AGREEMENT AND PLAN OF MERGER
SYNERGISTICS ACQUISITION CORP.
("BUYER")
SYNERGISTICS, INC.
("SELLER")
DATED AS OF JULY 25, 2002
AGREEMENT AND PLAN OF MERGER BETWEEN
SYNERGISTICS ACQUISITION CORP. AND SYNERGISTICS, INC.
TABLE OF CONTENTS
ARTICLE I
THE MERGER
1.1 The Merger 1
1.2 Effective Time 1
1.3 Articles of Organization and By-Laws 2
1.4 Directors of Surviving Company 2
1.5 Officers of Surviving Company 2
1.6 Additional Actions 2
ARTICLE II
CONVERSION OF SHARES
2.1 Conversion of Seller Common Stock 2
2.2 Exchange Procedures 3
2.3 Cash Consideration 4
2.4 Dissenters' Rights 4
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
3.1 Corporate Organization 5
3.2 Capitalization 5
3.3 Legal Proceedings 5
3.4 Authorization and Effectiveness of Agreement 5
3.5 Tax Returns and Payment of Taxes 6
3.6 Financial Statements 6
3.7 Absence of Certain Changes 6
3.8 Absence of Undisclosed Liabilities 6
3.9 Ownership of Properties 7
3.10 Certain Line Items and Related Items 7
3.11 Broker's fees 8
3.12 Disclosure 8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 Corporate Organization 8
4.2 Authorization and Effectiveness of Agreement 8
4.3 Legal Proceedings 8
4.4 Broker's fees 8
4.5 Disclosure 9
ARTICLE V
COVENANTS OF SELLER
5.1 Conduct of Seller's Business Pending the Closing 9
5.2 Access to Information 10
5.3 Approval of Seller's Stockholders 10
5.4 All Reasonable Efforts 10
5.5 Inability to Fulfill Conditions 10
5.6 Payment of Attorney Fees 10
ARTICLE VI
COVENANTS OF BUYER
6.1 Conduct of Business 11
6.2 Consents and Approvals of Third-Parties 11
6.3 All Reasonable Efforts 11
6.4 Inability to Fulfill Conditions 12
6.5 Directors and Officers Indemnification
and Insurance 12
6.6 Payment of Attorney Fees 14
ARTICLE VII
CLOSING CONDITIONS
7.1 Conditions to Each Party's Obligations
Under this Agreement 14
7.2 Conditions to the Obligations of Buyer
Under this Agreement 14
7.3 Conditions to the Obligations of Seller
Under this Agreement 15
ARTICLE VIII
THE CLOSING
8.1 Time and Place 15
8.2 Deliveries at the Closing 16
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1 Termination 16
9.2 Effect of Termination 16
9.3 Equitable Remedies 16
9.4 Seller Termination Fee 17
9.5 Limitation on Personal Liability 17
9.6 Amendment, Extension and Waiver 17
ARTICLE X
CERTAIN DEFINITIONS
10.1 Certain Definitions 18
ARTICLE XI
MISCELLANEOUS
11.1 Confidentiality 19
11.2 Public Announcements 19
11.3 Survival 19
11.4 Notices 19
11.5 Parties in Interest 20
11.6 Rights of Employment 20
11.7 Complete Agreement 20
11.8 Counterparts 20
11.9 Severability 20
11.10 Governing Law 21
11.11 Headings 21
Ex.A Form of Seller Stockholder Agreement 23
THIS AGREEMENT AND PLAN OF MERGER dated as of July 25, 2002 (the
"Agreement"), is by and between Synergistics Acquisition Corp.
a Massachusetts corporation the "Buyer") and Synergistics,
Inc., a Massachusetts corporation (the "Seller"). (Certain
capitalized terms used herein shall have the meanings defined
in Section 10.1 hereof).
WHEREAS, the respective Boards of Directors of Buyer and Seller
have approved the acquisition of Seller by Buyer pursuant to the
merger of Buyer with Seller (the "Merger") (the resulting company
of such Merger sometimes is referred to herein as the "Surviving
Company");
WHEREAS, as a condition and inducement to Buyer's willingness to
enter into this Agreement, certain stockholders of Seller are
concurrently entering into a stockholder agreement with Buyer
(the "Seller Stockholder Agreement"), in substantially the form
attached hereto as Exhibit A, pursuant to which, among other
things, such stockholders agree to vote their shares of Seller
Common Stock in favor of this Agreement and the Transactions
contemplated hereby; and
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements herein contained, and
of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree
hereto as follows:
Article I
The Merger
1.1 The Merger. At the Effective Time, Buyer shall be
merged with Seller. Buyer shall be the Surviving Company.
At the Effective Time, the separate existence of Seller
shall cease and all of the rights, privileges, powers,
franchises, properties, assets, liabilities and obligations
of Seller shall be vested in and assumed by Surviving
Company.
1.2 Effective Time. The Merger shall be effected by the
filing of Articles of Merger with the Secretary of the
Commonwealth of Massachusetts (the "Secretary of the
Commonwealth") in accordance with Massachusetts law on the
date of the closing (the "Closing Date") provided for in
Article VIII hereof (the "Closing"). The term "Effective
Time" shall mean the time on the Closing Date or not later
than the commencement of business on the next succeeding
business day when the Merger becomes effective, as set forth
in the Articles of Merger.
1.3 Articles of Organization and By-Laws. The Articles of
Organization and By-Laws of Surviving Company shall be the
Articles of Organization and By-Laws of Buyer as in effect
immediately prior to the Effective Time, until thereafter
amended as provided therein and by applicable law.
1.4 Directors of Surviving Company. The directors of Buyer
immediately prior to the Effective Time shall be the initial
directors of Surviving Company, each to hold office in
accordance with the Articles of Organization and By-Laws of
Surviving Company.
1.5 Officers of Surviving Company. The officers of Buyer
immediately prior to the Effective Time shall be the initial
officers of Surviving Company, in each case until their
respective successors are duly elected or appointed and
qualified.
1.6 Additional Actions. If, at any time after the
Effective Time, Surviving Company shall consider or be
advised that any further assignments or assurances in law or
any other acts are necessary or desirable (a) to vest,
perfect or confirm, of record or otherwise, in Surviving
Company, title to and possession of any property or right of
Seller acquired or to be acquired by reason of, or as a
result of, the Merger, or (b) otherwise to carry out the
purposes of this Agreement, Buyer, Seller and their proper
officers and directors shall be deemed to have granted to
Surviving Company an irrevocable power of attorney to
execute and deliver all such property deeds, assignments and
assurances in law and to do all acts necessary or proper to
vest, perfect or confirm title to and possession of such
property or rights of Surviving Company and otherwise to
carry out the purposes of this Agreement; and the proper
officers and directors of Surviving Company are fully
authorized in the name of Buyer and Seller or otherwise to
take any and all such action.
Article II
Conversion of Shares
2.1 Conversion of Seller Common Stock.
(a) Merger Consideration. At the Effective Time, each
share of Seller's common stock, par value $.01 per share
(the "Seller Common Stock") issued and outstanding
immediately prior to the Effective Time (other than
Dissenting Shares, as defined in Section 2.4 hereof) and
other than Seller Common Stock then owned by Seller or
Buyer shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted
into and exchangeable for the Per Share Cash
Consideration, as defined below. The "Seller Outstanding
Share Number" shall mean the number of shares of Seller
Common Stock issued or subject to a binding obligation to
issue as of the Effective Time. The "Per Share Cash
Consideration" shall be determined by dividing the Net
Cash Consideration (calculated in accordance with Section
2.3 hereof) by the Seller Outstanding Share Number. The
consideration to be received for each share of Seller
Common Stock, as the same may be adjusted as provided in
this Agreement, is referred to herein as the "Merger
Consideration."
(b) Stock Owned by Seller. All Seller Common Stock owned
by Seller, or Buyer shall, at the Effective Time, cease
to exist, and the certificates for such shares shall, as
promptly as practicable thereafter, be canceled and no
payments shall be made in consideration therefor. All
shares of Buyer Common Stock that are owned by Seller (in
each case other than in a fiduciary capacity or as a
result of debts previously contracted) shall become
treasury stock of Buyer.
2.2 Exchange Procedures.
(a) Rights of Holders Upon Exchange of Certificates. The
holder of a Certificate that prior to the Merger
represented issued and outstanding Seller Common Stock
shall have no rights after the Effective Time, with
respect to such Seller Common Stock except to surrender
the Certificate in exchange for the Merger Consideration
as provided in this Agreement or to perfect the rights of
appraisal as a holder of Dissenting Shares that such
holder may have pursuant to the applicable provisions of
Massachusetts law. Upon surrender of a Certificate for
exchange and cancellation at the Closing, the holder of
such Certificates shall be entitled to receive in
exchange therefor a check representing the amount of
cash, if any, which such holder has the right to receive
in respect to the Certificate surrendered pursuant to the
provisions of Section 2.1 hereof and the Certificate so
surrendered shall forthwith be canceled. No interest
shall be paid or accrued on the cash and unpaid dividends
and distributions, if any, payable to holders of
Certificates.
(b) Transfer Books. After the Effective Time, there shall
be no transfers on Seller's stock transfer books of the
shares of Seller Common Stock which were issued and
outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates representing such
shares are presented for transfer, they shall be canceled
and exchanged for cash as provided in this Article II.
(c) Lost Certificates. In the event any Certificate shall
have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed and, if
required by Buyer, the posting by such person of a bond
in such amount as Buyer may direct as indemnity against
any claim that may be made against it with respect to
such Certificate, Buyer will issue in exchange for such
lost, stolen or destroyed Certificate cash deliverable in
respect thereof pursuant to Section 2.1 hereof.
(d) Surrender by Persons Other Than Record Holders. If the
Person surrendering a Certificate and signing the
accompanying letter of transmittal is not the record
holder thereof, then it shall be a condition of the
payment of the Merger Consideration that such Certificate
is properly endorsed to such Person or is accompanied by
appropriate stock powers, in either case signed exactly
as the name of the record holder appears on such
Certificate, and is otherwise in proper form for
transfer, or is accompanied by appropriate evidence of
the authority of the Person surrendering such Certificate
and signing the letter of transmittal to do so on behalf
of the record holder and that the person requesting such
exchange shall pay to Buyer in advance any transfer or
other taxes required by reason of the payment to a person
other than the record holder of the Certificate
surrendered, or required for any other reason, or shall
establish to the satisfaction of the Buyer that such tax
has been paid or is not payable.
2.3 Cash Consideration. The "Cash Consideration" shall
equal $350,000.00 The "Net Cash Consideration" shall equal
the Cash Consideration minus the lesser of (i) $50,000 or
(ii) the amount necessary to pay in full to Xxxxx and
Xxxxxxxx Professional Corporation the Total Legal Fees and
Expenses, as defined in Section 5.6(a) hereof (which remain
outstanding after payments are made under Sections 5.6(b)
and 6.6(a) hereof). Such amount due to Xxxxx and Xxxxxxxx
Professional Corporation shall be paid directly by Seller to
Xxxxx and Xxxxxxxx Professional Corporation at the Closing.
2.4 Dissenters' Rights. Notwithstanding anything in this
Agreement to the contrary and unless otherwise provided by
applicable law, Seller Common Stock which is issued and
outstanding immediately prior to the Effective Time and
which is owned by stockholders who, pursuant to applicable
law, (a) deliver to Seller in the manner provided by law,
before the taking of the vote of Seller's stockholders on
the Merger, a written objection to the Merger and a written
demand for the appraisal of their shares if the Merger is
effected, and (b) whose shares are not voted in favor of the
Merger, nor consented thereto in writing (the "Dissenting
Shares"), shall not be converted into the right to receive,
or be exchangeable for, the Merger Consideration, but,
instead, the holders thereof shall be entitled to payment of
the appraised value of such Dissenting Shares in accordance
with the provisions of Chapter 156B,sect. 85-98 of the
Massachusetts Business Corporation Law, as from time to time
amended. If any such holder shall have failed to perfect or
shall have effectively withdrawn or lost such right of
appraisal, the Seller Common Stock of such holder shall
thereupon be deemed to have been irrevocably converted into
and be exchangeable for, at the Effective Time, the right to
receive the Merger Consideration. Buyer shall have the
right to participate in any proceeding involving dissenters'
rights.
2.5 Upon receipt of any written objections to the Merger
submitted to Seller by Seller's Stockholders, Seller
promptly shall notify Buyer in writing of the receipt of
such objections, shall provide Buyer with copies of each
such objections and shall identify the total number of
shares of Seller's Common Stock held by the objecting
stockholders.
Article III
Representations and Warranties of Seller
Seller hereby represents and warrants to Buyer as follows, and
Buyer has relied upon the truth and accuracy of such
representations and warranties in making its decision to enter
into the Transactions contemplated hereby:
3.1 Corporate Organization. The Seller is a corporation
duly organized and existing in good standing under the laws
of the Commonwealth of Massachusetts, and it has all
corporate powers necessary to own its properties and carry
on its business as it is now being conducted. Complete and
correct copies of (a) Seller's Articles of Organization,
together with any amendments thereto, (b) By-Laws of the
Seller, (c) a list of Seller's stockholders, dated as of May
17, 2002 and prepared by the Seller's transfer agent,
Registrar and Transfer Company (the "Seller Stockholder
List"), (d) outstanding agreements between the Seller and
its stockholders and (e) Seller's corporate minute books
(collectively, the "Corporate Documents") are incorporated
by reference and have been provided under a letter dated the
date hereof. At the time of the Closing, the Seller's
original Corporate Documents will be delivered to the Buyer.
The Seller has no Subsidiaries.
3.2 Capitalization. The aggregate number of shares that
the Seller is authorized to issue is 12,000,000 common
shares, par value $.01 per share, of which 10,285,806 shares
are issued and outstanding (including 16,445 shares held by
Seller as treasury stock). All such issued shares of the
Seller have been validly issued and are fully paid and
nonassessable. There are no existing options, warranties,
calls, preemptive rights or commitments of any kind relating
to the authorized and unissued capital stock of the Seller,
except for outstanding options to issue an aggregate of
43,723 shares of Seller Common Stock to Seller's officers
and employees as evidenced by option agreements and the
stock option plan Previously Disclosed to Buyer.
3.3 Legal Proceedings. To the best of Seller's knowledge,
except as Previously Disclosed, after conducting a diligent
review of its books and records, no suits, actions, claims,
or demands are pending against the Seller, and Seller does
not anticipate any such suits, actions, claims or demands.
3.4 Authorization and Effectiveness of Agreement. Once
approved by Seller's stockholders by the required vote,
Seller will have taken all corporate and other actions
necessary to authorize it to execute, deliver and perform
under this Agreement and all instruments and agreements
delivered pursuant hereto and thereto and to consummate the
Transactions contemplated hereby and thereby, and all
instruments and agreements delivered in connection herewith
or therewith by the Seller will constitute its legal, valid
and binding obligation enforceable against it in accordance
with its terms, subject to laws of general application
relating to the rights of creditors generally and, as to
enforcement, to general principles of equity, regardless of
whether applied in a proceeding at law or in equity.
3.5 Tax Returns and Payment of Taxes. The Seller has duly
filed or will file all tax returns and schedules due before
the Closing Date with all local, state, and federal taxing
authorities, and has paid all taxes due thereon, and is not
delinquent or in default with respect to such taxes or the
filing of any return.
3.6 Financial Statements. The balance sheets of the Seller
as at December 31, 1999, December 31, 2000 and December 31,
2001 and the related statements of operations and
accumulated deficit and cash flows for the years ended
December 31, 1999, December 31, 2000 and December 31, 2001,
in each case as audited by Xxxxxxxxxx & Xxxxxx, P.C., (the
"Year-End Financial Statements") the most recent balance
sheet of the Seller as at June 30, 2002 and the related
statement of income for the six-month period ended June 30,
2002 (together with the Year-End Financial Statements, the
"Corporate Financial Statements") which were previously
delivered to the Buyer, fairly present the financial
position of the Seller as of the dates set forth therein and
the results of the operations and changes in accumulated
deficit and cash flows of the Seller for the respective
periods or as of the respective dates set forth therein, in
each case in conformity with GAAP applied on a consistent
basis throughout the periods involved.
3.7 Absence of Certain Changes. Since the date of the
Corporate Financial Statements, there has not been,
individually or collectively, any Material Adverse Effect
resulting from the following (a) any actual or, to Seller's
knowledge, any threatened, anticipated or contemplated
damage, destruction, loss (whether or not covered by
insurance), conversion, termination, cancellation, default or taking
by eminent domain or other action by governmental authority which has
materially adversely affected or may hereafter materially adversely
affect the properties, assets business or prospects of Seller's
business; (b) an increase, other than in the ordinary course, in the
compensation payable or to become payable to any of the Seller's
officers, employees, agents or consultants (including, without
limitation, any increase pursuant to any bonus, pension, profit-sharing
or other plan or commitment), or the entering into of any employment
contract with any officer, or employee, or the making of any loan to, or
engagement in any transaction with, any officers, directors or
stockholders of the Seller in respect of Seller's business, or the
establishment of any new, or the modification of any existing, employee
benefit, compensation or stock plan in respect of Seller's business; or
(c) capital expenditures or commitments therefor by the Seller in excess
of $6,000 in the aggregate for additions, alterations, or modifications
to property, plant or equipment of Seller's business.
3.8 Absence of Undisclosed Liabilities. To the best of Seller's
knowledge, after conducting a diligent review of its books and records,
there are no liabilities or other obligations of Seller (whether
absolute or contingent) except for liabilities and obligations (i)
reflected on the Corporate Financial Statements or adequately reserved
for on the Corporate Financial Statements, (ii) incurred in the ordinary
course of business of the Seller since the date of the Corporate
Financial Statements consistent with past practices, and (iii)
individually or in the aggregate, not material in amount, including,
without limitation, pending suits or claims against Seller.
3.9 Ownership of Properties. To the best of Seller's knowledge based
upon the records of the Uniform Commercial Code Division of the
Secretary of the Commonwealth of Massachusetts, Seller has possession
of all of Seller's assets, free and clear of all mortgages, pledges,
security interests, conditional sales agreements, charges of any
kind, restrictions, liens, encumbrances, rights, title and interests
of others. The Seller has valid and subsisting leasehold interest or
licenses in, and possession of all Seller's assets that are leased by
the Seller.
3.10 Certain Line Items and Related Items.
(a) Trade Accounts Receivable. To the best of Seller's knowledge, all
accounts receivable reflected on the Corporate Financial Statements
arose or will arise from the sale of products and services provided
in the ordinary course of Seller's business. Except for accounts
receivable as Previously Disclosed, all accounts receivable
reflected on the June 30, 2002 Financial Statements are the legal
and binding claims of the Seller, free and clear of all liens, have
been recorded in accordance with GAAP, and subject to consistently
recorded reserves for bad debts and returns, which reserves have been
established in accordance with GAAP consistently applied (subject to
normal recurring year-end adjustments), fairly reflect the past
collection experience of Seller's business.
(b) Properties. To the best of Seller's knowledge, after conducting a
diligent review of its books and records, the Previously Disclosed
list is a true and accurate disclosure of the matters set forth
therein, including without limitation, a list of all leases or other
material agreements under which the Seller is lessee of or holds or
operates any items of machinery, equipment, motor vehicles, computer
equipment, printers, office furniture or fixtures owned by any third-
party. True, complete and correct copies (or, in the case of oral
leases or agreements, descriptions) of which leases and agreements
have been furnished to the Buyer. To the best of Seller's knowledge,
after conducting a diligent review of its books and records, Seller
is the owner and holder of all of the leasehold estates purported to
be granted by such leases or agreements and all other leases or
agreements under which Seller is lessee of or holds or operates any
such items owned by a third-party, and each of such leases and
agreements is in full force and effect and constitutes a legal, valid
and binding obligation of Seller and the other parties hereto. To
the best of Seller's knowledge, there is not under any of such leases
any existing default or event, condition or occurrence which, with
the giving of notice or lapse of time, or both, would constitute a
default thereunder and which would have a Material Adverse Effect
upon the Seller.
(c) Contracts, Etc. To the best of Seller's knowledge, after
conducting a diligent review of its books and records, the Previously
Disclosed list of (i) all written contracts, agreements and other
instruments not made in the ordinary course of Seller's business to
which the Seller is a party and which involve an amount in excess of
$25,000 and (ii) all written contracts, agreements and other
instruments made in the ordinary course of Seller's business is true
and complete.
(d) Compliance; Governmental. To the best of Seller's knowledge, no
proceeding is pending or threatened to revoke or limit Seller's
business or impose any penalty, monetary or otherwise, with respect
to Seller's business or its assets, for Seller's failure to comply
with (i) in any material respect, any federal, state, local or
foreign laws, ordinances, regulations or orders applicable to
Seller's business or its assets, or (ii) any federal, state, local
and foreign governmental licenses or permits necessary in the conduct
of Seller's business as presently conducted.
(e) Accounts Payable. All accounts payable reflected have been or
will have been incurred on or prior to the Closing Date in the
ordinary course of Seller's business.
3.11 Broker's Fees. Except for Seller's retention of Xxxx Xxxxx Xxxx
Xxxxxx, Inc. pursuant to an agreement dated October 29, 2001 which
Seller Previously Disclosed to Buyer, neither Seller nor any of its
officers or directors has employed any broker, finder or investment
advisor or incurred any liability for any broker's fees, commissions,
finder's fees or investment advisory fees in connections with any of the
Transactions contemplated by this Agreement. Seller's agreement with
Xxxx Xxxxx Xxxx Xxxxxx Inc. provides that no fees will be charged in
connection with any of the Transactions contemplated by this Agreement,
however Seller shall be responsible for all expenses due and owing to
Xxxx Xxxxx Xxxx Xxxxxx, Inc., which expenses shall be payable at the
Closing if not previously paid.
3.12 Disclosure. To the best of Seller's knowledge, after conducting a
diligent review of its books and records, no representation or warranty
contained in this Agreement, and no statement Previously Disclosed to
Seller pursuant to the provisions hereof or thereof, contains any untrue
statement of a material fact.
Article IV
Representations and Warranties of Buyer
Buyer hereby represents and warrants to Seller as follows:
4.1 Corporate Organization. The Buyer is a Massachusetts corporation
duly organized and existing in good standing under the laws of the
Commonwealth of Massachusetts. Buyer is legally competent to enter into
this Agreement and has furnished to Seller a copy of the certified
resolutions of its Board of Directors authorizing it to enter into this
Agreement and to consummate the Transactions contemplated hereby. Buyer
has no Subsidiaries.
4.2 Authorization and Effectiveness of Agreement. Buyer has taken all
corporate and other actions necessary to authorize it to execute,
deliver and perform under this Agreement and all instruments and
agreements delivered pursuant hereto and thereto and to consummate the
Transactions contemplated hereby and thereby, and all instruments and
agreements delivered in connection herewith or therewith by the Buyer
constitute its legal, valid and binding obligation enforceable against
it in accordance with its terms, subject to laws of general application
relating to the rights of creditors generally and, as to enforcement, to
general principles of equity, regardless of whether applied in a
proceeding at law or in equity.
4.3 Legal Proceedings. No suits, actions, claims, or demands are
pending against the Buyer, and Buyer has no actual knowledge of, or any
reason to anticipate any suit, action, claim, or demand against the
Buyer.
4.4 Broker's Fees. Neither Buyer nor any of its officers or directors
has employed any broker, finder or investment advisor, or incurred
any liability for any broker's fees, commissions, finder's fees or
investment advisory fees in connections with any of the Transactions
contemplated by this Agreement.
4.5 Disclosure. To Buyer's knowledge, no representation or warranty
of Buyer contained in this Agreement, contains any untrue statement of a
material fact.
Article V
Covenants of Seller
5.1 Conduct of Seller's Business Pending the Closing. The Seller
covenants from the date hereof to and including the Closing Date,
without receiving Buyer's prior written consent, which consent shall not
unreasonably be withheld or delayed, to comply with the following:
(a) Seller shall not enter into or modify any agreement (or agree to
enter into or modify an agreement) that would have a Material Adverse
Effect upon the ability of Seller to consummate the Transactions
contemplated hereby or of the Buyer to conduct Seller's business from
and after the Effective Time;
(b) Without Buyer approval, Seller shall not do any of the following:
(i) make any capital expenditures from the date hereof to and
including the Closing Date, out of the ordinary course of Seller's
business, in the aggregate in excess of $3,000; (ii) make any
commitment to make any capital expenditures after the Closing Date
relating to Seller's business or its assets in the aggregate in
excess of $3,000; (iii) amend or waive any rights under any of its
material contracts relating to Seller's business or its assets,
except in the ordinary course of business; or (iv) enter into (1) any
written employment or severance agreement with any existing full-time
or part-time employee or (2) any new employee benefit plan, program
or arrangement or amend any existing employee benefit plan, program
or arrangement specifically relating to existing full-time or part-
time employees or grant any increases in compensation to existing
full-time or part-time employees in excess of increases in
compensation consistent with Seller's past practices;
(c) Seller shall maintain in full force and effect all insurance
policies now in effect or renewals thereof covering Seller's
business, its assets and its existing full-time and part-time
employees;
(d) Seller promptly shall notify Buyer of the following of which it
may become aware: (i) any written notice received by Seller alleging
any breach or violation of, default or event of default under, or
actual or threatened termination or cancellation of any material
contract relating to Seller's business; (ii) any material loss of,
damage to, or disposition of any of Seller's assets (other than the
sale or use of inventories in the ordinary course of business); and
(iii) any material claim or litigation, threatened in writing or
instituted against the Seller and relating to Seller's business;
(e) Seller shall not sell, dispose of, lease, sublease, distribute,
encumber or enter into any agreement, arrangement or commitment,
whether oral or written, for the sale, disposition, leasing,
subleasing, distribution or encumbrance of any portion of Seller's
assets or its business (other than the sale and use of inventories in
the ordinary course of Seller's business) or initiate or participate,
through agents, representatives or otherwise, in any discussions or
negotiations with, or otherwise solicit from any business or person
any proposals or offers relating to the disposition of any such
portion of Seller's assets or its business;
(f) Seller shall not make any material change to any business policy,
including, without limitation, promotional, advertising, marketing,
pricing, purchasing, personnel, return or product acquisition policy;
and
(g) Seller shall use its best efforts to preserve for the benefit of
Seller's business its relations with customers, contractors,
subcontractors and suppliers.
5.2 Access to Information. Prior to the Closing Date and upon
reasonable notice from the Buyer, Seller shall: (a) give the Buyer and
its authorized representatives and representatives of its financing
sources reasonable access to all offices, warehouses, plants, stores and
other facilities relating to Seller's business or its assets and to all
books and records of Seller's business, (b) permit the Buyer and all
such other persons to make such inspections as they may reasonably
request at reasonable times and (c) cause its officers to furnish the
Buyer and all such other persons with such financial and operating data
and other information with respect Seller's business as they may from
time to time reasonably request.
5.3 Approval of Seller's Stockholders. Seller shall take all
reasonable steps necessary to duly call, give notice to stockholders on
the Seller Stockholder List of, solicit proxies for, convene and hold a
special meeting of its stockholders, including the preparation and
filing of proxy materials with the Securities and Exchange Commission
(the "Commission"), for the purpose of approving this Agreement and the
Transactions contemplated hereby (the "Special Meeting"). The Seller's
Board of Directors will recommend to Seller's stockholders the approval
of this Agreement and the Transactions contemplated hereby and will use
all reasonable efforts to obtain, as promptly as practicable, the
necessary approvals by Seller's stockholders of this Agreement and the
Transactions contemplated hereby. Seller shall submit to Buyer for its
approval the notice and proxy statement for the Special Meeting prior to
filing with the Commission and prior to distributing to stockholders.
Seller shall also provide Buyer with copies of all comments and other
correspondence received by Seller from the Commission relating to the
proxy statement, the Special Meeting or the Merger.
5.4 All Reasonable Efforts. Subject to the terms and conditions
herein provided, Seller agrees to use all reasonable efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the Transactions
contemplated by this Agreement.
5.5 Inability to Fulfill Conditions. In the event that Seller
determines that a condition to its obligation to complete the Merger
cannot be fulfilled and that it will not waive that condition, it will
promptly notify Buyer.
5.6 Payment of Attorney Fees.
(a) As of May 31, 2002, the amount of legal fees and expenses billed
to Seller by Xxxxx and Xxxxxxxx Professional Corporation, and still
outstanding as of such date, was $43,024.44 (the "Billed Legal Fees
and Expenses"), and the amount of unbilled legal fees and expenses
was $17,479.35. From June 1, 2002 until the Effective Time, Xxxxx
and Xxxxxxxx Professional Corporation shall incur on behalf of Seller
additional, reasonable legal fees and expenses in connection with the
negotiation and execution of this Agreement and the subsequent
actions necessary to consummate the Merger and the other Transactions
contemplated hereby, which legal fees and expenses may pertain to
work to be completed after the Effective Time (together with unbilled
legal fees and expenses as of May 31, 2002, the "Unbilled Legal Fees
and Expenses"). The Billed Legal Fees and Expenses plus the Unbilled
Legal Fees and Expenses shall equal the "Total Legal Fees and
Expenses." At the Closing, Xxxxx and Xxxxxxxx Professional
Corporation shall provide to Seller a written invoice listing the
Total Legal Fees and Expenses and describing any payments made to
Xxxxx and Xxxxxxxx Professional Corporation by the Seller from June
1, 2002 to the Closing (the "Pre-Closing Payments").
(b) At the Closing, and prior to the distribution of any of the Merger
Consideration to the Seller's stockholders, Seller shall pay to Xxxxx
and Xxxxxxxx Professional Corporation an amount equal to (a) one-half
(1/2) of (i) the Total Legal Fees and Expenses less (ii) the amount
which Buyer shall pay under Section 6.6 hereof (but such amount shall
not exceed $25,000), less (b) any Pre-Closing Payments made by
Seller.
5.7 No Solicitation. Without the prior written approval of Buyer,
which approval shall not be unreasonably withheld, from the date hereof
until the earlier of Closing Date and the termination of this Agreement,
neither Seller nor any of its officers, directors, employees,
representatives, agents or affiliates (including, without limitation,
any investment banker, attorney or accountant retained by Seller) shall
(a) take any action to encourage the making of inquiries or proposals
that constitute an Acquisition Proposal (as defined below), (b) enter
into or maintain or continue negotiations with any person or entity in
furtherance of such inquiries, (c) accept an Acquisition Proposal or
agree to endorse an Acquisition Proposal, or (d) authorize or permit any
such persons to take any such action. For purposes of this Agreement,
"Acquisition Proposal" shall mean any of the following (other than the
Transactions contemplated hereby): any merger, sale, consolidation,
share, exchange, recapitalization, business combination or other similar
transaction involving the Seller, its business and its assets.
Notwithstanding the foregoing, Seller and its officers, directors,
employees, representatives, agents or affiliates (including, without
limitation, any investment banker, attorney or accountant retained by
Seller) may (a) respond to inquiries regarding a possible transaction
with the Seller, (b) provide general information about the progress of
the consummation of the Transactions contemplated hereby and (c) provide
public information about Seller.
Article VI
Covenants of Buyer
6.1 Conduct of Business. During the period from the date of this
Agreement to the Effective Time, except with the prior written consent
of Seller, Buyer shall take no action which would (i) materially
adversely affect its ability to perform its covenants and agreements
under this Agreement, or (ii) result in the representations and
warranties of Buyer contained in this Agreement not being true and
correct on the date of this Agreement or at any future date on or prior
to the Closing Date.
6.2 Consents and Approvals of Third-Parties. Buyer shall use all
reasonable efforts to obtain as soon as practicable all consents and
approvals of any other Persons necessary or desirable for the
consummation of the Transactions contemplated by this Agreement.
6.3 All Reasonable Efforts. Subject to the terms and conditions
herein provided, Buyer agrees to use all reasonable efforts to take,
or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the Transactions
contemplated by this Agreement.
6.4 Inability to Fulfill Conditions. In the event that Buyer
determines that a condition to its obligation to complete the Merger
cannot be fulfilled and that it will not waive that condition, it will
promptly notify Seller.
6.5 Directors and Officers Indemnification and Insurance.
(a) Contractual Indemnification. In the event any threatened or
actual claim, action, suit, proceeding or investigation, whether
civil or administrative which arises within two (2) years after the
Effective Time against a person who, as of the date hereof, is an
officer, director or employee of Seller (each an "Indemnified Party"
and collectively, the "Indemnified Parties") is brought by a person
who is not an Indemnified Party, or, in the event any Indemnified
Party is threatened to be, made a party to any such claim, action,
suit, proceeding or investigation, which claim, action, suit,
proceeding or investigation arises out of or pertains to (i) the fact
that the Indemnified Party is or was an officer, director or employee
of Seller, or (ii) this Agreement or any of the Transactions
contemplated hereby, whether in any case asserted or arising from
facts and circumstances occurring before the Effective Time, such
Indemnified Parties and Buyer agree to cooperate and use their
reasonable efforts to defend against and respond to such claim,
action, suit, proceedings or investigation. It is understood and
agreed that from and after the Effective Time, Buyer shall indemnify
and hold harmless up to an amount, inclusive of all costs, expenses,
legal fees and settlement amounts, not to exceed $50,000, each
Indemnified Party against any and all losses, claims, damages,
liabilities, fines, expenses (including without limitation reasonable
attorney fees and disbursements) and amounts actually and reasonably
paid in settlement, in connection with any such threatened or actual
claim, action, suit, proceeding or investigation (whether asserted or
arising before or after the Effective Time). Notwithstanding the
foregoing, (1) Buyer shall not be liable for any settlement effected
without its prior written consent (which consent shall not be
unreasonably withheld), and (2) Buyer shall have no obligation
hereunder to any Indemnified Party when and if a court of competent
jurisdiction shall ultimately determine, and such determination shall
have become final and non-appealable, that indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by
applicable law. Nothing contained in this Section 6.5(a) shall
affect any rights to indemnification which are provided under Section
6.5(c) or under the documents referred to therein.
(b) Procedural Limitations. Any Indemnified Party wishing to claim
indemnification under Section 6.5(a) shall, upon learning of any such
claim, action, suit, proceeding or investigation, notify Buyer
thereof in writing and provide all material respective and indicative
thereof, provided that the failure so to notify shall not affect the
obligations of Buyer under Section 6.5(a) except to the extent that
such failure materially prejudices Buyer's investigation, defense or
settlement thereof. As a condition to receiving indemnification
under Section 6.5(a), the party claiming indemnification shall
assign, by separate writing, to Buyer all right, title and interest
to and in proceeds of any insurance maintained or provided by Seller
or Buyer, for the benefit of claimant, to the extent of
indemnification actually received from Buyer hereunder. Any Person
entitled to indemnification pursuant to Section 6.5(a) shall be
required to cooperate fully in the defense and investigation of any
claim as to which indemnification may be made and shall send such
notices as Buyer may reasonably request under any applicable
directors and officers liability to preserve claims of which the
claiming party is aware. No Person shall be entitled to
indemnification under Section 6.5(a) if such Person is seeking
indemnification based on a claim (other than a claim arising as a
supplier to or customer of Buyer of Seller) brought by such Person or
by an entity of which such Person is a general partner, executive
officer, director, trustee, beneficiary or controlling person unless
such Person or entity has waived any right to participate in any
damage or other award to such claiming party or other entity in any
such action, suit or proceeding.
(c) Articles of Organization and By-Laws. All rights to
indemnification and all imitations of liability existing in favor of
the Indemnified Parties as provided in Seller's Articles of
Organization and By-Laws, or similar governing documents of Seller,
as in effect as of the date hereof with respect to claims or
liabilities arising from facts or events existing or occurring prior
to the Effective Time shall survive the Merger and shall continue in
full force and effect, without any amendment thereto, after the
Effective Time. Buyer shall indemnify, defend and hold harmless the
Indemnified Parties pursuant to the rights surviving pursuant to the
preceding sentence to the fullest extent permitted under applicable
law. Nothing contained in this Section 6.5(c) or in Seller's
Articles or By-laws shall affect any rights to indemnification which
are provided under Section 6.5(a) hereof.
(d) Purchase of Insurance. From and after the Effective Time, Buyer
shall have no obligation to cause the Indemnified Parties to be
covered by a directors' and officers' liability insurance policy, nor
shall Buyer have any obligation to continue any directors' and
officers' liability insurance policy currently maintained by Seller.
(e) Successors or Assigns. To the extent not otherwise provided by
applicable law, contract or otherwise, and to the extent necessary
under the circumstances for Buyer's successors or assigns to be
bound, in the event Buyer or any of its successors or assigns (i)
consolidates with or merges into any other Person and shall not be
the continuing or surviving corporation or entity of such
consolidation or merger, or (ii) transfers or conveys all or
substantially all of its properties and assets to any Person, proper
provision shall be made so that the successors and assigns of Buyer
assume the obligations set forth in this Section 6.5.
(f) Third-Party Beneficiary. The provisions of this Section 6.5 are
expressly intended to be for the irrevocable benefit or, and shall be
enforceable by, each director or officer covered hereby and his or
her heirs and representatives, and nothing herein shall affect any
indemnification rights that any Indemnified Party and his or her
heirs and representatives may have under the Articles of Organization
or By-Laws of the Seller, any contract or applicable law.
6.6 Payment of Attorney Fees.
(a) At the Closing, Buyer agrees to pay to Xxxxx and Xxxxxxxx
Professional Corporation $25,000 to cover a portion of the Total
Legal Fees and Expenses owed by Seller. Such payment is in addition
to the payment of the Cash Consideration.
(b) At the Closing, Seller's stockholders shall pay to Xxxxx and
Xxxxxxxx Professional Corporation an amount equal the lesser of (i)
$50,000 or (ii) the amount necessary to pay in full to Xxxxx and
Xxxxxxxx Professional Corporation the Total Legal Fees and Expenses,
as defined in Section 5.6(a) hereof (which remain outstanding after
payments are made under Sections 5.6(b) and 6.6(a) hereof).
Article VII
Closing Conditions
7.1 Conditions to Each Party's Obligations Under This Agreement. The
respective obligations of each party under this Agreement shall be
subject to the fulfillment at or prior to the Closing of the following
conditions.
(a) Stockholder Approval. This Agreement and the Transactions
contemplated hereby shall have been approved in accordance with
applicable law by the requisite vote of Seller's stockholders.
(b) Injunctions. None of the parties hereto shall be subject to any
order, decree or injunction of a court or agency of competent
jurisdiction which enjoins or prohibits the consummation of the
Merger.
7.2 Conditions to the Obligations of Buyer Under This Agreement. The
obligations of Buyer under this Agreement shall be further subject to
the satisfaction, at or prior to the Effective Time, of the following
conditions.
(a) Representations and Warranties. The representations and
warranties of Seller set forth in this Agreement shall be true and
correct in all material respects as of the date of this Agreement,
except as otherwise contemplated by this Agreement or consented to in
writing by the Buyer; provided, however, that the condition contained
in this Section 7.2(a) shall be deemed to be satisfied unless the
failure of such representations and warranties to be so true and
correct constitute, individually or in the aggregate, a Material
Adverse Effect on Seller, and Seller shall have delivered to Buyer a
certificate of Seller to such effect signed by the President of
Seller as of the Effective Time.
(b) Agreements and Covenants. Seller shall have performed in all
material respects all obligations and complied in all material
respects with all agreements or covenants of Seller to be performed
or complied with by it at or prior to the Effective Time under this
Agreement, and Buyer shall have received a certificate signed on
behalf of Seller by the President of Seller to such effect dated as
of the Effective Time.
(c) Termination of Exchange Act Registration. Buyer shall have
received from Seller at the Closing a completed and signed Securities
Exchange Commission Form 15 with respect to the termination of the
registration of Seller's Common Stock under the Securities Exchange
Act of 1934.
Seller will furnish Buyer with such certificates of its officers or others and
such other documents to evidence fulfillment of the conditions set forth in
this Section 7.2 as Buyer may reasonably request.
7.3 Conditions to the Obligations of Seller Under This Agreement. The
obligations of Seller under this Agreement shall be further subject to
the satisfaction, at or prior to the Effective Time, of the following
conditions.
(a) Representations and Warranties. The representations and
warranties of Buyer set forth in this Agreement shall be true and
correct in all material respects as of the date of this Agreement,
except as otherwise contemplated by this Agreement or consented to in
writing by the Seller; provided, however, that the condition
contained in this Section 7.3(a) shall be deemed to be satisfied
unless the failure of such representations and warranties to be so
true and correct constitute, individually or in the aggregate, a
Material Adverse Effect on Buyer, and Buyer shall have delivered to
Seller a certificate of Buyer to such effect signed by the President
and Treasurer of Buyer as of the Effective Time.
(b) Agreements and Covenants. Buyer shall have performed in all
material respects all obligations and complied in all material
respects with all agreements or covenants of Buyer to be performed or
complied with by it at or prior to the Effective Time under this
Agreement, and Seller shall have received a certificate signed on
behalf of Buyer by the President of Buyer to such effect dated as of
the Effective Time.
Buyer will furnish Seller with such certificates of its officers or others and
such other documents to evidence fulfillment of the conditions set forth in
this Section 7.3 as Seller may reasonably request.
Article VIII
The Closing
8.1 Time and Place. Subject to the provisions of Articles VII and IX
hereof, the Closing of the Transactions contemplated hereby shall take
place at the offices of Xxxxx and Xxxxxxxx Professional Corporation,
Federal Reserve Plaza, 000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000,
at 10:00 a.m. on a date specified by Buyer at least three (3) business
days prior to such date. The Closing Date shall be held on the date
which is as soon as practicable after the last required approval for the
Merger has been obtained from Seller's stockholders, or at such other
place, date or time as Buyer and Seller may mutually agree upon in
writing.
8.2 Deliveries at the Closing. At the Closing there shall be
delivered to Buyer and Seller the certificates and other documents
and instruments required to be delivered under Article VII hereof.
Article IX
Termination, Amendment and Waiver
9.1 Termination. This Agreement may be terminated at any time prior
to the Effective Time:
(a) At any time, by the mutual written agreement of Buyer and Seller;
(b) By Buyer or Seller (provided that the terminating party is not
then in material breach of any representation, warranty, covenant or
other agreement contained herein), if there has been a material
breach on the part of the other party of any representation,
warranty, covenant or other agreement contained herein which cannot
be or has not been cured within thirty (30) days after written notice
by Buyer to Seller (or by Seller to Buyer) of such breach;
(c) At the election of either Buyer or Seller, if the Closing shall
not have occurred on or before the earlier of five (5) business days
after the date of the Special Meeting and December 31, 2002 (the
"Termination Date"), or such later date as Buyer and Seller shall
have agreed to in writing; provided, that no party may terminate this
Agreement pursuant to this Section 9.1(c) if the failure of the
Closing to have occurred on or before said date was due to such
party's breach of any of its obligations under this Agreement; and
9.2 Effect of Termination. In the event of termination of this
Agreement pursuant to any provision of Section 9.1, this Agreement shall
forthwith become void and have no further force, except that the
provisions of Sections 9.3, 9.4, 9.5, 10.1, 11.1, 11.7, 11.10 and 11.11
(and of this Section 9.2) shall survive such termination of this
Agreement and remain in full force and effect.
9.3 Equitable Remedies. The parties hereto acknowledge that
irreparable damage would result if this Agreement is not
specifically enforced and that, therefore, the rights and
obligations of the parties under this Agreement may be enforced by
a decree of specific performance issued by a court of competent
jurisdiction, and appropriate injunctive relief may be applied for
and granted in connection therewith. The inclusion of provisions
relating to the Seller Termination Fee and the Buyer Termination
Fee (each as defined in Section 9.4 hereof) in this Agreement
shall not be construed as a limitation of any kind on the ability
of either party to seek (or be entitled to receive) specific
performance under this Section 9.3; provided, however, that no
party shall be entitled to receive both specific performance and
the payment of a Termination Fee.
9.4 Termination Fees.
(a) Buyer shall pay to Seller a termination fee of Three Hundred
Fifty Thousand Dollars ($350,000.00) (the "Seller Termination
Fee"), as provided for in the form of Escrow Agreement among the
Buyer, Seller, and Xxxxx Xxxxxxx Berlack Israels LLP, dated the
date hereof, within five (5) business days of the occurrence of
any of the following: Buyer terminates this Agreement or refuses
to close the Transactions contemplated hereby in violation of the
terms hereof, or the Closing does not take place as a consequence
of Buyer's material breach of its representations and warranties
made as of the date of this Agreement, or by reason of a material
breach by Buyer of its covenants made herein, if such material
breach involves action, the failure to take such action, or an
occurrence which is within the control of Buyer.
(b) Seller shall pay to Buyer a termination fee of Twenty Five
Thousand Dollars ($25,000) (the "Buyer Termination Fee") within
five (5) business days of the occurrence of any of the following
(individually, a "Buyer Termination Event"): Seller terminates
this Agreement or refuses to close the Transactions contemplated
hereby in violation of the terms hereof, or the Closing does not
take place as a consequence of Seller's material breach of its
representations and warranties made as of the date of this
Agreement, or by reason of a material breach by Seller of its
covenants made herein, if such material breach involves action,
the failure to take such action, or an occurrence which is within
the control of Seller. In addition to the Buyer Termination Fee,
if Seller consummates an Acquisition Proposal at any time within
12 months following the termination of this Agreement as a result
of a Buyer Termination Event, then the third party or parties
(together, the "Third Party") that engage in the Acquisition
Proposal with Seller shall pay Buyer or its designee a fee of
$25,000 (the "Buyer Reimbursement Fee"). Seller shall not
consummate any such Acquisition Proposal without including as a
binding obligation of the Third Party its agreement to pay the
Buyer Reimbursement Fee. The Buyer Reimbursement Fee shall be
paid within three (3) business days following consummation of the
Acquisition Proposal by wire transfer of immediately available
funds to an account specified by Buyer or its designee.
(c) The Termination Fees shall constitute liquidated damages and
shall be the sole monetary remedy of the Seller and Buyer. It is
understood that the existence of this monetary remedy is not to be
construed as a limitation of any kind on the ability of the Seller
and the Buyer to seek (or be entitled to receive) specific
performance under Section 9.3.
9.5 Limitation on Personal Liability.
(a) In no event shall any stockholder, officer, agent or
director of Seller be personally liable to Buyer, its directors,
officers or stockholders for any reason in connection with the
Agreement or the Transactions contemplated thereby, except for (i)
actions caused by the fraudulent conduct of any such stockholder,
officer, agent or director and (ii) actions arising out of breach
of the Seller Stockholder Agreement by any stockholder of Seller.
(b) In no event shall any stockholder, officer, agent or
director of Buyer be personally liable to Seller, its directors,
officers or stockholders for any reason in connection with the
Agreement or the Transactions contemplated thereby, except for (i)
actions caused by the fraudulent conduct of any such stockholder,
officer, agent or director and (ii) actions arising out of breach
of the Buyer Stockholder Agreement by any stockholder of Buyer.
9.6 Amendment, Extension and Waiver. Subject to applicable law, at
any time prior to the Effective Time (whether before or after approval
thereof by the stockholders of Seller), the parties hereto may (a) amend
this agreement, (b) extend the time for the performance of any of the
obligations or other acts of any party hereto, (c) waive any
inaccuracies in the representations and warranties contained herein or
in any document delivered pursuant hereto, or (d) waive compliance with
any of the agreements or conditions contained herein; provided, however,
that after any approval of this Agreement and the Transactions
contemplated hereby by the stockholders of Seller, there may not be,
without further approval of such stockholders, any amendment of this
Agreement which reduces the amount or changes the form of consideration
to be delivered to Seller's stockholders pursuant to this Agreement.
This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto. Any agreement on the
part of a party hereto to any extension or waiver shall be valid only if
set forth in an instrument in writing signed on behalf of such party,
but such waiver or failure to insist on strict compliance with such
obligation, covenant, agreement or condition shall not operate as a
waiver of, or estoppel with respect to, any subsequent or other failure.
Article X
Certain Definitions
10.1 Certain Definitions. As used in this Agreement, the following
terms have the following meanings (unless the context otherwise
requires, both here and throughout this Agreement and, references to
Articles and Sections refer to Articles and Sections of this Agreement.
(a) "Material Adverse Effect", when used with respect to any Person,
shall mean a material adverse effect on the financial condition,
business or results of operations of such Person; provided, however,
that the following matters shall not constitute or contribute to a
Material Adverse Effect: (i) changes in the financial condition,
business or results of operations of the Seller, (ii) changes in the
financial condition, business or results of operations of a Person
resulting directly or indirectly from changes in general economic
conditions or the public announcement of the Transactions
contemplated hereby; or (iii) matters related to changes in federal,
state or local tax laws or changes in federal, state or local tax
statues, characteristics or attributes, or the ability to use such
attributes.
(b) "Person" shall mean any individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or
government or any agency or political subdivision thereof.
(c) "Previously Disclosed" shall mean disclosed in a letter dated the
date hereof delivered from the disclosing party to the other party
specifically referring to the appropriate section of this Agreement
and describing in reasonable detail the matters contained therein.
Such disclosures sometimes are referred to herein as Schedules.
(d) "Subsidiary" or "Subsidiaries" of any Person shall mean any Person
who directly or indirectly through one or more intermediaries, is
controlled by, such specified Person, including, without limitation,
any partnership or joint venture in which a Person (either alone, or
through or together with any subsidiary) has, directly or indirectly,
an interest of five percent (5%) or more.
(e) "Transactions contemplated by this Agreement" and "Transactions
contemplated hereby" shall include the Merger.
Article XI
Miscellaneous
11.1 Confidentiality. Buyer and Seller mutually agree to be bound by
all the terms of the Confidentiality Agreement previously executed by
the parties hereto on May 28, 2002, which sections are hereby reinstated
and incorporated herein by reference.
11.2 Public Announcements. Seller and Buyer shall cooperate with each
other in the development and distribution of all news releases and
other public information disclosures with respect to this Agreement
or any of the Transactions contemplated hereby, except as may be
otherwise required by law, and neither Seller nor Buyer shall issue
any joint news releases with respect to this Agreement or any of the
Transactions contemplated hereby, unless such news releases have been
mutually agreement upon by the parties hereto.
11.3 Survival. Except for any agreement of the parties contained in
this Agreement which by its terms is intended to be performed after the
Effective Time, the respective representations, warranties and
agreements of the parties contained in this Agreement or in any Exhibit,
Schedule, certificate, list, letter or other instrument referred to in
this Agreement, and which are delivered or made pursuant to this
Agreement (or in connection with any of the Transactions contemplated
hereby) shall not survive the Effective Time but shall terminate as of
the Effective Time.
11.4 Notices. All notices or other communications hereunder shall be
in writing and shall be deemed given if delivered by receipted hand
delivery or mailed by prepaid registered or certified mail (return
receipt requested) or by cable, telegram, telex or telecopy addressed as
follows:
If to Buyer, to:
Synergistics Acquisition Corp.
c/o Renaissance Industrial LLC
Ten Xxxx Xxxxxx Xxxxxx
Xxxxx 000 Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
with a copy to:
Xxxxxx X. London, Esquire
Xxxxx Xxxxxxx Xxxxxxx Israels LLC
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
If to Seller, to: Synergistics, Inc.
0 Xxxx Xxxxxx
Xxxxxx, XX 00000
(000) 000-0000
fax (000) 000-0000
Attention: President
with a copy to: Xxxxx X. Xxxxxx, Esq.
Xxxxx and Xxxxxxxx Professional Corporation
Federal Reserve Plaza
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
(000) 000-0000
fax (000) 000-0000.
11.5 Parties in Interest. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that neither this Agreement
nor any of the rights, interests or obligations hereunder shall be
assigned by any party hereto without the prior written consent of the
other party, and that (except as otherwise expressly provided in this
Agreement) nothing in this Agreement is intended to confer upon any
other Person any rights or remedies under or by reason of this
Agreement.
11.6 Rights of Employment. Nothing in this Agreement shall be deemed
to confer upon any person any rights of employment with or any rights
to hold any particular office with Buyer or to limit the right of
Buyer to terminate the employment or office of any person.
11.7 Complete Agreement. This Agreement, including the Exhibits
hereto and the documents and other writings referred to herein or
delivered pursuant hereto (including the Seller and Buyer
Stockholder Agreements), contain the entire agreement and
understanding of the parties with respect to its subject matter.
There are no restrictions, agreements, promises, warranties,
covenants or undertakings between the parties other than those
expressly set forth herein. This Agreement supersedes all prior
agreements and understandings (other than the Confidentiality
Agreement referred to in Section 11.1 hereof) between the parties,
both written and oral, with respect to its subject matter.
11.8 Counterparts. This Agreement may be executed in one or more
counterparts all of which shall be considered one and the same
agreement and each of which shall be deemed an original.
11.9 Severability. In the event that any one or more provisions
of this Agreement shall for any reason be held invalid, illegal or
unenforceable in any respect, by any court of competent
jurisdiction, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, and the
parties shall use their reasonable efforts to substitute a valid,
legal and enforceable provision which, insofar as practical,
implements the purposes and intents of this Agreement.
11.10 Governing Law. This Agreement shall be governed by the laws
of the Commonwealth of Massachusetts.
11.11 Headings. The Article and Section headings contained in
this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, Buyer and Seller have caused this Agreement to be executed
under seal by their duly authorized officers as of the day and year first
written above.
Witness: BUYER:
SYNERGISTICS ACQUISITION CORP.
By:
Name: Xxxxxxx X. Xxxxxxx
Title: President
Witness: SELLER:
SYNERGISTICS, INC.
By:
Name:
Title:
Exhibit A
Form of Seller Stockholder Agreement
July 25, 2002
Synergistics Acquisition Corp.
c/o Renaissance Industrial LLC
Ten Xxxx Xxxxxx Xxxxxx
Xxxxx 000 Xxxxx
Xxxxxx, XX 00000
Gentlemen:
Each of the undersigned (a "Stockholder") is entering into this
letter agreement ("Agreement") with respect to shares of the
common stock, par value $.01 per share ("Seller Common Stock"),
of Synergistics, Inc., a Massachusetts corporation ("Seller").
As used in this Agreement the term "Shares" shall mean and refer
to any and all shares of Seller Common Stock now owned or
hereafter acquired by a Stockholder and any other shares of
Seller Common Stock with respect to which a Stockholder or his
nominee may from time to time possess voting power.
Simultaneously with the execution of this Agreement, Synergistics
Acquisition Corp., a Massachusetts corporation ("Buyer") and
Seller are entering into an Agreement and Plan of Merger (the
"Merger Agreement") providing, among other things, for the merger
of Seller with Buyer (the "Merger"). We understand that Buyer
has undertaken and will continue to undertake substantial
expenses in connection with the negotiation and execution of the
Merger Agreement and the subsequent actions necessary to
consummate the Merger and the other transactions contemplated by
the Merger Agreement.
In consideration of, and as a condition to, Buyer's entering into
the Merger Agreement, and in consideration of the expenses
incurred and to be incurred by Buyer in connection therewith,
each Stockholder and Buyer agree as follows:
1. Agreement to Vote in Favor of Merger. Each Stockholder
specifically agrees that: he will be bound by the terms of
the Merger Agreement; he will use all reasonable efforts to
cause a special meeting of stockholders of Seller (the
"Special Meeting") to be held as soon as is practicable to
vote to approve the Merger, the Merger Agreement and the
transactions contemplated thereby; and at the Special
Meeting or any other meeting of stockholders of Seller, he
will cause all of the Shares he may be entitled to vote to
be voted (X) in favor of the Merger, the Merger Agreement
and the transactions contemplated thereby and (Y) against
the approval of any other agreement providing for a merger,
consolidation, sale of assets or other business combination
of Seller with any person or entity other than Buyer.
2. Restrictions on Sale or other Disposition of Shares.
Each Stockholder hereby agrees that from and after the date
hereof and until the Effective Time of the Merger (as
defined in the Merger Agreement), each Stockholder will not,
directly or indirectly, sell, assign, hypothecate, transfer,
pledge, give, place in trust or in any other fashion dispose
of (including, without limitation, by granting of proxies,
or relinquishment of voting rights, with respect to)
(collectively, a "Transfer") any of the Shares owned by each
Stockholder, unless the party to which such Transfer is made
enters into a written Agreement with Buyer in substantially
the form of this Agreement.
3. Representations and Warranties. Each Stockholder
represents and warrants to Buyer as follows:
(a) This Agreement has been duly executed and delivered by
each Stockholder and constitutes his legal and valid
obligation enforceable against him in accordance with its
terms. Neither the execution and delivery of this
Agreement nor compliance by the Stockholder with any of
the provisions hereof does or will violate, conflict with
or result in a breach of any term, condition or provision
of, any material agreement to which the Stockholder is a
party.
(b) He is the beneficial owner of, and if not the
beneficial owner has voting authority over, the number of
Shares indicated opposite such Stockholder's name on the
signature page hereof; he has plenary voting and
dispositive power with respect to such Shares; he owns
and has the authority to vote no other shares of Seller
Common Stock; there are no proxies, voting trusts or
other agreements or understandings with respect to the
voting of any of the Shares other than this Agreement or
as Previously Disclosed; and no Stockholder has entered
into (and no Stockholder will enter into) any agreement
or arrangement in any way inconsistent with this
Agreement.
4. Waiver and Release of Claims. Upon the Effective Time,
with respect to the Shares of Seller Common Stock they
beneficially own, each of the Stockholders, individually and
severally, hereby release, remise, acquit, satisfy and
forever discharge Buyer and Surviving Company (as defined in
the Merger Agreement), their agents, employees, officers,
directors, attorneys and all other persons acting or
purporting to act on behalf of or at the direction of Buyer
and Surviving Company, their representatives, successors and
assigns, from and against any and all manner of actions,
causes of action, suits, specialties, summons, doings,
omissions, sums of money, debts, expenses, accounts,
reckonings, bonds, representations, covenants, contracts,
controversies, agreements, variances, damages, judgments,
executions, claims, demands and liabilities whatsoever, in
law or in equity, which any of such parties individually or
in any combination thereof, now has or can, shall or may at
any time hereafter have against Buyer and Surviving Company,
their agents, employees, officers, directors, attorneys or
all other persons acting or purporting to act on behalf or
at the direction of Buyer and Surviving Company, their
representatives, successors and assigns, for, upon or by
reason of any matter, cause or thing and liabilities
pertaining to the Merger, this Agreement and any breach
thereof; provided, however, that the Stockholders do not
waive any claims to the payment of the Per Share Cash
Consideration provided by the Merger Agreement.
5. Equitable Remedies. The parties hereto acknowledge
that irreparable damage would result if this Agreement is
not specifically enforced and that, therefore, the rights
and obligations of the parties under this Agreement may be
enforced by a decree of specific performance issued by a
court of competent jurisdiction, and appropriate injunctive
relief may be applied for and granted in connection
therewith. Without limiting the generality of the
foregoing, it is the intention of the parties that an order
be issued (if necessary) causing the covenants of the
Stockholders set forth in this agreement to be specifically
enforced. Such remedies shall, however, not be exclusive
and shall be in addition to any other remedies which any
party may have under this Agreement or otherwise; provided,
however, that no Stockholder shall have personal liability
hereunder so long as (i) the requisite number of
stockholders of Seller approves the Merger, the Merger
Agreement and the transactions contemplated thereby on or
before December 31, 2002, and (ii) such approval remains in
full force and effect and is not modified, amended,
superseded or rescinded, and (iii) the stockholders of
Seller do not vote to approve any other agreement providing
for a merger, consolidation, sale of assets or other
business combination of Seller or any of its subsidiaries
with any person or entity other than Buyer or a subsidiary
of Buyer.
6. Notices. Notices may be provided to Buyer and the
Stockholders in the manner specified in Section 11.4 of the
Merger Agreement, with all notices to the Stockholders being
provided to their attention, in care of the President of
Seller in the manner specified in such Section.
7. Miscellaneous. Notwithstanding anything herein to the
contrary, this Agreement shall remain in full force and
effect until the earlier of (i) the consummation of the
Merger and (ii) the termination of the Merger Agreement in
accordance with its terms. The agreements contained herein
are intended to continue for such time as may reasonably be
necessary to obtain all necessary approvals, including
stockholder approval, of the Merger and any other
transactions contemplated by the Merger Agreement. For the
convenience of the parties hereto, this Agreement may be
executed in any number of counterparts, each such
counterpart being deemed to be an original instrument, and
all such counterparts shall together constitute the same
agreement. This Agreement shall be governed by and
construed in accordance with the laws of Massachusetts,
without giving effect to conflicts of law principles. If
any provision hereof is deemed unenforceable, the
enforceability of the other provisions hereof shall not be
affected.
8. Survival. The representations, warranties and
agreements of the Stockholders contained in this Agreement
shall not survive the Effective Time (as defined in the
Merger Agreement) but shall terminate as of the Effective
Time.
9. Several Obligations. Each of the Stockholders has
signed this letter agreement intending to be bound severally
thereby and not to be bound as joint obligors.
Please confirm your agreement with us by signing a copy of
this letter.
NUMBER OF SHARES- NUMBER OF SHARES - SELLER STOCKHOLDERS:
BENEFICIALLY OWNED VOTING AUTHORITY ONLY
XXXX, XXXXXXX & CO., INC.
shares shares By:
Name:
Title:
3,575 shares 0 shares
Xxxxx X. Xxxxxxxxx
Agreed to and accepted as of the 25 day of July, 2002.
SYNERGISTICS ACQUISITION CORP.
By:
Name:
Title: President
