EXECUTION COPY
ACQUISITION AGREEMENT
AMONG
PRODUCTION RESOURCE GROUP, L.L.C.
Buyer
CBE EXHIBITS & EVENTS INCORPORATED
Seller
and
XXXXXXX XXXXX MARMACK
Sole Shareholder
July 31 ,1998
Exhibit A Inventory Schedule
Exhibit B Form of Employment Agreement - Xxxxxxx Xxxxx Marmack
Exhibit C Form of Legal Opinion
Exhibit D Form of Lease Agreement
Exhibit E Form of Investment Option Agreement
Exhibit F Form of Contingent Payment Note
ACQUISITION AGREEMENT
ACQUISITION AGREEMENT, dated as of July 31 ,1998 by and among CBE
EXHIBITS & EVENTS INCORPORATED, a Texas corporation, ("Seller"), Xxxxxxx Xxxxx
Marmack ("Marmack" or "Shareholder") and PRODUCTION RESOURCE GROUP, L.L.C., a
Delaware limited liability company ("PRG").
RECITALS
A. Seller is engaged, in the business of providing trade show exhibit
products and services. Such business operations of Seller have been carried on
under the name of "CBE Exhibits & Events Incorporated". Seller has a principal
place of business located at 00000 Xxxx Xxxxxxxx, Xxxxxxx, Xxxxx 00000.
Shareholder is the sole owner, of record and beneficially, of all of Seller's
issued and outstanding capital stock.
B. PRG is engaged, in part, in the business of providing set design,
and construction and maintenance services for a variety of staged events and
environments, and desires to acquire all of the above-described business
operations of Seller, except for certain Excluded Assets (as hereinafter
defined). All of the assets related to the business operations of Seller to be
acquired by PRG hereunder are collectively referred to herein as the "Business"
and such assets of Seller not to be acquired by PRG are collectively referred to
herein as the "Excluded Assets."
C. Subject only to the limitations and exclusions contained in this
Agreement and on the terms and conditions hereinafter set forth, Seller desires
to sell and PRG desires to purchase the Business and its operations, and, on the
terms and conditions hereinafter set forth, PRG desires to assume certain of the
liabilities associated with the Business.
NOW, THEREFORE, in consideration of the recitals and of the respective
covenants, representations, warranties and agreements herein contained, and
intending to be legally bound hereby, the parties hereto hereby agree as
follows:
ARTICLE 1 - PURCHASE AND SALE
1.1 Agreement to Sell. At the Closing (as defined in Section 2.1 hereof),
except as otherwise specifically provided in this Section 1.1, Seller shall
sell, convey, assign, transfer and deliver to PRG, upon and subject to the terms
and conditions of this Agreement, all of its respective rights, titles and
interests in and to (a) the Business as a going concern, (b) the name "CBE
Exhibits & Events Incorporated" including any variation thereon and all goodwill
associated therewith, and (c) all of the assets, properties and rights of Seller
constituting the Business or used therein, of every kind and description, real,
personal and mixed, tangible and intangible, wherever situated (which Business,
name, goodwill, assets, properties and rights are herein sometimes collectively
called the "Assets"), free and clear of all mortgages, liens, pledges, security
interests, charges, claims,
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restrictions and encumbrances of any nature whatsoever (except for Permitted
Liens as defined in subsection 3.1.12 hereof).
1.1.1 Included Assets. The Assets shall include, without limitation,
the following assets, properties and rights of Seller used directly or
indirectly in the conduct of, or generated by or constituting, the Business,
except as otherwise expressly set forth in subsection 1.1.2 hereof:
(a) all cash and cash equivalents in transit, on hand or inand
the book balances of all bank accounts;
(b) all machinery, equipment, tools, vehicles, furniture,
furnishings, leasehold improvements, goods, and other tangible
personal property including, without limitation, the assets shown on
Schedule 1.1.1 hereof;
(c) all prepaid items, utility and similar deposits, insurance
return premiums, if any, unbilled costs and fees, and all accounts
receivable, notes and other receivables;
(d) all supplies and inventories and office and other supplies;
(e) all rights under any written or oral contract, agreement,
lease, plan, instrument, registration, license, certificate of
occupancy, other permit or approval of any nature, or other document,
commitment, arrangement, undertaking, practice or authorization;
(f) all rights under any patent, trademark, service xxxx, trade
name or copyright, whether registered or unregistered, and any
applications therefor;
(g) all technologies, methods, formulations, data bases, trade
secrets, know-how, inventions and other intellectual property used in
the Business or under development, if any;
(h) all rights or chooses in action arising out of occurrences
before or after the Closing, including without limitation all rights
under express or implied warranties relating to the Assets;
(i) all assets and properties reflected on the Closing Balance
Sheet (as defined in Section 1.7);
(j) all inventory reflected on the Inventory Schedule attached as
Exhibit A hereof; and
(k) all information, files, records, data, plans, contracts and
recorded knowledge, including customer and supplier lists, related to
the foregoing.
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1.1.2 Excluded Assets. Notwithstanding the foregoing, the
Assets shall not include any of the following:
(a) the corporate seal, certificate of incorporation, minute
books, stock books, tax returns, books of account or other records
having to do with corporate organization of Seller;
(b) the rights which accrue or will accrue to Seller under this
Agreement;
(c) any rights under any written or oral contract, agreement,
lease, plan, instrument, registration, license, certificate of
occupancy, other permit or approval of any nature, or other document,
commitment, arrangement, undertaking, practice or authorization to the
extent the transfer of such rights is prohibited by applicable law or
requires the consent of a third party, which consent has not been
obtained; provided, however, that Section 2.3 hereof shall apply to
any such rights;
(d) the rights to any claims of Seller for any federal, state,
local, or foreign tax refunds; or
(e) the assets, properties or rights set forth on Schedule 1.1.2.
1.2 Agreement to Purchase At the Closing, PRG shall purchase the Assets
(other than the Excluded Assets) from Seller, upon and subject to the terms and
conditions of this Agreement and in reliance on the representations, warranties
and covenants of Seller contained herein, in exchange for the Purchase Price (as
defined in Section 1.3 hereof). In addition, PRG shall assume at the Closing and
agree to pay, discharge or perform, as appropriate, certain liabilities and
obligations of Seller only to the extent and as provided in Section 1.5 of this
Agreement (the "Assumed Liabilities"). Except as specifically provided in
Section 1.5 hereof, PRG shall not assume or be responsible for any of the
liabilities or obligations of Seller, whether related to or arising under or
with respect to the Business, or otherwise.
1.3 Purchase Price.
1.3.1 The "Initial Purchase Price" shall be three million dollars
($3,000,000) less (b) the Adjustment Amount, if any (determined pursuant to
subsection 1.3.31.4 hereof). The Initial Purchase Price shall be paid on the
Closing Date by wire transfer of immediately available funds to such account as
Seller shall designate.
1.3.2 The Contingent Purchase Price shall be Seven Million Dollars
($7,000,000.00) plus the amount, if any, payable pursuant to subsection
1.3.3(iv). PRG will issue a non-negotiable contingent payment note substantially
in the form of Exhibit F hereof in payment of the Contingent Purchase
Price.
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1.3.3 The Contingent Purchase Price will be paid annually in three
equal installments of Two Million Three Hundred Thirty-Three Thousand, Three
Hundred Thirty-Three Dollars and Thirty Four cents ($2,333,333.34) upon
satisfaction of the annual or cumulative earnings before interest, taxes and
amortization ("EBITA") conditions set forth below:
Year Annual EBITA Target Cumulative EBITA Target
---- ------------------- -----------------------
1998 $2 million $ 2 million
1999 $2.5 million $4.5 million
2000 $3.0 million $7.5 million
(i) 1998 EBITA will include recast earnings starting from January 1,
1998 through closing of transaction. Recast EBITA will be calculated
without deduction for the direct costs incurred by Seller in connection
herewith and will not include any corporate overhead charge except for
agreed-upon capital charges.
(ii) EBITA is cumulative. Any deficiency or excess over the target
EBITA for any year will be carried over to the next year and such
deficiency or excess will be used to calculate the annual or cumulative
EBITA.
(iii) Each of the annual payments of the Contingent Purchase Price
will be paid within 30 days of the later of (x) the determination of EBITA
for the applicable year or (y) the filing of PRG's Form 10-K with the
Securities and Exchange Commission for the immediately preceding year.
(iv) To the extent cumulative EBITA exceeds $8.5 million for the
three-year period consisting of calendar years 1998, 1999 and 2000, the
purchase price will be increased by ten percent of the excess, if any, of
such cumulative EBITA above $8.5 million. PRG anticipates paying this
amount in equity subject to a vesting schedule to be agreed upon but may
elect to pay the additional amounts in cash and will do so if PRG equity is
not publicly traded.
(v) Notwithstanding the above, in the event that the employment of
Xxxxxxx Xxxxx Marmack by the Company is terminated other than for "Cause"
as defined in an employment agreement between the Company and Xx. Xxxxxxx
dated as of July 31, 1998, the annual and cumulative EBITA targets for any
period including or subsequent to the date of termination shall be zero and
the unpaid installments of the Contingent Purchase Price, to the extent
earned in accordance with this subsection, shall be payable pursuant to
subsection (iii) hereof.
1.4 In the event that the Net Asset Value of the Business (hereinafter
defined) on the Closing Balance Sheet is less than one million five hundred
thousand dollars ($1,500,000.00), the Initial Purchase Price shall be reduced by
an amount (the "Adjustment Amount") equal to the difference between $1,500,000
and the Net Asset Value of the Business (as hereinafter defined) on
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the Closing Balance Sheet. For these purposes "net assets" will include cash,
accounts receivable (net of allowance for doubtful accounts), inventory, rental
equipment, small tools and parts, computer equipment, other off-balance sheet
assets set forth in Schedule 1.4, a 100 X 100 rental booth (the "Booth") and the
other assets of CBE as set forth in a balance sheet prepared in accordance with
generally accepted accounting principles ("GAAP") adjusted (i) to eliminate the
effect of the capitalization policies of Seller and (ii) with the Booth valued
at its fair market value as agreed by PRG and Seller. Any assets other than the
100 X 100 rental booth which are placed on the balance sheet shall be
depreciated in accordance with PRG's depreciation policies for purposes of
calculating the Contingent Purchase Price hereunder. At least three business
days prior to the Closing Date, Seller will provide PRG with a good faith
estimate of the Net Asset Value on the Closing Date and PRG will have the right
to review such estimate. If the estimated Net Asset Value is less than
$1,500,000, PRG shall hold back the Adjustment Amount from the Initial Purchase
Price. Promptly following the determination of the amount of any Adjustment
Amount pursuant to Section 1.7, if the actual Adjustment Amount is less than the
estimated Adjustment Amount, PRG shall pay the difference to Seller by wire
transfer of immediately available funds to such account as Seller shall
designate.or if the actual Adjustment Amount is more than the estimated
Adjustment Amount Seller shall pay such portion to PRG by wire transfer of
immediately available funds to such account as PRG shall designate.
1.5 Allocation of Purchase Price. The parties agree that the Purchase
Price, the Assumed Liabilities and any non-recourse liabilities to which any
Asset is subject (together, the "Total Consideration") as finally determined
shall be allocated among the Assets acquired herein in accordance with Schedule
1.5 hereof after the completion of the Closing Balance Sheet. Upon any reduction
of the Purchase Price pursuant to section 1.4, the allocation to "Goodwill" set
forth in Schedule 1.5 shall be reduced accordingly. The parties hereto shall
timely file with the Internal Revenue Service a Form 8594. Seller and PRG each
hereby covenant and agree that it will not take a position on any income tax
return, before any governmental agency charged with the collection of any income
tax, or in any judicial proceeding that is in any way inconsistent with the
terms of this Section 1.5 or such Form.
1.6 Assumption of Liabilities. At the Closing hereunder and except as
otherwise specifically provided in this Section 1.6, PRG shall assume and agree
to pay, discharge or perform, as appropriate, solely the following liabilities
and obligations of Seller:
1.6.1 all liabilities and obligations of Seller in respect of the Business
existing as of the 1997 Balance Sheet Date (as defined in subsection 3.1.6(a)),
but only if and to the extent that the same arose in the regular and ordinary
course of business and are reflected on the Reviewed 1997 Balance Sheet (as
defined in subsection 3.1.6(a)) and remain unpaid and undischarged on the
Closing Date;
1.6.2 all liabilities and obligations of Seller arising in the regular and
ordinary course of the Business between the 1997 Balance Sheet Date and the
Closing Date, to the extent that the same remain unpaid and undischarged on the
Closing Date; and
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1.6.3 all liabilities and obligations of Seller in respect of the
agreements, contracts, commitments and leases which are specifically identified
in any schedule required by and attached to this Agreement, except that PRG
shall not assume or agree to pay, discharge or perform any:
(i) liabilities or obligations in excess of an aggregate of fifteen thousand
dollars ($15,000) existing as of the 1997 Balance Sheet Date, and which under
generally accepted accounting principles should have been reflected on a balance
sheet or the notes thereto as a liability or obligation, if and to the extent
that the same were not reflected on the 1997 Balance Sheet; or
(ii) liabilities or obligations arising out of any breach by Seller of any
provision of any agreement, contract, commitment or lease, including but not
limited to liabilities or obligations arising out of Seller's failure to perform
any agreement, contract, commitment or lease in accordance with its terms prior
to the Closing, but excluding however any liability arising out of the
assignment to PRG of such agreements, contracts, commitments or leases in
violation of the terms thereof to the extent that the agreement, contract,
commitment or lease is listed on Schedule 5.1.8 hereof.
1.6.4 In no event, however, shall PRG assume or incur any liability or
obligation under this Section 1.6 or otherwise in respect of any of the
following:
(i) any indebtedness for borrowed money, including without limitation, any
indebtedness arising under any note, debenture, bond, letter of credit
agreement, loan agreement or other contract or commitment for the borrowing or
lending of money relating to the Business or agreement or arrangement for a line
of credit, or any guaranties, in any manner, whether directly or indirectly, of
any indebtedness, dividend or other obligation of any other person or entity
relating to the Business (other than endorsements in the ordinary course of
business of negotiable instruments for deposit or collection);
(ii) any product liability or similar claim for injury to person or property,
regardless of when made or asserted, which arises out of or is based upon any
express or implied representation, warranty, agreement or guarantee made by
Seller, or alleged to have been made by Seller, or which is imposed or asserted
to be imposed by operation of law, in connection with any service performed or
product sold or leased by or on behalf of Seller on or prior to the Closing,
including without limitation any claim relating to any product delivered in
connection with the performance of such service and any claim seeking recovery
for consequential damage, lost revenue or income;
(iii) any federal, state or local income or other tax (i) payable with respect
to the business, assets, properties or operations of Seller or any Shareholder
or any member of any affiliated group of which Seller or any Shareholder is a
member for any period prior to the Closing Date, or (ii) incident to or arising
as a consequence of the negotiation or consummation by Seller or Shareholders of
this Agreement and the transactions contemplated hereby;
(iv) any liability or obligation under or in connection with respect to the
Excluded Assets;
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(v) any liability or obligation arising prior to or as a result of the Closing
to any employees, agents or independent contractors of Seller, whether or not
employed by PRG after the Closing, or under any benefit arrangement with respect
thereto, except for obligations incurred in the ordinary course of the Business;
(vi) any liability or obligation of Seller or any Shareholder arising or
incurred in connection with the negotiation, preparation and execution of this
Agreement and the consummation of the transactions contemplated hereby
(including without limitation fees and expenses of counsel, accountants and
other experts);
(vii) any liability or obligation of Seller or any Shareholder relating to any
entity affiliated with Seller;
(viii) any liability or obligation relating to any employee benefit plan.
1.7 Closing Financial Statements.
1.7.1 Not later than sixty (60) days after the Closing Date, Seller shall
cause to be prepared the balance sheet of the Business as of the Closing Date
(hereinafter defined) and the related statement of income, changes in financial
position, and notes of the Business for the period from the 1997 Balance Sheet
Date until the Closing Date, in accordance with generally accepted accounting
principles consistently applied by Seller. PRG acknowledges that the historical
financial statements of Seller were not prepared in accordance with GAAP and
include assets not included in the Business acquired hereunder. Such balance
sheet shall specifically identify all assets reflected thereon which are not
included in the Assets and all liabilities reflected thereon which are not
assumed by Purchaser hereunder.
1.7.2 Ernst and Young or such other firm of independent certified public
accountants selected by PRG (the "Auditors"), shall review the financial
statements described in subsection 1.7.1, above, in accordance with AICPA review
provisions, and shall issue, as soon as practicable but in any event not later
than sixty (60) days after the Closing Date, its report thereon to Seller and
PRG to the effect that such financial statements present fairly the financial
position of the Business as of the Closing Date in conformity with generally
accepted accounting principles. If requested by PRG, the Auditors shall audit
(rather than review) the financial statements. PRG will provide Sellers with
notice if it elects to have the financial statements audited in which event
references to "reviewed financial statements" shall be deemed to be references
to audited financial statements. Such report shall also include a detailed
schedule setting forth the calculation of the Adjustment Amount, if any,
calculated in accordance with section 1.4 and a statement to the effect that the
Adjustment Amount was calculated in accordance with the provisions of this
Agreement.
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(a) if the Sellers dispute the Adjustment Amount or any adjustments to
the Closing Balance Sheet prepared by the Auditors, the Sellers shall
notify PRG in writing within 30 days after the delivery to Sellers of the
report of the Auditors pursuant hereto of such dispute; such notice shall
specify in reasonable detail the nature of the dispute;
(b) during the 15 day period following the date of such notice,
Sellers and PRG shall attempt to resolve such dispute and to determine the
appropriateness of the Closing Balance Sheet, Financial Statements or the
Adjustment Amount; and
(c) if at the end of the 15 day period specified in subsection (b)
above, Seller and PRG shall have failed to reach a written agreement with
respect to such dispute, the matter shall be referred to, an independent
firm of certified public accountants mutually acceptable to Sellers and PRG
(the "Arbitrator"), which shall act as an arbitrator and shall issue its
report as to the Closing Balance Sheet and Adjustment Amount within thirty
(30) days after such dispute is referred to the Arbitrator. Each of the
parties hereto shall bear all costs and expenses incurred by it in
connection with such arbitration, except that the fees and expenses of the
Arbitrator hereunder shall be borne equally by Seller and PRG. This
provision for arbitration shall be specifically enforceable by the parties
and the decision of the Arbitrator in accordance with the provision hereof
shall be final and binding and there shall be no right of appeal therefrom.
1.7.3 References in this Agreement to (a) the "Closing Balance Sheet" shall
mean the balance sheet of the Business at the Closing Date, prepared and
reviewed as described in this Section 1.7 and (b) the "Adjustment Date" shall
mean the day that the report of the Auditors described in this Section 1.7 is
delivered to Seller and PRG.
ARTICLE 2 - CLOSING, ITEMS TO BE DELIVERED, THIRD PARTY
CONSENTS, CHANGE IN NAME AND FURTHER ASSURANCES
2.1 Closing. The closing (the "Closing") of the sale and purchase of the
Assets shall take place at 10:00 A.M., local time, on July 31, 1998 or on such
other date as may be mutually agreed upon in writing by PRG and Seller. The date
of the Closing is sometimes herein referred to as the "Closing Date." The
closing shall take place at the offices of PRG, or at such other location as the
parties shall mutually agree.
2.2 Items to be Delivered at Closing. At the Closing and subject to the
terms and conditions herein contained:
2.2.1 Seller shall deliver to PRG such bills of sale with covenants of
warranty, assignments, endorsements, and other good and sufficient instruments
and documents of conveyance and transfer, in form reasonably satisfactory to PRG
and its counsel, as shall be necessary and effective to transfer and assign to,
and vest in, PRG all of Seller's rights, titles and interests in and to the
Assets, including without limitation, (a) good and valid title in and to all of
the Assets owned by Seller, (b) assignments of all leasehold interests in and to
all of the Assets leased by Seller as lessee, and (c)
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all of Seller's rights under all agreements, contracts, commitments, leases,
plans, bids, quotations, proposals, instruments and other documents included in
the Assets to which Seller is party or by which it has rights on the Closing
Date, and simultaneously with such delivery, all such actions will be taken as
may be required to put PRG in actual possession and operating control of the
Assets.
2.2.2 PRG shall deliver to the Seller the Cash Payment and an undertaking
whereby PRG will assume and agree to pay, discharge or perform, as appropriate,
the Assumed Liabilities to the extent and as provided in Section 1.5 hereof, in
form reasonably satisfactory to Seller and its counsel.
2.2.3 PRG and Marmack shall mutually execute and deliver an employment
agreement substantially in the form of Exhibit B, attached hereto.
2.2.4 At or prior to the Closing, the parties hereto shall also deliver to
each other the agreements, opinions, certificates and other documents and
instruments referred to in Article V hereof.
2.3 Third Party Consents. To the extent that Seller's rights under any
agreement, contract, commitment, lease, authorization or other Asset to be
assigned to PRG hereunder may not be assigned without the consent of another
person which has not been obtained, this Agreement shall not constitute an
agreement to assign the same if an attempted assignment would constitute a
breach thereof or be unlawful, and Seller, at its expense, shall use its best
efforts to obtain any such required consent(s) as promptly as possible. If any
such consent shall not be obtained or if any attempted assignment would be
ineffective or would impair PRG's rights under the Asset in question so that PRG
would not in effect acquire the benefit of all such rights, Seller, to the
maximum extent permitted by law, shall act after the Closing as PRG's agent in
order to obtain for it the benefits thereunder and shall cooperate, to the
maximum extent permitted by law, with PRG in any other reasonable arrangement
designed to provide such benefits to PRG.
2.4 Change in Name. On the Closing Date, Seller and the Shareholders shall
deliver to PRG all such executed documents as may be required to change Seller's
name on that date to another name bearing no similarity to "CBE Exhibits &
Events Incorporated," including but not limited to a name change amendment with
the Secretary of State of Texas and an appropriate name change notice for each
state where Seller is qualified to do business. Seller hereby irrevocably grants
PRG a power of attorney and appoints PRG as its attorney-in-fact to file all
such documents on or after the Closing Date. The power granted hereunder is
coupled with an interest and shall survive the death, incompetency, bankruptcy
and dissolution of Seller and each Shareholder.
2.5 Leases
2.5.1 On the Closing Date, PRG as tenant, shall enter into a lease with an
affiliate of Marmack, as landlord, with respect to the land and all buildings
erected thereon located at 00000 Xxxx Xxxxxxxx, Xxxxxxx, Xxxxx, substantially in
the form of Exhibit D hereof (the "Lease").
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2.6 Further Assurances. Seller and the Shareholders from time to time
after the Closing, at PRG's request, will execute, acknowledge and deliver to
PRG such other instruments of conveyance and transfer and will take such other
actions and execute and deliver such other documents, certifications and further
assurances as PRG may reasonably require in order to vest more effectively in
PRG, or to put PRG more fully in possession of, any of the Assets, or to better
enable PRG to complete, perform or discharge any of the Assumed Liabilities.
Each of the parties hereto will cooperate with the other parties hereto and take
other actions as may be reasonably requested from time to time by any other
party hereto as necessary to carry out, evidence and confirm the intended
purposes of this Agreement.
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Seller. Seller hereby represents
and warrants to PRG that, except as set forth on the Disclosure Schedule
attached hereto (each of which exceptions shall specifically identify the
relevant section or subsection hereof to which it relates and shall be deemed to
be a representation and warranty as if made hereunder):
3.1.1 Corporate Existence. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation. Seller is duly qualified to do business and is in good standing
as a foreign corporation in each jurisdiction where the conduct of the Business
by it requires it to be so qualified, all of which jurisdictions are listed on
the Disclosure Schedule in a manner that identifies the jurisdiction in which
Seller is in good standing and so qualified.
3.1.2 Corporate Power; Authorization; Enforceable Obligations. Each
Shareholder and Seller has the power (corporate or otherwise), authority and
legal right to execute, deliver and perform this Agreement. The execution,
delivery and performance of this Agreement by Seller has been duly authorized by
all necessary corporate and shareholder action. This Agreement has been, and the
other agreements, documents and instruments required to be delivered by Seller
in accordance with the provisions hereof (the "Seller's Documents") will be,
duly executed and delivered by Seller by duly authorized officers of Seller, and
this Agreement constitutes, and the Seller's Documents when executed and
delivered will constitute, the legal, valid and binding obligations of Seller's,
enforceable against Seller in accordance with their respective terms.
3.1.3 No Interest in Other Entities. Seller does not own any shares of any
corporation or any ownership or other investment interest, either of record,
beneficially or equitably, in any association, partnership, joint venture,
limited liability company or other legal entity.
3.1.4 Validity of Contemplated Transactions, etc. The execution, delivery
and performance of this Agreement by Seller does not and will not violate,
conflict with or result in the breach of any term, condition or provision of, or
require the consent of, any other person under, (a) any existing law, ordinance,
or governmental rule or regulation to which Seller is subject, (b) any judgment,
order, writ, injunction, decree or award of any court, arbitrator or
governmental or regulatory official, body or authority which is applicable to
Seller, (c) the charter documents of Seller or any securities issued
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by Seller, or (d) any mortgage, indenture, agreement, contract, commitment,
lease, plan, authorization, or other instrument, document or understanding, oral
or written, to which Seller is a party, by which Seller may have rights or by
which any of the Assets may be bound or affected, or give any party with rights
thereunder the right to terminate, modify, accelerate or otherwise change the
existing rights or obligations of Seller thereunder in a manner which would
materially adversely impair the Assets or otherwise materially adversely affect
PRG. Except as aforesaid, no authorization, approval or consent of, and no
registration or filing with, any governmental or regulatory official, body or
authority is required in connection with the execution, delivery or performance
of this Agreement by Seller.
3.1.5 No Third Party Options. There are no existing agreements, options,
commitments, or rights with, of or to any person to acquire any of Seller's
assets, properties or rights included in the Assets or any interest therein,
except for those contracts entered into in the normal course of business
consistent with past practice for the sale of inventory of Seller.
3.1.6 Financial Statements; Customer and Vendor List.
(i) Seller has delivered to PRG true and complete copies of (i) the balance
sheet of Seller for the fiscal year ending December 31, 1997, accompanied by a
report of the Auditors unqualified as to scope limitations imposed by the Seller
and otherwise without qualification except as noted therein (the "Reviewed 1997
Balance Sheet"); and (ii) tax balance sheets and tax returns of Seller for the
fiscal years ending December 31, 1995 and 1996 and the related statements of
income and cash flow for the periods then ended, each of which has been prepared
on a compilation basis by Seller'sPRG's independent certified public
accountants; the Reviewed 1997 Balance Sheet and the related statements of
income, cash flow and changes in shareholders equity described in clauses (i)
and (ii) of this subsection 3.1.6(a) have been prepared in accordance with
generally accepted accounting principles consistently applied through the
periods involved. Such balance sheets, including the related notes, fairly
present the financial position, assets and liabilities (whether accrued,
absolute, contingent or otherwise) of Seller at the dates indicated and such
statements of income, cash flow and changes in shareholders equity fairly
present the respective results of operation, cashflow and changes in
shareholders equity of the Seller for the periods indicated. The Reviewed 1997
Balance Sheet specifically identifies the asset and liabilities which, if the
Closing had been held on the 1997 Balance Sheet Date, would have been
transferred to or assumed by PRG in accordance herewith. References in this
Agreement to the "1997 Balance Sheet Date" shall be deemed to refer to December
31, 1997 except with respect to the physical inventory, in which case it shall
be deemed to refer to the date set forth on Exhibit A.
(ii) Seller has delivered to PRG true and complete copies of all customer and
vendor lists and all historic data in its possession with respect to prior sales
to customers and purchases from vendors.
3.1.7 Inventory. All inventory of Seller including resale inventory and
rental inventory used in the conduct of the Business, including without
limitation raw materials, work-in process and finished goods, reflected on
Exhibit A or acquired since the date thereof was acquired and has been
maintained in the ordinary course of the Business; is of good and merchantable
quality; consists
11
substantially of a quality, quantity and condition usable, leasable or saleable
in the ordinary course of the Business; is valued at reasonable amounts based on
the ordinary course of business of Seller during the past six months; and is not
subject to any write-down or write-off. Seller is not under any liability or
obligation with respect to the return of inventory in the possession of
wholesalers, retailers or other customers.
3.1.8 Absence of Undisclosed Liabilities. Seller has no liabilities or
obligations with respect to the Business, either direct or indirect, matured or
unmatured or absolute, contingent or otherwise, except:
(i) those liabilities or obligations set forth on the 1997 Balance Sheet and not
heretofore paid or discharged;
(ii) liabilities arising in the ordinary course of business under any agreement,
contract, commitment, lease or plan specifically disclosed on the Disclosure
Schedule; and
(iii) those liabilities or obligations incurred, consistently with past business
practice, in or as a result of the normal and ordinary course of business since
the 1997 Balance Sheet Date including liabilities or obligations for purchased
goods reasonably consistent with past practice.
For purposes of this Agreement, the term "liabilities" shall include,
without limitation, any indebtedness, guaranty, endorsement, claim, loss damage,
deficiency, cost, expense, obligation or responsibility, fixed or unfixed, known
or unknown, asserted or unasserted, xxxxxx or inchoate, liquidated or
unliquidated, secured or unsecured.
3.1.9 Taxes. All tax returns required to be filed by Seller ("Tax Returns")
in any jurisdiction have been filed and all taxes, assessments, fees and other
governmental charges upon Seller or upon any of Seller's properties, income or
franchises ("Taxes"), which are shown to be due and payable in such Tax Returns
have been paid except for such Taxes the payment of which is being contested by
Seller in good faith by appropriate proceedings and with respect to which Seller
has set aside on its books reserves deemed by it to be adequate. For all taxable
years ended on or before December 31, 1995, the federal income tax liability of
Seller has been satisfied and either the period of limitations on assessment of
additional federal income tax has expired or Seller has entered into an
agreement with the Internal Revenue Service closing conclusively the total tax
liability for the taxable year. Seller has not executed any waiver or waivers
that would have the effect of extending the applicable statute of limitations in
respect of income tax liabilities. Seller does not know of any proposed
additional tax assessment against it for which provision has not been made on
its accounts, and no controversy in respect of additional federal or state
income taxes due since said date is pending or to the knowledge of Seller
threatened. Seller is not being audited or challenged for any federal or state
income tax liability for any period by the Internal Revenue Service or any state
taxing authority. The provisions for Taxes on the books of Seller are deemed
adequate in all material respects by Seller. Seller has not received any notice
of assessment or proposed assessment in connection with any taxes or any nature
whatsoever and there are not pending tax examinations of or tax claims asserted
against Seller or any assets or properties of Seller which could adversely
affect
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PRG. There are no tax liens (other than any lien for current taxes not yet due
and payable) on any of the assets or properties of Seller. Seller has made all
deposits required by law to be made with respect to employees' withholding and
other employment taxes, including without limitation the portion of such
deposits relating to taxes imposed upon Seller.
3.1.10 Books of Account. The books, records and accounts of Seller maintained
with respect to the Business accurately and fairly reflect, in reasonable
detail, the transactions and the assets and liabilities of Seller with respect
to the Business. Seller has not engaged in any transaction with respect to the
Business, maintained any bank account for the Business or used any of the funds
of Seller in the conduct of the Business, except for transactions, bank accounts
and funds related solely to the Business and reflected in the normally
maintained books and records of the Business.
3.1.11 Existing Condition. Since the 1997 Balance Sheet Date,
Seller has not:
(i) incurred any liabilities, other than liabilities incurred in the ordinary
course of business consistent with past practice, or discharged or satisfied any
lien or encumbrance, or paid any liabilities, other than in the ordinary course
of business consistent with past practice, or failed to pay or discharge when
due any liabilities of which the failure to pay or discharge has caused or will
cause any material damage or risk of material loss to it or any of its assets or
properties other than with the prior written consent of PRG;
(ii) sold, encumbered, assigned or transferred any assets or properties which
would have been included in the Assets if the Closing had been held on the 1997
Balance Sheet Date or an any date since then, except for the sale of property in
the ordinary course of business consistent with past practice or with the prior
written consent of PRG;
(iii) created, incurred, assumed or guaranteed any indebtedness for money
borrowed, or mortgaged, pledged or subjected any of its Assets to any mortgage,
lien, pledge, security interest, conditional sales contract or other encumbrance
of any nature whatsoever, except for Permitted Liens (as defined in subsection
3.1.12), other than with the prior written consent of PRG;
(iv) made or suffered any amendment or termination of any material agreement,
contract, commitment, lease or plan to which it is a party or by which it is
bound, or canceled, modified or waived any substantial debts or claims held by
it or waived any rights of substantial value, whether or not in the ordinary
course of business, other than with the prior written consent of PRG;
(v) declared, set aside or paid any dividend or made or agreed to make any other
distribution or payment in respect of its capital shares or redeemed, purchased
or otherwise acquired or agreed to redeem, purchase or acquire any of its
capital shares, other than with the prior written consent of PRG;
(vi) suffered any damage, destruction or loss, whether or not covered by
insurance, (i) materially and adversely affecting its business, operations,
assets properties or prospects or (ii) of any item or items carried on its books
of account individually or in the aggregate at more than $7,500 or suffered
13
any repeated, recurring or prolonged shortage, cessation or interruption of
supplies or utility or other services required to conduct its business and
operations;
(vii) suffered any material adverse change in its business, operations, assets,
properties, prospects or condition (financial or otherwise);
(viii) received notice or had knowledge of any actual or threatened labor
trouble, strike or other occurrence, event or condition of any similar character
which has had or might have an adverse effect on it business, operations,
assets, properties or prospects;
(ix) made commitments or agreements for capital expenditures or capital
additions or betterments except such as may be involved in ordinary repair,
maintenance or replacement of its assets, other than with the prior written
consent of PRG;
(x) materially increased the salaries or other compensation of, or made any
advance (excluding advances for ordinary and necessary business expenses) or
loan to, any of its employees or made any increase in, or any addition to, other
benefits to which any of its employees may be entitled, other than with the
prior written consent of PRG;
(xi) changed any of the accounting principles followed by it or the methods of
applying such principles other than with the prior written consent of PRG; or
(xii) entered into any transaction other than in the ordinary course of business
consistent with past practice, other than with the prior written consent of PRG.
3.1.12 Title to Properties. Seller has good, valid and marketable title to
all of its properties and assets which would be included in the Assets if the
Closing took place on the date hereof, which it purports to own, including
without limitation all properties and assets reflected in the 1997 Balance Sheet
(except for property sold for fair value since the date thereof in the ordinary
course of business consistent with past practice), and all assets physically on
the Business premises on the date hereof, free and clear of all mortgages,
liens, pledges, security interest, charges, claims, restrictions and other
encumbrances and defects of title of any nature whatsoever, except for (i) liens
for current real or personal property taxes not yet due and payable, (ii) liens
disclosed in the Disclosure Schedule in response to this Section, (iii)
worker's, carrier's and materialman's liens, and (iv) liens that individually
and in the aggregate are immaterial in character, amount, and extent, and which
do not detract from the value or interfere with the present or proposed use of
the properties they affect ("Permitted Liens").
3.1.13 Condition for Tangible Assets. All buildings, structures, facilities,
equipment and other material items of tangible property and assets which would
be included in the Assets if the Closing took place on the date hereof are in
reasonable operating condition and repair, subject to normal wear and
maintenance, are usable in the regular and ordinary course of business, and
conform to all applicable laws, ordinances, codes, rules and regulations, and
Authorizations (as defined in subsection 3.1.14) relating to their construction,
use and operation. No person other than Seller
14
owns any equipment or other tangible assets or properties situated on the
premises of Seller or necessary for the operation of the Business, except for
leased items disclosed in the Disclosure Schedule and for items that,
individually and in the aggregate, are of immaterial value.
3.1.14 Compliance with Law; Authorizations. Seller has complied with each,
and is not in violation of any, law, ordinance, or governmental or regulatory
rule or regulation, whether federal, state, local or foreign, to which Seller's
business, operations, assets or properties is subject ("Regulations"). Seller
owns, holds, possesses or lawfully uses in the operation of its business all
franchises, licenses, permits, easements, rights, applications, filings,
registrations and other authorizations ("Authorizations") which are in any
manner necessary for it to conduct its business as now or previously conducted
or for the ownership and use of the assets owned or used by Seller in the
conduct of the business of Seller, free and clear of all liens, charges,
restrictions and encumbrances and in compliance with all Regulations. All such
Authorizations are listed and described in the Disclosure Schedule. Seller is
not in default, nor has Seller received any notice of any claim of default, with
respect to any such Authorization. All such Authorizations are renewable by
their terms or in the ordinary course of business without the need to comply
with any special qualification procedures or to pay any amounts other than
routine filing fees. None of such Authorizations will be adversely affected by
consummation of the transactions contemplated hereby. No shareholder, director,
officer, employee or former employee of Seller or any affiliates of Seller, or
any other person, firm or corporation owns or has any proprietary, financial or
other interest (direct or indirect) in any Authorization which Seller owns,
possesses or uses in the operation of the business of Seller as now or
previously conducted.
3.1.15 Related Party Transactions. Except for the lease attached as
Exhibit D, and the previous lease between Xxxxxxx Xxxxx MarmackJAM Holdings Ltd.
and Seller for the property leased pursuant to Exhibit D, no employee, officer,
or director of Seller, or member of the immediate family of any employee,
officer, or director of Seller presently has, or during the past three years has
had, any direct or indirect ownership interest in (a) any firm or corporation
with which Seller is or was affiliated or with which Seller presently has, or
during the past three years has had, a business relationship, or (b) any firm or
corporation that competes or during the past three years has competed with
Seller, or (c) any property which is, or during the past three years was, the
subject of any material contract, agreement, understanding or business
relationship. Except for those leases described in Section 5.1.9, no employee,
officer, or director of Seller, or member of the immediate family of any
employee, officer, or director of Seller presently has, or during the past three
years has had, any direct or indirect interest in any material contract with
Seller.
3.1.16 Litigation. No litigation, including any arbitration, investigation or
other proceeding of or before any court, arbitrator or governmental or
regulatory official, body or authority is pending or, to the best knowledge of
Seller is threatened which relates to the assets of Seller or the transactions
contemplated by this Agreement, nor does Seller know of any reasonably likely
basis for any such litigation, arbitration, investigation or proceeding, the
result of which could adversely affect Seller, its assets or the transactions
contemplated hereby.
15
3.1.17 Insurance. The assets, properties and operations of Seller are insured
under various policies of general liability and other forms of insurance, all of
which are described in the Disclosure Schedule, which discloses for each policy
the risks insured against, coverage limits, deductible amounts, all outstanding
claims thereunder, and whether the terms of such policy provide for
retrospective premium adjustments. All such policies are in full force and
effect in accordance with their terms, no notice of cancellation has been
received, and there is no existing default or event which, with the giving of
notice or lapse of time or both, would constitute a default thereunder. Such
policies are in amounts which are adequate in relation to the business and
assets of Seller and all premiums to date have been paid in full. Seller has not
been refused any insurance, nor has its coverage been limited, by any insurance
carrier to which it has applied for insurance or with which it has carried
insurance during the past five years. The Disclosure Schedule also contains a
true and complete description of all outstanding bonds and other surety
arrangements issued or entered into in connection with the business, assets and
liabilities of Seller.
3.1.18 Contracts and Commitments.
(i) The agreements listed on the Disclosure Schedule constitute all written and
oral agreements to which Seller is a party that are material to the Business as
currently conducted, including, without limitation,
(1) any agreements relating to the construction or purchase of capital
improvements, or the purchase of any materials, supplies, or equipment,
involving the expenditure of more than $50,000;
(2) any employment, consulting, management, or noncompetition agreement not
terminable at will without liability on less than 30 days notice;
(3) any bonus, pension, retirement, profit sharing or other plan or agreement
providing for employee benefits other than group health insurance, sick pay, and
vacation pay plans for employees generally;
(4) any license of any patent, copyright, trade secret or other proprietary
right or any other license, or, franchise, or similar agreement;
(5) any contract with any labor union or association of employees;
(6) any indemnification agreement relating to infringement of proprietary
rights;
(7) any agreement, contract, or commitment that is expected by Seller to be
performed at or result in a loss, or which has a would have material adverse
effect upon the Business;
(8) any lease of personal property material to the operations of Seller;
(9) any agreement with any broker, finder, investment banker or underwriter;
16
(10) any note, debenture, bond, equipment trust agreement, letter of credit
agreement, loan agreement or other contract or commitment for the borrowing or
lending of money relating to the Business or agreement or arrangement for a line
of credit or any guaranties, in any manner, whether directly or indirectly, of
any indebtedness, dividend or other obligation of any other person or entity
relating to the Business (other than endorsements in the ordinary course of
business of negotiable instruments for deposit or collection);
(1) agreements with sales representatives and distributors,
(11) and including each amendment, modification, renewal or extension or other
material ancillary document pertaining thereto (the "Seller Agreements"). Seller
has previously delivered or made available to BuyerPRG correct and complete
copies of each of the Seller Agreements that are in writing.
(ii) Seller has not received notice of cancellation or termination (written or
otherwise) under any option or right reserved to the other party to Seller
Agreement or any notice of default (written or otherwise) under such agreement.
Except as otherwise disclosed on the Disclosure Schedule, Seller is not, nor to
the knowledge of Seller, is any other party, in breach or default of any Seller
Agreement that would cause a material adverse effect on the Business and, to the
knowledge of Seller, no event has occurred that, with notice or lapse of time or
both, would constitute such a breach or default or permit termination,
modification or acceleration under such Seller Agreement that would cause a
material adverse effect on the Business. Except as separately identified in the
Disclosure Schedule, no approval or consent of any person is needed in order
that the Seller Agreements continue in full force and effect following the
assignment of such agreements to Buyer.PRG. Furthermore, to the best knowledge
of Seller, no Seller Agreement, in the reasonable opinion of Seller, contains
any contractual requirement with which there is a reasonable likelihood Seller
or any other party thereto will be unable to comply.
3.1.19 Additional Information. The Disclosure Schedule contains accurate lists
and summary descriptions of the following:
(i) all inventory, equipment and furniture and fixtures of Seller included in
the Assets as of the 1997 Balance Sheet Date, specifying such items as are owned
and such as are leased and, with respect to the owned property, specifying its
net book value as of 1997 Balance Sheet Date and, with respect to the leased
property as to which Seller is lessee, specifying the identity of the lessor,
the rental rate and the unexpired term of the lease;
(ii) the names and titles of and current annual base salary or hourly rates and
date and amount of most recent raise for all employees of Seller engaged in the
conduct of the Business, together with a statement of the full amount and nature
of any other remuneration, whether in cash or kind, paid to each such person
during the past or current fiscal year or payable to each such person in the
future and the bonuses accrued for, the vacation and severance benefits to
which, each such person is entitled; and
(iii) all names under which Seller has conducted any business or which it has
otherwise used during the last five years.
17
3.1.20 Labor Matters. The Disclosure Schedule contains a complete list of all
written, oral, express or implied, contracts, commitments or arrangements with
any labor union, and no labor union has requested or, to the best of Seller's
knowledge, has sought to represent any of the employees, representatives or
agents of Seller, other than as disclosed in the Disclosure Schedule. There is
no strike or other labor dispute involving Seller pending, or to the best of
Seller's knowledge, threatened, that could have a material adverse effect on the
Business, nor is Seller aware of any labor organization activity involving its
employees.
3.1.21 Employees and Related Matters.
(i) The Disclosure Schedule contains a complete list of all employee benefit
plans, whether formal or informal, whether or not set forth in writing, and
whether covering one person or more than one person, sponsored or maintained by
Seller. For the purposes hereof, the term "employee benefit plan" includes all
plans, funds, programs, policies, arrangements, practices, customs and
understandings providing benefits of economic value to any employee, former
employee, or present or former beneficiary, dependent or assignee of any such
employee or former employee other than regular salary, wages or commissions paid
substantially concurrently with the performance of the services for which paid.
Without limitation, the term "employee benefit plan" includes all employee
welfare benefit plans within the meaning of section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and all employee
pension benefit plans within the meaning of section 3(2) of ERISA. Each plan
providing benefits which are funded through a policy of insurance is indicated
by the word "insured" placed by the listing of the plan in the Disclosure
Schedule. Neither Seller nor any trade or business (whether or not incorporated)
which, together with Seller, would be treated as a single employer under Section
4001 of the Employee Retirement Income Security Act of 1974 (an "ERISA
Affiliate") is a contributing employer to a multi-employer plan as defined in
Section 3(37) of ERISA. With respect to employee benefit plans subject to Title
IV of ERISA, Seller has made full and timely payment of all contributions
required under the terms of each such plan and Section 412(m) of the Internal
Revenue Code of 1986, as amended (the "Code") and Section 203(3) of ERISA; the
present fair market value of all assets of each such plan exceeds the present
value of all vested benefits under each such plan, as determined on the most
recent valuation date of such plan and in accordance with the provisions of
ERISA and the regulations thereunder for calculating the potential liability of
Company or any ERISA Affiliate under Title IV of ERISA; and no accumulated
funding deficiency (as defined in Section 412 of the Code and Section 302 of
ERISA) exists with respect to any such plan. Neither Seller nor any ERISA
Affiliate has incurred any liability to the Pension Benefit Guaranty Corporation
under ERISA.
(ii) Seller has no obligation to provide medical, life insurance, disability or
other benefits to its or any of its predecessors retired employees formerly
engaged in the Business.
(iii) Seller is not a party to any collective bargaining agreement, other than
as disclosed in the Disclosure Schedule.
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(iv) Upon execution of this Agreement, PRG shall have no liability for any
withdrawal or similar liability with respect to any present or former employee
of Seller under any employee benefit or pension plan.
3.1.22 Intellectual Property Matters. Seller does not in the conduct of the
Business utilize any patent, trademark, tradename (other than "CBE Exhibits &
Events Incorporated""), service xxxx, copyright, software, trade secret or
know-how except for those listed on the Disclosure Schedule (the "Intellectual
Property") under Seller's name, all of which (together with the tradenames "CBE
Exhibits & Events Incorporated" and "") are owned by Seller free and clear of
any liens, claims, charges or encumbrances. Seller does not infringe upon or
unlawfully or wrongfully use any patent, trademark, tradename, service xxxx,
copyright or trade secret owned or claimed by another. Seller is not in default
under, and Seller has not received any notice of any claim of infringement or
any other claim or process relating to any such patent, trademark, tradename,
service xxxx, copyright or trade secret. No present or former employee of Seller
and no other person owns or has any proprietary, financial or other interest,
direct or indirect, in whole or in part, in any patent, trademark, tradename,
service xxxx or copyright, or in any application therefor, or in any trade
secret, which Seller owns, possesses or uses in its operations as now or
heretofore conducted. The Disclosure Schedule lists all confidentiality or
non-disclosure agreements to which Seller or any of Seller's employees engaged
in the Business is a party which relates to the Business.
3.1.23 Environmental Matters.
(i) Seller is not required to obtain any permits, licenses and other
authorizations which are required in connection with the conduct of the Business
under Regulations relating to pollution or protection of the environment.
(ii) Seller is in full compliance with all limitations, restrictions,
conditions, standards, prohibitions, requirements, and obligations, contained in
Regulations relating to pollution or protection of the environment or contained
in any code, plan, order, decree, judgment, injunction, notice or demand letter
issued, entered, promulgated or approved thereunder.
(iii) Seller is not aware of, nor has Seller received notice of, any past,
present or future events, conditions, circumstances, activities, practices,
incidents, actions or plans which may interfere with or prevent compliance or
continued compliance with those laws or any regulations, code, plan, order,
decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder, or which may give rise to any common law or
legal liability, or otherwise form the basis of any claim, action, demand, suit,
proceeding, manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling, or the emission, discharge, release or
threatened release into the environment, of any pollutant, contaminant,
chemical, or industrial, toxic or hazardous substance or waste.
(iv) There is no civil, criminal or administrative action, suit, demand, claim,
hearing, notice or demand letter, notice or violation, investigation, or
proceeding pending or threatened against Seller in connection with the conduct
of the Business relating in any way to those laws relating to pollution
19
or protection of the environment or any regulation, code, plan, order, decree,
judgment, injunction, notice or demand letter issued, entered, promulgated or
approved thereunder.
3.1.24 Real Property.
(i) Real Property Defined. All real property (including, without limitation, all
interests in and rights to real property) and improvements located thereon which
are owned or leased by Seller and used in connection with the Business or
included in the Assets are listed on the Disclosure Schedule in response to this
subsection (collectively, the "Real Property").
(ii) Title to Owned Real Property. Seller does not own any Real Property.
(iii) Leased Real Property. With respect to the Real Property that is leased by
Seller:
(1) Seller has delivered to PRG a true and complete copy of every lease and
sublease to which Seller is a tenant or subtenant (each a "Lease" and
collectively, the "Leases"); the Disclosure Schedule describes each Lease by
setting forth the name of Seller, the name of the landlord or sublandlord, a
description of the leased premises, the commencement and expiration dates of the
current term, the security deposited by Seller with the landlord or sublandlord,
if any, the monthly rental (including base and all additional rents), and
whether the assignment of such Lease by Seller to PRG requires the consent of
the landlord or sublandlord; and
(2) each Lease is, and at Closing shall be, in full force and effect, shall
constitute a legal and permissible use of the applicable property, and has not
been assigned, modified, supplemented or amended except as listed on the
Disclosure Schedule, and neither Seller nor the landlord or sublandlord under
any Lease is in material default under any of the Leases, and no circumstances
or state of facts presently exists which, with the giving of notice or passage
of time, or both, would permit the landlord or sublandlord under any Lease to
terminate any Lease.
(iv) Utility Services. The water, electric, gas and sewer utility services and
the storm drainage facilities currently available to the Real Property are
adequate for the present use of the Real Property by Seller in conducting the
Business and there is no condition which will result in the termination of the
present access from the Real Property to such utility services and other
facilities.
(v) Access. There are no restrictions on entrance to or exit from the Real
Property to adjacent public streets and no conditions which will result in the
termination of the present access from the Real Property to existing highways
and roads.
(vi) Absence of Notice. Seller has not received notices, oral or written, with
respect to matters which would materially adversely affect the use of the Real
Property or which would require the expenditure of more than $5,000 to cure
breaches, violations or like matters relating to such Real Property.
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(vii) No Violations. The Real Property and the present uses thereof comply in
all material respects with all Regulations of all governmental bodies having
jurisdiction over the Real Property, and Seller has received no notices, oral or
written, from any governmental body, and has no reason to believe, that the Real
Property or any improvements erected or situate thereon, or the uses conducted
thereon or therein, violate any Regulations of any governmental body having
jurisdiction over the Real Property.
(viii) No Encumbrances. Between the date of this Agreement
and Closing Seller shall not sell, mortgage or encumber the
Leases.
(ix) Executory Contracts. Set forth on the Disclosure Schedule is a description
of all executory contracts made by or on behalf of Seller, or by which Seller is
bound, with respect to the Real Property ("Executory Contracts"), including,
without limitation, operation, management, maintenance, utility, and
construction contracts. At Closing, the Seller shall deliver to PRG a true and
complete copy (the original execution copy, if available) of each of the
Executory Contracts.
3.1.25 Exhibit Revenues. The Disclosure Schedule lists each contract in
existence after December 31, 1996 (the "Measurement Date") pursuant to which an
exhibit has been manufactured, fabricated or leased by Seller that, either (i)
during the twelve months preceding the Measurement Date provided, or (ii) is
projected to provide anytime after the Measurement Date, revenues in excess of
$50,000 per annum (each an "Exhibit Contract"), indicating for each such Exhibit
Contract: (a) the amount of annual revenues provided during such preceding
twelve-month period (if any), (b) the amount of annual revenues projected to be
provided subsequent to the Measurement Date, (c) the year of manufacture or
fabrication of the related exhibit and (d) the anticipated remaining number of
years (measured from the Measurement Date) during which such Exhibit Contract is
projected to provide revenues.
3.1.26 Availability of Documents. Seller has made available to PRG copies of
all documents, including, without limitation, all agreements, contracts,
commitments, insurance policies, leases, plans, instruments, undertakings,
authorizations, permits, licenses, patents, trademarks, trade names, service
marks, copyrights and applications therefor listed in the Disclosure Schedule
hereto or referred to herein. All such copies are true and complete and include
all amendments, supplements and modifications thereto or waivers currently in
effect thereunder.
3.1.27 Completeness of Disclosure. On the Date hereof and on the Closing Date
(i) neither this Agreement nor any other document, certificate or statement
furnished to PRG by or on behalf of Seller in connection with the transactions
contemplated hereby, taken as a whole, contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained herein and therein, in the light of the circumstances under
which such statements were made, not misleading and (ii) there is no fact known
to Seller that materially adversely affects or in the future may (so far as
Seller can now foresee) materially adversely affect the Business that has not
been set forth in this Agreement, or in the other documents, certificates or
statements furnished to PRG by or on behalf of Seller prior to the date hereof
and on or prior to the closing date in connection with the transactions
contemplated hereby.
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3.2 Representations and Warranties of PRG. PRG represents and warrants to
the Seller as follows:
3.2.1 Legal Existence. PRG is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Delaware.
3.2.2 Power and Authorization. PRG has the power, authority and legal
right to execute, deliver and perform this Agreement. The execution, delivery
and performance of this Agreement by PRG have been duly authorized by all
necessary action of PRG. This Agreement has been duly executed and delivered by
PRG and constitutes the legal, valid and binding obligation of PRG enforceable
against PRG in accordance with its terms.
3.2.3 Validity of Contemplated Transactions, etc. The execution, delivery
and performance of this Agreement by PRG does not and will not violate, conflict
with or result in the breach of any term, condition or provision of, or require
the consent of any other party to, (a) any existing law, ordinance, or
governmental rule or regulation to which PRG is subject, (b) any judgment,
order, writ, injunction, decree or award of any court, arbitrator or
governmental or regulatory official, body or authority which is applicable to
PRG, (c) the charter documents or by-laws of, or any securities issued by, PRG,
or (d) any mortgage, indenture, agreement, contract, commitment, lease, plan or
other instrument, document or understanding, oral or written, to which PRG is a
party or by which PRG is otherwise bound. No authorization, approval or consent
of, and no registration or filing with, any governmental or regulatory official,
body or authority is required in connection with the execution, delivery and
performance of this Agreement by PRG.
3.3 Survival of Representations and Warranties. All representations and
warranties made by the parties in this Agreement or in any certificate,
schedule, statement, document or instrument furnished hereunder or in connection
with negotiation, execution and performance of this Agreement shall survive the
Closing for a period of three (3) years except that representations and
warranties related to Taxes shall survive until 30 days after the expiration of
the applicable statute of limitations. Notwithstanding any investigation or
audit conducted before or after the Closing Date or the decision of any party to
complete the Closing, each party shall be entitled to rely upon the
representations and warranties set forth herein and therein. In addition to any
other remedies hereunder, PRG shall have the right to offset any damages arising
from the breach of any representation or warranty contained in this Agreement
against the Contingent Purchase Price to the extent such amount remains unpaid.
ARTICLE 4 - AGREEMENTS PENDING CLOSING
4.1 Agreements of Seller Pending the Closing. Seller covenants and agrees
that, pending the Closing and except as otherwise agreed to in writing by PRG:
4.1.1 Business in the Ordinary Course. The Business shall be conducted
solely in the ordinary course consistent with past practice.
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4.1.2 Existing Condition. Seller shall not cause nor permit to occur any
of the events or occurrences described in subsection 3.1.11 hereof.
4.1.3 Maintenance of Physical Assets. Seller shall continue to maintain and
service the physical assets used in the conduct of the Business in the same
manner as has been consistent with past practice.
4.1.4 Employees and Business Relations. Seller shall use its best efforts to
keep available the services of the present employees and agents of the Business
and to maintain the relations and goodwill with the suppliers, customers,
distributors and any others having business relations with the Business;
provided, however, that the inability of PRG to obtain the services of any
employee or agent shall not constitute an event of default hereunder.
4.1.5 Maintenance of Insurance. Seller shall notify PRG of any changes in
the terms of the insurance policies and binders referred to on the insurance
portion of the Disclosure Schedule hereto.
4.1.6 Maintenance of Franchises, etc. Seller shall use its best efforts to
maintain in full force and effect all franchises currently in effect used in the
conduct of the business of the Business.
4.1.7 Compliance with Laws, etc. Seller shall continue to comply with all
laws, ordinances, rules, regulations and orders applicable to the Business, and
to Seller's operations, assets or properties in respect thereof, the
noncompliance with which might materially adversely affect the Business or the
Assets.
4.1.8 Update Schedules. Seller shall promptly disclose to PRG any
information contained in their representations and warranties or the Schedules
which, because of an event occurring after the date hereof, is incomplete or is
no longer correct as of all times after the date hereof until the Closing Date.
4.1.9 Conduct of Business. Seller shall use its best efforts to conduct its
business in such a manner that on the Closing Date the representations and
warranties of Seller contained in this Agreement shall be true, as though such
representations and warranties were made on and as of such date. Furthermore,
Seller shall cooperate with PRG and use its best efforts to cause all of the
conditions to the obligations of PRG and Seller under this Agreement to be
satisfied on or prior to the Closing Date.
4.1.10 Sale of Assets; Negotiations. Neither Seller nor any Shareholder will
enter into any agreement, discussion, or negotiation with, or provide
information to, any other corporation, firm or other person, or solicit,
encourage, entertain or consider any inquiries or proposals, with respect to (a)
the possible disposition of a material portion of Seller or any assets of
Seller, (b) any business combination involving Seller, whether by way of merger,
consolidation, share exchange or other transaction, (c) the purchase of any debt
or equity security (including without limitation any options, warrants, rights,
or convertible security) issued or to be issued by Seller, (d) the provision of
any loan
23
to Seller or (e) the granting of any security interest, or the creation of any
other lien, encumbrance or charge upon any asset comprising the Business. Seller
shall not provide any confidential information concerning the Business or its
properties or assets to any third party other than in the ordinary course of
business. No Shareholder shall, directly or indirectly, sell or encumber all or
any part of the capital stock of Seller.
4.1.11 Access; Review. Seller shall give to PRG's officers, employees,
counsel, accountants and other representatives, including without limitation the
Auditors (collectively, the "Agents"), free and full access to and the right to
inspect, during normal business hours, all of the premises, properties, assets,
financial and other records, contracts and other documents relating to the
Business and shall permit them to consult with the officers, employees,
accountants, counsel and agents of Seller for the purpose of (a) making such
investigation of the Business, including, without limitation, the 1997 Balance
Sheet, as PRG shall desire to make and (b) reviewing the financial statements
and financial and operational condition of Seller, and preparing reviewed
financial statements with respect to, each of the fiscal years of Seller in the
three-year period ending on December 31, 1997. Furthermore, Seller shall furnish
to PRG and the Agents all such documents and copies of documents and records and
information with respect to the affairs of the Business and copies of any
working papers relating thereto as PRG or such Agents shall from time to time
reasonably request and shall permit PRG and the Agents to make such physical
inventories and inspections of the Assets as PRG or such Agents may request from
time to time. PRG shall pay at the Closing, the fees, costs and out-of-pocket
expenses of the Auditors incurred in connection with the review and the
preparation of the reviewed financial statements described in this subsection
4.1.11.
4.2 Agreements of PRG Pending the Closing. PRG covenants and agrees that,
pending the Closing and except as otherwise agreed to in writing by Seller:
4.2.1 Actions of PRG. PRG will not knowingly take any action which would
result in a breach of any of its representations and warranties hereunder.
Furthermore, PRG shall cooperate with Seller and use its best efforts to cause
all of the conditions to the obligations of PRG and Seller under this Agreement
to be satisfied on or prior to the Closing Date.
4.2.2 Confidentiality. Unless and until the Closing has been consummated,
PRG will hold, and shall cause its counsel, independent certified public
accountants, appraisers and investment bankers to hold in confidence any
confidential data or information made available to PRG in connection with this
Agreement with respect to the Business, using the same standard of care to
protect such confidential data or information as is used to protect PRG's
confidential information. If the transactions contemplated by this Agreement are
not consummated, PRG agrees that it shall return or cause to be returned to
Seller all written materials and all copies thereof that were supplied to PRG by
the Seller that contain any such confidential data or information.
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ARTICLE 5 - CONDITIONS PRECEDENT TO THE CLOSING
5.1 Conditions Precedent to PRG's Obligations. All obligations of PRG
under this Agreement are subject to the fulfillment or satisfaction, prior to or
at the Closing, of each of the following conditions precedent:
5.1.1 Representations and Warranties True as of the Closing Date. The
representations and warranties of Seller contained in this Agreement or in any
schedule, certificate or document delivered by Seller to PRG pursuant to the
provisions hereof shall have been true in all material respects on the date
hereof and shall be true in all material respects on the Closing Date with the
same effect as though such representations and warranties were made as of such
date.
5.1.2 Compliance with this Agreement. Seller shall have performed and
complied with all agreements and conditions required by this Agreement to be
performed or complied with by it prior to or at the Closing.
5.1.3 Reviewed Financial Statements. The Auditors shall have provided PRG
with an reviewed balance sheet of Seller for the fiscal year ending December 31,
1997; such reviewed balance sheet shall have been satisfactory to PRG in form,
scope and substance.
5.1.4 Completion of Due Diligence. PRG shall have completed its due
diligence examination of Seller and the results of such due diligence
examinations shall be satisfactory to PRG in all respects.
5.1.5 Delivery of Employment Agreement. Marmack shall have executed and
delivered an employment agreement substantially identical to that set forth as
Exhibit B hereof.
5.1.6 Closing Certificate. PRG shall have received a certificate from Seller
dated the Closing Date, certifying in such detail as PRG may reasonably request
that the conditions specified in subsections 5.1.1 and 5.1.2 hereof have been
fulfilled and certifying that Seller has obtained all consents and approvals
required with respect to it or the Business by subsection 5.1.8 hereof.
5.1.7 No Threatened or Pending Litigation. On the Closing Date, no suit,
action or other proceeding, or injunction or judgment relating thereto, shall be
threatened or be pending before any court or governmental or regulatory
official, body or authority in which it is sought to restrain or prohibit or to
obtain damages or other relief in connection with this Agreement or the
consummation of the transactions contemplated hereby, and no investigation that
might result in any such suit, action or proceeding shall be pending or
threatened.
5.1.8 Consents and Approvals. Except for consents required by the terms of
the contracts, commitments, agreements or franchises listed in Schedule 5.1.8
hereto, the holders of any indebtedness of Seller, the lessors or lessees of any
real or personal property or assets leased by Seller, the parties (other than
Seller) to any contract, commitment or agreement to which Seller is a party or
subject, any governmental or regulatory
25
official, body or authority or any other person which owns or has authority to
grant any franchise and any governmental, judicial or regulatory official, body
or authority having jurisdiction over any Shareholder, Seller or PRG to the
extent that their consent or approval is required or necessary under the
pertinent debt, lease, contract, commitment or agreement or other document or
instrument or under applicable orders, laws, rules or regulations, for the
consummation of the transactions contemplated hereby in the manner herein
provided, shall have granted such consent or approval.
5.1.9 Lease. On the Closing Date: Seller shall have delivered to
PRG the Lease.
5.1.10 Material Adverse Changes. The business, operations, assets, properties
or prospects of the Business shall not have been and shall not be threatened to
be materially adversely affected in any way as a result of any event or
occurrence.
5.1.11 Legal Opinion. Xxxxxxx X. Xxxxx, Esq., counsel for Seller, shall have
delivered to PRG a written opinion, dated the Closing Date, in the form of
Exhibit C, attached hereto, with only such changes as shall be in form and
substance reasonably satisfactory to PRG and its counsel.
5.1.12 Minimum Net Asset Value. At the closing the net asset value of the
Assets (as defined in Section 1.4) shall be a minimum of one million five
hundred thousand dollars. PRG shall be satisfied with the estimated Net Asset
Value provided by Sellers pursuant to Section 1.4 hereof.
5.1.13 Minimum EBITA. CBE will demonstratehas demonstrated that it had a
recast EBITA for 1997 of at least $1.5 million determined in accordance with
GAAP (it is understood that some 1998 income may be recast into 1997). Any 1998
income recast as 1997 income shall not also be included in the determination of
EBITA for any subsequent year for purposes of calculating the contingent
purchase price.
5.2 Conditions Precedent to the Obligations of Seller. All obligations of
Seller under this Agreement are subject to the fulfillment or satisfaction,
prior to or at the Closing, of each of the following conditions precedent:
5.2.1 Representations and Warranties True as of the Closing Date. The
representations and warranties of PRG contained in this Agreement or in any
list, certificate or document delivered by PRG to Seller pursuant to the
provisions hereof shall be true on the Closing Date with the same effect as
though such representations and warranties were made as of such date.
5.2.2 Compliance with this Agreement. PRG shall have performed and complied
with all agreements and conditions required by this Agreement to be performed or
complied with by them prior to or at the Closing.
5.2.3 Delivery of Employment Agreement. PRG shall have executed and
delivered an employment agreement substantially identical to that set forth in
Exhibit B hereof.
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5.2.4 Closing Certificates. Seller shall have received a certificate from
PRG dated the Closing Date certifying in such detail as Seller may reasonably
request that the conditions specified in subsections 5.2.1 and 5.2.2 hereof have
been fulfilled.
5.2.5 No Threatened or Pending Litigation. On the Closing Date, no suit,
action or other proceeding, or injunction or final judgment relating thereto,
shall be threatened or be pending before any court or governmental or regulatory
official, body or authority in which it is sought to restrain or prohibit or to
obtain damages or other relief in connection with this Agreement or the
consummation of the transactions contemplated hereby, and no investigation that
might result in any such suit, action or proceeding shall be pending or
threatened.
5.2.6 Lease. On the Closing Date: PRG shall have delivered to Seller the
Lease.
5.2.7 Investment Option. PRG shall have executed and delivered an investment
option agreement substantially in the form of Exhibit E hereof.
ARTICLE 6 - INDEMNIFICATION
6.1 General Indemnification Obligation of Seller. From and after the
Closing, Seller and the Shareholders, jointly and severally, will reimburse,
indemnify and hold harmless PRG, its officers, directors, employees, agents,
successors and assigns (each an "Indemnified PRG Party") against and in respect
of:
6.1.1 any and all damages, losses, deficiencies, liabilities, costs and
expenses incurred or suffered by any Indemnified PRG Party that result from,
relate to or arise out of:
(i) any and all liabilities and obligations of Seller of any nature
whatsoever, except for the Assumed Liabilities;
(ii) any and all actions, suits, claims, or legal, administrative, arbitration,
governmental or other proceedings or investigations against any Indemnified PRG
Party that relate to Seller or the Business in which the principal event giving
rise thereto occurred prior to the Closing Date or which result from or arise
out of any action or inaction prior to the Closing Date of Seller or any
director, officer, employee, agent, representative or subcontractor of Seller,
except for the Assumed Liabilities;
(iii) any misrepresentation, breach of warranty or nonfulfillment of any
agreement or covenant on the part of Seller under this Agreement; or
(iv) any misrepresentation in or omission from any certificate, schedule,
statement, document or instrument furnished to PRG pursuant hereto or in
connection with the negotiation, execution or performance of this Agreement.
27
6.1.2 any and all actions, suits, claims, proceedings, investigations,
demands, assessments, audits, fines, judgments costs and other expenses
(including, without limitation, reasonable legal fees and expenses) incident to
any of the foregoing or to the enforcement of this Section 6.1.
6.2 General Indemnification Obligation of PRG. From and after the Closing,
PRG will reimburse, indemnify and hold harmless the Seller and its officers,
directors, employees, agents, successors and assigns (each an "Indemnified
Seller Party") against and in respect of:
6.2.1 Any and all damages, losses, deficiencies, liabilities costs and
expenses incurred or suffered by any Indemnified Seller Party that result from,
relate to or arise out of:
(i) the Assumed Liabilities;
(ii) any misrepresentation, breach of warranty or non-fulfillment of any
agreement or covenant on the part of PRG under this Agreement, or from any
misrepresentation in or omission from any certificate, schedule, statement,
document or instrument furnished to Seller pursuant hereto or in connection with
the negotiation, execution or performance of this Agreement; and
(iii) any and all actions, suits, claims, proceeding, investigations, demands,
assessments, audits, fines, judgments, costs and other expenses (including,
without limitation, reasonable legal fees and expenses) incident to any of the
foregoing or to the enforcement of this Section 6.2.
6.3 Method of Asserting Claims, etc.
6.3.1 Promptly after receipt by an Indemnified PRG Party or an Indemnified
Seller Party (the "Indemnified Party") of notice of a claim or demand (an
"Asserted Liability") that may result in indemnification pursuant to Sections
6.1 or 6.2 of this Agreement, the Indemnified Party shall give written notice
thereof (the "Claims Notice") to the party or parties against whom
indemnification is or may be claimed (individually an "Indemnifying Party", and
collectively the "Indemnifying Parties"). The Claims Notice shall describe the
Asserted Liability in reasonably sufficient detail, based on the information
then available, to allow the Indemnifying Party to evaluate the Asserted
Liability. The Indemnifying Party may elect to compromise or defend, at its own
expense and by its own counsel, reasonably acceptable to the Indemnified Party,
any Asserted Liability; provided, however, that (a) the Indemnifying Party may
not compromise or settle any Asserted Liability without the consent of the
Indemnified Party or Parties unless such compromise or settlement requires no
more than a monetary payment for which the Indemnified Party or Indemnified
Parties hereunder are fully indemnified or involves other matters not binding
upon the Indemnified Party or Indemnified Parties, and (b) if the Indemnified
Party (or any of the Indemnified Parties) is an Indemnified PRG Party and, in
the reasonable opinion of such Indemnified PRG Party, the Asserted Liability
involves an issue or matter which could have a materially adverse effect on the
business, operations, assets, properties or prospects of the Indemnified PRG
Party, including without limitation the administration of the tax returns and
responsibilities under the tax laws of such Indemnified PRG Party, then such
Indemnified PRG Party shall have the right to compromise or defend, by its own
counsel, such Asserted Liability and the reasonable costs incurred by the
Indemnified PRG Party
28
with respect to such compromise and defense shall be included in the
indemnification obligation of Seller and the Shareholders hereunder. If the
Indemnifying Party elects to compromise or defend such Asserted Liability, it
shall within thirty (30) calendar days of notice of the Asserted Liability
provided under this Subsection (or sooner, if the nature of the Asserted
Liability so requires) notify the Indemnified Party or Indemnified Parties in
writing of its intent to do so, and the Indemnified Party or Indemnified Parties
shall cooperate, at the expense of the Indemnifying Party with respect to
out-of-pocket expenses of the Indemnified Party or Indemnified Parties, in the
compromise of, or defense against, such Asserted Liability. If the Indemnifying
Party elects not to compromise or defend the Asserted Liability, fails to notify
the Indemnified Party or Indemnified Parties of its election as herein provided
or contests its obligation to indemnify under this Section, the Indemnified
Party or Indemnified Parties may pay, compromise or defend such Asserted
Liability in respect of any Asserted Liability for which the Indemnifying Party
may have an indemnification obligation under this Agreement. Notwithstanding the
foregoing, the Indemnified Party or Indemnified Parties and the Indemnifying
Party may participate, at its/their own expense, in the defense of such Asserted
Liability in respect of any Asserted Liability for which the Indemnifying Party
may have an indemnification obligation under this Agreement. Notwithstanding
anything in the foregoing to the contrary, the party that would be responsible
under the terms of this Agreement for paying the underlying claim in connection
with any Asserted Liability (should that claim ultimately prevail) shall bear
the cost of the defense of the claim (with the exception of the costs incurred
by any party that voluntarily participates in such defense) regardless of which
party actually provides the defense.
6.3.2 If a party hereunder should have a claim against another party
hereunder not involving a third-party claim or demand, the party making the
claim (the "Claiming Party") shall promptly notify the other party of the claim.
Within ten (10) days following receipt of the notice, the party against which
the claim is made (the "Challenged Party") shall notify the Claiming Party
whether it disputes liability with respect to the claim. If the Challenged Party
fails to provide timely notice, the amount of such claim shall be conclusively
deemed a liability of the Challenged Party hereunder.
6.4 Payment. Upon the determination of the liability hereunder, if any
party (a "Paying Party") is required to make a payment to another party (the
"Receiving Party"), the Paying Party shall make such payment within ten (10)
days after such determination of the amount of any claim for indemnification
made hereunder. In the event that the Receiving Party is not paid in full for
any such claim pursuant to the foregoing provisions promptly after the Paying
Party's obligation to indemnify has been determined in accordance herewith, it
shall have the right, notwithstanding any other rights that it may have against
any other person, firm or corporation, to set-off the unpaid amount of any such
claim against any amounts owed by it under any agreements entered into pursuant
to this Agreement, the Seller's Documents or the PRG's Documents. Upon the
payment in full of any claim, either by set-off or otherwise, the Paying Party
shall be subrogated to the rights of the Receiving Party against any person,
firm or corporation with respect to the subject matter of such claim.
6.5 Arbitration.
29
6.5.1 All disputes among the parties hereto under this Article VI shall be
settled by arbitration in New York, New York, before a single arbitrator
pursuant to the commercial arbitration rules of the American Arbitration
Association. Arbitration may be commenced at any time by any party hereto giving
written notice to each other party to a dispute that such dispute has been
referred to arbitration under this Section 6.5. The arbitrator shall be selected
by the mutual agreement of Seller and PRG, but if they do not so agree within
twenty (20) days after the date of the notice referred to above, the selection
shall be made pursuant to the rules from the panels of arbitrators maintained by
such Association. Any award rendered by the arbitrator shall be conclusive and
binding upon the parties hereto; provided, however, that any such award shall be
accompanied by a written opinion of the arbitrator giving the reasons for the
award. This provision for arbitration shall be specifically enforceable by the
parties and the decision of the arbitrator in accordance herewith shall be final
and binding and there shall be no right of appeal therefrom. Each party shall
pay its own expenses of arbitration and the expenses of the arbitrator shall be
equally shared; provided, however, that if in the opinion of the arbitrator any
claim for indemnification or any defense or objection thereto was unreasonable,
the arbitrator may assess, as part of his award, all or any part of the
arbitration expenses of the other party (including reasonable attorneys' fees)
and of the arbitrator against the party raising such unreasonable claim, defense
or objection.
6.5.2 To the extent that arbitration may not be legally permitted hereunder
and the parties to any dispute hereunder may not at the time of such dispute
mutually agree to submit such dispute to arbitration any party may commence a
civil action in a court of appropriate jurisdiction to solve disputes hereunder.
Nothing contained in this Section 6.5 shall prevent the parties from settling
any dispute by mutual agreement at any time.
6.6 Compliance with Bulk Sales Laws. PRG and Seller hereby waive
compliance by PRG and Seller with the bulk sales law and any other similar laws
in any applicable jurisdiction in respect of the transactions contemplated by
this Agreement.
6.7 Other Rights and Remedies Not Affected. The indemnification rights of
the parties under this Article VI are independent of and in addition to such
rights and remedies as the parties may have at law or in equity or otherwise for
any misrepresentation, breach of warranty or failure to fulfill any agreement or
covenant hereunder on the part of any party hereto, including without limitation
the right to seek specific performance, rescission or restitution, none of which
rights or remedies shall be affected or diminished hereby.
ARTICLE 7 - POST CLOSING MATTERS
7.1 Non-Solicitation. As of the Closing Date, PRG shall offer employment
to, and Seller shall use its best efforts to assist PRG in employing as new
employees of PRG, all persons presently engaged in the Business who are
identified by PRG prior to the Closing Date as persons that PRG desires to
employ (the "Employees"). Seller shall at its sole cost and expense terminate
effective as of the Closing Date all employment agreements it has with any of
the Employees. Until the third
30
anniversary of the Closing Date, neither Seller nor any Shareholder will
directly or indirectly solicit or offer employment to any Employee.
7.2 Employee Benefits. Seller shall pay directly to each employee of the
Business that portion of all benefits (including the arrangements, plans and
programs set forth in the Disclosure Schedule which has been accrued on behalf
of that employee (or is attributable to expenses properly incurred by that
employee) as of the Closing Date, and PRG shall assume no liability therefor. No
portion of the assets of any plan, fund, program or arrangement, written or
unwritten, heretofore sponsored or maintained by Seller (and no amount
attributable to any such plan, fund, program or arrangement) shall be
transferred to PRG, and PRG shall not be required to continue any such plan,
fund, program or arrangement after the Closing Date. The amounts payable on
account of all benefit arrangements (other than as specified in the following
subsections) shall be determined with reference to the date of the event by
reason of which such amounts become payable, without regard to conditions
subsequent, and PRG shall not be liable for any claim for insurance
reimbursement or other benefits payable by reason of any event which occurs
prior to the Closing Date. All amounts payable directly to employees, or to any
fund, program, arrangement or plan maintained by Seller therefor shall be paid
by Seller within 30 days after the Closing Date to the extent that such payment
is not inconsistent with the terms of such fund, program, arrangement or plan.
All employees of Seller who are employed by PRG on or after the Closing Date
shall be new employees of PRG and any prior employment by Seller of such
employees shall not affect entitlement to, or the amount of, salary or other
cash compensation, current or deferred, which PRG may make available to its
employees.
7.3 Maintenance of Books and Records. Seller and PRG shall each preserve
until the seventh anniversary of the Closing Date all records possessed or to be
possessed by such party relating to any of the assets, liabilities or business
of the Business prior to the Closing Date. After the Closing Date, where there
is a legitimate purpose, such party shall provide the other parties with access,
upon prior reasonable written request specifying the need therefor, during
regular business hours, to (i) the officers and employees of such party and (ii)
the books of account and records of such party, but, in each case, only to the
extent relating to the assets, liabilities or business of the Business prior to
the Closing Date, and the other parties and their representatives shall have the
right to make copies of such books and records; provided, however, that the
foregoing right of access shall not be exercisable in such a manner as to
interfere unreasonably with the normal operations and business of such party;
and further, provided, that, as to so much of such information as constitutes
trade secrets or confidential business information of such party, the requesting
party and its officers, directors and representatives will use due care to not
disclose such information except (i) as required by law, (ii) with the prior
written consent of such party, which consent shall not be unreasonably withheld,
or (iii) where such information becomes available to the public generally, or
becomes generally known to competitors of such party, through sources other than
the requesting party, its affiliates or its officers, directors or
representatives. Such records may nevertheless be destroyed by a party after the
third anniversary of the Closing Date if such party sends to the other parties
written notice of its intent to destroy records, specifying with particularly
the contents of the records to be destroyed. Such records may then be destroyed
after the 30th day after such notice is given unless
31
another party objects to the destruction in which case the party seeking to
destroy the records shall deliver such records to the objecting party.
7.4 Payments Received. Seller and PRG each agree that after the Closing
they will hold and will promptly transfer and deliver to the other, from time to
time as and when received by them, any cash, checks with appropriate
endorsements (using their best efforts not to convert such checks into cash), or
other property that they may receive on or after the Closing which properly
belongs to the other party, including without limitation any insurance proceeds,
and will account to the other for all such receipts. From and after the Closing,
PRG shall have the right and authority to endorse without recourse the name of
Seller on any check or any other evidences of indebtedness received by PRG on
account of the Business and the Assets transferred to PRG hereunder.
7.5 Use of Name. From and after the Closing Date, Seller will sign such
consents and take such other action as PRG shall reasonably request in order to
permit PRG to use the names "CBE Exhibits & Events" and variants thereof. From
and after the Closing Date, Seller will not itself use any such names or any
names similar thereto or variants thereof.
7.6 UCC Matters. From and after the Closing Date, Seller will promptly
refer all inquiries with respect to ownership of the Assets or the Business to
PRG. In addition, Seller will execute such documents and financing statements as
PRG may request from time to time to evidence transfer of the Assets to PRG,
including any necessary assignments of financing statements.
32
7.7 Covenant Not To Compete. Seller and each Shareholder and each of their
affiliates agrees that for a period of three years after the Closing Date,
neither it nor any of its affiliates will, directly or indirectly, own, manage,
operate, join, control or participate in the ownership, management, operation or
control of any business, whether in corporate, proprietorship or partnership
form or otherwise where such business is competitive with the Business,
including, without limitation, any business which provides trade show exhibit
products and services. The parties hereto specifically acknowledge and agree
that the remedy at law for any breach of the foregoing will be inadequate and
that the PRG, in addition to any other relief available to it, shall be entitled
to temporary and permanent injunctive relief without the necessity of proving
actual damage. In the event that the provisions of this Section 7.7 should ever
be deemed to exceed the limitation provided by applicable law, then the parties
hereto agree that such provisions shall be reformed to set forth the maximum
limitations permitted.
ARTICLE 8 - MISCELLANEOUS
8.1 Termination. (a) Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated by written notice of
termination at any time before the Closing Date only as follows:
8.1.1 by mutual consent of the Seller and PRG;
8.1.2 by PRG, (a) at any time if the representations and warranties of
Seller contained in Section 3.1 hereof were incorrect in any material respect
when made or at any time thereafter, (b) upon written notice to the Seller in
the event that (i) the results of PRG's due diligence examination of Seller is
not satisfactory to PRG in all respects or (ii) any reviewed financial statement
prepared by the Auditors pursuant to subsection 4.1.11 is not satisfactory to
PRG in all respects; or
8.1.3 by the Seller, (a) at any time if the representations and warranties
of PRG contained in Section 3.2 hereof were incorrect in any material respect
when made or at any time thereafter, (b) upon written notice to PRG given at any
time after May 1, 1998 (or such later date as shall have been specified in a
writing authorized on behalf of Seller and PRG) if all of the conditions
precedent set forth in Section 5.2 hereof have not been met or (c) upon written
notice to PRG given at any time after May 1, 1998 (or such later date as shall
have been specified in a writing authorized on behalf of Seller and PRG) if PRG
shall have failed to notify Seller in writing prior to such date that the
condition precedent to PRG's obligation to close the transactions contemplated
herein described in subsection 5.1.4 has either been deemed satisfied or been
waived by PRG.
8.1.4 In the event of the termination and abandonment hereof pursuant to the
provisions of this Section 8.1, this Agreement (except for Section 4.2.2 which
shall continue) shall become void and
33
have no effect, without any liability on the part of any of the parties or their
directors or officers or stockholders in respect of this Agreement.
8.2 Brokers' and Finders' Fees.
8.2.1 Seller represents and warrants to PRG that all negotiations relative
to this Agreement have been carried on by it directly without the intervention
of any person, who may be entitled to any brokerage or finder's fee or other
commission in respect of this Agreement or the consummation of the transactions
contemplated hereby and Seller agrees to indemnify and hold harmless PRG against
any and all claims, losses, liabilities and expenses which may be asserted
against or incurred by it as a result of Seller's dealings, arrangements or
agreements with any other such person.
8.2.2 PRG represents and warrants that all negotiations relative to this
Agreement have been carried on by it directly without the intervention of any
person who may be entitled to any brokerage or finder's fee or other commission
in respect of this Agreement or the consummation of the transactions
contemplated hereby, and PRG agrees to indemnify and hold harmless the Seller
against any and all claims, losses, liabilities and expenses which may be
asserted against or incurred by it as a result of PRG's dealings, arrangements
or agreements with any such person.
8.3 Sales, Transfer and Documentary Taxes, etc. Seller shall pay all
federal, state and local sales, documentary and other transfer taxes, if any,
due as a result of the purchase, sale or transfer of the Assets and the
assumption of the Assumed Liabilities in accordance herewith whether imposed by
law on Seller or PRG and Seller shall indemnify, reimburse and hold harmless PRG
in respect of the liability for payment of or failure to pay any such taxes or
the filing of or failure to file any reports required in connection therewith.
8.4 Expenses. Except as otherwise provided in this Agreement, each party
hereto shall pay its own expenses incidental to the negotiation and preparation
of this Agreement, the carrying out of the provisions of this Agreement and the
consummation of the transactions contemplated hereby.
8.5 Contents of Agreement; Parties in Interest; etc. This Agreement sets
forth the entire understanding of the parties hereto with respect to the
transactions contemplated hereby. It shall not be amended or modified except by
written instrument duly executed by each of the parties hereto. Any and all
previous agreements and understandings between or among the parties regarding
the subject matter hereof, whether written or oral, are superseded by this
Agreement.
8.6 Assignment and Binding Effect. This Agreement may not be assigned
prior to the Closing by any party hereto without the prior written consent of
the other parties; provided that PRG shall have the right to assign its rights
and obligations hereunder to any entity controlled by PRG or by its principals.
Subject to the foregoing, all of the terms and provisions of this Agreement
shall be binding upon and insure to the benefit of and be enforceable by the
successors and assigns of each Shareholder, Seller and XXX.
00
8.7 Waiver. Any term or provision of this Agreement may be waived at any
time by the party entitled to the benefit thereof by a written instrument duly
executed by such party.
8.8 Notices. Any notice, request, demand, waiver, consent, approval or
other communication which is required or permitted hereunder shall be in writing
and shall be deemed given only if delivered personally or sent by telegram or by
registered or certified mail, postage prepaid, as follows:
If to PRG, to:
Production Resource Group, L.L.C.
000 Xxxxxx Xxxx Xxxx
Xxx Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Manners
fax (000) 000-0000
With a required copy to:
Xxxxxxx X. Xxxxxx, Esq.
Pepe & Hazard
Xxxxxxx Square, 000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
facsimile 860-522-2796
If to Seller or a Shareholder, to:
CBE Exhibits & Events Incorporated
00000 Xxxx Xxxxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx Xxxxx Marmack, President
fax
With a required copy to:
Xxxxxxx X. Xxxxx, Esq.
0000 X. Xxxx Xxxxx, Xxxxx 000
Xxxxxxxx, Xxxxx 00000
facsimile 000-000-0000
35
or to such other address as the addressee may have specified in a notice duly
given to the sender as provided herein. Such notice, request, demand, waiver,
consent, approval or other communication will be deemed to have been given as of
the date so delivered, telegraphed or mailed.
8.9 Choice of Law. This Agreement shall be governed by and interpreted and
enforced in accordance with the laws of the State of New York, as applied to
agreements among New York residents entered into and to be performed entirely
with the State of New York.
8.10 No Benefit to Others. The representations, warranties, covenants and
agreements contained in this Agreement are for the sole benefit of the parties
hereto and, in the case of Article VI hereof, the other Indemnified Parties, and
their heirs, executors, administrators, legal representatives, successors and
assigns, and they shall not be construed as conferring any rights on any other
persons.
8.11 Headings, Gender and "Person". All section headings contained in this
Agreement are for convenience of reference only, do not form a part of this
Agreement and shall not affect in any way the meaning or interpretation of this
Agreement. Words used herein, regardless of the number and gender specifically
used, shall be deemed and construed to include any other number, singular or
plural, and any other gender, masculine, feminine, or neuter, as the context
requires. Any reference to a "person" herein shall include an individual, firm,
corporation, partnership, trust, governmental authority or body, association,
unincorporated organization or any other entity.
8.12 Schedules and Exhibits. All Exhibits and Schedules referred to herein
are intended to be and hereby are specifically made a part of this Agreement.
8.13 Severability. Any provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall be ineffective to the extent of such
invalidity or unenforceability without invalidating or rendering unenforceable
the remaining provisions hereof, and any such invalidity or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
8.14 Counterparts. This Agreement may be executed in any number of
counterparts and any party hereto may execute any such counterpart, each of
which when executed and delivered shall be deemed to be an original and all of
which counterparts taken together shall constitute but one and the same
instrument notwithstanding that not all parties hereto are signatories to the
same counterpart. This Agreement shall become binding when one or more
counterparts taken together shall have been executed and delivered by the
parties. It shall not be necessary in making proof of this Agreement or any
counterpart hereof to produce or account for any of the other counterparts.
36
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on
the date first written.
BUYER:
PRODUCTION RESOURCE GROUP, L.L.C.
By: /s/ Xxxxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxxxx X. Xxxxxx
------------------------------------
Its: Chairman & CEO
------------------------------------
SELLER:
CBE EXHIBITS & EVENTS INCORPORATED
By: /s/ Xxxxxxx Xxxxx Marmack
------------------------------------
Name: Xxxxxxx Xxxxx Marmack
------------------------------------
Its: President
------------------------------------
SHAREHOLDER:
/s/ Xxxxxxx Xxxxx Marmack
------------------------------------
XXXXXXX XXXXX MARMACK
37
EXHIBIT A
39
EXHIBIT B
FORM OF EMPLOYMENT AGREEMENT
40
EXHIBIT C
FORM OF LEGAL OPINION
41
EXHIBIT D
FORM OF LEASE AGREEMENT
42
EXHIBIT E
FORM OF INVESTMENT OPTION AGREEMENT
43
EXHIBIT F
FORM OF CONTINGENT NOTE
44
