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EXHIBIT 10.27
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is dated as of
March 26, 1997, by and among BRISTOL TECHNOLOGY SYSTEMS, INC., a Delaware
corporation ("Bristol"); BRISTOL MERGER CORPORATION, a Delaware corporation
("Purchaser"); INTERNATIONAL SYSTEMS & ELECTRONICS CORPORATION, a Florida
corporation ("Company"); and XXXXX XXXXXX, a resident of the State of Florida
("Shareholder").
RECITALS
A. Bristol owns all of the issued and outstanding capital stock
of Purchaser.
B. Shareholder owns all of the issued and outstanding capital
stock of Company.
C. This Agreement contemplates a forward subsidiary merger of
Company with and into Purchaser in a tax free reorganization pursuant to Code
Section 368(a)(2)(D), whereby Shareholder shall exchange all of his shares of
capital stock of Company (the "Company Shares") for cash and shares of
non-registered, restricted Common Stock of Bristol (the "Restricted Stock"),
which consideration shall be subject to adjustment as expressly provided below.
D. The parties hereto anticipate that the merger will further
certain of their business objectives, including, without limitation, increased
market share, reduced administrative costs and volume efficiencies.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations, and warranties herein contained, the parties hereto do hereby
agree as follows:
ARTICLE 0
CERTAIN DEFINITIONS
Capitalized terms not ascribed a meaning in this Section 0 shall have
the meaning ascribed to such term elsewhere in this Agreement. The capitalized
terms set forth below shall have the following meanings:
"Approval" has the meaning set forth in Section 2.5(d).
"Audited Closing Balance Sheet" has the meaning set forth in Section
1.5.
"Audited Closing Income Statement" has the meaning set forth in Section
1.5.
"Audited Value" has the meaning set forth in Section 1.6.
"Book Value" has the meaning set forth in Section 1.6.
"Certificates" has the meaning set forth in Section 1.1.
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"Class I Inventory" and "Class II Inventory" have the meanings set
forth in Section 2.4(c).
"Closing" has the meaning set forth in Section 1.4.
"Closing Balance Sheet" has the meaning set forth in Section 1.5.
"Closing Date" has the meaning set forth in Section 1.1.
"Closing Income Statement" has the meaning set forth in Section 1.5.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Shares" has the meaning set forth in Recital C.
"Confidential Information" means any information concerning the
business and affairs of Company that is not already generally available to the
public.
"Delaware General Corporation Law" means the General Corporation Law of
the State of Delaware, as amended.
"Effective Time" has the meaning set forth in Section 1.1.
"Employee Benefit Plan" means any (i) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan; (ii) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan; (iii) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multiemployer Plan); or (iii) Employee Welfare Benefit Plan or
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).
"Encumbrance" means any mortgage, pledge, lien, encumbrance, security
interest, charge, option, or other adverse interest, other than (i) mechanic's,
materialmen's, and similar liens; (ii) liens for Taxes not yet due and payable
or for Taxes that Company is contesting in good faith through appropriate
proceedings; (iii) purchase money liens and liens securing rental payments under
capital lease arrangements; and (iv) other liens arising in the Ordinary Course
of Business and not incurred in connection with the borrowing of money.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Financial Statements" has the meaning set forth in Section 2.3(a).
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Hazardous Substances" has the meaning set for in Section 2.5(d).
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"Knowledge" means that Company and/or Shareholder, as applicable, are
actually aware of the fact or matter in question after a reasonable
investigation concerning the existence of such fact or matter.
"Leased Premises" has the meaning set forth in Section 2.4(a).
"Leases" has the meaning set forth in Section 2.4(a).
"Liability" means any debt, claim, loss, liability, damage, judgment,
fine, penalty, cost, expense or other obligation of any nature, whether known or
unknown, asserted or unasserted, absolute or contingent, liquidated or
unliquidated, or due or to become due, including any Liability for Taxes.
"Materially Adverse Effect" means a substantial and materially adverse
effect on the business, financial condition, sales, results of operation,
prospects, customers, suppliers, employee relations, insurability, assets or
properties of Company.
"Merger" has the meaning set forth in Section 1.1.
"Net Worth" means the difference between (i) the audited aggregate book
value of the assets of Company, and (ii) the audited aggregate book value of the
liabilities of Company as reflected on the Audited Closing Balance Sheet,
provided, that in determining Net Worth for purposes of the Audited Closing
Balance Sheet, Ernst & Young, LLP may (i) make reasonable adjustments to or
establish reasonable reserves for uncollectible accounts receivable, (ii) adjust
the book value of Company's inventory, other assets or liabilities, to account
for under- or over-valued inventory, other assets or liabilities, as the case
may be; and/or (iii) make any other adjustments that the auditors deem
necessary or appropriate in order to state the Audited Closing Balance Sheet in
accordance with GAAP.
"Net Worth Deficiency" has the meaning set forth in Section 1.5(b).
"Net Worth Reduction" has the meaning set forth in Section 1.5(b).
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Personal Property" has the meaning set forth in Section 2.4(b).
"Pre-Tax Earnings" means audited earnings before income taxes as
reflected on the Audited Closing Income Statement, provided, that in determining
Pre-Tax Earnings for purposes of the Audited Closing Income Statement, Ernst &
Young, LLP may make any adjustments that such accountants deem necessary or
appropriate in order to state the Audited Closing Income Statement in accordance
with GAAP.
"Pre-Tax Earnings Deficiency" has the meaning set forth in Section
1.5(c).
"Pre-Tax Earnings Reduction" has the meaning set forth in Section
1.5(c).
"Restricted Shares" has the meaning set forth in Section 1.4.
"Restricted Stock" has the meaning set forth in Recital C.
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"Surviving Corporation" has the meaning set forth in Section 1.1.
"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 Sec. 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, duty or assessment 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.
ARTICLE 1
THE BASIC TRANSACTION
1.1 The Merger. On and subject to the terms and conditions of this
Agreement, the Company will merge with and into Purchaser (the "Merger") on
April 30, 1997 (the "Closing Date"), at such time (the "Effective Time") as the
Purchaser and Company file Certificates of Merger (the "Certificates") with the
Secretaries of State of the States of Delaware and Florida, substantially in the
form of Exhibits "A" and "B" hereto. Purchaser shall be the corporation
surviving the Merger (the "Surviving Corporation").
1.2 Actions Taken on or Prior to the Closing Date. On or prior to
the Closing Date, Bristol and Purchaser shall conduct a due diligence
investigation of Company and the parties shall perform their respective delivery
obligations set forth in Article 6, below.
1.3 Effect of Merger.
1.3.1 General. At the Effective Time, the merger shall have
the effect set forth in Sections 259, 260 and 261 of the Delaware General
Corporation Law. Without limiting the foregoing, Surviving Corporation may, at
any time after the Effective Time, take any action (including executing and
delivering any document) in the name and on behalf of either Purchaser or
Company in order to carry out and effectuate the transactions contemplated by
this Agreement.
1.3.2 Certificate of Incorporation. The Certificate of
Incorporation of Purchaser in effect at and as of the Effective Time shall
remain the Certificate of Incorporation of Surviving Corporation.
1.3.3 By-laws. The By-laws of Purchaser in effect at and as
of the Effective Time shall remain the By-laws of Surviving Corporation.
1.3.4 Directors and Officers. The directors and officers of
Surviving Corporation at and as of the Effective Time, shall be those
individuals holding such titles and positions set forth on Schedule 1.3.4
hereto. Such directors and officers shall be duly and properly appointed and/or
elected by Surviving Corporation in accordance with the Delaware General
Corporation Law and shall serve until such individuals
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are either re-elected or removed and replaced by Surviving Corporation's Board
of Directors or shareholder, as the case may be.
1.3.5 Conversion of Company Shares. At and as of the
Effective Time, the Company Shares owned by Shareholder shall be converted into
the right of Shareholder to exchange his Company Shares at the Closing for cash
and Restricted Shares in accordance with Sections 1.4 and 1.5, below. Upon such
conversion, no Company Share shall be deemed to be outstanding or to have any
rights attributed to it other than those set forth in this Section 1.3.5.
Shareholder shall deliver all of his Company Shares to Bristol on or before the
Closing Date and such shares shall be canceled at the Closing.
1.3.6 Capital Stock of Purchaser and Bristol. Each share of
capital stock of Purchaser and Bristol, including, but not limited to, each
share of Restricted Stock, issued and outstanding at and as of the Effective
Time shall remain issued and outstanding.
1.4 Closing. If the conditions to close, as set forth in Article 5,
below, are satisfied, then the parties hereto shall meet on the Closing Date at
the offices of Bristol, located at 00000 Xxx Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000,
commencing at 9:00 a.m. local time (the "Closing"), or at such other place or in
such other manner as the parties shall mutually agree. At the Closing, Bristol
shall file the Certificates and, thereafter (and on the Closing Date) (i)
Purchaser shall deliver to Shareholder One Million One Hundred Thousand Dollars
($1,100,000) in immediately available funds; and (ii) Bristol shall deliver to
Shareholder Seven Hundred Fifty Thousand Dollars ($750,000) worth of Restricted
Stock.(1)
1.5 Adjustments. Commencing immediately after the Closing Date, (i)
Shareholder shall prepare a balance sheet (the "Closing Balance Sheet") as of
the Closing Date. Ernst & Young, LLP shall thereafter audit in accordance with
GAAP the Closing Balance Sheet (the "Audited Closing Balance Sheet") and the
Company's income statement for the year ended December 31, 1996 (the "Closing
Income Statement" and, as audited by Ernst & Young, LLP, the "Audited Closing
Income Statement"). Upon completion of the Audited Closing Balance Sheet and the
Audited Closing Income Statement, the parties hereto shall have the following
rights and obligations:
(a) If the Net Worth of Company as stated on the Audited Closing
Balance Sheet is greater than One Million One Hundred Thousand Dollars
($1,100,000), then such excess amount shall be paid to Shareholder within ten
(10) of the completion of the Audited Closing Balance Sheet, on a dollar for
dollar basis, in the ratio of 40.54% cash paid by Purchaser and 59.46%
Restricted Shares delivered by Bristol.
(b) If the Net Worth of Company as stated on the Audited Closing
Balance Sheet is less than One Million Dollars ($1,000,000) (the "Net Worth
Deficiency"), then Surviving Corporation, as its sole and exclusive remedy,
shall have the right to reduce any amounts otherwise due Shareholder under the
"First
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(1) The exact number of shares of Restricted Stock which Bristol is to
deliver to Shareholder on the Closing Date (which shall be rounded to the
nearest whole number of shares) shall be determined by and based upon the April
25, 1997 closing price of Bristol's publicly traded Common Stock as reported in
the Wall Street Journal (the Restricted Stock delivered by Bristol to Purchaser
shall hereinafter referred to as the "Restricted Shares").
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Bonus" (as defined in the Employment Agreement described in Section 6.2,
below), by that portion of the "Net Worth Reduction" (defined below) in excess
of One Hundred Thousand Dollars ($100,000). "Net Worth Reduction" means the
product of (i) the Net Worth Deficiency, times (ii) 1.85.
(c) If the Pre-Tax Earnings of Company as stated on the
Audited Closing Income Statement are less than Two Hundred Thousand Dollars
($200,000) (the "Pre-Tax Earnings Deficiency"), then Surviving Corporation, as
its sole and exclusive remedy, shall have the right to reduce any amounts
otherwise due Shareholder under the "First Bonus" (as defined in the Employment
Agreement described in Section 6.2, below) by that portion of the "Pre-Tax
Earnings Reduction" (defined below) in excess of One Hundred Thousand Dollars
($100,000). "Pre-Tax Earnings Reduction" means the product of (i) the Pre-Tax
Earnings Deficiency, times (ii) 9.25.
1.6 Right to Purchase Inventory and Accounts Receivable. If (i)
Surviving Corporation is entitled to reduce the "First Bonus" pursuant to
section 1.5(b), above, and (ii) an item of inventory or an account receivable is
valued on the Audited Closing Balance Sheet ("Audited Value") in an amount less
than the book value of such item of inventory or account receivable as stated on
the Closing Balance Sheet ("Book Value"), then Shareholder may, within thirty
(30) days of the completion of the Audited Closing Balance Sheet, purchase such
item of inventory or account receivable from Surviving Corporation in cash at
its Audited Value and sell such item of inventory or collect such account
receivable for his own account. Shareholder's right to purchase inventory and
accounts receivable pursuant to this Section 1.6 is subject to the prior written
approval of Surviving Corporation's Board of Directors, which approval may be
granted or denied in the Board's absolute and sole discretion; provided,
however, that if the Board denies such request, then such item of inventory or
account receivable shall, for purposes of the adjustments set forth in Section
1.5(b), above, be stated on the Audited Closing Balance Sheet at Book Value.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
OF COMPANY AND SHAREHOLDER
Company and Shareholder jointly and severally represent and warrant to,
and agree with, Bristol, Purchaser and Surviving Corporation that (except for
changes contemplated by this Agreement), each of the following statements is
true, correct and complete as of the date of this Agreement and will be true,
correct and complete as of the Closing Date (each such statement to be made
again by Company and Shareholder on that date with the Closing Date being
substituted for the date of this Agreement throughout this Article 2):
2.1 Organization and Authority.
(a) Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Florida, has all requisite
corporate power and authority to carry on its business as currently conducted
and to own or lease and operate its properties, and is duly qualified to do
business as a foreign corporation in each jurisdiction where its business makes
such qualification necessary.
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Company and Shareholder have the requisite power to enter into this Agreement
and to carry out their respective obligations hereunder.
(b) The copies of the Certificate of Incorporation and the
By-laws of Company which have been heretofore made available to Purchaser and
Bristol, are true copies of such instruments as amended to date, and such
instruments are in full force and effect. The stock certificates, transfer books
and minute books of Company heretofore made available to Purchaser and Bristol
are true and complete and constitute all of the stock certificates, transfer
books and minute books of Company (it being acknowledged by the parties hereto
that the original stock certificates, transfer books and minute books of
Company, and contents, has been lost or misplaced and were recently replaced and
updated by Company; and that Company shall deliver to Bristol prior to the
Closing Date written indemnities for such lost certificates).
(c) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by Company's Board of Directors and shareholders, and no other proceedings on
the part of Company are necessary to authorize this Agreement and the
transactions contemplated hereby. This Agreement is a valid and binding
obligation of Company and Shareholder enforceable in accordance with its terms
except as enforcement may be limited to bankruptcy, insolvency or other similar
laws affecting the enforcement of creditors rights generally and except that the
availability of equitable remedies, including specific performance, is subject
to the discretion of the court before which any proceeding therefor may be
brought.
(d) Except as disclosed in Schedule 2.1(d) attached hereto,
there are no persons or entities of any kind in which Company owns, directly or
indirectly, any shares of capital stock, or any partnership, membership, joint
venture or equitable or similar interest.
(e) Except as set forth on Schedule 2.1(e)(1) attached hereto,
to the Knowledge of Company and Shareholder no consent, approval or
authorization of, or declaration, filing or registration with, any third party,
including any government or regulatory authority, is required in connection with
the execution and delivery by Company or Shareholder of this Agreement and the
consummation by Company and Shareholder of the transactions contemplated hereby.
Except as set forth on Schedule 2.1(e)(2) attached hereto, neither the execution
and delivery of this Agreement nor the consummation of the transactions
contemplated hereby will (i) conflict with, result in a breach of, or constitute
a default under any of the terms, conditions, or provisions of the Certificate
of Incorporation or By-laws of Company; (ii) violate any law, order, judgment or
decree to which any of Company's properties or assets are bound; (iii) violate
or constitute a default under (whether after the giving of notice, passage of
time or both), or permit the termination of, or impair any rights or increase
any obligations of Company under, any agreement or instrument to which Company
is a party or by which any part of Company's properties or assets is bound; or
(iv) result in the acceleration of the maturity of any debt or obligation of
Company or in the creation or imposition of any Encumbrance upon any of the
property or assets of Company.
2.2 Capitalization. The authorized capital stock of the Company
consists of 100 shares of common stock, $1.00 par value per share, of which 100
shares are issued and outstanding. All outstanding capital stock of Company was
duly authorized and validly issued, and is fully paid and nonassessable. Company
does not have outstanding, and is not
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bound by, any option, warrant or other right, call or commitment to issue, or
any obligation or commitment to purchase, any of its capital stock or any
securities convertible into or exchangeable for any of its authorized capital
stock. Shareholder (i) owns all of the outstanding capital stock of Company;
(ii) is the sole legal and beneficial owner of that number of Company Shares set
forth on Schedule 2.2(1) hereto; (iii) is in possession of the certificate(s)
representing such shares; (iv) owns such shares free and clear of all
Encumbrances with respect thereto; and (iv) has the full power, authority and
right to exchange, surrender and cancel such shares in accordance with this
Agreement and to perform his obligations hereunder with respect to the exchange,
surrender and cancellation of such shares. Except as set forth on Schedule
2.2(2) attached hereto, there are no buy-sell agreements, shareholders'
agreements or similar agreements relating to any of the shares of the capital
stock of Company.
2.3 Financial Matters.
(a) Attached hereto as Schedule 2.3(a)(1) are the unaudited
balance sheets of Company at December 31, 1994, at December 31, 1995, at
December 31, 1996, and at February 28, 1997, the related statements of income,
shareholders' equity and cash flows for the annual and one (1) month period then
ended, respectively, and the related notes to such financial statements (all of
such financial statements and notes being hereinafter referred to as the
"Financial Statements"). Except as set forth in Schedule 2.3(a)(2) attached
hereto, to the Knowledge of Company and Shareholder the Financial Statements
(including the notes thereto) (i) have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods covered thereby; (ii)
except as disclosed on Schedule 2.3(a)(3), present fairly and accurately the
financial condition of Company as of such dates and the results of operations of
Company for such periods; and (iii) are correct and complete, and are consistent
with the books and records of Company (which books and records are correct and
complete).
(b) Except as set forth on Schedule 2.3(b), Company does not
have any Liabilities, other than those which (i) are set forth in the Financial
Statements; (ii) have been specifically and expressly disclosed in the Schedules
hereto by reference to the specific Section of this Agreement to which such
disclosure relates; (iii) have been incurred since the date of the most recent
Financial Statements in the Ordinary Course of Business in amounts and on terms
consistent, individually and in the aggregate, with Company's past practice; or
(vi) are expressly contemplated by this Agreement.
(c) Except as set forth on Schedule 2.3(c ), since the date of
the February 28, 1997 Financial Statements, (i) Company has operated its
business only in the Ordinary Course of Business; (ii) there has not occurred
any event, condition or circumstance that has had or is likely to have a
Materially Adverse Effect on Company; (iii) Company has not issued or sold, or
contracted to sell, any of its capital stock, notes, bonds or other securities,
or any option to purchase the same, or entered into any agreement with respect
thereto; (iv) Company has not incurred any property damage, destruction or
similar loss in an aggregate amount exceeding Five Thousand Dollars ($5,000)
whether or not covered by insurance; (v) Company has not suffered any loss or
any prospective loss, of any significant supplier, distributor, licensor,
contractor or customer or altered any contractual arrangement with any such
supplier, distributor, licensor, contractor or customer; (vi) Company has not
incurred any Liability, made any expenditure, or sold any assets or properties;
except in each case in
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the Ordinary Course of Business, consistent with past practices and at
arms-length; (vii) there has been no declaration, setting aside or payment of
any dividend or other distribution in respect of the capital stock of Company,
and Company has not redeemed, repurchased or otherwise acquired any of its
capital stock or securities convertible into or exchangeable for its capital
stock or entered into any agreement to do so; (viii) Company has not made any
material prepayments on any of its Liabilities, securities or other obligations,
other than trade payables in the Ordinary Course of Business; (ix) there has not
been any increase in the rate of compensation payable or to become payable to
any of Company's officers or employees or any increase in the amounts paid or
payable to such officers or employees under any bonus, insurance, pension or
other benefit plan, or any arrangements theretofore made for or with any of such
officers or employees; (x) Company has not adopted or amended any benefit plan,
agreement, trust, fund or other arrangement for the benefit of employees except
as required by Tax laws; and (xi) except as required by applicable law, there
has been no change in any accounting principle, procedure or practice followed
by Company or in the method of applying such principle, procedure or practice.
(d) Attached as Schedule 2.3(d) is a list containing all
distributions, credits or compensation, of any nature, paid or to be paid to
Shareholder by Company in fiscal year 1996 and 1997.
2.4 Assets.
(a) Company does not own any real property. Schedule 2.4(a)(1)
attached hereto contains a list of all real property leased by Company (the
"Leased Premises"), together with copies of each of the leases (the "Leases"),
including the name of the landlord or sublandlord, a description of the Leased
Premises, the commencement and expiration dates of the current term, the
security deposited by Company with the landlord or sublandlord, if any, and the
monthly rental (including all base rent and all additional rents). Except as set
forth on Schedule 2.4(a)(2), each Lease is in full force and effect and has not
been assigned, modified, supplemented or amended, and neither Company nor the
landlord or sublandlord under any Lease is in default under any of the Leases,
and no circumstance or state of facts exists which, with the giving of notice or
passage of time, or both, would permit the landlord or sublandlord under any
Lease to terminate any Lease.
(b) Schedule 2.4(b) attached hereto contains a list of all
personal property (other than inventory and other than items with a book value
of less than Ten Thousand Dollars ($10,000)) ("Personal Property") and real
property improvements (including fixtures but excluding items with a book value
of less than Ten Thousand Dollars ($10,000)) owned by Company. All Personal
Property and real property improvements of Company are in good condition and
repair and are adequate for the uses to which they are being put or would be put
in the Ordinary Course of Business, and such Personal Property and real property
improvements are not in need of maintenance or repair except for routine
maintenance and repair and as otherwise disclosed on Schedule 2.4(b). The
parties acknowledge that that certain lease with Xxxxxxxx XxXxxxxx has been
called into default by the Lessor.
(c) The inventory of Company is comprised of two types: (i)
inventory held for sale to customers ("Class I Inventory"), which inventory is
identified on Schedule 2.4(c)(i) attached hereto; and (ii) inventory of
products, parts and supplies held for customer support and service ("Class II
Inventory"), which inventory is identified on
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Schedule 2.4(c)(ii) attached hereto. Each item of Class I Inventory is in good
and marketable condition and fit for the purpose for which it was produced or
manufactured, and each item of Class II inventory is fairly and reasonably
valued on the balance sheet of the most recent Financial Statements and is not
obsolete, damaged or defective (except for obsolescence, damages or defects
which in the aggregate are not likely to have a Materially Adverse Effect on
Company).
(d) The accounts receivable of Company reflected on the
balance sheet of the January 31, 1997 Financial Statements have arisen from
sales or the rendering of services in the Ordinary Course of Business and are
not in dispute or subject to any setoffs, discounts, credits, reductions or
counterclaims whatsoever and, with usual and ordinary collection efforts, will
be paid in full, net of reserves reflected on such balance sheet, within one
hundred twenty (120) days after the Closing Date, without resort to legal
action.
(e) Company owns, licenses or otherwise has the full right to
use, all patents, trademarks, trade names, service marks, copyrights,
technology, know-how and processes and confidential information used in the
conduct of its business. Schedule 2.4(e)(1) attached hereto contains a list of
all registered and unregistered patents, trademarks, trade names, service marks
and copyrights used by Company, all applications therefor and all licenses and
other agreements relating thereto, which are owned by Company or used in the
business of Company. To the Knowledge of Company and Shareholder, no consent of
any third party will be required for the use thereof upon completion of the
transactions contemplated by this Agreement. No claims are currently being
asserted by any person or entity with respect to the use of any such patents,
trademarks, service marks, trade names, copyrights, technology, know-how or
processes or confidential information or challenging or questioning the validity
or effectiveness of any such license or agreement, nor, to the Knowledge of
Company and Shareholder, is there any basis for any such claims. The perpetual
use of such patents, trademarks, trade names, service marks, copyrights,
technology, know-how or processes or confidential information by Company does
not infringe on the rights of any person or entity, and, to the Knowledge of
Company and Shareholder, there is no infringing use of Company's patents,
trademarks, trade names, service marks or copyrights by others.
(f) Schedule 2.4(f) attached hereto contains a list of all
written and oral agreements (other than the Leases) that either are not
terminable at will or which involve more than Ten Thousand Dollars ($10,000)
during the term thereof and to which Company is a party or by which Company or
any of Company's assets or properties are bound. Each such agreement is legally
binding and in full force and effect, and to the Knowledge of Company and
Shareholder there is no existing or alleged default or event of default under
any such agreement, nor does there exist any event or condition which, with
notice or lapse of time or both, would constitute such a default or event of
default by Company. Copies of all documents listed in Schedule 2.4(f) have been
delivered to Purchaser and Bristol, and are true and complete in all respects
and include all amendments and supplements thereto and modifications thereof.
(g) Schedule 2.4(g) attached hereto contains a list of (i)
every bank, savings and loan or other financial institution in which Company has
any accounts or lock boxes and the corresponding account identification number,
if any; (ii) the names of the persons authorized to make withdrawals therefrom
or have access thereto; and (iii) each person who holds a power of attorney for
Company.
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(h) Schedule 2.4(h) attached hereto contains a list of the ten
(10) largest customers of Company measured by the revenues from such customers
during the twelve (12) month period commencing April 1, 1996 and ending March
31, 1997, showing the approximate total xxxxxxxx by Company to each such
customer during such period. To the Knowledge of Company and Shareholder, there
has not been any materially adverse change in the business relationship of
Company with any customer named in Schedule 2.4(h). Except for the customers
named in Schedule 2.4(h), Company did not have any customer who accounted for
more than five percent (5%) of the aggregate sales or services of Company during
the twelve (12) month period commencing April 1, 1996 and ending March 31, 1997.
No person or entity that was a customer of Company at any time during the past
twelve (12) months was at such time controlled by, in control of or under common
control with Company or Shareholder.
(i) Schedule 2.4(i) attached hereto contains a list of the ten
(10) largest suppliers of the Company measured by payments to such suppliers
during the twelve (12) month period commencing April 1, 1996 and ending March
31, 1997. To the Knowledge of Company and Shareholder, there has not been any
materially adverse change in the business relationship of Company with any
supplier named in Schedule 2.4(i). Except as set forth on Schedule 2.4(i), no
person or entity that was a supplier of Company at any time during the past
twelve (12) months was at such time controlled by, in control of or under common
control with Company or Shareholder.
(j) Schedule 2.4(j) attached hereto contains a list of
insurance policies in force currently or at any time during the past two (2)
years and relating to Company or its assets or properties, including in each
instance the name of the carrier, the term of the policy, the periods for which
it has been continuously in effect, the annual premium and the general scope of
coverage. The premiums for such insurance policies are fully paid. None of the
policies provides for the assessment of additional or retroactive premiums, and
there are no loans outstanding against any of such policies. No notice of
cancellation or non-renewal with respect to, or disallowance of any claim under,
any insurance policy listed or required to be listed on Schedule 2.4(j) or
binder listed or required to be listed in Schedule 2.4(j) has been received by
Company. To the Knowledge of Company and Shareholder, no claim or event which
forms the basis of a claim has occurred which could cause Company's insurers to
substantially increase the cost of insurance for Company.
(k) Except as set forth on Schedule 2.4(k) attached hereto,
all assets and properties purported to be owned by Company are owned free and
clear of all Encumbrances. Company rightfully possesses or has the right to use
all assets and properties necessary to conduct its business.
2.5 Legal Matters.
(a) Except as set forth on Schedule 2.5(a) attached hereto,
there is no action, suit, proceeding or investigation pending, or, to the
Knowledge of Company or Shareholder, threatened, at law or in equity, before any
arbitrator or court or other governmental authority, nor any outstanding
judgment, decree, injunction, charge, award or order, against or in any manner
involving Company or any of Company's assets or properties, or the Company
Shares.
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(b) Company has complied with all judgments, orders, rulings,
statutes, laws, permits, licenses, franchises, ordinances and other governmental
authorizations, approvals and regulations applicable to it or any of its
operations, properties or assets. To the Knowledge of Company and Shareholder,
Company has all licenses and permits and other governmental authorizations and
approvals required for the operation of its business and the use of its assets
and properties.
(c) Company has filed or caused to be filed all federal,
state, local and foreign income and other Tax Returns required under applicable
law to be filed on or before the Closing Date, Company has paid or made
provision for all Taxes and other charges which have or may become due for the
periods covered by such Tax Returns, all such Tax Returns are true, correct and
complete in all respects. None of the Tax Returns of Company are currently under
investigation or audit, nor to the Knowledge of Company or Shareholder is an
investigation or audit pending, and there has not been an investigation or audit
of the Tax Returns of Company during the past seven (7) years. There are no
outstanding agreements or waivers extending the statutory period of limitations
applicable to any Tax Return for any period. The accounting treatment of all
items of income, gain, loss, deduction and credit as reported on all Tax Returns
and estimates filed by or on behalf of Company are true and complete, and all
deferred Taxes and all Taxes due for the period ending on the Closing Date have
been accrued on the Balance Sheet of the most recent Financial Statements
through the date thereof. Company has never been, nor is Company currently, a
party to any agreement relating to the sharing of any liability for, or payment
of, Taxes with any third party. Schedule 2.5(c) attached hereto (i) lists all
federal, state, local and foreign income Tax Returns filed with respect to
Company for taxable periods ended on or after December 31, 1992; (ii) indicates
those Tax Returns that have been audited, if any; (iii) and indicates those
copies of all income Tax Returns, examination reports and statements of
deficiencies assessed against or agreed to by Company since December 31, 1992.
No claim has ever been made by an authority in a jurisdiction where Company does
not file Tax Returns that it is or may be subject to taxation by that
jurisdiction. There are no Encumbrances on any of the assets of Company that
arose in connection with any failure (or alleged failure) to pay any Tax. All
Taxes owed by Company or which Company is obligated to withhold from amounts
owing to any employee, independent contractor, stockholder, creditor or third
party have been paid. There are no unresolved claims concerning Company's Tax
Liability, and, to the Knowledge of Company and Shareholder, no basis for any
such claim exists.
(d) No solid, hazardous or toxic wastes, substances or
materials, as those terms are used in the Clean Air Act, Resource Conservation
and Recovery Act of 1976, as amended, the Hazardous Materials Transportation Act
or the Comprehensive Environmental Response, Compensation and Liability Act of
1980 (CERCLA), as amended by the Superfund Amendments and Reauthorization Act of
1986 (XXXX), or in any other federal, state or local law or ordinance governing
hazardous, toxic or solid wastes, materials or substances, and no asbestos,
polychlorinated biphenyls, urea formaldehyde foam, explosives, infectious or
biological wastes or radioactive materials (all of the above being collectively
referred to herein as "Hazardous Substances") have been or are unlawfully
stored, treated, disposed of, managed, generated, manufactured, produced,
released, emitted or discharged, in, on, under or about the Leased Premises by
Company so as to (i) require, under any applicable law or treaty, a governmental
approval, consent, waiver, exemption, variance, franchise, order, permit,
authorization, right or license (an "Approval"), unless such Approval has been
obtained
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and remains in full force and effect; or (ii) render the Leased Premises in
noncompliance with or in violation of any applicable law, regulation, or permit
or subject to any obligation, Liability, order or requirements for remediation.
No governmental or private action, suit or proceeding concerning or arising out
of the use, storage, treatment, discharge, disposal, handling, manufacturing,
processing, treatment, transportation, release or threat of release of any
Hazardous Substance at, under or in connection with Company's business or the
Leased Premises, or to enforce or impose liability under environmental pollution
laws, common law or laws relating to the protection of worker and work place
health and safety has been instituted, initiated or, to the Knowledge of Company
and Shareholder, threatened against or with respect to Company or Shareholder or
the Leased Premises as a result of the Company's or Shareholders' acts or
omissions.
(e) Product Warranty. Each product manufactured, sold, or
delivered by Company has been in conformity with all applicable contractual
commitments and all express and implied warranties, and Company has no Liability
(and there is no basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand against any of them
giving rise to any Liability) for replacement or repair thereof or other damages
in connection therewith, subject only to the reserve for product warranty claims
set forth on the face of the balance sheet of the most recent Financial
Statements (rather than in any notes thereto) as adjusted for the passage of
time through the Closing Date in accordance with the past custom and practice of
Company. No product manufactured, sold, or delivered by Company is subject to
any guaranty, warranty, or other indemnity beyond the applicable standard terms
and conditions of sale. Schedule 2.5(e) includes copies of the standard terms
and conditions of sale for Company (containing applicable guaranty, warranty,
and indemnity provisions).
(f) Product Liability. Except as set forth on Schedule
2.5(f), Company has no Liability (and there is no basis for any present or
future action, suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand against any of them giving rise to any Liability) arising out
of any injury to individuals or property as a result of the ownership,
possession, or use of any product manufactured, sold, or delivered by Company.
(g) Health and Safety. Except as set forth on Schedule 2.5(g),
Company has received no notice of any violation, nor, to the Knowledge of
Company and Shareholder, is there any basis for any assertion of a violation by
Company, of the Occupational Safety and Health Act of 1970, as amended, together
with all other laws (including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings and changes thereunder) of federal, state
and local governments (and all agencies thereof) concerning public health and
safety or employee health and safety laws.
2.6 Employment Matters
(a) None of Company's employees belongs to a labor union in
connection with his or her employment by Company nor has there been any request
by any employee to be represented by a union in such connection.
(b) Except as identified on Schedule 2.6(b) attached hereto,
no officer, manager or key employee of Company has indicated within the past
twelve (12) months that he or she may terminate his or
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her employment with Company (regardless of whether such indication was formal or
informal).
(c) Schedule 2.6(c) attached hereto sets forth the names of
all Company's directors and officers, and the names of all persons whose
compensation from Company during the current year will exceed Thirty Thousand
Dollars ($30,000).
(d) Schedule 2.6(d) attached hereto contains a list of each
pension, retirement, profit-sharing, deferred compensation, bonus or other
incentive plan, employee program, arrangement, agreement or understanding,
medical, vision, dental or other health plan, life insurance plan, severance
plan or any other employee benefit plan to which Company or any entity under
common control with the Company contributes or is a party or is bound and under
which current or former employees of Company are eligible to participate or
derive a benefit.
(e) Company does not maintain, never has maintained or
contributed to, and has never been required to contribute to any Employee
Benefit Plan or has any Liability under any Employee Benefit Plan.
(f) Company does not contribute to, never has contributed to,
and has never been required to contribute to any multiemployer plan or has any
Liability (including withdrawal liability) under any multiemployer plan.
2.7 Continuity of Interest. Shareholder has no present plan, intention
or arrangement to dispose of any of the Restricted Shares in a manner that would
cause the Merger to violate the continuity of shareholder interest requirement
set forth in Treasury Regulation Section 1.368-1.
2.8 Brokers. No broker, finder or investment banker has acted directly
or indirectly for Company, any of its officers or directors, or shareholders in
connection with this Agreement or the transactions contemplated hereby, and no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in respect thereof based in any way on agreements,
arrangements or understandings made by or on behalf of Company or Shareholder.
2.9 Disclosure. No representation or warranty by Company or Shareholder
in this Agreement or in any other certificate or document delivered to Purchaser
and Bristol and their representatives contains any untrue statement of a
material fact or omits to state any material fact necessary to make the
statements herein or therein not misleading. There is no fact which has not been
disclosed to Purchaser and Bristol which has had or is likely to have a
Materially Adverse Effect on Company.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF PURCHASER
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Purchaser and Bristol hereby represent and warrant to, and agree with,
Company and Shareholder that (except for changes contemplated by this
Agreement), each of the following statements is true, correct and complete as of
the date of this Agreement and will be true correct and complete as of the
Closing Date (each such statement to be made again by Purchaser on that date
with the Closing Date being substituted for the date of this Agreement
throughout this Article 3):
3.1 Organization and Authority.
(a) Purchaser and Bristol are corporations duly organized,
validly existing and in good standing under the laws of the State of Delaware,
have all requisite corporate power and authority to carry on their respective
businesses as currently conducted and to own or lease and operate their
respective properties, and are duly qualified to do business as foreign
corporations in each jurisdiction where their respective businesses makes such
qualification necessary. Purchaser and Bristol have the requisite power to enter
into this Agreement and to carry out their respective obligations hereunder.
(b) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by Purchaser's and Bristol's respective Boards of Directors, and no other
proceedings on the part of Purchaser or Bristol are necessary to authorize this
Agreement and the transactions contemplated hereby, and this Agreement is a
valid and binding obligation of Purchaser and Bristol enforceable in accordance
with its terms except as enforcement may be limited by bankruptcy, insolvency or
other similar laws affecting the enforcement of creditors rights generally and
except that the availability of equitable remedies, including specific
performance, is subject to the discretion of the court before which any
proceeding therefor may be brought.
(c) Except as set forth on Schedule 3.1(c)(1) attached hereto,
no consent, approval or authorization of, or declaration, filing or registration
with, any third party, including any government or regulatory authority, is
required in connection with the execution and delivery by Purchaser and Bristol
of this Agreement and the consummation by Purchaser and Bristol of the
transactions contemplated hereby. Except as set forth on Schedule 3.1(c)(2)
attached hereto, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) conflict with,
result in a breach of or constitute a default under any of the terms, conditions
or provisions of the Certificate of Incorporation or By-laws of Purchaser or
Bristol; (ii) violate any law, order, judgment or decree to which any of
Purchaser's or Bristol's properties or assets are bound; (iii) violate or
constitute a default under (whether after the giving of notice, passage of time
or both), or permit the termination of, or impair any rights or increase any
obligations of Purchaser or Bristol under, any agreement or instrument to which
Purchaser or Bristol is a party or by which any part of Purchaser's or Bristol's
properties or assets are bound; or (iv) result in the acceleration of the
maturity of any debt or obligation of Purchaser or Bristol, or in the creation
or imposition of any Encumbrance upon any of the properties or assets of
Purchaser or Bristol.
3.2 Brokers. No broker, finder or investment banker has acted directly
or indirectly for Purchaser or Bristol, or any of their officers or directors in
connection with this Agreement or the
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transactions contemplated hereby, and no broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in respect
thereof based in any way on agreements, arrangements or understandings made by
or on behalf of Purchaser or Bristol.
3.3 Disclosure. No representation or warranty by Purchaser or Bristol
in this Agreement or in any other certificate or document delivered to Company
and Shareholder and their representatives contains any untrue statement of a
material fact or omits to state any material fact necessary to make the
statements herein or therein not misleading. There is no fact which has not been
disclosed to Company and Shareholder which has had or is likely to have a
Materially Adverse Effect on Bristol.
3.4 Restricted Stock. The Restricted Stock when issued to Shareholder
in accordance with Section 1.4, above, will be duly issued, authorized and
outstanding non-registered, restricted Common Stock of Bristol, fully paid and
non-assessable, and free and clear of all Encumbrances; and Bristol has the full
power, authority and right to exchange the Restricted Stock in accordance with
the terms of this Agreement.
3.5 Governmental Matters. Bristol and Purchaser have complied with all
judgments, orders, rulings, statutes, laws (including any securities laws),
permits, licenses, franchises, ordinances and other governmental authorizations,
approvals and regulations applicable to it or any of its operations, properties
or assets. To the best of their knowledge and belief, Bristol and Purchaser have
all licenses and permits and other governmental authorizations and approvals
required for the operation of its business and the use of its assets and
properties.
ARTICLE 4
COVENANTS
4.1 General. Each of the parties hereto shall use its best efforts to
take all action and to do all things necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the conditions to close set forth in
Article 5, below).
4.2 Notices and Consents. Company shall give all notices to third
parties and shall obtain prior to the Closing Date any third party consents that
are necessary, proper or advisable to consummate and make effective the
transactions contemplated by this Agreement. Company's obligations with respect
to the above shall include, but not be limited to, obtaining prior to the
Closing Date the consents of (i) lenders holding a majority of Company
indebtedness to the assignment to and assumption by Surviving Corporation of
such indebtedness, without default, acceleration, amendment or modification
thereof; and (ii) manufacturers to the assignment to and assumption by Surviving
Corporation of all manufacturing agreements between such manufacturers and
Company, without default, modification or amendment thereof. Bristol's
obligations shall include but not be limited to obtaining the release of
Shareholder of any personal guarantees provided by Shareholder in connection
with any Company indebtedness with financial institution, including, if
necessary, the assumption of such personal guarantees by Bristol.
4.3 Regulatory Matters and Approvals. Each of the parties shall give
all notices to, make any filings with, and use its best efforts to
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obtain any authorizations, consents, and approvals of governments and
governmental agencies in connection with the matters referred to in Sections
2.1(e) and 3.1(c), above, or elsewhere in this Agreement.
4.4 Continuity of Interest. Shareholder shall not dispose of any
of the Restricted Shares within two (2) years after the Closing Date in a manner
that would cause the Merger to violate the continuity of shareholder interest
requirement set forth in Treasury Regulation Section 1.368-1. If before two (2)
years after the Closing Date, Shareholder desires to dispose of any of the
Restricted Shares, then he shall provide written notice to Bristol, not less
than sixty (60) days prior to the intended date of disposition, specifying the
number of Restricted Shares that Shareholder desires to dispose.
4.5 Continuity of Business. Purchaser shall continue at least one
significant historical business line of Company, or use at least a significant
portion of Company's historical business assets in a business, in each case in
accordance with Treasury Regulation Section 1.368- 1(d).
4.6 Tax Free Reorganization. Shareholder shall assume his
Liability, including all Tax Liability, caused by, arising from, or related to
the failure of the Merger to qualify, in any respects, as a tax-free
reorganization pursuant to Code Section 368(a)(2)(D).
4.7 Registration and Listing of Restricted Shares. On the second
anniversary of the Closing Date, Bristol shall forthwith use its best efforts to
cause and shall pay for the Restricted Shares to be (i) registered with the
Securities and Exchange Commission; and (ii) approved for listing and transfer
on the NASDAQ stock exchange or on such other stock exchange as Bristol's
publicly traded securities are then listed.
4.8 Operation of Business. From the date of this Agreement,
Company shall not engage in any practice, take any action, or enter into any
transaction outside the Ordinary Course of Business which is likely to have an
adverse effect on Company. Without limiting the generality of the foregoing:
(a) Company shall not authorize or effect any change in its
Certificate of Incorporation or By-laws;
(b) Company shall not grant any options, warrants, or other
rights to purchase or obtain any of its capital stock or issue, sell, or
otherwise dispose of any of its capital stock;
(c) Company shall not declare, set aside, or pay any dividend
or distribution with respect to its capital stock (whether in cash or in kind),
or redeem, purchase, or otherwise acquire any of its capital stock;
(d) Company shall not issue any note, bond or other debt
security or create, incur, assume, or guarantee any indebtedness for borrowed
money or capitalized lease obligation;
(e) Company shall not impose, or allow to be imposed, any
Encumbrance upon any of its assets;
(f) Company shall not make any capital investment in, make
any loan to, or acquire the securities or assets of any person or entity;
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(g) Company shall not make any change in the terms and
conditions of employment for any of its directors, officers, and employees; and
(h) Company shall not commit to do any of the foregoing.
4.9 Full Access. Company shall permit representatives of Bristol
and Purchaser to have full access to all personnel, premises, properties, books,
records (including tax records), accounts, contracts, and documents of or
pertaining to Company and, unless otherwise agreed, such due diligence shall be
conducted at reasonable times during business hours and shall not unduly disrupt
the business and employees of Company. Purchaser and Bristol shall treat and
hold as such any Confidential Information they receive from Company in the
course of the due diligence investigation contemplated by this section 4.9,
shall not use any of the Confidential Information except in connection with the
transactions contemplated by this Agreement, and, if this Agreement is
terminated for any reason whatsoever, shall return to Company all tangible
embodiments (and all copies) thereof which are in their possession.
4.10 Notice of Developments. Each party hereto shall give prompt
written notice to the other of any material adverse development causing a breach
of any of its own representations and warranties in Articles 2 and 3, above, or
the breach of any of its own covenants in this Article 4. No disclosure by any
party pursuant to this Section 4.10, however, shall be deemed to amend or
supplement the Schedules hereto or to prevent or cure any misrepresentation,
breach of warranty, or breach of covenant.
4.12 Exclusivity. So long as this Agreement is in effect, Company
shall not solicit, initiate, or encourage the submission of any proposal or
offer from any person or entity relating to the acquisition of all or
substantially all of the capital stock or assets of Company.
4.13 Financing of Surviving Corporation. Bristol shall use its best
efforts to secure and arrange for adequate ongoing financing of the operations
of Surviving Corporation in accordance with its requirements and capabilities,
as determined by the Board of Directors of Surviving Corporation.
ARTICLE 5
CONDITIONS TO CLOSE
5.1 Conditions to Obligations of Bristol and Purchaser to Close.
The obligations of Bristol and Purchaser to consummate the transactions to be
performed by them on or prior to the Closing Date are subject to the
satisfaction of the following conditions:
(a) This Agreement and the Merger shall have been
approved by the Board of Directors and shareholder of Company;
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(b) The representations and warranties set forth in
Article 2, above, shall be true and correct in all material respects on and as
of the Closing Date;
(c) Company and Shareholder shall have performed and
complied with all of their covenants hereunder in all material respects through
the Closing Date;
(d) Company shall have obtained all third party consents
that are necessary, proper or advisable to consummate and make effective the
transactions contemplated by this Agreement;
(e) Company and Shareholder shall have performed their
respective delivery obligations set forth in Article 6, below;
(f) Except for the Company's pending litigation with
Xxxxxxx XxXxxxxx, 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 (i)
prevent consummation of any of the transactions contemplated by this Agreement;
(ii) cause any of the transactions contemplated by this Agreement to be
rescinded following consummation; or (iii) affect adversely the right of
Surviving Corporation to own the former assets and to operate the former
businesses of Company, and no such injunction, judgment, order, decree, ruling
or charge shall be in effect;
(g) Company shall have completed and delivered the
Schedules to this Agreement and the information contained in such Schedules
shall be satisfactory to Purchaser and Bristol in their absolute and sole
discretion, which determination shall be made on or prior to the Closing Date;
(h) Bristol and Purchaser shall have completed their due
diligence investigation of Company and shall be satisfied with the results of
such investigation in their absolute and sole discretion;
(i) Ernst & Young, LLP shall have confirmed in writing to
Bristol not later than ten (10) days prior to the Closing Date that Ernst &
Young, LLP is capable of completing an audit of Company not later than sixty
(60) days following the Closing Date; provided, however, that Bristol's sole
remedy if this condition to close is not satisfied is to delay the Closing Date
until the last day of the month after which Ernst & Young, LLP shall be able to
complete the audit within such sixty (60) day timeframe.
Bristol and Purchaser may waive any condition specified in this Section 5.1 if
they execute a writing so stating on or prior to the Closing Date.
5.2 Conditions to Obligations of Company and Shareholder to Close.
The obligations of Company and Shareholder to consummate the transactions to be
performed by them on or prior to the Closing Date are subject to satisfaction of
the following conditions:
(a) The representations and warranties set forth in
Article 3, above, shall be true and correct in all material respects on and as
of the Closing Date;
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(b) Bristol and Purchaser shall have performed and
complied with all of their covenants hereunder in all material respects through
the Closing Date;
(c) Bristol and Purchaser shall have performed their
respective delivery obligations set forth in Article 6, below;
(d) There shall not be any injunction, judgment, order,
decree, ruling or charge in effect against Bristol or Purchaser preventing the
consummation of any of the transactions contemplated by this Agreement; and
(e) All actions to be taken by Bristol and Purchaser in
connection with the consummation of the transactions contemplated by this
Agreement and all certificates, instruments, and other documents required to
effect the transactions contemplated by this Agreement shall be satisfactory in
form and substance to Company and Shareholder in their reasonable discretion.
(f) This Agreement, the Merger and the issuance of the
Restricted Shares shall have been approved by the Board of Directors and, if
necessary, the shareholders of Bristol and Purchase.
(g) Bristol and Purchaser shall have performed and
complied with all of their covenants hereunder in all material respects through
the Closing Date.
(h) 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 (i)
prevent consummation of any of the transactions contemplated by this Agreement
to be rescinded following consummation; or (ii) affect adversely the right of
Surviving Corporation to own the former assets and to operate the former
businesses of Company, and no such injunction, judgment, order, decree, ruling
or charge shall be in effect.
Company and Shareholder may waive any condition in this Section 5.2 if they
execute a writing so stating on or prior to the Closing Date.
ARTICLE 6
DELIVERIES ON OR PRIOR TO THE CLOSING DATE
6.1 Deliveries Subject to Filing of Certificates. All deliveries
to be made pursuant to this Article 6 shall, to the extent appropriate, be
prepared in such a manner so as to become effective only upon the filing of the
Certificates in accordance with Section 1.1, above.
6.2 Mutual Deliveries. On or prior to the Closing Date, (i)
Purchaser and Shareholder shall execute and deliver to each other Shareholder's
Employment Agreement with Surviving Corporation in substantially the form set
forth as Exhibit "C" attached hereto; and
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(ii) Bristol, Purchaser and Company shall deliver to each other the
Certificates.
6.3 Deliveries by Company. Not less than ten (10) days prior to
the Closing Date, Shareholder shall cause Company to deliver to Purchaser and
Bristol the Schedules to this Agreement. On or prior to the Closing Date,
Shareholder shall cause Company to deliver to Purchaser and Bristol (i) a
certificate stating that the representations and warranties of Company contained
in this Agreement are true and correct on and as of the Closing Date as though
made at and as of that date (except where such representation and warranty is
made as of a date specifically set forth therein); (ii) a copy of the
Certificate of Incorporation, as amended, and By-laws of Company as then in
effect, an incumbency certificate, and resolutions of the Board of Directors and
shareholders of Company approving the Agreement and authorizing the performance
of the transactions contemplated hereby, all as certified by the Secretary of
Company; (iii) a long-form good standing certificate dated as of or within
fifteen (15) business days of the Closing Date from the Secretary of State of
the State of Florida; (iv) the legal opinion of Company's counsel in the form
attached hereto as Exhibit "D;" (v) the resignations, effective as of the
Closing Date, of each director and officer of Company; and (vi) such other
documents as Purchaser may reasonably request for the purposes of consummating
the transactions contemplated hereby.
6.4 Deliveries by Shareholder. On or prior to the Closing Date,
Shareholder shall deliver to Bristol and Purchaser (i) the certificate(s)
representing all of the Company Shares owned by Shareholder, duly endorsed for
surrender and cancellation; (ii) a certificate stating that the representations
and warranties of Shareholder contained in this Agreement are true and correct
on and as of the Closing Date as though made at and as of that date (except
where such representation and warranty is made as of a date specifically set
forth therein); and (iii) such other documents as Purchaser may reasonably
request for the purposes of consummating the transactions contemplated herein.
6.5 Deliveries by Purchaser. On or prior to the Closing Date,
Purchaser shall deliver to Shareholder (i) a certificate stating that the
representations and warranties of Purchaser contained in this Agreement are true
and correct on and as of the Closing Date as though made at and as of that date
(except where such representation and warranty is made as of a date specifically
set forth therein); (ii) a copy of the Certificate of Incorporation, as amended,
and By-laws of Purchaser as then in effect, and resolutions of the Board of
Directors of Purchaser approving the Agreement and authorizing the performance
of the transactions contemplated herein, all as certified by the Secretary of
Purchaser; (iii) a long-form good standing certificate dated as of or within
fifteen (15) business days of the Effective Date from the Secretary of State of
the State of Delaware; and (iv) such other documents as Shareholder may
reasonably request for the purposes of consummating the transactions
contemplated hereby. Immediately after the Effective Time and on the Closing
Date, Purchaser shall deliver to Shareholder One Million One Hundred Thousand
Dollars ($1,100,000) in immediately available funds.
6.6 Deliveries by Bristol. On or prior to the Closing Date,
Bristol shall deliver to Shareholder (i) a certificate stating that the
representations and warranties of Bristol contained in this Agreement are true
and correct on and as of the Closing Date as though made at and
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as of that date (except where such representation and warranty is made as of a
date specifically set forth therein); (ii) a copy of the Certificate of
Incorporation, as amended, and By-laws of Bristol then in effect, and
resolutions of the Board of Directors of Bristol approving the Agreement and
authorizing the performance of the transactions contemplated herein, all as
certified by the Secretary of Bristol; (iii) a long-form good standing
certificate dated as of or within fifteen (15) business days of the Effective
Date from the Secretary of State of the State of Delaware; and (iv) such other
documents as Shareholder may reasonably request for the purposes of consummating
the transactions contemplated hereby. Immediately after the Effective Time and
on the Closing Date, Bristol shall deliver to Shareholder Seven Hundred Fifty
Thousand Dollars ($750,000) worth of Restricted Shares.
6.7 Waivers. A party may waive any deliveries to which it is
entitled pursuant to this Article 6 if it executes a writing so stating on or
before the Closing Date.
ARTICLE 7
INDEMNITIES
7.1 Indemnity by Bristol and Purchaser.
(a) Bristol and Purchaser hereby expressly and
unequivocally agree to indemnify, defend and hold harmless Shareholder, his
heirs, successors, attorneys, agents, employees and representatives from and
against and in respect of any and all claims, demands, losses, costs, expenses,
obligations, guaranties, liabilities, actions, suits, damages and deficiencies,
including without limitation, interest, penalties, reasonable attorneys' fees
and all amounts paid in settlement of any claim, action or suit (all such
claims, demands, losses, costs, expenses, etc. being referred to herein
collectively as "Claims") which are asserted against Shareholder or which
Shareholder incurs or suffers, whether as a result of third party claims or
otherwise, and which arise out of, result from or relate to (i) any failure by
Bristol and Purchaser to fully perform in a timely manner any agreement,
covenant or obligation of Bristol and Purchaser hereunder; or (ii) the existence
or non-existence of any fact or circumstance which is different from or
inconsistent with or a breach of any representation or warranty of Bristol and
Purchaser made herein, provided, however, that any insurance proceeds paid to
Shareholder with respect to any indemnification claim hereunder shall reduce
Purchaser's and Bristol's indemnification obligations, dollar for dollar.
(b) The indemnities provided for above shall not require
payment as a condition precedent to recovery.
7.2 Indemnity by Company and Shareholder.
(a) The Company and Shareholder hereby expressly and
unequivocally agree to indemnify, defend and hold harmless Bristol, Purchaser
and Surviving Corporation, and Bristol's, Purchaser's and Surviving
Corporation's officers, directors, employees, agents, affiliates, attorneys,
representatives and related entities (for purposes of this Section 7.2 only, the
"Indemnified Parties") from and against and in respect of any and all Claims
which are asserted against any Indemnified Party or which any Indemnified Party
incurs or suffers, whether as a result of third party claims or otherwise, and
which arise out of, result from or relate to (i) any failure by Company and/or
Shareholder to fully perform in a timely manner any agreement, covenant
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or obligation of Company and Shareholder hereunder; (ii) the existence or
non-existence of any act or circumstance which is different from or inconsistent
with or a breach of any representation or warranty of Company and/or Shareholder
made herein; (iii) any Liabilities of Company which are based on acts or
omissions occurring prior to the Closing Date and which are not (a) specifically
listed in the Schedules to this Agreement or (b) expressly assumed by Purchaser
under this Agreement; (iv) all Liability arising in connection with the
Company's pending litigation with Xxxxxxx XxXxxxxx; or (v) any Liability arising
from the lost stock certificates discussed in Section 2.1(b), below; provided,
however, that any insurance proceeds paid to Bristol or Surviving Corporation
with respect to any indemnification claim hereunder shall reduce Company's and
Shareholder's indemnification obligations, dollar for dollar.
(b) The indemnities provided for above shall not require
payment as a condition precedent to recovery.
7.3 Defense of Claims. If any party receives notice of the
commencement of any action or of the existence of any Claim or a written
assertion of any facts by a third party with respect to any matter that would
give rise to a Claim hereunder or otherwise suffers a loss for which such party
is entitled to be indemnified pursuant to Section 7.1 or Section 7.2, above,
then that party (the "Indemnified Party") shall give the party required to
indemnify (the "Indemnifying Party") reasonable notice thereof and shall permit
the Indemnifying Party to have reasonable access to relevant information in the
Indemnified Party's possession or control regarding such Claim. The Indemnifying
Party shall have the right to take all reasonable action, at its own expense, as
it deems desirable in order to minimize or eliminate such Claim. In the event of
a Claim requesting solely monetary damages, the Indemnifying Party shall have
the right, at its own expense, to appoint counsel to handle the defense of such
matter and the exclusive right to prosecute, defend, compromise, settle or pay
such Claim provided that the Indemnifying Party acknowledges in writing its
obligations and Liability for such Claim as between the parties hereto or
procures from the person making the Claim a full and complete release of the
Indemnified Parties which is satisfactory in form and substance to counsel for
the Indemnified Parties. If the foregoing acknowledgments or releases are not
furnished to the Indemnified Party, then they may appoint associate counsel to
participate in the defense of such matter at the expense of the Indemnifying
Party. If the person asserting the Claim requests relief other than or in
addition to monetary damages, then the Indemnifying Party may not settle any
aspects of such Claim requesting relief other than monetary damages without the
Indemnified Parties' prior written consent, which consent shall be subject only
to their obligation to act in good faith.
7.4 Remedies Not Exclusive. The remedies provided in this
Article 7 shall be in addition to, and not in lieu of, any other remedies which
a party may have at law, in equity or otherwise.
ARTICLE 8
TERMINATION
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8.1 Termination of Agreement. This Agreement and the transactions
contemplated herein may be terminated as follows:
(a) By the mutual written consent of the parties hereto
at any time prior to the Effective Time;
(b) By Bristol and/or Purchaser by giving oral or written
notice to Company and Shareholder at any time prior to the Effective Time (i) in
the event Company or Shareholder has breached any representation, warranty, or
covenant contained in this Agreement; or (ii) in the event of the failure of a
condition to close set forth in Section 5.1, above; and
(c) By Company and/or Shareholder by giving oral or
written notice to Bristol and Purchaser at any time prior to the Effective Time
(i) in the event Bristol and/or Purchaser has breached any material
representation, warranty, covenant contained in this Agreement in any material
respect; or (ii) in the event of the failure of a condition set forth in Section
5.2, above.
8.2 Effect of Termination. If any Party terminates this Agreement
pursuant to Section 8.1, above, then all rights and obligations of the parties
hereto shall terminate without any Liability of any party to any other party
(except for any Liability of any party then in breach); provided, however, that
the confidentially provisions contained in Section 4.9, above, shall survive any
such termination.
ARTICLE 9
GENERAL PROVISIONS
9.1 Publicity. After the Effective Time and except as may
otherwise be required by law (i) Bristol shall determine the timing and content
of any press release or public announcement relating to the transactions
contemplated by this Agreement; and (ii) Bristol, Surviving Corporation and
Shareholder shall determine the timing and content of any announcements to
Company's customers, suppliers, licensors, licensees or employees relating to
the transactions contemplated by this Agreement and no such announcement shall
be made without the prior written consent of such parties. Nothing contained in
this Section 9.1 shall preclude Shareholder and Company from giving notice of
the anticipated Merger to any party from which consent to the Merger must be
obtained.
9.2 Complete Agreement; Modifications. This Agreement and any
documents referred to herein or executed in connection herewith constitute the
parties' entire agreement with respect to the subject matter hereof and
supersede all agreements, representations, warranties, statements, promises and
understandings, whether oral or written, with respect to the subject matter
hereof. This Agreement may not be amended, altered or modified except by a
writing signed by the parties.
9.3 Additional Documents. Each party hereto agrees to execute,
acknowledge and deliver any and all further documents, instruments,
certificates, agreements and other writings and to perform such other actions
which may be or become necessary or expedient to effectuate and carry out this
Agreement.
9.4 Notices. Unless otherwise specifically permitted by this
Agreement, all notices under this Agreement shall be in writing and shall be
delivered by personal service, telecopy (to be followed on the
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same day by regular or certified mail, return receipt requested), federal
express or comparable overnight service or certified mail (if such service is
not available, then by first class mail), postage prepaid, to such address as
may be designated from time to time by the relevant party. Any notice sent by
certified mail shall be deemed to have been given three (3) days after the date
on which it is mailed. All other notices shall be deemed given when received. No
objection may be made to the manner of delivery of any notice actually received
in writing by an authorized agent of a party. The initial addresses of the
parties shall be as follows:
IF TO BRISTOL: WITH A COPY TO:
Bristol Technology Systems, Inc. Xxxxxxx X. Xxxx, Esq.
18201 Xxx Xxxxxx, Suite 305 Smith, Silbar, Xxxxx,
Xxxxxx, XX 00000 Xxxxxx & Xxxxxxxxx, LLP
Attn: Xxxxxxx X. Xxxxxx 00000 Xxx Xxxxxx
Xxxxxxxxx Xxxxx 000
Xxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000 Tel: (000) 000-0000
Fax: (000) 000-0000
IF TO PURCHASER: WITH A COPY TO:
Bristol Merger Corporation Xxxxxxx X. Xxxx, Esq.
[Same as above] [Same as above]
IF TO SHAREHOLDER: WITH A COPY TO:
Xxxxx Xxxxxx Xxxxxx X. Xxxxxxx, Esq.
0000 X.X. 00xx Xxxxxxx Xxxxxxxx, Xxxxxxx &
Xxxxx, Xxxxxxx 00000 Singer, P.A.
25 X.X. 0xx Xx, Xxxxx 000
Tel: (000) 000-0000 Xxxxx, Xxxxxxx 00000
Fax: (000) 000-0000
Tel: (000) 000-0000
Fax: (000) 000-0000
IF TO COMPANY: WITH A COPY TO:
International Systems & Xxxxxx X. Xxxxxxx, Esq.
Electronics Corporation [Same as above]
0000 X.X. 00xx Xxxxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxxx Xxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
9.5 No Third Persons or Entities. None of the provisions of this
Agreement shall be for the benefit of, or enforceable by, any third person or
entity; provided, however, that Bristol shall be a third-party beneficiary of
all rights of Purchaser and Surviving Corporation hereunder.
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9.6 Governing Law; Jurisdiction. This Agreement, the respective
rights, obligations and remedies of the parties hereunder, the interpretation
hereof and all disputes, controversies and Liabilities arising out of or related
to this Agreement or the relationship between the parties created hereby shall
be governed by and construed in accordance with the internal laws of the State
of Delaware without reference to its principles of conflict of laws.
9.7 Attorneys' Fees. Should any litigation or arbitration be
commenced (including any proceedings in a bankruptcy court) between the parties
hereto or their representatives concerning any provision of this Agreement or
the rights and duties of any person or entity hereunder, the party or parties
prevailing in such proceeding shall be entitled, in addition to such other
relief as may be granted, to the reasonable attorneys' fees and costs incurred
by reason of or in connection with such litigation or arbitration.
9.8 Post-Judgment Attorneys' Fees. The prevailing party in any
legal action or other proceeding between the parties regarding this Agreement
shall be entitled, in addition to and separately from the amounts recoverable
under Section 9.7, to the payment by the losing party of the prevailing party's
reasonable attorneys' fees, costs, and litigation expenses incurred in
connection with (i) any appellate review of the judgment rendered in such action
or of any other ruling in such action; and (ii) any proceeding to enforce,
collect or execute upon a judgment in such action. It is the intent of the
parties that the provisions of this Section 9.8 be distinct and severable from
the other rights of the parties under this Agreement, shall survive the entry of
judgment in any action and shall not be merged into such judgment.
9.9 Successors and Assigns. Neither this Agreement nor any rights
or obligations hereunder may be assigned, transferred or delegated by operation
of law or otherwise, without the prior written consent of the other parties
hereto. Subject to the above, this Agreement shall inure to the benefit of the
parties' respective successors and assigns.
9.10 Survival of Warranties. Each representation and warranty
contained herein shall survive the Closing Date for a period of three (3) years
following the Closing Date. The right to indemnification pursuant to this
Agreement shall survive any investigation made by the parties or their
representatives, lenders or investors, or the receipt of any opinion or
certificate.
9.11 Joint and Several Liability. Notwithstanding any provision of
this Agreement to the contrary, the Liability of Company and Shareholder arising
prior to the Effective Time for the representations and warranties made by, and
the covenants and indemnification obligations imposed upon Company and
Shareholder or either of them under this Agreement, shall be joint and several.
The Liability of Company shall terminate at the Effective Time. Notwithstanding
any provision of this Agreement to the contrary, the Liability of Bristol and
Purchaser arising prior to the Effective Time for the representations and
warranties made by, and covenants and indemnification obligations imposed upon
Bristol and Purchaser or either of them under this Agreement, shall be joint and
several.
9.12 Remedies Not Exclusive. No remedy conferred by any of the
specific provisions of this Agreement is intended to be exclusive of any other
remedy, and each and every remedy will be cumulative and will be in addition to
every other remedy given hereunder or now or hereafter
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existing at law or in equity or by statute or otherwise. The election of any one
or more remedies will not constitute a waiver of the right to pursue other
available remedies.
9.13 Expenses. Each party shall pay all of the costs and expenses
incurred by such party in connection with the authorization, preparation,
execution and performance of this Agreement, including, without limitation, all
fees and expenses of its agents, representatives, counsel and accountants.
9.14 Waivers Strictly Construed. With regard to any power, remedy
or right provided herein or otherwise available to any party hereunder (i) no
waiver or extension of time shall be effective unless expressly contained in a
writing signed by the waiving party; and (ii) no alteration, modification or
impairment shall be implied by reason of any previous waiver, extension of time,
delay or omission in exercise, or by any other indulgence.
9.15 Rules of Construction. The Article and Section headings in
this Agreement are inserted only as a matter of convenience, and in no way
define, limit, or interpret the scope of this Agreement or any particular
Article or Section. Throughout this Agreement, as the context may require, the
singular tense and number includes the plural, and the plural tense and number
includes the singular. 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, or covenant contained herein shall have
independent significance.
9.16 Severability. If any provision, clause or application of this
Agreement is determined by a court of competent jurisdiction or arbitrator to be
invalid or unenforceable for any reason whatsoever, then (i) this Agreement
shall remain binding and in full force and effect to the maximum extent
permitted under applicable law, except for such invalidated or unenforceable
provision, clause or application; (ii) the parties shall negotiate in good faith
to provide adjustments to ameliorate any injustice or frustration of purpose
resulting therefrom in a manner consistent with the original intent of the
parties; and (iii) if the parties are unable to agree upon such adjustments,
then the invalid or unenforceable provision, clause or application shall be
modified and reformed by such court or arbitrator so that it is valid and
enforceable in a manner that comes the closest to expressing the original
intention of the parties with respect thereto, and each party hereto agrees to
be bound by any such modification and reformation as if such modification and
reformation were contained in this Agreement in the first instance.
9.17 Funds. Any requirement in this Agreement to pay immediately
available funds may be satisfied by delivery of a certified or cashier's check
in the applicable amount or by wiring to an account designated by the recipient
of the applicable amount.
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9.18 Exhibits and Schedules. All Exhibits and Schedules attached
hereto are hereby incorporated in and made a part of this Agreement as if fully
set forth herein.
9.19 Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have signed this Agreement as of the
date first set forth above.
"BRISTOL" "COMPANY"
BRISTOL TECHNOLOGY SYSTEMS, INTERNATIONAL SYSTEMS &
INC., a Delaware corporation ELECTRONICS CORPORATION,
a Florida corporation
By:________________________ By:______________________
Xxxxxxx X. Xxxxxx, Xxxxx Xxxxxx,
President President
"PURCHASER" "SHAREHOLDER"
BRISTOL MERGER CORPORATION,
a Delaware Corporation
_________________________
Xxxxx Xxxxxx
By:_________________________
Xxxxxxx X. Xxxxxx,
President
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