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EXHIBIT 2.18
MERGER AGREEMENT
THIS MERGER AGREEMENT ("Agreement") is made as of April 23, 1998, by
and among OFFICE CENTRE CORPORATION, a Delaware corporation ("Buyer"), OFFICE
CENTRE GEORGIA, a Delaware corporation to be formed as a wholly-owned
subsidiary of Buyer ("Acquisition"), GEORGIA IMPRESSIONS, INC., a Georgia
corporation ("Company"), XXXXXXX X. XXXXXXX, an individual resident in Georgia
and XXXXXX X. XXXX, an individual residing in Georgia (each a "Seller" or
"Shareholder" collectively, the "Sellers" or "Shareholders").
RECITALS
WHEREAS, Buyer, Acquisition, the Company and the Sellers wish to set
forth the terms and conditions upon which a merger of the Company with and into
Acquisition will occur and provide for the representations, warranties,
agreements, and conditions applicable to the transactions contemplated by this
Agreement;
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.
WHEREAS, the shareholders of Acquisition and the Company have approved
this Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following terms have the
meanings specified or referred to in this Section 1:
"APPLICABLE CONTRACT"--any Contract (a) under
which the Company has or may acquire any rights, (b) under which the Company
has or may become subject to any obligation or liability, 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.
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"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 any inaccuracy in or breach of, or any failure to perform or comply 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 the Company with and into Acquisition;
(b) the execution, delivery, and performance of the
Employment Agreement;
(c) the performance by Buyer, Acquisition, the Company and
Sellers of their respective covenants and obligations under this Agreement; and
"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 10.2.
"DISCLOSURE LETTER"--the disclosure letter delivered by
Sellers and the Company to Buyer concurrently with the execution and delivery
of this Agreement.
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"EBITDA"--earnings before interest, taxes, depreciation and
amortization, as adjusted.
"EMPLOYMENT AGREEMENT"--as defined in Section 7.2.
"ENCUMBRANCE"--any charge, claim, 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, or obligation, 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;
(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 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. ss. 9601 et
seq., as amended ("CERCLA").
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"ENVIRONMENTAL LAW"--any Legal Requirement that requires or
relates to:
(a) advising or notifying of appropriate authorities and
employees of 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) reducing to acceptable levels the risks inherent in the
transportation of hazardous substances, pollutants, oil, or other potentially
harmful substances;
(e) cleaning up pollutants that have been released,
preventing the threat of release, or paying the costs of such clean up or
prevention;
(f) 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 the Company and any
buildings, plants, structures, or equipment (including motor vehicles, tank
cars, and rolling stock) currently or formerly owned or operated by the
Company.
"GAAP"--generally accepted United States 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 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:
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(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) 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, processing, production, refinement,
Release, storage, transfer, transportation, treatment, or use of Hazardous
Materials in, on, under, about, or from the Facilities or any part thereof into
the Environment and any other act 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.
"INTERIM BALANCE SHEET"--as defined in Section 3.4.
"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.
"IRC"--the Internal Revenue Code of 1986 or any successor
law, 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 ordinary
course of business.
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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 or officer of such Person
has, or at any time had, Knowledge of such fact or other matter.
"LEGAL REQUIREMENT"--any federal, state, local, municipal, or
other administrative order, constitution, law, ordinance, principle of common
law, regulation, or statute.
"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 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 businesses 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.
"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.
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"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, general
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;
(e) For purposes of this definition, (a) the "Family" of an
individual includes (i) the individual, (ii) the individual's spouse, (iii) any
other natural person who is related to the individual or the individual's
spouse within the second degree, and (iv) 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 5% of the outstanding
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voting power of a Person or equity securities or other equity interests
representing at least 5% 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.
"SELLER"--as defined in the first paragraph of this
Agreement.
"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 Acquisition into the Company.
"TAX"--any tax (including any income tax, capital gains tax,
value added tax, sales tax, property tax, gift tax, or estate levy), levy,
assessment, tariff, duty, deficiency, or other fee in 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
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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) 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, Company shall be merged with and into
Acquisition (the "Merger"). The separate existence and corporate organization
of the Company shall thereupon cease and the Company and Acquisition shall
thereupon be a single corporation. Acquisition shall be the surviving
corporation in the Merger (the "Surviving Corporation") and shall continue its
existence under the provisions of the Delaware General Corporation Law.
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 Acquisition and shall be filed
with the Secretary of State of the States of Georgia and Delaware. The Merger
shall become effective at such time as the Articles of Merger are filed with
the Secretary of State of the States of Georgia and Delaware, 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.
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2.4 BY-LAWS
The By-Laws of 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 Xxxxxx X.
Xxxxxx, Xx., [Buyer appointment] and [Seller appointment] to be appointed as
directors of the Surviving Corporation. Xxxxxx X. Xxxx, Xxxx Xxxxxxx and Xxxxxx
X. Xxxxxx, Xx. shall serve as the officers of the Surviving Corporation 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
(i) on the date the conditions in Sections 7 and 8 have been satisfied or
otherwise waived, 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
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,
the 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 1 share of capital stock of the Surviving Corporation
and shall represent all the issued and outstanding shares of the Surviving
Corporation; and (ii) the shares of the Company held by Sellers shall be
converted into and shall become, without further action on the part of the
Sellers, the right to receive six (6) times the Company's annualized EBITDA
based upon the annualized adjusted projected EBITDA for the number of full
months of the fiscal year beginning July 1, 1997 and ending with the month
ended December 31, 1997. The EBITDA shall be adjusted as set forth on Schedule
2.7 (a). The consideration shall be (i) seventy-five percent (75%) in shares of
restricted Common Stock of Buyer which number of shares of Common Stock shall
be determined by dividing seventy-five percent (75%) of the consideration to be
received by Buyer's initial public offering price per share (the "IPO Price");
and (ii) twenty-five percent (25%) in cash. The adjusted EBITDA is Two Hundred
Seventeen Thousand Dollars ($217,000) resulting in a total purchase price
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of One Million Three Hundred Two Thousand Dollars ($1,302,000). Sellers shall
be entitled to an additional cash payment in an amount equal to the excess of
cash available to the Company at closing in excess of One Hundred Thousand
Dollars ($100,000) provided no more than $0 is outstanding under the Company's
line of credit and all payables are current.
3. REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers and the 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 its jurisdiction of
incorporation, 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.
(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 the Company, enforceable against Sellers and the
Company in accordance with its terms subject to bankruptcy, insolvency or other
laws affecting the rights of creditors generally. Upon the execution and
delivery by Sellers of the Employment Agreement, the Employment Agreement will
constitute the legal, valid, and binding obligations of each Seller enforceable
against each Seller in accordance with its respective terms. Sellers and the
Company have the absolute and unrestricted right, power, authority, and
capacity to execute and deliver this Agreement and to perform their obligations
under this Agreement. The Sellers and the Company have approved this Agreement
under applicable state corporate law provisions, and such approval is binding.
(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):
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(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 material remedy or obtain any
material relief under, any Legal Requirement or any Order to which the Company
or Sellers, 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 material
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 material Applicable Contract; or
(vi) result in the imposition or creation of any Encumbrance
upon or with respect to any of the material assets owned or used by the
Company.
Except as set forth in Part 3.2 of the Disclosure Letter,
neither Sellers 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 Agreement or the consummation or performance of any of the
Contemplated Transactions.
(c) Each Seller is acquiring the Buyer's Common Stock for his own
account and not with a view to its 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. Seller acknowledges
that each certificate representing Buyer's Common Stock acquired pursuant to
this Agreement shall bear the following restrictive legend:
THE SECURITIES REPRESENTED BY THE CERTIFICATE (THE
"SHARES") HAVE NOT BEEN REGISTERED UNDER
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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, REASONABLY
SATISFACTORY TO THE CORPORATION, THAT SUCH REGISTRATION IS
NOT REQUIRED AS TO SAID SALE, OFFER OR DISTRIBUTION.
Each Seller further acknowledges that he shall be subject to such "lock-up"
restriction as may be imposed by the Buyer's underwriter or any entity
regulating the issuance of the Buyer's Common Stock in its initial public
offering.
3.3 CAPITALIZATION
The authorized equity securities of the Company consist of
100,000 shares of common stock, $1.00 par value, of which 16,000 shares are
issued and outstanding and constitute all the shares of the Company. The
Sellers are, and will be on the Closing Date, the record and beneficial owner
and holder of the shares of the Company free and clear of all Encumbrances.
Each Seller owns a number of shares set forth in Part 3.3 of the Disclosure
Letter. All of the outstanding shares of the Company have been duly authorized
and validly issued and are fully paid and nonassessable. 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
other Legal Requirement. The Company does not own, or has 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 September 30, 1996 and September 30, 1997
("Balance Sheet") and the related statements of income, changes in
stockholders' equity, and cash flow for each of the fiscal years then ended and
(b) an unaudited consolidated balance sheet of the Company as at December 31,
1997 (the "Interim Balance Sheet") and the related consolidated statement of
income, changes in stockholders' equity, and cash flow for the three (3) months
then ended. Such financial statements and notes fairly present in all material
respects 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
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case of interim financial statements, to normal recurring year-end adjustments
(the effect of which will not, individually run the aggregate, be materially
adverse). No financial statements of any Person other than the Company are
required by GAAP to be included in the financial statements.
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 and the requirements of Section 13(b)(2) of the Securities
Exchange Act of 1934, as amended (regardless of whether or not the Company is
subject to that Section), including the maintenance of an adequate system of
internal controls. The minute books of the Company contain accurate and
complete records of all meetings held of, and corporate action taken by, the
stockholders, the Board of Directors, and committees of the Board of Directors
of the Company. At the Closing, all of those books and records will be in the
possession of the Company.
3.6 TITLE TO PROPERTIES; ENCUMBRANCES
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 leases and other instruments by which the Company occupies or
acquired such real property and interests and such instruments are true,
complete and accurate. The Company owns (with good and marketable title in the
case of real property) or lease all the properties and assets (whether real,
personal, or mixed and whether tangible or intangible) that they purport to own
or lease located in the facilities owned or operated by the Company and
reflected as owned or leased 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, 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 and the
Interim 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 except with respect to all such
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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 (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.
3.7 CONDITION AND SUFFICIENCY OF ASSETS
The buildings, plants, structures, and equipment of the
Company are structurally sound, in good operating condition and repair, and
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.
3.8 ACCOUNTS RECEIVABLE
All accounts receivable of the Company that are reflected on
the Balance Sheet, 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, the Interim Balance Sheet or on the accounting records of
the Company as of the Closing Date (which reserves are 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,
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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. Part 3.8 of the
Disclosure Letter contains 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.
3.9 INVENTORY
All inventory of the Company, whether or not reflected in the
Balance Sheet, or the Interim Balance Sheet, 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 $10,000,
all of which have been written off or written down to net realizable value in
the 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. The quantities of each item of inventory 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
whether absolute, accrued, contingent, or otherwise) except for liabilities or
obligations reflected or reserved against in the Balance Sheet and current
liabilities incurred in the Ordinary Course of Business since the date 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 pursuant to applicable Legal
Requirements. Sellers have delivered to Buyer copies of, and Part 3.11 of the
Disclosure Letter contains a complete and accurate list of, all such Tax
Returns filed by the Company 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 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.
(b) Except as set out in Part 3.11 of the Disclosure
Schedule, no United States federal income Tax Returns of the Company subject to
such Taxes have been audited by the
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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
Except for group medical insurance and associated life
insurance others, the Company (i) has not contributed to any pension, profit
sharing, option or other incentive plan or other type of employee benefit plan,
(ii) does not maintain or has maintained, is or was a party to, or otherwise
participates or participated in, on its own behalf or on behalf of any former
employees, any pension, profit sharing, option or other incentive plan or other
type of employee benefit plan, or (iii) does not have any obligation to, or
customary arrangement with, former employees, if any, for bonuses, incentive
compensation, vacation, severance pay, sick pay, sick leave, insurance, service
award, relocation, disability or other benefits, whether oral or written.
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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;
(ii) no event has occurred or circumstance exists that
(with or without notice or lapse of time) in any material respect (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 material Legal Requirement, or (B)
any actual, alleged, possible, or potential material 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
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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 material
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
(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 except where the failure to
obtain a Governmental Authorization would not result in a material adverse
change to the Company.
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 that
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, no such
Proceeding as described above has been Threatened. 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
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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
(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 the 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
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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,
distributions or other compensation to any stockholder, director, officer, or
employee;
(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, taken as a whole;
(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 $10,000.
(g) except in the Ordinary Course of Business, sale, lease, or
other disposition of any asset or property (other than inventory in the
Ordinary Course of Business) 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 $10,000;
(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:
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(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;
(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 and sales commission arrangements for employees;
(x) each power of attorney granted by the Company that is
currently effective and outstanding;
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(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 future capital
expenditures in excess of $15,000;
(xiii) each currently effective written warranty, guaranty,
indemnity, and or other similar undertaking with respect to contractual
performance extended by the Company other than in the Ordinary Course of
Business;
(xiv) each Contract for indebtedness of the Company
involving future 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.
(b) Except as set forth in Part 3.17(b) of the Disclosure
Letter:
(i) Sellers (and no Related Person of the Sellers) do not
have or may acquire any rights under, and Sellers do not have 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 material obligation or liability or by which
the Company or
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any of the material assets owned or used by the Company is or was bound;
(ii) each other Person that has or had any material
obligation or liability under any Contract under which the Company has or had
any rights is in full compliance with all material 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 Applicable 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 Applicable Contracts with any Person and, to
Sellers' Knowledge, no such Person has made written demand for such
renegotiation.
(f) The Applicable Contracts relating to the sale 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 made available to Buyer true, complete and
correct copies of the Contracts required to be set forth in Part 3.17 of the
Disclosure Letter.
3.18 INSURANCE
(a) Sellers have made available 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; and
(ii) true and complete copies of all pending applications
for policies of insurance.
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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) All material assets, properties and risks of the Company
are, and for the past three years have been, covered by valid and, except for
policies that have expired under their terms in the ordinary course, currently
effective insurance policies or binders of insurance (including, without
limitation, general liability insurance, property insurance and workers'
compensation insurance) issued in favor of the Company, in each case with
responsible insurance companies, in such types and amounts and covering such
risks as are consistent with customary practices and standards of companies
engaged in business and operations similar to those of the Company. There has
not been any claim under any such insurance policy during the past three years
that could reasonably be expected to have a material adverse effect on the
Company.
(d) Except as set forth on Part 3.18(d) of the Disclosure
Letter:
(i) Since January 1, 1993 the Company has not 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.
(ii) The Company has paid all premiums due, and have
otherwise performed all of their obligations, under each policy to which the
Company is a party or that provides coverage to the Company or director
thereof.
(iii) The Company has given notice to the insurer of all
claims that may be insured thereby.
3.19 ENVIRONMENTAL MATTERS
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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. Neither Sellers or the Company has any basis to expect,
nor has any of them 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, or the Company, or from which Hazardous Materials have
been transported, treated, stored, handled, transferred, disposed, recycled, or
received.
(b) There are no pending or, to the Knowledge of Sellers and the
Company, Threatened claims, Proceedings or Encumbrances 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 the
Company has or had an interest.
(c) Neither Sellers or the Company has any basis to expect, nor
has any of them 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 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 the Company have been transported, treated, stored, handled,
transferred, disposed, recycled, or received.
(d) The Company has no 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 the Company
(or any predecessor), has or had an interest.
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(e) There are no Hazardous Materials present on or in the
Environment at the Facilities, 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 incorporated into any structure therein or thereon. The
Company has not permitted or conducted 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.
(f) There has been no Release or Threat of Release, of any
Hazardous Materials at or from the Facilities, or from or by any other
properties and assets (whether real, personal, or mixed) in which the Company
has or had an interest.
(g) Sellers have delivered to Buyer true and complete copies and
results of any reports, studies, analyses, tests, or monitoring possessed by
Sellers or the Company pertaining to Hazardous Materials or Hazardous
Activities in, on, or under the Facilities, or concerning compliance by the
Company with Environmental Laws.
(h) 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) Part 3.20 of the Disclosure Letter contains 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, 1997; vacation accrued; and service credited
for purposes of vesting and eligibility to participate under the Company's
insurance, medical, welfare, or vacation plan, or any other employee benefit
plan.
(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 director. No director, officer,
or other key employee of the
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Company presently intends to terminate his employment with the Company.
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. 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) The Company does not own or licenses for use any patents,
trademarks, trade names, service marks, mask works or copyrights, other than
the common trade law names, the common law trade names listed on 3.22 of the
Disclosure Letter.
(b) There has not been any actual or alleged infringement or use
or misuse by any party of the Company's trade secrets, confidential information
or other intellectual property rights.
3.23 CERTAIN PAYMENTS
Neither the Company or any director, officer, agent, or employee
of the Company, or any other person associated with or acting for or on behalf
of the Company, has directly or indirectly and in violation of any Legal
Requirement (a) made any contribution, gift, bribe, rebate, payoff, influence
payment, kickback, or other payment to any person, private or public,
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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, (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 knowingly 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.
3.25 RELATIONSHIPS WITH RELATED PERSONS
Neither Sellers or any Related Person of any Seller or of the
Company has any interest in any property (whether real, personal, or mixed and
whether tangible or intangible), used in or pertaining to the Company's
business. Neither Sellers or any Related Person of any Seller or of the Company
owns (of record or as a beneficial owner) an equity interest or any other
financial or profit interest in, a Person that (i) has business dealings or a
material financial interest in any transaction with the Company, or (ii)
engages 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, neither Sellers or any Related Person of any Seller or of
the Company is a party to any Contract with, or has any claim or right against
the Company that will survive the Closing.
3.26 BROKERS OR FINDERS
Sellers, the Company 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
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Acquisition and Buyer (the "Buyer Companies") jointly and
severally represent and warrant to Sellers as follows:
4.1 ORGANIZATION; POWER; QUALIFICATION
Acquisition will at the Closing Date be a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware 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
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 may be limited by bankruptcy, insolvency or other
laws effecting creditors' rights generally.
4.3 CAPITALIZATION
As of the date hereof, the authorized common stock of the Buyer
consist of 50,000,000 shares of common stock, $.001 par value per share, of
which 4,712,372 shares are issued and outstanding. All of the outstanding
common stock of the Buyer has been duly authorized and validly issued and are
fully paid and nonassessable. The shares of the Buyer's Common Stock to be
delivered to Sellers at Closing pursuant to Section 2.7 will be duly
authorized, validly issued, fully paid and non-assessable.
4.4 BOOKS AND RECORDS
The books of account, minute books, stock record books, and
other records of the Buyer, are complete, in all material respects, and correct
and have been maintained in
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accordance with sound business practices, including the maintenance of an
adequate system of internal controls.
4.5 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.
4.6 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 the 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 THE 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 the Company and its 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 pertaining to the Company as Buyer may reasonably request,
and (c) furnish Buyer and Buyer's Advisors with such additional financial,
operating, and other data and information pertaining to the Company as Buyer
may reasonably request.
5.2 OPERATION OF THE BUSINESS OF THE COMPANY
Between the date of this Agreement and the Closing Date, Sellers
will cause the Company to:
(a) conduct the business of the Company only in the Ordinary
Course of Business;
(b) preserve intact the current business organization of the
Company, keep available the services of the
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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, Sellers
will promptly notify Buyer in writing if Sellers become 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 any
Seller becomes aware of the occurrence after the date of this Agreement of any
fact or condition that would (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
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period, Sellers 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 10, Sellers will not, and the Company will not and each of
their Representatives will not directly or indirectly solicit, initiate or
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 the
Company. Sellers or 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 Section
7 to be satisfied.
6. COVENANTS OF BUYER PRIOR TO CLOSING DATE.
6.1 NOTIFICATION
Between the date of this Agreement and the Closing Date, Buyer
will promptly notify Sellers in writing if Buyer becomes aware of any fact or
condition that causes or constitutes a Breach of any of Buyer's or
Acquisition's representations and warranties as of the date of this Agreement,
or if Buyer becomes aware of the occurrence after the date of this Agreement or
any fact or condition that would, except as expressly contemplated by this
Agreement, cause or constitute a Breach of any such representation or warranty.
6.2 BEST EFFORTS
Between the date of this Agreement and the Closing Date, Buyer
will use its Best Efforts to cause the conditions in Section 8 to be satisfied.
7. CONDITIONS PRECEDENT TO BUYER'S AND ACQUISITION'S OBLIGATION
TO CLOSE
Buyer's and Acquisition's obligations to consummate the Merger
and to take the other actions required to
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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):
7.1 ACCURACY OF REPRESENTATIONS
All of Sellers' and the Company's representations and warranties
in this Agreement must have been accurate in all material respects as of the
date of this Agreement, and must be accurate in all material respects as of the
Closing Date as if made on the Closing Date, without giving effect to any
supplement to the Disclosure Letter.
7.2 SELLERS' PERFORMANCE
(a) All of the covenants and obligations that Sellers and the
Company are required to perform or to comply with pursuant to this Agreement at
or prior to the Closing, must have been duly performed and complied with in all
material respects.
(b) There shall be delivered at Closing (i) the Employment
Agreements with Xxxx Xxxxxxx and Xxxxxx X. Xxxx ("Xxxxxxx" and "Xxxx,"
respectively) in the form of Exhibit 7.2(b)(i) (the "Employment Agreements")
executed by Xxxxxxx and Pace and (ii) the certificate executed by Sellers and
an officer of the Company representing to Buyer and Acquisition that Sellers'
and the Company's representations and warranties in this Agreement was accurate
in all material respects as to the date of this Agreement and is accurate in
all material respects as of the Closing as if made on the Closing Date, and
(iii) each of the other covenants and obligations in the Agreement must have
been performed and complied with in all respects.
7.3 CONSENTS
Each of the consents identified in subpart ____ of the
Disclosure Letter, must have been obtained and must be in full force and
effect.
7.4 ADDITIONAL DOCUMENTS
Each of the following documents must have been delivered to
Buyer:
(a) an opinion of Xxxxxxx Xxxxxxxxxx & Xxxxxxx, dated the Closing
Date, in the form of Exhibit 7.4(a);
(b) 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 8.4(a), (ii) evidencing the accuracy of any of Sellers'
and the Company's
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representations and warranties, (iii) evidencing the performance by Sellers,
the Company, or the compliance by Sellers 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 7, or
(v) otherwise facilitating the consummation or performance of any of the
Contemplated Transactions.
7.5 NO PROCEEDINGS
Since the date of this Agreement, there must not have been
commenced, pending or Threatened 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.
7.6 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.
7.7 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.
7.8 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.
7.9 MATERIAL ADVERSE CHANGE
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There shall have been no material adverse change in the
business, operations, prospects, financial condition or results of the Company.
7.10 INITIAL PUBLIC OFFERING
Buyer shall have completed its initial public offering.
8. CONDITIONS PRECEDENT TO SELLERS' AND THE COMPANY'S OBLIGATION
TO CLOSE
Sellers' and the Company's obligations 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 and the
Company, in whole or in part):
8.1 ACCURACY OF REPRESENTATIONS
All of Buyer's and Acquisition's representations and warranties
in this Agreement must have been accurate in all material respects as of the
date of this Agreement and must be accurate in all material respects as of the
Closing Date as if made on the Closing Date.
8.2 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 must have been performed and complied with
in all material respects.
(b) Buyer must have executed and delivered (i) the Employment
Agreement (ii) a certificate executed by an officer of Buyer representing to
Sellers that Buyer and Acquisition's representations and warranties contained
in this Agreement were accurate in all material respects as to the date of this
Agreement and is accurate in all material respects as of the Closing as if made
on the Closing.
8.3 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 8.3(a); and
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(b) such other documents as Sellers or their 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
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 (v) otherwise facilitating the
consummation or performance of any of the Contemplated Transactions.
8.4 INITIAL PUBLIC OFFERING
Buyer shall have completed its initial public offering.
8.5 GUARANTEES
At Closing, Buyer shall either (i) release; (ii) provide a
mechanism for; or (iii) agree to indemnify Sellers from any guarantees as set
forth on Schedule 8.5.
9. TERMINATION
9.1 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 cured or waived within 10 days of
the date of notification of such Breach;
(b) (i) by Buyer and Acquisition 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
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 the
Company, if any of the conditions in Section 8 has not been satisfied of the
Closing Date or if satisfaction of such a condition is or becomes impossible
(other than through the failure of Sellers and the 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
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(d) by either Buyer and Acquisition or Sellers and the Company
if the Closing 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 September 30, 1998, or such later date as the
parties may agree upon.
A party's right of termination under Section 9.1 is in addition
to any other rights it may have under this Agreement or otherwise, the exercise
of a right of termination will not be an election of remedies. If this
Agreement is terminated pursuant to Section 9.1, all further obligations of the
parties under this Agreement terminate, except the obligations in Section 11.1
and 11.3 will survive; provided, however, that if this Agreement is terminated
by a party because of a breach of the Agreement by the other party or because
one or more of the conditions to the terminating party's obligations is not
satisfied as a result of the other party's failure to comply with its
obligations under this Agreement, the terminating party's right to pursue all
legal remedies will survive such termination unimpaired.
10. INDEMNIFICATION; REMEDIES
10.1 SURVIVAL
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 until the thirty-six (36) months from the Closing except
for the representations and warranties in Sections 3.3, 3.11, 3.15 and 3.19,
which shall survive for the applicable statute of limitations. 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.
10.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS
Sellers will jointly and severally indemnify and hold harmless
Buyer, Acquisition, 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 (including incidental
and consequential damages), expense (including costs of investigation and
defense and reasonable attorneys' and other professional fees) or diminution of
value, whether or not involving a third-
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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, without 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 Sellers or the Company of any covenant or
obligation of Sellers or the Company in this Agreement;
(c) any product shipped or any services provided by Company
prior to the Closing Date; and
(d) 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.
The remedies provided in this Section 10.2 will not be exclusive
of or limit any other remedies that may be available to Buyer or the other
Indemnified Persons.
10.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER
Buyer will indemnify and hold harmless Sellers for, and will pay
to the Sellers the amount of, any loss, liability, claim, damage (including
incidental and consequential damages), 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;
(b) any Breach by Buyer of any covenant or obligation of Buyer
in this Agreement;
(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 any Person acting
on their behalf) in connection with any of the Contemplated Transactions.
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The remedies provided in this Section 10.3 will not be exclusive
of or limit any other remedies that may be available to Sellers.
10.4 TIME 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, 3.15 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. A claim with
respect to Section 3.3, 3.11, 3.15 and 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 to comply with prior to the
Closing Date, unless on or before thirty-six (36) months from the date of
Closing, Sellers notify Buyer of claims specifying the factual basis of that
claim.
10.5 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS
(a) Promptly after receipt by an indemnified party under
Sections 10.2 or 10.3 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 indemnified
party's failure to give such notice.
(b) If any Proceeding referred to in Section 10.5(a) is brought
against an indemnified party and it gives notice, unless the claim involves
Taxes, 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
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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 10 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 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).
11. GENERAL PROVISIONS
11.1 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
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Transactions, including all fees and expenses of agents, representatives,
counsel, and accountants.
11.2 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 determines. 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
other than their professional advisors. 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.
11.3 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, Acquisition 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
legal proceedings. Notwithstanding the foregoing, Buyer may disclose
information about this Agreement, the Sellers, or the Company in connection
with its initial public offering and any related obligations therewith.
(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.
11.4 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, (b) sent by telecopier (with written confirmation
of receipt), provided that a copy is mailed by registered mail, return receipt
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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):
Sellers: Georgia Impressions, Inc.
0000 Xxxxxxx Xxxxx, Xxxxx X
Xxxxxxx, Xxxxxxx 00000
Attention: ___________________
Facsimile No.: (___) ________
with a copy to: Xxxxxxx Friedewald & Xxxxxxx
000 Xxxxxxxxxx Xxx.
Xxxxxxxx, XX 00000
Attention: _____________________
Facsimile No.: (___) ________
Buyer or Acquisition: Office Center 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
11.5 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.
11.6 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
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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 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.
11.7 ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements between the
parties with respect to its subject matter 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.
11.8 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. Subject to the preceding
sentence, this Agreement will apply to, be binding in all respects upon, and
inure to the benefit of the heirs, 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 heirs, successors and assigns.
11.9 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.
11.10 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
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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.
11.11 TIME OF ESSENCE
With regard to all dates and time periods set forth or referred
to in this Agreement, time is of the essence.
11.12 GOVERNING LAW
This Agreement will be governed by the laws of the State of
Delaware without regard to conflicts of laws principles.
11.13 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.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed and
delivered this Agreement as of the date first written above.
BUYER: SELLERS:
OFFICE CENTRE CORPORATION /s/ Xxxxxxx X. Xxxxxxx
__________________________________
XXXXXXX X. XXXXXXX
/s/ X.X. Xxxxxx, Xx. /s/ Xxxxxx X. Xxxx
By:___________________________ __________________________________
Name: Xxxxxx X. Xxxxxx, Xx. XXXXXX X. XXXX
Title:
ACQUISITION:
OFFICE CENTRE GEORGIA
/s/ X.X. Xxxxxx, Xx.
By:___________________________
Name: XXXXXX X. XXXXXX, XX.
Title:
COMPANY:
GEORGIA IMPRESSIONS, INC.
/s/ Xxxxxx X. Xxxx
By:___________________________
Name: XXXXXX X. XXXX
Title:
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GEORGIA IMPRESSIONS, INC.
LIST OF DISCLOSURE SCHEDULES AND EXHIBITS
EXHIBITS
--------
Exhibit A Independent Sales Groups Commission
Exhibit 7.2(b)(i) "Employment Agreement"
Exhibit 7.4(a) Opinion of Xxxxxxx Xxxxxxxxxx & Xxxxxxx
Exhibit 8.3(a) Opinion of Atlas, Xxxxxxxx, Trop & Borkson,
P.A.
SCHEDULES
---------
Schedule 3.1 (a) Organization and Good Standing
Schedule 3.2(b) Authority; No Conflict
Schedule 3.3 Capitalization
Schedule 3.5 Books and Records
Schedule 3.6 Real Property; Encumbrances
Schedule 3.14 Compliance with Legal Requirements;
Governmental Authorizations
Schedule 3.17 Contracts; No Default
Schedule 3.20 Employees
The Company agrees to furnish supplementally a copy of any
omitted schedule to the Securities Exchange Commission upon request.
