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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
AMONG
MAJOR REALTY CORPORATION
(the "Company")
PBD HOLDINGS, L.P.
("BUYER")
and
PEMBROKE ACQUISITION, INC.
("MERGER SUBSIDIARY")
DATED AS OF MARCH 4, 1998
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TABLE OF CONTENTS
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ARTICLE 1 THE MERGER......................................................................................2
SECTION 1.01. The Merger................................................................................2
SECTION 1.02. Conversion of Shares At the Effective Time................................................2
SECTION 1.03. Surrender and Payment.....................................................................2
SECTION 1.04. Dissenting Shares.........................................................................4
SECTION 1.05. Stock Options.............................................................................4
SECTION 1.06. Lost Certificates.........................................................................5
SECTION 1.07. Adjustments...............................................................................5
SECTION 1.08. FIRPTA....................................................................................5
ARTICLE 2 THE SURVIVING CORPORATION.......................................................................5
SECTION 2.01. Certificate of Incorporation..............................................................5
SECTION 2.02. Bylaws....................................................................................5
SECTION 2.03. Directors and Officers....................................................................6
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................................................6
SECTION 3.01. Corporate Existence and Power.............................................................6
SECTION 3.02. Corporate Authorization...................................................................6
SECTION 3.03. Governmental Authorization................................................................6
SECTION 3.04. Non-contravention.........................................................................7
SECTION 3.05. Capitalization............................................................................7
SECTION 3.06. Subsidiaries..............................................................................7
SECTION 3.07. SEC Filings...............................................................................8
SECTION 3.08. Financial Statements......................................................................8
SECTION 3.09. Disclosure Documents......................................................................9
SECTION 3.10. Absence of Certain Changes................................................................9
SECTION 3.11. No Undisclosed Material Liabilities......................................................10
SECTION 3.12. Litigation...............................................................................11
SECTION 3.13. Taxes....................................................................................11
SECTION 3.14. ERISA....................................................................................11
SECTION 3.15. Compliance with Laws.....................................................................14
SECTION 3.16. Finders' Fees............................................................................15
SECTION 3.17. Other Information........................................................................15
SECTION 3.18. Environmental Matters....................................................................15
SECTION 3.19. Vote Required............................................................................16
SECTION 3.20. Anti-Takeover Plan; State Takeover Statutes..............................................16
SECTION 3.21. Material Contracts.......................................................................16
SECTION 3.22. Properties...............................................................................17
SECTION 3.23. Licenses and Permits.....................................................................18
SECTION 3.24. Receivables..............................................................................18
SECTION 3.25. Labor Matters............................................................................18
SECTION 3.26. Required and Other Consents..............................................................19
SECTION 3.27. Intellectual Property....................................................................19
SECTION 3.28. Insurance................................................................................19
SECTION 3.29. Related Party Transactions...............................................................19
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ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER........................................................20
SECTION 4.01. Existence and Power......................................................................20
SECTION 4.02. Authorization............................................................................20
SECTION 4.03. Governmental Authorization...............................................................20
SECTION 4.04. Non-contravention........................................................................20
SECTION 4.05. Disclosure Documents.....................................................................21
SECTION 4.06. Finders' Fees............................................................................21
ARTICLE 5 COVENANTS OF THE COMPANY.......................................................................21
SECTION 5.01. Conduct of the Company...................................................................21
SECTION 5.02. Company Information Statement............................................................23
SECTION 5.03. Access to Information....................................................................24
SECTION 5.04. Other Offers.............................................................................24
SECTION 5.05. Notices of Certain Events................................................................24
SECTION 5.06. State Takeover Laws......................................................................25
SECTION 5.07. Resignations.............................................................................25
ARTICLE 6 COVENANTS OF BUYER.............................................................................25
SECTION 6.01. Confidentiality..........................................................................25
SECTION 6.02. Obligations of Merger Subsidiary.........................................................26
ARTICLE 7 COVENANTS OF BUYER AND THE COMPANY.............................................................26
SECTION 7.01. Best Efforts.............................................................................26
SECTION 7.02. Certain Filings..........................................................................26
SECTION 7.03. Public Announcements.....................................................................26
SECTION 7.04. Further Assurances.......................................................................26
ARTICLE 8 CONDITIONS TO THE MERGER.......................................................................27
SECTION 8.01. Conditions to the Obligations of Each Party..............................................27
SECTION 8.02. Conditions to the Obligations of Buyer and Merger Subsidiary.............................27
SECTION 8.03. Conditions to the Obligations of the Company.............................................28
ARTICLE 9 TERMINATION....................................................................................29
SECTION 9.01. Termination..............................................................................29
SECTION 9.02. Effect of Termination....................................................................29
SECTION 9.03. Payment of Breakup Fees and Expenses Upon Termination....................................30
ARTICLE 10 MISCELLANEOUS.................................................................................30
SECTION 10.01. Notices.................................................................................30
SECTION 10.02. Nonsurvival of Representations and Warranties...........................................31
SECTION 10.03. Amendments; No Waivers..................................................................31
SECTION 10.04. Expenses................................................................................31
SECTION 10.05. Successors and Assigns..................................................................31
SECTION 10.06. Governing Law...........................................................................32
SECTION 10.07. WAIVER OF JURY TRIAL....................................................................32
SECTION 10.08. Counterparts; Effectiveness; Third Party Beneficiaries..................................32
SECTION 10.09. Severability............................................................................32
SECTION 10.10. Specific Performance....................................................................32
SECTION 10.11. Entire Agreement........................................................................32
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of March 4, 1998, among Major
Realty Corporation, a Delaware corporation (the "Company"), PBD Holdings, L.P.,
a Delaware limited partnership ("BUYER"), and Pembroke Acquisition, Inc., a
Delaware corporation and a wholly owned subsidiary of Buyer ("MERGER
SUBSIDIARY").
WHEREAS, the Board of Directors of each of Buyer, the Company and
Merger Subsidiary have determined that it is advisable and in the best interests
of their respective stockholders to engage in the transactions contemplated
hereby; and
WHEREAS, the Board of Directors of the Company has unanimously approved
the merger (the "MERGER") of the Merger Subsidiary with and into the Company in
accordance with the terms of this Agreement and the General Corporation Law of
the State of Delaware (the "DELAWARE LAW") and other applicable law; and
WHEREAS, this Agreement and the Merger shall be approved by the
stockholders of the Company for purposes of Delaware Law at such time as the
Company is in receipt of written consents approving this Agreement and the
Merger executed by the holders of that number of shares of common stock, par
value $.01 per share, of the Company (each, a "SHARE") representing the right to
cast a majority of the votes entitled to be cast at a meeting to consider the
Agreement and the Merger; and
WHEREAS, holders of a majority of the issued and outstanding Shares are
delivering to the Company concurrently with the execution of this Agreement
written consents approving this Agreement and the Merger as permitted by the
certificate of incorporation and bylaws of the Company and Delaware Law; and
WHEREAS, such consent constitutes the only action necessary by
stockholders of the Company required in order to authorize this Agreement and
the Merger under the Company's certificate of incorporation and bylaws and
Delaware Law;
WHEREAS, as a condition to the willingness of Buyer and Merger
Subsidiary to enter into this Agreement, the holders of 3,461,111 Shares have
entered into Stockholders Agreements, each dated as of the date hereof (the
"Stockholders Agreements") with the Buyer.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, the parties hereto agree as follows:
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ARTICLE 1
THE MERGER
SECTION 1.01. THE MERGER.
(a) At the Effective Time (as defined below), Merger Subsidiary shall
be merged with and into the Company in accordance with Delaware Law, whereupon
the separate existence of Merger Subsidiary shall cease, and the Company shall
be the surviving corporation (the "SURVIVING CORPORATION").
(b) As soon as practicable after the later of (i) satisfaction or
waiver of all conditions to the Merger and (ii) the 20th calendar day after the
Company Information Statement (as defined below) is first sent or given to the
stockholders of the Company, the Company and Merger Subsidiary will file a
certificate of merger with the Secretary of State of the State of Delaware and
make all other filings or recordings required by Delaware Law in connection with
the Merger. The Merger shall become effective at such time as the certificate of
merger is duly filed with the Secretary of State of the State of Delaware or at
such later time as is specified in the certificate of merger (the "EFFECTIVE
TIME").
(c) From and after the Effective Time, the Surviving Corporation shall
possess all the rights, privileges, powers and franchises and be subject to all
of the restrictions, disabilities and duties of the Company and Merger
Subsidiary, all as provided under Delaware Law.
SECTION 1.02. CONVERSION OF SHARES AT THE EFFECTIVE TIME.
(a) Each Share held by the Company as treasury stock or owned by Buyer
or any subsidiary of Buyer immediately prior to the Effective Time shall be
canceled and cease to exist, and no payment shall be made with respect thereto;
(b) Each share of common stock of Merger Subsidiary outstanding
immediately prior to the Effective Time shall be converted into and become one
share of common stock of the Surviving Corporation with the same rights, powers
and privileges as the shares so converted and shall constitute the only
outstanding shares of capital stock of the Surviving Corporation; and
(c) Each Share outstanding immediately prior to the Effective Time
shall, except as otherwise provided in Section 1.02(a) or as provided in Section
1.04 with respect to Shares as to which appraisal rights have been exercised, by
virtue of the Merger and without any action on the part of the holder thereof be
converted into, exchanged for and represent the right to receive an amount equal
to $1.25 in cash, without interest (the "MERGER CONSIDERATION").
SECTION 1.03. SURRENDER AND PAYMENT.
(a) Prior to the Effective Time, Buyer shall appoint an agent (the
"EXCHANGE AGENT") for the purpose of exchanging certificates representing Shares
for the Merger Consideration. Buyer will make available to the Exchange Agent,
in such amounts as may be needed from time to time, the Merger Consideration to
be paid in respect of the Shares. Such funds
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shall be invested by the Exchange Agent as directed by the Buyer, provided that
such investments shall be in obligations of or guaranteed by the United States
of America or any agency thereof and backed by the full faith and credit of the
United States of America, or in deposit accounts, certificates of deposit or
banker's acceptances of, repurchase or reverse repurchase agreement with, or
Eurodollar time deposits purchased from, commercial banks with capital, surplus
and undivided profits aggregating in excess of $150 million (based on the most
recent financial statements of such bank which are then publicly available).
Promptly after the Effective Time, Buyer will send, or will cause the Exchange
Agent to send, to each holder of Shares (other than the holders of Shares to be
canceled as set forth in Section 1.02(a) or Dissenting Shares (as defined in
Section 1.04)) at the Effective Time a letter of transmittal for use in such
exchange (which shall specify that the delivery shall be effected, and risk of
loss and title shall pass, only upon proper delivery of the certificates
representing Shares to the Exchange Agent).
(b) Each holder of Shares that have been converted into a right to
receive the Merger Consideration, upon surrender to the Exchange Agent of a
certificate or certificates representing such Shares, together with a properly
completed and duly executed letter of transmittal covering such Shares, will be
entitled to receive the Merger Consideration payable in respect of such Shares.
From and after the Effective Time, all shares which have been so converted shall
no longer be outstanding and shall automatically be canceled and retired and
each such certificate shall, after the Effective Time, represent for all
purposes, only the right to receive such Merger Consideration. From and after
the Effective Time, the holders of Shares outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to such Shares except
as otherwise provided in this Agreement or by applicable law. All cash paid upon
the surrender of certificates in accordance with the terms of this Section 1.03
shall be deemed to have been paid in full satisfaction of all rights pertaining
to the Shares previously represented by such certificates. No interest shall
accrue or be paid on the Merger Consideration payable upon the surrender of any
certificate.
(c) If any portion of the Merger Consideration is to be paid to a
Person (as defined below) other than the registered holder of the Shares
represented by the certificate or certificates surrendered in exchange therefor,
it shall be a condition to such payment that the certificate or certificates so
surrendered shall be properly endorsed or otherwise be in proper form for
transfer and that the Person requesting such payment shall pay to the Exchange
Agent any transfer or other taxes required as a result of such payment to a
Person other than the registered holder of such Shares or establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
payable. For purposes of this Agreement, "PERSON" means an individual, a
corporation, a limited liability company, a partnership, an association, a trust
or any other entity or organization, including a government or political
subdivision or any agency or instrumentality thereof.
(d) After the Effective Time, the stock transfer books of the Company
shall be closed and there shall be no further registration of transfers of
Shares. If, after the Effective Time, certificates representing Shares are
presented to the Surviving Corporation, they shall be canceled and exchanged for
the consideration provided for, and in accordance with the procedures set forth,
in this Article 1.
(e) Any portion of the Merger Consideration made available to the
Exchange Agent pursuant to Section 1.03(a) that remains unclaimed by the holders
of Shares nine months after the
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Effective Time shall be returned to Buyer, upon demand, and any such holder who
has not exchanged his Shares for the Merger Consideration in accordance with
this Section prior to that time shall thereafter look only to Buyer for payment
of the Merger Consideration in respect of his Shares. Notwithstanding the
foregoing, Buyer shall not be liable to any holder of Shares for any amount paid
to a public official pursuant to applicable abandoned property, escheat or other
similar laws. Any amounts remaining unclaimed by holders of Shares two years
after the Effective Time (or such earlier date immediately prior to such time as
such amounts would otherwise escheat to or become property of any governmental
entity) shall, to the extent permitted by applicable law, become the property of
Buyer free and clear of any claims or interest of any Person previously entitled
thereto.
(f) Any portion of the Merger Consideration made available to the
Exchange Agent pursuant to Section 1.03(a) to pay for Shares for which appraisal
rights have been perfected shall be returned to Buyer, upon demand.
SECTION 1.04. DISSENTING SHARES.
Notwithstanding Section 1.02, Shares outstanding immediately prior to
the Effective Time and held by a holder who has not voted in favor of the Merger
or consented thereto in writing and who has demanded appraisal for such Shares
in accordance with Delaware Law shall not be converted into a right to receive
the Merger Consideration but instead shall be converted into the right to
receive payment from the Surviving Corporation with respect to such shares
("Dissenting Shares") in accordance with Delaware law, unless such holder fails
to perfect or withdraws or otherwise loses his right to appraisal. If after the
Effective Time such holder fails to perfect or withdraws or loses his right to
appraisal, such Shares shall be treated as if they had been converted as of the
Effective Time into a right to receive the Merger Consideration. The Company
shall give Buyer prompt written notice of any demands received by the Company
for appraisal of Shares, and Buyer shall have the right to participate in all
negotiations and proceedings with respect to such demands. The Company shall
not, except with the prior written consent of Buyer, make any payment with
respect to, or settle or offer to settle, any such demands.
SECTION 1.05. STOCK OPTIONS.
(a) At or immediately prior to the Effective Time, each outstanding
employee stock option to purchase Shares granted under any employee stock option
or compensation plan or arrangement of the Company shall be canceled, and each
holder of any such option, whether or not then vested or exercisable, shall be
paid by the Company promptly after the Effective Time for each such option an
amount determined by multiplying (i) the excess, if any, of the Merger
Consideration over the applicable exercise price of such option by (ii) the
number of Shares such holder could have purchased (assuming full vesting of all
options) had such holder exercised such option in full immediately prior to the
Effective Time, less any taxes required to be withheld by the Company with
respect thereto.
(b) Prior to the Effective Time, the Company shall (i) obtain any
consents from holders of options to purchase Shares granted under the Company's
stock option or compensation plans or arrangements and (ii) make any amendments
to the terms of such stock option or compensation
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plans or arrangements that, in the case of either clauses 1.05(b)(i) or
1.05(b)(ii), are necessary to give effect to the transactions contemplated by
Section 1.05(a). Notwithstanding any other provision of this Section, payment
may be withheld in respect of any employee stock option until necessary consents
are obtained. From and after the date hereof no additional options or warrants
shall be granted under any Company stock option plans.
SECTION 1.06. LOST CERTIFICATES. If any certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
holder claiming such certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such holder of a bond, in
such reasonable amount as the Surviving Corporation may direct, as indemnity
against any claim that may be made against it with respect to such certificate,
the Exchange Agent will issue in exchange for such lost, stolen or destroyed
certificate the Merger Consideration to be paid in respect of the Shares
represented by such certificate as contemplated by this Article.
SECTION 1.07. ADJUSTMENTS. If at any time during the period between the
date of this Agreement and the Effective Time, any change in the outstanding
Shares shall occur, including by reason of any reclassification,
recapitalization, stock dividend, stock split or combination, exchange or
readjustment of Shares, or any stock dividend thereon with the record date
during such period, the price per share to be paid to holders of Shares in the
Merger shall be appropriately adjusted.
SECTION 1.08. FIRPTA. The Buyer, the Merger Subsidiary and the Exchange
Agent shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of Shares such amounts as the
Buyer, the Merger Subsidiary or the Exchange Agent is required to deduct and
withhold with respect to the making of such payment under the United States
Internal Revenue Code of 1986, as amended, and the rules and regulations
thereunder (the "Code"), or any provision of United States state or local or
foreign tax law. To the extent that amounts are so deducted or withheld, such
amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of the Shares in respect of which such deduction and withholding
was made.
ARTICLE 2
THE SURVIVING CORPORATION
SECTION 2.01. CERTIFICATE OF INCORPORATION. The certificate of
incorporation of Merger Subsidiary in effect at the Effective Time shall be the
certificate of incorporation of the Surviving Corporation until amended in
accordance with applicable law, except that the name of the Surviving
Corporation shall be changed to "Major Realty Corporation".
SECTION 2.02. BYLAWS. The bylaws of Merger Subsidiary in effect at the
Effective Time shall be the bylaws of the Surviving Corporation until amended in
accordance with applicable law.
SECTION 2.03. DIRECTORS AND OFFICERS. From and after the Effective
Time, until successors are duly elected or appointed and qualified in accordance
with applicable law, (a) the directors of Merger Subsidiary at the Effective
Time shall be the directors of the Surviving Corporation, and (b) the officers
of the Company at the Effective Time shall be the officers of the Surviving
Corporation.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in the letter of the Company dated the date hereof
and delivered to Buyer in connection with this Agreement (the "Disclosure
Letter") and making reference to the particular section of this Agreement to
which exception is being taken, the Company represents and warrants to Buyer
that:
SECTION 3.01. CORPORATE EXISTENCE AND POWER. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted. The Company is duly qualified to do business
as a foreign corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its activities
makes such qualification necessary, except for those jurisdictions where the
failure to be so qualified would not, individually or in the aggregate, have a
material adverse effect on the condition (financial or otherwise), business,
assets or results of operations of the Company and the Subsidiaries (as defined
below) taken as a whole (a "MATERIAL ADVERSE EFFECT"). The Company has
heretofore delivered to Buyer true and complete copies of the Company's
certificate of incorporation and bylaws as currently in effect.
SECTION 3.02. CORPORATE AUTHORIZATION. (a) The execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby are within the Company's corporate
powers and have been duly authorized by all necessary corporate action. This
Agreement has been duly and validly executed and delivered by the Company, and
assuming the due authorization, execution and delivery by Buyer and Merger
Subsidiary, constitutes a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as may be
limited by bankruptcy, reorganization, fraudulent conveyance, insolvency and
similar laws of general application relating to or affecting the enforcement of
creditors' rights and subject to general principles of equity.
(b) The Company's Board of Directors has approved the Merger and this
Agreement, and such approval is sufficient to render inapplicable to the Merger
and this Agreement and the transactions contemplated by this Agreement the
provisions of Section 203 of the Delaware General Corporation Law. To the
knowledge of the Company, no other state takeover statute or similar statute or
regulation applies or purports to apply to the Merger, this Agreement or any of
the transactions contemplated by this Agreement.
SECTION 3.03. GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by the Company of this Agreement and the consummation of the Merger
by the Company require no action by or in respect of, or filing with, any
governmental body, agency, official or authority other than (a) the filing of a
certificate of merger in accordance with Delaware Law; (b) compliance with any
applicable requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
0000 (xxx "XXX XXX"); and (c) compliance with any applicable requirements of the
Securities Exchange Act of 1934 and the rules and regulations promulgated
thereunder (the "EXCHANGE ACT").
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SECTION 3.04. NON-CONTRAVENTION. Except as set forth in Section 3.04 of
the Disclosure Letter, the execution, delivery and performance by the Company of
this Agreement and the consummation by the Company of the transactions
contemplated hereby do not and will not (a) contravene or conflict with the
certificate of incorporation or bylaws of the Company, (b) assuming compliance
with the matters referred to in Section 3.03, contravene or conflict with or
constitute a violation of any provision of any law, regulation, judgment,
injunction, order or decree binding upon or applicable to the Company or any
Subsidiary, (c) constitute a default under or give rise to a right of
termination, cancellation or acceleration of any right or obligation of the
Company or any Subsidiary or to a loss of any benefit to which the Company or
any Subsidiary is entitled under any provision of any agreement, contract or
other instrument binding upon the Company or any Subsidiary or any license,
franchise, permit or other similar authorization held by the Company or any
Subsidiary, or (d) result in the creation or imposition of any Lien on any asset
of the Company or any Subsidiary. For purposes of this Agreement, "LIEN" means,
with respect to any asset, any mortgage, lien, pledge, charge, security interest
or encumbrance of any kind in respect of such asset.
SECTION 3.05. CAPITALIZATION. The authorized capital stock of the
Company consists of 12,000,000 Shares, and 1,500,000 shares of preferred stock,
par value $1.00 per share. As of January 31, 1998, there were outstanding
6,893,378 Shares, no shares of preferred stock and employee stock options to
purchase an aggregate of 100,000 Shares. As of January 31, 1998, Acceptance
Insurance Companies held a promissory note of the Company. The note is
convertible into Common Stock at a conversion price of $1.00 per share. The
amount due under such note at February 20, 1998 was $2,541,409.76 ($2,513,511.14
principal amount, $27,898.62 accrued interest). All outstanding shares of
capital stock of the Company have been duly authorized and validly issued and
are fully paid and nonassessable. Except as set forth in this Section, there are
outstanding (a) no shares of capital stock or other voting securities of the
Company, (b) no securities of the Company convertible into or exchangeable for
shares of capital stock or voting securities of the Company, and (c) no options
or other rights to acquire from the Company, and no obligation of the Company to
issue, any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of the Company (the items in
clauses 3.05(a), 3.05(b) and 3.05(c) being referred to collectively as the
"COMPANY SECURITIES"). There are no outstanding obligations of the Company or
any Subsidiary to repurchase, redeem or otherwise acquire any Company
Securities.
SECTION 3.06. SUBSIDIARIES.
(a) Each Subsidiary is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, has all corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted and is duly qualified to do business as a foreign corporation and is
in good standing in each jurisdiction where the character of the property owned
or leased by it or the nature of its activities makes such qualification
necessary, except for those jurisdictions where failure to be so qualified would
not, individually or in the aggregate, have a Material Adverse Effect. For
purposes of this Agreement, "SUBSIDIARY" means any corporation or other entity
of which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are directly or indirectly owned
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by the Company. All Subsidiaries and their respective jurisdictions of
incorporation are identified in the Company's annual report on Form 10-KSB for
the fiscal year ended December 31, 1996 (the "COMPANY 10-K").
(b) All of the outstanding capital stock of, or other ownership
interests in, each Subsidiary, is owned by the Company, directly or indirectly,
free and clear of any Lien and free of any other limitation or restriction
(including any restriction on the right to vote, sell or otherwise dispose of
such capital stock or other ownership interests). There are no outstanding (i)
securities of the Company or any Subsidiary convertible into or exchangeable for
shares of capital stock or other voting securities or ownership interests in any
Subsidiary, and (ii) options or other rights to acquire from the Company or any
Subsidiary, and no other obligation of the Company or any Subsidiary to issue,
any capital stock, voting securities or other ownership interests in, or any
securities convertible into or exchangeable for any capital stock, voting
securities or ownership interests in, any Subsidiary (the items in clauses
3.06(b)(i) and 3.06(b)(ii) being referred to collectively as the "SUBSIDIARY
SECURITIES"). There are no outstanding obligations of the Company or any
Subsidiary to repurchase, redeem or otherwise acquire any outstanding Subsidiary
Securities.
SECTION 3.07. SEC FILINGS.
(a) The Company has delivered to Buyer (i) the annual reports on Form
10-KSB for its fiscal years ended December 31, 1996, 1995 and 1994, (ii) the
quarterly report of the Company on Form 10-QSB for the fiscal quarters ended
September 30, June 30 and March 31, 1997 (such annual reports and quarterly
reports are referred to hereinafter as the "Company SEC Filings"), and (iii) its
proxy or information statements relating to meetings of, or actions taken
without a meeting by, the stockholders of the Company since December 31, 1996.
(b) As of its filing date, each such report or statement filed pursuant
to the Exchange Act was prepared in accordance with the applicable requirements
of the Exchange Act and the rules and regulations thereunder and did not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
SECTION 3.08. FINANCIAL STATEMENTS. The audited consolidated financial
statements and unaudited consolidated interim financial statements of the
Company included in its annual reports on Form 10-KSB and the quarterly report
on Form 10-QSB referred to in Section 3.07 fairly present, in conformity with
generally accepted accounting principles applied on a consistent basis (except
as may be indicated in the notes thereto), the consolidated financial position
of the Company and its consolidated Subsidiaries as of the dates thereof and
their consolidated results of operations and changes in financial position for
the periods then ended (subject to normal year-end adjustments in the case of
any unaudited interim financial statements). For purposes of this Agreement,
"BALANCE SHEET" means the consolidated balance sheet of the Company as of
September 30, 1997, as set forth in the quarterly report of the Company on Form
10-QSB for the quarter ended September 30, 1997 and "BALANCE SHEET DATE" means
September 30, 1997.
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SECTION 3.09. DISCLOSURE DOCUMENTS.
(a) Each document required to be filed by the Company with the SEC in
connection with the transactions contemplated by this Agreement (the "COMPANY
DISCLOSURE DOCUMENTS"), including, without limitation, the information statement
of the Company (the "COMPANY INFORMATION STATEMENT") to be filed with the SEC in
connection with the Merger, and any amendments or supplements thereto will, when
filed, comply as to form in all material respects with the applicable
requirements of the Exchange Act.
(b) At the time the Company Information Statement or any amendment or
supplement thereto is first mailed to stockholders of the Company, and at the
Effective Time, the Company Information Statement, as supplemented or amended,
if applicable, will not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading. At the time of the filing of any Company Disclosure Document other
than the Company Information Statement and at the time of any distribution
thereof, such Company Disclosure Document will not contain any untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements made therein, in the light of the circumstances under which they
were made, not misleading. The representations and warranties contained in this
Section 3.09(b) will not apply to statements or omissions included in the
Company Disclosure Documents based upon information furnished to the Company in
writing by Buyer specifically for use therein.
SECTION 3.10. ABSENCE OF CERTAIN CHANGES. Since the Balance Sheet Date,
the Company and Subsidiaries have conducted their business in the ordinary
course consistent with past practice and there has not been:
(a) any event, occurrence or development of a state of circumstances or
facts which has had or reasonably could be expected to have a Material Adverse
Effect;
(b) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of the Company, or any
issuance, grant, sale, repurchase, redemption or other acquisition by the
Company or any Subsidiary of any outstanding shares of capital stock or other
securities of, or other ownership interests (including options, rights or
warrants) in, the Company or any Subsidiary;
(c) any amendment of any material term of any outstanding security of
the Company or any Subsidiary or any subdivision, reclassification,
recapitalization, split, combination or exchange of any shares of capital stock
of the Company (other than in connection with outstanding options);
(d) any incurrence, assumption or guarantee by the Company or any
Subsidiary of any indebtedness for borrowed money;
(e) any creation or assumption by the Company or any Subsidiary of any
Lien on any material asset other than in the ordinary course of business
consistent with past practices;
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(f) any making of any loan, advance or capital contributions to or
investment in any Person other than loans, advances or capital contributions to
or investments in wholly-owned Subsidiaries made in the ordinary course of
business consistent with past practices;
(g) any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the business or assets of the Company or any
Subsidiary which, individually or in the aggregate, has had or would reasonably
be expected to have a Material Adverse Effect;
(h) any transaction or commitment made, or any contract or agreement
entered into, by the Company or any Subsidiary relating to its assets or
business (including the acquisition or disposition of any assets) or any
relinquishment by the Company or any Subsidiary of any contract or other right,
in either case, material to the Company and the Subsidiaries taken as a whole,
other than transactions and commitments in the ordinary course of business
consistent with past practice (including the contracts for the sale of real
property by the Company set forth in Section 3.21 of the Disclosure Letter) and
those contemplated by this Agreement;
(i) any change in any method of accounting or accounting practice by
the Company or any Subsidiary, except for any such change required by reason of
a concurrent change in generally accepted accounting principles;
(j) any tax election, other than those consistent with past practice,
not required by law or any settlement or compromise of any tax liability in
either case that is material to the Company and the Subsidiaries;
(k) any (i) grant of any severance or termination pay to any director,
officer or employee of the Company or any Subsidiary, (ii) entering into of any
employment, severance or termination, deferred compensation or other similar
agreement (or any amendment to any such existing agreement) with any director,
officer or employee of the Company or any Subsidiary, (iii) increase in benefits
payable under any existing severance or termination pay policies or employment
agreements or (iv) increase in compensation, bonus or other benefits payable to
directors, officers or employees of the Company or any Subsidiary, other than in
the ordinary course of business consistent with past practice; or
(l) any labor dispute, other than routine individual grievances, or any
activity or proceeding by a labor union or representative thereof to organize
any employees of the Company or any Subsidiary, which employees were not subject
to a collective bargaining agreement at the Balance Sheet Date, or any lockouts,
strikes, slowdowns, work stoppages or threats thereof by or with respect to such
employees.
SECTION 3.11. NO UNDISCLOSED MATERIAL LIABILITIES. There are no
liabilities or obligations of the Company or any Subsidiary of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable or
otherwise, and there is no existing condition, situation or set of circumstances
which could reasonably be expected to result in such a liability or obligation,
other than:
(a) liabilities or obligations disclosed or provided for in the Balance
Sheet;
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(b) liabilities or obligations incurred in the ordinary course of
business consistent with past practice since the Balance Sheet Date, which in
the aggregate are not material to the Company and the Subsidiaries, taken as a
whole; and
(c) liabilities or obligations under this Agreement.
SECTION 3.12. LITIGATION. Except as set forth in the Disclosure Letter
or Company SEC Filings, there is no action, suit, investigation or proceeding
(or any basis therefor) pending against, or to the knowledge of the Company,
threatened against or affecting, the Company or any Subsidiary or any of their
respective properties before any court or arbitrator or any governmental body,
agency or official (i) as of the date hereof and (ii) which, if determined or
resolved adversely to the Company or any Subsidiary in accordance with the
plaintiff's demands, would reasonably be expected to have a Material Adverse
Effect or which in any manner challenges or seeks to prevent, enjoin, alter or
delay the Merger or any of the other transactions contemplated hereby.
SECTION 3.13. TAXES. Except as set forth in the Balance Sheet
(including the notes thereto) and except as would not, individually or in the
aggregate, have a Material Adverse Effect, (i) all tax returns, statements,
reports and forms (collectively, the "COMPANY RETURNS") required to be filed
with any taxing authority by, or with respect to, the Company and its
Subsidiaries have been filed in accordance with all applicable laws, (ii) the
Company and its Subsidiaries have timely paid all taxes shown as due and payable
on such Company Returns that have been so filed, and, as of the time of filing,
the Company Returns correctly reflected the facts regarding the income,
business, assets, operations, activities and the status of the Company and its
Subsidiaries, (iii) the Company and its Subsidiaries have made adequate
provision on their books for all taxes payable by the Company and its
Subsidiaries for which no Company Return has yet been filed, (iv) the charges,
accruals and reserves for taxes with respect to the Company and its Subsidiaries
reflected on the Balance Sheet (excluding any provision for deferred income
taxes) are adequate under United States generally accepted accounting principles
("GAAP") to cover the tax liabilities accruing through the date thereof, (v)
there is no action, suit, proceeding, audit, or claim with respect to tax
matters now proposed or pending against or with respect to the Company or any of
its Subsidiaries, (vi) there are no outstanding waivers or other agreements
extending any statutory periods of limitation for the assessment of taxes of the
Company and its Subsidiaries, (vii) neither the Company nor any of its
Subsidiaries has been a member of an affiliated, consolidated, combined or
unitary group.
SECTION 3.14. ERISA.
(a) Definitions. For purposes hereof the following terms have the
following meanings:
"BENEFIT ARRANGEMENT" means any employment, severance or
similar contract or arrangement (whether or not written) providing for
compensation, bonus, profit-sharing, stock option, or other stock
related rights or other forms of incentive or deferred compensation,
vacation benefits, insurance coverage (including any self-insured
arrangements), health or medical benefits, disability benefits,
worker's compensation, supplemental unemployment
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benefits, workers' compensation, supplemental unemployment benefits,
severance benefits and post-employment or retirement benefits
(including compensation, pension, health, medical or life insurance or
other benefits) that (i) is not an Employee Plan (as defined below),
(ii) is entered into, maintained, administered, contributed to or
required to be contributed to, as the case may be, by the Company or
any of its ERISA Affiliates (as defined below) and (iii) covers any
employee or former employee of the Company or any Subsidiary.
"EMPLOYEE PLAN" means any "employee benefit plan", as defined
in Section 3(3) of ERISA, that (i) is subject to any provision of
ERISA, (ii) is maintained, administered, contributed to or required to
be contributed to by the Company or any of its ERISA Affiliates and
(iii) covers any employee or former employee of the Company or any
Subsidiary.
"ERISA" means the Employee Retirement Income Security Act of
1974.
"ERISA AFFILIATE" of any entity means any other entity which,
together with such entity, would be treated as a single employer under
Section 414 of the Code.
"MULTIEMPLOYER PLAN" means each Employee Plan that is a
multiemployer plan, as defined in Section 3(37) of ERISA.
"PBGC" means the Pension Benefit Guaranty Corporation.
"TITLE IV PLAN" means an Employee Plan subject to Title IV of
ERISA other than any Multiemployer Plan.
(b) The Company has provided, or will provide prior to the Effective
Time, Buyer with a list and copies of the Employee Plans (and, if applicable,
related trust agreements) and all amendments thereto and written interpretations
thereof together with the most recent annual report (Form 5500 including all
required Schedules thereto) and the most recent actuarial valuation report
prepared in connection with any Employee Plan. Such list identifies each
Employee Plan which is (i) a Multiemployer plan, (ii) a Title IV Plan or (iii)
maintained in connection with any trust described in Section 501(c)(9) of the
Code. The Company has provided, or will provide prior to the Effective Time,
Buyer with complete age, salary, service and related data as of the most recent
practicable date for all employees and former employees covered under any Title
IV Plan.
(c) The fair market value of the assets of each Title IV Plan
(excluding for these purposes any accrued but unpaid contributions) exceeds the
present value of all benefits accrued under such Title IV Plan determined on a
termination basis using the assumptions established by the PBGC. There is no
unfunded liability of the Company or any Subsidiary in respect of any Employee
Plans or Benefit Arrangements described under Sections 4(b)(5) of ERISA or
401(a)(1) of the Code, as computed using reasonable actuarial assumptions and
determined as if all benefits under such plans are vested and payable.
(d) No transaction prohibited by Section 406 of ERISA or Section 4975
of the Code has occurred with respect to any employee benefit plan or
arrangement which is covered by Title I of
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ERISA, which transaction has or will cause the Company or any of its
Subsidiaries to incur any liability under ERISA, the Code or otherwise,
excluding transactions effected pursuant to and in compliance with a statutory
or administrative exemption. No "accumulated funding deficiency", as defined in
Section 412 of the Code, has been incurred with respect to any Employee Plan or
any trust established thereunder subject to such Section 412, whether or not
waived. No "reportable event", within the meaning of Section 4043 of ERISA,
other than a "reportable event" that will not have a Material Adverse Effect,
and no event described in Section 4062 or 4063 of ERISA, has occurred in
connection with any Employee Plan. Neither the Company nor any ERISA Affiliate
of the Company has (i) engaged in, or is a successor or parent corporation to an
entity that has engaged in, a transaction described in Sections 4069 or 4212(c)
of ERISA or (ii) incurred, or reasonably expects to incur prior to the Effective
Time, (A) any liability under Title IV of ERISA arising in connection with the
termination of, or a complete or partial withdrawal from, any plan covered or
previously covered by Title IV of ERISA or (B) any liability under Section 4971
of the Code that in either case could become a liability of the Company or any
Subsidiary or Buyer or any of its ERISA Affiliates after the Effective Time. No
condition exists that (i) could constitute grounds for termination by the PBGC
of any employee benefit plan that is subject to Title IV of ERISA that is
maintained by the Company, any Subsidiary or any of their ERISA Affiliates or
(ii) presents a material risk of complete or partial withdrawal from any
multiemployer plan, as defined in Section 3(37) of ERISA, which could result in
the Company, any Subsidiary or Buyer or any ERISA Affiliate of any of them
incurring a withdrawal liability within the meaning of Section 4201 of ERISA.
The assets of the Company and all of its Subsidiaries are not now, nor will they
after the passage of time be, subject to any lien imposed under Code Section
412(n) by reason of a failure of the Company or any Subsidiary to make timely
installments or other payments required under Code Section 412. If a "complete
withdrawal" by the Company and all of its ERISA Affiliates were to occur as of
the Effective Time with respect to all Multiemployer Plans, none of the Company,
any Subsidiary or any of their ERISA Affiliates would incur any material
withdrawal liability under Title IV of ERISA.
(e) Each Employee Plan that is intended to be qualified under Section
401(a) of the Code is so qualified and has been so qualified during the period
since its adoption; each trust created under any such Plan is exempt from tax
under Section 501(a) of the Code and has been so exempt since its creation. The
Company has provided, or will provide prior to the Effective Time, Buyer with
the most recent determination letter of the Internal Revenue Service relating to
each such Employee Plan. Each Employee Plan has been maintained in material
compliance with its terms and with the requirements prescribed by any and all
applicable statutes, orders, rules and regulations, including but not limited to
ERISA and the Code.
(f) The Company has provided, or will provide prior to the Effective
Time, Buyer with a list and copies or descriptions of each Benefit Arrangement
(and, if applicable, related trust agreements) and all amendments thereto and
written interpretations thereof. Each Benefit Arrangement has been maintained in
material compliance with its terms and with the requirements prescribed by any
and all applicable statutes, orders, rules and regulations and has been
maintained in good standing with applicable regulatory authorities.
(g) Neither the Company nor any Subsidiary has any current or projected
liability in respect of post-employment or post-retirement health or medical or
life insurance benefits for
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retired, former or current employees of the Company or any Subsidiary, except as
required to avoid excise tax under Section 4980B of the Code. No condition
exists that would prevent the Company or any Subsidiary from amending or
terminating any Employee Plan or Benefit Arrangement providing health or medical
benefits in respect of any active employee of the Company or any Subsidiary
other than limitations imposed under the terms of a collective bargaining
agreement.
(h) All contributions and payments which have either become due and
payable or should be accrued under each Employee Plan and Benefit Arrangement,
determined in accordance with prior funding and accrual practices, will be
discharged and paid or accrued, respectively, on or prior to the Effective Time
in accordance with such practices. There has been no amendment to, written
interpretation of or announcement (whether or not written) by the Company or any
Subsidiary relating to, or change in employee participation or coverage under,
any Employee Plan or Benefit Arrangement that would increase materially the
expense of maintaining such Employee Plan or Benefit Arrangement above the level
of the expense incurred in respect thereof for the most recent fiscal year ended
prior to the date hereof.
(i) There is no contract, plan or arrangement (written or otherwise)
covering any employee or former employee of the Company or any Subsidiary that,
individually or collectively, could give rise to the payment of any amount that
would not be deductible pursuant to the terms of Section 280G of the Code.
(j) There has been no failure of a group health plan (as defined in
Section 5000(b)(1) of the Code) to meet the requirements of Code Section
4980B(f) with respect to a qualified beneficiary (as defined in Section
4980B(g)). Neither the Company nor any of its Subsidiaries has contributed to a
nonconforming group health plan (as defined in Section 5000(c)) and no ERISA
Affiliate of the Company or any of its Subsidiaries has incurred a tax under
Section 5000(a) which is or could become a liability of the Company or any of
its Subsidiaries.
(k) No employee or former employee of the Company or any Subsidiary
will become entitled to any bonus, retirement, severance, job security or
similar benefit or enhanced such benefit (including acceleration of vesting or
exercise of an incentive award) as a result of the transactions contemplated
hereby, either alone or in combination with another event, except as
contemplated by this Agreement.
(l) There are no pending, threatened or anticipated claims by or on
behalf of any Employee Plan or Benefit Arrangement, by any employee or
beneficiary under any such Employee Plan or Benefit Arrangement, or otherwise
involving any such Employee Plan or Benefit Arrangement (other than routine
claims for benefits).
SECTION 3.15. COMPLIANCE WITH LAWS. The Company and each of its
Subsidiaries is and has been in compliance with, and to the knowledge of the
Company is not under investigation with respect to and has not been threatened
to be charged with or given notice of any violation of, any applicable law,
rule, regulation, judgment, injunction, order or decree, except for matters that
have not had and could not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect.
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SECTION 3.16. FINDERS' FEES. There is no investment banker, broker,
finder or other intermediary which has been retained by or is authorized to act
on behalf, of the Company or any Subsidiary who might be entitled to any fee or
commission from Buyer or any of its affiliates upon consummation of the
transactions contemplated by this Agreement.
SECTION 3.17. OTHER INFORMATION. None of the documents or information
delivered to Buyer in connection with the transactions contemplated by this
Agreement contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained therein not
misleading. The financial projections relating to the Company and the
Subsidiaries delivered to Buyer constitute the Company's best estimate of the
information purported to be shown therein and the Company is not aware of any
fact or information that would lead it to believe that such projections are
incorrect or misleading in any material respect.
SECTION 3.18. ENVIRONMENTAL MATTERS.
(a) Definitions. For purposes hereof the following terms have the
following meanings:
"ENVIRONMENTAL LAWS" means any federal, state, local or
foreign law (including, without limitation, common law), treaty,
judicial decision, regulation, rule, judgment, order, decree,
injunction, permit or governmental restriction or requirement or any
agreement with any governmental authority or other third party,
relating to human health and safety, the environment or to pollutants,
contaminants, wastes or chemicals or any toxic, radioactive, ignitable,
corrosive, reactive or otherwise hazardous substances, wastes or
materials.
"ENVIRONMENTAL PERMITS" means all permits, licenses,
franchises, certificates, approvals and other similar authorizations of
governmental authorities relating to or required by Environmental Laws
and affecting, or relating in any way to, the business of the Company
or any Subsidiary as currently conducted.
(b) Except as set forth in the Company 10-K:
(i) no notice, notification, demand, request for
information, citation, summons or order has been received, no complaint
has been filed, no penalty has been assessed, and no investigation,
action, claim, suit, proceeding or review (or any basis therefor) is
pending or, to the knowledge of the Company or any Subsidiary, is
threatened by any governmental entity or other Person with respect to
any matters relating to the Company or any Subsidiary and relating to
or arising out of any Environmental Law which, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse
Effect;
(ii) The Company is in compliance with all Environmental Laws
and has been and is in compliance with all Environmental Permits,
except where any noncompliance or failure to receive Environmental
Permits could not reasonably be expected to result in a Material
Adverse Effect; and
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(iii) there are no liabilities of or relating to the Company
or any Subsidiary of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise arising under or
relating to any Environmental Law that have had or may reasonably be
expected to have a Material Adverse Effect, and there are no facts,
conditions, situations or set of circumstances which could reasonably
be expected to result in or be the basis for any such liability.
(c) There has been no environmental investigation, study, audit, test,
review or other analysis conducted of which the Company has knowledge in
relation to the current or prior business of the Company or any Subsidiary or
any property or facility now or previously owned or leased by the Company or any
Subsidiary which has not been delivered to Buyer at least five days prior to the
Effective Time.
(d) For purposes of this Section, the terms "COMPANY" and "SUBSIDIARY"
shall include any entity which is, in whole or in part, a predecessor of the
Company or any Subsidiary.
SECTION 3.19. VOTE REQUIRED. The only vote of the holders of any class
or series of capital stock of the Company necessary to approve the Merger is the
affirmative vote of the holders of a majority of the outstanding Shares.
SECTION 3.20. ANTI-TAKEOVER PLAN; STATE TAKEOVER STATUTES. Neither the
Company nor any Subsidiary has in effect any plan, scheme, device or
arrangement, commonly or colloquially known as a "poison pill" or
"anti-takeover" plan or any similar plan, scheme, device or arrangement. The
Board of Directors of the Company has approved the Merger and this Agreement.
Except for Section 203 of Delaware Law, no state takeover statute or similar
statute or regulation applies or purports to apply to the Merger, this Agreement
or any of the transactions contemplated by this Agreement.
SECTION 3.21. MATERIAL CONTRACTS.
(a) Except as set forth in the Company SEC Filings and Section 3.21 of
the Disclosure Letter, neither the Company nor any Subsidiary is a party to or
bound by:
(i) any lease (whether of real or personal property)
providing for annual rentals of $25,000 or more;
(ii) any agreement with a term of at least one year for the
purchase of materials, supplies, goods, services, equipment or other
assets providing for either (A) annual payments by the Company and the
Subsidiaries of $50,000 or more or (B) aggregate payments by the
Company and the Subsidiaries of $50,000 or more;
(iii) any sales, distribution or other similar agreement with
a term of at least six months, providing for the sale by the Company or
any Subsidiary of materials, supplies, goods, services, equipment or
other assets that provides for (A) annual payments to the Company and
the Subsidiaries of $100,000 or more and (B) does not by its terms
permit the
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Company or any Subsidiary to pass any increase in the costs of such
materials, supplies, goods, services, equipment or other assets on to
the counterparty thereto;
(iv) any partnership, joint venture or other similar
agreement or arrangement;
(v) any agreement relating to the acquisition or
disposition of any business (whether by merger, sale of stock, sale of
assets or otherwise);
(vi) any agreement relating to asset sale programs,
indebtedness for borrowed money or the deferred purchase price of
property (in either case, whether incurred, assumed, guaranteed or
secured by any asset);
(vii) any option, license, franchise or similar agreement;
(viii) any agency, dealer, sales representative, marketing or
other similar agreement;
(ix) any agreement that limits the freedom of the Company or
any Subsidiary or any officer or key employee to compete in any line of
business or with any Person or in any area or which would so limit the
freedom of the Company or any Subsidiary after the Effective Time;
(x) any other agreement, commitment, arrangement or plan
not made in the ordinary course of business that is material to the
Company and the Subsidiaries, taken as a whole.
As used herein, the term "AFFILIATE" means, with respect to any Person, any
other Person directly or indirectly controlling, controlled by or under common
control with such Person.
(b) Each agreement, contract, plan, lease, arrangement or commitment
disclosed in any Section of the Disclosure Letter or required to be disclosed
pursuant to this Section is a valid and binding agreement of the Company or a
Subsidiary, as the case may be, and is in full force and effect, and none of the
Company, any Subsidiary or, to the knowledge of the Company, any other party
thereto is in default or breach in any material respect under the terms of any
such agreement, contract, plan, lease, arrangement or commitment, and, to the
knowledge of the Company, no event or circumstance has occurred that, with
notice or lapse of time or both, would constitute any event of default
thereunder. True and complete copies of each such agreement, contract, plan,
lease, arrangement or commitment have been delivered to Buyer.
SECTION 3.22. PROPERTIES.
(a) The Company and the Subsidiaries have good and marketable,
indefeasible, fee simple title to, or in the case of leased property and assets
have valid leasehold interests in, all property and assets (whether real,
personal, tangible or intangible) reflected on the Balance Sheet or acquired
after the Balance Sheet Date, except for properties and assets sold since the
Balance
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Sheet Date in the ordinary course of business consistent with past practices.
None of such property or assets is subject to any Lien, except:
(i) Liens disclosed on the Balance Sheet;
(ii) Liens for taxes not yet due or being contested in good
faith (and for which adequate accruals or reserves have been
established on the Balance Sheet); or
(iii) Liens which do not materially detract from the value or
materially interfere with any present or intended use of such property
or assets.
(b) There are no developments affecting any such property or assets
pending or, to the knowledge of the Company threatened, which might materially
detract from the value, materially interfere with any present or intended use or
materially adversely affect the marketability of any such property or assets.
The Company has delivered or made available to the Buyer complete and correct
copies of all leases of real property and material personal property to which it
or any of its Subsidiaries is a party. All such leases are valid, subsisting and
effective in accordance with their terms and there does not exist thereunder any
material default or event or condition which, after notice or lapse of time or
both, would constitute a material default thereunder. All physical properties
owned or used by Company or any of its Subsidiaries and all equipment necessary
for the operation of its businesses are in good operating condition.
SECTION 3.23. LICENSES AND PERMITS. Section 3.23 of the Disclosure
Letter correctly describes each material license, franchise, permit,
certificate, approval or other similar authorization affecting, or relating in
any way to, the assets or business of the Company and its Subsidiaries together
with the name of the government agency or entity issuing such permit. All
permits or other similar authorizations (whether material or not) are valid and
in full force and effect and neither the Company nor any Subsidiary is in
default under, and no condition exists that with notice or lapse of time or both
would constitute a default under, the Permits. No permits or other similar
authorizations (whether material or not) will be terminated or impaired or
become terminable, in whole or in part, as a result of the transactions
contemplated hereby.
SECTION 3.24. RECEIVABLES. All accounts, notes receivable and other
receivables (other than receivables collected since the Balance Sheet Date)
reflected on the Balance Sheet are, and all accounts and notes receivable
arising from or otherwise relating to the business of the Company and its
Subsidiaries as of the Effective Time will be, valid, genuine and fully
collectible in the aggregate amount thereof, subject to normal and customary
trade discounts, less any reserves for doubtful accounts recorded on the Balance
Sheet. All accounts, notes receivable and other receivables arising out of or
relating to such business of the Company and its Subsidiaries as of the Balance
Sheet Date have been included in the Balance Sheet, and all accounts, notes
receivable and other receivables arising out of or relating to the Business as
of the Effective Time will be included on the books of the Company in accordance
with generally accepted accounting principles applied on a consistent basis.
SECTION 3.25. LABOR MATTERS. The Company and the Subsidiaries are in
compliance with all currently applicable laws respecting employment and
employment practices, terms and
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conditions of employment and wages and hours, and are not engaged in any unfair
labor practice, failure to comply with which or engagement in which, as the case
may be, would reasonably be expected to have a Material Adverse Effect. There is
no unfair labor practice complaint pending or, to the knowledge of the Company,
threatened against the Company or any Subsidiary before the National Labor
Relations Board. Neither the Company nor any of its Subsidiaries has any
knowledge of any strikes, slowdowns, work stoppages, lockouts, or threats
thereof, by or with respect to any employees of Company of any of its
Subsidiaries which could have a Material Adverse Effect.
SECTION 3.26. REQUIRED AND OTHER CONSENTS.
(a) Section 3.26(a) of the Disclosure Letter sets forth each agreement,
contract or other instrument binding upon the Company or its Affiliates
requiring a consent as a result of the execution, delivery and performance of
this Agreement, except such consents as would not, individually or in the
aggregate, have, or reasonably be expected to have, a Material Adverse Effect if
not received by the Effective Time (each such consent, a "REQUIRED CONSENT" and
together the "REQUIRED CONSENTS").
(b) Section 3.26(b) of the Disclosure Letter sets forth every other
consent (each such consent, an "OTHER CONSENT" and together the "OTHER
CONSENTS") under such agreements, contracts or other instruments or such Permits
that is necessary or desirable with respect to the execution, delivery and
performance of this Agreement.
SECTION 3.27. INTELLECTUAL PROPERTY. The Company and its Subsidiaries
own, or are licensed or otherwise have the rights to use, all patents,
trademarks, trade names, copyrights, technology, trade secrets, know-how and
processes (collectively, "INTELLECTUAL PROPERTY RIGHTS") material to or
necessary for the conduct of their respective businesses, as presently
conducted. No claims are pending by any person against the Company or any of its
Subsidiaries as to the use of any Intellectual Property Rights and, to the
Company's best knowledge, the use by the Company or any of its Subsidiaries of
all Intellectual Property Rights does not infringe on the rights of any person.
To the Company's best knowledge, no third person is infringing on the
Intellectual Property Rights of the Company or any of its Subsidiaries.
SECTION 3.28. INSURANCE. The Company maintains, and has maintained,
without interruption, during the past three years, policies or binders of
insurance covering such risks, and events, including personal injury, property
damage and general liability, in amounts the Company reasonably believes
adequate for its business and operations.
SECTION 3.29. RELATED PARTY TRANSACTIONS. Except as described in the
Company's reports filed with the SEC, there have been no transactions between
the Company and any officer, director or 10% stockholder which have involved an
amount in excess of $60,000 ("Related Party Transaction").
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Company that:
SECTION 4.01. EXISTENCE AND POWER. Buyer is a limited partnership duly
organized, and Merger Subsidiary is a corporation duly incorporated, under the
laws of the State of Delaware, and each is validly existing and in good standing
under the laws of the State of Delaware and has all necessary powers and all
material governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted. Since the date of its incorporation,
Merger Subsidiary has not engaged in any activities other than in connection
with or as contemplated by this Agreement or in connection with arranging any
financing required to consummate the transactions contemplated hereby.
SECTION 4.02. AUTHORIZATION. The execution, delivery and performance by
Buyer and Merger Subsidiary of this Agreement and the consummation by Buyer and
Merger Subsidiary of the transactions contemplated hereby are within each of
Buyer's and Merger Subsidiary's respective powers and have been duly authorized
by all necessary action (including all necessary action of their respective
partners and stockholders). This Agreement has been duly and validly executed
and delivered by Buyer and Merger Subsidiary, and assuming the due
authorization, execution and delivery by the Company, constitutes a valid and
binding agreement of Buyer and Merger Subsidiary, enforceable against Buyer and
Merger Subsidiary in accordance with its terms, except as may be limited by
bankruptcy, reorganization, fraudulent conveyance, insolvency and similar laws
of general application relating to or affecting the enforcement of creditors'
rights and subject to general principles of equity.
SECTION 4.03. GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by Buyer and Merger Subsidiary of this Agreement and the
consummation by Buyer and Merger Subsidiary of the transactions contemplated by
this Agreement require no action by or in respect of, or filing with, any
governmental body, agency, official or authority other than (a) the filing of a
certificate of merger in accordance with Delaware Law, (b) compliance with any
applicable requirements of the HSR Act and (c) compliance with any applicable
requirements of the Exchange Act.
SECTION 4.04. NON-CONTRAVENTION. The execution, delivery and
performance by Buyer and Merger Subsidiary of this Agreement and the
consummation by Buyer and Merger Subsidiary of the transactions contemplated
hereby do not and will not (a) contravene or conflict with the certificate of
limited partnership or partnership agreement or certificate of incorporation or
bylaws of Buyer or Merger Subsidiary, respectively, (b) assuming compliance with
the matters referred to in Section 4.03, contravene or conflict with any
provision of law, regulation, judgment, order or decree binding upon Buyer or
Merger Subsidiary, or (c) constitute a default under or give rise to any right
of termination, cancellation or acceleration of any right or obligation of Buyer
or Merger Subsidiary or to a loss of any benefit to which Buyer or Merger
Subsidiary is entitled under any agreement, contract or other instrument binding
upon Buyer or Merger Subsidiary, except, in the case of clause (b) and (c), for
such matters as would not materially adversely affect the ability of Buyer and
Merger Subsidiary to consummate the transactions contemplated by this Agreement.
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SECTION 4.05. DISCLOSURE DOCUMENTS. The information with respect to
Buyer and its subsidiaries that Buyer furnishes to the Company in writing
specifically for use in any Company Disclosure Document will not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading (i) in the case of the Company
Information Statement at the time the Company Information Statement or any
amendment or supplement thereto is first mailed to stockholders of the Company
and (ii) in the case of any Company Disclosure Document other than the Company
Information Statement, at the time of the filing thereof and at the time of any
distribution thereof.
SECTION 4.06. FINDERS' FEES. There is no investment banker, broker,
finder or other intermediary who might be entitled to any fee or commission from
the Company or any of its affiliates upon consummation of the transactions
contemplated by this Agreement.
ARTICLE 5
COVENANTS OF THE COMPANY
The Company agrees that:
SECTION 5.01. CONDUCT OF THE COMPANY. From the date hereof until the
Effective Time, the Company and the Subsidiaries shall conduct their business in
the ordinary course consistent with past practice and shall use their best
efforts to preserve intact their business organizations and relationships with
third parties and to keep available the services of their present officers and
employees. Without limiting the generality of the foregoing, from the date
hereof until the Effective Time, the Company shall:
(a) carry on its business in, and only in, the ordinary course of
business in the same manner as heretofore and, to the extend consistent with
such business, use all reasonable efforts to preserve intact its present
business organization, keep available the services of its present officers and
employees, and preserve its goodwill and its relationships with customers,
suppliers and others having business dealings with it;
(b) consistent with prior practice, maintain all of its structures,
equipment and other tangible personal property in good repair, order and
condition, except for depletion, depreciation, ordinary wear and tear and damage
by unavoidable casualty;
(c) keep in full force and effect insurance comparable in amount and
scope of coverage to insurance now carried by it;
(d) perform in all respects all of its obligations under agreements,
contracts and instruments relating to or affecting its properties, assets and
business, except to the extent that the failure to do so in any instance or in
the aggregate would not have a Material Adverse Effect;
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(e) continue to collect amounts receivable and pay accounts payable
utilizing normal procedures and without discounting or accelerating payment of
such accounts except in the ordinary course of business consistent with prior
practice;
(f) maintain its books of accounts and records in the usual, regular
and ordinary manner consistent with past practice and not make any change to its
accounting (including tax accounting) methods, principles or practices, except
as may be required by GAAP or by applicable tax laws;
(g) comply in all respects with all statutes, laws, ordinances, rules
and regulations applicable to it and to the conduct of its business, except to
the extent that the failure to do so in any instance or in the aggregate would
not have a Material Adverse Effect;
(h) not amend its Certificate of Incorporation or By-Laws;
(i) not materially increase the annual level of compensation of any of
its employees, increase the annual level of compensation payable or to become
payable by it to any of its executive officers, or grant any unusual or
extraordinary bonus, benefit or other direct or indirect compensation to any
employee, director or consultant, other than to non-executive employees in the
ordinary course of business consistent with past practice;
(j) except in the ordinary course, consistent with past practice, not
enter into, assume or amend in any respect any agreement, contract or commitment
of the character referred to in Section 3.21;
(k) not merge or consolidate with, or agree to merge or consolidate
with, or purchase substantially all the assets of, or otherwise acquire any
business or any corporation, partnership, association or other business
organization or division thereof;
(l) not acquire any material properties or assets or sell, assign,
transfer, convey, lease or otherwise dispose of any of its material properties
or assets, except for fair consideration in the ordinary course of business
consistent with prior practice, which includes sales of real property pursuant
to contracts described in Section 3.21 of the Disclosure Letter;
(m) not purchase for cash and cancel any options outstanding under
Company stock option plans or otherwise amend such plans;
(n) promptly advise Buyer in writing of any materially adverse change
in the financial condition, operations or business of Company or any of its
Subsidiaries;
(o) not declare or pay dividends (cash or otherwise) or make any
distribution on, or directly or indirectly redeem, purchase or otherwise
acquire, any of its outstanding capital shares;
(p) not affect any recapitalization or any split or other
reclassification of shares;
(q) not authorize the creation or issuance of or issue, sell or dispose
of, or create any obligation to issue, sell or dispose of, any of its capital
shares or any securities or obligations
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convertible into or exchangeable for, any of its capital shares (other than
pursuant to stock options or warrants heretofore outstanding);
(r) not create, incur, assume, guarantee or otherwise become directly
or indirectly liable with respect to any indebtedness for borrowed money, other
than indebtedness incurred in the ordinary course of business consistent with
past practice under agreements existing on the date hereof and identified in
writing to Buyer;
(s) not subject any of its properties or assets (whether tangible or
intangible) to any encumbrance, other than in the ordinary course of business;
(t) not engage in any Related Party Transaction;
(u) not enter into any agreement or understanding to do or engage in
any of the foregoing;
(v) not, and shall not permit any Subsidiary to, make any material tax
election or settle or compromise any material contested tax liability (whether
with respect to amount or timing), in each case without the prior written
consent of Buyer which consent shall not be unreasonably withheld; and
(w) not, and shall not permit any Subsidiary to, (i) take or agree or
commit to take any action that would make any representation and warranty of the
Company hereunder inaccurate in any respect at, or as of any time prior to, the
Effective Time or (ii) omit or agree or commit to omit to take any action
necessary to prevent any such representation or warranty from being inaccurate
in any respect at any such time.
SECTION 5.02. COMPANY INFORMATION STATEMENT. As promptly as practicable
following the date hereof, the Company (a) will prepare and file with the SEC,
will use its best efforts to have cleared by the SEC and will thereafter mail to
its stockholders as promptly as practicable the Company Information Statement
and all other related materials, if any, (b) include in any Company Information
Statement the determination of the Board of Directors to the effect that the
Board of Directors, having determined that each of them, by virtue of his
service on the Board of Directors of Acceptance Insurance Companies, has a
conflict of interest that will prevent him from passing on the fairness of this
Agreement and the transactions contemplated hereby and (c) will otherwise comply
with all legal requirements applicable to such action. Buyer, Merger Subsidiary
and the Company shall cooperate with each other in the preparation of the
Company Information Statement, and the Company shall notify Buyer of the receipt
of any comments of the SEC with respect to the Company Information Statement and
of any request by the SEC for any amendment or supplement thereto or for
additional information and shall provide to Buyer promptly copies of all
correspondence between the Company or any representative of the Company and the
SEC. The Company shall give Buyer and its counsel the opportunity to review the
Company Information Statement prior to its being filed with the SEC and shall
give Buyer and its counsel the opportunity to review all amendments and
supplements to the Company Information Statement and all responses to requests
for additional information and replies to comments prior to their being filed
with, or sent to, the SEC. If at any time prior to the Effective Time any event
or circumstance
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relating to any party hereto, or their respective officers or directors, any
party hereto, or their respective officers or directors, should be discovered by
such party which should be set forth in an amendment or a supplement to the
Company Information Statement, such party shall promptly inform the Company and
Buyer thereof and take appropriate action in respect thereof.
SECTION 5.03. ACCESS TO INFORMATION. From the date hereof until the
Effective Time, the Company will give Buyer, its counsel, financial advisors,
auditors and other authorized representatives full access to the offices,
properties, books and records of the Company and the Subsidiaries, will furnish
to Buyer, its counsel, financial advisors, auditors and other authorized
representatives such financial and operating data and other information as such
Persons may reasonably request and will instruct the Company's employees,
counsel and financial advisors to cooperate with Buyer in its investigation of
the business of the Company and the Subsidiaries; provided that no investigation
pursuant to this Section shall affect any representation or warranty given by
the Company to Buyer hereunder.
SECTION 5.04. OTHER OFFERS. From the date hereof until the termination
hereof, the Company and the Subsidiaries and the officers, directors, employees
or other agents of the Company and the Subsidiaries will not, directly or
indirectly, (i) take any action to solicit, initiate, facilitate or encourage
any Acquisition Proposal (as defined below), (ii) engage in negotiations with,
or disclose any nonpublic information relating to the Company or any Subsidiary
or afford access to the properties, books or records of the Company or any
Subsidiary to, any Person that may be considering making, or has made, an
Acquisition Proposal or (iii) enter into any agreement or understanding
requiring the Company to abandon, terminate or fail to consummate the Merger or
the other transactions contemplated hereby. The Company will promptly (and in no
event later than 24 hours after receipt of the relevant Acquisition Proposal)
notify (which notice shall be provided orally and in writing and shall identify
the Person making the relevant Acquisition Proposal and set forth the material
terms thereof) Buyer after receipt of any Acquisition Proposal or any indication
that any Person is considering making an Acquisition Proposal or any request for
nonpublic information relating to the Company or any Subsidiary or for access to
the properties, books or records of the Company or any Subsidiary by any Person
that may be considering making, or has made, an Acquisition Proposal and will
keep Buyer fully informed of the status and details of any such Acquisition
Proposal, indication or request. The Company shall, and shall cause the
Subsidiaries and the Company's directors, officers, employees, financial
advisors and other agents and representatives to, cease immediately and cause to
be terminated all activities, discussions or negotiations, if any, with any
Persons conducted heretofore with respect to any Acquisition Proposal. For
purposes of this Agreement, "Acquisition Proposal" means any offer or proposal
for, or any indication of interest in, a merger or other business combination
involving the Company or any Subsidiary or the acquisition of any equity
interest in, or a substantial portion of the assets of, the Company or any
Subsidiary, other than the transactions contemplated by this Agreement.
SECTION 5.05. NOTICES OF CERTAIN EVENTS. The Company shall promptly
notify Buyer in writing of:
(a) any notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with the transactions
contemplated by this Agreement;
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(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions contemplated
by this Agreement;
(c) any actions, suits, claims, investigations or proceedings commenced
or, to the best of its knowledge threatened against, relating to or involving or
otherwise affecting the Company or any Subsidiary which, if pending on the date
of this Agreement, would have been required to have been disclosed pursuant to
Section 3.12 or which relate to the consummation of the transactions
contemplated by this Agreement; and
(d) the occurrence of any event which will or may result in the failure
to satisfy, the conditions specified in Article 8.
SECTION 5.06. STATE TAKEOVER LAWS. The Company shall, upon the request
of Buyer or Merger Subsidiary, take all reasonable steps to assist in any
challenge by Buyer or Merger Subsidiary in respect of the validity or
applicability to the transactions contemplated by this Agreement, including the
Merger, of any state takeover law.
SECTION 5.07. RESIGNATIONS. At or prior to the Effective Time, the
Company will deliver to Buyer the resignations of Xxxxx Xxxxxxxxx from all
positions held with the Company and of all of the other directors of the
Company.
ARTICLE 6
COVENANTS OF BUYER
Buyer agrees that:
SECTION 6.01. CONFIDENTIALITY. Prior to the Effective Time and after
any termination of this Agreement, Buyer will hold, and will use its best
efforts to cause its officers, directors, employees, accountants, counsel,
consultants, advisors and agents to hold, in confidence, unless compelled to
disclose by judicial or administrative process or by other requirements of law
or the rules of the Nasdaq Stock Market, all confidential documents and
information concerning the Company and the Subsidiaries furnished to Buyer in
connection with the transactions contemplated by this Agreement, including,
without limitation, any stockholder lists furnished by the Company, except to
the extent that such information can be shown to have been (a) previously known
on a nonconfidential basis by Buyer, (b) in the public domain through no fault
of Buyer, (c) later lawfully acquired by Buyer from sources other than the
Company or (d) developed independently by Buyer; provided that Buyer may
disclose such information to its officers, directors, employees, accountants,
counsel, consultants, advisors and agents in connection with the transactions
contemplated by this Agreement and to its lenders in connection with obtaining
the financing for the transactions contemplated by this Agreement so long as
such Persons are informed by Buyer of the confidential nature of such
information and are directed by Buyer to treat such information confidentially.
Buyer's obligation to hold any such information in confidence shall be satisfied
if it exercises the same care with respect to such information as it would take
to preserve the confidentiality of its own similar information. If this
Agreement is terminated (a) Buyer will, and will use its best efforts to cause
its officers, directors, employees, accountants, counsel, consultants,
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advisors and agents to, destroy or deliver to the Company, upon request, all
documents and other materials, and all copies thereof, obtained by Buyer or on
its behalf from the Company in connection with this Agreement that are subject
to such confidence and (b) for a period of one year after the date hereof, Buyer
will not solicit the employment of any management or sales employee of the
Company.
SECTION 6.02. OBLIGATIONS OF MERGER SUBSIDIARY. Buyer will take all
action necessary to cause Merger Subsidiary to perform its obligations under
this Agreement and to consummate the Merger on the terms and conditions set
forth in this Agreement.
ARTICLE 7
COVENANTS OF BUYER AND THE COMPANY
The parties hereto agree that:
SECTION 7.01. BEST EFFORTS. Subject to the terms and conditions of this
Agreement, each party will use its commercially reasonable best efforts to take,
or cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate the transactions contemplated by this Agreement.
SECTION 7.02. CERTAIN FILINGS. The Company and Buyer shall cooperate
with one another (a) in connection with the preparation of the Company
Disclosure Documents and (b) in determining whether any action by or in respect
of, or filing with, any governmental body, agency or official, or authority is
required, or any actions, consents, approvals or waivers are required to be
obtained from parties to any material contracts, in connection with the
consummation of the transactions contemplated by this Agreement and (c) in
seeking any such actions, consents, approvals or waivers or making any such
filings, furnishing information required in connection therewith or with the
Company Disclosure Documents and seeking timely to obtain any such actions,
consents, approvals or waivers.
SECTION 7.03. PUBLIC ANNOUNCEMENTS. Buyer and the Company will consult
with each other before issuing any press release or making any public statement
with respect to this Agreement and the transactions contemplated hereby and,
except as may be required by applicable law or any listing agreement with any
national securities exchange, will not issue any such press release or make any
such public statement prior to such consultation.
SECTION 7.04. FURTHER ASSURANCES. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Merger
Subsidiary, any deeds, bills of sale, assignments or assurances and to take and
do, in the name and on behalf of the Company or Merger Subsidiary, any other
actions and things to vest, perfect or confirm of record or otherwise in the
Surviving Corporation any and all right, title and interest in, to and under any
of the rights, properties or assets of the Company acquired or to be acquired by
the Surviving Corporation as a result of, or in connection with, the Merger.
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ARTICLE 8
CONDITIONS TO THE MERGER
SECTION 8.01. CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. The
obligations of the Company, Buyer and Merger Subsidiary to consummate the Merger
are subject to the satisfaction of the following conditions:
(a) this Agreement shall have been adopted by the stockholders of the
Company in accordance with Delaware Law and the Company's Certificate of
Incorporation;
(b) any applicable waiting period under the HSR Act relating to the
Merger shall have expired;
(c) no provision of any applicable United States federal or state
statute, rule or regulation and no judgment, preliminary or permanent
injunction, order or decree shall prohibit the consummation of the Merger or
impose material limitations on the ability of Buyer to exercise full rights of
ownership of the Company's assets or business; and
(d) all actions by or in respect of or filings with any governmental
body, agency, official, or authority or any other third party required or
necessary to permit the consummation of the Merger shall have been obtained.
SECTION 8.02. CONDITIONS TO THE OBLIGATIONS OF BUYER AND MERGER
SUBSIDIARY. The obligations of Buyer and Merger Subsidiary to consummate the
Merger are subject to the satisfaction of the following further conditions:
(a) (i) the Company shall have performed in all material
respects all of its obligations hereunder required to be performed by
it at or prior to the Effective Time,
(ii) the representations and warranties of the Company
contained in this Agreement and in any certificate or other writing
delivered by the Company pursuant hereto, disregarding all
qualifications contained therein relating to materiality or Material
Adverse Effect, shall be true in all material respects at and as of the
Effective Time as if made at and as of such time and
(iii) Buyer shall have received a certificate signed by the
Chairman of the Company to the foregoing effect;
(b) there shall not be instituted or pending any action or proceeding
by any government or governmental authority or agency, domestic or foreign, or
by any other Person, domestic or foreign, before any court or governmental
authority or agency, domestic or foreign, (i) challenging or seeking to make
illegal, to delay materially or otherwise directly or indirectly to restrain or
prohibit the consummation of the Merger, seeking to obtain material damages or
otherwise directly or indirectly relating to the transactions contemplated by
the Merger, (ii) seeking to restrain or prohibit Buyer's ownership or operation
(or that of its Affiliates) of all or any material portion of the business or
assets of the Company and its Subsidiaries, taken as a whole, or of Buyer and
its Affiliates, taken as a whole, or to compel Buyer or any of its Affiliates to
dispose of or hold separate all or any material portion of the business or
assets of the Company and its Subsidiaries, taken as a whole, or of Buyer and
its
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Affiliates, taken as a whole or (iii) that otherwise is likely to materially
adversely affect the Company and its Subsidiaries, taken as a whole, or Buyer
and its Affiliates, taken as a whole;
(c) there shall not be any action taken, or any statute, rule,
regulation, injunction, order or decree proposed, enacted, enforced,
promulgated, issued or deemed applicable to the Merger, by any court, government
or governmental authority or agency, domestic or foreign, other than the
application of the waiting period provisions of the HSR Act to the Merger, that
is likely, directly or indirectly, to result in any of the consequences referred
to in clauses (i) through (iii) of paragraph (b) above;
(d) The Company shall have received all Required Consents in form and
substance reasonably satisfactory to Buyer;
(e) Buyer shall have received the resignation of the officers and
directors of the Company as contemplated by Section 5.07;
(f) Buyer shall have received all documents it may reasonably request
relating to the existence of the Company and the Subsidiaries and the authority
of the Company for this Agreement, all in form and substance satisfactory to
Buyer;
(g) Buyer shall have received the opinion of counsel to the Company
relating to the due organization of the Company, its good standing in Delaware
and Florida, the due authorization, execution and enforceability of this
Agreement, and the fact that, to the present knowledge of such counsel after
inquiry of the officers of the Company, but without any other independent
investigation, the representations set forth in Section 3.04 hereof are true;
(h) At any time after the date of this Agreement, there shall not have
occurred any event or series of events having a Material Adverse Effect; and
(i) Holders of more than 15% of the outstanding Shares shall not have
delivered to the Company, within 20 days after the date on which the Company
Information Statement is mailed to the stockholders of the Company, written
notice of their intent to seek, or demand for, appraisal of their shares under
Section 262 of the Delaware General Corporation Law.
SECTION 8.03. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The
obligations of the Company to consummate the Merger are subject to the
satisfaction of the following further conditions:
(a) (i) Buyer and Merger Subsidiary shall have performed in all
material respects all of their respective obligations hereunder
required to be performed by them at or prior to the Effective Time,
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(ii) the representations and warranties of Buyer and Merger
Subsidiary contained in this Agreement and any certificate or other
writing delivered by Buyer or Merger Subsidiary pursuant hereto,
disregarding all qualifications contained therein relating to
materiality or material adverse effect, shall be true in all material
respects at and as of the Effective Time as if made at and as of such
time and
(iii) the Company shall have received a certificate signed by
the President of Buyer and an equivalent officer of Merger Subsidiary
to the foregoing effect; and
(b) The Company shall have received all documents it may reasonably
request relating to the existence of Buyer or Merger Subsidiary and the
authority of Buyer or Merger Subsidiary for this Agreement, all in form and
substance satisfactory to the Company.
ARTICLE 9
TERMINATION
SECTION 9.01. TERMINATION. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time (notwithstanding
any approval of this Agreement by the stockholders of the Company):
(a) by mutual written consent of the Company and Buyer;
(b) by either the Company or Buyer, if (i) the other party hereto
commits a material breach of this Agreement which is not cured within 10 days
after notice thereof is given to the breaching party or (ii) the Merger has not
been consummated by April 20, 1998 (the "Termination Date"); provided that the
right to terminate this Agreement pursuant to this Section 9.01(b) shall not be
available to any party whose breach of any provision of this Agreement results
in the failure of the Merger to be consummated by such time, and provided
further that in the event that the Securities and Exchange Commission (the
"Commission") reviews the Company Information Statement, the Termination Date
shall be extended by a number of days equal to the number of days between the
date that the Commission informs the Company that it intends to review the
Company Information Statement and the date on which the Commission informs the
Company that it has no further comments on the Company Information Statement; or
(c) by either the Company or Buyer, if there shall be any law or
regulation that makes consummation of the Merger illegal or otherwise prohibited
or if any judgment, injunction, order or decree enjoining Buyer or the Company
from consummating the Merger is entered and such judgment, injunction, order or
decree shall become final and nonappealable. The party desiring to terminate
this Agreement pursuant to clauses 9.01(b) or 9.01(c) shall give written notice
of such termination to the other party in accordance with Section 10.01.
SECTION 9.02. EFFECT OF TERMINATION. If this Agreement is terminated
pursuant to Section 9.01, this Agreement shall become void and of no effect with
no liability on the part of any party hereto, except that the agreements
contained in Sections 6.01, 9.03, 10.01, 10.02, 10.04, 10.05, 10.06, 10.07,
10.08, 10.10 and 10.11 shall survive the termination hereof.
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SECTION 9.03. PAYMENT OF BREAKUP FEES AND EXPENSES UPON TERMINATION.
(a) If this Agreement is terminated by the Company pursuant to Section
9.01(b) due to the material breach hereof by Buyer, Buyer shall promptly pay to
the Company as liquidated damages a fee in cash in an amount equal to $500,000,
plus all out-of-pocket expenses incurred in connection with the negotiation of
the Merger by the Company, including, without limitation, reasonable fees and
expenses of legal counsel, accountants and other professionals in connection
with the negotiation and execution of the Agreement in Principle, this Agreement
and all of the transactions contemplated herein. The deposit of $500,000 held by
Xxxxxxxx, Loop & Xxxxxxxx, LLP, as escrow agent, shall be paid to the Company by
the escrow agent as a portion of such fee.
(b) If this Agreement is terminated by the Buyer pursuant to Section
9.01(b) due to the material breach hereof by the Company, the Company shall
promptly pay to Buyer as liquidated damages a fee in cash in an amount equal to
$500,000, plus all out-of-pocket expenses incurred in connection with the
negotiation of the Merger by Buyer, including, without limitation, reasonable
fees and expenses of legal counsel, accountants and other professionals in
connection with the negotiation and execution of the Agreement in Principle,
this Agreement and all of the transactions contemplated herein.
ARTICLE 10
MISCELLANEOUS
SECTION 10.01. NOTICES. All notices, requests and other communications
to any party hereunder shall be in writing (including telecopy or similar
writing) and shall be given,
if to Buyer or Merger Subsidiary, to: c/o Pembroke Companies, Inc.
1325 Avenue of the Americas, Suite 1200
New York, New York
Attention: Xxxxxxxx X. Xxxxx
Telecopy: 212/399-9199
with a copy to: Blackacre Capital Group
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
Telecopy: 212/750-5305
and Skadden, Arps, Slate, Xxxxxxx & Xxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxx
Telecopy: (000) 000-0000
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if to the Company, to: Major Realty Corporation
0000 Xxxxx Xxxx.
Xxxxxxx, Xxxxxxx
Attention: Xxxxx X. Xxxxxxxxx, Chairman
Telecopy: (000) 000-0000
with a copy to: Xxxxxxxx, Loop & Xxxxxxxx, LLP
Xxxxxxx Xxxxx - Xxxxx 0000
000 Xxxx Xxxxxxx Xxxxxxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telecopy No.: (000) 000-0000
or such other address or telecopy number as such party may hereafter specify for
the purpose by notice to the other parties hereto. Each such notice, request or
other communication shall be effective (a) if given by telecopy, when such
telecopy is transmitted to the telecopy number specified in this Section and the
appropriate telecopy confirmation is received or (b) if given by any other
means, when delivered at the address specified in this Section.
SECTION 10.02. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of
the representations and warranties of the Company, Buyer and Merger Subsidiary
contained herein or in any certificate or other writing delivered pursuant
hereto shall survive the Effective Time.
SECTION 10.03. AMENDMENTS; NO WAIVERS.
(a) Any provision of this Agreement may be amended or waived prior to
the Effective Time if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by the Company, Buyer and Merger Subsidiary
or in the case of a waiver, by the party against whom the waiver is to be
effective; provided that no such amendment or waiver shall, without the further
approval of the stockholders of the Company, alter or change (i) the amount or
kind of consideration to be received in exchange for any Shares, (ii) any term
of the certificate of incorporation of the Surviving Corporation or (iii) any of
the terms or conditions of this Agreement, if such alteration or change would
adversely affect the holders of any shares of capital stock of the Company.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 10.04. EXPENSES. All costs and expenses incurred in connection
with this Agreement shall be paid by the party incurring such cost or expense.
SECTION 10.05. SUCCESSORS AND ASSIGNS. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and
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assigns; provided that no party may assign, delegate or otherwise transfer any
of its rights or obligations under this Agreement without the consent of the
other parties hereto.
SECTION 10.06. GOVERNING LAW. This Agreement shall be construed in
accordance with and governed by the law of the State of Delaware without regard
to the conflict of law provisions of such State. All actions and proceedings
arising out of or relating to this Agreement shall be heard and determined in
any Delaware state or federal court.
SECTION 10.07. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
SECTION 10.08. COUNTERPARTS; EFFECTIVENESS; THIRD PARTY BENEFICIARIES.
This Agreement may be signed in any number of counterparts, each of which shall
be an original, with the same effect as if the signatures thereto and hereto
were upon the same instrument. This Agreement shall become effective when each
party hereto shall have received counterparts hereof signed by all of the other
parties hereto. No provision of this Agreement is intended to confer upon any
Person other than the parties hereto any rights or remedies hereunder.
SECTION 10.09. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions of
this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated. Upon such a determination, the parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner in order
that the transactions contemplated hereby be consummated as originally
contemplated to the fullest extent possible.
SECTION 10.10. SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement is
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof in addition to any other
remedy to which they are entitled at law or in equity.
SECTION 10.11. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
thereof and supersede all prior agreements and understandings, both oral and
written, between the parties with respect to the subject matter hereof and
thereof.
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Next page is signature page.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
"BUYER"
PBD HOLDINGS, L.P.
By: PBD Holdings, Inc., General Partner
By:/s/ Xxxxxxxx X. Xxxxx
-------------------------------------
Name: Xxxxxxxx X. Xxxxx
Title:
"MERGER SUBSIDIARY"
PEMBROKE ACQUISITION, INC.
By:/s/ Xxxxxxxx X. Xxxxx
-------------------------------------
Name: Xxxxxxxx X. Xxxxx
Title:
MAJOR REALTY CORPORATION
By:/s/ Xxxxx X. Xxxxxxxxx
-------------------------------------
Xxxxx X. Xxxxxxxxx, Chairman
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