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EXHIBIT 2.10
MERGER AGREEMENT
THIS MERGER AGREEMENT ("Agreement") is made as of April 20,
1998, by and among OFFICE CENTRE CORPORATION, a Delaware corporation ("Buyer"),
OFFICE CENTRE MONTGOMERY, a Delaware corporation to be formed as a wholly-owned
subsidiary of Buyer ("Acquisition"), OFFICE EXPRESS, INC., an Alabama
corporation ("Company"), XXXXX X. XXXXXX ("Motley"), an individual residing in
Alabama and XXXX X. XXXXXXXXX ("Xxxxxxxxx"), an individual residing in Alabama
(Motley and Xxxxxxxxx each as the "Seller" or "Shareholder" and collectively
"Sellers" or "Shareholders").
RECITALS
WHEREAS, Buyer, Acquisition, the Company and the Sellers wish
to set forth the terms and conditions upon which a merger of the Company with
and into Acquisition will occur and provide for the representations, warranties,
agreements, and conditions applicable to the transactions contemplated by this
Agreement;
WHEREAS, the Board of Directors of each of Buyer, Acquisition
and the Company deems the merger advisable and in the best interests of each of
Buyer, Acquisition and the Company and of their respective shareholders.
WHEREAS, the shareholders of Acquisition and the Company have
approved this Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following
terms have the meanings specified or referred to in this Section
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"APPLICABLE CONTRACT"--any Contract (a) under
which the Company has or may acquire any rights, (b) under which the Company has
or may become subject to any obligation or liability, or (c) by which the
Company or any of the assets owned, leased or used by it is or may become bound.
"BALANCE SHEET"--as defined in Section 3.4.
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"BEST EFFORTS"--the efforts that a prudent Person
desirous of achieving a result would use in similar circumstances to ensure that
such result is achieved as expeditiously as possible.
"BREACH"--a "Breach" of a representation,
warranty, covenant, obligation, or other provision of this Agreement or any
instrument delivered pursuant to this Agreement will be deemed to have occurred
if there is or has been any inaccuracy in or breach of, or any failure to
perform or comply with, such representation, warranty, covenant, obligation, or
other provision, and the term "Breach" means any such inaccuracy, breach,
failure, claim, occurrence, or circumstance.
"BUYER"--as defined in the first paragraph of this
Agreement.
"CLOSING"--as defined in Section 2.6.
"CLOSING DATE"--the date and time as of which the Closing
actually takes place.
"COMPANY"--as defined in the Recitals of this Agreement.
"CONSENT"--any approval, consent, ratification, waiver, or
other authorization (including any Governmental Authorization).
"CONTEMPLATED TRANSACTIONS"--all of the transactions
contemplated by this Agreement, including:
(a) the merger of the Company with and into Acquisition;
(b) the execution, delivery, and performance of the
Employment Agreement;
(c) the performance by Buyer, Acquisition, the Company and
Sellers of their respective covenants and obligations under this Agreement; and
"CONTRACT"--any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"DAMAGES"--as defined in Section 10.2.
"DISCLOSURE LETTER"--the disclosure letter delivered by
Sellers and the Company to Buyer concurrently with the execution and delivery of
this Agreement.
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"EBITDA"--earnings before interest, taxes, depreciation and
amortization, as adjusted.
"EMPLOYMENT AGREEMENT"--as defined in Section 7.2.
"ENCUMBRANCE"--any charge, claim, lien, option, pledge,
security interest, right of first refusal, or restriction of any kind, including
any restriction on use, voting, transfer, receipt of income, or exercise of any
other attribute of ownership.
"ENVIRONMENT"--soil, land surface or subsurface strata,
surface waters (including navigable waters, ocean waters, streams, ponds,
drainage basins, and wetlands), groundwaters, drinking water supply, stream
sediments, ambient air (including indoor air), plant and animal life, and any
other environmental medium or natural resource.
"ENVIRONMENTAL, HEALTH, AND SAFETY LIABILITIES"-- any cost,
damages, expense, liability, or obligation, arising from or under Environmental
Law or Occupational Safety and Health Law and consisting of or relating to:
(a) any environmental, health, or safety matters or
conditions (including on-site or off-site contamination, occupational safety and
health, and regulation of chemical substances or products);
(b) fines, penalties, judgments, awards, settlements, legal
or administrative proceedings, damages, losses, claims, demands and response,
investigative, remedial, or inspection costs and expenses arising under
Environmental Law or Occupational Safety and Health Law;
(c) financial responsibility under Environmental Law or
Occupational Safety and Health Law for cleanup costs or corrective action,
including any investigation, cleanup, removal, containment, or other remediation
or response actions ("Cleanup") required by applicable Environmental Law or
Occupational Safety and Health Law and for any natural resource damages; or
(d) any other compliance, corrective, investigative, or
remedial measures required under Environmental Law or Occupational Safety and
Health Law.
The terms "removal," "remedial," and "response action,"
include the types of activities covered by the United States Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C. sec. 9601 et
seq., as amended ("CERCLA").
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"ENVIRONMENTAL LAW"--any Legal Requirement that requires or
relates to:
(a) advising or notifying of appropriate authorities and
employees of releases of pollutants or hazardous substances or materials,
violations of discharge limits, or other prohibitions and of the commencements
of activities, such as resource extraction or construction, that could have
significant impact on the Environment;
(b) preventing or reducing to acceptable levels the release
of pollutants or hazardous substances or materials into the Environment;
(c) reducing the quantities, preventing the release, or
minimizing the hazardous characteristics of wastes that are generated;
(d) reducing to acceptable levels the risks inherent in the
transportation of hazardous substances, pollutants, oil, or other potentially
harmful substances;
(e) cleaning up pollutants that have been released,
preventing the threat of release, or paying the costs of such clean up or
prevention;
(f) pollution, contamination, protection of the Environment,
human health or safety.
"ERISA"--the Employee Retirement Income Security Act of 1974
or any successor law, and regulations and rules issued pursuant to that Act or
any successor law.
"FACILITIES"--any real property, leaseholds, or other
interests currently or formerly owned or operated by the Company and any
buildings, plants, structures, or equipment (including motor vehicles, tank
cars, and rolling stock) currently or formerly owned or operated by the Company.
"GAAP"--generally accepted United States accounting
principles, applied on a basis consistent with the basis on which the Balance
Sheet and the other financial statements referred to in Section 3.4 were
prepared.
"GOVERNMENTAL AUTHORIZATION"--any approval, consent,
license, permit, waiver, or other authorization issued, granted, given, or
otherwise made available by or under the authority of any Governmental Body or
pursuant to any Legal Requirement.
"GOVERNMENTAL BODY"--any:
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(a) nation, state, county, city, town, village, district, or
other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other
government;
(c) governmental or quasi-governmental authority of any
nature (including any governmental agency, branch, department, official, or
entity and any court or other tribunal);
(d) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory, or taxing
authority or power of any nature.
"HAZARDOUS ACTIVITY"--the distribution, generation,
handling, importing, management, manufacturing, processing, production,
refinement, Release, storage, transfer, transportation, treatment, or use of
Hazardous Materials in, on, under, about, or from the Facilities or any part
thereof into the Environment and any other act or thing that increases the
danger, or risk of danger, or poses an unreasonable risk of harm to persons or
property on or off the Facilities, or that may affect the value of the
Facilities or the Company.
"HAZARDOUS MATERIALS"--any waste or other substance that is
listed, defined, designated, classified or regulated as, or otherwise determined
to be, hazardous, radioactive, or toxic or a pollutant or a contaminant under or
pursuant to any Environmental Law, including any admixture or solution thereof,
and specifically including petroleum and all derivatives thereof or synthetic
substitutes therefor and asbestos or asbestos-containing materials.
"IRC"--the Internal Revenue Code of 1986 or any successor
law, and regulations issued by the IRS pursuant to the Internal Revenue Code or
any successor law.
"IRS"--the United States Internal Revenue Service or any
successor agency, and, to the extent relevant, the United States Department of
the Treasury.
"KNOWLEDGE"--an individual will be deemed to have
"Knowledge" of a particular fact or other matter if (a) such individual is
actually aware of such fact or other matter or (b) a prudent individual could be
expected to discover or otherwise become aware of such fact or other matter in
the ordinary course of business.
A Person (other than an individual) will be deemed to have
"Knowledge" of a particular fact or other matter if any individual who is
serving, or who has at any time served, as a
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director or officer of such Person has, or at any time had, Knowledge of such
fact or other matter.
"LEGAL REQUIREMENT"--any federal, state, local, municipal,
or other administrative order, constitution, law, ordinance, principle of common
law, regulation, or statute.
"OCCUPATIONAL SAFETY AND HEALTH LAW"--any Legal Requirement
designed to provide safe and healthful working conditions and to reduce
occupational safety and health hazards, and any program designed to provide safe
and healthful working conditions.
"ORDER"--any award, decision, injunction, judgment, order,
ruling, subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"ORDINARY COURSE OF BUSINESS"--an action taken by a Person
will be deemed to have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past practices of
such Person and is taken in the ordinary course of the normal day-to-day
operations of such Person;
(b) such action is not required to be authorized by the
board of directors of such Person (or by any Person or group of Persons
exercising similar authority); and
(c) such action is similar in nature and magnitude to
actions customarily taken, without any authorization by the Board of Directors
(or by any Person or group of Persons exercising similar authority), in the
ordinary course of the normal day-to-day operations of other Persons that are in
the same line of businesses as such Person.
"ORGANIZATIONAL DOCUMENTS"--(a) the articles or certificate
of incorporation and the bylaws of a corporation; (b) any charter or similar
document adopted or filed in connection with the creation, formation, or
organization of a Person; and (c) any amendment to any of the foregoing.
"PERSON"--any individual, corporation (including any
non-profit corporation), general or limited partnership, limited liability
company, joint venture, estate, trust, association, organization, labor union,
or other entity or Governmental Body.
"PROCEEDING"--any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil,
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criminal, administrative, investigative, or informal) commenced, brought,
conducted, or heard by or before, or otherwise involving, any Governmental Body
or arbitrator.
"RELATED PERSON"--with respect to a particular individual:
(a) each other member of such individual's Family;
(b) any Person that is directly or indirectly controlled by
such individual or one or more members of such individual's Family;
(c) any Person in which such individual or members of such
individual's Family hold (individually or in the aggregate) a Material Interest;
and
(d) any Person with respect to which such individual or one
or more members of such individual's Family serves as a director, officer,
partner, executor, or trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly controls, is
directly or indirectly controlled by, or is directly or indirectly under common
control with such specified Person;
(b) any Person that holds a Material Interest in such
specified Person;
(c) each Person that serves as a director, officer, general
partner, executor, or trustee of such specified Person (or in a similar
capacity);
(d) any Person in which such specified Person holds a
Material Interest;
(e) For purposes of this definition, (a) the
"Family" of an individual includes (i) the individual, (ii) the individual's
spouse, (iii) any other natural person who is related to the individual or the
individual's spouse within the second degree, and (iv) any other natural person
who resides with such individual, and (b) "Material Interest" means direct or
indirect beneficial ownership (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934) of voting securities or other voting interests
representing at least 5% of the outstanding voting power of a Person or equity
securities or other equity
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interests representing at least 5% of the outstanding equity securities or
equity interests in a Person.
"RELEASE"--any spilling, leaking, emitting, discharging,
depositing, escaping, leaching, dumping, or other
releasing into the Environment, whether intentional or unintentional.
"REPRESENTATIVE"--with respect to a particular Person, any
director, officer, employee, agent, consultant, advisor, or other representative
of such Person, including legal counsel, accountants, and financial advisors.
"SECURITIES ACT"--the Securities Act of 1933 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"SELLERS"--as defined in the first paragraph of this
Agreement.
"SUBSIDIARY"--with respect to any Person (the "Owner"), any
corporation or other Person of which securities or other interests having the
power to elect a majority of that corporation's or other Person's board of
directors or similar governing body, or otherwise having the power to direct the
business and policies of that corporation or other Person (other than securities
or other interests having such power only upon the happening of a contingency
that has not occurred) are held by the Owner or one or more of its Subsidiaries;
when used without reference to a particular Person, "Subsidiary" means a
Subsidiary of the Company.
"SURVIVING CORPORATION"--the corporation that survives the
merger of Acquisition into the Company.
"TAX"--any tax (including any income tax, capital gains tax,
value added tax, sales tax, property tax, gift tax, or estate levy), levy,
assessment, tariff, duty, deficiency, or other fee in any related charge or
amount (including any fine, penalty, interest or addition to tax), imposed,
assessed or collected by or under the authority of any Governmental Body or
payable pursuant to any tax sharing agreement or any other contract relating to
the sharing or payment of any such tax, levy, assessment, tariff, duty,
deficiency or fee.
"TAX RETURN"--any return (including any information return),
report, statement, schedule, notice, form, or other document or information
filed with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection,
or payment of any Tax or in connection with the administration,
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implementation, or enforcement of or compliance with any Legal Requirement
relating to any Tax.
"THREAT OF RELEASE"--a substantial likelihood of a Release
that may require action in order to prevent or mitigate damage to the
Environment that may result from such Release.
"THREATENED"--a claim, Proceeding, dispute,
action, or other matter will be deemed to have been "Threatened" if any demand
or statement has been made (orally or in writing) or any notice has been given
(orally or in writing) that would lead a prudent Person to conclude that such a
claim, Proceeding, dispute, action, or other matter is likely to be asserted,
commenced, taken, or otherwise pursued in the future.
2. THE MERGER
2.1 THE MERGER
Upon the terms and subject to the conditions of
this Agreement, at the Effective Time, Company shall be merged with and into
Acquisition (the "Merger"). The separate existence and corporate organization of
the Company shall thereupon cease and the Company and Acquisition shall
thereupon be a single corporation. Acquisition shall be the surviving
corporation in the Merger (the "Surviving Corporation") and shall continue its
existence under the provisions of the Delaware General Corporation Law.
2.2 EFFECTIVE DATE OF THE MERGER
On the Closing Date, a certificate of merger (the
"Articles of Merger") shall be executed by the Company and Acquisition and shall
be filed with the Secretary of State of the States of Alabama and Delaware. The
Merger shall become effective at such time as the Articles of Merger are filed
with the Secretary of State of the States of Alabama and Delaware, such time
being hereinafter called the "Effective Time."
2.3 ARTICLES OF INCORPORATION
The Articles of Incorporation of Acquisition as in
effect immediately prior to the Effective Time shall be and remain the Articles
of Incorporation of the Surviving Corporation from and after the Effective Time
until amended as provided by law.
2.4 BY-LAWS
The By-Laws of Acquisition as in effect immediately prior
to the Effective Time shall be and remain the
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By-Laws of the Surviving Corporation from and after the Effective Time until
amended as provided by law.
2.5 DIRECTORS AND OFFICERS
Acquisition and Buyer shall, at Closing, cause
Xxxxxx X. Xxxxxx, Xx., [Buyer appointment] and Xxxxx X. Xxxxxx to be appointed
as directors of the Surviving Corporation. Xxxxx X. Xxxxxx and Xxxxxx X. Xxxxxx,
Xx. shall serve as the officers of the Surviving Corporation until their
successors have been elected or appointed and shall have qualified in accordance
with applicable law.
2.6 CLOSING
The closing of such Merger (the "Closing") shall
be effective (i) on the date the conditions in Sections 7 and 8 have been
satisfied or otherwise waived, or (ii) at such other date as the parties hereto
shall agree in writing (the "Closing Date"), and shall be held at the offices of
Buyer's counsel at 000 Xxxx Xxx Xxxx Xxxxxxxxx, Xxxx Xxxxxxxxxx, Xxxxxxx 00000
at 10:00 a.m. (local time).
2.7 CONVERSION OF COMPANY COMMON STOCK
At the Effective Time, by virtue of the Merger and
without any action on the part of any holder of capital stock of Buyer,
Acquisition, the Company or Sellers: (i) the shares of Common Stock of
Acquisition purchased, issued and outstanding immediately prior to the Effective
Time shall be converted as a result of the Merger and without any action on the
part of the holder thereof, into 1 share of capital stock of the Surviving
Corporation and shall represent all the issued and outstanding shares of the
Surviving Corporation; and (ii) the shares of the Company held by Sellers shall
be converted into and shall become, without further action on the part of the
Sellers, the right to receive six (6) times the Company's annualized EBITDA
based upon the adjusted projected EBITDA for the fiscal year ended December 31,
1997 (the "Purchase Price"). The Purchase Price shall be One Million Three
Hundred Two Thousand Dollars ($1,302,000). The EBITDA shall be adjusted by the
amounts set forth on Schedule 2.7(a). The consideration shall consist (i) of
shares of restricted Common Stock of Buyer which number of shares of Common
Stock shall be determined by dividing eighty-five percent (85%) of the amount
determined above by Buyer's initial public offering price per share (the "IPO
Price") and (ii) fifteen percent (15%) in cash, all of which shall be allocated
to the shares held by Xxxxxxxxx.
3. REPRESENTATIONS AND WARRANTIES OF SELLERS
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Sellers and the Company hereby jointly and
severally represent and warrant to Buyer and Acquisition as
follows:
3.1 ORGANIZATION AND GOOD STANDING
(a) The Company is a corporation duly organized,
validly existing, and in good standing under the laws of its jurisdiction of
incorporation, with full corporate power and authority to conduct its business
as it is now being conducted, to own or use the properties and assets that it
purports to own or use, and to perform all its obligations under Applicable
Contracts. The Company is duly qualified to do business as a foreign corporation
and is in good standing under the laws of each state or other jurisdiction in
which either the ownership or use of the properties owned or used by it, or the
nature of the activities conducted by it, requires such qualification.
(b) Sellers have delivered to Buyer copies of
the Organizational Documents of the Company, as currently in effect.
3.2 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid,
and binding obligation of Sellers and the Company, enforceable against Sellers
and the Company in accordance with its terms subject to bankruptcy, insolvency
or other laws affecting the rights of creditors generally. Upon the execution
and delivery by each Seller of his Employment Agreement, the Employment
Agreement will constitute the legal, valid, and binding obligations of such
Seller enforceable against such Seller in accordance with its respective terms.
Sellers and the Company have the absolute and unrestricted right, power,
authority, and capacity to execute and deliver this Agreement and to perform
their obligations under this Agreement. The Sellers and the Company have
approved this Agreement under applicable state corporate law provisions, and
such approval is binding.
(b) Neither the execution and delivery of this
Agreement nor the consummation or performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time):
(i) contravene, conflict with, or result
in a violation of (A) any provision of the Organizational Documents of the
Company, or (B) any resolution adopted by the board of directors or the
stockholders of the Company;
(ii) contravene, conflict with, or result
in a violation of, or give any Governmental Body or other Person the right to
challenge any of the Contemplated Transactions or to exercise any material
remedy or obtain any material relief under,
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any Legal Requirement or any Order to which the Company or Sellers, or any of
the assets owned or used by the Company, may be subject;
(iii) contravene, conflict with, or
result in a violation of any of the terms or requirements of, or give any
Governmental Body the right to revoke, withdraw, suspend, cancel, terminate, or
modify, any material Governmental Authorization that is held by the Company or
that otherwise relates to the business of, or any of the assets owned or used
by, the Company;
(iv) cause Buyer or the Company to become
subject to, or to become liable for the payment of any tax;
(v) contravene, conflict with, or result in
a violation or breach of any provision of, or give any Person the right to
declare a default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any material Applicable
Contract; or
(vi) result in the imposition or creation
of any Encumbrance upon or with respect to any of the material assets owned or
used by the Company.
Except as set forth in Part 3.2 of the
Disclosure Letter, neither Sellers or the Company is or will be required to give
any notice to or obtain any Consent from any Person in connection with the
execution and delivery of this Agreement or the consummation or performance of
any of the Contemplated Transactions.
(c) Sellers are acquiring the Buyer's Common
Stock for their own account and not with a view to its distribution within the
meaning of Section 2(11) of the Securities Act. Each Seller is an "accredited
investor" as such term is defined in Rule 501(a) under the Securities Act.
Sellers acknowledge that each certificate representing Buyer's Common Stock
acquired pursuant to this Agreement shall bear the following restrictive legend:
THE SECURITIES REPRESENTED BY THE CERTIFICATE (THE "SHARES")
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). THE SECURITIES MAY NOT BE SOLD
OR OFFERED FOR SALE OR OTHERWISE DISTRIBUTED WITHOUT ONE OF
THE FOLLOWING: (i) AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SHARES UNDER THE SECURITIES ACT, OR (ii) AN OPINION OF
COUNSEL, SATISFACTORY TO THE CORPORATION, THAT SUCH
REGISTRATION IS NOT
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REQUIRED AS TO SAID SALE, OFFER OR DISTRIBUTION.
Each Seller further acknowledges that he shall be subject to such "lock-up"
restriction as may be imposed by the Buyer's underwriter or any entity
regulating the issuance of the Buyer's Common Stock in its initial public
offering.
3.3 CAPITALIZATION
The authorized equity securities of the Company
consist of 1,000 shares of common stock, $1.00 par value, of which 1,000 shares
are issued and outstanding and constitute all the shares of the Company. Motley
is the owner of 625 shares and Xxxxxxxxx is the owner of 375 shares. The Sellers
are, and will be on the Closing Date, the record and beneficial owner and holder
of the shares of the Company free and clear of all Encumbrances. All of the
outstanding shares of the Company have been duly authorized and validly issued
and are fully paid and nonassessable. There are no Contracts relating to the
issuance, sale, or transfer of any equity securities or other securities of the
Company. None of the outstanding equity securities or other securities of the
Company was issued in violation of the Securities Act or any other Legal
Requirement. The Company does not own, or has any Contract to acquire, any
equity securities or other securities of any Person or any direct or indirect
equity or ownership interest in any other business.
3.4 FINANCIAL STATEMENTS
Sellers have delivered to Buyer unaudited
consolidated balance sheets of the Company as at December 31, 1996 and December
31, 1997 ("Balance Sheet") and the related statements of income, changes in
stockholders' equity, and cash flow for each of the fiscal years then ended.
Such financial statements and notes fairly present in all material respects the
financial condition and the results of operations, changes in stockholders'
equity, and cash flow of the Company as at the respective dates of and for the
periods referred to in such financial statements, all in accordance with GAAP
subject, in the case of interim financial statements, to normal recurring
year-end adjustments (the effect of which will not, individually run the
aggregate, be materially adverse). No financial statements of any Person other
than the Company are required by GAAP to be included in the financial
statements.
3.5 BOOKS AND RECORDS
The books of account, minute books, stock record
books, and other records of the Company, all of which have been made available
to Buyer, are, complete and correct and have been maintained in accordance with
sound business practices and the
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requirements of Section 13(b)(2) of the Securities Exchange Act of 1934, as
amended (regardless of whether or not the Company is subject to that Section),
including the maintenance of an adequate system of internal controls. The minute
books of the Company contain accurate and complete records of all meetings held
of, and corporate action taken by, the stockholders, the Board of Directors, and
committees of the Board of Directors of the Company. At the Closing, all of
those books and records will be in the possession of the Company.
3.6 TITLE TO PROPERTIES; ENCUMBRANCES
Part 3.6 of the Disclosure Letter contains a
complete and accurate list of all real property, leaseholds, or other interests
therein owned by the Company. Sellers have delivered or made available to Buyer
copies of the deeds and leases and other instruments by which the Company
occupies or acquired such real property and interests and such instruments are
true, complete and accurate. The Company owns (with good and marketable title in
the case of real property) or lease all the properties and assets (whether real,
personal, or mixed and whether tangible or intangible) that they purport to own
or lease located in the facilities owned or operated by the Company and
reflected as owned or leased in the books and records of the Company, including
all of the properties and assets reflected in the Balance Sheet (except for
assets held under capitalized leases disclosed or not required to be disclosed
in Part 3.6 of the Disclosure Letter and personal property sold since the date
of the Balance Sheet, as the case may be, in the Ordinary Course of Business),
and all of the properties and assets purchased or otherwise acquired by the
Company since the date of the Balance Sheet (except for personal property
acquired and sold since the date of the Balance Sheet in the Ordinary Course of
Business and consistent with past practice), which subsequently purchased or
acquired properties and assets (other than inventory and short-term investments)
are listed in Part 3.6 of the Disclosure Letter. All material properties and
assets reflected in the Balance Sheet are free and clear of all Encumbrances
except with respect to all such properties and assets, (a) mortgages or security
interests shown on the Balance Sheet as securing specified liabilities or
obligations, with respect to which no default (or event that, with notice or
lapse of time or both, would constitute a default) exists, (b) mortgages or
security interests incurred in connection with the purchase of property or
assets after the date of the Balance Sheet (such mortgages and security
interests being limited to the property or assets so acquired), with respect to
which no default (or event that, with notice or lapse of time or both, would
constitute a default) exists, (c) liens for current taxes not yet due, and (d)
with respect to real property, (i) minor imperfections of title, if any, none of
which is substantial in amount, materially detracts from the value or impairs
the use of the property subject
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thereto, or impairs the operations of the Company, and (ii) zoning laws and
other land use restrictions that do not impair the present or anticipated use of
the property subject thereto.
3.7 CONDITION AND SUFFICIENCY OF ASSETS
The buildings, plants, structures, and equipment
of the Company are structurally sound, in good operating condition and repair,
and adequate for the uses to which they are being put, and none of such
buildings, plants, structures, or equipment is in need of maintenance or repairs
except for ordinary, routine maintenance and repairs that are not material in
nature or cost.
3.8 ACCOUNTS RECEIVABLE
All accounts receivable of the Company that are
reflected on the Balance Sheet or on the accounting records of the Company as of
the Closing Date (collectively, the "Accounts Receivable") represent or will
represent valid obligations arising from sales actually made or services
actually performed in the Ordinary Course of Business. Unless paid prior to the
Closing Date, the Accounts Receivable are, or will be as of the Closing Date,
current and collectible net of the respective reserves shown on the Balance
Sheet or on the accounting records of the Company as of the Closing Date (which
reserves are calculated consistent with past practice and, in the case of the
reserve as of the Closing Date, will not represent a greater percentage of the
Accounts Receivable as of the Closing Date than the reserve reflected in the
Balance Sheet represented of the Accounts Receivable reflected therein and will
not represent a material adverse change in the composition of such Accounts
Receivable in terms of aging). Subject to such reserves, each of the Accounts
Receivable either has been or will be collected in full, without any set-off,
within ninety days after the day on which it first becomes due and payable.
There is no contest, claim, or right of set-off, other than returns in the
Ordinary Course of Business, under any Contract with any obligor of an Accounts
Receivable relating to the amount or validity of such Accounts Receivable. Part
3.8 of the Disclosure Letter contains a complete and accurate list of all
Accounts Receivable as of the date of the Balance Sheet, which list sets forth
the aging of such Accounts Receivable.
3.9 INVENTORY
All inventory of the Company, whether or not
reflected in the Balance Sheet, consists of a quality and quantity usable and
salable in the Ordinary Course of Business, except for obsolete items and items
of below-standard quality, which in no event exceeds $10,000, all of which have
been written
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off or written down to net realizable value in the Balance Sheet or on the
accounting records of the Company as of the Closing Date, as the case may be.
All inventories not written off have been priced at the [lower of cost or net
realizable value on and average cost basis.] The quantities of each item of
inventory are reasonable in the present circumstances of the Company.
3.10 NO UNDISCLOSED LIABILITIES
Except as set forth in Part 3.10 of the Disclosure
Letter, the Company has no liabilities or obligations of any nature (whether
known or whether absolute, accrued, contingent, or otherwise) except for
liabilities or obligations reflected or reserved against in the Balance Sheet
and current liabilities incurred in the Ordinary Course of Business since the
date thereof.
3.11 TAXES
(a) The Company has filed or caused to be filed
(on a timely basis) all Tax Returns that are or were required to be filed by or
with respect to any of them pursuant to applicable Legal Requirements. Sellers
have delivered to Buyer copies of, and Part 3.11 of the Disclosure Letter
contains a complete and accurate list of, all such Tax Returns filed by the
Company since December 31, 1993. The Company has paid, or made provision for the
payment of, all Taxes that have or may have become due pursuant to those Tax
Returns or otherwise, or pursuant to any assessment received by the Company,
except such Taxes, if any, as are listed in Part 3.11 of the Disclosure Letter
and are being contested in good faith and as to which adequate reserves
(determined in accordance with GAAP) have been provided in the Balance Sheet.
(b) Except as set out in Part 3.11 of the
Disclosure Schedule, no United States federal income Tax Returns of the Company
subject to such Taxes have been audited. Part 3.11 of the Disclosure Letter
contains a complete and accurate list of any audits of all such Tax Returns,
including a reasonably detailed description of the nature and outcome of each
audit. All deficiencies proposed as a result of such audits have been paid,
reserved against, settled, or, as described in Part 3.11 of the Disclosure
Letter, are being contested in good faith by appropriate proceedings. Part 3.11
of the Disclosure Letter describes all adjustments to the United States federal
income Tax Returns filed by the Company or any group of corporations including
the Company for all taxable years since December 31, 1993, and the resulting
deficiencies proposed by the IRS. Except as described in Part 3.11 of the
Disclosure Letter, the Company has not given or been requested to give waivers
or extensions (or is or would be subject to a waiver or extension given by any
other Person) of any statute of limitations relating
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to the payment of Taxes of the Company or for which the Company may be liable.
(c) The charges, accruals, and reserves with
respect to Taxes on the respective books of the Company are adequate (determined
in accordance with GAAP) and are at least equal to the Company's liability for
Taxes. There exists no proposed tax assessment against the Company except as
disclosed in the Balance Sheet or in Part 3.11 of the Disclosure Letter. No
consent to the application of Section 341(f)(2) of the IRC has been filed with
respect to any property or assets held, acquired, or to be acquired by the
Company. All Taxes that the Company is or was required by Legal Requirements to
withhold or collect have been duly withheld or collected and, to the extent
required, have been paid to the proper Governmental Body or other Person.
(d) All Tax Returns filed by (or that include on
a consolidated basis) the Company are true, correct, and complete. There is no
tax sharing agreement that will require any payment by the Company after the
date of this Agreement.
3.12 NO MATERIAL ADVERSE CHANGE
Since the date of the Balance Sheet, there has not
been any material adverse change in the business, operations, properties,
prospects, assets, or condition of the Company, and, no event has occurred or
circumstance exists that may result in such a material adverse change.
3.13 EMPLOYEE BENEFITS
Except for group medical insurance and associated
life insurance, the Company (i) has not contributed to any pension, profit
sharing, option or other incentive plan or other type of employee benefit plan,
(ii) does not maintain or has maintained, is or was a party to, or otherwise
participates or participated in, on its own behalf or on behalf of any former
employees, any pension, profit sharing, option or other incentive plan or other
type of employee benefit plan, or (iii) does not have any obligation to, or
customary arrangement with, former employees, if any, for bonuses, incentive
compensation, vacation, severance pay, sick pay, sick leave, insurance, service
award, relocation, disability or other benefits, whether oral or written.
3.14 COMPLIANCE WITH LEGAL REQUIREMENTS;
GOVERNMENTAL AUTHORIZATIONS
(a) Except as set forth in Part 3.14 of the
Disclosure Letter:
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(i) the Company is, and at all times,
has been, in full compliance with each Legal Requirement that is or was
applicable to it or to the conduct or operation of its business or the ownership
or use of any of its assets;
(ii) no event has occurred or
circumstance exists that (with or without notice or lapse of time) in any
material respect (A) may constitute or result in a violation by the Company of,
or a failure on the part of the Company to comply with, any Legal Requirement,
or (B) may give rise to any obligation on the part of the Company to undertake,
or to bear all or any portion of the cost of, any remedial action of any nature;
and
(iii) the Company has not received,
at any time, any notice or other communication (whether oral or written) from
any Governmental Body or any other Person regarding (A) any actual, alleged,
possible, or potential violation of, or failure to comply with, any material
Legal Requirement, or (B) any actual, alleged, possible, or potential material
obligation on the part of the Company to undertake, or to bear all or any
portion of the cost of, any remedial action of any nature.
(b) Part 3.14 of the Disclosure Letter contains a
complete and accurate list of each Governmental Authorization that is held by
the Company or that otherwise relates to the business of, or to any of the
assets owned or used by, the Company (all of which authorizations have been
delivered to Buyer). Each Governmental Authorization listed or required to be
listed in Part 3.14 of the Disclosure Letter is valid and in full force and
effect. Except as set forth in Part 3.14 of the Disclosure Letter:
(i) the Company is, and at all times has
been, in full compliance with all of the terms and requirements of each
Governmental Authorization identified or required to be identified in Part 3.14
of the Disclosure Letter;
(ii) no event has occurred or
circumstance exists that may (with or without notice or lapse of time) (A)
constitute or result directly or indirectly in a violation of or a failure to
comply with any term or requirement of any Governmental Authorization listed or
required to be listed in Part 3.14 of the Disclosure Letter, or (B) result
directly or indirectly in the revocation, withdrawal, suspension, cancellation,
or termination of, or any modification to, any Governmental Authorization listed
or required to be listed in Part 3.14 of the Disclosure Letter;
(iii) the Company has not received
any notice or other communication (whether oral or written) from any
Governmental Body or any other Person regarding (A) any
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actual, alleged, possible, or potential material violation of or failure to
comply with any term or requirement of any Governmental Authorization, or (B)
any actual, proposed, possible, or potential revocation, withdrawal, suspension,
cancellation, termination of, or modification to any Governmental Authorization;
and
(iv) all applications required to have
been filed for the renewal of the Governmental Authorizations listed or required
to be listed in Part 3.14 of the Disclosure Letter have been duly filed on a
timely basis with the appropriate Governmental Bodies, and all other filings
required to have been made with respect to such Governmental Authorizations have
been duly made on a timely basis with the appropriate Governmental Bodies.
The Governmental Authorizations listed in Part
3.14 of the Disclosure Letter collectively constitute all of the Governmental
Authorizations necessary to permit the Company to lawfully conduct and operate
their businesses in the manner they currently conduct and operate such
businesses and to permit the Company to own and use their assets in the manner
in which they currently own and use such assets except where the failure to
obtain a Governmental Authorization would not result in a material adverse
change to the Company.
3.15 LEGAL PROCEEDINGS; ORDERS
(a) Except as set forth in Part 3.15 of the
Disclosure Letter, there is no pending Proceeding:
(i) that has been commenced by or against
the Company that relates to or may affect the business of, or any
of the assets owned or used by, the Company; or
(ii) that challenges, or that may have the
effect of preventing, delaying, making illegal, or otherwise interfering with,
any of the Contemplated Transactions.
To the Knowledge of Sellers and the
Company, no such Proceeding as described above has been Threatened. Sellers have
delivered to Buyer copies of all pleadings, correspondence, and other documents
relating to each Proceeding listed in Part 3.15 of the Disclosure Letter. The
Proceedings listed in Part 3.15 of the Disclosure Letter will not have a
material adverse effect on the business, operations, assets, condition, or
prospects of the Company.
(b) Except as set forth in Part 3.15 of the
Disclosure Letter:
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(i) there is no Order to which the Company,
or any of the assets owned or used by the Company, is subject;
(ii) Sellers are not subject to any Order
that relates to the business of, or any of the assets owned or used by, the
Company; and
(iii) no officer, director, agent,
or employee of the Company is subject to any Order that prohibits such officer,
director, agent, or employee from engaging in or continuing any conduct,
activity, or practice relating to the business of the Company.
(c) Except as set forth in Part 3.15 of the
Disclosure Letter:
(i) the Company is, and at all times has
been, in full compliance with all of the terms and requirements of each Order to
which it, or any of the assets owned or used by it, is or has been subject;
(ii) no event has occurred or circumstance
exists that may constitute or result in (with or without notice or lapse of
time) a violation of or failure to comply with any term or requirement of any
Order to which the Company, or any of the assets owned or used by the Company,
is subject; and
(iii) the Company has not received
any notice or other communication (whether oral or written) from any
Governmental Body or any other Person regarding any actual, alleged, possible,
or potential violation of, or failure to comply with, any term or requirement of
any Order to which the Company, or any of the assets owned or used by the
Company, is or has been subject.
3.16 ABSENCE OF CERTAIN CHANGES AND EVENTS
Except as set forth in Part 3.16 of the Disclosure
Letter, since the date of the Balance Sheet, the Company has conducted its
business only in the Ordinary Course of Business and there has not been any:
(a) change in the Company's authorized or issued
capital stock; grant of any stock option or right to purchase shares of capital
stock of the Company; issuance of any security convertible into such capital
stock; grant of any registration rights; purchase, redemption, retirement, or
other acquisition by the Company of any shares of any such capital stock; or
declaration or payment of any dividend or other distribution or payment in
respect of shares of capital stock;
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(b) amendment to the Organizational Documents of
the Company;
(c) payment or increase by the Company of any
bonuses, salaries, distributions or other compensation to any
stockholder, director, officer, or employee;
(d) adoption of, or increase in the payments to
or benefits under, any profit sharing, bonus, deferred compensation, savings,
insurance, pension, retirement, or other employee benefit plan for or with any
employees of the Company;
(e) damage to or destruction or loss of any
asset or property of the Company, whether or not covered by insurance,
materially and adversely affecting the properties, assets, business, financial
condition, or prospects of the Company, taken as a whole;
(f) entry into, termination of, or receipt of
notice of termination of (i) any license, distributorship, dealer, sales
representative, joint venture, credit, or similar agreement, or (ii) any
Contract or transaction involving a total remaining commitment by or to the
Company of at least $10,000.
(g) except in the Ordinary Course of Business,
sale, lease, or other disposition of any asset or property (other than inventory
in the Ordinary Course of Business) of the Company or mortgage, pledge, or
imposition of any lien or other encumbrance on any material asset or property of
the Company, including the sale, lease, or other disposition of any of the
intellectual property assets;
(h) cancellation or waiver of any claims or
rights with a value to the Company in excess of $10,000;
(i) material change in the accounting methods
used by the Company; or
(j) agreement, whether oral or written, by the
Company to do any of the foregoing.
3.17 CONTRACTS; NO DEFAULTS
(a) Part 3.17(a) of the Disclosure Letter
contains a complete and accurate list, and Sellers have delivered to Buyer true
and complete copies, of:
(i) each Applicable Contract that involves
performance of services or delivery of goods or materials by the
Company of an amount or value in excess of $15,000;
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(ii) each Applicable Contract that involves
performance of services or delivery of goods or materials to the
Company of an amount or value in excess of $15,000;
(iii) each Applicable Contract that
was not entered into in the Ordinary Course of Business and that
involves expenditures or receipts of the Company in excess of
$15,000;
(iv) each lease, rental or occupancy
agreement, license, installment and conditional sale agreement, and other
Applicable Contract affecting the ownership of, leasing of, title to, use of, or
any leasehold or other interest in, any real or personal property (except
personal property leases and installment and conditional sales agreements having
a value per item or aggregate payments of less than $15,000 and with terms of
less than one year);
(v) each licensing agreement or other
Applicable Contract with respect to patents, trademarks, copyrights, or other
intellectual property, including agreements with current or former employees,
consultants, or contractors regarding the appropriation or the non-disclosure of
any of the Intellectual Property Assets;
(vi) each collective bargaining agreement
and other Applicable Contract to or with any labor union or other employee
representative of a group of employees;
(vii) each joint venture, partnership,
and other Applicable Contract (however named) involving a sharing of profits,
losses, costs, or liabilities by the Company with any other Person;
(viii) each Applicable Contract
containing covenants that in any way purport to restrict the business activity
of the Company or any Affiliate of the Company or limit the freedom of the
Company or any Affiliate of the Company to engage in any line of business or to
compete with any Person;
(ix) each Applicable Contract providing
for payments to or by any Person based on sales, purchases, or profits, other
than direct payments for goods and sales commission arrangements for employees;
(x) each power of attorney granted by the
Company that is currently effective and outstanding;
(xi) each Applicable Contract entered into
other than in the Ordinary Course of Business that contains or
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provides for an express undertaking by the Company to be responsible for
consequential damages;
(xii) each Applicable Contract for
future capital expenditures in excess of $15,000;
(xiii) each currently effective
written warranty, guaranty, indemnity, and or other similar undertaking with
respect to contractual performance extended by the Company other than in the
Ordinary Course of Business;
(xiv) each Contract for indebtedness
of the Company involving future aggregate payments of more than
$10,000; and
(xv) each amendment, supplement, and
modification (whether oral or written) in respect of any of the
foregoing.
(b) Except as set forth in Part 3.17(b) of the
Disclosure Letter:
(i) Sellers (and no Related Person of
the Sellers) do not have or may acquire any rights under, and Sellers do not
have or may become subject to, any obligation or liability under, any Contract
that relates to the business of, or any of the assets owned or used by, the
Company; and
(ii) no officer, director, agent,
employee, consultant, or contractor of the Company is bound by any Contract that
purports to limit the ability of such officer, director, agent, employee,
consultant, or contractor to (A) engage in or continue any conduct, activity, or
practice relating to the business of the Company, or (B) assign to the Company
or to any other Person any rights to any invention, improvement, or discovery.
(c) Except as set forth in Part 3.17(c) of the
Disclosure Letter, each Contract identified or required to be identified in Part
3.17(a) of the Disclosure Letter is in full force and effect and is valid and
enforceable in accordance with its terms.
(d) Except as set forth in Part 3.17(d) of the
Disclosure Letter:
(i) the Company is, and at all times has
been, in full compliance with all applicable terms and requirements of each
Contract under which the Company has or had any material obligation or liability
or by which the Company or any of the material assets owned or used by the
Company is or was bound;
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(ii) each other Person that has or had
any material obligation or liability under any Contract under which the Company
has or had any rights is in full compliance with all material applicable terms
and requirements of such Contract;
(iii) no event has occurred or
circumstance exists that (with or without notice or lapse of time) may
contravene, conflict with, or result in a violation or breach of, or give the
Company or other Person the right to declare a default or exercise any remedy
under, or to accelerate the maturity or performance of, or to cancel, terminate,
or modify, any Applicable Contract; and
(iv) the Company has not given to or
received from any other Person, any notice or other communication (whether oral
or written) regarding any actual, alleged, possible, or potential violation or
breach of, or default under, any Applicable Contract.
(e) There are no renegotiations of, attempts to
renegotiate, or outstanding rights to renegotiate any material amounts paid or
payable to the Company under current or completed Applicable Contracts with any
Person and, to Sellers' Knowledge, no such Person has made written demand for
such renegotiation.
(f) The Applicable Contracts relating to the
sale or provision of products or services by the Company have been entered into
in the Ordinary Course of Business and have been entered into without the
commission of any act alone or in concert with any other Person, or any
consideration having been paid or promised, that is or would be in violation of
any Legal Requirement.
(g) The Company has made available to Buyer
true, complete and correct copies of the Contracts required to be set forth in
Part 3.17 of the Disclosure Letter.
3.18 INSURANCE
(a) Sellers have made available to Buyer:
(i) true and complete copies of all
policies of insurance to which the Company is a party or under which the
Company, or any director of the Company, is or has been covered at any time
within the three years preceding the date of this Agreement; and
(ii) true and complete copies of all
pending applications for policies of insurance.
(b) Part 3.18(b) of the Disclosure Letter
describes:
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(i) any self-insurance arrangement by or
affecting the Company, including any reserves established
thereunder;
(ii) any contract or arrangement, other
than a policy of insurance, for the transfer or sharing of any risk by the
Company; and
(iii) all obligations of the Company
to third parties with respect to insurance (including such obligations under
leases and service agreements) and identifies the policy under which such
coverage is provided.
(c) All material assets, properties and risks of
the Company are, and for the past three years have been, covered by valid and,
except for policies that have expired under their terms in the ordinary course,
currently effective insurance policies or binders of insurance (including,
without limitation, general liability insurance, property insurance and workers'
compensation insurance) issued in favor of the Company, in each case with
responsible insurance companies, in such types and amounts and covering such
risks as are consistent with customary practices and standards of companies
engaged in business and operations similar to those of the Company. There has
not been any claim under any such insurance policy during the past three years
that could reasonably be expected to have a material adverse effect on the
Company.
(d) Except as set forth on Part 3.18(d) of the
Disclosure Letter:
(i) Since January 1, 1993 the Company
has not received (A) any refusal of coverage or any notice that a defense will
be afforded with reservation of rights, or (B) any notice of cancellation or any
other indication that any insurance policy is no longer in full force or effect
or will not be renewed or that the issuer of any policy is not willing or able
to perform its obligations thereunder.
(ii) The Company has paid all premiums due,
and have otherwise performed all of their obligations, under each policy to
which the Company is a party or that provides coverage to the Company or
director thereof.
(iii) The Company has given notice
to the insurer of all claims that may be insured thereby.
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3.19 ENVIRONMENTAL MATTERS
Except as set forth in part 3.19 of the disclosure
letter:
(a) The Company is, and at all times has been,
in full compliance with, and has not been and is not in violation of or liable
under, any Environmental Law. Neither Sellers or the Company has any basis to
expect, nor has any of them received, any actual or Threatened Order, notice, or
other communication from (i) any Governmental Body or private citizen acting in
the public interest, or (ii) the current or prior owner or operator of any
Facilities, of any actual or potential violation or failure to comply with any
Environmental Law, or of any actual or Threatened obligation to undertake or
bear the cost of any Environmental, Health, and Safety Liabilities with respect
to any of the Facilities or any other properties or assets (whether real,
personal, or mixed) in which any Seller or the Company has had an interest, or
with respect to any property or Facility at or to which Hazardous Materials were
generated, manufactured, refined, transferred, imported, used, or processed by
any Seller, or the Company, or from which Hazardous Materials have been
transported, treated, stored, handled, transferred, disposed, recycled, or
received.
(b) There are no pending or, to the Knowledge of
Sellers and the Company, Threatened claims, Proceedings or Encumbrances relating
to any Environmental, Health, and Safety Liabilities or arising under or
pursuant to any Environmental Law, with respect to or affecting any of the
Facilities or any other properties and assets (whether real, personal, or mixed)
in which the Company has or had an interest.
(c) Neither Sellers or the Company has any basis
to expect, nor has any of them received, any citation, directive, inquiry,
notice, Order, summons, warning, or other communication that relates to
Hazardous Activity, Hazardous Materials, or any alleged, actual, or potential
violation or failure to comply with any Environmental Law, or of any alleged,
actual, or potential obligation to undertake or bear the cost of any
Environmental, Health, and Safety Liabilities with respect to any of the
Facilities or any other properties or assets (whether real, personal, or mixed)
in which the Company had an interest, or with respect to any property or
facility to which Hazardous Materials generated, manufactured, refined,
transferred, imported, used, or processed by the Company have been transported,
treated, stored, handled, transferred, disposed, recycled, or received.
(d) The Company has no Environmental, Health,
and Safety Liabilities with respect to the Facilities or with respect to any
other properties and assets (whether real, personal, or
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mixed) in which the Company (or any predecessor), has or had an interest.
(e) There are no Hazardous Materials present on
or in the Environment at the Facilities, including any Hazardous Materials
contained in barrels, above or underground storage tanks, landfills, land
deposits, dumps, equipment (whether moveable or fixed) or other containers,
either temporary or permanent, and deposited or located in land, water, sumps,
or any other part of the Facilities, or incorporated into any structure therein
or thereon. The Company has not permitted or conducted any Hazardous Activity
conducted with respect to the Facilities or any other properties or assets
(whether real, personal, or mixed) in which the Company has or had an interest.
(f) There has been no Release or Threat of
Release, of any Hazardous Materials at or from the Facilities, or from or by any
other properties and assets (whether real, personal, or mixed) in which the
Company has or had an interest.
(g) Sellers have delivered to Buyer true and
complete copies and results of any reports, studies, analyses, tests, or
monitoring possessed by Sellers or the Company pertaining to Hazardous Materials
or Hazardous Activities in, on, or under the Facilities, or concerning
compliance by the Company with Environmental Laws.
(h) There are no underground or above-ground
storage tanks, incinerators or surface impoundments at, on, or about under or
within any real property operated or controlled, in whole or in part by the
Company.
3.20 EMPLOYEES
(a) Part 3.20 of the Disclosure Letter contains
a complete and accurate list of the following information for each employee or
director of the Company, including each employee on leave of absence or layoff
status: employer; name; job title; current compensation paid or payable and any
change in compensation since December 31, 1997; vacation accrued; and service
credited for purposes of vesting and eligibility to participate under the
Company's insurance, medical, welfare, or vacation plan, or any other employee
benefit plan.
(b) No employee or director of the Company is a
party to, or is otherwise bound by, any agreement or arrangement, including any
confidentiality, non-competition, or proprietary rights agreement, between such
employee or director and any other Person ("Proprietary Rights Agreement") that
in any way adversely affects or will affect (i) the performance of his duties as
an employee or director of the Company, or (ii) the ability of the Company to
conduct its business, including any Proprietary Rights
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Agreement with Sellers or the Company by any such employee or director. No
director, officer, or other key employee of the Company presently intends to
terminate his employment with the Company.
3.21 LABOR RELATIONS; COMPLIANCE
The Company has not been or is a party to any
collective bargaining or other labor Contract. There has not been, there is not
presently pending or existing, and to Sellers' Knowledge there is not
threatened, (a) any strike, slowdown, picketing, work stoppage, or employee
grievance process, (b) any proceeding against or affecting the Company relating
to the alleged violation of any Legal Requirement pertaining to labor relations
or employment matters, including any charge or complaint filed by an employee or
union with the National Labor Relations Board, the Equal Employment Opportunity
Commission, or any comparable Governmental Body, organizational activity, or
other labor or employment dispute against or affecting the Company or its
premises, or (c) any application for certification of a collective bargaining
agent. No event has occurred or circumstance exists that could provide the basis
for any work stoppage or other labor dispute. There is no lockout of any
employees by the Company, and no such action is contemplated by the Company. The
Company has complied in all respects with all Legal Requirements relating to
employment, equal employment opportunity, nondiscrimination, immigration, wages,
hours, benefits, collective bargaining, the payment of social security and
similar taxes, occupational safety and health, and plant closing. The Company is
not liable for the payment of any compensation, damages, taxes, fines,
penalties, or other amounts, however designated, for failure to comply with any
of the foregoing Legal Requirements.
3.22 INTELLECTUAL PROPERTY
(a) The Company does not own or licenses for use
any patents, trademarks, trade names, service marks, mask works or copyrights,
other than the common trade law names, the common law trade names listed on 3.22
of the Disclosure Letter.
(b) There has not been any actual or alleged
infringement or use or misuse by any party of the Company's trade secrets,
confidential information or other intellectual property rights.
3.23 CERTAIN PAYMENTS
Neither the Company or any director, officer,
agent, or employee of the Company, or any other person associated with or acting
for or on behalf of the Company, has directly or indirectly and in violation of
any Legal Requirement (a) made any
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contribution, gift, bribe, rebate, payoff, influence payment, kickback, or other
payment to any person, private or public, regardless of form, whether in money,
property, or services (i) to obtain favorable treatment in securing business,
(ii) to pay for favorable treatment for business secured, (iii) to obtain
special concessions or for special concessions already obtained, for or in
respect of the Company or any Affiliate of the Company, (b) established or
maintained any fund or asset that has not been recorded in the books and records
of the Company.
3.24 DISCLOSURE
(a) No representation or warranty of Sellers in
this Agreement and no statement in the Disclosure Letter knowingly omits to
state a material fact necessary to make the statements herein or therein, in
light of the circumstances in which they were made, not misleading.
(b) No notice given pursuant to Section 5.5 will
contain any untrue statement or omit to state a material fact necessary to make
the statements therein or in this Agreement, in light of the circumstances in
which they were made, not misleading.
3.25 RELATIONSHIPS WITH RELATED PERSONS
Neither Sellers or any Related Person of Sellers
or of the Company has any interest in any property (whether real, personal, or
mixed and whether tangible or intangible), used in or pertaining to the
Company's business. Neither Sellers or any Related Person of Sellers or of the
Company owns (of record or as a beneficial owner) an equity interest or any
other financial or profit interest in, a Person that (i) has business dealings
or a material financial interest in any transaction with the Company, or (ii)
engages in competition with the Company with respect to any line of the products
or services of the Company (a "Competing Business") in any market presently
served by the Company. Except as set forth in Part 3.25 of the Disclosure
Letter, no Seller or any Related Person of any Seller or of the Company is a
party to any Contract with, or has any claim or right against the Company that
will survive the Closing.
3.26 BROKERS OR FINDERS
Sellers, the Company and their agents have
incurred no obligation or liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or other similar payment in connection with
this Agreement.
3.27 ADJUSTED EBITDA
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The Adjusted EBITDA of the Company for the fiscal
year ended December 31, 1997 equals or exceeds One Hundred Fifty Thousand
Dollars ($150,000).
4. REPRESENTATIONS AND WARRANTIES OF ACQUISITION AND
BUYER
Acquisition and Buyer (the "Buyer Companies")
jointly and severally represent and warrant to Sellers as
follows:
4.1 ORGANIZATION; POWER; QUALIFICATION
Acquisition will at the Closing Date be a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Each of Acquisition and Buyer
has the corporate power and authority to own or lease and operate its properties
to carry on its business as now being conducted, and is duly qualified and in
good standing and authorized to do business as a foreign corporation in each
jurisdiction in which the character of its properties or the nature of its
business requires such qualification and authorization except where the failure
to so qualify would not have a material adverse effect on the Buyer and
Acquisition, taken as a whole.
4.2 AUTHORITY
Each of Acquisition and Buyer has the corporate
power and has taken all necessary corporate action to authorize Acquisition or
Buyer as the case may be, to execute, deliver and perform the Agreement and to
consummate the transactions contemplated thereby. The execution and delivery by
each of Acquisition and Buyer of this Agreement and the Employment Agreement to
which each is a party constitutes the valid and legally binding obligation of
Acquisition or Buyer, as the case may be, enforceable in accordance with the
documents' terms, except as may be limited by bankruptcy, insolvency or other
laws effecting creditors' rights generally.
4.3 CAPITALIZATION
As of the date hereof, the authorized common stock
of the Buyer consist of 50,000,000 shares of common stock, $.001 par value per
share, of which 4,712,372 shares are issued and outstanding. All of the
outstanding common stock of the Buyer has been duly authorized and validly
issued and are fully paid and nonassessable. The shares of the Buyer's Common
Stock to be delivered to Sellers at Closing pursuant to Section 2.7 will be duly
authorized, validly issued, fully paid and non-assessable.
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4.4 BOOKS AND RECORDS
The books of account, minute books, stock record
books, and other records of the Buyer, are complete, in all material respects,
and correct and have been maintained in accordance with sound business
practices, including the maintenance of an adequate system of internal controls.
4.5 CERTAIN PROCEEDINGS
There is no pending Proceeding that has been
commenced against Buyer or Acquisition and that challenges, or may have the
effect of preventing, delaying, making illegal, or otherwise interfering with,
any of the contemplated transactions. To Buyer's and Acquisition's knowledge, no
such proceeding has been threatened.
4.6 BROKERS OR FINDERS
Buyers and Acquisition and their officers and
agents have incurred no obligation or liability, contingent or otherwise, for
brokerage or finders' fees or agents' commissions or other similar payment in
connection with this Agreement and will indemnify and hold the Company and
Sellers harmless from any such payment alleged to be due by or through Buyer or
Acquisition as a result of the action of Buyer and Acquisition or their officers
or agents.
5. COVENANTS OF SELLERS AND THE COMPANY PRIOR TO
CLOSING DATE
5.1 ACCESS AND INVESTIGATION
Between the date of this Agreement and the Closing
Date, Sellers will, and will cause the Company and its Representatives to, (a)
afford Buyer and its Representatives and prospective lenders and their
Representatives (collectively, "Buyer's Advisors") full and free access to the
Company's personnel, properties (including subsurface testing), contracts, books
and records, and other documents and data, (b) furnish Buyer and Buyer's
Advisors with copies of all such contracts, books and records, and other
existing documents and data pertaining to the Company as Buyer may reasonably
request, and (c) furnish Buyer and Buyer's Advisors with such additional
financial, operating, and other data and information pertaining to the Company
as Buyer may reasonably request.
5.2 OPERATION OF THE BUSINESS OF THE COMPANY
Between the date of this Agreement and the Closing
Date, Sellers will cause the Company to:
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(a) conduct the business of the Company only in
the Ordinary Course of Business;
(b) preserve intact the current business
organization of the Company, keep available the services of the current
officers, employees, and agents of the Company, and maintain the relations and
good will with suppliers, customers, landlords, creditors, employees, agents,
and others having business relationships with the Company;
(c) confer with Buyer concerning operational
matters of a material nature; and
(d) otherwise report periodically to Buyer
concerning the status of the business, operations, and finances
of the Company.
5.3 NEGATIVE COVENANT
Except as otherwise expressly permitted by this
Agreement, between the date of this Agreement and the Closing Date, Sellers will
not, and will cause the Company not to, without the prior consent of Buyer, take
any affirmative action, or fail to take any reasonable action within their or
its control, as a result of which any of the changes or events listed in Section
3.16 is likely to occur.
5.4 REQUIRED APPROVALS
As promptly as practicable after the date of this
Agreement, Sellers will, and will cause the Company to, make all filings
required by Legal Requirements to be made by them in order to consummate the
Contemplated Transactions. Between the date of this Agreement and the Closing
Date, Sellers will, and will cause the Company to, (a) cooperate with Buyer with
respect to all filings that Buyer elects to make or is required by Legal
Requirements to make in connection with the Contemplated Transactions, and (b)
cooperate with Buyer in obtaining any required consents.
5.5 NOTIFICATION
Between the date of this Agreement and the Closing
Date, Sellers will promptly notify Buyer in writing if any Seller becomes aware
of any fact or condition that causes or constitutes a Breach of any of Sellers'
representations and warranties as of the date of this Agreement, or if any
Seller becomes aware of the occurrence after the date of this Agreement of any
fact or condition that would (except as expressly contemplated by this
Agreement) cause or constitute a Breach of any such representation or warranty
had such representation or warranty been made as of the time of occurrence or
discovery of such fact
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or condition. Should any such fact or condition require any change in the
Disclosure Letter if the Disclosure Letter were dated the date of the occurrence
or discovery of any such fact or condition, Sellers will promptly deliver to
Buyer a supplement to the Disclosure Letter specifying such change. During the
same period, Sellers will promptly notify Buyer of the occurrence of any Breach
of any covenant of Sellers in this Section 5 or of the occurrence of any event
that may make the satisfaction of the conditions in Section 7 impossible or
unlikely.
5.6 NO NEGOTIATION
Until such time, if any, as this Agreement is
terminated pursuant to Section 9, Sellers will not, and the Company will not and
each of their Representatives will not directly or indirectly solicit, initiate
or encourage, accept or discuss any inquiries or proposals from, discuss or
negotiate with, provide any non-public information to, or consider the merits of
any unsolicited inquiries or proposals from, any Person (other than Buyer)
relating to any transaction involving the sale of the business or assets of the
Company, or any of the capital stock of the Company, or any merger,
consolidation, business combination, or similar transaction involving the
Company. Sellers or the Company will promptly notify Buyer of any such inquiries
or proposals.
5.7 BEST EFFORTS
Between the date of this Agreement and the Closing
Date, Sellers and the Company will use their Best Efforts to cause the
conditions in Section 7 to be satisfied.
6. COVENANTS OF BUYER PRIOR TO CLOSING DATE.
6.1 NOTIFICATION
Between the date of this Agreement and the Closing
Date, Buyer will promptly notify Sellers in writing if Buyer becomes aware of
any fact or condition that causes or constitutes a Breach of any of Buyer's or
Acquisition's representations and warranties as of the date of this Agreement,
or if Buyer becomes aware of the occurrence after the date of this Agreement or
any fact or condition that would, except as expressly contemplated by this
Agreement, cause or constitute a Breach of any such representation or warranty.
6.2 BEST EFFORTS
Between the date of this Agreement and the Closing
Date, Buyer will use its Best Efforts to cause the conditions in Section 8 to be
satisfied.
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7. CONDITIONS PRECEDENT TO BUYER'S AND ACQUISITION'S
OBLIGATION TO CLOSE
Buyer's and Acquisition's obligations to
consummate the Merger and to take the other actions required to be taken by
Buyer and Acquisition at the Closing is subject to the satisfaction, at or prior
to the Closing, of each of the following conditions (any of which may be waived
by Buyer and Acquisition, in whole or in part):
7.1 ACCURACY OF REPRESENTATIONS
All of Sellers' and the Company's representations
and warranties in this Agreement must have been accurate in all material
respects as of the date of this Agreement, and must be accurate in all material
respects as of the Closing Date as if made on the Closing Date, without giving
effect to any supplement to the Disclosure Letter.
7.2 SELLERS' PERFORMANCE
(a) All of the covenants and obligations that
Sellers and the Company are required to perform or to comply with pursuant to
this Agreement at or prior to the Closing, must have been duly performed and
complied with in all material respects.
(b) There shall be delivered at Closing (i) any
Employment Agreement with Xxxxx X. Xxxxxx ("Xxxxxx") in the form of Exhibit
7.2(b)(i) and an Employment Agreement with Xxxx X. Xxxxxxxxx in the form of
Exhibit 7.2(b)(ii) (the "Employment Agreements") executed by Motley and (ii) the
certificate executed by Sellers and an officer of the Company representing to
Buyer and Acquisition that Sellers' and the Company's representations and
warranties in this Agreement was accurate in all material respects as to the
date of this Agreement and is accurate in all material respects as of the
Closing as if made on the Closing Date, and (iii) each of the other covenants
and obligations in the Agreement must have been performed and complied with in
all respects.
7.3 CONSENTS
Each of the consents identified in subpart ____ of
the Disclosure Letter, must have been obtained and must be in full force and
effect.
7.4 ADDITIONAL DOCUMENTS
Each of the following documents must have been
delivered to Buyer:
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(a) an opinion of Xxxxxxx & Xxxxxxxxx P.C.,
dated the Closing Date, in the form of Exhibit 7.4(a);
(b) such other documents as Buyer or its counsel
may reasonably request for the purpose of (i) enabling its counsel to provide
the opinion referred to in Section 8.4(a), (ii) evidencing the accuracy of any
of Sellers' and the Company's representations and warranties, (iii) evidencing
the performance by Sellers, the Company, or the compliance by Sellers or the
Company with, any covenant or obligation required to be performed or complied
with by such party, (iv) evidencing the satisfaction of any condition referred
to in this Section 7, or (v) otherwise facilitating the consummation or
performance of any of the Contemplated Transactions.
7.5 NO PROCEEDINGS
Since the date of this Agreement, there must not
have been commenced, pending or Threatened any Proceeding (a) involving any
challenge to, or seeking damages or other relief in connection with, any of the
Contemplated Transactions, or (b) that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with any of the Contemplated
Transactions.
7.6 NO CLAIM REGARDING STOCK OWNERSHIP OR MERGER
PROCEEDS
There must not have been made or Threatened by any
Person any claim asserting that such Person (a) is the holder or the beneficial
owner of, or has the right to acquire or to obtain beneficial ownership of, any
stock of, or any other voting, equity, or ownership interest in, the Company, or
(b) is entitled to all or any portion of the Merger consideration.
7.7 NO PROHIBITION
Neither the consummation nor the performance of
any of the Contemplated Transactions will, directly or indirectly (with or
without notice or lapse of time), materially contravene, or conflict with, or
result in a violation of, or cause Buyer or any Person affiliated with Buyer to
suffer any material adverse consequence under, (a) any applicable Legal
Requirement or Order, or (b) any Legal Requirement or Order that has been
published, introduced, or otherwise proposed by or before any Governmental Body.
7.8 NO INJUNCTION
No preliminary or permanent injunction or other
order by any federal or state court preventing or consummation of the
transactions contemplated in this Agreement has been issued
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and continues in effect, and this Agreement and the transactions contemplated
hereby are not prohibited under any applicable federal or state law or
regulation.
7.9 MATERIAL ADVERSE CHANGE
There shall have been no material adverse change
in the business, operations, prospects, financial condition or
results of the Company.
7.10 INITIAL PUBLIC OFFERING
Buyer shall have completed its initial public
offering.
7.11 REMOVAL OF PROPERTY; LEASE
The property located at 000 Xxxxxxxxxx Xxx,
Xxxxxxxxxx, Xxxxxxx shall have been transferred to B&M Enterprises, L.C.
("Enterprises") on terms and conditions reasonably satisfactory to Buyer and the
Company and Enterprises shall have entered into a lease in the form of Exhibit
7.11 hereto (the "Lease").
8. CONDITIONS PRECEDENT TO SELLERS' AND THE COMPANY'S
OBLIGATION TO CLOSE
Sellers' and the Company's obligations to
consummate the Merger and to take the other actions required to be taken by each
Seller and the Company at the Closing is subject to the satisfaction, at or
prior to the Closing, of each of the following conditions (any of which may be
waived by Sellers and the Company, in whole or in part):
8.1 ACCURACY OF REPRESENTATIONS
All of Buyer's and Acquisition's representations
and warranties in this Agreement must have been accurate in all material
respects as of the date of this Agreement and must be accurate in all material
respects as of the Closing Date as if made on the Closing Date.
8.2 BUYER'S AND ACQUISITION'S PERFORMANCE
(a) All of the covenants and obligations that
Buyer and Acquisition are required to perform or to comply with pursuant to this
Agreement at or prior to the Closing must have been performed and complied with
in all material respects.
(b) Buyer must have executed and delivered (i)
the Employment Agreements (ii) a certificate executed by an officer of Buyer
representing to Sellers that Buyer and
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Acquisition's representations and warranties contained in this Agreement were
accurate in all material respects as to the date of this Agreement and is
accurate in all material respects as of the Closing as if made on the Closing.
8.3 ADDITIONAL DOCUMENTS
Buyer and Acquisition must have caused the following
documents to be delivered to Sellers:
(a) an opinion of Atlas, Xxxxxxxx, Trop &
Borkson, P.A., dated the Closing Date, in the form of
Exhibit 8.3(a); and
(b) such other documents as Sellers or their
counsel may reasonably request for the purpose of (i) enabling its counsel to
provide the opinion referred to in Section 7.3(a), (ii) evidencing the accuracy
of any representation or warranty of Buyer or Acquisition, (iii) evidencing the
performance by Buyer or Acquisition of, or the compliance by Buyer or
Acquisition with, any covenant or obligation required to be performed or
complied with by Buyer or Acquisition, (iv) evidencing the satisfaction of any
condition referred to in this Section 7, or (v) otherwise facilitating the
consummation or performance of any of the Contemplated Transactions.
8.4 GUARANTY
Buyer shall have (i) released, (ii) made provision
for release or (iii) agreed to indemnify Sellers from the personal guaranties
set forth on Schedule 8.4.
8.5 INITIAL PUBLIC OFFERING
Buyer shall complete its initial public offering.
9. TERMINATION
9.1 TERMINATION EVENTS
This Agreement may, by notice given prior to or at
the Closing, be terminated:
(a) by either Buyer and Acquisition or Sellers
and the Company if a material Breach of any provision of this Agreement has been
committed by the other party and such Breach has not been cured or waived within
ten (10) days of the date of notification of such Breach;
(b) (i) by Buyer and Acquisition if any of the
conditions in Section 7 has not been satisfied as of the Closing Date or if
satisfaction of such a condition is or becomes
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impossible (other than through the failure of Buyer to comply with its
obligations under this Agreement) and Buyer has not waived such condition on or
before the Closing Date; or (ii) by Sellers and the Company, if any of the
conditions in Section 8 has not been satisfied of the Closing Date or if
satisfaction of such a condition is or becomes impossible (other than through
the failure of Sellers and the Company to comply with their obligations under
this Agreement) and Sellers have not waived such condition on or before the
Closing Date;
(c) by mutual consent of Buyer and Acquisition
and Sellers and the Company; or
(d) by either Buyer and Acquisition or Sellers
and the Company if the Closing has not occurred (other than through the failure
of any party seeking to terminate this Agreement to comply fully with its
obligations under this Agreement) on or before September 30, 1998, or such later
date as the parties may agree upon.
A party's right of termination under Section 9.1
is in addition to any other rights it may have under this Agreement or
otherwise, the exercise of a right of termination will not be an election of
remedies. If this Agreement is terminated pursuant to Section 9.1, all further
obligations of the parties under this Agreement terminate, except the
obligations in Section 11.1 and 11.3 will survive; provided, however, that if
this Agreement is terminated by a party because of a breach of the Agreement by
the other party or because one or more of the conditions to the terminating
party's obligations is not satisfied as a result of the other party's failure to
comply with its obligations under this Agreement, the terminating party's right
to pursue all legal remedies will survive such termination unimpaired.
10. INDEMNIFICATION; REMEDIES
10.1 SURVIVAL
All representations, warranties, covenants, and
obligations in this Agreement, the Disclosure Letter and any of the supplements
thereto, and any other certificate or document delivered pursuant to this
Agreement will survive the Closing until the thirty-six (36) months from the
Closing except for the representations and warranties in Sections 3.3, 3.11,
3.15 and 3.19, which shall survive for the applicable statute of limitations.
The waiver of any condition based on the accuracy of any representation or
warranty, or on the performance of or compliance with any covenant or
obligation, will not affect the right to indemnification, payment of Damages, or
other remedy based on such representations, warranties, covenants, and
obligations. [Discuss with Pooling]
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10.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY
SELLERS
Sellers will jointly and severally indemnify and
hold harmless Buyer, Acquisition, the Surviving Corporation, and their
respective Representatives, stockholders, controlling persons, and affiliates
(collectively, the "Indemnified Persons") for, and will pay to the Indemnified
Persons the amount of, any loss, liability, claim, damage (including incidental
and consequential damages), expense (including costs of investigation and
defense and reasonable attorneys' and other professional fees) or diminution of
value, whether or not involving a third-party claim (collectively, "Damages"),
arising, directly or indirectly, from or in connection with:
(a) any Breach of any representation or warranty
made by Sellers in this Agreement, without giving effect to any supplement to
Disclosure Letter, the Disclosure Letter and any of the supplements thereto, or
any other certificate or document delivered by Sellers pursuant to this
Agreement;
(b) any Breach by Sellers or the Company of any
covenant or obligation of Sellers or the Company in this
Agreement;
(c) any product shipped or any services provided
by Company prior to the Closing Date;
(d) any claim by any Person for brokerage or
finder's fees or commissions or similar payments based upon any agreement or
understanding alleged to have been made by any such Person with Sellers or the
Company (or any Person acting on their behalf) in connection with any of the
Contemplated Transactions; and
(e) any matter disclosed in Part ____ of the
Disclosure Letter.
The remedies provided in this Section 10.2 will
not be exclusive of or limit any other remedies that may be available to Buyer
or the other Indemnified Persons.
10.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY
BUYER
Buyer will indemnify and hold harmless Sellers
for, and will pay to the Sellers the amount of, any loss, liability, claim,
damage (including incidental and consequential damages), expense (including
costs of investigation and defense and reasonable attorneys' and other
professional fees) or diminution of value, whether or not involving a
third-party claim
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(collectively, "Damages"), arising, directly or indirectly, from or in
connection with:
(a) any Breach of any representation or warranty
made by Buyer in this Agreement;
(b) any Breach by Buyer of any covenant or
obligation of Buyer in this Agreement;
(c) any claim by any Person for brokerage or
finder's fees or commissions or similar payments based upon any agreement or
understanding alleged to have been made by any such Person with Buyer (or any
Person acting on their behalf) in connection with any of the Contemplated
Transactions.
The remedies provided in this Section 10.3 will
not be exclusive of or limit any other remedies that may be
available to Sellers.
10.4 TIME LIMITATIONS
If the Closing occurs, Sellers will have no liability
(for indemnification or otherwise) with respect to any representation or
warranty, or covenant or obligation to be performed and complied with prior to
the Closing Date, other than those in Sections 3.3, 3.11, 3.15 and 3.19, unless
on or before thirty-six (36) months from the date of Closing, Buyer notifies
Seller of a claim specifying the factual basis of that claim. A claim with
respect to Section 3.3, 3.11, 3.15 and 3.19 may be made at any time prior to the
applicable statute of limitations with respect to such matter.
If the Closing occurs, Buyer will have no liability (for
indemnification or otherwise) with respect to any representation or warranty, or
covenant or obligation to be performed and to comply with prior to the Closing
Date, unless on or before thirty-six (36) months from the date of Closing,
Sellers notify Buyer of claims specifying the factual basis of that claim.
10.5 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY
CLAIMS
(a) Promptly after receipt by an indemnified
party under Sections 10.2 or 10.3 of notice of the commencement of any
Proceeding against it, such indemnified party will, if a claim is to be made
against an indemnifying party under such Section, give notice to the
indemnifying party of the commencement of such claim, but the failure to notify
the indemnifying party will not relieve the indemnifying party of any liability
that it may have to any indemnified party, except to the extent that the
indemnifying party demonstrates that the
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defense of such action is prejudiced by the indemnified party's failure to give
such notice.
(b) If any Proceeding referred to in Section
10.5(a) is brought against an indemnified party and it gives notice, unless the
claim involves Taxes, to the indemnifying party of the commencement of such
Proceeding, the indemnifying party will be entitled to participate in such
Proceeding and, to the extent that it wishes (unless (i) the indemnifying party
is also a party to such Proceeding and the indemnified party determines in good
faith that joint representation would be inappropriate, or (ii) the indemnifying
party fails to provide reasonable assurance to the indemnified party of its
financial capacity to defend such Proceeding and provide indemnification with
respect to such Proceeding), to assume the defense of such Proceeding with
counsel satisfactory to the indemnified party and, after notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such Proceeding, the indemnifying party will not, as long as it
diligently conducts such defense, be liable to the indemnified party under this
Section 10 for any fees of other counsel or any other expenses with respect to
the defense of such Proceeding, in each case subsequently incurred by the
indemnified party in connection with the defense of such Proceeding other than
reasonable costs of investigation. If the indemnifying party assumes the defense
of a Proceeding, (i) it will be conclusively established for purposes of this
Agreement that the claims made in that Proceeding are within the scope of and
subject to indemnification; (ii) no compromise or settlement of such claims may
be effected by the indemnifying party without the indemnified party's consent
unless (A) there is no finding or admission of any violation of Legal
Requirements or any violation of the rights of any Person and no effect on any
other claims that may be made against the indemnified party, and (B) the sole
relief provided is monetary damages that are paid in full by the indemnifying
party; and (iii) the indemnified party will have no liability with respect to
any compromise or settlement of such claims effected without its consent. If
notice is given to an indemnifying party of the commencement of any Proceeding
and the indemnifying party does not, within ten days after the indemnified
party's notice is given, give notice to the indemnified party of its election to
assume the defense of such Proceeding, the indemnifying party will be bound by
any determination made in such Proceeding or any compromise or settlement
effected by the indemnified party.
(c) Notwithstanding the foregoing, if an
indemnified party determines in good faith that there is a reasonable
probability that a Proceeding may adversely affect it or its affiliates other
than as a result of monetary damages for which it would be entitled to
indemnification under this Agreement, the indemnified party may, by notice to
the
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indemnifying party, assume the exclusive right to defend, compromise, or settle
such Proceeding, but the indemnifying party will not be bound by any
determination of a Proceeding so defended or any compromise or settlement
effected without its consent (which may not be unreasonably withheld).
10.6 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS
A claim may be asserted by notice to the party
from whom indemnification is sought.
11. GENERAL PROVISIONS
11.1 EXPENSES
Except as otherwise expressly provided in this
Agreement, each party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution, and performance of this
Agreement and the Contemplated Transactions, including all fees and expenses of
agents, representatives, counsel, and accountants.
11.2 PUBLIC ANNOUNCEMENTS
Any public announcement or similar publicity with
respect to this Agreement or the Contemplated Transactions will be issued, if at
all, at such time and in such manner as Buyer determines. Unless consented to by
Buyer in advance or required by Legal Requirements, prior to the Closing Sellers
shall, and shall cause the Company to, keep this Agreement strictly confidential
and may not make any disclosure of this Agreement to any Person other than their
professional advisors. Sellers and Buyer will consult with each other concerning
the means by which the Company's employees, customers, and suppliers and others
having dealings with the Company will be informed of the Contemplated
Transactions, and Buyer will have the right to be present for any such
communication. Notwithstanding the foregoing, Buyer may disclose information
about this Agreement, the Sellers, or the Company in connection with its initial
public offering and any related obligations therewith.
11.3 CONFIDENTIALITY
(a) Between the date of this Agreement and the
Closing Date, Buyer and Sellers will maintain in confidence, and will cause the
directors, officers, employees, agents, and advisors of Buyer, Acquisition and
the Company to maintain in confidence, and not use to the detriment of another
party or the Company any written, oral, or other information obtained in
confidence from another party or the Company in connection with this Agreement
or the Contemplated Transactions, unless (a) such information is already known
to such party or to others not bound
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by a duty of confidentiality or such information becomes publicly available
through no fault of such party, (b) the use of such information is necessary or
appropriate in making any filing or obtaining any consent or approval required
for the consummation of the Contemplated Transactions, or (c) the furnishing or
use of such information is required by legal proceedings. Notwithstanding the
foregoing, Buyer may disclose information about this Agreement, the Sellers, or
the Company in connection with its initial public offering and any related
obligations therewith.
(b) If the Contemplated Transactions are not
consummated, each party will return or destroy as much of such written
information as the other party may reasonably request.
11.4 NOTICES
All notices, consents, waivers, and other
communications under this Agreement must be in writing and will be deemed to
have been duly given when (a) delivered by hand, (b) sent by telecopier (with
written confirmation of receipt), provided that a copy is mailed by registered
mail, return receipt requested, or (c) when received by the addressee, if sent
by a nationally recognized overnight delivery service (receipt requested), in
each case to the appropriate addresses and telecopier numbers set forth below
(or to such other addresses and telecopier numbers as a party may designate by
notice to the other parties):
Seller: Office Express, Inc.
000 Xxxxxxxxxx Xxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Facsimile No.: (___) ________
with a copy to: __________________________
__________________________
__________________________
Attention: __________________________
Facsimile No.: (___) ________
Buyer or Acquisition: Office Center Corporation
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Xx.
Facsimile No.: (000) 000-0000
with a copy to: Atlas, Xxxxxxxx, Trop & Borkson, P.A.
000 Xxxx Xxx Xxxx Xxxxxxxxx, Xxxxx 0000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
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11.5 FURTHER ASSURANCES
The parties agree (a) to furnish upon request to
each other such further information, (b) to execute and deliver to each other
such other documents, and (c) to do such other acts and things, all as the other
party may reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.
11.6 WAIVER
The rights and remedies of the parties to this
Agreement are cumulative and not alternative. Neither the failure nor any delay
by any party in exercising any right, power, or privilege under this Agreement
or the documents referred to in this Agreement will operate as a waiver of such
right, power, or privilege, and no single or partial exercise of any such right,
power, or privilege will preclude any other or further exercise of such right,
power, or privilege or the exercise of any other right, power, or privilege. To
the maximum extent permitted by applicable law, (a) no claim or right arising
out of this Agreement or the documents referred to in this Agreement can be
discharged by one party, in whole or in part, by a waiver or renunciation of the
claim or right unless in writing signed by the other party; (b) no waiver that
may be given by a party will be applicable except in the specific instance for
which it is given; and (c) no notice to or demand on one party will be deemed to
be a waiver of any obligation of such party or of the right of the party giving
such notice or demand to take further action without notice or demand as
provided in this Agreement or the documents referred to in this Agreement.
11.7 ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements
between the parties with respect to its subject matter and constitutes (along
with the documents referred to in this Agreement) a complete and exclusive
statement of the terms of the agreement between the parties with respect to its
subject matter. This Agreement may not be amended except by a written agreement
executed by the party to be charged with the amendment.
11.8 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY
RIGHTS
Neither party may assign any of its rights under
this Agreement without the prior consent of the other parties. Subject to the
preceding sentence, this Agreement will apply to, be binding in all respects
upon, and inure to the benefit of the heirs, successors and permitted assigns of
the parties. Nothing expressed or referred to in this Agreement will be
construed to give any Person other than the parties to this Agreement any
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legal or equitable right, remedy, or claim under or with respect to this
Agreement or any provision of this Agreement. This Agreement and all of its
provisions and conditions are for the sole and exclusive benefit of the parties
to this Agreement and their heirs, successors and assigns.
11.9 SEVERABILITY
If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
11.10 SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Agreement are
provided for convenience only and will not affect its construction or
interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Agreement. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.
11.11 TIME OF ESSENCE
With regard to all dates and time periods set
forth or referred to in this Agreement, time is of the essence.
11.12 GOVERNING LAW
This Agreement will be governed by the laws of the
State of Delaware without regard to conflicts of laws principles.
11.13 COUNTERPARTS
This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the date first written above.
BUYER: SELLERS:
OFFICE CENTRE CORPORATION /s/ Xxxxx X. Xxxxxx
------------------------------
XXXXX X. XXXXXX
By: /s/ Xxxxxx X. Xxxxxx, Xx. /s/ Xxxx X. Xxxxxxxxx
--------------------------------- --------------------------------
Name: Xxxxxx X. Xxxxxx, Xx. XXXX X. XXXXXXXXX
Title:
ACQUISITION:
OFFICE CENTRE MONTGOMERY
By: /s/Xxxxxx X. Xxxxxx, Xx.
---------------------------------
Name: Xxxxxx X. Xxxxxx, Xx.
Title:
COMPANY:
OFFICE EXPRESS, INC.
By: /s/ Xxxxx X. Xxxxxx
----------------------------------
Name: XXXXX X. XXXXXX
Title:President
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OFFICE EXPRESS, INC.
LIST OF DISCLOSURE SCHEDULES AND EXHIBITS
EXHIBITS
--------
Exhibit 3.8 Accounts Receivable
Exhibit 3.20 List of employees
Exhibit 7.2 Employment Agreement
Exhibit 7.4 Opinion from Xxxxxxx & Rothfeder
Exhibit 7.11 The "Lease"
SCHEDULES
---------
Schedule 3.6 Real Property; Encumbrances
Schedule 3.8 Accounts Receivable
Schedule 3.10 Liabilities
Schedule 3.11 Taxes
Schedule 3.14 Compliance with Legal Requirements;
Governmental Authorizations
Schedule 3.17 Contracts; No Defaults
Schedule 3.25 Relationships with Related Persons
Schedule 8.4 Guaranty
The Company agrees to furnish supplementally a copy of any
omitted schedule to the Securities Exchange Commission upon request.
