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AGREEMENT AND PLAN OF MERGER, dated as of February 14, 1997,
among ▇▇▇▇▇ & Co., Inc., a New York corporation ("Parent"), BAZ Acquisition,
Inc., an Arizona corporation ("Sub"), Imagineer, Inc., an Arizona corporation
(the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, and
▇▇▇▇▇▇ ▇▇▇▇▇ (collectively, the "Stockholders").
R E C I T A L S :
WHEREAS, the respective Boards of Directors of Parent, Sub and
the Company and the stockholders of Sub and the Company have approved the
acquisition of the Company by Parent subject to the terms and conditions of this
Agreement;
WHEREAS, to effect such transaction, the respective Boards of
Directors of Parent, Sub and the Company have approved the merger of Sub with
and into the Company (the "Merger"), subject to the terms and conditions of this
Agreement, whereby the issued and outstanding shares of common stock, par value
$.01 per share, of the Company (the "Company Common Stock"), will be converted
into the right to receive the Merger Consideration (as defined in Section 3.1)
upon the terms and subject to the conditions herein;
WHEREAS, Sub will acquire ▇▇▇▇▇▇ ▇▇▇▇▇'▇ membership
interests in Imagineer of California, L.L.C. upon the terms and
subject to the conditions herein;
WHEREAS, Parent, Sub, the Company and the Stockholders desire
to make certain representations, warranties, covenants and agreements in
connection with the Merger and also to prescribe various conditions to the
Merger; and
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WHEREAS, for Federal income tax purposes, it is intended that
the Merger shall qualify as a reorganization under the provisions of Section 368
of the Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, in consideration of the representations,
warranties, covenants and agreements contained in this Agreement, the parties
agree as follows:
ARTICLE I: DEFINITIONS
As used in this Agreement, the following terms have the
following meanings:
"Affiliate" when used with respect to another Person shall mean any
Person controlling, controlled by or under common control with such Person.
"Agreement" means this Agreement and Plan of Merger dated as of
February 14, 1997 among Parent, Sub, the Company, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇, as it may be amended from time to time
as provided herein.
"Business Day" means any day that is not a Saturday, Sunday or other
day on which banks are required or authorized by law to be closed in New York,
New York.
"Code" means the Internal Revenue Code of 1986, as amended.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Intellectual Property" means patents, patent applications, trademarks,
tradenames, service marks, copyright registrations or copyright applications.
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"Leased Real Property" means the land, buildings and structures leased
by the Company as lessee and listed in Schedule 4.1(i) hereto under the name of
the Company, including any additions thereto or substitutions therefor.
"Lien" means any mortgage, pledge, security interest, option, adverse
claim, encumbrance, lien, claim or charge of any kind, whether voluntarily
incurred or arising by operation of law or otherwise.
"Material Adverse Effect" means any change, effect or circumstance
that, individually or when taken together with all such other changes, effects
or circumstances, is or is reasonably likely to be materially adverse to the
business, results of operations or financial condition of the Company and its
Subsidiary or Parent and its Subsidiaries, as the case may be, in each case,
taken as a whole.
"Person" means and includes any natural person, corporation, limited
liability company, partnership, limited partnership, firm, joint venture,
association, joint-stock company, trust, business trust, unincorporated
organization, governmental or regulatory body, or other entity of whatever
nature.
"Subsidiary" means, as to any Person, a corporation, partnership or
other entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests having
such power only by reason of the happening of a contingency) to elect a majority
of the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the
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management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person.
"Transfer" shall be construed broadly and shall include any transfer by
way of issuance, sale, assignment, hypothecation, disposition, participation,
pledge, gift, bequeath, intestate transfer, distribution, liquidation, merger or
consolidation.
ARTICLE II: THE MERGER
2.1 The Merger. Upon the terms and subject to the conditions
of this Agreement, and in accordance with the Arizona Business Corporation Act
(the "ABCA"), Sub shall be merged with and into the Company at the Effective
Time. Following the Merger, the separate corporate existence of Sub shall cease
and the Company shall continue as the surviving corporation (the "Surviving
Corporation") and the name of the Surviving Corporation shall be "Imagineer,
Inc.".
2.2 Closing. The closing of the Merger (the "Closing") shall
take place at 11:00 a.m., on February 14, 1997 or on any other date specified by
the parties, which date shall be no later than the second business day after the
satisfaction or waiver of the conditions set forth in Article VI (the "Closing
Date"), at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or such other place, time and date as the parties may
agree.
2.3 Effective Time. As soon as practicable on or after the
Closing Date, the parties shall file articles of merger or other appropriate
documents (in any such case, the "Articles
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of Merger") executed in accordance with the relevant provisions of the ABCA and
shall make all other filings or recordings required under the ABCA. The Merger
shall become effective at such time as the Articles of Merger is duly filed with
the Secretary of State of Arizona or at such other time (in accordance with the
ABCA) as Sub and the Company shall agree should be specified in the Articles of
Merger (the time the Merger becomes effective being the "Effective Time").
2.4 Effects of the Merger. The Merger shall have the
effects set forth in Section 10-1106 of the ABCA.
2.5 Articles of Incorporation; By-Laws; Purposes.
(a) The Articles of Incorporation of the Company, as
in effect immediately prior to the Effective Time of the Merger, shall be the
Articles of Incorporation of the Surviving Corporation until thereafter changed
or amended as provided therein or by applicable law.
(b) The By-laws of the Company as in effect at the Effective
Time of the Merger shall be the By-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.
2.6 Directors. The directors of Sub at the Effective Time of
the Merger shall be the directors of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
2.7 Officers. The officers of the Company at the Effective
Time of the Merger shall be the officers of the
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Surviving Corporation, until the earlier of their resignation or removal or
until their respective successors are duly elected and qualified, as the case
may be.
ARTICLE III: EFFECT OF THE MERGER ON THE CAPITAL
STOCK OF THE CONSTITUENT CORPORATIONS
3.1 Effect on Capital Stock. As of the Effective Time of the
Merger, by virtue of the Merger and without any action on the part of the holder
of any shares of Company Common Stock or any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each share of capital stock of Sub
issued and outstanding immediately prior to the Effective Time of the
Merger shall be converted into and exchanged for one validly issued,
fully paid and nonassessable share of Surviving Corporation Common
Stock.
(b) Cancellation of Treasury Stock. Each share of Company
Common Stock that is owned by the Company or any subsidiary of the
Company, shall automatically be cancelled and retired and shall cease
to exist, and no common stock, par value $.01 per share, of Parent
("Parent Common Stock") or other consideration shall be delivered or
deliverable in exchange therefor.
(c) Conversion of Company Common Stock. In consideration for
all of the issued and outstanding shares of Company Common Stock each
Stockholder shall receive (i) that number of fully paid and
nonassessable shares of Parent Common Stock set forth opposite such
Stockholder's name under the heading "Shares" on Schedule 3.1 and (ii)
the
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dollar amount set forth opposite such Stockholder's name under the
heading "Cash" on Schedule 3.1 (collectively, the "Merger
Consideration"). At the Effective Time each share of Company Common
Stock shall be converted into the right to receive a portion of the
Merger Consideration in accordance with this subsection 3.1.
3.2 Exchange Procedures. (a) As soon as reasonably practicable
as of or after the Effective Time, Parent shall deposit with its transfer agent,
for the benefit of the holders of shares of Company Common Stock, for exchange
in accordance with this Article III, the shares of Parent Common Stock to be
issued in the Merger.
(b) As soon as practicable after the Effective Time, each
holder of an outstanding certificate or certificates which prior thereto
represented shares of Company Common Stock shall, upon surrender to Parent, be
entitled to a certificate or certificates representing the number of full shares
of Parent Common Stock and the amount of cash, if any, and the number of shares
of Surviving Corporation Common Stock into which the aggregate number of shares
of Company Common Stock previously represented by such certificate or
certificates surrendered shall have been converted pursuant to this Agreement.
Each such certificate of Parent Common Stock issued to each holder will bear the
following legend on the face thereof:
NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE
MADE EXCEPT (A) PURSUANT TO A REGISTRATION STATEMENT EFFECTIVE UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) PURSUANT TO AN EXEMPTION
FROM REGISTRATION THEREUNDER.
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No interest will be paid or will accrue on any cash payable in
lieu of any fractional shares of Parent Common Stock.
3.3 Limited Liability Company. ▇▇▇▇▇▇ ▇▇▇▇▇ shall receive
$16,667 in exchange for his 40% membership interest in Imagineer of California,
L.L.C., which represents all of the membership interests in Imagineer of
California, L.L.C. not owned by the Company.
ARTICLE IV: REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the Company. The Company
represents and warrants to Parent and Sub as follows:
(a) Due Organization of the Company. The Company is a
corporation duly organized, validly existing and in good standing under
the laws of the State of Arizona. Imagineer of California, L.L.C.,
which is the only Subsidiary of the Company, is a limited liability
company duly organized, validly existing and in good standing under the
laws of the State of Arizona. Each of the Company and its Subsidiary is
duly qualified or licensed to do business and is in good standing in
each jurisdiction in which the nature of its business or the ownership
or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so
qualified or licensed (individually or in the aggregate) would not have
a Material Adverse Effect. Accurate and complete copies of the
certificate of incorporation, including all amendments thereto and
restatements thereof, and bylaws of the Company and the articles of
organization and operating agreement of
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the Subsidiary have been delivered to Parent. Accurate and complete
copies of the corporate minutes and the stock record books of the
Company and the records of the Subsidiary have been delivered to
Parent. Complete and accurate records with respect to the issuance,
transfer, redemption and cancellation of shares of capital stock of the
Company and the membership interests of the Subsidiary are contained in
the records which have been delivered to Parent.
(b) Authorization and Validity of Agreement. The Company has
all requisite corporate power and authority to enter into this
Agreement and to perform its obligations hereunder and to consummate
the transactions contemplated hereby. The execution, delivery and
performance by the Company of this Agreement and the consummation by it
of the transactions contemplated hereby have been duly authorized by
the Board of Directors and stockholders of the Company, and no other
action on the part of the Company is necessary for the execution,
delivery and performance by the Company of this Agreement and the
consummation by it of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by the Company and,
assuming due authorization, execution and delivery by Parent and Sub,
is a valid and legally binding obligation of the Company, enforceable
against the Company in accordance with its terms.
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(c) Capitalization. As of the date hereof, the authorized
capital stock of the Company is 1,000,000 shares of Company Common
Stock and 6,666 shares of Company Common Stock are issued and
outstanding. Except as set forth above, as of the date hereof, no
shares of capital stock of the Company are issued, reserved for
issuance or outstanding. Each outstanding share of the Company Common
Stock is duly authorized, validly issued, fully paid and nonassessable
and not subject to preemptive rights. Except as set forth on Schedule
4.1(c), there are no outstanding bonds, debentures, notes or other
indebtedness or other securities of the Company having the right to
vote (or convertible into, or exchangeable for, securities having the
right to vote) on any matters on which stockholders of the Company may
vote. There are no outstanding existing or authorized subscriptions,
options, warrants, calls, rights, or any other agreements of any
character relating to the sale, issuance or voting of any shares of the
capital stock of, or other equity interests in, the Company or its
Subsidiary or any securities convertible into or evidencing the right
to purchase such capital stock or other equity interests in, the
Company or its Subsidiary, and except as set forth on Schedule 4.1(c)
there are no voting trusts, stockholder agreements, or other agreements
or understandings with respect to the voting or transfer of the Company
Common Stock and any such trusts, agreements or understandings shall be
terminated as of the Effective Time
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and the parties thereto will have no further rights thereunder. As of
the date hereof, all persons who are the record and beneficial owners
of the Company Common Stock are set forth on Schedule 4.1(c)
(d) Subsidiaries. Except as set forth on Schedule 4.1(d), the
Company has no Subsidiaries and there are no corporations,
partnerships, joint ventures, associations or other entities in which
the Company owns, of record or beneficially, any direct or indirect
equity or other interest or any right (contingent or otherwise) to
acquire the same. Except as set forth on Schedule 4.1(d), the Company
is not a member of (nor is any part of the Company's business conducted
through) any partnership, nor is the Company a participant in any joint
venture or similar arrangement. Except as set forth on Schedule 4.1(d),
all of the outstanding membership interests of the Company's Subsidiary
are duly authorized, validly issued, fully paid and nonassessable and
all such membership interests are owned by the Company or the
Stockholders free and clear of all Liens.
(e) No Conflict; Consents. The execution, delivery and
performance by the Company of this Agreement and the consummation by it
of the transactions contemplated hereby will not either alone or with
the passage of time or both: (i) violate any provision of any law,
rule, regulation, order, judgment or decree applicable to the Company
or the Subsidiary; (ii) require any consent or approval of, or
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filing with or notice to, any governmental or regulatory authority
under any provision of any law applicable to the Company or the
Subsidiary; (iii) violate the Articles of Incorporation or By-laws (or
equivalent organizational documents) of the Company or the Subsidiary;
and (iv) require any consent, approval or notice under, and will not
conflict with, or result in the breach or termination of, or constitute
a default under, or result in the acceleration of the performance by
the Company or the Subsidiary under, any contract, indenture, mortgage,
deed of trust, lease, license, franchise, agreement or other instrument
to which the Company or the Subsidiary is a party or by which either of
them, or any of their assets, are bound or encumbered, other than, in
the case of clauses (i), (ii) or (iv), any consent, approval, filing or
notice that would not, if not given or made, or any violation,
conflict, breach, termination, default or acceleration which would not
(x) impair in any material respect the ability of the Company to
perform its obligations under this Agreement or (y) prevent or
materially delay the consummation of the transactions contemplated by
this Agreement.
(f) Financial Statements. The Company heretofore has delivered
to Parent (i) a copy of the unaudited balance sheets of the Company as
at December 31, 1995, December 31, 1994 and December 31, 1993 and an
interim balance sheet of the Company as of November 30, 1996 (such
balance sheets and any notes thereto being referred to herein as the
"Balance
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Sheets"), the unaudited income statements of the Company for the years
ended December 31, 1995 and December 31, 1994 and for the period ended
December 31, 1993 and the interim unaudited consolidated income
statement of the Company for the eleven-month period ended November 30,
1996 (such income statements and any notes thereto being referred to
herein as the "Income Statements") and the unaudited statement of cash
flows for each of the years ended December 31, 1995 and December 31,
1994 and for the period ended December 31, 1993 (the "Cash Flow
Statements") (collectively with the Balance Sheets and the Income
Statements, the "Financial Statements"). The Financial Statements were
prepared in accordance with generally accepted accounting principles
applied on a consistent basis, except as may be indicated in the notes
thereto. The Financial Statements accurately reflect the books, records
and accounts of the Company in all material respects and present fairly
in all material respects as of the dates and for the periods stated
therein the financial condition and results of operations of the
Company except that any interim Financial Statements may be subject to
normal year-end adjustments.
(g) Tax Matters. For purposes of this Section 4.1(g), any
reference to the Company or its Subsidiary shall include any
corporation that merged or was liquidated with and into the Company or
its Subsidiary. Except as disclosed in Schedule 4.1(g):
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(i) All Tax Returns required to be filed by or
with respect to the Company and its Subsidiary have been
timely filed and all such Tax Returns are complete and correct
in all respects. The Company and its Subsidiary have (i)
timely paid all Taxes that are due, or that have been asserted
in writing by any taxing authority to be due, from or with
respect to it for the periods ending prior to the date hereof
or (ii) provided adequate reserves in its financial statements
for any Taxes that have not been paid, whether or not shown as
being due on any Tax Returns.
(ii) No material claim for unpaid Taxes has become
a lien against the property of the Company or its Subsidiary
or is being asserted against the Company or any of its
Subsidiaries.
(iii) The statute of limitations with respect to
the Tax Returns of the Company and its Subsidiary and of each
affiliated group (within the meaning of the Code) of which the
Company and its Subsidiary are or have been a member for all
periods through the respective years specified in Schedule
4.1(g) has expired. There are no outstanding agreements,
waivers or arrangements extending the statutory period of
limitation applicable to any claim for, or the period for the
collection or assessment of, Taxes due from or with respect to
the Company or its Subsidiary of the Company for any taxable
period, and no power of
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attorney granted by or with respect to the Company or its
Subsidiary of the Company relating to Taxes is currently in
force.
(iv) No audit or other proceeding by any
governmental entity has formally commenced and no specific
notification has been given to the Company or its Subsidiary
that such an audit or other proceeding is pending or
threatened with respect to any Taxes due from or with respect
to the Company or its Subsidiary or any Tax Return filed by or
with respect to the Company or any Subsidiary of the Company.
No assessment of Tax has been proposed in writing against the
Company or any Subsidiary of the Company or any of their
assets or properties.
(v) As of the Effective Time, neither the Company
nor its Subsidiary shall be a party to, be bound by or have
any obligation under, any Tax sharing agreement or similar
contract or arrangement.
(vi) There is no contract or agreement, plan or
arrangement by the Company or its Subsidiary covering any
person that, individually or collectively, could give rise to
the payment of any amount that would not be deductible by the
Company or its Subsidiary by reason of section 280G of the
Code, as now in effect.
(vii) As used herein, "Taxes" shall mean all taxes
of any kind, including, without limitation, those on or
measured by or referred to as income, gross receipts,
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sales, use, ad valorem, franchise, profits, license,
withholding, payroll, employment, excise, severance, stamp,
occupation, premium, value added, property or windfall profits
taxes, customs, duties or similar fees, assessments or charges
of any kind whatsoever, together with any interest and any
penalties, additions to tax or additional amounts imposed by
any governmental entity. As used herein, "Tax Return" shall
mean 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.
(h) Insurance. As of the date hereof, the Company and its
Subsidiary are covered by valid and currently effective insurance
policies issued in favor of the Company or its Subsidiary that, in the
judgment of the Company, are customary for companies of similar size in
the industry and locale in which it operates. All such policies are in
full force and effect, all premiums due thereon have been paid and the
Company and its Subsidiary have complied in all material respects with
the provisions of such policies.
(i) Title to Property; Liens and Encumbrances. (i) Neither the
Company nor its Subsidiary owns any real property. Schedule 4.1(i) (i)
lists all leases relating to Leased Real Property. The Company owns a
valid and subsisting interest as lessee under the Leased Real Property
and except as set forth on Schedule 4.1(i) hereto, to the
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Company's knowledge, all such Leased Real Property is free and clear of
all Liens except (i) statutory Liens arising or incurred in the
ordinary course of business with respect to which the underlying
obligations are not delinquent or the validity of which is being
contested in good faith by appropriate proceedings and for which
adequate reserves for monies owed are reflected on the Financial
Statements in accordance with generally accepted accounting principles,
(ii) Liens for taxes not yet delinquent or the validity of which are
being contested in good faith by appropriate proceedings and for which
adequate reserves are reflected on the Financial Statements in
accordance with generally accepted accounting principles, and (iii)
Liens and defects in title that are not material to the lessee (the
types of Liens identified in clauses (i) through (iii) above being
herein referred to as "Permitted Liens").
(ii) To the Company's knowledge, all improvements on the
Leased Real Property are in compliance with applicable zoning and land
use laws, ordinances and regulations in all respects necessary to
conduct the operation of the Company and its Subsidiary operating
thereon as presently conducted, except for any instances of
non-compliance which do not and will not in the aggregate have a
material adverse effect on the owner or lessee of such Leased Real
Property. All such improvements are in good working condition and
repair, are insurable at standard rates, and comply in all material
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respects with applicable federal, state and local statutes,
ordinances and regulations.
(iii) Except as specified on Schedule 4.1(i) (iii) and
except for Permitted Liens, each of the Company and its Subsidiary has
good title to the assets owned by it free and clear of all Liens. All
tangible personal property owned by the Company or the Subsidiary is in
a good state of repair and operating condition subject to normal
repair, maintenance and replacement. Except as set forth on Schedule
4.1(i), the Company owns, directly or indirectly, all assets,
properties, rights, franchises, claims and agreements of every kind and
description used to conduct the businesses and operations of the
Company and the Subsidiary as they are presently conducted.
(j) Patents, Trademarks, Tradenames, Service Marks and
Copyrights. Schedule 4.1(j)(1) and Schedule 4.1(j)(2) set forth all
Intellectual Property owned, licensed or used by or registered in the
name of the Company and its Subsidiary, respectively. The Company owns,
free and clear of all Liens, and without infringement on the rights of
others, all right and interest in, and right and authority to use in
connection with the conduct of its business as presently conducted, all
Intellectual Property used in such business and there are not
outstanding or, to the knowledge of the Company, threatened judicial or
adversary proceedings with respect thereto.
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(k) Legal Proceedings. There is no claim, legal action,
decree, judgment, order, arbitration or administrative or other
proceeding, suit or governmental investigation pending, or to the
knowledge of the Company, threatened, against the Company or its
Subsidiary which, individually or in the aggregate, could have a
Material Adverse Effect or which, as of the date hereof, seeks to
enjoin or prohibit or otherwise question the validity of any action to
be taken by the Company in connection with this Agreement. As of the
date hereof, to the Company's knowledge, there are no events or
conditions which could reasonably be expected to result in a claim,
legal action, decree, judgment, order, arbitration or administrative or
other proceeding, suit or governmental investigation of the Company or
its Subsidiary which, individually or in the aggregate, would have a
Material Adverse Effect.
(l) Conduct of Business in Compliance with Laws. (i) Neither
the Company nor its Subsidiary is in violation of, or in default with
respect to, any order, law, rule, regulation, judgment, order or decree
of any federal, state, foreign, municipal or governmental department,
commission, board, bureau, agency or instrumentality which affects the
Company, except where the violation or default would not give rise,
individually or in the aggregate, to a Material Adverse Effect.
(ii) The Company and its Subsidiary possess all material
governmental licenses, permits, franchises and
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other authorizations of any federal, state, local or foreign
governmental authority ("Licenses"). All such Licenses are in full
force and effect except for those whose failure to be in full force and
effect would not, individually or in the aggregate, have a Material
Adverse Effect. To the Company's knowledge, no proceeding is pending or
threatened seeking the revocation or limitation of any such License
that could, individually or in the aggregate, have a Material Adverse
Effect.
(m) Absence of Undisclosed Liabilities. Except for liabilities
reflected or reserved against in the Financial Statements, neither the
Company nor its Subsidiary has any liabilities, commitments,
indebtedness or obligations of any nature, whether absolute, accrued,
contingent or otherwise, and whether due or to become due that would be
required to be reflected on a balance sheet (or required to be
disclosed in the notes thereto) prepared in accordance with generally
accepted accounting principles and that would, individually or in the
aggregate, have a Material Adverse Effect.
(n) Absence of Changes or Events. Except for the organization
and capitalization of Imagineer of California, L.L.C., since December
31, 1995, (i) the business of the Company has been conducted in all
material respects only in the ordinary course, (ii) neither the Company
nor its Subsidiary has, except in the ordinary course of business,
purchased, sold, assigned or transferred any of the assets of the
Company or its Subsidiary or made or obligated itself
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in any way to make any increase in the compensation, incentive,
opportunity or benefits payable to any employee of the Company, except
for regular periodic employee pay raises consistent with past practice
and (ii) there has not been a Material Adverse Effect in the Company
and its Subsidiary, taken as a whole, except for any change resulting
from general economic, financial or market conditions.
(o) Employee Benefit Plans. (i) Schedule 4.1(o) contains a
true and complete list of each "employee benefit plan" (within the
meaning of section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), including, without limitation,
multiemployer plans within the meaning of ERISA section 3(37)), stock
purchase, stock option, severance, employment, change-in-control,
fringe benefit, collective bargaining, bonus, incentive, deferred
compensation and all other employee benefit plans, agreements,
programs, policies or other arrangements, whether or not subject to
ERISA (including any funding mechanism therefor now in effect or
required in the future as a result of the transaction contemplated by
this Agreement or otherwise), whether formal or informal, oral or
written, legally binding or not, under which any employee or former
employee of the Company or any Subsidiary has any present or future
right to benefits or under which the Company or any Subsidiary has any
present or future liability. All such plans, agreements, programs,
policies
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and arrangements shall be collectively referred to as the
"Company Plans".
(ii) With respect to each Company Plan, the Company has
delivered to Parent a current, accurate and complete copy (or, to the
extent no such copy exists, an accurate description) thereof and, to
the extent applicable: (i) any related trust agreement or other funding
instrument; (ii) the most recent determination letter, if applicable;
(iii) any summary plan description and other written communications (or
a description of any oral communications) by the Company or its
Subsidiaries to their employees concerning the extent of the benefits
provided under a Company Plan; and (iv) for the three most recent years
(A) the Form 5500 and attached schedules, (B) audited financial
statements, (C) actuarial valuation reports and (D) attorney's response
to an auditor's request for information.
(iii) (A) Each Company Plan has been established and
administered in accordance with its terms, and in compliance with the
applicable provisions of ERISA, the Code and other applicable laws,
rules and regulations; (B) each Company Plan which is intended to be
qualified within the meaning of Code section 401(a) is so qualified and
has received a favorable determination letter as to its qualification,
and nothing has occurred, whether by action or failure to act, that
would cause the loss of such qualification; (C) no event has occurred
and no condition exists that would
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subject the Company or its Subsidiaries, either directly or by reason
of their affiliation with any member of their "Controlled Group"
(defined as any organization which is a member of a controlled group of
organizations within the meaning of Code sections 414(b), (c), (m) or
(o)), to any tax, fine, lien or penalty imposed by ERISA, the Code or
other applicable laws, rules and regulations; (D) for each Company Plan
with respect to which a Form 5500 has been filed, no material change
has occurred with respect to the matters covered by the most recent
Form since the date thereof; and (E) no "reportable event" (as such
term is defined in ERISA section 4043), "prohibited transaction" (as
such term is defined in ERISA section 406 and Code section 4975) or
"accumulated funding deficiency" (as such term is defined in ERISA
section 302 and Code section 412 (whether or not waived)) has occurred
with respect to any Company Plan.
(iv) With respect to each of the Company Plans that is not
a multiemployer plan within the meaning of section 4001(a)(3) of ERISA
but is subject to Title IV of ERISA, as of the Closing Date, the assets
of each such Company Plan are at least equal in value to the present
value of the accrued benefits (vested and unvested) of the participants
in such Company Plan on a termination and projected benefit obligation
basis, based on the actuarial methods and assumptions indicated in the
most recent actuarial valuation reports.
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(v) With respect to any multiemployer plan (within the
meaning of ERISA section 4001(a)(3)) to which the Company, any
Subsidiary or any member of their Controlled Group has any liability or
contributes (or has at any time contributed or had an obligation to
contribute): (A) none of the Company, any Subsidiary or any member of
their Controlled Group has incurred any withdrawal liability under
Title IV of ERISA or would be subject to such liability if, as of the
Closing Date, the Company, its Subsidiary or any member of their
Controlled Group were to engage in a complete withdrawal (as defined in
ERISA section 4203) or partial withdrawal (as defined in ERISA section
4205) from any such multiemployer plan; and (B) no such multiemployer
plan is in reorganization or insolvent (as those terms are defined in
ERISA sections 4241 and 4245, respectively).
(f) With respect to any Company Plan, (i) no actions, suits or
claims (other than routine claims for benefits in the ordinary course)
are pending or threatened, and (ii) no facts or circumstances exist
that could give rise to any such actions, suits or claims.
(g) No Company Plan exists that could result in the payment to
any present or former employee of the Company or its Subsidiary of any
money or other property or accelerate or provide any other rights or
benefits to any present or former employee of the Company or its
Subsidiary as a result of the transaction contemplated by this
Agreement, whether
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or not such payment would constitute a parachute payment within the
meaning of Code section 280G.
(p) Environmental Matters. (i) Except as would not reasonably
be expected to result individually or in the aggregate in any material
liability under any Environmental Law, to the Company's knowledge, all
operations and uses by the Company and its Subsidiary of the Leased
Real Property are in compliance with all currently applicable
environmental statutes, ordinances, regulations and orders relating to
the protection of the environment (collectively, "Environmental Laws").
To the Company's knowledge, the Company and its Subsidiary have
obtained all permits necessary under Environmental Laws for the
operation of its business, and all such permits are in full force and
effect and the Company and its Subsidiary are in compliance with the
terms and conditions of all such permits. To the knowledge of the
Company, there are no outstanding Liens on the Company's or the
Subsidiary's interest in the Leased Real Property under any
Environmental Laws. Neither the Company nor the Subsidiary, has
received any notice of, or is otherwise aware of, any administrative or
judicial investigations, proceedings or actions with respect to
violations, alleged or proven, of any Environmental Laws by the Company
or the Subsidiary or any tenants or subtenants of the Company or the
Subsidiary, or otherwise involving such Leased Real Property or the
operations conducted on or in such Leased Real Property.
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(ii) To the knowledge of the Company, and except as would
not reasonably be expected to result individually or in the aggregate
in any material liability under any Environmental Law, the Leased Real
Property is in compliance with all Environmental Laws and there has
been no release (nor, to the knowledge of the Company, is there any
substantial threat of a release) of any hazardous substance at or from
such Leased Real Property in amounts or concentrations requiring
remediation under or that would violate current Environmental Laws. To
the knowledge of the Company, there are no hazardous substances present
on such Leased Real Property except for ordinary quantities of properly
stored hazardous substances found in consumer or commercial products
that are used in the normal course of the Company's and its
Subsidiary's business, including grounds and building operation and
maintenance, or except as otherwise present in material compliance with
Environmental Laws or as would not reasonably be expected to result
individually or in the aggregate in any material liability under any
Environmental Law.
To the knowledge of the Company, there are no underground
storage tanks, or underground piping associated with such tanks, at
such Leased Real Property.
(q) Affiliate Transactions. Neither the Company nor its
Subsidiary (i) has any outstanding contract, agreement or other
arrangement with any of the Stockholders or any of such Stockholders'
Affiliates which will continue in effect
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subsequent to the Closing or (ii) other than the movement of monetary
assets, has engaged in any transaction outside the ordinary course of
business consistent with past practice with the Stockholders or their
Affiliates since December 31, 1995, which was (x) material to the
business or operations of the Company and its Subsidiaries taken as a
whole or (y) undertaken in contemplation of the sale of the Company or
its Subsidiaries.
(r) Material Contracts. Schedule 4.1(r) lists all contracts,
agreements, leases, and licenses, as to which the Company or any
Subsidiary is a party or by which any of them is bound, and which is
not disclosed in any other Schedules to this Agreement, including,
without limitation, all collective bargaining agreements and employment
agreements and consulting agreements providing for compensation in
excess of $50,000 of salary per year. Such contracts are collectively
referred to herein as "Material Contracts". The Company has delivered
to Parent copies of all such Material Contracts. Except as set forth on
Schedule 4.1(r) hereto, each Material Contract is valid and binding
(except to the extent that the invalidity or nonbinding nature of any
Material Contract would not have a Material Adverse Effect) and is in
full force and effect in accordance with its terms and neither the
Company nor the Subsidiary has granted any material waivers or
forebearances thereunder and neither the Company nor the Subsidiary, or
to the knowledge of the Company or the Subsidiary, any third party, is
in
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material default in the performance of any of its obligations under any
such Material Contract and no event or circumstance has occurred which,
with the giving of notice or the lapse of time or both, would
constitute a material default by the Company or the Subsidiary, under
any Material Contract. The transactions contemplated hereby may be
consummated without the consent of any party to any Material Contract
and such sale will not affect the validity or enforceability of any
such Material Contract or cause any material change in the substantive
terms thereof.
(s) Brokers, Finders, etc. No broker, finder, consultant or
other intermediary is or will be entitled to any broker's or finder's
fee or any other commission or similar fee in connection with the
transactions contemplated by this Agreement.
4.2 Representations and Warranties of the Stockholders. The
Stockholders, jointly and severally, represent and warrant to Parent and Sub as
follows:
(a) Authorization and Validity of Agreement. Each of the
Stockholders has legal capacity to enter into this Agreement and
perform its obligations hereunder. This Agreement has been duly
executed and delivered by each Stockholder and, assuming due
authorization, execution and delivery by Parent and Sub, is a valid and
legally binding obligation of such Stockholder, enforceable against
such Stockholder in accordance with its terms.
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(b) Investment Intent. Each Stockholder understands that the
Parent Common Stock delivered in connection with the Merger, at the
time of its receipt by such Stockholders, will not be registered under
the Securities Act of 1933, as amended (the "Act"), or any other
applicable securities laws. Each Stockholder is acquiring the Parent
Common Stock for investment for his own account and not with a view to,
or for resale in connection with, the distribution or other disposition
thereof except as contemplated by the Registration Rights Agreement
provided for herein. Each Stockholder agrees and acknowledges that he
will not, directly or indirectly, offer, transfer, sell, assign,
pledge, hypothecate or otherwise dispose of any shares of the Parent
Common Stock received in the Merger unless such transfer, sale,
assignment, pledge, hypothecation or other disposition is pursuant to
an effective registration statement under the Act or counsel for such
Stockholder (which counsel shall be acceptable to Parent) shall have
furnished Parent with an opinion, satisfactory in form and substance to
Parent, that no such registration is required because of the
availability of an exemption from registration under the Act. Each
Stockholder further represents and warrants that (i) his financial
condition is such that he can afford to bear the economic risk of
holding the Parent Common Stock for an indefinite period of time and
has adequate means for providing for his current needs and personal
contingencies, (ii) he can afford to suffer a
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complete loss of his investment in the Parent Common Stock, and (iii)
his knowledge and experience in financial and business matters are such
that he is capable of evaluating the merits and risks of his
acquisition of the Parent Common Stock as contemplated by this
Agreement.
4.3 Representations and Warranties of Parent and Sub. Parent
and Sub jointly and severally represent and warrant to the Company and the
Stockholders as follows:
(a) Due Organization and Power of Parent and Sub. Each of
Parent and Sub is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization. Each
of Parent and Sub is duly qualified or licensed to do business and is
in good standing in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such jurisdictions
where the failure to be so qualified or licensed (individually or in
the aggregate) would not have a Material Adverse Effect.
(b) Authorization and Validity of Agreement. Each of Parent
and Sub has all requisite corporate power and authority to enter into
this Agreement and perform its obligations hereunder. The execution,
delivery and performance by each of Parent and Sub of this Agreement
and the consummation by it of the transactions contemplated hereby have
been duly authorized by its respective Board of Directors, and no other
corporate action on the part of
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Parent or Sub is necessary for the execution, delivery and performance
by Parent and Sub of this Agreement and the consummation by it of the
transactions contemplated hereby. This Agreement has been duly executed
and delivered by each of Parent and Sub and, assuming due
authorization, execution and delivery by the Company and the
Stockholders, is a valid and legally binding obligation of Parent and
Sub, enforceable against Parent and Sub in accordance with its terms.
(c) Interim Operations of Sub. Sub was formed solely for the
purpose of engaging in a business combination transaction with the
Company and has engaged in no other business activities and has
conducted its operations only as contemplated hereby.
(d) Validity of Parent Common Stock. The Parent Common Stock
to be delivered in exchange for Company Common Stock at the Effective
Time, when issued and delivered in accordance with the terms hereof,
will be duly authorized and validly issued, free and clear of any
liens, encumbrances or claims of other persons (other than liens,
encumbrances or claims resulting from acts of the Company or any
Stockholder), and will be fully paid and nonassessable with no personal
liability attached to the ownership thereof and will not be subject to
any preemptive rights under the New York Business Corporation Law.
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ARTICLE V: COVENANTS
5.1 Access to Information Concerning Properties and Records;
Confidentiality. During the period commencing on the date hereof and ending on
the Closing Date, the Company shall, upon reasonable request, afford to Parent,
its counsel, accountants, engineers, appraisers and other authorized
representatives reasonable access during normal business hours to the
properties, equipment, books, accounts, contracts, documents and records of the
Company, its businesses and properties, to the extent that doing so does not
materially disrupt or interfere with the operations of the Company, and the
Company shall, within a reasonable period of time, furnish or cause to be
furnished to Parent and its representatives all existing data and information
concerning its business and properties as Parent may reasonably request. Parent
shall keep, and shall cause its agents, attorneys, employees and representatives
to keep, confidential all information obtained by Parent with respect to the
Company.
5.2 Conduct of the Business of the Company Prior to the
Closing Date. The Company agrees that, except as permitted, required or
specifically contemplated by this Agreement or as otherwise consented to or
approved in writing by Parent, during the period commencing on the date hereof
and ending at the Closing Date:
(a) the business of the Company and its Subsidiary shall be
conducted only in the ordinary course consistent with past practices;
(b) neither the Company nor its Subsidiary will amend its
organizational documents;
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(c) neither the Company nor its Subsidiary will (i) make any
change in the number of shares of its capital stock authorized, issued
or outstanding or grant or issue any option, warrant or other right to
purchase, or convert any obligation into, shares of its capital stock
or (ii) purchase or redeem any shares of its capital stock or any other
security;
(d) the Company will use its, and will cause its Subsidiary to
use its reasonable efforts to preserve intact the operations,
organization and reputation of the Company and its Subsidiary to keep
available the services of the Company's and its Subsidiary's present
officers and key employees, and to preserve the good will and business
of the suppliers and others having business relationships with the
Company and the Subsidiary;
(e) the Company and its Subsidiary will maintain their assets
in the same condition (ordinary wear and tear excepted) as at the date
hereof;
(f) neither the Company nor the Subsidiary will remove or make
any significant alterations to any of its assets;
(g) the Company and the Subsidiary will timely make all
payments required to be paid under any Material Contract when due and
otherwise pay all liabilities and satisfy all obligations within 90
days of invoice;
(h) neither the Company nor its Subsidiary will declare, pay
or make any dividend or other distribution;
(i) the Company and its Subsidiary will maintain their books
and records in accordance with generally accepted accounting principles
and will not change the accounting methods, principles or practices
currently used;
(j) neither the Company nor its Subsidiary will introduce any
material change with respect to the operation of its business;
(k) the Company and its Subsidiary shall continue to maintain
and carry their existing insurance;
(l) neither the Company nor its Subsidiary will alter the
terms of any existing Material Contract except for immaterial
alterations;
(m) except to the extent required under existing Company Plans
as in effect on the date of this Agreement, neither the Company nor its
Subsidiary will increase or modify, or agree to increase or modify, the
compensation, bonuses or other benefits or perquisites for employees of
the Company or any Subsidiary, except in the ordinary course
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of business consistent with past practice, and neither the Company nor
any of its Subsidiaries will enter into any employment or consulting
agreement; and
(n) neither the Company nor its Subsidiary will incur any
obligations or sell, dispose of or transfer any of the assets of its
business other than in the ordinary course of business consistent with
past practice.
5.3 Employment Agreements. At the Closing, each of ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇ shall enter into an Employment Agreement
with ▇▇▇▇▇ Business Services, Inc., substantially in the form attached hereto as
Exhibits ▇-▇, ▇-▇ and A-3, respectively.
5.4 Notification. (a) The Company shall notify Parent of any
material litigation, arbitration or administrative proceeding pending or, to its
knowledge, threatened against the Company or its Subsidiary.
(b) Between the date of this Agreement and the Closing, the
Company shall keep Parent reasonably informed of all material operational
matters and business developments known to the Company with respect to its
business, including any competitive changes.
5.5 No Inconsistent Action. The Company shall not take any
action which is inconsistent with its obligations under this Agreement or that
would hinder or delay the consummation of the transactions contemplated by this
Agreement.
5.6 Non-Solicitation. Between the date of this Agreement and
the Closing Date, neither the Company nor any Affiliate thereof shall, directly
or indirectly, (i) solicit, initiate or encourage submission of any proposal or
offer from any Person relating to any acquisition or purchase of any capital
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stock or assets of the Company or any other transaction that would result in the
transfer of control of the Company or an investment of any kind by any Person in
the Company (each an "Acquisition Proposal") or (ii) participate in any
discussions or negotiations regarding, or furnish to any Person any information
with respect to, an Acquisition Proposal or any of the foregoing, except to the
extent required by law, or (iii) otherwise cooperate in any way with, or assist
or participate in, facilitate or encourage, any effort or attempt by any other
Person to do or seek any of the foregoing.
5.7 Further Actions. Subject to the terms and conditions
hereof, each of the parties hereto agrees to use its reasonable best efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective the
transactions contemplated by this Agreement, including using its reasonable best
efforts: (i) to obtain any licenses, permits, consents, approvals,
authorizations, qualifications and orders of governmental authorities as are
required in connection with the consummation of the transactions contemplated
hereby; (ii) to effect all necessary registrations and filings; (iii) to take
such reasonable actions to defend any lawsuits or other legal proceedings,
whether judicial or administrative, whether brought derivatively or on behalf of
third parties (including governmental agencies or officials), challenging this
Agreement or the consummation of the transactions contemplated hereby; and
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(iv) to furnish to each other such information and assistance as is reasonably
requested in connection with the foregoing.
5.8 Registration Rights Agreement. At the Closing, Parent
shall enter into a registration rights agreement, substantially in the form
attached hereto as Exhibit B (the "Registration Rights Agreement").
5.9 Tax-Free Reorganization Treatment. None of Parent, Sub,
the Company or any of their respective affiliates shall take or cause to be
taken any action, whether before or after the Effective Time, which would
disqualify the Merger as a tax-free reorganization within the meaning of Section
368 of the Code.
5.10 Personal Guarantees. After the Effective Time, Parent
shall use its best efforts to obtain the release of any personal guarantees by
the Stockholders guaranteeing obligations of the Company, including, to the
extent possible, by substituting guarantees of the Company or its Subsidiaries
in lieu thereof.
ARTICLE VI: CONDITIONS PRECEDENT
6.1 Conditions Precedent to Obligations of Parties. The
respective obligations of the parties hereto are subject to the satisfaction (or
waiver by each party) at or prior to the Closing Date of the following
condition:
(a) No Injunction. No order of any court or any administrative
agency shall be in effect which restrains or prohibits the transactions
contemplated hereby.
6.2 Conditions Precedent to Obligations of Parent and Sub. The
obligations of Parent and Sub to consummate the
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transactions contemplated by this Agreement are subject to the satisfaction (or
waiver by Parent and Sub) at or prior to the Closing Date of each of the
following additional conditions:
(a) Accuracy of Representations and Warranties. The
representations and warranties of the Company and the Stockholders
contained herein shall have been true and correct in all material
respects as of the date of this Agreement and as of the Closing Date as
though made on and as of the Closing Date.
(b) Performance of Agreements. The Company and the
Stockholders shall have performed in all material respects all
obligations and agreements, and complied in all material respects with
all covenants and conditions, contained in this Agreement to be
performed or complied with by it prior to or on the Closing Date.
(c) Certificate. Parent shall have received (i) a certificate
of the Company, dated the Closing Date, executed on behalf of the
Company by its President to the effect that the conditions specified in
paragraphs (a) and (b) above have been fulfilled and (ii) a certificate
of each of the Stockholders, dated the Closing Date, to the effect that
the conditions specified in paragraphs (a) and (b) above have been
fulfilled.
(d) Legal Opinion. Parent shall have received a legal opinion
from ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ P.C. dated the Closing Date,
substantially in the form attached hereto as Exhibit C.
(e) No Material Adverse Change. Between the date hereof and
the Closing Date, there shall not have occurred any material adverse
change in the condition (financial or otherwise), business or results
of operations of the Company and its Subsidiaries, taken as a whole.
(f) Employment Agreements. ▇▇▇▇▇ Business Services, Inc. and
each of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇ shall have
duly executed and delivered an Employment Agreement as contemplated by
Section 5.3.
(g) Registration Rights Agreement. Each of the Stockholders
shall have duly executed and delivered the Registration Rights
Agreement.
6.3 Conditions Precedent to the Obligations of the Company and
the Stockholders. The obligations of the Company and the Stockholders to
consummate the transactions contemplated by
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this Agreement is subject to the satisfaction (or waiver by the Company and the
Stockholders) at or prior to the Closing Date of each of the following
additional conditions:
(a) Accuracy of Representations and Warranties. The
representations and warranties of Parent and Sub contained herein shall
have been true and correct in all material respects as of the date of
this Agreement and as of the Closing Date as though made on and as of
the Closing Date.
(b) Performance of Agreements. Parent shall have performed in
all material respects all obligations and agreements, and complied in
all material respects with all covenants and conditions, contained in
this Agreement to be performed or complied with by it prior to or on
the Closing Date.
(c) Certificate. The Company shall have received a certificate
of Parent and Sub, dated the Closing Date, executed on behalf of Parent
and Sub by its respective President or any Senior Vice President, to
the effect that the conditions specified in paragraphs (a) and (b)
above have been fulfilled.
(d) Legal Opinions. The Company shall have received a legal
opinion from ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ dated the Closing Date,
substantially in the form attached hereto as Exhibit D.
(e) Registration Rights Agreement. Parent shall have duly
executed and delivered the Registration Rights Agreement.
ARTICLE VII: INDEMNIFICATION
7.1 Indemnification Against Loss Due to Inaccuracies in
Company's or Stockholders' Representations and Warranties, Etc. The
Stockholders, jointly and severally, indemnify Parent and the Surviving
Corporation and their respective Subsidiaries and Affiliates (collectively, the
"Parent Indemnified Parties") against, and agree to hold the Parent Indemnified
Parties harmless from, all losses, costs, damages, liabilities, claims, demands,
judgments, settlements and expenses of any nature
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whatsoever, governmental or non-governmental (including, but not limited to,
reasonable fees and expenses of counsel and expenses of investigation) (other
than any such items relating to Taxes for which the agreed-upon indemnification
provisions are set forth in Section 7.3) (collectively, "Losses") incurred
directly or indirectly because or resulting from or arising out of the fact that
any matter which is the subject of a representation or warranty contained in
Section 4.1 or 4.2 is not as represented or warranted or the failure of the
Company or any Stockholder to fulfill in any respect any of its obligations
under this Agreement which is required to be fulfilled before or after the
Closing Date.
7.2 Indemnification Against Loss Due to Inaccuracies in
Parent's or Sub's Representations and Warranties, Etc. Parent and Sub, jointly
and severally, indemnify the Stockholders and their Affiliates (the "Stockholder
Indemnified Parties") against, and agree to hold the Stockholder Indemnified
Parties harmless from, all Losses incurred directly or indirectly because or
resulting from or arising out of the fact that any matter which is the subject
of a representation or warranty contained in Section 4.3 is not as represented
or warranted or the failure of Parent or Sub to fulfill in any respect any of
its obligations under this Agreement which is required to be fulfilled before or
after the Closing Date.
7.3 Tax Indemnification. (a) The Stockholders, jointly and
severally, shall be responsible for and shall indemnify and hold harmless the
Parent Indemnified Parties from
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and against any and all Taxes for or in respect of each of the
following:
(i) any and all Taxes with respect to any taxable period of
Company or its Subsidiary (or any predecessor) ending on or before the
Closing Date or apportioned to such period under Section 7.3(b) below;
(ii) any and all Taxes arising out of a breach of
representations and warranties contained in Section 4.1(g);
(iii) any payments required to be made after the Closing Date
under any Tax sharing, Tax indemnity, Tax allocation or similar
contracts (whether or not written) to which the Company was obligated,
or was a party, on or prior to the Closing date; and
(iv) any legal, accounting and other fees and expenses for any
item attributable to (i) through (iii) above.
(b) The Stockholders and Parent shall, to the extent permitted
by applicable law, elect with the relevant taxing authority to close the taxable
period of Company and its Subsidiary at the end of the day on the Closing Date.
In any case where applicable law does not permit the Company and its Subsidiary
to close its taxable year on the Closing Date, then Taxes attributable to the
taxable period of the Company and its subsidiaries beginning on or before and
ending after the Closing Date (including without limitation any Taxes resulting
from a Tax audit or administrative or court proceeding) shall be apportioned to
the period ending on the Closing Date and to the period beginning on the day
after the Closing Date by means of a closing
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of the books and records of the Company and its Subsidiary as of the close of
business on the Closing Date and, to the extent not susceptible to such
allocation, by apportionment on the basis of elapsed days unless such Tax is
transaction based (such as sales, transfer and other similar Taxes) in which
case such Tax shall be apportioned to the period in which the related
transaction occurred/occurs.
(c) (i) Any Stockholder shall promptly notify Parent of the
commencement of any claim, audit, examination or other proposed change or
adjustment by any taxing authority which could reasonably be expected to affect
the liability of Parent or its affiliates for Taxes.
(ii) Any claim for indemnity hereunder shall be made in
conformance with the provisions of Section 7.5 below.
Any claim for indemnity made pursuant to this Section 7.3 may
be made at any time prior to 90 days after the expiration of the applicable Tax
statute of limitations with respect to the relevant tax period (including all
periods of extension, whether automatic or permissive).
7.4 Limit on Claims Other than Tax Matters. (a) Any claim for
indemnification under Section 7.1 or 7.2 or otherwise under this Agreement other
than under Section 7.3 must be made by notice as provided herein not later than
the date which is three years after the Closing Date. Any indemnity obligation
of the Stockholders pursuant to Section 7.1 or otherwise under this Agreement
may be satisfied directly from, and with full recourse to, the Stockholders.
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7.5 Procedure. If any claim or demand by any person is made
against a Parent Indemnified Party or a Stockholder Indemnified Party
(collectively, an "Indemnified Party"), and if such Indemnified Party intends to
seek indemnity with respect thereto under this Article VII, such Indemnified
Party shall promptly notify the indemnifying party in writing of such claim or
demand, provided that the failure to so notify the indemnifying party shall not
relieve the indemnifying party from any liability which it may have hereunder
unless it is actually prejudiced thereby. The indemnifying party shall have 30
days after receipt of such notice to undertake, conduct and control, through
counsel of its own choosing and at its own expense, the settlement or defense
thereof, and the Indemnified Party shall cooperate with the indemnifying party
in connection therewith; provided that the Indemnified Party may participate at
its own expense in such settlement or defense through counsel chosen by such
Indemnified Party. The Indemnified Party shall have the right to pay or settle
any such claim; provided that in such event it shall waive any right to
indemnity therefor by the indemnifying party. If the indemnifying party does not
notify the Indemnified Party within 30 days after the receipt of the Indemnified
Party's notice of a claim of indemnity hereunder that it elects to undertake the
defense thereof, the Indemnified Party shall have the right to contest, settle
or compromise the claim in its sole discretion and shall not thereby waive any
right to indemnity therefor pursuant to this Agreement. The indemnifying party
shall not, except with the consent of the Indemnified
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Party, enter into any settlement that does not include as an unconditional term
thereof the giving by the person or persons asserting such claim to all
Indemnified Parties an unconditional release from all liability with respect to
such claim or consent to entry of any judgment. Notwithstanding the foregoing,
following the Closing, the Parent will afford, and cause the Company and its
Subsidiary to afford, to the Indemnified Parties and their counsel, accountants
and other authorized representatives reasonable access during normal business
hours to the properties, books and records of the Company and its Subsidiary
(and permit the Indemnified Parties and their counsel, accountants and other
authorized representatives to make copies of such books and records at their own
expense), to the extent that such access may be reasonably required to
facilitate the investigation, litigation and final disposition of any claim
which may have been or may be made against any Stockholder Indemnified Party
relating to the Company or its Subsidiaries or any of the transactions
contemplated by this Agreement. The Stockholder Indemnified Parties shall hold
any such confidential information in confidence on the same terms and subject to
the same conditions applicable to Parent in Section 5.1 hereof.
7.6 Payment. On each occasion that an Indemnified Party shall
be entitled to indemnification or reimbursement under this Article VII, the
indemnifying party shall, at each such time, promptly pay the amount of such
indemnification or reimbursement. If the Indemnified Party shall be entitled to
indemnification under this Article VII and the indemnifying party
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shall not elect to control any legal proceeding in connection therewith, the
indemnifying party shall pay upon request from time to time to the Indemnified
Party an amount equal to the Indemnified Party's costs and expenses arising as a
result of such proceeding which have not been previously reimbursed.
7.7 Tax Related Adjustments. If any indemnity payment is
determined to be taxable income by any taxing authority, then the Stockholders
shall indemnify Parent for any Taxes payable by Parent, Sub or any of their
affiliates by reason of the receipt of such indemnity payment (including any
payments under this Section 7.7), determined at an assumed marginal tax rate
equal to the highest marginal tax rate then in effect for corporate taxpayers in
the relevant jurisdiction.
ARTICLE VIII: MISCELLANEOUS
8.1 Termination and Abandonment.
(a) General. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time
prior to the Effective Time:
(i) by mutual written consent of Parent, Sub, the
Company and the Stockholders;
(ii) by Parent after March 31, 1997 if, through no
fault of Parent, the Closing shall not have occurred;
(iii) by the Company after March 31, 1997 if, through
no fault of the Company, the Closing shall not have occurred;
(iv) by Parent if there has been a material breach of
any representation, warranty or covenant made in this Agreement by the
Company or the Stockholders; or
(v) by the Company if there has been a material breach
of any representation, warranty or covenant made in this Agreement by
Parent or Sub.
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(b) Procedure Upon Termination. In the event of the
termination and abandonment of this Agreement, written notice thereof specifying
in sufficient detail the basis for such termination (including, in respect of
any termination pursuant to clause (iv) or (v) of Section 8.1(a), reasonably
sufficient detail of the breaches of representation, warranty or covenant) shall
promptly be given to the other party hereto and this Agreement shall terminate
and the transactions contemplated hereby shall be abandoned without further
action by any of the parties hereto.
(c) Survival of Certain Provisions. The respective obligations
of the parties hereto pursuant to this Section 8.1 and Sections 8.2 and 8.10
shall survive any termination of this Agreement.
8.2 Survival of Representations, Warranties and Agreements.
All covenants and agreements made by the parties in this Agreement not fully
performed as of the Effective Time shall survive the Effective Time until fully
performed. The respective representations and warranties of the Company, the
Stockholders, Parent and Sub contained in Article IV shall survive the
consummation of the transactions contemplated by this Agreement for three years
after the Effective Time (except that the representations and warranties
relating to Taxes) made in Section 4.1(g) shall survive until 90 days after the
expiration of the statute of limitations (including any extensions thereof)
applicable to such Taxes) and shall be binding notwithstanding any due diligence
investigation by Parent.
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8.3 Fees and Expenses. Whether or not the transactions
contemplated hereby are consummated, each of the parties hereto shall pay its
own fees and expenses incident to the negotiation, preparation and execution of
this Agreement, including attorneys', accountants' and other advisors' fees and
the fees and expenses of any broker, finder or agent retained by such party in
connection with the transactions contemplated by the Agreement.
8.4 Transfer Taxes. Any transfer tax shall be borne by the
Company.
8.5 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing delivered by hand, facsimile or registered letter with return receipt
requested and shall be deemed to have been duly given or made when delivered by
hand, or, in the case of facsimile note or registered letter, when received by
the addressee, addressed as follows:
(a) if to the Company or the Stockholders:
Imagineer, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇-▇▇▇
7373 North Scottsdale Road
Scottsdale, Arizona 85253-3527
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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(b) if to Parent or Sub:
▇▇▇▇▇ & Co., Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other persons or addresses as any party shall specify as to itself by
notice in writing to the other parties.
8.6 Entire Agreement. This Agreement (including the Schedules
hereto) constitutes the entire agreement between the parties hereto and
supersedes all prior agreements and understandings, oral and written, between
the parties hereto with respect to the subject matter hereof.
8.7 Binding Effect; Benefit. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and assigns. Nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto or their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
8.8 Assignability. This Agreement shall not be assigned by
either of the parties hereto without the prior written consent of the other
party; provided, however, that Parent and Sub may, without the prior written
consent of the
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Company, assign all of their rights hereunder to any direct wholly owned
subsidiary of Parent provided that no such assignment shall relieve the
assigning party of its obligations hereunder.
8.9 Amendment and Modification; Waiver. Subject to applicable
law, this Agreement may be amended, modified and supplemented by a written
instrument authorized and executed on behalf of the parties at any time prior to
the Closing Date with respect to any of the terms contained herein. No waiver by
any party of any of the provisions hereof shall be effective unless explicitly
set forth in writing and executed by the party so waiving. Except as provided in
the preceding sentence, no action taken pursuant to this Agreement, including
without limitation, any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action or compliance with
any representations, warranties, covenants, or agreements contained herein, and
in any documents delivered or to be delivered pursuant to this Agreement and in
connection with the Closing hereunder. The waiver by any party hereto of a
breach of any provision of this Agreement shall not operate or be construed as a
waiver of any other or subsequent breach.
8.10 Public Announcements. Unless otherwise required by law or
any regulation or rule of any stock exchange binding upon the Company or Parent,
prior to the Closing no news release or other public announcement pertaining to
the transactions contemplated by this Agreement will be made by or on behalf of
any party hereto without the prior written approval of the other
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party (such consent not to be unreasonably withheld or delayed). Where any
announcement, communication or circular concerning the transactions referred to
in this Agreement is required by law or any regulation or rule of any stock
exchange it shall be made by the relevant party after consultation, where
reasonably practicable, with the other party and taking into account the
reasonable requirements (as to timing, contents and manner of making or despatch
of the announcement, communication or circular) of the other party.
8.11 Section Headings. The section headings contained in this
Agreement are inserted for reference purposes only and shall not affect the
meaning or interpretation of this Agreement.
8.12 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, and all
of which together shall be deemed to be one and the same instrument.
8.13 Applicable Law. This Agreement and the legal relations
between the parties hereto shall be governed by and construed in accordance with
the laws of the State of New York without regard to conflicts of laws principles
thereof.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
▇▇▇▇▇ & CO. INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman and CEO
BAZ ACQUISITION, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
IMAGINEER, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------