1
EXHIBIT 99
STOCK PURCHASE AND SALE AGREEMENT
AMONG
TCA CABLE TV, INC.,
MYRIAD CORPORATION
AND
THE SHAREHOLDERS OF
MYRIAD CORPORATION
2
TABLE OF CONTENTS
ARTICLE I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Purchase and Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.01. Purchase and Sale of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.03. Status of TCA Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.04. Tax Status of Purchase and Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Closing Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.01. Deliveries of the Corporation, and the Shareholders . . . . . . . . . . . . . . . . . . 2
Section 2.02. Deliveries of Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Representations and Warranties of the Corporation and the Shareholders . . . . . . . . . . . . . . . . . . . . 4
Section 3.01. Ownership of the Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 3.02. Organization and Good Standing: Qualification . . . . . . . . . . . . . . . . . . . . . 5
Section 3.03. Capitalization of the Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3.04. Corporate Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3.05. Authorization and Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3.06. No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.07. Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.08. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.10. Liabilities and Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.11. Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.12. Title; Leased Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.13. Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.14. Adverse Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.15. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.16. Patents, Trademarks, Service Marks and Copyrights . . . . . . . . . . . . . . . . . . 11
Section 3.17. Trade Secrets and Customer Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.18. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.19. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.20. Finder's Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.21. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
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Section 3.22. Condition of Fixed Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.23. Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.24. Books of Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.25. Corporate Name - Cable One . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.26. Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.27. Product Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.28. Banking Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.29. Ownership Interests of Interested Persons . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.30. Investments in Competitors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.31. Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.33. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 3.34. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 3.35. Certain Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 3.36. Accuracy of Information Furnished . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Representations and Warranties of Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.01. Organization and Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.02. Authorization and Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.03. No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.04. Finder's Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE V . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
The Covenants of the Corporation and the Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 5.0l. Consummation of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 5.02. Business Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 5.03. Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 5.04. Material Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 5.05. Approvals of Third Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.06. Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.07. Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.08. Changes in Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.09. Capital Assets; Payments of Liabilities . . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.10. Mortgages, Liens and Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.11. No Negotiation with Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
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ARTICLE VI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Purchaser's Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 6.01. Consummation of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 6.02. Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE VII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Purchaser's Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 7.01. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 7.02. Covenants and Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 7.03. Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 7.04. No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 7.05. Resignations of Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 7.06. Closing Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 7.07. Tax Affidavit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE VIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
The Conditions Precedent of the Corporation and the Shareholders . . . . . . . . . . . . . . . . . . . . . . 23
Section 8.01. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 8.02. Covenants and Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 8.03. Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 8.04. Closing Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE IX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Post Closing Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 9.01. Further Instruments of Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 10.01. Indemnification by the Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 10.02. Indemnification by Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 10.03. Conditions of Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 10.04. Remedies Not Exclusive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 10.05. Effect of Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE XI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 11.01. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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ARTICLE XII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 12.01. Costs, Expenses and Legal Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 12.02. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 12.03. Offset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 12.04. Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 12.05. Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 12.06. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 12.07. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 12.08. Parties In Interest: No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . 28
Section 12.09. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 12.10. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 12.11. Survival of Representations, Warranties and Covenants . . . . . . . . . . . . . . . . 28
Section 12.12. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 12.13. Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 12.14. Gender and Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 12.15. Reference to Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 12.16. Confidentiality, Publicity and Disclosures . . . . . . . . . . . . . . . . . . . . . 29
Section 12.18. Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 12.20. Service of Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 12.21. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
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STOCK PURCHASE AND SALE AGREEMENT
This Stock Purchase and Sale Agreement (this "Agreement"), dated
effective as of September 1, 1997, among Myriad Corporation, a Texas
corporation (the "Corporation"), the holders of all of the outstanding capital
stock of the Corporation who are Xxxxx Xxx, Xxxxx Xxxxxxxx, Xxxxxx Xxxxxxxx,
Xxxx Xxxxxxxx, Xxxxxxx X. Xxxxx, Xxxxx X. Xxxxxx, and Xxxxxx X. Xxxxx
(collectively, the "Shareholders"), and TCA Cable TV, Inc., a Texas corporation
("Purchaser").
WITNESSETH:
WHEREAS, the Shareholders hold all of the issued and outstanding
shares of capital stock of the Corporation, as set forth on Exhibit A (the
"Stock"), and desire to sell, and Purchaser desires to purchase, the Stock;
WHEREAS, Myriad Corporation is the surviving corporation of a merger
of Digiphone Corporation and Myriad Corporation dated effective January 1,
1997;
WHEREAS, the Shareholders represent that any and all representations
or warranties in this Agreement shall include and are intended to include
Myriad Corporation and the dissolved corporation Digiphone Corporation; and
WHEREAS, the Shareholders, the Corporation, and Purchaser desire to
enter into various agreements relating to the purchase and sale of the Stock;
NOW, THEREFORE, in consideration of the mutual representations,
warranties and covenants herein contained, and on the terms and subject to the
conditions herein set forth, the parties hereto hereby agree as follows:
ARTICLE I
Purchase and Sale
Section 1.01. Purchase and Sale of Stock.
(a) Subject to and upon the terms and conditions contained herein,
at the Closing, the Shareholders shall sell, transfer, assign, convey and
deliver to Purchaser, free and clear of all adverse claims, security interests,
liens, claims and encumbrances, and Purchaser shall purchase, accept and
acquire from the Shareholders, the Stock.
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(b) For the purposes of this Agreement, (i) the term "Closing"
shall mean the closing of the transactions contemplated by this Agreement,
which shall be effective as of September 1, 1997 at 12:01 a.m., and fully
consummated upon the signature of all parties and representatives as provided
herein.
Section 1.02. Purchase Price.
(a) Total Purchase Price. The total purchase price to be paid by
Purchaser for the Stock shall be 10,000 shares of the voting Common Stock, $.10
par value per share ("TCA Stock"), of TCA Cable TV, Inc. ("TCA"), (the "Closing
Shares").
(b) Delivery of the Closing Shares. The Closing Shares shall be
delivered by Purchaser to the Shareholders pursuant to the provisions of this
Agreement through the transfer agent for TCA.
Section 1.03 Status of TCA Stock. The Shareholders hereby
acknowledge that the TCA Stock transferred to them by Purchaser hereunder will
not be registered under the Securities Act of 1933, as amended (the "Securities
Act"), or the securities laws of any state at the time of Closing. TCA
represents and warrants that it will have the TCA Stock registered on or before
January 31, 1998 at its sole cost and expense. Each of the Shareholders hereby
acknowledge that he will be required to hold the TCA Stock received hereunder
until such time as the TCA Stock is registered under the Securities Act and
applicable state laws or unless exemptions from such registrations are
available. Each of the shareholders agrees to and shall execute a Letter of
Investment Intent relating to his ownership of the Closing Shares in the form
of the letter attached hereto as Exhibit 1.03, and agrees to remain subject to
the representations, warranties and covenants made therein after the Closing
Date.
Section 1.04 Tax Status of Purchase and Sale. The exchange of the
Stock for the Closing Shares contemplated by this Agreement is intended by the
parties to qualify as a tax-free reorganization under Section 368(a)(1)(B) of
the Code, and each of the parties hereto agrees to act with respect to the
Stock and the Closing Shares, as applicable, and take such other steps,
including the proper filing of plans of reorganization, as shall be necessary
to ensure the tax- free status of the exchange under such Code section and the
underlying regulations.
ARTICLE II
Closing Deliveries
Section 2.01. Deliveries of the Corporation, and the Shareholders.
At the Closing, the Corporation, and the Shareholders shall deliver to
Purchaser the following, all of which shall be in form and content satisfactory
to Purchaser and its counsel:
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(a) certificates representing all of the Stock, duly endorsed and
in proper form for transfer to Purchaser by delivery under applicable law, or
accompanied by duly executed instruments of transfer in blank;
(b) executed Agreement Not to Compete (the "Agreement Not to
Compete") among the Corporation, Purchaser, Xxxxx Xxx and Xxxxx Xxxxxxxx, in
the form of the agreement attached as Exhibit 2.01(b);
(c) a separate Letter of Investment Intent, in the form attached
hereto as Exhibit 1.03, executed by each of the Shareholders;
(d) a copy of resolutions of the Board of Directors of the
Corporation authorizing the execution, delivery and performance of this
Agreement and all related documents and agreements, each certified by the
Secretary of that corporation as being true and correct copies of the originals
thereof subject to no modifications or amendments;
(e) a separate certificate of each of the President of the
Corporation and the Shareholders, dated the Closing Date, (i) as to the truth
and correctness of the representations and warranties of the Corporation and
the Shareholders contained herein on and as of the Closing Date, (ii) as to the
performance of and compliance by the Corporation and the Shareholders with all
covenants contained herein on and as of the Closing Date, and (iii) certifying
that all conditions precedent of the Corporation and the Shareholders to the
Closing have been satisfied;
(f) certificate of the Secretary of the Corporation certifying as
to the incumbency of the directors and officers of the Corporation and as to
the signatures of such directors and officers who have executed documents
delivered at the Closing on behalf of the Corporation;
(g) a certificate, dated within thirty (30) days of the Closing
Date, of the Secretary of State of the State of Texas establishing that the
Corporation is in existence, has paid all franchise taxes and otherwise is in
good standing to transact business in that state;
(h) certificates, dated within thirty (30) days of the Closing
Date, of the Secretaries of State of the states, if any, in which it is
necessary for the Corporation to be qualified to do business, to the effect
that the Corporation is qualified to do business and is in good standing as a
foreign corporation in each of such states;
(i) an opinion of legal counsel to the Corporation and the
Shareholders, dated as of the Closing Date, in the form attached hereto as
Exhibit 2.01(j);
(j) all necessary authorizations, consents, approvals, permits and
licenses referenced in Schedule 3.12(d); and
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(k) such other instrument or instruments as shall be necessary or
appropriate, as Purchaser or its counsel shall reasonably request, to vest in
Purchaser good and marketable title to the Stock.
Section 2.02. Deliveries of Purchaser. Purchaser shall deliver the
following to the Corporation or the Shareholders, as applicable:
(a) the Closing Shares to the Shareholders in the percentage set on
Exhibit "A", attached hereto and incorporated herein by reference;
(b) the Agreement Not to Compete;
(c) a copy of the resolutions of the Board of Directors of Purchaser
authorizing the execution, delivery and performance of this Agreement and all
related documents and agreements, each certified by Purchaser's Secretary as
being true and correct copies of the originals thereof subject to no
modifications or amendments;
(d) a certificate of the President or any Vice President of
Purchaser, dated the Closing Date, (i) as to the truth and correctness of the
representations and warranties of Purchaser contained herein on and as of the
Closing Date, (ii) as to the performance of and compliance by Purchaser with
all covenants contained herein on and as of the Closing Date, and (iii)
certifying that all conditions precedent of Purchaser to the Closing have been
satisfied;
(e) a certificate of the Secretary of Purchaser certifying as to the
incumbency of such officers of Purchaser, and as to their signatures, who have
executed documents delivered at the Closing on behalf of Purchaser; and
(f) a certificate, dated within thirty (30) days of the Closing Date,
of the Secretary of State of the State of Texas, establishing, that Purchaser
is in existence, has paid all franchise taxes and otherwise is in good standing
to transact business in such state.
(g) an opinion of legal counsel to TCA, dated as of the closing date,
in form attached hereto as Exhibit 2.02(h).
ARTICLE III
Representations and Warranties of the Corporation and the Shareholders
The Corporation and the Shareholders jointly and severally represent
and warrant that the following are true and correct as of the date hereof and
will be true and correct through the Closing Date as if made on that date.
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Section 3.01. Ownership of the Stock. The Shareholders own,
beneficially and of record, good and marketable title to the Stock, which
constitutes all of the issued and outstanding capital stock of the Corporation
free and clear of all security interests, liens, adverse claims, encumbrances,
equities, proxies, options or shareholder agreements. At the Closing, the
Shareholders will convey to Purchaser good and marketable title to all of the
stock, free and clear of any security interests, liens, adverse claims,
encumbrances, equities, proxies, options, shareholder agreements or other
restrictions.
Section 3.02. Organization and Good Standing: Qualification. The
Corporation is a corporation duly organized, validly existing, and in good
standing under the laws of its state of incorporation, with all requisite
corporate power and authority to carry on the business in which it is engaged,
to own the properties it owns, to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The Corporation is duly
qualified and licensed to do business and is in good standing in all
jurisdictions where the nature of its business makes such qualification
necessary, which jurisdictions are listed in Schedule 3.02, except where the
failure to be qualified or licensed would not have a material adverse effect on
the business of the Corporation. The Corporation does not have any assets,
employees or offices located in any state other than the states listed in
Schedule 3.02.
Section 3.03. Capitalization of the Corporation. The authorized
capital stock of the Corporation consists of 1,000,000 shares of common stock,
$0.01 par value per share, of which 100,000 shares are issued and outstanding.
No shares of such capital stock are held in the treasury of the Corporation.
All of issued and outstanding shares of capital stock of the Corporation are
duly authorized, validly issued, fully paid and nonassessable. There exist no
options, warrants, subscriptions or other rights to purchase, or securities
convertible into or exchangeable for, the capital stock of the Corporation.
Neither the Shareholders nor the Corporation are parties to or bound by, nor do
they have any knowledge of, any agreement, instrument, arrangement, contract,
obligation, commitment or understanding of any character, whether written or
oral, express or implied, relating to the sale, assignment, encumbrance,
conveyance, transfer or delivery of any capital stock of the Corporation. No
shares of capital stock of the Corporation have been issued or disposed of in
violation of the preemptive rights of any of the Corporation's shareholders.
All accrued dividends on the capital stock of the Corporation, whether or not
declared, have been paid in full.
Section 3.04. Corporate Records. The copies of the Articles of
Incorporation and all amendments thereto and the Bylaws of the Corporation that
have been delivered to Purchaser are true, correct and complete copies thereof,
as in effect on the date hereof. The minute book of the Corporation, a copy of
which has been delivered to Purchaser, contains accurate minutes of all
meetings of, and accurate consents to all actions taken without meetings by,
the Board of Directors (and any committees thereof) and the shareholders of the
Corporation since its formation.
Section 3.05. Authorization and Validity. The execution, delivery and
performance by the Corporation of this Agreement and the other agreements
contemplated hereby, and the consummation
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of the transactions contemplated hereby and thereby, have been duly authorized
by the Corporation and the Shareholders. This Agreement and each other
agreement contemplated hereby have been or will be as of the Closing Date duly
executed and delivered by the Corporation and the Shareholders, as applicable,
and constitute or will constitute legal, valid and binding obligations of the
Corporation and the Shareholders, as applicable, enforceable against the
Corporation and the Shareholders in accordance with their respective terms. To
the knowledge of the Corporation and the Shareholders, the sale of the Stock by
Shareholders to Purchaser will not impair the ability or authority of the
Corporation to carry on the Corporation's business as now conducted in any
respect.
Section 3.06. No Violation. Neither the execution, delivery or
performance of this Agreement or the other agreements contemplated hereby nor
the consummation of the transactions contemplated hereby or thereby will (i)
conflict with, or result in a violation or breach of the terms, conditions or
provisions of, or constitute a default under, the Articles of Incorporation or
Bylaws of the Corporation or any agreement, indenture or other instrument under
which the Corporation is bound or to which the appropriate portion of the Stock
or any of the assets of the Corporation are subject, or result in the creation
or imposition of any security interest, lien, charge or encumbrance upon the
Stock or any of the assets of the Corporation, or (ii) violate or conflict with
any judgment, decree, order, statute, rule or regulation of any court or any
public, governmental or regulatory agency or body having jurisdiction over the
Corporation, the Stock or the assets of the Corporation.
Section 3.07. Consents. Except as set forth in Schedule 3.07, no
consent, authorization, approval, permit or license of, or filing with, any
governmental or public body or authority, any lender or lessor or any other
person or entity is required to authorize, or is required in connection with,
the execution, delivery and performance of this Agreement or the agreements
contemplated hereby on the part of the Corporation or the Shareholders.
Section 3.08. Financial Statements. The Corporation has furnished to
Purchaser the balance sheet and related statements of income, retained earnings
and cash flows for the twelve-month periods ended December 31, 1993 through
December 31, 1996 for Digiphone Corporation, including the notes thereto, and
for the interim period ended July 31, 1997 for Myriad Corporation
(collectively, the "Financial Statements"). The Financial Statements are true,
correct and complete, are in accordance with the books and records of the
Corporation fairly present the financial condition and results of operations of
the Corporation as of the dates and for the periods indicated and have been
prepared in conformity with generally accepted accounting principles applied on
a consistent basis.
Section 3.10. Liabilities and Obligations. Except as set forth in
Schedule 3.10, the Financial Statements reflect all liabilities of the
Corporation accrued, contingent or otherwise (known or unknown and asserted or
unasserted), arising out of transactions effected or events occurring on or
prior to the date hereof. All reserves shown in the Financial Statements are
appropriate, reasonable and sufficient to provide for losses thereby
contemplated. Except as set forth in the Financial Statements, the Corporation
is not liable upon or with respect to, or obligated in any other way to
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provide funds in respect of or to guarantee or assume in any manner, any debt,
obligation or dividend of any person, corporation, association, partnership,
joint venture, trust or other entity, and neither the Corporation nor the
Shareholders know of any basis for the assertion of any other claims or
liabilities of any nature or in any amount.
Section 3.11. Absence of Certain Changes. Except as set forth in
Schedule 3.11, since December 31, 1996, the Corporation has not, except in the
ordinary course of business:
(a) suffered any material adverse change, whether or not caused by
any deliberate act or omission of the Corporation or any Shareholder, in its
condition (financial or otherwise), operations, assets, liabilities, business
or prospects;
(b) contracted for the purchase of any capital assets other than
those identified in the Corporation's financial statements dated July 31, 1997,
previously provided to Purchaser;
(c) incurred any indebtedness for borrowed money or issued or sold
any debt securities;
(d) incurred or discharged any liabilities or obligations;
(e) paid any amount on any indebtedness prior to the due date,
forgiven or canceled any debts or claims or released or waived any rights or
claims;
(f) mortgaged, pledged or subjected to any security interest, lien,
lease or other charge or encumbrance any of its properties or assets;
(g) suffered any damage or destruction to or loss of any assets
(whether or not covered by insurance) that has materially and adversely
affected, or could reasonably be expected to materially and adversely affect,
its business;
(h) acquired or disposed of any assets;
(i) written up or written down the carrying value of any of its
assets;
(j) changed the costing system or depreciation methods of accounting
for its assets;
(k) waived any material rights or forgiven any material claims;
(l) lost or terminated any employee, customer or supplier, the loss
or termination of which has materially and adversely affected, or could
reasonably be expected to materially and adversely affect, its business or
assets;
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(m) increased the compensation of or paid any bonus to any director
or officer;
(n) increased the compensation of or paid any bonus to any employee;
(o) made any payments to or loaned any money to any person or entity
referred to in Section 3.29;
(p) formed or acquired or disposed of any interest in any
corporation, partnership, joint venture or other entity;
(q) redeemed, purchased or otherwise acquired, or sold, granted or
otherwise disposed of, directly or indirectly, any of its capital stock or
securities or any rights to such capital stock or securities, or agreed to
change the terms and conditions of any such rights;
(r) entered into any agreement with any person or group, or modified
or amended in any material respect the terms of any such existing agreement,
except in the ordinary course of business;
(s) entered into, adopted or amended any Employee Benefit Plan (as
hereinafter defined); or
(t) entered into any other commitment or transaction or experienced
any other event that is material to this Agreement or to any of the other
agreements and documents executed or to be executed pursuant to this Agreement
or to the transactions contemplated hereby or thereby, or that has materially
and adversely affected, or could materially and adversely affect, the condition
(financial or otherwise), operations, assets, liabilities, business or
prospects of the Corporation taken as a whole.
Section 3.12. Title; Leased Assets.
(a) Real Property. Purchaser and the Shareholders represent that the
Corporation and any predecessor entity does not own any real property.
(b) Personal Property. Except as set forth in Schedule 3.12(b), the
Corporation has good, valid and marketable title to all tangible and intangible
personal property owned by them (collectively, the "Personal Property"). The
Personal Property and the leased personal property referred to in Section
3.12(c) constitute the only personal property used in the conduct of the
business of the Corporation.
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(c) Leases. A list and brief description of all leases of real and
personal property to which the Corporation is a party, either as lessor or
lessee, are set forth in Schedule 3.12(c). All such leases are valid and
enforceable in accordance with their respective terms except as may be limited
by applicable bankruptcy, insolvency or similar laws affecting creditors'
rights generally or the availability of equitable remedies.
(d) Right to Use Assets. Except for those assets acquired since June
30, 1997, which are listed in Schedule 3.12(d), all tangible and intangible
assets used in the conduct of the business of the Corporation are reflected in
the Financial Statements in a manner that is in conformity with generally
accepted accounting principles, consistently applied. The Corporation owns,
leases or otherwise possesses a right to use all assets used in the conduct of
the business of the Corporation, which will not be impaired by the consummation
of the transactions contemplated hereby.
Section 3.13. Commitments.
(a) Commitments; Defaults. Except as set forth in Schedule 3.13(a),
the Corporation has not entered into, and the Stock, the assets, and the
business of the Corporation are not bound by, whether or not in writing, any
(i) partnership or joint venture agreement;
(ii) deed of trust or other security agreement;
(iii) guaranty or suretyship, indemnification or
contribution agreement or performance bond;
(iv) employment, consulting or compensation agreement or
arrangement, including the election or retention in
office of any director or officer;
(v) labor or collective bargaining agreement;
(vi) debt instrument, loan agreement or other obligation
relating to indebtedness for borrowed money or money
lent or to be lent to another;
(vii) deed or other document evidencing an interest in or
contract to purchase or sell real property;
(viii) agreement with dealers or sales or commission agents,
public relations or advertising agencies, accountants
or attorneys;
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(ix) lease of real or personal property, whether as
lessor, lessee, sublessor or sublessee;
(x) agreement between the Corporation and any affiliate
of the Corporation;
(xi) agreement relating to any material matter or
transaction in which an interest is held by a person
or entity that is an affiliate of the Corporation;
(xii) any agreement for the acquisition of services,
supplies, equipment or other personal property and
involving, more than $1,000 in the aggregate;
(xiii) powers of attorney;
(xiv) contracts containing non-competition covenants;
(xv) any other contract or agreement that involves either
an unperformed commitment in excess of $1,000 or that
terminates more than 30 days after the date hereof;
(xvi) agreement relating to any material matter or
transaction in which an interest is held by any
person or entity referred to in Section 3.29;
(xvii) agreement providing for the purchase from a supplier
of all or substantially all of the requirements of
the Corporation of a particular product or service;
or
(xviii) any other agreement or commitment not made in the
ordinary course of business or that is material to
the business or financial condition of the
Corporation.
All of the foregoing items which are listed on Schedule 3.13(a) are
hereinafter collectively referred to as the "Commitments." True, correct and
complete copies of the written Commitments, and true, correct and complete
written descriptions of any oral Commitments, have heretofore been delivered or
made available to Purchaser. There are no existing defaults, events of default
or events, occurrences, acts or omissions that, with the giving of notice or
lapse of time or both, would constitute defaults by the Corporation and no
penalties have been incurred nor are amendments pending, with respect to the
Commitments, except as described in Schedule 3.13(a). The Commitments are in
full force and effect and are valid and enforceable obligations of the parties
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thereto in accordance with their respective terms, and no defenses, offsets or
counterclaims have been asserted, or to the knowledge of the Corporation or the
Shareholders, may be made, by any party thereto, nor has the Corporation waived
any rights thereunder, except as described in Schedule 3.13(a). Neither the
Corporation nor any Shareholder has received notice of any default with respect
to any Commitment.
(b) No Cancellation or Termination of Commitment. Except as
contemplated hereby, neither the Corporation nor any Shareholder has received
notice of any plan or intention of any other party to any Commitment to
exercise any right to cancel or terminate any Commitment or agreement, and
neither the Corporation nor any Shareholder knows of any fact that would
justify the exercise of such a right. Neither the Corporation nor any
Shareholder currently contemplates, or has reason to believe any other person
or entity currently contemplates, any amendment or change to any Commitment.
Except as listed in Schedule 3.13(b), to the knowledge of the Corporation and
the Shareholders, none of the customers or suppliers of the Corporation have
refused, or communicated that they will or may refuse, to purchase or supply
goods or services, as the case may be, or have communicated that they will or
may substantially reduce the amounts of goods or services that they are
willing, to purchase from, or sell to, the Corporation.
Section 3.14. Adverse Agreements. The Corporation is not a party to
any agreement or instrument or subject to any charter or other corporate
restriction or any judgment, order, writ, injunction, decree, rule or
regulation that materially and adversely affects, or so far as the Corporation
or any Shareholder can now reasonably foresee, may in the future materially and
adversely affect, the condition (financial or otherwise), operations, assets,
liabilities, business or prospects of the Corporation.
Section 3.15. Insurance. The Corporation carries adequate and
necessary property, liability, workers' compensation and other types of
insurance. A list and brief description of all insurance policies of the
Corporation are set forth in Schedule 3.15. All of such policies are valid and
enforceable policies, issued by insurers of recognized responsibility and in
amounts and against such risks and losses as are customary in its industry.
Such insurance shall be outstanding and duly in force without interruption up
to and including the Closing Date. True, complete and correct copies of all
such policies have been provided to Purchaser on or prior to the date hereof.
Section 3.16. Patents, Trademarks, Service Marks and Copyrights.
(a) Ownership. The Corporation owns all patents, trademarks,
service marks and copyrights, if any, necessary to conduct its business, or
possesses adequate licenses or other rights, if any, therefor, without conflict
with the rights of others. Set forth in Schedule 3.16 is a true and correct
description of the following (the "Proprietary Rights"):
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(i) all trademarks, tradenames, service marks and other
trade designations, registrations and applications therefor,
and all patents, copyrights and applications currently owned,
in whole or in part, by the Corporation with respect to the
business of the Corporation and all licenses, royalties,
assignments and other similar agreements relating to the
foregoing to which the Corporation is a party (including
expiration date if applicable); and
(ii) all agreements relating to technology, know how or
processes that the Corporation is licensed or authorized to
use by others, or which either licenses or authorizes others
to use.
(b) Conflicting Rights of Third Parties. The Corporation has the
sole and exclusive right to use the Proprietary Rights without infringing or
violating the rights of any third parties. Use of the Proprietary Rights does
not require the consent of any other person and the Proprietary Rights are
freely transferable. No claim has been asserted by any person to the ownership
of or right to use any Proprietary Right or challenging or questioning the
validity or effectiveness of any license or agreement constituting a part of
any Proprietary Right, and neither the Corporation nor any Shareholder knows of
any valid basis for any such claim. Each of the Proprietary Rights is valid
and subsisting, has not been canceled, abandoned or otherwise terminated and,
if applicable, has been duly issued or filed.
(c) Claims of Other Persons. The Corporation and the Shareholders
have no knowledge of any claim that, or inquiry as to whether, any product,
activity or operation of the Corporation infringes upon or involves, or has
resulted in the infringement of, any proprietary right of any other person,
corporation or other entity; and no proceedings have been instituted, are
pending, or to the knowledge of the Corporation and the Shareholders are
threatened, that challenge the rights of the Corporation with respect thereto.
Section 3.17. Trade Secrets and Customer Lists. The Corporation has
the right to use, free and clear of any claims or rights of others, except
claims or rights specifically set forth in Schedule 3.17, all trade secrets,
customer lists and proprietary information required for the marketing of all
merchandise and services formerly or presently sold or marketed by the
Corporation. The Corporation is not using or in any way making use of any
confidential information or trade secrets of any third party.
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Section 3.18. Taxes.
(a) Filing of Tax Returns. The Corporation has duly and timely
filed with the appropriate governmental agencies all tax returns (including
information returns) and reports required to be filed by the United States or
any state or any political subdivision thereof or any foreign jurisdiction.
All such tax returns or reports are complete and accurate and properly reflect
the taxes of the Corporation for the periods covered thereby.
(b) Payment of Taxes. The Corporation has paid or accrued all
taxes, penalties and interest which have become due with respect to any returns
that it has filed and any assessments of which it is aware. The Corporation is
not delinquent in the payment of any tax, assessment or governmental charge.
(c) No Pending Deficiencies, Delinquencies, Assessments or Audits.
Except as listed in Schedule 3.18(c), no tax deficiency or delinquency has been
asserted against the Corporation. There is no unpaid assessment, proposal for
additional taxes, deficiency or delinquency in the payment of any of the taxes
of the Corporation that could be asserted by any taxing authority. There is no
taxing authority audit of the Corporation pending, or threatened, and the
results of any completed audits are properly reflected in the Financial
Statements of the Corporation. The Corporation has not violated any federal
state, local or foreign tax law.
(d) No Extension of Limitation Period. The Corporation has not
granted an extension to any taxing authority of the limitation period during
which any tax liability may be assessed or collected.
(e) All Withholding Requirements Satisfied. All monies required
to be withheld by the Corporation and paid to Governmental agencies for all
taxes have been (i) collected or withheld and either paid to the respective
Governmental agencies or set aside in accounts for such purpose, or (ii)
properly reflected in the Financial Statements of the Corporation.
(f) State Unemployment Taxes. In respect of its most recently
completed reporting period and all previous reporting periods, the Corporation
has paid state unemployment taxes to all applicable states at the appropriate
rates for the wages paid by the Corporation during such period which were
subject to such tax.
(g) Reasonable Expenditures. All amounts paid by the Corporation
(i) to officers, employees, consultants and agents as salaries, compensation,
and expenses reimbursed by the Corporation, or (ii) as rental payments, have
been in amounts which are reasonable and deductible for income tax purposes.
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(h) Tax Liability in Financial Statements. The liabilities
(including deferred taxes) shown in the Corporation's December 31, 1996
Financial Statements and to be accrued on the books and records of the
Corporation through the Closing Date for taxes, interest and penalties are and
will be adequate accruals and have been and will be accrued in a manner
consistent with the practices utilized for accruing tax liabilities in the tax
year ended December 31, 1996 and take into account net operating losses,
investment credits and other carryovers for periods ended prior to the Closing
Date.
(i) Foreign Investment in U.S. Real Property. None of the
Shareholders are foreign persons, as such term is used in Section 1445(b)(2) of
the Internal Revenue Code of 1986 (the "Code").
(j) Tax Exempt Entity. None of the assets of the Corporation are
or will be subject to a lease to a "tax exempt entity" as such term is defined
in Section 168(h)(2) of the Code.
(k) Collapsible Corporation. The Corporation has not at any time
consented, and the Shareholders will not permit the Corporation to elect, to
have the provisions of Section 341(f)(2) of the Code apply to it.
(l) Change in Accounting Method. The Corporation has not
voluntarily or involuntarily changed a method of accounting resulting in the
Corporation's inclusion of amounts in income pursuant to the adjustment
provisions of Section 481 of the Code.
(m) S Corporation. The Corporation is not currently and has never
been an S corporation as such term is defined in Section 1361(a) of the Code.
(n) All references in this Section 3.18 to the Corporation is
treated as a representation by the Corporation and each of its predecessor
entities.
Section 3.19. Compliance with Laws. The Corporation has complied with
all laws, regulations and licensing requirements and has filed with the proper
authorities all necessary statements and reports. There are no existing
violations by the Corporation or the Shareholders of any federal, state or
local law or regulation that could materially and adversely affect the property
or business of the Corporation. The Corporation possesses all necessary
licenses, franchises, permits and governmental authorizations material to the
conduct of its business as now conducted, all of which are listed in Schedule
3.19.
Section 3.20. Finder's Fee. Neither the Corporation nor any
Shareholder has incurred any obligation for any finder's, broker's or agent's
fee in connection with the transactions contemplated hereby.
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Section 3.21. Litigation. Except as described in Schedule 3.21, there
are no legal actions or administrative proceedings or investigations
instituted, or to the knowledge of the Corporation or the Shareholders
threatened, against or affecting, or that could affect, the Corporation any of
the Stock, or the business of the Corporation. Neither the Corporation nor the
Shareholders are (i) subject to any continuing court or administrative order,
writ, injunction or decree applicable specifically to the Corporation or its
businesses, assets, operations or employees, or (ii) in default with respect to
any such order, writ, injunction or decree. Neither the Corporation, nor the
Shareholders know of any basis for any such action, proceeding or
investigation.
Section 3.22. Condition of Fixed Assets. All of the plants,
structures and equipment (the "Fixed Assets") owned by the Corporation are in
good condition and repair for their intended use in the ordinary course of
business and conform in all material respects with all applicable ordinances,
regulations and other laws and there are no known latent defects therein.
Section 3.23. Inventory. All of the tangible inventory owned by the
Corporation is in good, current, standard and merchantable condition and is not
obsolete or defective. Purchase commitments for merchandise are not in excess
of normal requirements and, taken as a whole, are not at prices in excess of
market prices. The Corporation has, and at the Closing Date will have, the
types and quantities of inventories appropriate, taken as a whole, to conduct
its business consistently with past practices.
Section 3.24. Books of Account. The books of account of the
Corporation have been kept accurately in the ordinary course of business, the
transactions entered therein represent bona fide transactions and the revenues,
expenses, assets and liabilities of the Corporation have been properly recorded
in such books.
Section 3.25. Corporate Name - Myriad. There are no actions, suits or
proceedings pending, or to the knowledge of the Corporation or the Shareholders
threatened, against or affecting the Corporation that could result in any
impairment of the right of the Corporation to use the name "Myriad," or "Myriad
Internet Access." The use of the name "Myriad" does not infringe the rights of
any third party nor is it confusingly similar with the corporate name of any
third party. After the Closing Date, no person or business entity other than
the Corporation will be authorized, directly or indirectly, to use the name
"Myriad" or any name confusingly similar thereto.
Section 3.26. Accounts Receivable. Schedule 3.26 sets forth the
accounts receivable of the Corporation from sales made as of July 31, 1997 and
the payments and rights to receive payments related thereto. All such accounts
receivable have arisen from bona fide transactions in the ordinary course of
business and are valid and enforceable claims subject to no right of set-off or
counterclaim.
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Section 3.27. Product Warranties. There is no claim against or
liability of the Corporation on account of product warranties or with respect
to the manufacture, sale or rental of defective products or services and there
is no basis for any such claim on account of defective products or services
heretofore manufactured, sold or rented that is not fully covered by insurance.
Section 3.28. Banking Relations. Set forth in Schedule 3.28 is a
complete and accurate list of all arrangements that the Corporation has with
any bank or other financial institution, indicating with respect to each
relationship the type of arrangement maintained (such as checking account,
borrowing arrangements, safe deposit box, etc.) and the person or persons
authorized in respect thereof.
Section 3.29. Ownership Interests of Interested Persons. Except as
set forth in Schedule 3.29, no officer, supervisory employee, director or
shareholder of the Corporation, or their respective spouses or children, owns
directly or indirectly, on an individual or joint basis, any material interest
in, or serves as an officer or director of, any customer or supplier of the
Corporation, or any organization that has a material contract or arrangement
with the Corporation.
Section 3.30. Investments in Competitors. No Shareholder owns
directly or indirectly any interests or has any investment in any corporation,
business or other person that is a competitor of the Corporation.
Section 3.31. Employee Matters.
(a) Cash Compensation. Schedule 3.31(a) contains a complete and
accurate list of the names, titles and cash compensation, including without
limitation wages, salaries, bonuses (discretionary and formula) and other cash
compensation (the "Cash Compensation") of all employees of the Corporation who
are currently compensated at a rate in excess of $15,000 per year and who
earned in excess of such amount during the preceding fiscal year. In addition,
Schedule 3.31(a) contains a complete and accurate description of (i) all
increases in Cash Compensation of employees of the Corporation during the
current and immediately preceding fiscal year of the Corporation, and (ii) any
promised increases in Cash Compensation of employees of the Corporation that
have not yet been effected.
(b) Compensation Plans. Schedule 3.31(b) contains a complete and
accurate list of all compensation plans, arrangements or practices (the
"Compensation Plans") sponsored by the Corporation or to which the Corporation
contributes on behalf of its employees, other than Employee Benefit Plans
listed in Schedule 3.33(a). The Compensation Plans include without limitation
plans, arrangements or practices that provide for severance pay, deferred
compensation, incentive, bonus or performance awards, and stock ownership or
stock options. The Corporation has provided Purchaser a copy of each written
Compensation Plan and a written description of each unwritten Compensation
Plan. Each of the Compensation Plans can be terminated or amended at will by
the Corporation.
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(c) Employment Agreements. All written or oral employment
agreements (the "Employment Agreements") which exist between the Corporation
and its employees, including agreements containing covenants not to compete,
are listed on Schedule 3.31(c). The Corporation has provided Purchaser a copy
of each written Employment Agreement and a written description of each
unwritten Employment Agreement, if any.
(d) Employee Policies and Procedures. Schedule 3.31(d) contains a
complete and accurate list of all employee manuals, policies, procedures and
work-related rules (the "Employee Policies and Procedures") that apply to
employees of the Corporation. The Corporation has provided Purchaser a copy of
all written Employee Policies and Procedures and a written description of all
unwritten Employee Policies and Procedures. Each of the Employee Policies and
Procedures can be amended or terminated at will by the Corporation, except as
prohibited by law.
(e) Unwritten Amendments. No unwritten amendments have been made,
whether by oral communication, pattern of conduct or otherwise, with respect to
any Compensation Plans, Employment Agreements or Employee Policies and
Procedures.
(f) Labor Compliance. Except as set forth in Schedule 3.31(f),
the Corporation:
(i) has been and is in compliance with all laws, rules,
regulations and ordinances respecting employment and
employment practices, terms and conditions of employment and
wages and hours, and
(ii) is not liable for any arrears of wages or penalties for
failure to comply with any of the foregoing.
The Corporation has not engaged in any unfair labor practice or
discriminated on the basis of race, color, religion, sex, national origin, age
or handicap in its employment conditions or practices.
There are no:
(i) unfair labor practice charges or complaints or racial,
color, religious, sex, national origin, age or handicap
discrimination charges or complaints, pending or to the
knowledge of the Corporation and the Shareholders threatened,
against the Corporation before any federal, state or local
court, board, department, commission or agency nor does any
basis therefor exist, or
(ii) existing, or to the knowledge of the Corporation and the
Shareholders threatened, labor strikes, disputes, grievances,
controversies or other labor troubles affecting the
Corporation and no basis therefor exists.
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(g) Unions. The Corporation has never been a party to any
agreement with any union, labor organization or collective bargaining unit. No
employees of the Corporation are represented by any union, labor organization
or collective bargaining unit. To the knowledge of the Corporation and the
Shareholders, the employees of the Corporation have no intention to and have
not threatened to organize or join a union, labor organization or collective
bargaining unit.
(h) Aliens. All employees of the Corporation are citizens of, or
are authorized to be employed in, the United States.
Section 3.33. Employee Benefit Plans. Neither the Corporation nor any
predecessor entity has sponsored or provided any employee benefit plans (the
"Employee Benefit Plans") (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")).
Section 3.34. Environmental Matters.
(a) Environmental Laws. Neither the Corporation nor any of its
assets, are currently in violation of, or subject to any existing, pending, or
threatened investigation or inquiry by any governmental authority or to any
remedial obligations under, any laws or regulations pertaining to health or the
environment , whether federal or state (hereinafter sometimes collectively
called "Environmental Laws").
(b) Use of Assets. To the knowledge of the Corporation and the
Shareholders, the assets of the Corporation have never been used in a manner
that would be in violation of any of the Environmental Laws, including without
limitation, CERCLA or RCRA.
Section 3.35. Certain Payments. To the knowledge of the Corporation
and the Shareholders, neither the Corporation, the Shareholders nor any
director, officer or employee of the Corporation has paid or caused to be paid,
directly or indirectly, in connection with the business of the Corporation:
(a) to any government or agency thereof or any agent of any supplier
or customer any bribe, kick-back or other similar payment; or
(b) any contribution to any political party or candidate (other than
from personal funds of directors, officers or employees not reimbursed by the
Corporation or as otherwise permitted by applicable law).
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Section 3.36. Accuracy of Information Furnished. All information
furnished to Purchaser by the Corporation or any Shareholder hereby or in
connection with the transactions contemplated hereby is true, correct and
complete in all material respects. Such information states all facts required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which such statements are made, true, correct and
complete.
ARTICLE IV
Representations and Warranties of Purchaser
Purchaser represents and warrants that the following are true and
correct as of the date hereof and will be true and correct through the Closing
Date as if made on that date:
Section 4.01. Organization and Good Standing. Purchaser is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Texas, with all requisite corporate power and authority to
carry on the business in which it is engaged, to own the properties it owns, to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby.
Section 4.02. Authorization and Validity. The execution, delivery and
performance by Purchaser of this Agreement and the other agreements
contemplated hereby, and the consummation of the transactions contemplated
hereby and thereby, have been duly authorized by Purchaser. This Agreement and
each other agreement contemplated hereby have been or will be as of the Closing
Date duly executed and delivered by Purchaser and constitute or will
constitute legal, valid and binding obligations of Purchaser, enforceable
against Purchaser in accordance with their respective terms, except as may be
limited by applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally or the availability of equitable remedies. The
Closing Shares, when issued in compliance with the provisions of the Agreement,
will be validly issued, fully paid, non-assessable, not issued in violation of
any preemptive rights, and will be free from all taxes, liens, charges and
other encumbrances, subject to the terms and provisions of the Letter of
Investment Intent.
Section 4.03. No Violation. Neither the execution, delivery or
performance of this Agreement or the other agreements contemplated hereby nor
the consummation of the transactions contemplated hereby or thereby will (i)
conflict with, or result in a violation or breach of the terms, conditions and
provisions of, or constitute a default under, the Articles of Incorporation or
Bylaws of Purchaser or any agreement, indenture or other instrument under which
Purchaser is bound, (ii) violate or conflict with any judgment, decree, order,
statute, rule or regulation of any court or any public, governmental or
regulatory agency or body having jurisdiction over Purchaser or the properties
or assets of Purchaser, or (iii) violate or conflict with any laws, rules or
regulations, including but not limited anti-trust laws, or that of any
applicable jurisdiction or any applicable public, governmental or regulatory
agency or body.
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Section 4.04. Finder's Fee. Purchaser has not incurred any obligation
for any finder's, broker's or agent's fee in connection with the transactions
contemplated hereby.
ARTICLE V
The Covenants of the Corporation and the Shareholders
The Corporation and the Shareholders jointly and severally make the
following covenants relating to the period between the date hereof and the
Closing.
Section 5.0l. Consummation of Agreement. The Corporation and the
Shareholders shall use their best efforts to cause the consummation of the
transactions contemplated hereby in accordance with their terms and conditions.
Section 5.02. Business Operations. The Corporation shall operate its
business in the ordinary course and will not introduce any new method of
management or operation. The Corporation and the Shareholders shall use their
best efforts to preserve the business of the Corporation intact, to retain the
present customers and suppliers so that they will be available to Purchaser
after the Closing. The Corporation and the Shareholders shall not take any
action that could adversely affect the condition (financial or otherwise),
operations, assets, liabilities, business or prospects of the Corporation
without the prior written consent of Purchaser or take or fail to take any
action that would cause or permit the representations made in Article III to be
inaccurate at the time of Closing or preclude the Corporation and the
Shareholders from making such representations and warranties at the Closing.
Section 5.03. Access. The Corporation and the Shareholders shall
permit Purchaser and its authorized representatives full access to, and make
available for inspection, all of the assets and business of the Corporation,
including their employees, customers and suppliers, and permit Purchaser and
its authorized representatives to inspect and make copies of all documents,
records and information with respect to the affairs of the Corporation as
Purchaser and its representatives may request, all for the sole purpose of
permitting Purchaser to become familiar with the business and assets and
liabilities of the Corporation.
Section 5.04. Material Change. The Corporation and the Shareholders
shall promptly inform Purchaser in writing, of any material adverse change in
the condition (financial or otherwise), operations, assets, liabilities,
business or prospects of the Corporation. Notwithstanding the disclosure to
Purchaser of any such material adverse change, the Corporation and the
Shareholders shall not be relieved of any liability for, nor shall the
providing of such information by the Corporation to Purchaser be deemed a
waiver by Purchaser of the breach of any representation or warranty of the
Corporation and the Shareholders contained in this Agreement.
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Section 5.05. Approvals of Third Parties. The Corporation and the
Shareholders shall use their best efforts to secure, as soon as practicable
after the date hereof, all necessary approvals and consents of third parties to
the consummation of the transactions contemplated hereby.
Section 5.06. Employee Matters. The Corporation shall not, without
the prior written approval of Purchaser, except as required by law:
(a) increase the Cash Compensation of any employee of the
Corporation;
(b) adopt, amend or terminate any Compensation Plan, Employment
Agreement, Employee Policies and Procedures or Employee Benefit Plan;
(c) institute, settle or dismiss any employment litigation;
(d) enter into, modify, amend or terminate any agreement with any
union, labor organization or collective bargaining unit;
(e) take or fail to take any action with respect to any past or
present employee of the Corporation that could adversely affect the business of
the Corporation;
(f) take any action that would deplete the assets of any Employee
Benefit Plan, other than payment of benefits in the ordinary course to
participants and beneficiaries;
(g) fail to pay any premium or contribution due with respect to
any Employee Benefit Plan;
(h) fail to file any return or report with respect to any Employee
Benefit Plan; or
(i) take or fail to take any action that could adversely affect
any Employee Benefit Plan.
Section 5.07. Contracts. Except with Purchaser's prior written
consent, the Corporation shall not waive any right or cancel any contract, debt
or claim or assume or enter into any contract, lease, license, obligation,
indebtedness, commitment, or purchase or sale, except in the ordinary course of
business.
Section 5.08. Changes in Inventory. The Corporation shall not alter
the physical contents or character of its raw materials, work-in-process or
finished goods inventory or the mixture of products in its finished goods
inventory so as to affect the nature of its business or result in a change in
the total dollar valuation thereof.
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Section 5.09. Capital Assets; Payments of Liabilities. The
Corporation shall not, without the prior written approval of Purchaser, (i)
acquire or dispose of any capital asset, or (ii) discharge or satisfy any lien
or encumbrance or pay or perform any obligation or liability other than (a)
liabilities and obligations reflected in the Financial Statements, or (b)
current liabilities and obligations incurred in the ordinary course of business
and, in the case of either (a) or (b) above, only as required by the express
terms of the agreement or other instrument pursuant to which the liability or
obligation was incurred.
Section 5.10. Mortgages, Liens and Guaranties. The Corporation shall
not, without the prior written approval of Purchaser, enter into or assume any
mortgage, pledge, conditional sale or other title retention agreement, permit
any security interest, lien, encumbrance or claim of any kind to attach to any
of its assets, whether now owned or hereafter acquired, or guarantee or
otherwise become contingently liable for any obligation of another, except
obligations arising by reason of endorsement for collection and other similar
transactions in the ordinary course of business, or make any capital
contribution or investment in any corporation, business or other person.
Section 5.11. No Negotiation with Others. The Corporation and the
Shareholders shall not solicit or participate in negotiations with (and the
Corporation and the Shareholders shall use their best efforts to prevent any
affiliate, shareholder, director, officer, employee or other representative or
agent of the Corporation from negotiating with, soliciting or participating in
negotiations with) any third party with respect to the sale of the business of
the Corporation or any transaction inconsistent with those contemplated hereby.
Section 5.12.
(a) Income Tax Refunds. The Shareholders hereby acknowledge that
they have no claim to or interest in any income tax refunds which the
Corporation may receive after the Closing Date relating to tax periods prior to
the Closing Date.
(b) Cooperation. The Shareholders shall provide such assistance
to Purchaser as Purchaser may reasonably request in connection with the
preparation of any tax return required to be filed in respect of the
Corporation, any audit or other examination by any taxing authority, any
judicial or administrative proceeding relating to liability for taxes, or any
claim for refund in respect of such taxes, and the Shareholders will retain,
and upon request provide, any records or information which may be relevant to
such return, audit, examination, proceeding or claim. Such assistance shall
include (i) making employees or counsel available at and for reasonable times
to provide additional information and explanation of any material to be
provided hereunder, and (ii) furnishing access to, and permitting the copying
of any records, returns, schedules, documents, work papers or other relevant
materials which might reasonably be expected to be of use in connection with
such return, audit, examination, proceeding or claim.
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ARTICLE VI
Purchaser's Covenants
Section 6.01. Consummation of Agreement. Purchaser shall use its best
efforts to cause the consummation of the transactions contemplated hereby in
accordance with their terms and conditions.
Section 6.02. Registration. After the Closing, Purchaser agrees to
use its best efforts to insure that the Closing Shares, or any portion thereof,
is registered pursuant to the provisions of Section 1.03 above.
ARTICLE VII
Purchaser's Conditions Precedent
Except as may be waived in writing by Purchaser, the obligations of
Purchaser hereunder are subject to the fulfillment at or prior to the Closing
Date of each of the following conditions:
Section 7.01. Representations and Warranties. The representations and
warranties of the Corporation and the Shareholders contained herein shall have
been true and correct in all respects when initially made and shall be true and
correct in all material respects as of the Closing Date; and Purchaser shall
have received a certificate from each of the Corporation's President and the
Shareholders, dated as of the Closing Date, to the foregoing effect.
Section 7.02. Covenants and Conditions. The Corporation and the
Shareholders shall have performed and complied in all material respects with
all covenants and conditions required by this Agreement to be performed and
complied with by the Corporation and the Shareholders prior to the Closing
Date; and Purchaser shall have received a certificate from each of the
Corporation's President and the Shareholders, dated as of the Closing, Date, to
the foregoing effect.
Section 7.03. Proceedings. No action, precaution or order by any
court or governmental body or agency shall have been threatened, orally or in
writing, asserted, instituted or entered to restrain or prohibit the carrying
out of the transactions contemplated hereby.
Section 7.04. No Material Adverse Change. No material adverse change
in the condition (financial or otherwise), operations, assets, liabilities,
business or prospects of the Corporation shall have occurred since the date of
the most recent balance sheet of each included in the Financial Statements,
whether or not such change shall have been caused by the deliberate act or
omission of the Corporation or any Shareholder.
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Section 7.05. Resignations of Directors and Officers. Purchaser shall
have received the resignations of the directors and officers of the Corporation
to the extent requested by Purchaser.
Section 7.06. Closing Deliveries. Purchaser shall have received all
documents referred to in Section 2.01 hereof, duly executed in form
satisfactory to Purchaser and its counsel.
Section 7.07. Tax Affidavit. Purchaser shall have received a
non-foreign affidavit, as such affidavit is referred to in Section 1445(b)(2)
of the Code, of each Shareholder, signed under penalties of perjury and dated
as of the date of the Closing Date, to the effect that such Shareholder is not
a foreign person (as such term is defined in Section 1445(f)(3) of the Code)
and providing such Shareholder's United States taxpayer identification number.
ARTICLE VIII
The Conditions Precedent of the Corporation and the Shareholders
Except as may be waived in writing by the Corporation and the
Shareholders, the obligations of the Corporation and the Shareholders hereunder
are subject to fulfillment at or prior to the Closing Date of each of the
following conditions:
Section 8.01. Representations and Warranties. The representations and
warranties of Purchaser contained herein shall have been true and correct in
all respects when initially made and shall be true and correct in all material
respects as of the Closing Date; and Purchaser shall have delivered to the
Shareholders a certificate of Purchaser's President or Vice President, dated as
of the Closing Date, to the foregoing effect.
Section 8.02. Covenants and Conditions. Purchaser shall have
performed and complied in all material respects with all covenants and
conditions required by this Agreement to be performed and complied with by it
prior to the Closing Date; and Purchaser shall have delivered to the
Shareholders a certificate of Purchaser's President or Vice President, dated as
of the Closing Date, to the foregoing effect.
Section 8.03. Proceedings. No action, proceeding or order by any
court or governmental body or agency shall have been threatened in writing,
asserted, instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
Section 8.04. Closing Deliveries. The Corporation or the
Shareholders, as the case may be, shall have received all documents referred to
in Section 2.02.
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ARTICLE IX
Post Closing Matters
Section 9.01. Further Instruments of Transfer. Following the Closing,
at the request of Purchaser, the Shareholders shall deliver any further
instruments of transfer and take all reasonable action as may be necessary or
appropriate to (i) vest in Purchaser good and marketable title to the Stock,
and (ii) carry out more effectively the provisions of this Agreement and to
establish and protect the rights created in favor of the parties hereunder or
thereunder.
ARTICLE X
Remedies
Section 10.01. Indemnification by the Shareholders. Subject to the
terms and conditions of this Article, the Shareholders jointly and severally
agree to indemnify, defend and hold Purchaser and its directors, officers,
agents, attorneys and affiliates harmless from and against all losses, claims,
obligations, demands, assessments, penalties, liabilities, costs, damages,
attorneys' fees and expenses (collectively "Damages"), asserted against or
incurred by any of such indemnitees by reason of or resulting from
(a) a breach of any representation, warranty or covenant of the
Corporation or the Shareholders contained herein, in any exhibit, schedule,
certificate or financial statement delivered hereunder, or in any agreement
executed in connection with the transactions contemplated hereby; or
(b) any undisclosed liability, debt or expense, whether known or
unknown by Shareholders, contingent or otherwise, of the Corporation or any
predecessor entity, for which Purchaser is or may become liable.
Section 10.02. Indemnification by Purchaser. Subject to the terms and
conditions of this Article, Purchaser hereby agrees to indemnify, defend and
hold the Corporation and the Shareholders and its or their respective
directors, officers, agents, attorneys and affiliates harmless from and against
all Damages asserted against or incurred by any of such indemnitees by reason
of or resulting, from a breach of any representation, warranty or covenant of
Purchaser contained herein or in any exhibit, schedule or certificate delivered
hereunder, or in any agreement executed in connection with the transactions
contemplated hereby.
Section 10.03. Conditions of Indemnification. The respective
obligations and liabilities of the Shareholders and Purchaser (the
"indemnitor") to the other (the "indemnitee") under Sections 10.01 and 10.02
with respect to claims resulting from the assertion of liability by third
parties, shall be subject to the following terms and conditions:
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(a) In the event that a legal proceeding or action is commenced
against an indemnitee with respect to any indemnified matter, that indemnitee
promptly will provide written notice thereof to the indemnitor (but in no event
later than twenty (20) days after receipt of notice), together with a copy of
any claim, process or other legal pleading. The indemnitor will undertake the
defense thereof, as its expense, by counsel of its own choosing and reasonably
acceptable to the indemnitee; provided that the indemnitee may participate in
all aspects of the defense with, or without, counsel of its own choice. In the
event that the indemnitee elects to retain additional counsel of its own
choice, the fees and expenses of said counsel shall be the exclusive
responsibility of the indemnitee unless (i) the indemnitor has agreed to pay
such fees and expenses, (ii) the indemnitor has failed to undertake the defense
of such action. If the nature of any action presents a conflict between the
interests of the indemnitor and the indemnitee, or the indemnitee has been
advised by counsel that there may be one or more legal defenses available to it
that are different from or additional to those available to the indemnitor (in
which case, if the indemnitee informs the indemnitor in writing that it elects
to employ separate counsel at the expense of the indemnitor, the indemnitor
shall have no further right to participate in or undertake the defense of such
action on behalf of the indemnitor except with respect to payment of full
indemnification for any Damages).
(b) Except for failure by the indemnitee to provide notice as
provided for above in subsection (a), in the event that the indemnitor, on or
before the thirtieth day after receipt of notice of any such action, or, if
applicable and earlier, on or before the tenth day preceding the day on which
an answer, appearance or other pleading must be served in order to prevent
judgment by default in favor of the person asserting such claim or other
prejudice to the indemnitee, fails to undertake the defense of such action, the
indemnitee will have the right to retain counsel of its own choosing and
undertake the defense, compromise or settlement of such claim for the account
and risk of the indemnitor without waiving the indemnitee's right to full
indemnification from the indemnitor and at the indemnitor's expense, subject to
the right of the indemnitor to assume the defense of such claims at any time
prior to settlement, compromise or final determination thereof with counsel
reasonably acceptable to the indemnitee.
(c) Notwithstanding the foregoing, the indemnitor shall not settle
any claim asserted against the indemnitee without the prior consent of the
indemnitee unless such settlement involves only the payment of money and the
claimant provides the indemnitee with a release from all liability in respect
of such claim. If the settlement of any claims involves more than the payment
of money, the indemnitor shall not settle the claim without the prior written
consent of the indemnitee, which consent shall not be unreasonably withheld.
In the event the indemnitor has not undertaken the defense, as described above,
with respect to any claim resulting from the assertion of liability by third
parties, the indemnitor may settle any claim without prior notice to and
consent of the indemnifying party, and indemnitor agrees to promptly, and in
any event within thirty days after receipt of written demand, reimburse
indemnitee for all Damages, including without limitation all amounts paid or
incurred in connection with such settlement, together with attorneys' fees,
costs and expenses and other costs incurred in connection with defense of the
claim.
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(d) The indemnitee and indemnitor will each cooperate with all
reasonable requests of the other.
Section 10.04. Remedies Not Exclusive. The remedies provided in this
Agreement shall not be exclusive of any other rights or remedies available to
one party against the other, either at law or in equity.
Section 10.05. Effect of Indemnification. Notwithstanding any term or
provision of this Agreement to the contrary, any indemnity payments owed by one
party to another party to this Agreement shall be reduced by (a) any tax
benefits to the party claiming indemnity hereunder and increased by any tax
detriments to the party claiming indemnity hereunder, and/or (b) any insurance
proceeds received by the party claiming indemnity hereunder.
ARTICLE XI
Termination
Section 11.01. Termination. This Agreement may be terminated:
(a) At any time prior to the Closing Date by mutual agreement of
all parties.
(b) At any time prior to the Closing Date by Purchaser if any
representation or warranty of the Corporation or the Shareholders contained in
this Agreement or in any certificate or other document executed and delivered
by the Corporation or any Shareholder pursuant to this Agreement is or becomes
untrue or breached in any material respect, or if the Corporation or the
Shareholders fail to comply in any material respect with any covenant contained
herein.
(c) At any time prior to the Closing Date unanimously by the
Shareholders if any representation or warranty of Purchaser contained in this
Agreement or in any certificate or other document executed and delivered by
Purchaser pursuant to this Agreement is or becomes untrue or breached in any
material respect or if Purchaser fails to comply in any material respect with
any covenant contained herein.
(d) After the Closing Date by Purchaser if the conditions stated
in Article VII have not been satisfied by the Closing Date.
(e) After the Closing Date unanimously by the Shareholders if the
conditions stated in Article VIII and have not been satisfied by the Closing
Date.
In the event this Agreement is terminated pursuant to subparagraph
(b), (c), (d) or (e) above, Purchaser, the Corporation and the Shareholders
shall each be entitled to pursue, exercise and enforce
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any and all remedies, rights, powers and privileges available at law or in
equity. In the event of a termination of this Agreement under the provisions
of this Article, a party not then in material breach of this Agreement shall
stand fully released and discharged of any and all obligations under this
Agreement.
ARTICLE XII
Miscellaneous
Section 12.01. Costs, Expenses and Legal Fees. Whether or not the
transactions contemplated hereby are consummated, each party hereto shall bear
its own costs and expenses (including attorneys' fees and expenses), except
that each party hereto that is shown to have breached this Agreement or any
other agreement contemplated hereby agrees to pay the costs and expenses
(including reasonable attorneys' fees and expenses) incurred by any other party
in successfully (i) enforcing any of the terms of this Agreement against such
breaching party, or (ii) proving that another party breached any of the terms
of this Agreement.
Section 12.02. Waiver. No waiver by any party of any default or
breach by another party of any representation, warranty, covenant or condition
contained in this Agreement, or any exhibit or any document, instrument or
certificate contemplated hereby shall be deemed to be a waiver of any
subsequent default or breach by such party of the same or any other
representation, warranty, covenant or condition. No act, delay, omission or
course of dealing on the part of any party in exercising any right, power or
remedy under this Agreement or at law or in equity shall operate as a waiver
thereof or otherwise prejudice any of such party's rights, powers and remedies.
All remedies, whether at law or in equity, shall be cumulative and the election
of any one or more shall not constitute a waiver of the right to pursue other
available remedies.
Section 12.03. Offset. Any and all amounts owing, or to be paid by
Purchaser to the Shareholders hereunder or otherwise, shall be subject to
offset and reduction pro tanto by any amounts that may be owing at any time by
the Shareholders to Purchaser in respect of any failure or breach of any
representation, warranty or covenant of the Corporation or the Shareholders
under or in connection with this Agreement, the Agreement Not to Compete or any
other agreement with Purchaser or any Shareholder, any transaction contemplated
hereby or thereby, as reasonably determined by Purchaser. If Purchaser
determines that such offset is appropriate, notice shall be given to
Shareholders of such determination on or prior to the due date of the payment
or amount to be reduced.
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Section 12.04. Knowledge. "Knowledge," "have no knowledge of," or "do
not know of" and similar phrases shall mean (i) in the case of a natural
person, the particular fact was known, or not known, as the context requires,
to such person after diligent investigation and inquiry by such person, and
(ii) in the case of an entity, the particular fact was known, or not known, as
the context requires, to any employee of such entity after diligent
investigation and inquiry by the principal executive officer of such entity.
Section 12.05. Specific Performance. Each of the parties hereto
acknowledges that a refusal by any other party to consummate the transactions
contemplated hereby will cause irreparable harm to each other party for which
there may be no adequate remedy at law and for which the ascertainment of
damages would be difficult. Therefore, each of the parties hereto shall be
entitled, in addition to, and without having to prove the inadequacy of, other
remedies at law, to specific performance of this Agreement, as well as
injunctive relief (without being required to post bond or other security).
Section 12.06. Amendment. This Agreement may be amended, modified or
supplemented only by an instrument in writing executed by all the parties
hereto.
Section 12.07. Assignment. Neither this Agreement nor any right
created hereby or in any agreement entered into in connection with the
transactions contemplated hereby shall be assignable by any party hereto,
except by Purchaser to a wholly-owned subsidiary of Purchaser or an affiliate
of Purchaser.
Section 12.08. Parties In Interest: No Third Party Beneficiaries.
Except as otherwise provided herein, the terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective heirs, legal
representatives, successors and assigns of the parties hereto. Neither this
Agreement nor any other agreement contemplated hereby shall be deemed to confer
upon any person not a party hereto or thereto any rights or remedies hereunder
or thereunder.
Section 12.09. Entire Agreement. This Agreement and the agreements
contemplated hereby constitute the entire agreement of the parties regarding
the subject matter hereof, and supersede all prior agreements and
understandings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof.
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Section 12.10. Severability. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under present or future laws
effective during the term hereof, such provision shall be fully severable and
this Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision never comprised a part hereof; and the remaining
provisions hereof shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its severance
herefrom. Furthermore, in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as part of this Agreement a
provision as similar in its terms to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid and enforceable.
Section 12.11. Survival of Representations, Warranties and Covenants.
The representations, warranties and covenants contained herein shall survive
the Closing and all statements contained in any certificate, exhibit or other
instrument delivered by or on behalf of the Corporation the Shareholders or
Purchaser pursuant to this Agreement shall be deemed to have been
representations and warranties by the Corporation and the Shareholders or
Purchaser, as the case may be, and, notwithstanding any provision in this
Agreement to the contrary, shall survive the Closing for an indefinite period
of time.
Section 12.12. Governing Law. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
Section 12.13. Captions. The captions in this Agreement are for
convenience of reference only and shall not limit or otherwise affect any of
the terms or provisions hereof.
Section 12.14. Gender and Number. When the context requires, the
gender of all words used herein shall include the masculine, feminine and
neuter and the number of all words shall include the singular and plural.
Section 12.15. Reference to Agreement. Use of the words "herein,"
"hereof," "hereto" and the like in this Agreement shall be construed as
references to this Agreement as a whole and not to any particular Article,
Section or provision of this Agreement, unless otherwise noted.
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Section 12.16. Confidentiality, Publicity and Disclosures. Each party
shall keep this Agreement and its terms confidential, and shall make no press
release or public disclosure, either written or oral, regarding the
transactions contemplated by this Agreement without the prior knowledge and
consent of the other parties hereto; provided that the foregoing shall not
prohibit any disclosure (i) by press release, filing or otherwise that is
required by federal securities laws or the rules applicable to issuers whose
securities are traded on the National Association of Securities Dealers
Automatic Quotation System, and (ii) to attorneys, accountants, investment
bankers or other agents of the parties assisting the parties in conducting an
examination of the operations and assets of the Corporation.
Section 12.18. Notice. Any notice or communication hereunder or in
any agreement entered into in connection with the transactions contemplated
hereby must be in writing, and given by depositing the same in the United
States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested, or by delivering the
same in person or by facsimile transmission. Such notice shall be deemed
received on the date on which it is hand delivered or received by facsimile
transmission or on the third business day following the date on which it is so
mailed. For purposes of notice, the addresses of the parties shall be:
If to Purchaser: TCA CABLE TV, INC.
0000 X.X.X. Xxxx 000
Xxxxx, Xxxxx 00000
c/o Xxxx X. Xxxxxxx, President
(000) 000-0000
with a copy to: Xxxxxxx X. Xxxxx
P. O. Xxx 0000
Xxxxx, Xxxxx 00000
(000) 000-0000
If to the Shareholders: c/o Xxxxx Xxx
000 Xxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxxxx, Xxxxx 00000
with a copy to: Xxxxxxx Xxxxxx
Horlen & Xxxx
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxx Xxxxxxx, Xxxxx 00000
Any party may change its address for notice by written notice given to
the other parties in accordance with this Section.
STOCK PURCHASE AND SALE AGREEMENT
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37
Section 12.19. Service of Process. Service of any and all process
that may be served on any party hereto in any suit, action or proceeding,
arising out of this Agreement may be made in the manner and to the address set
forth in Section 12.18 and service thus made shall be taken and held to be
valid personal service upon such party by any party hereto on whose behalf such
service is made.
Section 12.20. Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original, and all of
which together shall constitute one and the same instrument.
EXECUTED as of the date first above written.
TCA Cable TV, Inc.,
a Texas corporation
By:
------------------------------
Xxxxxxx X. Xxxxxx,
Senior Vice President
Myriad Corporation,
a Texas corporation
By:
------------------------------
Xxxxx Xxx,
President
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38
SHAREHOLDERS:
------------------------------
Xxxxx Xxx
------------------------------
Xxxxx Xxxxxxxx
------------------------------
Xxxxxx Xxxxxxxx
------------------------------
Xxxx Xxxxxxxx
------------------------------
Xxxxxxx X. Xxxxx
------------------------------
Xxxxx X. Xxxxxx
------------------------------
Xxxxxx X. Xxxxx
STOCK PURCHASE AND SALE AGREEMENT
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39
EXHIBIT A
% ownership # of shares
- --------- - -- ------
Xxxxx Xxx 27.5 27,500
Xxxxx Xxxxxxxx 27.5 27,500
Xxxxxx Xxxxxxxx 15.0 15,000
Xxxx Xxxxxxxx 15.0 15,000
Xxxxxxx X. Xxxxx 5.0 5,000
Xxxxx X. Xxxxxx 5.0 5,000
Xxxxxx X. Xxxxx 5.0 5,000
==========================================================================================
Total 100.00% 100,000
STOCK PURCHASE AND SALE AGREEMENT
40
EXHIBIT 1.02(c)
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41
EXHIBIT 1.03
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42
EXHIBIT 2.01(b)
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43
EXHIBIT 2.01(j)
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44
EXHIBIT 2.01(k)
Opinions of Counsel to the Corporation and the Shareholders
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45
EXHIBIT 2(b)
Agreements Not to Compete dated as of September 1, 1997,
between the Company, Xxxxx Xxx and Xxxxx Xxxxxxxx
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46
EXHIBIT 2.01(l)
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47
EXHIBIT 2.02(h)
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48
SCHEDULE 3.12(d)
None
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49
SCHEDULE 3.02
Texas
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50
SCHEDULE 3.07
1. Real property lease between College Station Village Shopping Center, .C.
and Myriad Corporation dated May 2, 1997, effective September 1, 1997.
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51
SCHEDULE 3.10
not applicable
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52
SCHEDULE 3.11
not applicable
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53
SCHEDULE 3.12(a)
The Corporation owns no real property.
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54
SCHEDULE 3.12(b)
not applicable
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55
SCHEDULE 3.12(c)
1. Real property lease between College Xxxxxxx Xxxxxxx Xxxxxxxx Xxxxxx,
X.X. and Myriad Corporation dated effective September 1, 1997.
2. Equipment lease between Colonial Pacific Leasing and Digiphone
Corporation dated June 2, 1997.
3. Equipment lease between Colonial Pacific Leasing and Digiphone
Corporation dated March 27, 1997.
4. Equipment lease between Colonial Pacific Leasing and Digiphone
Corporation dated ______________.
STOCK PURCHASE AND SALE AGREEMENT
56
SCHEDULE 3.12(d)
None
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57
SCHEDULE 3.13(a)
1. Leased equipment identified in schedule 3.12 (c).
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58
SCHEDULE 3.13(b)
not applicable
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59
SCHEDULE 3.15
1. CGL insurance policy with CNA Insurance for period 10/05/96 to
10/05/97.
STOCK PURCHASE AND SALE AGREEMENT
60
SCHEDULE 3.16
1. Myriad claims trademark in name "Myriad" and has filed for
registration with Patent and Trademark office.
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61
SCHEDULE 3.17
not applicable
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62
SCHEDULE 3.18(c)
not applicable
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63
SCHEDULE 3.19
None
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64
SCHEDULE 3.21
1. Receipt of notice regarding alleged trademark infringement from IC
Group, Inc. regarding Myriad's use of the internet domain names
"X-X-XXX.xxx" and "XXXXXXX.xxx" and IC Group, Inc.'s trademark
"XXXXX.xxx."
2. Receipt of notice regarding alleged trademark infringement from the
Summerland Group, Inc. regarding Myriad's use of the internet domain
name "XXXXXXXXX.XXX" and the Summerland Group, Inc.'s trademark "The
Office."
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65
SCHEDULE 3.26
None
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66
SCHEDULE 3.28
1. Norwest Bank Texas, South Central
2. Compass Bank
STOCK PURCHASE AND SALE AGREEMENT
67
SCHEDULE 3.29
None
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68
SCHEDULE 3.31(a)
None
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69
SCHEDULE 3.31(b)
not applicable
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70
SCHEDULE 3.31(c)
1. Each employee has signed non-compete and confidentiality agreement
with corporation.
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71
SCHEDULE 3.31(d)
not applicable
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72
SCHEDULE 3.31(f)
not applicable
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73
SCHEDULE 3.33(a)
None
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74
SCHEDULE 3.33(g)
None
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75
SCHEDULE 3.33(k)
None
STOCK PURCHASE AND SALE AGREEMENT
