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EXHIBIT 10.19
AGREEMENT AND PLAN OF MERGER
by and among
INTERNATIONAL ALLIANCE SERVICES, INC.
and
IASI/ECI ACQUISITION CO.
and
ENVIRONMENTAL & COMMERCIAL INSURANCE AGENCY, INC.
and
ITS SHAREHOLDERS
Dated: November 5, 1996
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This Agreement and Plan of Merger (the "Agreement") is entered into as
of this 5th day of November, 1996 by and among International Alliance Services,
Inc., (" I-Alliance"), IASI/ECI Acquisition Co., ("Merger Sub"), Environmental
and Commercial Agency Inc., ("ECI"), and Xxxxxxxxxxx Xxxx ("Xxxx"), Xxxxxxx Xxx
Xxxxx aka Xxxxxxx X. Xxxxx ("Xxxxx") and Xxxx Xxxxxxx ("Xxxxxxx"), (the
preceding individually "Shareholder" and collectively "Shareholders").
WHEREAS, the Shareholders own all of the common stock of ECI, in the
amounts set forth in Exhibit A hereto (collectively the "ECI Shares"); and
WHEREAS, I-Alliance has determined that it wishes to acquire ECI; and
WHEREAS, to consummate such acquisition I-Alliance has formed Merger
Sub into which ECI will be merged with ECI as the surviving corporation; and
WHEREAS, ECI has determined that it wishes to be acquired by
I-Alliance.
Therefore in consideration of the mutual promises contained herein and other
good and valuable consideration the parties agree as follows.
ARTICLE 1
DEFINITIONS
As used herein the following terms will have the meanings set forth:
1.1 "Closing" will have the meaning set forth in section 9.1.
1.2 "Closing Date" will have the meaning set forth in section 9.1.
1.3 "Effective Date" will have the meaning set forth in Article 3.
1.4 "I-Alliance Indemnified Parties" will mean I-Alliance and
I-Alliance's employees, directors, officers, shareholders and
agents.
1.5 "Liens" will mean any lien, mortgage, claim, charge, security
interest, encumbrance, restriction or limitation.
1.6 "Losses" will mean any and all expenses, losses, costs,
deficiencies, liabilities and damages including, but not limited to legal and
professional fees and expenses suffered or incurred in any manner including
investigation and defense of claims.
1.7 "Person" will mean any natural person, corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, government (or any agency or political subdivision thereof) or other
entity of any kind.
ARTICLE 2
MERGER
2.1 The Merger Subject to the terms and conditions of this Agreement
and in accordance with the Ohio General Corporation Law (the "OGCL") at the
Effective Date the Merger Sub will be merged with and into ECI (the "Merger")
and the separate existence of Merger Sub will cease and ECI will continue as the
surviving corporation (the "Surviving Corporation").
2.2 Effect of the Merger. The Merger will have the effect set
forth in Section 1701.82 of the
OGCL.
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2.3 Certificate of Incorporation and Code of Regulations. At the
Effective Date, the Articles of Incorporation and the Code of Regulations of ECI
prior to the Effective Date will be and continue to be the Articles of
Incorporation and Code of Regulations of the Surviving Corporation.
2.4 Directors. Each person serving as a director of ECI prior to the
Effective Date will become the initial directors of the Surviving Corporation,
each to hold office in accordance with the Articles of Incorporation until his
or her respective successor is duly elected or appointed and qualified or until
their earlier death, resignation or removal.
2.5 Officers. Each person serving as an officer of ECI prior to the
Effective Date will become the initial officers of the Surviving Corporation,
each to hold office in accordance with the Article of Incorporation until his or
her respective successor is duly elected or appointed and qualified or until
their earlier death, resignation or removal.
2.6 Conversion of Securities. At the Effective Date, by virtue of
the Merger and without any action on the part of the parties or the holders
of any of the respective securities:
2.6.1 All shares of ECI common stock, issued and outstanding
immediately prior to the Effective Date (the "ECI Shares") will be
converted into the right to receive in the aggregate one hundred ninety
two thousand five hundred (192,500) shares of I-Alliance common stock
(the "I-Alliance Shares") as described in Article 7, which will be
delivered to each Shareholder in the number of shares set forth
opposite such Shareholder's name on Schedule 2.6.
2.6.2 Each share of ECI common stock held in the treasury of
ECI will automatically be canceled and retired without any conversion
thereof.
2.6.3 Each share of Merger Sub common stock, without par
value, issued and outstanding immediately prior to the Effective Date
will be automatically converted into one share of common stock of the
Surviving Corporation.
2.7 Consideration. As additional consideration, I-Alliance will pay, at
the Effective Date, to the holders of all the ECI Shares in the aggregate, One
Million Dollars ($1,000,000), to be allocated equally to each such share, to be
delivered to each Shareholder in the amount set forth opposite such
Shareholder's name on Schedule 2.6.
ARTICLE 3
CONSUMMATION OF MERGER
The Closing will take place on the Closing Date at the offices of
I-Alliance, 00000 Xxxxx Xxxxxx Xxxxx, Xxxxxx Xxxx, XX 00000 or such other place
as the parties may agree. At the time of the Closing, the parties will cause the
Merger to be consummated by filing a Certificate of Merger with the Secretary of
State of Ohio, in such form as required by and executed in accordance with the
OGCL. The date and time of such filing will be the Effective Date.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF ECI, XXXX AND SHAREHOLDERS
4.1 Warranties and Representations of Shareholders. Each Shareholder,
severally, represents and warrants to I-Alliance and Merger Sub that:
4.1.1 Authority. The Shareholder has the right, power,
authority and legal capacity to enter into and perform such
Shareholder's obligations under this Agreement and to consummate the
transactions contemplated hereby to be performed by such Shareholder,
and this Agreement has been duly executed and delivered by the
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Shareholder and is a valid and binding agreement of the Shareholder
enforceable against such Shareholder in accordance with its terms,
except as may be limited by applicable bankruptcy, insolvency or
similar laws affecting creditors' rights generally or the availability
of equitable remedies.
4.1.2 Title to the ECI Shares. The Shareholder owns, of record
and beneficially, all of the ECI Shares set forth opposite such
Shareholder's name on Exhibit A, hereto free and clear of all Liens.
4.1.3 No Brokers. The Shareholder has not employed any broker
or finder or incurred any liability for any brokerage fees, commissions
or finders' fees in connection with the transactions contemplated
hereby for which ECI or I-Alliance may be responsible.
4.1.4 Affiliated Transactions. Except as specifically set
forth (including dollar amounts) on Schedule 4.1.4 as of the date
hereof, neither the Shareholder nor any Affiliate of the Shareholder
(as defined below) is indebted to, or is a creditor of, or a guarantor
of any obligation of, or a party to any contract, agreement, license,
option, commitment or other arrangement, written or oral, express or
implied, with, ECI except as disclosed on such schedule. For purposes
of this Section, an "Affiliate of the Shareholder" means any employee,
officer or director of the Shareholder, any spouse or family member
(including in-laws) of the Shareholder, or any corporation or other
entity in which such Shareholder has an equity or ownership interest
exceeding five percent.
4.1.5 Representation. Each Shareholder has has been
represented by its own counsel is not relying on or represented by
counsel for I-Alliance.
4.2 Warranties and Representations of ECI and Xxxx. ECI and Xxxx
hereby represent and warrant to I-Alliance and Merger Sub that:
4.2.1 Organization. ECI is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Ohio with full power and authority (including any applicable licenses)
to own, lease and operate its properties and to carry on its business
as now being and as heretofore conducted, and is duly qualified or
otherwise authorized as a foreign corporation to transact business and
is in good standing in each jurisdiction in which it is required to be
so qualified or authorized (each of which jurisdictions is set forth on
Schedule 4.2.1).
4.2.2 Authority. The execution, delivery and performance by
ECI of this Agreement and the consummation of the transactions
contemplated by this Agreement, have been duly authorized by all
necessary corporate action by ECI. This Agreement has been, and each
other document ancillary to this Agreement to which ECI is a party will
be at the Closing, duly executed and delivered by ECI and constitute,
or will when delivered, constitute, the legal, valid and binding
obligations of ECI, enforceable against ECI, in accordance with their
respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium, and other similar laws and equitable
principles relating to or limiting creditors' rights generally.
4.2.3 Capitalization. The authorized capital stock of ECI
consists of 100 shares of common stock, of which the ECI Shares
constitute all of the shares outstanding (there being no treasury
shares). The ECI Shares have been duly authorized and are validly
issued, fully paid and nonassessable, and there are no outstanding
rights, subscriptions, warrants, calls, preemptive rights, options or
other agreements or commitments of any kind or character to purchase or
otherwise to acquire from ECI any of its unissued shares of capital
stock or any other security of ECI in favor of any Person.
4.2.4 Financial Statements. There have been delivered to
I-Alliance and there are attached hereto as Schedule 4.2.4 true and
correct copies of (a) the balance sheet of ECI as at September 30, 1995
(the "September 30, 1996 Balance Sheet") and the related unaudited
statement of income of ECI for the nine months then ended and (b) the
balance sheet of ECI as at June 30, 1996, together with the unaudited
statement of income of ECI for the six months then ended. I-Alliance
previously has been furnished with the unaudited balance sheets of ECI
as at December 31, 1992, 1993, 1994 and 1995 and the related unaudited
statements of income for each of the years then ended. All of such
financial statements, including the notes thereto, are true and
correct, are in accordance with the books and records of ECI, fairly
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present the financial condition and results of operations of ECI as at
the respective dates and for the respective periods covered thereby and
were prepared in conformity with generally accepted accounting
principles consistently applied.
4.2.5 Absence of Changes. Since September 30, 1996, ECI has
carried on its business in the ordinary course, and there has not been
any material adverse change in its business condition (financial or
otherwise), results of operations or liabilities.
4.2.6 Net Worth. At the Effective Date the net worth of ECI,
computed on the same basis as the September 30, 1996 Balance Sheet
will be One Hundred Fifty Thousand Dollars ($150,000).
4.2.7 No Subsidiaries. Except as setforth on Schedule 4.2.7,
ECI has no subsidiaries.
4.2.8 Articles of Incorporation, Code of Regulations,
Corporate Records and Committees. The copies of the
Articles of Incorporation and Code of Regulations of ECI
heretofore delivered to I-Alliance are correct and complete. The stock
transfer, minute books and corporate records of ECI which have been
made available to I-Alliance are correct and complete and constitute
the only written records and minutes of the meetings, proceedings, and
other actions of the shareholders and the Board of Directors of ECI
from the date of its organization to the date hereof, there being no
committees of its Board of Directors.
4.2.9 No Consent. Except as set forth on Schedule 4.2.9, no
consent, order, license, approval or authorization of, or exemption by,
or registration or declaration or filing with, any governmental
authority, bureau or agency, and no consent or approval of any other
Person, is required to be obtained or made in connection with the sale
of the ECI Shares.
4.2.10 No Breach. Except as set forth on Schedule 4.2.10, the
performance of this Agreement will not (i) violate any provision of the
Articles of Incorporation or Code of Regulations of ECI; (ii) violate,
conflict with or result in the breach or termination of, or constitute
an amendment to, or otherwise give any Person the right to terminate,
or constitute (or with notice or lapse of time or both would
constitute) a default (by way of substitution, novation or otherwise)
under the terms of, any contract, mortgage, lease, bond, indenture,
agreement, franchise or other instrument or obligation to which ECI is
a party or by which ECI or any of its respective assets or properties
are bound or affected; (iii) result in the creation of any Liens" upon
the properties or assets of ECI pursuant to the terms of any contract,
mortgage, lease, bond, indenture, agreement, franchise or other
instrument or obligation; (iv) violate any judgment, order, injunction,
decree or award of any court, arbitrator, administrative agency or
governmental or regulatory body against, or binding upon, ECI or any of
its securities, properties, assets or business; (v) constitute a
violation by ECI of any statute, law, rule or regulation of any
jurisdiction as such statute, law, rule or regulation relates to ECI or
to any of its securities, properties, assets or business; or (vi)
violate any Permit.
4.2.11 Accounts Receivable. The accounts receivable of ECI
reflected on the September 30, 1996 Balance Sheet are actual and bona
fide accounts receivable which arose in the ordinary and usual course
of ECI's business, represent valid obligations due to ECI, are
collectible in the aggregate recorded amounts thereof on the books of
ECI and substantially all of such accounts will be collected by
December 31, 1996. Schedule 4.2.11 sets forth a summary of the terms of
payment (with the aging indicated) of all such accounts receivable at
the date hereof.
4.2.12 Other Tangible Property. ECI has good and marketable
title to all of the assets reflected on its books and records and on
the September 30, 1996 Balance Sheet, free and clear of all Liens,
except for those assets leased by ECI under leases listed on Schedule
4.2.12. The tangible personal properties material to the business of
ECI including, without limitation, ECI's personal computers, are in
good operating condition and repair, ordinary wear and tear excepted.
4.2.13 Real Property. ECI does not own any real property.
Schedule 4.2.13 sets forth a true and correct list of all leases,
subleases or other agreements under which ECI is lessee or lessor of
any real property or has any interest in real property and, except as
set forth in Schedule 4.2.13, there are no rights or options held by
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ECI, or any contractual obligations on its part, to purchase or
otherwise acquire (including by way of lease or sublease) any interest
in or use of any real property, not any rights or options granted by
ECI, or any contractual obligations entered into by it, to sell or
otherwise dispose of (including by way of lease or sublease) any
interest in or use of any real property. All such leases, subleases and
other agreements grant the leasehold estates or other interests they
purport to grant with the right to quiet possession, are in full force
and effect and constitute legal, valid and binding obligations of the
respective parties hereto, with no existing or claimed default or event
of default or event which with notice or lapse of time or both would
constitute a default or event of default by ECI or, to the knowledge of
Xxxx, by any other party thereto, which would materially and adversely
affect ECI. ECI is not in violation of any building, zoning, health,
safety, environmental or other law, rule or regulation and no notice
from any Person has been served upon ECI claiming any such violation.
4.2.14 Intellectual Property. Except as listed on Schedule
4.2.14, ECI does not own or use any trademarks, trade names, trade
secrets, patents, inventions, processes, copyrights, copyright rights
or other intellectual property rights (or applications therefor), nor
is the use thereof required, in connection with its business.
4.2.15 Tax Matters. ECI has timely filed all federal, state,
county and local tax returns, estimates and reports (collectively,
"Returns") required to be filed by it through the date hereof, copies
of which have been delivered to I-Alliance, which Returns accurately
reflect the taxes due for the periods indicated, and has paid in full
all income, gross receipts, value added, excise, property, franchise,
sales, use, employment, payroll and other taxes of any kind whatsoever
(collectively, "Taxes") shown to be due by such Returns, and adequate
reserves have been established with respect to any liabilities for
Taxes accrued through September 30, 1996 and are reflected on the
September 30, 1996 Balance Sheet and, to the knowledge of Xxxx, there
is no unassessed deficiency for Taxes proposed or threatened against
ECI, and no taxing authority has raised any issue with respect to ECI
which, if adversely determined, would result in a liability for any Tax
which has not been reserved against on the September 30, 1996 Balance
Sheet, and there are not in force any extensions with respect to the
dates on which any Return was or is due to be filed by ECI or any
waivers or agreements by ECI for the extension of time for the
assessment or payment of any Taxes. ECI has not been, and currently is
not being, audited by any federal, state or local tax authority.
4.2.16 Compliance with Laws. ECI is not in violation of any
applicable law, rule or regulation, the violation of which could
materially and adversely affect the assets, properties, liabilities,
business, results of operations, condition (financial or otherwise) or
prospects of ECI, nor does Xxxx know of the enactment, promulgation or
adoption of any such law, rule or regulation which is not yet
effective.
4.2.17 Permits. (a) Except as set forth on Schedule 4.2.17(a),
ECI (including, without limitation, its employees) has duly obtained
and holds in full force and effect all consents, authorizations,
permits, licenses, orders or approvals of, and has made all
declarations and filings with, all federal, state or local governmental
or regulatory bodies that are material or necessary in or to the
conduct of its business (collectively, the "Permits"); all of the
Permits were duly obtained and are in full force and effect; no
violations are or have been recorded in respect of any such Permit and
no proceeding is pending or threatened to revoke, deny or limit any
such Permit; and (b) Schedule 4.2.17(b) sets forth a true and complete
list of all local recording agent licenses, surplus lines licenses and
managing general agency licenses issued by any jurisdiction to ECI,
together with the expiration dates thereof.
4.2.18 Contracts and Agreements. Schedule 4.2.18 lists and
briefly describes all written or oral contracts, agreements, leases,
mortgages and commitments to which ECI is a party or by which is may be
bound, including, without limitation, all insurance underwriting
agreements, agency agreements, brokerage agreements, management
agreements, joint venture agreements, leases, guarantees and
indemnifications, employment and consulting agreements and instruments
of indebtedness (collectively, "Contracts"), true and correct copies of
which have been made available to I-Alliance. All Contracts constitute
legal, valid and binding obligations of ECI and, to the knowledge of
Xxxx, of the other parties thereto and are in full force and effect on
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the date hereof, and ECI has paid in full amounts due thereunder which
are due and payable and is not in default under any of them nor, to the
knowledge of Xxxx, is any other party to any such contract or other
agreement in default thereunder, nor does any condition exist that with
notice or lapse of time or both would constitute a default or event of
default thereunder by ECI or, to the knowledge of Xxxx, by any other
Person. Except as set forth in Schedule 4.2.9, no Contract requires the
consent or approval of a third party in connection with the sale of the
ECI Shares.
4.2.19 Employee Benefits. (a) Except as set forth on Schedule
4.2.19, there are no pension, retirement, savings, disability, medical,
dental or other health plans, life insurance (including any individual
life insurance policy as to which ECI makes premium payments whether or
not ECI is the owner, beneficiary or both of such policy) or other
death benefit plans, profit sharing, deferred compensation, stock
option, bonus or other incentive plans, vacation benefit plans,
severance plans, or other employee benefit plans or arrangements
(whether written or arising from custom), and ECI has no employee
pension benefit plan as defined Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or any employee
welfare benefit plan as defined in Section 3(1) of ERISA.
(b) ECI has in all material respects complied with the
requirements to the extent applicable, of the Consolidated Omnibus
Budget Reconciliation Act of 1985 ("COBRA") with respect to the
continuation of employer-provided health benefits following a
"qualifying event" which would otherwise terminate such benefits, as
provided in Section 4980B of the Internal Revenue Code of 1986, as
amended, and applicable regulations and Internal Revenue Service
rulings, notices and other pronouncements.
4.2.20 Insurance. Schedule 4.2.20 lists and provides a summary
description of all policies of property, theft, fire, liability,
workers' compensation, title, professional liability or life insurance
or reinsurance or any other insurance owned or maintained by ECI or in
which ECI is a named insured or on which ECI is paying any premiums.
All such policies are of a type and in amounts of coverage customary in
businesses such as those engaged in by ECI, and except as set forth on
Schedule 4.2.20, are in full force and effect at the date hereof, and
each of the insured parties thereunder is not in default with respect
to any provision contained in any such insurance policy nor failed to
give any notice or present any claim thereunder in due and timely
fashion. Schedule 4.2.20 sets forth a summary of the claims history for
ECI under such policies since January 1, 1993 and, except as set forth
on Schedule 4.2.20, there are no claims outstanding under any such
policies.
4.2.21 Accounts Payable. Except as set forth on Schedule
4.2.21, no accounts payable of ECI have arisen subsequent to September
30, 1996 that exceed $10,000 for any one payee or $100,000 in the
aggregate, other than premiums payable to insurance companies.
4.2.22 Liabilities. There are no material liabilities or
obligations of ECI, either accrued, absolute, contingent or otherwise,
whether or not of a kind required by generally accepted accounting
principles to be set forth on a financial statement ("Liabilities"),
except (a) those accrued, reflected or otherwise provided for on the
September 30, 1996 Balance Sheet and (b) those listed on Schedule
4.2.22.
4.2.23 Actions and Proceedings. Except as provided on Schedule
4.2.23, there are no claims, actions, suite, arbitrations, proceedings,
investigations or inquiries, whether at law or in equity and whether or
not before any court, private body or group, governmental department,
commission, board, agency or instrumentally (collectively "Actions"),
pending or to the knowledge of Xxxx or Xxxxxxx, threatened against,
involving or affecting ECI or any of its assets, whether or not fully
or partially covered by insurance, or which would give rise to any
right of indemnification by any Person from ECI, and there are no
outstanding orders, writs, injunctions, awards, sentences or decrees of
any court, private body or group, governmental department, commission,
board, agency or instrumentality against involving or affecting ECI.
4.2.24 Bank Accounts, Guarantees and Powers. Schedule 4.2.24
sets forth (i) a list of all accounts, borrowing resolutions and
deposit boxes maintained by ECI at any bank or other financial
institution and the names of the person authorized to effect
transactions in such accounts, to borrow pursuant to such resolutions
and with access to such boxes; (ii) all agreements or commitments of
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ECI guaranteeing the payment of money or the performance of other
contracts by any third persons; and (iii) the names of all persons,
firms, associations, corporations, or business organizations holding
general or special powers of attorney from ECI together with a summary
of the terms thereof.
4.2.25 Absence of Changes. Except as set forth in Schedule
4.2.25, since September 30, 1996, ECI has carried on its business in
the ordinary course, and there has not been:
4.2.25.1 any material adverse change in its business condition
(financial or otherwise), results of operations or
liabilities; 4.2.25.2 any pending or threatened amendment,
modification, or termination of any agreement, license or
permit which is material to its business; 4.2.25.3 any
disposition or acquisition of any of its assets or properties
other than in the ordinary course; 4.2.25.4 any damage,
destruction or other casualty loss (whether or not covered by
insurance) adversely affecting or that could reasonably be
expected to adversely affect its business or assets; 4.2.25.5
any increase in the compensation of any of its employees; or
4.2.25.6 except in the ordinary course, any obligation or
liability (whether matured, unmatured, absolute, accrued,
contingent or otherwise) incurred. 4.2.26 Employee Relations.
ECI has not at any time during the last five years had, or, to
the knowledge of Xxxx, is there now threatened, a strike, picket, work
stoppage, work slowdown, or other labor trouble or dispute, and Xxxx
has no knowledge of any employee's proposed resignation.
4.2.27 Full Disclosure. All documents, schedules and other
materials delivered or made available by ECI to I-Alliance in
connection with this Agreement and the transactions contemplated hereby
are true and complete in all material respects, and do not, in light of
the circumstances under which the statements contained in the
information so furnished are made, contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements contained therein not false or misleading.
4.2.28 Employee Compensation. Schedule 4.2.28 lists all
employees of ECI, setting forth their respective salaries, whether they
are employed under contract or at will, and the expiration date of each
contract.
4.2.29 Representation. ECI has has been represented by its
own counsel is not relying on or represented by counsel for I-Alliance.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF I-ALLIANCE
I-Alliance represents and warrants to the Shareholders and ECI that:
5.1 Organization. I-Alliance is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, has full
power and authority to own, lease and operate its properties and to carry on its
business as now being and as heretofore conducted by it, and is duly qualified
or otherwise authorized as a foreign corporation to transact business and is in
good standing in each jurisdiction in which it is required to be so qualified or
authorized.
5.2 Authority. This Agreement has been duly authorized, executed and
delivered by I-Alliance and is the valid and bind agreement of I-Alliance
enforceable against I-Alliance in accordance with its terms.
5.3 The I-Alliance Shares. The I-Alliance Shares being delivered
hereby are validly issued, fully paid and non-assessable.
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5.4 No Breach. The authorization, execution, delivery and performance
of this Agreement by I-Alliance will not violate any provision of its
certificate of incorporation or by-laws or violate, conflict with or result in
the breach or termination of, or otherwise give any Person the right to
terminate, any agreement to which it is a party.
5.6 Documents Delivered. I-Alliance has delivered to Shareholders
I-Alliance's Annual Report on Form 10-K for the fiscal year ended December 31,
1995 (the "1995 Form 10-K"), its Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1996 and June 30, 1996, its Information Statement dated
September 23, 1996 (collectively the"SEC Documents"). The SEC Documents were
true and complete in all material respects as at their respective dates, did not
contain any untrue statement of a material fact nor omit to state any material
fact required to be stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading, and since September 23, 1996, there has not been any material
adverse change in I-Alliance's business condition (financial or otherwise),
results of operations or liabilities, not reflected in the SEC Documents.
ARTICLE 6
CONDITIONS PRECEDENT TO CLOSING
6.1 I-Alliance Conditions Precedent. The obligation of I-Alliance
to close the transactions herein contemplated is subject to the following
express conditions precedent:
6.1.1 Representations and Warranties. The representations and
warranties set forth in Article 4 of this Agreement shall be true and
correct in all material respects at and as of the Closing Date.
6.1.2 Covenants. ECI and Shareholders shall have performed
and complied with all of their covenants under this Agreement in all
material respects through the Closing Date.
6.1.3 Satisfactory Performance. All actions to be taken by ECI
and Shareholders in connection with consummation of the transaction
contemplated hereby and all certificates, opinions, instruments, and
other documents required to effect the transactions contemplated hereby
have been completed in a manner which is reasonably satisfactory in
form and substance to I-Alliance.
6.1.4 Continuation of Business. Between the date of the
Financial Statements and the Closing Date, ECI will have been operated
in the normal course and will not have suffered any damage,
destruction, loss or occurrence, whether covered by insurance or not,
which may materially adversely affect the value of ECI or its business
prospects.
6.1.5 Legal Actions. No suit, action, or other proceeding
shall be pending or threatened before any court or governmental agency
seeking to restrain, prohibit or obtain damages or other relief in
connection with this Agreement or the consummation of the transactions
contemplate herein and there shall have been no investigation or
inquiry made or commenced by any governmental agency in connection with
this Agreement or the transactions contemplated herein, except that the
foregoing shall not be a condition precedent if ECI and the
Shareholders shall have offered indemnity with respect thereto that is
reasonably satisfactory to I-Alliance .
6.1.6 Legal Limitations on Closing. There shall not be in
effect any statute, rule or regulation which makes it illegal for
I-Alliance to consummate the transactions contemplated herein or any
order, decree of judgment which enjoins I-Alliance from consummating
the transactions contemplated hereby, except that any such order,
decree or judgment shall not be a condition precedent if ECI and
Shareholders shall have offered indemnity with respect thereto that is
reasonably satisfactory to I-Alliance.
6.1.7 Deliveries by the Shareholders. The Shareholders will
have delivered the stock certificates representing the ECI Shares, duly
endorsed for transfer.
6.1.8 Deliveries by ECI. ECI will have delivered the minute
book, stock book and stock ledger of ECI, and a good standing
certificate, dated as of a date not more than fourteen (14) days prior
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to the date hereof as to the corporate existence and good standing of
ECI certified by the Secretary of State of the State of Ohio.
6.1.9 Waivers. I-Alliance may waive one or more of said
conditions but such waiver shall be effective only if in writing and
signed on behalf of I-Alliance by one of its duly authorized officers
and may be conditioned in any manner I-Alliance sees fit.
6.2 Conditions Precedent to Closing by ECI and Shareholders. The
obligation of ECI and Shareholders to close the transactions herein contemplated
is subject to the following express conditions precedent:
6.2.1 Representations and Warranties. Representations and
warranties set forth in Article 5 of this Agreement shall be true and
correct in all material respects at and as of the Closing Date.
6.2.2 Covenants. I-Alliance will have performed and complied
with all of its covenants under this Agreement in all material respects
through the Closing Date.
6.2.3 Legal Limitations on Closing. There shall not be in
effect any statute, rule or regulation which makes it illegal for
I-Alliance, ECI or the Shareholders to consummate the transactions
contemplated herein or any order, decree or judgment which enjoins ECI
or the Shareholders from consummating the transactions contemplated
hereby, except that any such order, decree or judgment shall not be a
condition precedent if I-Alliance shall have offered indemnity with
respect thereto that is reasonably satisfactory to ECI and
Shareholders.
6.2.4 Legal Actions. No suit, action, or other proceeding
shall be pending or threatened before any court or governmental agency
seeking to restrain, prohibit or obtain damages or other relief in
connection with this Agreement or the consummation of the transactions
contemplate herein and there shall have been no investigation or
inquiry made or commenced by any governmental agency in connection with
this Agreement or the transactions contemplated herein, except that the
foregoing shall not be a condition precedent if I-Alliance shall have
offered indemnity with respect thereto that is reasonably satisfactory
to ECI and the Shareholders.
6.2.5 Satisfactory Performance. All actions to be taken by
I-Alliance in connection with consummation of the transactions
contemplated hereby and all certificates, opinions, instruments, and
other documents required to effect the transactions contemplated hereby
have been completed in a manner which is reasonably satisfactory in
form and substance to ECI and Shareholders.
6.2.6 Waiver. ECI and Shareholders may waive one or more of
the foregoing conditions but such waiver shall only be effective if in
writing and signed by ECI and Shareholders and may be conditioned in
any manner ECI and Shareholders see fit.
ARTICLE 7
I-ALLIANCE SHARES
7.1 Legend. Any certificate or certificates representing I-Alliance
Shares will bear the following legend unless and until removal thereof is
permitted pursuant to the terms of this Agreement:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT") OR UNDER ANY APPLICABLE STATE SECURITIES LAW AND MAY
NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT FOR THESE
SHARES OR AN OPINION OF I-ALLIANCE'S COUNSEL THAT REGISTRATION
IS NOT REQUIRED UNDER THE ACT AND THE RULES AND REGULATIONS
PROMULGATED THEREUNDER OR UNDER APPLICABLE STATE SECURITIES
LAWS.
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7.2 Examination and Investment Representation. Shareholders, severally,
represent and warrant to I-Alliance that each of them has examined I-Alliance's
Annual Report on Form 10-K for the year ended December 31, 1995, its Quarterly
Report on Form 10-Q for the quarters ended March 31, 1996 and June 30, 1996, and
its Information Statement dated September 23, 1996, including the financial
statements contained therein, has had the opportunity to discuss I-Alliance's
operations with its officers and employees, and is acquiring the I-Alliance
Shares for his/her own account for investment within the contemplation of the
Securities Act of 1933, as amended (the "Securities Act") and not with a view to
the transfer or resale thereof, except to the extent otherwise expressly
provided in this Agreement, that he has been advised by his counsel of the legal
implications and effect of the foregoing under the Securities Act and of the
circumstances under which he may dispose of his I-Alliance Shares under the
Securities Act, including the possible limited sale thereof pursuant to Rule 144
under the Securities Act and of the affect of the legending of the certificate
for his I-Alliance Shares with the legend described in Section 7.1.
7.3 Registration Rights. Each Shareholder shall have the following
registration rights with respect to the I-Alliance Shares:
7.3.1 Transfer of Registration Rights. Shareholder may assign
the registrations rights with respect to the I-Alliance Shares to any
party or parties to which he may from time to time transfer the
I-Alliance Shares. Upon assignment of any registration rights pursuant
to this Section 7.3, Shareholder shall deliver to the transfer agent
for I-Alliance, a notice of such assignment which includes the identity
and address of any assignee (collectively, Shareholder and each such
subsequent holder is referred to as a "Holder").
7.3.2 Required Registration. As promptly as practicable after
the Closing, I-Alliance agrees to register all of the Registrable
Securities (as hereinafter defined) pursuant to a registration
statement on Form S-3 (the "Shelf Registration Statement"). I-Alliance
shall use its best efforts to cause the Shelf Registration Statement to
be declared effective as quickly as practicable and to maintain the
effectiveness of the Shelf Registration Statement until such time as
I-Alliance reasonably determines based on an opinion of counsel that
the Holders will be eligible to sell all of the Registrable Securities
then owned by the Holders without the need for continued registration
of the Shares in the three-month period immediately following the
termination of the effectiveness of the Shelf Registration Statement.
I-Alliance's obligations contained in this Section 7.3 shall terminate
on the third anniversary of the Effective Date.
7.3.3 Registration Procedures. In case of each registration,
qualification or compliance effected by I-Alliance subject to this
Section 7.3, I-Alliance shall keep Holder advised in writing as to the
initiation of each such registration, qualification and compliance and
as to the completion thereof. In addition, I-Alliance shall at its own
expense:
7.3.3.1 subject to this Section 7.3, before filing a
registration or prospectus or any amendment or supplements
thereto, furnish to counsel selected by Holder copies of all
such documents proposed to be filed and the portions of such
documents provided in writing by Holder for use therein,
subject to such Holder's approval, and for which Holder shall
indemnify I-Alliance;
7.3.3.2 prepare and file with the SEC such amendments
and supplements to the Shelf Registration Statement as may be
necessary to keep the Shelf Registration Statement effective
and comply with provisions of the Securities Act with respect
to the disposition of all securities covered thereby during
such period;
7.3.3.3 update, correct, amend and supplement the
Shelf Registration Statement as necessary;
7.3.3.4 if such offering is to be underwritten, in
whole or in part, enter into a written agreement in form and
substance reasonably satisfactory to the managing underwriter
and the registering Holder;
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7.3.3.5 furnish to Holder such number of
prospectuses, including preliminary prospectuses, and other
documents that are included in the Shelf Registration
Statement as Holder may reasonably request from time to time;
7.3.3.6 use its best efforts to register to qualify
such Registrable Securities under such other securities or
blue sky laws of such jurisdictions of the United States as
Holder may request to enable it to consummate the disposition
in such jurisdiction of the Registrable Securities (provided
that I-Alliance will not be required to (A) qualify generally
to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Article I, or
(B) consent to general service of process in any such
jurisdiction);
7.3.3.7 notify Holder, at any time when the
prospectus included the Shelf Registration Statement relating
to the Registrable Securities is required to be delivered
under the Securities Act, of the happening of any event which
would cause such prospectus to contain an untrue statement of
a material fact or omit any fact necessary to make the
statement therein in light of the circumstances under which
they are made not misleading and, at the request of Holder,
prepare a supplement or amendment to such prospectus, so that,
as thereafter delivered to purchasers of such shares, such
prospectus will not contain any untrue statements of a
material fact or omit to state any fact necessary to make the
statements therein in light of the circumstances under which
they are made not misleading;
7.3.3.8 use its best efforts to cause all such
Registrable Securities to be listed on each securities
exchange or national market on which similar securities issued
by I-Alliance are then listed and obtain all necessary
approvals from such exchange or national market for trading
thereon;
7.3.3.9 provide a transfer agent and registrar for
all such Registrable Securities not late than the effective
date of the Shelf Registration; and
7.3.3.10 upon the sale of any Registrable Securities
pursuant to the Shelf
Registration, remove all restrictive legends from all
certificates or other instruments evidencing such Registrable
Securities (to the extent permitted by the Securities Act).
7.3.4 Delay and Suspension. If Issuer is aware of any event
which has occurred or which it reasonably expects might occur
within the next ninety days, andsuch event would cause (or Issuer
believes might cause) the Shelf Registration Statement (or any
prospectus) to contain any untrue statements of a material fact or
omit to state any fact necessary to make the statements therein in
light of the circumstances under which they are made not misleading,
then notwithstanding any other provision of this Section 7.3, Issuer
upon notice to Holder, may delay filing any Shelf Registration
Statement otherwise required hereunder or may withdraw or suspend for
up to ninety days any then pending Shelf Registration Statement.
7.3.5 Expenses. Except as required by law, all expenses
incurred by in complying with this Section 7.3, including but not
limited to, all registration, qualification and filing fees, printing
expenses, fees and disbursements of counsel and accountants for
I-Alliance, blue sky fees and expenses (including fees and
disbursements of counsel related to all blue sky matters)
("Registration Expenses") incurred in connection with any registration,
qualification or compliance pursuant this Section 7.3 shall be borne by
I-Alliance. All underwriting discounts and selling commissions and any
fees of Holder's own attorneys or other advisors applicable to a sale
incurred in connection with any registration of I-Alliance Shares and
the legal fees of Holder shall be borne by Holder.
7.3.6 Further Information. If Registrable Securities owned by
Holder are included in any registration, such Holder shall use
reasonable efforts to cooperate with I-Alliance and shall furnish
I-Alliance such information regarding itself as I-Alliance may
reasonably request and as shall be required in connection with any
registration, qualification or compliance referred to in this
Agreement.
7.3.7 Definition For purposes of this Section 7.3,
"Registrable Securities" will mean the I-Alliance Shares and all common
stock or other securities issued in respect of such Shares by way of a
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stock dividend or stock split or in connection with a combination or
subdivision of shares, recapitalization, merger or consolidation or
reorganization, and any securities issued in respect of the I-Alliance
Shares by way of stock dividend or stock split or in connection with
any combination or subdivision of shares, recapitalization, merger or
consolidation or reorganization; provided, however, as to any
particular Registrable Securities, such Registrable Securities will
cease to be subject to this Article when they have been sold pursuant
to an effective registration statement or in a transaction exempt from
the registration and prospectus delivery requirements of the Securities
Act under Section 4(1) thereof so that all transfer restrictions and
restrictive legends with respect thereto are removed upon the
consummation of such sale and the purchaser and seller receive an
opinion of counsel from the seller or the purchaser, which opinion
shall be in form and substance reasonably satisfactory to the other
party and I-Alliance and their respective counsel, to the effect that
such stock in the hands of the purchase is freely transferable without
restriction or registration under the Securities Act in any public or
private transaction.
7.4 Indemnity. I-Alliance shall indemnify Shareholders from and against
any and all liabilities to which they may become subject as a result of any
untrue statement or alleged untrue statement of a material fact contained in the
related registration statement, or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statement therein not misleading, other than a statement or omission made in
reliance on and consistent with information furnished in writing by the
Shareholders for use in such registration statement, provided, however, that
each Shareholder shall indemnify I-Alliance, and the underwriters of the
offering, if any, from and against any and all liabilities to which I-Alliance
may become subject as a result of any untrue statement or alleged untrue
statement of a material fact contained in the related registration statement, or
the omission or alleged omissions to state therein a material fact required to
be stated therein or necessary to make the statement not misleading, but only
insofar as such statement or omission was made in reliance by I-Alliance on and
consistent with information furnished in writing by such Shareholder.
7.5 Documents. I-Alliance shall furnish to Shareholder one copy of the
registration statement and any amendments thereto and such number of copies of
the final prospectus as they may reasonably request, and shall deliver to the
exchanges or NASDAQ (where listed) such number of copies of the final prospectus
required to comply with the prospectus delivery requirements and permit the sale
of the registered I-Alliance Shares on such exchange or national market.
ARTICLE 8
OTHER COVENANTS
8.1 Announcements. Prior to the Closing, none of the parties will make
any public release of information regarding this Agreement or the transactions
contemplated hereto, except that I-Alliance may issue press release after the
execution of this Agreement and the Closing and as otherwise required by law.
8.2 Conduct of Business. During the period from the date hereof to the
Effective Date, unless I-Alliance consents otherwise in writing (which consent
will not be unreasonably withheld), ECI will conduct the business of ECI only in
the ordinary course of business consistent with past practice except as
contemplated by this Agreement.
8.3 Cooperation. Each party hereto agrees that before and after the
Closing to execute any and all further documents and writings and to perform
such other reasonable actions which may be or become necessary or expedient to
effectuate and carry out this Agreement.
8.4 Tax Matters. It is the intent of the parties that the exchange of
the ECI shares for the I-Alliance Shares be a tax free exchange (except to the
extent of the other considerations received). I-Alliance
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and Merger Sub will use all reasonable efforts to consummate the merger in such
fashion, but neither I-Alliance nor Merger Sub makes any representation as to
the tax treatment of Shareholders or any agreement with respect to refraining
from taking any future action which could adversely affect the tax treatment of
this transaction. Notwithstanding anything in this Agreement to the contrary,
the Shareholders will remain solely liable for any tax consequences to them
as a result of the transactions contemplated by this Agreement.
8.5 Tax Cooperation. After Closing the parties will cooperate with each
other in the preparation of all tax returns, and will provide to such other
parties any records and other information reasonably requested by such party in
connection therewith as well as access to, and cooperation of, the auditors of
such other party.
ARTICLE 9
CLOSING, CLOSING ADJUSTMENTS AND TERMINATION
9.1 Closing. The closing ("Closing"), i.e. the execution and delivery
of the documents contemplated by this Agreement, will take place at the offices
of I-Alliance, as soon as practical after the date of this agreement, provided
that such date will not be after December 27, 1996, or at such time as mutually
agreed (the "Closing Date"). The parties agree that time is of the essence.
9.2 Adjustments. The consideration paid to the Shareholders will be
subject to adjustment at or after the Closing for any increase or decrease in
the Net Worth of ECI at the Effective Date above or below $150,000. The amount
of such adjustment will be promptly paid by I-Alliance to the Shareholders (in
proportion to their interests reflected in Schedule 2.6, or will be immediately
refunded to I-Alliance (or ECI as directed by I-Alliance) by each Shareholder
(in proportion to their interests reflected in Schedule 2.6) upon a demand by
I-Alliance.
9.3 Termination. This Agreement may be terminated at any time
on or prior to the Effective Date:
9.3.1 by I-Alliance or ECI if any court of competent jurisdiction
will issue any order (other than temporary restraining order)
restraining, enjoining or prohibiting the transactions;
9.3.2 by mutual written agreement of I-Alliance and ECI;
9.3.3 by either I-Alliance or ECI if the Effective
Date will not have occurred on or before December
3, 1996, time being of the essence, provided that the right to
terminate this Agreement pursuant to this section will not be
available to any party whose failure to fulfill any obligation
of this Agreement has been the cause or resulted in the
failure of the Effective Date to occur on or before such date;
9.3.4 Breach by ECI. By I-Alliance if there has been a material
breach on the part of ECI in its representations, warranties
or covenants set forth herein, provided however that if such
breach is susceptible to cure, then ECI will have 30 days
after receipt of notice from I-Alliance, of its intent to
terminate this Agreement, in which to cure such breach; and
9.3.5 Breach by I-Alliance. By ECI if there has been a material
breach on the part of I-Alliance in its representations,
warranties or covenants set forth herein, provided however
that if such breach is susceptible to cure, then I-Alliance
will have 30 days after receipt of notice from ECI, of its
intent to terminate this Agreement, in which to cure such
breach.
9.4 Affect of Termination. If this Agreement is terminated pursuant to
this Article, all obligations of the parties under this Agreement will terminate
(except for this Article), and no party hereto will have any further liability
to the other parties hereto, except that such termination will be without
prejudice to any claim which a party may have against another for breach of this
Agreement that occurred prior to the date of termination.
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ARTICLE 10
SURVIVAL, INDEMNIFICATION AND LIMIT OF LIABILITY
10.1 Survival. All of the representations or warranties contained
herein will survive for a period of three years from the Closing Date and will
then expire. Upon the expiration of representations and warranties pursuant to
this section, unless written notice of a claim based on such representations and
warranty specifying in reasonable detail the facts on which the claim is based
will have been delivered to the indemnifying party prior to expiration of such
representation and warranty, such representation and warranty will be of no
further force or effect, as if never made and no action may be brought based on
the same, whether for breach of contract or any other legal theory, except,
however, that claims based on fraud, willful misrepresentation or with respect
to the representations and warranties set forth in Section 4.1.1 may be asserted
at any time within one year after I-Alliance learns of such fraud, willful
misrepresentation or breach.
10.2 Shareholders Indemnity. Each Shareholder agrees to indemnify,
defend and hold I-Alliance Indemnified Parties harmless from and against all
Losses incurred by I-Alliance Indemnified Parties resulting from or on account
of a breach of any representation, warranty or covenant of such Shareholder made
in this Agreement.
10.3 Limit of Liability. No Shareholder will be liable to I-Alliance
under this Agreement (except for and excluding amounts described in Section 10.4
below) for an amount in excess of the consideration received by such Shareholder
pursuant to this Agreement.
10.4 Shareholders Additional Indemnity. Each Shareholder agrees to
indemnify, defend and hold I-Alliance Indemnified Parties harmless from and
against all Losses incurred by I-Alliance Indemnified Parties resulting from or
on account of Indemnified Tax Liability or Errors and Omissions Liability (as
defined below).
For purposes of this Article the following definitions apply:
10.4.1 "Indemnified Tax Liability" will mean any and all
federal, state or local income tax or franchise tax liability of ECI
(or on account of ECI) whether in the current or future tax years, on
account of the distribution to the Shareholders and others of the
Contingent Receivable and or the realization thereof.
10.4.2 "Errors and Omissions Liability" will mean any
liability to ECI due to errors and omissions of its employees and
agents occurring before the Closing Date which has not been disclosed
in the Schedules to this Agreement and whose existence is not a breach
of the representations and warranties contained herein, to the extent
such liability is not reimbursed by insurance coverage maintained by
ECI prior to the Closing Date.
10.4.3 "Contingent Receivable" will mean a certain receivable
for contingent commissions for business written prior to the Closing
which was distributed or otherwise transferred from ECI to its then
shareholders prior to this Agreement.
10.5 Limit of Liability. No Shareholder will be liable to I-Alliance
under Section 10.4 above for an amount in excess of the amount actually received
by (or on behalf of) such Shareholder from its interest in the Contingent
Receivable (plus any remaining interest the Shareholder has therein), provided
that such Shareholder has given I-Alliance as of the Closing a first security
interest in such Contingent Receivable on terms reasonably satisfactory to
I-Alliance.
ARTICLE 11
MISCELLANEOUS PROVISIONS
11.1 Amendment and Modification. This Agreement may be amended,
modified and supplemented only by a writing signed by I-Alliance and the
Shareholders.
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11.2 Waiver of Compliance. Any failure of I-Alliance or the
Shareholders to comply with any obligation, covenant, agreement or condition
herein contained my be expressly waived, in writing only, by (i) I-Alliance in
the case of any failure of the Shareholders or (ii) the Shareholders in the case
of any failure of I-Alliance. Such waiver shall be effective only in the
specific instance and for the specific purpose for which made or given.
11.3 Expenses. Each party will pay its own expenses incurred in
connection with this Agreement or any transaction contemplated by this
Agreement. The foregoing shall not be construed as limiting any other rights
which any party may have as a result of misrepresentation of or breach by any
other party.
11.4 Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given when delivered by hand, or when mailed by certified or
registered mail (return receipt requested), postage prepaid or when delivered by
fax (evidenced by confirmation of successful transmission), as follows:
A. If to I-Alliance:
International Alliance Services, Inc.
00000 Xxxxx Xxxxxx Xxxxx
Xxxxxx Xxxx, Xxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxx X. XxXxxxx
With a copy to:
Xxxx X. Xxxxxx & Associates Co., LPA
0 Xxxxxx Xxxx Xxxxx, Xxx. 000
Xxxxxxxxx, Xxxx 00000-0000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxx X. Xxxxxx
or to such other person or place as I-Alliance or I-Alliance shall designate by
notice in the manner provided in this Section 11.4:
B. If to the Shareholders:
To the Shareholders at their
respective addresses set forth on
Exhibit A
With a copy to:
____________________________
____________________________
____________________________
____________________________
____________________________
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or to such other person as the Shareholders shall designate by notice in the
manner provided in this Section 11.4.
11.5 Assignment. This Agreement shall be binding upon and inure to the
benefit of I-Alliance and its successors and assigns, and to the Shareholders
and their respective successors and assigns or heirs, executors, administrators
and personal representatives, as the case may be, but neither this Agreement nor
any of the rights, interests and obligations hereunder shall be assigned by
I-Alliance or any of the Shareholders without the prior written consent of the
other parties.
11.6 Third Parties. This Agreement is not intended to and shall not be
construed to give any Person other than the parties hereto any interest or
rights (including, without limitation, any third party beneficiary rights) with
respect to or in connection with any agreement or provision contained herein or
contemplated hereby.
11.7 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the Ohio, without regard to principles of
conflicts of laws. I-Alliance and the Shareholders hereby irrevocably submit to
the jurisdiction of the courts of the State of Ohio, with venue in Cuyahoga
County, over any dispute arising out of this Agreement and agree that all claims
in respect of such dispute or proceeding shall be heard and determined in such
court. I-Alliance and the Shareholders hereby irrevocably waive, to the fullest
extent permitted by applicable law, any objection which they may have to the
venue of any such dispute brought in such court or any defense of inconvenient
forum for the maintenance of such dispute. I-Alliance and the Shareholders
hereby consent to process being served by them in any suit, action or proceeding
by delivering it in the manner specified by the provisions of Section 11.4 of
this Agreement.
11.8 Counterparts. This Agreement may be executed in two more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
11.9 Headings. The headings of the sections, schedules and articles of
this Agreement are inserted for the sake of convenience only and shall not
constitute a part hereof.
11.10 Entire Agreement. This Agreement, including the schedules and
exhibits, contains the entire understanding of the parties in respect of the
subject matter contained herein and therein and there are no other terms or
conditions, representations or warranties, written or oral, express or implied,
except as set forth herein.
[Remainder of page left intentionally blank]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
INTERNATIONAL ALLIANCE SERVICES, INC.
By: _____________________________________
Xxxxxx X. XxXxxxx, Vice Chairman
IASI/ECI ACQUISITION CO.
By: ______________________________________
Xxxxx X. Xxxxx, President
ENVIRONMENTAL & COMMERCIAL INSURANCE
AGENCY, INC.
By: _____________________________________
Xxxxxxxxxxx X. Xxxx, President
SHAREHOLDERS:
____________________________________
Xxxxxxxxxxx X. Xxxx
____________________________________
Xxxxxxx Xxx Xxxxx
____________________________________
Xxxx X. Xxxxxxx
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LOCK-UP AGREEMENT
This LOCK-UP AGREEMENT (this "Agreement"), dated as of November 30,
1996, is entered into by and between
_____________________________("Stockholder"), and International Alliance
Services, Inc., a Delaware corporation
("I-Alliance").
W I T N E S S E T H:
WHEREAS, contemporaneously with the delivery of this Agreement, SMR &
Co. Business Services, of which Stockholder is a shareholder, and IASI/SMR
Acquisition Co., a wholly-owned subsidiary of I-Alliance, are closing the
transactions contemplated by that certain Agreement and Plan of Merger dated as
of even date herewith (the "Merger Agreement"), providing for, among other
items, the merger of SMR & Co. Business Services with and into IASI/SMR
Acquisition Co. with SMR & Co. Business Services being the surviving corporation
(the "Merger").
WHEREAS, as a condition to the closing of the transactions contemplated
by the Merger Agreement (the "Closing"), Stockholder agrees not to make any
Transfer (defined herein) of (i) the shares (the "Shares") of I-Alliance common
stock, $.01 par value per share ("Shares"), and warrants to purchase shares of
Common Stock (the "Warrants") to be acquired by Stockholder pursuant to the
Merger Agreement and (ii) the shares of Common Stock to be acquired by
Stockholder upon exercise of the Warrants (the "Warrant Shares"), except as
expressly permitted by this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto hereby agree as follows:
1 Restrictions on Transfer. Stockholder hereby agrees that, without the
unanimous consent of the Board of Directors of I-Alliance, it will not, directly
or indirectly sell, assign, transfer, pledge (other than by pledge or other
grant of a security interest if the pledgee agrees in writing to be bound by the
terms of this Agreement) or otherwise dispose of, (collectively, "Transfer"),
the Shares prior to the end of the two-year period following the date hereof;
provided, however, that after the expiration of six months from the date hereof,
Stockholder may thereafter Transfer, in the aggregate, up to fifteen (15%) per
cent of the Shares.
Stockholder hereby agrees that, without the unanimous consent of the Board of
Directors of I-Alliance, it will not Transfer the Warrants or the Warrant Shares
prior to the end of the thirty (30) month period following the date hereof;
provided that (a) after the expiration of six months from the date hereof,
Stockholder may thereafter Transfer Warrants for or Warrant Shares totaling, in
the aggregate, up to thirty three (33%) per cent of the number of Warrant Shares
issuable on the exercise of all the Warrants; and (b) after the expiration of
eighteen (18) months from the date hereof, Stockholder may thereafter Transfer
Warrants for or Warrant Shares totaling (together with any Warrants or Warrant
Shares Transferred pursuant to the preceding subparagraph (a)), in the
aggregate, up to sixty six (66%) per cent of the number of Warrant Shares
issuable on the exercise of all the Warrants.
Notwithstanding the foregoing, Stockholder may Transfer the Shares, Warrants or
Warrant Shares (a) to the spouse or children of such Stockholder, whether
directly or in trust (including pursuant to the uniform gift to minors
provisions) for their sole benefit, provided that the transferee agrees in
writing to be bound by the terms of this Agreement, and provided further that
Stockholder may not disclaim beneficial ownership of such Shares, Warrants or
Warrant Shares for purposes of any filing pursuant to any securities law, or (b)
to a third party making a cash tender or exchange offer in compliance with
Regulations 14D and 14E under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), following the filing with the SEC in compliance with the
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Exchange Act by I-Alliance of a Recommendation Statement on Schedule 14D-9
pursuant to which I-Alliance affirmatively recommends to the I-Alliance
stockholders the acceptance of such cash tender or exchange offer.
2 Miscellaneous
2.1 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
2.2 Binding Effect and Assignment. This Agreement and all of
the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns, but except
as otherwise specifically provided, neither this Agreement nor any of the
rights, interests or obligations of the parties hereto may be assigned by any of
the parties hereto without the prior written consent of the other.
2.3 Amendments and Modification. This Agreement may not be
modified, amended, altered or supplemented except upon the execution and
delivery of a written agreement executed by the parties hereto.
2.4 Specific Performance. The parties hereto acknowledge that
I-Alliance will be irreparably harmed and that there will be no adequate remedy
at law for a violation of any of the covenants or agreements of Stockholder set
forth herein. Therefore, it is agreed that, in addition to any other remedies
which may be available to I-Alliance upon such violation, I-Alliance shall have
the right to enforce such covenants and agreements by specific performance,
injunctive relief or by any other means available to I-Alliance at law or in
equity.
2.5 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and sufficient if delivered in
person, by cable, telecopy, telegram or telex, or sent by mail (registered or
certified mail, postage prepaid, return receipt requested) to the respective
parties as follows:
If to Stockholder:
___________________________________
___________________________________
___________________________________
Attention: ________________________
Telecopy: _________________________
With a copy to:
___________________________________
___________________________________
___________________________________
Attention: ________________________
Telecopy: _________________________
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If to ______:
___________________________________
___________________________________
___________________________________
Attention: ____________________
Telecopy: _________________________
With a copy to:
___________________________________
___________________________________
___________________________________
Attention: ________________________
Telecopy: _________________________
or to such other address any party may have furnished to the other in writing in
accordance herewith, except that notices of change of address shall only be
effective upon receipt.
2.6______Governing Law. This Agreement shall be governed by,
construed and enforced in accordance with the laws of the State of Ohio as
applied to contracts entered into solely between residents of, and to be
performed entirely in, such state.
2.7______Entire Agreement. This Agreement contains the entire
understanding of the parties in respect of the subject matter hereof, and
supersedes all prior negotiations and understandings between the parties with
respect to such subject matters.
2.8______Effect of Headings. The section headings herein are
for convenience only and shall not affect the construction or interpretation of
this Agreement.
2.9______Definitions. All capitalized terms used herein shall
have the meanings defined in the Merger Agreements, unless otherwise defined
herein.
2.10_____Counterparts. This Agreement shall be executed in one
or more counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the date first above written.
"Stockholder"
___________________________________
"I-Alliance"
International Alliance Services, Inc.
By: _____________________________________
Printed Name: ___________________________
Title: ____________________________
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