SETTLEMENT AGREEMENT
SETTLEMENT AGREEMENT, dated October 1, 1996, by and among AGP and
Company, Inc. , a New Jersey corporation (the "Company"), Xxxxxx X. Xxxxxxxx
("Xxxxxxxx"), Xxxxx X. Xxxxxx ("Xxxxxx"), Xxxx X. Xxxxxx ("Xxxxxx"),
individually and as trustee of the Xxxxxx Trust U/I/T, dated May 18, 1989 (the
"Trust"), Social Expressions Acquisition Corporation, a Delaware corporation
("NewCo"), Xxxxxx Xxxxxxx ("Xxxxxxx"), Xxxxxx Xxxxxxx ("X. Xxxxxxx"), solely as
co-trustee of the Xxxxxx Xxxxxxx 1995 Trust (the "Xxxxxxx Trust"), and Xxxxx
Xxxxxx, solely as co-trustee of the Xxxxxxx Trust ("Xxxxxx" and, collectively
with Xxxxxx, the Trust, NewCo, Xxxxxxx, X.
Xxxxxxx and the Xxxxxxx Trust, the "Xxxxxx Entities").
W I T N E S S E T H:
WHEREAS, Xxxxxx commenced an action against the Company in the Superior
Court for Xxxxxx County, Chancery Division, captioned Xxxx X. Xxxxxx,
individually and on behalf of the Xxxxxx Trust v. AGP & Company, Inc., Docket
No. C-99-96 (the "Action"); and
WHEREAS, the Court has issued an order in the Action setting October 15,
1996 as the date for a Special Meeting of the Company's shareholders (the
"Special Meeting") to consider Xxxxxx'x proposal that Xxxxxxxx and Xxxxxx be
removed as directors of the Company; and
WHEREAS, Xxxxxx and Xxxxxxx, through NewCo, have previously offered to
purchase the Company's subsidiary, TMC Group, Inc. ("TMC"), on the terms and
conditions summarized in NewCo's letter to the Company, dated July 1, 1996 (the
"Acquisition"), a copy of which is attached hereto as Exhibit A and made a part
hereof (the "Offer Letter"); and
WHEREAS, the Company has established BSM Acquisition Corp. ("BSM") as a
wholly owned subsidiary of the Company for the purpose of acquiring Border Steel
Xxxxx Incorporated pursuant to which, among other things, BSM (or its successor)
will become a public company and the Company will own less than a majority of
BSM's capital stock (the "Border Acquisition"); and
WHEREAS, Xxxxxxxx has been elected as the President and Chief Executive
Officer of BSM; and
WHEREAS, Xxxxxxxx intends to devote substantially all of his business
efforts to operating BSM upon consummation of the Border Acquisition; and
WHEREAS, the parties have agreed to settle the disputes existing between
them by, among other things, providing for the sale of TMC to NewCo pursuant to
the terms contained in the Offer Letter and for certain other matters contained
herein.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and intending to be legally bound, the parties hereto agree as follows:
ARTICLE I
Dismissal of Action; Adjournment of the Special Meeting
Section 1.1. Dismissal of Action. Not later than the end of the business
day immediately following the closing date of the Acquisition, Xxxxxx and the
Company shall execute and file, or cause their respective counsel to execute and
file, such mutually acceptable stipulations, orders and other documents as may
be necessary to effect the dismissals of the Action without prejudice and
without costs to any party; provided, that the Court shall retain jurisdiction
in the Action for the purpose of enforcing this Agreement.
Section 1.2. Adjournment of the Special Meeting; Cancellation. The Special
Meeting shall be adjourned so long as the Company, Xxxxxxxx and Xxxxxx are in
full compliance with the terms of this Agreement. Upon consummation of the
Acquisition, the Special Meeting shall be canceled.
ARTICLE II
Resignations; Irrevocable Proxy
Section 2.1. Resignations; Irrevocable Proxies. Simultaneously with the
execution hereof, each of Xxxxxxxx and Xxxxxx shall deliver to Continental Stock
Transfer and Trust Company (together with any successor escrow agent, the
"Escrow Agent") (i) their written resignations of all positions each of them may
have as a director, officer or employee of the Company and its subsidiaries,
such resignations to be in the form of Exhibits B and C hereto, respectively,
and (ii) irrevocable proxies, each in the form of Exhibit D hereto, covering all
shares of Common Stock, no par value (the "Common Stock"), of the Company
(collectively, the "Restricted Shares") owned beneficially or of record by
Xxxxxxxx, Xxxxxx, their respective spouses, parents, minor children and any
entities over which any of them has or shares control (collectively, the
"Xxxxxxxx Parties"). The resignations and the proxies shall be held in escrow by
the Escrow Agent pursuant to the terms of the Escrow Agreement attached hereto
as Exhibit E, which shall be entered into simultaneously herewith and which
shall provide, among other things, that such resignations and proxies shall be
released from escrow and delivered to Xxxxxx upon the earlier of (i) except as
provided in Section 2.2, the close of business on February 1, 1997 if the
Acquisition has not been consummated prior thereto, or (ii) the breach by
Xxxxxxxx, Xxxxxx or the Company of any representations or warranties made by any
of them hereunder or their respective obligations hereunder.
Section 2.2. Return to Status Quo. Notwithstanding the other provisions of
this Agreement, if the Acquisition is not consummated prior to February 1, 1997
(other than as a result of any breach by Xxxxxxxx, Xxxxxx or the Company of
their obligations hereunder), then (i) the resignations and proxies shall
continue to be held in escrow and (ii) upon Xxxxxx'x request the Company shall
call a special meeting of shareholders to be held not later than 60 days
following receipt of Xxxxxx'x request to consider and act upon Xxxxxx'x proposal
to remove Xxxxxxxx and Xxxxxx as directors of the Company.
ARTICLE III
Sale of TMC
Section 3.1. Sale of TMC. Xxxxxxxx and Xxxxxx, in their capacities as
directors and shareholders of the Company, at a meeting of the Board of
Directors of the Company duly called and held prior to the date hereof, have
reviewed the terms of the Offer Letter and have determined that the Acquisition,
and the transactions contemplated thereby, are in the best interest of the
Company and its shareholders and, accordingly, each of them hereby approves the
sale of TMC to NewCo on the terms set forth in the Offer Letter. Xxxxxxx has
abstained and shall abstain from any Board of Directors vote on the Acquisition.
Section 3.2. Preparation of Acquisition Agreement. Promptly after the date
hereof, the Company and NewCo shall jointly prepare and negotiate in good faith
an acquisition agreement to reflect the Acquisition and shall execute and
deliver a mutually acceptable acquisition agreement (the "Acquisition
Agreement") no later than October 11, 1996. The Acquisition Agreement shall
contain no conditions precedent to either the Company's or NewCo's obligations
thereunder, other than (i) the receipt of a fairness opinion from Nutmeg
Securities (the "Fairness Opinion") (which shall (x) state that the
consideration to be received by the Company pursuant to the Acquisition
Agreement is fair from a financial point of view, and (y) be provided to the
Company as promptly as possible but in no event later than the date on which the
Company is first able to mail its Proxy Materials (as defined below) to
shareholders), (ii) the receipt of shareholder approval of the Acquisition, as
provided in Section 3.3 below, (iii) subject to the provisions of the following
sentence, the receipt of financing for the Acquisition satisfactory to NewCo in
its sole discretion, and (iv) the satisfaction or waiver of other customary
conditions of closing agreed to by the parties in good faith. The Acquisition
Agreement shall provide that in the event that NewCo is not a public company
subject to the reporting requirements of the Securities Exchange Act of 1934, as
amended, on the date of closing of the Acquisition, the consideration to be paid
by NewCo for TMC shall consist of (i) NewCo's 10% Subordinated Notes due ten
years from the closing of the Acquisition (the "Notes") in aggregate principal
amount of $2,500,000 and (ii) a royalty payment equal to 1.5% of TMC's annual
net collected revenues (defined as gross cash revenues less returns and
allowances) for a period of three years post-consummation, one-half of which
shall reduce the principal amount otherwise due and owing on the Notes. Subject
to the satisfaction or waiver of the conditions set forth in the Acquisition
Agreement, the Acquisition and the other transactions contemplated thereby shall
be consummated no later than February 1, 1997.
Section 3.3. Meeting of Shareholders. (a) As soon as practicable but in no
event later than January 31, 1997, the Company shall convene a meeting of
shareholders (the "Meeting") to consider and vote upon the Acquisition and the
Acquisition Agreement. In the event that Hall Xxxxxxx Xxxx Xxxxxxxx & Xxxx LLP
provides NewCo with a written opinion on or prior to November 18, 1996 that the
Company will be able to comply with the financial statement requirements of Rule
14a-3 promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), in connection therewith, the Company shall have the right to
include in the matters to be considered at the Meeting a proposal to elect a
slate of nominees (which shall include Xxxxxxx) approved by the Company's Board
of Directors and to refer to the Meeting as an annual meeting of shareholders.
Promptly following the execution of the Acquisition Agreement, the Company shall
prepare proxy materials for use in connection with the Meeting (the "Proxy
Materials"), shall file preliminary copies of such Proxy Materials with the
Securities and Exchange Commission (the "Commission") as promptly as practicable
but in no event later than November 18, 1996 and thereafter finalize and mail
such Proxy Materials to shareholders as promptly as practicable but in no event
later than December 31, 1996. The Company shall provide Xxxxxx and Xxxxxxx with
drafts of the Proxy Materials and shall consider and resolve in good faith their
comments on the Proxy Materials if received within 48 hours after their receipt
of such drafts.
(b) In connection with the Meeting and provided that the Company has
received the Fairness Opinion, Xxxxxxxx and Xxxxxx, in their capacity as
directors of the Company, shall in the Proxy Materials recommend to the
shareholders that the shareholders vote in favor of the approval of the
Acquisition and the adoption of the Acquisition Agreement and such
recommendation shall not be amended, modified or rescinded.
(c) All fees and expenses payable in connection with the preparation of the
Proxy Materials and the conduct of the Meeting (including any adjournments or
postponements thereof) shall be borne by the Company.
Section 3.4. Grant of Irrevocable Proxies; Transfer Restrictions. (a) Each
of Xxxxxxxx and Xxxxxx hereby revokes any and all prior proxies and irrevocably
appoints and constitutes each of Xxxxxx and Xxxxxxx, with full power of
substitution, as their proxy to vote the shares of the Company's Common Stock
owned by each of them, whether beneficially or of record (collectively, the
"Restricted Shares"), at the Meeting in favor of the Acquisition and the
Acquisition Agreement and, in their discretion, on such other matters as may
properly come before the Meeting (including any adjournments thereof). The proxy
authority contained herein shall be deemed to be coupled with an interest and
shall be irrevocable. This proxy shall survive the death or incapacity of either
Xxxxxxxx or Xxxxxx and may not be revoked by any guardian or other personal
representative of any of them for any reason whatsoever. No later than the date
hereof, Xxxxxxxx and Xxxxxx shall cause the Xxxxxxxx Parties to execute and
deliver to Xxxxxx irrevocable proxies in the form set forth above covering the
remaining Restricted Shares.
(b) From the date hereof until the conclusion of the Meeting, neither
Xxxxxxxx nor Xxxxxx shall, nor shall either Xxxxxxxx or Xxxxxx permit any
Xxxxxxxx Party to, transfer, sell, assign, pledge, hypothecate, give, create a
security interest in or lien on, place in trust (voting or otherwise), transfer
by operation of law, grant a proxy with respect to or in any other way encumber
or dispose of, directly or indirectly and whether or not voluntarily (each, a
"Transfer"), any of the Restricted Shares.
(c) No later than the date hereof, the Company shall provide the
transfer agent for the Common Stock (the "Transfer Agent") irrevocable written
instructions in the form of Exhibit F attached hereto not to effect any Transfer
of Restricted Shares to any person or entity in violation of this Agreement. No
later than the close of business on the fifth business day following the date
hereof, Xxxxxxxx and Xxxxxx shall cause all of the Restricted Shares to be
registered in the names of the appropriate Xxxxxxxx Party and shall exchange or
cause the Xxxxxxxx Parties to exchange the certificates representing the
Restricted Shares for certificates of like tenor which shall be stamped or
endorsed with a legend in substantially the following form:
TRANSFERS AND VOTING IN RESPECT OF THE SHARES OF COMMON STOCK REPRESENTED BY
THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF AN AGREEMENT DATED OCTOBER 1, 1996
BY AND BETWEEN AGP AND COMPANY, INC. AND THE OTHER PARTIES THERETO, A COPY OF
WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY AND MAY BE
OBTAINED WITHOUT CHARGE UPON WRITTEN REQUEST TO THE COMPANY.
Section 3.5. Appointment of Proxy for NewCo Shares. The Company hereby
revokes any and all prior proxies and hereby irrevocably appoints and
constitutes each of Xxxx X. Xxxxxx and Xxxxxx Xxxxxxx, with full power of
substitution, as the Company's proxy (i) to vote the shares of Common Stock of
NewCo (or any successor or assignee of NewCo) owned by the Company from time to
time following the closing of the Acquisition on all matters presented at any
meeting of NewCo's shareholders (including any adjournments or postponements
thereof) and/or (ii) to execute and deliver any shareholder consent in lieu
thereof, as in either case any one of them may determine in their sole
discretion. This proxy shall be effective for all purposes for five years from
date of Agreement. The proxy authority contained herein shall be deemed to be
coupled with an interest and shall be irrevocable. This proxy may not be revoked
by any successor, assign or representative of the Company for any reason
whatsoever.
Section 3.6. Non-interference. So long as this Agreement remains in full
force and effect and the Xxxxxx Entities are not in violation of their
respective obligations hereunder, each of the Company, Xxxxxxxx and Xxxxxx shall
not take any action, or omit to take any action, for the purpose of, or
reasonably calculated to result in the, impeding, interfering with, hindering or
delaying the Acquisition; provided, however, that nothing contained herein shall
restrict or in any way limit the right of the Company, Xxxxxxxx and Xxxxxx to
require strict performance with the terms and conditions of this Agreement.
Section 3.7. Assumption of Certain Indebtedness. Upon consummation of the
Acquisition, NewCo shall assume all obligations owed by TMC to the Company
arising in the ordinary course of business in bona fide transactions.
Section 3.8. Equitable Remedies. Each of the Company, Xxxxxxxx and Xxxxxx
acknowledges that the Xxxxxx Entities would suffer immediate and irreparable
harm for which an adequate remedy would not be available at law as a result of
any breach of this Article III. Accordingly, in the event of any breach, or
threatened breach, of the provisions of this Article III, the Xxxxxx Entities
shall be entitled to an order of specific performance or other injunctive relief
in addition to any other rights and remedies to which the Xxxxxx Entities may be
entitled, whether at law or in equity, and each of the Company, Xxxxxxxx and
Xxxxxx, on their own behalf and on behalf of the Xxxxxxxx Parties, hereby
irrevocably and unconditionally consents to the entry of an order providing such
relief. The Xxxxxx Entities shall not be required to post any bond or other
security in connection with any such action for specific performance or other
injunctive relief.
Section 3.9. Survival of Provisions. The provisions of this Article III
shall survive the expiration or termination of this Agreement.
ARTICLE IV
The Border Acquisition
Section 4.1. Certain Information. Simultaneous with the execution and
delivery hereof, Xxxxxxxx shall provide Xxxxxx with true and complete copies of
all term sheets, memoranda of understanding, letters of intent and contracts or
agreements, if any, entered into on or prior to the date hereof relating to the
Border Acquisition, including, but not limited to, all financing arrangements
with National Securities or any other person or entity (collectively, the
"Border Documents"). Prior to the earlier of (i) consummation of the Acquisition
or (ii) consummation of the Border Acquisition, Xxxxxxxx shall promptly provide
Xxxxxx with true and complete copies of all Border Documents entered into from
and after the date hereof.
Section 4.2. Non-interference. So long as this Agreement remains in full
force and effect and the Company, Xxxxxxxx and Xxxxxx are not in violation of
their respective obligations hereunder, each Xxxxxx Entity shall not take any
action, or omit to take any action, for the purpose of, or reasonably calculated
to result in the, impeding, interfering with, hindering or delaying the Border
Acquisition; provided, however, that nothing contained herein shall restrict or
in any way limit the right of the Xxxxxx Entities to require strict performance
with the terms and conditions of this Agreement.
Section 4.3. Appointment of Proxy for BSM Shares. The Company hereby
revokes any and all prior proxies and hereby irrevocably appoints and
constitutes each of Xxxxxx X. Xxxxxxxx and Xxxxx X. Xxxxxx, with full power of
substitution, as the Company's proxy (i) to vote the shares of Common Stock of
BSM (or any successor or assignee of BSM) owned by the Company from time to time
on all matters presented at any meeting of BSM's shareholders (including any
adjournments or postponements thereof) and/or (ii) to execute and deliver any
shareholder consent in lieu thereof, as in either case any one of them may
determine in their sole discretion. This proxy shall be effective for all
purposes for five years from the date of the Agreement. The proxy authority
contained herein shall be deemed to be coupled with an interest and shall be
irrevocable. This proxy may not be revoked by any successor, assign or
representative of the Company for any reason whatsoever.
Section 4.4. Equitable Remedies. Each of the Xxxxxx Entities acknowledges
that the Company, Xxxxxxxx and Xxxxxx would suffer immediate and irreparable
harm for which an adequate remedy would not be available at law as a result of
any breach of this Article IV. Accordingly, in the event of any breach, or
threatened breach, of the provisions of this Article IV, the Company, Xxxxxxxx
and Xxxxxx shall be entitled to an order of specific performance or other
injunctive relief in addition to any other rights and remedies to which the
Company, Xxxxxxxx and Xxxxxx may be entitled, whether at law or in equity, and
each of Xxxxxx Entities hereby irrevocably and unconditionally consents to the
entry of an order providing such relief. The Company, Xxxxxxxx and Xxxxxx shall
not be required to post any bond or other security in connection with any such
action for specific performance or other injunctive relief.
Section 4.5. Survival of Provisions. The provisions of this Article IV
shall survive the expiration or termination of this Agreement.
ARTICLE V
Standstill Obligations
Section 5.1. Standstill Obligations. (a) From the date hereof until
consummation of the Acquisition, the Company shall not issue, grant or sell
shares of the Company's Common Stock ("Shares") or any option, warrant,
security, right or other instrument convertible into or exchangeable or
exercisable for or otherwise giving the holder thereof the right to acquire,
directly or indirectly, any of the Company's Common Stock or any other such
option, warrant, security, right or instrument, including without limitation,
any instrument the value of which is measured by reference to the value of the
Company's Common Stock (collectively, "Rights").
(b) No later than the date hereof, the Company shall provide the Transfer
Agent with written notice in the form of Exhibit G attached hereto of the
standstill obligations contained in this Section 5.1.
Section 5.2. Exceptions. (a) The provisions of Section 5.1 shall not apply
to (i) the grant of employee stock options to purchase Shares pursuant to any
stock option plan adopted by the shareholders of the Company; and (ii) the
issuance of Shares upon the exercise of any of the employee stock options
specified in clause (i) above.
(b) Any issuance of Shares or Rights, other than grants and issuances
pursuant to Section 5.2(a)(i) and 5.2(a)(ii), shall be made for consideration at
least equal to the fair market value as of the date of issuance of such Shares
or Rights as determined by the Board of Directors of the Company in the good
faith exercise of its business judgment.
ARTICLE VI
Other Obligations
Section 6.1 Other Obligations. Until the closing of the Acquisition,
Xxxxxxxx shall continue to guarantee all loans and over-advances made by BNY
Financial Corp. ("BNY") to TMC. Until the closing of the Acquisition, Xxxxxxxx
shall, and shall cause the Company to, preserve its present relationships with
BNY, AT&T Corp. and the Company's and TMC's customers, suppliers, contractors
and distributors.
Section 6.2. Release of Guarantee. Prior to the consummation of the
Acquisition, Xxxxxx shall obtain a release (either expressly or in substance) of
Xxxxxxxx'x personal guarantee of all obligations of TMC owed to BNY effective as
of the closing of the Acquisition. Xxxxxxxx shall cooperate with Xxxxxx in
connection therewith.
Section 6.3. Payment of Audit Fees. Upon consummation of the Acquisition,
NewCo shall pay one-half of all fees and expenses incurred by Xxxxxxx, Xxxxx &
Company and X.X. Xxxxxx in connection with the completion of the Company's 1994
and 1995 audits; provided, however, that NewCo's maximum liability pursuant to
this Section 6.3 shall not exceed $75,000 in the aggregate.
Section 6.4. Sale of Warrants. The Xxxxxx Entities shall not object to a
sale by the Company approved by the Board of Directors of the warrants
previously issued to it covering shares of common stock of each of U.S. House
and Garden and MHI, Inc. (the "Warrants") in one or more bona fide cash sales to
one or more unrelated third parties. Provided that such use is permitted under
applicable law and is approved by the Board of Directors, the Xxxxxx Entities
shall not object to the use by the Company of up to $200,000 of the net proceeds
from such sales to repay amounts due and owing to Xxxxxxxx. Any remaining net
proceeds shall be added to the Company's working capital.
Section 6.5. Certain Other Arrangements. In light of Xxxxxxx'x affiliation
with Xxxxxx in connection with the proposed acquisition of TMC, and in
recognition of the fact that Xxxxxxx must remain on the Company's Board of
Directors until the Action is dismissed while involving himself currently in
efforts to structure and consummate the financing transactions which NewCo must
undertake in order to be able to complete such proposed acquisition, the Company
and Xxxxxxx hereby agree as follows:
(a) Xxxxxxx shall remain employed by the Company in accordance
with the terms of the employment agreement dated March 19, 1993 between the
Company and Xxxxxxx (as amended as of September 15, 1995, the "Employment
Agreement").
(b) In the event that the Company's shareholders approve the
Acquisition at the Meeting, the Company and Xxxxxxx covenant and agree with one
another that they will negotiate in good faith with respect to the termination
of the Employment Agreement which shall provide, among other things, for a
buy-out of all sums then due (including, without limitation, accrued but unpaid
salary aggregating approximately $195,000 as of September 30, 1996), or
thereafter to become due, thereunder to Xxxxxxx; and an exchange of general
releases running from the Company and its directors and officers, acting
individually and in their representative capacities, to Xxxxxxx individually and
in his representative capacities, and from Xxxxxxx to the Company and its
directors and officers, both individually and in their representative
capacities. The Company and Xxxxxxx further covenant and agree that they shall
employ their respective best efforts to complete such negotiations and
consummate such buy-out and exchange or releases simultaneously with, or at the
closing of, the Acquisition.
(c) Notwithstanding Xxxxxxx'x continued employment by the
Company pursuant to the provisions of this Section 6.5, Xxxxxxx shall vacate the
Company's office premises not later than 5:00 p.m. New York time on October 15,
1996 or such later date as Xxxxxxxx and Xxxxxxx may mutually agree, and shall
thereafter be permitted to devote such time as he may deem necessary and
appropriate to structure and consummate the above-mentioned financing
transactions on behalf of NewCo. Any such activities undertaken by Xxxxxxx shall
not be considered to constitute a violation of Xxxxxxx'x obligations or
responsibilities under the Employment Agreement, and shall not otherwise
constitute grounds for the maintenance of any claim by the Company, or by anyone
acting in the Company's behalf, of an alleged breach of any duty, responsibility
or obligation which Xxxxxxx may owe to the Company. Xxxxxxx'x absence from the
Company's offices shall not (i) give rise to any obligation on the Company's
part to provide him, at the Company's expense or otherwise, with an office or
with telephone, secretarial or other office facilities at any other location; or
(ii) be deemed to be, or characterized as, a dismissal, change of title or
responsibilities, vacation or leave of absence.
(d) In the event that the Company's shareholders do not
approve the Acquisition at the Meeting, Xxxxxxx shall thereupon return to the
Company's offices unless he and the Company enter into an agreement providing
otherwise.
(e) Unless and until there shall be a change in Xxxxxxx'x
status as an officer, general counsel and/or director of the Company, he shall
receive from the Company, or from Hall Xxxxxxx Xxxx Xxxxxxxx & Xxxx LLP, the
Company's special counsel, drafts of all documents which the Company shall be
preparing for filing with the Commission, as well as copies of all documents
actually filed by the Company with the Commission. However, in light of the
activities which Xxxxxxx shall be undertaking on behalf of NewCo, and in order
to eliminate any potential claim of a conflict of interest or a breach of any
professional or fiduciary obligation which Xxxxxxx may owe to the Company by
reason of his positions as a director and officer of, and/or as general counsel
to, the Company, Xxxxxxx shall not (except to the extent necessary for him to
satisfy his fiduciary obligations as a director or as may be required by the
Company from time to time) involve himself in any activities pertaining to the
Company's ongoing business matters until the Acquisition is either disapproved
by the Company's shareholders or consummated, whichever first occurs.
Section 6.6. Engagement. The Company shall engage Nutmeg Securities to
provide the Fairness Opinion no later than the date on which the Acquisition
Agreement is executed by the parties thereto. The Company shall be solely
responsible for the fees and expenses of Nutmeg Securities in connection
therewith.
ARTICLE VII
Representations and Warranties Relating to Xxxxxxxx, Xxxxxx and the Company
Each of Xxxxxxxx, Xxxxxx and the Company, severally and not jointly,
represents and warrants to the Xxxxxx Entities as follows:
Section 7.1. Organization; Authorization. The Company is duly
organized, validly existing and in good standing under the laws of the State of
New Jersey and has full power and authority to execute and deliver this
Agreement and to perform its obligations hereunder, all of which have been duly
authorized by all requisite corporate action (other than shareholder approval of
the Acquisition). Each of Xxxxxxxx and Xxxxxx has the capacity to execute and
deliver this Agreement and to perform his obligations hereunder and neither
Xxxxxxxx nor Xxxxxx is under any impairment or other disability, legal,
physical, mental or otherwise, that would preclude or limit his ability to
perform his obligations hereunder. This Agreement has been duly authorized,
executed and delivered by Xxxxxxxx, Xxxxxx and the Company and constitutes a
valid and binding agreement of each of them, enforceable against each of them in
accordance with its terms.
Section 7.2. Non-contravention. Neither the execution and delivery of
this Agreement by Xxxxxxxx, Xxxxxx or the Company nor the performance by any of
them of their obligations hereunder will (i) contravene any provision contained
in the Certificate of Incorporation or by-laws of the Company, (ii) violate or
result in a breach (with or without the lapse of time, the giving of notice or
both) of or constitute a default under (A) any material contract, agreement,
commitment, indenture, mortgage, lease, pledge, note, license, permit or other
instrument or obligation or (B) any judgment, order, decree, law, rule or
regulation or other restriction of any governmental authority, in each case to
which any of them is a party or by which any of them is bound or to which any of
their respective assets or properties are subject, (iii) result in the creation
or imposition of any material lien, claim, charge, mortgage, pledge, security
interest, equity, restriction or other encumbrance (collectively,
"Encumbrances") on any of the assets or properties of any of them, or (iv)
result in the acceleration of, or permit any person to accelerate or declare due
and payable prior to its stated maturity, any obligation of any of them.
Section 7.3. No Consents. Other than in connection with the shareholder
approval required for the Acquisition and the Border Acquisition, no notice to,
filing with, or authorization, registration, consent or approval of any
governmental authority or other person is necessary for the execution, delivery
or performance of this Agreement or the consummation of the transactions
contemplated hereby by Xxxxxxxx, Xxxxxx or the Company.
Section 7.4. Ownership of Restricted Shares. A true and complete
listing of each Xxxxxxxx Party, and the number of shares of Common Stock held by
each such Xxxxxxxx Party as of the date hereof is attached hereto as Exhibit H.
Each Xxxxxxxx Party is the sole beneficial owner of the shares of Common Stock
set forth opposite their names on Exhibit H (except as indicated on such
Exhibit) free and clear of any Encumbrances. Except as created hereby, there are
no voting trust arrangements, shareholder agreements or other agreements (i)
granting any option, warrant, proxy or right of first refusal with respect to
the Restricted Shares to any person or entity, (ii) restricting the right of any
Xxxxxxxx Party to grant the proxies contemplated hereby, or (iii) restricting
the right of the Xxxxxxxx Parties to vote the Restricted Shares owned by them.
Each Xxxxxxxx Party has the absolute and unrestricted right, power and capacity
to grant the proxies contemplated hereby free and clear of any Encumbrances
(except for restrictions imposed generally by applicable securities laws).
Section 7.5. Accuracy of the Proxy Materials. The Proxy Materials will
comply as to form, in all material respects, with the requirements of the
Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and, at the time of filing with the Commission, at the time of
mailing to the Company's shareholders and on the date of the Meeting will not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Section 7.6. Ownership of Warrants. The Company is the sole legal and
beneficial owner of the Warrants free and clear of any Encumbrances. There are
no voting trust arrangements, shareholder agreements or other agreements
granting any option, warrant, proxy or right of first refusal with respect to
the Warrants to any person or entity. The Company has the absolute and
unrestricted right, power and capacity to sell the Warrants as contemplated
hereby free and clear of any Encumbrances (except for restrictions imposed
generally by applicable securities laws). True and complete copies of the
Warrants have been provided to Xxxxxxx on or prior to the date hereof.
ARTICLE VIII
Representations and Warranties Relating to the Xxxxxx Entities
Each of the Xxxxxx Entities, severally and not jointly, represents and
warrants to Xxxxxxxx, Xxxxxx and the Company as follows:
Section 8.1. Organization; Authorization. NewCo is duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has full power and authority to execute and deliver this Agreement and to
perform its obligations hereunder, all of which have been duly authorized by all
requisite corporate action. Each of the Trust and the Xxxxxxx Trust has been
duly created and is validly existing under the laws of the state of its
formation. Xxxxxx has been duly appointed as, and is currently acting as, the
sole trustee of the Trust. X. Xxxxxxx and Xxxxxx have been duly appointed as,
and are currently acting as, the sole trustees of the Xxxxxxx Trust. Each of the
Trust, the Xxxxxxx Trust, Peraza, Drucker, X. Xxxxxxx and Xxxxxx has the
capacity and authority to execute and deliver this Agreement and to perform its
obligations hereunder, in the case of the Trust and the Xxxxxxx Trust only, all
of which have been duly authorized by all requisite action on behalf of the
Trust or the Xxxxxxx Trust, as the case may be. No Xxxxxx Party is under any
impairment or other disability, legal, physical, mental or otherwise, that would
preclude or limit the ability of the Xxxxxx Entities to perform their respective
obligations hereunder. This Agreement has been duly authorized, executed and
delivered by each Xxxxxx Party and constitutes a valid and binding obligation of
each Xxxxxx Party, enforceable against each of them in accordance with its
terms.
Section 8.2. Non-contravention. Neither the execution and delivery of
this Agreement by any Xxxxxx Party nor the performance by any of them of their
obligations hereunder will (i) contravene any provision contained in (x) the
Certificate of Incorporation or by-laws of NewCo, or (y) the trust instrument
creating the Trust or the Xxxxxxx Trust, as the case may be, (ii) violate or
result in a breach (with or without the lapse of time, the giving of notice or
both) of or constitute a default under (A) any material contract, agreement,
commitment, indenture, mortgage, lease, pledge, note, license, permit or other
instrument or obligation or (B) any judgment, order, decree, law, rule or
regulation or other restriction of any governmental authority, in each case to
which any of them is a party or by which any of them is bound or to which any of
their respective assets or properties are subject, (iii) result in the creation
or imposition of any material Encumbrance on any of the assets or properties of
any of them, or (iv) result in the acceleration of, or permit any person to
accelerate or declare due and payable prior to its stated maturity, any
obligation of any of them.
Section 8.3. No Consents. No notice to, filing with, or authorization,
registration, consent or approval of any governmental authority or other person
is necessary for the execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated hereby by the Xxxxxx Entities.
ARTICLE IX
Additional Covenants and Agreements
Section 9.1. Affirmative Covenants. From the date hereof until the
earlier of (i) consummation of the Acquisition, or (ii) the delivery of the
resignations to Xxxxxx pursuant to the terms of the Escrow Agreement, Xxxxxxxx,
Xxxxxx and the Company shall, and shall cause their respective affiliates to:
(a) not take any action, or omit to take any action, for the purpose
of, or reasonably calculated to result in the, impeding, interfering with,
hindering or delaying the conduct of the business of TMC;
(b) conduct the business of the Company only in the ordinary and
regular course of business consistent with past practices;
(c) keep in full force and effect all material rights, franchises,
licenses, proprietary rights and goodwill relating or obtaining to the business
of the Company;
(d) endeavor to retain the employees of the Company and preserve its
present relationships with customers, suppliers, contractors, distributors and
such employees, and continue to compensate such employees consistent with past
practices;
(e) maintain the assets of the Company in customary repair, order and
condition and maintain insurance reasonably comparable to that in effect on the
date of this Agreement; and in the event of any casualty, loss or damage to any
of the assets of the Company repair or replace such assets with assets of
comparable quality;
(f) maintain the books, accounts and records of the Company in
accordance with generally accepted accounting principles, to the extent
applicable, and sound business practices;
(g) obtain all authorizations, consents, waivers, approvals or other
actions necessary or desirable to consummate the Acquisition and the other
transactions contemplated hereby; and
(h) promptly inform Xxxxxx in writing of any material breach of or
change in the representations and warranties contained in Article VI hereof.
Section 9.2. Negative Covenants. From the date hereof until the earlier
of (i) consummation of the Acquisition, or (ii) the delivery of the resignations
to Xxxxxx pursuant to the terms of the Escrow Agreement, Xxxxxxxx, Xxxxxx and
the Company shall not, and shall cause their respective affiliates not to:
(a) enter into any contract, agreement or commitment or take any other
action which, if entered into or taken prior to the date of this Agreement,
would cause any representation or warranty of Xxxxxxxx, Xxxxxx or the Company to
be untrue;
(b) enter into any contract, agreement, commitment or understanding,
make any payment to, or otherwise engage in any transaction with, Xxxxxxxx or
Xxxxxx or their respective affiliates; provided, however, that, subject to
approval by the Board of Directors, the Company may enter into such contracts,
agreements, commitments or understandings with Xxxxxxxx as may be reasonably
necessary in connection with the financing of the Company's operations;
(c) incur, create or suffer to exist any Encumbrance on the assets of
the Company and TMC;
(d) take or omit to be taken any action, or permit its affiliates to
take or to omit to take any action, which has or which could reasonably be
expected to have a material adverse effect on the business, financial condition,
results of operations or the prospects (financial or other) of the Company or
TMC;
(e) except as expressly provided in Section 9.1(c), cancel any debts
owed to or claims held by the Company (including the settlement of any claims or
litigation) other than in the ordinary course of business consistent with past
business practices;
(f) accelerate collection of any notes or accounts receivable generated
by the Company in advance of their regular due dates or the dates when the same
would have been collected in the ordinary course of business consistent with
past business practices;
(g) make any material change in the compensation of the employees of
the Company, other than changes made in accordance with normal compensation
practices and consistent with past compensation practices; or
(h) take or omit to be taken any action, or permit its respective
affiliates to take or to omit to take any action, other than in the ordinary
course of business, consistent with past practices.
Section 9.3. Further Assurances. Subject to the terms and conditions
herein provided, each of the parties hereto shall take, or cause to be taken,
all action, and to do, or cause to be done, all things reasonably necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement. In the event that at
any time hereafter any further action is necessary to carry out the purposes of
this Agreement, the parties hereto shall take all such action without any
further consideration therefor.
ARTICLE X
Miscellaneous
Section 10.1. Notices. All notices or other communications required or
permitted hereunder shall be in writing and shall be delivered personally, by
facsimile or sent by certified, registered or express air mail, postage prepaid,
and shall be deemed given when so delivered personally, or by facsimile, or if
mailed, five days after the date of mailing, as follows:
If to Xxxxxxxx, Xxxxxx
or the Company: Xx. Xxxxxx X. Xxxxxxxx, President
AGP and Company, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
with copies to:
Xxxxxx X. Xxxxxx, Esq.
Hall Xxxxxxx Xxxx Xxxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
If to the Xxxxxx Entities: Xx. Xxxx X. Xxxxxx
00 Xxx Xxxxx
Xxxxxxx, Xxx Xxxxxxxxx 00000
and to: Xx. Xxxxx Xxxxxx
00 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
with copies to:
Xxxxxx Xxxxxxx, Esq.
00 Xxxxxxxxxx Xxxxx
Xxxxxxx, Xxx Xxxxxx 00000
and
Xxxxx X. Xxxxxxxxx, Esq.
Xxxxxxxxxx, Sandler, Kohl, Xxxxxx & Xxxxxx, P.A.
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
or to such other address as any party hereto shall notify the other parties
hereto (as provided above) from time to time.
Section 10.2. Expenses. Regardless of whether the transactions provided
for in this Agreement are consummated, except as otherwise provided herein, each
party hereto shall pay its own expenses incident to this Agreement and the
transactions contemplated herein.
Section 10.3. Governing Law; Consent to Jurisdiction. This Agreement
shall be governed by, and construed in accordance with, the internal laws of the
State of New Jersey, without reference to the choice of law principles thereof.
Each of the parties hereto irrevocably submits to the exclusive jurisdiction of
the courts of the State of New Jersey and the United States District Court for
the District of New Jersey for the purpose of any suit, action, proceeding or
judgment relating to or arising out of this Agreement and the transactions
contemplated hereby. Service of process in connection with any such suit, action
or proceeding may be served on each party hereto anywhere in the world by the
same methods as are specified for the giving of notices under this Agreement.
Each of the parties hereto irrevocably consents to the jurisdiction of any such
court in any such suit, action or proceeding and to the laying of venue in such
court. Each party hereto irrevocably waives any objection to the laying of venue
of any such suit, action or proceeding brought in such courts and irrevocably
waives any claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum.
Section 10.4. Assignment; Successors and Assigns; No Third Party
Rights. This Agreement may not be assigned by operation of law or otherwise, and
any attempted assignment shall be null and void; provided, that, NewCo may
assign its rights and obligations hereunder to any other entity formed for the
purpose of effecting the Acquisition. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
successors, assigns and legal representatives.
Section 10.5. Counterparts. This Agreement may be executed in counter-
parts, each of which shall be deemed an original agreement, but all of which
together shall constitute one and the same instrument.
Section 10.6. Titles and Headings. The headings in this Agreement
are for reference purposes only, and shall not in any way affect the meaning or
interpretation of this Agreement.
Section 10.7. Entire Agreement. This Agreement, including the Exhibits
attached hereto, constitutes the entire agreement among the parties with respect
to the matters covered hereby and supersedes all previous written, oral or
implied understandings among them with respect to such matters.
Section 10.8. Amendment and Modification. This Agreement may only be
amended or modified in writing signed by the party against whom enforcement of
such amendment or modification is sought.
Section 10.9. Public Announcement. Except as may be required by law, no
party hereto shall issue any press release or otherwise publicly disclose the
existence of this Agreement or the terms and conditions hereof or any dealings
between or among the parties in connection with the subject matter hereof
without the prior approval of the other. Notwithstanding the foregoing, the
parties hereto may disclose this Agreement and the terms and conditions hereof
(i) to members of their respective immediate families, (ii) to their respective
legal and financial advisors, (iii) to the Commission, and (iv) in connection
with any litigation among the parties hereto.
Section 10.10. Waiver. Any of the terms or conditions of this Agreement
may be waived at any time by the party or parties entitled to the benefit
thereof, but only by a writing signed by the party or parties waiving such terms
or conditions.
Section 10.11. Severability. The invalidity of any portion hereof shall
not affect the validity, force or effect of the remaining portions hereof. If it
is ever held that any restriction hereunder is too broad to permit enforcement
of such restriction to its fullest extent, such restriction shall be enforced to
the maximum extent permitted by law.
Section 10.12. No Strict Construction. Each of the parties hereto
acknowledge that this Agreement has been prepared jointly by the parties hereto,
and shall not be strictly construed against any party.
Section 10.13. Time of the Essence. Time shall be of the essence in
connection with the performance of this Agreement. Accordingly, Xxxxxxxx, Xxxxxx
and the Company acknowledge that their failure to meet the time deadlines
specified herein shall be deemed to be a material breach by them of the terms
hereof, entitling the Xxxxxx Entities to the remedies specified in Section 2.1
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
AGP AND COMPANY, INC.
By: /s/Xxxxxx X. Xxxxxxxx
___________________________
Name: Xxxxxx X. Xxxxxxxx
Title: President
WITNESS:
/s/Xxxxxx Xxxxxx /s/Xxxxxx X. Xxxxxxxx
________________________________
Xxxxxx X. Xxxxxxxx, Individually
WITNESS:
/s/Xxxxxx Xxxxxx /s/Xxxxx X. Xxxxxx
________________________________
Xxxxx X. Xxxxxx, Individually
SOCIAL EXPRESSIONS
ACQUISITION CORPORATION
By:/s/Xxxx X. Xxxxxx
_____________________________
Name: Xxxx X. Xxxxxx
Title: President
THE XXXXXX TRUST U/I/T/
DATED MAY 18, 1989
By: /s/Xxxx X. Xxxxxx
____________________________
Name: Xxxx X. Xxxxxx
Title: Trustee
WITNESS:
/s/Xxxxxx Xxxxxxx
/s/Xxxx X. Xxxxxx
____________________________
Xxxx X. Xxxxxx, Individually
THE XXXXXX XXXXXXX 1995 TRUST
By: /s/Xxxxxx Xxxxxxx
___________________________
Name: Xxxxxx Xxxxxxx
Title: Co-Trustee
By: /s/Xxxxx Xxxxxx
___________________________
Name: Xxxxx Xxxxxx
Title: Co-Trustee
WITNESS:
/s/Xxxx Xxxxxx /s/Xxxxxx Xxxxxxx
____________________________
Xxxxxx Xxxxxxx, Individually
