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EXHIBIT 10.2
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AGREEMENT AND PLAN OF MERGER,
DATED AS OF JULY 27, 1998,
BY AND AMONG
▇▇▇ ▇▇▇▇ MARKETING, INC.,
MAYOR'S JEWELERS ACQUISITION CORP.
AND
MAYOR'S JEWELERS, INC.
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AGREEMENT AND PLAN OF MERGER
Table of Contents
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ARTICLE I
THE TRANSACTIONS; CLOSING................................................................................2
1.01 The Merger....................................................................2
1.02 The Closing...................................................................2
1.03 Effect of Merger..............................................................2
1.04 Certificate of Incorporation..................................................2
1.05 Bylaws........................................................................2
1.06 Directors and Officers........................................................2
1.07 Conversion of Securities......................................................3
1.08 Equity Rights; Option Shares..................................................3
1.09 Dissenting Shares.............................................................3
1.10 Surrender of Shares; Stock Transfer Books.....................................4
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY..............................................................................................6
2.01 Organization and Qualification................................................6
2.02 Capital Stock.................................................................6
2.03 Authority Relative to This Agreement and the Operative
Agreements....................................................................6
2.04 Subsidiaries; Company; Business...............................................7
2.05 No Conflicts..................................................................8
2.06 Governmental Approvals and Filings............................................9
2.07 Books and Records.............................................................9
2.08 Financial Statements..........................................................9
2.09 Absence of Changes............................................................9
2.10 No Undisclosed Liabilities...................................................11
2.11 Taxes........................................................................11
2.12 Legal Proceedings............................................................13
2.13 Compliance with Laws and Orders..............................................14
2.14 Benefit Plans; ERISA.........................................................14
2.15 Real Property................................................................15
2.16 Tangible Personal Property...................................................17
2.17 Inventory....................................................................17
2.18 Intellectual Property Rights.................................................17
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2.19 Contracts....................................................................18
2.20 Licenses.....................................................................20
2.21 Insurance....................................................................20
2.22 Affiliate Transactions.......................................................21
2.23 Employees; Labor Relations...................................................21
2.24 Environmental Matters........................................................21
2.25 Substantial Suppliers........................................................22
2.26 Accounts Receivable..........................................................22
2.27 Other Negotiations; Brokers..................................................23
2.28 Bank and Brokerage Accounts; Investment Assets...............................23
2.29 Board Recommendation.........................................................23
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ▇▇▇ ▇▇▇▇..............................................................24
3.01 Organization and Qualification...............................................24
3.02 Authority Relative to This Agreement and the Operative
Agreements...................................................................24
3.03 No Conflicts.................................................................24
3.04 Governmental Approvals and Filings...........................................25
3.05 Legal Proceedings............................................................25
3.06 Brokers......................................................................25
3.07 Financial Statements. ......................................................26
3.08 SEC Documents. .............................................................26
ARTICLE IV
COVENANTS...............................................................................................26
4.01 Conduct of Business Prior to the Closing.....................................26
4.02 Access to Information.......................................................29
4.03 Books and Records............................................................29
4.04 Confidentiality..............................................................30
4.05 Regulatory and Other Authorizations; Consents................................30
4.06 No Solicitation of Offers, Etc...............................................31
4.07 Notice of Certain Matters....................................................32
4.08 Interim Financial Statements.................................................32
4.09 Operation of Company as a Subsidiary.........................................32
4.10 Indemnification; Directors' and Officers' Insurance..........................33
ARTICLE V
CONDITIONS TO OBLIGATION TO CLOSE.......................................................................34
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5.01 Conditions to the Obligations of MJAC and ▇▇▇ ▇▇▇▇...........................34
5.02 Conditions to Closing by the Company.........................................36
ARTICLE VI
SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS................................................................................37
6.01 Survival of Representations, Warranties, Covenants and
Agreements...................................................................37
ARTICLE VII
TERMINATION.............................................................................................38
7.01 Grounds for Termination......................................................38
7.02 Effect of Termination........................................................40
ARTICLE VIII
DEFINITIONS.............................................................................................40
8.01 Definitions..................................................................40
ARTICLE IX
MISCELLANEOUS...........................................................................................49
9.01 Notices......................................................................49
9.02 Entire Agreement.............................................................51
9.03 Expenses.....................................................................51
9.04 Payment of Transfer Taxes and Fees...........................................51
9.05 Confidentiality..............................................................51
9.06 Cumulative Remedies. .......................................................51
9.07 Waiver.......................................................................51
9.08 Amendment....................................................................52
9.09 No Third Party Beneficiary...................................................52
9.10 No Assignment; Binding Effect................................................52
9.11 Headings.....................................................................52
9.12 Invalid Provisions...........................................................52
9.13 Governing Law................................................................52
9.14 Consent to Jurisdiction and Service of Process...............................52
9.15 Limited Recourse.............................................................53
9.16 Construction.................................................................53
9.17 Counterparts.................................................................54
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Exhibits:
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Exhibit A - Articles of Merger A-1
Exhibit B - Certificate of Incorporation of Surviving Corporation B-1
Exhibit C - Bylaws of Surviving Corporation C-1
Exhibit D - Initial Directors of Surviving Corporation D-1
Exhibit E - Joinder Agreement E-1
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as
of July 27, 1998, by and among MAYOR'S JEWELERS ACQUISITION CORP., a Florida
corporation ("MJAC"), ▇▇▇ ▇▇▇▇ MARKETING, INC., a Delaware corporation ("▇▇▇
▇▇▇▇"), and MAYOR'S JEWELERS, INC., a Florida corporation (the "Company"). MJAC,
▇▇▇ ▇▇▇▇ and the Company are sometimes referred to collectively herein as the
"Parties."
WITNESSETH:
WHEREAS, the Boards of Directors of MJAC, ▇▇▇ ▇▇▇▇ and the
Company have each determined that it is in the best interests of their
respective shareholders for MJAC to acquire the Company and consummate the
transactions contemplated by this Agreement (the "Transactions") upon the terms
and subject to the conditions set forth herein; and
WHEREAS, in furtherance of such acquisition, the Boards of
Directors of ▇▇▇ ▇▇▇▇, MJAC and the Company have each approved the merger (the
"Merger") of MJAC with and into the Company in accordance with the Florida
Business Corporation Act ("FBCA") upon the terms and subject to the conditions
set forth herein; and
WHEREAS, upon consummation of that certain Stock Purchase
Agreement dated as of May 26, 1998 (the "Stock Purchase Agreement"), ▇▇▇ ▇▇▇▇,
the parent of MJAC, will purchase a majority of the Outstanding Shares of common
stock of the Company, par value $.01 per share and will satisfy, assume or
purchase certain debt obligations of the Company; and
WHEREAS, ▇▇▇ ▇▇▇▇ wishes to consolidate its ownership of MJAC
with its majority interest of the Company;
WHEREAS, the Board of Directors of the Company has determined
that it is in the best interests of the Company, taking into account its current
business operations and future growth prospects, as well as the best interests
of all of its shareholders, employees, customers and suppliers for the Company
to be operated as a wholly-owned subsidiary of ▇▇▇ ▇▇▇▇; and
WHEREAS, capitalized terms used and not otherwise defined
herein have the meanings set forth in Section 8.01 hereof;
NOW, THEREFORE, in consideration of the foregoing and the
mutual promises herein made, and in consideration of the representations,
warranties, and covenants herein contained, the Parties agree as follows:
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ARTICLE I
THE TRANSACTIONS; CLOSING
1.01 The Merger. Subject to the terms and conditions of this
Agreement and in accordance with the FBCA, MJAC will merge with and into the
Company at the Effective Time. Upon the Effective Time, the separate existence
of MJAC shall cease and the Company shall be the corporation surviving the
Merger (the "Surviving Corporation"), shall continue under the name "Mayor's
Jewelers, Inc." and shall be operated as a wholly-owned subsidiary of ▇▇▇ ▇▇▇▇.
1.02 The Closing. The closing of the Transactions contemplated
by this Agreement (the "Closing") shall take place at the offices of ▇▇▇▇▇▇,
▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP in New York, New York following the closing of the Stock
Purchase Agreement, assuming the satisfaction or waiver of all conditions to the
obligations of the Parties to consummate the Transactions as set forth in
Article 5 hereof (other than those conditions that by their nature are to be
satisfied at the Closing, but subject to satisfaction or waiver of those
conditions) or such other date and place as the Parties may mutually determine
(the "Closing Date").
1.03 Effect of Merger. The Merger shall become effective at
the time (the "Effective Time") the Company duly files articles of merger (the
"Articles of Merger"), substantially in the form of Exhibit A hereto, with the
Secretary of State of the State of Florida or at such later time as is specified
in the Articles of Merger. The Merger shall have the effect set forth in the
FBCA. The Surviving Corporation may, at any time after the Effective Time, take
any action (including executing and delivering any document) in the name and on
behalf of either the Company or MJAC in order to carry out and effectuate the
Transactions.
1.04 Certificate of Incorporation. At the Effective Time, the
certificate of incorporation of the Surviving Corporation shall be amended to
read in its entirety as set forth in Exhibit B attached hereto until thereafter
amended as provided by law and such certificate of incorporation.
1.05 Bylaws. At the Effective Time, the bylaws of the
Surviving Corporation shall be amended to read as set forth in Exhibit C
attached hereto until thereafter amended as provided by law and such bylaws.
1.06 Directors and Officers. The initial directors of the
Surviving Corporation shall be those persons listed on Exhibit D attached
hereto, each to hold office in accordance with the certificate of incorporation
and bylaws of the Surviving Corporation. The officers of the Company immediately
prior to the Effective Time shall be the initial officers of the Surviving
Corporation, in each case until their respective successors are duly elected or
appointed and qualified.
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1.07 Conversion of Securities. As of the Effective Time, by
virtue of the Merger and without any further action on the part of ▇▇▇ ▇▇▇▇,
MJAC, the Company or the holders of any of the following securities:
(a) Conversion of Shares. Each Share (or fraction thereof)
issued and outstanding immediately prior to the Effective Time (other than any
Shares to be canceled pursuant to Section 1.07(b) hereof and any Dissenting
Shares (as defined in Section 1.09 hereof)) shall be canceled and shall be
converted automatically into the right to receive, subject to the provisions of
Section 1.10 hereof, an amount equal to $8.00 (eight dollars) (the "Merger
Consideration") payable, without interest, to the holder of such Share, upon
surrender of the Certificate that formerly evidenced such Share, in the manner
provided in Section 1.10 hereof.
(b) Treasury Shares and ▇▇▇ ▇▇▇▇-owned Shares. Each Share
owned by the Company or any Subsidiary as treasury stock and each Share owned by
▇▇▇ ▇▇▇▇ immediately prior to the Effective Time shall be canceled and cease to
exist, and no consideration shall be delivered or deliverable with respect
thereto.
(c) Conversion of MJAC Common Stock. Each issued and
outstanding share of common stock, par value $.01 per share, of MJAC shall be
converted into one share of common stock of the Surviving Corporation.
1.08 Equity Rights; Option Shares. Any Equity Right that is
outstanding immediately prior to the Effective Time, other than those Equity
Rights canceled pursuant to the Stock Purchase Agreement, shall, at the
Effective Time, be canceled, and in exchange therefor, each holder of any such
Equity Right shall be entitled to receive from the Surviving Corporation $8.00
(eight dollars). Any Option Share that is outstanding immediately prior to the
Effective Time, other than those Option Shares canceled pursuant to the Stock
Purchase Agreement, (whether or not vested or exercisable) shall, at the
Effective Time, be canceled, and in exchange therefor, each holder of each such
Option Share shall be entitled to receive from the Surviving Corporation the
difference between $8.00 (eight dollars) and the exercise price of each such
Option Share, as set forth in Section 2.02 of the Disclosure Schedule. Neither
the Equity Rights Plan nor the Option Plan will survive the Effective Time.
1.09 Dissenting Shares. Notwithstanding any provisions of this
Agreement to the contrary, Shares which are issued and outstanding immediately
prior to the Effective Time and which are held by a Company Stockholder who has
not approved of the Merger by written consent and, with respect to which,
appraisal rights shall have been duly exercised in accordance with Section
607.1320 of the FBCA ("Dissenting Shares") shall not be converted into a right
to receive the Merger Consideration. The holders of Dissenting Shares shall be
entitled only to such rights as are granted by Section 607.1320 of the FBCA.
Each holder of Dissenting Shares who becomes entitled to payment for such Shares
pursuant to Section 607.1320 of the FBCA shall receive payment therefor from the
Surviving Corporation in accordance with the FBCA; provided, however, that (i)
if any such holder of Dissenting Shares shall have failed to establish
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his or its entitlement to appraisal rights as provided in Section 607.1320 of
the FBCA, (ii) if any such holder of Dissenting Shares shall have effectively
withdrawn his or its demand for appraisal of such Shares or lost his or its
right to appraisal and payment for his or its Shares under Section 607.1320 of
the FBCA or (iii) if neither any holder of Dissenting Shares nor the Surviving
Corporation shall have filed a petition demanding a determination of the value
of all Dissenting Shares within the time provided in Section 607.1320 of the
FBCA, such holder shall forfeit the right to appraisal of such Shares and each
such Share shall be treated as if such Share had been converted, as of the
Effective Time, into a right to receive, subject to the provisions of Section
1.10 hereof, the Merger Consideration, without interest thereon, from the
Surviving Corporation as provided in Section 1.07(a) hereof.
1.10 Surrender of Shares; Stock Transfer Books.
(a) As of the Effective Time, ▇▇▇ ▇▇▇▇ shall deposit with
SunTrust Bank, Miami, N.A., as agent (the "Paying Agent") for the holders of
Shares in connection with the Merger, the funds to which holders of Shares shall
become entitled pursuant to Section 1.07(a) hereof. Such funds shall be held by
the Paying Agent and invested as directed by the Surviving Corporation, provided
that any investments shall be in obligations of or guaranteed by the United
States of America or of any agency thereof and backed by the full faith and
credit of the United States of America, in commercial paper obligations rated
A-1 or P-1 or better by ▇▇▇▇▇'▇ Investors Service, Inc. or Standard & Poor's
Corporation, respectively, or in deposit accounts, certificates of deposit or
banker's acceptances of, repurchase or reverse repurchase agreements with, or
Eurodollar time deposits purchased from, commercial banks with capital, surplus
and undivided profits aggregating in excess of $1.0 billion (based on the most
recent financial statements of such bank which are then publicly available at
the SEC or otherwise).
(b) Promptly after the Effective Time, the Surviving
Corporation shall cause to be mailed to each Person who was, at the Effective
Time, a holder of record of Shares entitled to receive the Merger Consideration
pursuant to Section 1.07(a) hereof, (i) a joinder agreement in the form of
Exhibit E hereto (the "Joinder Agreement"), pursuant to which, in consideration
of the receipt of the Merger Consideration, such holder of record: (A) shall
agree to become a party to the Stock Purchase Agreement; (B) shall agree to
become a party to the Escrow Agreement appended as Exhibit C to the Stock
Purchase Agreement (the "Escrow Agreement"); and (C) shall agree that $1 (one
dollar) of the Merger Consideration for each Share to be surrendered by such
holder shall be deposited with SunTrust Bank, Miami, N.A., as escrow agent (the
"Escrow Agent"), as collateral security for any Liability of such holder to ▇▇▇
▇▇▇▇ pursuant to the terms of the Stock Purchase Agreement and the Joinder
Agreement executed by such holder; (ii) a form of letter of transmittal which
shall specify that delivery shall be effected, and risk of loss and title to the
certificates evidencing Shares (the "Certificates") shall pass, only upon proper
delivery of the Certificates to ▇▇▇ ▇▇▇▇ and pursuant to which, such holder may
elect to receive, in exchange for his or its Shares, in lieu of cash, his or its
pro rata portion (based on the number of Shares surrendered by such holder of
record in proportion to the Outstanding Shares) of 2 million shares of ▇▇▇ ▇▇▇▇
common stock (valued at $3.50 per share) subject to restrictions on resale until
the
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third anniversary of the Closing Date (except to other Company Stockholders
under certain conditions, which shares will be deposited with the Escrow Agent
as additional security for the obligations of such holder pursuant to the Stock
Purchase Agreement and the Joinder Agreement, and (iii) instructions for use in
effecting the surrender of the Certificates pursuant to such letter of
transmittal.
(c) Upon surrender to ▇▇▇ ▇▇▇▇ of a Certificate, together with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, and such other documents as may be required
pursuant to such instructions, including a duly completed and validly executed
Joinder Agreement, the holder of such Certificate shall be entitled to receive
from the Paying Agent the Merger Consideration for each Share formerly evidenced
by such Certificate, less such consideration to be withheld pursuant to such
holder's Joinder Agreement, and such Certificate shall then be canceled. No
interest shall accrue or be paid on the Merger Consideration payable upon the
surrender of any Certificate for the benefit of the holder of such Certificate.
(d) Effective upon (at the open of business) the two month
anniversary of the Effective Time, ▇▇▇ ▇▇▇▇ shall be entitled to require the
Paying Agent to deliver to it any funds which had been made available to the
Paying Agent and not disbursed to holders of Shares (including, without
limitation, all interest and other income received by the Paying Agent in
respect of all funds made available to it), and thereafter such holders shall be
entitled to look to ▇▇▇ ▇▇▇▇ (subject to abandoned property, escheat and other
similar laws) only as general creditors thereof with respect to any Merger
Consideration that may be payable upon due surrender of the Certificates held by
them to the fullest extent permitted by law, provided, however, that any holder
of Shares who has not surrendered each of his or its Shares in accordance with
this Section 1.10 by the two month anniversary of the Effective Time shall have
forfeited the right to elect to receive shares of ▇▇▇ ▇▇▇▇ common stock in lieu
of cash. Notwithstanding the foregoing, to the fullest extent permitted by law,
none of ▇▇▇ ▇▇▇▇, the Surviving Corporation nor the Paying Agent shall be liable
to any holder of a Share for any Merger Consideration delivered in respect of
such Share to a public official pursuant to any abandoned property, escheat or
other similar law.
(e) Any portion of the Merger Consideration made available to
the Paying Agent to pay for Shares for which appraisal rights have been
perfected shall be paid to ▇▇▇ ▇▇▇▇ upon demand.
(f) At the Effective Time, the stock transfer books of the
Company shall be closed to the extent permitted by applicable law and thereafter
there shall be no further registration of transfers of Shares on the records of
the Company. From and after the Effective Time, the holders of Shares
outstanding immediately prior to the Effective Time shall cease to have any
rights with respect to such Shares except as otherwise provided herein or by
applicable law.
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(g) ▇▇▇ ▇▇▇▇ shall pay all charges and expenses of the Paying
Agent.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY
The Company hereby represents and warrants to ▇▇▇ ▇▇▇▇ and
MJAC as follows:
2.01 Organization and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Florida and has full corporate power and authority to conduct
its business as and to the extent now conducted and to own, use and lease its
Assets and Properties. The Company is duly qualified, licensed or admitted to do
business and is in good standing in each jurisdiction in which the ownership,
use or leasing of its Assets and Properties, or the conduct or nature of its
business, makes such qualification, licensing or admission necessary, except for
such failures to be so qualified, licensed or admitted and in good standing
which, individually or in the aggregate, (i) are not having and could not be
reasonably expected to have a material adverse effect on the Business or
Condition of the Company and (ii) could not be reasonably expected to have a
material adverse effect on the validity or enforceability of this Agreement or
any Operative Agreement to which it is a party or on the ability of the Company
to perform its obligations hereunder or thereunder.
2.02 Capital Stock. The authorized capital stock of the
Company consists only of 15,000,000 shares of common stock, par value $.01 per
share, and 5,000,000 shares of preferred stock, par value $.01 per share. The
outstanding shares and equity equivalents of capital stock of the Company
consists only of 3,049,722 shares of common stock, all of which are fully paid
and nonassessable, 46,650 "phantom" equity rights and 120,000 option shares, and
all such shares, equity equivalents and option shares were validly issued in
compliance with all applicable Laws. Except for the Outstanding Shares, the
Equity Rights and the Option Shares and except as set forth in Section 2.02 of
the Disclosure Schedule: (i) no shares of Company capital stock have been issued
or reserved for issuance, (ii) there are no outstanding Options with respect to
the Company or agreements, arrangements or understandings to issue Options with
respect to the Company, and (iii) there are no preemptive rights or agreements,
arrangements or understandings to issue preemptive rights with respect to the
issuance or sale of the Company's capital stock. The record owners of the Shares
are those Persons listed in Section 2.02 of the Disclosure Schedule, which
accurately reflects the number of Shares owned by each such Person. The exercise
price for each of the Option Shares reflected in Section 2.02 Disclosure
Schedule accurately represents the legal entitlement of each option holder to
acquire Shares.
2.03 Authority Relative to This Agreement and the Operative
Agreements. The Company has full corporate power and authority to enter into
this Agreement and the Operative Agreements to which it is party and to perform
its obligations hereunder and thereunder and to
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consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance of this Agreement and the Operative Agreements to which
it is a party by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby have been duly and validly approved
by the board of directors of the Company, and, except for the affirmative vote
or consent of a majority of the holders of the Outstanding Shares, no other
action on the part of the Company or its stockholders is necessary to authorize
the execution, delivery and performance of this Agreement and the Operative
Agreements to which it is a party and the consummation by the Company of the
transactions contemplated hereby and thereby. This Agreement and the Operative
Agreements to which the Company is a party have been duly and validly executed
and delivered by the Company and constitute legal, valid and binding obligations
of the Company enforceable against the Company in accordance with their
respective terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar laws relating to the enforcement of creditors' rights generally
and by general principles of equity.
2.04 Subsidiaries; Company; Business. Section 2.04 of the
Disclosure Schedule lists the name of each Subsidiary and all lines of business
in which the Company and each Subsidiary is participating or engaged or has
participated or engaged in the preceding three years. Each Subsidiary is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation set forth opposite its name in Section 2.04
of the Disclosure Schedule, and has full power and authority to conduct its
business as and to the extent now conducted and to own, use and lease its Assets
and Properties. Each Subsidiary is duly qualified, licensed or admitted to do
business and is in good standing in each jurisdiction in which the ownership,
use or leasing of its Assets and Properties, or the conduct or nature of its
business, makes such qualification, licensing or admission necessary, except for
such failures to be so qualified, licensed or admitted and in good standing
which, individually or in the aggregate, (i) are not having and could not
reasonably be expected to have a material adverse effect on the Business or
Condition of the Company and (ii) could not be reasonably expected to have a
material adverse affect on the validity or enforceability of this Agreement or
any Operative Agreement or the ability of any such Subsidiary to perform its
obligations thereunder. Section 2.04 of the Disclosure Schedule lists for each
Subsidiary the amount of its authorized and outstanding equity interests. Except
as disclosed in Section 2.04 of the Disclosure Schedule, all of the outstanding
equity interests of each Subsidiary have been duly authorized and validly
issued, are fully paid and nonassessable, and are owned, beneficially and of
record, by the Company or Subsidiaries wholly owned, directly or indirectly by
the Company free and clear of all Liens. Other than as contemplated by this
Agreement or the Operative Agreements, there are no outstanding Options with
respect to any Subsidiary or agreements, arrangements or understandings to issue
Options with respect to any Subsidiary and there are no preemptive rights or
agreements, arrangements or understandings to issue preemptive rights with
respect to the issuance or sale of any Subsidiary's equity interests. Except as
set forth in Section 2.04 of the Disclosure Schedule there are no directors or
officers of the Company or any of its Subsidiaries who are not employees or
stockholders of the Company as of the date hereof. The Company has delivered to
▇▇▇ ▇▇▇▇ true and complete copies of the certificate or articles of
incorporation and
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by-laws (or other comparable corporate charter documents) and minutes of the
meetings of the Board of Directors (including any committees thereof) of the
Company and each of the Subsidiaries, including all amendments thereto effected
through the Closing Date. Except for the Subsidiaries, the Company holds no
equity, partnership, joint venture or other interest in any Person.
2.05 No Conflicts. The execution and delivery by the Company
of this Agreement do not, and the execution and delivery by each of the Company
and its Subsidiaries of the Operative Agreements to which it is a party, the
performance by each of the Company and its Subsidiaries of its respective
obligations under this Agreement and such Operative Agreements and the
consummation of the transactions contemplated hereby and thereby did not, do not
and will not:
(i) conflict with or result in a violation or breach
of any of the terms, conditions or provisions of the Amended and
Restated Stockholders' Agreement, dated April 18, 1994, among the
Company and certain Company Stockholders (the "Stockholders'
Agreement") or the certificate or articles of incorporation or by-laws
(or other comparable corporate charter documents) of the Company or the
Subsidiaries;
(ii) subject to obtaining the consents, approvals and
actions, making the filings and giving the notices referred to in
Section 2.06 below or disclosed in Section 2.06 of the Disclosure
Schedule, if any, conflict with or result in a violation or breach of
any term or provision of any Law or Order applicable to the Company,
any of its Subsidiaries or any of their respective Assets and
Properties; or
(iii) except as disclosed in Section 2.05 of the
Disclosure Schedule, (a) conflict with or result in a violation or
breach of, (b) constitute (with or without notice or lapse of time or
both) a default under, (c) require the Company or any of the
Subsidiaries to obtain any consent, approval or action of, make any
filing with or give any notice to any Person as a result or under the
terms of, (d) result in or give to any Person any right of termination,
cancellation, acceleration or modification in or with respect to, (e)
result in or give to any Person any additional rights or entitlement to
increased, additional, accelerated or guaranteed payments under, or (f)
result in the creation or imposition of any Lien upon the Company or
any of the Subsidiaries or any of their respective Assets and
Properties under, any Contract or License to which the Company or any
of the Subsidiaries is a party or by which any of their respective
Assets and Properties is bound except for such conflicts, violations,
breaches, defaults, consents, approvals, actions, filings, notices,
terminations, cancellations, accelerations, modifications, additional
rights or entitlement or Liens that, individually or in the aggregate,
(x) are not having and could not be reasonably expected to have a
material adverse effect on the Business or Condition of the Company and
(y) could not be reasonably expected to have a material adverse effect
on the validity or enforceability of this Agreement or any Operative
Agreement or
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on the ability of the Company or any Subsidiary to perform its
obligations hereunder or thereunder.
2.06 Governmental Approvals and Filings. Except as disclosed
in Section 2.06 of the Disclosure Schedule, no consent, approval or action of,
filing with or notice to any Governmental or Regulatory Authority on the part of
the Company, any of the Subsidiaries or any Company Stockholder is required in
connection with the execution, delivery and performance of this Agreement or any
of the Operative Agreements to which it is a party or the consummation of
transactions contemplated hereby or thereby.
2.07 Books and Records. The minute books and other similar
records of the Company and the Subsidiaries provided to ▇▇▇ ▇▇▇▇ prior to the
execution of this Agreement contain a true and complete record, in all material
respects, of all action taken at all meetings and by all written consents in
lieu of meetings of the stockholders, members, the boards of directors and
committees of the boards of directors (or other similar governing entities) of
the Company and the Subsidiaries.
2.08 Financial Statements. The Company has furnished ▇▇▇ ▇▇▇▇
with true and complete copies of the audited consolidated balance sheets of the
Company and its Subsidiaries as of January 31, 1998 and the related consolidated
statements of operations and cash flows, together with the notes thereto (the
"Audited Financial Statements"). The Audited Financial Statements fairly present
in all material respects the consolidated financial position of the Company and
its Subsidiaries as of the dates thereof and for the periods covered thereby and
the results of operations and cash flows of the Company and its Subsidiaries for
the periods set forth therein, all in conformity with GAAP, except as
specifically noted in the notes thereto.
2.09 Absence of Changes. Since January 31, 1998, there has not
been any material adverse change, or any event or development which,
individually or together with other such events, could reasonably be expected to
result in a material adverse change, in the Business or Condition of the
Company. None of the other representations or warranties set forth in this
Agreement shall be deemed to limit the foregoing. In addition, without limiting
the foregoing, except as expressly contemplated hereby and by the Operative
Agreements and except as disclosed in Section 2.09 of the Disclosure Schedule,
there has not occurred since January 31, 1998:
(a) any declaration, setting aside or payment of any dividend
or other distribution in respect of the capital stock (or other equity
interests) of the Company or any Subsidiary, or any direct or indirect
redemption, purchase or other acquisition by the Company or any Subsidiary of
any such capital stock (or other equity interests) of the Company or any
Subsidiary;
(b) except for the execution, delivery and performance by the
Company of the Operative Agreements to which it is a party, and the transactions
contemplated thereby, any
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authorization, issuance, sale or other disposition by the Company or any
Subsidiary of any shares of capital stock (or other equity interests) of the
Company or any Subsidiary, or any modification or amendment of any right of any
holder of any outstanding shares of capital stock (or other equity interests) of
the Company or any Subsidiary;
(c) (i) any increase in excess of 10% of salary, rate of
commissions or rate of consulting fees of any employee or consultant of the
Company or any Subsidiary whose annual salary, commissions and consulting fees
exceeds $50,000; (ii) any payment of any nature whatsoever (other than salary,
commissions, consulting fees or directors' fees paid in the ordinary course to
any employee consultant or director of the Company or any Subsidiary) to any
officer, director, stockholder, employee or consultant of the Company or any
Subsidiary; (iii) any establishment or modification of (A) targets, goals, pools
or similar provisions under any Benefit Plan, employment Contract or other
employee compensation arrangement or (B) salary ranges, increase guidelines or
similar provisions in respect of any Benefit Plan, employment Contract or other
employee compensation arrangement; or (iv) any adoption, entering into,
amendment, modification or termination (partial or complete) of any Benefit
Plan;
(d) except for payments to and borrowings under the Revolving
Credit Facility in the ordinary course of business consistent with past practice
(i) incurrences by the Company or any Subsidiary of Indebtedness or (ii) any
voluntary purchase, cancellation, prepayment or complete or partial discharge in
advance of a scheduled payment date with respect to, or waiver of any right of
the Company or any Subsidiary under, any Indebtedness of or owing to the Company
or any Subsidiary;
(e) any physical damage, destruction or other casualty loss
(whether or not covered by insurance) affecting any of the real or personal
property or equipment of the Company or any Subsidiary in an amount exceeding
$25,000 with respect to any single loss, or in an aggregate amount exceeding
$100,000;
(f) any theft, damage or other loss (whether or not covered by
insurance) affecting any of the inventory of the Company or any Subsidiary in an
amount exceeding $25,000 with respect to any single loss, or in an aggregate
amount exceeding $50,000;
(g) any write-off or write-down of or any determination to
write off or write down any of the Assets and Properties of the Company or any
Subsidiary in an aggregate amount exceeding $50,000 otherwise than in the
ordinary course of business consistent with past practice;
(h) any purchase of any Assets and Properties of any Person or
disposition of, or incurrence of a Lien (other than a Permitted Lien) on, any
Assets and Properties of the Company or any Subsidiary, other than acquisitions
or dispositions of inventory or equipment in the ordinary course of business of
the Company or any Subsidiary consistent with past practice and the terms of
this Agreement and the Operative Agreements;
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(i) any entering into, amendment, modification, termination
(partial or complete) or granting of a waiver under or giving any consent with
respect to (i) any Contract which is required (or had it been in effect on the
date hereof would have been required) to be disclosed in the Disclosure Schedule
pursuant to Section 2.22(a), (ii) any License held by the Company or any
Subsidiary or (iii) any Intellectual Property;
(j) any capital expenditures or commitments for additions to
property, plant or equipment of the Company or any Subsidiary constituting
capital assets in an aggregate amount exceeding $50,000;
(k) any commencement, termination or change by the Company or
any Subsidiary of any line of business;
(l) any transaction by the Company or any Subsidiary with any
officer, director, stockholder or Affiliate of the Company or any Subsidiary,
other than pursuant to any Contract in effect on January 31, 1998 and disclosed
to ▇▇▇ ▇▇▇▇ pursuant to Section 2.22(a) hereof or other than pursuant to any
contract of employment listed pursuant to Section 2.19(a)(i) of the Disclosure
Schedule;
(m) any entering into of an agreement to do or engage in any
of the foregoing, including without limitation with respect to any Business
Combination not otherwise restricted by the foregoing paragraphs; or
(n) any change in the Tax or accounting methods or procedures
of the Company or any Subsidiary.
2.10 No Undisclosed Liabilities. Except as reflected or
reserved against in the January 31, 1998 balance sheet included in the Audited
Financial Statements or as disclosed in Section 2.10 of the Disclosure Schedule,
or as expressly contemplated hereby and by the Operative Agreements, there are
no Liabilities of, relating to or affecting the Company or any Subsidiary or any
of their respective Assets and Properties, other than (i) Liabilities incurred
in the ordinary course of business consistent with past practice since January
31, 1998 and in accordance with the provisions of this Agreement and the
Operative Agreements which in the aggregate are not material to the Business or
Condition of the Company and are not for tort or for breach of contract or (ii)
contingent, unknown liabilities which are not required to be reflected or
reserved against on a balance sheet prepared in accordance with GAAP.
2.11 Taxes.
(a) All Tax Returns required to have been filed by or with
respect to the Company or any Subsidiary or any affiliated, combined,
consolidated, unitary or similar group of which the Company or any Subsidiary is
or was a member (a "Relevant Group") with any Taxing
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Authority have been duly and timely filed, and each such Tax Return correctly
and completely reflects the income, franchise or other Tax liability and all
other information required to be reported thereon. All Taxes owed by the Company
or any Subsidiary or any member of a Relevant Group (whether or not shown on any
Tax Return) have been paid. All monies required to be withheld by the Company or
its Subsidiaries from employees, independent contractors, creditors or other
third parties for Taxes have been collected or withheld, and either duly and
timely paid to the appropriate Taxing Authority or (if not yet due for payment)
set aside in accounts for such purposes. Neither the Company nor any
Subsidiaries has any liability for Taxes of any person other than the Company or
such Subsidiary (i) solely as a present or former member of a Relevant Group,
(ii) as a transferee or successor, (iii) by contract or (iv) otherwise.
(b) The provision for current Taxes (as opposed to any reserve
for deferred taxes) in the Audited Financial Statements are sufficient for the
payments of all accrued and unpaid Taxes not yet due and payable as of such
date, whether or not disputed, of the Company and its Subsidiaries. As of the
Closing Date, such provision, as adjusted for the passage of time through the
Closing Date, will be sufficient for then-accrued and unpaid Taxes not yet due
and payable of the Company and its Subsidiaries.
(c) Neither the Company nor any Subsidiary is a party to any
agreement extending, or having the effect of extending, the time within which to
file any Tax Return or the period of assessment or collection of any Taxes.
Neither the Company nor any Subsidiary has received any written ruling of a
Taxing Authority related to Taxes or entered into any written and legally
binding agreement with a Taxing Authority relating to Taxes.
(d) Except as disclosed in Section 2.11 of the Disclosure
Schedule, (i) no Taxing Authority is now asserting or threatening to assert
against any Relevant Group, the Company or any Subsidiary any deficiency, claim
or liability for additional Taxes or any adjustment of Taxes, and there is no
reasonable basis for any such assertion of which the Company or any Subsidiary
is or reasonably should be aware, and (ii) no issues have been raised in any
examination by any Taxing Authority with respect to any Relevant Group, the
Company or any Subsidiary which, by application of similar principles,
reasonably could be expected to result in a proposed deficiency for any other
period not so examined. The federal income Tax Returns of or including the
Company (including Tax Returns of Relevant Groups) disclose (in accordance with
Section 6662(d)(2)(B)(ii) of the Code) all positions taken therein that could
give rise to a substantial understatement of federal income Tax within the
meaning of Section 6662(d) of the Code. No claim has ever been made by any
Taxing Authority in a jurisdiction in which the Company or any Subsidiary does
not file Tax Returns that it is or may be subject to taxation by that
jurisdiction. Schedule 2.11 of the Disclosure Schedule lists all federal, state,
local and foreign income Tax Returns filed by or with respect to the Company or
any Subsidiary (including Tax Returns of Relevant Groups) for all taxable
periods ended on or after January 31, 1994, indicates those Tax Returns, if any,
that have been audited, and indicates those Tax Returns that currently are the
subject of audit. The Company has delivered to ▇▇▇ ▇▇▇▇ complete and correct
copies of all federal, state, local and foreign income Tax Returns filed by or
with respect to, and
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all Tax examination reports and statements of deficiencies assessed against or
agreed to by, the Company and any Subsidiary since January 31, 1994. There are
no Liens for Taxes upon the Assets or Properties of the Company or any
Subsidiary.
(e) Neither the Company nor any Subsidiary (i) is a party to
or is bound by any obligations under any tax sharing, tax indemnity or similar
agreement or arrangement, (ii) has made or is subject to any election under
section 341(f) of the Code, (iii) has made or is subject to any election or
deemed election under section 338 or section 336(e) of the Code or the
regulations thereunder, (iv) has agreed to or is required to make, or reasonably
expects that it might have to make, any adjustment under section 481 of the Code
(or any comparable provision of state, local or foreign law) by reason of a
change in accounting method or otherwise, (v) has ever entered into any
agreement or arrangement that could result separately or in the aggregate in the
payment of any "excess parachute payments" within the meaning of section 280G of
the Code, (vi) is, or at any time has been, a "United States real property
holding corporation" within the meaning of section 897(c)(2) of the Code, (vii)
is a party to any "safe harbor lease" that is subject to the provisions of
section 168(f)(8) of the Internal Revenue Code as in effect prior to the Tax
Reform Act of 1986 or to any "long-term contract" within the meaning of section
460 of the Code, (viii) is a party to any joint venture, partnership or other
arrangement that is treated as a partnership for federal income Tax purposes,
(ix) has ever been a member of any affiliated, consolidated, combined, unitary
or similar group for any Tax purpose, other than the Relevant Group of which the
Company is the parent, (x) has an excess loss account as defined in section
1.1502-19 of the Treasury Regulations with respect to the stock of any
subsidiary or (xi) has engaged in any intercompany transactions subject to
Section 1.1502-13 of the Treasury Regulations.
2.12 Legal Proceedings.
(a) Except as disclosed in Section 2.12(a) of the Disclosure
Schedule (with paragraph references corresponding to those set forth below):
(i) there are no Actions or Proceedings pending or,
to the knowledge of the Company, threatened against, relating to or
affecting the Company, any Subsidiary or any Company Stockholder, or
any of their respective Assets and Properties which (A) could
reasonably be expected to result in the issuance of an Order
restraining, enjoining or otherwise prohibiting or making illegal any
of the transactions contemplated by this Agreement or any of the
Operative Agreements or otherwise result in a material diminution of
the benefits contemplated by this Agreement or any of the Operative
Agreements to ▇▇▇ ▇▇▇▇, or (B) if determined adversely to the Company,
any Subsidiary or any Company Stockholder, could reasonably be expected
to result in (x) any injunction or other equitable relief against the
Company or any Subsidiary, or (y) Losses by the Company or any
Subsidiary, individually or in the aggregate with Losses in respect of
other such Actions or Proceedings, exceeding $50,000;
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(ii) neither the Company nor any Subsidiary has
received notice, or is aware, of any Orders outstanding against the
Company or any Subsidiary; and
(iii) neither the Company nor any Subsidiary has
received notice or is aware, of any defects, dangerous or substandard
conditions in the products or materials sold, distributed, or to be
sold or distributed by the Company or any Subsidiary that could cause
bodily injury, sickness, disease, death, or damage to property, or
result in loss of use of property, or any claim, suit, demand for
arbitration or notice seeking damages for bodily injury, sickness,
disease, death, or damage to property, or loss of use of property.
(b) Prior to the execution of this Agreement, the Company has
delivered all responses of counsel for the Company and the Subsidiaries to
auditors' requests for information regarding Actions or Proceedings pending or
threatened against, relating to or affecting the Company and the Subsidiaries
for the fiscal years ended January 31, 1997 and January 31, 1998.
2.13 Compliance with Laws and Orders. Except as disclosed in
Section 2.13 of the Disclosure Schedule, none of the Company or any Subsidiary
has received at any time since February 1, 1996 any notice that the Company or
any Subsidiary is or has been at any time since such date, in material violation
of or in material default under, any Law or Order applicable to the Company or
any Subsidiary or any of their respective Assets and Properties.
2.14 Benefit Plans; ERISA. All Benefit Plans are listed in
Section 2.14 of the Disclosure Schedule, and copies of all documentation
relating to such Benefit Plans have been delivered or made available to ▇▇▇ ▇▇▇▇
(including copies of written Benefit Plans, written descriptions of oral Benefit
Plans, summary plan descriptions, trust agreements, the two most recent annual
returns, employee communications, and IRS determination letters). Except as
disclosed in Section 2.14 of the Disclosure Schedule:
(a) each Benefit Plan has at all times been maintained and
administered in all material respects in accordance with its terms and with the
requirements of all applicable Law, including ERISA and the Code, and each
Benefit Plan intended to qualify under section 401(a) of the Code has at all
times since its adoption been so qualified, and each trust which forms a part of
any such plan has at all times since its adoption been tax-exempt under section
501(a) of the Code;
(b) no direct, contingent or secondary liability has been
incurred or is expected to be incurred by the Company or any Subsidiary under
Title IV of ERISA to any party with respect to any Benefit Plan, or with respect
to any other Plan presently or heretofore maintained or contributed to by any
ERISA Affiliate;
(c) no Benefit Plan is a "defined benefit plan" within the
meaning of section 414(j) of the Code;
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(d) no Benefit Plan is a multiemployer plan within the meaning
of section 3(37) of ERISA;
(e) neither the Company, any Subsidiary nor any ERISA
Affiliate has incurred any liability for any tax imposed under section 4971
through 4980B of the Code or civil liability under section 502(i) or (l) of
ERISA;
(f) no benefit under any Benefit Plan, including, without
limitation, any severance or parachute payment plan or agreement, will be
established or become accelerated, vested or payable by reason of any
transaction contemplated under this Agreement;
(g) no tax has been incurred under section 511 of the Code
with respect to any Benefit Plan (or trust or other funding vehicle pursuant
thereto).
(h) no Benefit Plan provides health or death benefit coverage
beyond the termination of an employee's employment, except as required by Part 6
of Subtitle B of Title I of ERISA or section 4980B of the Code or any State laws
requiring continuation of benefits coverage following termination of employment;
(i) no suit, actions or other litigation (excluding claims for
benefits incurred in the ordinary course of plan activities) have been brought
or, to the knowledge of the Company or any Subsidiary, threatened against or
with respect to any Benefit Plan and there are no facts or circumstances known
to the Company or any Subsidiary that could reasonably be expected to give rise
to any such suit, action or other litigation; and
(j) all contributions to Benefit Plans that were required to
be made under such Benefit Plans have been made, and all benefits accrued under
any unfunded Benefit Plan have been paid, accrued or otherwise adequately
reserved in accordance with GAAP, all of which accruals under unfunded Benefit
Plans are as disclosed in Section 2.14(j) of the Disclosure Schedule, and each
of the Company and each Subsidiary has performed all material obligations
required to be performed under all Benefit Plans.
2.15 Real Property.
(a) Section 2.15(a) of the Disclosure Schedule contains a true
and correct list of (i) each parcel of real property owned (the "Owned Real
Property") by the Company or any Subsidiary, (ii) each parcel of real property
leased or subleased or otherwise occupied by the Company or any Subsidiary as
tenant or subtenant (the "Leased Real Property"; together with the Owned Real
Property, the "Real Property") together with a true and correct list of all such
leases, subleases or other similar agreements and any amendments, modifications
or extensions thereto (the "Real Property Leases"), and (iii) all Liens relating
to or affecting any parcel of Real Property.
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(b) The Company or a Subsidiary has good and marketable title
to the Owned Real Property, free and clear of all Liens, other than as
specifically listed in Section 2.15(b) of the Disclosure Schedule.
(c) Subject to the terms of their respective leases, the
Company or a Subsidiary has a valid and subsisting leasehold estate in and the
right to quiet enjoyment to the Leased Real Property for the full term of the
lease thereof. Each Real Property Lease is a legal, valid and binding agreement,
enforceable in accordance with its terms, of the Company or a Subsidiary and of
each other Person that is a party thereto, and except as set forth in Section
2.15(c) of the Disclosure Schedule, there is no, and neither the Company nor any
Subsidiary has knowledge of any nor received notice of any, default (or any
condition or event which, after notice or lapse of time or both, would
constitute a default) thereunder. Neither the Company nor any Subsidiary has
assigned, sublet, transferred, hypothecated or otherwise disposed of their
interest in any Real Property Lease. No penalties are accrued and unpaid under
any Real Property Lease.
(d) Section 2.15(d) of the Disclosure Schedule contains a true
and correct list of all leases, subleases or other similar agreements, and any
amendments, modifications or extensions thereto, by the Company or any
Subsidiary as landlord or sublandlord (the "Tenant Leases") affecting the Real
Property. There are no parties with any right to possession of the Real Property
or any part thereof other than the tenants under the Tenant Leases. The terms of
each of the Tenant Leases has commenced and the tenant thereunder is occupying
the space demised to it and has commenced the payment of rent.
(e) No tenant under any of the Tenant Leases or its successors
or assigns (i) has made, asserted or has any defense, set off or counterclaim
with regard to its tenancy, (ii) claims or is entitled to "free" rent, rent
concessions, rebates or rent abatements, or (iii) has questioned or disputed its
share or any real estate tax or other escalated payments, additional rent or
other charges required to be paid under its Lease. Each Tenant Lease is a legal,
valid and binding agreement, enforceable in accordance with its terms, the
Company or a Subsidiary and each other Person that is a party thereto and except
as set forth in Section 2.15(e) of the Disclosure Schedule, there is no, and
neither the Company nor any Subsidiary has any knowledge of any default (or any
condition or event which, after notice or lapse of time or both, would
constitute a default) thereunder. Neither the Company nor any Subsidiary owes
any brokerage commissions or finders fees with respect to any Tenant Lease or
renewal or extension thereof.
(f) The Company has delivered to ▇▇▇ ▇▇▇▇ prior to the
execution of this Agreement true and complete copies of all (i) title policies,
mortgages, deeds of trust, deeds, leases, easements, restrictive covenants,
certificates of occupancy, and similar documents, and all amendments thereto
concerning the Owned Real Property, and (ii) Real Property Leases and, to the
extent reasonably available, all other documents referred to in clause (i) of
this paragraph (f) with respect to the Leased Real Property.
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(g) To the knowledge of the Company, the improvements on the
Real Property are in good operating condition and in a state of good maintenance
and repair, ordinary wear and tear excepted, are adequate and suitable for the
purposes for which they are presently being used and, to the knowledge of
Company or any Subsidiary, there are no condemnation or appropriation
proceedings pending or threatened against Real Property or the improvements
thereon.
(h) Neither the Company nor any Subsidiary has any knowledge
of any claim, action or proceeding, actual or threatened, against the Company,
any Subsidiary or the Real Property by any Person which would materially affect
the future use, occupancy or value of the Real Property or any part thereof.
2.16 Tangible Personal Property. The Company or a Subsidiary
is in possession of and has good and marketable title to, or has valid leasehold
interests in or valid rights under Contract to use, all tangible personal
property used in the conduct of its business, including all tangible personal
property reflected on the Audited Financial Statements for the period ended
January 31, 1998 and tangible personal property acquired since January 31, 1998
other than property disposed of since such date in the ordinary course of
business consistent with past practice and the terms of this Agreement and the
Operative Agreements. All such tangible personal property is free and clear of
all Liens, other than Permitted Liens and Liens disclosed in Section 2.16 of the
Disclosure Schedule, and its use complies in all material respects with all
applicable Laws.
2.17 Inventory. Except as disclosed in the notes to the
Audited Financial Statements or in Section 2.17 of the Disclosure Schedule, all
items included in the inventory of the Company and each Subsidiary are the
property of the Company and each Subsidiary, respectively, free and clear of all
Liens other than Permitted Liens, have not been pledged as collateral, are not
held by the Company or any Subsidiary on consignment from others and conform in
all material respects to all standards applicable to such inventory or its use
or sale imposed by any Governmental or Regulatory Authority.
2.18 Intellectual Property Rights.
(a) The Company or a Subsidiary has interests in or uses only
the Intellectual Property disclosed in Section 2.18(a) of the Disclosure
Schedule. The Company or a Subsidiary either has all right, title and interest
in or a valid and binding license to use such Intellectual Property. No other
Intellectual Property is used in or necessary to the conduct of the business of
the Company and its Subsidiaries in any material. Neither the Company nor any
Subsidiary has any knowledge that such Intellectual Property is being infringed
by any other Person.
(b) Except as set forth in Section 2.18(b) of the Disclosure
Schedule, to the knowledge of the Company and each Subsidiary neither the
Company nor any Subsidiary is infringing any Intellectual Property of any other
Person, and no litigation is pending and no claim
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has been made or, to the knowledge of the Company or any Subsidiary, has been
threatened to such effect.
2.19 Contracts.
(a) Section 2.19(a) of the Disclosure Schedule (with paragraph
references corresponding to those set forth below) contains a true and complete
list of each of the following Contracts or other arrangements (true and complete
copies or, if none, reasonably complete and accurate written descriptions of
which, together with all amendments and supplements thereto and all waivers of
any terms thereof, have been delivered to ▇▇▇ ▇▇▇▇ prior to the execution of
this Agreement), to which the Company or any Subsidiary is a party or by which
any of their respective Assets and Properties is bound:
(i) (A) all Contracts (excluding Benefit Plans)
providing for a commitment of employment or consultation services for a
specified or unspecified term, the name, position and rate of
compensation of each Person party to such a Contract and the expiration
date of each such Contract; (B) any written representations,
commitments, promises, communications or courses of conduct involving
an obligation of the Company or any Subsidiary to make payments (with
or without notice, passage of time or both) to any Person in connection
with, or as a consequence of, the transactions contemplated hereby or
by the Operative Agreements, other than with respect to salary or
incentive compensation payments in the ordinary course of business
consistent with past practice; and (C) any unwritten representations,
commitments, promises, communications or courses of conduct involving
an obligation of the Company or any Subsidiary to make payments in
excess of $5,000 to any employee or $50,000 in the aggregate (with or
without notice, passage of time or both) to any Person in connection
with, or as a consequence of, the transactions contemplated hereby or
by the Operative Agreements, other than with respect to salary or
incentive compensation payments in the ordinary course of business
consistent with past practice
(ii) all Contracts with any Person containing any
provision or covenant prohibiting or limiting the ability of the
Company or any Subsidiary to engage in any business activity or compete
with any Person or prohibiting or limiting the ability of any Person to
compete with the Company or any Subsidiary or prohibiting or limiting
disclosure of confidential or proprietary information;
(iii) all partnership, joint venture, shareholders'
or other similar Contracts with any Person;
(iv) all Contracts relating to Indebtedness of the
Company or any Subsidiary;
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(v) all Contracts with independent contractors,
distributors, dealers, manufacturers' representatives, sales agencies
or franchisees that involve the payment or potential payment, pursuant
to the terms of any such Contract, by the Company or any Subsidiary of
more than $50,000;
(vi) all guarantees of any Indebtedness or other
obligations of the Company, any Subsidiary or any third Person;
(vii) all Contracts relating to (A) the future
disposition or acquisition of any Assets and Properties, other than
dispositions or acquisitions in the ordinary course of business
consistent with past practice and the provisions of this Agreement and
the Operative Agreements, and (B) any Business Combination;
(viii) all Contracts between or among the Company or
any Subsidiary, on the one hand, and any current or former officer,
director, stockholder or Affiliate of the Company or any Subsidiary or
any Affiliate of any such officer, director, stockholder or Affiliate,
including, without limitation, any Company Stockholder (other than ▇▇▇
▇▇▇▇, the Company or any Subsidiary), on the other hand, other than
contracts disclosed pursuant to Section 2.19(a)(i) hereof;
(ix) all collective bargaining or similar labor
Contracts;
(x) all Contracts that (A) limit or contain
restrictions on the ability of the Company or any Subsidiary to declare
or pay dividends on, to make any other distribution in respect of or to
issue or purchase, redeem or otherwise acquire its capital stock, to
incur Indebtedness, to incur or suffer to exist any Lien, to purchase
or sell any Assets and Properties, to change the lines of business in
which it participates or engages or to engage in any Business
Combination, (B) require the Company or any Subsidiary to maintain
specified financial ratios or levels of net worth or other indicia of
financial condition or (C) require the Company or any Subsidiary to
maintain insurance in certain amounts or with certain coverages; and
(xi) all other Contracts, including but not limited
to Contracts with customers, that involve the payment or potential
payment, pursuant to the terms of any such Contract, by or to the
Company or any Subsidiary of more than $50,000 and all powers of
attorney and comparable delegations of authority.
(b) Each Contract required to be disclosed in Section 2.19(a)
of the Disclosure Schedule is in full force and effect and constitutes a legal,
valid and binding agreement, enforceable in accordance with its terms, of each
party thereto; and except as disclosed in Section 2.19(b) of the Disclosure
Schedule neither the Company nor any Subsidiary nor, to the knowledge of the
Company or any Subsidiary, any other party to such Contract is, or has received
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notice that it is, in violation or breach of or default under any such Contract
(or with notice or lapse of time or both, would be in violation or breach of or
default under any such Contract).
2.20 Licenses. Section 2.20 of the Disclosure Schedule
contains a true and complete list of all Licenses used in and material to the
business or operations of the Company and the Subsidiaries, setting forth the
owner, the function and the expiration and renewal date of each. Prior to the
execution of this Agreement, the Company has delivered to ▇▇▇ ▇▇▇▇ true and
complete copies of all such Licenses. Except as disclosed in Section 2.20 of the
Disclosure Schedule:
(a) the Company and the Subsidiaries own or validly hold all
Licenses that are material to their respective business or operations;
(b) each License listed in Section 2.20 of the Disclosure
Schedule is valid, binding and in full force and effect; and
(c) neither the Company nor any Subsidiary is, or has received
any notice that it is, in default (or with the giving of notice or lapse of time
or both, would be in default) under any such License.
2.21 Insurance. Section 2.21 of the Disclosure Schedule
contains a true and complete list (including the names and addresses of the
insurers, the expiration dates thereof, the annual premiums and payment terms
thereof, the period of time covered thereby and a brief description of the
interests insured thereby) of all liability, property, workers' compensation,
directors' and officers' liability and other insurance policies currently in
effect that insure the business, operations or employees of the Company and the
Subsidiaries or affect or relate to the ownership, use or operation of any of
the Assets and Properties of the Company or any Subsidiary and that (i) have
been issued to the Company or any Subsidiary or (ii) have been issued to any
Person (other than the Company or any Subsidiary) for the benefit of the Company
or any Subsidiary. The insurance coverage provided by the policies described in
clause (i) above will not terminate or lapse by reason of any of the
transactions contemplated by this Agreement or the Operative Agreements. Each
policy listed in Section 2.21 of the Disclosure Schedule is valid and binding
and in full force and effect, all premiums due thereunder have been paid when
due and none of the Company, any Subsidiary, or the Person to whom such policy
has been issued has received any notice of cancellation or termination in
respect of any such policy or is in default thereunder, and neither the Company
nor any Subsidiary knows of any reason or state of facts that could lead to the
cancellation of such policies. The insurance policies listed in Section 2.21 of
the Disclosure Schedule (i) in light of the business, operations and Assets and
Properties of the Company and the Subsidiaries are in amounts and have coverages
that are reasonable and customary for Persons engaged in such businesses and
operations and having such Assets and Properties and (ii) are in amounts and
have coverages as required by any Contract to which the Company or any
Subsidiary is a party. Section 2.21 of the Disclosure Schedule contains a list
of all pending claims made under any insurance policies covering the
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Company or the Subsidiaries. None of the Company or any Subsidiary has received
notice that any insurer under any policy referred to in this Section 2.21 is
denying liability with respect to a claim thereunder or defending under a
reservation of rights clause.
2.22 Affiliate Transactions.
(a) Except as disclosed in Section 2.22(a) of the Disclosure
Schedule (i) there are no Liabilities between the Company or any Subsidiary, on
the one hand, and any current or former officer, director, stockholder,
Affiliate (other than the Company and the Subsidiaries) of the Company or any
Subsidiary or any Affiliate of any such officer, director, stockholder or
Affiliate, including, without limitation, any Company Stockholder, on the other
and (ii) neither the Company nor any Subsidiary provides or causes to be
provided any assets, services or facilities to any such current or former
officer, director, stockholder or Affiliate.
(b) Except as disclosed in Section 2.22(b) of the Disclosure
Schedule, each of the Liabilities and transactions listed in Section 2.22(a) of
the Disclosure Schedule was incurred or engaged in, as the case may be, on an
arm's-length basis on competitive terms.
(c) Except as disclosed in Section 2.22(a) of the Disclosure
Schedule, no Company Stockholder nor any of their respective Affiliates (other
than the Company and its subsidiaries), as the case may be, has any interest of
any nature in any of the Assets and Properties used for or related to the
business or operations of the Company or any of the Subsidiaries.
2.23 Employees; Labor Relations. Except as disclosed in
Section 2.23 of the Disclosure Schedule, to the knowledge of the Company and the
Subsidiaries, neither the Company nor any Subsidiary is engaged in any labor or
employment practice which could reasonably be expected to have a material
adverse effect on the Business or Condition of the Company. There is (i) no
unfair labor practice complaint pending or, to the knowledge of the Company or
any Subsidiary, threatened against the Company or its Subsidiaries before the
National Labor Relations Board, and no grievance or arbitration proceeding
arising out of or under collective bargaining agreements is so pending or, to
the knowledge of the Company or any Subsidiary, threatened against the Company
or its Subsidiaries, (ii) no strike, labor dispute, slowdown or stoppage pending
or, to the knowledge of the Company or any Subsidiary, threatened against the
Company or its Subsidiaries, and (iii) no union representation question exists
with respect to the employees of the Company or its Subsidiaries and, to the
knowledge of the Company or any Subsidiary, no union organizing activities are
taking place.
2.24 Environmental Matters.
(a) The Company and the Subsidiaries have obtained and hold
all necessary Environmental Permits.
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(b) The Company and the Subsidiaries are in compliance with
all terms, conditions and provisions of all applicable (i) Environmental Permits
and (ii) Environmental Laws.
(c) There are no past, pending, or (to the knowledge of the
Company or any Subsidiary) threatened Environmental Claims against the Company
or any Subsidiary, and neither the Company nor any Subsidiary is aware of any
facts or circumstances which could reasonably be expected to form the basis for
any Environmental Claim against the Company or any Subsidiary.
(d) No Releases of Hazardous Materials have occurred at, from,
in, to, on, or under any Site and no Hazardous Materials are present in, on,
about or migrating to or from any Site that could give rise to an Environmental
Claim against the Company or any Subsidiary.
(e) Neither the Company, any Subsidiary, any predecessor of
the Company or any Subsidiary, nor any entity previously owned by the Company or
any Subsidiary, has transported or arranged for the treatment, storage,
handling, disposal, or transportation of any Hazardous Material to any off-Site
location which could result in an Environmental Claim against the Company or any
Subsidiary.
(f) Except as set forth in Section 2.24(f) of the Disclosure
Schedule, there are no (a) underground storage tanks, active or abandoned, (b)
polychlorinated biphenyl containing equipment, or (c) asbestos containing
material at any Site.
2.25 Substantial Suppliers. Section 2.25 of the Disclosure
Schedule lists the ten (10) largest suppliers of the Company and the
Subsidiaries on the basis of cost of goods or services purchased for the most
recent fiscal year. Except as disclosed in Section 2.25 of the Disclosure
Schedule, to the knowledge of the Company or any Subsidiary, no such supplier
(i) is threatened with bankruptcy or insolvency, or (ii) will cease to conduct
business with the Company or will conduct business with the Company on terms
materially different than existed in past practice, as a result of the
transactions contemplated hereby.
2.26 Accounts Receivable. Except as set forth in Section 2.26
of the Disclosure Schedule, the accounts and notes receivable of the Company and
the Subsidiaries reflected on the balance sheet included in the Audited
Financial Statements for the period ended January 31, 1998, and all accounts and
notes receivable arising subsequent to January 31, 1998, (i) arose from bona
fide sales transactions in the ordinary course of business consistent with past
practice and are payable on ordinary trade terms, (ii) are legal, valid and
binding obligations of the respective debtors enforceable in accordance with
their respective terms, (iii) are not subject to any valid set-off or
counterclaim, (iv) did not arise out of sales of goods on consignment, on
approval or on a sale-or-return basis or subject to any other repurchase or
return arrangement, and (v) are not the subject of any Actions or Proceedings
brought by or on behalf of the Company or any Subsidiary. Section 2.26 of the
Disclosure Schedule sets forth a description of any
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security arrangements and collateral securing the repayment or other
satisfaction of receivables of the Company or any Subsidiary.
2.27 Other Negotiations; Brokers.
(a) Except as set forth in Section 2.27(a) of the Disclosure
Schedule, neither the Company, nor any Subsidiary, nor any Company Stockholder,
nor any of their respective Affiliates (nor any investment banker, financial
advisor, attorney, accountant or other Person retained by or acting for or on
behalf of the Company, any Subsidiary or any such Affiliate) has entered into
any agreement or had any discussions with any third party regarding any
transaction involving the Company or any Subsidiary which could result in the
Company, any Subsidiary, ▇▇▇ ▇▇▇▇ or its stockholders or any general partner,
limited partner, officer, director, employee, agent or Affiliate of any of them
being subject to any claim for liability to said third party as a result of
entering into this Agreement or the Operative Agreements or consummating the
transactions contemplated hereby or thereby.
(b) Except as set forth in Section 2.27(b) of the Disclosure
Schedule, no agent, broker, finder, investment banker, financial advisor or
other similar Person will be entitled to any fee, commission or other
compensation in connection with the transactions contemplated by this Agreement
or the Operative Agreements on the basis of any act or statement made by the
Company, any Subsidiary, any Company Stockholder, any of their respective
Affiliates, or any investment banker, financial advisor, attorney, accountant or
other Person retained by or acting for or on behalf of the Company, any
Subsidiary, any Company Stockholder or any such Affiliate.
2.28 Bank and Brokerage Accounts; Investment Assets. Section
2.28 of the Disclosure Schedule sets forth (a) a true and complete list of the
names and locations of all banks, trust companies, securities brokers and other
financial institutions at which the Company or any Subsidiary has an account or
safe deposit box or maintains a banking, custodial, trading or other similar
relationship; and (b) a true and complete list and description of each such
account, box and relationship, indicating in each case the account number and
the names of the respective officers, employees, agents or other similar
representatives of the Company or any Subsidiary having signatory power with
respect thereto.
2.29 Board Recommendation. The Board of Directors of the
Company, at a meeting duly called and held, has (i) determined that this
Agreement and the Transactions, including the Merger, are fair to, and in the
best interests of, the Company Stockholders, and (ii) approved this Agreement
and the Transactions, including the Merger, which approval satisfies in full the
requirements of the FBCA including, without limitation, Section 607.1103 thereof
with respect to the Transactions.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇ makes the following representations and warranties to
the Company with respect to the representations and warranties contained in
Sections 3.01, 3.02, 3.03, 3.04, 3.05, and 3.06 hereof, and to those Company
Stockholders electing to receive ▇▇▇ ▇▇▇▇ common stock pursuant to Section 1.10
hereof with respect to the representations and warranties contained in Sections
3.07 and 3.08 hereof:
3.01 Organization and Qualification. MJAC is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Florida. ▇▇▇ ▇▇▇▇ is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. ▇▇▇ ▇▇▇▇ and MJAC are
each duly qualified, licensed or admitted to do business and in good standing in
each jurisdiction in which the ownership, use or leasing of their respective
Assets and Properties, or the conduct or nature of their respective businesses,
make such qualifications, licenses or admissions necessary, except for such
failures to be so qualified, licensed or admitted and in good standing which,
individually or in the aggregate, could not be reasonably expected to have a
material adverse effect on the validity or enforceability of this Agreement or
the Operative Agreements to which either of them is a party or on the ability of
either of them to perform their respective obligations hereunder or thereunder.
3.02 Authority Relative to This Agreement and the Operative
Agreements. ▇▇▇ ▇▇▇▇ and MJAC each have full corporate power and authority to
enter into this Agreement and the Operative Agreements to which each of them is
a party and to perform their respective obligations hereunder and thereunder and
to consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance of this Agreement and the Operative Agreements to which
each of ▇▇▇ ▇▇▇▇ and MJAC is a party and the consummation by ▇▇▇ ▇▇▇▇ or MJAC,
as the case may be, of the transactions contemplated hereby and thereby have
been duly and validly approved by their respective boards of directors and
stockholders and no other corporate proceedings on the part of either ▇▇▇ ▇▇▇▇,
MJAC or their respective stockholders are necessary to authorize the execution,
delivery and performance of this Agreement and the Operative Agreements to which
each of ▇▇▇ ▇▇▇▇ and MJAC is a party and the consummation by ▇▇▇ ▇▇▇▇ or MJAC,
as the case may be, of the transactions contemplated hereby and thereby. This
Agreement and the Operative Agreements to which each of ▇▇▇ ▇▇▇▇ and MJAC is a
party have been duly and validly executed and delivered by ▇▇▇ ▇▇▇▇ or MJAC, as
the case may be, and constitute legal, valid and binding obligations of ▇▇▇ ▇▇▇▇
or MJAC, as the case may be, enforceable against ▇▇▇ ▇▇▇▇ or MJAC, as the case
may be, in accordance with their respective terms.
3.03 No Conflicts. The execution and delivery by each of ▇▇▇
▇▇▇▇ and MJAC of this Agreement do not, and the execution and delivery by each
of ▇▇▇ ▇▇▇▇ and MJAC of the Operative Agreements to which either of them is a
party, the performance by each of ▇▇▇ ▇▇▇▇ and
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MJAC of their respective obligations under this Agreement and such Operative
Agreements and the consummation of the transactions contemplated hereby and
thereby did not, do not and will not:
(i) conflict with or result in a violation or breach
of any of the terms, conditions or provisions of the certificate of
incorporation or by-laws of ▇▇▇ ▇▇▇▇ or MJAC;
(ii) subject to obtaining the consents, approvals and
actions, making the filings and giving the notices disclosed in Section
4.03 of the Disclosure Schedule, if any, conflict with or result in a
violation or breach of any term or provision of any Law or Order
applicable to ▇▇▇ ▇▇▇▇ or MJAC or their respective Assets and
Properties; or
(iii) except as disclosed in Section 4.03 of the
Disclosure Schedule, (a) conflict with or result in a violation or
breach of, (b) constitute (with or without notice or lapse of time or
both) a default under, or (c) require ▇▇▇ ▇▇▇▇ or MJAC to obtain any
consent, approval or action of, make any filing with or give any notice
(other than a filing, if any, with the Securities and Exchange
Commission and The American Stock Exchange) to any Person as a result
or under the terms of any Contract or License to which ▇▇▇ ▇▇▇▇ or MJAC
is a party or by which their respective Assets and Properties are
bound, the effect of which, individually or in the aggregate, would
reasonably be expected to have a material adverse effect on the ability
of ▇▇▇ ▇▇▇▇, or, as the case may be, MJAC to consummate the
transactions contemplated by this Agreement.
3.04 Governmental Approvals and Filings. Except as disclosed
in Section 3.04 of the Disclosure Schedule, no consent, approval or action of,
filing with or notice to any Governmental or Regulatory Authority on the part of
▇▇▇ ▇▇▇▇ or MJAC is required in connection with the execution, delivery and
performance of this Agreement or the Operative Agreements to which either of
them is a party or the consummation of the transactions contemplated hereby or
thereby.
3.05 Legal Proceedings. Except as disclosed in Section 2.12 of
the Disclosure Schedule, there are no Actions or Proceedings pending or, to the
knowledge of ▇▇▇ ▇▇▇▇ or MJAC, threatened against, relating to or affecting ▇▇▇
▇▇▇▇ or MJAC, as the case may be, or any of their respective Assets and
Properties which (i) could reasonably be expected to result in the issuance of
an Order restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement or any of
the Operative Agreements or (ii) could reasonably be expected, individually or
in the aggregate with other such Actions or Proceedings, to have a material
adverse effect on the Business or Condition of ▇▇▇ ▇▇▇▇ or MJAC, as the case may
be.
3.06 Brokers. No agent, broker, finder, investment banker,
financial advisor or other similar Person will be entitled to any fee,
commission or other compensation in connection
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with any of the transactions contemplated by this Agreement or the Operative
Agreements on the basis of any act or statement made by ▇▇▇ ▇▇▇▇ or MJAC.
3.07 Financial Statements. ▇▇▇ ▇▇▇▇ has furnished the Company
with true and complete copies of its audited consolidated balance sheets as of
January 31, 1998 and the related consolidated statements of operations and cash
flows, together with the notes thereto (the "▇▇▇ ▇▇▇▇ Financial Statements").
The ▇▇▇ ▇▇▇▇ Financial Statements fairly present in all material respects the
consolidated financial position of ▇▇▇ ▇▇▇▇ as of the dates thereof and for the
periods covered thereby and the results of operations and cash flows of ▇▇▇ ▇▇▇▇
for the periods set forth therein, all in conformity with GAAP, except as
specifically noted in the notes thereto.
3.08 SEC Documents. As of their respective dates, the SEC
Documents filed by ▇▇▇ ▇▇▇▇ with the Securities and Exchange Commission complied
in all material respects with the requirements of the Securities Exchange Act of
1934 and the applicable rules and regulations of the Securities and Exchange
thereunder. Each of the SEC Documents, as of the date of its filing, did not
contain any untrue statement of material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
ARTICLE IV
COVENANTS
The Parties hereto hereby covenant as follows:
4.01 Conduct of Business Prior to the Closing.
(a) The Company covenants and agrees that between the date
hereof and the Closing Date, it shall (i) conduct its business in the ordinary
course and consistent with its prior practice, and (ii) use its best efforts to
collect any Indebtedness owed to it by any Company Stockholder, provided,
however, that ▇▇▇ ▇▇▇▇ may, and may direct the Paying Agent to, offset from the
Merger Consideration payable to any Company Stockholder any such sums not so
collected as of the date such Company Stockholder surrenders his or its Shares
in accordance with Section 1.10 hereof.
(b) The Company covenants and agrees that prior to the Closing
Date, and without making any commitment on ▇▇▇ ▇▇▇▇'▇ behalf, it will use all
reasonable efforts to preserve substantially intact the business organization of
the Company, to keep available to ▇▇▇ ▇▇▇▇ the services of the employees of the
Company and to preserve the current relationships of the Company with its
customers, suppliers and other persons with which the Company has significant
business relationships.
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(c) The Company covenants and agrees that prior to the Closing
Date, it will maintain its Books and Records in the usual, regular and ordinary
manner consistent with past practices; to use all reasonable efforts to continue
in full force and effect the policies of insurance listed in Section 2.21 of the
Disclosure Schedule or comparable substitute policies and will promptly notify
▇▇▇ ▇▇▇▇ of any cancellation or non-renewal of such insurance; and to use all
reasonable efforts to maintain all of the Company's Assets and Properties in
good repair, working order and operating condition (subject only to ordinary
wear and tear).
(d) The Company covenants and agrees that prior to the Closing
Date, it will not amend its charter or by-laws or merge or consolidate or sell
all or substantially all of its Assets and Property, or obligate itself to do
so, with or into or to any other entity, without the prior written consent of
▇▇▇ ▇▇▇▇.
(e) The Company covenants and agrees that prior to the Closing
Date, it will (i) comply with all material applicable Laws, (ii) file all
foreign, federal, state and local Tax Returns required to be filed and make
timely payments of applicable Taxes when due (taking into account any duly
obtained extensions); and (iii) take all reasonable actions necessary to be in
compliance with, and to maintain the effectiveness of, all material Licenses.
(f) The Company covenants and agrees that without the prior
written consent of ▇▇▇ ▇▇▇▇, it will not, prior to the Closing Date:
(i) change its Tax or accounting methods, principles
or practices, except to the extent (with respect to accounting matters)
required by GAAP and concurred in by the Company's independent
accountants;
(ii) declare, set aside or pay any dividend or other
distribution (whether in cash, stock, property or any combination
thereof) in respect of the capital stock (or other equity interests) of
the Company or any other securities or redeem, repurchase or otherwise
acquire any equity securities;
(iii) revalue any of its assets, including, without
limitation, writing off notes or accounts receivable, other than in the
ordinary course of business consistent with past practice;
(iv) establish or increase any bonus, insurance,
severance, termination, deferred compensation, pension, retirement,
profit sharing, stock option (including, without limitation, the
granting of stock options, stock appreciation rights, performance
awards, or restricted stock awards), stock purchase or other employee
benefit plans, or otherwise increase the compensation payable or to
become payable to any directors, officers or employees of the Company,
except salary increases as may be required by law, salary increases to
non-officers in the ordinary course of business consistent with past
practice and not in excess or $25,000 per annum in the aggregate;
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(v) enter into any employment or severance agreement
with any of its directors, officers or employees (whether new hires or
existing employees) or establish, adopt or enter into any collective
bargaining agreement or adopt or amend any Benefit Plan;
(vi) create, incur, assume, maintain or permit to
exist any Lien on any Asset or Property of the Company other than
Permitted Liens;
(vii) except for borrowings under the Revolving
Credit Facility in the ordinary course of business consistent with past
practice, create, incur or assume any Indebtedness for borrowed money,
including obligations in respect of capital leases, or guarantee any
Indebtedness for borrowed money or any other obligation of any other
Person;
(viii) pay or discharge any material claim, Liability
or Lien (whether absolute, accrued, contingent or otherwise), or waive
any right, other than in the ordinary course of business consistent
with past practice or pursuant to binding contractual obligations of
the Company in existence on the date hereof;
(ix) hire any new employees, agents or consultants at
an annual base salary in excess of $50,000;
(x) authorize or make any capital expenditure in
excess of an aggregate of $25,000;
(xi) issue or agree to issue any shares of its
capital stock or securities exercisable or exchangeable for or
convertible into such capital stock;
(xii) become a party to any agreement which, if it
existed on the date hereof, would be required to be listed in the
Disclosure Schedule, or amend or terminate any material Contact;
(xiii) dispose of or acquire any material Assets or
Properties;
(xiv) abandon, modify, waive, terminate or otherwise
change any of the Licenses described in Section 2.20 of the Disclosure
Schedule;
(xv) settle or compromise any material claims against
the Company, provided that ▇▇▇ ▇▇▇▇'▇ consent to settle or compromise
the State of Florida sales tax audit disclosed pursuant to Section 2.11
of the Disclosure Schedule and the legal proceedings disclosed as items
(1) and (2) in Section 2.12 of the Disclosure Schedule shall not be
unreasonably withheld; reasonableness in this regard will be determined
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consistent with the amounts reserved for such matters in the Audited
Financial Statements;
(xvi) take any action or course of action inconsistent
with compliance with the covenants and agreements contained in this
Agreement; or
(xvii) take or agree to commit to take any action that
would make any representation or warranty of the Company contained
herein inaccurate in any material respect at the Closing or omit to
take any action necessary to prevent any such representation or
warranty from being inaccurate in any material respect at such time or
which would diminish the value of the Company as a going concern.
4.02 Access to Information. From the date hereof until the
Closing, upon reasonable notice, the Company shall, and shall cause the
Company's officers, directors, employees, auditors and agents to, (i) afford the
officers, employees and authorized agents and representatives of ▇▇▇ ▇▇▇▇
reasonable access, during normal business hours, to the offices, properties,
Books and Records of the Company and to the Company's officers, employees,
agents, accountants and actuaries, and (ii) furnish to the officers, employees
and authorized agents and representatives of ▇▇▇ ▇▇▇▇ such additional financial
and operating data and other information regarding the assets, properties,
goodwill and business of the Company as ▇▇▇ ▇▇▇▇ may from time to time
reasonably request; provided, however, that such investigation shall not
unreasonably interfere with the business or operations of the Company. No
investigation or access to information pursuant to this Section 4.02 shall
affect any representation or warranty made by The Company to ▇▇▇ ▇▇▇▇ hereunder
or otherwise affect the rights and remedies available to ▇▇▇ ▇▇▇▇ hereunder.
4.03 Books and Records.
(a) ▇▇▇ ▇▇▇▇ agrees that it shall preserve and keep all
material Books and Records of the Company for the period up to and including the
Closing Date in the possession of ▇▇▇ ▇▇▇▇ or the Company for a period of at
least five years from the Closing Date. After such five-year period, before ▇▇▇
▇▇▇▇ or the Company shall dispose of any of such Books and Records, at least 90
calendar days' prior written notice to such effect shall be given by ▇▇▇ ▇▇▇▇ to
the Company Stockholders, and the Company Stockholders, on their own behalf
shall be given an opportunity, at their cost and expense, to remove and retain
all or any part of such Books and Records as such the Company Stockholders may
select. During such five-year period, duly authorized representatives of the
Company Stockholders shall, upon reasonable notice, have access thereto during
normal business hours to examine, inspect and copy such Books and Records, with
any out-of-pocket costs being borne by such the Company Stockholders upon
providing to ▇▇▇ ▇▇▇▇ in reasonable detail the basis upon which such requested
Books and Records are relevant to the inquiry, and such access shall be limited
to such relevant Books and Records.
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(b) If, in order properly to prepare documents required to be
filed with governmental authorities or financial statements, it is necessary
that any party hereto or any successors be furnished with additional information
relating to the Company, and such information is in the possession of the other
parties hereto, such possessing party agrees to use all reasonable efforts to
furnish such information to such other parties, at the cost and expense of the
party making the request, upon the furnishing by the requesting party the reason
such information is necessary, and excluding from any party's obligation any
information which is subject to a confidentiality agreement with any third
Person.
4.04 Confidentiality. The terms of the letter agreement dated
January 16, 1998 between the Company and ▇▇▇ ▇▇▇▇ with respect to the use of
confidential information (collectively, the "Confidentiality Provisions") are
hereby incorporated by reference and shall continue in full force and effect
until the Closing, at which time such Confidentiality Provisions and the
obligations of ▇▇▇ ▇▇▇▇ under this Section 4.04 shall terminate. If this
Agreement is, for any reason, terminated prior to the Closing, the
Confidentiality Provisions shall continue in full force and effect in respect of
such confidential information. After the Closing Date, the Company and its
Affiliates shall keep all non-public information relating to ▇▇▇ ▇▇▇▇ or the
Company confidential on the same terms as set forth for ▇▇▇ ▇▇▇▇ in the
Confidentiality Provisions.
4.05 Regulatory and Other Authorizations; Consents.
(a) Each of the Company and ▇▇▇ ▇▇▇▇ will use all reasonable
efforts to obtain all authorizations, consents, orders and approvals of all
federal, state, local and foreign regulatory bodies and officials that may be or
become necessary for its execution and delivery of, and the performance of its
obligations pursuant to, this Agreement, and will cooperate fully with the other
parties in promptly seeking to obtain all such authorizations, consents, orders
and approvals, subject to the proviso in Section 4.05(b) hereof.
(b) ▇▇▇ ▇▇▇▇ and the Company will use all their respective
reasonable efforts to assist one another in obtaining the consents referred to
in Sections 5.01(d), 5.02(d) hereof and, if any, the consents referred to in
Section 5.01(e) hereof; provided, however, that ▇▇▇ ▇▇▇▇ shall not be obligated
with respect to such assistance (i) to expend any funds except the payment of
the fees and expenses of any applicable attorneys, consultants or other advisors
retained by it and applicable filing fees or (ii) to take any actions with
respect to its business or the business of the Company which, in its reasonable
judgement, is materially adverse.
(c) The Company and the Subsidiaries shall (a) take all
necessary or desirable steps and proceed diligently and in good faith and use
its best efforts, as promptly as practicable, to obtain all consents, approvals
or actions of, to make all filings with and to give all notices to, Governmental
or Regulatory Authorities or any other Person required of the Company or any
Subsidiary to consummate the transactions contemplated hereby and by the
Operative Agreements and those described in Sections 2.05 and 2.06 of the
Disclosure Schedule, (b)
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provide such other information and communications to such Governmental or
Regulatory Authorities or other Persons as ▇▇▇ ▇▇▇▇ or such Governmental or
Regulatory Authorities or other Persons may reasonably request and (c) cooperate
with ▇▇▇ ▇▇▇▇ as promptly as practicable in obtaining all consents, approvals or
actions of, making all filings with and giving all notices to, Governmental or
Regulatory Authorities or other Persons required of ▇▇▇ ▇▇▇▇ to consummate the
transactions contemplated hereby or by the Operative Agreements. The Company
will provide prompt notification to ▇▇▇ ▇▇▇▇ when any such consent, approval,
action, filing or notice referred to in clause (a) above is obtained, taken,
made or given, as applicable, and will advise ▇▇▇ ▇▇▇▇ of any communications
(and, unless precluded by Law, provide copies of any such communications that
are in writing) with any Governmental or Regulatory Authority or other Person
regarding any of the transactions contemplated by this Agreement or any of the
Operative Agreements.
4.06 No Solicitation of Offers, Etc.
(a) Prior to the termination of this Agreement in accordance
with its terms, the Company and its Affiliates shall not, nor shall they
authorize or permit any officer, director, employee, investment banker,
attorney, accountant or other representative of or Person retained by them to,
directly or indirectly, take any action to knowingly solicit, encourage or
facilitate any action that might lead to, or accept any offers, initiate or
participate in negotiations or discussions with, or provide any non-public
information to, or enter into any letter of intent, preliminary agreement or
definitive agreement with any Person with respect to, any possible merger,
acquisition, reorganization, exchange offer or any sale of all or substantially
all of the Assets and Properties, purchase or sale of capital stock or equity
equivalents (whether outstanding shares, treasury or other shares) or change in
control of, or any similar transaction or transactions involving, directly or
indirectly, the Company (collectively, a "Sale"). The Company shall immediately
cease and cause to be terminated any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any of the
foregoing. The foregoing shall not prevent any director of the Company, solely
in his capacity as a director and not as a shareholder of the Company, from
entering into discussions relating to a Sale with any Person if (i) the Closing
has been delayed beyond July 31, 1998 and this Agreement has not been terminated
by either party; and (ii) the directors of the Company, on the written advice of
legal counsel to the Company satisfactory to ▇▇▇ ▇▇▇▇, shall have determined in
good faith that the directors must engage in such discussions to avoid breaching
their fiduciary obligations to the stockholders of the Company.
(b) The Company acknowledges and agree that a violation by it
of Section 4.06(a) hereof will cause irreparable damage to ▇▇▇ ▇▇▇▇.
Accordingly, the Company agrees that, in the event of a breach of Section
4.06(a) hereof, and assuming that ▇▇▇ ▇▇▇▇ is not in material breach of this
Agreement, ▇▇▇ ▇▇▇▇ shall be entitled to a temporary, permanent or mandatory
injunction or restraining order to prevent breaches of Section 4.06(a) hereof
and to specifically enforce the terms and provisions thereof without the need to
post any security or bond, such rights to be cumulative and in addition to
whatever other remedies at law or in equity or otherwise ▇▇▇ ▇▇▇▇ may have
pursuant to this Agreement.
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(c) In addition to the foregoing, if this Agreement is
terminated, and the Company within twelve months of the date hereof enters into
an agreement relating to, or close, a Sale, ▇▇▇ ▇▇▇▇ shall be entitled to a
break-up fee of $500,000 from the Company, such break-up fee to be cumulative
and in addition to whatever other remedies at law or in equity or otherwise ▇▇▇
▇▇▇▇ may have pursuant to this Agreement.
4.07 Notice of Certain Matters.
(a) The Company covenants and agrees to give prompt notice in
writing to ▇▇▇ ▇▇▇▇ of: (i) any information that indicates that any
representation or warranty of the Company contained herein was not true and
correct as of the date hereof or will not be true and correct as of the Closing
Date, (ii) the occurrence of any event which will result, or has a reasonable
prospect of resulting, in the failure to satisfy a condition specified in
Article V hereof, (iii) any notice or other communication from any third party
alleging that the consent of such third party is or may be required in
connection with the transactions contemplated by this Agreement, (iv) any notice
of, or other communication relating to, any default or event which, with notice
or lapse of time or both, would become a default under any material Contract and
(v) any change in the officers or directors of the Company.
(b) The Company covenants and agrees to (i) promptly advise
▇▇▇ ▇▇▇▇ of any fact, condition or change that, individually or in the
aggregate, has or results in a material adverse effect on the Business or
Condition of the Company, and (ii) notify ▇▇▇ ▇▇▇▇ of any governmental
complaint, investigation or hearing (or communications indicating that the same
may be contemplated) or adjudicatory proceeding involving the Company or any
Assets and Properties of the Company, and will keep ▇▇▇ ▇▇▇▇ fully informed of
such events and permit ▇▇▇ ▇▇▇▇'▇ representatives reasonable access to all
materials prepared in connection therewith.
(c) The giving of any such notice under this Section 4.07 or
the providing of the financial statements contemplated by Section 4.08 hereof
shall in no way change or modify the Company's representations and warranties or
the conditions to ▇▇▇ ▇▇▇▇'▇ obligations contained herein or otherwise affect
the remedies available to ▇▇▇ ▇▇▇▇ hereunder.
4.08 Interim Financial Statements. The Company shall deliver
promptly to ▇▇▇ ▇▇▇▇ any and all final monthly, quarterly and annual financial
statements for the Company, audited or unaudited, prepared for the management of
the Company after the date of this Agreement and prior to the Closing Date, and
the Company shall use their best efforts to cause the Company to prepare such
financial statements.
4.09 Operation of Surviving Corporation as a Subsidiary. It is
the present intention of ▇▇▇ ▇▇▇▇ to operate the Surviving Corporation after the
Closing as wholly-owned direct or indirect subsidiary of ▇▇▇ ▇▇▇▇; that this
provision is to be construed solely as a present intention and shall not limit
▇▇▇ ▇▇▇▇, exercising its reasonable business judgment, from exerting
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sole authority and control over the conduct of its business and the business of
the Surviving Corporation, including, without limitation, changing the corporate
structure or ownership of the Surviving Corporation, merging or combining all or
a portion of the business of the Surviving Corporation with other Subsidiaries
or Affiliates of ▇▇▇ ▇▇▇▇ or selling, otherwise disposing or liquidating the
Surviving Corporation or its business, and neither the Surviving Corporation nor
any Company Stockholder shall have any rights of action with respect to any such
decision.
4.10 Indemnification; Directors' and Officers' Insurance.
(a) Until six years from the Closing Date, unless otherwise
required by applicable law, the certificate of incorporation and by-laws of the
Surviving Corporation shall contain provisions no less favorable with respect to
the elimination of liability of directors and the indemnification of (and
advancement of expenses to) directors, officers, employees and agents that are
set forth in the certificate of incorporation and by-laws of the Company, as in
effect on the date hereof.
(b) ▇▇▇ ▇▇▇▇ will cause to be maintained for a period of not
less than six years from the Closing Date the Company's current directors' and
officers' insurance and indemnification policy to the extent that it provides
coverage for events occurring prior to the Closing Date (the "D&O Policy") for
all persons who are directors and officers of the Company on the date of this
Agreement; provided, however, that ▇▇▇ ▇▇▇▇ may, in lieu of maintaining the D&O
Policy as provided above, cause coverage to be provided under any policy
maintained for the benefit of ▇▇▇ ▇▇▇▇ or any of its Affiliates, so long as the
terms thereof are no less advantageous to the intended beneficiaries thereof
than the D&O Policy. If the D&O Policy or any alternative policy expires, is
terminated or canceled during such six-year period, ▇▇▇ ▇▇▇▇ will use all
reasonable efforts to cause to be obtained as much directors' and officers'
insurance as can be obtained for the remainder of such period for an annualized
premium not in excess of an annual premium of up to 150% of the last annual
premium paid therefor, on terms and conditions no less advantageous to the
covered persons than the D&O Policy. The Company represents to ▇▇▇ ▇▇▇▇ that the
current annual premium on the D&O Policy is $42,149.
4.11 FBCA; Stockholder Consents. The Surviving Corporation
will, pursuant to ▇▇▇ ▇▇▇▇'▇ reasonable request, provide notice to any Company
Stockholders (other than those Company Stockholders who have agreed to sell
their Shares to ▇▇▇ ▇▇▇▇ pursuant to the Stock Purchase Agreement) who have not
consented to the adoption of this Agreement and the approval of the Merger in
accordance with the FBCA.
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ARTICLE V
CONDITIONS TO OBLIGATION TO CLOSE
5.01 Conditions to the Obligations of MJAC and ▇▇▇ ▇▇▇▇. The
obligations of MJAC and ▇▇▇ ▇▇▇▇ to consummate the Transactions are subject to
satisfaction or waiver by MJAC and ▇▇▇ ▇▇▇▇ of the following conditions:
(a) Representations and Warranties. Each of the
representations and warranties made by the Company in this Agreement shall be
true and correct in all material respects (if not qualified by materiality) and
in all respects (if qualified by materiality) on and as of the Closing Date as
though such representation or warranty was made on and as of the Closing Date,
and any representation or warranty made as of a specified date earlier than the
Closing Date shall also have been true and correct in all material respects (if
not qualified by materiality) and in all respects (if qualified by materiality)
on and as of such earlier date.
(b) Performance. The Company shall have performed and complied
with each agreement, covenant and obligation required by this Agreement or any
Operative Agreement to be so performed or complied with by such Person at or
before the Closing.
(c) Orders and Laws. There shall not be in effect on the
Closing Date any Order or Law restraining, enjoining or otherwise prohibiting or
making illegal the consummation of any of the transactions contemplated by this
Agreement or any of the Operative Agreements or which could reasonably be
expected to otherwise result in a material diminution of the benefits of the
transactions contemplated by this Agreement or any of the Operative Agreements
to ▇▇▇ ▇▇▇▇, and there shall not be pending or threatened on the Closing Date
any Action or Proceeding or any other action (i) which could reasonably be
expected to result in the issuance of any such Order or the enactment,
promulgation or deemed applicability to ▇▇▇ ▇▇▇▇, the Company, any Subsidiary or
the transactions contemplated by this Agreement or any of the Operative
Agreements of any such Law; or (ii) wherein an unfavorable judgment, decree or
Order would prevent the carrying out of this Agreement or any of the Operative
Agreements or any of the transactions or events contemplated hereby or thereby,
declare unlawful any of the transactions or events contemplated by this
Agreement or present a risk of damages to ▇▇▇ ▇▇▇▇.
(d) Regulatory Consents and Approvals. All consents, approvals
and actions of, filings with and notices to any Governmental or Regulatory
Authority necessary to permit ▇▇▇ ▇▇▇▇, MJAC and the Company to perform their
obligations under this Agreement and the Operative Agreements and to consummate
the transactions contemplated hereby and thereby (i) shall have been duly
obtained, made or given, (ii) shall be in form and substance reasonably
satisfactory to ▇▇▇ ▇▇▇▇, (iii) shall not impose any limitations or restrictions
on ▇▇▇ ▇▇▇▇, (iv) shall not be subject to the satisfaction of any condition that
has not been satisfied or waived and (v)
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shall be in full force and effect, and all terminations or expirations of
waiting periods imposed by any Governmental or Regulatory Authority necessary
for the consummation of the transactions contemplated by this Agreement and the
Operative Agreements shall have occurred.
(e) Third Party Consents. The consents (or in lieu thereof
waivers) disclosed in Section 2.05 of the Disclosure Schedule, and all other
consents (or in lieu thereof waivers) to the performance by the Company of its
obligations under this Agreement, and the Operative Agreements or to the
consummation of the transactions contemplated hereby and thereby as are required
under any Contract or License to which the Company is a party or by which any of
its Assets and Properties are bound and where the failure to obtain any such
consent (or in lieu thereof waiver) could reasonably be expected, individually
or in the aggregate with other such failures, to materially adversely affect ▇▇▇
▇▇▇▇, MJAC or the Business or Condition of the Company or otherwise result in a
material diminution of the benefits of the transactions contemplated by this
Agreement and the Operative Agreements to ▇▇▇ ▇▇▇▇ in its sole discretion, (i)
shall have been obtained, (ii) shall be in form and substance satisfactory to
▇▇▇ ▇▇▇▇ in its sole discretion, (iii) shall not be subject to the satisfaction
of any condition that has not been satisfied or waived and (iv) shall be in full
force and effect.
(f) Officers' Certificates. The Company shall have delivered
to ▇▇▇ ▇▇▇▇ (i) a certificate in form and substance reasonably satisfactory to
▇▇▇ ▇▇▇▇ and the Company, dated the Closing Date and executed by the Secretary
or Assistant Secretary of the Company, and (ii) a certificate in form and
substance reasonably satisfactory to ▇▇▇ ▇▇▇▇ and the Company, dated the Closing
Date and executed by the President or Chief Financial Officer of the Company,
confirming that all of the conditions set forth in Section 5.01(a) through (e)
hereof, to the extent they concern the Company, have been satisfied.
(g) Good Standing Certificates. The Company shall have
delivered to ▇▇▇ ▇▇▇▇ (a) copies of the certificate or articles of incorporation
(or other comparable corporate charter documents), including all amendments
thereto of the Company and the Subsidiaries certified by the applicable
Secretary of State or other appropriate government official, (b) certificates
from the applicable Secretary of State or other appropriate government official
to the effect that the Company and each Subsidiary is in good standing or
subsisting in such jurisdiction, listing all charter documents of the Company
and each Subsidiary on file and attesting to its payment of all franchise or
similar Taxes, and (c) certificates from the Secretary of State or other
appropriate official in each jurisdiction in which the Company and all
Subsidiaries of the Company are qualified or admitted to do business to the
effect that the Company and any such Subsidiary of the Company is duly qualified
or admitted and in good standing in such jurisdiction.
(h) Delivery of Operative Agreements. All Operative Agreements
shall have been duly executed and delivered by the respective parties (other
than ▇▇▇ ▇▇▇▇ or MJAC).
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(i) Resignation of Directors. The Company shall have received
and accepted the resignations of all of the current directors of the Company;
(j) Debt Settlement Amount. The Debt Settlement Amount shall
not exceed $71,200,000, and none of the holders of the Company's Subordinated
Debt shall have exercised, or indicated his or its intention to exercise, any
acceleration, penalty interest, equity conversion or similar right thereunder.
5.02 Conditions to Closing by the Company. The obligations of
the Company to consummate the Transactions are subject to satisfaction or waiver
by the Company of the following conditions:
(a) Representations and Warranties. Each of the
representations and warranties made by ▇▇▇ ▇▇▇▇ in this Agreement shall be true
and correct in all material respects on and as of the Closing Date as though
such representation or warranty was made on and as of the Closing Date.
(b) Performance. ▇▇▇ ▇▇▇▇ shall have performed and complied
with, in all material respects, each agreement, covenant and obligation required
by this Agreement or any Operative Agreement to be so performed or complied with
by ▇▇▇ ▇▇▇▇ at or before the Closing.
(c) Orders and Laws. There shall not be in effect on the
Closing Date any Orders or Laws restraining, enjoining or otherwise prohibiting
or making illegal the consummation of any of the transactions contemplated by
this Agreement or any of the Operative Agreements, and there shall not be
pending or threatened on the Closing Date any Action or Proceeding or any other
action (i) which could reasonably be expected to result in the issuance of any
such Order or the enactment, promulgation or deemed applicability to ▇▇▇ ▇▇▇▇,
the Company or any Company Stockholder or the transactions contemplated by this
Agreement or any of the Operative Agreements of any such Law; or (ii) wherein an
unfavorable judgment, decree or Order would prevent the carrying out of this
Agreement or any of the Operative Agreements or any of the transactions or
events contemplated hereby or thereby or declare unlawful any of the
transactions or events contemplated by this Agreement.
(d) Regulatory Consents and Approvals. All consents, approvals
and actions of, filings with and notices to any Governmental or Regulatory
Authority necessary to permit ▇▇▇ ▇▇▇▇ and MJAC to perform their obligations
under this Agreement and the Operative Agreements and to consummate the
transactions contemplated hereby and thereby (i) shall have been duly obtained,
made or given, (ii) shall not be subject to the satisfaction of any condition
that has not been satisfied or waived and (iii) shall be in full force and
effect, and all terminations or expirations of waiting periods imposed by any
Governmental or Regulatory Authority necessary for the consummation of the
transactions contemplated by this Agreement and the Operative Agreements shall
have occurred.
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(e) Operative Agreements. The Operative Agreements shall have
been duly executed and delivered by the respective parties thereto (other than
the Company or any Company Stockholder), and shall be in full force and effect.
(f) Officers' Certificates. ▇▇▇ ▇▇▇▇ shall have delivered to
the Company (i) a certificate in form and substance reasonably satisfactory to
▇▇▇ ▇▇▇▇ and the Company, dated the Closing Date and executed by the Secretary
or any Assistant Secretary of ▇▇▇ ▇▇▇▇, and (ii) a certificate in form and
substance reasonably satisfactory to ▇▇▇ ▇▇▇▇ and the Company, dated the Closing
Date and executed by the President of ▇▇▇ ▇▇▇▇ confirming that all of the
conditions set forth in Section 5.02(a) through (e) hereof, to the extent they
concern the Company, have been satisfied.
(g) ▇▇▇ ▇▇▇▇ Good Standing Certificates. ▇▇▇ ▇▇▇▇ shall have
delivered to the Company (a) copies of the certificate of incorporation,
including all amendments thereto of ▇▇▇ ▇▇▇▇ certified by the Secretary of State
of the State of Delaware, (b) certificates from the Secretary of State to the
effect that ▇▇▇ ▇▇▇▇ is in good standing or subsisting in such jurisdiction,
listing all charter documents of ▇▇▇ ▇▇▇▇ on file and attesting to its payment
of all franchise or similar Taxes, and (c) certificates from the Secretary of
State or other appropriate official in each jurisdiction in which ▇▇▇ ▇▇▇▇ is
qualified or admitted to do business to the effect that ▇▇▇ ▇▇▇▇ is duly
qualified or admitted and in good standing in such jurisdiction.
(h) MJAC Good Standing Certificates. MJAC shall have delivered
to the Company (a) copies of the certificate of incorporation, including all
amendments thereto of MJAC certified by the Secretary of State of the State of
Florida, (b) certificates from the Secretary of State to the effect that MJAC is
in good standing or subsisting in such jurisdiction, listing all charter
documents of MJAC on file and attesting to its payment of all franchise or
similar Taxes, and (c) certificates from the Secretary of State or other
appropriate official in each jurisdiction in which MJAC is qualified or admitted
to do business to the effect that MJAC is duly qualified or admitted and in good
standing in such jurisdiction.
ARTICLE VI
SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS
6.01 Survival of Representations, Warranties, Covenants and
Agreements. Notwithstanding any right of ▇▇▇ ▇▇▇▇ (whether or not exercised) to
investigate the affairs of the Company, the Company or any Subsidiary or any
right of any party (whether or not exercised) to investigate the accuracy of the
representations and warranties of the other party contained in this Agreement or
the waiver of any provision hereof, the Company, on the one hand, and ▇▇▇ ▇▇▇▇,
on the other hand, have the right to rely fully upon the representations,
warranties, covenants and agreements of the other contained in this Agreement.
The representations, warranties, covenants
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and agreements of the Company and ▇▇▇ ▇▇▇▇ contained in this Agreement (a) will
survive the Closing Date with respect to the covenants contained in Sections
4.03, 4.04, and 4.10 hereof for the time periods indicated in such sections, (b)
will expire on the Closing Date with respect to the representations and
warranties contained in Sections 2.07, 2.13, 2.15, 2.16, 2.18, 2.20, 2.21, 2.23,
2.24, 2.25, 2.27, and 2.28 hereof (c) will survive the Closing Date until the
second anniversary of the Closing Date with respect to all other representations
and warranties and any covenant or agreement to be performed in whole or in part
on or prior to the Closing provided, however, that subsequent to the Closing
Date, claims by or on behalf of ▇▇▇ ▇▇▇▇ asserting the breach of any
representation, warranty covenant or agreement that survives the Closing Date
pursuant to this Article VI may be brought only in accordance with the Joinder
Agreements and the arrangements contemplated thereby.
ARTICLE VII
TERMINATION
7.01 Grounds for Termination. This Agreement may be terminated
at any time prior to the Closing:
(a) by mutual written agreement of ▇▇▇ ▇▇▇▇ and the Company;
(b) by ▇▇▇ ▇▇▇▇ after written notice to the Company if ▇▇▇
▇▇▇▇ is not then in material breach of any material provision of this Agreement
and there has been any one or more misrepresentations in or breaches of the
representations or warranties made by the Company contained herein that, if not
cured on or prior to the Closing Date, could be reasonably expected to give ▇▇▇
▇▇▇▇ grounds not to close under Section 5.01 hereof when taken into account with
all other uncured misrepresentations in or breaches of such representation or
warranties as to which ▇▇▇ ▇▇▇▇ shall have given notice to the Company as
provided in this paragraph (b); a termination pursuant to this paragraph (b)
shall become effective (i) fifteen (15) days after such notice with respect to
such a misrepresentation or breach that is not capable of being cured on or
prior to the Closing Date, or (ii) immediately prior to the Closing with respect
to such a misrepresentation or breach that is capable of being cured, but is not
cured, on or prior to the Closing Date;
(c) by ▇▇▇ ▇▇▇▇ if ▇▇▇ ▇▇▇▇ is not then in material breach of
any material provision of this Agreement after written notice to the Company of
the failure by the Company to perform and satisfy in any material respect any of
their material obligations required to be performed and satisfied by the Company
on or prior to the Closing Date, if the aggregate of all such failures shall be
material; a termination pursuant to this paragraph (c) shall become effective
(i) fifteen (15) days after such notice with respect to such a failure that is
not capable of being cured on or prior to the Closing Date, or (ii) immediately
prior to the Closing with respect to such a failure that is capable of being
cured, but is not cured, on or prior to the Closing Date;
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(d) by the Company after written notice to ▇▇▇ ▇▇▇▇ if the
Company is not then in material breach of any material provision of this
Agreement and there has been one or more material misrepresentation in or
material breaches of the representations or warranties made by ▇▇▇ ▇▇▇▇ herein
which, if not cured on or prior to the Closing Date, could be reasonably
expected to give the Company grounds not to close under Section 5.02 hereof when
taken into account with all other uncured misrepresentations in or breaches of
such representations or warranties as to which the Company shall have given
notice to ▇▇▇ ▇▇▇▇ as provided in this paragraph (d); a termination pursuant to
this paragraph (d) shall become effective (i) fifteen (15) days after such
notice with respect to such a misrepresentation or breach that is not capable of
being cured on or prior to the Closing Date, or (ii) immediately prior to the
Closing with respect to such a misrepresentation or breach that is capable of
being cured, but is not cured, on or prior to the Closing Date;
(e) by the Company if the Company are not then in material
breach of any material provision of this Agreement after written notice to ▇▇▇
▇▇▇▇ of ▇▇▇ ▇▇▇▇'▇ failure to perform and satisfy in any material respect any of
its material obligations under this Agreement required to be performed and
satisfied by ▇▇▇ ▇▇▇▇ on or prior to the Closing Date, if the aggregate of all
such failures shall be material; a termination pursuant to this paragraph (e)
shall become effective (i) fifteen (15) days after such notice with respect to
such a failure that is not capable of being cured on or prior to the Closing
Date, or (ii) immediately prior to the Closing with respect to such a failure
that is capable of being cured, but is not cured, on or prior to the Closing
Date;
(f) by ▇▇▇ ▇▇▇▇ or by the Company, if the Closing shall not
have been consummated by July 31, 1998; provided, however, that neither ▇▇▇ ▇▇▇▇
nor the Company may terminate this Agreement pursuant to this paragraph (f) if
the Closing shall not have been consummated by such date by reason of the
failure of such party or any of its Affiliates to perform in all material
respects any of its or their respective covenants or agreements contained in
this Agreement; and
(g) by ▇▇▇ ▇▇▇▇ or the Company if any federal, state or
foreign law or any rule or regulation thereunder shall hereafter be enacted or
become applicable that makes the transactions contemplated hereby or the
consummation of the Closing illegal or otherwise prohibited, or if any judgment,
injunction, order or decree enjoining any party hereto from consummating the
transactions contemplated hereby is entered and such judgment, injunction, order
or decree shall become final and nonappealable; and
(h) the Company may terminate this Agreement by giving written
notice to ▇▇▇ ▇▇▇▇, at any time prior to the Effective Time, in the event that a
Person has made an Acquisition Proposal that the Board of Directors of the
Company determines, in good faith, and after consultation with, and upon receipt
of written advice from, its financial and legal advisors, is likely to be
completed within 30 days of the date hereof, and would, if consummated, result
in a transaction materially more favorable, from a financial point of view, to
the Company
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Stockholders than the Transactions contemplated by this Agreement and the Merger
(a "Superior Acquisition Proposal"); and
(i) ▇▇▇ ▇▇▇▇ may terminate this Agreement by giving written
notice to the Company if (A) the Board of Directors of the Company shall have
withdrawn or modified or amended, in a manner adverse to ▇▇▇ ▇▇▇▇, either its
approval or recommendation of this Agreement and the Merger or its
recommendation that the Company Stockholders adopt and approve the Transactions
contemplated by this Agreement and the Merger, or (B) the Board of Directors of
the Company shall have approved, recommended or endorsed any Superior
Acquisition Proposal.
The party or parties desiring to terminate this Agreement
pursuant to clauses (b) through (i) shall give written notice of such
termination to the other party or parties hereto.
7.02 Effect of Termination. If this Agreement is terminated as
permitted by Section 7.01 hereof, such termination shall be without liability of
any party to any other party to this Agreement except as hereinafter expressly
provided in this Section 7.02. If such termination shall result from the breach
by any party of its representations, warranties, covenants or agreements
contained in this Agreement, such party shall be fully liable for any and all
Losses incurred or suffered by the other parties hereto as a result of such
failure or breach and such termination shall not be deemed to be an election of
remedies. The provisions of Sections 4.04, 4.06, 9.01, 9.02, 9.03, 9.04, 9.05,
9.06, 9.07, 9.08, 9.09, 9.10, 9.11, 9.12, 9.13, 9.14, 9.15, 9.16 and 9.17 hereof
shall survive any termination of this Agreement pursuant to this Article VII,
and each party hereto shall be fully responsible for all Losses incurred or
suffered by the other parties hereto resulting from any breach of Sections 4.04,
4.06 and 9.05 hereof, whether or not such breach occurs prior to the termination
of this Agreement.
ARTICLE VIII
DEFINITIONS
8.01 Definitions. As used in this Agreement, the following
capitalized terms shall have the meanings indicated below:
"Acquisition Proposal" means an offer or proposal relating to a Sale.
"Actions or Proceedings" means any action, suit, proceeding,
arbitration or Governmental or Regulatory Authority investigation or audit.
"Affiliate" means, as applied to any Person, (a) any other Person
directly or indirectly controlling, controlled by or under common control with,
that Person, (b) any other Person that owns or controls (i) 5% or more of any
class of equity securities of that Person or any of its
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Affiliates or (ii) 5% or more of any class of equity securities (including any
equity securities issuable upon the exercise of any option or convertible
security) of that Person or any of its Affiliates or (c) any director, partner,
officer, agent, employee or member of the immediate family (i.e., mother,
father, sister, brother, son, etc.) of such Person. For the purposes of this
definition, "control" (including with correlative meanings, the terms
"controlling", "controlled by", and "under common control with") as applied to
any Person, means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of that Person, whether
through ownership of voting securities or by contract or otherwise.
"Agreement" has the meaning set forth in the preamble.
"Articles of Merger" has the meaning set forth in Section 1.03 hereof.
"Assets and Properties" of any Person means all assets and properties
of every kind, nature, character and description (whether real, personal or
mixed, whether tangible or intan gible, whether absolute, accrued, contingent,
fixed or otherwise and wherever situated), including the goodwill related
thereto, operated, owned or leased by such Person, including without limitation
cash, cash equivalents, Investment Assets, accounts and notes receivable,
chattel paper, documents, instruments, general intangibles, real estate,
equipment, inventory, goods and Intellectual Property.
"Asset or Property" and "Assets or Properties" of any Person means all
assets or properties of every kind, nature, character and description (whether
real, personal or mixed, whether tangible or intangible, whether absolute,
accrued, contingent, fixed or otherwise and wherever situated), including the
goodwill related thereto, operated, owned or leased by such Person, including
without limitation cash, cash equivalents, Investment Assets, accounts and notes
receivable, chattel paper, documents, instruments, general intangibles, real
estate, equipment, inventory, goods and Intellectual Property.
"Audited Financial Statements" has the meaning ascribed to it in
Section 2.08 hereof.
"Benefit Plan" means any Plan, existing at the Closing Date or prior
thereto, established or to which contributions have at any time been made by the
Company or any Subsidiary, or any predecessor of any of the foregoing, or under
which any employee, former employee or director of the Company or any Subsidiary
or any beneficiary thereof is covered, is eligible for coverage or has benefit
rights.
"Books and Records" means all files, documents, instruments, papers,
books and records relating to the Business or Condition of the Company,
including without limitation financial statements, Tax Returns and related work
papers and letters from accountants, budgets, pricing guidelines, ledgers,
journals, deeds, title policies, minute books, stock certificates and books,
stock transfer ledgers, Contracts, Licenses, customer lists, computer files and
programs, retrieval programs, operating data and plans and environmental studies
and plans.
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"Business Combination" means, with respect to any Person, any (i)
merger, consolidation or combination to which such Person is a party, (ii) any
sale, dividend, split or other disposition of any capital stock or other equity
interests of such Person, (iii) any tender offer (including without limitation a
self- tender), exchange offer, recapitalization, liquidation, dissolution or
similar transaction, (iv) any sale, dividend or other disposition of all or a
material portion of the Assets and Properties of such Person or (v) the entering
into of any agreement or understanding, or the granting of any rights or
options, with respect to any of the foregoing.
"Business Day" means a day other than Saturday, Sunday or any day on
which banks located in the State of New York are authorized or obligated to
close.
"Business or Condition of ▇▇▇ ▇▇▇▇" means the business, condition
(financial or otherwise), results of operations, Assets and Properties and
prospects of ▇▇▇ ▇▇▇▇ and its subsidiaries taken as a whole.
"Business or Condition of the Company" means the business, condition
(financial or otherwise), results of operations, Assets and Properties and
prospects of the Company and its Subsidiaries.
"Certificates" has the meaning set forth in Section 1.10(b) hereof.
"Closing" has the meaning set forth in Section 1.02 hereof.
"Closing Date" has the meaning set forth in Section 1.02 hereof.
"Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
"Company" has the meaning set forth in the preamble hereof.
"Company Stockholder" means any Person who or which holds any Shares.
"Confidentiality Provisions" has the meaning ascribed to it in Section
4.04 hereof.
"Contract" means any agreement, lease, evidence of Indebtedness,
mortgage, indenture, security agreement or other contract (whether written or
oral).
"D&O Policy" has the meaning ascribed to it in Section 4.10(b) hereof.
"Debt Settlement Amount" means the amount required to discharge or
otherwise satisfy in full on the Closing Date, all of the debt obligations of
the Company under the Revolving Credit Facility and the Subordinated Debt.
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"Disclosure Schedule" means the disclosure schedule delivered pursuant
to the Stock Purchase Agreement.
"Dissenting Shares" has the meaning set forth in Section 1.09 hereof.
"Effective Time" has the meaning set forth in Section 1.03 hereof.
"Environment" means all air, surface water, groundwater, or land,
including land surface or subsurface, including all fish, wildlife, biota and
all other natural resources.
"Environmental Claim" means any and all administrative or judicial
actions, suits, orders, claims, liens, notices, notices of violations,
investigations, complaints, requests for information, proceedings, or other
communication (written or oral), whether criminal or civil, (collectively,
"Claims") pursuant to or relating to any applicable Environmental Law by any
person (including but not limited to any Governmental or Regulatory Authority,
private person and citizens' group) based upon, alleging, asserting, or claiming
any actual or potential (i) violation of or liability under any Environmental
Law, (ii) violation of any Environmental Permit, or (iii) liability for
investigatory costs, cleanup costs, removal costs, remedial costs, response
costs, natural resource damages, property damage, personal injury, fines, or
penalties arising out of, based on, resulting from, or related to the presence,
Release, or threatened Release into the Environment, of any Hazardous Materials
at any location, including but not limited to any off-Site location to which
Hazardous Materials or materials containing Hazardous Materials were sent for
handling, storage, treatment, or disposal.
"Environmental Law" means all federal, state, local and foreign
environmental, health and safety Laws, common law orders, decrees, judgments,
codes and ordinances and all rules and regulations promulgated thereunder, civil
or criminal, including, without limitation, Laws relating to emissions,
discharges, releases or threatened releases of Hazardous Materials, pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes
into the environment or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials, pollutants, contaminants, chemicals, or industrial, solid,
toxic or hazardous substances or wastes.
"Environmental Permit" means any federal, state, local, provincial, or
foreign permits, licenses, approvals, consents or authorizations required by any
Governmental or Regulatory Authority under or in connection with any
Environmental Law and includes any and all orders, consent orders or binding
agreements issued or entered into by a Governmental or Regulatory Authority
under any applicable Environmental Law.
"Equity Rights" means the equity rights granted pursuant to the Equity
Rights Plan.
"Equity Rights Plan" means the Company's Directors' Deferred
Compensation Plan.
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"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"ERISA Affiliate" means any Person who is, or at any time was, a member
of a controlled group (within the meaning of Section 412(n)(6) of the Code) that
includes, or at any time included, the Company or any Subsidiary, or any
predecessor of any of the foregoing.
"Escrow Agent" has the meaning ascribed to it in Section 1.10(b)
hereof.
"Escrow Agreement" has the meaning ascribed to it in Section 1.10(b)
hereof.
"FBCA" has the meaning set forth in the recitals hereof.
"GAAP" means generally accepted accounting principles, consistently
applied.
"Governmental or Regulatory Authority" means any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality of
the United States, any foreign country or any domestic or foreign state, county,
city or other political subdivision, and shall include, without limitation, any
stock exchange, quotation service and the National Association of Securities
Dealers.
"Hazardous Material" means (A) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation and transformers or other equipment that
contain dielectric fluid containing levels of polychlorinated biphenyls (PCBs);
(B) any chemicals, materials, substances or wastes which are now or hereafter
become defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," "extremely hazardous wastes,"
"restricted hazardous wastes," "toxic substances," "toxic pollutants" or words
of similar import, under any Environmental Law; and (C) any other chemical,
material, substance or waste, exposure to which is now or hereafter prohibited,
limited or regulated by any Governmental or Regulatory Authority.
"Indebtedness" of any Person means all obligations of such Person (i)
for borrowed money, (ii) evidenced by notes, bonds, debentures or similar
instruments, (iii) for the deferred purchase price of goods or services (other
than trade payables or accruals incurred in the ordinary course of business),
(iv) under capital leases and (v) in the nature of guarantees of the obligations
described in clauses (i) through (iv) above of any other Person.
"Intangibles" means with respect to the Company and its Subsidiaries,
taken as a whole, at any date, the amount of all assets required to be
classified as intangibles in accordance with GAAP.
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"Intellectual Property" means all trademarks and trademark rights,
trade names and trade name rights, service marks and service ▇▇▇▇ rights,
service names and service name rights, copyrights and copyright rights, patents
and patent rights, brand names, trade dress, product designs, product packaging,
business and product names, logos, slogans, rights of publicity, trade secrets,
inventions, processes, formulae, industrial models, processes, designs,
specifications, data, technology, methodologies, computer programs and any other
confidential and proprietary right or information, whether or not subject to
statutory registration, and all related technical information, manufacturing,
engineering and technical drawings, know-how and all pending applications for
and registrations of patents, trademarks, service marks and copyrights, and the
right to ▇▇▇ for past infringement, if any, in connection with any of the
foregoing, and all documents, disks and other media on which any of the
foregoing is stored.
"Investment Assets" means all debentures, notes and other evidences of
Indebtedness, stocks, securities (including rights to purchase and securities
convertible into or exchangeable for other securities), interests in joint
ventures and general and limited partnerships, mortgage loans and other
investment or portfolio assets owned of record or beneficially by the Company.
"IRS" means the United States Internal Revenue Service.
"Joinder Agreement" has the meaning ascribed to it in Section 1.10(b)
hereof.
"Laws" means all laws, statutes, rules, regulations, ordinances and
other pronouncements having the effect of law of the United States, any foreign
country or any domestic or foreign state, county, city or other political
subdivision or of any Governmental or Regulatory Authority.
"Leased Real Property" has the meaning ascribed to it in Section
2.15(a) hereof.
"Liability" or "Liabilities" means all Indebtedness, obligations and
other liabilities (or contingencies that have not yet become liabilities) of a
Person (whether absolute, accrued, contingent (or based upon any contingency),
known or unknown, fixed or otherwise, or whether due or to become due).
"Licenses" means all licenses, permits, certificates of authority,
authorizations, approvals, registrations, franchises and similar consents
granted or issued by any Governmental or Regulatory Authority.
"Liens" means any mortgage, pledge, assessment, security interest,
lease, lien, adverse claim, levy, charge or other encumbrance of any kind, or
any conditional sale Contract, title retention Contract or other Contract to
give any of the foregoing.
"Loss" means any and all damages, fines, fees, penalties, deficiencies,
diminution in value of investment, losses and expenses, including without
limitation, interest, reasonable expenses of investigation, court costs,
reasonable fees and expenses of attorneys, accountants and
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other experts or other expenses of litigation or other proceedings or of any
claim, default or assessment, including all fees and expenses incurred in
connection with asserting or disputing any rights under this Agreement against
any party hereto or otherwise.
"MJAC" has the meaning set forth in the preamble hereof.
"Merger" has the meaning set forth in the recitals hereof.
"Merger Consideration" has the meaning set forth in Section 1.07(a)
hereof.
"Operative Agreements" means the Stock Purchase Agreement, the Escrow
Agreement, the Joinder Agreements and the other agreements to be entered into in
connection with the transactions contemplated by this Agreement.
"Option" with respect to any Person means any security, right,
subscription, warrant, option, "phantom" stock right or other Contract that
gives the right to (i) purchase or otherwise receive or be issued any shares of
capital stock or other equity interests of such Person or any security of any
kind convertible into or exchangeable or exercisable for any shares of capital
stock or other equity interests of such Person or (ii) receive any benefits or
rights similar to any rights enjoyed by or accruing to the holder of shares of
capital stock or other equity interests of such Person, including without
limitation any rights to participate in the equity, income or election of
directors or officers of such Person.
"Option Plan" means the Company's 1995 Long-Term Stock Incentive Plan.
"Option Shares"means the option shares granted pursuant to the Option
Plan and any other Option with respect to the Shares.
"Order" means any writ, judgment, decree, injunction or similar order
of any Governmental or Regulatory Authority (in each such case whether
preliminary or final).
"Outstanding Shares" means the outstanding shares of capital stock of
the Company, consisting of 3,049,722 shares of common stock.
"Owned Real Property" has the meaning ascribed to it in Section 2.15(a)
hereof.
"Parties" has the meaning set forth in the preamble hereof.
"Paying Agent" has the meaning set forth in Section 1.10(a) hereof.
"Permitted Lien" means (i) any Lien for Taxes not yet due or delinquent
or being contested in good faith by appropriate proceedings for which adequate
reserves have been established in accordance with GAAP, and (ii) any minor
imperfection of title or similar Lien
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which individually or in the aggregate with other such Liens does not impair the
value or marketability of the property subject to such Lien or interfere with
the use of such property in the conduct of the business of the Company and which
does not secure obligations for money borrowed.
"Person" means any natural person, corporation, general partnership,
limited partnership, limited liability company or partnership, proprietorship,
other business organization, trust, union, association or Governmental or
Regulatory Authority.
"Plan" means any bonus, incentive compensation, deferred compensation,
pension, profit sharing, retirement, stock purchase, stock option, stock
ownership, stock appreciation rights, phantom stock, leave of absence, layoff,
vacation, day or dependent care, legal services, cafeteria, life, health,
accident, disability, workmen's compensation or other insurance, severance,
separation or other employee benefit plan, practice, policy or arrangement of
any kind, whether written or oral, or whether for the benefit of a single
individual or more than one individual including, but not limited to, any
"employee benefit plan" within the meaning of Section 3(3) of ERISA
"Real Property" has the meaning ascribed to it in Section 2.15 hereof.
"Real Property Leases" have the meaning ascribed to it in Section 2.15
hereof.
"Relevant Group" has the meaning ascribed to it in Section 2.11 hereof.
"Representatives" means ▇▇▇ ▇▇▇▇ and its Affiliates, any Persons
designated by ▇▇▇ ▇▇▇▇ as a prospective lender to the Company at or following
the Closing, and each of their respective officers, employees, agents, counsel,
accountants, financial advisors, consultants and other representatives.
"Revolving Credit Facility" means the revolving credit facility
pursuant to the loan agreement among the Company, Citibank and the lenders named
therein dated June 30, 1995, as amended.
"Sale" has the meaning ascribed to it in Section 4.06(a) hereof.
"SEC Documents" means: (i) the Form 10-Q filed by ▇▇▇ ▇▇▇▇ with the
Securities and Exchange Commission as of December 16, 1997; (ii) the Form 10-Q
filed by ▇▇▇ ▇▇▇▇ with the Securities and Exchange Commission as of September
17, 1997; (iii) the Form 10-Q filed by ▇▇▇ ▇▇▇▇ with the Securities and Exchange
Commission as of June 17, 1997; and (iv) the Form 10-K filed by ▇▇▇ ▇▇▇▇ with
the Securities and Exchange Commission as of May 2, 1997, in each case as
amended, where applicable.
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"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Share" or "Shares" means the Company's common stock par value $.01 per
share.
"Stockholders' Agreement" has the meaning ascribed to it in Section
2.05 hereof.
"Stock Purchase Agreement" has the meaning ascribed to it in the
preamble hereof.
"Subordinated Debt" means all of the Company's subordinated
indebtedness, a summary of which appears on Section 2.19 of the Disclosure
Schedule.
"Subsidiary" means any Person in which the Company, directly or
indirectly through Subsidiaries or otherwise, beneficially owns at least fifty
percent (50%) of either the equity interest in, or the voting control of, such
Person, whether or not existing on the date hereof and with respect to any
Person other than the Company, any Person which, directly or indirectly through
subsidiaries or otherwise, beneficially owns at least fifty percent (50%) of
either the equity interest in, or the voting control of, such Person, whether or
not existing on the date hereof.
"Superior Acquisition Proposal" has the meaning set forth in Section
7.01(h) hereof.
"Surviving Corporation" has the meaning set forth in Section 1.01
hereof.
"Tax" or "Taxes" means all federal, state, local or foreign net or
gross income, gross receipts, net proceeds, sales, use, ad valorem, value added,
franchise, bank shares, withholding, payroll, employment, excise, property
(including, without limitation, the Florida Intangible Personal Property Tax),
alternative or add-on minimum, environmental or other taxes, assessments,
duties, fees, levies or other governmental charges of any nature whatever,
whether disputed or not, together with any interest, penalties, additions to tax
or additional amounts with respect thereto.
"Tax Returns" means any returns, reports or statements (including any
information returns) required to be filed for purposes of a particular Tax.
"Taxing Authority" means any governmental agency, board, bureau, body,
department or authority of any United States federal, state or local
jurisdiction or any foreign jurisdiction, having or purporting to exercise
jurisdiction with respect to any Tax.
"Tenant Leases" has meaning ascribed to it in Section 2.15(d) hereof.
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"Transactions" has the meaning set forth in the recitals hereof.
ARTICLE IX
MISCELLANEOUS
9.01 Notices. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only if
delivered personally against written receipt or by facsimile transmission or
mailed by prepaid first class certified mail, return receipt requested, or
mailed by overnight courier prepaid, to the parties at the following addresses
or facsimile numbers:
(a) If to ▇▇▇ ▇▇▇▇, to:
▇▇▇ ▇▇▇▇ Marketing, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Chairman & CEO
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
If to the Company, to:
Mayor's Jewelers, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇, President & CEO
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with a copy to:
Akerman, Senterfitt & ▇▇▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
(b) If to MJAC, to:
Mayor's Jewelers Acquisition Corp.
c/o ▇▇▇ ▇▇▇▇ Marketing, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Chairman & CEO
with copy to:
▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section 9.01, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided for in this Section 9.01, be deemed given upon receipt, (iii) if
delivered by mail in the manner described above to the address as provided in
this Section 9.01, be deemed given on the earlier of the third Business Day
following mailing or upon receipt and (iv) if delivered by overnight courier to
the address as provided for in this Section 9.01, be deemed given on the earlier
of the first Business Day following the date sent by such overnight courier or
upon receipt (in each case regardless of whether such notice, request or other
communication is received by any other Person to whom a copy of such notice is
to be delivered pursuant to this Section 9.01). Any party from time to time may
change its address, facsimile number or other information for the purpose of
notices to that party by giving notice specifying such change to the other party
hereto.
9.02 Entire Agreement. This Agreement and the Operative
Agreements supersede all prior discussions and agreements between the parties,
including, without limitation, the letter of intent dated February 4, 1998 and
the letter agreement dated January 16, 1998, with respect to the subject matter
hereof and thereof and contain the sole and entire agreement between the parties
hereto with respect to the subject matter hereof and thereof.
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9.03 Expenses. Except as otherwise expressly provided in this
Agreement, each party will pay its own costs and expenses incurred in connection
with this Agreement, the Operative Agreements, and the transactions contemplated
hereby and thereby.
9.04 Payment of Transfer Taxes and Fees. The Company shall pay
all sales, use, transfer, stamp, documentary or similar Taxes imposed upon or
arising out of or in connection with the transactions effected pursuant to this
Agreement, and shall indemnify, defend, and hold harmless ▇▇▇ ▇▇▇▇, Company and
their respective subsidiaries and Affiliates with respect to such Taxes. The
Company shall file all necessary documentation and Tax Returns with respect to
such Taxes.
9.05 Confidentiality. ▇▇▇ ▇▇▇▇, on the one hand, and the
Company, on the other hand, will hold in strict confidence from any Person
(other than any of its Affiliates or in the case of ▇▇▇ ▇▇▇▇, any Representative
of ▇▇▇ ▇▇▇▇), unless (i) compelled to disclose by judicial or administrative
process (including without limitation in connection with obtaining the necessary
approvals of this Agreement and the transactions contemplated hereby of
Governmental or Regulatory Authorities) or by other requirements of Law or (ii)
disclosed in an Action or Proceeding brought by a party hereto in pursuit of its
rights or in the exercise of its remedies hereunder, all documents and
information concerning the other party hereto or any of its Affiliates furnished
to it by or on behalf of the other party in connection with this Agreement or
the transactions contemplated hereby, except to the extent that such documents
or information can be shown to have been (a) previously known by the party
receiving such documents or information, (b) in the public domain (either prior
to or after the furnishing of such documents or information hereunder) through
no fault of such receiving party or (c) later acquired by the receiving party
from another source if the receiving party is not aware that such source is
under an obligation to another party hereto to keep such documents and
information confidential.
9.06 Cumulative Remedies. The rights, remedies, powers and
privileges herein and in the Operative Agreements are cumulative and not
exclusive of any rights, remedies, powers and privileges provided by law or
equity.
9.07 Waiver. Any term or condition of this Agreement may be
waived at any time by the party that is entitled to the benefit thereof, but no
such waiver shall be effective unless set forth in a written instrument duly
executed by or on behalf of the party waiving such term or condition. No waiver
by any party of any term or condition of this Agreement, in any one or more
instances, shall be deemed to be or construed as a waiver of the same or any
other term or condition of this Agreement on any future occasion. All remedies,
either under this Agreement or by Law or otherwise afforded, will be cumulative
and not alternative.
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9.08 Amendment. This Agreement may be amended, supplemented or
modified only by a written instrument duly executed by or on behalf of the
parties hereto.
9.09 No Third Party Beneficiary. The terms and provisions of
this Agreement are intended solely for the benefit of each party hereto and
their respective successors or permitted assigns, and it is not the intention of
the parties to confer third-party beneficiary rights, and this Agreement does
not confer any such rights, upon any other Person.
9.10 No Assignment; Binding Effect. Neither this Agreement nor
any right, interest or obligation hereunder may be assigned (by operation of law
or otherwise) by the Company without the prior written consent of ▇▇▇ ▇▇▇▇ and
any attempt to do so will be void. Subject to the preceding sentence, this
Agreement is binding upon, inures to the benefit of and is enforceable by the
parties hereto and their respective successors and assigns.
9.11 Headings. The headings used in this Agreement have been
inserted for convenience of reference only and do not define or limit the
provisions hereof.
9.12 Invalid Provisions. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under any present or future Law,
and if the rights or obligations of any party hereto under this Agreement will
not be materially and adversely affected thereby, (a) such provision will be
fully severable, (b) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(c) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance here from and (d) in lieu of such illegal, invalid
or unenforceable provision, there will be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible.
9.13 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of Florida or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Florida.
9.14 Consent to Jurisdiction and Service of Process. EACH
PARTY HERETO CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED
WITHIN THE COUNTY OF DADE, STATE OF FLORIDA AND IRREVOCABLY AGREES THAT ALL
ACTIONS OR PROCEEDINGS RELATING TO THIS AGREEMENT MAY BE LITIGATED IN SUCH
COURTS. EACH PARTY HERETO ACCEPTS FOR ITSELF AND HIMSELF (OR HERSELF) AND IN
CONNECTION WITH ITS AND HIS (OR HER) RESPECTIVE PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND
BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT
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OR ANY OPERATIVE AGREEMENT. NOTHING HEREIN SHALL IN ANY WAY BE DEEMED TO LIMIT
THE ABILITY OF ANY PARTY HERETO TO SERVE ANY SUCH LEGAL PROCESS, SUMMONS,
NOTICES AND DOCUMENTS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW OR TO
OBTAIN JURISDICTION OVER OR TO BRING ACTIONS, SUITS OR PROCEEDINGS AGAINST ANY
OF THE OTHER PARTIES HERETO IN SUCH OTHER JURISDICTIONS, AND IN SUCH MANNER, AS
MAY BE PERMITTED BY ANY APPLICABLE LAW.
9.15 Limited Recourse. Notwithstanding anything in this
Agreement or any Operative Agreement to the contrary, (i) obligations and
liabilities of ▇▇▇ ▇▇▇▇ hereunder and thereunder shall be without recourse to
any stockholder of ▇▇▇ ▇▇▇▇ or any of such stockholder's Affiliates, directors,
employees, officers or agents and shall be limited to the assets of such party
and (ii) the stockholders of ▇▇▇ ▇▇▇▇ have made no (and shall not be deemed to
have made any) representations, warranties or covenants (express or implied)
under or in connection with this Agreement or any other Operative Agreement.
9.16 Construction.
(a) Any reference to any applicable Law shall be deemed also
to refer to all rules and regulations promulgated thereunder, unless the context
requires otherwise. Whenever required by the context, any gender shall include
any other gender, the singular shall include the plural and the plural shall
include the singular. The words "herein," "hereof," "hereunder," and words of
similar import refer to this Agreement as a whole and not to a particular
section. The terms "Article" and "Section" refer to the specified Article or
Section of this Agreement. Whenever the word "including" is used in this
Agreement, it shall be deemed to mean "including, without limitation,"
"including, but not limited to" or other words of similar import such that the
items following the word "including" shall be deemed to be a list by way of
illustration only and shall not be deemed to be an exhaustive list of applicable
items in the context thereof. The phrases "ordinary course of business" and
"ordinary course of business consistent with past practice" refer to the
business and practice of the Company. All accounting terms used herein and not
expressly defined herein shall have the meanings given to them under GAAP.
(b) When used herein, the phrase "to the knowledge of" any
Person, "to the best knowledge of" any Person or any similar phrase, means (i)
with respect to any Person who is an individual, the actual knowledge of such
Person, (ii) with respect to any other Person, the actual knowledge of the
directors, officers, members, managers, general partners, and other similar
Persons in a similar position or having similar powers and duties and (iii) in
the case of each of (i) and (ii), the knowledge of facts that such individuals
should have after reasonable inquiry.
(c) The parties hereto 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
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specificity) that 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.
(d) Nothing in the Disclosure Schedule hereto shall be deemed
adequate to disclose an exception to a representation or warranty made herein
unless (i) the Disclosure Schedule identifies the exception with particularity
and describes the relevant facts in reasonable detail of the exception or (ii)
the disclosure on its face in one Section of the Disclosure Schedule would,
without further change, satisfy the disclosure requirements of another Section
of the Disclosure Schedule. Without limiting the generality of the foregoing,
the mere listing (or inclusion of a copy) of a document or other item shall not
be deemed adequate to disclose an exception to a representation or warranty made
herein (unless the representation or warranty has to do with the existence of
the document or other items itself).
(e) The parties hereto agree that this Agreement is the
product of negotiation between sophisticated parties and individuals, all of
whom were represented by counsel, and each of whom had an opportunity to
participate in and did participate in, the drafting of each provision hereof.
Accordingly, ambiguities in this Agreement, if any, shall not be construed
strictly or in favor of or against any party hereto but rather shall be given a
fair and reasonable construction without regard to the rule of contra
proferentum.
9.17 Counterparts. This Agreement may be executed in any
number of counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
MAYOR'S JEWELERS, INC.
By: /s/
------------------------------------------
Name:
Title:
MAYOR'S JEWELERS ACQUISITION CORP.
By: /s/
------------------------------------------
Name:
Title:
▇▇▇ ▇▇▇▇ MARKETING, INC.
By: /s/
------------------------------------------
Name:
Title:
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