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Exhibit 10.2
AGREEMENT AND PLAN OF MERGER
AND REORGANIZATION
BY AND AMONG
INDUSTRIAL DISTRIBUTION GROUP, INC.,
A DELAWARE CORPORATION,
IDG ACQUISITION COMPANY I, INC.,
A GEORGIA CORPORATION,
INDUSTRIAL DISTRIBUTION GROUP, INC.,
A GEORGIA CORPORATION,
AND
THE STOCKHOLDERS NAMED HEREIN
DATED AS OF ______ ___, 1997
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TABLE OF CONTENTS
PAGE
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PRELIMINARY STATEMENT............................................................................................ 1
ARTICLE I: DEFINITIONS.......................................................................................... 2
1.01. Certain Defined Terms................................................................................... 2
ARTICLE II: THE MERGER; RELATED MATTERS; AND RELATED AGREEMENTS................................................. 6
2.01. Certificate Of Merger................................................................................... 6
2.02. The Effective Time...................................................................................... 6
2.03. Certain Effects of the Merger........................................................................... 6
2.04. Effect of the Merger on Capital Stock................................................................... 7
2.05. Delivery, Exchange and Payment.......................................................................... 7
2.06. Fractional Shares....................................................................................... 9
2.07. Related Agreements..................................................................................... 9
ARTICLE III: REPRESENTATIONS AND WARRANTIES OF EACH SELLING STOCKHOLDER.........................................10
3.01. Representations and Warranties of Each Selling Stockholder..............................................10
3.02. Incorporation of the Uniform Provisions.................................................................10
ARTICLE IV: REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE MANAGEMENT STOCKHOLDERS.......................10
4.01. Truthfulness of the Representations and Warranties by the Company and Each Management Stockholder.......10
4.02. Organization and Capitalization of Company..............................................................11
4.03. Incorporation of the Uniform Provisions.................................................................11
ARTICLE V: REPRESENTATIONS AND WARRANTIES OF IDG AND NEWCO......................................................11
5.01. Representations and Warranties of IDG and Newco.........................................................11
5.02. Organization of Newco...................................................................................11
5.03. Incorporation of the Uniform Provisions.................................................................11
ARTICLE VI: COVENANTS EXTENDING TO THE EFFECTIVE TIME...........................................................12
6.01. Incorporation of the Uniform Provisions.................................................................12
ARTICLE VII: THE CLOSING AND CONDITIONS TO CLOSING..............................................................12
7.01. Incorporation of the Uniform Provisions.................................................................12
ARTICLE VIII: COVENANTS FOLLOWING THE EFFECTIVE TIME.............................................................12
8.01. Incorporation of the Uniform Provisions.................................................................12
ARTICLE IX: INDEMNIFICATION.....................................................................................12
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9.01. Incorporation of the Uniform Provisions.................................................................12
ARTICLE X: LIMITATIONS ON COMPETITION...........................................................................12
10.01. Prohibited Activities..................................................................................12
10.02. Damages................................................................................................13
10.03. Reasonable Restraint...................................................................................13
10.04. Severability; Reformation..............................................................................14
10.05. Independent Covenant...................................................................................14
10.06. Materiality............................................................................................14
ARTICLE XI: GENERAL PROVISIONS..................................................................................14
11.01 Restrictions on Transfer of IDG Common Stock............................................................14
11.02 Brokers and Agents......................................................................................16
11.03 Assignment; No Third Party Beneficiaries................................................................16
11.04 Entire Agreement; Amendment; Waivers....................................................................16
11.05 Counterparts...........................................................................................16
11.06 Expenses...............................................................................................16
11.07 Notices................................................................................................17
11.08 Governing Law...........................................................................................18
11.09 Exercise of Rights and Remedies.........................................................................18
11.10 Time..................................................................................................18
11.11. Reformation and Severability..........................................................................18
11.12 Remedies Cumulative....................................................................................19
11.13 Respecting the IPO.....................................................................................19
11.14 Treatment of Confidential Information..................................................................19
ARTICLE XII: TERMINATION........................................................................................20
12.01. Termination of this Agreement..........................................................................20
12.02. Liabilities in Event of Termination...................................................................21
ARTICLE XIII: POWER OF ATTORNEY.................................................................................21
13.01 Appointment of Shareholders' Agent......................................................................21
13.02 Liability of Agent.....................................................................................21
13.03 Succession.............................................................................................22
13.04 Irrevocable; Binding on Successors, Etc................................................................21
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ANNEXES
Annex 1 Uniform Provisions for the Acquisition of Founding Companies
Annex 2 Founding Companies
Annex 3 Initial Directors and Officers of the Surviving Corporation
Annex 4 Merger Consideration
Annex 5 Designated Inventory
Annex 6 Guaranteed Receivables
Annex 7 Management Stockholders
SCHEDULES
Schedule 3.03 Selling Stockholders Who Are Not Accredited Investors
Schedule 3.04 Disclosure of Equity Ownership and Liens
Schedule 3.09 Disclosure of Stockholders' Controlling Interests and
Material Related Transactions
Schedule 4.02 Authorized Capital Stock of the Company and Company
Subsidiaries
Schedule 4.04 Jurisdictions Of Authorization Or Qualification
Schedule 4.08 Company Subsidiaries
Schedule 4.10(a) Obligations with Respect to Company's Capital Stock
Schedule 4.10(b) Stock Transfers Since June 30, 1996
Schedule 4.11 Legal and Assumed Names
Schedule 4.12 Continuing Related Party Agreements
Schedule 4.13 Litigation
Schedule 4.15(a) Compliance with Laws: Licenses, Permits, and Government
Approvals
Schedule 4.15(b) Non-Compliance with Laws
Schedule 4.16(a) Environmental Matters: Compliance
Schedule 4.16(b) Environmental Matters: Disposition of Hazardous
Substances
Schedule 4.16(c) Environmental Matters: Transportation of Hazardous
Substances
Schedule 4.16(d) Environmental Matters: Storage Tanks
Schedule 4.17(a) Liabilities: Not Reflected on Current Balance Sheet Date
Schedule 4.17(b) Liabilities: Incurred After Current Balance Sheet
Schedule 4.17(c) Liabilities: Outstanding Guaranties
Schedule 4.18 Receivables Not Collected or Collectible as of March 31,
1997
Schedule 4.19(a) Owned and Leased Real Property
Schedule 4.19(b) Liens on Owned and Leased Properties
Schedule 4.19(c) Subleases
Schedule 4.19(d) Fixed Assets Not in Good Condition
Schedule 4.20(a) Owned and Leased Personal Property, Plant, and Equipment
Schedule 4.20(b) Liens on Personal Property, Plant, and Equipment
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Schedule 4.20(c) Subleases Relating to Personal Property, Plant, and
Equipment
Schedule 4.20(d) Personal Property, Plant, and Equipment Not in Good
Condition
Schedule 4.21 Proprietary Rights
Schedule 4.23(a)(i) Partnerships, Joint Ventures, Cost-Sharing Arrangements
Schedule 4.23(a)(ii) Guaranties or Suretyships, Indemnification or Contribution
Agreements, Performance Bonds
Schedule 4.23(a)(iii) Instruments, Agreements, or Other Obligations Evidencing
or Relating to Indebtedness or to Money Lent or to be
Lent to Another Person
Schedule 4.23(a)(iv) Contracts to Purchase or Sell Real Property or any Material
Property, Plant, and Equipment
Schedule 4.23(a)(v) Agreements with Dealers or Sales or Commission Agents,
Public Relations or Advertising Agencies, Accountants, or
Attorneys
Schedule 4.23(a)(vi) Related Party Agreements Requiring Penalties or Notice to
Terminate
Schedule 4.23(a)(vii) Material Service, Supplies, Equipment, Inventory, or
Fixture Agreements
Schedule 4.23(a)(viii) Non-Compete Agreements
Schedule 4.23(a)(ix) Purchasing Agreements
Schedule 4.23(a)(x) Material Commitments and Commitments Not Made in the
Ordinary Course of Business
Schedule 4.23(b)(i) Defaults, Penalties, and Waivers
Schedule 4.23(b)(ii) Expected Cancellations of Company Commitments
Schedule 4.24 Capital Expenditures
Schedule 4.25 Nonconforming Inventory
Schedule 4.26(a) Insurance: Policies
Schedule 4.26(b) Insurance: Loss Runs and Workers' Compensation Claims
Schedule 4.27(a) Employee Matters: Cash Compensation
Schedule 4.27(b) Employee Matters: Engagement and Non-Competition
Agreements
Schedule 4.27(c) Employee Matters: Other Compensation Plans
Schedule 4.27(d) Employee Matters: ERISA Benefit Plans
Schedule 4.27(e) Employee Matters: Employee Policies and Procedures
Schedule 4.27(f) Employee Matters: Unwritten Amendments
Schedule 4.27(g) Employee Matters: Labor Compliance
Schedule 4.27(h) Employee Matters: Unions
Schedule 4.27(j) Employee Matters: Change of Control Benefits
Schedule 4.27(k) Employee Matters: Retirees
Schedule 4.28(b) Non-Qualified ERISA Pension Benefit Plans
Schedule 4.28(g) Compliance with ERISA: Participation in Multiemployer
Plan
Schedule 4.28(h) Compliance with ERISA: Claims and Litigation
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Schedule 4.28(k) ERISA Benefit Plans and Other Compensation Plans with No
Amendment, Modification or Termination Rights
Schedule 4.29 Exceptions to Tax Representations and Warranties
Schedule 4.30 Governmental Contracts
Schedule 4.31 Changes Since Balance Sheet Date
Schedule 4.32 Bank Accounts
Schedule 6.04 Prohibited Activities: Exceptions for Activities Involving
ERISA Employee Benefit Plans or Any Other
Compensation Plan, or Employee Policies and Procedures
Schedule 6.12 Disposition of Unwanted Assets
Schedule 8.05 Listing of Stockholder Guaranties Expected to be
Terminated
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EXHIBITS
Exhibit A Form of Escrow Agreement
Exhibit B Form of Employment Agreement
Exhibit C Form of Stock Incentive Plan
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (the "Acquisition
Agreement") is made as of _____ ___, 1997, by and among INDUSTRIAL DISTRIBUTION
GROUP, INC., a Delaware corporation ("IDG"), IDG ACQUISITION COMPANY I, INC., a
Georgia corporation and a wholly owned subsidiary of IDG ("Newco"), INDUSTRIAL
DISTRIBUTION GROUP, INC., a Georgia corporation (the "Company"), and the persons
listed on the signature pages hereof under the caption "Selling Stockholders."
PRELIMINARY STATEMENT
The Company is a distributor that provides flexible procurement
solutions, products and services to industrial users that have production and
maintenance, repair, operating, and production supply requirements (the
"Business"). IDG is a newly formed Delaware corporation created for the purpose
of acquiring and consolidating a number of companies that are in a similar line
of business as the Company. As part of the consolidation undertaken by IDG, the
parties to this Acquisition Agreement have determined that it is in their
respective best long-term interests to effect a business combination pursuant to
which:
(a) the Company will merge with and into Newco, a newly formed
Georgia corporation, on the terms and subject to the conditions set
forth herein (the "Merger");
(b) IDG will acquire the stock of all or some of the entities
listed in Annex 2 (each an "Other Founding Company" and, collectively
with the Company, the "Founding Companies") pursuant to agreements that
are (i) similar to this Acquisition Agreement and (ii) entered into
among those entities and their equity owners, IDG and other wholly
owned subsidiaries of IDG (collectively, the "Companion Agreements");
and
(c) IDG shall, contemporaneously with the effectiveness of the
Merger, effect a public offering of a portion of the shares of its
common stock and issue and sell those shares as contemplated in this
Acquisition Agreement.
The parties to this Acquisition Agreement intend that this Acquisition
Agreement be approved and adopted by all relevant parties as a plan of
reorganization within the provisions of Sections 368(a)(1)(A) and 368(a)(2)(D)
of the Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, representations and undertakings contained herein, the parties
hereto hereby agree as follows:
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ARTICLE I
DEFINITIONS
1.01 CERTAIN DEFINED TERMS. As used herein, the following terms have
the meanings assigned to them below in this Section 1.01. Capitalized terms used
herein and not defined in Section 1.01 have the meanings assigned to them in
Section 1.02 of Article I of Annex 1: "Industrial Distribution Group, Inc.
Formation Corp. Uniform Provisions for the Acquisition of Founding Companies"
(the "Uniform Provisions"), the text of which is hereby incorporated herein by
reference. References to sections not found herein are to sections in the
Uniform Provisions.
"ACQUISITION AGREEMENT" means this Agreement and Plan of Merger and
Reorganization, including the Disclosure Statement relating hereto and all
attached Annexes and Exhibits, as each of the same may be amended, modified or
supplemented from time to time pursuant to the provisions hereof or thereof.
"ACQUISITION CONSIDERATION" means the Merger Consideration.
"ACQUISITION TRANSACTION" means the Merger, and any ancillary
transactions contemplated to be consummated in accordance herewith.
"BALANCE SHEET DATE" means December 31, 1996.
"BUSINESS" has the meaning set forth in the first paragraph of the
Preliminary Statement.
"CAPITAL STOCK" has the meaning set forth in Section 1.02 of the
Uniform Provisions.
"CERTIFICATE OF MERGER" means (a) if the Company is a Georgia
corporation, the certificate of merger respecting the Merger that contains the
information required by the GBCC to effectuate the Merger; and (b) if the
Company's Organization State is not Georgia, the articles or certificate of
merger or other documents respecting the Merger that contains the information
required by the GBCC and the laws of the Company's Organization State to
effectuate the Merger.
"CHARTER DOCUMENTS" means, with respect to any Entity at any time, in
each case as amended, modified and supplemented at that time, the articles or
certificate of formation, incorporation or organization (or the equivalent
organizational documents) of that Entity, (b) the bylaws, operating agreement,
trust indenture or regulations (or the equivalent governing documents) of that
Entity and (c) each document setting forth the designation, amount and relative
rights, limitations and preferences of any class or series of that Entity's
Capital Stock or of any rights in respect of that Entity's Capital Stock.
"CLOSING" has the meaning set forth in Section 7.02 of the Uniform
Provisions.
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"CLOSING DATE" has the meaning set forth in Section 7.02 of the Uniform
Provisions, which shall be the same date as the IPO Closing Date.
"CLOSING MEMORANDUM" means the form of closing memorandum to be
prepared by IDG for the Closing under this Acquisition Agreement in which are
included the forms of certificates of officers, the opinions of counsel, and
certain other documents to be delivered at the Closing as provided in Article
VII.
"COMPANION AGREEMENTS" has the meaning set forth in the Preliminary
Statement.
"COMPANY" means Industrial Distribution Group, Inc., a Georgia
corporation.
"COMPANY CAPITAL STOCK" means the common stock, par value $.01 per
share, of the Company.
"COMPANY SUBSIDIARY" has the meaning set forth in Section 1.02 of the
Uniform Provisions.
"CONFIDENTIAL INFORMATION" means, with respect to any Person, all trade
secrets and other confidential, nonpublic and/or proprietary information of that
Person, including information derived from reports, investigations, research,
work in progress, codes, marketing and sales programs, capital expenditure
projects, cost summaries, pricing formulae, contract analyses, financial
information, projections, confidential filings with any Governmental Authority
and all other confidential, nonpublic concepts, methods of doing business,
ideas, materials or information prepared or performed for, by or on behalf of
that Person.
"COUNSEL FOR IDG AND NEWCO" means Xxxxxxxxxx Xxxxxxxx XXX, Xxxxxxx,
Xxxxxxx.
"COUNSEL FOR THE COMPANY" means Xxxxxx/Xxxxxx & Xxxxxx, Atlanta,
Georgia.
"COVENANTING STOCKHOLDER" has the meaning set forth in Section 10.01.
"CURRENT BALANCE SHEET" means the unaudited balance sheet of the
Company as at the Current Balance Sheet Date.
"CURRENT BALANCE SHEET DATE" means March 31, 1997.
"DERIVATIVE SECURITIES" has the meaning set forth in Section 1.02 of
the Uniform Provisions.
"DESIGNATED INVENTORY" has the meaning set forth in Section 2.07(a).
"DISCLOSURE STATEMENT" means the Schedules and a written statement
executed by the Company and each of the Selling Stockholders and delivered to
IDG prior to the execution and delivery of this Acquisition Agreement by IDG and
Newco in which either (a) exceptions are
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taken to representations and warranties made by the Company and the Selling
Stockholders herein or (b) it is confirmed that no exception is taken to such
representations and warranties.
"DISSENTING STOCKHOLDER" shall mean any Person holding record title to
any shares of the Company Capital Stock, as reflected on the books and records
of the Company as of the date hereof, that has exercised such Person's statutory
right to dissent from the Merger, in compliance with, and as required by, the
laws of the Organization State of the Company.
"EFFECTIVE TIME" has the meaning set forth in Section 2.02.
"EMPLOYMENT AGREEMENT" means the employment agreement to be entered
into as of the Closing Date between Xxxxxxx X. Xxxxxxxxxxxx and IDG, which shall
be substantially in the form of Exhibit B attached hereto.
"ENTITY" has the meaning set forth in Section 1.02 of the Uniform
Provisions.
"ESCROW ACCOUNT" has the meaning set forth in Section 2.07(c).
"ESCROW AGENT" means SunTrust Bank, N.A., Atlanta, Georgia.
"ESCROW AGREEMENT" means the escrow agreement to be entered into on the
Closing Date by and among IDG, the Selling Stockholders, and the Escrow Agent,
which shall be substantially in the form of Exhibit A attached hereto.
"ESCROWED SHARES" has the meaning set forth in Section 2.07(c).
"FOUNDING COMPANIES" has the meaning set forth in the Preliminary
Statement.
"GBCC" means the Georgia Business Corporation Code, O.C.G.A. xx.xx.
14-2-101, et. seq.
"GUARANTEED RECEIVABLES" has the meaning set forth in Section 2.07(b).
"IDG" means Industrial Distribution Group, Inc., a Delaware
corporation.
"IDG ACQUISITION CANDIDATE" means any Entity engaged in any of the
businesses of providing flexible procurement solutions, products and services to
industrial users that have production and maintenance, repair and operating
supplies requirements which either the Company or IDG or any of their
Subsidiaries (i) have entered into discussions regarding a possible acquisition
or (ii) have performed an acquisitions analysis with respect to any possible
acquisition.
"IDG COMMON STOCK" means the common stock, par value $.01 per share, of
IDG.
"IMMEDIATE FAMILY MEMBER" has the meaning set forth in Section 1.02 of
the Uniform Provisions.
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"IPO PRICE" has the meaning set forth in Section 1.02 of the Uniform
Provisions.
"MANAGEMENT STOCKHOLDERS" means those Selling Stockholders set forth
in Annex 7.
"MERGER" has the meaning set forth in the Preliminary Statement.
"MERGER CONSIDERATION" has the meaning set forth in Section 2.04(a).
"NEWCO" means IDG Acquisition Company I, Inc., a Georgia corporation.
"NEWCO COMMON STOCK" means the common stock, par value $.01 per share,
of Newco.
"ORGANIZATION STATE" has the meaning set forth in Section 1.02 of the
Uniform Provisions.
"OTHER FOUNDING COMPANIES" has the meaning set forth in the
Preliminary Statement.
"PRO RATA SHARE" means, for each Selling Stockholder, the fraction
expressed as a percentage the numerator of which is the number of shares of
outstanding Company Capital Stock owned by that Selling Stockholder and the
denominator of which is the total number of shares of outstanding Company
Capital Stock owned by all Stockholders, as of the Closing Date.
"RECEIVABLES DETERMINATION DATE" shall mean the date that is the first
anniversary of the Closing Date.
"RESTRICTED PERIOD" has the meaning set forth in Section 11.01.
"RETURNS" has the meaning set forth in Section 1.02 of the Uniform
Provisions.
"SCHEDULES" shall mean those certain disclosures made by the Company,
the Stockholders, IDG or Newco containing such information, as appropriate,
relating to the representations and warranties made by the respective party as
set forth in the Disclosure Statement.
"SELLING STOCKHOLDERS" shall mean all Persons holding record title to
any of the shares of the Company Capital Stock, as reflected on the books and
records of the Company as of the date hereof, that have not exercised a
statutory right to dissent from the Merger in compliance with, and as required
by, the laws of the Organization State of the Company.
"STOCKHOLDERS" shall mean collectively the Selling Stockholders and
Dissenting Stockholders.
"STOCKHOLDERS' AGENT" has the meaning set forth in Section 13.01.
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"STOCK INCENTIVE PLAN" means the IDG Stock Incentive Plan adopted or to
be adopted by the directors and shareholders of IDG on or prior to the Closing
Date, substantially in the form of Exhibit C attached hereto.
"SURVIVING CORPORATION" means the Entity to be designated in the
Certificate of Merger as the surviving corporation of the Merger.
"TERRITORY" has the meaning set forth in Section 10.01(a).
"THRESHOLD AMOUNT" means 2% of the Indemnification Limit.
"TRANSACTION VALUE" means the value expressed in dollars resulting as
the product of (a) the aggregate number of shares of IDG Common Stock designated
as Merger Consideration and allocated to the Selling Stockholders, multiplied by
(b) the IPO Price, as discounted by 25%.
"TRANSFER TAXES" has the meaning set forth in Section 11.06.
"UNIFORM PROVISIONS" has the meaning set forth in the first paragraph
of this Section 1.01.
ARTICLE II
THE MERGER; RELATED MATTERS; AND RELATED AGREEMENTS
2.01 CERTIFICATE OF MERGER. Subject to the terms and conditions hereof,
Newco will cause a Certificate of Merger to be duly executed and delivered on or
prior to the Closing Date, to be filed with the Secretary of State of the State
of Georgia and, if required, in the appropriate filing office of the
Organization State of the Company.
2.02 THE EFFECTIVE TIME. The effective time of the Merger (the
"Effective Time") will be the time on the Closing Date that the Certificate of
Merger specifies or, if the Certificate of Merger does not specify another time,
10:00 a.m., Eastern Time, on the Closing Date.
2.03 CERTAIN EFFECTS OF THE MERGER. At and as of the Effective Time:
(a) the Company will be merged with and into Newco in
accordance with the provisions of the GBCC and the laws of the Organization
State of the Company;
(b) the Company will cease to exist as a separate legal
entity;
(c) the articles of incorporation of Newco will remain the
articles of incorporation of the Surviving Corporation;
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(d) Newco, as the Surviving Corporation, will (i) possess all
of the properties, rights, privileges, immunities, franchises and powers, and be
subject to all the restrictions, duties, liabilities, debts and obligations, of
the Company, and (ii) be governed by the laws of the State of Georgia;
(e) the Charter Documents of Newco will remain (until changed
in accordance with applicable law or their terms) the Charter Documents of the
Surviving Corporation;
(f) the initial board of directors of the Surviving
Corporation will consist of the persons named in Annex 3, each of whom will hold
the office of director of the Surviving Corporation subject to the provisions of
the GBCC and other applicable laws and the Charter Documents of the Surviving
Corporation; and
(g) the initial officers of the Surviving Corporation will be
as set forth in Annex 3, each of whom will serve in such office, subject to the
provisions of the GBCC and other applicable laws and the Charter Documents of
the Surviving Corporation, until that person's successor is duly elected to,
and, if necessary, qualified for, that office.
2.04 EFFECT OF THE MERGER ON CAPITAL STOCK. (a) As of the Effective
Time, as a result of the Merger and without any action on the part of any of the
Stockholders:
(i) all of the shares of Company Capital Stock issued and
outstanding immediately prior to the Effective Time will (A) be converted into
the right to receive, subject to the provisions of Sections 2.05, 2.06, and
2.07(c), without interest, on surrender of the certificates evidencing those
shares, the number of whole shares of IDG Common Stock and the amount of cash
(if any), as provided in Annex 4 (the "Merger Consideration"), (B) cease to be
outstanding, and (C) be canceled and retired;
(ii) each share of Company Capital Stock held in the treasury
of the Company or any Company Subsidiary will (A) cease to be outstanding, and
(B) be canceled and retired; and
(iii) each share of the Newco Common Stock issued and
outstanding immediately prior to the Effective Time will remain one share of the
common stock, par value $.01 per share, of the Surviving Corporation, and
collectively will constitute all of the issued and outstanding shares of the
Capital Stock of the Surviving Corporation.
(b) Each holder of a certificate representing shares of
Company Capital Stock immediately prior to the Effective Time will, as of the
Effective Time and thereafter, cease to have any rights respecting those shares
other than the right to receive, subject to the provisions of Sections 2.05,
2.06 and 2.07 (c), without interest, the Merger Consideration.
2.05 DELIVERY, EXCHANGE, AND PAYMENT. (a) At or after the Effective
Time each Selling Stockholder, upon surrender to IDG (or any agent that may be
appointed by IDG for
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purposes of this Section 2.05) of any and all certificates representing the
shares of Company Capital Stock held by such Selling Stockholder, will receive,
subject to the provisions of Sections 2.05, 2.06 and 2.07(c), the Merger
Consideration. Until any certificate representing shares of Company Capital
Stock has been surrendered pursuant to this Section 2.05, that certificate will,
for all purposes, be deemed to evidence ownership of the number of whole shares
of IDG Common Stock included in the Merger Consideration deliverable subject to
Section 2.07(c), in respect of that certificate pursuant to Section 2.04. All
shares of IDG Common Stock issuable in the Merger will be deemed for all
purposes to have been issued by IDG at the Effective Time. Notwithstanding the
foregoing, the Stockholders' Agent may, at the instruction of any of the Selling
Stockholders, surrender the shares of Company Capital Stock of such Selling
Stockholders to IDG and receive the Merger Consideration on behalf of such
Selling Stockholders, subject to the provisions of Sections 2.05, 2.06 and 2.07
(c).
(b) Each Selling Stockholder, or the Stockholders' Agent, will
deliver to IDG (or any agent that may be appointed by IDG for purposes of this
Section 2.05), on or before the Closing Date, the certificates representing
shares of Company Capital Stock owned by the Selling Stockholder, duly endorsed
in blank, or accompanied by duly executed stock powers in blank, and with all
necessary transfer taxes and other revenue stamps, acquired at the Selling
Stockholders' expense, affixed and canceled. Each Selling Stockholder shall cure
any deficiencies in the endorsement of the certificates or other documents of
conveyance respecting, or in the stock powers accompanying, the certificates
representing the shares of Company Capital Stock delivered by the Selling
Stockholders, or the Stockholders' Agent, as may be requested by IDG.
(c) No dividends or other distributions declared or earned
after the Effective Time with respect to IDG Common Stock and payable to the
holders of record thereof after the Effective Time will be paid to the holder of
any unsurrendered certificates representing shares of Company Capital Stock for
which shares of IDG Common Stock have been issued in the Merger, until those
certificates are surrendered as provided herein, but (i) on such surrender, IDG
will cause to be paid, to the Person in whose name the certificates representing
such shares of IDG Common Stock shall then be issued, (1) the amount of
dividends or other distributions previously paid to any holders of IDG Common
Stock as of the record date with respect to such whole shares of IDG Common
Stock, or which have accrued, subsequent to the Effective Time but prior to
surrender, and (2) the amount of any cash payable in lieu of fractional shares
pursuant to Section 2.06, and (ii) at the appropriate payment date or as soon as
practicable thereafter, IDG will cause to be paid to that Person the amount of
dividends or other distributions with a record date, or which have been accrued,
subsequent to the Effective Time, but which are not payable until a date
subsequent to surrender, which are payable with respect to such whole shares of
IDG Common Stock, subject in all cases to any applicable escheat laws. No
interest will be payable with respect to any such dividends or other
distributions on surrender of the outstanding certificates.
(d) Each Dissenting Stockholder, in lieu of receiving the
Merger Consideration as set forth on Annex 4, shall receive from the Company (or
the Surviving Corporation) the payment in respect of the shares of the Company
Capital Stock owned by such
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Dissenting Shareholder or other consideration, as required by, and in compliance
with, the GBCC or the laws of the Organization State of Company as appropriate.
2.06 FRACTIONAL SHARES. Notwithstanding any other provision herein, no
fractional shares of IDG Common Stock will be issued, and any Selling
Stockholder who otherwise would be entitled hereunder to receive a fractional
share of IDG Common Stock but for this Section 2.06 will be entitled to receive,
in lieu thereof, a cash payment for and in the amount (rounded up to the nearest
whole cent) equal to that Selling Stockholder's fractional interest in a share
of IDG Common Stock multiplied by the IPO Price.
2.07 RELATED AGREEMENTS. In connection with the Merger, each of the
parties to this Acquisition Agreement agrees to comply with the provisions of
this Section 2.07 as set forth below.
(a) Designated Inventory. The inventory set forth in Annex 5
attached hereto is hereinafter called the "Designated Inventory". With respect
to sales of Designated Inventory made after the Current Balance Sheet Date until
5:00 p.m., Eastern Time, on the second anniversary of the Closing Date, IDG will
cause the Surviving Corporation to pay the Stockholders' Agent, for the benefit
of the Selling Stockholders, 80% of the gross proceeds collected by the
Surviving Corporation from any sales of the Designated Inventory (whether such
sale or sales are made directly or through IDG or any of its Subsidiaries). All
proceeds from the sale of any Designated Inventory sold after the second
anniversary of the Closing Date shall be retained by the Surviving Corporation
and no amounts from such sales shall be owed to any of the Selling Stockholders.
The Company and the Selling Stockholders agree that IDG may use any reasonable
method to sell the Designated Inventory, including selling such inventory at a
discount or in one or more bulk sales.
(b) Guaranteed Receivables. The Selling Stockholders hereby
jointly and severally agree to the unconditional and irrevocable guarantee of
the collection in full, on or before the Receivables Determination Date, of the
gross dollar amount of the receivables set forth in Annex 6 attached hereto (the
"Guaranteed Receivables"), for the benefit of the Surviving Corporation, and
further agree to secure such guarantee with the Escrowed Shares (as defined in
paragraph (c) below). The obligations of the Selling Stockholders under this
paragraph shall be limited to such Selling Stockholder's Pro Rata Share of the
Indemnification Limit, and shall expire and be of no further effect as to any
Guaranteed Receivables remaining uncollected as of the Receivables Determination
Date for which a claim has not been made by IDG with the Selling Stockholder at
or before 5:00 p.m., Eastern Time, on or before ten business days after the
Receivables Determination Date. For purposes of determining whether any of the
Guaranteed Receivables remain uncollected at the Receivables Determination Date,
reductions to the Guaranteed Receivables resulting from the return of inventory
or other offsets (to the extent such offsets reduce any liability of the
Company) shall be considered a collection, and therefore the Surviving
Corporation shall have no claim against the Selling Stockholders to the extent
of such reduction or offset.
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(c) Escrow Account. On the Closing Date, an aggregate of
twenty-five percent (25%) of the shares of IDG Common Stock to be received by
the Selling Stockholders as part of the Merger Consideration (the "Escrowed
Shares") allocated among the Selling Stockholders, shall be deposited with the
Escrow Agent in a segregated account (the "Escrow Account") pursuant to the
Escrow Agreement for a period of up to two years from the Closing Date, for the
purpose of securing and funding part of the obligations of the Selling
Stockholders and the Company to IDG and Newco that may arise pursuant to Section
2.07(b) and Article IX hereof. The Escrowed Shares shall be held in the Escrow
Account and disbursed in accordance with the terms of the Escrow Agreement.
Notwithstanding the foregoing, the respective Selling Stockholders as the legal
owners of the Escrowed Shares, unless and until disposed of in accordance with
the terms of this Acquisition Agreement and the Escrow Agreement, shall be
entitled to exercise the voting rights and to receive any dividends or other
distributions declared and paid with respect to such shares; provided, however,
any shares of IDG Common Stock issued with respect to the Escrowed Shares as a
result of a stock dividend, share exchange, stock split, or other action in
respect of the IDG Common Stock, shall be held in the Escrow Account as
additional Escrowed Shares.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF EACH SELLING STOCKHOLDER
3.01 REPRESENTATIONS AND WARRANTIES OF EACH SELLING STOCKHOLDER. Each
Selling Stockholder represents and warrants to IDG and Newco that, as applied
solely to such Selling Stockholder, all of the representations and warranties in
this Article III are, as of the date of this Acquisition Agreement, and as
amended or supplemented pursuant to Section 6.08, will be, on the Closing Date,
true and correct, and do not and will not contain or omit any disclosure that
has or will or could have a Material Adverse Effect on the Company or on the
Surviving Corporation or IDG.
3.02 INCORPORATION OF THE UNIFORM PROVISIONS. Sections 3.03 through
3.09 of the Uniform Provisions are hereby incorporated herein by reference.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND THE MANAGEMENT STOCKHOLDERS
4.01 TRUTHFULNESS OF THE REPRESENTATIONS AND WARRANTIES BY THE COMPANY
AND EACH MANAGEMENT STOCKHOLDER. The Company and each Management Stockholder,
jointly and severally, represent and warrant to IDG and Newco that all of the
following representations and warranties in this Article IV are, as of the date
of this Acquisition Agreement, and as amended or supplemented pursuant to
Section 6.08, will be, on the Closing Date, true and correct, and do not
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and will not contain or omit any disclosure that has or will or could have a
Material Adverse Effect on the Company or on the Surviving Corporation or IDG.
4.02 ORGANIZATION AND CAPITALIZATION OF COMPANY. (a) The Organization
State of the Company is Georgia, and the Company (i) is a corporation duly
organized, validly existing and in good standing under the laws of that State,
(ii) has all requisite corporate power and authority under all applicable laws
and its Charter Documents to own or lease and to operate its properties and to
carry on its business as it is now conducted and (iii) is duly qualified and in
good standing as a foreign corporation in all jurisdictions in which it owns or
leases property or in which the carrying on of its business as now conducted so
requires, except where the failure to be so qualified, singularly or in the
aggregate, would not have a Material Adverse Effect.
(b) The authorized, issued, and outstanding Capital Stock of the
Company is as set forth on Schedule 4.02, and, except as set forth in such
Schedule, (i) no shares are held by the Company as treasury shares, and (ii) no
outstanding Derivative Securities of the Company exist.
4.03 INCORPORATION OF THE UNIFORM PROVISIONS. Sections 4.04 through
4.33 of the Uniform Provisions are hereby incorporated herein by reference.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF IDG AND NEWCO
5.01 REPRESENTATIONS AND WARRANTIES OF IDG AND NEWCO. IDG and Newco,
jointly and severally, represent and warrant to the Company and each Selling
Stockholder that all of the following representations and warranties in this
Article V are, as of the date of this Acquisition Agreement, and will be, on the
Closing Date, true and correct.
5.02 ORGANIZATION AND CAPITAL STOCK OF NEWCO. (a) Newco is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Georgia; (b) the authorized Capital Stock of Newco is
comprised of 1,000 shares of Newco Common Stock, 100 shares of which are issued
and outstanding and owned of record and beneficially by IDG; (c) no Derivative
Securities of Newco are outstanding; (d) Newco has been organized for the sole
purpose of participating in the Merger and has not, and will not, engage in any
activities other than those necessary to effectuate the Merger; and (e) the
Newco Common Stock has been duly authorized and issued in accordance with the
GBCC and its Charter Documents, and is fully paid and non-assessable.
5.03 INCORPORATION OF THE UNIFORM PROVISIONS. Sections 5.04 through
5.12 of the Uniform Provisions are hereby incorporated herein by reference.
Sections 5.05, 5.06, 5.09, 5.10, 511 and 5.12 are also applicable to Newco in
each instance as if the reference to IDG therein was a reference to Newco.
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ARTICLE VI
COVENANTS EXTENDING TO THE EFFECTIVE TIME
6.01 INCORPORATION OF THE UNIFORM PROVISIONS. Sections 6.02 through
6.13 of the Uniform Provisions are hereby incorporated herein by reference. Each
party to this Acquisition Agreement, subject to the waiver provisions of Section
11.04, agrees to comply with each covenant set forth therein.
ARTICLE VII
THE CLOSING AND CONDITIONS TO CLOSING
7.01 INCORPORATION OF THE UNIFORM PROVISIONS. Sections 7.02 through
7.05 of the Uniform Provisions are hereby incorporated herein by reference.
ARTICLE VIII
COVENANTS FOLLOWING THE EFFECTIVE TIME
8.01 INCORPORATION OF THE UNIFORM PROVISIONS. Sections 8.02 through
8.05 of the Uniform Provisions are hereby incorporated herein by reference. From
and after the Effective Time, subject to the waiver provisions of Section 11.04,
each party hereto (other than the Company) agrees to comply with each covenant
therein to be performed or observed by that party.
ARTICLE IX
INDEMNIFICATION
9.01 INCORPORATION OF THE UNIFORM PROVISIONS. Sections 9.02 through
9.08 of the Uniform Provisions are hereby incorporated herein by reference.
ARTICLE X
LIMITATIONS ON COMPETITION
10.01 PROHIBITED ACTIVITIES. Each Management Stockholder and each
Selling Stockholder owning five percent or more of the Company Capital Stock
(each a "Covenanting Stockholder") agrees severally, but not jointly with any
other Person, that he or she will not,
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during the period beginning on the date hereof and ending on the third
anniversary of the Closing Date, directly or indirectly, for any reason, for his
or her own account, or on behalf of, or together with, any other Person except
for, and on behalf of, the Company or any Company Subsidiary:
(a) be engaged as an officer or director or in any other
managerial or sales capacity or as an owner, co-owner or other investor of or
in, whether as an employee, independent contractor, consultant or advisor, or as
a sales representative or distributor of any kind, in a business that sells any
products or provides any services in competition with the Company, any Company
Subsidiary, or IDG or any Subsidiary of IDG (IDG and its Subsidiaries
collectively being "IDG" for purposes of this Article X) within a radius of 100
miles of each location in which any of the Company or any Company Subsidiary or
IDG was engaged in the Business on the date hereof or on the Closing Date (those
locations collectively being the "Territory");
(b) call on any natural person who is at that time employed by
the Company, any Company Subsidiary, or IDG in any managerial or sales capacity
with the purpose or intent of attracting that person from the employ of the
Company, any Company Subsidiary, or IDG;
(c) call on any Person who at that time is, or at any time
within one year prior to that time was, a customer of the Company, any Company
Subsidiary, or IDG within the Territory, of whom the Covenanting Stockholder had
knowledge, and contact with, that customer relationship, for the purpose of
soliciting or selling any product or service in competition with the Company,
any Company Subsidiary, or IDG within the Territory; or
(d) call on any IDG Acquisition Candidate, with the knowledge
of that Person's status as an IDG Acquisition Candidate, for the purpose of
acquiring that Person or arranging the acquisition of that Person by any Person
other than IDG.
Notwithstanding the foregoing, any Covenanting Stockholder may own and
hold as a passive investment up to one percent (1%) of the outstanding Capital
Stock of a competing Entity if that class of Capital Stock is listed for trading
or quotation on a national or regional stock exchange registered with the SEC or
on The Nasdaq National Stock Market.
10.02 DAMAGES. Because of the difficulty in measuring the economic
losses that may be incurred by IDG as a result of any breach by a Covenanting
Stockholder of his or her covenants in Section 10.01, and because of the
immediate and irreparable damage that could be caused to IDG for which it would
have no other adequate remedy, each Covenanting Stockholder agrees that IDG may
enforce the provisions of Section 10.01 by any equitable or legal means,
including seeking an appropriate injunction or restraining order against that
Covenanting Stockholder if a breach of any of those provisions occurs.
10.03 REASONABLE RESTRAINT. The parties hereto each agree that Sections
10.01 and 10.02 impose a reasonable restraint on the Covenanting Stockholders in
light of the activities and Business of the Company on the date hereof, the
current business plans of IDG as a result of its
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proposed acquisitions of the Company and the Other Founding Companies (of which
each Covenanting Stockholder acknowledges that he or she is aware), and the
consideration to be received by each Covenanting Stockholder from IDG as a
result of the Merger.
10.04 SEVERABILITY; REFORMATION. The covenants in this Article X are
severable and separate, and the unenforceability of any specific covenant in
this Article X is not intended by any party hereto to, and shall not, affect the
provisions of any other covenant in this Article X. If any court of competent
jurisdiction shall determine that the scope, time, or territorial restrictions
set forth in Section 10.01 are unreasonable as applied to any Covenanting
Stockholder, the parties hereto, including that Covenanting Stockholder,
acknowledge their mutual intention and agreement that those restrictions be
enforced to the fullest extent the court deems reasonable, and thereby shall be
reformed to that extent as applied to that Covenanting Stockholder or any other
Covenanting Stockholder similarly situated.
10.05 INDEPENDENT COVENANT. All of the covenants in this Article X are
intended by each party hereto to be, and shall be construed as, an agreement
independent of any other provision in this Acquisition Agreement, and the
existence of any claim or cause of action of any Covenanting Stockholder against
IDG, whether predicated on this Acquisition Agreement or otherwise, shall not
constitute a defense to the enforcement by IDG of any covenant in this Article
X. It is specifically agreed that the period specified in Section 10.01 shall be
computed in the case of each Covenanting Stockholder by excluding from that
computation any time during which that Covenanting Stockholder is in violation
of any provision of Section 10.01. The covenants contained in this Article X
shall not be affected by any breach of any other provision hereof by any party
hereto.
10.06 MATERIALITY. The Company and each Covenanting Stockholder,
severally and not jointly with any other Person, hereby agree that this Article
X is a material and substantial part of the transactions contemplated hereby.
ARTICLE XI
GENERAL PROVISIONS
11.01 RESTRICTIONS ON TRANSFER OF IDG COMMON STOCK. (a) During the
two-year period ending on the second anniversary of the Closing Date (the
"Restricted Period"), no Selling Stockholder voluntarily will: (i) sell, assign,
exchange, transfer, or otherwise dispose of (A) any shares of IDG Common Stock
received by any Selling Stockholder in the Merger or (B) any interest in
(including any option to buy or sell unless such option is not exercisable until
after expiration of the Restricted Period) any of those shares of IDG Common
Stock, in whole or in part, and IDG will have no obligation to, and shall not,
treat any such attempted transfer as effective for any purpose; or (ii) engage
in any transaction, whether or not with respect to any shares of IDG Common
Stock or any interest therein, the intent or effect of which is to reduce the
risk of owning the shares of IDG Common Stock acquired pursuant to Section 2.04
(including, for example, engaging in put, call, short-sale, straddle or similar
market transactions);
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provided, however, that this Section 11.01 shall not restrict any transfer of
IDG Common Stock acquired by a Selling Stockholder pursuant to Section 2.04 to
any of that Selling Stockholder's Related Persons who agree in writing to be
bound by the provisions of this Section 11.01. The certificates evidencing the
shares of IDG Common Stock delivered to each Selling Stockholder, or the
Stockholders' Agent as the case may be, pursuant to Section 2.05 will bear a
legend substantially in the form set forth below and containing such other
information as IDG may deem necessary or appropriate:
EXCEPT PURSUANT TO THE TERMS OF THE AGREEMENT AND PLAN OF MERGER AND
REORGANIZATION DATED JUNE 27, 1997 AMONG THE ISSUER, THE HOLDER OF THIS
CERTIFICATE AND THE OTHER PARTIES THERETO, THE SHARES REPRESENTED BY
THIS CERTIFICATE MAY NOT BE VOLUNTARILY SOLD, ASSIGNED, EXCHANGED,
TRANSFERRED OR OTHERWISE DISPOSED OF, AND THE ISSUER SHALL NOT BE
REQUIRED TO GIVE EFFECT TO ANY ATTEMPTED VOLUNTARY SALE, ASSIGNMENT,
EXCHANGE, TRANSFER, OR OTHER DISPOSITION OF ANY OF THOSE SHARES, DURING
THE TWO-YEAR PERIOD ENDING ON _____________, 0000 (XXX "XXXXXXXXXX
XXXXXX"). XX THE WRITTEN REQUEST OF THE HOLDER OF THIS CERTIFICATE, THE
ISSUER AGREES TO REMOVE THIS RESTRICTIVE LEGEND (AND ANY STOP ORDER
PLACED WITH THE TRANSFER AGENT) AFTER THE EXPIRATION OF THE RESTRICTED
PERIOD.
(b) Each Selling Stockholder, severally and not jointly with
any other Person, (i) acknowledges that the shares of IDG Common Stock to be
delivered to that Selling Stockholder, or the Stockholders' Agent, as the case
may be, pursuant to Section 2.04 have not been, and will not be, registered
under the Securities Act, and therefore may not be resold by that Selling
Stockholder without being in compliance with the Securities Act or an exemption
thereof, and (ii) covenants that none of the shares of IDG Common Stock issued
to that Selling Stockholder pursuant to Section 2.04 will be offered, sold,
assigned, transferred or otherwise disposed of except upon full compliance with
all the applicable provisions of the Securities Act and the rules and
regulations of the SEC and applicable state securities laws and regulations. All
certificates evidencing shares of IDG Common Stock issued pursuant to Section
2.04 will bear substantially the following legend in addition to the legend
prescribed by Section 11.01(a):
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "SECURITIES ACT") OR ANY STATE SECURITIES
LAWS, HAVE BEEN ISSUED PURSUANT TO AND UNDER ONE OR MORE EXEMPTIONS
THERETO, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, OR
DISPOSED OF UNLESS AND UNTIL REGISTERED UNDER THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS, UNLESS THE COMPANY HAS RECEIVED AN
OPINION OF COUNSEL SATISFACTORY TO THE
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COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.
In addition, certificates evidencing shares of IDG Common Stock issued pursuant
to Section 2.04 to each Selling Stockholder will bear any legend required by the
securities or blue sky laws of the state in which that Stockholder resides.
11.02 BROKERS AND AGENTS. Except with respect to the retention and
remuneration of Xxxxx Xxxxx Company, the Company and the Selling Stockholders
jointly and severally represent and warrant to IDG and Newco that the Company
has not directly or indirectly employed or become obligated to pay any broker or
similar agent in connection with the transactions contemplated hereby, and
agree, without regard to the Threshold Amount limitations set forth in Article
IX, to indemnify IDG and Newco against all Damage Claims arising out of claims
for any and all fees and commissions of brokers or similar agents employed or
promised payment by the Company.
11.03 ASSIGNMENT; NO THIRD PARTY BENEFICIARIES. This Acquisition
Agreement and the rights of the parties hereunder may not be assigned (except by
operation of law) and shall be binding on and inure to the benefit of the
parties hereto, the successors of IDG and Newco, and the heirs and legal
representatives of the Selling Stockholders (and, in the case of any trust, the
successor trustees of that trust). Neither this Acquisition Agreement nor any
other Transaction Document is intended, or shall be construed, deemed, or
interpreted, to confer on any Person not a party hereto or thereto any rights or
remedies hereunder or thereunder, except as provided in Section 6.05(b) or
11.13, or Article IX, or as otherwise expressly provided herein or therein.
11.04 ENTIRE AGREEMENT; AMENDMENT; WAIVERS. This Acquisition Agreement
and the documents delivered pursuant hereto constitute the entire agreement and
understanding among the Selling Stockholders, the Company, Newco, and IDG and
supersede all prior agreements and understandings, both written and oral,
relating to the subject matter of this Acquisition Agreement. This Acquisition
Agreement may be amended, modified, or supplemented, and any right hereunder may
be waived, if, but only if, that amendment, modification, supplement, or waiver
is in writing and signed by the party to be bound thereby, and in the case of
each Selling Stockholder, the Stockholders' Agent or such Selling Stockholder.
The waiver of any of the terms and conditions hereof shall not be construed or
interpreted as, or deemed to be, a waiver of any other term or condition hereof.
11.05 COUNTERPARTS. This Acquisition Agreement may be executed in
multiple counterparts, each of which will be an original, but all of which
together will constitute one and the same instrument.
11.06 EXPENSES. Whether or not the transactions contemplated hereby are
consummated, (a) IDG will pay the fees, expenses, and disbursements of IDG and
Newco and their Representatives that are incurred in connection with the subject
matter of this Acquisition Agreement and any amendments thereto, including all
costs and expenses incurred in the performance of and compliance with all
conditions to be performed by IDG and Newco under
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this Acquisition Agreement, including the costs of preparing the Registration
Statement, (b) the Stockholders will pay from personal funds, and not from funds
of the Company or any Company Subsidiary, all sales, use, transfer, and other
similar taxes and fees (collectively, "Transfer Taxes") incurred in connection
with the transactions contemplated hereby, and (c) the Company will pay the
fees, expenses, and disbursements of Counsel for the Company incurred in
connection with the subject matter of this Acquisition Agreement and the
Registration Statement on or before the Closing Date. Notwithstanding the
foregoing, and in addition thereto, the parties hereto acknowledge that the
Company and IDG are parties to a certain Letter of Intention and Expense Sharing
Commitment dated as of February 20, 1997 and agree that such agreement shall
continue to be effective with respect to the obligations of the Company to IDG
to pay or reimburse certain expenses incurred by IDG in connection with its
pursuit of the IPO and the transactions contemplated hereunder.
The Selling Stockholders will file all necessary documentation and
Returns with respect to all Transfer Taxes. In addition, each Selling
Stockholder acknowledges that he or she, and not the Company or IDG or the
Surviving Corporation, will pay all Taxes, if any, due upon receipt of the
consideration payable to that Stockholder pursuant to Article II.
11.07 NOTICES. All notices required or permitted hereunder shall be in
writing, and shall be deemed to be delivered and received (a) if personally
delivered or, if delivered by telegram, facsimile, or courier service, when
actually received by the party to whom notice is sent (or upon confirmation of
receipt received by the sender), or (b) if delivered by mail (whether actually
received or not), at the close of business on the third business day next
following the day when placed in the mail, postage prepaid, certified or
registered, addressed to the appropriate party or parties, at the address of
such party set forth below (or at such other address as such party may designate
by written notice to all other parties in accordance herewith):
(i) if to IDG or Newco:
Industrial Distribution Group, Inc.
0000 Xxxxx Xxxxx
Xxxxxx, Xxxxxxx 00000
Attn.: Chief Executive Officer
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
with copies (which shall not constitute notice for purposes of
this Acquisition Agreement) to:
Xxxxxxxxxx Xxxxxxxx LLP
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attn.: W. Xxxxx Xxxxx, Esq.
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
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(ii) if to a Selling Stockholder, to the address set forth
with respect to such Selling Stockholder in Annex 4; and
(iii) if to the Company:
Industrial Distribution Group, Inc.
0000 Xxxxx Xxxxx
Xxxxxx, Xxxxxxx 00000
Attn: Xxxxxxxx X. Xxxxx
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
with copies (which shall not constitute notice for purposes of
this Acquisition Agreement) to:
Xxxxxx/Xxxxxx & Xxxxxx
One Buckhead Plaza, Suite 1100
0000 Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Attn.: Xxxxx Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
11.08 GOVERNING LAW. THIS ACQUISITION AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE SUBSTANTIVE LAWS OF THE STATE OF GEORGIA
WITHOUT REGARD TO THE CONFLICTS OF LAW PROVISIONS THEREOF.
11.09 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise provided
herein, no delay or omission in the exercise of any right, power, or remedy
accruing to any party hereto as a result of any breach or default hereunder by
any other party hereto shall impair any such right, power, or remedy, nor shall
it be construed, deemed, or interpreted as a waiver of or acquiescence in any
such breach or default, or of any similar breach or default occurring later; nor
shall any waiver of any single breach or default be construed, deemed, or
interpreted as a waiver of any other breach or default hereunder occurring
before or after that waiver.
11.10 TIME. Time is of the essence in the performance of this
Acquisition Agreement in all respects.
11.11 REFORMATION AND SEVERABILITY. If any provision of this
Acquisition Agreement is invalid, illegal, or unenforceable, that provision
shall, to the extent possible, be modified in such manner as to be valid, legal,
and enforceable and so as to most nearly retain the intent of the parties hereto
as expressed herein, and if such a modification is not possible, that provision
shall
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be severed from this Acquisition Agreement, and in either case the validity,
legality, and enforceability of the remaining provisions of this Acquisition
Agreement shall not in any way be affected or impaired thereby.
11.12 REMEDIES CUMULATIVE. No right, remedy, or election given by any
term of this Acquisition Agreement shall be deemed exclusive, but each shall be
cumulative with all other rights, remedies, and elections available at law or in
equity.
11.13 AGREEMENTS RESPECTING THE IPO. Each of the Company and the
Selling Stockholders acknowledges and agrees that: (a) no firm commitment,
binding agreement, or promise or other assurance of any kind, whether express or
implied, oral or written, exists at the date hereof that the Registration
Statement will become effective or that the IPO will occur at a particular price
or within a particular range of prices or will occur at all; (b) neither IDG nor
any of its Representatives nor any prospective underwriters in the IPO will have
any liability to the Company, the Stockholders, or any of their respective
Affiliates or associates for any failure of (i) the Registration Statement to
become effective (provided, however, that IDG will use its reasonable best
efforts to cause the Registration Statement to become effective prior to October
31, 1997) or (ii) the IPO to occur at a particular price or within a particular
range of prices or to occur at all; and (c) the decision of the Selling
Stockholders to enter into this Acquisition Agreement, or to vote in favor of or
consent to the Merger, as the case may be, has been made independent of, and
without reliance on, any statements, opinions, or other communications of, or
due diligence investigations that have been or will be made or performed by, any
prospective underwriter relative to IDG or the IPO.
11.14 TREATMENT OF CONFIDENTIAL INFORMATION. (a) Each of the Company
and the Selling Stockholders, severally and not jointly with any other Person,
acknowledges that it, he or she has or may have had in the past, and in the
future may have, access to Confidential Information of the Company and the
Company Subsidiaries, the Other Founding Companies and their Subsidiaries, and
IDG and its Subsidiaries. Each of the Company and the Stockholders, severally
and not jointly with any other Person, agrees that it, he or she will keep
confidential all such Confidential Information and, except with the specific
prior written consent of IDG, will not disclose such Confidential Information to
any Person except: (i) Representatives of IDG, (ii) its own Representatives,
provided that such Representatives (other than counsel) agree to the
confidentiality provisions of this Section 11.14. Confidential Information shall
not include (A) such information that becomes known to the public generally
through no fault of any Selling Stockholder, (B) information required to be
disclosed by law or the order of any Governmental Authority under color of law,
provided that prior to disclosing any information pursuant to this clause (B),
each Selling Stockholder shall, if possible, give prior written notice thereof
to IDG and provide IDG with the opportunity to contest such disclosure, or (C)
such information that the disclosing party reasonably believes the disclosure of
which is required in connection with the defense of a lawsuit against the
disclosing party. In the event of a breach or threatened breach by any Selling
Stockholder of the provisions of this Section 11.14 with respect to any
Confidential Information, IDG shall be entitled to an injunction restraining
such Selling Stockholder from disclosing, in whole or in part, that Confidential
Information. Nothing herein shall be construed
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as prohibiting IDG from pursuing any other remedy available at law or in equity
for such breach or threatened breach, including the recovery of Damages.
(b) Because of the difficulty of measuring the economic loss
that may be incurred by IDG, the Surviving Company, or any IDG Subsidiary as a
result of the breach of the covenants in Section 11.14(a), and because of the
immediate and irreparable damage that would be caused to IDG and its
Subsidiaries for which it would have no other adequate remedy, each of the
Company and the Selling Stockholders agrees that IDG may enforce the provisions
of Section 11.14(a) by injunctions and restraining orders against each of them
who breaches any of those provisions.
(c) The obligations of IDG set forth in Section 6.02(d) are
incorporated in this Section 11.14 by this reference.
(d) The obligations of the parties under this Section 11.14
shall survive the termination of this Acquisition Agreement.
ARTICLE XII
TERMINATION
12.01 TERMINATION OF THIS ACQUISITION AGREEMENT. (a) This
Acquisition Agreement may be terminated at any time prior to the Closing solely:
(i) by the mutual written consent of IDG and the Company;
(ii) by the Selling Stockholders and the Company, on the one
hand, or by IDG, on the other hand, if the conditions to Closing in Section 7
have not either been satisfied or waived and the transactions contemplated by
this Acquisition Agreement to take place at the Closing shall not have been
consummated by December 31, 1997, unless the failure of such transactions to be
consummated results from the willful failure of the party (or in the case of the
Selling Stockholders and the Company, any of them) seeking to terminate this
Acquisition Agreement to perform or adhere to any agreement required hereby to
be performed or adhered to by such party prior to or at the Closing or on the
Closing Date;
(iii) by the Selling Stockholders and the Company, on the one
hand, or by IDG, on the other hand, if a material breach or default shall be
made by the other party (or in the case of the Selling Stockholders and the
Company, any of them) in the observance or in the due and timely performance of
any of the covenants, agreements or conditions contained herein and such breach
or default shall not have been cured by the breaching or defaulting party or
parties within ten (10) days after notice of such breach or default is provided
thereto; or
(iv) by IDG if it is entitled to do so as provided in Section
6.08.
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(b) If this Acquisition Agreement is terminated pursuant to
this Section 12.01, the Merger will be deemed for all purposes to have been
abandoned and of no force or effect. If this Acquisition Agreement is terminated
pursuant to this Section 12.01 after the Certificate of Merger has been filed
with the Secretary of State of the State of Georgia and the appropriate filing
office of the Organization State of the Company, but before the IPO has been
consummated, IDG will take all actions that Counsel for the Company and the
Selling Stockholders advise IDG are required by the applicable laws of the State
of Georgia and the Organization State of the Company in order to rescind the
Merger.
12.02 LIABILITIES IN EVENT OF TERMINATION. If this Acquisition
Agreement is terminated pursuant to Section 12.01, there shall be no liability
or obligation on the part of any party hereto except (a) as provided in Section
11.06 and (b) to the extent that such liability is based on the breach by that
party of any of its representations, warranties or covenants set forth in this
Acquisition Agreement.
ARTICLE XIII
POWER OF ATTORNEY
13.01 APPOINTMENT OF STOCKHOLDERS' AGENT. The Selling Stockholders, and
each of them, hereby irrevocably constitute and appoint Xxxxxxxx X. Xxxxx with
an address at 0000 Xxxxxxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxx 00000 (the
"Stockholders' Agent") as their agent and attorney-in-fact to modify, amend, or
otherwise change this Acquisition Agreement, or any of its terms or provisions
(including modifications, amendments, or changes subsequent to Closing), to take
all actions and to execute all documents (including all actions and documents
required under Article VII hereof) necessary or desirable to consummate the
transactions contemplated by this Acquisition Agreement, to tender their shares
of Company Capital Stock pursuant to this Acquisition Agreement and to accept
the Merger Consideration in connection therewith and to take all actions, to
execute all documents that may be necessary or desirable in connection therewith
(including, without limitation, delivery of the certificates for their shares of
Company Capital Stock and execution of such powers of attorney or other
instruments as may be necessary to comply with this Acquisition Agreement), to
give and receive consents and all notices hereunder, to negotiate and settle
claims for indemnification under Article IX hereof, and to perform any other act
arising under or pertaining to this Acquisition Agreement and the transactions
contemplated hereby. The Selling Stockholders, and each of them, agree that
service of process upon the Stockholders' Agent in any action or proceeding
arising under or pertaining to this Acquisition Agreement shall be deemed to be
valid service of process upon the Selling Stockholders, and any claim by IDG or
Newco against the Selling Stockholders, or any of them, in respect to this
Acquisition Agreement may be asserted against, and settled with, said
Stockholders' Agent. The Stockholders' Agent shall be deemed to have accepted
the appointment herein upon his execution of this Acquisition Agreement.
13.02 LIABILITY OF AGENT. Nothing contained herein shall be deemed to
make the Stockholders' Agent personally liable to the Selling Stockholders
because of service in his
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capacity as agent and attorney-in-fact. In performing any of his duties
hereunder, the Stockholders' Agent shall not incur any liability to the Selling
Stockholders for losses, damages, liabilities, or expenses, except for his own
willful or intentional default.
13.03 SUCCESSION. In the event of the death, disability, incompetency,
or resignation of the original Stockholders' Agent, the successor agent shall be
Xxxxxxx X. Xxxxxxxxxxxx. In the event of the death, disability, incompetency, or
resignation of any successor Stockholders' Agent, the Selling Stockholders
shall, within 30 days after notice from IDG and designate a successor
Stockholders' Agent, determined by simple majority vote, who shall have all of
the rights, powers, and authority conferred and limitation on personal liability
provided by, this Article XIII, and if the Stockholders fail to designate such
successor Stockholders' Agent within such period, IDG may petition a court of
appropriate jurisdiction for appointment of a successor Stockholders' Agent.
13.04 IRREVOCABLE; BINDING ON SUCCESSORS, ETC. It is expressly
understood and agreed that the power of attorney and agency created by this
Article XIII is coupled with an interest of the respective parties hereto and
shall be binding and enforceable on and against the respective heirs, personal
representatives, successors and assigns of the Selling Stockholders, and each of
them, and the same shall not be revoked or terminated by the death, disability,
bankruptcy, or incompetency of the Selling Stockholders, or any of them, but
shall continue to be binding and enforceable by the Stockholders' Agent, IDG and
Newco, and their respective successors and on and against the heirs, personal
representatives, and successors and assigns of the Stockholders in the manner
provided herein.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this
Acquisition Agreement as of the date first above written.
INDUSTRIAL DISTRIBUTION GROUP, INC., A
DELAWARE CORPORATION
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
IDG ACQUISITION COMPANY I, INC.
By:
-----------------------------------
Xxxxxxxx X. Xxxxx
President
INDUSTRIAL DISTRIBUTION GROUP, INC., A
GEORGIA CORPORATION
By:
-----------------------------------
Xxxxxxx X. Xxxxxxxxxxxx
Executive Vice President
[signatures continued on next page]
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SELLING STOCKHOLDERS:
-----------------------------------
XXXXXXXX X. XXXXX
-----------------------------------
X. XXXXX XXXXXX, II
-----------------------------------
XXXXXXXX X. XXXXX
-----------------------------------
XXX X. XXXXX
-----------------------------------
XXXXXXX X. XXXXXXXXXXXX
-----------------------------------
XXX X. XXXXXX
-----------------------------------
XXXX X. XXXXXX
-----------------------------------
XXXXX XXXXXXX XXXXXXX XXXXXXX
-----------------------------------
XXXXX X. XXXXXX
-----------------------------------
XXXXXXX X. XXXXXXX
-----------------------------------
XXXXX X. XXXXX
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