EXHIBIT 10.45
AGREEMENT AND PLAN OF MERGER
by and among
TRK Acquisition Corporation,
TRAK International, Inc.
and
the Major Stockholders listed herein
July 19, 1995
TABLE OF CONTENTS
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ARTICLE I--DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Definitions. . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Interpretive Rules . . . . . . . . . . . . . . . . . 7
ARTICLE II--THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.1 The Merger . . . . . . . . . . . . . . . . . . . . . 7
Section 2.2 Effective Time of the Merger . . . . . . . . . . . . 7
Section 2.3 Rights of the Surviving Corporation. . . . . . . . . 7
Section 2.4 Certificate of Incorporation . . . . . . . . . . . . 8
Section 2.5 By-Laws. . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.6 Directors and Officers . . . . . . . . . . . . . . . 8
Section 2.7 Conversion of Shares . . . . . . . . . . . . . . . . 8
Section 2.8 Appointment of Representative. . . . . . . . . . . . 9
Section 2.9 Closing of Company Transfer Books. . . . . . . . . . 10
Section 2.10 Supplementary Action . . . . . . . . . . . . . . . . 10
ARTICLE III--MERGER CONSIDERATION; CLOSING . . . . . . . . . . . . . . . 11
Section 3.1 Merger Consideration Determination . . . . . . . . . 11
Section 3.2 Payment of Merger Consideration. . . . . . . . . . . 13
Section 3.3 Payment for Stock. . . . . . . . . . . . . . . . . . 15
Section 3.4 Dissenting Shares. . . . . . . . . . . . . . . . . . 16
Section 3.5 Closing. . . . . . . . . . . . . . . . . . . . . . . 16
Section 3.6 Deliveries by the Company. . . . . . . . . . . . . . 16
Section 3.7 Deliveries by TRK. . . . . . . . . . . . . . . . . . 17
ARTICLE IV--ADDITIONAL AGREEMENTS. . . . . . . . . . . . . . . . . . . . 18
Section 4.1 Indemnification and Escrow Agreement . . . . . . . . 18
Section 4.2 Noncompetition Agreements. . . . . . . . . . . . . . 18
Section 4.3 Stockholder Releases . . . . . . . . . . . . . . . . 18
Section 4.4 HSR Act. . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE V--REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . . 18
Section 5.1 Corporate Organization . . . . . . . . . . . . . . . 19
Section 5.2 Valid and Binding Agreement. . . . . . . . . . . . . 19
Section 5.3 No Violation . . . . . . . . . . . . . . . . . . . . 20
Section 5.4 Consents and Approvals . . . . . . . . . . . . . . . 20
Section 5.5 Capitalization . . . . . . . . . . . . . . . . . . . 20
Section 5.6 Subsidiaries and Affiliates. . . . . . . . . . . . . 21
Section 5.7 Financial Statements . . . . . . . . . . . . . . . . 21
Section 5.8 Absence of Undisclosed Liabilities . . . . . . . . . 22
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Section 5.9 Interim Operations and Absence of Certain Changes. . 22
Section 5.10 Taxes. . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.11 Employee Benefit Plans . . . . . . . . . . . . . . . 27
Section 5.12 Compliance with Law. . . . . . . . . . . . . . . . . 29
Section 5.13 Litigation; Claims . . . . . . . . . . . . . . . . . 29
Section 5.14 Contracts and Commitments. . . . . . . . . . . . . . 29
Section 5.15 Intellectual Property Rights . . . . . . . . . . . . 30
Section 5.16 Liens. . . . . . . . . . . . . . . . . . . . . . . . 31
Section 5.17 Insurance. . . . . . . . . . . . . . . . . . . . . . 31
Section 5.18 Disclosure . . . . . . . . . . . . . . . . . . . . . 32
Section 5.19 Accounts Receivable and Accounts Payable . . . . . . 32
Section 5.20 Inventories. . . . . . . . . . . . . . . . . . . . . 32
Section 5.21 Tangible Personal Property . . . . . . . . . . . . . 33
Section 5.22 Real Property. . . . . . . . . . . . . . . . . . . . 33
Section 5.23 Environmental Matters. . . . . . . . . . . . . . . . 34
Section 5.24 Employees. . . . . . . . . . . . . . . . . . . . . . 37
Section 5.25 Employee Relations . . . . . . . . . . . . . . . . . 37
Section 5.26 Vendors. . . . . . . . . . . . . . . . . . . . . . . 38
Section 5.27 Distributors and Representatives . . . . . . . . . . 38
Section 5.28 Governmental Authorizations. . . . . . . . . . . . . 38
Section 5.29 Broker's or Finder's Fees. . . . . . . . . . . . . . 39
Section 5.30 Certain Transactions . . . . . . . . . . . . . . . . 39
Section 5.31 Absence of Questionable Payments . . . . . . . . . . 39
Section 5.32 Directors and Officers; Bank Accounts. . . . . . . . 39
Section 5.33 Government Contracts . . . . . . . . . . . . . . . . 39
ARTICLE VI--CERTAIN ASSURANCES OF THE MAJOR STOCKHOLDERS . . . . . . . . 41
Section 6.1 Certain Assurances of the Major Stockholders . . . . 41
ARTICLE VII--REPRESENTATIONS AND WARRANTIES OF TRK . . . . . . . . . . . 42
Section 7.1 Corporate Organization . . . . . . . . . . . . . . . 42
Section 7.2 Valid and Binding Agreements . . . . . . . . . . . . 42
Section 7.3 No Violation . . . . . . . . . . . . . . . . . . . . 42
Section 7.4 Consents and Approvals . . . . . . . . . . . . . . . 43
Section 7.5 Broker's or Finder's Fees. . . . . . . . . . . . . . 43
ARTICLE VIII--COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 8.1 Compliance with Law. . . . . . . . . . . . . . . . . 43
Section 8.2 Operation of Business Prior to Closing . . . . . . . 43
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Section 8.3 Access . . . . . . . . . . . . . . . . . . . . . . . 45
Section 8.4 Stockholders' Meeting. . . . . . . . . . . . . . . . 45
ARTICLE IX--CONDITIONS PRECEDENT TO OBLIGATIONS OF TRK . . . . . . . . . 46
Section 9.1 Representations and Warranties . . . . . . . . . . . 46
Section 9.2 Covenants, Agreements and Conditions . . . . . . . . 46
Section 9.3 Proceedings. . . . . . . . . . . . . . . . . . . . . 46
Section 9.4 Corporate Proceedings. . . . . . . . . . . . . . . . 46
Section 9.5 Opinion of Counsel . . . . . . . . . . . . . . . . . 47
Section 9.6 Governmental Approvals . . . . . . . . . . . . . . . 47
Section 9.7 No Material Adverse Change . . . . . . . . . . . . . 47
Section 9.8 Insurance. . . . . . . . . . . . . . . . . . . . . . 47
Section 9.9 Deliveries . . . . . . . . . . . . . . . . . . . . . 47
Section 9.10 Tax Status Certification . . . . . . . . . . . . . . 47
Section 9.11 Exercise of Rights . . . . . . . . . . . . . . . . . 47
Section 9.12 HSR Act Requirements . . . . . . . . . . . . . . . . 48
Section 9.13 Dissenting Shares. . . . . . . . . . . . . . . . . . 48
Section 9.14 Financing. . . . . . . . . . . . . . . . . . . . . . 48
Section 9.15 Payment of Certain Notes . . . . . . . . . . . . . . 48
ARTICLE X--CONDITIONS PRECEDENT TO OBLIGATIONS
OF THE COMPANY AND THE MAJOR STOCKHOLDERS . . . . . . . . . . 48
Section 10.1 Representations and Warranties . . . . . . . . . . . 49
Section 10.2 Covenants, Agreements and Conditions . . . . . . . . 49
Section 10.3 Proceedings. . . . . . . . . . . . . . . . . . . . . 49
Section 10.4 Corporate Proceedings. . . . . . . . . . . . . . . . 49
Section 10.5 Opinion of Counsel . . . . . . . . . . . . . . . . . 49
Section 10.6 Governmental Approvals . . . . . . . . . . . . . . . 49
Section 10.7 Deliveries . . . . . . . . . . . . . . . . . . . . . 50
Section 10.8 HSR Act Requirements . . . . . . . . . . . . . . . . 50
Section 10.9 Merger Consideration Adjustment. . . . . . . . . . . 50
Section 10.10 SWIB Debt. . . . . . . . . . . . . . . . . . . . . . 50
Section 10.11 Financing. . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE XI--OTHER MATTERS. . . . . . . . . . . . . . . . . . . . . . . . 50
Section 11.1 Confidentiality. . . . . . . . . . . . . . . . . . . 50
Section 11.2 Further Assurances . . . . . . . . . . . . . . . . . 50
ARTICLE XII--TERMINATION . . . . . . . . . . . . . . . . . . . . . . . 51
Section 12.1 Methods of Termination . . . . . . . . . . . . . . . 51
Section 12.2 Procedure Upon Termination . . . . . . . . . . . . . 51
ARTICLE XIII--MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . 52
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Section 13.1 Survival of Representations,
Warranties and Agreements. . . . . . . . . . . . . . 52
Section 13.2 Service of Process . . . . . . . . . . . . . . . . . 52
Section 13.3 Notices. . . . . . . . . . . . . . . . . . . . . . . 52
Section 13.4 Governing Law. . . . . . . . . . . . . . . . . . . . 54
Section 13.5 Modification; Waiver . . . . . . . . . . . . . . . . 54
Section 13.6 Entire Agreement . . . . . . . . . . . . . . . . . . 54
Section 13.7 Assignment; Successors and Assigns . . . . . . . . . 54
Section 13.8 Public Announcements . . . . . . . . . . . . . . . . 55
Section 13.9 Severability . . . . . . . . . . . . . . . . . . . . 55
Section 13.10 No Third Party Beneficiary . . . . . . . . . . . . . 55
Section 13.11 Expenses . . . . . . . . . . . . . . . . . . . . . . 55
Section 13.12 Execution in Counterpart . . . . . . . . . . . . . . 55
EXHIBIT A -- Stockholders
EXHIBIT A-1--Major Stockholders
EXHIBIT A-2--Stockholders Executing Noncompetition
Agreements
EXHIBIT B -- Form of Closing Certificate
EXHIBIT C -- Form of Indemnification and Escrow Agreement
EXHIBIT D -- Principles and Procedures
EXHIBIT E -- Form of Noncompetition Agreement
EXHIBIT F -- Form of Stockholder Release
EXHIBIT G -- Certificate of Incorporation of the Surviving
Corporation
EXHIBIT H -- Form of Opinion of Hill & Xxxxxx
EXHIBIT I -- Form of Opinion of Xxxxxxxxx, Xxxxxxx & Xxxxx,
L.L.P.
Schedule 5.1 Foreign Qualifications
Schedule 5.4 Consents and Approvals
Schedule 5.5 Capitalization
Schedule 5.6 Subsidiaries and Affiliates
Schedule 5.7 Company Financial Statements
Schedule 5.7A Company Interim Financial Statements
Schedule 5.8 Liabilities and Obligations
Schedule 5.9 Changes During Interim Operations
Schedule 5.10 Tax Matters
Schedule 5.11 Employee Benefit Plans
Schedule 5.12 Compliance with Law
Schedule 5.13 Litigation; Claims
Schedule 5.14 Contracts and Commitments
Schedule 5.15 Intellectual Property Rights
Schedule 5.16 Liens
Schedule 5.17 Insurance
Schedule 5.20 Inventories
Schedule 5.21 Tangible Personal Property Owned
Schedule 5.21A Tangible Personal Property Leased
Schedule 5.22 Real Property
Schedule 5.23 Environmental Matters
Schedule 5.24 Employees
Schedule 5.25 Employee Relations
Schedule 5.26 Vendors
Schedule 5.27 Distributors and Representatives
Schedule 5.28 Governmental Authorizations
Schedule 5.30 Certain Transactions
Schedule 5.32 Directors and Officers; Bank Accounts
Schedule 5.33 Government Contracts; Assignments
Schedule 7.5 Broker's or Finder's Fee
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated July 19, 1995,
by and among TRK Acquisition Corporation, a Delaware corporation ("TRK"), TRAK
International, Inc., a Delaware corporation (the "Company"), and the
stockholders of the Company listed on EXHIBIT A-1 attached hereto (the "Major
Stockholders").
WITNESSETH:
WHEREAS, the respective Boards of Directors of TRK and the Company have
approved the merger of TRK with and into the Company (the "Merger"), pursuant to
and subject to the conditions set forth herein;
WHEREAS, TRK, the Company and the Major Stockholders desire to make certain
representations, warranties and agreements in connection with the Merger and to
prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and covenants which are to be made and performed by
the respective parties, it is hereby agreed as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS.
The following terms when used in this Agreement have the meanings set
forth below:
(a) "Affiliate" means any Person now or hereinafter controlling,
controlled by or under common control with another Person.
(b) "Arbitrator" has the meaning set forth in Section 3.1(b)(iii).
(c) "Atlas Adjustment" has the meaning set forth in
Section 3.1(c).
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(d) "Atlas Program" means that certain U.S. Army Tank-Automotive
Command project to procure telescopic lifts, as more particularly described in
Request for Proposal DAAE07-94-R-R077 dated November 17, 1994, or any substitute
project resubmitted for bid with substantially the same product and performance
specifications.
(e) "CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. Section 9601, ET SEQ.
(f) "CERCLIS" has the meaning set forth in Section 5.23(h).
(g) "Certificate of Merger" has the meaning set forth in Section
2.2.
(h) "Class A Preferred Stock" means the Class A Convertible
Preferred Stock of the Corporation, par value $500.00 per share.
(i) "Class B Preferred Stock" means the Class B Convertible
Preferred Stock of the Company, par value $1,000.00 per share.
(j) "Class C Preferred Stock" means the Class C Convertible
Preferred Stock, par value $1,000.00 per share.
(k) "Closing" has the meaning set forth in Section 3.5.
(l) "Closing Certificate" means the certificate in the form annexed
hereto as EXHIBIT B delivered by the chief financial officer of the Company
pursuant to Section 3.2(c).
(m) "Closing Date" has the meaning set forth in Section 3.5.
(n) "Closing Report" has the meaning set forth in Section 3.1(b).
(o) "Closing Statements" has the meaning set forth in Section
3.1(b).
(p) "Code" means the United States Internal Revenue Code of 1986,
as amended.
4
(q) "Common Stock" means the common stock of the Company, par value
$1.00 per share.
(r) "Company" has the meaning set forth in the Preamble.
(s) "Company Financial Statements" has the meaning set forth in
Section 5.7.
(t) "Company Interim Financial Statements" has the meaning set
forth in Section 5.7.
(u) "Constituent Corporations" means TRK and the Company.
(v) "Debt" means (i) the principal amount of all indebtedness for
borrowed money of the Company owed as of a particular date plus (ii) the
actuarially determined retiree healthcare obligations of the Company as of the
Closing Date, as such obligations are determined in accordance with the
Principles and Procedures.
(w) "Debt Variance" means the amount equal to the Debt as of the
Closing Date, as determined pursuant to Section 3.1(b), MINUS $12,262,000.
(x) "Dissenting Shares" has the meaning set forth in Section 3.4.
(y) "Effective Time" has the meaning set forth in Section 2.2.
(z) "Environmental Laws" has the meaning set forth in Section
5.23(c).
(aa) "ERISA" means the Employment Retirement Income Security Act of
1974, as amended.
(ab) "Escrow Agent" means the escrow agent selected by the parties
to act pursuant to the Indemnification and Escrow Agreement.
(ac) "Escrow Amount" has the meaning set forth in Section 3.2(b).
(ad) "Estimated Debt" means the estimated Debt of the Company
determined as of the Closing Date and set forth on the Closing Certificate.
5
(ae) "Estimated Merger Consideration" has the meaning set forth in
Section 3.2(a).
(af) "Estimated Merger Consideration Adjustment" means the estimated
amount, if any, of the Merger Consideration Adjustment as determined from the
Estimated Net Assets and Estimated Debt on the basis of the Closing Certificate
delivered by the chief financial officer in accordance with Section 3.2(c).
(ag) "Estimated Net Assets" means the estimated Net Assets of the
Company determined as of the Closing Date and set forth on the Closing
Certificate.
(ah) "GAAP" means generally accepted accounting principles of the
United States applied in a manner consistent with past practice of the Company,
except as otherwise disclosed in the Company Financial Statements.
(ai) "GCL" means the Delaware General Corporation Law.
(aj) "Government" has the meaning set forth in Section 5.33(a).
(ak) "Government Contracts" has the meaning set forth in
Section 5.33(a).
(al) "Hazardous Material" has the meaning set forth in Section
5.23(a).
(am) "HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended.
(an) "Improvements" has the meaning set forth in Section 5.22(a).
(ao) "Indemnification and Escrow Agreement" means an indemnification
and escrow agreement substantially in the form attached hereto as EXHIBIT C.
(ap) "Intellectual Property" means any and all inventions, Marks
(including trademarks, service marks, certification marks, collective marks, and
collective membership marks whether word, logo, or other forms of Marks, all of
the foregoing collectively referred to as "Marks"), trade names, copyrights,
applications therefor, patents thereon, registrations thereof and licenses
thereof, royalty rights, any and all goodwill associated with the business or
represented by the
6
assets of the Company, trade secrets, secret processes and procedures,
engineering, production, assembly design and installation encompassed in any and
all embodiments including, but not limited to technical drawings and
specifications, working notes and memos, market studies, consultants' reports,
technical and laboratory data, competitive samples, engineering prototypes, and
confidential information, know-how, and all similar property of any nature,
tangible or intangible, including, but not limited to, all property listed or
described on SCHEDULE 5.15.
(aq) "IRS" means the United States Internal Revenue Service.
(ar) "Knowledge" means the actual knowledge of a senior officer of
the Company, after due inquiry with respect thereto.
(as) "Marks" has the meaning set forth in Section 1.1(ap).
(at) "Material Adverse Effect" means, with respect to the Company,
any effect which is materially adverse to the business, properties, financial
condition, operations, or results of the operation of the Company.
(au) "Merger" has the meaning set forth in the Preamble.
(av) "Merger Consideration" has the meaning set forth in Section
3.1(a).
(aw) "Merger Consideration Adjustment" is equal to the excess, if
any, of the Debt Variance over the Net Assets Variance, such that (i) if the
Debt Variance exceeds the Net Assets Variance (each, as determined in accordance
with Section 3.1(b)), then the Merger Consideration Adjustment is equal to the
amount of such excess or (ii) if the Debt Variance is zero (0) or, if greater
than zero (0), is equal to or less than the Net Assets Variance (each, as
determined in accordance with Section 3.1(b)), then the Merger Consideration
Adjustment is equal to zero (0).
(ax) "Merger Consideration Variance" means the amount equal to the
Merger Consideration Adjustment, as determined pursuant to Section 3.1(b), minus
the Estimated Merger Consideration Adjustment.
7
(ay) "Net Assets" means the excess as of a particular date of
(i) the Company's assets over (ii) the Company's non-interest bearing current
liabilities, each as determined in accordance with the Principles and
Procedures.
(az) "Net Assets Variance" means the amount equal to the Net Assets
as of the Closing Date, as finally determined pursuant to Section 3.1(b), MINUS
$19,122,000 (subject to adjustment pursuant to the third and sixth paragraphs of
Section III(D) and Section III(I) of the Principles and Procedures).
(ba) "Noncompetition Agreements" has the meaning set forth in
Section 4.2.
(bb) "Operating Agreements" has the meaning set forth in Section
5.14.
(bc) "Pension Plans" has the meaning set forth in Section
5.11(c)(i).
(bd) "Permits" has the meaning set forth in Section 5.28.
(be) "Person" means and includes an individual, a partnership, a
joint venture, a corporation or trust, an unincorporated organization, a group
or a government or other department or agency thereof.
(bf) "Plans" has the meaning set forth in Section 5.11(a).
(bg) "Price Waterhouse" means the St. Louis office of Price
Waterhouse LLP, as independent certified public accountants for TRK and the
Surviving Corporation.
(bh) "Principles and Procedures" means the principles and procedures
set forth on EXHIBIT D.
(bi) "Real Property" has the meaning set forth in Section 5.22(a).
(bj) "Reports" has the meaning set forth in Section 5.23(b).
(bk) "Stock" means the Common Stock, the Class A Preferred Stock,
the Class B Preferred Stock and the Class C Preferred Stock.
8
(bl) "Stockholders" means the holders of the Company's capital stock
listed on EXHIBIT A.
(bm) "Stockholder Release" has the meaning set forth in Section 4.3.
(bn) "Stockholders' Representative" has the meaning set forth in
Section 2.8.
(bo) "Surviving Corporation" has the meaning set forth in Section
2.1.
(bp) "SWIB" means the State of Wisconsin Investment Board.
(bq) "SWIB Debt" means all principal and accrued and unpaid interest
owed as of the Closing Date pursuant to each of the Subordinated Promissory Note
of the Company, dated October 30, 1987, made payable to SWIB in the original
principal amount of $3,000,000, due on October 30, 1997, and the Subordinated
Promissory Note of the Company, dated July 6, 1988, made payable to SWIB in the
original principal amount of $1,200,000, due on June 30, 1998.
(br) "TRK" has the meaning set forth in the Preamble.
(bs) "Tax" has the meaning set forth in Section 5.10(c).
(bt) "Taxing Authority" has the meaning set forth in Section
5.10(a).
(bu) "Tax Return" has the meaning set forth in Section 5.10(d).
SECTION 1.2 INTERPRETIVE RULES.
For purposes of this Agreement, except as otherwise expressly provided
herein or unless the context otherwise requires: (a) defined terms include the
plural as well as the singular and the use of any gender shall be deemed to
include the other gender; (b) references to "Articles," "Sections" and other
subdivisions and to "Schedules" and "Exhibits" without reference to a document,
are to designated Articles, Sections and other subdivisions of, and to Schedules
and Exhibits to, this Agreement; (c) the use of the term "including" means
"including but not limited to"; and (d) the words "herein," "hereof,"
9
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular provision.
ARTICLE II
THE MERGER
SECTION 2.1 THE MERGER.
At the Effective Time, TRK shall be merged with and into the Company in
accordance with the applicable provisions of the GCL and the separate existence
of TRK shall thereupon cease, and the Company, as the surviving corporation in
the Merger (the "Surviving Corporation"), shall continue its corporate existence
in accordance with the GCL under the name TRAK International, Inc.
SECTION 2.2 EFFECTIVE TIME OF THE MERGER.
At the Closing, the Company shall cause the Merger to be consummated by
filing with the Secretary of State of Delaware an appropriate certificate of
merger (the "Certificate of Merger") duly executed in accordance with this
Agreement and the GCL. The date and time at which the Certificate of Merger is
filed is referred to herein as the "Effective Time."
SECTION 2.3 RIGHTS OF THE SURVIVING CORPORATION.
At the Effective Time, the Surviving Corporation shall thereupon and
thereafter possess all the rights, privileges, powers and franchises as well of
a public as of a private nature, of each of the Constituent Corporations, and be
subject to all the restrictions, disabilities and duties of each of the
Constituent Corporations, and all and singular, the rights, privileges, powers
and franchises of each of the Constituent Corporations, and all property, real,
personal and mixed, and all debts due to either of the Constituent Corporations
on whatever account, as well for stock subscriptions as all other things in
action or belonging to each of the Constituent Corporations shall be vested in
the Surviving Corporation; and all property, rights, privileges, powers and
franchises, and all and every other interest shall be thereafter as effectually
the property of the Surviving Corporation as they were of the several and
respective Constituent Corporations, and the title to any real estate, vested by
deed, or otherwise, under the laws of the State of
10
Delaware or elsewhere, in either of the Constituent Corporations, shall not
revert or be in any way impaired by reason of the Merger; but all rights of
creditors and all liens upon any property of either of the Constituent
Corporations shall be preserved unimpaired, and all debts, liabilities and
duties of each of the Constituent Corporations shall thenceforth attach to the
Surviving Corporation, and may be enforced against it to the same extent as if
said debts, liabilities and duties had been incurred or contracted by it; all in
accordance with Section 259(a) of the GCL.
SECTION 2.4 CERTIFICATE OF INCORPORATION.
The Certificate of Incorporation of the Company as amended and restated in
the form set forth on EXHIBIT G shall be the Certificate of Incorporation of the
Surviving Corporation.
SECTION 2.5 BY-LAWS.
The By-Laws of TRK as in effect at the Effective Time shall be the By-Laws
of the Surviving Corporation.
SECTION 2.6 DIRECTORS AND OFFICERS.
The directors of the Surviving Corporation at the Effective Time shall be
the directors of TRK in office immediately prior to the Effective Time, to serve
in accordance with the By-Laws of the Surviving Corporation. The officers of
the Surviving Corporation at the Effective Time shall be the officers of TRK
immediately prior to the Effective Time, to serve in accordance with the By-Laws
of the Surviving Corporation.
SECTION 2.7 CONVERSION OF SHARES.
At the Effective Time, by virtue of the Merger and without any action on
the part of the holder of any securities of the Constituent Corporations:
(a) each share of Common Stock then outstanding, other than Common Stock
to be canceled pursuant to Section 2.7(c) and other than Dissenting Shares, and
each share of Common Stock which is issuable pursuant to a warrant, option or
conversion right which warrant, option or conversion right has been exercised
(including the payment of all sums and/or delivery of all documents and
instruments) on or prior to the Closing Date (for the purposes of this Section
2.7, such shares of Common
11
Stock are hereby deemed to be outstanding as of the Effective Time), and all
rights with respect thereto, shall be converted into and represent the right to
receive the amounts of cash set forth in Section 3.1, payable as provided in
Sections 3.2 and 3.3 and subject to adjustment as provided in Sections 3.1 and
3.2;
(b) each share of Class A Preferred Stock, Class B Preferred Stock and
Class C Preferred Stock, other than such stock to be canceled pursuant to
Section 2.7(c) and other than Dissenting Shares, and all rights with respect
thereto, shall be converted into and represent the right to receive the amounts
of cash set forth in Section 3.1, payable as provided in Section 3.2 and 3.3 and
subject to adjustment as provided in Sections 3.1 and 3.2;
(c) each share of the Company's capital stock held in the Company's
treasury shall be canceled and retired without payment of any consideration
therefor; and
(d) each issued and outstanding share of common stock of TRK, $0.01 par
value per share, outstanding immediately prior to the Effective Time shall
remain outstanding and unchanged as a share of common stock of the Surviving
Corporation.
SECTION 2.8 APPOINTMENT OF REPRESENTATIVE.
Upon approval of the Merger by the Stockholders, such Stockholders, with
the exception of SWIB, which, unless it otherwise agrees in writing, shall
continue to act on its own behalf, shall have been deemed to appoint Xxxxxx X.
Xxxxx, Xx., Esq., as their agent and attorney-in-fact (the "Stockholders'
Representative"), with full power and authority (including power of
substitution), except as otherwise expressly provided in this Agreement, in the
name of and for and on behalf of such Stockholders, or in his own name as
Stockholders' Representative, to take all actions required or permitted under
this Agreement and the Indemnification and Escrow Agreement (including giving
and receiving all accountings, reports, notices and consents). The
Stockholders' Representative may engage advisors, including attorneys and
accountants, as it deems reasonable, with the prior written consent of SWIB, and
the costs and expenses of such advisors shall be borne by the Stockholders. The
authority conferred under this Section 2.8 shall be an agency coupled with an
interest, and all authority conferred hereby is irrevocable and not subject to
termination by the Stockholders or any of them, or by operation of law, whether
by the death or incapacity
12
of any Stockholder, the termination of any trust or estate or the occurrence of
any other event. If any Stockholder should die or become incapacitated, if any
trust or estate should terminate or if any other such event should occur, any
action taken by the Stockholders' Representative pursuant to this Section 2.8
shall be as valid as if such death or incapacity, termination or other event had
not occurred, regardless of whether or not the Stockholders' Representative, TRK
or the Surviving Corporation shall have received notice of such death,
incapacity, termination or other event. Any notice given to the Stockholders'
Representative pursuant to Section 13.3 shall constitute effective notice to all
Stockholders other than SWIB, and any other party to this Agreement or any other
Person may rely on any notice, consent, election or other communication received
from the Stockholders' Representative as if such notice, consent, election or
other communication had been received from all Stockholders other than SWIB.
SECTION 2.9 CLOSING OF COMPANY TRANSFER BOOKS.
At the Effective Time, the stock transfer books of the Company shall be
closed and there shall be no further registration of transfers of Common Stock
thereafter. If, after the Effective Time, subject to the terms and conditions
of this Agreement, certificates representing any such shares are presented to
the Surviving Corporation, they shall be canceled and exchanged for cash in
accordance with Section 2.7.
SECTION 2.10 SUPPLEMENTARY ACTION.
If at any time after the Effective Time, any further assignments or
assurances in law or any other things are necessary or desirable to vest or to
perfect or confirm of record in the Surviving Corporation the title to any
property or rights of either of the Constituent Corporations, or otherwise to
carry out the provisions of this Agreement, the officers and directors of the
Surviving Corporation are hereby authorized and empowered on behalf of the
respective Constituent Corporations, in the name of and on behalf of the
appropriate Constituent Corporation, to execute and deliver any and all things
necessary or proper to vest or to perfect or confirm title to such property or
rights in the Surviving Corporation, and otherwise carry out the purposes and
provisions of this Agreement.
13
ARTICLE III
MERGER CONSIDERATION; CLOSING
SECTION 3.1 MERGER CONSIDERATION DETERMINATION.
(a) MERGER CONSIDERATION. Subject to Section 3.4, the aggregate
Merger Consideration shall be (i) Fifteen Million Four Hundred Fifteen Thousand
Four Hundred Dollars ($15,415,400) PLUS (ii) the Atlas Adjustment MINUS (iii)
the Merger Consideration Adjustment. The aggregate Merger Consideration shall
be distributed to the individual Stockholders pursuant to the various
percentages listed on EXHIBIT A.
(b) DETERMINATION OF MERGER CONSIDERATION ADJUSTMENT. The amount
of the Merger Consideration Adjustment shall be determined in the following
manner:
(i) CLOSING STATEMENTS; REVIEW. Promptly after the Closing
Date, the Surviving Corporation will prepare statements in accordance with this
Agreement and the Principles and Procedures which shall set forth the Net Assets
and Debt as of the Closing Date, the Net Assets Variance, the Debt Variance, the
Merger Consideration Adjustment and the Merger Consideration Variance (the
"Closing Statements"). Price Waterhouse, at the Surviving Corporation's
expense, will audit the Closing Statements in accordance with U.S. generally
accepted auditing standards and the Principles and Procedures and issue their
report as to the results of such audit (the "Closing Report"). Upon completion
of the Closing Report, the Surviving Corporation will deliver the Closing
Statements and Closing Report to the Stockholders' Representative and to SWIB.
The Surviving Corporation shall direct Price Waterhouse to deliver drafts of the
Closing Statement and Closing Report to the Stockholders' Representative and to
SWIB for review and analysis at least ten (10) days prior to final issuance of
the Closing Statements and Closing Report and delivery to the Stockholders'
Representative and to SWIB as noted above. The Stockholders' Representative and
SWIB shall have the opportunity to review and evaluate all working papers,
worksheets and other documents utilized by the Surviving Corporation in the
preparation of the Closing Statement and by Price Waterhouse in the audit of the
Closing Statement. Price Waterhouse, the Stockholders' Representative and SWIB
will attempt to resolve any disputed items prior to issuance of the Closing
Statements and Closing Report.
14
(ii) REVIEW BY THE PARTIES. Failing such resolution, the
Stockholders' Representative (and SWIB, if it so chooses) will provide the
Surviving Corporation within fifteen (15) days of receipt of the Closing
Statements and Closing Report detailed written explanations of any disputed
items in the Closing Statements and the Closing Report. The amount of the
Merger Consideration Adjustment not affected by the disputed items will be
deemed to be as set forth in the Closing Statements and Closing Report. Within
a further period of ten (10) days from the end of the aforementioned review
period, the parties will attempt to resolve in good faith any disputed items.
(iii) ARBITRATION. Failing resolution pursuant to paragraph
(ii) above, the unresolved disputed items will be referred for final binding
resolution to Xxxxxx Xxxxxxxx & Co. or to such other nationally-recognized firm
of certified public accountants as the Surviving Corporation, the Stockholders'
Representative and SWIB may hereafter jointly select (the "Arbitrator"). Such
referral shall be in the form of written statements of position by the
Stockholders' Representative (including, at the election of the Stockholders'
Representative, a written statement by its selected accountant), SWIB (if it so
chooses), the Surviving Corporation and Price Waterhouse, with each party having
an opportunity to respond to such written statements and any requests for
statements or information by the Arbitrator. If the Arbitrator determines that
the resolution of a given disputed item requires an interpretation of law, then,
with the permission of the Surviving Corporation, the Stockholders'
Representative and SWIB, the Arbitrator may request a law firm of national
standing chosen by it to render a legal opinion as to such matter. The amount
of the Merger Consideration Adjustment affected by such unresolved disputed
items (if any) will be as determined by the Arbitrator. The cost of such
Arbitrator's review (including reasonable attorneys' fees, if any) shall be
borne by the party or parties as determined by the Arbitrator.
(c) DETERMINATION OF ATLAS ADJUSTMENT. For each unit ordered by the
U.S. Army under the Atlas Program within five years from the Closing Date, the
Stockholders shall receive, and the Surviving Corporation shall pay
unconditionally, without right of offset or counterclaim, the following
increase, if any, in the aggregate Merger Consideration (the "Atlas
Adjustment"):
15
(i) The Surviving Corporation shall pay the Stockholders,
in accordance with the Atlas percentages listed on EXHIBIT A, Two Thousand
Dollars ($2,000) for each of the first three hundred (300) units ordered under
the Atlas Program each such payment to be earned when the Surviving Corporation
(or the Company, if prior to the Closing Date) receives an order, without regard
to the dates of shipment or acceptance;
(ii) Upon receipt by the Surviving Corporation (or the
Company, if prior to the Closing Date) of the order for the three hundredth
(300th) unit under the Atlas Program, the Surviving Corporation shall pay the
Stockholders, in accordance with the Atlas percentages listed on EXHIBIT A, (A)
Four Hundred Thousand Dollars ($400,000) PLUS (B) for each of such three hundred
(300) units so ordered, interest on One Thousand Three Hundred Thirty-Three
Dollars ($1,333), calculated at the rate of five percent (5%) per annum (based
on a 365-day year), from the date of receipt by the Surviving Corporation of the
order through the date of payment to the Stockholders pursuant to this Section
3.1(c)(ii); and
(iii) In the event the aggregate number of units ordered
under the Atlas Program exceeds three hundred (300), then the Surviving
Corporation shall pay the Stockholders, in accordance with the Atlas percentages
listed on EXHIBIT A, Three Thousand Three Hundred Thirty-Three Dollars ($3,333)
for each unit in excess of three hundred (300) ordered under the Atlas Program,
each such payment to be earned when the Surviving Corporation (or the Company,
if prior to the Closing Date) receives an order, without regard to the dates of
shipment or acceptance; provided, however, that the aggregate Atlas Adjustment
payable pursuant to this Section 3.1(c) shall not exceed the sum of (i) Two
Million Dollars ($2,000,000) PLUS (ii) the sums payable pursuant to Section
3.1(c)(ii)(B).
(iv) As of the end of each calendar quarter, the Surviving
Corporation will provide a certificate to the Stockholders' Representative and
SWIB, signed by the Surviving Corporation's chief executive officer or chief
financial officer, stating the aggregate number of units ordered under the Atlas
Program (i) since its inception and (ii) since the last such certificate. The
Stockholders' Representative, SWIB, and their representatives shall have the
same access described in Section 8.3, after the Closing Date, for the purpose of
establishing the number of units ordered under the Atlas Program.
16
SECTION 3.2 PAYMENT OF MERGER CONSIDERATION.
(a) ESTIMATED PAYMENTS. Subject to Section 3.4, at the Closing,
TRK shall pay the Stockholders (i) Fifteen Million Four Hundred Fifteen Thousand
Four Hundred Dollars ($15,415,400) MINUS (ii) the sum of (A) the Estimated
Merger Consideration Adjustment and (B) the Escrow Amount to be deposited with
the Escrow Agent pursuant to Section 3.2(b), PLUS (iii) any portion of the Atlas
Adjustment which has been earned as of such time (the "Estimated Merger
Consideration"). The payments to the individual Stockholders pursuant to clause
(i) above shall be made on the basis of the closing percentages listed on
EXHIBIT A, and payments pursuant to clause (iii) above shall be made on the
basis of the Atlas percentages listed on EXHIBIT A.
(b) ESCROW AMOUNT. TRK shall deposit Two Million Dollars
($2,000,000) (the "Escrow Amount") with the Escrow Agent pursuant to the terms
of the Indemnification and Escrow Agreement.
(c) CLOSING CERTIFICATE. At the Closing, the chief financial
officer of the Company shall deliver to TRK the Closing Certificate, which shall
set forth his or her best estimate of Estimated Net Assets, Estimated Debt and
Estimated Merger Consideration Adjustment.
(d) MERGER CONSIDERATION ADJUSTMENT AND MERGER CONSIDERATION
VARIANCE. The Net Assets and Debt as of the Closing Date, the Net Assets
Variance, the Debt Variance, the Merger Consideration Adjustment and the Merger
Consideration Variance shall be computed as provided in Section 3.1(b), and the
Merger Consideration Variance shall be paid within ten (10) business days
thereafter. If the Merger Consideration Variance is a positive number, that
amount shall be paid by the Stockholders to the Surviving Corporation from the
funds in the Escrow Funds. If the Merger Consideration Variance is a negative
number, that amount shall be paid by the Surviving Corporation to the
Stockholders on the basis of the closing percentages listed on EXHIBIT A. All
payments hereunder shall bear interest from and after the Closing Date, until
paid, at the rate which is equal to the rate of interest actually earned on the
Escrow Amount during such period, computed on the basis of a 365-day year and
paid for the actual number of days elapsed. Interest calculated in accordance
with this Section 3.2(d) shall be due and payable on the date on which the
corresponding payment is due.
17
(e) ATLAS ADJUSTMENT. Except as provided pursuant to Section
3.2(a), the Surviving Corporation shall pay the Stockholders the Atlas
Adjustment pursuant to Sections 3.1(c)(i) and 3.1(c)(iii) on a calendar
quarterly basis (or within (10) days of the date when the aggregate unpaid
amount exceeds $100,000, if earlier) and pursuant to Section 3.1(c)(ii) within
10 days of the Surviving Corporation's receipt of the order for the 300th unit
under the Atlas Program; provided, however, the Surviving Corporation shall have
no obligation to pay the Atlas Adjustment for any units with respect to which
orders are received under the Atlas Program more than five (5) years after the
Closing Date.
(f) FORM OF PAYMENTS. All payments hereunder, other than payments
originating from the Escrow Agent, shall be made by depositing, by bank wire
transfer, the required amount (in immediately available funds) in an account of
the recipient, which account shall be designated by the recipient at least three
(3) business days prior to the date of the required payment.
SECTION 3.3 PAYMENT FOR STOCK.
(a) At the Effective Time, TRK shall make available for
disbursement in accordance with this Agreement, the Estimated Merger
Consideration into which shares of the Stock are to be converted in the Merger
pursuant to Section 2.7 hereof. Upon surrender to TRK of an outstanding
certificate or certificates, together with a letter of transmittal, duly
executed, TRK shall promptly disburse to the Stockholder entitled thereto the
amount of cash into which his shares shall have been converted in the Merger.
Until so surrendered, each certificate which immediately prior to the Effective
Time represented outstanding Stock shall be deemed for all corporate purposes to
evidence only the right to receive upon such surrender the cash into which his
shares represented thereby shall have been converted in the Merger. No interest
shall accrue or be paid on any cash payable upon the surrender of a certificate
or certificates which immediately prior to the Effective Time represented
outstanding Stock (including any certificates or instruments which prior to the
Effective Time represented preferred stock or convertible notes of the Company
to the extent such were converted into shares of Common Stock as of or prior to
the Effective Time). If outstanding certificates for shares of the Company are
not surrendered, or the cash payment therefor not claimed prior to six years
after the Effective Time (or, in any particular case,
18
prior to such earlier date on which such cash payment would otherwise escheat to
or become the property of any governmental unit or agency), the unclaimed
amounts shall, to the extent permitted by applicable law, become the property of
the Surviving Corporation, free and clear of all claims or interest of any
Person previously entitled thereto.
(b) If the Merger Consideration (or any portion thereof) is to be
delivered to a Person other than the Person in whose name the certificates or
other instruments surrendered in exchange therefor are registered, it shall be a
condition to the payment of such Merger Consideration that the certificates or
instruments so surrendered shall be properly endorsed or accompanied by
appropriate stock powers and otherwise in proper form for transfer, that such
transfer otherwise be proper and that the Person requesting such transfer pay to
TRK any transfer or other taxes payable by reason of the foregoing or establish
to the satisfaction of TRK that such taxes have been paid or are not required to
be paid. Appropriate procedures shall be implemented to deal with lost stock
certificates and shares of Common Stock issuable pursuant warrants, option or
conversion rights exercised (including the payment of all sums and/or delivery
of all documents and instruments) on or prior to the Closing Date with respect
to which stock certificates had not been issued at the Effective Time.
SECTION 3.4 DISSENTING SHARES.
Notwithstanding anything herein to the contrary, any shares of the
Company's Stock outstanding immediately prior to the Effective Time and held by
holders who have not voted in favor of the Merger and who have complied with all
of the relevant provisions of Section 262 of the GCL (the "Dissenting Shares")
shall not be converted into the right to receive the Estimated Merger
Consideration, unless and until such holder shall have failed to perfect, or
shall have effectively withdrawn or lost, their rights to appraisal thereunder.
If, after the Effective Time, any holder of Dissenting Shares fails to protect
or withdraw or otherwise loses such right, each of such holders of shares of
capital stock of the Company shall thereupon be deemed to have converted into
the right to receive, as of the Effective Time, the Estimated Merger
Consideration without any interest thereon.
19
SECTION 3.5 CLOSING.
The closing of the transactions contemplated hereby (the "Closing") shall
take place at the offices of the Company, 000 Xxxx Xxxxxxx Xxxxxx, Xxxx
Xxxxxxxxxx, Xxxxxxxxx 00000 on July 27, 1995, or at such other place, time or
date as may be agreed upon by the parties hereto (the "Closing Date"); provided,
however, TRK shall have the right to postpone the Closing until September 1,
1995 to satisfy the conditions set forth in Section 9.14.
SECTION 3.6 DELIVERIES BY THE COMPANY.
At the Closing, the Company shall deliver the following items to TRK:
(a) Certificates representing the shares of Stock, duly endorsed or
accompanied by stock powers duly executed in blank (with signatures guaranteed
by any national bank or trust company) and otherwise in form acceptable for
transfer on the books of the Company, with all requisite stock transfer tax
stamps attached;
(b) Documents and instruments, satisfactory to TRK and its counsel,
evidencing the exercise, and all payments and deliveries incident to such
exercise, by the holder thereof, of any and all warrants, options and conversion
rights exercised with respect to which Stock is issuable and deemed to be issued
and outstanding as of the Effective Time pursuant to Section 2.7;
(c) The stock books, stock ledgers, minute books and corporate seal
of the Company;
(d) Certificates from appropriate authorities, dated as of or about
the Closing Date, as to the good standing, qualification to do business of, and
payment of taxes by the Company in each jurisdiction where it is so qualified;
(e) The opinion of counsel to the Company referred to in
Section 9.5;
(f) The certificates referred to in Sections 3.2(c), 9.1, 9.2, and
9.10;
(g) The Indemnification and Escrow Agreement referred to in
Section 4.1, duly executed by the Major Stockholders;
20
(h) The Noncompetition Agreements referred to in Section 4.2, duly
executed by each of the Stockholders listed on EXHIBIT A-2;
(i) The Stockholder Releases referred to in Section 4.3, duly
executed by each of the Major Stockholders;
(j) The resignation of each director and officer of the Company, as
requested by TRK; and
(k)
(l) All other previously undelivered items required to be delivered
by the Company or the Stockholders to TRK at or prior to the Closing pursuant to
this Agreement or otherwise required in connection herewith unless waived in
writing by TRK.
SECTION 3.7 DELIVERIES BY TRK.
At the Closing, TRK shall deliver the following items to the Stockholders
and as applicable, the Escrow Agent:
(a) The payments as required in Sections 3.2(a) and 3.2(b);
(b) The opinion of counsel to TRK referred to in Section 10.5;
(c) The certificates referred to in Sections 10.1 and 10.2;
(d) Agreements with the Company's President and Vice-Presidents
regarding equity interests in the corporate parent of TRK and severance
arrangements, substantially in the form previously delivered by TRK to the
President of the Company; and
(e) All other previously undelivered items required to be delivered
by TRK at or prior to the Closing pursuant to this Agreement or otherwise
required in connection herewith unless waived in writing by the Company.
21
ARTICLE IV
ADDITIONAL AGREEMENTS
SECTION 4.1 INDEMNIFICATION AND ESCROW AGREEMENT.
At the Closing, the Stockholders, the Company, TRK and the Escrow Agent
will enter into the Indemnification and Escrow Agreement, pursuant to which TRK
shall deliver the Escrow Amount to be held in escrow by the Escrow Agent.
SECTION 4.2 NONCOMPETITION AGREEMENTS.
In order to protect TRK's investment in the business of the Company, each
of the Stockholders listed on EXHIBIT A-2 shall execute and deliver to TRK at
the Closing, separate agreements dated as of the Closing Date not to compete
with the Surviving Corporation, in the form attached hereto as EXHIBIT E (the
"Noncompetition Agreement").
SECTION 4.3 STOCKHOLDER RELEASES.
At the Closing, each of the Major Stockholders shall deliver a release of
the Company in the form attached hereto as EXHIBIT F (the "Stockholder
Release").
SECTION 4.4 HSR ACT.
TRK, the Company and the Stockholders agree to furnish to each other such
necessary information and reasonable assistance as may be requested in
connection with any necessary filings or submissions required pursuant to the
HSR Act.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to TRK as follows, and TRK in
agreeing to consummate the transactions contemplated by this Agreement has
relied upon such representations and warranties, that:
SECTION 5.1 CORPORATE ORGANIZATION.
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State
22
of Delaware and has the requisite power and authority (corporate and other) to
own, lease and operate its properties and to carry on its business as now being
conducted.
(b)The Company is duly qualified or licensed to do business as a
foreign corporation and is in good standing in each of the jurisdictions listed
on SCHEDULE 5.1. The Company is not qualified or licensed to do business as a
foreign corporation in any other jurisdiction and there are no other
jurisdictions in which the failure to be qualified or licensed as a foreign
corporation would have a Material Adverse Effect on the Company.
(c) The copies of the certificate of incorporation and all
amendments thereto of the Company, as certified by the Secretary of State of
Delaware, and the by-laws, as amended to date, of the Company, as certified by
its secretary, which have heretofore been delivered to TRK, are true, complete
and correct copies of the certificate of incorporation and by-laws of the
Company, as amended and in effect on the date hereof, and will be true, complete
and correct as of the Closing Date.
(d) Except as otherwise disclosed in writing by counsel to the
Company, the minute books and records of the Company, copies of which have been
delivered to TRK prior to the date hereof, are the original minute books and
records of the Company, contain all proceedings of the stockholders, the Board
of Directors and any committees thereof with respect to the Company, and are
true, correct and complete in all material respects. There have been no
changes, alterations or additions to the minute books and records which have not
been furnished to counsel for TRK prior to the date hereof.
SECTION 5.2 VALID AND BINDING AGREEMENT.
The Company has the full corporate power to enter into this Agreement and
the Indemnification and Escrow Agreement. All necessary action on the part of
the Company has been taken to authorize the execution and delivery of this
Agreement and the Indemnification and Escrow Agreement, the performance of its
obligations hereunder and thereunder and (subject to the required approval by
the Stockholders) the consummation of the transactions contemplated hereby and
thereby. This Agreement has been, and as of the Closing Date, the
Indemnification and Escrow Agreement will be, duly and validly executed and
delivered by the Company, and, assuming such agreements constitute the valid and
binding agreements of the other parties thereto, will constitute
23
valid and binding agreements of the Company, enforceable in accordance with
their respective terms, subject to bankruptcy, insolvency, reorganization or
similar laws relating to creditors' rights generally and by principles of equity
regarding the availability of remedies.
SECTION 5.3 NO VIOLATION.
Neither the execution and delivery of this Agreement nor (subject to the
required approval by the Stockholders) the consummation of the transactions
contemplated hereby nor compliance by the Company with any of the provision
hereof will (a) violate or conflict with any provision of the certificate of
incorporation or by-laws of the Company, or (assuming compliance with the HSR
Act) any statute, code, ordinance, rule, regulation, judgment, order, writ,
decree or injunction applicable to the Company, or (b) except as otherwise
disclosed on SCHEDULE 5.4, violate, or conflict with, or result in a breach of
any provision of, or constitute a default (or any event which, with or without
due notice or lapse of time, or both, would constitute a default) under, or
result in the termination of, accelerate the performance required by, or result
in the creation of any lien, security interest, charge or other encumbrance
upon the capital stock or any of the properties or assets of the Company under
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation of which the Company is a party or by which the Company or any of its
assets are bound.
SECTION 5.4 CONSENTS AND APPROVALS.
Except as set forth on SCHEDULE 5.4 and except for any filings required
under the HSR Act, no permit, consent, approval or authorization of, or
declaration, filing or registration with, any governmental or regulatory
authority or third party is required to be made or obtained by the Company in
connection with the execution, delivery and performance of this Agreement or the
Indemnification and Escrow Agreement or the consummation of the transactions
contemplated hereby and thereby.
SECTION 5.5 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of
(i) 20,000 shares of Common Stock, of which 3,990 shares are issued and
outstanding; (ii) 2,000 shares of Class A
24
Preferred stock, par value $500 per share, of which 1,273 shares are issued and
outstanding; (iii) 3,000 shares of Class B Preferred stock, par value $1,000 per
share, of which 3,000 shares are issued and outstanding; and (iv) 5,000 shares
of Class C Preferred stock, par value $1,000 per share, of which 1,110 shares
are issued and outstanding. The issued and outstanding Stock of the Company is
duly authorized, validly issued, fully paid and nonassessable, and none of the
issued and outstanding shares of Stock of the Company were issued in violation
of the preemptive rights of any present or former stockholder of the Company.
(b) Except as set forth in Section 5.5(a) or SCHEDULE 5.5,
(i) there are no shares of capital stock or other equity securities (as the term
"equity security" is defined in the Securities Exchange Act of 1934, as amended)
of the Company outstanding, (ii) there are no outstanding subscriptions,
options, warrants or rights to purchase or acquire any equity securities of the
Company, (iii) no equity securities of the Company are reserved for issuance for
any purpose, and (iv) there are no contracts, commitments, agreements,
understandings, arrangements or restrictions to which the Company is a party or
by which the Company is bound, other than applicable securities laws
restrictions, relating to any shares of the capital stock or other equity
securities of the Company (including the Stock), whether or not outstanding.
(c) EXHIBIT A sets forth a true, correct and complete listing of
the record holders of the Stock and of each other instrument, certificate,
document or other right, whether or not represented by a certificate or other
document or instrument, convertible (with or without consideration) into the
Common Stock.
SECTION 5.6 SUBSIDIARIES AND AFFILIATES.
Except as set forth on SCHEDULE 5.6, the Company owns no capital stock or
other equity securities of any other corporation and has no other type of equity
interest in any other corporation, partnership, joint venture or other business
organization or entity. The interests of the Company in any Person as set forth
on SCHEDULE 5.6 are owned by the Company free and clear of all liens, options,
claims or encumbrances (including without limitation, rights of first refusal or
similar rights) with respect to the ownership thereof, except as
25
otherwise identified on SCHEDULE 5.6. Except as otherwise set forth on SCHEDULE
5.6, the Company is not subject to any obligation or requirement to provide
funds for, or to make any investment (in the form of a loan, capital
contribution or otherwise) in, any Person.
SECTION 5.7 FINANCIAL STATEMENTS.
The audited financial statements of the Company for each of the three (3)
years ended August 29, 1992, August 28, 1993 and September 3, 1994, attached as
SCHEDULE 5.7 hereto (the "Company Financial Statements") (a) present fairly the
financial position, results of operations, shareholders' equity and cash flows
of the Company in accordance with GAAP, as of the statement dates and for the
periods indicated, and (b) have been prepared in accordance with the Company's
customary procedures for the preparation of financial statements consistently
applied throughout and among the periods indicated. The unaudited interim
financial statements of the Company for the five (5) months ended January 31,
1995, attached as SCHEDULE 5.7A hereto (the "Company Interim Financial
Statements") (a) present fairly the financial position, results of operations,
and cash flows of the Company, as of the statement date and for the period
indicated, and (b) have been prepared in accordance with the Company's customary
procedures for the preparation of interim financial statements consistently
applied throughout and among the periods indicated and are consistent with the
Company Financial Statements subject to year-end audit and other normal or
recurring year-end adjustments (made in accordance with GAAP, in the ordinary
course of business and consistent with prior year-end accounting principles and
adjustments).
SECTION 5.8 ABSENCE OF UNDISCLOSED LIABILITIES.
Except as set forth on SCHEDULE 5.8, the Company has no liability which
must be accrued on a balance sheet or disclosed in the footnotes to a balance
sheet prepared in accordance with GAAP, except (a) such liabilities as are fully
reflected, reserved against or disclosed in the Company Financial Statements or
the Company Interim Financial Statements and (b) such liabilities as have been
incurred in the ordinary course of business, consistent with past practice,
since September 3, 1994.
26
SECTION 5.9 INTERIM OPERATIONS AND ABSENCE OF CERTAIN CHANGES.
Since September 3, 1994, except as set forth on SCHEDULE 5.9, the Company
has conducted its business in the ordinary course and consistent with past
practice, and the Company did not:
(a) incur any indebtedness or other liabilities (whether absolute,
accrued, contingent or otherwise) or, except as set forth on SCHEDULE 5.8,
guarantee or agree to purchase any such indebtedness, except in the usual and
ordinary course of its business, consistent with past practice, and except for
indebtedness relating to the Company's capital expenditure program;
(b) suffer any change in its financial condition, assets,
liabilities or business, or suffer any other event or condition of any character
which individually or in the aggregate had or has a Material Adverse Effect on
the Company or materially diminishes the value of the assets of the Company;
(c) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, contingent or otherwise) except in each case in
the ordinary course of business;
(d) cancel any debts or waive any claims or rights of substantial
value, except in each case in the ordinary course of business;
(e) pledge or permit the imposition of any lien on or sell, assign,
transfer or otherwise dispose of any of its tangible assets, except the sale of
inventory in the ordinary course of business;
(f) sell, assign, encumber, license, pledge, abandon or otherwise
transfer any patents, applications for patents, Marks, trade names, copyrights,
licenses or other intangible assets;
(g) make any change in any method of accounting or accounting
principle or practice;
(h) make any reduction in accruals or reserves, except to the
extent of related cash payments or other reductions consistent with past
practice;
27
(i) write up or down the value of the inventory or determined as
collectible any notes or accounts receivable that were previously considered to
be uncollectible, except for write-ups or write-downs and other determinations
in accordance with GAAP and in the ordinary course of business and consistent
with past practice;
(j) grant any general increase in the compensation payable or to
become payable to its officers or employees (including any such increase
pursuant to any bonus, pension, profit-sharing or other plan or commitment) or
any special increase in the compensation payable or to become payable to any
officer or employee, except for normal merit and cost of living increases in the
ordinary course of business and in accordance with past practice and increases
pursuant to collective bargaining agreements;
(k) declare, pay or set aside for payment any dividend or other
distribution on any shares of its capital stock, other than dividends due in
accordance with the terms and conditions of such capital stock;
(l) make or guaranty any loans to any customer, vendor or
distributor of the Company or its products, other than as set forth on SCHEDULE
5.8 and other than normal open account activities;
(m) make any loans which in the aggregate exceed $5,000 to any
employee or make any loans to any stockholder, officer, director or Affiliate;
(n) make capital expenditures or commitments for same in excess of
$100,000 in the aggregate;
(o) except for any shares of Common Stock issued pursuant to the
warrants and options listed on EXHIBIT A, issue any additional shares of Common
Stock, whether pursuant to the exercise of warrants, options or conversion
rights or otherwise, or any other equity securities of the Company;
(p) lose or learn of the prospective loss of any vendor listed on
SCHEDULE 5.26 or any distributor, representative or agent listed on SCHEDULE
5.27 where the result of such loss would have a Material Adverse Effect; or
(q) agree, whether in writing or otherwise, to take any action
described in this Section 5.9.
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SECTION 5.10 TAXES.
(a) The Company has duly and timely filed with each appropriate
federal, state, local and foreign governmental entity or other authority
(individually or collectively, "Taxing Authority") all Tax Returns required to
be filed. All such Tax Returns were true, correct and complete in all material
respects. The Company has in all material respects paid all Taxes which have
become due and payable (whether or not shown on any Tax Return). Adequate
reserves and accruals in accordance with GAAP have been established by the
Company to provide for the payment of all Taxes which are not yet due and
payable with respect to the Company for taxable periods or portions thereof
ending on or before the Closing Date. There are no liens for Taxes upon the
Company or its assets except liens for current Taxes not yet due. The Company
has delivered to TRK correct and complete copies of all federal and state income
Tax Returns for the five (5) most recently completed years, all examination
reports by any Taxing Authority, and any statements of deficiencies proposed or
assessed against or agreed to by the Company. No audit, examination,
investigation, proceeding, action or claim with respect to the Company's Taxes
is pending, proposed or threatened, and to the best of the Company's Knowledge,
there is no basis for the assessment or collection of additional Taxes against
the Company.
Except as set forth on SCHEDULE 5.10, there has never been an examination
or notice of potential examination of the Tax Returns of the Company by any
Taxing Authority. No extension is in effect with respect to the filing of any
Tax Return, the payment of any Taxes, or any limitation period regarding the
assessment or collection of any Taxes.
(b) All Taxes that are required to have been withheld or collected
by the Company have been duly withheld or collected and, to the extent required,
have been paid to the proper governmental authorities or properly deposited as
required by applicable laws.
(c) As used in this Agreement, "Tax" means any of the Taxes and
"Taxes" means, with respect to the Company, all income taxes (including any tax
on or based upon net income, or gross income, or income as specially defined, or
earnings, or profits, or selected items of income, earnings or profits) and all
gross receipts, sales, use, ad valorem, transfer, franchise, license,
withholding, payroll, employment, excise, severance, stamp,
29
occupation, premium, property or windfall profit taxes, alternative or add-on
minimum taxes, custom duties or other taxes, together with any interest,
penalties, additions to tax or additional amounts imposed by any Taxing
Authority whether disputed or not.
(d) As used in this Agreement, "Tax Return" is defined as any
return, report, information return or other document (including any related or
supporting information) filed or required to be filed with any Taxing Authority
or other authority in connection with the determination, assessment or
collection of any Tax paid or payable by the Company or the administration of
any laws, regulations or administrative requirements relating to any such Tax.
(e) SCHEDULE 5.10 lists each jurisdiction in which the Company
either files Tax Returns or pays Taxes with respect to which no returns are
required to be filed. No claim has ever been made by any Taxing Authority in a
jurisdiction where the Company does not file Tax Returns that it is or may be
subject to taxation by that jurisdiction.
(f) No property of the Company recorded as an asset on the
Company's Interim Financial Statements is property that the Company is or will
(under current laws) be required to treat as owned for tax purposes by another
person, or is "tax-exempt use property" as defined in Section 168(h) of the
Code.
(g) The Company has never agreed to or been required to make any
adjustment pursuant to Section 481(a) of the Code by reason of any change in
accounting method initiated by the Company; the IRS has not proposed any such
adjustment or change in accounting method; and the Company has no application
pending with any Taxing Authority requesting permission for any change in
accounting method.
(h) The Company is not now and during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code has not been a United States
real property holding corporation as defined in Section 897(c)(2) of the Code.
(i) The Company is not now nor has ever been a party to any
agreement, contract, arrangement or plan that would result, separately or in the
aggregate, in the payment of any "excess parachute payments" within the meaning
of Section 280G of the Code.
30
(j) The Company has not filed a consent pursuant to Section 341(f)
of the Code nor has the Company agreed to have Section 341(f)(2) of the Code
apply to any disposition of a section (f) asset (as such term is defined in
Section 341(f)(4) of the Code) owned by the Company.
(k) The Company has never been (i) a member of an affiliated group
of corporations (as defined in Section 1504(a) of the Code), or filed or been
included in a combined, consolidated, or unitary Tax Return, or (ii) a party to
any tax allocation, sharing or reimbursement agreement or arrangement.
(l) The Company is not an obligor on and none of its assets has
been financed directly or indirectly by any tax-exempt bonds.
(m) Except as set forth on SCHEDULE 5.10, the Company has not
executed or entered into a closing agreement pursuant to Section 7121 of the
Code or any predecessor provision thereof or any similar provision of state,
local or foreign law.
(n) The Company has no liability for the Taxes of any other person
under Treas. Reg. Section 1.1502-6 (or any similar provision of state, local,
or foreign law), as a transferee or successor, by contract, or otherwise.
(o) The Company does not have pending any request for a private
letter ruling.
(p) The Company has not been a personal holding company within the
meaning of Section 542 of the Code during the five-year period preceding the
date hereof.
(q) The Company has disclosed on its federal income tax Returns all
positions therein that could give rise to a substantial understatement of
federal income tax within the meaning of Code Section 6662.
SECTION 5.11 EMPLOYEE BENEFIT PLANS.
(a) SCHEDULE 5.11 is a true and complete list of all annuity,
bonus, cafeteria, stock option, stock purchase, profit sharing, savings,
pension, retirement, incentive, group insurance, disability, employee welfare,
prepaid legal, nonqualified deferred compensation including without limitation,
excess benefit plans, top-hat plans, deferred bonuses, rabbi trusts, secular
trusts, nonqualified annuity contracts, insurance
31
arrangements, nonqualified stock options, phantom stock plans, or golden
parachute payments, or other similar fringe benefit plans, and all other
employee benefit funds or programs (within the meaning of Section 3(3) of
ERISA), covering employees, former employees or directors of the Company (the
"Plans"). Except as set forth on SCHEDULE 5.11, and except for normal
compensation and agreements entered into in the ordinary course of business and
in accordance with past practice, the Company is not a party to any employee
agreement, understanding, plan, policy, procedure, or other enforceable
arrangement, whether written or oral, which provides compensation or fringe
benefits to its employees, and the Company is in compliance with all its
obligations under all such Plans, except for such noncompliance as would not
have a Material Adverse Effect.
(b) With respect to each employee benefit plan listed on SCHEDULE
5.11, and to the extent the following are required by applicable law, true and
complete copies of (i) all Plan documents (including all amendments and
modifications thereof), and related agreements including without limitation, the
trust agreement and amendments thereto, insurance contracts and investment
management agreements; (ii) the last three filed Form 5500 series and Schedules
A, B, C, P and/or SSA, as applicable, and Forms PBGC-1, if any; (iii) summary
plan descriptions; (iv) summary of material modifications, if any; (v) the most
recent auditor's report, and copies of any and all tax qualification
correspondence including without limitation, private letter rulings,
applications for determination and determination letters issued with respect to
the Plans; and (vi) the most recent annual and periodic accounting of related
Plan assets, have also been delivered to TRK.
(c) With respect to the Plans listed on SCHEDULE 5.11 which are
subject to ERISA:
(i) The Plans are in material compliance with the
applicable provisions of ERISA and each of the employee pension benefit plans,
within the meaning of Section 3(2) of ERISA (the "Pension Plans"), which are
intended to be qualified under Section 401(a) of the Code have received a
favorable determination letter from the IRS or a request for such determination
has been timely filed with the IRS (and to the Knowledge of the Company, nothing
has occurred to cause the IRS to revoke such determination and the IRS has not
indicated any disapproval of any request for such a determination);
32
(ii) Each Plan has been operated in accordance with its
terms and all required filings that are due prior to the date hereof, including
without limitation, the Forms 5500, for all Plans have been timely made;
(iii) No prohibited transactions, as defined by Section 406
of ERISA or Section 4975 of the Code, have occurred with respect to any of the
Plans;
(iv) The Company has not engaged in any transaction in
connection with which the Company could be subjected to a criminal or civil
penalty under ERISA;
(v) None of the Plans, nor any trust which serves as a
funding medium for any of such Plans, nor any issue relating thereto is
currently under examination by or pending before the IRS, the Department of
Labor, the PBGC or any court, other than applications for determinations pending
before the IRS;
(vi) None of the Pension Plans is a defined benefit plan
within the meaning of Section 414(j) of the Code;
(vii) None of the Plans is a "multiemployer plan" as that
term is defined in Section 3(37) of ERISA and Section 411(f) of the Code, nor a
plan maintained by more than one employer (hereinafter referred to as an
"multiple employer plan"), nor a single employer plan under a multiple
controlled group within the meaning of Section 4063 of ERISA, and neither the
Company nor any entity required to be aggregated with the Company under Section
414(b), (c), (m), or (o) of the Code has incurred any withdrawal liability with
respect to any single plan, multiemployer or multiple employer plan, which
liability could constitute a liability of the Surviving Corporation;
(viii) No benefit claims (except those submitted in the
ordinary course of administration of such Plan) are currently pending against
any Plan;
(ix) Except as set forth on SCHEDULE 5.11, no Plan provides
for retiree medical or retiree life insurance benefits for former employees of
the Company; and
(x) No Pension Plan has been terminated by the Company.
33
(d) There have been no failures to comply with the continuation
coverage provisions required by Sections 601-608 of ERISA and Section 4980B of
the Code under any Plan.
(e) There are no employee benefit plans which cover employees of
the Company which are required to comply with the provisions of any foreign law.
(f) All excess contributions, if any (together with any income
allocable thereto), have been distributed (or, if forfeitable, forfeited) before
the close of the first two and one half (21/2) months of the following plan
year; and there is no liability for excise tax under Section 4979 of the Code
with respect to such excess contributions, if any, for any Plan.
SECTION 5.12 COMPLIANCE WITH LAW.
Except as set forth on SCHEDULE 5.12, the Company has been, is and on the
Closing Date will continue to be in compliance with all applicable laws
(including duties imposed by common law), rules, regulations, orders,
ordinances, judgments and decrees of all governmental authorities (federal,
state, local and foreign) and all requirements imposed under building, zoning,
occupational safety and health, pension, environmental control, toxic waste,
fair employment, equal opportunity or similar laws, rules, regulations and
ordinances, in each case the noncompliance with which would be likely to have a
Material Adverse Effect on the Company; provided that, notwithstanding the
foregoing, the representations and warranties contained in this Section 5.12
shall not apply to any matter as to which a more specific representation or
warranty applies.
SECTION 5.13 LITIGATION; CLAIMS.
SCHEDULE 5.13 hereto contains a complete and accurate list of (a) all
claims, actions, suits, proceedings or investigations pending or (to the
Knowledge of the Company) threatened by or against the Company, and (b) all
judgments, decrees, arbitration awards, consent agreements or orders binding
upon the Company. Except as set forth on SCHEDULE 5.13, during the past five
(5) years, no product liability claims have been asserted against the Company
and the Company has not been a party to any litigation in any capacity. To the
Knowledge of the Company, there is no basis for any material action, proceeding
or investigation involving the Company, other than as set forth on SCHEDULE
5.13.
34
SECTION 5.14 CONTRACTS AND COMMITMENTS.
SCHEDULE 5.14 contains a complete and accurate list and brief description
of all contracts, agreements and commitments (other than the agreements or
arrangements set forth in SCHEDULES 5.11, 5.15, 5.17, 5.21A, 5.22A, 5.24, 5.26
and 5.27, and other than agreements or arrangements similar in nature thereto
but not set forth in such Schedules due to the limitations contained in the
corresponding Sections thereof), whether written or oral, of the Company that
involve commitments of the Company in excess of $100,000, have a term of six (6)
months or more, or that are not in the ordinary course of business.
The agreements set forth in SCHEDULES 5.11, 5.14, 5.15, 5.17, 5.21A, 5.22A,
5.24, 5.26 and 5.27 are hereinafter referred to collectively as the "Operating
Agreements." None of the Operating Agreements has been assigned or is the
subject of any security agreement, except as set forth on SCHEDULE 5.16. Except
as otherwise set forth on SCHEDULE 5.14, (a) each of the Operating Agreements is
a valid and binding obligation of the Company and (to the Knowledge of the
Company) the other party or parties thereto, enforceable in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization or similar laws relating to creditors' rights generally and by
principles of equity regarding the availability of remedies; (b) neither the
Company nor (to the Knowledge of the Company) any other party thereto, has
terminated, canceled, modified or waived any term or condition of any Operating
Agreement in a manner which would have a Material Adverse Effect; and
(c) neither the Company nor (to the Knowledge of the Company) any other party to
any Operating Agreement is in default or alleged to be in default under any
Operating Agreement in a manner which would have a Material Adverse Effect, and
there exists no event, condition or occurrence that, after notice or lapse of
time, or both, would constitute such a default by the Company or any party to
any such Operating Agreement. None of such Operating Agreements contains any
covenant or other restriction preventing or limiting the consummation of the
transactions contemplated hereby. The Company has no outstanding powers of
attorney except routine powers of attorney relating to the representation of the
Company before governmental agencies or given in connection with qualification
to conduct business or customs matters.
35
SECTION 5.15 INTELLECTUAL PROPERTY RIGHTS.
SCHEDULE 5.15 contains a correct and complete list of the following assets
and related matters: (a) all patents and applications for patents, all Marks
and registration of Marks and applications for registration of Marks, all
copyright registrations and applications for copyright registration, and all
trade names, owned or used (pursuant to license agreements or otherwise) by the
Company, and in the case of any such Intellectual Property that is so owned, the
jurisdictions in or by which such assets or any of them have been registered,
filed or issued and (b) to the extent not listed on SCHEDULE 5.14, all
contracts, agreements or understandings pursuant to which the Company has
authorized any Person to use any of the Intellectual Property which is so owned.
The Company owns, possesses or licenses and as of the Closing Date will own,
possess or license, all right, title and interest in and to the items of
Intellectual Property that are required to conduct its businesses as now
conducted without conflict with the rights of others. Except as set forth in
SCHEDULE 5.15: (i) the Company has the right to use the Intellectual Property
(including applications for any of the foregoing) owned or licensed by the
Company, and, to the Company's Knowledge, the sole and exclusive rights to use
the patents and Marks contained in the Intellectual Property (including
applications for any of the foregoing) owned or licensed by the Company, and to
the Knowledge of the Company, none of the past or present employees, officers,
directors or stockholders of the Company, or anyone else, has any rights with
respect thereto; (ii) the consummation of the transactions contemplated hereby
will not alter or impair any such rights; (iii) the Company has not received any
notice or claim of infringement or any claim challenging or questioning the
validity or effectiveness of any of the items of Intellectual Property, and,
except as set forth on SCHEDULE 5.15, there is no valid basis for any such
claim; and (iv) to the Knowledge of the Company, the Company is not liable, nor
has it made any contract or arrangement whereby it may become liable, to any
Person for any royalty or other compensation for use of any of the items of
Intellectual Property.
SECTION 5.16 LIENS.
Except as set forth on SCHEDULE 5.16, none of the properties or assets,
whether real, personal or mixed, or tangible or intangible, owned or leased by
the Company is subject
36
to any mortgage, lien, encumbrance or other security interest, except for
(a) liens for taxes and assessments or governmental charges or levies not at the
time due or in respect of which the validity thereof shall currently be
contested in good faith by appropriate proceedings; (b) liens in respect of
pledges or deposits under workmen's compensation laws or similar legislation,
carriers', warehousemen's, mechanics', laborers' and materialmen's and similar
liens, if the obligations secured by such liens are not then delinquent or are
being contested in good faith by appropriate proceedings; and (c) liens
incidental to the conduct of the business.
SECTION 5.17 INSURANCE.
All insurance policies and fidelity bonds relating to the assets of the
Company, including identification of the insurer and the termination dates
thereof, are set forth on SCHEDULE 5.17. Except as set forth on SCHEDULE 5.17,
the Company has not had coverage limited by any insurance carrier to which it
has applied for insurance or with which it has carried insurance, during the
last two (2) years. If the Company receives, prior to the Closing, any notice
of cancellation or other termination of any such policies presently in effect,
the Company will use its best efforts to replace such policies not later than a
date prior to the effective date of any such cancellation or other termination
with policies providing substantially the same coverage.
SECTION 5.18 DISCLOSURE.
No representation or warranty by the Company contained in this Agreement,
and no statement contained in the Schedules hereto or any certificate furnished
to TRK or the Surviving Corporation pursuant to the provisions hereof, contains
or will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary in order to make the statements herein or
therein not misleading.
SECTION 5.19 ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE.
All accounts receivable of the Company whether reflected on the Closing
Statements, the Company Financial Statements and/or the Company Interim
Financial Statements, or otherwise, represent sales actually made in the
ordinary course of business or valid claims as to which full performance has
been rendered
37
and the reserves against the accounts receivable for returns and bad debts are
commercially reasonable and have been determined in accordance with GAAP,
consistently applied. Except to the extent reserved against the accounts
receivable, no counterclaims or offsetting claims with respect to the accounts
receivable are pending or, to the Company's Knowledge, threatened. The accounts
payable of the Company reflected on the Company Financial Statements and the
Company Interim Financial Statements and to be reflected on the Closing
Statements arose, or will arise, from BONA FIDE transactions in the ordinary
course of business.
SECTION 5.20 INVENTORIES.
The inventories of the Company as of the date hereof consist of raw
materials, goods in process and finished goods salable or usable in the normal
course of the business of the Company, and such inventories are at levels
consistent with past practices of the business. All such inventories are
carried on the books of the Company pursuant to the normal inventory valuation
policy of the Company, which is in accordance with GAAP, as reflected in the
Company Financial Statements. SCHEDULE 5.20 sets forth the locations of all
inventories of the Company. Except as set forth on SCHEDULE 5.16, no items
included in inventories of the Company are or will be pledged as collateral or
held by the Company on consignment from others. The Company is not committed to
purchase inventories in amounts greater than are reasonably expected to be
usable in the ordinary course of business as presently conducted. At March 31,
1995, the total amount of outstanding purchase orders was in excess of $27.7
million.
SECTION 5.21 TANGIBLE PERSONAL PROPERTY.
SCHEDULE 5.21 lists all of the fixed assets of the Company and each item of
tangible personal property, other than inventory (whether finished goods or raw
materials) or supplies, owned by the Company including all such furniture,
furnishings, office equipment, machinery, tools and other equipment, in all
cases as of the date hereof. The Company has good title to all of the items
listed on SCHEDULE 5.21, free and clear of all liens, claims and encumbrances
except as set forth in Section 5.16 or on SCHEDULE 5.16. SCHEDULE 5.21A lists
all leases of tangible personal property leased by the Company and the location
thereof. None of such leases contains any covenant or restriction preventing
or limiting the consummation of the
38
transactions contemplated hereunder. All of the personal property listed in
SCHEDULE 5.21 and the assets leased pursuant to the leases listed on SCHEDULE
5.21A are in operating condition.
SECTION 5.22 REAL PROPERTY.
(a) SCHEDULE 5.22 contains a correct and complete list of all the
real property that is owned by the Company or that the Company has agreed (or
has an option) to purchase, sell or lease, or may be obligated to purchase, sell
or lease to a third party in connection with its business and any title
insurance or guarantee policies providing owners coverage with respect thereto.
Such real property is hereinafter referred to as the "Real Property," and the
improvements and fixtures thereon are hereinafter referred to as the
"Improvements."
(b) Except as set forth on SCHEDULE 5.22, the Company does not
lease any real property, and the Company has neither an agreement to lease nor
an obligation to lease any real property in connection with its business.
(c) Except as set forth on SCHEDULE 5.22, the Company is the sole
legal and equitable owner of the Real Property, the Improvements and all
interests therein and possesses good and marketable title to the Real Property
and the Improvements, free and clear of all conditions, exceptions,
reservations, liens, restrictions, rights-of-way, easements, encumbrances and
other matters affecting marketability.
(d) There are no adverse or other parties in possession of the Real
Property, the Improvements, or any portion or portions thereof, and on the
Closing Date the Real Property and the Improvements will be free and clear of
any and all leases, licensees, occupants or tenants. To the Knowledge of the
Company, there are no pending or threatened condemnation, eminent domain or
similar proceedings, or litigation or other proceedings affecting the Real
Property, the Improvements or any portion or portions thereof. To the Knowledge
of the Company, there are no pending or threatened requests, applications or
proceedings to alter or restrict any zoning or other use restrictions applicable
to the Real Property or the Improvements that would interfere with the conduct
of the business of the Company or the use of the assets consistent with past
practice, which interference would have a Material Adverse Effect. Except as
set forth on SCHEDULE 5.22, to the Company's Knowledge, all water, sewer, gas,
39
electric, telephone, drainage and other utility equipment, facilities and
services required by law or necessary for the operation of the Improvements are
installed and connected pursuant to valid permits and no notice has been
received by the Company regarding the termination or material impairment of any
such service. All necessary easements exist and are in full force and effect.
The Real Property has access, in accordance with past practice, to and from a
public right of way or road dedicated for public use and no notice has been
received by the Company relating to the termination or impairment of such access
(including applicable parking requirements).
SECTION 5.23 ENVIRONMENTAL MATTERS.
(a) As used in this Agreement "Hazardous Material" shall mean:
(i) any "hazardous substance" as now defined pursuant to CERCLA, 42 U.S.C.
Section 9601(14), or any substance listed or identified by any characteristic
in any regulation adopted pursuant to any statute referred to or incorporated
into such definition, all as in effect on the date hereof; (ii) any petroleum,
including crude oil and any fraction thereof; (iii) any asbestos,
polychlorinated biphenyl (PCB), or isomer of dioxin, or any material or thing
containing or composed of such substance or substances.
(b) Except as disclosed in the reports identified on SCHEDULE 5.23
(the "Reports"), there is no Hazardous Material at, under or on any properties
owned or operated by the Company where such could have a Material Adverse
Effect. With respect to the period prior to January 1, 1990, neither the
Company, nor, to the Company's Knowledge, any of its predecessors in interest,
manufactured, processed, distributed, used, treated, stored, disposed of,
transported or handled any such Hazardous Material, where such could have a
Material Adverse Effect. With respect to the period from January 1, 1990,
neither the Company, nor, to the Company's Knowledge, any of its predecessors in
interest, has manufactured, processed, distributed, used, treated, stored,
disposed of, transported or handled any such Hazardous Material, where such
could have a Material Adverse Effect, other than in compliance with applicable
law.
(c) Except as disclosed in the Reports, neither the Company nor, to
the Company's Knowledge, its predecessors in interest, has any obligation or
liability, known or unknown, matured or not matured, absolute or contingent,
assessed or
40
unassessed, imposed or based upon any provision under any foreign, federal,
state or local law, rule, or regulation or common law, or any code, order,
decree, judgment or injunction applicable to the Company or its predecessors in
interest or any notice, or request for information issued, promulgated, approved
or entered thereunder, or the common law, relating to pollution, damage to or
protection of the environment including without limitation, laws relating to
emissions, discharges, releases or threatened releases of Hazardous Material
into the environment (including without limitation, ambient air, surface water,
groundwater, land surface or surface), (hereinafter collectively referred to as
"Environmental Laws") where such obligation or liability could have a Material
Adverse Effect; provided that the representations and warranties contained in
this sentence shall not apply to the matters described in Section 5.23(b).
Except as disclosed in the Reports, there are no specific facts or circumstances
that would indicate (i) that the Company is not, or the Company will not be
prior to the Closing, in compliance in all material respects with the
Environmental Laws and with the provisions of the Federal Occupational Safety
and Health Act, or (ii) to the Knowledge of the Company, that operation of the
Company's business and plant locations gives rise to any liability to any
Person, contingent or otherwise, under the Environmental Laws.
(d) The Company possesses and is in compliance in all material
respects with all permits, licenses, certificates, franchises and other
authorizations relating to the Environmental Laws necessary to conduct its
business or required by environmental regulations, except where the failure to
have any such permit, license, certificate, franchise or other authorization
would not have a Material Adverse Effect.
(e) Except as disclosed in the Reports, no claims have been made
against the Company or its predecessors in interest during the past three (3)
years (except minor claims, all of which have been resolved without material
fines or penalties), and no presently outstanding citations or notices have been
issued against the Company, under the Environmental Laws where such could have a
Material Adverse Effect, including without limitation, any such claim, citation
or notice relating to or arising out of or attributable, in whole or in part,
to:
(i) the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of any
41
Hazardous Material by the Company or its predecessors in interest, or any of the
Company's employees, agents or representatives in connection with or in any way
arising from or relating to the Company or its predecessors in interest or any
of its properties;
(ii) the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of any Hazardous Material by
any other Person at, on or under any real property owned, leased, operated or
controlled by the Company where such activity could have a Material Adverse
Effect.
(f) The Company has not been subject to any civil, criminal or
administrative action, suit, claim, hearing, notice of violation, investigation,
inquiry or proceeding for failure to comply with, or received notice of any
violation or potential liability under the Environmental Laws where such could
have a Material Adverse Effect, nor is the Company aware of any information,
whether or not confirmed or reported, which could give rise to any such
potential liability.
(g) No real property, site or facility (as defined in CERCLA,
42 U.S.C. Section 9601(9)) owned by the Company is (i) listed or proposed for
listing on the National Priority List or (ii) to the Company's Knowledge, listed
on the Comprehensive Environmental Response, Compensation, Liability Information
System List ("CERCLIS") promulgated pursuant to CERCLA, or any comparable list
maintained by any foreign, state or local government authority.
(h) There are no underground storage tanks at any real property,
site or facility (as defined in CERCLA) owned by the Company and the Company
further warrants and represents that any prior use and operation of underground
storage tanks has been in material compliance with all Environmental Laws.
(i) The Company has delivered to TRK true, complete and correct
copies of results of any reports, studies, analyses, tests or monitoring in the
possession of or initiated by the Company pertaining to the existence of
Hazardous Material and any other environmental concerns relating to any of its
facilities, or sites or real property owned, leased, operated, used or
controlled by the Company or any of its predecessors in interest, or concerning
compliance with or liability under the Environmental Laws.
42
(j) Except as disclosed in the Reports, (i) there are no
polychlorinated biphenyls ("PCBs") in or at any premises owned, leased, operated
or controlled by the Company, and (ii) the Company further warrants and
represents that any prior use, handling, storage, transport or disposal of PCBs
has been in compliance with all Environmental Laws.
(k) The Company has not assumed by contract the liability of any
other Person pursuant to any of the Environmental Laws.
(l) To the Knowledge of the Company, except as disclosed in the
Reports, there are no unasserted potential claims against the Company or its
predecessors in interest related to the generation, transport, treatment,
recycling, storage or disposal of Hazardous Material, or arrangement therefor,
to or at any facility owned, leased, controlled or operated by the Company or
any of its predecessors in interest.
SECTION 5.24 EMPLOYEES.
SCHEDULE 5.24 sets forth a complete and accurate list of all employees of
the Company having total annual compensation in excess of $65,000, showing for
each: name, hire date, current job title or description, current salary level
(including any bonus or deferred compensation arrangements) and any bonus,
commission or other remuneration paid during fiscal 1994, and describing any
existing contractual arrangement with such employee.
SECTION 5.25 EMPLOYEE RELATIONS.
Except as set forth on SCHEDULE 5.25, the Company has not at any time
during the past five years had, nor is there now threatened, any strike, picket,
work stoppage, work slowdowns or other job action due to labor disagreements.
Except as set forth on SCHEDULE 5.25, and except for those matters which would
not have a Material Adverse Effect, (a) the Company is in compliance with all
applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, including the terms and provisions
of any collective bargaining agreement or other contract with a labor union
representing any employees of the Company and is not engaged in any unfair labor
practice; (b) there is no unfair labor practice charge or complaint filed
against the Company, or (to the Knowledge of the Company) threatened before the
National Labor
43
Relations Board or any foreign authority; (c) no question concerning
representation has been raised or is (to the Knowledge of the Company)
threatened respecting the employees of the Company; and (d) no grievance has
been made since November 1, 1993 nor is any arbitration proceeding arising out
of or under any collective bargaining agreement pending, and no claims therefor
exist.
SECTION 5.26 VENDORS.
SCHEDULE 5.26 sets forth correct and complete lists of the twenty-five (25)
largest (by dollar volume) vendors of the Company during the most recently
completed fiscal year. Except as set forth in SCHEDULE 5.26, there are no
outstanding disputes with any vendor listed thereon and no vendor listed thereon
has refused to continue to do business with the Company or has stated its
intention not to continue to do business with the Company.
SECTION 5.27 DISTRIBUTORS AND REPRESENTATIVES.
SCHEDULE 5.27 sets forth a correct and complete list of the twenty-five
(25) largest (by dollar volume) distributors, representatives and agents for the
sale of the products of the Company during the two most recently completed
fiscal years. Since September 3, 1994, there has been no termination of any
independent distributor, wholesaler, sales representative or agent relationship,
nor has any present independent distributor, wholesaler, sales representative or
agent indicated any present or future intention to terminate or materially
change the terms of its relationship with the Company.
SECTION 5.28 GOVERNMENTAL AUTHORIZATIONS.
The Company possesses all licenses, franchises, permits, certificates,
orders, approvals, exemptions, registrations or other authorizations
(collectively, "Permits") from governmental, regulatory or administrative
agencies or authorities required for the ownership of its properties and assets
and operation of its business in the manner presently conducted (including those
required pursuant to laws or regulations relating to the protection of the
environment), each of which will be in full force and effect on the Closing
Date, except where the failure to possess any such Permit would not have a
Material Adverse Effect. A list of all material Permits is set forth in
SCHEDULE 5.28. Except as specified in SCHEDULE 5.28, no registrations, filings,
44
applications, notices, transfers, consents, approvals, orders, qualifications,
waivers or other actions of any kind are required by virtue of the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby to enable the Company to continue the possession and operation of its
properties and assets and the business of the Company as presently conducted in
all material respects.
SECTION 5.29 BROKER'S OR FINDER'S FEES.
No agent, broker, investment banker, Person or firm retained by the Company
or an Affiliate of the Company is or will be entitled to any broker's or
finder's fee or any other commission or similar fee directly or indirectly from
the Company in connection with any of the transactions contemplated hereby.
SECTION 5.30 CERTAIN TRANSACTIONS.
Except as set forth on SCHEDULE 5.30, none of the directors or officers of
the Company is currently a party to any contractual relationship with the
Company (other than for services as employees, officers and directors),
including without limitation any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from, any
such Person, or to or from any corporation, partnership, trust or other entity
in which any such Person owns in excess of five percent (5%) of the outstanding
equity interest, which is not terminable without penalty at the will of the
Company.
SECTION 5.31 ABSENCE OF QUESTIONABLE PAYMENTS.
Neither the Company nor any present director, officer, agent, employee or
other Person acting on its behalf has, to the Company's Knowledge, (a) used any
corporate or other funds for unlawful contributions, payments, gifts or
entertainment, or made any unlawful expenditures relating to political activity
to government officials or others or established or maintained any unlawful or
unrecorded funds in violation of Section 30A of the Securities Exchange Act of
1934, as amended, or any other applicable foreign, federal or state law; or
(b) accepted or received any unlawful contributions, payments, expenditures or
gifts.
45
SECTION 5.32 DIRECTORS AND OFFICERS; BANK ACCOUNTS.
SCHEDULE 5.32 lists each of the directors and officers and all of the bank
accounts (and signatories thereto) of the Company.
SECTION 5.33 GOVERNMENT CONTRACTS.
For purposes of this Agreement, "Government Contracts" means with respect to
any Person, any contract (including purchase orders, blanket purchase orders and
agreements and delivery orders) between such Person and the United States
Government or any department, agency, or instrumentality thereof or any state or
local governmental agency or authority (the "Government"), and any subcontract
at any tier held by such Person under a prime government contract. Except as
set forth on SCHEDULE 5.33, with respect to the Government Contracts to which
the Company is a party: (i) such Government Contracts constitute valid and
binding obligations of the Company and (to the Knowledge of the Company) the
other party or parties thereto, enforceable in accordance with their terms,
except as enforcement may be limited by bankruptcy, insolvency, reorganization
or similar laws relating to creditors' rights generally; (ii) the Company is in
compliance in all material respects with the terms of all Government Contracts
to which it is a party and all laws, regulations, and contract provisions
applicable to the obtaining, formation, pricing, performance, billing,
administration, and other aspects of its Government Contracts, including
compliance in all material respects with the Truth in Negotiations Act (as
amended) and with all defective pricing, price reduction, or similar clauses
contained or incorporated in its Government Contracts, and the Company is in
compliance in all material respects with the False Claims Act (as amended), or
any similar applicable statutes or regulations concerning false claims, false
statements, defective pricing, misrepresentation, or procurement integrity
concerning any Government Contract, open market, commercial or other sale order
involving or pursuant to its Government Contracts; (iii) neither the Company nor
(to the Knowledge of the Company) any other party has terminated, canceled or
waived any material term or condition of any Government Contract; and (iv) the
cost accounting, estimating, property, and procurement systems relating to the
Company's Government Contracts are in compliance in all material respects with
applicable laws, regulations, and contract
46
provisions, including applicable cost principles and applicable cost accounting
standards.
(b) In addition to the representations and warranties set forth in
Section 5.19, with respect to any Government Contracts to which the Company is a
Party, (i) each billed account receivable in excess of $25,000 (determined
individually) represents a bona fide claim against the Government for sales,
services performed, or other charges arising on or prior to the date hereof, and
all the products delivered and services performed which gave rise to such
accounts were delivered or performed in accordance with applicable Government
Contracts; and (ii) all unbilled or unreserved amounts included in accounts
receivable in excess of $25,000 (determined individually) will, in the ordinary
course of business as currently conducted and consistent with past practices,
mature into and become billed accounts receivable in the same or greater amount.
(c) None of such Government Contracts has a currently incurred or
currently projected cost overrun in an amount exceeding $100,000.
(d) Except as set forth on SCHEDULE 5.16 and those liens made in
accordance with the Assignment of Claims Act (as amended), 31 U.S.C. Section
3727, and the Assignment of Contracts Act (as amended), 31 U.S.C. Section 15,
which are listed on SCHEDULE 5.33, the Company has not assigned or otherwise
conveyed or transferred, or agreed to assign, to any Person, any Government
Contracts to which it is a party, or any account receivable relating thereto,
whether as a security interest or otherwise.
(e) The Company has not received any notice or other communication
in any form from the Government regarding its actual or threatened
disqualification, suspension, or debarment from contracting with the Government
including without limitation any show cause notice or cure notice.
(f) Except as set forth on SCHEDULE 5.33 or 5.13 there is no:
(i) pending or (to the Knowledge of the Company) threatened investigation
relating to any Government Contract to which the Company is a party;
(ii) existing or (to the Knowledge of the Company) threatened claim, cost
disallowance, pricing adjustment, or adverse audit finding relating to any
Government Contract to which the Company is a party; or (iii) termination for
default or cure notice or show cause notice proposed or
47
currently in effect, relating to any Government Contract to which the Company is
a party.
(g) (i) Each bid or proposal involving more than $1,000,000
estimated gross revenues submitted by the Company on procurements in effect as
of the Closing Date ("Procurements") complies in all material respects with all
applicable laws and regulations; and (ii) under any teaming or other agreements
entered into by the Company with partners, vendors, suppliers or other third
parties ("Partners") in connection with each of the Procurements, if the Company
(A) withdraws its offers and/or (B) modifies or reprices its offers, as the
Company deems appropriate, in either event the Company will not incur any
material liability from either the Company's government customers issuing the
Procurements or the Company's Partners.
ARTICLE VI
CERTAIN ASSURANCES OF THE MAJOR STOCKHOLDERS
SECTION 6.1 CERTAIN ASSURANCES OF THE MAJOR STOCKHOLDERS.
The Major Stockholders agree to vote in favor of the Merger.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF TRK
TRK represents and warrants to the Company, and the Company in agreeing to
consummate the transactions contemplated by this Agreement has relied upon such
representations and warranties, that:
SECTION 7.1 CORPORATE ORGANIZATION.
TRK is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the requisite power and
authority (corporate and other) to own, lease and operate its properties and to
carry on its business as now being conducted.
48
SECTION 7.2 VALID AND BINDING AGREEMENTS.
TRK has the full corporate power to enter into this Agreement and the
Indemnification and Escrow Agreement. All necessary action on the part of TRK
has been taken to authorize the execution and delivery of this Agreement and the
Indemnification and Escrow Agreement, the performance of its obligations
hereunder and thereunder and the consummation of the transactions contemplated
hereby and thereby. This Agreement has been, and as of the Closing Date, the
Indemnification and Escrow Agreement will be, duly and validly executed and
delivered by TRK, and, assuming such agreement constitutes the valid and binding
agreements of the other parties thereto, will constitute valid and binding
agreements of TRK, enforceable in accordance with their respective terms,
subject to bankruptcy, insolvency, reorganization or similar laws relating to
creditors' rights generally and by principles of equity regarding the
availability of remedies.
SECTION 7.3 NO VIOLATION.
Neither the execution and delivery of this Agreement and the
Indemnification and Escrow Agreement nor the consummation of the transactions
contemplated hereby or thereby nor compliance by TRK with any of the provisions
hereof or thereof will (a) violate or conflict with any provision of the
certificate of incorporation or by-laws of TRK or (assuming compliance with the
HSR Act) any statute, code, ordinance, rule, regulation, judgment, order, writ,
decree or injunction applicable to TRK, or (b) violate or conflict with, or
result in a breach of any provision of, or constitute a default (or any event
which, with or without due notice or lapse of time, or both, would constitute a
default) under, or result in the termination of, or accelerate the performance
required by, or result in the creation of any lien, security interest, charge or
other encumbrance upon the stock or any of the properties or assets of TRK under
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument of TRK.
SECTION 7.4 CONSENTS AND APPROVALS.
Except for any filings required under the HSR Act, no permit, consent,
approval or authorization of, or declaration, filing or registration with, any
governmental or regulatory
49
authority or third party is required to be made or obtained by TRK in connection
with the execution, delivery and performance of this Agreement or the
Indemnification and Escrow Agreement or the consummation of the transactions
contemplated hereby or thereby.
SECTION 7.5 BROKER'S OR FINDER'S FEES.
Except as set forth on SCHEDULE 7.5, no agent, broker, investment banker,
Person or firm retained by TRK or any Affiliate of TRK is or will be entitled to
any broker's or finder's fee or any other commission or similar fee directly or
indirectly from TRK in connection with any of the transactions contemplated
hereby.
ARTICLE VIII
COVENANTS
SECTION 8.1 COMPLIANCE WITH LAW.
From the date hereof through the Closing Date, the Company will promptly
comply in all material respects with the HSR Act and will promptly notify TRK of
any legal, administrative or other proceedings, investigations, inquiries,
complaints, notices of violation or other asserted claims, judgments,
injunctions or restrictions, pending, outstanding or, to the Knowledge of the
Company, threatened or contemplated, which could materially affect the business
or any of the assets of the Company.
SECTION 8.2 OPERATION OF BUSINESS PRIOR TO CLOSING.
During the period from the date hereof through the Closing Date, the
Company agrees that (except as expressly contemplated or permitted by this
Agreement or to the extent that TRK shall otherwise consent in writing):
(a) The Company shall carry on its business in the usual, regular
and ordinary course in substantially the same manner as heretofore conducted and
shall use all reasonable efforts to preserve intact its present business
organization, keep available the services of its present officers and employees
and preserve its relationships with customers, suppliers and others having
business dealings with it.
50
(b) The Company shall not amend or propose to amend its certificate
of incorporation or by-laws, other than to (i) delete certain anti-dilution
rights of the holders of the Class B Preferred Stock as they relate to employee
stock issuances and (ii) delay the expiration of the conversion rights under the
Class C Preferred Stock.
(c) The Company shall not: (i) increase the compensation payable
or to become payable to its officers or employees, except for customary year-end
cash bonuses consistent with past practice as to the amount and category of
employees, increases in salaries and wages of employees consistent with past
practice, or grant any severance or termination pay to or enter into any
employment or severance agreement with any of its directors, officers or other
employees; (ii) except with respect to the gain-sharing program and except as
otherwise contemplated by this Agreement, establish, adopt, enter into or make
any new grants or awards under or amend any employee benefit plan or other
arrangement, plan or policy between the Company and one or more of its
directors, officers or employees; or (iii) except as otherwise contemplated by
this Agreement, establish, adopt, enter into or amend any Plan.
(d) The Company shall not settle or compromise any material claims
or litigation or, except in the ordinary and usual course of business, modify,
amend or terminate any of its material contracts or waive, release or assign any
material rights or claims.
(e) The Company shall not permit with its Knowledge any material
insurance policy to be canceled or terminated without notice to TRK, except in
the ordinary and usual course of business.
(f) The Company shall not fail to confer on a regular and frequent
basis with one or more representatives of TRK to report material operational
matters and the general status of ongoing operations.
(g) The Company shall not fail to use its reasonable efforts to
cause the conditions listed in Article IX to be satisfied on the Closing Date.
(h) The Company shall not issue, sell, pledge, lease, dispose of,
encumber, or authorize the issuance, sale, pledge, lease, disposition or
encumbrance of, (i) any shares of capital
51
stock of any class, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of capital stock, or any other
ownership interest, other than in connection with the exercise of existing
purchase or conversion rights or (ii) any assets that are material, alone or in
the aggregate, to the Company except for the sale of products in the ordinary
course of business and consistent with past practice.
(i) The Company shall not make any tax election or settle or
compromise any material federal, state, local or foreign income tax liability.
(j) The Company shall not (i) declare or pay any dividends on or
make other distributions in respect of any of its capital stock, except
declaration and payment of regularly scheduled dividends on its Class B
Preferred Stock and Class C Preferred Stock, (ii) split, combine or reclassify
any of its capital stock or issue or authorize or propose the issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock or (iii) repurchase or otherwise acquire any shares of its capital
stock.
SECTION 8.3 ACCESS.
At all times prior to the Closing Date, the Company shall provide TRK and
its representatives with full access to, and will make available for inspection
and review, all properties, personnel, books, records and accounts of the
Company in order that TRK may have full opportunity to make such investigation
as each shall desire to make of the affairs of the Company. It is understood
that TRK shall be permitted to maintain personnel on the premises of the Company
during customary business hours to observe all aspects of the operations of the
Company and to confer with their management, attorneys and other third parties
reasonably requested for verification of any information obtained pursuant to
such observations. The Company also consents to the examination by Price
Waterhouse of workpapers and other records of the Accountants pertaining to the
Company and will cooperate with TRK to obtain such access and related
information from the Accountants.
SECTION 8.4 STOCKHOLDERS' MEETING.
In order to consummate the Merger, the Company, acting through its Board of
Directors, shall in accordance with its Certificate of Incorporation and by-laws
and applicable law duly
52
call, give notice of and hold a meeting of its Stockholders or execute a written
consent in lieu thereof as soon as practicable following the date hereof.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF TRK
All obligations of TRK that are to be discharged under this Agreement at
the Closing are subject to the Company's fulfillment, at the Closing or
effective as of the Closing Date, of each of the following conditions (unless
expressly waived in writing by TRK at any time at or prior to the Closing) and
the Company shall use its reasonable efforts to cause each of such conditions
to be satisfied:
SECTION 9.1 REPRESENTATIONS AND WARRANTIES.
On the Closing Date, the representations and warranties of the Company set
forth in Article V of this Agreement shall be true and correct in all material
respects as though such representations and warranties had been made by the
Company on and as of the Closing Date and TRK shall have received at the
Closing a certificate, dated the Closing Date, signed by the President or a Vice
President of the Company to such effect.
SECTION 9.2 COVENANTS, AGREEMENTS AND CONDITIONS.
The Company shall have performed and complied in all material respects
with all covenants, agreements and conditions contained in this Agreement
required to be performed by the Company on or prior to the Closing Date, and
TRK shall have received at the Closing a certificate, dated the Closing Date,
signed by the President or a Vice President of the Company to such effect.
SECTION 9.3 PROCEEDINGS.
No action or proceeding shall be pending or threatened to restrain or
prevent the consummation of the transactions contemplated hereby.
53
SECTION 9.4 CORPORATE PROCEEDINGS.
All corporate and other proceedings to be taken and all consents to be
obtained in connection with the transactions contemplated by this Agreement by
the Company and all documents incident thereto shall be reasonably satisfactory
in form and substance to TRK and its counsel, Xxxxxxxxx, Xxxxxxx & Xxxxx,
L.L.P., each of whom shall have received all such originals or certified or
other copies of such documents as either may reasonably request.
SECTION 9.5 OPINION OF COUNSEL.
TRK shall have received a written opinion dated the Closing Date from
Hill & Xxxxxx, counsel to the Company, in the form attached as EXHIBIT H hereto.
SECTION 9.6 GOVERNMENTAL APPROVALS.
Except for the filing and approval of the Certificate of Merger, there
shall have been received all necessary governmental consents or authorizations
required in connection with the transactions contemplated hereby.
SECTION 9.7 NO MATERIAL ADVERSE CHANGE.
During the period from the date hereof through the Closing Date, there
shall not have been any material adverse change in the condition (financial or
otherwise) or earnings of the Company.
SECTION 9.8 INSURANCE.
The Company shall have maintained in full force and effect the insurance
coverage described on SCHEDULE 5.17 hereto or policies providing substantially
equivalent coverage.
SECTION 9.10 DELIVERIES.
The Company shall have delivered to TRK the items referred to in Section
3.5. TRK shall have received a certification from the Company, pursuant to and
complying with Treasury Regulation Sections
54
1.897-2(h) and 1.1445-2(c)(3) that none of the interests in the Company is a
real property interest as defined in Section 897 of the Code.
SECTION 9.11 EXERCISE OF RIGHTS.
All outstanding warrants and options pursuant to which shares of Common
Stock are or may be issuable by the Company shall have been duly and fully
exercised by the holders thereof and all amounts payable to the Company pursuant
to such exercise shall have been paid and all other conditions precedent to the
issuance of shares of Common Stock pursuant thereto shall have been satisfied.
One million dollars in aggregate principal amount (but not more than such
aggregate amount) outstanding under the Company's 15% convertible subordinated
notes, due August 9, 1995, shall have been converted into shares of Common Stock
pursuant to the conversion rights of such notes and all conditions precedent to
the issuance of shares of Common Stock pursuant to such conversion rights shall
have been satisfied.
SECTION 9.12 HSR ACT REQUIREMENTS.
In the reasonable opinion of TRK, all necessary requirements of the HSR Act
and the regulations promulgated thereunder shall have been complied with, and
any "waiting period" applicable to the transactions contemplated hereby shall
have expired by the Closing Date or shall have been terminated by the
appropriate agency.
SECTION 9.13 DISSENTING SHARES.
Stockholders owning more than 750 shares of Common Stock, on a
fully-diluted basis, shall have not demanded appraisal of such Common Stock
pursuant to the GCL.
SECTION 9.14 FINANCING.
In addition to the capital and subordinated debt of the corporate parent of
TRK and its Affiliates in the approximate amount of $8,000,000, TRK shall have
received financing adequate to consummate the transactions contemplated hereby
on terms and conditions reasonably satisfactory to TRK.
55
SECTION 9.15 PAYMENT OF CERTAIN NOTES.
TRK shall have received each of the original Promissory Note of X. Xxxxx
Stiff, dated September 1, 1991, made payable to the Company in the original
principal amount of $50,000 and the original Promissory Note of Xxxxx X.
Xxxxxxxxxxx, dated November 1, 1994, made payable to the Company in the original
principal amount of $27,208.02 marked "cancelled" or "paid-in-full."
ARTICLE X
CONDITIONS PRECEDENT TO OBLIGATIONS OF
THE COMPANY AND THE MAJOR STOCKHOLDERS
All obligations of the Company that are to be discharged under this
Agreement at the Closing are subject to TRK's fulfillment at the Closing or
effective as of the Closing Date of each of the following conditions (unless
expressly waived in writing by the Company, the Stockholders' Representative and
SWIB at any time at or prior to the Closing) and TRK shall use its reasonable
efforts to cause each of such conditions to be satisfied:
SECTION 10.1 REPRESENTATIONS AND WARRANTIES.
On the Closing Date, the representations and warranties of TRK set forth in
Article VII of this Agreement shall be true and correct in all material respects
as though such representations and warranties had been made on and as of the
Closing Date, and the Company shall have received at the Closing a certificate,
dated the Closing Date, signed by the President or a Vice President of TRK to
such effect.
SECTION 10.2 COVENANTS, AGREEMENTS AND CONDITIONS.
TRK shall have performed and complied in all material respects with all
covenants, agreements and conditions contained in this Agreement required to be
performed by it on or prior to the Closing Date, and the Company shall have
received at the Closing a certificate, dated the Closing Date, signed by the
President or a Vice President of TRK to such effect.
56
SECTION 10.3 PROCEEDINGS.
No action or proceeding shall be pending or threatened to restrain or
prevent the consummation of the transactions contemplated hereby.
SECTION 10.4 CORPORATE PROCEEDINGS.
All corporate and other proceedings to be taken and all consents to be
obtained in connection with the transactions contemplated by this Agreement and
all documents incident thereto shall be reasonably satisfactory in form and
substance to the Company and its counsel, Hill & Xxxxxx, each of whom shall have
received all such originals or certified or other copies of such documents as
either may reasonably request.
SECTION 10.5 OPINION OF COUNSEL.
The Company shall have received a written opinion dated the Closing Date
from Xxxxxxxxx, Xxxxxxx & Xxxxx, L.L.P., counsel to TRK, in the form attached as
EXHIBIT I hereto.
SECTION 10.6 GOVERNMENTAL APPROVALS.
Except for the filing and approval of the Certificate of Merger, there
shall have been received all necessary governmental consents or authorizations
required in connection with the transactions contemplated hereby.
SECTION 10.7 DELIVERIES.
TRK shall have delivered to the Stockholders and the Escrow Agent the items
referred to in Section 3.6.
SECTION 10.8 HSR ACT REQUIREMENTS.
In the reasonable opinion of the Company, all necessary requirements of the
HSR Act and the regulations promulgated thereunder shall have been complied
with, and any "waiting period" applicable to the transactions contemplated
hereby shall have expired by the Closing Date or shall have been terminated by
the appropriate agency.
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SECTION 10.9 MERGER CONSIDERATION ADJUSTMENT.
The Merger Consideration Adjustment shall not in the reasonable opinion of
the Company be expected to exceed $1,000,000.
SECTION 10.10 SWIB DEBT.
All SWIB Debt outstanding on the Closing Date shall be paid in full.
SECTION 10.11 FINANCING.
The financing obtained by TRK shall provide express permission for the
payment of any and all amounts due from the Company to the Stockholders pursuant
to this Agreement without subordination.
ARTICLE XI
OTHER MATTERS
SECTION 11.1 CONFIDENTIALITY.
Notwithstanding the termination of this Agreement, each party hereto and
his, her or its respective accountants, attorneys, employees and other agents,
will, unless otherwise required by law, keep confidential all information, oral
and written, obtained from any other party hereto or its Affiliates and refrain
from using in any manner all information set forth above not otherwise publicly
available.
SECTION 11.2 FURTHER ASSURANCES.
Each party hereto shall cooperate with the others, and execute and deliver,
or cause to be executed and delivered, all such other instruments, including
instruments of conveyance, assignment and transfer, and take all such other
actions as may be reasonably requested by the other parties hereto from time to
time, consistent with the terms of this Agreement, to effectuate the purposes
and provisions of this Agreement.
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ARTICLE XII
TERMINATION
SECTION 12.1 METHODS OF TERMINATION.
This Agreement may be terminated at any time prior to the Closing,
notwithstanding Stockholder approval:
(a) by the mutual consent of TRK and the Company;
(b) by TRK at any time after the date which is sixty (60) days from
the date of this Agreement, or any such longer period as may be required in the
event of an extension of the waiting period under the HSR Act, if any of the
conditions provided for in Article IX of this Agreement shall not have been met
prior to such date;
(c) by the Company at any time after the date which is sixty (60)
days from the date of this Agreement, or any such longer period as may be
required in the event of an extension of the waiting period under the HSR Act,
if any of the conditions provided for in Article X of this Agreement shall not
have been met prior to such date;
(d) at any time prior to the Effective Time by either the Company
or TRK if the Merger shall not have been consummated by September 1, 1995; or
(e) by TRK or the Company, if any required approval of the
Stockholders shall not have been obtained by reason of failure to obtain the
required vote at a duly held meeting of Stockholders or at any adjournment
thereof.
SECTION 12.2 PROCEDURE UPON TERMINATION.
In the event of termination by TRK, the Company, or both, pursuant to this
Article XII, written notice thereof shall promptly be given to the other party
or parties and the obligations of TRK and the Company under this Agreement
shall, except as set forth below, terminate without further action. Upon any
such termination:
(a) each party will redeliver all documents, workpapers and other
materials of the other party or parties relating to the transactions
contemplated hereby, whether
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obtained before or after the execution hereof, to the party or parties
furnishing the same;
(b) all information received by any of the parties shall be kept
confidential in accordance with Section 11.1; and
(c) no party shall have any liability or further obligation to any
other party, except for such legal and equitable rights and remedies as any
party may have under this Agreement or otherwise, by reason of any breach or
violation of this Agreement by the other party.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
All representations and warranties of TRK and the Company contained in
Articles V and VII herein and in any certificate executed and delivered by
either TRK or the Company in connection with this Agreement shall survive the
Closing Date and shall terminate and expire eighteen (18) months thereafter;
provided, however, that the representations and warranties contained in Sections
5.10 and 5.23 shall survive the Closing Date and terminate and expire two (2)
years thereafter. All agreements of the parties contemplating performance after
the Closing Date shall survive the Closing Date for a period equal to ninety
(90) days after the expiration of the applicable statute of limitations for any
claim relating thereto.
SECTION 13.2 SERVICE OF PROCESS.
Service of process on the Company, the Stockholders or TRK for any claim,
legal action or proceeding under this Agreement may be made in the manner set
forth in Section 13.3.
SECTION 13.3 NOTICES.
All notices, requests, consents and other communications hereunder shall be
deemed given if delivered personally (including by courier), telecopied (which
is confirmed) or mailed by registered or certified mail (return receipt
requested) to the
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parties at the following addresses or to other such addresses as may be
furnished in writing by one party to the others:
(a) if to the Company (prior to Closing):
000 Xxxx Xxxxxxx Xxxxxx
Xxxx Xxxxxxxxxx, XX 00000
Attention: X. Xxxxx Stiff, President
with a copy to:
Hill & Xxxxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxxxx, Esquire
(b) if to the Stockholders' Representative
(after the Closing):
Xxxxxxxx & Xxxxx
0000 00xx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Xx., Esq.
with a copy to:
Hill & Xxxxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxxxx, Esquire
and to:
State of Wisconsin Investment Board
000 X. Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
and to:
Xxxxx Xxxxxxxxxxx Xxxxx S.C.
Suite 2100
000 X. Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxxxx, Esq.
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(c) if to TRK or the Surviving Corporation:
c/o Harbour Group Industries, Inc.
0000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xx. Xxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
with a copy to:
Xxxxxxxxx, Xxxxxxx & Xxxxx, L.L.P.
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxx X. Xxxxx, Esquire
SECTION 13.4 GOVERNING LAW.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of Wisconsin, without regard to such jurisdiction's conflicts
of laws principles. Any legal action or proceeding with respect to this
Agreement may be brought in the state or federal courts located in the State of
Wisconsin having subject matter jurisdiction, and, by execution and delivery of
this Agreement, each of parties hereto hereby irrevocably accepts for itself or
himself and in respect of any of its or his property, generally and
unconditionally, the jurisdiction of the aforesaid courts. Each of the parties
hereto hereby irrevocably waives to the fullest extent it or he may effectively
do so, any objection it or he may have to venue and the defense of an
inconvenient forum to the maintenance of such actions or proceedings.
SECTION 13.5 MODIFICATION; WAIVER.
This Agreement shall not be altered or otherwise amended except pursuant to
an instrument in writing signed by TRK, the Company and the Stockholders'
Representative. Any party may waive any misrepresentation by any other party,
or any breach of warranty by, or failure to perform any covenant, obligation or
agreement of, any other party, PROVIDED that mere inaction or failure to
exercise any right, remedy or option under this Agreement, or delaying in
exercising the same, will not operate as nor shall be construed as a waiver, and
no waiver will be effective unless set forth in writing and only to the extent
specifically stated therein.
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SECTION 13.6 ENTIRE AGREEMENT.
This Agreement, the schedules and exhibits hereto, and any other agreements
or certificates delivered pursuant hereto constitute the entire agreement of the
parties hereto with respect to the matters contemplated hereby and supersede all
previous written or oral negotiations, commitments, representations and
agreements.
SECTION 13.7 ASSIGNMENT; SUCCESSORS AND ASSIGNS.
Prior to the Closing, this Agreement may not be assigned by the Company or
the Major Stockholders without the prior written consent of TRK. After the
Closing, this Agreement may not be assigned by the Major Stockholders without
the prior written consent of the Surviving Corporation. Prior to the Closing,
this Agreement may not be assigned by TRK without the prior written consent of
the Company. After the Closing, the Surviving Corporation may assign this
Agreement. All covenants, representations, warranties and agreements of the
parties contained herein shall be binding upon and inure to the benefit of their
respective successors and permitted assigns.
SECTION 13.8 PUBLIC ANNOUNCEMENTS.
Prior to the Closing, no public announcement of the transactions
contemplated hereby or of the terms hereof shall be made by the parties to this
Agreement without the written consent, such consent not to be unreasonably
withheld or delayed, of TRK and the Company, except to the extent required by
law.
SECTION 13.9 SEVERABILITY.
The provisions of this Agreement are severable, and in the event that any
one or more provisions are deemed illegal or unenforceable, the remaining
provisions shall remain in full force and effect.
SECTION 13.10 NO THIRD PARTY BENEFICIARY.
This Agreement is intended and agreed to be solely for the benefit of the
parties hereto and their stockholders, and no other party shall accrue any
benefit, claim or right of any kind whatsoever pursuant to, under, by or through
this Agreement.
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SECTION 13.11 EXPENSES.
Except as otherwise expressly provided herein, each party to this Agreement
will pay his, her or its own expenses in connection with the negotiation of this
Agreement, the performance of its obligations hereunder, and the consummation of
the transactions contemplated herein; provided that all sales and other transfer
taxes and the like arising from the Merger shall be paid one-half by the Company
(through reduction in the aggregate Merger Consideration) and one-half by TRK.
No expense of the Stockholders shall be charged to the Company.
SECTION 13.12 EXECUTION IN COUNTERPART.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original but all of which shall constitute one and the same
instrument.
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IN WITNESS WHEREOF, the parties have executed this Agreement and Plan of
Merger as of the date first written above.
TRK ACQUISITION CORPORATION
By:/S/ XXXXX X. XXXXXX
----------------------------------
Name:
Title:
TRAK INTERNATIONAL, INC.
By:/S/ X. XXXXX STIFF
----------------------------------
Name: X. Xxxxx Stiff
Title: President
MAJOR STOCKHOLDERS:
STATE OF WISCONSIN
INVESTMENT BOARD
By:/S/ XXXXXX XXXXX
----------------------------------
Name: Xxxxxx Xxxxx
Title: Inv. Dir.
/S/ XXXX X. XXXXXX
-------------------------------------
Xxxx X. Xxxxxx
/S/ X. XXXXX STIFF
-------------------------------------
X. Xxxxx Stiff
The undersigned certifies that he is the duly elected Assistant Secretary
of the Company and that the foregoing Agreement and Plan of Merger was duly
adopted by the holders of the issued and outstanding capital stock of the
Company entitled to vote thereon on July 20, 1995.
/S/ XXXX X. XXXXXX
-------------------------------------
Name: Xxxx X. Xxxxxx
Title: Asst. Sec.
The undersigned certifies that he is the duly elected Secretary of TRK and
that the foregoing Agreement and Plan of Merger was duly adopted by written
consent of the sole stockholder of TRK on July 28, 1995.
/S/ XXXXXXX X. XXXXXXX
-------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Assistant Secretary
