EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
STRATEGIC DISTRIBUTION, INC.,
INTERMAT INTERNATIONAL MATERIALS MANAGEMENT ENGINEERS, INC.,
INTERMAT ACQUISITION CORP.,
XXXXXXX X. XXXXXXXXX,
XXXX X. XXXXXXXXX,
XXXXXXX X. XXXXXX,
XXXXXXX XXXXXX,
XXXX XXXXXXX
and
XXXX XXXXX
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Dated as of January 28, 1997
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TABLE OF CONTENTS *
Page
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ARTICLE I DEFINITIONS.....................................................1
Section 1.01. Definitions..............................................1
ARTICLE II THE MERGER.....................................................5
Section 2.01. The Merger...............................................5
Section 2.02. Conversion of Outstanding Shares.........................6
Section 2.03. Certificate of Incorporation.............................6
Section 2.04. By-laws..................................................7
Section 2.05. Directors and Officers...................................7
Section 2.06. Exchange Procedures......................................7
Section 2.07. Dividends................................................8
Section 2.08. No Fractional Shares.....................................8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF INTERMAT AND THE
STOCKHOLDERS............................................8
Section 3.01. Corporate Organization...................................8
Section 3.02. Qualification to Do Business.............................8
Section 3.03. Authorization and Validity of Merger Agreement...........9
Section 3.04. No Conflict or Violation.................................9
Section 3.05. Consents and Approvals...................................9
Section 3.06. Financial Statements.....................................9
Section 3.07. Absence of Certain Changes or Events....................10
Section 3.08. Tax Matters.............................................12
Section 3.09. Absence of Undisclosed Liabilities......................12
Section 3.10. Equipment and Machinery; Tangible Assets................12
Section 3.11. Intellectual Property; Intangible Assets................13
Section 3.12. Licenses and Permits....................................14
Section 3.13. Compliance with Law.....................................14
Section 3.14. Litigation..............................................14
Section 3.15. Contracts...............................................15
Section 3.16. Receivables.............................................15
Section 3.17. Inventories.............................................15
Section 3.18. Employee Plans..........................................16
Section 3.19. Customers, Suppliers and Competitors....................17
Section 3.20. Insurance...............................................17
Section 3.21. Transactions with Affiliates............................18
Section 3.22. Change in Ownership.....................................18
Section 3.23. Labor Matters...........................................18
* The Table of Contents is not part of this Merger Agreement.
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Section 3.24. Products Liability.......................................19
Section 3.25. Environmental Matters....................................19
Section 3.26. Capitalization of INTERMAT; Title to the Shares..........20
Section 3.27. Financial Projections....................................20
Section 3.28. Accuracy of Information..................................20
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SDI AND MERGER SUB...........21
Section 4.01. Corporate Organization...................................21
Section 4.02. Authority................................................21
Section 4.03. No Conflict or Violation.................................21
Section 4.04. Consents and Approvals...................................21
Section 4.05. Stock Consideration......................................22
Section 4.06. Business.................................................22
Section 4.07. Financial Statements.....................................22
Section 4.08. Tax Matters..............................................22
Section 4.09. Licenses and Permits.....................................22
Section 4.10. Compliance with Law......................................23
Section 4.11. Litigation...............................................23
Section 4.12. Accuracy of Information..................................23
ARTICLE V COVENANTS OF INTERMAT AND THE STOCKHOLDERS......................24
Section 5.01. Conduct Pending the Merger...............................24
Section 5.02. Consents and Approvals...................................25
Section 5.03. Access to Properties and Records.........................26
Section 5.04. Negotiations.............................................26
Section 5.05. Further Assurances; Reasonable Best Efforts..............26
Section 5.06. Covenant Not To Compete..................................26
Section 5.07. Non-Solicitation of Employees............................27
Section 5.08. Disclosure of Information................................27
Section 5.09. Expenses related to INTERMAT Lease.......................28
Section 5.10. Notice of Breach.........................................28
ARTICLE VI COVENANTS OF SDI...............................................28
Section 6.01. Actions Before the Effective Time........................28
Section 6.02. Consents and Approvals...................................28
Section 6.03. Further Assurances; Reasonable Best Efforts..............28
Section 6.04. Notice of Breach.........................................28
ARTICLE VII OTHER AGREEMENTS..............................................29
Section 7.01. Stock Consideration and Debt Consideration...............29
Section 7.02. Legend...................................................30
Section 7.03. Delivery of Audited Financial Statements.................30
Section 7.04. Tax Matters..............................................30
Section 7.05. Representations and Warranties by Xxxxxx,
Xxxxxx and Xxxxx.........................................31
Section 7.06. Key Man Life Insurance...................................32
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ARTICLE VIII SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION..........................................................32
Section 8.01. Survival of Representations and Warranties..............32
Section 8.02. Indemnification.........................................32
ARTICLE IX CONDITIONS TO THE MERGER......................................34
Section 9.01. Conditions to the Obligations of Each Party.............34
Section 9.02. Conditions to the Obligations of INTERMAT
and the Stockholders....................................35
Section 9.03. Conditions to the Obligations of SDI and Merger Sub.....36
ARTICLE X TERMINATION....................................................37
Section 10.01. Termination............................................37
Section 10.02. Effect of Termination..................................37
ARTICLE XI MISCELLANEOUS.................................................38
Section 11.01. Notices................................................38
Section 11.02. Force Majeure..........................................39
Section 11.03. Amendment; Waiver......................................39
Section 11.04. Successors and Assigns.................................39
Section 11.05. Governing Law..........................................40
Section 11.06. Entire Agreement.......................................40
Section 11.07. Third Party Beneficiaries..............................40
Section 11.08. Specific Performance...................................40
Section 11.09. Remedies Cumulative....................................41
Section 11.10. Publicity..............................................41
Section 11.11. Fees and Expenses......................................41
Section 11.12. Broker's and Finder's Fees.............................41
Section 11.13. Severability...........................................41
Section 11.14. Scheduled Disclosures..................................41
Section 11.15. Headings; Counterparts; Effectiveness..................41
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of January 28, 1997 (this
"Merger Agreement"), by and among STRATEGIC DISTRIBUTION, INC., a Delaware
corporation ("SDI"), INTERMAT INTERNATIONAL MATERIALS MANAGEMENT ENGINEERS,
INC., a Texas corporation ("INTERMAT"), INTERMAT ACQUISITION CORP., a Delaware
corporation and a wholly owned subsidiary of SDI ("Merger Sub"), XXXXXXX X.
XXXXXXXXX ("X. Xxxxxxxxx"), XXXX X. XXXXXXXXX (X. Xxxxxxxxx and Xxxx X.
Xxxxxxxxx are collectively referred to as the "Beauchamps"), XXXXXXX X. XXXXXX
("Xxxxxx"), XXXXXXX XXXXXX ("Xxxxxx"), XXXX XXXXXXX ("Xxxxxxx") and XXXX XXXXX
("Xxxxx" and collectively with the Beauchamps, Enders, Xxxxxx and Xxxxxxx, the
"Stockholders").
WHEREAS, the Board of Directors of each of INTERMAT, SDI and Merger
Sub deem it advisable and in the best interests of their respective stockholders
to consummate the transactions provided for herein in which INTERMAT would merge
with and into Merger Sub upon the terms and subject to the conditions set forth
herein (the "Merger"); and
WHEREAS, by virtue of their execution of the stockholder consent in
the form attached hereto as Exhibit A (the "Stockholder Consent"), the
Stockholders have unanimously approved the Merger, this Merger Agreement and the
adoption of a plan of merger with respect to the Merger contemplated hereby in
accordance with the Texas Business Corporation Act (the "TBCA").
NOW THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. As used in this Merger Agreement, the
following terms shall have the respective meanings set forth below (terms
defined in the singular shall have the same meanings when used in the plural and
vice versa):
"Articles of Merger" shall mean the articles of merger with respect to
the Merger, containing the provisions required by, and executed in accordance
with, Article V of the TBCA.
"Audited Financial Statements" -- see Section 7.03.
"Xxxxxxxxx Notes" shall mean the $100,000 demand promissory note of
INTERMAT, dated January 10, 1996, payable to the order of the Beauchamps, and
the $150,000 demand promissory note of INTERMAT, dated February 22, 1996,
payable to the order of the Beauchamps.
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"Business Day" shall mean any day which is not a Saturday or a Sunday
or a day on which banks in the State of New York are authorized or required by
law to close.
"Certificate of Merger" shall mean the certificate of merger with
respect to the Merger, containing the provisions required by, and executed in
accordance with, Section 251 of the DGCL.
"Closing" -- See Section 2.01.
"Closing Date" -- See Section 2.01.
"Closing Date Balance Sheet" -- See Section 7.03.
"Code" -- See Section 3.08.
"Commission" shall mean the U.S. Securities and Exchange Commission.
"Contracts" -- See Section 3.15.
"DGCL" shall mean the Delaware General Corporation Law.
"Effective Time" -- see Section 2.01.
"Environmental, Health or Safety Laws" -- See Section 3.25.
"Equipment and Machinery" shall mean (i) all the equipment, machinery,
furniture, fixtures and improvements owned or leased by INTERMAT at the
Effective Time (including, without limitation, all such items as reflected on
the November 30, 1996 Balance Sheet with additions thereto (net of dispositions)
in the ordinary course of business), (ii) any rights of INTERMAT to the
warranties and licenses received from manufacturers and sellers of the aforesaid
items and (iii) any related claims, credits, rights of recovery and set-off with
respect thereto.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" -- See Section 3.18(d).
"Exchange Act" shall mean the Securities Exchange Act of 1934.
"Files and Records" shall mean all files and records, whether in hard
copy or magnetic format, of INTERMAT, including, without limitation, the
following types of files and records: customer and supplier files, equipment
maintenance records, equipment warranty information, plant plans, specifications
and drawings, equipment drawings, trade secrets and
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customer specifications and all files relating to employees of INTERMAT,
correspondence with national, state and local governmental agencies relating to
INTERMAT and related files and records of INTERMAT.
"GAAP" -- See Section 3.06.
"Hazardous Substance" -- See Section 3.25.
"Historical Financial Statements" -- See Section 3.06(a).
"Intangible Assets" shall mean all intangible personal property
rights, including, without limitation, all rights on the part of INTERMAT to
proceeds of any insurance policies and all claims on the part of INTERMAT for
recoupment, reimbursement and coverage under any insurance policies, and all
goodwill of INTERMAT.
"Intellectual Property" shall mean all (i) trademarks and service
marks (registered or unregistered) and trade names, and all goodwill associated
therein; (ii) patents, patentable inventions, discoveries, improvements, ideas,
know-how, processes and computer programs, software and databases (including
source code); (iii) trade secrets and the right to limit the use or disclosure
thereof; (iv) copyrights in all works, including software programs and mask
works; and (v) domain names owned or used in the business of a Person.
"Inventory" means (i) all the inventory held for sale and
inventoriable supplies owned by INTERMAT at the Effective Time (including,
without limitation, all such items as reflected on the November 30, 1996 Balance
Sheet with additions thereto (net of dispositions) in the ordinary course of
business) and (ii) any and all rights of INTERMAT to the warranties received
from its suppliers with respect to such inventory and related claims, credits,
rights of recovery and set-off with respect thereto.
"INTERMAT Common Stock" shall mean the common stock, no par value, of
INTERMAT.
"INTERMAT Lease" shall mean the Lease Contract between Nine Greenway,
Ltd., a Texas limited partnership, and INTERMAT, dated as of January 1, 1990,
relating the Company's offices at Nine Greenway Plaza.
"INTERMAT Licenses and Permits" -- See Section 3.12.
"Lien" shall mean any mortgage, charge, pledge, lien (statutory or
otherwise), privilege, security interest, hypothecation, or other encumbrance
upon or with respect to any property of any kind, tangible or intangible, real
or personal, movable or immovable, now owned or hereafter acquired.
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"Merger" shall have the meaning set forth in the recitals to this
Merger Agreement.
"Merger Agreement" shall have the meaning set forth in the recitals to
this Merger Agreement.
"Merger Consideration" shall have the meaning set forth in Section
2.02.
"November Financial Statements" shall mean INTERMAT's unaudited
balance sheet at November 30, 1996 and the related statement of income, retained
earnings and cash flows for the eleven months ended on such date, certified by
the Stockholders, which financial statements are attached hereto as Schedule
3.06(b).
"November 30, 1996 Balance Sheet" shall mean INTERMAT's unaudited
balance sheet at November 30, 1996, which is included in the November Financial
Statements.
"Person" shall mean any individual, partnership, corporation, trust,
association, limited liability company, governmental agency or any other entity.
"Plan" -- See Section 3.18(a).
"Products" shall mean (i) the products distributed by INTERMAT as of
the Effective Time (including, but not limited to, any product necessary and
useful for the performance of any Contract) and (ii) any products distributed by
INTERMAT (or its predecessors in interest) during the last five years.
"Purchase Price" -- See Section 7.04(c).
"Qualified Plan" -- See Section 3.18(c).
"SDI Common Stock" shall mean the common stock, par value $.10 per
share, of SDI.
"SDI Licenses and Permits" -- See Section 4.03.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Services" shall mean (i) the services provided by INTERMAT as of the
Effective Time (including, but not limited to, any services necessary and useful
for the performance of any Contract) and (ii) any services provided by INTERMAT
(or its predecessors in interest) during the last five years.
"Surviving Corporation" shall mean Merger Sub, which shall be the
surviving corporation in the Merger.
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"Taxes" shall mean for all purposes of this Merger Agreement all taxes
however denominated, including any interest, penalties or additions to tax that
may become payable in respect thereof, imposed by any governmental body, which
taxes shall include, without limiting the generality of the foregoing, all
income taxes, payroll and employee withholding taxes, unemployment insurance,
social security, sales and use taxes, excise taxes, franchise taxes, gross
receipts taxes, occupation taxes, real and personal property taxes, stamp taxes,
transfer taxes, workmen's compensation taxes and other obligations of the same
or a similar nature, whether arising before, at or after the Effective Time, as
applicable; and "Tax" shall mean any one of them.
"Tax Returns" shall mean any return, report, information return or
other document (including any related or supporting information) filed or
required to be filed with any governmental body in connection with the
determination, assessment, collection or administration of any Taxes.
"TBCA" shall have the meaning set forth in the recitals to this Merger
Agreement.
"Texas Commerce Note" shall mean the $400,000 revolving promissory
note of INTERMAT, dated March 29, 1996, payable to the order of Texas Commerce
Bank National Association.
"Trademarks" shall mean the trademarks and service marks of INTERMAT
set forth on Schedule 3.11.
"Valuation" -- See Section 7.04(c).
ARTICLE II
THE MERGER
Section 2.01. The Merger.
(a) Upon the terms and subject to the conditions of this Merger
Agreement, at the Effective Time, INTERMAT shall be merged with and into Merger
Sub in accordance with the DGCL and the TBCA, whereupon the separate existence
of INTERMAT shall cease, and Merger Sub shall be the Surviving Corporation.
(b) The Merger shall become effective on the date and at the time (the
"Effective Time") that the Certificate of Merger shall have been accepted for
filing by the Secretary of State of the State of Delaware and the Articles of
Merger shall have been accepted for filing by the Secretary of State of the
State of Texas.
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(c) Unless this Merger Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
10.01, and subject to the satisfaction or, if permissible, waiver of the
conditions set forth in Article IX, the closing of the Merger (the "Closing")
shall take place as promptly as practicable after satisfaction or waiver of the
conditions set forth in Article IX (the "Closing Date"), at the offices of
Xxxxxxx Xxxx & Xxxxxxxxx, One Citicorp Center, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx,
Xxx Xxxx, unless another date, time or place is agreed to in writing by the
parties hereto. The parties hereto shall their reasonable best efforts to cause
the Certificate of Merger and the Articles of Merger to be filed with the
Secretary of State of the State of Delaware and the Secretary of State of the
State of Texas, respectively, on the Closing Date or as soon as practicable
thereafter.
(d) From and after the Effective Time, the Surviving Corporation shall
have all the rights, privileges, powers and franchises and be subject to all of
the restrictions, disabilities and duties of INTERMAT and Merger Sub, all as
provided under the DGCL and the TBCA.
Section 2.02. Conversion of Outstanding Shares.
(a) Subject to the provisions hereof, at the Effective Time, by virtue
of the Merger and without any action on the part of the holders thereof, the
shares of INTERMAT Common Stock issued and outstanding immediately prior to the
Effective Time shall convert into the right to receive (x) promissory notes of
Merger Sub (the "Guaranteed Term Notes") in the aggregate principal amount of
$10,800,000 substantially in the form of Exhibit B-1 hereto which Guaranteed
Term Notes will be guaranteed by SDI pursuant to guarantees thereon, (y) 625,000
fully paid and nonassessable shares of SDI Common Stock (the "Stock
Consideration") and (z) a promissory notes of Merger Sub (the "Merger Sub
Notes") in the aggregate principal amount of $1,400,000 substantially in the
form of Exhibit B hereto, which Merger Sub Notes will be guaranteed by SDI
pursuant to guarantees (the "SDI Guarantees") substantially in the form of
Exhibit C hereto (the Guaranteed Term Notes, the Merger Sub Notes and the SDI
Guarantees are collectively referred to as the "Debt Consideration," and
together with the Stock Consideration, the "Merger Consideration"). The Merger
Consideration shall be allocated among the Stockholders in the manner set forth
on Schedule 2.02(a).
(b) At such time as each Stockholder delivers its shares of INTERMAT
Common Stock in accordance with Section 2.06, pursuant to the Escrow Agreement
substantially in the form of Exhibit D hereto (the "Escrow Agreement") by and
among SDI, the Stockholders and Texas Commerce Bank National Association, as
Escrow Agent (the "Escrow Agent"), SDI shall deliver to the Escrow Agent 300,000
shares of SDI Common Stock on behalf of the Stockholders in the respective
amounts set forth on Schedule 2.02(b) hereto (the "Escrow Amount"). The Escrow
Amount shall be held by the Escrow Agent subject to the terms and conditions of
the Escrow Agreement.
Section 2.03. Certificate of Incorporation. The Certificate of
Incorporation of Merger Sub in effect at the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation, until amended in
accordance with the DGCL.
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Section 2.04. By-laws. The By-laws of Merger Sub in effect at the
Effective Time shall be the By-laws of the Surviving Corporation, until amended
in accordance with the DGCL and the Certificate of Incorporation of the
Surviving Corporation.
Section 2.05. Directors and Officers.
(a) From and after the Effective Time, until successors are duly
elected or appointed in accordance with the DGCL and the Surviving Corporation's
Certificate of Incorporation and By-laws, (a) the directors of Merger Sub at the
Effective Time shall be the directors of the Surviving Corporation and (b) the
officers of INTERMAT at the Effective Time shall be the officers of the
Surviving Corporation.
(b) SDI shall elect X. Xxxxxxxxx to its Board of Directors and shall
appoint him as Executive Vice President, in each case as soon as practicable
after the date hereof. SDI further agrees to include X. Xxxxxxxxx among the
nominees proposed by SDI to be elected to its Board of Directors at each of
SDI's Annual Meeting of Stockholders, provided that on the date of such Annual
Meeting X. Xxxxxxxxx is an employee of SDI or Merger Sub.
(c) Merger Sub shall elect X. Xxxxxxxxx to its Board of Directors and
shall appoint him as Chairman Emeritus, in each case as soon as practicable
after the date hereof. Merger Sub agrees to include X. Xxxxxxxxx among the
nominees proposed by Merger Sub to be elected to its Board of Directors at each
of Merger Sub's Annual Meeting of Stockholders, and SDI agrees to vote its
shares of Merger Sub in favor of X. Xxxxxxxxx'x election, provided, in each
case, that on the date of such Annual Meeting X. Xxxxxxxxx is an employee of SDI
or Merger Sub.
Section 2.06. Exchange Procedure.
(a) As soon as practicable after the Effective Time, each Stockholder
shall surrender to SDI the certificates evidencing his or her shares of INTERMAT
Common Stock. Upon such surrender to SDI, SDI shall deliver the Escrow Amount to
the Escrow Agent in accordance with the Escrow Agreement and shall pay the
remainder of the Merger Consideration to the Stockholders in accordance with the
allocation set forth on Schedule 2.02(b). Until so surrendered, each certificate
evidencing shares of INTERMAT Common Stock shall after the Effective Time
represent for all purposes only the right to receive the Merger Consideration.
After the Closing Date, there shall be no further registration of transfers of
INTERMAT Common Stock.
(b) If any delivery of the Merger Consideration is to be made to a
Person other than the registered holder of the certificates of INTERMAT Common
Stock surrendered in exchange therefor, it shall be a condition to such delivery
that the certificate so surrendered shall be properly endorsed or otherwise be
in proper form for transfer and that the Person requesting such delivery shall
(i) pay to SDI any transfer or other taxes required as a result of
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delivery to a Person other than the registered holder or (ii) establish to the
satisfaction of SDI that such tax has been paid or is not payable.
Section 2.07. Dividends. To the extent SDI declares a dividend after
the Effective Time, no dividend will be paid to Persons entitled to receive
certificates representing SDI Common Stock pursuant to this Merger Agreement
until such Persons surrender their certificates theretofore representing
INTERMAT Common Stock to SDI. Upon such surrender, any dividends shall be paid
to the Person in whose name the SDI Common Stock certificate shall be issued. In
no event shall the Person entitled to receive such dividends or distributions be
entitled to receive interest on such dividends or distributions.
Section 2.08. No Fractional Shares. No fractional shares of SDI Common
Stock will be issued in connection with the Merger. In lieu of any fractional
shares, each holder of INTERMAT Common Stock who would otherwise have been
entitled to a fractional share of SDI Common Stock upon surrender of the
certificates evidencing shares of INTERMAT Common Stock for exchange will be
paid cash (without interest) in an amount equal to such fractional share
multiplied by the Exchange Rate.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF INTERMAT
AND THE STOCKHOLDERS
INTERMAT and each of the Beauchamps jointly and severally represent
and warrant, subject to Section 7.05 hereof, each of Xxxxxx and Xxxxxx,
severally and not jointly represent and warrant, and, with respect to Section
3.11 hereof, Xxxxx, severally and not jointly represents and warrants, to SDI
and Merger Sub that:
Section 3.01. Corporate Organization.
(a) INTERMAT is a corporation duly organized, validly existing and in
good standing under the laws of the State of Texas, and has all requisite
corporate power and authority to own its properties and assets and to conduct
its businesses as now conducted. Copies of the Articles of Incorporation and
By-laws of INTERMAT, with all amendments thereto to the date hereof, have been
furnished to SDI or its representatives, and such copies are accurate and
complete as of the date hereof. INTERMAT is not in violation of its Articles of
Incorporation or By-laws.
(b) INTERMAT has no subsidiaries and no interests or investments in
any other Person.
Section 3.02. Qualification to Do Business. INTERMAT is not qualified
to do business as a foreign corporation in any jurisdiction. There are no
jurisdictions in which the character of the properties owned or leased by
INTERMAT or the nature of the business conducted by it makes such qualification
necessary.
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Section 3.03. Authorization and Validity of Merger Agreement. INTERMAT
and each of the Stockholders has all requisite power and authority to enter into
this Merger Agreement and to carry out its obligations hereunder. This Merger
Agreement has been duly executed by INTERMAT and each of the Stockholders and
constitutes their valid and binding obligations, enforceable against each of
them in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
from time to time in effect that affect creditors' rights generally and by legal
and equitable limitations on the availability of specific remedies. No other
corporate action (including stockholder approval) is necessary to authorize such
execution and delivery or the performance of the transactions contemplated by
this Merger Agreement.
Section 3.04. No Conflict or Violation. The execution, delivery and
performance by INTERMAT and the Stockholders of this Merger Agreement do not and
will not violate or conflict with any provision of the Articles of Incorporation
or By-laws of INTERMAT and do not and will not violate any provision of law, or
any order, judgment or decree of any court or other governmental or regulatory
authority, nor, except as set forth in Schedule 3.04 hereto, violate nor result
in a breach of or constitute (with due notice or lapse of time or both) a
default under any contract, lease, loan agreement, mortgage, security agreement,
trust indenture or other agreement or instrument to which any of INTERMAT or the
Stockholders is a party or by which any of them is bound or to which any of
their properties or assets is subject, nor result in the creation or imposition
of any Lien upon any of the property, including Intellectual Property, of any of
INTERMAT or the Stockholders, nor result in the cancellation, modification,
revocation or suspension of any of the INTERMAT Licenses and Permits.
Section 3.05. Consents and Approvals. No filing with, and no consent,
waiver, authorization or approval of, any governmental or regulatory authority,
domestic or foreign, is required in connection with the execution and delivery
of this Merger Agreement by any of INTERMAT or the Stockholders or the
performance of their respective obligations hereunder.
Section 3.06. Financial Statements.
(a) Attached hereto as Schedule 3.06(a) are true, complete and correct
copies of INTERMAT's balance sheets at December 31, 1995 and 1994, and the
related statements of income, retained earnings and cash flows for the fiscal
years ended on such dates, accompanied by the opinion or review opinion, as
applicable, of Wallingford, McDonald, Fox & Co., P.C. (the "Historical Financial
Statements"). INTERMAT's balance sheet at December 31, 1995 has been audited by
Wallingford, McDonald, Fox & Co., P.C. and an opinion to this effect has been
delivered to the Board of Directors of INTERMAT. Wallingford, McDonald, Fox &
Co., P.C. has reviewed INTERMAT's statements of income, retained earnings and
cash flows for the fiscal year ended December 31, 1995 and INTERMAT's balance
sheet at December 31, 1994 and the related statements of income, retained
earnings and cash flows for the year then ended, and has delivered its review
opinion to the Board of Directors of INTERMAT. The Historical Financial
Statements fairly present
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the financial position of INTERMAT as at the dates thereof and fairly present
the results of operations and cash flows of INTERMAT for the respective periods
indicated. The Historical Financial Statements, including the schedules and
notes thereto, were prepared in accordance with generally accepted accounting
principles ("GAAP") applied consistently throughout the periods involved.
(b) The November Financial Statements attached hereto as Schedule 3.06
(b) have been prepared in accordance with GAAP (except for the omission of the
related notes thereto) applied on a basis consistent with the Historical
Financial Statements, (ii) present fairly the financial position of INTERMAT as
at the date thereof and fairly present the results of operations and cash flows
of INTERMAT for the period indicated, (iii) are complete, correct and in
accordance with the books of account and records of INTERMAT and (iv) are
accompanied by the certificate to the foregoing effect by the Stockholders.
Section 3.07. Absence of Certain Changes or Events.
(a) Since November 30, 1996, except as set forth on Schedule 3.07,
there has not been:
(i) any material adverse change in the assets, properties,
including Intellectual Property, business, operations, prospects,
net income or condition (financial or otherwise) of INTERMAT, or
any event that has had a material adverse effect on the
foregoing, and no factor or condition exists and no event has
occurred that would be likely to result in any such change;
(ii) any material loss, damage, destruction or other casualty to
INTERMAT's property, including Intellectual Property;
(iii) any change in any method of accounting or accounting
practice of INTERMAT; or
(iv) any loss of the employment, services or benefits of any key
employee of INTERMAT.
(b) Since November 30, 1996, except as set forth on Schedule 3.07, the
business of INTERMAT has been operated in the ordinary course consistent with
past practice and, neither INTERMAT nor any of the Stockholders has:
(i) incurred any material obligation or liability (whether
absolute, accrued, contingent or otherwise) relating to the
operations of INTERMAT except in the ordinary course of business
consistent with past practice;
(ii) failed to discharge or satisfy any Lien or pay or satisfy
any obligation or liability (whether absolute, accrued,
contingent or otherwise), other than liabilities being contested
in good faith and for which adequate reserves have been provided
and Liens arising in the ordinary course of business that do not,
10
individually or in the aggregate, interfere with the use,
operation, enjoyment or marketability of any of INTERMAT's
property;
(iii) mortgaged, pledged or subjected to any Lien any of
INTERMAT's property, including Intellectual Property, except for
mechanics' Liens and Liens for Taxes not yet due and payable;
(iv) sold or transferred any of the assets of INTERMAT or
canceled any debts or claims or waived any rights material to the
business of INTERMAT, except in the ordinary course of business
consistent with past practice;
(v) disposed of or conveyed any patents, trademarks, service
marks, trade names, trade secrets, know-how, copyrights or other
Intellectual Property or any trademark, service xxxx or copyright
application or registration used in the operations of the
business of INTERMAT;
(vi) defaulted on any obligation relating to the operations of
the business of INTERMAT;
(vii) entered into any transaction material to the business of
INTERMAT, except in the ordinary course of business consistent
with past practice;
(viii) written down the value of any Inventory or written off as
uncollectible any accounts receivable except to the extent
reflected in the November 30, 1996 Balance Sheet;
(ix) granted any increase in the compensation or benefits of
employees of INTERMAT other than increases in accordance with
past practice not exceeding 5% or entered into any employment or
severance agreement or arrangement with any of them;
(x) made any capital expenditure in excess of $10,000, or
additions to property, plant and equipment used in the operations
of the business of INTERMAT other than ordinary repairs and
maintenance;
(xi) laid off any employees;
(xii) discontinued the offering of any Services or programs;
(xiii) incurred any obligation or liability for the payment of
severance benefits;
(xiv) paid any dividend on or with respect to the capital stock
of INTERMAT; or
11
(xv) entered into any agreement or made any commitment (including
any guarantee) to do any of the foregoing.
Section 3.08. Tax Matters. All Tax Returns required to be filed before
the Effective Time in respect of INTERMAT have been (or will have been by the
Effective Time) filed, and INTERMAT has (or will have by the Effective Time)
paid, accrued or otherwise adequately reserved for the payment of all Taxes
required to be paid in respect of the periods covered by such Tax Returns and
has (or will have by the Effective Time) adequately reserved for the payment of
all Taxes with respect to periods ended at or before the Effective Time for
which Tax Returns have not yet been filed. All Taxes of INTERMAT have been paid
or adequately provided for and neither INTERMAT nor any of the Stockholders
knows of any proposed additional Tax assessment against INTERMAT not adequately
provided for in the November 30, 1996 Balance Sheet. In the ordinary course,
INTERMAT makes adequate provision on its books for the payment of Taxes
(including for the current fiscal period) owed by INTERMAT. INTERMAT validly
elected under Section 1362(a) of the Internal Revenue Code of 1986, as amended
(the "Code"), to be treated as an S corporation for federal income tax purposes
for the taxable year beginning on July 1, 1989, and such election has not been
terminated or revoked. No comparable election has been made under the laws of
any state.
Section 3.09. Absence of Undisclosed Liabilities. INTERMAT does not
have any indebtedness or liability, absolute or contingent, known or unknown,
which is not shown or provided for on the November 30, 1996 Balance Sheet other
than liabilities as shall have been incurred or accrued in the ordinary course
of business since November 30, 1996. Except as shown on the November 30, 1996
Balance Sheet, INTERMAT is not directly or indirectly liable upon or with
respect to (by discount, repurchase agreements or otherwise), or obliged in any
other way to provide funds in respect of, or to guarantee or assume, any debt,
obligation or dividend of any Person, except endorsements in the ordinary course
of business in connection with the deposit, in banks or other financial
institutions, of items for collection.
Section 3.10. Equipment and Machinery; Tangible Assets. Schedule 3.10
sets forth a complete and correct list and brief description of each item of
Equipment and Machinery. As of the date of this Merger Agreement, INTERMAT has
good title to the Equipment and Machinery and other properties and assets owned
by it, free and clear of all title defects, objections and Liens (other than the
Lien of current property Taxes and assessments not in default, if any). INTERMAT
does not own any real property. Except as set forth on Schedule 3.10, INTERMAT
holds good and transferable leaseholds in all of the Equipment and Machinery and
other properties and assets leased by it, in each case under valid and
enforceable leases. INTERMAT is not in default with respect to any item of
Equipment and Machinery or other property or asset purported to be leased by it,
and no event has occurred that constitutes or with due notice or lapse of time
or both may constitute a default under any lease thereof. All facilities,
machinery, equipment, fixtures and other properties owned, leased or used by
INTERMAT (including the Equipment and Machinery) are in good operating condition
and repair, are reasonably fit and usable for the purposes for which they are
being used, are adequate and sufficient to carry on INTERMAT's business as
presently
12
conducted and as proposed by INTERMAT to be conducted, and conform in all
material respects with all applicable ordinances, regulations and laws.
Section 3.11. Intellectual Property; Intangible Assets.
(a) Schedule 3.11 sets forth a complete and correct listing of the
Intellectual Property owned by INTERMAT or used in its business. All
Intellectual Property listed on Schedule 3.11 is owned by INTERMAT, free and
clear of all Liens, and is not known to be the subject of any challenge. Except
as set forth on Schedule 3.11, INTERMAT is not a licensee of any Intellectual
Property rights. As of the date hereof, there are no unresolved claims made and
there has not been communicated to INTERMAT or any of the Stockholders the
threat of any claim that the holder of such Intellectual Property is in
violation or infringement of any Intellectual Property, including patent,
service xxxx, trademark, trade name, trademark, service xxxx or trade name
application or registration, copyright or copyright application or registration
of any other Person. INTERMAT is the owner of the patents, patent licenses,
trade names, trademarks, service marks, brand marks, brand names, copyrights,
know-how, trade secrets, formula and other proprietary and Intellectual Property
rights necessary for the conduct of INTERMAT's business as now conducted, and
without any known conflict with the rights of others, and INTERMAT has not
forfeited or otherwise relinquished any such patent, patent license, trade name,
trademark, service xxxx, brand xxxx, brand name, copyright, trade secrets,
know-how, formula or other proprietary right or Intellectual Property necessary
for the conduct of its business as conducted on the date hereof. INTERMAT owns
or has the right to use all computer software, software systems and databases
and all other information systems necessary for the operation of its business.
(b) No present or former employee of INTERMAT and no other Person owns
or has any proprietary, financial or other interest, direct or indirect, in
whole or in part, in any Intellectual Property or in any application therefor
which INTERMAT owns, possesses or uses in its business as now and heretofore
conducted and following the Effective Time, the Surviving Corporation shall have
the exclusive, transferable right to use the Intellectual Property used by
INTERMAT in conducting its business. The Trademarks are valid, subsisting,
unexpired and enforceable in the United States and to the best knowledge of
INTERMAT and each of the Stockholder valid, subsisting, unexpired and
enforceable elsewhere in the world. All renewal fees and other maintenance fees
for registration of the Intellectual Property or applications therefor which
have fallen due on or prior to the date hereof have been paid and any such fees
arising prior to the Effective Time, will be paid. The Stockholders agree to
reasonably cooperate with the Surviving Corporation with regard to registering
Intellectual Property in the respective offices of any domestic or foreign
jurisdiction.
(c) Schedule 3.11 sets forth a true and complete list of all of the
Intangible Assets and a summary description of each such item. There is no
restriction affecting the use of any of the Intangible Assets and, except as set
forth on Schedule 3.11, no license has been granted with respect thereto. Each
of the Intangible Assets is valid, is not currently being challenged, is not
involved in any pending or threatened administrative or judicial proceeding, and
does
13
not conflict with any rights of any other Person. INTERMAT's rights in and to
the Intangible Assets are sufficient and adequate in all respects to permit the
conduct of INTERMAT's business as now conducted and as proposed to be conducted,
and none of the services, products or operations of INTERMAT's business involves
any infringement of any proprietary right of any other Person.
Section 3.12. Licenses and Permits. Schedule 3.12 sets forth a true
and complete list of all licenses, permits, franchises, authorizations and
approvals issued or granted to INTERMAT by the government of the United States,
any state or local government, any foreign national or local government, or any
department, agency, board, commission, bureau or instrumentality of any of the
foregoing (the "INTERMAT Licenses and Permits"), and all pending applications
therefor. Such list contains a summary description of each such item and, where
applicable, specifies the date issued, granted or applied for, the expiration
date and the current status thereof. Each INTERMAT License and Permit has been
duly obtained, is valid and in full force and effect, and is not subject to any
pending or threatened administrative or judicial proceeding to revoke, cancel,
suspend or declare such INTERMAT License and Permit invalid in any respect. The
INTERMAT Licenses and Permits are sufficient and adequate in all respects to
permit the continued lawful conduct of INTERMAT's business in the manner now
conducted and as proposed to be conducted, and none of the operations of
INTERMAT are being conducted in a manner that violates any of the terms or
conditions under which any INTERMAT License and Permit was granted. Except for
the Texas State Sales Tax Permit issued to INTERMAT, no INTERMAT License and
Permit will be affected by, or terminate or lapse by reason of, the transactions
contemplated by this Merger Agreement.
Section 3.13. Compliance with Law. The operations of INTERMAT have
been conducted in accordance with all applicable laws, regulations, orders and
other requirements of all courts and other governmental or regulatory
authorities having jurisdiction over INTERMAT and its assets, properties and
operations, including, without limitation, all such laws, regulations, orders
and requirements promulgated by or relating to consumer protection, equal
opportunity, health, environmental protection, conservation, architectural
barriers to the handicapped, fire, zoning and building, occupation safety,
pension, securities matters and Intellectual Property matters. INTERMAT has not
received notice of any violation of any such law, regulation, order or other
legal requirement, and is not in default with respect to any order, writ,
judgment, award, injunction or decree of any national, state or local court or
governmental or regulatory authority or arbitrator, domestic or foreign. Neither
INTERMAT nor any of the Stockholders has knowledge of any proposed change in any
such laws, rules or regulations (other than laws of general applicability) that
would materially and adversely affect INTERMAT or its business or the
transactions contemplated by this Merger Agreement.
Section 3.14. Litigation. There are no claims, actions, suits,
proceedings, labor disputes or investigations pending or, to the best knowledge
of INTERMAT and each of the Stockholders, threatened, before any national, state
or local court or governmental or regulatory authority, domestic or foreign, or
before any arbitrator of any nature, brought by or against any of the
Stockholders or INTERMAT or any of INTERMAT's officers, directors,
14
employees or agents involving, affecting or relating to INTERMAT's business or
Intellectual Property, or the transactions contemplated by this Merger
Agreement, nor is any basis known to any of the Stockholders or INTERMAT or any
of INTERMAT's directors or officers for any such action, suit, proceeding or
investigation. INTERMAT is not subject to any order, writ, judgment, award,
injunction or decree of any national, state or local court or governmental or
regulatory authority or arbitrator, domestic or foreign, that affects or might
affect INTERMAT's business or that would or might interfere with the
transactions contemplated by this Merger Agreement.
Section 3.15. Contracts.
(a) Schedule 3.15(a) sets forth a true and complete list of each
contract, agreement, instrument, commitment and other arrangement to which
INTERMAT is a party or otherwise relating to or affecting any of its assets,
including, without limitation, employment, severance or consulting agreements,
loan, credit or security agreements and customer contracts (each, a "Contract").
Each Contract is valid, binding and enforceable against INTERMAT and, to the
best knowledge INTERMAT and each of the Stockholders, the other parties thereto,
in accordance with its terms, and in full force and effect on the date hereof.
INTERMAT has performed all obligations required to be performed by it to date
under, and is not in default or delinquent in performance, status or any other
respect (claimed or actual) in connection with any Contract, and no event has
occurred which, with due notice or lapse of time or both, would constitute such
a default. With respect to each Contract, INTERMAT expects to comply with all
material terms thereof, all certifications and representations of INTERMAT with
respect thereto and all statutes and regulations applicable thereto.
(b) Except as set forth on Schedule 3.15(b), no Contract requires the
consent of any Person in connection with the consummation of the transactions
contemplated hereby. The parties hereto acknowledge and agree that certain other
Contracts on Schedule 3.15(a) provide that such Contracts may not be assigned
without the prior written consent of the other party thereto but are otherwise
silent as to changes in control, and that INTERMAT will not seek the consents of
any such party in connection with the transactions contemplated hereby.
Section 3.16. Receivables. All notes and accounts receivable payable
to or for the benefit of INTERMAT reflected on the November 30, 1996 Balance
Sheet, or acquired by INTERMAT after the date thereof and before the Effective
Time, except as set forth in Schedule 3.16, are or will be valid and legally
binding obligations of the obligor thereon, have been collected or are (or will
be) current and collectible within 90 days after the Effective Time in amounts
not less than the aggregate amount thereof (net of reserves established in
accordance with prior practice) carried (or to be carried) on the books of
INTERMAT, and are not subject to any defense, counterclaim or set-off. Schedule
3.16 sets forth a true and correct list of each note and account receivable of
INTERMAT at November 30, 1996 and December 31, 1996, in each case together with
the date each such receivable was created.
Section 3.17. Inventories. The Inventory is stated on the November 30,
1996 Balance Sheet at not more than the lower of cost or net realizable value
and such Inventory (i) will be
15
sold by INTERMAT in the ordinary course of its business within 90 days after the
Effective Time or (ii) is subject to repurchase by INTERMAT's customers pursuant
to valid and enforceable written agreements between such customers and INTERMAT
as in effect on the date of this Merger Agreement or (iii) shall be returned to
the applicable vendor for full credit.
Section 3.18. Employee Plans.
(a) Schedule 3.18 sets forth all pension, savings, retirement, health,
insurance, severance and other employee benefit or fringe benefit plans
maintained by INTERMAT (collectively referred to herein as the "Plans"). With
respect to the Plans, INTERMAT has delivered to SDI copies of: (i) all Plan
documents, and, where applicable, related trust agreements, and any related
agreements which are in writing; (ii) summary plan descriptions; (iii) the most
recent Internal Revenue Service determination letter relating to each Plan for
which a letter of determination was obtained; (iv) to the extent required to be
filed, the most recent Annual Report (Form 5500 Series and accompanying
schedules of each Plan and applicable financial statements) as filed with the
Internal Revenue Service; and (v) audited financial statements, if any.
(b) (i) Each Plan conforms to, and its administration is in compliance
with, all applicable requirements of law, including, without limitation, ERISA
and the Code, and (ii) all of the Plans are in full force and effect as written,
and all premiums, contributions and other payments required to be made by
INTERMAT under the terms of any Pension Plan or Welfare Plan (each as defined
below) have been made or accrued.
(c) Each Plan maintained by INTERMAT that is a pension plan as defined
in Section 3(2) of ERISA (a "Qualified Plan"), is qualified under Section 401(a)
of the Code, and a favorable determination letter has been issued by the
Internal Revenue Service with respect to each such qualified Pension Plan. No
Plan maintained by INTERMAT that is an employee welfare benefit plan as defined
in Section 3(1) of ERISA (a "Welfare Plan") is funded through a voluntary
employee beneficiary association as defined in Section 501(c)(9) of the Code.
(d) Except for the Plan set forth on Schedule 3.18, neither INTERMAT
nor any trade or business (whether or not incorporated) which has ever been
under common control with INTERMAT within the meaning of Sections 414(b), (c),
(m) or (o) of the Code (each, an "ERISA Affiliate") has ever sponsored,
contributed to, or incurred any liability with respect to any pension plan as
defined in Section 3(2) of ERISA.
(e) There are no multiemployer plans (as defined in Subsection 3(37)
of ERISA) to which INTERMAT or any ERISA Affiliate is, or has been, required to
make a contribution or other payment.
(f) There has been no non-exempt prohibited transaction (within the
meaning of Section 4975 of the Code or Part 4 of Subtitle B of Title I of ERISA)
with respect to any Plan.
16
(g) INTERMAT does not maintain any Plan providing post-retirement
benefits other than pension benefits provided under Qualified Plans
("Post-Retirement Benefits"). INTERMAT is not liable for Post-Retirement
Benefits under any Plan not maintained by INTERMAT. INTERMAT and each ERISA
Affiliate has complied in all material respects with the requirements of Section
4980B of the Code and Sections 601 to 608 of ERISA relating to continuation
coverage for group health plans.
Section 3.19. Customers, Suppliers and Competitors.
(a) Schedule 3.19 sets forth a complete and correct list of (i) all
customers (listed by account and sorted by size) during INTERMAT's last full
fiscal year; (ii) the suppliers by dollar volume of INTERMAT and the aggregate
dollar volume of purchases by INTERMAT from such suppliers for such fiscal year;
(iii) all distributors of any Products; and (iv) all representatives of INTERMAT
with respect to the business of INTERMAT. None of such customers, suppliers,
distributors or representatives has or, to the best knowledge of INTERMAT and
each of the Stockholders, intends to terminate or change significantly its
relationship with INTERMAT.
(b) Neither INTERMAT, nor the Stockholders, nor any of INTERMAT's
officers or directors has any interest, nor during the last three years had any
interest, either by way of contract or by way of investment or otherwise,
directly or indirectly, in any Person other than INTERMAT that (i) provides any
services or designs, produces or sells any Product or Product lines or engages
in any activity similar to or competitive with any activity currently conducted
or currently proposed to be conducted by INTERMAT or (ii) has any direct or
indirect interest in any asset or property, real or personal, tangible or
intangible, of INTERMAT.
Section 3.20. Insurance. Schedule 3.20 lists the fidelity bonds and
the aggregate coverage amount and type and generally applicable deductibles of
all policies of title, liability, fire, casualty, business interruption,
workers' compensation and other forms of insurance insuring INTERMAT. INTERMAT
has furnished a true, complete and accurate copy of all such policies and bonds
to SDI. All such policies and bonds are in full force and effect, underwritten
by financially sound and reputable insurers and sufficient for all applicable
requirements of law and will not be affected by or terminated or lapsed by
reason of the consummation of the transactions contemplated by this Merger
Agreement. INTERMAT shall maintain the coverage under all policies and bonds
listed on Schedule 3.20 in full force and effect through the Effective Time.
INTERMAT is not in default under any provision of any such policy of insurance
nor has received notice of cancellation of any such insurance. There is no claim
by INTERMAT pending under any of such policies or bonds as to which coverage has
been questioned, denied or disputed by the underwriters of such policies or
bonds. Neither INTERMAT nor any of the Stockholders has received any written
notice from or on behalf of any insurance carrier issuing such policies that
insurance rates will hereafter be substantially increased, that there will
hereafter be a cancellation, or an increase in a deductible (or an increase in
premiums in order to maintain an existing deductible) or non-renewal of existing
policies, or that alteration of any Equipment and Machinery, the
17
purchase of additional Equipment and Machinery or modification of any of the
methods of conducting INTERMAT's business, will be required or suggested. The
insurance maintained by INTERMAT is adequate in accordance with industry
standards, the requirements of any applicable leases and is in at least the
minimum amount required by currently applicable environmental regulations.
Section 3.21. Transactions with Affiliates. Except as set forth on
Schedule 3.21, there have been no transactions between any of the Stockholders
and INTERMAT, or any director, officer or employee of INTERMAT. Except as set
forth on Schedule 3.21, to the best knowledge of INTERMAT and each of the
Stockholders, during the past three years none of the officers, directors or
employees of INTERMAT, or any spouse or relative of any of such Person, has been
a director or officer of, or has had any direct or indirect interest in, any
Person which during such period has been a supplier, customer or sales agent of
INTERMAT.
Section 3.22. Change in Ownership. To the best knowledge of INTERMAT
and each of the Stockholders, the consummation of the transactions contemplated
by this Merger Agreement will not result in the loss of the benefits of any
Contract or any material relationship with any customer or supplier.
Section 3.23. Labor Matters.
(a) Schedule 3.23(a) lists all of INTERMAT's employees as of the date
hereof, together with each such employee's salary. Except as set forth on
Schedule 3.23(a): (i) INTERMAT is not a party to any outstanding employment
agreements or contracts with officers or employees of INTERMAT that are not
terminable at will, or that provide for the payment of any bonus or commission;
(ii) INTERMAT is not a party to any agreement, policy or practice that requires
it to pay termination or severance pay to salaried, non-exempt or hourly
employees of INTERMAT (other than as required by law); (iii) INTERMAT is not a
party to any collective bargaining agreement or other labor union contract
applicable to employees of INTERMAT nor do any of the Stockholders or INTERMAT
know of any activities or proceedings of any labor union to organize any such
employees currently taking place or planned or that have occurred within the
last three years. INTERMAT has furnished to SDI complete and correct copies of
all such agreements (the "Employment and Labor Agreements"). INTERMAT has not
breached or otherwise failed to comply with any provisions of any Employment and
Labor Agreement, and there are no grievances outstanding thereunder.
(b) (i) INTERMAT is in compliance with all applicable laws relating to
employment and employment practices, wages, hours, and terms and conditions of
employment; (ii) there is no unfair labor practice charge or complaint pending
before the National Labor Relations Board ("NLRB"); (iii) there is no labor
strike, material slowdown or material work stoppage or lockout pending or, to
the best knowledge of INTERMAT and each of the Stockholders, threatened against
or affecting the business of INTERMAT, and INTERMAT has not experienced any
strike, material slow down or material work stoppage, lockout or other
collective labor action; (iv) there is no representation claim or petition
pending before the
18
NLRB or any similar foreign agency and no question concerning representation
exists relating to the employees of INTERMAT; (v) there are no charges with
respect to or relating to INTERMAT pending before the Equal Employment
Opportunity Commission or any state, local or foreign agency responsible for the
prevention of unlawful employment practices; and (vi) neither INTERMAT nor any
of the Stockholders has received notice from any national, state, local or
foreign agency responsible for the enforcement of labor or employment laws of an
intention to conduct an investigation of INTERMAT and no such investigation is
in progress.
Section 3.24. Products Liability.
(a) (i) There is no notice, demand, claim, action, suit, inquiry,
hearing, proceeding, notice of violation or investigation of a civil, criminal
or administrative nature before any court or governmental or other regulatory or
administrative agency, commission or authority, domestic or foreign, against or
involving any Product or any product distributed by or on behalf of INTERMAT, or
class of claims or lawsuits involving the same or similar Product or any product
distributed by or on behalf of INTERMAT which is pending or, to the best
knowledge of INTERMAT and each of the Stockholders, threatened, resulting from
an alleged defect in design, manufacture, materials or workmanship of any
Product or any product distributed or sold by or on behalf of INTERMAT, or any
alleged failure to warn, or from any breach of implied warranties or
representations; (ii) there has not been any Occurrence; and (iii) there has not
been, nor is there under consideration or investigation by INTERMAT, any Product
rework, or retrofit (collectively, "Retrofits") conducted by or on behalf of
INTERMAT concerning any products manufactured, produced, distributed or sold by
or on behalf of INTERMAT.
(b) For purposes of this Section 3.24, the term "Occurrence" shall
mean any accident, happening or event which takes place at any time which is
caused or allegedly caused by any alleged hazard or alleged defect in
manufacture, design, materials or workmanship including, without limitation, any
alleged failure to warn or any breach of express or implied warranties or
representations with respect to, or any such accident, happening or event
otherwise involving any Product or any product distributed by or on behalf of
INTERMAT (including any parts or components), that is likely to result in a
claim or loss.
Section 3.25. Environmental Matters. INTERMAT has obtained and
maintained in effect all licenses, permits and other authorizations required
under all applicable laws, regulations and other requirements of governmental or
regulatory authorities relating to pollution or to the protection of the
environment, health or safety ("Environmental, Health or Safety Laws") and is in
compliance with all Environmental, Health or Safety Laws and with all such
licenses, permits and authorizations. Neither INTERMAT nor any of the
Stockholders has performed or suffered any act which could give rise to, or has
otherwise incurred, liability to any Person (governmental or not) under the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
ss. 9601 et seq. or any other Environmental, Health or Safety Laws, nor have any
of the Stockholders or INTERMAT received notice of any such liability or any
claim therefor or submitted notice
19
pursuant to section 103 of such Act to any governmental agency with respect to
any of INTERMAT's operations or assets. Neither INTERMAT nor any of the
Stockholders is subject to, or the subject of, any investigation by, enforcement
order from or consent agreement with, any governmental authority with respect to
any Environmental, Health or Safety Laws. No hazardous substance, hazardous
waste, contaminant, pollutant or toxic substance (as such terms are defined in
any applicable Environmental, Health or Safety Law) ("Hazardous Substance") has
been released, placed, dumped or otherwise come to be located on, at, beneath or
near any property owned or leased by INTERMAT or any surface waters or
groundwaters thereon or thereunder. Neither INTERMAT nor any of the Stockholders
owns or operates, and has not owned or operated, an underground storage tank or
land disposal unit nor is there or has there even been any underground storage
tank or land disposal unit located on any property owned or leased by INTERMAT.
Section 3.26. Capitalization of INTERMAT; Title to the Shares. The
authorized capital stock of INTERMAT consists of 500,000 shares of INTERMAT
Common Stock. The 6,143 shares of INTERMAT Common Stock held by the Stockholders
(which number is rounded up to the nearest whole share) are the only capital
stock of INTERMAT outstanding on the date of this Merger Agreement. The
outstanding shares of INTERMAT Common Stock have been duly authorized and
validly issued and are fully paid and non-assessable. There are no outstanding
options, warrants, agreements, conversion rights, preemptive rights, or other
rights to subscribe for, purchase or otherwise acquire any shares of INTERMAT
Common Stock or any unissued or treasury shares of capital stock of INTERMAT.
Each Stockholder has valid and marketable title to his or her shares of INTERMAT
Common Stock, free and clear of any liens, claims, charges, security interests
or other legal or equitable encumbrances, limitations or restrictions.
Section 3.27. Financial Projections. The financial projections
attached hereto as Schedule 3.27 were prepared by INTERMAT on a reasonable basis
and in good faith. The assumptions used in the preparation of such projections
(a) are those INTERMAT believes are significant in forecasting the financial
results of INTERMAT and (b) reflect, as of the date made and for the relevant
periods presented, a reasonable estimate of the events, contingencies and
circumstances described therein. Such projections present INTERMAT's estimate of
the expected results of operations subject to certain uncertainties and
contingencies mentioned therein.
Section 3.28. Accuracy of Information. None of the Stockholders' or
INTERMAT's representations, warranties or statements contained in this Merger
Agreement, or in the exhibits hereto, contains any untrue statement of a
material fact or omits to state any material fact necessary in order to make any
of such representations, warranties or statements in light of the circumstances
under which they were made not misleading.
20
ARTICLE IV
REPRESENTATIONS AND
WARRANTIES OF SDI AND
MERGER SUB
SDI and Merger Sub jointly and severally represent and warrant to
INTERMAT and the Stockholders that:
Section 4.01. Corporate Organization. Each of SDI and Merger Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware.
Section 4.02. Authority. Each of SDI and Merger Sub has full corporate
power and authority to execute and perform this Merger Agreement in accordance
with its terms. This Merger Agreement has been duly and validly authorized by
all necessary corporate action on the part of SDI and Merger Sub, has been duly
executed and delivered on behalf of SDI and Merger Sub and constitutes the valid
and binding obligation of SDI and Merger Sub, enforceable against them in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws from time to
time in effect that affect creditors' rights generally and by legal and
equitable limitations on the availability of specific remedies. No other
corporate action (including stockholder approval) is necessary to authorize such
execution and delivery or the performance of the transactions contemplated by
this Merger Agreement.
Section 4.03. No Conflict or Violation. The execution, delivery and
performance by SDI and Merger Sub of this Merger Agreement do not and will not
violate or conflict with any provision of the Certificate of Incorporation or
By-laws of SDI or Merger Sub and do not and will not violate any provision of
law, or any order, judgment or decree of any court or other governmental or
regulatory authority, nor violate nor result in a breach of or constitute (with
due notice or lapse of time or both) a default under any contract, lease, loan
agreement, mortgage, security agreement, trust indenture or other agreement or
instrument to which SDI or Merger Sub is a party or by which either of them is
bound or to which either of their properties or assets is subject, nor result in
the creation or imposition of any Lien upon any of the property of SDI or Merger
Sub, nor result in the cancellation, modification, revocation or suspension of
any of the licenses, permits, franchises, authorizations and approvals issued or
granted to SDI by the government of the United States, any state or local
government, any foreign national or local government, or any department, agency,
board, commission, bureau or instrumentality of any of the foregoing (the "SDI
Licenses and Permits").
Section 4.04. Consents and Approvals. No filing with, and no consent,
waiver, authorization or approval of, any governmental or regulatory authority,
domestic or foreign, is required in connection with the execution and delivery
of this Merger Agreement by SDI or Merger Sub or the performance of their
respective obligations hereunder.
21
Section 4.05. Stock Consideration. The shares of SDI Common Stock
constituting the Stock Consideration, when issued and delivered in accordance
with the terms of this Merger Agreement, will be duly and validly issued, fully
paid and nonassessable.
Section 4.06. Business. SDI has caused to be delivered to INTERMAT
copies of SDI's Annual Report on Form 10-K for the fiscal year ended December
31, 1995, Quarterly Reports on Form 10-Q for each of the first three fiscal
quarters of SDI's 1996 fiscal year, the final Prospectus dated May 29, 1996
relating to the offering of 8,200,000 shares of SDI Common Stock, SDI's Proxy
Statement for its annual meeting of stockholders held in 1996 and such
additional documents as have been filed by SDI pursuant to the Exchange Act
since January 1, 1995 (collectively, the "SEC Reports"). The SEC Reports were
prepared and filed in material compliance with the rules and regulations
promulgated by the Commission under the Exchange Act, and do not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein in order to make the statements contained therein, in light
of the circumstances under which they were made, not misleading.
Section 4.07. Financial Statements. The audited consolidated balance
sheet of SDI as at December 31, 1995 and the unaudited consolidated balance
sheet of SDI as at September 30, 1996 included in the SEC Reports fairly present
the consolidated financial position of SDI as at the dates thereof, and the
related consolidated statements of operations, stockholders' equity and cash
flows for the fiscal periods ended on such dates fairly present the results of
operations and cash flows of SDI and its subsidiaries for the respective periods
indicated. All such financial statements, including the schedules and notes
thereto, were prepared in accordance with GAAP applied consistently throughout
the periods involved.
Section 4.08. Tax Matters. All Tax Returns required to be filed before
the Effective Time in respect of SDI have been (or will have been by the
Effective Time) filed, and SDI has (or will have by the Effective Time) paid,
accrued or otherwise adequately reserved for the payment of all Taxes required
to be paid in respect of the periods covered by such Tax Returns and has (or
will have by the Effective Time) adequately reserved for the payment of all
Taxes with respect to periods ended at or before the Effective Time for which
Tax Returns have not yet been filed. All Taxes of SDI have been paid or
adequately provided for and SDI knows of no proposed additional tax assessment
against SDI not adequately provided for in the unaudited consolidated balance
sheet of SDI as at September 30, 1996 included in the SEC Reports. In the
ordinary course, SDI makes adequate provision on its books for the payment of
Taxes (including for the current fiscal period) owed by SDI.
Section 4.09. Licenses and Permits. Each SDI License and Permit has
been duly obtained, is valid and in full force and effect, and is not subject to
any pending or threatened administrative or judicial proceeding to revoke,
cancel, suspend or declare such SDI License and Permit invalid in any respect.
The SDI Licenses and Permits are sufficient and adequate in all respects to
permit the continued lawful conduct of SDI's business in the manner now
conducted and as proposed to be conducted, and none of the operations of SDI are
being conducted in a manner that violates any of the terms or conditions under
which any SDI
22
License and Permit was granted. No such SDI License and Permit will be affected
by, or terminate or lapse by reason of, the transactions contemplated by this
Merger Agreement.
Section 4.10. Compliance with Law. The operations of SDI have been
conducted in accordance with all applicable laws, regulations, orders and other
requirements of all courts and other governmental or regulatory authorities
having jurisdiction over SDI and its assets, properties and operations,
including, without limitation, all such laws, regulations, orders and
requirements promulgated by or relating to consumer protection, equal
opportunity, health, environmental protection, conservation, architectural
barriers to the handicapped, fire, zoning and building, occupation safety,
pension, securities matters and intellectual property matters. SDI has not
received notice of any violation of any such law, regulation, order or other
legal requirement, and is not in default with respect to any order, writ,
judgment, award, injunction or decree of any national, state or local court or
governmental or regulatory authority or arbitrator, domestic or foreign. Neither
SDI nor Merger Sub has knowledge of any proposed change in any such laws, rules
or regulations (other than laws of general applicability) that would materially
and adversely affect SDI or its business or the transactions contemplated by
this Merger Agreement.
Section 4.11. Litigation. Except as set forth in the SEC Reports,
there are no material claims, actions, suits, proceedings, labor disputes or
investigations pending or, to the best knowledge of SDI or Merger Sub,
threatened, before any national, state or local court or governmental or
regulatory authority, domestic or foreign, or before any arbitrator of any
nature, brought by or against SDI or Merger Sub or any of their officers,
directors, employees or agents involving, affecting or relating to SDI's
business, or the transactions contemplated by this Merger Agreement, nor is any
basis known to SDI or Merger Sub or any of their directors or officers for any
such action, suit, proceeding or investigation. SDI is not subject to any order,
writ, judgment, award, injunction or decree of any national, state or local
court or governmental or regulatory authority or arbitrator, domestic or
foreign, that affects or might affect SDI's business or that would or might
interfere with the transactions contemplated by this Merger Agreement.
Section 4.12. Accuracy of Information. None of SDI's or Merger Sub's
representations, warranties or statements contained in this Merger Agreement, or
in the exhibits hereto, contains any untrue statement of a material fact or
omits to state any material fact necessary in order to make any of such
representations, warranties or statements in light of the circumstances under
which they were made not misleading.
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ARTICLE V
COVENANTS OF INTERMAT AND THE STOCKHOLDERS
Section 5.01. Conduct Pending the Merger.
(a) From and after the date of this Merger Agreement and until the
Effective Time, INTERMAT shall conduct its business solely in the ordinary
course consistent with past practice and, without the prior written consent of
SDI, INTERMAT shall not, except as required or permitted pursuant to the terms
hereof:
(i) make any material change in the conduct of its businesses and
operations or enter into any transaction, other than in the ordinary course of
business consistent with past practice;
(ii) make any change in its Articles of Incorporation or By-laws,
issue any additional shares of capital stock or equity securities, grant any
option, warrant or right to acquire any capital stock or equity securities,
issue any security convertible into or exchangeable for its capital stock, alter
in any material respect the terms of any of its outstanding securities, or make
any change in its outstanding shares of capital stock or in its capitalization,
whether by reason of a reclassification, recapitalization, stock split or
combination, exchange or readjustment of shares, stock dividend or otherwise;
(iii) incur, assume or guarantee any indebtedness for borrowed
money, issue any notes, bonds, debentures or other corporate securities or grant
any option, warrant or right to purchase any thereof;
(iv) make any sale, assignment, transfer, abandonment or other
conveyance of any of its assets or any part thereof, except in the ordinary
course of business consistent with past practices;
(v) subject any of its assets, or any part thereof, to any Lien
or suffer such to be imposed other than mechanics Liens and Liens for taxes not
yet due and payable;
(vi) redeem, retire, purchase or otherwise acquire, directly or
indirectly, any shares of its capital stock or declare, set aside or pay any
dividends or other distribution in respect of such shares;
(vii) increase the compensation payable or to become payable to
its executive officers or employees, except for increases in the ordinary course
of business in accordance with past practices, or grant any severance or
termination pay to, enter into any employment or severance agreement with, any
director or executive officer, or establish, adopt, enter into or amend in any
material respect or take action to accelerate any rights or benefits under any
bonus, profit sharing, compensation, pension, retirement, deferred compensation,
24
employment, termination, severance or other plan, agreement, trust fund, policy
or arrangement for the benefit of any director, executive officer or employee;
(viii) make or commit to make any capital expenditure in excess
of $10,000;
(ix) pay, lend or advance any amount to, or sell, transfer or
lease any properties or assets to, or enter into any agreement or arrangement
with, any of the Stockholders;
(x) fail to keep in full force and effect insurance comparable in
amount and scope to coverage maintained in respect of the business of INTERMAT;
(xi) make any change in the method of accounting or accounting
principle, method, estimate or practice except for any such change required by
reason of a concurrent change in GAAP, or write down the value of any Inventory
or write off as uncollectible any accounts receivable except in the ordinary
course of business consistent with past practice;
(xii) take any other action that would cause any of the
representations and warranties made in this Merger Agreement not to remain true
and correct; or
(xiii) commit itself to do any of the foregoing.
(b) From and after the date of this Merger Agreement and until
the Effective Time, the Stockholders shall, and shall cause INTERMAT to:
(i) continue to maintain, in all material respects, INTERMAT's
property, including its Intellectual Property in accordance with past practice
in a condition suitable for its current use;
(ii) file, when due or required, national, state, foreign and
other Tax Returns and other reports required to be filed and pay when due all
Taxes, assessments, fees and other charges lawfully levied or assessed against
them, unless the validity thereof is contested in good faith and by appropriate
proceedings diligently conducted;
(iii) continue to conduct INTERMAT's business in the ordinary
course consistent with past practice;
(iv) keep INTERMAT's books of account, Files and Records in the
ordinary course and in accordance with past practice; and
(v) continue to maintain existing business relationships with
suppliers and customers other than relationships not economically beneficial to
the business of INTERMAT.
Section 5.02. Consents and Approvals. INTERMAT (a) shall, at its
cost and expense, use its reasonable best efforts to obtain all necessary
consents, waivers, authorizations and approvals of all governmental and
regulatory authorities, domestic and foreign, and of all
25
other Persons required in connection with the execution, delivery and
performance by INTERMAT of this Merger Agreement, and (b) shall diligently
assist and cooperate with SDI in preparing and filing all documents required to
be submitted by SDI to any governmental or regulatory authority, domestic or
foreign, in connection with such transactions and in obtaining any governmental
consents, waivers, authorizations or approvals which may be required to be
obtained by SDI in connection with such transactions (which assistance and
cooperation shall include, without limitation, timely furnishing to SDI all
information concerning INTERMAT that counsel to SDI determines is required to be
included in such documents or would be helpful in obtaining any such required
consent, waiver, authorization or approval).
Section 5.03. Access to Properties and Records. INTERMAT shall, and
each of the Stockholders shall cause INTERMAT to, afford to SDI, and to the
accountants, counsel and representatives of SDI, reasonable access during normal
business hours throughout the period prior to the Closing (or the earlier
termination of this Merger Agreement pursuant to Section 10.01) to all
properties, books, Contracts, commitments and Files and Records (including, but
not limited to, Tax Returns and correspondence with accountants) of INTERMAT
and, during such period, shall furnish promptly to SDI all other information
concerning INTERMAT as SDI may reasonably request, provided that no
investigation or receipt of information pursuant to this Section 5.03 shall
qualify any representation or warranty of INTERMAT or the conditions to the
obligations of SDI.
Section 5.04. Negotiations. From and after the date hereof and until
January 31, 1997, neither INTERMAT nor any of the Stockholders, nor INTERMAT's
officers or directors or anyone acting on behalf of INTERMAT or such persons
shall, directly or indirectly, encourage, solicit, engage in discussions or
negotiations with, or provide any information to, any Person or other entity or
group (other than SDI or its representatives) concerning any merger, sale of
substantial assets, purchase or sale of shares of capital stock or similar
transaction involving INTERMAT or any other transaction inconsistent with the
transactions contemplated hereby.
Section 5.05. Further Assurances; Reasonable Best Efforts. Upon the
request of SDI at any time after the Closing, each of the Stockholders shall
forthwith execute and deliver such further instruments and other documents as
SDI or its counsel may reasonably request to effectuate the purposes of this
Merger Agreement. Upon the terms and subject to the conditions of this Merger
Agreement, INTERMAT and each of the Stockholders will use their reasonable best
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, all things necessary, proper or advisable consistent with applicable law
to consummate and make effective in the most expeditious manner practicable the
transactions contemplated hereby.
Section 5.06. Covenant Not To Compete.
(a) Each Stockholder agrees that, for a period of five years after the
Effective Time, such Stockholder shall not, directly or indirectly, as a sole
proprietor, member of a
26
partnership, or stockholder, investor, officer or director of a corporation, or
as an employee, agent, associate or consultant of any Person:
(i) Solicit or accept business (x) from any clients or
prospects of INTERMAT, the Surviving Corporation or their affiliates
or (y) from any former client who was such within the last two (2)
years prior to the date of this Merger Agreement, if such business
would be in competition with the Company or its affiliates or
otherwise interfere with the customer relationships of the Company or
its affiliates; or
(ii) Engage in the business of the type performed by SDI or
its affiliates (including the Surviving Corporation).
(b) Each Stockholder agrees that a monetary remedy for a breach of the
agreement set forth in Section 5.06(a) hereof will be inadequate and
impracticable and further agree that such a breach would cause SDI irreparable
harm, and that SDI shall be entitled to temporary and permanent injunctive
relief without the necessity of proving actual damages. In the event of such a
breach, each Stockholder agrees that SDI shall be entitled to such injunctive
relief, including temporary restraining orders, preliminary injunctions and
permanent injunctions as a court of competent jurisdiction shall determine, in
addition to any damages to which SDI may be entitled.
Section 5.07. Non-Solicitation of Employees. Each Stockholder agrees,
for the five-year period commencing on the Effective Time, not to make, offer,
solicit or induce to enter into, any written or oral arrangement, agreement or
understanding regarding employment or retention as a consultant with any Person
who was, on the date hereof, a full-time employee of INTERMAT, without the
written consent of SDI.
Section 5.08. Disclosure of Information. Each Stockholder recognizes
and acknowledges that the Company's trade secrets and confidential or
proprietary information, including such trade secrets or information as may
exist from time to time, and information as to the identity of customers of the
Company and its affiliates and other similar items, are valuable, special and
unique assets of the Company's business, access to and knowledge of which are
essential to the performance of the Stockholder's duties to the Company. Each
Stockholder will not, during or after the term hereof, in whole or in part,
disclose, and has not prior to the commencement of the term hereof disclosed,
such secrets or confidential or proprietary information to any person, firm,
corporation, association or other entity for any reason or purpose whatsoever,
except in furtherance of the Stockholder's duties to the Company. Each
Stockholder will not make use of any such property for his or her own purposes
or for the benefit of any person, firm, corporation or other entity (except the
Company) under any circumstances, during or after the term hereof, and each
Stockholder has not prior to the commencement of the term hereof made such use,
provided that after the term hereof these restrictions shall not apply to such
secrets or information which are then in the public domain (provided that she
was not responsible, directly or indirectly, for such secrets or information
entering the public domain without the Company's consent).
27
Section 5.09. Expenses related to INTERMAT Lease. The Stockholders
shall be responsible for the any and all expenses incurred that are related to
obtaining the consent to the Merger of Nine Greenway, Ltd., as landlord under
the INTERMAT Lease, or expenses incurred that are related to the failure to
obtain such consent ("Lease Consent Expenses").
Section 5.10. Notice of Breach. Through the Effective Time, INTERMAT
and the Stockholders shall promptly give SDI written notice with particularity
upon having knowledge of any matter that may constitute a breach of any
representation, warranty, agreement or covenant contained in this Merger
Agreement.
ARTICLE VI
COVENANTS OF SDI
Section 6.01. Actions Before the Effective Time. SDI shall not take
any action which shall cause it to be in breach of any of its representations,
warranties, covenants or agreements contained in this Merger Agreement. SDI
shall use its reasonable best efforts to perform and satisfy all conditions to
Closing to be performed or satisfied by SDI under this Merger Agreement as soon
as possible, but in no event later than the Effective Time.
Section 6.02. Consents and Approvals. SDI shall use its reasonable
best efforts to obtain all consents and approvals of third parties required to
be obtained by SDI to effect the transactions contemplated by this Merger
Agreement.
Section 6.03. Further Assurances; Reasonable Best Efforts. Upon the
request of the Stockholders at any time after the Closing, SDI or the Surviving
Corporation shall forthwith execute and deliver such further instruments and
other documents as the Stockholders or their counsel may reasonably request to
effectuate the purposes of this Merger Agreement. Upon the terms and subject to
the conditions of this Merger Agreement, SDI and Merger Sub will use their
reasonable best efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary, proper or advisable consistent with
applicable law to consummate and make effective in the most expeditious manner
practicable the transactions contemplated hereby.
Section 6.04. Notice of Breach. Through the Effective Time, SDI and
Merger Sub shall promptly give INTERMAT and the Stockholders written notice with
particularity upon having knowledge of any matter that may constitute a breach
of any representation, warranty, agreement or covenant contained in this Merger
Agreement.
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ARTICLE VII
OTHER AGREEMENTS
Section 7.01. Stock Consideration and Debt Consideration.
(a) Each Stockholder understands that the Stock Consideration and Debt
Consideration issued in the Merger have not been registered under the Securities
Act nor qualified under the Blue Sky laws of any state; and that the Stock
Consideration and Debt Consideration are being offered and sold to the
Stockholders pursuant to an exemption from such registration and qualification
based in part upon the representations of such Stockholder contained herein.
(b) Each Stockholder represents that he or she is (i) an "accredited
investor," as defined in Rule 501 under the Securities Act, or (ii) has such
knowledge and experience in financial and business matters that he or she is
capable of evaluating the merits and risks of an investment such as the SDI
Common Stock and the Merger Sub Notes.
(c) Each Stockholder acknowledges and agrees that he or she has
received and reviewed this Merger Agreement and has received and reviewed all
further information, if any, regarding SDI and Merger Sub necessary to make an
informed investment decision to invest in the SDI Common Stock and the Merger
Sub Notes, including information requested to verify other information received,
and has received all information that he or she has requested from SDI, and has
been afforded a reasonable time to ask questions about the SDI Common Stock and
the Merger Sub Notes and the terms and conditions of the Merger Agreement, and
has received satisfactory answers to all such questions.
(d) Each Stockholder acknowledges that he or she is fully aware of the
applicable transfer restrictions of the SDI Common Stock and the Merger Sub
Notes to be issued in the Merger, recognizes that it may be necessary to hold
the SDI Common Stock and the Merger Sub Notes indefinitely and can bear the
economic risk of his or her investment in the SDI Common Stock and the Merger
Sub Notes (including a complete loss of the investment).
(e) Each Stockholder acknowledges and agrees that he or she is
acquiring the Stock Consideration and Debt Consideration issued in the Merger
for investment for his or her own account and not with a view to, or for resale
in connection with, the distribution or other disposition thereof. Each
Stockholders agree that he or she will not, directly or indirectly, offer,
transfer, sell, assign, pledge, hypothecate or otherwise dispose of
(hereinafter, "Transfer") any of the Stock Consideration or Debt Consideration
issued in the Merger unless (i) the Transfer is pursuant to an effective
registration statement under the Securities Act, and the rules and regulations
in effect thereunder, or (ii) counsel for such Stockholder (which counsel shall
be reasonably acceptable to SDI) shall have furnished SDI with an opinion,
satisfactory in form and substance to SDI, to the effect that no such
registration is required because of the availability of an exemption from
registration under the Securities Act.
29
Section 7.02. Legend. Each certificate representing Stock
Consideration and each Merger Sub Note representing Debt Consideration shall
bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT
BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
IN THE ABSENCE OF (i) AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH
SECURITIES UNDER SAID ACT OR (ii) AN OPINION OF COMPANY COUNSEL THAT
SUCH REGISTRATION IS NOT REQUIRED."
Section 7.03. Delivery of Audited Financial Statements. By February
28, 1997, the Stockholders shall prepare and deliver to SDI audited balance
sheets of INTERMAT at December 31, 1994, 1995 and 1996 and related statements of
income, retained earnings and cash flows for the fiscal years then ended (the
"Audited Financial Statements"), and by March 15, 1997, the Stockholders shall
prepare and deliver to SDI an audited balance sheet of INTERMAT at the close of
business on the Closing Date (the "Closing Date Balance Sheet"). The Audited
Financial Statements and the Closing Date Balance Sheet shall be prepared in
accordance with GAAP applied on a basis consistent with that used in, and in
accordance with the same accounting principles applied in, the preparation of
the Historical Financial Statements. The Audited Financial Statements and the
Closing Date Balance Sheet shall be audited by Wallingford, McDonald, Fox & Co.,
P.C. and shall include the opinion of Wallingford, McDonald, Fox & Co., P.C.
that such accountants have audited the Audited Financial Statements and the
Closing Date Balance Sheet in accordance with generally accepted auditing
standards and that the Audited Financial Statements and the Closing Date Balance
Sheet were prepared in accordance with GAAP, applied on a basis consistent with
that used in, and in accordance with the same accounting principles applied in
the preparation of the Historical Financial Statements.
Section 7.04. Tax Matters.
(a) The Stockholders shall be responsible for the payment of all Tax
due with respect to taxable periods ending on or before the close of business on
the date of the Effective Time, including, but not limited to, Taxes relating to
the final S corporation Tax Return of INTERMAT for the period beginning January
1, 1997 and ending on the date of the Effective Time. Such final S corporation
Tax Return shall reflect INTERMAT's liability resulting from the imposition of
Tax under Section 1374 of the Code on "built-in gains." Where any such Tax
Return is required to be filed after the Effective Time, the Stockholders shall
prepare, or cause to be prepared, a draft of such Tax Return and shall furnish
such draft to SDI for review by SDI at least 30 days prior to the due date of
such Tax Return. SDI shall have the right to consent to the form and content of
such Tax Return, which consent shall not be unreasonably withheld. Where such
Tax Return is required to be filed by the Surviving Corporation, at least five
days prior to the due date for the Tax Return, the Stockholders shall pay over
to the Surviving Corporation the Tax due with respect to such Tax Return.
30
(b) Subject to Section 7.04(a), for taxable periods beginning before
and ending after the date of the Effective Time, SDI shall prepare or cause the
Surviving Corporation to prepare the Tax Returns required to be filed, if any,
for such periods and shall pay the Taxes due with respect to such Tax Returns;
provided, however, that SDI shall furnish a draft of such Tax Return to the
Stockholders at least 30 days prior to the due date for such Tax Return, and the
Stockholders shall pay SDI the portion of the Tax attributable to the taxable
period ending at the close of business on the date of the Effective Time. The
Stockholders shall have the right to review and consent to the form and
substance of such Tax Return, such consent not to be unreasonably withheld. For
this purpose, the Tax attributable to the period ending at the Effective Time
shall be based on a closing of the books of INTERMAT as of close of business on
the date of the Effective Time, except that in the case of deductions and
allowances based on time (such as depreciation), such deductions or allowances
shall be apportioned based on the ratio that the number of days in the portion
of the taxable period ending on the date of the Effective Time bears to the
total number of days in the taxable period.
(c) SDI and the Stockholders agree to treat the Merger as a sale by
INTERMAT of all of its assets for federal and state income Tax purposes for an
amount equal to the Merger Consideration plus any liabilities assumed by SDI or
Merger Sub or to which such assets are subject to, other than liabilities for
which the Stockholders are liable under this Merger Agreement (the "Purchase
Price") The Purchase Price shall be allocated in accordance with Section
338(b)(5) of the Code and the Treasury Regulations thereunder using the
methodology set forth on Schedule 7.04(c). SDI shall determine the fair market
value of the assets of INTERMAT (the "Valuation"). The Valuation shall be
binding on all parties hereto unless the Stockholders shall, within 15 days of
notice to them of the Valuation, conclude in good faith that the Valuation is
manifestly unreasonable. SDI shall be under no obligation to have such Valuation
prepared by an independent appraiser. All values contained in the Valuation
shall be used by each party in preparing all relevant Tax Returns.
(d) SDI and the Stockholders agree to furnish or cause to be furnished
to each other, as promptly as practicable, such information and assistance
relating to INTERMAT's business as is reasonably necessary for the preparation
and filing of any Tax Return, claim for refund or other required or optional
filings relating to Tax matters, for the preparation for and proof of facts
during any Tax audit, for the preparation for any Tax protest, for the
prosecution or defense of any suit or other proceeding relating to Tax matters
and for the answer to any governmental or regulatory inquiry relating to Tax
matters.
Section 7.05. Representations and Warranties by Xxxxxx and Xxxxxx. (a)
With respect to the representations and warranties by Xxxxxx in Article III
hereof, and in any instrument delivered pursuant to the Merger Agreement with
respect thereto, no facts arising, or circumstances occurring, before January 1,
1994, shall constitute a breach of any such representation or warranty by Xxxxxx
unless on the date hereof he has knowledge of such facts or circumstances; and
(b) with respect to the representations and warranties by Xxxxxx in Article III
hereof, and in any instrument delivered pursuant to the Merger Agreement with
respect thereto, no facts arising, or circumstances occurring, before January 1,
1990, shall
31
constitute a breach of any such representation or warranty by Xxxxxx unless on
the date hereof he has knowledge of such facts or circumstances.
Section 7.06. Key Man Life Insurance. In the event that Merger Sub
determines to discontinue or terminate the key man life insurance policy on the
life of X. Xxxxxxxxx, Merger Sub shall offer to assign to X. Xxxxxxxxx such
policy, subject to the assumption by X. Xxxxxxxxx of all obligations and
liabilities in connection therewith.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
Section 8.01. Survival of Representations and Warranties. The
representations and warranties made by each of the parties hereto in this Merger
Agreement or in any instrument delivered pursuant to this Merger Agreement shall
survive the Closing and the consummation of the transactions contemplated by
this Merger Agreement and any investigation made by any party prior to the
Effective Time. Notwithstanding the foregoing, such representations and
warranties (except for the representations and warranties contained in Section
3.08 and 3.25 which shall survive indefinitely) shall terminate on the third
anniversary of the Closing Date. No claim or action for breach of any
representation or warranty shall be asserted or maintained by any party hereto
after the expiration of such representation or warranty pursuant to the
preceding sentence except for claims made in writing prior to such expiration or
actions (whether instituted before or after such expiration) based on any claim
made in writing prior to such expiration. In the event of a breach of any of
such representations, warranties or covenants, the party to whom such
representations, warranties or covenants have been made shall have all rights
and remedies for such breach available to it under the provisions of this Merger
Agreement or otherwise, whether at law or at equity, regardless of any
disclosure to, or investigation made by or on behalf of, such party on or before
the Effective Time.
Section 8.02. Indemnification.
(a) Each of the Beauchamps will jointly and severally, and each of
Xxxxxx and Xxxxxx (subject to the provisions of Section 7.05), Xxxxx and Xxxxxxx
will severally and not jointly (i) indemnify and hold harmless SDI, Merger Sub
and the Surviving Corporation and each of their directors, officers, employees,
advisors, affiliates, agents and stockholders from and against any and all
losses, damages, liabilities, costs and claims arising out of, based upon or
resulting from (w) any inaccuracy of any of their respective representations or
warranties contained in or made pursuant to this Merger Agreement; (x) any
breach by INTERMAT or the Stockholders of any of their respective agreements,
covenants or obligations contained in or made pursuant to this Merger Agreement,
(y) any Taxes for which the Stockholders are responsible under Section 7.04
hereof, or (z) any Lease Consent Expenses for which the Stockholders are
responsible under Section 5.09 hereof, and (ii) reimburse SDI, Merger Sub and
the Surviving Corporation and each of their directors, officers, employees,
advisors,
32
affiliates, agents and stockholders for any and all fees, costs and expenses of
any kind related thereto (including, without limitation, any and all Legal
Expenses); provided, however, that in no case shall Enders, Gilpin, Xxxxxxx or
Xxxxx be liable or responsible under this Section 8.02(a) for any amounts in
excess of the value of the respective Merger Consideration that such party is
entitled to receive hereunder and; provided, further, that in no case shall
Xxxxx be liable or responsible under this Section 8.02(a) with respect to a
breach of Section 3.11 hereof for any amounts in excess of (i) if Xxxxx shall
not have sold any shares of SDI Common Stock received by him as part of the
Merger Consideration (the "Xxxxx Shares"), then Xxxxx shall be liable for up to
an amount equal to the fair market value of the Xxxxx Shares, which amount may
be paid by Xxxxx by transferring to the claimant Xxxxx Shares having a fair
market value equal to the claim, or (ii) if Xxxxx shall have sold the Xxxxx
Shares, Xxxxx shall be liable for up to an amount equal to the proceeds received
by Xxxxx upon the sale of the Xxxxx Shares, or (iii) if Xxxxx shall have sold
some but not all of the Xxxxx Shares, Xxxxx shall be liable first for up to an
amount equal to the proceeds received by Xxxxx upon the sale of the sold Xxxxx
Shares, and second for up to an amount equal to the fair market value of the
unsold Xxxxx Shares (which amount may be paid by Xxxxx by transferring to the
claimant the unsold Xxxxx Shares having a fair market value equal to the claim).
For purposes of the preceding sentence, the fair market value of any Xxxxx
Shares shall be calculated by multiplying the number of such shares by the
closing sale price of the SDI Common Stock on the Nasdaq National Market (or
other securities exchange on which the shares of SDI Common Stock are primarily
listed) on the date a claim is made hereunder. As used in this Section 8.02,
"Legal Expenses" of a Person shall mean any and all reasonable out-of-pocket
fees, costs and expenses of any kind incurred by such Person and its counsel in
investigating, preparing for, defending against or providing evidence, producing
documents or taking other action with respect to any threatened or asserted
claim of a third party or governmental entity.
(b) SDI and Merger Sub will jointly and severally (i) indemnify and
hold harmless the Stockholders and each of their advisors, affiliates and
agents, as applicable, from and against any and all losses, damages,
liabilities, costs and claims (x) arising out of, based upon or resulting from
any inaccuracy of any representation or warranty of SDI or Merger Sub which is
contained in or made pursuant to this Merger Agreement or (y) arising out of,
based upon or resulting from any breach by SDI or Merger Sub of any of their
respective agreements, covenants or obligations contained in or made pursuant to
this Merger Agreement and (ii) reimburse the Stockholders and each of their
advisors, affiliates and agents, as applicable, for any and all fees, costs and
expenses of any kind related thereto (including, without limitation, any and all
Legal Expenses).
(c) No party entitled to indemnification under this Section 8.02 shall
assert any claims or bring any action against another party hereto arising out
of this Merger Agreement until such time as the cumulative aggregate claims of
such party exceed $50,000; provided, however, that if the aggregate amounts due
to a party under this Section 8.02 exceed such threshold, then such party shall
have the right to recover the full amounts due without regard to such threshold.
33
(d) Promptly after receipt by any person entitled to indemnification
under this Section 8.02 (an "indemnified party") of notice of the commencement
of any action in respect of which the indemnified party will seek
indemnification hereunder, the indemnified party shall notify the Person that is
obligated to provide such indemnification (the "indemnifying party") thereof in
writing, but any failure to so notify the indemnifying party shall not relieve
it from any liability that it may have to the indemnified party except to the
extent the indemnified party shall be materially prejudiced by such failure. The
indemnifying party shall be entitled to participate in the defense of such
action and to assume control of such defense with counsel reasonably acceptable
to the indemnified party; provided, however, that:
(i) the indemnified party shall be entitled to participate in the
defense of such claim and to employ counsel at its own expense to
assist in the handling of such claim;
(ii) the indemnifying party shall obtain the prior written approval of
the indemnified party before entering into any settlement of such
claim or ceasing to defend against such claim, if, pursuant to or as a
result of such settlement or cessation, injunctive or other equitable
relief would be imposed against the indemnified party or would
otherwise restrict the future activity or conduct of the indemnified
party; and
(iii) the indemnifying party shall not consent to the entry of any
judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to
each indemnified party of a release from all liability in respect of
such claim.
(e) After written notice by the indemnifying party to the indemnified
party of its election to assume control of the defense of any such action, the
indemnifying party shall not, except as otherwise provided, be liable to such
indemnified party hereunder for any Legal Expenses subsequently incurred by such
indemnified party in connection with the defense thereof. If the indemnifying
party does not assume control of the defense of such claims as provided in this
Section 8.02, the indemnified party shall have the right to defend such claim in
such manner as it may deem appropriate at the cost and expense of the
indemnifying party, and the indemnifying party will promptly reimburse the
indemnified party therefor in accordance with this Section 8.02. The
reimbursement of fees, costs and expenses required by this Section 8.02 shall be
made by periodic payments during the course of the investigation or defense, as
and when bills are received or expenses incurred.
ARTICLE IX
CONDITIONS TO THE MERGER
Section 9.01. Conditions to the Obligations of Each Party. The
respective obligations of INTERMAT, the Stockholders, SDI and Merger Sub to
consummate the transactions contemplated by this Merger Agreement are subject to
the fulfillment at or prior to the
34
Effective Time of each of the following conditions, any or all of which may be
waived in whole or in part, to the extent permitted by applicable law:
(a) all filings required to be made prior to the Effective Time with,
and all consents, approvals, permits and authorizations required to be obtained
prior to the Effective Time from, governmental and regulatory authorities in
connection with the execution and delivery of this Merger Agreement and the
consummation of the transactions contemplated hereby by INTERMAT, the
Stockholders, SDI and Merger Sub shall have been made or obtained (as the case
may be) without restrictions, except where the failure to obtain such consents,
approvals, permits and authorizations could not be reasonably be expected to
have a material adverse effect on the business or operations of SDI or INTERMAT;
and
(b) no court or governmental or regulatory authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent) or taken any action that prohibits the
consummation of the transactions contemplated by this Merger Agreement or makes
such consummation illegal; provided, however, that the parties invoking this
condition shall use their reasonable best efforts to have any such judgment,
decree, injunction or order vacated.
Section 9.02. Conditions to the Obligations of INTERMAT and the
Stockholders. The obligations of INTERMAT and the Stockholders to consummate the
transactions contemplated by this Merger Agreement are subject to the
fulfillment at or prior to the Effective Time of each of the following
conditions, any or all of which may be waived in whole or in part by INTERMAT or
the Stockholders as applicable and to the extent permitted by applicable law:
(a) each of SDI and Merger Sub shall have performed all of its
obligations hereunder required to be performed by it at or prior to the
Effective Time;
(b) each of the representations and warranties of SDI and Merger Sub
contained in this Merger Agreement and in any certificate or other writing
delivered by SDI and Merger Sub pursuant hereto shall be true and correct at and
as of the Effective Time, as if made at and as of such time (except to the
extent it relates to a particular date);
(c) Merger Sub (and SDI in the case of X. Xxxxxxxxx) shall have
offered to enter into a separate Employment Agreement with each of X. Xxxxxxxxx,
Enders, Gilpin, Xxxxxxx and Xxxxx, such Employment Agreements to be
substantially in the forms attached as Exhibit E hereto (each, an "Employment
Agreement");
(d) SDI shall have offered to enter into the Registration Rights
Agreement with the Stockholders, such Registration Rights Agreement to be
substantially in the form of Exhibit F hereto (the "Registration Rights
Agreement");
35
(e) INTERMAT shall have received a certificate from SDI and Merger
Sub, signed by an executive officer of SDI and Merger Sub, respectively, to the
effect set forth in clauses (a) and (b) of this Section;
(f) SDI shall have paid, on behalf of INTERMAT, all principal and
interest due under the Texas Commerce Note and the Xxxxxxxxx Notes;
(g) INTERMAT and the Stockholders shall have received a favorable
opinion, dated as of the Effective Time, from Xxxxxxx Xxxx & Xxxxxxxxx, counsel
to SDI and Merger Sub, substantially in the form of Exhibit G hereto; and
(h) INTERMAT shall have received such other certificates, instruments
and documents in confirmation of the representations and warranties of SDI and
Merger Sub or in furtherance of the transactions contemplated by this Merger
Agreement as INTERMAT or its counsel may reasonably request.
Section 9.03. Conditions to the Obligations of SDI and Merger Sub. The
obligation of each of SDI and Merger Sub to consummate the transactions
contemplated by this Merger Agreement is subject to the fulfillment at or prior
to the Effective Time of each of the following conditions, any or all of which
may be waived in whole or in part by SDI and Merger Sub to the extent permitted
by applicable law:
(a) each of the Stockholders and INTERMAT shall have performed all of
its obligations hereunder required to be performed by it at or prior to the
Effective Time;
(b) each of the representations and warranties of each of the
Stockholders and INTERMAT contained in this Merger Agreement and in any
certificate or other writing delivered by the Stockholders and INTERMAT pursuant
hereto shall be true and correct at and as of the Effective Time, as if made at
and as of such time (except to the extent it relates to a particular date);
(c) the persons listed in Section 9.02(c) shall have each entered into
separate Employment Agreements with Merger Sub (and SDI in the case of X.
Xxxxxxxxx), and such Employment Agreements shall be in full force and effect;
(d) SDI and Merger Sub shall have received a certificate from INTERMAT
and the Stockholders, signed by an executive officer of INTERMAT and by each of
the Stockholders individually, to the effect set forth in clauses (a) and (b) of
this Section;
(e) each Stockholder shall have entered into the Escrow Agreement with
SDI and the Escrow Agent, and the Escrow Agreement shall be in full force and
effect;
(f) during the period from November 30, 1996 to the Effective Time,
there shall not have been any material adverse change in the assets, properties,
business, operations, prospects, net income or condition (financial or
otherwise) of INTERMAT;
36
(g) SDI and Merger Sub shall have received a favorable opinion, dated
as of the Effective Time, from Xxxxxxxxx & Xxxxxx, L.L.P., counsel to INTERMAT
and the Stockholders, substantially in the form of Exhibit H hereto;
(h) INTERMAT shall have entered in releases with each of Enders,
Gilpin, Xxxxxxx and Xxxxx, substantially in the forms of Exhibit I hereto, and
such releases shall be in full force and effect;
(i) SDI shall have received such other certificates, instruments and
documents in confirmation of the representations and warranties of INTERMAT and
the Stockholders or in furtherance of the transactions contemplated by this
Merger Agreement as SDI or its counsel may reasonably request; and
(j) all certificates, instruments, opinions and other documents
required to be executed or delivered by or on behalf of INTERMAT and the
Stockholders under the provisions of this Merger Agreement, and all other
actions and proceedings required to be taken by or on behalf of INTERMAT and the
Stockholders in furtherance of the transactions contemplated hereby, shall be
reasonably satisfactory in form and substance to counsel for SDI.
ARTICLE X
TERMINATION
Section 10.01. Termination. This Merger Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time:
(a) by joint written consent of INTERMAT and SDI;
(b) by INTERMAT if any of the conditions specified in Sections 9.01 or
9.02 have not been satisfied or waived by INTERMAT at such time as such
condition is no longer capable of satisfaction;
(c) by SDI and Merger Sub if any of the conditions specified in
Sections 9.01 or 9.03 have not been satisfied or waived by SDI and Merger Sub at
such time as such condition is no longer capable of satisfaction; or
(d) by either INTERMAT or SDI and Merger Sub if the Merger has not
been consummated on or before January 31, 1997; provided, however, that a party
may not terminate this Merger Agreement pursuant to this clause if the failure
of such party to fulfill any of its obligations under this Merger Agreement
shall have been the reason that the Merger shall not have been consummated on or
before said date.
Section 10.02. Effect of Termination. In the event of termination of
this Merger Agreement pursuant to Section 10.01, this Merger Agreement shall
forthwith terminate and
37
become void, and there shall be no liability or obligation on the part of any of
the parties hereto, except with respect to the obligations set forth in Article
VIII and Section 11.11, or arising out of any breach of any provision of this
Merger Agreement prior to such termination. In addition to the foregoing,
Sections 10.02, 11.05, 11.06, 11.07, 11.09 and 11.12 shall survive any such
termination of this Merger Agreement.
ARTICLE XI
MISCELLANEOUS
Section 11.01. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including facsimile or similar
writing) and shall be given:
(a) if to INTERMAT to:
INTERMAT International Materials Management Engineers, Inc.
0 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
with copies to:
Xxxxxxxxx & Grundy, L.L.P.
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxx III
Facsimile: (000) 000-0000
(b) if to the Stockholders to:
c/o INTERMAT International Materials Management
Engineers, Inc.
0 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
with copies to:
Xxxxxxxxx & Xxxxxx, L.L.P.
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxx III
Facsimile: (000) 000-0000
38
and
(c) if to SDI or Merger Sub to:
Strategic Distribution, Inc.
000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
with copies to:
Xxxxxxx Xxxx & Xxxxxxxxx
One Citicorp Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
or such other address or facsimile number as such party may hereafter specify by
notice to the other parties hereto. Each such notice, request or other
communication shall be effective (a) if given by facsimile, when such facsimile
is transmitted to the facsimile number specified in this Section and the
appropriate confirmation is provided, (b) if given via United States mail, three
days after such notice is deposited in the mail in a postage pre-paid envelope
or (c) if given by any other means, when delivered at the address specified in
this Section.
Section 11.02. Force Majeure. None of the parties hereto shall be
liable for any failure of or delay in the performance of this Merger Agreement
for the period that such failure or delay is due to acts of God, public enemy,
civil war, strikes or labor disputes, or any other cause beyond the parties'
reasonable control. Each party agrees to notify the other party promptly of the
occurrence of any such cause and to carry out this Merger Agreement as promptly
as practicable after such cause is terminated.
Section 11.03. Amendment; Waiver. This Merger Agreement may be amended
or modified, and any of the terms, covenants, representations, warranties or
conditions hereof may be waived, only by a written instrument executed by SDI,
Merger Sub, INTERMAT and the Stockholders, or in the case of a waiver, by the
party waiving compliance. Any waiver by any party of any condition, or of the
breach of any provision, term, covenant, representation or warranty contained in
this Merger Agreement, in any one or more instances, shall not be deemed to be
nor construed as further or continuing waiver of any such condition, or of the
breach of any other provision, term, covenant, representation or warranty of
this Agreement.
Section 11.04. Successors and Assigns. Except as otherwise provided in
this Merger Agreement, no party hereto shall assign this Merger Agreement or any
rights or obligations hereunder without the prior written consent of SDI, Merger
Sub, INTERMAT and the
39
Stockholders and any such attempted assignment without such prior written
consent shall be void and of no force and effect; provided, however, that SDI
and Merger Sub may assign their rights hereunder to an affiliate and to any
party providing financing in connection with the transactions contemplated
hereby; and provided, further, that no such assignment shall reduce or otherwise
vitiate any of the obligations of SDI or Merger Sub hereunder. This Merger
Agreement shall inure to the benefit of and shall be binding upon the successors
and permitted assigns of the parties hereto.
Section 11.05. Governing Law. This Merger Agreement and all disputes
hereunder shall be governed by and construed in accordance with the internal
laws of the State of Delaware, without regard to principles of conflict of laws.
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
MERGER AGREEMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF
THE STATE OF DELAWARE OR IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
DELAWARE. EACH OF THE UNDERSIGNED HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO
THE JURISDICTION OF THE COURTS OF THE STATE OF DELAWARE AND OF THE UNITED STATES
DISTRICT COURT FOR THE DISTRICT OF DELAWARE FOR THE PURPOSE OF ANY SUCH
LITIGATION AS SET FORTH ABOVE. EACH OF THE UNDERSIGNED HEREBY EXPRESSLY AND
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION
BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH
LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
Section 11.06. Entire Agreement. This Merger Agreement contains the
entire understanding among the parties hereto with respect to the transactions
contemplated hereby and supersedes and replaces all prior and contemporaneous
agreements and understandings, oral or written, with regard to such
transactions. All Exhibits and schedules hereto and any documents and
instruments delivered pursuant to any provision hereof are expressly made a part
of this Merger Agreement as though completely set forth herein.
Section 11.07. Third Party Beneficiaries. This Merger Agreement
(including the documents and instruments referred to herein) is not intended to
confer upon any other Person any rights or remedies hereunder.
Section 11.08. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Merger Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Merger
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which they are entitled at law or in equity.
40
Section 11.09. Remedies Cumulative. All rights, powers and remedies
provided under this Merger Agreement otherwise available at law or in equity
shall be cumulative and not alternative, and the exercise or beginning of any
thereof by any party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party.
Section 11.10. Publicity. So long as this Merger Agreement is in
effect, each of the parties agrees to consult with each other in issuing any
press release or otherwise making any public statement with respect to the
Merger, and none of them shall issue any press release or make any public
statement prior to such consultation, except as may be required by law or by
obligations pursuant to any listing agreement with any national securities
exchange. If any such announcement or other disclosure is so required, the
disclosing party agrees to give the nondisclosing parties prior written notice
of the proposed disclosure. The commencement of litigation relating to this
Merger Agreement or any proceedings in connection therewith shall not be deemed
a violation of this Section.
Section 11.11. Fees and Expenses. Except for the fees and expenses of
Wallingford, McDonald, Fox & Co., P.C. incurred in connection with the
transactions contemplated by this Merger Agreement which shall become the
obligation of the Surviving Corporation at the Effective Time, and except as
otherwise provided herein, the Stockholders shall pay all fees and expenses of
INTERMAT and the Stockholders in connection with the transactions contemplated
hereby, including, without limitation, the legal fees of Xxxxxxxxx & Xxxxxx
L.L.P. relating to its representation of INTERMAT and the Stockholders, the fees
of Xxxxxx Xxxxxxxx LLP as the Stockholders' tax advisor, and all state and local
sales, transfer, excise, value-added or other similar Taxes due in connection
with the Merger and the payment of the Merger Consideration. SDI shall pay its
own expenses in connection with this Merger Agreement and the transactions
contemplated hereby.
Section 11.12. Broker's and Finder's Fees. Each of the parties hereto
represents and warrants that it has dealt with no broker or finder in connection
with any of the transactions contemplated by this Merger Agreement and, insofar
as it knows, no other broker or other person is entitled to any commission or
finder's fee in connection with any of the transactions contemplated hereby.
Section 11.13. Severability. In the event that any part of this Merger
Agreement is declared by any court or other judicial or administrative body to
be null, void or unenforceable, said provision shall survive to the extent it is
not so declared, and all of the other provisions of this Merger Agreement shall
remain in full force and effect.
Section 11.14. Scheduled Disclosures. Disclosure of any matter, fact
or circumstance in a Schedule to this Merger Agreement shall not be deemed to be
disclosure thereof for purposes of any other Schedule hereto.
Section 11.15. Headings; Counterparts; Effectiveness. The headings
contained in this Merger Agreement are for reference purposes only and shall not
affect in any way the
41
meaning or interpretation of this Merger Agreement. This Merger Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument. This Merger Agreement shall become effective when each party hereto
shall have received counterparts hereof signed by the other parties hereto.
42
IN WITNESS WHEREOF, the parties hereto have caused this Merger
Agreement to be duly executed as of the day and year first above written.
INTERMAT INTERNATIONAL MATERIALS
MANAGEMENT ENGINEERS, INC.
/s/ Xxxxxxx X. Xxxxxx
By:__________________________________
Name: Xxxxxxx X. Xxxxxx
Title: President
STRATEGIC DISTRIBUTION, INC.
/s/ Xxxxxxx X. Xxxxxx
By:___________________________________
Name: Xxxxxxx X. Xxxxxx
Title: Assistant Secretary
INTERMAT ACQUISITION CORP.
/s/ Xxxxxxx X. Xxxxxx
By:___________________________________
Name: Xxxxxxx X. Xxxxxx
Title: Assistant Secretary
/s/ Xxxxxxx X. Xxxxxxxxx
-----------------------------------
XXXXXXX X. XXXXXXXXX
/s/ Xxxx X. Xxxxxxxxx
-----------------------------------
XXXX X. XXXXXXXXX
/s/ Xxxxxxx X. Xxxxxx
-----------------------------------
XXXXXXX X. XXXXXX
43
/s/ Xxxxxxx Xxxxxx
-----------------------------------
XXXXXXX XXXXXX
/s/ Xxxx Xxxxxxx
-----------------------------------
XXXX XXXXXXX
/s/ Xxxx Xxxxx
-----------------------------------
XXXX XXXXX
44
