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EXHIBIT 2.02
MERGER AGREEMENT
THIS MERGER AGREEMENT ("Agreement") is made as of October 31,
1997, by and among OFFICE CENTRE CORPORATION, a Delaware corporation ("Buyer"),
OFFICE CENTRE GRAND RAPIDS, INC., a Michigan corporation and a wholly-owned
subsidiary of Buyer ("Acquisition"), "SOS" OFFICE SUPPLY COMPANY, a Michigan
corporation (the "Company"), XXXXX X. XXXXXXX, an individual resident in
Michigan ("X. Xxxxxxx") and XXXXX X. XXXXXXX, an individual resident in Michigan
("X. Xxxxxxx") (X. Xxxxxxx and X. Xxxxxxx each a "Seller" and, collectively the
"Sellers or Shareholders").
RECITALS
WHEREAS, Sellers own 100% of the issued and outstanding
shares of capital stock of the Company;
WHEREAS, Buyer, Acquisition, the Company and the Sellers wish
to set forth the terms and conditions upon which a merger of Company with and
into Acquisition will occur and provide for the representations, warranties,
agreements, and conditions applicable to the transactions contemplated by this
Agreement; and
WHEREAS, the Board of Directors of each of Buyer, Acquisition
and the Company deems the merger advisable and in the best interests of each of
Buyer, Acquisition and the Company and of their respective shareholders. The
Board of Directors of each of Buyer, Acquisition and the Company has adopted
resolutions approving this Agreement and the transactions contemplated hereby,
and each of the Boards of Directors of Acquisition and the Company have directed
that this Agreement be submitted for consideration by the shareholders of
Acquisition and the Company.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
0.0.1 DEFINITIONS
For purposes of this Agreement, the following
terms have the meanings specified or referred to in this Section
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"APPLICABLE CONTRACT"--any Contract (a) under
which Company has or may acquire any rights, (b) under which the
Company has or may become subject to any obligation or liability,
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or (c) by which the Company or any of the assets owned, leased or
used by it is or may become bound.
"BALANCE SHEET"--as defined in Section 3.4.
"BEST EFFORTS"--the efforts that a prudent Person desirous of
achieving a result would use in similar circumstances to ensure that such result
is achieved as expeditiously as possible.
"BREACH"--a "Breach" of a representation, warranty, covenant,
obligation, or other provision of this Agreement or any instrument delivered
pursuant to this Agreement will be deemed to have occurred if there is or has
been (a) any inaccuracy in or breach of, or any failure to perform or comply
with, such representation, warranty, covenant, obligation, or other provision,
or (b) any claim (by any Person) or other occurrence or circumstance that is or
was inconsistent with such representation, warranty, covenant, obligation, or
other provision, and the term "Breach" means any such inaccuracy, breach,
failure, claim, occurrence, or circumstance.
"BUYER"--as defined in the first paragraph of this Agreement.
"CLOSING"--as defined in Section 2.6.
"CLOSING DATE"--the date and time as of which the Closing
actually takes place.
"COMPANY"--as defined in the Recitals of this Agreement.
"CONSENT"--any approval, consent, ratification, waiver, or
other authorization (including any Governmental Authorization).
"CONTEMPLATED TRANSACTIONS"--all of the transactions
contemplated by this Agreement, including:
(a) the merger of Company with and into Acquisition;
(b) the execution, delivery, and performance of the Employment
Agreements and the Sellers' Releases;
(c) the performance by Buyer, Company and Sellers of their
respective covenants and obligations under this Agreement; and
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"CONTRACT"--any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"DAMAGES"--as defined in Section 9.2.
"DISCLOSURE LETTER"--the disclosure letter
delivered by Sellers and Company to Buyer concurrently with the execution and
delivery of this Agreement.
"EBITDA"--shall mean the earnings of the Surviving
Corporation, or an indicated period, for such period determined in accordance
with generally accepted accounting principles applied on a consistent basis
before taking into account interest, income taxes (including the Michigan Single
Business Tax), depreciation and amortization based upon the Company's annualized
adjusted revenues and expenses.
"EMPLOYMENT AGREEMENT"--as defined in Section 6.2.
"ENCUMBRANCE"--any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right of
first refusal, or restriction of any kind, including any restriction on use,
voting, transfer, receipt of income, or exercise of any other attribute of
ownership.
"ENVIRONMENT"--soil, land surface or subsurface strata,
surface waters (including navigable waters, ocean waters, streams, ponds,
drainage basins, and wetlands), groundwaters, drinking water supply, stream
sediments, ambient air (including indoor air), plant and animal life, and any
other environmental medium or natural resource.
"ENVIRONMENTAL, HEALTH, AND SAFETY LIABILITIES"-- any cost,
damages, expense, liability, obligation, or other responsibility arising from or
under Environmental Law or Occupational Safety and Health Law and consisting of
or relating to:
(a) any environmental, health, or safety matters or conditions
(including on-site or off-site contamination, occupational safety and health,
and regulation of chemical substances or products);
(b) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and response,
investigative, remedial, or inspection costs and expenses arising under
Environmental Law or Occupational Safety and Health Law;
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(c) financial responsibility under Environmental Law or
Occupational Safety and Health Law for cleanup costs or corrective action,
including any investigation, cleanup, removal, containment, or other remediation
or response actions ("Cleanup") required by applicable Environmental Law or
Occupational Safety and Health Law (whether or not such Cleanup has been
required or requested by any Governmental Body or any other Person) and for any
natural resource damages; or
(d) any other compliance, corrective, investigative, or
remedial measures required under Environmental Law or Occupational Safety and
Health Law.
The terms "removal," "remedial," and "response action,"
include the types of activities covered by the United States Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C. sec. 9601 et
seq., as amended ("CERCLA").
"ENVIRONMENTAL LAW"--any Legal Requirement that requires or
relates to:
(a) advising appropriate authorities, employees, and the
public of intended or actual releases of pollutants or hazardous substances or
materials, violations of discharge limits, or other prohibitions and of the
commencements of activities, such as resource extraction or construction, that
could have significant impact on the Environment;
(b) preventing or reducing to acceptable levels the release of
pollutants or hazardous substances or materials into the Environment;
(c) reducing the quantities, preventing the release, or
minimizing the hazardous characteristics of wastes that are generated;
(d) assuring that products are designed, formulated, packaged,
and used so that they do not present unreasonable risks to human health or the
Environment when used or disposed of;
(e) protecting resources, species, or ecological amenities;
(f) reducing to acceptable levels the risks inherent in the
transportation of hazardous substances, pollutants, oil, or other potentially
harmful substances;
(g) cleaning up pollutants that have been released, preventing
the threat of release, or paying the costs of such clean up or prevention;
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(h) making responsible parties pay private parties, or groups
of them, for damages done to their health or the Environment, or permitting
self-appointed representatives of the public interest to recover for injuries
done to public assets; or
(i) pollution, contamination, protection of the Environment,
human health or safety.
"ERISA"--the Employee Retirement Income Security Act of 1974
or any successor law, and regulations and rules issued pursuant to that Act or
any successor law.
"FACILITIES"--any real property, leaseholds, or other
interests currently or formerly owned or operated by Company and any buildings,
plants, structures, or equipment (including motor vehicles, tank cars, and
rolling stock) currently or formerly owned or operated by Company.
"GAAP"--generally accepted accounting principles, applied on a
basis consistent with the basis on which the Balance Sheet and the other
financial statements referred to in Section 3.4(b) were prepared.
"GOVERNMENTAL AUTHORIZATION"--any approval, consent, license,
permit, waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"GOVERNMENTAL BODY"--any:
(a) nation, state, county, city, town, village, district, or
other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other
government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official, or entity and
any court or other tribunal);
(d) multi-national governmental organization or body; or
(e) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory, or taxing
authority or power of any nature.
"HAZARDOUS ACTIVITY"--the distribution, generation, handling,
importing, management, manufacturing,
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processing, production, refinement, Release, storage, transfer, transportation,
treatment, or use (including any withdrawal or other use of groundwater) of
Hazardous Materials in, on, under, about, or from the Facilities or any part
thereof into the Environment, and any other act, business, operation, or thing
that increases the danger, or risk of danger, or poses an unreasonable risk of
harm to persons or property on or off the Facilities, or that may affect the
value of the Facilities or the Company.
"HAZARDOUS MATERIALS"--any waste or other substance that is
listed, defined, designated, classified or regulated as, or otherwise determined
to be, hazardous, radioactive, or toxic or a pollutant or a contaminant under or
pursuant to any Environmental Law, including any admixture or solution thereof,
and specifically including petroleum and all derivatives thereof or synthetic
substitutes therefor and asbestos or asbestos-containing materials.
"HSR ACT"--the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976 or any successor law, and regulations and rules issued pursuant to that Act
or any successor law.
"INTELLECTUAL PROPERTY ASSETS" --as defined in Section 3.22.
"INTERIM BALANCE SHEET"--as defined in Section 3.4.
"IRC"--the Internal Revenue Code of 1986 or any successor law
(the "Internal Revenue Code"), and regulations issued by the IRS pursuant to the
Internal Revenue Code or any successor law.
"IRS"--the United States Internal Revenue Service or any
successor agency, and, to the extent relevant, the United States Department of
the Treasury.
"KNOWLEDGE"--an individual will be deemed to have "Knowledge"
of a particular fact or other matter if:
(a) such individual is actually aware of such fact or other
matter; or
(b) a prudent individual could be expected to discover or
otherwise become aware of such fact or other matter in the course of conducting
a reasonably comprehensive investigation concerning the existence of such fact
or other matter.
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A Person (other than an individual) will be deemed to have
"Knowledge" of a particular fact or other matter if any individual who is
serving, or who has at any time served, as a director, officer, partner,
manager, executor, or trustee of such Person (or in any similar capacity) has,
or at any time had, Knowledge of such fact or other matter.
"LEGAL REQUIREMENT"--any federal, state, local, municipal,
foreign, international, multinational, or other administrative order,
constitution, law, ordinance, principle of common law, regulation, statute, or
treaty.
"OCCUPATIONAL SAFETY AND HEALTH LAW"--any Legal Requirement
designed to provide safe and healthful working conditions and to reduce
occupational safety and health hazards, and any program, whether governmental or
private (including those promulgated or sponsored by industry associations and
insurance companies), designed to provide safe and healthful working conditions.
"ORDER"--any award, decision, injunction, judgment, order,
ruling, subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"ORDINARY COURSE OF BUSINESS"--an action taken by a Person
will be deemed to have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past practices of such
Person and is taken in the ordinary course of the normal day-to-day operations
of such Person;
(b) such action is not required to be authorized by the board
of directors of such Person (or by any Person or group of Persons exercising
similar authority); and
(c) such action is similar in nature and magnitude to actions
customarily taken, without any authorization by the board of directors (or by
any Person or group of Persons exercising similar authority), in the ordinary
course of the normal day-to-day operations of other Persons that are in the same
line of business as such Person.
"ORGANIZATIONAL DOCUMENTS"--(a) the articles or certificate of
incorporation and the bylaws of a corporation; (b) any charter or similar
document adopted or filed in connection with the creation, formation, or
organization of a Person; and (c) any amendment to any of the foregoing.
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"PERSON"--any individual, corporation (including any
non-profit corporation), general or limited partnership, limited liability
company, joint venture, estate, trust, association, organization, labor union,
or other entity or Governmental Body.
"PLAN"--as defined in Section 3.13.
"PROCEEDING"--any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative,
investigative, or informal) commenced, brought, conducted, or heard by or
before, or otherwise involving, any Governmental Body or arbitrator.
"RELATED PERSON"--with respect to a particular individual:
(a) each other member of such individual's Family;
(b) any Person that is directly or indirectly controlled by
such individual or one or more members of such individual's Family;
(c) any Person in which such individual or members of such
individual's Family hold (individually or in the aggregate) a Material Interest;
and
(d) any Person with respect to which such individual or one or
more members of such individual's Family serves as a director, officer, partner,
executor, or trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly controls, is
directly or indirectly controlled by, or is directly or indirectly under common
control with such specified Person;
(b) any Person that holds a Material Interest in such
specified Person;
(c) each Person that serves as a director, officer, partner,
executor, or trustee of such specified Person (or in a similar capacity);
(d) any Person in which such specified Person holds a Material
Interest;
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(e) any Person with respect to which such specified Person
serves as a general partner or a trustee (or in a similar capacity); and
(f) any Related Person of any individual described in clause
(b) or (c).
(g) For purposes of this definition, (a) the "Family" of an
individual includes (i) the individual, (ii) the individual's spouse, and (iii)
any other natural person who resides with such individual, and (b) "Material
Interest" means direct or indirect beneficial ownership (as defined in Rule
13d-3 under the Securities Exchange Act of 1934) of voting securities or other
voting interests representing at least 1% of the outstanding voting power of a
Person or equity securities or other equity interests representing at least 1%
of the outstanding equity securities or equity interests in a Person.
"RELEASE"--any spilling, leaking, emitting, discharging,
depositing, escaping, leaching, dumping, or other releasing into the
Environment, whether intentional or unintentional.
"REPRESENTATIVE"--with respect to a particular Person, any
director, officer, employee, agent, consultant, advisor, or other representative
of such Person, including legal counsel, accountants, and financial advisors.
"SECURITIES ACT"--the Securities Act of 1933 or any successor
law, and regulations and rules issued pursuant to that Act or any successor law.
"SELLERS"--as defined in the first paragraph of this
Agreement.
"SELLERS' RELEASES"--as defined in Section 6.2.
"SUBSIDIARY"--with respect to any Person (the "Owner"), any
corporation or other Person of which securities or other interests having the
power to elect a majority of that corporation's or other Person's board of
directors or similar governing body, or otherwise having the power to direct the
business and policies of that corporation or other Person (other than securities
or other interests having such power only upon the happening of a contingency
that has not occurred) are held by the Owner or one or more of its Subsidiaries;
when used without reference to a particular Person, "Subsidiary" means a
Subsidiary of the Company.
"SURVIVING CORPORATION"--the corporation that survives the
merger of Company into the Acquisition.
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"TAX"--any tax (including any income tax, capital gains tax,
value-added tax, sales tax, property tax, gift tax, or estate tax), levy,
assessment, tariff, duty (including any customs duty), deficiency, or other fee,
and any related charge or amount (including any fine, penalty, interest, or
addition to tax), imposed, assessed, or collected by or under the authority of
any Governmental Body or payable pursuant to any tax-sharing agreement or any
other contract relating to the sharing or payment of any such tax, levy,
assessment, tariff, duty, deficiency, or fee.
"TAX RETURN"--any return (including any information return),
report, statement, schedule, notice, form, or other document or information
filed with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection,
or payment of any Tax or in connection with the administration, implementation,
or enforcement of or compliance with any Legal Requirement relating to any Tax.
"THREAT OF RELEASE"--a substantial likelihood of a Release
that may require action in order to prevent or mitigate damage to the
Environment that may result from such Release.
"THREATENED"--a claim, Proceeding, dispute, action, or other
matter will be deemed to have been "Threatened" if any demand or statement has
been made (orally or in writing) or any notice has been given (orally or in
writing), or if any other event has occurred or any other circumstances exist,
that would lead a prudent Person to conclude that such a claim, Proceeding,
dispute, action, or other matter is likely to be asserted, commenced, taken, or
otherwise pursued in the future.
2. THE MERGER
2.1 THE MERGER
Upon the terms and subject to the conditions of this
Agreement, at the Effective Time (as defined in Section 2.2), Company shall be
merged with and into Acquisition (the "Merger"). The separate existence and
corporate organization of Company shall thereupon cease and the Company and
Acquisition shall thereupon be a single corporation. The Acquisition shall be
the surviving corporation in the Merger (the "Surviving Corporation") and shall
continue its existence under the provisions of the Business Corporation Act of
Michigan.
2.2 EFFECTIVE DATE OF THE MERGER
On the Closing Date, a certificate of merger (the "Articles of
Merger") shall be executed by the Company and
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Acquisition and shall be filed with the Michigan Department of Consumer &
Industry Services; Corporation, Securities and Land Development Bureau
("Bureau") of the State of Michigan. The Merger shall become effective at such
time as the Certificate of Merger is filed with the Bureau of the State of
Michigan, such time being hereinafter called the "Effective Time."
2.3 ARTICLES OF INCORPORATION
The Articles of Incorporation of Acquisition as in
effect immediately prior to the Effective Time shall be and remain the Articles
of Incorporation of the Surviving Corporation from and after the Effective Time
until amended as provided by law.
2.4 BY-LAWS
The By-Laws of the Acquisition as in effect
immediately prior to the Effective Time shall be and remain the By-laws of the
Surviving Corporation from and after the Effective Time until amended as
provided by law.
2.5 DIRECTORS AND OFFICERS
Acquisition and Buyer shall, at Closing, cause
Xxxxxxx X. Case, Xxxxxx X. Xxxxxx, Xx. and Xxxxx X. Xxxxxxx to be
appointed as directors of the Surviving Corporation. Xxxxx X.
Xxxxxxx shall serve as the President of the Surviving
Corporation. Directors and officers of Surviving Corporation
shall serve until their successors have been elected or appointed
and shall have qualified in accordance with applicable law.
2.6 CLOSING
The closing of such Merger (the "Closing") shall
be effective on the (i) closing or effective date of Buyer's initial public
offering, or (ii) at such other date as the parties hereto shall agree in
writing (the "Closing Date"), and shall be held at the offices of Buyer's
counsel at 000 Xxxx Xxx Xxxx Xxxxxxxxx, Xxxx Xxxxxxxxxx, Xxxxxxx 00000 at 10:00
a.m. (local time).
2.7 CONVERSION OF COMPANY COMMON STOCK
(a) At the Effective Time, by virtue of the
Merger and without any action on the part of any holder of capital stock of
Buyer, Acquisition, Company or Sellers: (i) the shares of common stock of
Acquisition purchased, issued and outstanding immediately prior to the Effective
Time shall be converted as a result of the Merger and without any action on the
part of the holder thereof, into 100 shares of capital stock of the Surviving
Corporation and shall thereafter represent all the
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issued and outstanding Shares; and (ii) the shares of the Company shall be
converted into and shall become, without further action on the part of the
Sellers, the right to receive on a pro rata basis Three Million Five Hundred Ten
Thousand Dollars ($3,510,000) in consideration to be paid as follows: (a) Six
Hundred Thousand Dollars ($600,000) by wire transfer or certified check; (b) Two
Million Nine Hundred Ten Thousand Dollars ($2,910,000) principal amount of
restricted Common Stock of Buyer, which number of shares of Common Stock shall
be determined by dividing $2,910,000 by the initial public offering price of
Buyer's Common Stock (the "IPO Price").
(b) At the Closing, the Sellers shall be
issued options to purchase 25,000 shares of Buyer's restricted Common Stock. The
options shall have a ten (10) year term and shall vest immediately upon Closing.
The exercise price shall be the IPO Price, the grant date shall be the Closing
Date of Buyer's initial public offering.
3. REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers and Company hereby jointly and severally
represent and warrant to Buyer and Acquisition as follows:
3.1 ORGANIZATION AND GOOD STANDING
(a) The Company is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Michigan, with full corporate power and authority to conduct its business as it
is now being conducted, to own or use the properties and assets that it purports
to own or use, and to perform all its obligations under Applicable Contracts.
The Company is duly qualified to do business as a foreign corporation and is in
good standing under the laws of each state or other jurisdiction in which either
the ownership or use of the properties owned or used by it, or the nature of the
activities conducted by it, requires such qualification except where the failure
to so qualify would not have a material adverse effect on the Company.
(b) Sellers have delivered to Buyer copies
of the Organizational Documents of the Company, as currently in
effect.
3.2 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the
legal, valid, and binding obligation of Sellers and Company, enforceable against
Sellers and Company in accordance with its terms. Upon the execution and
delivery by Sellers of the Employment Agreement and the Sellers' Releases,
(collectively, the "Sellers' Closing Documents"), the Sellers' Closing Documents
will constitute the
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legal, valid, and binding obligations of Sellers, enforceable against Sellers in
accordance with their terms. Sellers and Company have the absolute and
unrestricted right, power, authority, and capacity to execute and deliver this
Agreement and the Sellers' Closing Documents and to perform their obligations
under this Agreement and the Sellers' Closing Documents.
(b) Neither the execution and delivery of
this Agreement nor the consummation or performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time):
(i) contravene, conflict with, or result in a violation of (A)
any provision of the Organizational Documents of the Company, or (B) any
resolution adopted by the board of directors or the stockholders of the Company;
(ii) contravene, conflict with, or result in a violation of,
or give any Governmental Body or other Person the right to challenge any of the
Contemplated Transactions or to exercise any remedy or obtain any relief under,
any Legal Requirement or any Order to which the Company or any Seller, or any of
the assets owned or used by the Company, may be subject;
(iii) contravene, conflict with, or result in a violation of
any of the terms or requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate, or modify, any Governmental
Authorization that is held by the Company or that otherwise relates to the
business of, or any of the assets owned or used by, the Company;
(iv) cause Buyer or the Company to become subject to, or to
become liable for the payment of, any Tax;
(v) contravene, conflict with, or result in a violation or
breach of any provision of, or give any Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of, or
to cancel, terminate, or modify, any Applicable Contract; or
(vi) result in the imposition or creation of any Encumbrance
upon or with respect to any of the assets owned or used by the Company.
Except as set forth in Part 3.2 of the Disclosure Letter, no
Seller or the Company is or will be required to give any notice to or obtain any
Consent from any Person in connection with the execution and delivery of this
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Agreement or the consummation or performance of any of the Contemplated
Transactions.
(c) Sellers are acquiring the Buyer's Common Stock for their
own account and not with a view to their distribution within the meaning of
Section 2(11) of the Securities Act. Each Seller is an "accredited investor" as
such term is defined in Rule 501(a) under the Securities Act. Each Seller
acknowledges that each certificate representing Buyer's Common Stock acquired
pursuant to the transactions contemplated hereby shall bear the following
restrictive legend:
THE SECURITIES REPRESENTED BY THE CERTIFICATE (THE
"SHARES") HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"). THE SECURITIES MAY NOT BE SOLD OR OFFERED FOR
SALE OR OTHERWISE DISTRIBUTED WITHOUT ONE OF THE
FOLLOWING: (i) AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SHARES UNDER THE SECURITIES ACT, OR (ii) AN
OPINION OF COUNSEL, SATISFACTORY TO THE CORPORATION,
THAT SUCH REGISTRATION IS NOT REQUIRED AS TO SAID
SALE, OFFER OR DISTRIBUTION.
Each Seller further acknowledges
that each shall be subject to such "lock-up" restriction as imposed by the
Buyer's underwriter or any entity regulating the issuance of the Buyer's Common
Stock in its initial public offering. Such lock-up shall not, in any event,
exceed eighteen (18) months from Closing.
3.3 CAPITALIZATION
The authorized common stock of the Company
consist of 50,000 shares of common stock, $1.00 par value per share, of which
12,319 shares are issued and outstanding and constitute the Shares and 5,000
shares of preferred stock $1.00 par value per share, none of which are
outstanding. The Sellers are and will be on the Closing Date the record and
beneficial owners and holders of the shares listed on Schedule 3.3 hereto, free
and clear of all Encumbrances. All of the outstanding securities of the Company
are owned of record and beneficially by the persons listed on Schedule 3.3. No
legend or other reference to any purported Encumbrance appears upon any
certificate representing equity securities of the Company. All of the
outstanding equity securities of the Company have been duly authorized and
validly issued and are fully paid and nonassessable. Except as set forth in
Schedule 3.3, there are no Contracts relating to the issuance, sale, or transfer
of any equity securities or other securities of the Company. None of the
outstanding equity securities or other securities of the Company was issued in
violation of the Securities Act or any
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other Legal Requirement. The Company does not own, or have any Contract to
acquire, any equity securities or other securities of any Person or any direct
or indirect equity or ownership interest in any other business.
3.4 FINANCIAL STATEMENTS
Sellers have delivered to Buyer: (a) unaudited consolidated
balance sheets of the Company as at July 31, 1997, (including the notes thereto,
the "Balance Sheet"); (b) unaudited consolidated balance sheets as at July 31 of
1996 and 1997, and the related unaudited consolidated statements of income,
changes in stockholders' equity, and cash flow for each of the fiscal years then
ended, together with the report thereon of Xxxxx Xxxxxxxx independent certified
public accountants; and (c) an unaudited consolidated balance sheet of the
Company as at September 30, 1997 (the "Interim Balance Sheet") and the related
unaudited consolidated statements of income. Such financial statements and notes
fairly present the financial condition and the results of operations, changes in
stockholders' equity, and cash flow of the Company as at the respective dates of
and for the periods referred to in such financial statements, all in accordance
with GAAP, subject, in the case of interim financial statements, to normal
recurring year-end adjustments (the effect of which will not, individually or in
the aggregate, be materially adverse) and the absence of notes (that, if
presented, would not differ materially from those included in the Balance
Sheet). The financial statements referred to in this Section 3.4 reflect the
consistent application of such accounting principles throughout the periods
involved. No financial statements of any Person other than the Company are
required by GAAP to be included in the consolidated financial statements of the
Company.
3.5 BOOKS AND RECORDS
The books of account, minute books, stock record books, and
other records of the Company, all of which have been made available to Buyer,
are complete and correct and have been maintained in accordance with sound
business practices. The minute books of the Company contain accurate and
complete records of all meetings held of, and corporate action taken by, the
stockholders, the Boards of Directors, and committees of the Boards of Directors
of the Company, and no meeting of any such stockholders, Board of Directors, or
committee has been held for which minutes have not been prepared and are not
contained in such minute books. At the Closing, all of those books and records
will be in the possession of the Company.
3.6 TITLE TO PROPERTIES; ENCUMBRANCES
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Part 3.6 of the Disclosure Letter contains a
complete and accurate list of all real property, leaseholds, or other interests
therein owned by the Company. Sellers have delivered or made available to Buyer
copies of the deeds and other instruments (as recorded) by which the Company
acquired such real property and interests and such instruments are true,
complete and accurate, and copies of all title insurance policies, opinions,
abstracts, and surveys in the possession of Sellers or the Company and relating
to such property or interests. The Company owns (with good and marketable title
in the case of real property, subject only to the matters permitted by the
following sentence) all the properties and assets (whether real, personal, or
mixed and whether tangible or intangible) that they purport to own located in
the facilities owned or operated by the Company or reflected as owned in the
books and records of the Company, including all of the properties and assets
reflected in the Balance Sheet and the Interim Balance Sheet (except for assets
held under capitalized leases disclosed or not required to be disclosed in Part
3.6 of the Disclosure Letter and personal property sold since the date of the
Balance Sheet and the Interim Balance Sheet, as the case may be, in the Ordinary
Course of Business), and all of the properties and assets purchased or otherwise
acquired by the Company since the date of the Balance Sheet (except for personal
property acquired and sold since the date of the Balance Sheet in the Ordinary
Course of Business and consistent with past practice), which subsequently
purchased or acquired properties and assets (other than inventory and short-term
investments) are listed in Part 3.6 of the Disclosure Letter. All material
properties and assets reflected in the Balance Sheet and the Interim Balance
Sheet are free and clear of all Encumbrances; and the Company has good and
marketable title thereto and are not, in the case of real property, subject to
any rights of way, building use restrictions, exceptions, variances,
reservations, or limitations of any nature except, with respect to all such
properties and assets, (a) mortgages or security interests shown on the Balance
Sheet or the Interim Balance Sheet as securing specified liabilities or
obligations, with respect to which no default (or event that, with notice or
lapse of time or both, would constitute a default) exists, (b) mortgages or
security interests incurred in connection with the purchase of property or
assets after the date of the Interim Balance Sheet (such mortgages and security
interests being limited to the property or assets so acquired), with respect to
which no default (or event that, with notice or lapse of time or both, would
constitute a default) exists, (c) liens for current taxes not yet due and
payable, and (d) with respect to real property, (i) minor imperfections of
title, if any, none of which is substantial in amount, materially detracts from
the value or impairs the use of the property subject thereto, or impairs the
operations of the Company, and (ii) zoning laws and other land use restrictions
that do not impair the present or anticipated use of the property subject
thereto. All buildings, plants, and structures owned by
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the Company lie wholly within the boundaries of the real property owned by the
Company and do not encroach upon the property of, or otherwise conflict with the
property rights of, any other Person.
3.7 CONDITION AND SUFFICIENCY OF ASSETS
The buildings, plants, structures, and
equipment of the Company are structurally sound, are in good operating condition
and repair, and are adequate for the uses to which they are being put, and none
of such buildings, plants, structures, or equipment is in need of maintenance or
repairs except for ordinary, routine maintenance and repairs that are not
material in nature or cost. The building, plants, structures, and equipment of
the Company are sufficient for the continued conduct of the Company's business
after the Closing in substantially the same manner as conducted prior to the
Closing.
3.8 ACCOUNTS RECEIVABLE
All accounts receivable of the Company that
are reflected on the Balance Sheet or the Interim Balance Sheet or on the
accounting records of the Company as of the Closing Date (collectively, the
"Accounts Receivable") represent or will represent valid obligations arising
from sales actually made or services actually performed in the Ordinary Course
of Business. Unless paid prior to the Closing Date, the Accounts Receivable are
or will be as of the Closing Date current and collectible net of the respective
reserves shown on the Balance Sheet or the Interim Balance Sheet or on the
accounting records of the Company as of the Closing Date (which reserves are
adequate and calculated consistent with past practice and, in the case of the
reserve as of the Closing Date, will not represent a greater percentage of the
Accounts Receivable as of the Closing Date than the reserve reflected in the
Interim Balance Sheet represented of the Accounts Receivable reflected therein
and will not represent a material adverse change in the composition of such
Accounts Receivable in terms of aging). Subject to such reserves, each of the
Accounts Receivable either has been or will be collected in full, without any
set-off, within ninety days after the day on which it first becomes due and
payable. There is no contest, claim, or right of set-off, other than returns in
the Ordinary Course of Business, under any Contract with any obligor of an
Accounts Receivable relating to the amount or validity of such Accounts
Receivable. A complete and accurate list of all Accounts Receivable as of the
date of the Interim Balance Sheet, which list sets forth the aging of such
Accounts Receivable, has been furnished to Buyer.
3.9 INVENTORY
All inventory of the Company, whether or not
reflected in the Balance Sheet or the Interim Balance Sheet,
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consists of a quality and quantity usable and salable in the Ordinary Course of
Business, except for obsolete items and items of below-standard quality, which
in no event exceeds $25,000, all of which have been written off or written down
to net realizable value in the Balance Sheet or the Interim Balance Sheet or on
the accounting records of the Company as of the Closing Date, as the case may
be. All inventories not written off have been priced at the lower of cost or
market on a first in, first out basis. The quantities of each item of inventory
(whether raw materials, work-in-process, or finished goods) are not excessive,
but are reasonable in the present circumstances of the Company.
3.10 NO UNDISCLOSED LIABILITIES
Except as set forth in Part 3.10 of the
Disclosure Letter, the Company has no liabilities or obligations of any nature
(whether known or unknown and whether absolute, accrued, contingent, or
otherwise) except for liabilities or obligations reflected or reserved against
in the Balance Sheet or the Interim Balance Sheet and current liabilities
incurred in the Ordinary Course of Business since the respective dates thereof.
3.11 TAXES
(a) The Company has filed or caused to
be filed (on a timely basis since December 31, 1993) all Tax Returns that are or
were required to be filed by or with respect to any of them, either separately
or as a member of a group of corporations, pursuant to applicable Legal
Requirements. Sellers have delivered to Buyer a complete and accurate list of
all such Tax Returns filed since December 31, 1993. The Company has paid, or
made provision for the payment of, all Taxes that have or may have become due
pursuant to those Tax Returns or otherwise, or pursuant to any assessment
received by Sellers or the Company, except such Taxes, if any, as are listed in
Part 3.11 of the Disclosure Letter and are being contested in good faith and as
to which adequate reserves (determined in accordance with GAAP) have been
provided in the Balance Sheet and the Interim Balance Sheet.
(b) The United States federal and the
Michigan single business Tax Returns of the Company subject to such Taxes have
been audited by the IRS or relevant state tax authorities or are closed by the
applicable statute of limitations for all taxable years through 1993. Part 3.11
of the Disclosure Letter contains a complete and accurate list of all audits of
all such Tax Returns, including a reasonably detailed description of the nature
and outcome of each audit. All deficiencies proposed as a result of such audits
have been paid, reserved against, settled, or, as described in Part 3.11 of the
Disclosure Letter, are being contested in good faith by appropriate proceedings.
Part 3.11 of the Disclosure Letter describes all adjustments to the United
States federal income Tax
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Returns filed by the Company or any group of corporations including the Company
for all taxable years since December 31, 1993, and the resulting deficiencies
proposed by the IRS. Except as described in Part 3.11 of the Disclosure Letter,
the Company has not given or been requested to give waivers or extensions (or is
or would be subject to a waiver or extension given by any other Person) of any
statute of limitations relating to the payment of Taxes of the Company or for
which the Company may be liable.
(c) The charges, accruals, and reserves
with respect to Taxes on the respective books of the Company are adequate
(determined in accordance with GAAP) and are at least equal to the Company's
liability for Taxes. There exists no proposed tax assessment against the Company
except as disclosed in the Balance Sheet or in Part 3.11 of the Disclosure
Letter. No consent to the application of Section 341(f)(2) of the IRC has been
filed with respect to any property or assets held, acquired, or to be acquired
by the Company. All Taxes that the Company is or was required by Legal
Requirements to withhold or collect have been duly withheld or collected and, to
the extent required, have been paid to the proper Governmental Body or other
Person.
(d) All Tax Returns filed by (or that
include on a consolidated basis) the Company are true, correct, and complete.
There is no tax sharing agreement that will require any payment by the Company
after the date of this Agreement.
3.12 NO MATERIAL ADVERSE CHANGE
Since the date of the Balance Sheet, there
has not been any material adverse change in the business, operations,
properties, prospects, assets, or condition of the Company, and no event has
occurred or circumstance exists that may result in such a material adverse
change.
3.13 EMPLOYEE BENEFITS
(a) As used in this Section 3.13, the
following terms have the meanings set forth below.
"COMPANY OTHER BENEFIT OBLIGATION" means an
Other Benefit Obligation owed, adopted, or followed by the Company or an ERISA
Affiliate of the Company.
"COMPANY PLAN" means all Plans of which the
Company or an ERISA Affiliate of the Company is or was a Plan Sponsor, or to
which the Company or an ERISA Affiliate of the Company otherwise contributes or
has contributed, or in which the Company or an ERISA Affiliate of the Company
otherwise
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participates or has participated. All references to Plans are to Company Plans
unless the context requires otherwise.
"COMPANY VEBA" means a VEBA whose members include employees of
the Company or any ERISA Affiliate of the Company.
"ERISA AFFILIATE" means, with respect to the Company, any
other person that, together with the Company, would be treated as a single
employer under IRC ss. 414.
"MULTI-EMPLOYER PLAN" has the meaning given in ERISA ss.
3(37)(A).
"OTHER BENEFIT OBLIGATIONS" means all obligations,
arrangements, or customary practices, whether or not legally enforceable, to
provide benefits, other than salary, as compensation for services rendered, to
present or former directors, employees, or agents, other than obligations,
arrangements, and practices that are Plans. Other Benefit Obligations include
consulting agreements under which the compensation paid does not depend upon the
amount of service rendered, sabbatical policies, severance payment policies, and
fringe benefits within the meaning of IRC ss. 132.
"PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto.
"PENSION PLAN" has the meaning given in ERISA ss. 3(2)(A).
"PLAN" has the meaning given in ERISA ss. 3(3).
"PLAN SPONSOR" has the meaning given in ERISA ss. 3(16)(B).
"QUALIFIED PLAN" means any Plan that meets or purports to meet
the requirements of IRC ss. 401(a).
"TITLE IV PLANS" means all Pension Plans that are subject to
Title IV of ERISA, 29 U.S.C. ss. 1301 et seq., other than Multi-Employer Plans.
"VEBA" means a voluntary employees' beneficiary association
under IRC ss. 501(c)(9).
"WELFARE PLAN" has the meaning given in ERISA ss. 3(1).
(b) (i) Part 3.13(i) of the Disclosure Letter contains a
complete and accurate list of all Company
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Plans, Company Other Benefit Obligations, and Company VEBAs, and identifies as
such all Company Plans that are (A) defined benefit Pension Plans, (B) Qualified
Plans, (C) Title IV Plans, or (D) Multi-Employer Plans.
(ii) Part 3.13(ii) of the Disclosure Letter contains a
complete and accurate list of (A) all ERISA Affiliates of the Company, and (B)
all Plans of which any such ERISA Affiliate is or was a Plan Sponsor, in which
any such ERISA Affiliate participates or has participated, or to which any such
ERISA Affiliate contributes or has contributed.
(iii) Part 3.13(iii) of the Disclosure Letter sets forth, for
each Multi-Employer Plan, as of its last valuation date, the amount of potential
withdrawal liability of the Company and the Company's other ERISA Affiliates,
calculated according to information made available pursuant to ERISA ss.
4221(e).
(iv) Part 3.13(iv) of the Disclosure Letter sets forth a
calculation of the liability of the Company for post-retirement benefits other
than pensions, made in accordance with Financial Accounting Statement 106 of the
Financial Accounting Standards Board, regardless of whether the Company is
required by this Statement to disclose such information.
(v) Part 3.13(v) of the Disclosure Letter sets forth the
financial cost of all obligations owed under any Company Plan or Company Other
Benefit Obligation that is not subject to the disclosure and reporting
requirements of ERISA.
(c) Sellers have delivered to Buyer
(i) all documents that set forth the terms of the Company
Plan, Company Other Benefit Obligation, or Company VEBA and of any related
trust, including (A) all plan descriptions and summary plan descriptions of
Company Plans for which Sellers or the Company are required to prepare, file,
and distribute plan descriptions and summary plan descriptions, and (B) all
summaries and descriptions furnished to participants and beneficiaries regarding
Company Plans, Company Other Benefit Obligations, and Company VEBAs for which a
plan description or summary plan description is not required;
(ii) all personnel, payroll, and employment manuals and
policies;
(iii) all collective bargaining agreements pursuant to which
contributions have been made or obligations incurred (including both pension and
welfare
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benefits) by the Company and the ERISA Affiliates of the Company, and all
collective bargaining agreements pursuant to which contributions are being made
or obligations are owed by such entities;
(iv) a written description of any Company Plan or Company
Other Benefit Obligation that is not otherwise in writing;
(v) all registration statements filed with respect to any
Company Plan;
(vi) all insurance policies purchased by or to provide
benefits under any Company Plan;
(vii) all contracts with third party administrators,
actuaries, investment managers, consultants, and other independent contractors
that relate to any Company Plan, Company Other Benefit Obligation, or Company
VEBA;
(viii) all reports submitted within the four years preceding
the date of this Agreement by third party administrators, actuaries, investment
managers, consultants, or other independent contractors with respect to any
Company Plan, Company Other Benefit Obligation, or Company VEBA;
(ix) all notifications to employees of their rights under
ERISA ss. 601 et seq. and IRC ss. 4980B;
(x) the Form 5500 filed in each of the most recent three plan
years with respect to each Company Plan, including all schedules thereto and the
opinions of independent accountants;
(xi) all notices that were given by the Company or any ERISA
Affiliate of the Company or any Company Plan to the IRS, the PBGC, or any
participant or beneficiary, pursuant to statute, within the three years
preceding the date of this Agreement, including notices that are expressly
mentioned elsewhere in this Section 3.13;
(xii) all notices that were given by the IRS, the PBGC, or the
Department of Labor to the Company, any ERISA Affiliate of the Company, or any
Company Plan within the three years preceding the date of this Agreement;
(xiii) with respect to Qualified Plans and VEBAs, the most
recent determination letter for each Plan of the Company that is a Qualified
Plan; and
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(xiv) with respect to Title IV Plans, the Form PBGC-1 filed
for each of the three most recent plan years.
(d) Except as set forth in Part 3.13(vi) of the Disclosure Letter:
(i) The Company has performed all of its respective
obligations under all Company Plans, Company Other Benefit Obligations, and
Company VEBAs. The Company has made appropriate entries in its financial records
and statements for all obligations and liabilities under such Plans, VEBAs, and
Obligations that have accrued but are not due.
(ii) No statement, either written or oral, has been made by
the Company to any Person with regard to any Plan or Other Benefit Obligation
that was not in accordance with the Plan or Other Benefit Obligation and that
could have an adverse economic consequence to the Company or to Buyer.
(iii) The Company, with respect to all Company Plans, Company
Other Benefits Obligations, and Company VEBAs, are, and each Company Plan,
Company Other Benefit Obligation, and Company VEBA is, in full compliance with
ERISA, the IRC, and other applicable Laws including the provisions of such Laws
expressly mentioned in this Section 3.13, and with any applicable collective
bargaining agreement.
(A) No transaction prohibited by ERISA ss. 406 and no
"prohibited transaction" under IRC ss. 4975(c) have occurred with respect to any
Company Plan.
(B) No Seller or the Company has any liability to the IRS
with respect to any Plan, including any liability imposed by Chapter 43 of the
IRC.
(C) No Seller or the Company has any liability to the
PBGC with respect to any Plan or has any liability under ERISA ss. 502 or ss.
4071.
(D) All filings required by ERISA and the IRC as to each
Plan have been timely filed, and all notices and disclosures to participants
required by either ERISA or the IRC have been timely provided.
(E) All contributions and payments made or accrued with
respect to all Company Plans, Company Other Benefit Obligations, and Company
VEBAs are deductible under IRC ss. 162 or ss. 404. No amount, or any asset of
any Company Plan or Company VEBA, is subject to tax as unrelated business
taxable income.
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(iv) Each Company Plan can be terminated within thirty days,
without payment of any additional contribution or amount and without the vesting
or acceleration of any benefits promised by such Plan.
(v) Since January 1, 1996, there has been no establishment
or amendment of any Company Plan, Company VEBA, or Company Other Benefit
Obligation.
(vi) No event has occurred or circumstance exists that could
result in a material increase in premium costs of Company Plans and Company
Other Benefit Obligations that are insured, or a material increase in benefit
costs of such Plans and Obligations that are self-insured.
(vii) Other than claims for benefits submitted by
participants or beneficiaries, no claim against, or legal proceeding involving,
any Company Plan, Company Other Benefit Obligation, or Company VEBA is pending
or, to Sellers' Knowledge, is Threatened.
(viii) No Company Plan is a stock bonus, pension, or
profit-sharing plan within the meaning of IRC ss. 401(a).
(ix) Each Qualified Plan of the Company is qualified in form
and operation under IRC ss. 401(a); each trust for each such Plan is exempt from
federal income tax under IRC ss. 501(a). Each Company VEBA is exempt from
federal income tax. No event has occurred or circumstance exists that will or
could give rise to disqualification or loss of tax-exempt status of any such
Plan or trust.
(x) The Company and each ERISA Affiliate of the Company has
met the minimum funding standard, and has made all contributions required, under
ERISA ss. 302 and IRC ss. 402.
(xi) No Company Plan is subject to Title IV of ERISA.
(xii) The Company has paid all amounts due to the PBGC
pursuant to ERISA ss. 4007.
(xiii) The Company or any ERISA Affiliate of the Company has
not ceased operations at any facility or has withdrawn from any Title IV Plan in
a manner that would subject to any entity or Sellers to liability under ERISA
ss. 4062(e), ss. 4063, or ss. 4064.
(xiv) The Company or any ERISA Affiliate of the Company has
not filed a notice of intent to terminate any Plan or has adopted any amendment
to treat a Plan as terminated.
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The PBGC has not instituted proceedings to treat any Company Plan as terminated.
No event has occurred or circumstance exists that may constitute grounds under
ERISA ss. 4042 for the termination of, or the appointment of a trustee to
administer, any Company Plan.
(xv) No amendment has been made, or is reasonably expected
to be made, to any Plan that has required or could require the provision of
security under ERISA ss. 307 or IRC ss. 401(a)(29).
(xvi) No accumulated funding deficiency, whether or not
waived, exists with respect to any Company Plan; no event has occurred or
circumstance exists that may result in an accumulated funding deficiency as of
the last day of the current plan year of any such Plan.
(xvii) The actuarial report for each Pension Plan of the
Company and each ERISA Affiliate of the Company fairly presents the financial
condition and the results of operations of each such Plan in accordance with
GAAP.
(xviii) Since the last valuation date for each Pension Plan
of the Company and each ERISA Affiliate of the Company, no event has occurred or
circumstance exists that would increase the amount of benefits under any such
Plan or that would cause the excess of Plan assets over benefit liabilities (as
defined in ERISA ss. 4001) to decrease, or the amount by which benefit
liabilities exceed assets to increase.
(xix) No reportable event (as defined in ERISA ss. 4043 and
in regulations issued thereunder) has occurred.
(xx) No Seller or the Company has knowledge of any facts or
circumstances that may give rise to any liability of any Seller, the Company, or
Buyer to the PBGC under Title IV of ERISA.
(xxi) Neither the Company nor any ERISA Affiliate of the
Company has established, maintained, or contributed to or otherwise participated
in, or had an obligation to maintain, contribute to, or otherwise participate
in, any Multi-Employer Plan.
(xxii) Neither the Company nor any ERISA Affiliate of the
Company has withdrawn from any Multi-Employer Plan with respect to which there
is any outstanding liability as of the date of this Agreement. No event has
occurred or circumstance exists that presents a risk of the occurrence of any
withdrawal from, or the participation, termination, reorganization, or
insolvency of, any Multi-Employer Plan that could result in any liability of the
Company or Buyer to a Multi-Employer Plan.
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(xxiii) Neither the Company nor any ERISA Affiliate of the
Company has received notice from any Multi- Employer Plan that it is in
reorganization or is insolvent, that increased contributions may be required to
avoid a reduction in plan benefits or the imposition of any excise tax, or that
such Plan intends to terminate or has terminated.
(xxiv) No Multi-Employer Plan to which the Company or any
ERISA Affiliate of the Company contributes or has contributed is a party to any
pending merger or asset or liability transfer or is subject to any proceeding
brought by the PBGC.
(xxv) Except to the extent required under ERISA ss. 601 et
seq. and IRC ss. 4980B, or by written agreement, the Company provides no health
or welfare benefits for any retired or former employee or is obligated to
provide health or welfare benefits to any active employee following such
employee's retirement or other termination of service.
(xxvi) The Company has the right to modify and terminate
benefits to retirees (other than pensions) with respect to both retired and
active employees except as set forth on Part 3.13.
(xxvii) Sellers and the Company have complied with the
provisions of ERISA ss. 601 et seq. and IRC ss. 4980B.
(xxviii) No payment that is owed or may become due to any
director, officer, employee, or agent of the Company will be non-deductible to
the Company or subject to tax under IRC ss. 280G or ss. 4999; nor will the
Company be required to "gross up" or otherwise compensate any such person
because of the imposition of any excise tax on a payment to such person.
(xxix) The consummation of the Contemplated Transactions
will not result in the payment, vesting, or acceleration of any benefit.
3.14 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL
AUTHORIZATIONS
(a) Except as set forth in Part 3.14 of the Disclosure
Letter:
(i) the Company is, and at all times, has been, in full
compliance with each Legal Requirement that is or was applicable to it or to the
conduct or operation of its business or the ownership or use of any of its
assets;
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(ii) no event has occurred or circumstance exists that (with
or without notice or lapse of time) (A) may constitute or result in a violation
by the Company of, or a failure on the part of the Company to comply with, any
Legal Requirement, or (B) may give rise to any obligation on the part of the
Company to undertake, or to bear all or any portion of the cost of, any remedial
action of any nature; and
(iii) the Company has not received, at any time, any notice
or other communication (whether oral or written) from any Governmental Body or
any other Person regarding (A) any actual, alleged, possible, or potential
violation of, or failure to comply with, any Legal Requirement, or (B) any
actual, alleged, possible, or potential obligation on the part of the Company to
undertake, or to bear all or any portion of the cost of, any remedial action of
any nature.
(b) Part 3.14 of the Disclosure Letter contains a complete
and accurate list of each Governmental Authorization that is held by the Company
or that otherwise relates to the business of, or to any of the assets owned or
used by, the Company (all of which authorizations have been delivered to Buyer).
Each Governmental Authorization listed or required to be listed in Part 3.14 of
the Disclosure Letter is valid and in full force and effect. Except as set forth
in Part 3.14 of the Disclosure Letter:
(i) the Company is, and at all times has been, in full
compliance with all of the terms and requirements of each Governmental
Authorization identified or required to be identified in Part 3.14 of the
Disclosure Letter;
(ii) no event has occurred or circumstance exists that may
(with or without notice or lapse of time) (A) constitute or result directly or
indirectly in a violation of or a failure to comply with any term or requirement
of any Governmental Authorization listed or required to be listed in Part 3.14
of the Disclosure Letter, or (B) result directly or indirectly in the
revocation, withdrawal, suspension, cancellation, or termination of, or any
modification to, any Governmental Authorization listed or required to be listed
in Part 3.14 of the Disclosure Letter;
(iii) the Company has not received any notice or other
communication (whether oral or written) from any Governmental Body or any other
Person regarding (A) any actual, alleged, possible, or potential violation of or
failure to comply with any term or requirement of any Governmental
Authorization, or (B) any actual, proposed, possible, or potential revocation,
withdrawal, suspension, cancellation, termination of, or modification to any
Governmental Authorization; and
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(iv) all applications required to have been filed for the
renewal of the Governmental Authorizations listed or required to be listed in
Part 3.14 of the Disclosure Letter have been duly filed on a timely basis with
the appropriate Governmental Bodies, and all other filings required to have been
made with respect to such Governmental Authorizations have been duly made on a
timely basis with the appropriate Governmental Bodies.
The Governmental Authorizations listed in Part 3.14 of the
Disclosure Letter collectively constitute all of the Governmental Authorizations
necessary to permit the Company to lawfully conduct and operate their businesses
in the manner they currently conduct and operate such businesses and to permit
the Company to own and use their assets in the manner in which they currently
own and use such assets.
3.15 LEGAL PROCEEDINGS; ORDERS
(a) Except as set forth in Part 3.15 of the
Disclosure Letter, there is no pending Proceeding:
(i) that has been commenced by or against the Company or
that otherwise relates to or may affect the business of, or any of the assets
owned or used by, the Company; or
(ii) that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions.
To the Knowledge of Sellers and the Company, (1) no such
Proceeding has been Threatened, and (2) no event has occurred or circumstance
exists that may give rise to or serve as a basis for the commencement of any
such Proceeding. Sellers have delivered to Buyer copies of all pleadings,
correspondence, and other documents relating to each Proceeding listed in Part
3.15 of the Disclosure Letter. The Proceedings listed in Part 3.15 of the
Disclosure Letter will not have a material adverse effect on the business,
operations, assets, condition, or prospects of the Company.
(b) Except as set forth in Part 3.15 of the Disclosure
Letter:
(i) there is no Order to which the Company, or any of the
assets owned or used by the Company, is subject;
(ii) Sellers are not subject to any Order that relates to
the business of, or any of the assets owned or used by, the Company; and
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(iii) no officer, director, agent, or employee of the
Company is subject to any Order that prohibits such officer, director, agent, or
employee from engaging in or continuing any conduct, activity, or practice
relating to the business of Company.
(c) Except as set forth in Part 3.15 of the Disclosure Letter:
(i) the Company is, and at all times has been, in full
compliance with all of the terms and requirements of each Order to which it, or
any of the assets owned or used by it, is or has been subject;
(ii) no event has occurred or circumstance exists that may
constitute or result in (with or without notice or lapse of time) a violation of
or failure to comply with any term or requirement of any Order to which the
Company, or any of the assets owned or used by the Company, is subject; and
(iii) the Company has not received any notice or other
communication (whether oral or written) from any Governmental Body or any other
Person regarding any actual, alleged, possible, or potential violation of, or
failure to comply with, any term or requirement of any Order to which the
Company, or any of the assets owned or used by the Company, is or has been
subject.
3.16 ABSENCE OF CERTAIN CHANGES AND EVENTS
Except as set forth in Part 3.16 of the Disclosure Letter, since
the date of the Balance Sheet, the Company has conducted its business only in
the Ordinary Course of Business and there has not been any:
(a) change in the Company's authorized or issued
capital stock; grant of any stock option or right to purchase shares of capital
stock of the Company; issuance of any security convertible into such capital
stock; grant of any registration rights; purchase, redemption, retirement, or
other acquisition by the Company of any shares of any such capital stock; or
declaration or payment of any dividend or other distribution or payment in
respect of shares of capital stock;
(b) amendment to the Organizational Documents of
the Company;
(c) payment or increase by the Company of any
bonuses, salaries, or other compensation to any stockholder, director, officer,
or (except in the Ordinary Course of Business provided that any increase in the
compensation of a Seller or any member of the family of Seller shall not be
deemed to be in the
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Ordinary Course of Business and any increase shall in no event exceed 1% of the
aggregate employee payroll of the Seller other than a bonus or dividend to the
Seller's in the Ordinary Course of Business);
(d) adoption of, or increase in the payments to
or benefits under, any profit sharing, bonus, deferred compensation, savings,
insurance, pension, retirement, or other employee benefit plan for or with any
employees of the Company;
(e) damage to or destruction or loss of any
asset or property of the Company, whether or not covered by insurance,
materially and adversely affecting the properties, assets, business, financial
condition, or prospects of the Company;
(f) entry into, termination of, or receipt of
notice of termination of (i) any license, distributorship, dealer, sales
representative, joint venture, credit, or similar agreement, or (ii) any
Contract or transaction involving a total remaining commitment by or to the
Company of at least $15,000;
(g) sale (other than sales of inventory in the
Ordinary Course of Business), lease, or other disposition of any asset or
property of the Company or mortgage, pledge, or imposition of any lien or other
encumbrance on any material asset or property of the Company, including the
sale, lease, or other disposition of any of the Intellectual Property Assets;
(h) cancellation or waiver of any claims or
rights with a value to the Company in excess of $15,000;
(i) material change in the accounting methods
used by the Company; or
(j) agreement, whether oral or written, by
the Company to do any of the foregoing.
3.17 CONTRACTS; NO DEFAULTS
(a) Part 3.17(a) of the Disclosure Letter
contains a complete and accurate list, and Sellers have delivered to Buyer true
and complete copies, of:
(i) each Applicable Contract that
involves performance of services or delivery of goods or materials by the
Company of an amount or value in excess of $15,000;
(ii) each Applicable Contract that
involves performance of services or delivery of goods or materials to the
Company of an amount or value in excess of $15,000;
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(iii) each Applicable Contract that was not
entered into in the Ordinary Course of Business and that involves
expenditures or receipts of the Company in excess of $15,000;
(iv) each lease, rental or occupancy
agreement, license, installment and conditional sale agreement, and other
Applicable Contract affecting the ownership of, leasing of, title to, use of, or
any leasehold or other interest in, any real or personal property (except
personal property leases and installment and conditional sales agreements having
a value per item or aggregate payments of less than $15,000 and with terms of
less than one year);
(v) each licensing agreement or other
Applicable Contract with respect to patents, trademarks, copyrights, or other
intellectual property, including agreements with current or former employees,
consultants, or contractors regarding the appropriation or the non-disclosure
of any of the Intellectual Property Assets;
(vi) each collective bargaining agreement and other
Applicable Contract to or with any labor union or other employee representative
of a group of employees;
(vii) each joint venture, partnership, and other Applicable
Contract (however named) involving a sharing of profits, losses, costs, or
liabilities by the Company with any other Person;
(viii) each Applicable Contract containing covenants that in
any way purport to restrict the business activity of the Company or any
Affiliate of the Company or limit the freedom of the Company or any Affiliate of
the Company to engage in any line of business or to compete with any Person;
(ix) each Applicable Contract providing for payments to or
by any Person based on sales, purchases, or profits, other than direct payments
for goods;
(x) each power of attorney that is currently effective and
outstanding;
(xi) each Applicable Contract entered into other than in the
Ordinary Course of Business that contains or provides for an express undertaking
by the Company to be responsible for consequential damages;
(xii) each Applicable Contract for capital expenditures in
excess of $15,000;
(xiii) each written warranty, guaranty, indemnity, and or
other similar undertaking with respect to
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contractual performance extended by the Company other than in the Ordinary
Course of Business;
(xiv) each Contract for indebtedness involving aggregate
payments of more than $10,000; and
(xv) each amendment, supplement, and modification (whether
oral or written) in respect of any of the foregoing.
Part 3.17(a) of the Disclosure Letter sets forth reasonably
complete details concerning such Contracts, including the parties to the
Contracts, the amount of the remaining commitment of the Company under the
Contracts, and the Company's office where details relating to the Contracts are
located.
(b) Except as set forth in Part 3.17(b) of the Disclosure
Letter:
(i) no Seller (and no Related Person of any Seller) has or
may acquire any rights under, and no Seller has or may become subject to any
obligation or liability under, any Contract that relates to the business of, or
any of the assets owned or used by, the Company; and
(ii) no officer, director, agent, employee, consultant, or
contractor of the Company is bound by any Contract that purports to limit the
ability of such officer, director, agent, employee, consultant, or contractor to
(A) engage in or continue any conduct, activity, or practice relating to the
business of the Company, or (B) assign to the Company or to any other Person any
rights to any invention, improvement, or discovery.
(c) Except as set forth in Part 3.17(c) of the Disclosure
Letter, each Contract identified or required to be identified in Part 3.17(a) of
the Disclosure Letter is in full force and effect and is valid and enforceable
in accordance with its terms.
(d) Except as set forth in Part 3.17(d) of the Disclosure Letter:
(i) the Company is, and at all times has been, in full
compliance with all applicable terms and requirements of each Contract under
which the Company has or had any obligation or liability or by which the Company
or any of the assets owned or used by the Company is or was bound;
(ii) each other Person that has or had any obligation or
liability under any Contract under which the
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Company has or had any rights is in full compliance with all applicable terms
and requirements of such Contract;
(iii) no event has occurred or circumstance exists that
(with or without notice or lapse of time) may contravene, conflict with, or
result in a violation or breach of, or give the Company or other Person the
right to declare a default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate, or modify, any Applicable
Contract; and
(iv) the Company has not given to or received from any other
Person, any notice or other communication (whether oral or written) regarding
any actual, alleged, possible, or potential violation or breach of, or default
under, any Contract.
(e) There are no renegotiations of, attempts to renegotiate, or
outstanding rights to renegotiate any material amounts paid or payable to the
Company under current or completed Contracts with any Person and no such Person
has made written demand for such renegotiation.
(f) The Contracts relating to the sale, design, manufacture, or
provision of products or services by the Company have been entered into in the
Ordinary Course of Business and have been entered into without the commission
of any act alone or in concert with any other Person, or any consideration
having been paid or promised, that is or would be in violation of any Legal
Requirement.
(g) The Company has provided to Buyer true, complete and correct
copies of the Contracts set forth in this Section 3.17.
3.18 INSURANCE
(a) Sellers have delivered to Buyer:
(i) true and complete copies of all
policies of insurance to which the Company is a party or under which the
Company, or any director of the Company, is or has been covered at any time
within the three years preceding the date of this Agreement;
(ii) true and complete copies of all
pending applications for policies of insurance; and
(iii) any statement by the auditor of
the Company's financial statements with regard to the adequacy of such entity's
coverage or of the reserves for claims.
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(b) Part 3.18(b) of the Disclosure Letter describes:
(i) any self-insurance arrangement by or affecting the
Company, including any reserves established thereunder;
(ii) any contract or arrangement, other than a policy of
insurance, for the transfer or sharing of any risk by the Company; and
(iii) all obligations of the Company to third parties with
respect to insurance (including such obligations under leases and service
agreements) and identifies the policy under which such coverage is provided.
(c) Part 3.18(c) of the Disclosure Letter sets forth, by year,
for the current policy year and each of the three preceding policy years:
(i) a summary of the loss experience under each policy;
(ii) a statement describing each claim under an insurance
policy for an amount in excess of $15,000, which sets forth:
(A) the name of the claimant;
(B) a description of the policy by insurer, type of
insurance, and period of coverage; and
(C) the amount and a brief description of the claim;
and
(iii) a statement describing the loss experience for all
claims that were self-insured, including the number and aggregate cost of such
claims.
(d) Except as set forth on Part 3.18(d) of the Disclosure
Letter:
(i) All policies to which the Company is a party or that
provide coverage to any Seller, the Company, or any director or officer of the
Company:
(A) are valid, outstanding, and enforceable;
(B) are sufficient for compliance with all Legal
Requirements and Contracts to which the Company is a party or by which any of
them is bound;
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(C) will continue in full force and effect following the
consummation of the Contemplated Transactions; and
(D) do not provide for any retrospective premium adjustment or
other experienced-based liability on the part of the Company.
(ii) Neither Seller nor the Company has received (A) any
refusal of coverage or any notice that a defense will be afforded with
reservation of rights, or (B) any notice of cancellation or any other indication
that any insurance policy is no longer in full force or effect or will not be
renewed or that the issuer of any policy is not willing or able to perform its
obligations thereunder.
(iii) The Company has paid all premiums due, and have
otherwise performed all of their respective obligations, under each policy to
which the Company is a party or that provides coverage to the Company or
director thereof.
(iv) The Company has given notice to the insurer of all
claims that may be insured thereby.
3.19 ENVIRONMENTAL MATTERS
Except as set forth in part 3.19 of the disclosure
letter:
(a) The Company is, and at all times has been,
in full compliance with, and has not been and is not in violation of or liable
under, any Environmental Law. No Seller or the Company has any basis to expect,
nor has any of them or any other Person for whose conduct they are or may be
held to be responsible received, any actual or Threatened order, notice, or
other communication from (i) any Governmental Body or private citizen acting in
the public interest, or (ii) the current or prior owner or operator of any
Facilities, of any actual or potential violation or failure to comply with any
Environmental Law, or of any actual or Threatened obligation to undertake or
bear the cost of any Environmental, Health, and Safety Liabilities with respect
to any of the Facilities or any other properties or assets (whether real,
personal, or mixed) in which Sellers or the Company has had an interest, or with
respect to any property or Facility at or to which Hazardous Materials were
generated, manufactured, refined, transferred, imported, used, or processed by
Sellers, the Company, or any other Person for whose conduct they are or may be
held responsible, or from which Hazardous Materials have been transported,
treated, stored, handled, transferred, disposed, recycled, or received.
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(b) There are no pending or, to the Knowledge of
Sellers and the Company, Threatened claims, Proceedings, Encumbrances, or other
restrictions of any nature, relating to any Environmental, Health, and Safety
Liabilities or arising under or pursuant to any Environmental Law, with respect
to or affecting any of the Facilities or any other properties and assets
(whether real, personal, or mixed) in which Sellers or the Company has or had an
interest.
(c) No Seller or the Company has any basis to
expect, nor has any of them or any other Person for whose conduct they are or
may be held responsible, received, any citation, directive, inquiry, notice,
Order, summons, warning, or other communication that relates to Hazardous
Activity, Hazardous Materials, or any alleged, actual, or potential violation or
failure to comply with any Environmental Law, or of any alleged, actual, or
potential obligation to undertake or bear the cost of any Environmental, Health,
and Safety Liabilities with respect to any of the Facilities or any other
properties or assets (whether real, personal, or mixed) in which Sellers or the
Company had an interest, or with respect to any property or facility to which
Hazardous Materials generated, manufactured, refined, transferred, imported,
used, or processed by Sellers, the Company, or any other Person for whose
conduct they are or may be held responsible, have been transported, treated,
stored, handled, transferred, disposed, recycled, or received.
(d) No Seller or the Company, or any other
Person for whose conduct they are or may be held responsible, has any
Environmental, Health, and Safety Liabilities with respect to the Facilities or
with respect to any other properties and assets (whether real, personal, or
mixed) in which Sellers or the Company (or any predecessor), has or had an
interest, or, to the knowledge of Sellers, at any property geologically or
hydrologically adjoining the Facilities or any such other property or assets.
(e) There are no Hazardous Materials present on
or in the Environment at the Facilities or to the knowledge of Sellers at any
geologically or hydrologically adjoining property, including any Hazardous
Materials contained in barrels, above or underground storage tanks, landfills,
land deposits, dumps, equipment (whether moveable or fixed) or other containers,
either temporary or permanent, and deposited or located in land, water, sumps,
or any other part of the Facilities or such adjoining property, or incorporated
into any structure therein or thereon. No Seller, the Company, any other Person
for whose conduct they are or may be held responsible, or any other Person, has
permitted or conducted, or is aware of, any Hazardous Activity conducted with
respect to the Facilities or any other properties or assets (whether real,
personal, or mixed) in which the Company has or had an interest.
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(f) There has been no Release or Threat of
Release, of any Hazardous Materials at or from the Facilities or at any other
locations where any Hazardous Materials were generated, manufactured, refined,
transferred, produced, imported, used, or processed from or by the Facilities,
or to the knowledge of Sellers from or by any other properties and assets
(whether real, personal, or mixed) in which Sellers or the Company has or had an
interest, or any geologically or hydrologically adjoining property, whether by
Sellers, the Company, or any other Person.
(g) Sellers have delivered to Buyer true and
complete copies and results of any reports, studies, analyses, tests, or
monitoring possessed or initiated by Sellers or the Company pertaining to
Hazardous Materials or Hazardous Activities in, on, or under the Facilities, or
concerning compliance by Sellers, the Company, or any other Person for whose
conduct they are or may be held responsible, with Environmental Laws.
(h) Except as set forth on the Phase I
Environmental Audit dated September 16, 1997, prepared by Xxxxx Environmental
Consulting, Inc., there are no underground or above-ground storage tanks,
incinerators or surface impoundments at, on, or about under or within any real
property operated or controlled, in whole or in part by the Company.
3.20 EMPLOYEES
(a) A complete and accurate list of the
following information for each employee or director of the Company, including
each employee on leave of absence or layoff status: employer; name; job title;
current compensation paid or payable and any change in compensation since
December 31, 1996; vacation accrued; and service credited for purposes of
vesting and eligibility to participate under the Company's pension, retirement,
profit-sharing, thrift-savings, deferred compensation, stock bonus, stock
option, cash bonus, employee stock ownership (including investment credit or
payroll stock ownership), severance pay, insurance, medical, welfare, or
vacation plan, other Employee Pension Benefit Plan or Employee Welfare Benefit
Plan, or any other employee benefit plan or any Director Plan has been furnished
to Buyer.
(b) No employee or director of the Company is a
party to, or is otherwise bound by, any agreement or arrangement, including any
confidentiality, non-competition, or proprietary rights agreement, between such
employee or director and any other Person ("Proprietary Rights Agreement") that
in any way adversely affects or will affect (i) the performance of his duties as
an employee or director of the Company, or (ii) the ability of the Company to
conduct its business, including any Proprietary Rights Agreement with Sellers or
the Company by any such employee or
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director. To Sellers' knowledge, no director, officer, or other key employee of
the Company intends to terminate his employment with the Company.
(c) The Company has previously delivered to the
Buyer a complete and accurate list of the following information for each retired
employee or director of the Company, or their dependents, receiving benefits or
scheduled to receive benefits in the future: name, pension benefit, pension
option election, retiree medical insurance coverage, retiree life insurance
coverage, and other benefits.
3.21 LABOR RELATIONS; COMPLIANCE
The Company has not been or is a party to any
collective bargaining or other labor Contract. There has not
been, there is not presently pending or existing, and to Sellers' knowledge
there is not threatened, (a) any strike, slowdown, picketing, work stoppage, or
employee grievance process, (b) any proceeding against or affecting the Company
relating to the alleged violation of any Legal Requirement pertaining to labor
relations or employment matters, including any charge or complaint filed by an
employee or union with the National Labor Relations Board, the Equal Employment
Opportunity Commission, or any comparable Governmental Body, organizational
activity, or other labor or employment dispute against or affecting the Company
or its premises, or (c) any application for certification of a collective
bargaining agent. To Sellers' knowledge no event has occurred or circumstance
exists that could provide the basis for any work stoppage or other labor
dispute. There is no lockout of any employees by the Company, and no such action
is contemplated by the Company. The Company has complied in all respects with
all Legal Requirements relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective bargaining,
the payment of social security and similar taxes, occupational safety and
health, and plant closing. The Company is not liable for the payment of any
compensation, damages, taxes, fines, penalties, or other amounts, however
designated, for failure to comply with any of the foregoing Legal Requirements.
3.22 INTELLECTUAL PROPERTY
(a) INTELLECTUAL PROPERTY ASSETS--The term
"Intellectual Property Assets" includes:
(i) the name Company's, all fictional
business names, trading names, registered and unregistered
trademarks, service marks, and applications (collectively,
"Marks");
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(ii) all patents, patent applications,
and inventions and discoveries that may be patentable (collectively, "Patents");
(iii) all copyrights in both published
works and unpublished works (collectively, "Copyrights");
(iv) all rights in mask works
(collectively, "Rights in Mask Works"); and
(v) all know-how, trade secrets,
confidential information, customer lists, software, technical information, data,
process technology, plans, drawings, and blue prints (collectively, "Trade
Secrets"); owned, used, or licensed by the Company as licensee or licensor.
(b) AGREEMENTS--Part 3.22(b) of the Disclosure
Letter contains a complete and accurate list and summary description, including
any royalties paid or received by the Company, of all Contracts relating to the
Intellectual Property Assets to which the Company is a party or by which the
Company is bound, except for any license implied by the sale of a product and
perpetual, paid-up licenses for commonly available software programs with a
value of less than $15,000 under which the Company is the licensee. There are no
outstanding and, to Sellers' knowledge, no threatened disputes or disagreements
with respect to any such agreement.
(c) KNOW-HOW NECESSARY FOR THE BUSINESS
The Intellectual Property Assets are all
those necessary for the operation of the Company's business as they are
currently conducted. The Company is the owner of all right, title, and interest
in and to each of the Intellectual Property Assets, free and clear of all liens,
security interests, charges, encumbrances, equities, and other adverse claims,
and has the right to use without payment to a third party all of the
Intellectual Property Assets.
(d) Trademarks
(i) Part 3.22(d) of Disclosure Letter
contains a complete and accurate list and summary description of all Marks. The
Company is the owner of all right, title, and interest in and to each of the
Marks, free and clear of all liens, security interests, charges, encumbrances,
equities, and other adverse claims.
(ii) All Marks that have been
registered with the United States Patent and Trademark Office are currently in
compliance with all formal legal requirements (including the timely
post-registration filing of affidavits of use and
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incontestability and renewal applications), are valid and enforceable, and are
not subject to any maintenance fees or taxes or actions falling due within
ninety days after the Closing Date.
(iii) No Xxxx has been or is now
involved in any opposition, invalidation, or cancellation and, to Sellers'
Knowledge, no such action is Threatened with the respect to any of the Marks.
(iv) To Sellers' Knowledge, there is
no potentially interfering trademark or trademark application of any third
party.
(v) No Xxxx is infringed or, to
Sellers' Knowledge, has been challenged or threatened in any way. None of the
Marks used by any Acquired Company infringes or is alleged to infringe any trade
name, trademark, or service xxxx of any third party.
(vi) All products and materials
containing a Xxxx xxxx the proper federal registration notice where permitted by
law.
(e) Copyrights
(i) Part 3.22(e) of the Disclosure
Letter contains a complete and accurate list and summary description of all
Copyrights. The Company is the owner of all right, title, and interest in and to
each of the Copyrights, free and clear of all liens, security interests,
charges, encumbrances, equities, and other adverse claims.
(ii) All the Copyrights have been
registered and are currently in compliance with formal legal requirements, are
valid and enforceable, and are not subject to any maintenance fees or taxes or
actions falling due within ninety days after the date of Closing.
(iii) No Copyright is infringed or, to
Sellers' Knowledge, has been challenged or threatened in any way. None of the
subject matter of any of the Copyrights infringes or is alleged to infringe any
copyright of any third party or is a derivative work based on the work of a
third party.
(iv) All works encompassed by the
Copyrights have been marked with the proper copyright notice.
(f) Trade Secrets
(i) With respect to each Trade
Secret, the documentation relating to such Trade Secret is current, accurate,
and sufficient in detail and content to
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identify and explain it and to allow its full and proper use without reliance on
the knowledge or memory of any individual.
(ii) Sellers and the Company
have taken all reasonable precautions to protect the secrecy, confidentiality,
and value of their Trade Secrets.
(iii) The Company has good title
and an absolute (but not necessarily exclusive) right to use the Trade Secrets.
The Trade Secrets are not part of the public knowledge or literature, and, to
Sellers' knowledge, have not been used, divulged, or appropriated either for the
benefit of any Person (other than one or more of the Company) or to the
detriment of the Company. No Trade Secret is subject to any adverse claim or has
been challenged or threatened in any way.
3.23 CERTAIN PAYMENTS
The Company or any director, officer, agent, or
employee of the Company, or to Sellers' knowledge any other person associated
with or acting for or on behalf of the Company, has not directly or indirectly
(a) made any contribution, gift, bribe, rebate, payoff, influence payment,
kickback, or other payment to any person, private or public, regardless of form,
whether in money, property, or services (i) to obtain favorable treatment in
securing business, (ii) to pay for favorable treatment for business secured,
(iii) to obtain special concessions or for special concessions already obtained,
for or in respect of the Company or any Affiliate of the Company, or (iv) in
violation of any Legal Requirement, (b) established or maintained any fund or
asset that has not been recorded in the books and records of the Company.
3.24 DISCLOSURE
(a) No representation or warranty of Sellers in
this Agreement and no statement in the Disclosure Letter omits to state a
material fact necessary to make the statements herein or therein, in light of
the circumstances in which they were made, not misleading.
(b) No notice given pursuant to Section 5.5 will
contain any untrue statement or omit to state a material fact necessary to make
the statements therein or in this Agreement, in light of the circumstances in
which they were made, not misleading.
(c) There is no fact known to either Seller that
has specific application to either Seller or the Company (other than general
economic or industry conditions) and that materially adversely affects or, as
far as either Seller can reasonably foresee, materially threatens, the assets,
business, prospects,
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financial condition, or results of operations of the Company (on a consolidated
basis) that has not been set forth in this Agreement or the Disclosure Letter.
3.25 RELATIONSHIPS WITH RELATED PERSONS
Except as set forth on Part 3.25 of the Disclosure
Letter, no Seller or any Related Person of Sellers or of the Company has had any
interest in any property (whether real, personal, or mixed and whether tangible
or intangible), used in or pertaining to the Company's business. No Seller or
any Related Person of Sellers or of the Company is, or has owned (of record or
as a beneficial owner) an equity interest or any other financial or profit
interest in, a Person that has (i) had business dealings or a material financial
interest in any transaction with the Company, or (ii) engaged in competition
with the Company with respect to any line of the products or services of the
Company (a "Competing Business") in any market presently served by the Company.
Except as set forth in Part 3.25 of the Disclosure Letter, no Seller or any
Related Person of Sellers or of the Company is a party to any Contract with, or
has any claim or right against the Company.
3.26 BROKERS OR FINDERS
Sellers and their agents have incurred no
obligation or liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payment in connection with this
Agreement.
4. REPRESENTATIONS AND WARRANTIES OF ACQUISITION AND BUYER
Acquisition and Buyer (the "Buyer Companies") jointly and
severally represent and warrant to Sellers as follows:
4.1 ORGANIZATION; POWER; QUALIFICATION
Acquisition is a corporation duly organized,
validly existing and in good standing under the laws of the State of Michigan
and Buyer is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Each of Acquisition and Buyer has the
corporate power and authority to own or lease and operate its properties to
carry on its business as now being conducted, and is duly qualified and in good
standing and authorized to do business as a foreign corporation in each
jurisdiction in which the character of its properties or the nature of its
business requires such qualification and authorization except where the failure
to so qualify would not have a material adverse effect on the Buyer and
Acquisition, taken as a whole.
4.2 AUTHORITY
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Each of Acquisition and Buyer has the corporate
power and has taken all necessary corporate action to authorize Acquisition or
Buyer as the case may be, to execute, deliver and perform the Agreement and to
consummate the transactions contemplated thereby. The execution and delivery by
each of Acquisition and Buyer of this Agreement and the Employment Agreement to
which each is a party constitutes the valid and legally binding obligation of
Acquisition or Buyer, as the case may be, enforceable in accordance with the
documents' terms, except as maybe limited by bankruptcy, insolvency or other
laws effecting creditors' rights generally.
4.3 CERTAIN PROCEEDINGS
There is no pending Proceeding that has been
commenced against Buyer or Acquisition and that challenges, or may have the
effect of preventing, delaying, making illegal, or otherwise interfering with,
any of the contemplated transactions. To Buyer's and Acquisition's knowledge, no
such proceeding has been threatened.
4.4 BROKERS OR FINDERS
Buyers and Acquisition and their officers and
agents have incurred no obligation or liability, contingent or otherwise, for
brokerage or finders' fees or agents' commissions or other similar payment in
connection with this Agreement and will indemnify and hold Company and Sellers
harmless from any such payment alleged to be due by or through Buyer or
Acquisition as a result of the action of Buyer and Acquisition or their officers
or agents.
5. COVENANTS OF SELLERS AND COMPANY PRIOR TO CLOSING DATE
5.1 ACCESS AND INVESTIGATION
Between the date of this Agreement and the Closing
Date, Sellers will, and will cause Company and their Representatives to, (a)
afford Buyer and its Representatives and prospective lenders and their
Representatives (collectively, "Buyer's Advisors") full and free access to the
Company's personnel, properties (including subsurface testing), contracts, books
and records, and other documents and data, (b) furnish Buyer and Buyer's
Advisors with copies of all such contracts, books and records, and other
existing documents and data as Buyer may reasonably request, and (c) furnish
Buyer and Buyer's Advisors with such additional financial, operating, and other
data and information as Buyer may reasonably request.
5.2 OPERATION OF THE BUSINESSES OF THE COMPANY
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Between the date of this Agreement and the Closing
Date, Sellers will, and will cause the Company to:
(a) conduct the business of the Company only in
the Ordinary Course of Business;
(b) use their Best Efforts to preserve intact
the current business organization of the Company, keep available the services of
the current officers, employees, and agents of the Company, and maintain the
relations and good will with suppliers, customers, landlords, creditors,
employees, agents, and others having business relationships with the Company;
(c) confer with Buyer concerning operational
matters of a material nature; and
(d) otherwise report periodically to Buyer
concerning the status of the business, operations, and finances
of the Company.
5.3 NEGATIVE COVENANT
Except as otherwise expressly permitted by this
Agreement, between the date of this Agreement and the Closing Date, Sellers will
not, and will cause the Company not to, without the prior consent of Buyer, take
any affirmative action, or fail to take any reasonable action within their or
its control, as a result of which any of the changes or events listed in Section
3.16 is likely to occur.
5.4 REQUIRED APPROVALS
As promptly as practicable after the date of this
Agreement, Sellers will, and will cause the Company to, make all filings
required by Legal Requirements to be made by them in order to consummate the
Contemplated Transactions. Between the date of this Agreement and the Closing
Date, Sellers will, and will cause the Company to, (a) cooperate with Buyer with
respect to all filings that Buyer elects to make or is required by Legal
Requirements to make in connection with the Contemplated Transactions, and (b)
cooperate with Buyer in obtaining any required consents.
5.5 NOTIFICATION
Between the date of this Agreement and the Closing
Date, each Seller will promptly notify Buyer in writing if such Seller or the
Company becomes aware of any fact or condition that causes or constitutes a
Breach of any of Sellers' representations and warranties as of the date of this
Agreement, or if such Seller or the Company becomes aware of the occurrence
after the date of this Agreement of any fact or condition that would
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(except as expressly contemplated by this Agreement) cause or constitute a
Breach of any such representation or warranty had such representation or
warranty been made as of the time of occurrence or discovery of such fact or
condition. Should any such fact or condition require any change in the
Disclosure Letter if the Disclosure Letter were dated the date of the occurrence
or discovery of any such fact or condition, Sellers will promptly deliver to
Buyer a supplement to the Disclosure Letter specifying such change. During the
same period, each Seller will promptly notify Buyer of the occurrence of any
Breach of any covenant of Sellers in this Section 5 or of the occurrence of any
event that may make the satisfaction of the conditions in Section 7 impossible
or unlikely.
5.6 NO NEGOTIATION
Until such time, if any, as this Agreement is
terminated pursuant to Section 9, Sellers will not, and will cause the Company
and each of their Representatives not to, directly or indirectly solicit,
initiate, encourage, accept or discuss any inquiries or proposals from, discuss
or negotiate with, provide any non-public information to, or consider the merits
of any unsolicited inquiries or proposals from, any Person (other than Buyer)
relating to any transaction involving the sale of the business or assets of the
Company, or any of the capital stock of the Company, or any merger,
consolidation, business combination, or similar transaction involving any
Acquired Company. Seller and the Company will promptly notify Buyer of any such
inquiries or proposals.
5.7 BEST EFFORTS
Between the date of this Agreement and the Closing
Date, Sellers and the Company will use their Best Efforts to cause the
conditions in Sections 6 and 7 to be satisfied.
6. CONDITIONS PRECEDENT TO BUYER'S AND ACQUISITION'S
OBLIGATION TO CLOSE
Buyer's and Acquisition's obligation to consummate the Merger
and to take the other actions required to be taken by Buyer and Acquisition at
the Closing is subject to the satisfaction, at or prior to the Closing, of each
of the following conditions (any of which may be waived by Buyer and
Acquisition, in whole or in part):
6.1 ACCURACY OF REPRESENTATIONS
All of Sellers' and Company's representations and
warranties in this Agreement must have been accurate in all respects as of the
date of this Agreement, and must be accurate in all respects as of the Closing
Date as if made on the Closing
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Date, without giving effect to any supplement to the Disclosure Letter.
6.2 SELLERS' PERFORMANCE
(a) All of the covenants and obligations that
Sellers and Company are required to perform or to comply with pursuant to this
Agreement at or prior to the Closing, and each of these covenants and
obligations (considered individually), must have been duly performed and
complied with in all material respects.
(b) There shall be executed and delivered at
Closing (i) the sellers' releases, in the form of Exhibit 6.2(b)(i) (the
"Sellers' Releases"); (ii) the employment agreement with X. Xxxxxxx in the form
of Exhibit 6.2(b)(ii) (the "Employment Agreement"); (iii) the certificate
executed by Sellers and an officer of the Company representing to Buyer and
Acquisition that each of the Sellers' and Company's representations and
warranties in this Agreement was accurate in all respects as to the date of this
Agreement and is accurate in all respects as of the Closing as if made on the
Closing Date, and (iv) each of the other covenants and obligations in the
Agreement must have been performed and complied with in all respects.
6.3 CONSENTS
Each of the consents identified in subparts 3.2 of
the Disclosure Letter, must have been obtained and must be in full force and
effect.
6.4 ADDITIONAL DOCUMENTS
Each of the following documents must have been
delivered to Buyer:
(a) an opinion of Rhoades, McKee, Boer, Xxxxxxxx
& Titta, dated the Closing Date, in the form of Exhibit 6.4(a);
(b) termination of the Shareholder's Agreement
between X. Xxxxxxx and Xxxxxx Xxxxxxx;
(c) such other documents as Buyer or its counsel
may reasonably request for the purpose of (i) enabling its counsel to provide
the opinion referred to in Section 7.3(a), (ii) evidencing the accuracy of any
of Sellers' representations and warranties, (iii) evidencing the performance by
Seller, the Company, or the compliance by Seller or the Company with, any
covenant or obligation required to be performed or complied with by such party,
(iv) evidencing the satisfaction of any condition referred to in this Section 6,
or (v) otherwise facilitating the
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consummation or performance of any of the Contemplated Transactions; and
(d) Buyer shall have consummated its Initial
Public Offering.
6.5 NO PROCEEDINGS
Since the date of this Agreement, there must not
have been commenced or Threatened against Buyer or Acquisition, or against any
Person affiliated with Buyer, any Proceeding (a) involving any challenge to, or
seeking damages or other relief in connection with, any of the Contemplated
Transactions, or (b) that may have the effect of preventing, delaying, making
illegal, or otherwise interfering with any of the Contemplated Transactions.
6.6 NO CLAIM REGARDING STOCK OWNERSHIP OR MERGER
PROCEEDS
There must not have been made or Threatened by any
Person any claim asserting that such Person (a) is the holder or the beneficial
owner of, or has the right to acquire or to obtain beneficial ownership of, any
stock of, or any other voting, equity, or ownership interest in, the Company, or
(b) is entitled to all or any portion of the Merger consideration.
6.7 NO PROHIBITION
Neither the consummation nor the performance of
any of the Contemplated Transactions will, directly or indirectly (with or
without notice or lapse of time), materially contravene, or conflict with, or
result in a violation of, or cause Buyer or any Person affiliated with Buyer to
suffer any material adverse consequence under, (a) any applicable Legal
Requirement or Order, or (b) any Legal Requirement or Order that has been
published, introduced, or otherwise proposed by or before any Governmental Body.
6.8 NO INJUNCTION
No preliminary or permanent injunction or other
order by any federal or state court preventing or consummation of the
transactions contemplated in this Agreement has been issued and continues in
effect, and this Agreement and the transactions contemplated hereby are not
prohibited under any applicable federal or state law or regulation.
6.9 INITIAL PUBLIC OFFERING
Buyer shall have consummated its Initial Public
Offering.
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7. CONDITIONS PRECEDENT TO SELLERS' AND THE COMPANY'S
OBLIGATION TO CLOSE
Sellers' and the Company's obligation to consummate the merger
and to take the other actions required to be taken by Sellers and the Company at
the Closing is subject to the satisfaction, at or prior to the Closing, of each
of the following conditions (any of which may be waived by Sellers, in whole or
in part):
7.1 ACCURACY OF REPRESENTATIONS
All of Buyer's and Acquisition's representations
and warranties in this Agreement must have been accurate in all respects as of
the date of this Agreement and must be accurate in all respects as of the
Closing Date as if made on the Closing Date.
7.2 BUYER'S AND ACQUISITION'S PERFORMANCE
(a) All of the covenants and obligations that
Buyer and Acquisition are required to perform or to comply with pursuant to this
Agreement at or prior to the Closing (considered collectively), and each of
these covenants and obligations (considered individually), must have been
performed and complied with in all material respects.
(b) Buyer must have delivered the Employment
Agreement and the consideration set forth in Section 2.7(a) and (b).
7.3 ADDITIONAL DOCUMENTS
Buyer and Acquisition must have caused the
following documents to be delivered to Sellers:
(a) an opinion of Atlas, Xxxxxxxx, Trop &
Borkson, P.A., dated the Closing Date, in the form of
Exhibit 7.3(a);
(b) the Buyer's prospectus or latest form
thereof, in connection with its initial public offering; and
(c) such other documents as Sellers may
reasonably request for the purpose of (i) enabling their counsel to provide the
opinion referred to in Section 6.3(a), (ii) evidencing the accuracy of any
representation or warranty of Buyer or Acquisition, (iii) evidencing the
performance by Buyer or Acquisition of, or the compliance by Buyer or
Acquisition with, any covenant or obligation required to be performed or
complied with by Buyer or Acquisition, (iv) evidencing the satisfaction of any
condition referred to in this Section 7, or
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(v) otherwise facilitating the consummation of any of the Contemplated
Transactions.
8. TERMINATION
8.1 TERMINATION EVENTS
This Agreement may, by notice given prior to or at
the Closing, be terminated:
(a) by either Buyer and Acquisition or Sellers
and the Company if a material Breach of any provision of this Agreement has been
committed by the other party and such Breach has not been waived;
(b) (i) by Buyer and Acquisition if any of the
conditions in Section 6 has not been satisfied as of the Closing Date or if
satisfaction of such a condition is or becomes impossible (other than through
the failure of Buyer to comply with its obligations under this Agreement) and
Buyer has not waived such condition on or before the Closing Date; or (ii) by
Sellers and Company, if any of the conditions in Section 7 has not been
satisfied as of the Closing Date or if satisfaction of such a condition is or
becomes impossible (other than through the failure of Sellers and Company to
comply with their obligations under this Agreement) and Sellers have not waived
such condition on or before the Closing Date;
(c) by mutual consent of Buyer and Acquisition
and Sellers and the Company; or
(d) by either Buyer and Acquisition or Sellers
and the Company if the effective date of Buyer's initial public offering (as
determined by the SEC) has not occurred (other than through the failure of any
party seeking to terminate this Agreement to comply fully with its obligations
under this Agreement) on or before June 30, 1998, or such later date as the
parties may agree upon.
9. INDEMNIFICATION; REMEDIES
9.1 SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY
KNOWLEDGE
All representations, warranties, covenants, and
obligations in this Agreement, the Disclosure Letter and any of the supplements
thereto, and any other certificate or document delivered pursuant to this
Agreement will survive the Closing for a period of thirty-six (36) months other
than the representations or warranties contained in Sections 3.3, 3.11, 3.13 and
3.19 which shall survive for the applicable statute of limitations. The right to
indemnification, payment of Damages or other remedy
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based on such representations, warranties, covenants, and obligations will not
be affected by any investigation conducted with respect to, or any Knowledge
acquired (or capable of being acquired) at any time, whether before or after the
execution and delivery of this Agreement or the Closing Date, with respect to
the accuracy or inaccuracy of or compliance with, any such representation,
warranty, covenant, or obligation. Each party has the right to rely on the
representations and warranties of the other party. The waiver of any condition
based on the accuracy of any representation or warranty, or on the performance
of or compliance with any covenant or obligation, will not affect the right to
indemnification, payment of Damages, or other remedy based on such
representations, warranties, covenants, and obligations.
9.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS
Subject to the provisions of Section 9.4, Sellers,
jointly and severally will indemnify and hold harmless Buyer, the Surviving
Corporation, and their respective Representatives, stockholders, controlling
persons, and affiliates (collectively, the "Indemnified Persons") for, and will
pay to the Indemnified Persons the amount of, any loss, liability, claim,
damage, expense (including costs of investigation and defense and reasonable
attorneys' and other professional fees) or diminution of value, whether or not
involving a third-party claim (collectively, "Damages"), arising, directly or
indirectly, from or in connection with:
(a) any Breach of any representation or warranty
made by Sellers in this Agreement, giving effect to any supplement to Disclosure
Letter, the Disclosure Letter and any of the supplements thereto, or any other
certificate or document delivered by Sellers pursuant to this Agreement;
(b) any Breach by either Seller of any covenant
or obligation of such Seller in this Agreement;
(c) any product shipped or manufactured by, or
any services provided by, the Company prior to the Closing Date;
(d) any matter disclosed in Parts 3.11, 3.15 and
3.19 of the Disclosure Letter; or
(e) any claim by any Person for brokerage or
finder's fees or commissions or similar payments based upon any agreement or
understanding alleged to have been made by any such Person with Sellers or the
Company (or any Person acting on their behalf) in connection with any of the
Contemplated Transactions.
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The remedies provided in this Section 9.2 will not
be exclusive of or limit any other remedies that may be available to Buyer or
the other Indemnified Persons.
9.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER
Buyer will indemnify and hold harmless Sellers,
the Surviving Corporation, and their respective Representatives, stockholders,
controlling persons, and affiliates (collectively, the "Buyer's Indemnified
Persons") for, and will pay to the Indemnified Persons the amount of, any loss,
liability, claim, damage, expense (including costs of investigation and defense
and reasonable attorneys' and other professional fees) or diminution of value,
whether or not involving a third-party claim (collectively, "Damages"), arising,
directly or indirectly, from or in connection with:
(a) any Breach of any representation or warranty
made by Buyer in this Agreement, giving effect to any supplement to Disclosure
Letter, the Disclosure Letter and any of the supplements thereto, or any other
certificate or document delivered by Buyer pursuant to this Agreement;
(b) any Breach by Buyer of any covenant or
obligation of such Buyer in this Agreement; or
(c) any claim by any Person for brokerage or
finder's fees or commissions or similar payments based upon any agreement or
understanding alleged to have been made by any such Person with Buyer or the
Company (or any Person acting on their behalf) in connection with any of the
Contemplated Transactions.
The remedies provided in this Section 9.3 will not
be exclusive of or limit any other remedies that may be available to Seller or
the other Indemnified Persons.
9.4 TIME LIMITATIONS; DOLLAR LIMITATIONS
If the Closing occurs, Sellers will have no
liability (for indemnification or otherwise) with respect to any representation
or warranty, or covenant or obligation to be performed and complied with prior
to the Closing Date, other than those in Sections 3.3, 3.11, 3.13, and 3.19,
unless on or before thirty-six (36) months from the date of Closing, Buyer
notifies Sellers of a claim specifying the factual basis of that claim in
reasonable detail to the extent then known by Buyer. A claim with respect to
Section 3.3, 3.11, 3.13, or 3.19, may be made at any time prior to the
applicable statute of limitations with respect to such matter. If the Closing
occurs, Buyer will have no liability (for indemnification or otherwise) with
respect to any representation or warranty, or covenant or obligation to be
performed and complied with prior to the Closing Date, unless on
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or before thirty-six (36) months from the date of Closing, Sellers notify Buyer
of any claim specifying the factual basis of that claim in reasonable detail to
the extent then known by Sellers. Notwithstanding any conflicting provisions
herein, the Seller's aggregate liability for a breach of Section 3.19 will in no
event exceed the consideration to be paid to Seller pursuant to Section 2.7.
9.5 RIGHT OF SET-OFF
Buyer may set off any amount to which it may be
entitled under this Section 9 against amounts otherwise payable under the
Employment Agreement with X. Xxxxxxx. The exercise of or the failure to exercise
such right of set-off will not constitute an election of remedies or limit Buyer
in any manner in the enforcement of any other remedies that may be available to
it.
9.6 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS
(a) Promptly after receipt by an indemnified
party under Sections 9.2 or 9.3 of notice of the commencement of any Proceeding
against it, such indemnified party will, if a claim is to be made against an
indemnifying party under such Section, give notice to the indemnifying party of
the commencement of such claim, but the failure to notify the indemnifying party
will not relieve the indemnifying party of any liability that it may have to any
indemnified party, except to the extent that the indemnifying party demonstrates
that the defense of such action is prejudiced by the indemnifying party's
failure to give such notice.
(b) If any Proceeding referred to in Section
9.6(a) is brought against an indemnified party and it gives notice to the
indemnifying party of the commencement of such Proceeding, the indemnifying
party will be entitled to participate in such Proceeding and, to the extent that
it wishes (unless (i) the indemnifying party is also a party to such Proceeding
and the indemnified party determines in good faith that joint representation
would be inappropriate, or (ii) the indemnifying party fails to provide
reasonable assurance to the indemnified party of its financial capacity to
defend such Proceeding and provide indemnification with respect to such
Proceeding), to assume the defense of such Proceeding with counsel satisfactory
to the indemnified party and, after notice from the indemnifying party to the
indemnified party of its election to assume the defense of such Proceeding, the
indemnifying party will not, as long as it diligently conducts such defense, be
liable to the indemnified party under this Section 9 for any fees of other
counsel or any other expenses with respect to the defense of such Proceeding, in
each case subsequently incurred by the indemnified party in connection with
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the defense of such Proceeding, other than reasonable costs of investigation. If
the indemnifying party assumes the defense of a Proceeding, (i) it will be
conclusively established for purposes of this Agreement that the claims made in
that Proceeding are within the scope of and subject to indemnification; (ii) no
compromise or settlement of such claims may be effected by the indemnifying
party without the indemnified party's consent unless (A) there is no finding or
admission of any violation of Legal Requirements or any violation of the rights
of any Person and no effect on any other claims that may be made against the
indemnified party, and (B) the sole relief provided is monetary damages that are
paid in full by the indemnifying party; and (iii) the indemnified party will
have no liability with respect to any compromise or settlement of such claims
effected without its consent. If notice is given to an indemnifying party of the
commencement of any Proceeding and the indemnifying party does not, within ten
days after the indemnified party's notice is given, give notice to the
indemnified party of its election to assume the defense of such Proceeding, the
indemnifying party will be bound by any determination made in such Proceeding or
any compromise or settlement effected by the indemnified party.
(c) Notwithstanding the foregoing, if an
indemnified party determines in good faith that there is a reasonable
probability that a Proceeding may adversely affect it or its affiliates other
than as a result of monetary damages for which it would be entitled to
indemnification under this Agreement, the indemnified party may, by notice to
the indemnifying party, assume the exclusive right to defend, compromise, or
settle such Proceeding, but the indemnifying party will not be bound by any
determination of a Proceeding so defended or any compromise or settlement
effected without its consent (which may not be unreasonably withheld).
10. GENERAL PROVISIONS
10.1 EXPENSES
Except as otherwise expressly provided in this
Agreement, each party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution, and performance of this
Agreement and the Contemplated Transactions, including all fees and expenses of
agents, representatives, counsel, and accountants, provided Buyer shall bear the
costs of the preparation of the Company's audited financial statements for the
period ended September 30, 1997.
10.2 PUBLIC ANNOUNCEMENTS
Any public announcement or similar publicity with
respect to this Agreement or the Contemplated Transactions will be issued, if at
all, at such time and in such manner as Buyer
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determines provided that Buyer shall provide Sellers advance notice of any
public announcement that mentions Company or Sellers, excluding the filing of
Buyer's prospectus with the Securities and Exchange Commission or other related
filing or announcements. Unless consented to by Buyer in advance or required by
Legal Requirements, prior to the Closing Sellers shall, and shall cause the
Company to, keep this Agreement strictly confidential and may not make any
disclosure of this Agreement to any Person. Sellers and Buyer will consult with
each other concerning the means by which the Company's employees, customers, and
suppliers and others having dealings with the Company will be informed of the
Contemplated Transactions, and Buyer will have the right to be present for any
such communication.
10.3 CONFIDENTIALITY
(a) Between the date of this Agreement and the
Closing Date, Buyer and Sellers will maintain in confidence, and will cause the
directors, officers, employees, agents, and advisors of Buyer and the Company to
maintain in confidence, and not use to the detriment of another party or the
Company any written, oral, or other information obtained in confidence from
another party or the Company in connection with this Agreement or the
Contemplated Transactions, unless (a) such information is already known to such
party or to others not bound by a duty of confidentiality or such information
becomes publicly available through no fault of such party, (b) the use of such
information is necessary or appropriate in making any filing or obtaining any
consent or approval required for the consummation of the Contemplated
Transactions, or (c) the furnishing or use of such information is required by or
necessary or appropriate in connection with legal proceedings.
(b) If the Contemplated Transactions are not
consummated, each party will return or destroy as much of such written
information as the other party may reasonably request.
10.4 NOTICES
All notices, consents, waivers, and other
communications under this Agreement must be in writing and will be deemed to
have been duly given when (a) delivered by hand (with written confirmation of
receipt), (b) sent by telecopier (with written confirmation of receipt),
provided that a copy is mailed by registered mail, return receipt requested, or
(c) when received by the addressee, if sent by a nationally recognized overnight
delivery service (receipt requested), in each case to the appropriate addresses
and telecopier numbers set forth below (or to such other addresses and
telecopier numbers as a party may designate by notice to the other parties):
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Sellers: "SOS" Office Supply Company
0000 Xxxxxxx Xxxxxx, X.X.
Xxxxx Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
(000) 000-0000
Facsimile No.:
with a copy to: Rhoades, McKee, Boer, Xxxxxxxx & Titta
000 Xxxxxx Xxxxxx, X.X., Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxxx
Attention: Xxxxxx X. Xxxxxxxx
Facsimile No.: (000) 000-0000
Buyer or Acquisition: Office Centre Corporation
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Xx.
Facsimile No.: (000) 000-0000
with a copy to: Atlas, Xxxxxxxx, Trop & Borkson, P.A.
000 Xxxx Xxx Xxxx Xxxxxxxxx, Xxxxx 0000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
10.5 FURTHER ASSURANCES
The parties agree (a) to furnish upon request to
each other such further information, (b) to execute and deliver to each other
such other documents, and (c) to do such other acts and things, all as the other
party may reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.
10.6 WAIVER
The rights and remedies of the parties to this
Agreement are cumulative and not alternative. Neither the failure nor any delay
by any party in exercising any right, power, or privilege under this Agreement
or the documents referred to in this Agreement will operate as a waiver of such
right, power, or privilege, and no single or partial exercise of any such right,
power, or privilege will preclude any other or further exercise of such right,
power, or privilege or the exercise of any other right, power, or privilege. To
the maximum extent permitted by applicable law, (a) no claim or right arising
out of this Agreement or the documents referred to in this Agreement can be
discharged by one party, in whole or in part, by a waiver or renunciation of the
claim or right unless in writing signed by the other party; (b) no waiver that
may be given by a party will be applicable except in the specific instance for
which it is given; and (c) no notice to or demand on one party will be deemed to
be a waiver of any obligation of such party or of the right of
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the party giving such notice or demand to take further action without notice or
demand as provided in this Agreement or the documents referred to in this
Agreement.
10.7 ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements
between the parties with respect to its subject matter (including the Letter of
Intent between Buyer and Sellers dated June 30, 1997) and constitutes (along
with the documents referred to in this Agreement) a complete and exclusive
statement of the terms of the agreement between the parties with respect to its
subject matter. This Agreement may not be amended except by a written agreement
executed by the party to be charged with the amendment.
10.8 DISCLOSURE LETTER
(a) The disclosures in the Disclosure Letter,
and those in any Supplement thereto, must relate only to the representations and
warranties in the Section of the Agreement to which they expressly relate and
not to any other representation or warranty in this Agreement.
(b) In the event of any inconsistency between
the statements in the body of this Agreement and those in the Disclosure Letter
(other than an exception expressly set forth as such in the Disclosure Letter
with respect to a specifically identified representation or warranty), the
statements in the body of this Agreement will control.
10.9 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS
Neither party may assign any of its rights under
this Agreement without the prior consent of the other parties except that Buyer
may assign any of its rights under this Agreement to any Subsidiary of Buyer
provided that such assignment shall not release Buyer from any obligation or
agreement contained in this Agreement. Subject to the preceding sentence, this
Agreement will apply to, be binding in all respects upon, and inure to the
benefit of the successors and permitted assigns of the parties. Nothing
expressed or referred to in this Agreement will be construed to give any Person
other than the parties to this Agreement any legal or equitable right, remedy,
or claim under or with respect to this Agreement or any provision of this
Agreement. This Agreement and all of its provisions and conditions are for the
sole and exclusive benefit of the parties to this Agreement and their successors
and assigns.
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10.10 SEVERABILITY
If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
10.11 SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Agreement are
provided for convenience only and will not affect its construction or
interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Agreement. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.
10.12 TIME OF ESSENCE
With regard to all dates and time periods set
forth or referred to in this Agreement, time is of the essence.
10.13 GOVERNING LAW
This Agreement will be governed by the laws of the
State of New York without regard to conflicts of laws principles.
10.14 COUNTERPARTS
This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
BUYER: SELLERS:
/s/ XXXXX X. XXXXXXX
OFFICE CENTRE CORPORATION --------------------------
XXXXX X. XXXXXXX
By: /s/ X. X. XXXXXX, XX.
----------------------------
Name: Xxxxxx X. Xxxxxx, Xx. /s/ XXXXX X. XXXXXXX
-------------------------
Title: Chairman XXXXX X. XXXXXXX
ACQUISITION:
OFFICE CENTRE GRAND RAPIDS, INC.
By: /s/ X. X. XXXXXX, XX.
-----------------------------
Name: Xxxxxx X. Xxxxxx, Xx.
Title: Chairman
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COMPANY:
"SOS" OFFICE SUPPLY COMPANY
By: /s/ XXXXX X. XXXXXXX
---------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
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"SOS" OFFICE SUPPLY COMPANY
LIST OF DISCLOSURE SCHEDULES AND EXHIBITS
EXHIBITS
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Exhibit 6.2(b)(i) Sellers' Releases
Exhibit 6.2(b)(ii) Employment Agreement
Exhibit 6.4(a) Opinion of Rhoades, McKee, Boer, Xxxxxxxx & Titta
Exhibit 7.3(a) Opinion of Atlas, Xxxxxxxx, Trop & Borkson, P.A.
SCHEDULES
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Schedule 3.3 Capitalization
Schedule 3.6 Real Property; Encumbrances
Schedule 3.10 No Undisclosed Liabilities
Schedule 3.11 Taxes
Schedule 3.13 Employee Benefits
Schedule 3.14(b) List of Governmental Authorizations
Schedule 3.15 Legal Proceedings; Orders
Schedule 3.17 Contracts; No defaults
Schedule 3.18 Insurance
Schedule 3.19 Environmental Matters
Schedule 3.22 Intellectual Property
The Company agrees to furnish supplementally a copy of any
omitted schedule to the Securities Exchange Commission upon request.
