKHOLDER OF SAMPLING CORPORATION OF AMERICA
JULY 13, 1997
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "Agreement") is entered into as
of this 13th day of July 1997, by and among Xxxxxx Communications, Inc., a
Delaware corporation ("Xxxxxx"), Xxxxxx Acquisition Corp., an Illinois
corporation and wholly-owned subsidiary of Xxxxxx ("SAC"), Sampling Corporation
of America, an Illinois corporation ("SCA"), and Xxxxxx X. Xxxxxx, the sole
stockholder of SCA (the "Stockholder"). Xxxxxx, SAC, SCA and the Stockholder
are referred to collectively herein as the "Parties" and each individually as a
"Party."
RECITALS:
WHEREAS, the Stockholder is the record and beneficial owner of all of
the issued and outstanding capital stock of SCA; and
WHEREAS, the Parties hereto desire to consummate a merger (the
"Merger") whereby SAC will be merged with and into SCA and SCA will be the
surviving corporation in the Merger, upon the terms and subject to the
conditions of this Agreement and in accordance with the Business Corporation
Act of 1983 of the State of Illinois (the "Illinois BCA"); and
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization under Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), pursuant to which each issued
and outstanding share of SCA common stock shall be converted into the right to
receive shares of Xxxxxx common stock.
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Terms Defined in this Agreement. As used in this Agreement,
the following terms shall have the respective meanings set forth below:
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the meaning of
Code Section 1504, or any similar group defined under a similar provision of
state, local or foreign law.
"Agreement" has the meaning set forth in the preface above.
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"Basis" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that forms the basis for any specified
consequence.
"Closing" has the meaning set forth in Section 2.3 below.
"Closing Date" has the meaning set forth in Section 2.3 below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means any information concerning the
businesses and affairs of SCA or Xxxxxx, if any, that is not already generally
available to the public.
"Disclosure Schedule" has the meaning set forth in the first
paragraph of Article 5 below.
"Effective Time" has the meaning set forth in Section 2.2 below.
"Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) tax-qualified defined contribution retirement plan or
arrangement which is an Employee Pension Benefit Plan, (c) tax-qualified
defined benefit retirement plan or arrangement which is an Employee Pension
Benefit Plan (including any Multiemployer Plan), or (d) Employee Welfare
Benefit Plan or material fringe benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
Section 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
Section 3(1).
"Environmental, Health, and Safety Laws" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, and the Occupational Safety and Health
Act of 1970, each as amended, together with all other laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings,
and charges thereunder) of federal, state, local, and foreign governments (and
all agencies thereof) concerning pollution or protection of the environment,
public health and safety, or employee health and safety, including laws
relating to emissions, discharges, releases, or threatened releases of
pollutants, contaminants, or chemical, industrial, hazardous, or toxic
materials or wastes into ambient air, surface water, ground water, or lands or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Deposit" has the meaning set forth in Section 11.6 below.
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"Extremely Hazardous Substance" has the meaning set forth in Section
302 of the Emergency Planning and Community Right-to-Know Act of 1986, as
amended.
"Fiduciary" has the meaning set forth in ERISA Section 3(21).
"Financial Statements" has the meaning set forth in Section 5.7 below.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Xxxx-Xxxxx-Xxxxxx Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
"Illinois BCA" has the meaning set forth in the second paragraph of
the Recitals above.
"Indemnification Threshold" has the meaning set forth in Section 11.5
below.
"Intellectual Property" means (a) all inventions (whether patentable
or unpatentable and whether or not reduced to practice), all improvements
thereto, and all patents, patent applications, and patent disclosures, together
with all reissuances, continuations, continuations-in-part, revisions,
extensions, and reexaminations thereof, (b) all trademarks, service marks,
trade dress, logos, trade names, and corporate names, together with all
translations, adaptations, derivations, and combinations thereof and including
all goodwill associated therewith, and all applications, registrations, and
renewals in connection therewith, (c) all copyrightable works, all copyrights,
and all applications, registrations, and renewals in connection therewith, (d)
all mask works and all applications, registrations, and renewals in connection
therewith, (e) all trade secrets and confidential business information
(including ideas, research and development, know-how, formulas, compositions,
manufacturing and production processes and techniques, technical data, designs,
drawings, specifications, customer and supplier lists, pricing and cost
information, and business and marketing plans and proposals), (f) all computer
software (including data and related documentation), (g) all other proprietary
rights, and (h) all copies and tangible embodiments thereof (in whatever form
or medium).
"Knowledge" means the knowledge of the Stockholder after reasonable
investigation.
"Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"Material Adverse Effect" means, as to any Party, a material adverse
effect on the business, properties, operations, condition or future prospects
(financial or otherwise) of such Party.
"Merger" shall mean the merger of SAC with and into SCA in accordance
with the terms of this Agreement.
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"Most Recent Balance Sheet" means the balance sheet contained within
the Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth in
Section 5.7 below.
"Most Recent Fiscal Month End" has the meaning set forth in Section
5.7 below.
"Most Recent Fiscal Year End" has the meaning set forth in Section 5.7
below.
"Multiemployer Plan" has the meaning set forth in ERISA Section 3(37).
"NYSE" means the New York Stock Exchange.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity
and frequency).
"Party" or "Parties has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Prohibited Transaction" has the meaning set forth in ERISA Section
406 and Code Section 4975.
"Purchase Price" has the meaning set forth in Section 3.1(c) below.
"Reportable Event" has the meaning set forth in ERISA Section 4043.
"Restricted Period" has the meaning set forth in Section 8.5(a) below.
"SAC" has the meaning set forth in the preface above.
"SCA" has the meaning set forth in the preface above.
"SCA Articles of Merger" has the meaning set forth in Section 2.2
below.
"SCA Common Share Certificate" has the meaning set forth in Section
3.1(a) below.
"SCA Common Shares" means the shares of the common stock, no par
value, of SCA.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
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"Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, (b) liens for Taxes not yet due and payable or for Taxes
that the taxpayer is contesting in good faith through appropriate proceedings,
(c) purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business
and not incurred in connection with the borrowing of money.
"Share Consideration" has the meaning set forth in Section 3.1(a)
below.
"Xxxxxx" has the meaning set forth in the preface above.
"Xxxxxx Common Shares" shall mean the shares of common stock, par
value $0.001, of Xxxxxx.
"Xxxxxx Share Price" has the meaning set forth in Section 3.1(d)
below.
"Stockholder" has the meaning set forth in the preface above.
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
"Surviving Corporation" has the meaning set forth in Section 2.1
below.
"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section
59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or
add-on minimum, estimated, or other tax of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Third Party Claim" has the meaning set forth in Section 11.3 below.
"Transaction Costs" means any fees, costs or expenses incurred by the
Stockholder or SCA in connection with this Agreement and the transactions
contemplated hereby including investment banking, accounting and legal fees
and expenses. Transaction Costs include all fees, costs or expenses identified
on Schedule 1.1 as costs related to the Transaction which, as reflected
therein, total $1,086,789.50. Transaction Costs do not include any of the
fees, costs or expenses identified on Schedule 1.1 as "SCA costs."
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ARTICLE 2
MERGER; EFFECTIVE TIME; CLOSING; SURVIVING CORPORATION
2.1 Merger. Subject to the terms and conditions of this Agreement
and the Illinois BCA, at the Effective Time, SAC and SCA shall consummate the
Merger in which (i) SAC shall be merged with and into SCA and the separate
corporate existence of SAC shall thereupon cease, (ii) SCA shall be the
successor or surviving corporation in the Merger and shall continue to be
governed by the laws of the State of Illinois and (iii) the separate corporate
existence of SCA with all its rights, privileges, immunities, powers and
franchises shall continue unaffected by the Merger. The corporation surviving
the Merger is sometimes hereinafter referred to as the "Surviving Corporation".
The Merger shall have the effects set forth in the Illinois BCA.
2.2 Effective Time. On the Closing Date, subject to the terms and
conditions of this Agreement, SAC and SCA shall (i) cause to be executed
Articles of Merger in the form required by the Illinois BCA (the "SCA Articles
of Merger"), and (ii) cause the SCA Articles of Merger to be filed with the
Illinois Secretary of State as provided in the Illinois BCA. The Merger shall
become effective at (i) such time as the SCA Articles of Merger have been duly
filed with the Illinois Secretary of State or (ii) such other time as is agreed
upon by the Stockholder and Xxxxxx and specified in the and the SCA Articles of
Merger. Such time is hereinafter referred to as the "Effective Time".
2.3 The Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Shaw,
Pittman, Xxxxx & Xxxxxxxxxx, 0000 X Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000,
commencing at 8:00 a.m. local time on July 14, 1997 subject to the fulfillment
or waiver of the conditions set forth in Article 9 or such other place or time
or on such other date as Xxxxxx and the Stockholder may agree or as may be
necessary to permit the fulfillment or waiver of the conditions set forth in
Article 9 (the "Closing Date"). In the event that Closing has not occurred by
July 21, 1997, this Agreement is subject to termination pursuant to Section
10.2 hereof.
2.4 Surviving Corporation. The articles of incorporation, bylaws
and directors and officers of the Surviving Corporation shall be as follows:
(a) The articles of incorporation of SCA, as in effect immediately
prior to the Effective Time, shall be the articles of incorporation of the
Surviving Corporation until thereafter amended as provided therein and under
the Illinois BCA.
(b) The bylaws of SAC, as in effect immediately prior to the
Effective Time, shall be the bylaws of the Surviving Corporation.
(c) The directors and officers of SAC immediately prior to the
Effective Time shall be the directors and officers of the Surviving Corporation
from and after the Effective Time until their successors have been duly
elected, appointed or qualified or until their earlier death, resignation or
removal in accordance with the articles of incorporation and by-laws of the
Surviving Corporation.
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ARTICLE 3
SHARE CONSIDERATION; PAYMENT OF SHARE CONSIDERATION
3.1 Share Consideration; Conversion or Cancellation of SCA Common
Shares in Merger.
(a) At the Effective Time, by virtue of the Merger and without any
action by the Parties, all of the outstanding SCA Common Shares (i) shall be
converted into the right to receive the aggregate number of Xxxxxx Common
Shares (the "Share Consideration") equal to the quotient derived by dividing
the Purchase Price by the average closing price of a Xxxxxx Common Share,
rounded to the nearest cent, as reported on the NYSE over the five (5) trading
days immediately preceding the date of this Agreement and (ii) shall cease to
be outstanding and (iii) shall be canceled and retired and shall cease to
exist, and the Stockholder, as the holder of certificates representing such SCA
Common Shares (the "SCA Common Share Certificates"), shall cease to have any
rights with respect thereto, except the right to receive Xxxxxx Common Shares
therefor upon the surrender of such certificates in accordance with this
Section 3.1(a) and cash in lieu of fractional Xxxxxx Common Shares as set forth
in Section 3.3. At the Effective Time, each outstanding share of common stock,
$.01 par value, of SAC shall be converted into one share of common stock of the
Surviving Corporation, as such shares of common stock are constituted
immediately following the Effective Time.
(b) Prior to Closing, the Stockholder and SCA shall provide Xxxxxx
with the amount of the Transaction Costs incurred in connection with the
Merger, including all such costs paid, accrued or to be accrued and paid in the
future. In the event that Transaction Costs exceed such amount, the amount
of such excess shall be the responsibility of, and paid by, the Stockholder.
(c) For purposes of this Agreement, the term "Purchase Price"
shall mean (i) the sum of $39,000,000 and SCA's net income for the period from
January 1, 1997 through June 30, 1997 minus (ii) the sum of all Transaction
Costs and the $265,000 distribution made by SCA in March 1997.
(d) For purposes of this Agreement, the term "Xxxxxx Share Price"
shall mean the average closing price of a Xxxxxx Common Share, rounded to the
nearest cent, as reported on the NYSE over the five (5) trading days
immediately preceding the date of this Agreement.
3.2 Delivery and Payment of Share Consideration.
(a) At Closing or as soon as possible thereafter, Xxxxxx shall
deliver to the Stockholder two duly endorsed certificates, one of which
represents ninety percent (90%) of the Xxxxxx Common Shares to be issued in
payment of the Share Consideration pursuant to Section 3.1 and one of which
represents ten percent (10%) of the Xxxxxx Common Shares to be issued in
payment of the Share Consideration pursuant to Section 3.1.
(b) The certificate representing ten percent (10%) of the Xxxxxx
Common Shares to be issued in payment of the Share Consideration shall be
deposited into the escrow contemplated
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by Section 11.6 of this Agreement, together with stock powers duly endorsed in
blank by the Stockholder.
3.3 Fractional Xxxxxx Common Shares. No certificates representing
fractional Xxxxxx Common Shares shall be issued upon surrender of any SCA
Common Share Certificates. In lieu of any fractional Xxxxxx Common Shares,
there shall be paid to each holder of SCA Common Shares who otherwise would be
entitled to receive a fractional Xxxxxx Common Shares an amount of cash
(without interest) determined by multiplying such fraction by the Xxxxxx Share
Price.
3.4 Transfer of SCA Common Shares.
(a) No transfers of SCA Common Shares shall be made on the stock
transfer books of SCA after the date of this Agreement.
(b) The Stockholder agrees not to transfer any SCA Common Shares
after the date of this Agreement and before the Closing Date.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES CONCERNING THE STOCKHOLDER
The Stockholder represents and warrants to Xxxxxx and SAC that the
statements contained in this Article 4 are correct and complete as of the date
hereof with respect to himself:
4.1 Authorization of Transaction. The Stockholder has full power
and authority to execute and deliver this Agreement and to perform his
obligations hereunder. This Agreement constitutes the valid and legally binding
obligation of the Stockholder, enforceable in accordance with its terms and
conditions. To the Knowledge of the Stockholder no filing of a notification
pursuant to the Xxxx-Xxxxx-Xxxxxx Act is required in connection with the
transactions contemplated herein. The Stockholder does not otherwise need to
give any notice to, make any filing with, or obtain any authorization, consent,
or approval of any government or governmental agency in order to consummate the
transactions contemplated by this Agreement, except in connection with causing
the filing of the SCA Articles of Merger by SCA.
4.2 Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
will (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which the Stockholder is subject,
or (ii) result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which the Stockholder is a party
or by which he is bound or to which any of his assets is subject.
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4.3 Investment. The Stockholder (i) understands that the Xxxxxx
Common Shares to be acquired by such Stockholder pursuant to this Agreement
will not be registered under the Securities Act, or under any state securities
laws, and will be exchanged in reliance upon federal and state exemptions for
transactions not involving a public offering, (ii) is acquiring the Xxxxxx
Common Shares solely for his own account for investment purposes, and not with
a view towards the distribution thereof, (iii) is a sophisticated investor with
knowledge and experience in business and financial matters, (iv) has received
certain information concerning Xxxxxx, including, without limitation, (A) the
most recent annual report on Form 10-K, (B) the most recent quarterly reports
on Form 10-Q, (C) current reports on Form 8-K dated June 2, 1997, in each case
as filed by Xxxxxx under the Securities Exchange Act, and (D) the most recent
annual report to stockholders of Xxxxxx, and has had the opportunity to obtain
additional information as desired in order to evaluate the merits and the risks
inherent in holding Xxxxxx Common Shares, and (v) is able to bear the economic
risk and lack of liquidity inherent in holding Xxxxxx Common Shares which have
not been registered under the Securities Act.
4.4 SCA Common Shares. The Stockholder holds of record and owns
beneficially seventy-five (75) SCA Common Shares, which represent all of the
issued and outstanding capital stock of SCA. Such shares are owned, free and
clear of any restrictions on transfer (other than any restrictions under the
Securities Act and state securities laws), Taxes, Security Interests, options,
warrants, purchase rights, contracts, commitments, equities, claims, and
demands. The Stockholder is not a party to any option, warrant, purchase
right, or other contract or commitment that could require such Stockholder to
sell, transfer, or otherwise dispose of any of the SCA Common Shares (other
than pursuant to this Agreement) or is a party to any voting trust, proxy, or
other agreement or understanding with respect to the voting of any of the SCA
Common Shares.
4.5 HSR Requirements. The Stockholder understands that no filing
will be made in connection with this transaction under the Xxxx-Xxxxx-Xxxxxx
Act based on the Stockholder's representation that his "investment assets,"
"voting securities" and "income producing properties," collectively, as defined
or used in the Xxxx-Xxxxx-Xxxxxx Act or the related rules and regulations
thereunder do not exceed $10.0 million for all applicable periods under the
Xxxx-Xxxxx-Xxxxxx Act.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES CONCERNING SCA
The Stockholder and SCA jointly and severally represent and warrant to
Xxxxxx and SAC that the statements contained in this Article 5 are correct and
complete as of the date hereof, except as set forth in the disclosure schedule
delivered by the Stockholder and SCA to Xxxxxx and SAC on the date hereof (the
"Disclosure Schedule"). Nothing in the Disclosure Schedule shall be deemed
adequate to disclose an exception to a representation or warranty made herein,
however, unless the Disclosure Schedule identifies the exception with
particularity. Without limiting the generality of the foregoing, the mere
listing (or inclusion of a copy) of a document or other item shall not be
deemed adequate to disclose an exception to a representation or warranty
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made herein (unless the representation or warranty has to do with the existence
of the document or other item itself). The Disclosure Schedule will be arranged
in paragraphs corresponding to the lettered and numbered paragraphs contained
in this Article 5.
5.1 Organization, Qualification, and Corporate Power. SCA is a
corporation duly organized, validly existing, and in good standing under the
laws of Illinois. SCA is duly authorized to conduct business and is in good
standing under the laws of each jurisdiction where such qualification is
required, except where the failure to so qualify or obtain authorization would
not have a Material Adverse Effect on SCA. Except as set forth in Section
5.1(a) of the Disclosure Schedule, SCA has full corporate power and authority
and all licenses, permits, and authorizations necessary to carry on the
businesses in which it is engaged and to own and use the properties owned and
used by it. Section 5.1(b) of the Disclosure Schedule lists the directors and
officers of SCA. SCA has delivered to Xxxxxx and SAC correct and complete
copies of the articles of incorporation and by-laws of SCA (as amended to
date). The minute books (containing the records of meetings of the
stockholders, the board of directors, and any committees of the board of
directors), the stock certificate books, and the stock record books of SCA in
the forms in which they have been provided to Xxxxxx are correct and complete.
SCA is not in default under or in violation of any provision of its articles of
incorporation or by-laws.
5.2 Capitalization. The entire authorized capital stock of SCA
(the "SCA Common Shares") consists of 10,000 shares of common stock, no par
value, of which seventy-five (75) shares are issued and outstanding. No SCA
Common Shares are held in treasury. All of the issued and outstanding SCA
Common Shares have been duly authorized, are validly issued, fully paid, and
nonassessable, and are held of record by the Stockholder as set forth in
Section 5.2 of the Disclosure Schedule. There are no outstanding or authorized
options, warrants, purchase rights, subscription rights, conversion rights,
exchange rights, or other contracts or commitments that could require SCA to
issue, sell, or otherwise cause to become outstanding any of its capital stock.
There are no outstanding or authorized stock appreciation, phantom stock,
profit participation, or similar rights with respect to SCA. There are no
voting trusts, proxies, or other agreements or understandings with respect to
the voting of the SCA Common Shares.
5.3 Authorization of Transaction. SCA has full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement and to perform its obligations hereunder. This Agreement constitutes
the valid and legally binding obligation of SCA, enforceable in accordance with
its terms and conditions. SCA is not required to give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order to consummate the transactions
contemplated by this Agreement, except in connection with the filing of the SCA
Articles of Merger.
5.4 Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
will (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which SCA is subject or any
provision of the charter or bylaws of SCA or (ii) except for the consent
required in connection with the Xxxxxxx & Xxxxxx Master Sampling and
Distribution Agreement (which consent shall have been obtained
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prior to Closing) result in a breach of, constitute a default under, result in
the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which SCA is a party or by which
it is bound or to which any of its assets is subject (or result in the
imposition of any Security Interest upon any of its assets).
5.5 Title to Assets. SCA has good title to, or a valid leasehold
interest in, the properties and assets used by it, located on its premises, or
shown on the Most Recent Balance Sheet acquired after the date thereof, free
and clear of all Security Interests, except for properties and assets disposed
of in the Ordinary Course of Business since the date of the Most Recent Balance
Sheet.
5.6 Subsidiaries. SCA does not have any Subsidiaries, operating
or otherwise.
5.7 Financial Statements.
(a) SCA has delivered (collectively, the "Financial Statements")
to Xxxxxx its (i) compiled balance sheets and statements of income and cash
flow as of and for the fiscal years ended December 31, 1994, and December 31,
1995; (ii) audited balance sheet and statements of earnings and retained
earnings and cash flows as of and for the fiscal year ended December 31, 1996
(the "Most Recent Fiscal Year End"); and (iii) unaudited balance sheets and
statements of income, changes in stockholders' equity, and cash flow (the "Most
Recent Financial Statements") as of and for the six (6) months ended June 30,
1997 (the "Most Recent Fiscal Month End"). The Financial Statements (including
the notes thereto) have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby, present fairly the
financial condition of SCA as of such dates and the results of operations of
SCA for such periods, and are consistent with the books and records of SCA
(which books and records are correct and complete in all material respects).
(b) SCA's net income for the six (6) months ended June 30, 1997 was
$926,185.56.
5.8 Events Subsequent to Most Recent Fiscal Year End. Since the
Most Recent Fiscal Year End, there has not been any Material Adverse Effect
with respect to SCA. Since that date:
(a) SCA has not sold, leased, transferred, or assigned any of its
assets, tangible or intangible, other than for a fair consideration in the
Ordinary Course of Business;
(b) except as set forth in Schedule 5.8(b), SCA has not entered
into any agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) either involving more than $50,000
or outside the Ordinary Course of Business;
(c) no party (including SCA) has accelerated, terminated,
modified, or canceled any agreement, contract, lease, or license (or series of
related agreements, contracts, leases, and licenses) to which SCA is a party or
by which it is bound;
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(d) SCA has not imposed any Security Interest upon any of its
assets, tangible or intangible;
(e) SCA has not made any capital expenditure (or series of related
capital expenditures) involving more than $50,000;
(f) SCA has not made any capital investment in, any loan to, or
any acquisition of the securities or assets of, any other Person (or series of
related capital investments, loans, and acquisitions);
(g) SCA has not issued any note, bond, or other debt security or
created, incurred, assumed, or guaranteed any indebtedness for borrowed money
or capitalized lease obligation;
(h) SCA has not delayed or postponed the payment of accounts
payable and other Liabilities outside the Ordinary Course of Business;
(i) SCA has not canceled, compromised, waived, or released any
right or claim (or series of related rights and claims) outside the Ordinary
Course of Business;
(j) SCA has not granted any license or sublicense of any rights
under or with respect to any Intellectual Property;
(k) there has been no change made or authorized in the articles of
incorporation or by-laws of SCA;
(l) SCA has not issued, sold, or otherwise disposed of any of its
capital stock, or granted any options, warrants, or other rights to purchase or
obtain (including upon conversion, exchange, or exercise) any of its capital
stock;
(m) except for dividends paid in January 1997 in the amount of
$1,800,000 and for dividends paid in March 1997 in the amount of $265,000, SCA
has not declared, set aside, or paid any dividend or made any distribution with
respect to its capital stock (whether in cash or in kind) or redeemed,
purchased, or otherwise acquired any of its capital stock;
(n) SCA has not experienced any damage, destruction, or loss
(whether or not covered by insurance) to its property;
(o) SCA has not made any loan to, or entered into any other
transaction with, any of its directors, officers, and employees outside the
Ordinary Course of Business;
(p) except for the execution of an employment agreement with Xxxxx
Xxxxxxxx, the extension of employment agreements with Xxxxx Xxxxxx and Xxxxx
Xxxxxxxxx, the amendment of an employment agreement with Xxxxx Xxxx and the
commitment to pay a $20,000 bonus to Xxxxx Xxxx upon completion of an assigned
project, SCA has not entered into any employment
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contract or collective bargaining agreement, written or oral, or modified the
terms of any existing such contract or agreement;
(q) SCA has not granted any increase in the base compensation of
any of its directors, officers, and employees outside the Ordinary Course of
Business;
(r) SCA has not adopted, amended, modified, or terminated any
bonus, profit-sharing, incentive, severance, or other plan, contract, or
commitment for the benefit of any of its directors, officers, and employees (or
taken any such action with respect to any other Employee Benefit Plan);
(s) SCA has not made any other change in employment terms for any
of its directors, officers, and employees outside the Ordinary Course of
Business or in the terms of its agreements with any independent contractors;
(t) SCA has not made or pledged to make any charitable or other
capital contribution outside the Ordinary Course of Business;
(u) there has not been any other material occurrence, event,
incident, action, failure to act, or transaction outside the Ordinary Course of
Business involving SCA; and
(v) SCA is not under any legal obligation, whether written or
oral, to do any of the foregoing.
5.9 Undisclosed Liabilities. SCA does not have any Liability (and
there is no Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against it giving rise to
any Liability), except for (i) Liabilities set forth on the face of the Most
Recent Balance Sheet and (ii) Liabilities which have arisen after the Most
Recent Fiscal Month End in the Ordinary Course of Business (none of which
results from, arises out of, relates to, is in the nature of, or was caused by
any breach of contract, breach of warranty, tort, infringement, or violation of
law and none of which exceeds $50,000 individually).
5.10 Legal Compliance. SCA has complied in all material respects
with all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges thereunder) of
federal, state, local, and foreign governments (and all agencies thereof), and
no action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed or commenced against it alleging any failure
so to comply.
5.11 Tax Matters.
(a) SCA has filed all Tax Returns that it was required to file,
including, without limitation, any Tax Returns required to be filed with any
state. All such Tax Returns were correct and complete in all respects. All
Taxes owed by SCA (whether or not shown on any Tax Return) have been paid. SCA
currently is not the beneficiary of any extension of time within which to file
any Tax Return, except for extensions of time until September 15, 1997, to file
its 0000 X
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Xxxxxxxxxxx Xxxxxxx xxx Xxxxxxxx income tax returns. No claim has ever been
made by an authority in a jurisdiction where SCA does not file Tax Returns that
it is or may be subject to taxation by that jurisdiction. There are no Security
Interests on any of the assets of SCA that arose in connection with any failure
(or alleged failure) to pay any Tax.
(b) SCA has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other third party.
(c) The Stockholder does not expect any authority to assess any
additional Taxes for any period for which Tax Returns have been filed. There is
no dispute or claim concerning any Tax Liability of SCA either (A) claimed or
raised by any authority in writing or (B) as to which Stockholder has
Knowledge. Section 5.11(c) of the Disclosure Schedule lists all federal,
state, local, and foreign income Tax Returns filed with respect to SCA for
taxable periods ended on or after December 31, 1991, indicates those Tax
Returns that have been audited, and indicates those Tax Returns that currently
are the subject of audit. SCA has made available to Xxxxxx correct and
complete copies of all federal income Tax Returns, examination reports, and
statements of deficiencies assessed against or agreed to by SCA since December
31, 1991.
(d) SCA has not waived any statute of limitations in respect of
Taxes or agreed to any extension of time with respect to a Tax assessment or
deficiency.
(e) SCA has not filed a consent under Code Section 341(f)
concerning collapsible corporations. SCA has not made any payments, is
obligated to make any payments, or is a party to any agreement that under
certain circumstances could obligate it to make any payments that will not be
deductible under Code Section 280G. SCA has not been a United States real
property holding corporation within the meaning of Code Section 897(c)(2)
during the applicable period specified in Code Section 897(c)(1)(A)(ii). SCA
has disclosed on its federal income Tax Returns all positions taken therein
that could give rise to a substantial understatement of federal income Tax
within the meaning of Code Section 6662. SCA is not a party to any Tax
allocation or sharing agreement. SCA (A) has not been a member of an
Affiliated Group filing a consolidated federal income Tax Return (other than a
group the common parent of which was SCA) or (B) has any Liability for the
Taxes of any Person (other than SCA) under Treas. Reg. Section 1.1502-6 (or any
similar provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.
(f) Pursuant to an election effective on January 1, 1995, SCA (1)
has been treated and has been entitled to have been treated at all times during
taxable year 1995 and thereafter as an "S Corporation" within the meaning of
Section 1362(a) of the Code and corresponding provisions of state and local law
and (ii) has not been since January 1, 1995 and is not now subject to any
federal, state or local tax on any of its income, except for the Illinois
Replacement Tax.
5.12 Real Property. Section 5.12 of the Disclosure Schedule lists
and describes briefly all real property owned, leased or subleased to SCA. SCA
has delivered to Xxxxxx correct and
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complete copies of the real estate leases and subleases listed in Section 5.12
of the Disclosure Schedule (as amended to date). With respect to each real
estate lease and sublease listed in Section 5.12 of the Disclosure Schedule:
(a) the lease or sublease is legal, valid, binding, enforceable,
and in full force and effect;
(b) no consent is required with respect to any lease or sublease
as a result of this Agreement, and the actions contemplated by this Agreement
will not result in the change of any terms of any lease or sublease or
otherwise affect the ongoing validity of any lease or sublease;
(c) no party to the lease or sublease is in breach or default, and
no event has occurred which, with notice or lapse of time, would constitute a
breach or default or permit termination, modification, or acceleration
thereunder;
(d) no party to the lease or sublease has repudiated any provision
thereof;
(e) there are no disputes, oral agreements, or forbearance
programs in effect as to the lease or sublease;
(f) with respect to each sublease, the representations and
warranties set forth in subsections (a) through (e) above are true and correct
with respect to the underlying lease;
(g) SCA has not assigned, transferred, conveyed, mortgaged, deeded
in trust, or encumbered any interest in the leasehold or subleasehold;
(h) all facilities leased or subleased thereunder have received
all approvals of governmental authorities (including licenses and permits)
required by SCA in connection with the operation thereof and have been operated
and maintained by SCA in accordance with all applicable material laws, rules,
and regulations; and
(i) all facilities leased or subleased thereunder are supplied
with utilities and other services necessary for the operation of said
facilities.
5.13 Intellectual Property.
(a) SCA owns or has the right to use pursuant to license,
sublicense, agreement, or permission all Intellectual Property used in the
operation of the businesses of SCA as presently conducted. Each item of
Intellectual Property owned or used by SCA immediately prior to the Closing
hereunder will be owned or available for use by the Surviving Corporation on
identical terms and conditions immediately subsequent to the Closing hereunder.
(b) To their knowledge, SCA has not interfered with, infringed
upon, misappropriated, or otherwise come into conflict with any Intellectual
Property rights of third parties, and neither the Stockholder nor the directors
and officers (and employees with
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responsibility for Intellectual Property matters) of SCA has ever received any
charge, complaint, claim, demand, or notice alleging any such interference,
infringement, misappropriation, or violation (including any claim that SCA must
license or refrain from using any Intellectual Property rights of any third
party). To their Knowledge, no third party has interfered with, infringed
upon, misappropriated, or otherwise come into conflict with any Intellectual
Property rights of SCA.
(c) SCA has no patent or registration which has been issued to SCA
with respect to any of its Intellectual Property.
(d) Section 5.13(d) of the Disclosure Schedule identifies each
item of Intellectual Property that any third party owns and that SCA uses
pursuant to license, sublicense, agreement, or permission. SCA has delivered to
Xxxxxx and SAC correct and complete copies of all such licenses, sublicenses,
agreements, and permissions (as amended to date).
(e) To their knowledge, nothing will materially interfere with,
infringe upon, misappropriate, or otherwise come into conflict with, any
Intellectual Property rights of third parties as a result of the continued
operation of its business as presently conducted.
5.14 Tangible Assets. SCA owns or leases all buildings, machinery,
equipment, and other tangible assets used in the conduct of its business as
presently conducted and as presently proposed to be conducted. Each such
tangible asset is free from all material defects (patent and latent), has been
maintained in accordance with normal industry practice, is in good operating
condition and repair (subject to normal wear and tear), and is suitable for the
purposes for which it presently is used. With the exception of any licensed or
leased assets used by SCA, the Most Recent Balance Sheet sets forth all of the
assets necessary to conduct SCA's business as it is currently being conducted
and as it is contemplated to be conducted in the future.
5.15 Contracts. Section 5.15 of the Disclosure Schedule lists the
following contracts and other agreements to which SCA is a party:
(a) any agreement (or group of related agreements) for the lease
of personal property to or from any Person providing for lease payments in
excess of $50,000 per annum;
(b) any agreement concerning a partnership or joint venture;
(c) any agreement (or group of related agreements) under which it
has created, incurred, assumed, or guaranteed any indebtedness for borrowed
money, or any capitalized lease obligation or under which it has imposed a
Security Interest on any of its assets, tangible or intangible;
(d) except with respect to this transaction, any agreement
concerning confidentiality or noncompetition;
(e) any agreement with the Stockholder and his Affiliates;
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(f) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other material plan or
arrangement for the benefit of its current or former directors, officers, and
employees;
(g) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual compensation
in excess of $50,000 or providing severance benefits;
(h) any agreement under which it has advanced or loaned any amount
to any of its directors, officers and employees outside the Ordinary Course of
Business; or
(i) any agreement under which SCA is performing services for
customers or clients providing for payments in excess of $50,000 per annum or
any agreement under which SCA is receiving services providing for payments in
excess of $50,000 per annum.
The Stockholder and SCA have made available, and delivered if requested, to
Xxxxxx and SAC a correct and complete copy of each written agreement listed in
Section 5.15 of the Disclosure Schedule (as amended to date) and a written
summary setting forth the terms and conditions of each oral agreement, if any,
referred to in Section 5.15 of the Disclosure Schedule. With respect to each
such agreement: (A) the agreement is legal, valid, binding, enforceable, and in
full force and effect; (B) the agreement will continue to be legal, valid,
binding, enforceable, and in full force and effect on identical terms following
the consummation of the transactions contemplated hereby; (C) no party is in
breach or default, and no event has occurred which with notice or lapse of time
would constitute a breach or default, or permit termination, modification, or
acceleration, under the agreement; and (D) no party has repudiated any
provision of the agreement.
5.16 Notes and Accounts Receivable. All notes and accounts
receivable of SCA are reflected properly on its books and records, are valid
receivables subject to no setoffs or counterclaims, are current and fully
collectible in accordance with their terms at their recorded amounts and shall
be collectible, subject only to the reserve for bad debts set forth on the face
of the Most Recent Balance Sheet (rather than in any notes thereto) as adjusted
for the passage of time through the Closing Date in accordance with the past
custom and practice of SCA.
5.17 Powers of Attorney. There are no outstanding powers of
attorney executed on behalf of SCA, except as delivered to the Internal Revenue
Service in support of SCA's application for a determination letter.
5.18 Insurance. Section 5.18 of the Disclosure Schedule sets forth
the following information with respect to each insurance policy (including
policies providing property, casualty, liability, and workers' compensation
coverage and bond and surety arrangements) to which SCA has been a party, a
named insured, or otherwise the beneficiary of coverage at any time within the
past five years: (i) the name, address, and telephone number of the agent;
(ii) the name of the insurer, the name of the policyholder, and the name of
each covered insured; (iii) the policy number, the period of coverage and
whether such policy is presently in effect; (iv) the scope (including an
indication of whether the coverage was on a claims made, occurrence, or
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other basis) and amount (including a description of how deductibles and
ceilings are calculated and operate) of coverage; and (v) a description of any
retroactive premium adjustments or other loss-sharing arrangements. With
respect to each insurance policy presently in effect: (A) the policy is legal,
valid, binding, enforceable, and in full force and effect; (B) unless modified,
the policy will continue to be legal, valid, binding, enforceable, and in full
force and effect on identical terms following the consummation of the
transactions contemplated hereby; (C) neither SCA nor any other party to the
policy is in breach or default (including with respect to the payment of
premiums or the giving of notices), and no event has occurred which, with
notice or the lapse of time, would constitute such a breach or default, or
permit termination, modification, or acceleration, under the policy; and (D) no
party to the policy has repudiated any provision thereof. SCA has been covered
during the past five years by insurance in scope and amount customary and
reasonable for the businesses in which it has engaged during the aforementioned
period. Section 5.18 of the Disclosure Schedule describes any self-insurance
arrangements affecting SCA.
5.19 Litigation. Section 5.19 of the Disclosure Schedule sets
forth each instance in which SCA (i) is subject to any outstanding injunction,
judgment, order, decree, ruling, or charge or (ii) is a party or is threatened
to be made a party to any action, suit, proceeding, hearing, or investigation
of, in, or before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator. None
of the actions, suits, proceedings, hearings, and investigations set forth in
Section 5.19 of the Disclosure Schedule could result in any Material Adverse
Effect on SCA. The Stockholder has no Basis to believe that any such action,
suit, proceeding, hearing, or investigation may be brought or threatened
against SCA.
5.20 Employees. To the Knowledge of the Stockholder and to the
knowledge of SCA, no executive, key employee, or group of employees currently
has any plans to terminate employment with SCA independently of or as a result
of this Agreement. SCA has not committed any unfair labor practice. Neither
the Stockholder nor SCA has any Knowledge of any organizational effort
presently being made or threatened by or on behalf of any labor union with
respect to employees of SCA. The Disclosure Schedule sets forth the names of
all employees necessary in order to conduct SCA's business as it is currently
being conducted and as it is contemplated to be conducted in the future.
5.21 Employee Benefits.
(a) Section 5.21(a) of the Disclosure Schedule lists each Employee
Benefit Plan that SCA maintains or to which SCA contributes.
(b) Each such Employee Benefit Plan (and each related trust,
insurance contract, or fund) complies in form and in operation in all respects
with the applicable requirements of ERISA, the Code, and other applicable laws.
(c) All required reports and descriptions (including Form 5500
Annual Reports, Summary Annual Reports, and Summary Plan Descriptions) have
been filed or distributed
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appropriately with respect to each such Employee Benefit Plan. The requirements
of Part 6 of Subtitle B of Title 1 of ERISA and of Code Section 4980B have been
met with respect to each such Employee Benefit Plan which is an Employee
Welfare Benefit Plan.
(d) All contributions (including all employer contributions and
employee salary reduction contributions) which are due have been paid to each
such Employee Benefit Plan which is an Employee Pension Benefit Plan and all
contributions for any period ending on or before the Closing Date which are not
yet due have been paid to each such Employee Pension Benefit Plan or accrued in
accordance with the past custom and practice of SCA. All required premiums or
other payments for all periods ending on or before the Closing Date have been
paid with respect to each such Employee Benefit Plan which is an Employee
Welfare Benefit Plan.
(e) Each such Employee Benefit Plan which is an Employee Pension
Benefit Plan meets the requirements of a "qualified plan" under Code Section
401(a) and has received, a favorable determination letter from the Internal
Revenue Service reflecting its current compliance with the Code.
(f) The market value of assets under each such Employee Benefit
Plan which is an Employee Pension Benefit Plan (other than any Multiemployer
Plan), subject to Title IV of ERISA, equals or exceeds the present value of all
vested and nonvested Liabilities thereunder determined in accordance with PBGC
methods, factors, and assumptions applicable to an Employee Pension Benefit
Plan terminating on the date for determination.
(g) SCA has made available, and delivered, if requested, to Xxxxxx
correct and complete copies of the plan documents and summary plan
descriptions, the most recent determination letter received from the Internal
Revenue Service, the most recent Form 5500 Annual Report, and all related trust
agreements, insurance contracts, and other funding agreements which implement
each such Employee Benefit Plan.
(h) With respect to each Employee Benefit Plan that SCA maintains
or ever has maintained or to which it contributes, ever has contributed, or
ever has been required to contribute:
(i) No such Employee Benefit Plan which is an
Employee Pension Benefit Plan (other than any Multiemployer Plan), subject to
Title IV of ERISA, has been completely or partially terminated or been the
subject of a Reportable Event as to which notices would be required to be filed
with the PBGC. No proceeding by the PBGC to terminate any such Employee Pension
Benefit Plan (other than any Multiemployer Plan) has been instituted or
threatened.
(ii) There have been no non-exempt Prohibited
Transactions with respect to any such Employee Benefit Plan. No Fiduciary has
any Liability for breach of fiduciary duty or any other failure to act or
comply in connection with the administration or investment of the assets of any
such Employee Benefit Plan. No action, suit, proceeding, hearing, or
investigation with respect to the administration or the investment of the
assets of any such Employee Benefit
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Plan (other than routine claims for benefits) is pending or threatened. The
Stockholder has no Knowledge of any Basis for any such action, suit,
proceeding, hearing, or investigation.
(iii) SCA has not incurred, and neither the
Stockholder nor the directors and officers (and employees with responsibility
for employee benefits matters) of SCA has any reason to expect that SCA will
incur, any Liability to the PBGC (other than PBGC premium payments) or
otherwise under Title IV of ERISA (including any withdrawal Liability) or under
the Code with respect to any such Employee Benefit Plan which is an Employee
Pension Benefit Plan.
(i) SCA does not contribute to and has never contributed to or
been required to contribute to any Multiemployer Plan or has any Liability
(including withdrawal Liability) under any Multiemployer Plan.
(j) SCA does not maintain or ever has maintained or contributes,
ever has contributed, or ever has been required to contribute to any Employee
Welfare Benefit Plan providing medical, health, or life insurance or other
welfare-type benefits for current or future retired or terminated employees,
their spouses, or their dependents (other than in accordance with Code Section
4980B).
5.22 Guaranties. SCA is not a guarantor or otherwise is liable for
any Liability or obligation (including indebtedness) of any other Person.
5.23 Environment, Health, and Safety.
(a) SCA has complied in all material respects with all
Environmental, Health, and Safety Laws, and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice has been
filed or commenced against it alleging any failure so to comply. Without
limiting the generality of the preceding sentence, SCA has obtained and been in
compliance with all of the terms and conditions of all permits, licenses, and
other authorizations which are required under, and has complied with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules, and timetables which are contained in, all
Environmental, Health, and Safety Laws.
(b) SCA does not have any Liability and has not handled or
disposed of any substance, arranged for the disposal of any substance, except
as set forth in Schedule 5.23(b), exposed any employee or other individual to
any substance or condition, or owned or operated any property or facility in
any manner that could form the Basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
SCA giving rise to any Liability for damage to any site, location, or body of
water (surface or subsurface), for any illness of or personal injury to any
employee or other individual, or for any reason under any Environmental,
Health, and Safety Law.
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(c) All properties and equipment used in the business of SCA has
been free of asbestos, PCB's, methylene chloride, trichloroethylene,
1,2-trans-dichloroethylene, dioxins, dibenzofurans, and Extremely Hazardous
Substances.
5.24 Customers. The names and addresses of all customers of SCA
during fiscal year 1996 and all customers known as of the Closing Date who have
been customers during fiscal 1997 are listed in the Disclosure Schedule. All
contracts and agreements with such customers are valid, effective and
enforceable and the Disclosure Schedule sets forth all customers who have
account balances that are in excess of ninety (90) days past due.
5.25 Relationships with Customers and Suppliers. The Stockholder
and SCA believe that SCA's relationships with its existing customers are sound,
and there is no Basis to believe that any of SCA's primary customers are
considering materially and adversely changing the manner in which they
currently conduct business with SCA. SCA knows of no written or oral
communication, fact, event or action which exists or has occurred within one
hundred twenty (120) days prior to the date of this Agreement which would
indicate that any of the following are planning to terminate or materially
reduce its business with SCA:
(i) any current customer of SCA which accounted
for over 1% of total net sales of SCA for 1996; or
(ii) any current supplier to SCA of items
essential to the conduct of the business, which items cannot be replaced at
comparable cost and the loss of which would have an adverse effect on SCA.
Since the Most Recent Balance Sheet Date, (A) SCA has retained all
sales personnel employed in connection with the operation of the business and
(B) no customer (or group of customers) purchasing in the aggregate of $50,000
in products and services on a yearly basis has terminated its relationship with
SCA.
5.26 Employee and Stockholder Indebtedness. The Disclosure
Schedule sets forth all indebtedness to SCA of the Stockholder or the officers,
directors or employees of SCA.
5.27 Product Liability. Except to the extent covered by insurance,
SCA has no liability (and, to the Knowledge of SCA and the Stockholder, there
is no Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand against SCA giving rise to
any liability) arising out of any injury to individuals or property as a result
of the ownership, possession or use of any product manufactured, sold, leased
or delivered by SCA.
5.28 Bank Accounts. The Disclosure Schedule sets forth all bank
accounts and marketable securities (both debt and equity) of SCA.
5.29 Related Party Agreements. The Disclosure Schedule sets forth
all agreements between (i) SCA and its employees and (ii) SCA and the
Stockholder.
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5.30 Change in Control. SCA is not a party to any contract or
arrangement, including, without limitation, any agreement or contract with an
advertiser or supermarket, which contains a "change in control," "potential
change in control" or similar provision, and the consummation of the
Acquisition shall not (either alone or upon the occurrence of additional acts
or events) result in any payment or payments becoming due from SCA to any
person or give any person the right to terminate or alter the provisions of any
agreement to which SCA is a party.
5.31 Disclosure. The representations and warranties contained in
this Article 5 do not contain any untrue statement of a material fact or to the
Knowledge of the Stockholder or the knowledge of SCA omit to state any material
fact necessary in order to make the statements and information contained in
this Article 5 not misleading.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF XXXXXX AND SAC
Xxxxxx and SAC jointly and severally represent and warrant to SCA that
the statements contained in this Article 6 are correct and complete as of the
date hereof:
6.1 Organization of Xxxxxx and SAC. Xxxxxx is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of Delaware. SAC is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Illinois. Xxxxxx, and each of its
Subsidiaries, is duly authorized to conduct business and is in good standing
under the laws of each jurisdiction where such qualification is required except
where a failure to so qualify or obtain authorization would not have a Material
Adverse Effect on Xxxxxx and its Subsidiaries, taken as a whole. Xxxxxx and
each subsidiary has full corporate power and authority and all licenses,
permits and authorization necessary to carry on the business in which it is
engaged and to own and use the properties owned and used by it.
6.2 Capital Stock. The authorized capital stock of Xxxxxx
consists of 120,000,000 shares of common stock, $.001 par value (the "Xxxxxx
Common Shares"), of which 37,528,014 shares are outstanding as of June 30,
1997, and 5,000,000 shares of preferred stock, of which no shares are
outstanding as of June 30, 1997. Since June 30, 1997, Xxxxxx has not issued
any shares of capital stock except pursuant to the exercise of options
outstanding on such date to purchase Xxxxxx Common Shares. All outstanding
Xxxxxx Common Shares are, and all Xxxxxx Common Shares issuable under stock
option plans of Xxxxxx will be when issued in accordance with the terms
thereof, duly authorized, validly issued, fully paid and nonassessable. Except
for the 6,567,402 Xxxxxx Common Shares reserved for issuance pursuant to stock
option plans of Xxxxxx, there are outstanding on the date hereof no options,
warrants, calls, rights, commitments or any other agreements of any character
to which Xxxxxx is a party or by which it may be bound, requiring it to issue,
transfer, sell, purchase, register, redeem or acquire any shares of capital
stock or any securities or rights convertible into, exchangeable for or
evidencing the right to subscribe for or acquire any shares of its capital
stock. Xxxxxx has no shareholder rights plan or any other plan of a similar
nature in effect.
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6.3 Authorization for Common Stock. The Xxxxxx Common Shares
issued in payment of the Purchase Price will, when issued, be duly authorized,
validly issued, fully paid and nonassessable, and no stockholder of Xxxxxx will
have any preemptive right or similar rights of subscription or purchase in
respect thereof. The Xxxxxx Common Shares issued in payment of the Purchase
Price will, subject to the accuracy of the Stockholder's representations
contained in Section 4.3 hereof, be exempt from registration under the
Securities Act and will be registered or exempt from registration under all
applicable state securities laws. The Xxxxxx Common Shares issued in payment
of the Purchase Price will, when issued, be approved for listing on the NYSE,
subject to official notice of issuance.
6.4 Authorization of Transaction. Each of Xxxxxx and SAC has full
power and authority (including full corporate power and authority) to execute
and deliver this Agreement and to perform its respective obligations hereunder.
The execution and performance of this Agreement has been duly authorized by
Xxxxxx'x and SAC's Board of Directors constitutes the valid and legally binding
obligation of Xxxxxx, enforceable in accordance with its terms and conditions.
Assuming that the information provided by the Stockholder is correct, to the
Knowledge of Xxxxxx, no filing is required under the applicable requirements
under the Xxxx-Xxxxx-Xxxxxx Act. Neither Xxxxxx nor SAC need otherwise give
any notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order to consummate the
transactions contemplated by this Agreement, except in connection with the
federal securities laws and any applicable "Blue Sky" or state securities laws.
6.5 Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
will (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which either Xxxxxx or SAC is
subject or any provision of its articles of incorporation or by-laws or (ii)
result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which either Xxxxxx or SAC is a party or by
which it is bound or to which any of its assets is subject.
6.6 Brokers' Fees. Neither Xxxxxx nor SAC has any Liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement.
6.7 New York Stock Exchange. Xxxxxx is in compliance in all
material respects with its NYSE Listing Agreement.
6.8 SEC Filings; Financial Statements.
(a) Xxxxxx has filed and made available to the Stockholder, if
requested, all forms, reports and other filings required to be filed by Xxxxxx
with the SEC, other than registration statements on Form S-8 (collectively, the
"SEC Reports"). The SEC Reports (i) at the time filed,
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complied in all material respects with the applicable requirements of the
Securities Act and the Securities Exchange Act, as the case may be, and (ii)
did not at the time they were filed contain any untrue statement of a material
fact or omit to state a material fact required to be stated in the SEC Reports
or necessary in order to make the statements in the SEC Reports, in the light
of the circumstances under which they were made, not misleading. None of
Xxxxxx'x Subsidiaries is required to file any forms, reports or other documents
with the SEC.
(b) Each of the consolidated financial statements (including, in
each case, any related notes) contained in the SEC Reports, including any SEC
Reports files after the date of this Agreement until the Closing, complied or
will comply as to form in all material respects with the applicable published
rules and regulations of the SEC with respect thereto, was or will be prepared
in accordance with GAAP for the periods involved (except as may be indicated in
the notes to such financial statements or, in the case of unaudited statements,
as permitted for presentation in Quarterly Reports on Form 10-Q), and fairly
presented or will fairly present the consolidated financial position of Xxxxxx
as at the respective dates and the consolidated results of its operations and
cash flows for the periods indicated.
6.9 Litigation. Neither Xxxxxx nor any of its Subsidiaries are
subject to any outstanding injunction, judgment, order, decree, ruling or
charge or is a party or to the knowledge of Xxxxxx is threatened to be made a
party to any action, suit, proceeding, hearing or investigation of, in, or
before any court or quasi-judicial or administrative agency of any federal,
state, local or foreign jurisdiction or before any arbitrator.
6.10 Reorganization Treatment. At the time of the closing of this
transaction, Xxxxxx will be in control of SCA within the meaning of Section
368(c) of the Code, and Xxxxxx has no plan nor intention to cause SCA after the
closing of this transaction to issue additional shares of stock of SCA that
would result in Xxxxxx losing control of SCA within the meaning of Section
368(c) of the Code. Xxxxxx has no plan nor intention to reacquire any of its
stock issued in this transaction, nor to liquidate SCA, merge SCA into another
corporation, make any extraordinary distribution in respect of its stock in
SCA, sell or otherwise dispose of its stock in SCA nor cause SCA to sell or
otherwise dispose of any of the assets of SCA acquired in this transaction,
except for dispositions made in the ordinary course of business or transfers
described in Section 368(a)(2)(C) of the Code. Immediately after the closing of
this transaction, Xxxxxx intends to cause SCA to continue the historic business
of SCA and to use a significant portion of the historic business assets of SCA
in a business. Xxxxxx is not an investment company as defined in Section
368(a)(2)(F)(iii) of the Code.
6.11 Certain Tax Elections. Xxxxxx hereby acknowledges and agrees
that neither Xxxxxx nor SCA will make an election pursuant to Section 338 of
the Code (including, without limitation, an election pursuant to Section
338(h)(10) of the Code) with respect to the transactions set forth in the
Agreement.
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ARTICLE 7
PRE-CLOSING COVENANTS
The Parties agree as follows with respect to the period between the
execution of this Agreement and the Closing.
7,1 General. Each of the Parties will use his or its reasonable
best efforts to take all action and to do all things necessary, proper, or
advisable in order to consummate and make effective the transactions
contemplated by this Agreement (including satisfaction, but not waiver, of the
closing conditions set forth in Article 9 below).
7.2 Notices and Consents. The Stockholder and SCA shall give any
notices to third parties and shall use their reasonable best efforts to obtain
any third party consents that Xxxxxx and SAC may reasonably request in
connection with the matters referred to in Section 4.1 and 5.4 above. Each of
the Parties shall give any notices to, make any filings with, and use its
reasonable best efforts to obtain any authorizations, consents, and approvals
of governments and governmental agencies in connection with the matters
referred to in Section 6.4 above.
7.3 Maintenance of Business; Prohibited Acts. During the period
from the date of this Agreement to the Effective Time, the Stockholder will
not, and will not cause SCA to, take any action that adversely affects the
ability of SCA (i) to pursue its business in the ordinary course, (ii) to seek
to preserve intact its current business organizations (iii) to keep available
the service of its current officers and employees and (iv) preserve its
relationships with customers, suppliers and others having business dealings
with it; and the Stockholder will not allow SCA to, without Xxxxxx'x prior
written consent:
(a) issue, deliver, sell, dispose of, pledge or otherwise
encumber, or authorize or propose the issuance, delivery, sale, disposition or
pledge or other encumbrances of (i) any additional shares of its capital stock
of any class (including the SCA Common Shares), or any securities or rights
convertible into, exchangeable for or evidencing the right to subscribe for any
shares of its capital stock, or any rights, warrants, options, calls,
commitments or any other agreements of any character to purchase or acquire any
shares of its capital stock or any other securities or rights convertible into,
exchangeable for or evidencing the right to subscribe for any shares of its
capital stock, or (ii) any other securities in respect of, in lieu of or in
substitution for SCA Common Shares outstanding on the date hereof;
(b) redeem, purchase or otherwise acquire, or propose to redeem,
purchase or otherwise acquire, any of its outstanding securities (including the
SCA Common Shares);
(c) split, combine, subdivide or reclassify any shares of its
capital stock or otherwise make any dividends, distributions or other payments
to the Stockholder in his capacity as a stockholder of SCA;
(d) (i) grant any increases in the compensation of any of its
directors, officers or executives or grant any increases in compensation to any
of its employees, (ii) pay or agree to
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pay any pension retirement allowance or other employee benefit not required or
contemplated by any Employee Benefit Plan as in effect on the date hereof to
any such director, officer or employee, whether, past or present, (iii) enter
into any new or amend any existing employment or severance agreement with any
such director, officer or employee, except as approved by Xxxxxx in its sole
discretion, (iv) pay or agree to pay any bonus to any director, officer or
employee (whether in the form of cash, capital stock or otherwise), or (v)
except as may be required to comply with applicable law, amend any existing, or
become obligated under any new Employee Benefit Plan, except in the case of (i)
through (v) inclusive, under and pursuant to the employment agreements referred
to in Section 9.1(d);
(e) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization;
(f) make any acquisition, by means of merger, consolidation or
otherwise, of any direct or indirect ownership interest in or assets comprising
any business enterprise or operation;
(g) adopt any amendments to its articles of incorporation or
by-laws;
(h) incur any indebtedness for borrowed money or guarantee such
indebtedness or agree to become contingently liable, by guaranty or otherwise,
for the obligations or indebtedness of any other person or make any loans,
advances or capital contributions to, or investments in, any other corporation,
any partnership or other legal entity or to any other persons, except for bank
deposits and other investments in marketable securities and cash equivalents
made in the ordinary course of its business;
(i) engage in the conduct of any business the nature of which is
materially different from the business in which SCA is currently engaged;
(j) enter into any agreement providing for acceleration of payment
or performance or other consequence as a result of a change of control of SCA;
(k) forgive any indebtedness owed to SCA or convert or contribute
by way of capital contribution any such indebtedness owed;
(l) authorize or enter into any agreement providing for management
services to be provided by SCA to any third-party or an increase in management
fees paid by any third-party under existing management agreements;
(m) mortgage, pledge, encumber, sell, lease or transfer any
material assets of SCA except with the prior written consent of Xxxxxx or as
contemplated by this Agreement,
(n) authorize or announce an intention to do any of the foregoing,
or enter into any contract, agreement, commitment or arrangement to do any of
the foregoing; or
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(o) perform any act or omit to take any action that would make any
of the representations made above inaccurate or materially misleading as of the
Effective Time.
7.4 Full Access. Each of the Parties shall permit representatives
of the other Parties to have full access at all reasonable times, and in a
manner so as not to interfere with the normal business operations of such Party
to all premises, properties, personnel, books, records (including Tax records),
contracts, and documents of or pertaining to such Party.
7.5 Notice of Developments. The Stockholder and SCA on the one
hand and Xxxxxx on the other shall give prompt written notice to the other
party of any material adverse development causing a breach of any of their
respective representations and warranties in Article(s) 4, 5 or 6 above. No
disclosure by any Party pursuant to this Section 7.5, however, shall be deemed
to amend or supplement the Disclosure Schedule or to prevent or cure any
misrepresentation, breach of warranty, or breach of covenant.
7.6 Reorganization. From and after the date hereof and prior to
the Effective Time, except for the transactions contemplated or permitted
herein, none of SCA, SAC, the Stockholder or Xxxxxx shall knowingly take any
action that would be inconsistent with the representations and warranties made
by it herein, including, but not limited, to knowingly taking any action, or
knowingly failing to take any actions, that is known to cause disqualification
of the Merger as a reorganization within the meaning of Section 368(a) of the
Code.
7.7 Exclusivity. Neither the Stockholder nor SCA shall (i)
solicit, initiate, or encourage the submission of any proposal or offer from
any Person relating to the acquisition of any capital stock or other voting
securities or any substantial portion of the assets of SCA (including any
acquisition structured as a merger, consolidation, or share exchange) or (ii)
participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any Person to do or seek any of the
foregoing. The Stockholder shall not vote his SCA Common Shares in favor of
any such acquisition structured as a merger, consolidation, or share exchange.
The Stockholder and SCA shall notify Xxxxxx immediately if any Person makes any
proposal, offer, inquiry, or contact with respect to any of the foregoing.
ARTICLE 8
POST-CLOSING COVENANTS
The Parties agree as follows with respect to the period following the
Closing:
8.1 General. In the event that at any time after the Closing any
further action is necessary or desirable to carry out the purposes of this
Agreement, each of the Parties will take such further action (including the
execution and delivery of such further instruments and documents) as any other
Party reasonably may request, all at the sole cost and expense of the
requesting Party (unless the requesting Party is entitled to indemnification
therefor under Article 11 below). The Stockholder acknowledges and agrees that
from and after the Closing, the
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Surviving Corporation and Xxxxxx will be entitled to possession of all
documents, books, records (including Tax records), agreements, and financial
data of any sort relating to SCA.
8.2 Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving SCA, each of the other Parties will cooperate
with him and his counsel in the contest or defense, make available their
personnel, and provide such testimony and access to their books and records as
shall be necessary in connection with the contest or defense, all at the sole
cost and expense of the contesting or defending Party (unless the contesting or
defending Party is entitled to indemnification therefor under Article 11
below).
8.3 Transition. The Stockholder will not take any action that is
designed or intended to have the effect of discouraging any lessor, licensor,
customer, supplier, or other business associate of SCA from maintaining the
same business relationships with the Surviving Corporation after the Closing as
it maintained with SCA prior to the Closing.
8.4 Confidentiality. The Stockholder will treat and hold as such
all of the Confidential Information, refrain from using any of the Confidential
Information except in connection with this Agreement, and deliver promptly to
Xxxxxx or destroy, at the request and option of Xxxxxx, all tangible
embodiments (and all copies) of the Confidential Information which are in his
possession. In the event that the Stockholder is requested or required (by oral
question or request for information or documents in any legal proceeding,
interrogatory, subpoena, civil investigative demand, or similar process) to
disclose any Confidential Information, the Stockholder will notify Xxxxxx
promptly of the request or requirement so that Xxxxxx may seek an appropriate
protective order or waive compliance with the provisions of this Section 8.4.
If, in the absence of a protective order or the receipt of a waiver hereunder,
the Stockholder is, on the advice of counsel, compelled to disclose any
Confidential Information to any tribunal or else stand liable for contempt,
then the Stockholder may disclose the Confidential Information to such
tribunal; provided, however, that the disclosing Stockholder shall use his best
efforts to obtain, at the request of Xxxxxx, an order or other assurance that
confidential treatment will be accorded to such portion of the Confidential
Information required to be disclosed as Xxxxxx shall designate.
8.5 Covenant Not to Compete.
(a) For a period of five years from and after the Closing Date
(the "Restricted Period"), except as may otherwise be agreed in writing by
Xxxxxx and the Surviving Corporation, the Stockholder agrees to refrain, alone,
or as a partner, member, employee or agent of any partnership, or as an
officer, employee, agent, director, stockholder or investor of any corporation
(except as to not more than two percent (2%) of the outstanding stock of any
corporation the securities of which are traded on a regular basis on a
nationally recognized securities exchange or quoted on a regular basis on the
automated quotation system of the National Association of
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Securities Dealers, Inc. and except for any Xxxxxx Common Shares), or in any
other individual or representative capacity, from directly or indirectly
owning, managing, operating or controlling, or participating in the ownership,
management, operation or control of, or working for or providing consulting
services (including, without limitation, consulting services without fee or
other compensation) to, or permitting the use of his name by, or lending money
to, any business or activity within the United States which is or which becomes
during the Restricted Period directly or indirectly engaged in any business
that is the same or similar to any of the businesses conducted by the Surviving
Corporation as of the Closing Date.
(b) If the final judgment of a court of competent jurisdiction
declares that any term or provision of this Section 8.5 is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or
phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified after the expiration of the
time within which the judgment may be appealed.
8.6 Non-solicitation.
(a) The Stockholder and any entity controlled by him or with which
it is associated (as the terms "control" and "associate" are defined under the
Securities Exchange Act) shall not, during the Restricted Period, directly or
indirectly, solicit, interfere with, hire, offer to hire or induce any person,
who is or was an officer or employee of SCA or any Affiliate of SCA (other than
secretarial and clerical personnel) during the 12-month period prior to the
date hereof, to discontinue his or her relationship with SCA or the Surviving
Corporation or such Affiliate or to accept employment by, or enter into a
business relationship with, any other entity or person.
(b) The Stockholder and any entity controlled by him or with which
he is associated (as the terms "control" and "associate" are defined under the
Securities Exchange Act) shall not, during the Restricted Period, directly or
indirectly, (i) solicit, interfere with, induce or entice away any person or
entity that is or was a client, customer or agent of SCA or any Affiliate
during the 12-month period prior to the date hereof, or (ii) in any manner
persuade or attempt to persuade any such person or entity (A) to discontinue a
business relationship with SCA or the Surviving Corporation or such Affiliate,
or (B) to enter into a business relationship with any other entity or person
which would be detrimental to SCA or the Surviving Corporation in any respect.
8.7 Xxxxxx Common Shares. Each certificate issued to the
Stockholder representing the Xxxxxx Common Shares will be imprinted with a
legend substantially in the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), IN
RELIANCE UPON THE EXEMPTION FROM REGISTRATION CONTAINED IN SECTION
4(2) OF THE 1933 ACT AND
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REGULATION D OF THE RULES AND REGULATIONS PROMULGATED UNDER THE 1933
ACT, AND IN RELIANCE UPON THE REPRESENTATION BY THE HOLDER THAT THEY
HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO
RESALE OR FURTHER DISTRIBUTION. SUCH SHARES MAY NOT BE OFFERED FOR
SALE, SOLD, DELIVERED AFTER SALE, HYPOTHECATED, NOR WILL ANY ASSIGNEE
OR ENDORSEE HEREOF BE RECOGNIZED AS AN OWNER HEREOF BY THE ISSUER FOR
ANY PURPOSE, UNLESS A REGISTRATION STATEMENT FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION WITH RESPECT TO SUCH SHARES SHALL THEN BE IN
EFFECT OR UNLESS THE AVAILABILITY OF AN EXEMPTION FROM REGISTRATION
SHALL BE ESTABLISHED TO THE REASONABLE SATISFACTION OF COUNSEL OF THE
ISSUER.
If Stockholder desires to transfer any of the Xxxxxx Common Shares
received in connection with this Merger, other than in a registered offering or
pursuant to a sale which counsel for Xxxxxx confirms is in compliance with Rule
144 of the Securities Act, Stockholder must first furnish Xxxxxx with (i) a
written opinion satisfactory to Xxxxxx in form and substance from counsel
reasonably satisfactory to Xxxxxx to the effect that the Stockholder may
transfer the Xxxxxx Common Shares as desired without registration under the
Securities Act and (ii) a written undertaking executed by the desired
transferee reasonably satisfactory to Xxxxxx in form and substance agreeing to
be bound by the restrictions on transfer contained herein.
8.8 Certain Tax Matters.
(a) Tax Periods Ending on or Before the Closing Date. Xxxxxx
shall prepare or cause to be prepared and file or cause to be filed all Tax
Returns, if any, for SCA for all periods ending on or prior to the Closing Date
which are filed after the Closing Date. Xxxxxx shall permit the Stockholder to
review and comment on each such Tax Return described in the preceding sentence
prior to filing. The Stockholder acknowledges that he is liable for Taxes, if
any, not accrued on the June 30 Balance Sheet of SCA with respect to such
periods.
(b) Tax Periods Beginning Before and Ending After the Closing
Date. Xxxxxx shall prepare or cause to be prepared and file or cause to be
filed any Tax Returns of SCA for Tax periods which begin before the Closing
Date and end after the Closing Date. The Stockholder acknowledges that he is
liable for the portion of such Taxes, if any, not accrued on the June 30
Balance Sheet which relates to the portion of such Taxable period ending on the
Closing Date. For purposes of this Section, in the case of any Taxes that are
imposed on a periodic basis and are payable for a Taxable period that includes
(but does not end on) the Closing Date, the portion of such Tax which relates
to the portion of such Taxable period ending on the Closing Date shall (x) in
the case of any Taxes other than Taxes based upon or related to income or
receipts, be deemed to be the amount of such Tax for the entire Taxable period
multiplied by a fraction the numerator of which is the number of days in the
Taxable period ending on the Closing Date and the denominator of which is the
number of days in the entire Taxable period, and (y) in the case of any Tax
based upon or related to income or receipts be deemed equal to the amount which
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would be payable if the relevant Taxable period ended on the Closing Date. Any
credits relating to a Taxable period that begins before and ends after the
Closing Date shall be taken into account as though the relevant Taxable period
ended on the Closing Date. All determinations necessary to give effect to the
foregoing allocations shall be made in a manner consistent with prior practice
of SCA.
(c) Cooperation on Tax Matters.
(i) Xxxxxx, SCA and the Stockholder shall
cooperate fully, as and to the extent reasonably requested by the other party,
in connection with the filing of Tax Returns pursuant to this Section and any
audit, litigation or other proceeding with respect to Taxes. Such cooperation
shall include the retention and (upon the other party's request) the provision
of records and information which are reasonably relevant to any such audit,
litigation or other proceeding and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder. The Stockholder agrees (A) to retain all books
and records with respect to Tax matters pertinent to SCA relating to any
taxable period beginning before the Closing Date until the expiration of the
statute of limitations (and, to the extent notified by Xxxxxx, any extensions
thereof) of the respective taxable periods, and to abide by all record
retention agreements entered into with any taxing authority, and (B) to give
the other party reasonable written notice prior to transferring, destroying or
discarding any such books and records and, if the other party so request,
Xxxxxx or the Stockholder, as the case may be, shall allow the other party to
take possession of such books and records.
(ii) Xxxxxx and the Stockholder further agree,
upon request, to use their best efforts to obtain any certificate or other
document from any governmental authority or any other Person as may be
necessary to mitigate, reduce or eliminate any Tax that could be imposed
(including, but not limited to, with respect to the transactions contemplated
hereby).
(d) Certain Taxes. All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement shall be paid by the
Stockholder when due, and the Stockholder will, at his own expense, file all
necessary Tax Returns and other documentation with respect to all such
transfer, documentary, sales, use, stamp, registration and other Taxes and
fees.
8.9 Continuity of Interest. The Stockholder does not intend to
dispose of any of the Xxxxxx Common Shares received in the transaction in a
manner that would cause the transaction to violate the continuity of
stockholder interest requirement set forth in Treas. Reg. Section 1.368-1(b).
8.10 Share Consideration. The Stockholder intends to retain at
least one-half of the Xxxxxx Common Shares received by the Stockholder on the
Closing Date for a period of 365 days following the Closing Date.
8.11 Listing. Xxxxxx shall use its best efforts to effect, at or
before the issuance of any Xxxxxx Common Shares issued pursuant to Section 2.1,
authorization for listing or quotation of such Xxxxxx Common Shares on the
NYSE, subject to official notice of issuance.
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8.12 Pooling of Interests. Neither the Stockholder nor SCA shall
not take any action which to their knowledge would prevent the transactions
contemplated by this Agreement from being accounted for as a pooling of
interests for financial reporting purposes.
8.13 Assignment of Receivables. In the event that Xxxxxx makes,
and is paid by the Stockholder with respect to, an indemnity claim under
Section 11.1 hereof based on the inaccuracy of any of the representations
contained in Section 5.16 hereof, including a claim based on the
uncollectibility of any notes or accounts receivable of SCA, then Xxxxxx agrees
to assign to the Stockholder the accounts receivable that have given rise to
the claim (but only in a face amount equal to the amount that Xxxxxx has
received from the Stockholder in connection with such claim).
ARTICLE 9
CONDITIONS TO OBLIGATION TO CLOSE
9.1 Conditions to Each Party's Obligation. The respective
obligations of Xxxxxx, SAC, SCA and the Stockholder to consummate the
transactions contemplated by this Agreement are subject to the fulfillment at
or prior to the Closing Date of each of the following conditions, which
conditions may be waived upon the written consent of Xxxxxx and the
Stockholder:
(a) Governmental Approvals. The Parties shall have received all
material authorizations, consents, and approvals of governments and
governmental agencies, if any, required in connection with the consummation of
this Agreement.
(b) No Injunction or Proceedings. There shall not be in effect
any action, suit, or proceeding pending or threatened before any court or
quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge that would, in the
reasonable judgment of Xxxxxx or SCA, (A) prevent consummation of any of the
transactions contemplated by this Agreement, (B) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation, (C)
affect adversely the right of Xxxxxx to own the capital stock of the Surviving
Corporation, (D) affect adversely the right of the Stockholder to own the
capital stock of Xxxxxx, or (E) affect adversely the right of the Surviving
Corporation or Xxxxxx to own its assets and to operate its businesses (and no
such injunction, judgment, order, decree, ruling, or charge is in effect).
(c) No Suspension of Trading, Etc. At the Effective Date, there
shall be no suspension of trading in Xxxxxx Common Shares on the NYSE,
declaration of a banking moratorium by federal or state authorities or any
suspension of payments by banks in the United States (whether mandatory or not)
or of the extension of credit by lending institutions in the United States, or
commencement of war or other international, armed hostility or national
calamity directly or indirectly involving the United States, which war,
hostility or calamity (or any material acceleration or worsening thereof), in
the sole judgment of Xxxxxx, would have
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a Material Adverse Effect on SCA or, in the sole judgment of the Stockholder,
would have a Material Adverse Effect on Xxxxxx.
(d) Registration Rights Agreement. The registration rights
agreement, in substantially the form attach hereto as Exhibit B, shall have
been executed and delivered by the parties thereto.
(e) Escrow Agreement. Xxxxxx and the Stockholder shall have
executed and delivered counterparts of the Escrow Agreement in the form
attached hereto as Exhibit C, together with any counterparts signed by the
Escrow Agent and blank stock powers executed by the Stockholder with respect to
the Xxxxxx Common Shares to be held in the Escrow Deposit.
9.2 Conditions to Obligation of Xxxxxx and SAC. The obligations
of Xxxxxx and SAC to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the following
conditions:
(a) the Stockholder shall have delivered to Xxxxxx and SAC the
stock certificate representing the SCA Common Shares duly endorsed in blank;
(b) the Stockholder and SCA shall have delivered to Xxxxxx and SAC
a certificate to the effect that:
(i) the representations and warranties set forth
in Article 4 and Article 5 above are true and correct in all material respects
at and as of the Closing Date;
(ii) the Stockholder and SCA have performed and
complied with all of their covenants hereunder in all material respects at and
as of the Closing Date; and
(iii) no action, suit, or proceeding is pending or
threatened before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator wherein
an unfavorable injunction, judgment, order, decree, ruling, or charge that
would (A) prevent consummation of any of the transactions contemplated by this
Agreement, (B) cause any of the transactions contemplated by this Agreement to
be rescinded following consummation, (C) affect adversely the right of Xxxxxx
to own the capital stock of the Surviving Corporation, or (D) affect adversely
the right of the Surviving Corporation to own its assets and to operate its
businesses (and no such injunction, judgment, order, decree, ruling, or charge
is in effect);
(c) Xxxxxx and SAC shall have received an opinion dated as of the
Closing Date from Schoenberg, Fisher, Xxxxxx & Xxxxxxxxx, Ltd., counsel to the
Stockholder and SCA, substantially in the form set out in Exhibit D;
(d) Xxxxxx and SAC shall have received an opinion from KPMG Peat
Marwick, certified public accountants for SCA and the Stockholder, addressed to
Xxxxxx, and dated as of
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the Closing Date, to the effect that SCA is eligible to participate in a
transaction to be accounted for as a pooling of interest for financial
reporting purposes.
(e) The Stockholder shall have certified that the written
assurances previously provided to Xxxxxx'x accountants, Xxxxxx Xxxxxxxx LLP, by
the Stockholder regarding the ability of SCA to participate in a transaction to
be accounted for as a pooling of interest for financial reporting purposes
continue to be true and accurate as of the Closing Date;
(f) Xxxxxx shall have received the resignations, effective as of
the Closing, of each director and officer of SCA other than those whom Xxxxxx
shall have specified in writing prior to the Closing;
(g) Xxxxxx shall have received satisfactory evidence that all
bonus plans under which officers, directors or employees of SCA are
beneficiaries, except those that are contractually committed and disclosed on
Schedule 9.2(g) hereof, have been terminated as of the Closing Date; and
(h) the Stockholder shall have delivered to Xxxxxx any consents
from the third parties set forth in the Disclosure Schedule in connection with
Section 42 and Section 5.4.
Xxxxxx may waive any condition specified in this Section 9.2 if it executes a
writing so stating at or prior to the Closing.
9.3 Conditions to Obligation of the Stockholder. The obligation
of the Stockholder to consummate the transactions to be performed by them in
connection with the Closing is subject to satisfaction of the following
conditions:
(a) Xxxxxx and SAC shall have delivered to the Stockholder a
certificate setting forth the resolutions adopted by Xxxxxx'x Board of
Directors authorizing the execution and performance of this Agreement by Xxxxxx
and to the effect that:
(i) the representations and warranties set forth
in Article 6 above shall be true and correct in all material respects at and as
of the Closing Date;
(ii) Xxxxxx and SAC shall have performed and
complied with all of its covenants hereunder in all material respects through
the Closing; and
(iii) no action, suit, or proceeding shall be
pending or threatened before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling,
or charge would (A) prevent consummation of any of the transactions
contemplated by this Agreement or (B) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation (and no
such injunction, judgment, order, decree, ruling, or charge shall be in
effect);
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(b) the Stockholder shall have received an opinion dated as of the
Closing Date from Shaw, Pittman, Xxxxx & Xxxxxxxxxx, counsel to Xxxxxx,
substantially in the form set out in Exhibit F.
(c) At Closing, SCA or Xxxxxx shall pay to Alex. Xxxxx and Sons
Incorporated the amount of $971,072 in cash representing the payment in full of
the transaction fee and all out-of-pocket expenses pursuant to the terms of the
Alex. Xxxxx engagement letter dated March 31, 1997.
The Stockholder may waive any condition specified in this Section 9.3 if he
executes a writing so stating at or prior to the Closing.
ARTICLE 10
TERMINATION
10.1 Termination by Mutual Consent. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, before or after the approval by the Stockholder or the stockholder of
SAC, respectively, by the mutual written consent of Xxxxxx and the Stockholder.
10.2 Termination by Either Xxxxxx or Stockholder. This Agreement
may be terminated and the Merger may be abandoned (a) by action of the Board of
Directors of Xxxxxx in the event of a failure of a condition to the obligations
of Xxxxxx and SAC, respectively, set forth in Section 9.2 of this Agreement
which remains unfulfilled as of July 21, 1997; (b) by the Stockholder in the
event of a failure of a condition to the obligations of the Stockholder set
forth in Section 9.3 of this Agreement which remains unfulfilled as of July 21,
1997; or (c) if a United States federal or state court of competent
jurisdiction or United States federal or state governmental agency shall have
issued an order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated
by this Agreement and such other, decree, ruling or other action shall have
become final and non-appealable; and provided, in the case of a termination
pursuant to clause (a) or (b) above, that the terminating party shall not have
breached in any material respect its obligations under this Agreement in any
manner that shall have proximately contributed to the occurrence of the failure
referred to in said clause.
10.3 Effect of Termination and Abandonment. In the event of
termination of this Agreement pursuant to this Article 10, no party hereto (or
any of its directors or officers) shall have any liability or further
obligation to any other party to this Agreement to proceed with the Closing,
except that nothing herein will relieve any party from liability for any breach
of this Agreement.
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ARTICLE 11
INDEMNIFICATION
11.1 Indemnity Obligations of the Stockholder. Subject to Section
11.4 and Section 11.5, the Stockholder hereby agrees to indemnify and hold
Xxxxxx and the Surviving Corporation harmless from, and to reimburse Xxxxxx and
the Surviving Corporation for, any Xxxxxx Indemnity Claims arising under the
terms and conditions of this Agreement. For purposes of this Agreement, the
term "Xxxxxx Indemnity Claim" shall mean any loss, damage, deficiency, claim,
liability, obligation, suit, action, fee, cost or expense of any nature
whatsoever resulting from (i) any breach of any representation and warranty of
the Stockholder or SCA which is contained in this Agreement or any Schedule,
Exhibit or certificate delivered pursuant thereto; (ii) any breach or
non-fulfillment of, or any failure to perform, any of the covenants, agreements
or undertakings of the Stockholder or SCA which are contained in or made
pursuant to this Agreement; and (iii) all interest, penalties and costs and
expenses (including, without limitation, all reasonable fees and disbursements
of counsel) arising out of or related to any indemnification made under this
Section 11.1.
11.2 Indemnity Obligations of Xxxxxx. Xxxxxx hereby agrees to
indemnify and hold the Stockholder harmless from, and to reimburse the
Stockholder for, any Stockholder Indemnity Claims arising under the terms and
conditions of this Agreement. For purposes of this Agreement, the term
"Stockholder Indemnity Claim" shall mean any loss, damage, deficiency, claim,
liability, suit, action, fee, cost or expense of any nature whatsoever incurred
by the Stockholder resulting from (i) any breach of any representation and
warranty of Xxxxxx which is contained in this Agreement or any Schedule,
Exhibit or certificate delivered pursuant thereto; (ii) any breach or
non-fulfillment of, or failure to perform, any of the covenants, agreements or
undertakings of Xxxxxx which are contained in or made pursuant to the terms and
conditions of this Agreement; and (iii) all interest, penalties, costs and
expenses (including, without limitation, all reasonable fees and disbursements
of counsel) arising out of or related to any indemnification made under this
Section 11.2.
11.3 Notification of Claims. Subject to the provisions of Section
11.4 and Section 11.5, in the event of the occurrence of an event which any
party asserts constitutes a Xxxxxx Indemnity Claim or a Stockholder Indemnity
Claim, as applicable, such party shall provide the indemnifying party with
prompt notice of such event and shall otherwise make available to the
indemnifying party all relevant information which is material to the claim and
which is in the possession of the indemnified party. If such event involves
the claim of any third party (a "Third-Party Claim"), the indemnifying party
shall have the right to elect to join in the defense, settlement, adjustment or
compromise of any such Third-Party Claim, and to employ counsel to assist such
indemnifying party in connection with the handling of such claim, at the sole
expense of the indemnifying party, and no such claim shall be settled, adjusted
or compromised, or the defense thereof terminated, without the prior consent of
the indemnifying party unless and until the indemnifying party shall have
failed, after the lapse of a reasonable period of time, but in no event more
than thirty (30) days after written notice to it of the Third-Party Claim, to
join in the defense, settlement, adjustment or compromise of the same. An
indemnified party's failure to give timely notice or to furnish the
indemnifying party with any relevant data and documents in
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connection with any Third-Party Claim shall not constitute a defense (in part
or in whole) to any claim for indemnification by such party, except and only to
the extent that such failure shall result in any material prejudice to the
indemnifying party. If so desired by any indemnifying party, such party may
elect, at such party's sole expense, to assume control of the defense,
settlement, adjustment or compromise of any Third-Party Claim, with counsel
reasonably acceptable to the indemnified parties, insofar as such claim relates
to the liability of the indemnifying party, provided that such indemnifying
party shall obtain the consent of all indemnified parties before entering into
any settlement, adjustment or compromise of such claims, or ceasing to defend
against such claims, if as a result thereof, or pursuant thereto, there would
be imposed on an indemnified party any material liability or obligation not
covered by the indemnity obligations of the indemnifying parties under this
Agreement (including, without limitation, any injunctive relief or other
remedy). In connection with any Third-party claim that any indemnifying party
has elected to assume the control of as contemplated by the preceding sentence,
the indemnified party shall have the ability to employ counsel to monitor the
defense of such claim; provided that the costs of such counsel shall be borne
by the indemnified party unless the indemnifying party is asserting that any
portion of such claim is not covered by the indemnity obligation, in which case
the indemnifying party shall also bear the costs of counsel for the indemnified
party. In connection with any Third-Party Claim, the indemnified party, or the
indemnifying party if it has assumed the defense of such claim pursuant to the
preceding sentence, shall diligently pursue the defense of such Third-Party
Claim.
11.4 Survival. All representations and warranties, and, except as
otherwise provided in this Agreement, all covenants and agreements of the
parties contained in or made pursuant to this Agreement, and the rights of the
parties to seek indemnification with respect thereto, shall survive the Closing
Date. Such representations and warranties, and the rights of the parties to
seek indemnification with respect thereto, shall expire on the earlier of (i)
the date of issuance of the report of and Xxxxxx'x independent accountants with
respect to the audited consolidated financial statements of the Surviving
Corporation and Xxxxxx for the fiscal year ending December 31, 1997 or (ii) the
first anniversary of the Closing Date.
11.5 Limitations. Any claim by an indemnified party against any
indemnifying party under this Agreement shall be payable by the indemnifying
party only in the event, and to the extent, that the accumulated amount of the
claims in respect of such indemnifying party's obligations to indemnify under
this Agreement shall exceed $250,000 in the aggregate (the "Indemnification
Threshold"). Notwithstanding the foregoing, any breaches of Section 5.7(b) or
any covenant or obligation with respect to a misstatement of the Transaction
Costs shall not be subject to the Indemnification Threshold.
11.6 Escrow. The Stockholder shall deposit into escrow, with the
Escrow Agent named in the Escrow Agreement, ten percent of the Xxxxxx Common
Shares (such deposit being referred to as the "Escrow Deposit") issued in
connection with the Merger. Until such time as payment of the aggregate amount
of Xxxxxx Indemnity Claims in excess of the Indemnification Threshold which
have been definitively resolved to be payable in favor of Xxxxxx (or the
Surviving Corporation for the benefit of Xxxxxx or SAC) shall have exhausted
the Escrow Deposit, all Xxxxxx Indemnity Claims shall be satisfied first out of
the Xxxxxx Common Shares
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held in the Escrow Deposit, as further provided under the terms of the Escrow
Agreement. For purposes hereof, all Xxxxxx Common Shares returned to Xxxxxx in
settlement of any Xxxxxx Indemnity Claims under the Escrow Agreement shall be
valued at the Xxxxxx Share Price. At such time as the aggregate amount of
Xxxxxx Indemnity Claims in excess of the Indemnification Threshold which have
been definitively resolved to be payable in favor of Xxxxxx (or the Surviving
Corporation for the benefit of Xxxxxx or SAC) shall exceed the Escrow Deposit,
the Stockholder shall thereafter be liable to Xxxxxx (or the Surviving
Corporation for the benefit of Xxxxxx or SAC) for such claims. To the extent
not inconsistent with pooling of interest restrictions, the liability of the
Stockholder for Xxxxxx Indemnity Claims after exhaustion of the Escrow Deposit
may be satisfied, at the election of the Stockholder, through (i) the delivery
of Xxxxxx Common Shares to Xxxxxx, such shares to be valued at the Xxxxxx Share
Price, (ii) the payment of cash or (iii) any combination of such Xxxxxx Common
Shares (valued at the Xxxxxx Share Price) and cash.
11.7 Xxxxxx Payment of Stockholder Indemnity Claims.
Notwithstanding anything to the contrary herein, any liability of Xxxxxx and
SAC under this Agreement for Stockholder Indemnity Claims shall be satisfied
solely through the issuance of additional Xxxxxx Common Shares, such additional
Xxxxxx Common Shares to be valued at the Xxxxxx Share Price.
11.8 Aggregate Indemnification Obligation. Notwithstanding
anything contained in this Article 11 to the contrary, the indemnification
obligations of the Stockholder shall not exceed $20,000,000.
ARTICLE 12
MISCELLANEOUS
12.1 Press Releases and Public Announcements. No Party shall issue
any press release or make any public announcement relating to the subject
matter of this Agreement prior to the Closing without the prior written
approval of Xxxxxx and the Stockholder; provided, however, that any Party may
make any public disclosure it believes in good faith is required by applicable
law or any listing or trading agreement concerning its publicly-traded
securities (in which case the disclosing Party will use its best efforts to
advise the other Parties prior to making the disclosure). Subject to the
foregoing proviso, the Parties shall cooperate in the preparation of a joint
press release to be issued subsequent to the Closing.
12.2 No Third Party Beneficiaries. This Agreement shall not confer
any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns.
12.3 Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements, or representations by or among
the Parties, written or oral, to the extent they related in any way to the
subject matter hereof.
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12.4 Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of his rights, interests, or obligations hereunder without the prior
written approval of Xxxxxx and the Stockholder; provided, however, that Xxxxxx
may (i) assign any or all of its rights and interests hereunder to one or more
of its Affiliates and (ii) designate one or more of its Affiliates to perform
its obligations hereunder (in any or all of which cases Xxxxxx nonetheless
shall remain responsible for the performance of all of its obligations
hereunder).
12.5 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
12.6 Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
12.7 Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
two business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:
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If to SCA or the Stockholder:
Xxxxxx X. Xxxxxx
0000 XxXxxxx Xxxxxx
Xxxxxxxx, XX 00000
Telecopy: (000) 000-0000
With a copy to:
Schoenberg, Fisher, Xxxxxx & Xxxxxxxxx, Ltd.
000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxx
Telecopy: (000) 000-0000
If to Xxxxxx and SAC:
Mr. A. Xxxxxxx Xxxxxxx
Chief Financial Officer
Xxxxxx Communications, Inc.
0000 Xxxxxxxxx Xxxxx, 00xx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
With a copy to:
Shaw, Pittman, Xxxxx & Xxxxxxxxxx
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxx X. XxXxxxxxx, Esq.
Telecopy: (000) 000-0000
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set forth
above using any other means (including personal delivery, expedited courier,
messenger service, telecopy, telex, ordinary mail, or electronic mail), but no
such notice, request, demand, claim, or other communication shall be deemed to
have been duly given unless and until it actually is received by the intended
recipient. Any Party may change the address to which notices, requests,
demands, claims, and other communications hereunder are to be delivered by
giving the other Parties notice in the manner herein set forth.
12.8 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE
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OF DELAWARE WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR
RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD
CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF
DELAWARE.
12.9 Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by
Xxxxxx and the Stockholder. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
12.10 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
12.11 Expenses. Each of the Parties will bear his, her or its own
costs and expenses (including legal fees and expenses) incurred in connection
with this Agreement and the transactions contemplated hereby.
12.12 Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof
shall arise favoring or disfavoring any Party by virtue of the authorship of
any of the provisions of this Agreement. Any reference to any federal, state,
local, or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The Parties intend
that each representation, warranty, and covenant contained herein shall have
independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
12.13 Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
12.14 Specific Performance. Each of the Parties acknowledges and
agrees that the other Parties would be damaged irreparably in the event any of
the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Parties shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any action
instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter (subject to the provisions set
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forth in Section 12.15 below), in addition to any other remedy to which they
may be entitled, at law or in equity.
12.15 Submission to Jurisdiction. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in the State of Delaware, in
any action or proceeding arising out of or relating to this Agreement and
agrees that all claims in respect of the action or proceeding may be heard and
determined in any such court.
12.16 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
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XXXXXX:
XXXXXX COMMUNICATIONS, INC.
By: /s/ A. Xxxxxxx Xxxxxxx
--------------------------------------------
A. Xxxxxxx Xxxxxxx
Chief Financial Officer
SAC: XXXXXX ACQUISITION CORP.
By: /s/ A. Xxxxxxx Xxxxxxx
--------------------------------------------
A. Xxxxxxx Xxxxxxx
Vice President
SCA:
SAMPLING CORPORATION OF AMERICA
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------------
Xxxxxx X. Xxxxxx
President
STOCKHOLDER:
/s/ Xxxxxx X. Xxxxxx
-----------------------------------------------
Xxxxxx X. Xxxxxx
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