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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
AMONG
XXXXXX COMMUNICATIONS, INC.
AND
XXXXXX ACQUISITION CORP.
AND
MMD, INC.
AND
THE STOCKHOLDERS OF MMD, INC.
DATED AS OF JANUARY 6, 1997
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "Agreement") is entered into as
of this 6th day of January 1997, by and among Xxxxxx Communications, Inc., a
Delaware corporation ("Xxxxxx"), and Xxxxxx Acquisition Corp., a Delaware
corporation and wholly-owned subsidiary of Xxxxxx ("SAC"), and MMD, Inc., a New
Jersey corporation ("MMD"), and Xxxxxx Xxxxx, Xxxxxxxx Xxxxx, and Xxxxxxx
Xxxxxxxx, the sole stockholders of MMD (collectively, the "Stockholders").
Xxxxxx, SAC, MMD and the Stockholders are referred to collectively herein as
the "Parties" and individually as a "Party."
RECITALS:
WHEREAS, in consideration of the mutual agreements of the parties as
set forth herein, the boards of directors of Xxxxxx, SAC and MMD deem it in the
best interests of their respective stockholders that SAC be merged with and
into MMD upon the terms and subject to the conditions of this Agreement (the
"Merger").
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization under Sections 368(a)(1)(A) and
368(a)(2)(E) of the Internal Revenue Code of 1986, as amended (the "Code"),
pursuant to which each issued and outstanding share of MMD common stock shall
be converted into the right to receive shares of Xxxxxx common stock.
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows:
AGREEMENT:
1. Definitions.
"Accredited Investor" has the meaning set forth in Regulation D
promulgated under the Securities Act.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the meaning of
Code Section 1504, or any similar group defined under a similar provision of
state, local or foreign law.
"Basis" means any past or present fact, situation, circumstance,
status, condition, activity, practice, occurrence, event, incident, action, or
transaction that proximately, directly and foreseeably forms the basis for any
specified consequence.
"Closing" has the meaning set forth in Section 2(c) below.
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"Closing Date" has the meaning set forth in Section 2(c) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means any information concerning the
businesses and affairs of MMD or Xxxxxx, if any, that is not already generally
available to the public.
"DGCL" has the meaning set forth in Section 2(a) below.
"Determination" has the meaning set forth in Section 6(y) below.
"Disclosure Schedule" has the meaning set forth in Section 6 below.
"Effective Time" has the meaning set forth in Section 2(b) below.
"Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multiemployer Plan), or (d) Employee Welfare Benefit Plan or
material fringe benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
Section 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
Section 3(1).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Deposit" has the meaning set forth in Section 9(f)(ii) below.
"Fiduciary" has the meaning set forth in ERISA Section 3(21).
"Financial Statements" has the meaning set forth in Section 6(g)
below.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"IC Claim" has the meaning set forth in Section 9(a) below.
"Intellectual Property" means (a) all inventions (whether patentable
or unpatentable and whether or not reduced to practice), all improvements
thereto, and all patents, patent applications, and patent disclosures, together
with all reissuances, continuations, continuations-in-part, revisions,
extensions, and reexaminations thereof, (b) all trademarks, service marks,
trade dress, logos, trade names, and corporate names, together with all
translations, adaptations, derivations, and combinations thereof and including
all goodwill
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associated therewith, and all applications, registrations, and renewals in
connection therewith, (c) all copyrightable works, all copyrights, and all
applications, registrations, and renewals in connection therewith, (d) all mask
works and all applications, registrations, and renewals in connection
therewith, (e) all trade secrets and confidential business information
(including ideas, research and development, know-how, formulas, compositions,
manufacturing and production processes and techniques, technical data, designs,
drawings, specifications, customer and supplier lists, pricing and cost
information, and business and marketing plans and proposals), (f) all computer
software (including data and related documentation), (g) all other proprietary
rights, and (h) all copies and tangible embodiments thereof (in whatever form
or medium).
"IRS" means the Internal Revenue Service.
"IRS Audit" has the meaning set forth in Section 9(a) below.
"Knowledge" means the knowledge of each Stockholder after reasonable
investigation. For the purposes of this Agreement, the knowledge of one
Stockholder shall be attributed to the other Stockholders. The Stockholders
shall be deemed to have "Knowledge" of any matter which is clearly and
unambiguously disclosed in the books, records or files of MMD that were
created on or after the date of employment of Xxx. Xxxxxxxx by MMD. For the
purposes of the representations and warranties contained in Sections 6(f) and
6(j), the knowledge of MMD's independent accountants and tax advisors shall be
attributed to the Stockholders.
"Liability" means any liability (whether asserted or unasserted,
whether absolute or contingent, whether accrued or unaccrued, whether
liquidated or unliquidated, and whether due or to become due), including any
liability for Taxes.
"Merger" shall mean the merger of SAC with and into MMD in accordance
with the terms of this Agreement.
"MMD" has the meaning set forth in the first paragraph of the
Recitals.
"MMD Certificate of Merger" has the meaning set forth in Section 2(a)
below.
"MMD Common Shares" means the shares of the common stock, no par
value, of MMD.
"MMD Common Share Certificates" has the meaning set forth in Section
4(a) below.
"MMD Per Share Consideration " has the meaning set forth in Section
4(a) below.
"Multiemployer Plan" has the meaning set forth in ERISA Section 3(37).
"New Jersey GCL" has the meaning set forth in Section 2(a) below.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity
and frequency).
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"Party" or "Parties" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Prohibited Transaction" has the meaning set forth in ERISA Section
406 and Code Section 4975.
"Reportable Event" has the meaning set forth in ERISA Section 4043.
"Requisite Stockholders" means Stockholders holding a majority in
interest of the MMD Common Shares as set forth in Section 6(b) of the
Disclosure Schedule.
"SAC" has the meaning set forth in the preface above.
"SAC Certificate of Merger" has the meaning set forth in Section 2(a)
below.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, (b) liens for Taxes not yet due and payable or for Taxes
that the taxpayer is contesting in good faith through appropriate proceedings,
(c) purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business
and not incurred in connection with the borrowing of money.
"Share Consideration" has the meaning set forth in Section 4(b) below.
"Xxxxxx" has the meaning set forth in the preface above.
"Xxxxxx Common Shares" shall mean the shares of common stock, par
value $0.001, of Xxxxxx received by Stockholders in connection with the Merger.
"Stockholders" has the meaning set forth in the preface above.
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
"Surviving Corporation" has the meaning set forth in Section 2(a)
below.
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"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section
59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or
add-on minimum, estimated, or other tax of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Unaudited October Balance Sheet" has the meaning set forth in Section
6(h) below.
"Third Party Claim" has the meaning set forth in Section 9(d) below.
2. Merger; Effective Time; Closing; Deliveries at Closing
(a) Merger. Subject to the terms and conditions of this Agreement
and the General Corporation Law of the State of Delaware (the "DGCL") and the
General Corporation Law of the State New Jersey (the "New Jersey GCL"), at the
Effective Time (as defined in Section 2(b)), SAC and MMD shall consummate the
Merger in which (i) SAC shall be merged with and into MMD and the separate
corporate existence of SAC shall thereupon cease, (ii) MMD shall be the
successor or surviving corporation in the Merger and shall continue to be
governed by the laws of the State of New Jersey and (iii) the separate
corporate existence of MMD with all its rights, privileges, immunities, powers
and franchises shall continue unaffected by the Merger. The corporation
surviving the Merger is sometimes hereinafter referred to as the "Surviving
Corporation." The Merger shall have the effects set forth in the DGCL and the
New Jersey GCL.
(b) Effective Time. On the Closing Date, subject to the terms
and conditions of this Agreement, SAC and MMD shall (i) cause to be executed
(A) a Certificate of Merger in the form required by the DGCL (the "SAC
Certificate of Merger") and (B) a Certificate of Merger in the form required by
the New Jersey GCL (the "MMD Certificate of Merger"), and (ii) cause the SAC
Certificate of Merger to be filed with the Delaware Secretary of State as
provided in the DGCL and the MMD Certificate of Merger to be filed with the New
Jersey Secretary of State as provided in the New Jersey GCL. The Merger shall
become effective at (i) such time as the SAC Certificate of Merger has been
duly filed with the Delaware Secretary of State and the MMD Certificate of
Merger has been duly filed with the New Jersey Secretary of State or (ii) such
other time as is agreed upon by the Stockholders and Xxxxxx and specified in
the SAC Certificate of Merger and the MMD Certificate of Merger. Such time is
hereinafter referred to as the "Effective Time."
(c) The Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Shaw,
Pittman, Xxxxx & Xxxxxxxxxx, 0000 X Xxxxxx,
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X.X., Xxxxxxxxxx, X.X. 00000, commencing at 9:00 a.m. local time on the date
of this Agreement (the "Closing Date").
3. Certificate of Incorporation; By-laws; and Directors and
Officers of Surviving Corporation
(a) Certificate of Incorporation. The certificate of
incorporation of MMD, as in effect immediately prior to the Effective Time,
shall be the certificate of incorporation of the Surviving Corporation until
thereafter amended as provided therein and under the New Jersey GCL.
(b) By-Laws. The by-laws of MMD, as in effect immediately prior to
the Effective Time, shall be the by-laws of the Surviving Corporation.
(c) Directors and Officers. The directors and officers of SAC
immediately prior to the Effective Time shall be the directors and officers of
the Surviving Corporation from and after the Effective Time until their
successors have been duly elected, appointed or qualified or until their
earlier death, resignation or removal in accordance with the Articles of
Incorporation and by-laws of the Surviving Corporation.
4. Share Consideration; Conversion or Cancellation of Shares in
Merger; Purchase Price.
(a) Share Consideration; Conversion or Cancellation of Shares in
Merger. At the Effective Time, by virtue of the Merger and without any action
by the parties, (A) each outstanding share of common stock, no par value, of
MMD (the "MMD Common Shares") (i) shall be converted into the number of shares
of common stock, $.001 par value, of Xxxxxx (the "Xxxxxx Common Shares") set
forth in Section 4(b) (the "MMD Per Share Consideration"), (ii) shall cease to
be outstanding, and (iii) shall be canceled and retired and shall cease to
exist, and each Stockholder, as the holder of certificates (the "MMD Common
Share Certificates") representing such MMD Common Shares, shall cease to have
any rights with respect thereto, except the right to receive the MMD Per Share
Consideration therefor upon the surrender of such certificates in accordance
with this Section 4(a) and (B) each outstanding share of common stock, $0.001
par value, of SAC shall be converted into one share of common stock of the
Surviving Corporation, as such shares of common stock are constituted
immediately following the Effective Time.
At the Closing, upon surrender of the MMD Common Share
Certificates to Xxxxxx for cancellation, the Stockholders shall be entitled to
receive certificates representing the Share Consideration (as defined in
Section 4(b)), registered in the names requested by the Stockholders prior to
the Closing (subject to applicable pooling restrictions), and the MMD Common
Share Certificates so surrendered shall forthwith be canceled.
(b) The purchase price payable by Xxxxxx in connection with the
Merger shall be 1,354,500 Xxxxxx Common Shares (the "Share Consideration") and
shall be payable to the Stockholders pro-rata in proportion to their relative
percentage ownership interests in MMD
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immediately prior to the consummation of the Merger. The "Merger Share Price"
shall mean $26.13.
5. Representations and Warranties Concerning the Merger.
(a) Representations and Warranties of the Stockholders. Each of
the Stockholders represents and warrants to SAC and Xxxxxx that the statements
contained in this Section 5(a) are correct and complete as of the date hereof
with respect to himself or herself:
(i) Authorization of Transaction. Each of the
Stockholders has full power and authority to execute and deliver this Agreement
and to perform his or her obligations hereunder. This Agreement constitutes the
valid and legally binding obligation of each of the Stockholders, enforceable
in accordance with its terms and conditions. None of the Stockholders need give
any notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order to consummate the
transactions contemplated by this Agreement; provided, however, no
representation or warranty is being made with respect to the enforceability of
the covenant not to compete provision contained in Section 7(e) hereof.
(ii) Noncontravention. Neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will (A) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge, or other restriction
of any government, governmental agency, or court to which any Stockholder is
subject, or (B) result in a breach of, constitute a default under, result in
the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which any Stockholder is a party
or by which he or she is bound or to which any of his or her assets is subject.
(iii) Brokers' Fees. None of the Stockholders or MMD has
Liability or obligation to pay any fees or commissions to any broker, finder,
or agent with respect to the transactions contemplated by this Agreement other
than to the extent MMD may be alleged to have an obligation to Lazard Freres
pursuant to that letter agreement dated June 8, 1995 which was terminated by
MMD by letter dated January 11, 1996.
(iv). Investment. Each of the Stockholders (A) understands
that the Xxxxxx Common Shares acquired by such Stockholder pursuant to this
Agreement have not been registered under the Securities Act, or under any state
securities laws, and are being exchanged in reliance upon federal and state
exemptions for transactions not involving any public offering, (B) is acquiring
the Xxxxxx Common Shares solely for his or her own account for investment
purposes, and not with a view to the distribution thereof, (C) is a
sophisticated investor with knowledge and experience in business and financial
matters, (D) has received certain information concerning Xxxxxx and has had the
opportunity to obtain additional information as desired in order to evaluate
the merits and the risks inherent in holding Xxxxxx Common Shares, and (E) is
able to bear the economic risk and lack of liquidity inherent in holding Xxxxxx
Common Shares which have not been registered under the Securities Act.
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(v) MMD Common Shares. Each of the Stockholders holds of
record and owns beneficially the number of MMD Common Shares set forth next to
his or her name in Section 6(b) of the Disclosure Schedule, free and clear of
any restrictions on transfer (other than any restrictions under the Securities
Act and state securities laws), Taxes, Security Interests, options, warrants,
purchase rights, contracts, commitments, equities, claims, and demands. Except
for the agreements set forth on Section 5(a)(v) of the Disclosure Schedule
(which agreements shall be terminated prior to the execution of this
Agreement), none of the Stockholders is a party to any option, warrant,
purchase right, or other contract or commitment that could require one or more
Stockholders to sell, transfer, or otherwise dispose of any MMD Common Shares
(other than pursuant to this Agreement) or is a party to any voting trust,
proxy, or other agreement or understanding with respect to the voting of any
MMD Common Shares.
(vi) Continuity of Interest. None of the Stockholders has
any plan, intention or arrangement to sell, transfer or otherwise dispose of,
during the 12 month period following the Effective Time, the Xxxxxx Common
Shares to be received by them in the Merger which, in the aggregate, would
constitute a majority of the aggregate Share Consideration.
(b) Representations and Warranties of SAC and Xxxxxx. SAC and
Xxxxxx jointly and severally represent and warrant to the Stockholders and MMD
that the statements contained in this Section 5(b) are correct and complete as
of the date hereof:
(i) Organization of SAC and Xxxxxx. Each of SAC and
Xxxxxx is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Delaware.
(ii) Authorization of Transaction. Each of SAC and Xxxxxx
has full power and authority (including full corporate power and authority) to
execute and deliver this Agreement and to perform its respective obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of each of SAC and Xxxxxx, enforceable in accordance with its terms and
conditions. Neither SAC nor Xxxxxx need give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any government or
governmental agency in order to consummate the transactions contemplated by
this Agreement, except in connection with the federal securities laws and any
applicable "Blue Sky" or state securities laws.
(iii) Noncontravention. Neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will (A) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge, or other restriction
of any government, governmental agency, or court to which either SAC or Xxxxxx
is subject or any provision of its charter or bylaws or (B) result in a breach
of, constitute a default under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or other
arrangement to which either SAC or Xxxxxx is a party or by which it is bound or
to which any of its assets is subject.
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(iv) Brokers' Fees. Neither SAC nor Xxxxxx has any
Liability or obligation to pay any fees or commissions to any broker, finder,
or agent with respect to the transactions contemplated by this Agreement.
(v) New York Stock Exchange. Xxxxxx is in compliance in
all material respects with its New York Stock Exchange Listing Agreement, and
the Xxxxxx Common Shares to be issued to the Shareholders in the Merger have
been listed on the New York Stock Exchange, subject to official notice of
issuance.
(vi) SEC Filings. Xxxxxx is in compliance in all material
respects with its obligation under the Securities Exchange Act of 1934 to
publicly disclose material information in a timely fashion.
(vii) Xxxxxx Prospectus. On the date that Xxxxxx'x final
prospectus dated September 24, 1996 relating to the offering of Xxxxxx Common
Shares was filed with the Securities and Exchange Commission (the
"Commission"), such prospectus complied in all material respects with the
requirements of the Securities Act of 1933 and the General Rules and
Regulations of the Commission and did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
(viii) Absence of Changes. Since the date that Xxxxxx'x
final prospectus relating to the Xxxxxx Common Shares was filed with the
Commission, there has not been any material adverse change in the business,
assets, financial condition, results of operations or future prospects of
Xxxxxx.
(ix) Disclosure. The representations and warranties
contained in this Section 5(b) do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements and information contained in this Section 5(b) not misleading.
6. Representations and Warranties Concerning MMD. The
Stockholders and MMD represent and warrant to SAC and Xxxxxx that the
statements contained in this Section 6 are correct and complete as of the date
hereof, except as set forth in the disclosure schedule delivered by the
Stockholders and MMD to SAC and Xxxxxx on the date hereof (the "Disclosure
Schedule"). The Disclosure Schedule will be arranged in paragraphs
corresponding to the lettered and numbered paragraphs contained in this Section
6. Except for the representations and warranties contained in paragraph (b)
and (b-1) and the first sentence of paragraph (a) below, all representations
and warranties made by the Stockholders and MMD are made only to the extent of
the Knowledge of the Stockholders.
(a) Organization, Qualification, and Corporate Power. MMD is a
corporation duly organized, validly existing, and in good standing under the
laws of New Jersey. MMD is duly authorized to conduct business and is in good
standing under the laws of each jurisdiction where such qualification is
required. MMD has full corporate power and authority and all licenses,
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permits, and authorizations necessary to carry on the businesses in which it is
engaged and to own and use the properties owned and used by it. Section 6(a)
of the Disclosure Schedule lists the directors and officers of MMD. The
Stockholders have delivered to SAC and Xxxxxx correct and complete copies of
the certificate of incorporation and by-laws of MMD (as amended to date). The
minute books (containing the records of meetings of the stockholders, the board
of directors, and any committees of the board of directors), the stock
certificate books, and the stock record books of MMD are correct and complete.
MMD is not in default under or in violation of any provision of its certificate
of incorporation or by-laws.
(b) Capitalization. The entire authorized capital stock of MMD
consists of 2,500 MMD Common Shares, of which 966 MMD Common Shares are issued
and outstanding and no MMD Common Shares are held in treasury. All of the
issued and outstanding MMD Common Shares have been duly authorized, are validly
issued, fully paid, and nonassessable, and are held of record by the respective
Stockholders as set forth in Section 6(b) of the Disclosure Schedule. There are
no outstanding or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights, or other contracts or commitments
that could require MMD to issue, sell, or otherwise cause to become outstanding
any of its capital stock. There are no outstanding or authorized stock
appreciation, phantom stock, or similar rights with respect to MMD. There are
no voting trusts, proxies, or other agreements or understandings with respect
to the voting of the MMD Common Shares.
(b-1) Authorization of Transaction. MMD has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of MMD, enforceable in
accordance with its terms and conditions; provided, however, no representation
or warranty is being made with respect to the enforceability of the covenant
not to compete provision contained in Section 7(e) hereof. MMD need not give
any notice to, make any filing with, or obtain any authorization, consent or
approval of, any government or governmental agency in order to consummate the
transactions contemplated by this Agreement.
(c) Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
will (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which MMD is subject or any
provision of the charter or bylaws of MMD or (ii) result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other arrangement
to which MMD is a party or by which it is bound or to which any of its assets
is subject (or result in the imposition of any Security Interest upon any of
its assets). MMD is not required to give any notice to, make any filing with,
or obtain any authorization, consent, or approval of any government or
governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement.
(d) Title to Assets. MMD has good title to, or a valid leasehold
interest in, the properties and assets used by it or shown on the Unaudited
October Balance Sheet or acquired
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after the date thereof, free and clear of all Security Interests, except for
properties and assets disposed of in the Ordinary Course of Business since the
date of the Unaudited October Balance Sheet.
(e) Subsidiaries. MMD does not have any Subsidiaries, operating
or otherwise.
(f) Financial Statements. Attached hereto as Exhibit B are the
balance sheets and statements of income, changes in stockholders' equity, and
cash flow of MMD (collectively the "Financial Statements") as of and for the
fiscal years ended October 31, 1994 and October 31, 1995, and the balance sheet
and statement of income as of and for the fiscal year ended October 31, 1996
(the "Most Recent Fiscal Year End"). The Financial Statements as of and for the
fiscal years ended October 31, 1994 and October 31, 1995 have been audited, and
the Financial Statements as of and for the fiscal year ended October 31, 1996
are subject to year-end audit adjustments. The Financial Statements (including
the notes thereto) have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby, present fairly the
financial condition of MMD as of such dates and the results of operations of
MMD for such periods in accordance with GAAP, and are consistent with the books
and records of MMD (which books and records are correct and complete in all
material respects), except that the Financial Statements as of and for the
fiscal year ended October 31, 1996 do not include the required cash flow
statements, changes in stockholders' equity, or the footnotes in accordance
with GAAP.
(g) Events Subsequent to Most Recent Fiscal Year End. Since
October 31, 1996, there has not been any material adverse change in the
business, financial condition, operations, results of operations, or future
prospects of MMD. Without limiting the generality of the foregoing, since that
date:
(i) MMD has not sold, leased, transferred, or assigned
any of its assets, tangible or intangible, other than for a fair consideration
in the Ordinary Course of Business;
(ii) MMD has not entered into any agreement, contract,
lease, or license (or series of related agreements, contracts, leases, and
licenses) either involving more than $10,000 or outside the Ordinary Course of
Business;
(iii) no party (including MMD) has accelerated the
obligation to pay any money, terminated, modified, or canceled any agreement,
contract, lease, or license (or series of related agreements, contracts,
leases, and licenses) to which MMD is a party or by which it is bound outside
the Ordinary Course of Business;
(iv) MMD has not imposed any Security Interest upon any of
its assets, tangible or intangible;
(v) MMD has not made any capital expenditure (or series
of related capital expenditures) either involving more than $10,000 or outside
the Ordinary Course of Business;
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(vi) MMD has not made any capital investment in, any loan
to, or any acquisition of the securities or assets of, any other Person (or
series of related capital investments, loans, and acquisitions);
(vii) MMD has not issued any note, bond, or other debt
security or created, incurred, assumed, or guaranteed any indebtedness for
borrowed money or capitalized lease obligation;
(viii) MMD has not delayed or postponed the payment of
accounts payable and other Liabilities outside the Ordinary Course of Business;
(ix) MMD has not canceled, compromised, waived, or
released any right or claim (or series of related rights and claims) outside
the Ordinary Course of Business;
(x) MMD has not granted any license or sublicense of any
rights under or with respect to any Intellectual Property;
(xi) there has been no change made or authorized in the
charter or by-laws of MMD;
(xii) MMD has not issued, sold, or otherwise disposed of
any of its capital stock, or granted any options, warrants, or other rights to
purchase or obtain (including upon conversion, exchange, or exercise) any of
its capital stock;
(xiii) MMD has not declared, set aside, or paid any dividend
or made any distribution with respect to its capital stock (whether in cash or
in kind) or redeemed, purchased, or otherwise acquired any of its capital
stock;
(xiv) MMD has not experienced any material damage,
destruction, or loss (whether or not covered by insurance) to its property;
(xv) MMD has not made any loan to, or entered into any
other transaction with, any of its directors, officers, and employees outside
the Ordinary Course of Business;
(xvi) MMD has not entered into any employment contract or
collective bargaining agreement, written or oral, or modified the terms of any
existing such contract or agreement;
(xvii) MMD has not granted any increase in the base
compensation of any of its directors, officers, and employees outside the
Ordinary Course of Business;
(xviii) MMD has not adopted, amended, modified, or terminated
any bonus, profit-sharing, incentive, severance, or other plan, contract, or
commitment for the benefit of any of its directors, officers, and employees
(or taken any such action with respect to any other Employee Benefit Plan);
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(xix) MMD has not received notice from the IRS or any
applicable state authority that would indicate that the services being provided
by its sales representatives or field managers are being provided in the
capacity as employee and not that of an independent contractor;
(xx) MMD has not made any other change in employment terms
for any of its directors, officers, and employees outside the Ordinary Course
of Business or in the terms of its agreements with any independent contractors;
(xxi) MMD has not made or pledged to make any charitable or
other capital contribution outside the Ordinary Course of Business;
(xxii) there has not been any other material occurrence,
event, incident, action, failure to act, or transaction outside the Ordinary
Course of Business involving MMD; and
(xxiii) MMD is not under any legal obligation, whether
written or oral, to do any of the foregoing.
(h) Undisclosed Liabilities. MMD does not have any Liability,
except for (i) Liabilities set forth on the face of or reserved against in the
balance sheet of MMD, as of October 31, 1996, as set forth on Schedule 6(h)
(the "Unaudited October Balance Sheet") and (ii) Liabilities which have arisen
after October 31, 1996 in the Ordinary Course of Business (none of which
results from, arises out of, relates to, is in the nature of, or was caused by
any breach of contract, breach of warranty, tort, infringement, or violation of
law).
(i) Legal Compliance. MMD has complied with all applicable laws
(including rules, regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof), and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice has been
filed or commenced against it alleging any failure so to comply.
(j) Tax Matters.
(i) MMD has filed all Tax Returns that it was required to
file, including, without limitation, any Tax Returns required to be filed with
any state. The Tax Returns reflect accurately all liabilities for Taxes for the
periods covered thereby. All Taxes owed by MMD with respect to the periods
covered by the Tax Returns have been paid. MMD currently is not the
beneficiary of any extension of time within which to file any Tax Return. Since
October 31, 1994, there is no pending claim being made by an authority in a
jurisdiction where MMD does not file Tax Returns alleging that it is or may be
subject to taxation by that jurisdiction. There are no Security Interests on
any of the assets of MMD that arose in connection with any failure (or alleged
failure) to pay any Tax.
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(ii) MMD has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, stockholder, or other third party.
(iii) There is no dispute or claim concerning any Tax
Liability of MMD claimed or raised by any authority in writing. Section 6(j)
of the Disclosure Schedule lists all federal, state, local, and foreign income
Tax Returns filed with respect to MMD for taxable periods ended on or after
October 31, 1990, indicates those Tax Returns that have been audited, and
indicates those Tax Returns that currently are the subject of audit. The
Stockholders have delivered to SAC and Xxxxxx correct and complete copies of
all federal income Tax Returns, examination reports, and statements of
deficiencies assessed against or agreed to by MMD since October 31, 1990.
(iv) MMD has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.
(v) MMD has not filed a consent under Code Section 341(f)
concerning collapsible corporations. MMD has not made any payments, is
obligated to make any payments, or is a party to any agreement that under
certain circumstances could obligate it to make any payments that will not be
deductible under Code Section 280G. MMD has not been a United States real
property holding corporation within the meaning of Code Section 897(c)(2)
during the applicable period specified in Code Section 897(c)(1)(A)(ii). MMD
has disclosed on its federal income Tax Returns all positions taken therein
that could give rise to a substantial understatement of federal income Tax
within the meaning of Code Section 6662. MMD is not a party to any Tax
allocation or sharing agreement. MMD (A) has not been a member of an Affiliated
Group filing a consolidated federal income Tax Return (other than a group the
common parent of which was MMD) or (B) has any Liability for the Taxes of any
Person (other than MMD) under Treas. Reg. Section 1.1502-6 (or any similar
provision of state, local, or foreign law), as a transferee or successor, by
contract, or otherwise.
(vi) MMD has been a subchapter S corporation for federal
income taxes since November 1, 1993 and has made all requisite filings under
the Code.
(k) Real Property.
(i) MMD does not own any real property:
(ii) Section 6(k)(ii) of the Disclosure Schedule lists all
real property leased or subleased to MMD. The Stockholders have delivered to
SAC and Xxxxxx correct and complete copies of the leases and subleases listed
in Section 6(k)(ii) of the Disclosure Schedule (as amended to date). With
respect to each lease and sublease listed in Section 6(k)(ii) of the Disclosure
Schedule:
(A) the lease or sublease is legal, valid, binding,
enforceable on MMD, and in full force and effect;
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(B) no consent is required with respect to any lease or
sublease as a result of this Agreement, and the actions contemplated
by this Agreement will not result in the change of any terms of any
lease or sublease or otherwise affect the ongoing validity of any
lease or sublease;
(C) MMD is not, and has not received notice that any
other party to the lease or sublease is, in breach or default, and MMD
does not know of, and has not received notice that any other party to
the lease or sublease knows of, an event that has occurred which, with
notice or lapse of time, would constitute a breach or default or
permit termination, modification, or acceleration thereunder;
(D) MMD has not, and has not received notice that any
other party to the lease or sublease has, repudiated any provision
thereof;
(E) there are no disputes, oral agreements, or
forbearance programs in effect as to the lease or sublease;
(F) with respect to each sublease, the representations
and warranties set forth in subsections (A) through (E) above are true
and correct with respect to the underlying lease;
(G) MMD has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the
leasehold or subleasehold;
(H) all facilities leased or subleased thereunder have
received all approvals of governmental authorities (including licenses
and permits) required by MMD in connection with the operation thereof
and have been operated and maintained by MMD in accordance with
applicable laws, rules, and regulations; and
(I) all facilities leased or subleased thereunder are
supplied with utilities and other services necessary for the operation
of said facilities.
(1) Intellectual Property.
(i) MMD owns or has the right to use pursuant to license,
sublicense, agreement, or permission all Intellectual Property used in the
operation of the businesses of MMD as presently conducted, other than
Intellectual Property that, individually or in the aggregate, is not material
to the operation of the businesses of MMD as presently conducted. Each item of
Intellectual Property owned or used by MMD immediately prior to the Closing
hereunder will be owned or available for use by MMD on identical terms and
conditions immediately subsequent to the Closing hereunder. MMD has taken all
necessary action to maintain and protect each item of Intellectual Property
that it owns or uses, other than Intellectual Property that, individually or in
the aggregate, is not material to the operation of the businesses of MMD as
presently conducted.
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(ii) MMD has not received notice of any charge, complaint,
claim, demand, or notice alleging any interference, infringement,
misappropriation, or violation (including any claim that MMD must license or
refrain from using any Intellectual Property rights of any third party) of any
Intellectual Property rights of third parties. MMD has not received notice nor
issued notice to the effect that any third party has interfered with, infringed
upon, misappropriated, or otherwise come into conflict with any Intellectual
Property rights of MMD.
(iii) MMD has no patent or registration which has been
issued to MMD with respect to any of its Intellectual Property.
(iv) MMD does not use any Intellectual Property that any
third party owns pursuant to license, sublicense, agreement, or permission. The
Stockholders have delivered to SAC and Xxxxxx correct and complete copies of
all such licenses, sublicenses, agreements, and permissions (as amended to
date).
(m) Tangible Assets. MMD owns or leases all buildings, machinery,
equipment, and other tangible assets used in the conduct of its business as
presently conducted. The tangible assets, taken as a whole, are free from
defects (patent and latent), have been maintained in accordance with normal
industry practice, are in good operating condition and repair (subject to
normal wear and tear), and are suitable for the purposes for which they
presently are used.
(n) Bonuses and Profit-Sharing Distributions.Bonuses and
Profit-Sharing Distributions. The total amount paid or accrued by MMD for
fiscal year 1996 management bonuses as of October 31, 1996 is $252,681. All
bonuses and profit-sharing distributions earned by management, directors and
employees of MMD through October 31, 1996 have been accrued by MMD. All bonuses
approved by the board of directors of MMD at their meeting on December 31, 1996
are set forth on the Disclosure Schedule, are payable as compensation for
services rendered in 1996 and will be accounted for as expenses during the
period from November 1, 1996 to December 31, 1996. All bonus plans under which
Xxx. Xxxxxxxx is a beneficiary have been terminated effective November 1, 1996.
All bonus plans under which other officers, directors or employees of MMD are
beneficiaries are listed in Section 6(n) of the Disclosure Schedule.
(o) Line of Credit. MMD has not incurred any indebtedness for
borrowed money under its line of credit since October 31, 1996.
(p) Investment in Nippon Pharma Promotion K.K. MMD has no
agreement or commitment to make any further capital contribution, loan or
distribution to Nippon Pharma Promotion K.K. and the amount of the investment
in Nippon Pharma Promotion K.K. set forth on the Unaudited October Balance
Sheet has been paid in full by MMD and MMD has no further payment obligations
thereunder.
(q) Contracts. Section 6(q) of the Disclosure Schedule lists the
following contracts and other agreements to which MMD is a party:
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(i) any agreement (or group of related agreements) for
the lease of personal property to or from any Person providing for lease
payments in excess of $10,000 per annum;
(ii) all agreements with pharmaceutical companies or with
any other company which requires MMD to perform supplemental sales or marketing
services;
(iii) any agreement concerning a partnership or joint
venture;
(iv) any agreement (or group of related agreements) under
which it has created, incurred, assumed, or guaranteed any indebtedness for
borrowed money, or any capitalized lease obligation or under which it has
imposed a Security Interest on any of its assets, tangible or intangible;
(v) any agreement concerning confidentiality or
noncompetition;
(vi) any agreement with any of the Stockholders and their
Affiliates (other than MMD);
(vii) any profit sharing, stock option, stock purchase,
stock appreciation, deferred compensation, severance, or other material plan or
arrangement for the benefit of its current or former directors, officers, and
employees;
(viii) any collective bargaining agreement;
(ix) any agreement for the employment of any individual on
a full-time, part-time, consulting, or other basis providing annual
compensation in excess of $50,000 or providing severance benefits;
(x) any agreement under which it has advanced or loaned
any amount to any of its directors, officers, and employees outside the
Ordinary Course of Business; or
(xi) any agreement under which the consequences of a
default or termination could have a material adverse effect; or
(xii) the agreements with MMD's top five independent
contractors for the fiscal year ended October 31, 1996 based on gross fees paid
by MMD for the fiscal year ended October 31, 1996.
The Stockholders have delivered to SAC and Xxxxxx a correct and complete copy
of each written agreement listed in Section 6(q) of the Disclosure Schedule (as
amended to date) and a written summary setting forth the terms and conditions
of each oral agreement referred to in Section 6(q) of the Disclosure Schedule.
With respect to each such agreement: (A) the agreement is legal, valid,
binding, enforceable on MMD, and in full force and effect; (B) the agreement
will continue to be legal, valid, binding, enforceable on the Surviving
Corporation, and in full force and effect on identical terms following the
consummation of the transactions contemplated
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hereby; (C) MMD is not, and has not received notice that any other party to
such agreement is in breach or default, and MMD does not know of, and has not
received notice that any other party to the agreement knows of, an event has
occurred, which with notice or lapse of time, would constitute a breach or
default, or permit termination, modification, or acceleration, under the
agreement; and (D) MMD has not received notice that any other party has
repudiated any provision of the agreement.
(r) Notes and Accounts Receivable. All notes and accounts
receivable of MMD are reflected properly on its books and records, are valid
receivables subject to no setoffs or counterclaims, and are current and
collectible in accordance with their terms at their recorded amounts, subject
only to the reserve for bad debts set forth on the face of the Unaudited
October Balance Sheet (rather than in any notes thereto) as adjusted for the
passage of time through the Closing Date in accordance with the past custom and
practice of MMD.
(s) Powers of Attorney. There are no outstanding powers of
attorney executed on behalf of MMD.
(t) Insurance. Section 6(t) of the Disclosure Schedule sets forth
certain information with respect to each insurance policy to which MMD is a
party, a named insured, or otherwise the beneficiary of coverage. With respect
to each such insurance policy: (A) the policy is legal, valid, binding,
enforceable, and in full force and effect against MMD; (B) MMD is not in
breach or default in connection with any policy (including with respect to the
payment of premiums or the giving of notices), and no event has occurred which,
with notice or the lapse of time, would constitute such a breach or default, or
permit termination, modification, or acceleration, under the policy; and (C)
MMD has not, and has not received notice that any party has, repudiated any
provision thereof.
(u) Litigation. Section 6(u) of the Disclosure Schedule sets
forth each instance in which MMD (i) is subject to any outstanding injunction,
judgment, order, decree, ruling, or charge, (ii) is a party or is threatened to
be made a party to any action, suit, proceeding, hearing, or investigation of,
in, or before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator, or
(iii) has been threatened with any claim arising out of any injury or alleged
injury from products sold pursuant to MMD's services or marketing efforts.
None of the actions, suits, proceedings, hearings, claims and investigations
set forth in Section 6(u) of the Disclosure Schedule could reasonably be
expected to have a material adverse effect.
(v) Product Liability. All purchases and sales of pharmaceutical
products that occur as a result of MMD's sales representatives' marketing
efforts are made directly or indirectly between the pharmaceutical company and
the ultimate purchaser. The sales representatives of MMD do not sell any
pharmaceutical products to the ultimate purchaser of such products.
(w) Employees. MMD has not received notice that any executive,
key employee, or group of employees of MMD will terminate their employment with
MMD prior to the date hereof. MMD is not a party to or bound by any collective
bargaining agreement, nor has it
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experienced any strikes, grievances, claims of unfair labor practices, or other
collective bargaining disputes. MMD has not committed any unfair labor
practice. No organizational effort presently being made or threatened by or on
behalf of any labor union with respect to employees of MMD.
(x) Independent Contractors. All filings and submissions made by
MMD with respect to its sales representatives for federal and state income tax
purposes and federal and state unemployment purposes have treated such sales
representatives as independent contractors. MMD has filed on a timely basis a
Form 1099 for each individual classified by MMD as an independent contractor
for the period in which such individual performed services for MMD. The
Stockholders do not have current, actual knowledge (as described in Section
9(f)(i) below) that MMD, since the issuance by the Internal Revenue Service
(the "IRS") of the determination letter dated February 20, 1970 (the
"Determination"), has managed, and otherwise operated with respect to, all
sales representatives classified as independent contractors in violation of the
guidelines set forth in the Determination or representations made in
connection with the Determination. MMD has managed and otherwise operated with
respect to all of its sales representatives in a consistent manner in all
material respects since the date of its formation in 1982. No implication or
inference shall be derived from the representations and warranties contained in
this Section 6(x) that the Stockholders have current, actual knowledge of the
representations made to the IRS in connection with the Determination.
(y) Employee Benefits.
(i) Section 6(y) of the Disclosure Schedule lists each
Employee Benefit Plan that MMD maintains or to which MMD contributes.
(A) Each such Employee Benefit Plan (and each
related trust, insurance contract, or fund) complies in form
and in operation in all respects with the applicable
requirements of ERISA, the Code, and other applicable laws.
(B) All required reports and descriptions
(including Form 5500 Annual Reports, Summary Annual Reports,
PBGC-1's, and Summary Plan Descriptions) have been filed or
distributed appropriately with respect to each such Employee
Benefit Plan. The requirements of Part 6 of Subtitle B of
Title 1 of ERISA and of Code Section 4980B have been met with
respect to each such Employee Benefit Plan which is an
Employee Welfare Benefit Plan.
(C) All contributions (including all employer
contributions and employee salary reduction contributions)
which are due have been paid to each such Employee Benefit
Plan which is an Employee Pension Benefit Plan and all
contributions for any period ending on or before the Closing
Date which are not yet due have been paid to each such
Employee Pension Benefit Plan or accrued in accordance with
the past custom and practice of MMD. All premiums or other
payments for all periods ending on or before the Closing Date
have been paid with
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respect to each such Employee Benefit Plan which is an
Employee Welfare Benefit Plan.
(D) Each such Employee Benefit Plan which is an
Employee Pension Benefit Plan meets the requirements of a
"qualified plan" under Code Section 401(a) and has received,
within the last two years, a favorable determination letter
from the Internal Revenue Service.
(E) The market value of assets under each such
Employee Benefit Plan which is an Employee Pension Benefit
Plan (other than any Multiemployer Plan) equals or exceeds the
present value of all vested and nonvested Liabilities
thereunder determined in accordance with PBGC methods,
factors, and assumptions applicable to an Employee Pension
Benefit Plan terminating on the date for determination.
(F) The Stockholders have delivered to SAC and
Xxxxxx correct and complete copies of the plan documents and
summary plan descriptions, the most recent determination
letter received from the Internal Revenue Service, the most
recent Form 5500 Annual Report, and all related trust
agreements, insurance contracts, and other funding agreements
which implement each such Employee Benefit Plan.
(ii) With respect to each Employee Benefit Plan that MMD
maintains or ever has maintained since January 1, 1991 or to which it
contributes, has contributed since January 1, 1991, or has been since January
1, 1991 required to contribute:
(A) No such Employee Benefit Plan which is in
Employee Pension Benefit Plan (other than any Multiemployer
Plan) has been completely or partially terminated or been the
subject of a Reportable Event as to which notices would be
required to be filed with the PBGC. No proceeding by the PBGC
to terminate any such Employee Pension Benefit Plan (other
than any Multiemployer Plan) has been instituted or
threatened.
(B) There have been no Prohibited Transactions
with respect to any such Employee Benefit Plan. No Fiduciary
has any Liability for breach of fiduciary duty or any other
failure to act or comply in connection with the administration
or investment of the assets of any such Employee Benefit Plan.
No action, suit, proceeding, hearing, or investigation with
respect to the administration or the investment of the assets
of any such Employee Benefit Plan (other than routine claims
for benefits) is pending or threatened. None of the
Stockholders has any Knowledge of any Basis for any such
action, suit, proceeding, hearing, or investigation.
(C) MMD has not incurred, and none of the
Stockholders and the directors and officers (and employees
with responsibility for employee benefits
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matters) of MMD has any reason to expect that MMD will incur,
any Liability to the PBGC (other than PBGC premium payments)
or otherwise under Title IV of ERISA (including any withdrawal
Liability) or under the Code with respect to any such Employee
Benefit Plan which is an Employee Pension Benefit Plan.
(iii) MMD does not contributes to, has not contributed to
since January 1, 1991, or has not been required to contribute since January 1,
1991 to any Multiemployer Plan or has any Liability (including withdrawal
Liability) under any Multiemployer Plan.
(iv) MMD does not maintain or has not maintained or
contributed to, , or has not been required to contribute to any Employee
Welfare Benefit Plan providing medical, health, or life insurance or other
welfare-type benefits for current or future retired or terminated employees,
their spouses, or their dependents (other than in accordance with Code Section
4980B) since January 1, 1991.
(z) Guaranties. MMD is not a guarantor or otherwise liable for
any Liability or obligation (including indebtedness) of any other Person.
(aa) Environment, Health, and Safety.
(i) All properties and equipment used in the business of
MMD are free of asbestos, PCB's, methylene chloride, trichloroethylene,
1,2-trans-dichloroethylene, dioxins and dibenzofurans.
(ab) Certain Business Relationships with MMD. None of the
Stockholders and their Affiliates has been involved in any business arrangement
or relationship with MMD within the past 12 months, and none of the
Stockholders and their Affiliates owns any asset, tangible or intangible, which
is used in the business of MMD.
(ac) Contracts with Pharmaceutical Companies. With respect to any
contracts with pharmaceutical companies to which MMD is a party, the
Stockholders have no Basis to believe (i) any such contract will be prematurely
terminated or not be renewed upon expiration or (ii) that any material term
contained in any such contract will be renegotiated in a manner which could
reasonably be expected to adversely affect MMD prior to such contract's
expiration. (Xxxxxx and SAC acknowledge and agree that the representation made
in clause (i) of this Section 6(ac) does not imply by negative implication or
otherwise that the Stockholders have any Basis to believe that any such
contract will be renewed upon expiration.)
(ad) Disclosure. The representations and warranties contained in
this Section 6 do not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements and
information contained in this Section 6 not misleading.
7. Post-Closing Covenants. The Parties agree as follows with
respect to the period following the Closing.
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(a) General. In the event that at any time after the Closing any
further action is necessary or desirable to carry out the purposes of this
Agreement, each of the Parties will take such further action (including the
execution and delivery of such further instruments and documents) as any other
Party reasonably may request, all at the sole cost and expense of the
requesting Party (unless the requesting Party is entitled to indemnification
therefor under Section 8 below). The Stockholders acknowledge and agree that
from and after the Closing the Surviving Corporation and Xxxxxx will be
entitled to possession of all documents, books, records (including Tax
records), agreements, and financial data of any sort relating to MMD.
(b) Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving MMD, each of the other Parties will cooperate
with him or her and his or her counsel in the contest or defense, make
available their personnel, and provide such testimony and access to their books
and records as shall be necessary in connection with the contest or defense,
all at the sole cost and expense of the contesting or defending Party (unless
the contesting or defending Party is entitled to indemnification therefor under
Section 8 below).
(c) Transition. None of the Stockholders will take any action
that is designed or intended to have the effect of discouraging any lessor,
licensor, customer, supplier, or other business associate of MMD from
maintaining the same business relationships with the Surviving Corporation
after the Closing as it maintained with MMD prior to the Closing.
(d) Confidentiality. Each of the Stockholders will treat and hold
as such all of the Confidential Information, refrain from using any of the
Confidential Information except in connection with this Agreement, and deliver
promptly to Xxxxxx or destroy, at the request and option of Xxxxxx, all
tangible embodiments (and all copies) of the Confidential Information which are
in his or her possession. In the event that any of the Stockholders is
requested or required (by oral question or request for information or documents
in any legal proceeding, interrogatory, subpoena, civil investigative demand,
or similar process) to disclose any Confidential Information, the Stockholders
will notify Xxxxxx promptly of the request or requirement so that Xxxxxx may
seek an appropriate protective order or waive compliance with the provisions of
this Section 7(d). If, in the absence of a protective order or the receipt of
a waiver hereunder, any of the Stockholders is, on the advice of counsel,
compelled to disclose any Confidential Information to any tribunal or else
stand liable for contempt, then the Stockholders may disclose the Confidential
Information to such tribunal; provided, however, that the disclosing
Stockholder shall use his or her best efforts to obtain, at the request of
Xxxxxx, an order or other assurance that confidential treatment will be
accorded to such portion of the Confidential Information required to be
disclosed as Xxxxxx shall designate. The foregoing provisions shall not apply
to any Confidential Information which is generally available to the public
immediately prior to the time of disclosure.
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(e) Covenant Not to Compete. Unless employed by the Surviving
Corporation or Xxxxxx after the Closing, for a period of five years from and
after the Closing Date, none of the Stockholders will engage directly or
indirectly in any business that the Surviving Corporation or Xxxxxx conducts as
of the Closing Date. If the final judgment of a court of competent
jurisdiction declares that any term or provision of this Section 7(e) is
invalid or unenforceable, the Parties agree that the court making the
determination of invalidity or unenforceability shall have the power to reduce
the scope, duration, or area of the term or provision, to delete specific words
or phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified after the expiration of the
time within which the judgment may be appealed.
(f) Xxxxxx Common Shares. Each certificate issued to the
Stockholders representing the Xxxxxx Common Shares will be imprinted with a
legend substantially in the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), IN
RELIANCE UPON THE EXEMPTION FROM REGISTRATION CONTAINED IN SECTION
4(2) OF THE 1933 ACT AND REGULATION D OF THE RULES AND REGULATIONS
PROMULGATED UNDER THE 1933 ACT, AND IN RELIANCE UPON THE
REPRESENTATION BY THE HOLDER THAT THEY HAVE BEEN ACQUIRED FOR
INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO RESALE OR FURTHER
DISTRIBUTION. SUCH SHARES MAY NOT BE OFFERED FOR SALE, SOLD,
DELIVERED AFTER SALE, HYPOTHECATED, NOR WILL ANY ASSIGNEE OR ENDORSEE
HEREOF BE RECOGNIZED AS AN OWNER HEREOF BY THE ISSUER FOR ANY PURPOSE,
UNLESS A REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION WITH RESPECT TO SUCH SHARES SHALL THEN BE IN EFFECT OR
UNLESS THE AVAILABILITY OF AN EXEMPTION FROM REGISTRATION SHALL BE
ESTABLISHED TO THE REASONABLE SATISFACTION OF COUNSEL OF THE ISSUER.
Each Stockholder desiring to transfer any of the Xxxxxx Common Shares received
in connection with the Merger, other than in a registered offering or pursuant
to a sale which counsel for Xxxxxx confirms is in compliance with Rule 144 of
the Securities Act of 1933, must first furnish Xxxxxx with (i) a written
opinion satisfactory to Xxxxxx in form and substance from counsel reasonably
satisfactory to Xxxxxx to the effect that such Stockholder may transfer the
Xxxxxx Common Shares as desired without registration under the Securities Act
and (ii) a written undertaking executed by the desired transferee reasonably
satisfactory to Xxxxxx in form and substance agreeing to be bound by the
restrictions on transfer contained herein.
(g) Pooling of Interests. Each of the Stockholders and Xxxxxx
shall not take any action which would prevent the transactions contemplated by
this Agreement from being accounted for as a pooling of interests for financial
reporting purposes.
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(h) Employees. It is the current intention of Xxxxxx that the
Surviving Corporation shall continue to employ the current employees of MMD in
their current condition of employment, including at the same level of
compensation; provided, however, the decision to retain any of the employees
currently employed by MMD, the duration of their retention, and the terms and
conditions upon which such persons will be employed shall be in the discretion
of Xxxxxx and the Surviving Corporation.
(i) Obligations to Lazard Freres. Xxxxxx acknowledges that any
obligation to Lazard Freres arising out of or related to that letter agreement
between Lazard Freres and MMD dated June 8, 1995 is solely the obligation of
MMD (and upon consummation of the Merger, the Surviving Corporation). Xxxxxx
shall indemnify and hold harmless each of the Stockholders from, and shall
reimburse each of the Stockholders for, any and all losses, damages,
deficiencies, claims liabilities, obligations, suits, actions, fees, costs or
expenses of any nature whatsoever resulting or arising from or related to any
claim made by Lazard Freres against the Stockholders, MMD, the Surviving
Corporation or Xxxxxx arising out of or related to the letter agreement.
8. Conditions to Obligation to Close.
(a) Conditions to Obligation of SAC and Xxxxxx. The obligations of
SAC and Xxxxxx to consummate the transactions to be performed by it in
connection with the Closing are subject to satisfaction of the following
conditions:
(i) this Agreement and the Merger shall have been
approved by the Stockholders in accordance with the New Jersey GCL;
(ii) the Stockholders and MMD shall have delivered to SAC
and Xxxxxx a certificate to the effect that, to theknowledge of the
Stockholders and MMD no action, suit, or proceeding is pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge that would
(A) prevent consummation of any of the transactions contemplated by this
Agreement, (B) cause any of the transactions contemplated by this Agreement to
be rescinded following consummation, (C) affect adversely the right of Xxxxxx
to own the capital stock of the Surviving Corporation, or (D) affect adversely
the right of the Surviving Corporation to own its assets and to operate its
businesses (and no such injunction, judgment, order, decree, ruling, or charge
is in effect);
(iii) the Parties shall have received all other
authorizations, consents, and approvals of governments and governmental
agencies referred to in Section 5(a)(i), Section 5(b)(ii), and Section 6(c)
above;
(iv) SAC and Xxxxxx shall have received from counsel to
the Stockholders and MMD an opinion in form and substance as set forth in
Exhibit B attached hereto, addressed to SAC and Xxxxxx, and dated as of the
Closing Date;
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(v) the Stockholders shall have executed and delivered
counterparts of the Escrow Agreement in the form attached hereto as Exhibit C,
together with any counterparts signed by the Escrow Agent and blank stock
powers executed by each of the Stockholders with respect to the Xxxxxx Common
Shares to be held in the Escrow Deposit (as defined in Section 9(f)(ii));
(vi) Xxxxxxx Xxxxxxxx shall have executed and delivered
the employment agreement substantially in the form attached hereto as Exhibit
D;
(vii) SAC and Xxxxxx shall have received an opinion from
Goldstein, Golub, Xxxxxxx & Company, P.C., certified public accountants and
independent accountants to MMD, addressed to SAC and Xxxxxx, and dated as of
the Closing Date, to the effect that Goldstein, Golub, Xxxxxxx & Company, P.C.
is not aware of any circumstance related to MMD that would prohibit the
transactions contemplated by this Agreement from being accounted for as a
pooling of interests for financial reporting purposes;
(viii) Goldstein, Golub, Xxxxxxx & Company, P.C. shall
provide a letter addressed to Xxxxxx that it will, upon the reasonable request
of Xxxxxx, provide its consent for the inclusion by Xxxxxx of MMD's audited
financial statements in any filing made by Xxxxxx with the Securities and
Exchange Commission;
(ix) SAC and Xxxxxx shall have received satisfactory
evidence that all bonus plans under which Xxx. Xxxxxxxx is a beneficiary have
been terminated effective November 1, 1996; and
SAC and Xxxxxx may waive any condition specified in this Section 8(a) if they
execute a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Stockholders. The obligation
of the Stockholders and MMD to consummate the transactions to be performed by
them in connection with the Closing is subject to satisfaction of the following
conditions:
(i) SAC and Xxxxxx shall have delivered to the
Stockholders and MMD a certificate to the effect that no action, suit, or
proceeding shall be pending or threatened before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign jurisdiction or
before any arbitrator wherein an unfavorable injunction, judgment, order,
decree, ruling, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement or (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation (and no such injunction, judgment, order, decree, ruling, or
charge shall be in effect);
(ii) the Parties shall have received all other
authorizations, consents, and approvals of governments and governmental
agencies referred to in Section 5(a)(ii), Section 5(b)(ii), and Section 6(c)
above;
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(iii) Xxxxxx shall have executed and delivered counterparts
of the Escrow Agreement in the form attached hereto as Exhibit C, together
with any counterparts signed by the Escrow Agent with respect to the Xxxxxx
Common Shares to be held in the Escrow Deposit (as defined in Section
9(f)(ii));
(iv) Xxxxxx (or the Surviving Corporation) shall have
executed and delivered the employment agreement for Xxxxxxx Xxxxxxxx
substantially in the form attached hereto as Exhibit D;
(v) Xxxxxx shall have executed and delivered the
registration rights agreement substantially in the form attached hereto as
Exhibit E; and
(vi) the Stockholders shall have received from counsel to
SAC and Xxxxxx an opinion in form and substance as set forth in Exhibit F
attached hereto, addressed to the Stockholders, and dated as of the Closing
Date.
The Stockholders may waive any condition specified in this Section 8(b) if they
execute a writing so stating at or prior to the Closing.
9. Indemnification.
(a) Indemnity Obligations of the Stockholders. Subject to the
limitations set forth in Section 9(f)(i) below, each of the Stockholders
hereby, severally, but not jointly, agrees to indemnify and hold Xxxxxx and the
Surviving Corporation harmless from, and to reimburse Xxxxxx and the Surviving
Corporation for, any Xxxxxx Indemnity Claims arising under the terms and
conditions of this Agreement. For purposes of this Agreement, the term "Xxxxxx
Indemnity Claim" shall mean any loss, damage, deficiency, claim, liability,
obligation, suit, action, fee, cost or expense of any nature whatsoever
resulting from (i) any breach of any representation and warranty of the
Stockholders or MMD which is contained in this Agreement; (ii) any breach or
non-fulfillment of, or any failure to perform, any of the covenants, agreements
or undertakings of the Stockholders or MMD which are contained in or made
pursuant to this Agreement; (iii) any claim for periods prior to the Closing
Date that results from the audit currently being conducted by the IRS (the "IRS
Audit") regarding MMD's classification of sales representatives as independent
contractors (an "IC Claim"); and (iv) all interest, penalties and costs and
expenses (including, without limitation, all reasonable fees and disbursements
of counsel) arising out of or related to any indemnification made under this
Section 9(a).
(a) Indemnity Obligations of Xxxxxx. Xxxxxx hereby agrees to
indemnify and hold each of the Stockholders harmless from, and to reimburse
each of the Stockholders for, any Stockholder Indemnity Claims arising under
the terms and conditions of this Agreement. For purposes of this Agreement,
the term "Stockholder Indemnity Claim" shall mean any loss, damage, deficiency,
claim, liability, suit, action, fee, cost or expense of any nature whatsoever
incurred by the Stockholders resulting from (i) any breach of any
representation and warranty of SAC or Xxxxxx which is contained in this
Agreement; (ii) any breach or non-fulfillment of, or failure to perform, any of
the covenants, agreements or undertakings of SAC or Xxxxxx which are
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contained in or made pursuant to the terms and conditions of this Agreement;
and (iii) all interest, penalties, costs and expenses (including, without
limitation, all reasonable fees and disbursements of counsel) arising out of
or related to any indemnification made under this Section 9(b).
(c) Decisions by the Stockholders. The decisions of the
Stockholders with respect to asserting Stockholder Indemnity Claims against
Xxxxxx, defending all Xxxxxx Indemnity Claims, consenting to, compromising or
settling all Stockholder Indemnity Claims and Xxxxxx Indemnity Claims,
conducting negotiations with SAC and Xxxxxx and its representatives regarding
such claims, dealing with Xxxxxx and the Escrow Agent under the Escrow
Agreement referred to in Section 9(f)(ii) with respect to all matters arising
under such Escrow Agreement, taking any and all other actions specified in or
contemplated by this Agreement and engaging counsel, accountants or other
representatives in connection with the foregoing shall be determined by the
affirmative vote of the Requisite Stockholders. The vote of the Requisite
Stockholders shall be binding on all of the Stockholders, as if each
Stockholder were acting on his or her own behalf. Xxxxxx shall have the right
to rely upon all actions taken or omitted as a result of the vote of the
Requisite Stockholders pursuant to this Agreement and the Escrow Agreement, all
of which actions or omissions shall be legally binding upon each of the
Stockholders.
(d) Notification of Claims. Subject to the provisions of Section
9(e), in the event of the occurrence of an event which any party asserts
constitutes a Xxxxxx Indemnity Claim or a Stockholder Indemnity Claim, as
applicable, such party shall provide the indemnifying party with prompt notice
of such event and shall otherwise make available to the indemnifying party all
relevant information which is material to the claim and which is in the
possession of the indemnified party. If such event involves the claim of any
third party (a "Third-Party Claim"), the indemnifying party shall have the
right to elect to join in the defense, settlement, adjustment or compromise of
any such Third-Party Claim, and to employ counsel to assist such indemnifying
party in connection with the handling of such claim, at the sole expense of the
indemnifying party, and no such claim shall be settled, adjusted or
compromised, or the defense thereof terminated, without the prior consent of
the indemnifying party unless and until the indemnifying party shall have
failed, after the lapse of a reasonable period of time, but in no event more
than 30 days after written notice to it of the Third-Party Claim, to join in
the defense, settlement, adjustment or compromise of the same. An indemnified
party's failure to give timely notice or to furnish the indemnifying party with
any relevant data and documents in connection with any Third-Party Claim shall
not constitute a defense (in part or in whole) to any claim for indemnification
by such party, except and only to the extent that such failure shall result in
any material prejudice to the indemnifying party. If so desired by any
indemnifying party, such party may elect, at such party's sole expense, to
assume control of the defense, settlement, adjustment or compromise of any
Third-Party Claim, with counsel reasonably acceptable to the indemnified
parties, insofar as such claim relates to the liability of the indemnifying
party, provided that such indemnifying party shall obtain the consent of all
indemnified parties before entering into any settlement, adjustment or
compromise of such claims, or ceasing to defend against such claims, if as a
result thereof, or pursuant thereto, there would be imposed on an indemnified
party any material liability or obligation not covered by the indemnity
obligations of the indemnifying parties under this Agreement (including,
without limitation, any injunctive relief or other
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remedy). In connection with any Third-Party Claim, the indemnified party, or
the indemnifying party if it has assumed the defense of such claim pursuant to
the preceding sentence, shall diligently pursue the defense of such Third-Party
Claim.
(e) Survival. All representations and warranties, and, except as
otherwise provided in this Agreement, all covenants and agreements of the
parties contained in or made pursuant to this Agreement, and the rights of the
parties to seek indemnification with respect thereto, shall survive the
Closing. Such representations and warranties, and the rights of the parties to
seek indemnification with respect thereto, shall expire on the earlier of (i)
the date of issuance of the report of Xxxxxx'x independent accountants with
respect to the audited consolidated financial statements of Surviving
Corporation and Xxxxxx for the fiscal year ending December 31, 1997 or (ii) the
first anniversary of the Closing Date; provided, however, any claim that is an
IC Claim shall survive until the later of the expiration of the statute of
limitations with respect thereto or the conclusion of the IRS Audit.
(f) Limitations.
(i) Notwithstanding the foregoing, any claim by an
indemnified party against any indemnifying party under this Merger Agreement
shall be payable by the indemnifying party only in the event, and to the
extent, that the accumulated amount of the claims in respect of such
indemnifying party's obligations to indemnify under this Agreement shall exceed
the amount of $350,000 in the aggregate (the "Indemnification Threshold");
provided, however, the Indemnification Threshold shall not be applicable to any
Xxxxxx Indemnity Claim that is incurred by Xxxxxx as a result of an intentional
breach of a representation and warranty as described in Section 9(f)(ii) below.
In addition, the aggregate liability of the Stockholders for amounts in excess
of the Indemnification Threshold shall be further limited to the following
amounts: (A) the aggregate liability of the Stockholders for any IC Claim and
for any unintentional breach of the representations and warranties contained in
this Agreement, except for representations contained in Sections 5(a), 6(b) and
6(b-1) and the first sentence of paragraph 6(a), shall be limited to the Deemed
Escrow Value of the Escrow Deposit (each as defined below); (B) the aggregate
liability of the Stockholders for any breach of the representations and
warranties contained in Sections 5(a), 6(b) and 6(b-1) and the first sentence
of Section 6(a) shall be limited to the Share Consideration received by the
Stockholders in the Merger valued at the Merger Share Price; and (C)
notwithstanding the foregoing, the aggregate liability of the Stockholders for
any "intentional breach" of the representations and warranties contained in
this Agreement shall be limited to the Share Consideration received by the
Stockholders in the Merger valued at the Merger Share Price. For the purposes
of this Agreement, an "intentional breach" of a representation and warranty
shall be deemed to have occurred only if any Stockholder had current, actual
knowledge of any information required to be disclosed pursuant to this
Agreement and intentionally fails to disclose such information to Xxxxxx and
SAC. The current, actual knowledge of a Stockholder, solely for the purposes
of determining whether an intentional breach has occurred (and for the purpose
of Section 6(x)), shall not include the knowledge of MMD's independent
accountants and tax advisors. Furthermore, the Stockholders will not be deemed
to have current, actual knowledge of information based solely on the existence
of such information in the books, records and files of MMD; provided, however,
that the Stockholders
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hereby acknowledge and agree that for the purposes of determining current,
actual knowledge, Xxxxxx shall have the right to introduce to a trier of fact
circumstantial evidence of the type that would permit the inference by such
trier of fact that such Stockholder would have had current, actual knowledge.
The Stockholders hereby acknowledge and agree that in the event that a
Stockholder has committed an intentional breach, such intentional breach shall
be imputed to the remaining Stockholders and, Xxxxxx, subject to the
limitations contained in this Agreement, shall have to right to recover the
damages, on a several basis, as a result of such intentional breach from all of
the Stockholders. Notwithstanding the foregoing, in the event that a Xxxxxx
Indemnity Claim results from an intentional breach of Section 6(x), Xxxxxx
shall first bring a claim against the individual Stockholder to which the
intentional breach is attributed and to the extent that Xxxxxx'x recovery is
less than such Xxxxxx Indemnity Claim (the difference between the amount
recovered and such Xxxxxx Indemnity Claim being the "Deficiency"), Xxxxxx may
recover damages from the remaining two Stockholders, on a several basis, for
the amount equal to the Deficiency; provided, however, any payment made by a
Stockholder with respect to the Deficiency shall not exceed 25% of the Share
Consideration received by such Stockholder in the Merger.
(ii) The Stockholders shall deposit into escrow, with the
Escrow Agent named in the Escrow Agreement, a total of 135,450 of the Xxxxxx
Common Shares (such deposit being referred to as the "Escrow Deposit") issued
in connection with the Merger. Until such time as the aggregate amount of
Xxxxxx Indemnity Claims in excess of the Indemnification Threshold which have
been definitively resolved to be payable in favor of Xxxxxx (or the Surviving
Corporation for the benefit of SAC) shall equal or exceed the amount of the
Deemed Escrow Value (as hereinafter defined), all Xxxxxx Indemnity Claims
shall, subject to the limitations set forth in Section 9(f)(i) above, be
satisfied first out of the Xxxxxx Common Shares held in the Escrow Deposit, as
further provided under the terms of the Escrow Agreement. For purposes hereof,
all Xxxxxx Common Shares returned to Xxxxxx in settlement of any Xxxxxx
Indemnity Claims under the Escrow Agreement shall be valued at the Merger Share
Price. Subject to the limitations set forth in Section 9(f)(i) above and
except as otherwise provided in this Agreement, at such time as the aggregate
amount of Xxxxxx Indemnity Claims in excess of the Indemnification Threshold
which have been definitively resolved to be payable in favor of Xxxxxx (or the
Surviving Corporation for the benefit of SAC) shall exceed the Deemed Escrow
Value, each of the Stockholders shall thereafter be severally liable to Xxxxxx
(or the Surviving Corporation for the benefit of SAC) for such claims. For
purposes hereof, all Xxxxxx Common Shares returned to Xxxxxx in settlement of
any Xxxxxx Indemnity Claims under the Escrow Agreement shall be valued at the
Merger Share Price.
(iii) For purposes of this Agreement, the term "Deemed
Escrow Value" shall mean the value of the Xxxxxx Common Shares to be
transferred by the Stockholders into the Escrow Deposit, determined by
multiplying such number of Xxxxxx Common Shares times the Merger Share Price.
With respect to any Xxxxxx Common Shares to be returned to Xxxxxx by the
Stockholders in settlement of Xxxxxx Indemnity Claims pursuant to this Section
9(f), any dividends previously paid in respect of such returned Xxxxxx Common
Shares (whether paid in cash, Xxxxxx Common Shares or other property) shall
also be returned to Xxxxxx, provided that the value of such dividends shall not
be taken into account for purposes of determining the value
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of such returned Xxxxxx Common Shares, as contemplated under paragraph 47g of
Accounting Principles Board Opinion No. 16 (Interpretation No. 121).
(iv) Any liability of SAC and Xxxxxx under this Agreement
for Stockholder Indemnity Claims (other than pursuant to item (iii) of Section
9(b)) shall be satisfied solely through the issuance of additional Xxxxxx
Common Shares, such additional Xxxxxx Common Shares to be valued at the Merger
Share Price and to be issued on a pro rata basis to the Stockholders based on
their relative equity interests in MMD immediately prior to the consummation of
the Merger. Notwithstanding the foregoing, in the event (A) that a Stockholder
Indemnity Claim arises as a result of a breach by Xxxxxx of the
representations and warranties contained in Sections 5(b)(vi), (vii) or (viii),
(B) that the consequences of such breach causes the price of a Xxxxxx Common
Share as reported on the New York Stock Exchange to decrease to a price that is
below the Merger Share Price and (C) that on the date of Xxxxxx'x settlement of
such Stockholder Indemnity Claim, the price of a Xxxxxx Common Share as
reported on the New York Stock Exchange continues to be a price that is less
than the Merger Share Price, then Xxxxxx shall settle its obligation to pay
such Stockholder Indemnity Claim (to the extent not prohibited by pooling of
interests' restrictions) in Xxxxxx Common Shares valued at the price of a
Xxxxxx Common Share as reported on the New York Stock Exchange on the date of
settlement.
10. Miscellaneous.
(a) Nature of Certain Obligations. The representations and
warranties of each of the Stockholders in this Agreement are several
obligations. This means, subject to the limitations contained in Section
9(f)(i), that each Stockholder will be liable in connection with a breach of a
representation, warranty, or covenant for an amount equal to his or her pro
rata portion any Xxxxxx Indemnity Claim.
(b) No Third Party Beneficiaries. This Agreement shall not confer
any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns.
(c) Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements, or representations by or among
the Parties, written or oral, to the extent they related in any way to the
subject matter hereof.
(d) Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of his or her rights, interests, or obligations hereunder without the prior
written approval of Xxxxxx and the Requisite Stockholders; provided, however,
that Xxxxxx may (i) assign any or all of its rights and interests hereunder to
one or more of its Subsidiaries and (ii) designate one or more of its
Subsidiaries to perform its obligations hereunder (in any or all of which cases
Xxxxxx nonetheless shall remain responsible for the performance of all of its
obligations hereunder).
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(e) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
two business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:
If to the Stockholders:
Xxxxxx X. Xxxxx
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Xxxxxxxx X. Xxxxx
00 Xxxx 00xx Xxxxxx
Xxxxxxxxx 0X
Xxx Xxxx, XX 00000
Xx. Xxxxxxx Xxxxxxxx
0 Xxxxxx Xxxxx
Xxx Xxxxxxxx, Xxx Xxxx 00000
With copies to:
Rosenman & Colin LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxx, Esq.
Xxxxxx, Xxxxxxxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxxxx, Esq.
Xxxxxxx, Xxxxxx & Green, P.C.
00 Xxxxx Xxxxxx
00xx Xxxxx
Xxxxxx XX 00000
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Attention: Xxxxx Xxxxx, Esq.
Telecopy: (000) 000-0000
If to Xxxxxx:
Xx. Xxxx Xxxxxxx
Chief Financial Officer
Xxxxxx Communications, Inc.
0000 Xxxxxxxxx Xxxxx, 00xx Xxxxx
Xxxxxxxx, XX 00000
With copy to:
Shaw, Pittman, Xxxxx & Xxxxxxxxxx
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxx X. XxXxxxxxx, Esq.
Telecopy: (000) 000-0000
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been
duly given unless and until it actually is received by the intended recipient.
Any Party may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the other
Parties notice in the manner herein set forth.
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF DELAWARE WITHOUT
GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF
THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE
APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE.
(i) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by
Xxxxxx and the Requisite Stockholders. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(j) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of
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the remaining terms and provisions hereof or the validity or enforceability of
the offending term or provision in any other situation or in any other
jurisdiction.
(k) Expenses. Xxxxxx will bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby. The Stockholders will bear their own
costs and expenses and MMD's costs and expenses (including legal fees and
expenses) incurred in connection with this Agreement or any of the transactions
contemplated hereby.
(l) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof
shall arise favoring or disfavoring any Party by virtue of the authorship of
any of the provisions of this Agreement. Any reference to any federal, state,
local, or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The Parties intend
that each representation, warranty, and covenant contained herein shall have
independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
(m) Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
(n) Specific Performance. Each of the Parties acknowledges and
agrees that the other Parties would be damaged irreparably in the event any of
the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Parties shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any action
instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter (subject to the provisions set
forth in Section 10(p) below), in addition to any other remedy to which they
may be entitled, at law or in equity.
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(o) Submission to Jurisdiction. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in the State of Delaware, in
any action or proceeding arising out of or relating to this Agreement and
agrees that all claims in respect of the action or proceeding may be heard and
determined in any such court.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
XXXXXX:
XXXXXX COMMUNICATIONS, INC.
By: /s/ XXXXXXXX X. XXXXXX
----------------------------------------
Its: Vice Chairman, Executive Vice President
Chief Operating Officer
----------------------------------------
SAC:
XXXXXX ACQUISITION CORP.
By: /s/ XXXXXXXX X. XXXXXX
----------------------------------------
Its: Vice President
----------------------------------------
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MMD:
MMD, INC.
By: /s/ XXXXXXX XXXXXXXX
-----------------------------------------
Its: PRESIDENT
-----------------------------------------
STOCKHOLDERS:
/s/ XXXXXX XXXXX
---------------------------------------------
Xxxxxx Xxxxx
/s/ XXXXXXXX XXXXX
---------------------------------------------
Xxxxxxxx Xxxxx
/s/ XXXXXXX XXXXXXXX
---------------------------------------------
Xxxxxxx Xxxxxxxx
35
