EXECUTION COPY
STOCK PURCHASE AGREEMENT
Dated as of September 30, 1996
by and among
AMNEX, INC.
and
NATIONAL BUSINESS EXCHANGE, INC.
and
Xxxxx X. Xxxxxxxxxx,
a selling shareholder
and
Xxxxx X. Frame,
a selling shareholder
TABLE OF CONTENTS
Page
SECTION 1. Certain Definitions............................................. 1
SECTION 2. Purchase of Shares.............................................. 6
2.1. Purchase of Shares............................... 6
SECTION 3. Consideration for the Shares.................................... 6
3.1. Amount of Purchase Price......................... 6
3.2. Payment of Purchase Price........................ 6
SECTION 4. Representations and Warranties of NBE and the
Selling Shareholders............................. 7
4.1. Good Standing.................................... 7
4.2. Articles of Incorporation; By-Laws; Minute
Books............................................ 7
4.3. Authorization.................................... 8
4.4. Authorized Capitalization........................ 8
4.5. Financial Statements............................. 9
4.6. Records and Books of Account..................... 10
4.7. Liabilities...................................... 10
4.8. Tax Returns...................................... 10
4.9. Provision for Taxes.............................. 11
4.10. Title to Assets; Liens and Encumbrances............... 12
4.11. Trademarks, Service Marks, Trade Names,
Patents and Copyrights........................... 13
4.12. Insurance Policies.................................... 14
4.13. Contracts............................................. 14
4.14. Labor Relations....................................... 16
4.15. Legal Proceedings..................................... 17
4.16. Court Orders.......................................... 17
4.17. Compliance With Law; Permits and Licenses............. 17
4.18. Actions Not in Ordinary Course........................ 18
4.19. No Change............................................. 19
4.20. Accounts Receivable................................... 19
4.21. Certain Transactions.................................. 19
4.22. Employee Benefits..................................... 20
4.23. Governmental Approvals................................ 22
40860174
4.24. Investment Intent..................................... 22
4.25. Restricted Securities............................ 23
4.26. Secrecy and Noncompetition Agreements................. 24
4.27. No Omissions.......................................... 24
4.28. Shareholder and Voting Agreements..................... 25
4.29. Employees............................................. 25
SECTION 5. Representations and Warranties of Buyer......................... 25
5.1. Good Standing.................................... 25
5.2. Authorization.................................... 25
5.3. AMNEX Shares..................................... 26
5.4. Purchase for Investment.......................... 26
5.5. No Omissions..................................... 28
SECTION 6. Employment Agreements........................................... 28
SECTION 7. Consents........................................................ 28
SECTION 8. Deliveries of NBE and Selling Shareholders...................... 28
8.1. Stock Certificates..................................... 29
8.2. Opinion of Counsel..................................... 29
8.3. Closing Date Balance Sheet............................. 29
8.4. Other Deliveries....................................... 29
SECTION 9. Deliveries of Buyer on the Closing Date......................... 29
9.1. Opinion of Counsel..................................... 29
9.2. Stock Certificates..................................... 29
9.3. Other Deliveries....................................... 29
SECTION 10. Registration Rights.......................................... 29
10.1. Required Registration................................. 29
10.2. Procedure for Registration............................ 32
10.3. Piggyback Registration................................ 32
10.4. Indemnification by Buyer.............................. 34
10.5. Indemnification by the Selling Shareholders
................................................ 36
10.6. Holdback Agreement.................................... 38
SECTION 11. Moving Expenses; Billing Agreements with
LECs................................................... 38
11.1. Moving Expenses.................................. 39
11.2. Billing Agreements with LECs..................... 39
SECTION 12. Board of Directors; Voting and Lock-Up
Agreement.............................................. 39
12.1. Board of Directors.................................... 39
12.2. Voting and Lock-up Agreement.......................... 40
Page
SECTION 13. Buyer's Call Right............................................. 42
13.1. Buyer's Call Right; Valuation of Remaining
Shares............................................42
13.2. Exercise of Buyer's Call Right.........................43
13.3. Sale Event Differential................................43
SECTION 14. Indemnification................................................ 44
14.1. Indemnification by NBE and the Selling
Shareholders..................................... 44
14.2. Indemnification by Buyer.............................. 45
14.3. Procedures for Indemnification........................ 45
14.4. Escrow Agreement...................................... 46
SECTION 15. Survival of Representations; Effect of
Certificates................................................. 46
SECTION 16. No Broker; Expenses............................................ 46
SECTION 17. Notices........................................................ 47
SECTION 18. Miscellaneous.................................................. 48
18.1. Entire Agreement...................................... 48
18.2. Governing Law; Arbitration............................ 49
18.3. Benefit of Parties; Assignment........................ 50
18.4. Pronouns.............................................. 51
18.5. Headings.............................................. 51
18.6. Counterparts 51
18.7. Further Assurances.................................... 51
18.8. Good Faith and Fair Dealing............................51
AGREEMENT dated as of September 30, 1996, by and among AMNEX,
Inc., a New York corporation ("Buyer"), National Business Exchange, Inc., a
California corporation ("NBE"), Xxxxx Xxxxxxxxxx ("Xxxxxxxxxx") and Xxxxx X.
Frame ("Frame") and both Xxxxxxxxxx and Frame, each a "Selling Shareholder" and
together "Selling
Shareholders").
W I T N E S E T H:
WHEREAS, the Selling Shareholders are the owners of all the
issued and outstanding shares of capital stock of NBE ("NBE Stock"); and
WHEREAS, Buyer desires to purchase from Xxxxxxxxxx 408 shares
of NBE Stock and from Frame 220 shares of NBE Stock representing in the
aggregate 80% (the "Shares") of all of the issued and outstanding shares of NBE
Stock; and the Selling Shareholders desire to sell to Buyer, the Shares, upon
the terms and conditions and for the purchase price hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and for other good and valuable consideration set forth herein,
the parties hereto agree as follows:
SECTION 1. Certain Definitions. For purposes of this
Agreement, the following terms shall have the respective meanings set forth
below:
"Actions" mean any claims, actions, suits, proceedings and
investigations, whether at law, in equity or in admiralty or before any court,
arbitrator, arbitration panel or Governmental Authority.
"Affiliate" of a party means any Person which, directly or
indirectly, controls, is controlled by or is under common control with such
party.
"Assets" means all the assets, properties, rights and business
of NBE of every kind and description, wherever located, including, without
limitation, all property, tangible or intangible, real, personal or mixed, and
whether or not reflected on the Balance Sheet.
"Balance Sheet" means the balance sheet of NBE at July 31,
1996 referred to in paragraph 4.5 hereof.
"Business" means the existing and prospective business,
operations, facilities and other Assets, financial condition, results of
operations, finances, markets, products, competitive position, and customers and
customer relations of NBE.
"Balance Sheet Date" means July 31, 1996.
"Closing" means the closing of the transactions contemplated
hereby, which shall take place simultaneously with the execution and delivery of
this Agreement on the first above written.
"Closing Date" means the date first above written.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Contracts" mean all contracts, agreements, indentures,
licenses, leases, commitments, plans, arrangements, sales orders and purchase
orders of every kind, whether written or oral.
"Court Order" means any judgment, decree, injunction, order,
decision, directive, regulation or ruling of any Governmental Authority that is
binding on any Person or its property under Law.
"Damages" mean losses, liabilities, costs, damages, claims,
taxes and expenses (including reasonable attorneys fees and disbursements).
"Default" means (i) a material breach of or material default
under any Contract, (ii) the occurrence of an event that with the passage of
time or the giving of notice or both would constitute a material breach of or
material default under any Contract, or (iii) the occurrence of an event that
with or without the passage of time or the giving of notice or both would
give rise to a right of termination, renegotiation or acceleration under
any Contract.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder.
"GAAP" means generally accepted United States accounting
principles.
"Governmental Authority" means any agency, instrumentality,
department, commission, court, tribunal or board of any government, whether
foreign or domestic and whether national, federal, state, provincial or local.
"Laws" mean laws, statutes, rules, regulations, codes, orders,
ordinances, judgments, injunctions, decrees and policies.
"Liabilities" mean debts, liabilities, obligations,
guarantees, indemnities, duties and responsibilities of any kind and
description, whether absolute or contingent, monetary or non-monetary, direct or
indirect, known or unknown or matured or unmatured, or of any other nature.
"Licenses" means licenses, franchises, permits,
easements, rights and other authorizations.
"Lien" means any security interest, lien, mortgage, claim,
charge, pledge, restriction, equitable interest or encumbrance of any nature.
"Person" means any natural person, corporation, business
trust, joint venture, association, company, firm, partnership, or other entity
or government or Governmental Authority.
"Proprietary Right" means any trade name, trademark, service
xxxx, patent or copyright and any application for any of the foregoing.
"Registration Statement" means an appropriate shelf
registration statement pursuant to Rule 415 under the Securities Act.
"Returns" mean all returns, declarations, reports, estimates,
information returns and statements required to be filed with or supplied to any
taxing authority in connection with any Taxes.
"Sale Event" means any one of the following events: (i)
any sale or exchange of fifty percent (50%) or more of the issued
and outstanding common stock of Buyer to any Person that is not an
Affiliate of Buyer, (ii) any sale by NBE of all or substantially all of the
assets of NBE to any Person that is not an Affiliate of Buyer, (iii) any sale or
exchange of fifty percent (50%) or more of the issued and outstanding stock of
NBE on a fully diluted basis to any Person that is not an Affiliate of Buyer,
(iv) any sale of all or substantially all of the assets of Buyer to any Person
that is not an Affiliate of Buyer or, (v) with respect to either of the Selling
Shareholders, the termination of Selling Shareholder's employment by NBE
pursuant to the Employment Agreement entered into the date hereof with such
Selling Shareholder.
"Securities Act" means the Securities Act of 1933, as
amended.
"Taxes" mean all taxes, charges, fees, levies or other
assessments, including, without limitation, income, gross receipts, excise, real
and personal property, sales, transfer, license, payroll and franchise taxes,
imposed by any Governmental Authority and shall include any interest, penalties
or additions to tax attributable to any of the foregoing.
SECTION 2. Purchase of Shares.
2.1. Purchase of Shares. Based upon and subject to the terms,
agreements, warranties, representations and conditions of this Agreement, the
Selling Shareholders hereby agree to sell, convey, transfer, assign and deliver
to Buyer on the Closing Date, and Buyer hereby agrees to buy and accept on the
Closing Date, the Shares.
SECTION 3. Consideration for the Shares.
3.1. Amount of Purchase Price. The total consideration
(the "Purchase Price") to be paid by Buyer for the Shares shall be
$1,900,000.
3.2. Payment of Purchase Price.
(a) Concurrently with the execution hereof, Buyer
is paying to each of the Selling Shareholders their pro rata portion of the
Purchase Price, by the issuance and delivery by Buyer to Xxxxxxxxxx of 357,796
shares of Common Stock of Buyer, $.001 par value per share, and to Frame of
192,929 shares of Common Stock of Buyer, $.001 par value per share
(collectively, the "AMNEX Shares") . Such numbers of shares have been determined
by averaging the closing share price as reflected in the "Close" column in the
NASDAQ/Wall Street Journal Quotation of Buyer's Common Stock for the 90 trading
days preceding the date of this Agreement, as reported by the Nasdaq Stock
Market.
(b) Until such time as the AMNEX Shares are
registered under the Securities Act pursuant to Section 10 hereof, the AMNEX
Shares shall be unregistered and subject to certain trading restrictions which
shall be as set forth in Rule 144 promulgated under the Securities Act.
SECTION 4. Representations and Warranties of NBE and the
Selling Shareholders. NBE and the Selling Shareholders, jointly and severally,
hereby warrant and represent to and agree with Buyer as follows:
4.1. Good Standing. NBE is a corporation duly organized,
validly existing and in good standing under the laws of the State of California,
has full power and authority to own, lease and operate its properties and assets
and to conduct the Business as now being conducted. NBE is duly qualified or
licensed to do business as a foreign corporation, and is in good standing, in
all jurisdictions where the character of the properties it owns, leases or
operates, or the conduct of the Business, requires such qualification or
licensing, except where the failure to be so qualified would not have a material
adverse effect on the Business.
NBE does not have any subsidiaries and has not made any investments in or own
any securities of any other Person.
4.2. Articles of Incorporation; By-Laws; Minute Books. NBE has
heretofore delivered to Buyer true and complete copies of NBE's Articles of
Incorporation and By-Laws, as in effect on the date hereof. The minute books,
stock books and stock transfer records of NBE, true and complete copies of which
have been made available to Buyer, contain true and complete minutes and records
of all issuances and transfers of capital stock of NBE and of all minutes and
records of all meetings, proceedings and other actions of the shareholders,
Board of Directors and/or committees of the Board of Directors of NBE from its
date of incorporation and all such meetings, proceedings and actions have been
duly, legally and properly held or taken.
4.3. Authorization. The execution and delivery of this
Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by the Board of Directors of NBE,
and all other corporate action of NBE and the Selling Shareholders,
including all shareholder approvals, authorizations and
ratifications, necessary to authorize the execution and delivery of
this Agreement and the consummation of the transactions
contemplated hereby have been taken. This Agreement constitutes the valid and
binding obligation of NBE enforceable against it in accordance with its terms.
The execution and delivery of this Agreement by NBE and the consummation of the
transactions contemplated hereby will not (a) require the consent of any lender,
trustee or security holder of NBE, or of any other Person, (b) result in a
Default under any Contract, (c) violate any Law or Court Order or (d) require
the obtaining by NBE of any License. The Articles of Incorporation and By-Laws
of NBE do not conflict with or restrict the execution and delivery of this
Agreement by NBE or the consummation of the transactions contemplated hereby.
4.4. Authorized Capitalization. The authorized capital stock
of NBE consists solely of 10,000 shares of Common Stock, no par value, of which
785 shares of Common Stock (constituting all of the issued and outstanding
shares of such capital stock) are validly issued and outstanding, fully paid and
nonassessable, and owned beneficially and of record by the Selling Shareholders.
The Shares are owned beneficially and of record by the Selling Shareholders,
free and clear of all Liens and Buyer will receive good and marketable title to
the Shares, free and clear of all Liens. There are not outstanding any
Contracts, warrants, options
or rights (pre-emptive or otherwise) or other securities, plans or agreements
which give the holder or any other Person the right to purchase or otherwise
acquire (whether from NBE, any Selling Shareholder or Affiliate of any of them)
any NBE Shares or any securities convertible into, exchangeable or exercisable
for any NBE Shares or under which any such warrant, option, right or security
may be issued in the future. No shares of NBE Stock have been issued in
violation of any Contracts or Laws, including the Securities Act, or the
securities or blue sky laws of any country, state, territory or other
jurisdiction (whether foreign or domestic).
4.5. Financial Statements. NBE has delivered to the Buyer the
unaudited balance sheets of NBE as at July 31, 1996, together with the related
statements of income, retained earnings and cash flows for the period ended July
31, 1996, together with the notes thereto (collectively, the "Historical
Financial Statements"). The Historical Financial Statements in each case are
true and complete with respect to each item therein and have been prepared in
conformity with GAAP heretofore adopted by, and applied consistently with the
past practices of, NBE and fairly present the financial position, results of
operations and changes in financial
position of NBE as at, or for the periods ended on, such dates. Since the
Balance Sheet Date, NBE has conducted its business in a consistent manner
without change of policy or procedure, including, without limitation, its
practices in connection with the treatment of expenses, burdens, valuations of
inventory and selling and purchasing policies.
4.6. Records and Books of Account. Since the Balance
Sheet Date, the records and books of account of NBE have been
regularly kept and maintained in conformity with GAAP consistently
applied.
4.7. Liabilities. On the Balance Sheet Date, except as set
forth on Schedule 4.7 there were no Liabilities of NBE (including, but not
limited to, Liabilities for Taxes relating to any period prior to the Balance
Sheet Date) other than those Liabilities disclosed or provided for on the
Balance Sheet. On the date hereof, there are no other Liabilities of NBE except
(i) those incurred since the Balance Sheet Date, in the ordinary course of the
business of NBE, and not in violation of or in conflict with any of the terms,
agreements, warranties, representations and conditions of NBE contained in this
Agreement which do not in the aggregate exceed the liabilities set forth on the
Balance Sheet by more than $5,000, and (ii) those set forth in Schedule 4.7
hereto.
4.8. Tax Returns. NBE has timely filed (subject to
permitted extensions), or caused to be timely filed, all Returns required to be
filed by NBE, and all such Returns are complete and accurate and comply in all
respects with all applicable Laws. NBE has delivered to Buyer true and complete
copies of all Returns filed by NBE for each of its past five fiscal years ended
December 31, 1995. NBE's Returns have not been audited by the U.S. Internal
Revenue Service or any other Governmental Authority, nor is any such audit
scheduled or pending. NBE has not requested any, and there are no outstanding,
waivers or extensions of time relating to the filing of any Return. Any
deficiency assessments with respect to NBE's Returns have been paid by NBE. NBE
has not given any waivers or comparable consents to the application of the
statute of limitations to any Taxes or Returns, nor is any such waiver or
consent outstanding. There are no tax sharing or similar agreements or any other
agreements with respect to any Taxes paid or payable by NBE. NBE has not been a
member of any affiliated group as defined in Section 1504(a) of the Code
(determined without regard to the exceptions contained in Section 1504(b) of the
Code) at any time during the consistency period as defined in Section
338(h)(4) of the Code ending immediately prior to the Closing. NBE has not, at
any time, consented under Section 341(f)(1) of the Code to have the provisions
of Section 341(f)(2) of the Code apply to any sale of its stock. NBE has not
been a United States real property holding corporation within the meaning of
Section 897(c)(2) of the Code during the applicable period specified in Section
897(c)(1)(A) of the Code.
4.9. Provision for Taxes. NBE has timely paid and through the
Closing Date will have timely paid, all Taxes due and payable on or before such
date. NBE has, and through the Closing Date will have, established on its books
and records reserves that are adequate for the payment of all Taxes attributable
to any period (or portion of a period) or event occurring on or before the
Closing Date, but which are not due and payable on or before the Closing Date.
The provisions for Taxes of NBE shown on the Balance Sheet are sufficient for
the payment of all such Taxes not theretofore paid, whether or not disputed, for
the period then ended and for all periods prior thereto. The provision for
employment withholding and payroll taxes made by NBE through the Closing Date
will be adequate to pay all unpaid liabilities for such taxes through the
Closing Date and NBE has, and through the Closing Date will have, within the
time and in the manner prescribed, withheld from employees' wages and paid
over to the proper Governmental Authority all amounts required to be so
withheld and paid over under all applicable Laws.
4.10. Title to Assets; Liens and Encumbrances. NBE is the
owner of, and has good and marketable title to, all of the Assets reflected on
the Balance Sheet in the categories set forth therein and to all of the assets
acquired by NBE since the Balance Sheet Date, free and clear of all Liens except
for (a) receivables collected in the ordinary course of business of NBE since
the Balance Sheet Date, and (b) the Liens, if any, set forth on the Balance
Sheet or on Schedule 4.10 hereto (the "Permitted Liens"). NBE does not own any
real property. NBE has one lease for real property consisting of approximately
1,500 square feet of office space in Pasadena, California.
4.11. Trademarks, Service Marks, Trade Names, Patents
and Copyrights. Schedule 4.11 hereto sets forth a true and
complete list of all Proprietary Rights used by NBE in the conduct
of the Business. Each such Proprietary Right is owned by NBE and
is not subject to any license, royalty arrangement or dispute. No
other Proprietary Rights are used in or are necessary for the
conduct of the Business. To the knowledge of NBE and the Selling Shareholders,
none of such Proprietary Rights nor any trade secret, customer list or know-how
used by NBE infringes any Proprietary Right or other such right of any other
Person. To the knowledge of NBE and the Selling Shareholders, no Proprietary
Right or trade secret, customer list or know-how used by any other Person
infringes or conflicts with any Proprietary Right heretofore or presently used
by NBE. No claim has been asserted or, to NBE and the Selling Shareholders'
knowledge, threatened, by any Person with respect to the ownership, validity,
license or use of, or any infringement resulting from, any of the Proprietary
Rights used by NBE or the provision or sale of any services by NBE and, to NBE
and the Selling Shareholders' knowledge, there is no basis for any such claim.
To the knowledge of NBE and the Selling Shareholders, no trademark, service xxxx
or trade name used by NBE, infringes any trademark, service xxxx or trade name
of others in the United States of America or any other country in which such
trademark, service xxxx or trade name is used by NBE. To the knowledge of NBE
and the Selling Shareholders, no shareholder, officer, director or employee of
NBE or any Affiliate owns or has any interest in any Proprietary Rights or any
trade secret, invention or process, if any, used by NBE in connection with the
Business.
4.12. Insurance Policies. Schedule 4.12 hereto sets forth a
true and complete list and description (including face amount of policy, name of
insured, carrier, premium, expiration date and whether it is a "claims made" or
an "occurrence" policy) of all insurance policies held by NBE. True and complete
copies of all such policies have heretofore been provided by NBE to Buyer. All
such policies are in amounts customarily deemed to be adequate, and cover all
risks customarily insured against, in the type of business conducted by NBE and
all premiums due to the date hereof on such policies have been paid in full. All
pending claims, if any, made against NBE which are covered by insurance are
being defended by the appropriate insurance companies and are described on
Schedule 4.12 hereto. To the knowledge of NBE and the Selling Shareholders, NBE
has not failed to give any notice or present any claim under any such policy in
a timely fashion. Such insurance to the date hereof has, and to the Closing Date
will have, (a) been maintained in full force and effect and (b) not been
canceled or changed except to extend the maturity dates thereof. No policy of
NBE has been canceled by the issuer thereof, nor have the premiums on any such
policy been increased over the prior period.
4.13. Contracts. Schedule 4.13 hereto sets forth each of the
following Contracts to which NBE is a party or subject to or bound by: (i)
lease; (ii) royalty, distribution, agency, territorial or license agreement;
(iii) Contract (for employment or otherwise) with any present or former officer,
employee, director or shareholder (or any Affiliate of any such officer,
employee, director or shareholder) or any professional person or firm,
consultant, independent contractor or advertising firm or agency; (iv) Contract
or collective bargaining agreement with any labor union or representative of
employees; (v) Contract guaranteeing the payment or performance of the
obligations of others; (vi) Contract pursuant to which indebtedness may be
incurred; (vii) group health or life insurance, pension, profit sharing,
retirement, medical, bonus, incentive, severance, stock option or purchase plan
or other similar benefit plan in effect with respect to its employees or others;
(viii) Contract limiting the freedom of NBE to engage in any line of business or
to compete with any Person; (ix) Contract not entered into in the ordinary
course of business which involves $5,000 or more and is not cancelable without
penalty within 30 days; (x) any Contract which may have a potential adverse
impact on the Business of NBE; (xi) any shareholders' agreement, joint
venture agreement or other Contract with respect to the operation or management
of any entity; (xii) Contracts involving $5,000 or more for the purchase of, or
payment for, supplies or products or services; (xiii) Contracts involving $5,000
or more to sell or supply products or to perform services; or (xiv) any other
Contract that involves payments by or to NBE at a rate of $5,000 or more per
annum. Schedule 4.13 hereto contains a true and complete description of the
terms and conditions of each Contract to which NBE is a party or to which it is
subject or by which it is bound that involves an annualized rate of $5,000 or
more and which is not in writing. True and complete copies of all Contracts
listed on Schedule 4.13 have heretofore been made available by NBE to Buyer.
Except as set forth on Schedule 4.13, no Contract to which NBE is a party or to
which it is subject or by which it is bound will result in the realization of
less than normal profits of NBE. To the knowledge of NBE or the Selling
Shareholders, each of the Contracts to which NBE is a party or to which it is
subject or by which it is bound is a valid and subsisting Contract of all of the
parties thereto in full force and effect without modification. To the knowledge
of NBE or the Selling Shareholders, NBE has performed all obligations required
to be performed by it and is not in
Default under any Contract to which it is a party or to which it is subject or
by which it is bound. To the knowledge of NBE or the Selling Shareholders, no
other party is in Default under any such Contract.
4.14. Labor Relations. There are no labor strikes, disputes,
slow downs, work stoppages or other labor troubles or grievances pending or, to
the knowledge of NBE or the Selling Shareholders, threatened against or
involving NBE. No unfair labor practice complaint before the National Labor
Relations Board, no discharge or grievance before the Equal Employment
Opportunity Commission and no complaint, charge or grievance of any nature
before any similar or comparable state, local or foreign agency, in any case
relating to NBE or the conduct of its business is pending or, to NBE's
knowledge, threatened. NBE has not received notice, and has no knowledge, of the
intent of any Governmental Authority responsible for the enforcement of labor or
employment laws to conduct any investigation of or relating to NBE or the
conduct of its business. To the knowledge of NBE or the Selling Shareholders, no
officer or key employee of NBE has any plans to terminate his or her employment
with NBE.
4.15. Legal Proceedings. There are no Actions (whether
or not purportedly on behalf of NBE) pending or, to the knowledge of NBE and the
Selling Shareholders, threatened against or affecting NBE or any of its
properties, rights or the Business. NBE is not in default with respect to any
Court Order.
4.16. Court Orders. There are no Court Orders issued
against, or binding on, NBE which do or may affect, limit or
control the Assets or NBE's method or manner of doing Business.
4.17. Compliance With Law; Permits and Licenses.
(a) To the knowledge of NBE and the Selling
Shareholders, NBE has complied and is in compliance with all Court Orders and
Laws of any Governmental Authority applicable to NBE, its assets or property or
its Business, including, without limitation, Laws relating to zoning, building
codes, antitrust, occupational safety and health, environmental protection and
conservation, water or air pollution, toxic and hazardous waste and substances
control, consumer product safety, product liability, hiring, wages, hours,
employee benefit plans and programs, collective bargaining and withholding and
social security taxes.
(b) NBE holds all the Licenses which are necessary for or
material to its use, occupancy or operation of the Assets or the conduct of the
Business; and no notice of violation of any
applicable zoning regulation, ordinance or other similar Law binding on NBE with
respect to the Assets or the Business has been received.
4.18. Actions Not in Ordinary Course. Except as set forth on
Schedule 4.18 hereto, since the Balance Sheet Date NBE has not, and prior to the
Closing Date NBE will not have, (i) incurred any Liability, except current
liabilities in the ordinary course of business and Liabilities incurred under
Contracts entered into in the ordinary course of business; (ii) discharged or
satisfied any Lien or paid any Liability, other than current liabilities shown
on the Balance Sheet and current liabilities incurred since the Balance Sheet
Date in the ordinary course of business; (iii) sold or transferred any assets or
written off any receivables, except for the collection of receivables in the
ordinary course of business; (iv) mortgaged, pledged or subjected to any other
Lien any of its assets or properties, other than Permitted Liens; (v) suffered
any losses or waived any rights of substantial value; (vi) except in the
ordinary course of business, granted any bonuses or commissions or increased the
compensation payable to any of its employees, directors or officers or increased
the aggregate payment of any fees; (vii) made any loans to any Persons; (viii)
declared,
made, set aside or paid any dividend, distribution, or payment on, or any
purchase or redemption of, any shares of any class of its capital stock, or any
commitment therefor; (ix) made any change in any method of accounting or
auditing practice; or (x) entered into any transaction not in the ordinary
course of business or agreed (whether or not in writing) to do any of the
foregoing. From the Balance Sheet Date to the Closing Date, the business of NBE
has been and will have been operated only in the regular and ordinary course.
4.19. No Change. Since the Balance Sheet Date, there has not
been (i) any material adverse change (whether or not in the ordinary course of
business) in the Business, Assets or Liabilities of NBE as reflected on the
Balance Sheet or (ii) any damage, destruction or loss affecting the Business,
Assets, properties or rights of NBE.
4.20. Accounts Receivable. All of the accounts
receivable of NBE are actual and bona fide receivables representing
obligations for the total dollar amount thereof shown on the books
of NBE which resulted from the ordinary course of the business of
NBE. To the knowledge of NBE and the Selling Shareholders, such
receivables (net of the reserve for doubtful accounts shown on the
Balance Sheet) will be collected in full in accordance with their terms without
being subject to any recoupments, set-offs or counterclaims. No accounts
receivable have been written off since the Balance Sheet Date.
4.21. Certain Transactions. There are no sums owed to NBE,
however evidenced or denominated, by any of its present or former directors,
officers, shareholders or Affiliates. No director or officer of NBE, nor any
member of his or her immediate family or any other of his or her Affiliates,
owns or has a 10% or more ownership interest in any Person that is or was during
the last three years a party to, or in any property which is or was during the
last three years the subject of, any material Contract, business arrangement or
relationship with NBE.
4.22. Employee Benefits.
(a) Except for those plans set forth on Schedule 4.22A hereto
(the "Plans"), NBE does not maintain or contribute to any "employee benefit
plan," as that term is defined in Section 3(3) of ERISA, whether or not such
plan has been terminated.
(b) True and complete copies of all the documents embodying
the Plans, including, without limitation, the plan and trust instruments and
insurance, group annuity and other Contracts
pertaining thereto and any actuarial reports obtained with respect to any Plan,
as well as the books and records of the Plans, have been furnished to Buyer.
Each Plan which is intended to comply with Section 401(a) of the Code and each
trust related thereto is, to the knowledge of NBE and the Selling Shareholders,
qualified and exempt within the meaning of Sections 401 and 501 of the Code,
respectively, and a determination letter has been received from the Internal
Revenue Service with respect to each such Plan stating that such Plan and its
related trust are qualified and exempt within the meaning of Sections 401 and
501 of the Code, respectively, and a copy of each such determination letter has
been furnished to Buyer. There has been (i) no change in any of the documents
delivered to Buyer under which each Plan is maintained and (ii) no change, since
each Plan's most recent valuation date, in the operation of the Plan which could
be expected to materially adversely affect or alter the tax status of, or
materially increase the cost of maintaining, any such Plan.
(c) With respect to the Plans, the reporting and disclosure
requirements of ERISA and the Code, as applicable, and the group health plan
continuation coverage requirements of Section 4980B of the Code and Part 6 of
Title I of ERISA, have been
fulfilled in all material respects and NBE has furnished to Buyer copies of all
filings with the Internal Revenue Service and the Department of Labor or other
applicable Governmental Authority for each Plan's most recent plan year. NBE has
never sponsored a Plan which is subject to Section 412 of the Code or Part 3 of
Title I of ERISA.
(d) Neither NBE, the Plans, any of the trusts created
thereunder, nor any trustee, administrator or other fiduciary thereof, has
engaged in a "prohibited transaction" as such term is defined in Section 4975 of
the Code or Section 406 of ERISA or otherwise taken or omitted any action which
could subject the Plans, NBE, any of the trusts created thereunder or any
trustee or administrator thereof, or any party dealing with such Plans or
trusts, to a material Tax, penalty or other Liability resulting from any
prohibited transactions under Section 406 of ERISA or Section 4975 of the Code
or otherwise, and neither NBE, any Plan, any trust created thereunder nor any
other fiduciary (within the meaning of Section 3(21) of ERISA) of any Plan or
its attendant trust has breached its fiduciary duties under Title I of ERISA in
a manner which could result in a material direct or indirect liability to NBE or
the trustee or administrator of any Plan.
(e) Neither NBE nor any other "trade or business (whether or
not incorporated) which is under common control" (as such term is defined in
Section 4001 of ERISA and the regulations promulgated thereunder) with NBE has
ever (i) terminated a Plan subject to Title IV of ERISA or (ii) contributed to
any "multiemployer plan," as such term is defined in Section 3(37) of ERISA, and
neither NBE nor any such "trade or business" has effected either a "complete
withdrawal" or a "partial withdrawal," as those terms are defined in Sections
4203 and 4205, respectively, of ERISA, from any such multiemployer plan.
(f) NBE does not maintain or contribute to any "employee
welfare benefit plan" (as such term is defined in Section 3(1) of ERISA), or
other employee benefit plan or arrangement, relating to post-employment or
retirement benefits (other than an "employee pension benefit plan," as such term
is defined in Section 3(2) of ERISA).
4.23. Governmental Approvals. No governmental
authorization, approval, order, license, permit, franchise, or
consent and no registration, declaration or filing by NBE with any
Governmental Authority (including, without limitation, any filing
or registration pursuant to the Securities Act or the securities or
blue sky laws of any state or territory) is required in connection with the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby.
4.24. Investment Intent. The Selling Stockholders are
acquiring the AMNEX Shares for their own account and not with a present view to,
or for sale in connection with, any distribution thereof in violation of the
Securities Act. Seller consents to the placement of the following legend on each
certificate representing the AMNEX Shares and acknowledges that stop transfer
instructions will be placed with respect thereto:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE
TRANSFERRED OR SOLD UNLESS (i) A REGISTRATION STATEMENT UNDER
SUCH ACT IS THEN IN EFFECT WITH RESPECT THERETO, (ii) A
WRITTEN OPINION FROM COUNSEL FOR THE ISSUER OR OTHER COUNSEL
FOR THE HOLDER REASONABLY ACCEPTABLE TO THE ISSUER HAS BEEN
OBTAINED TO THE EFFECT THAT NO SUCH REGISTRATION IS REQUIRED
OR (iii) A 'NO ACTION' LETTER OR ITS THEN EQUIVALENT HAS BEEN
ISSUED BY THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION
WITH RESPECT TO SUCH TRANSFER OR SALE."
4.25. Restricted Securities. The Selling
Shareholders understand that the AMNEX Shares will not be
registered when issued and delivered to the Selling Shareholders
under the Securities Act for the reason that the sale provided for in this
Agreement is exempt pursuant to Section 4 of the Securities Act and that the
reliance of Buyer on such exemption is predicated in part on the Selling
Shareholders' representations set forth herein. Each of the Selling Shareholders
represents that he is experienced in evaluating companies such as Buyer, is able
to fend for himself, has such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of his investment,
and has the ability to suffer the total loss of his investment. Each of the
Selling Shareholders further represents that Buyer has furnished him with
Buyer's Annual Report on Form 10-K for the year ended December 31, 1995 and
subsequent reports on Form 10-Q and 8-K and that each such Selling Shareholder
has reviewed the same and has been afforded the opportunity to obtain such other
information as he has deemed necessary to evaluate his investment in AMNEX
Shares, ask questions of and receive answers from Buyer and to obtain additional
information (to the extent Buyer possessed such information or could acquire it
without unreasonable effort or expense) necessary to verify the accuracy of any
information furnished to him or to which he had access.
The Selling Shareholders understand that the AMNEX Shares may
not be sold, transferred or otherwise disposed of without registration under the
Securities Act or an exemption therefrom and that in the absence of an effective
registration statement covering the Shares or an available exemption from
registration under the Securities Act, the AMNEX Shares must be held
indefinitely.
4.26. Secrecy and Noncompetition Agreements. NBE has entered
into secrecy and noncompetition agreements in a form satisfactory to AMNEX with
the employees listed on Schedule 4.26, which persons are all of the persons with
whom NBE has entered into such agreements. To the knowledge of NBE and the
Selling Shareholders, no employee is subject to any secrecy or noncompetition
agreement with anyone other than NBE.
4.27. No Omissions. NBE and the Selling Shareholders do not
know of any facts or circumstances not disclosed to Buyer which indicate that
the Assets may be materially adversely affected or which otherwise should be
disclosed to Buyer in order to make any of the representations or warranties
made herein on the part of NBE and the Selling Shareholders not misleading in
any material respect. To the knowledge of NBE and the Selling Shareholders, no
representation or warranty by NBE and the Selling Shareholders
contained in this Agreement, and no statement contained in any Schedule,
Exhibit, certificate or other instrument furnished to Buyer under or in
connection with this Agreement, contains any untrue statement of any material
fact, or omits to state any material fact necessary in order to make the
statements contained herein or therein not misleading in any material respect.
4.28. Shareholder and Voting Agreements. There are no
shareholder or voting agreements with respect to any shares of NBE
Stock to which either of the Selling Shareholders is a party.
4.29. Employees. NBE has six full-time employees and one
part-time employee as of the date hereof.
SECTION 5. Representations and Warranties of Buyer.
Buyer warrants and represents to and agrees with NBE and the
Selling Shareholders as follows:
5.1. Good Standing. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of
New York.
5.2. Authorization. The execution and delivery of this
Agreement and the Note and the consummation of the transactions
contemplated hereby have been duly authorized by the Board of
Directors of Buyer, and all other corporate action of Buyer,
including all shareholder approvals, authorizations and ratifications, necessary
to authorize the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been taken. This Agreement
constitutes a binding obligation of Buyer, enforceable against Buyer in
accordance with its terms. The execution and delivery of this Agreement by the
Buyer and the consummation of the transactions contemplated hereby will not (a)
require the consent of any lender, trustee or security holder of Buyer or of any
other Person, (b) result in a Default under any Contract, (c) violate any Law or
Court Order or (d) require the obtaining by the Buyer of any License. The
Articles of Incorporation and By-Laws of Buyer do not conflict with or restrict
the execution and delivery of this Agreement by the Buyer or the consummation of
the transactions contemplated hereby.
5.3. AMNEX Shares. The AMNEX Shares to be issued pursuant to
this Agreement, when so issued, will be duly and validly authorized and issued,
fully paid and nonassessable and will be free and clear of any Liens created by
the Buyer (other than restrictions arising under the Securities Act and state
securities laws).
5.4. Purchase for Investment. Buyer is acquiring the Shares
solely for its own account for investment and not with a view to or for the
distribution thereof in violation of the Securities Act. Buyer acknowledges that
the Shares are not registered under the Securities Act, and that such Shares may
not be transferred or sold except pursuant to the registration provisions of the
Securities Act or pursuant to an applicable exemption therefrom. Buyer
understands that the Shares will not be registered at the Closing Date under the
Securities Act for the reason that the sale provided for in this Agreement is
exempt pursuant to Section 4 of the Securities Act and that the reliance of NBE
and the Selling Shareholders on such exemption is predicated in part on Buyer's
representations set forth herein. Buyer represents that it is experienced in
evaluating companies such as NBE, is able to fend for itself, has such knowledge
and experience in financial and business matters as to be capable of evaluating
the merits and risks of its investment, and has the ability to suffer the total
loss of its investment. Buyer further represents that it has had access during
the course of the transaction and prior to its acquisition of the Shares to such
information relating to NBE as it has desired and that it has had the
opportunity to ask
questions of and receive answers from NBE concerning the transaction and to
obtain additional information (to the extent NBE possessed such information or
could acquire it without unreasonable effort or expense) necessary to verify the
accuracy of any information furnished to it or to which it had access.
Buyer understands that the Shares may not be sold, transferred
or otherwise disposed of without registration under the Securities Act or an
exemption therefrom and that in the absence of an effective registration
statement covering the Shares or an available exemption from registration under
the Securities Act, the Shares must be held indefinitely.
5.5. No Omissions. Buyer does not know of any facts or
circumstances not disclosed to NBE and the Selling Shareholders which should be
disclosed to NBE and the Selling Shareholders in order to make any of the
representations or warranties made herein on the part of the Buyer not
misleading in any material respect. To the knowledge of the Buyer, no
representation or warranty by Buyer contained in this Agreement, and no
statement contained in any Schedule, Exhibit, certificate or other instrument
furnished to NBE and the Selling Shareholders under or in connection with this
Agreement, contains any untrue statement of any material fact, or
omits to state any material fact necessary in order to make the statements
contained herein or therein not misleading in any material respect.
SECTION 6. Employment Agreements. Xxxxxxxxxx and Frame have
entered into an employment agreement with NBE, such agreements to be in the form
of Exhibits 6.1 and 6.2 hereto containing non-competition and non-solicitation
agreements.
SECTION 7. Consents. Simultaneously with execution and
delivery of this Agreement, any and all consents required to be obtained by NBE
in connection with the transactions contemplated by this Agreement have been
obtained and are set forth on Schedule 7 hereto.
SECTION 8. Deliveries of NBE and Selling Shareholders. NBE and
the Selling Shareholders agree on the Closing Date to deliver to Buyer the
following:
8.1. Stock Certificates. Stock certificates registered
in the name of Buyer representing the Shares purchased by Buyer
hereunder.
8.2. Opinion of Counsel. An opinion of X. Xxxxxx Xxxx,
Esq., counsel for NBE and the Selling Shareholders, dated as of the
Closing Date, substantially in the form set forth as Exhibit 8.2 hereto.
8.3. Closing Date Balance Sheet. An unaudited balance
sheet dated as of the Closing Date.
8.4. Other Deliveries. Such other documents or
instruments as Buyer or its counsel may reasonably request.
SECTION 9. Deliveries of Buyer on the Closing Date.
Buyer agrees on the Closing Date to deliver to NBE and the Selling
Shareholders, as applicable, the following:
9.1. Opinion of Counsel. An opinion of Stroock &
Stroock & Xxxxx, counsel for Buyer, dated as of the Closing Date,
substantially in the form of Exhibit 9.1 hereto.
9.2. Stock Certificates. Certificates representing the
AMNEX Shares acquired by the Selling Shareholders pursuant to
paragraph 3.1 hereof.
9.3. Other Deliveries. Such other documents or
instruments as NBE or the Selling Shareholders and their counsel
may reasonably request.
SECTION 10. Registration Rights.
10.1. Required Registration. For purposes of this
Section 10.1 only, the term "Registrable Shares" shall mean the AMNEX Shares
acquired pursuant to this Agreement, provided,
however, that if such shares of AMNEX Shares owned by the Selling Shareholders
may be sold, in the opinion of counsel to Buyer, pursuant to an exemption from
the registration requirements of the Securities Act, including, without
limitation, pursuant to Rule 144 under the Securities Act, such shares shall not
be deemed to be Registrable Shares. Subject to clause (b) below (i) Buyer shall
use its reasonable best efforts to cause a Registration Statement covering
115,943 Registrable Shares (the "First Shares") to be filed with the Commission
on or prior to March 31, 1997 (the "First Date") and to become effective as soon
as reasonably practicable and to remain effective until the completion of the
distribution of the Registrable Shares to be offered or sold, but in any case
not longer than such period as is required for the intended method of
distribution, or such shorter period which will terminate when all Registrable
Shares covered by such Registration Statement have been sold or withdrawn, (ii)
Buyer shall use its reasonable best efforts to cause a Registration Statement
covering 217,391 Shares (the "Second Shares") plus, to the extent not already
sold or currently registered under a Registration Statement, the First Shares,
to be filed with the Commission on or prior to September 30, 1997 (the "Second
Date") and to become effective as soon as reasonably
practicable and to remain effective until the completion of the distribution of
the Registrable Shares to be offered or sold, but in any case not longer than
such period as is required for the intended method of distribution, or such
shorter period which will terminate when all AMNEX Shares covered by such
Registration Statement have been sold or withdrawn, and (iii) Buyer shall use
its reasonable best efforts to cause a Registration Statement covering 217,391
Registrable Shares plus, to the extent not already sold or currently registered
under a Registration Statement, the First Shares and Second Shares, to be filed
with the Commission on or prior to September 30, 1998 and to become effective as
soon as reasonably practicable and to remain effective until the completion of
the distribution of the Registrable Shares to be offered or sold, but in any
case not longer than such period as is required for the intended method of
distribution, or such shorter period which will terminate when all AMNEX Shares
covered by such Registration Statement have been sold or withdrawn.
(b) If Milestone 1 as set forth on schedule 10.1 hereto has
not been achieved by the First Date, the First Shares shall not be registered
until the Second Date and, provided, further, that if Milestone 1 and Milestone
2 have been completed by June 30, 1997
(the "Early Milestone Date"), Buyer shall use its reasonable best efforts to
cause a Registration Statement covering the First Shares and Second Shares to be
filed with the Commission on or prior to 30 days following the Early Milestone
Date.
(c) Buyer shall bear all of the Costs and Expenses of such
Registration Statements. Buyer shall not be required to file any of the
foregoing Registration Statements during any period in which another
registration statement (other than on Form S-4 or Form S-8 or any successor
forms thereto) shall have been filed by Buyer and not withdrawn or has been
declared effective within the prior 90 days.
10.2. Procedure for Registration. In connection with the
filing of a Registration Statement pursuant to Section 10.1 hereof, Buyer shall
use its reasonable best efforts to qualify, as soon as reasonably practicable,
the Registrable Shares being registered for sale under the securities or
blue-sky laws of such states and jurisdictions within the United States as shall
be reasonably requested by the Selling Shareholders; provided, however, that
Buyer shall not be required in connection therewith or as a condition thereto to
qualify to do business, to become subject to taxation or to file a consent to
service of process generally in any of the aforesaid states or jurisdictions.
10.3. Piggyback Registration. If at any time Buyer
shall propose the filing of a registration statement on an appropriate form
under the Securities Act of any securities of Buyer, otherwise than pursuant to
Section 10.1 hereof and other than a registration statement on Forms S-8 or S-4
or any equivalent form then in effect, and, provided, further, that the Selling
Shareholders have Registrable Shares which are required to be registered
pursuant to Section 10.1 hereof, then Buyer shall give each of the Selling
Shareholders notice of such proposed registration and shall include in any
registration statement relating to such securities all or a portion of the
Registrable Shares then owned by such Selling Shareholders, which such Selling
Shareholders shall request, by notice given by such Selling Shareholders to
Buyer within 15 days after the giving of such notice by Buyer, to be so
included; provided, however, the number of Registrable shares owned by a Selling
Shareholder to be included shall not exceed that percentage of the Registrable
Shares as would equal the percentage obtained by dividing the number of
Registrable Shares actually issued to such Selling Shareholder by the number of
shares of AMNEX Common Stock then outstanding, calculated on a
fully diluted basis to be registered as part of such offering. For example, if
Buyer has 30,000,000 shares of AMNEX Common Stock outstanding, calculated on a
fully diluted basis, and a Selling Shareholder has 3,000,000 Registrable Shares
(10%) and Buyer intends to register 3,000,000 shares of AMNEX Common Stock
(10%), then such Selling Shareholder shall have the right to piggyback 300,000
Registrable Shares (10% of the newly registered shares of common stock). In the
event of the inclusion of Registrable Shares pursuant to this Section 10.3,
Buyer shall bear all of the Costs and Expenses of such registration. In the
event the distribution of securities of Buyer covered by a Registration
Statement referred to in this Section 10.3 is to be underwritten, then Buyer's
obligation to include Registrable Shares in such Registration Statement shall be
subject, at the option of Buyer, to the following further conditions:
(a) The distribution for the account of the Selling
Shareholders shall be underwritten by the same underwriters who are underwriting
the distribution of the securities for the account of Buyer and/or any other
persons whose securities are covered by such Registration Statement, and the
Selling Shareholders will enter into an agreement with such underwriters
containing customary provisions;
(b) If the underwriting agreement entered into with
the aforesaid underwriters contains restrictions upon the sale of securities of
Buyer, other than the securities which are to be included in the proposed
distribution, for a period not exceeding 180 days from the effective date of the
Registration Statement, then such restrictions will be binding upon the Selling
Shareholders and, if requested by Buyer, the Selling Shareholders will enter
into a written agreement to that effect; and
(c) If the underwriters advise Buyer that they are
unwilling to include any or all of the Selling Shareholders' securities in the
proposed underwriting because such inclusion will interfere with the orderly
sale and distribution of the securities being offered by Buyer, then the number
of the Selling Shareholders' securities to be included will be reduced pro rata
on the basis of the number of shares owned by each of the Selling Shareholders,
or there will be no inclusion of the Selling Shareholders' securities in the
registration statement and proposed distribution, in accordance with such
statement by the underwriters.
10.4. Indemnification by Buyer. Buyer will indemnify
and hold harmless the Selling Shareholders and any underwriter (as defined in
the Securities Act) (but, in the case of an underwriter, only if such
underwriter indemnifies the persons mentioned in subdivision (b) of Section 10.5
hereof in the manner set forth therein), against any losses, claims, damages or
liabilities, joint or several, to which the Selling Shareholders or any such
underwriter becomes subject, under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof) are
caused by any untrue statement or alleged untrue statement of any material fact
contained in any preliminary prospectus (if used prior to the effective date of
the Registration Statement), or contained, on the effective date thereof, in any
Registration Statement under which AMNEX Shares were registered under the
Securities Act, the prospectus contained therein, or any amendment or supplement
thereto, or arising out of or based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading; and Buyer will reimburse the Selling
Shareholders and any such underwriter for any legal or other expenses reasonably
incurred by the Selling Shareholders, or underwriter in connection with
investigating or defending any such
loss, claim, damage, liability or action; provided, however, that Buyer will not
be liable to any such persons in any such case to the extent that any such loss,
claim, damage, liability or action arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with information furnished to Buyer in writing
by such person expressly for inclusion in any of the foregoing documents;
provided, further, however, that the foregoing indemnity agreement is subject to
the condition that, insofar as it relates to any untrue statement, alleged
untrue statement, omission or alleged omission made in any preliminary
prospectus but eliminated or remedied in the final prospectus (filed pursuant to
Rule 424 of the Securities Act), such indemnity agreement shall not inure to the
benefit of the Selling Shareholders and underwriter, broker or other person
acting on behalf of the Selling Shareholders and each other person, if any, who
controls any of the foregoing persons within the meaning of the Securities Act
from whom the person asserting any loss, claim, damage, liability or expense
purchased the AMNEX Shares which are the subject thereof, if a copy of such
final prospectus had been made available to such person and the Selling
Shareholders, underwriter, broker or other person
acting on behalf of the Selling Shareholders and such final prospectus was not
delivered to such person with or prior to the written confirmation of the sale
of such AMNEX Shares.
10.5. Indemnification by the Selling Shareholders. The
Selling Shareholders shall:
(a) Furnish in writing all information to Buyer
concerning itself and its holdings of securities of Buyer as shall be
required in connection with the preparation and filing of any
Registration Statement covering any AMNEX Shares; and
(b) Indemnify and hold harmless Buyer, each of its
directors, each of its officers who has signed a Registration
Statement, each person, if any, who controls Buyer within the meaning
of the Securities Act and any underwriter (as defined in the Securities
Act) for Buyer, against any losses, claims, damages or liabilities to
which Buyer or any such director, officer, controlling person or
underwriter may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) are caused by any untrue or alleged untrue statement
of any material fact contained in any preliminary prospectus (if used
prior to the effective date of the Registration Statement) or contained
on the effective date thereof, in any Registration Statement under
which AMNEX Shares were registered under the Securities Act, the
prospectus contained therein, or any amendment or supplement thereto,
or arising out of or based upon the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; in each case
to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in
reliance upon and in conformity with information furnished in writing
to Buyer by the Selling Shareholders expressly for inclusion in any of
the foregoing documents, and the Selling Shareholders shall reimburse
Buyer and any such underwriter, officer, director or controlling person
for any legal or other expenses reasonably incurred by the Selling
Shareholders or any such director, officer or controlling person in
connection with investigating or defending any such loss, claim,
damage, liability or action. Notwithstanding the foregoing provisions
of this Section 10.5, the Selling Shareholders shall not be required to
indemnify Buyer or any such underwriter, officer, director or
controlling persons for any amount in excess of the amount of the
proceeds received by the Selling Shareholders.
10.6. Holdback Agreement. If Buyer at any time shall register
shares of stock under the Securities Act (including any registration pursuant to
Sections 10.1 or 10.3) for sale to the public (other than on Form S-4 or Form
S-8 promulgated under the Securities Act or any successor forms thereto), the
Selling Shareholders shall not sell publicly, make any short sale of, grant
publicly any option for the purchase of, or otherwise dispose publicly of, any
AMNEX Shares (other than those AMNEX Shares included in such registration
pursuant to Sections 10.1 or 10.3) without the prior written consent of Buyer
for a period designated by Buyer in writing to the Selling Shareholders, which
period shall begin not more than 10 days prior to the effectiveness of the
registration statement pursuant to which such public offering shall be made and
shall not last more than 90 days after the effective date of such registration
statement. Buyer shall obtain the agreement of any person permitted to sell
shares of stock in a registration to be bound by and to comply with this Section
10.6 as if such person was a stockholder hereunder.
SECTION 11. Moving Expenses; Billing Agreements with LECs. The
parties agree that the headquarters of NBE shall be relocated from Pasadena,
California to Austin, Texas (the "Relocation") as promptly as practicable.
11.1. Moving Expenses. In order to provide for funding such
Relocation, Buyer agrees to make a capital contribution to NBE to cover (i)
reasonable moving expenses of NBE and (ii) reasonable moving expenses of NBE's
employees; provided, however, that the moving expenses for each employee shall
not exceed $15,000 and the moving expenses of NBE, including the moving expenses
for each employee, shall not exceed $100,000 in the aggregate.
11.2. Billing Agreements with LECs. NBE will proceed to
acquire billing and collection contracts from those LECs where the cost of such
agreements is justified in relation to the needs of NBE except that NBE will not
acquire any such LEC contract without the prior written consent of the Board of
Directors of NBE, including the affirmative vote of at least one of Buyer's
Appointees.
SECTION 12. Board of Directors; Voting and Lock-Up
Agreement.
12.1. Board of Directors. Upon consummation of this Agreement,
the Board of Directors shall consist of 5 persons: Xxxxx Xxxx, Xxx X. Xxxxx and
Xxxx Xxxx or such other persons as are nominated from time to time by Buyer
(collectively, the "Buyer's Appointees") shall be appointed to the Board of
Directors of NBE, and the Board of Directors of NBE shall consist of Buyer's
Appointees, Xxxxxxxxxx and Frame and the parties agree to vote their shares of
NBE Stock for Buyer's Appointees, Xxxxxxxxxx and Frame for so long as Xxxxxxxxxx
and Frame continue to own shares of NBE Stock.
12.2. Voting and Lock-up Agreement. (a) Each Selling
Shareholder agrees that, except as otherwise provided in this
Agreement, such Selling Shareholder shall not, directly or
indirectly, sell, assign, transfer, convey, give, bequeath,
hypothecate, grant a security interest in, otherwise encumber, make
a short sale of, loan, grant any option for the purchase of, or
otherwise dispose of, voluntarily or involuntarily, the shares NBE
Stock held by such Selling Shareholder and any such transfer or
attempted transfer shall be void; provided, however, that all
provisions of this Section 12.2 shall terminate immediately in the
event of such Selling Shareholder's death. Each Selling
Shareholder further agrees that in the event that NBE or any successor entity
declares a dividend or makes a distribution on NBE Stock payable in securities
or subdivides or reclassifies the NBE Stock or reorganizes, consolidates, or
merges with or into any other legal entity, then any securities issued to the
Selling Shareholder as a result of any such event shall be subject to this
Section 12.2 and shall be deemed to be such Selling Stockholder's NBE Stock.
(b) Each Selling Shareholder hereby appoints Buyer as his
proxy to exercise in person or by his nominees or proxies, the right to vote,
such Selling Shareholder's shares of NBE Stock in favor of Buyer's Appointees to
the Board of Directors of NBE. This appointment of Buyer as proxy hereunder is
irrevocable and coupled with an interest and shall survive until the earlier of:
(a) such Selling Shareholder's death or (b) the acquisition by Buyer of shares
of all of the issued and outstanding shares of NBE Stock as provided in this
Agreement. Such Selling Shareholder agrees that Buyer shall not be liable to the
Selling Shareholder for the consequences of any vote cast, or consent given, by
it, or any other action taken or omitted to be taken by it in its capacity as a
shareholder of an issuer of securities to which this Section 12.2
applies. The provisions of this Section 12.2 shall be binding on any
transferee(s) of such NBE Stock except for the shares of NBE Stock sold in
compliance with Section 10 shall be sold free and clear of the proxy granted
pursuant to this Section 12.2.
Each certificate representing securities, to which this
Section 12.2 applies, shall conspicuously bear a legend in substantially the
following form:
"The transfer of the common stock represented by this certificate is
restricted under and subject to the terms of an agreement to which the
Corporation is a party, as such agreement may be amended, supplemented,
or otherwise modified from time to time (the "Agreement"). A copy of
the Agreement is on file at the Corporation's office. The owner of this
certificate has appointed AMNEX, Inc. as his proxy to vote the shares
represented by this certificate for nomination of directors of the
Corporation. This appointment is binding on transferees. The holder of
this stock certificate, by his acceptance hereof, agrees to be bound by
all of the provisions of the Agreement."
On the Closing Date, each Selling Shareholder shall present to
the Secretary of NBE each of his certificates of shares
of NBE Stock to which this Section 12.2 applies and the Secretary shall affix
such legend thereto.
SECTION 13. Buyer's Call Right.
13.1. Buyer's Call Right; Valuation of Remaining Shares.
Subject to this Section 13, Buyer has the right (the "Buyer's Call Right"), but
not the obligation, to acquire or cause its designee to acquire all of the
issued and outstanding shares of NBE Stock held by a Selling Shareholder or his
heirs or personal representatives (the "Remaining Shares") upon the occurrence
of a Sale Event with respect to such Selling Shareholder. The value of the
Remaining Shares will be determined as follows: (a) if a Sale Event occurs
pursuant to either clause (ii) or (iii) under the definition of Sale Event, then
the value shall be based on a pro rata distribution after deducting from the
gross price to be received by NBE in such sale all capital investments
subsequent to the date hereof by Buyer in NBE, or (b) if a Sale Event occurs
pursuant to clause (i), (iv) or (v) under the definition of Sale Event, then an
independent appraiser shall be selected by mutual agreement of Selling
Shareholders, or their respective heirs or personal representatives, as the case
may be, and Buyer to establish a value of the Remaining Shares. If an
independent
appraiser cannot be agreed upon by Buyer and Selling Shareholders, or their
respective heirs or personal representatives, as the case may be, within 30 days
of written notice or if Buyer and Selling Shareholders, or their respective
heirs or personal representatives, as the case may be, disagree with the
appraisal then the parties shall submit the issue to binding arbitration. The
findings of the arbitrator shall be final and binding on all parties, including
their heirs and personal representatives.
13.2. Exercise of Buyer's Call Right. The Buyer's Call Right
may be exercised in whole but not in part by Buyer delivering to each Selling
Shareholder a notice of exercise of the Buyer's Call Right duly signed by the
Buyer. The Selling Shareholders shall receive as consideration for their
Remaining Shares the valuation determined pursuant to Section 13.1. Payment for
the Remaining Shares pursuant to any exercise of the Buyer's Call Right shall be
made by Buyer in cash or by check payable to the order of each of the Selling
Shareholders for their respective Remaining Shares, upon the latter to occur of
(i) receipt by NBE or AMNEX of the consideration from the Sale Event and (ii)
determination of the value of the remaining Shares pursuant to Section 13.1.
13.3. Sale Event Differential. Buyer shall pay to a
Selling Shareholder a Sale Event Differential (as defined below) in the event
that such Selling Shareholder's Remaining Shares have been acquired pursuant to
Section 13.1 as a result of a Sale Event pursuant to clause (v) under the
definition of Sale Event, and within twelve months following the acquisition of
such Selling Shareholder's Remaining Shares a letter of intent in connection
with a Sale Event (other than pursuant to clause (v) under the definition of
Sale Event) has been entered into by Buyer or NBE. "Sale Event Differential"
means the amount, if any, by which (i) an amount calculated to be such Selling
Shareholder's pro rata distribution of the amount that would have been received
by such Selling Shareholder, if such Selling Shareholder had held such Remaining
Shares until consummation of such Sale Event (other than pursuant to clause (v)
under the definition of Sale Event) exceeds the amount received by the Selling
Shareholder upon acquisition of his Remaining Shares. In the event of a Sale
Event, the Sale Event Differential shall be paid to the Remaining Shareholder
promptly following the consummation of the Sale Event.
SECTION 14. Indemnification.
14.1. Indemnification by NBE and the Selling
Shareholders. From and after the Closing, NBE and the Selling Shareholders
jointly and severally agree to indemnify Buyer against and hold it harmless from
any and all Damages which Buyer may sustain at any time by reason of (i) the
breach or inaccuracy of or failure to comply with, or the existence of any facts
resulting in the inaccuracy of, any of the warranties, representations,
conditions, covenants or agreements of NBE and the Selling Shareholders
contained in this Agreement or in any agreement or document delivered pursuant
hereto or in connection herewith, or arising out of the consummation of the
transactions contemplated hereby or (ii) any claim by a third party alleging
that this Agreement or the transactions contemplated herein interfere with or
violate any rights between such third party and NBE.
14.2. Indemnification by Buyer. From and after the Closing,
Buyer agrees to indemnify and hold each of the Selling Shareholders harmless
from and against any and all Damages which either of the Selling Shareholders
may sustain at any time by reason of the breach or inaccuracy of or failure to
comply with any warranties, representations, conditions, covenants or agreements
of Buyer contained in this Agreement or in any agreement, certificate or
document delivered pursuant to or in connection with this Agreement or arising
out of the closing of the transactions contemplated hereby.
14.3. Procedures for Indemnification. In the event that any
claim is asserted against any party hereto, or any party hereto is made a party
defendant in any action or proceeding, and such claim, action or proceeding
involves a matter which is the subject of this indemnification, then such party
(an "Indemnified Party") shall give written notice to the other party hereto
(the "Indemnifying Party") of such claim, action or proceeding, and such
Indemnifying Party shall have the right to join in the defense of said claim,
action or proceeding at such Indemnifying Party's own cost and expense and, if
the Indemnifying Party agrees in writing to be bound by and to promptly pay the
full amount of any final judgment from which no further appeal may be taken and
if the Indemnified Party is reasonably assured of the Indemnifying Party's
ability to satisfy such agreement, then at the option of the Indemnifying Party,
such Indemnifying Party may take over the defense of such claim, action or
proceeding, except that, in such case, the Indemnified Party shall have the
right to join in the defense of said claim, action or proceeding at its own cost
and expense.
14.4. Escrow Agreement. Simultaneously with the execution and
delivery of this Agreement, Buyer and Selling Shareholders shall enter into the
escrow agreement attached hereto as Schedule 14.4 providing for the placement of
25% of the AMNEX Shares to be issued hereunder for a period of 24 months to
provide a method of funding any Damages sustained by Buyer for which NBE and the
Selling Shareholders have agreed to indemnify Buyer pursuant to Section 14.1
hereof.
SECTION 15. Survival of Representations; Effect of
Certificates. The parties hereto agree that all representations, warranties,
covenants, indemnifications, conditions and agreements contained herein or in
any instrument or other document delivered pursuant to this Agreement or in
connection with the transactions contemplated hereby shall survive the execution
and delivery of this Agreement, the consummation of the transactions
contemplated hereby and any investigation or audit made by any party hereto.
SECTION 16. No Broker; Expenses. Buyer, on the one
hand, and NBE and the Selling Shareholders, on the other hand, each
represents to the other that no broker or finder has been involved
with any of the transactions relating to this Agreement. In the event of a claim
by any broker or finder that such broker or finder represented or was retained
by NBE or the Selling Shareholders, on the one hand, or Buyer, on the other
hand, in connection herewith, NBE and the Selling Shareholders (jointly and
severally) or Buyer, as the case may be, agrees to indemnify and hold the other
harmless from and against any and all Damages which may be incurred in
connection with such claim. All expenses of NBE and the Selling Shareholders
incurred in connection with matters relating to the Agreement shall be borne by
Selling Shareholders and all expenses of Buyer incurred in connection with
matters relating to this Agreement shall be borne by Buyer.
SECTION 17. Notices. All notices, requests, demands and other
communications provided for by this Agreement shall be in writing and shall be
deemed to have been given when hand delivered, when received if sent by
telecopier or by same day or overnight recognized commercial courier service or
three business days after being mailed in any general or branch office of the
United States Postal Service, enclosed in a registered or certified postpaid
envelope, addressed to the address of the parties stated below or to such
changed address as such party may have fixed by notice:
To NBE and the
Selling Stockholders: National Business Exchange, Inc.
000 Xxxx Xxxxxxxx Xxxx.
Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Fax: 000-000-0000
Attn: Xxxxx X. Xxxxxxxxxx
- copy to -
X. Xxxxxx Xxxx, Esq.
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Fax: 000-000-0000
To Buyer: AMNEX, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: 000-000-0000
Attn: Xxx Xxxxx, Esq.
- copy to -
AMNEX, Inc.
000 Xxxx Xxxxxxx Xxxxxx,
Xxxxx 000,
Xxxxxxx, Xxxxxxx 00000
Fax: 000-000-0000
Attn: Xxxx Xxxx
Executive Vice President
- copy to -
Stroock & Stroock & Xxxxx
Seven Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Fax: 000-000-0000
Attn: Xxxxx X. Xxxxx, Esq.
provided, that any notice of change of address shall be effective only upon
receipt.
SECTION 18. Miscellaneous.
18.1. Entire Agreement. This Agreement, including the Exhibits
and Schedules hereto, sets forth the entire agreement and understanding between
the parties and merges and supersedes all prior discussions, agreements and
understandings of every kind and nature among them as to the subject matter
hereof, and no party shall be bound by any condition, definition, warranty or
represen- tation other than as expressly provided for in this Agreement or as
may be on a date on or subsequent to the date hereof duly set forth in
writing signed by each party which is to be bound thereby. Unless otherwise
expressly defined, terms defined in the Agreement shall have the same
meanings when used in any Exhibit or Schedule and terms defined in any Exhibit
or Schedule shall have the same meanings when used in the Agreement or in
any other Exhibit or Schedule. This Agreement (including the Exhibits and
Schedules hereto) shall not be changed, modified or amended except by a
writing signed by each party to be charged and this Agreement may not be
discharged except by performance in accordance with its terms or by a writing
signed by each party to be charged.
18.2. Governing Law; Arbitration. THIS AGREEMENT AND
ITS VALIDITY, CONSTRUCTION AND PERFORMANCE SHALL BE GOVERNED IN ALL RESPECTS BY
THE LAWS OF NEW YORK, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
THE PARTIES HERETO AGREE TO ARBITRATE IN LIEU OF LITIGATION. ALL CLAIMS,
CONTROVERSIES, DISPUTES, DIFFERENCES OR QUESTIONS BETWEEN THE PARTIES HERETO
ARISING OUT OF OR RELATING TO THE PERFORMANCE, BREACH, CONSTRUCTION,
INTERPRETATION OR EFFECT OF THIS AGREEMENT OR ANY CLAUSE CONTAINED HEREIN, OR
CONCERNING ANY SUCH RIGHTS AND LIABILITIES OF THE PARTIES HERETO, SHALL BE
SUBMITTED TO BINDING ARBITRATION UNDER THE COMMERCIAL ARBITRATION RULES OF THE
AMERICAN ARBITRATION ASSOCIATION. SUBJECT TO THE TERMS AND PROVISIONS SET FORTH
HEREIN, SUCH ARBITRATOR(S) SHALL HAVE FULL POWER AND AUTHORITY TO AWARD ANY AND
ALL APPROPRIATE DAMAGES AND OTHER RELIEF, INCLUDING BUT NOT LIMITED TO DAMAGES
FOR LOST PROFITS OR REVENUES, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, AND
SPECIFIC PERFORMANCE. THE ARBITRATION PROCEEDINGS SHALL TAKE PLACE IN THE CITY
OF NEW YORK, NEW YORK, AND THE JUDGMENT AND DETERMINATION OF SUCH PROCEEDINGS
SHALL BE BINDING ON ALL PARTIES HERETO. JUDGMENT UPON ANY AWARD RENDERED BY ANY
ARBITRATOR(S)
APPOINTED HEREUNDER MAY BE ENTERED INTO ANY COURT HAVING COMPETENT JURISDICTION
THEREOF. ALL COSTS OF ARBITRATION SHALL BE BORNE EQUALLY BY THE ARBITRATING
PARTIES HERETO, EXCEPT FOR ATTORNEYS' FEES, AS TO WHICH EACH SUCH PARTY SHALL
BEAR ITS OWN COSTS. WITHIN FIFTEEN DAYS AFTER WRITTEN NOTICE BY ONE PARTY TO THE
OTHER PARTY OF ITS DEMAND FOR ARBITRATION, WHICH DEMAND SHALL SET FORTH THE NAME
AND ADDRESS OF ITS DESIGNATED ARBITRATOR, THE OTHER PARTY SHALL SELECT ITS
DESIGNATED ARBITRATOR AND SO NOTIFY THE DEMANDING PARTY. WITHIN FIFTEEN DAYS
THEREAFTER, THE TWO ARBITRATORS SO SELECTED SHALL SELECT THE THIRD ARBITRATOR.
THE DISPUTE SHALL BE HEARD BY THE ARBITRATORS WITHIN SIXTY DAYS AFTER SELECTION
OF THE THIRD ARBITRATOR. THE DECISION OF ANY TWO ARBITRATORS SHALL BE BINDING
UPON THE PARTIES. IN DEFAULT OF EITHER SIDE NAMING ITS ARBITRATOR AS AFORESAID
OR IN DEFAULT OF THE SELECTION OF THE SAID THIRD ARBITRATOR AS AFORESAID, THE
AMERICAN ARBITRATION ASSOCIATION SHALL DESIGNATE SUCH ARBITRATOR UPON THE
APPLICATION OF EITHER PARTY.
18.3. Benefit of Parties; Assignment. This Agreement
shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns. The
Agreement may not be assigned by NBE or the Selling Shareholders
except with the prior written consent of Buyer. Nothing herein contained shall
confer or is intended to confer on any third party or entity which is not a
party to this Agreement any rights under this Agreement.
18.4. Pronouns. Whenever the context requires, the use
in this Agreement of a pronoun of any gender shall be deemed to
refer also to any other gender, and the use of the singular shall
be deemed to refer also to the plural.
18.5. Headings. The headings in the sections, para-graphs,
Schedules and Exhibits of this Agreement are inserted for convenience of
reference only and shall not constitute a part hereof. The words "herein,"
"hereof," "hereto" and "hereunder," and other words of similar import refer to
this Agreement as a whole and not to any particular provision of this Agreement.
18.6. Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same instrument.
18.7. Further Assurances. Buyer, NBE and the Selling
Shareholders shall do and perform such further acts and execute and
deliver such further instruments as may be required by law or reasonably
requested by either party at such requesting party's expense to carry
out and effectuate the purposes of this Agreement.
18.8. Good Faith and Fair Dealing. The parties expressly agree
and covenant that good faith and fair dealing are an integral part of this
Agreement and no party hereto will do anything to prevent performance or receipt
of benefits by the other party.
[Signature pages follow]
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed on the day and year first above written.
NATIONAL BUSINESS EXCHANGE INC.
By:/s/
Name:
Title:
AMNEX, INC.
By:/s/
Name:
Title:
XXXXX X. XXXXXXXXXX
/s/ Xxxxx X. Xxxxxxxxxx
XXXXX X. FRAME
/s/ Xxxxx X. Frame
