SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 23, 1998
PUBLICARD, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 1-3315 23-0991870
(State or other (Commission (IRS Employer
jurisdiction File Number) Identification No.)
of incorporation)
One Post Road, Fairfield, Connecticut 06430
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 254-3900
(Former name or former address, if changed since last report.)
Item 2. Acquisition or Disposition of Assets
On November 24, 1998 (the "Closing Date"), PubliCARD, Inc. ("PubliCARD"
or the "Company") completed the acquisition of Tritheim Technologies, Inc.
("Tritheim") pursuant to an Agreement and Plan of Merger dated as of October
30, 1998 (the "Merger Agreement") whereby a wholly-owned subsidiary of the
Company merged with and into Tritheim. As a result of this merger, Tritheim
became a wholly-owned subsidiary of the Company. As consideration in the
merger, holders of Tritheim's common stock received a total of 1,495,037
shares of common stock of the Company in exchange for their shares of common
stock of Tritheim. Marc Postlewaite, President of Tritheim, and Kim Vogel,
Vice President - Engineering of Tritheim, held shares representing 74% of
Tritheim's outstanding common stock.
In addition, pursuant to the Merger Agreement options to purchase
354,616 shares of Tritheim common stock outstanding immediately prior to the
closing of the merger (a portion of which were held by Marc Postlewaite and
Kim Vogel) were converted into options to purchase 83,270 shares of PubliCARD
common stock with an exercise price of $2.00 per share (subject to anti-
dilution adjustments). These PubliCARD options are exercisable from the
Closing Date until the fifth anniversary of the Closing Date. Furthermore,
pursuant to the Merger Agreement, the Company issued on the Closing Date
options to purchase 250,000 shares of PubliCARD common stock to all of the
salaried employees of Tritheim to encourage them to remain in the employ of
Tritheim. These options have an exercise price of $2.00 per share (subject to
anti-dilution adjustments) and will be exercisable from the third anniversary
of the Closing Date until the eighth anniversary of the Closing Date.
The merger consideration was determined as a result of arms length
negotiations between the Company and Tritheim. The merger will be accounted
for under the purchase method of accounting.
Pursuant to the Merger Agreement, the Company is required to register
the shares of PubliCARD common stock issued as the merger consideration (other
than the approximately 1,253,771 shares issued to officers of Tritheim and one
additional employee of Tritheim), approximately 241,266 shares, under a shelf
registration statement under the Securities Act of 1933. In the event that
the shelf registration statement is not effective by the six month anniversary
of the Closing Date, the holders of the shares entitled to such registration
rights will have the right, for a specified period of time, to cause the
Company to repurchase their shares for a cash purchase price equal to the fair
market value (as defined in the Merger Agreement) of the shares on the date of
repurchase.
Pursuant to the Merger Agreement, the Company satisfied Tritheim's
indebtedness, including accrued interest, to a bank in the amount of $102,000
and to former shareholders of Tritheim in the amount of $531,000 (including
$480,000 to Marc Postlewaite). The repayment of certain indebtedness of
Tritheim by the Company was financed with available cash on hand.
Pursuant to the Merger Agreement, Tritheim entered into separate
employment agreements with three-year terms with the following officers and
former shareholders of Tritheim: (1) Marc Postlewaite to serve as President of
Tritheim, (2) Kim Vogel to serve as Vice President - Engineering of Tritheim,
(3) Vincent Poole to serve as Vice President - Product Development of Tritheim
and (4) Stephen Ewald to serve as Vice President - Sales and Marketing of
Tritheim.
Other than the Merger Agreement, a $300,000 loan made by PubliCARD to
Tritheim on September 18, 1998 and the employment agreements and stock option
agreements entered into pursuant to the Merger Agreement and described herein,
there are no material relationships between Tritheim or any of Tritheim's
former shareholders and PubliCARD or any of PubliCARD's affiliates, directors
or officers.
Tritheim, located in Tarpon Springs, Florida, has developed both
hardware and software smart card products. Its hardware products
include serial, parallel and PCMCIA smart card readers, smart port docking
stations and smart card reader chipsets. Its software products include smart
card software development tools for developing smart card applications, PC
security software, Internet data security smart card software, Internet
purchase terminal software and Internet automatic teller software.
Item 5. Other Events
As of September 30, 1998, the Company had 13,291,597 shares of common
stock outstanding. As a result of the issuance of (i) 2,059,000 shares
pursuant to the private placement described under Item 9 below, (ii) 1,495,037
shares pursuant to the merger with Tritheim and (iii) 33,000 shares upon the
exercise of previously existing stock options, the Company's had 16,878,618
shares of common stock outstanding on December 4, 1998.
Item 7. Financial Statements and Exhibits
(a) Financial statements of businesses acquired:
Financial statements of Tritheim Technologies, Inc. prepared
pursuant to Regulation S-X are not currently available but
will be filed not later than 60 days from the date on which
this report on Form 8-K was required to be filed.
(b) Pro forma financial information:
Pro forma financial statements of the Registrant are not
currently available but will be filed not later than 60 days
from the date on which this report on Form 8-K was required to
be filed.
(c) Exhibits:
2.1 Agreement and Plan of Merger dated as of October 30, 1998
among PubliCARD, Inc., Publicker Smart Card Acquisition Co.,
Tritheim Technologies, Inc. and the Security Holders of
Tritheim Technologies, Inc.
Item 9. Sales of Equity Securities Pursuant to Regulation S
On November 23, 1998, the Company completed the offer and sale of
2,059,000 shares of its common stock, par value $. 10 per share, for $5.00 per
share in cash, for aggregate cash consideration of $10,295,000 (the
"Offering") in transactions exempt from registration under the Securities Act
of 1933, as amended (the "Securities Act"). The Offering included the offer
and sale of 560,000 shares of common stock for aggregate consideration of
$2,800,000 to non-U.S. Persons in offshore transactions pursuant to Regulation
S under the Securities Act. Such non-U.S. Persons made representations to the
Company regarding their status and actions necessary to comply with Regulation
S. The Company intends to use the net proceeds of the Offering to fund
development of its smart card technology, to make strategic acquisitions
within the smart card industry, and for general
corporate purposes.
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PUBLICARD, INC.
(Registrant)
December 7, 1998
/s/ Antonio L. DeLise
Antonio L. DeLise, Vice President
Chief Financial Officer and Secretary
EXHIBIT INDEX
Exhibit No. Exhibit Page No.
2.1 Agreement and Plan of Merger dated as of October
30, 1998 among PubliCARD, Inc., Publicker Smart
Card Acquisition Co., Tritheim Technologies, Inc.
and the Security Holders of Tritheim Technologies, Inc.
Exhibit 2.1
Agreement and Plan of Merger
Dated as of October 30, 1998
Among
Publicker Industries Inc.,
Publicker Smart Card Acquisition Co.,
Tritheim Technologies, Inc.
And
the Security holders of Tritheim Technologies, Inc.
TABLE OF CONTENTS
PAGE
1. CERTAIN DEFINITIONS.. . . . . . . . . . . . . . . .1
1.1 Defined Terms. . . . . . . . . . .1
1.2 References to Dollars. . . . . . .6
2. THE MERGER. . . . . . . . . . . . . . . . . . . . .6
2.1 The Merger . . . . . . . . . . . .6
2.2 Effects of the Merger. . . . . . .6
2.3 Conversion of Shares . . . . . . .7
2.4 Subsequent Action. . . . . . . . .9
3. THE CLOSING.. . . . . . . . . . . . . . . . . . . .9
3.1 Place and Time . . . . . . . . . .9
3.2 Effective Time of the Merger . . .9
3.3 Deliveries by Sellers and Company10
3.4 Deliveries by Publicker. . . . . 10
4. CONDITIONS TO PUBLICKER'S AND ACQUISITION SUB'S
OBLIGATIONS . . . . . . . . . . . . . . . . . . . 10
4.1 Opinion of Counsel . . . . . . . 10
4.2 No Injunction. . . . . . . . . . 10
4.3 Representations, Warranties and
Agreements . . . . . . . . . . . 10
4.4 Litigation . . . . . . . . . . . 10
4.5 Approvals. . . . . . . . . . . . 11
4.6 Certificates of Merger . . . . . 11
4.7 Employment Agreements. . . . . . 11
4.8 FIRPTA Certificate . . . . . . . 11
4.9 Shareholder Approval.. . . . . . 11
4.10 Financial Statements.. . . . . . 11
4.12 Proceedings Satisfactory . . . . 11
5. CONDITIONS TO THE COMPANY'S OBLIGATIONS . . . . . 12
5.1 Opinion of Counsel . . . . . . . 12
5.2 No Injunction. . . . . . . . . . 12
5.3 Representations, Warranties
and Agreements . . . . . . . . . 12
5.4 Litigation . . . . . . . . . . . 12
5.5 Employment Agreements. . . . . . 12
5.6 Option Agreements. . . . . . . . 12
5.7 Shareholder Approval.. . . . . . 13
5.8 Proceedings Satisfactory . . . . 13
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND MANAGEMENT SELLERS. . . . . . . . . . . . . . 13
6.1 Organization and Good Standing . 13
6.2 Capitalization of the Company;
Subsidiaries . . . . . . . . . . 13
6.3 Authority; Absence of Conflict . 14
6.4 Consents and Approvals . . . . . 14
6.5 Financial Statements . . . . . . 14
6.6 Accounts Receivable. . . . . . . 15
6.7 Title to Property; Encumbrances. 15
6.8 Leased Property. . . . . . . . . 15
6.9 Intellectual Property Rights . . 16
6.10 Buildings, Plants and Equipment. 19
6.11 Rights and Assets Sufficient . . 19
6.12 Books and Records. . . . . . . . 19
6.13 Litigation . . . . . . . . . . . 19
6.14 Tax Matters. . . . . . . . . . . 19
6.15 Absence of Certain Changes or
Events . . . . . . . . . . . . . 21
6.16 Labor. . . . . . . . . . . . . . 23
6.17 Employee Benefits; ERISA . . . . 23
6.18 Insurance. . . . . . . . . . . . 26
6.19 Material Agreements. . . . . . . 26
6.20 Compliance with Law; Licenses. . 28
6.21 Environmental Matters. . . . . . 28
6.22 Transactions with Related Parties29
6.23 Bank Accounts. . . . . . . . . . 29
6.24 No Brokers or Finders. . . . . . 29
6.25 Year 2000 Compliance . . . . . . 29
6.26 Absence of Undisclosed Liabilities29
6.27 No Material Adverse Change . . . 30
6.28 Disclosure . . . . . . . . . . . 30
6.29 Knowledge Defined. . . . . . . . 30
7. REPRESENTATIONS AND WARRANTIES OF SELLERS . . . . 30
7.1 Organization and Good Standing . 30
7.2 Authority. . . . . . . . . . . . 30
7.3 Absence of Conflict. . . . . . . 31
7.4 Title to Company Shares. . . . . 31
7.5 Investment Representations . . . 31
7.6 Tax Matters. . . . . . . . . . . 32
8. REPRESENTATIONS AND WARRANTIES OF PUBLICKER . . . 32
8.1 Organization and Good Standing . 32
8.2 Capitalization of the Company. . 32
8.3 Authority Relative to Agreement;
Compliance with Other Instruments;
Absence of Conflict. . . . . . . 33
8.4 Binding Agreement. . . . . . . . 33
8.5 Litigation . . . . . . . . . . . 33
8.6 No Brokers or Finders. . . . . . 34
8.7 Reports. . . . . . . . . . . . . 34
8.8 Disclosure . . . . . . . . . . . 34
8.9 Knowledge Defined. . . . . . . . 34
9. FURTHER AGREEMENTS OF THE PARTIES . . . . . . . . 35
9.1 Expenses . . . . . . . . . . . . 35
9.2 Access Prior to the Closing. . . 35
9.3 Public Disclosure or
Communications . . . . . . . . . 35
9.4 Conduct of Business of the
Company. . . . . . . . . . . . . 36
9.5 No Negotiation . . . . . . . . . 37
9.6 Regulatory Matters . . . . . . . 37
9.7 Payment of Certain Indebtedness. 37
9.8 Benefits Matters . . . . . . . . 38
9.9 Technology Committee . . . . . . 38
9.10 Shareholder Approval . . . . . . 38
9.11 Management Sellers Approval. . . 38
9.12 S-8 Registration . . . . . . . . 38
9.13 Stock Options. . . . . . . . . . 38
9.14 Private Placement Materials. . . 39
9.15 Financial Statements . . . . . . 39
9.16 Updated Schedules. . . . . . . . 39
10. TRANSFER RESTRICTIONS . . . . . . . . . . . . . . 39
10.1 Transfer Restrictions on
Publicker Shares . . . . . . . . 39
10.2 Lock-Up on Publicker Shares. . . 40
11. REGISTRATION RIGHTS . . . . . . . . . . . . . . . 41
11.1 Intentionally omitted. . . . . . 41
11.2 Incidental Registration. . . . . 41
11.2A Shelf Registration . . . . . . . 42
11.3 Limitation on Registration
Requirement . . . . . . . . . . .42
11.4 Registration Procedures. . . . . 43
11.5 Expenses . . . . . . . . . . . . 44
11.6 Marketing Restrictions . . . . . 45
11.7 Time Limitations; Termination of
Rights . . . . . . . . . . . . . 46
11.8 Compliance with Rule 144 . . . . 46
11.9 Indemnification by Publicker . . 46
11.10 Indemnification by Holder. . . . 47
11.11 Contribution . . . . . . . . . . 48
11.12 Notification of and Participation
in Actions . . . . . . . . . . . 48
11.13 Underwriting Requirements. . . . 48
11.14 Furnish Information. . . . . . . 49
11.15 Permitted Transfers. . . . . . . 49
11.16 Put Rights . . . . . . . . . . . 49
12. INDEMNIFICATION AND RELATED MATTERS; SELLERS'
RELEASE; TAX MATTERS. . . . . . . . . . . . . . . 50
12.1 Indemnification. . . . . . . . . 50
12.2 Survival of Representations and
Warranties . . . . . . . . . . . 53
12.3 Procedure for Indemnification --
Third Party Claims . . . . . . . 53
12.4 Procedure for Indemnification --
Other Claims . . . . . . . . . . 54
12.5 Company's and Sellers' Releases. 54
12.6 Tax Matters. . . . . . . . . . . 55
13. TERMINATION . . . . . . . . . . . . . . . . . . . 56
13.1 Termination Procedures . . . . . 56
13.2 Effect of Termination. . . . . . 56
14. THE SELLERS' AGENT. . . . . . . . . . . . . . . . 57
14.1 Authorization of the Sellers' Agent57
14.2 Compensation; Exculpation;
Indemnity. . . . . . . . . . . . 57
14.3 Notices. . . . . . . . . . . . . 58
14.4 Resignation or Removal; Successor
Agent. . . . . . . . . . . . . . 58
15. MISCELLANEOUS . . . . . . . . . . . . . . . . . . 59
15.1 Entire Agreement . . . . . . . . 59
15.2 Governing Law. . . . . . . . . . 59
15.3 Jurisdiction; Service of Process 59
15.4 Headings . . . . . . . . . . . . 60
15.5 Notices. . . . . . . . . . . . . 60
15.6 Binding Effect; Assignment . . . 62
15.7 Additional Parties . . . . . . . 62
15.8 Amendment; Waiver. . . . . . . . 62
15.9 Further Assurances.. . . . . . . 62
15.10 Severability.. . . . . . . . . . 62
15.11 Counterparts . . . . . . . . . . 63
Schedules
Exhibits
Exhibit A-1 - Florida Articles of Merger
Exhibit A-2 - Delaware Certificate of Merger
Exhibit B - Form of Opinion of Counsel to Sellers and the Company
Exhibit C - Form of Employment Agreements
Exhibit D - Form of Opinion of Counsel to Publicker and Acquisition Sub
Exhibit E-1 - Form of Option Agreement
Exhibit E-2 - Form of Option Agreement
Exhibit F - Form of Promissory Note
Exhibit G - Form of Letter of Transmittal
Exhibit H - Form of Investor Questionnaire
Exhibit I - Form of Voting Agreement
Exhibit J - Form of FIRPTA Notification
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of October 30, 1998 among
Publicker Industries Inc., a Pennsylvania corporation ("Publicker"), Publicker
Smart Card Acquisition Co., a Delaware corporation ("Acquisition Sub"),
Tritheim Technologies, Inc., a Florida corporation (the "Company"), and each
shareholder of the Company and each holder of options to purchase capital
stock of the Company which has delivered a signature page to this Agreement
(collectively "Sellers").
R E C I T A L S:
The Boards of Directors of the Company, Publicker and Acquisition
Sub have determined that it is advisable and in the best interests of their
respective stockholders for Acquisition Sub to merge with and into the Company
with the result that the Company shall be the surviving corporation and shall
become a wholly-owned subsidiary of Publicker (the "Merger"), upon the terms
and conditions set forth herein and in accordance with the provisions of the
Florida 1989 Business Corporation Act (the "FBCA") and the Delaware General
Corporation Law (the "DGCL"). It is the intention of the parties that the
Merger be a tax-free reorganization under Section 368(a)(2)(E) of the Internal
Revenue Code of 1986, as amended.
Accordingly, in consideration of the premises and the mutual
representations, warranties, covenants and agreements hereinafter set forth,
the parties hereto do hereby agree as follows:
(c) CERTAIN DEFINITIONS.
(a) Defined Terms. As used in this Agreement, the following terms
shall have the meanings specified or referred to below (terms
defined in the singular to have the correlative meaning in the
plural and vice versa):
"Affiliate" of any Person shall mean any Person or entity which,
directly or indirectly, controls or is controlled by that Person, or is under
common control with that Person. For the purposes of this definition,
"control" (including, with correlative meaning, the terms "controlled by" and
"under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person, whether through the
ownership of voting securities or by contract or otherwise.
"Business Day" shall mean any day that is not a Saturday or a
Sunday or a day on which banks located in New York City are authorized or
required to be closed.
"Certificates of Merger" shall have the meaning set forth in
Section 3.2.
"Closing" shall have the meaning set forth in Section 3.1.
"Closing Date" shall mean the date and time of the Closing, as set
forth in Section 3.1.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company Documents" shall have the meaning set forth in
Section 6.3(a).
"Company Shares" shall mean shares of common stock, no par value,
of the Company.
"Constituent Corporations" shall have the meaning set forth in
Section 2.1.
"Contamination" shall mean Hazardous Substances which are present
at the Facilities or in soil or groundwater (whether or not at the Facilities)
as a result of a Release.
"Contemplated Transactions" shall mean (i) the Merger and (ii) the
execution, delivery and performance of and compliance with this Agreement and
all other agreements to be executed and delivered pursuant to this Agreement.
"DGCL" shall have the meaning set forth in the recitals to this
Agreement.
"Effective Time" shall have the meaning set forth in Section 3.2.
"Employee Sellers" shall mean Marc Postlewaite, Kim Vogel, Vince
Poole, Steve Ewald and Wayne Matthews.
"Encumbrance" shall mean any security interest, mortgage, lien,
charge, encumbrance on real property, adverse claim or restriction of any
kind, including, but not limited to, any restriction on the use, voting,
transfer, receipt of income or other exercise of any attributes of ownership.
"Environmental Law" shall mean federal, state or local statutes,
rules, regulations, orders, licenses, codes, plans, decrees, judgments,
injunctions, notices, or demand letters relating to pollution of the
environment, including laws relating to noise, or to emissions, discharges, or
releases of pollutants, contaminants, chemicals, or industrial, toxic, or
Hazardous Substances or hazardous wastes into the workplace, the community, or
the environment (including air, surface water, ground water, land surface or
subsurface strata), or otherwise relating to the generation, manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants, chemicals, or industrial, toxic or
Hazardous Substances or hazardous wastes.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" as applied to any Person, shall mean (a) any
corporation which is a member of a controlled group of corporations, within
the meaning of Section 414(b) of the Code, of which that Person is a member,
(b) any trade or business (whether or not incorporated) which is a member of a
group of trades or businesses under common control, within the meaning of
Section 414(c) of the Code, of which that person is a member, and (c) any
member of an affiliated service group, within the meaning of Sections 414(m)
and (o) of the Code, of which that Person or any entity described in clause
(a) or (b) is a member.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Facilities" shall mean any real property, leaseholds or other
interests currently or formerly owned or operated by the Company and any
buildings, plants, structures or equipment currently or formerly owned or
operated by the Company.
"Fair Market Value" of a share of a class of stock of any issuer
shall mean the per share value of such class of stock as of a given date,
determined as follows:
(a) If the class of stock is listed or admitted for
trading on the New York Stock Exchange (or if not, on
another national securities exchange), the Fair Market
Value of such class stock is the average of the
closing quotations for such stock based on composite
transactions for the New York Stock Exchange (or if
not listed on it, such other national securities
exchange) for the five Trading Days ending at the
close of business on the day prior to such given date.
(b) If the class of stock is not traded on any national
securities exchange, but is quoted on the National
Association of Securities Dealers, Inc. Automated
Quotation System (NASDAQ System) or any similar system
of automated dissemination of quotations of prices in
common use, the Fair Market Value of such class of
stock is the average of the last sales price (if the
stock is then listed as a national market issue under
the NASDAQ System) or the mean between the closing
representative bid and asked prices (in all other
cases) for the stock as reported by the NASDAQ System
(or such similar quotation system) for the five
Trading Days ending at the close of business on the
day prior to such given date.
(c) If neither clause (a) nor clause (b) of this
definition is applicable, the Fair Market Value of the
class of stock is the fair market value per share as
of such valuation date, as determined by the Board of
Directors of the issuer of such stock in good faith
and in accordance with uniform principles consistently
applied.
"FBCA" shall have the meaning set forth in the recitals to this
Agreement.
"Financial Statements" shall have the meaning set forth in
Section 6.5.
"GAAP" shall mean generally accepted accounting principles in the
United States, consistently applied throughout the relevant period.
"Governmental Body" shall mean any domestic or foreign national,
state, multi-state or municipal or other local government, any subdivision,
agency, commission or authority thereof, or any quasi-governmental or private
body exercising any regulatory or taxing authority thereunder.
"Hazardous Substance" shall have the meaning set forth in
section 101(14) of the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA") of 1980, as amended, 42 U.S.C. 9601(14) and shall
further include any petroleum, including crude oil or any fraction thereof.
"Holders" shall mean Sellers (other than Employee Sellers) holding
Registrable Publicker Shares and their permitted transferees under
Section 11.15.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
"Intellectual Property" shall have the meaning set forth in
Section 6.9(m).
"Management Sellers" shall mean Marc Postlewaite and Kim Vogel.
"Material Adverse Effect" shall mean any effect that is materially
adverse to the business, operations, prospects, results of operations or
financial condition of the Company taken as a whole.
"Material Agreements" shall have the meaning set forth in
Section 6.19(a).
"Merger" shall have the meaning set forth in the recitals to this
Agreement.
"Merger Consideration" shall have the meaning set forth in
Section 2.3(a).
"Person" shall mean any individual, corporation, partnership,
limited liability company, joint venture, trust, association, unincorporated
organization, other entity or Governmental Body.
"Proceeding" shall mean an action, suit, or a legal,
administrative, arbitration or other similar proceeding.
"Publicker Shares" shall mean shares of common stock, par value
$0.10 per share, of Publicker.
"Registrable Publicker Shares" shall mean all Publicker Shares
(other than Publicker Shares issued to Employee Sellers) issued pursuant to
this Agreement and any Publicker Shares issued as a dividend or other
distribution on or as a result of a subdivision or combination of any
Publicker Shares (other than Publicker Shares issued to Employee Sellers)
issued pursuant to this Agreement.
"Release" shall mean any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping, or
disposing of a Hazardous Substance into the environment (including the
abandonment or discarding of barrels, containers, and other closed receptacles
containing any Hazardous Substance).
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Seller Documents" shall have the meaning set forth in
Section 7.2.
"Sellers' Agent" shall have the meaning set forth in Section 14.1.
"Shelf Registration Statement" shall have the meaning set forth in
Section 11.2A.
"Subsidiary" shall mean with respect to any specified Person, any
other Person (a) whose board of directors or similar governing body, or a
majority thereof, may presently be directly or indirectly elected or appointed
by such specified Person, (b) whose management decisions and corporate actions
are directly or indirectly subject to the present control of such specified
Person, or (c) whose voting securities are more than 50% owned, directly or
indirectly, by such specified Person.
"Surviving Corporation" shall have the meaning set forth in
Section 2.1.
"Tax" shall mean any tax (including, without limitation, any
income tax, franchise tax, branch profits tax, gross receipts tax, employment
tax, withholding tax, capital gains tax, value-added tax, sales tax, property
tax, gift tax, or estate tax), levy, assessment, tariff, duty (including any
customs duty), deficiency, or other fee, and any related charge or amount
(including any fine, penalty, interest, or addition to tax), imposed,
assessed, or collected by or under the authority of any Governmental Body or
payable pursuant to any tax-sharing agreement or any other contract relating
to the sharing or payment of any such tax, levy, assessment, tariff, duty,
deficiency, or fee.
"Tax Return" shall mean any return (including, without limitation,
any information return), report, statement, schedule, notice, form, or other
document or information filed with or submitted to, or required to be filed
with or submitted to, any Governmental Body in connection with the
determination, assessment, collection, or payment of any Tax or in connection
with the administration, implementation, or enforcement of or compliance with
any legal requirement relating to any Tax.
"Technology" shall have the meaning set forth in Section 6.9(m).
"Trading Day" shall mean a day on which the principal national
securities exchange on which a class of stock is listed or admitted to trading
is open for the transaction of business or, if such class of stock is not
listed or admitted to trading on any national securities exchange, any
Business Day.
(b) References to Dollars. References to dollars or "$" in this
Agreement shall mean United States dollars.
(d) THE MERGER.
(a) The Merger. At the Effective Time of the Merger, Acquisition Sub
shall be merged with and into the Company. The separate existence
of Acquisition Sub shall thereupon cease and the Company shall
continue its corporate existence as the surviving corporation (the
"Surviving Corporation") under the laws of the State of Florida
under its present name. The Company and Acquisition Sub are
sometimes referred to collectively herein as the "Constituent
Corporations".
(b) Effects of the Merger. At the Effective Time of the Merger:
(a) the separate existence of Acquisition Sub shall cease
and Acquisition Sub shall be merged with and into the
Company, which shall be the Surviving Corporation;
(b) the articles of incorporation and by-laws of the
Company as in effect immediately prior to the
Effective Time, giving effect to the amendments set
forth in the Certificates of Merger, shall be the
articles of incorporation and by-laws of the Surviving
Corporation until each shall thereafter be amended in
accordance with each of their terms and as provided by
law;
(c) the directors of Acquisition Sub immediately prior to
the Effective Time shall be the initial directors of
the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time (other
than the Secretary) together with James J. Weis as a
Vice President and Antonio L. DeLise as Secretary
shall be the initial officers of the Surviving
Corporation, each to hold office in accordance with
the articles of incorporation and by-laws of the
Surviving Corporation, in each case until their
respective successors are duly elected and qualified;
(d) the Surviving Corporation shall possess all the
rights, privileges, immunities and franchises, of a
public as well as of a private nature, of each of the
Constituent Corporations, and all property, real,
personal, and mixed, and all debts due on whatever
account, and all other choses in action, and all and
every other interest of or belonging to or due to each
of the Constituent Corporations shall be taken and
deemed to be transferred to and vested in the
Surviving Corporation without further act or deed; and
(e) the Surviving Corporation shall thenceforth be
responsible and liable for all liabilities and
obligations of each of the Constituent Corporations,
and any claim existing or action or proceeding pending
by or against either of the Constituent Corporations
may be prosecuted as if such Merger had not taken
place or the Surviving Corporation may be substituted
in its place. Neither the rights of creditors nor
liens upon the property of either of the Constituent
Corporations shall be impaired by the Merger.
(c) Conversion of Shares. As of the Effective Time, by virtue of the
Merger and without any further action on the part of Publicker,
Acquisition Sub, the Company, or any holder of any equity
securities of the Constituent Corporations:
(a) each Company Share issued and outstanding immediately
prior to the Effective Time shall be converted into
the right to receive that number of Publicker Shares
(the "Merger Consideration") as determined by dividing
(x) 1,495,000 by (y) the aggregate number of Company
Shares issued and outstanding immediately prior to the
Effective Time, upon surrender of the certificates
representing such Company Shares to Publicker;
provided, however, that if Publicker determines, based
on its review of Investor Questionnaires in
substantially the form of Exhibit H delivered to
Publicker by the holders of Company Shares, that the
issuance of Publicker Shares as the Merger
Consideration to any holder of Company Shares may
cause the Contemplated Transactions to fail to comply
with applicable securities laws, then, at Publicker's
option, each outstanding Company Share held by such
holder shall be converted into the right to receive
cash in amount equal to (A) the Fair Market Value at
the Effective Time of 1,495,000 Publicker Shares
divided by (B) the aggregate number of Company Shares
issued and outstanding immediately prior to the
Effective Time (any such cash payable per Company
Share shall also be referred to herein as the "Merger
Consideration");
(b) if on or before the Effective Date the issued and
outstanding Publicker Shares are changed into a
different number of shares by reason of any
recapitalization, stock split or stock dividend, then
the Merger Consideration shall be correspondingly
adjusted as follows: (i) to the extent the Merger
Consideration consists of Publicker Shares, the Merger
Consideration shall be adjusted to that number of
Publicker Shares that the Merger Consideration, if it
was issued and outstanding immediately before any such
recapitalization, stock split or stock dividend
occurred, would have been converted into as a result
of any such recapitalization, stock split or stock
dividend and (ii) to the extent the Merger
Consideration consists of cash, the Merger
Consideration shall be adjusted to a cash amount
determined based on the Fair Market Value of that
number of Publicker Shares that 1,495,000 Publicker
Shares, if they were issued and outstanding
immediately before any such recapitalization, stock
split or stock dividend occurred, would have been
converted into as a result of any such
recapitalization, stock split or stock dividend;
(c) no fraction of a Publicker Share will be issued, but
in lieu thereof each holder of Company Shares who
would otherwise be entitled to a fraction of a
Publicker Share (after aggregating all fractional
Publicker Shares to be received by such holder) shall
receive from Publicker one additional Publicker Share;
(d) each share of common stock, $.01 par value per share,
of Acquisition Sub issued and outstanding immediately
prior to the Effective Time shall be converted into
and exchanged for one validly issued, fully paid and
nonassessable share of common stock, $.01 par value
per share, of the Surviving Corporation;
(e) all Company Shares by virtue of the Merger and without
any action on the part of the holders thereof, shall
no longer be outstanding and shall be canceled and
retired and shall cease to exist, and each holder of a
certificate representing any Company Shares shall
thereafter cease to have any rights with respect to
such Company Shares, except the right to receive the
Merger Consideration for the Company Shares upon the
surrender of such certificate in accordance with this
Section 2.3;
(f) each outstanding option to purchase Company Shares, by
virtue of the Merger and without any action on the
part of the holders thereof, shall be assumed by
Publicker and shall be converted into the right to
receive an option to purchase Publicker Shares in an
amount and with an exercise price as set forth on
Schedule 2.3(f) and otherwise substantially in the
form of Exhibit E-1;
(g) if on or before the Effective Date the issued and
outstanding Publicker Shares are changed into a
different number of shares by reason of any
recapitalization, stock split or stock dividend, then
the Publicker Shares issuable upon exercise of each of
the options described in Section 2.3(f) and on
Schedule 2.3(f) shall be correspondingly adjusted to
that number of Publicker Shares that such Publicker
Shares, if they were issued and outstanding
immediately before any such recapitalization, stock
split or stock dividend occurred, would have been
converted into as a result of any such
recapitalization, stock split or stock dividend;
(h) either prior to or promptly following the Effective
Time, Publicker shall deliver to each shareholder of
record of the Company immediately prior to the
Effective Time a letter of transmittal in
substantially the form of Exhibit G (each, a "Letter
of Transmittal") and instructions for use in
surrendering the certificates that formally
represented Company Shares entitled to payment of the
Merger Consideration. Promptly following proper
delivery of a certificate representing Company Shares
(accompanied by a duly executed Letter of Transmittal
and the documents contemplated thereby) by the holder
thereof to Publicker, Publicker shall deliver to such
holder either (i) a certificate representing (A) the
Merger Consideration (in terms of Publicker Shares)
times the number of Company Shares represented by the
certificate so delivered by such holder and (B) any
additional Publicker Share issuable in lieu of any
fractional Publicker Share issuable to such holder in
accordance with Section 2.3(c), or (ii) cash in amount
equal to the Merger Consideration (in terms of cash)
times the number of Company Shares represented by the
certificate so delivered by such holder, whichever is
applicable pursuant to Section 2.3(a); and
(i) if the Merger Consideration is to be issued or paid
(as the case may be) to a name other than the name in
which the certificate representing the Company Shares
surrendered in exchange therefor is registered, it
shall be a condition to such issuance or payment that
the person requesting such issuance or payment shall
pay to Publicker any transfer or other taxes required
by reason of the issuance of such shares or the
payment of such cash to a name other than that of the
registered holder of the certificate surrendered, or
such person shall establish to the satisfaction of
Publicker that such tax has been paid or is not
applicable.
(d) Subsequent Action. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments, assurances and any other actions or
things are necessary, desirable or proper to vest, perfect or
confirm, of record or otherwise, in the Surviving Corporation its
right, title or interest in, to or under any of the rights,
properties or assets of the Constituent Corporations as a result
of, or in connection with, the Merger, the officers and directors
of the Surviving Corporation shall be authorized to execute and
deliver, in the name and on behalf of the Constituent Corporations
or otherwise, all such deeds, bills of sale, assignments and
assurances and to take and do, in the name and on behalf of the
Constituent Corporations or otherwise, all such other actions and
things as may be necessary or desirable to vest, perfect or
confirm any and all right, title and interest in, to and under
such rights, properties or assets in the Surviving Corporation or
otherwise to carry out this Agreement.
(e) THE CLOSING.
(a) Place and Time. The Closing of the Merger (the "Closing") shall
take place on November 25, 1998 at the offices of Kaye, Scholer,
Fierman, Hays & Handler, LLP, 425 Park Avenue, New York, New York
at 10:00 a.m. (New York City time), or at such other place, date
and time as the parties may agree in writing.
(b) Effective Time of the Merger. At the Closing, the parties hereto
shall cause (i) articles of merger substantially in the form of
Exhibit A-1 to be executed and filed with the Secretary of State
of the State of Florida, as provided in Section 607.1105 of the
FBCA and (ii) a certificate of merger substantially in the form of
Exhibit A-2 to be executed and filed with the Secretary of State
of the State of Delaware, as provided in Section 252 of the DGCL
(collectively, the "Certificates of Merger"), and shall take all
such other and further actions as may be required by law to make
the Merger effective. The Merger shall become effective as of the
date and time of the filing of such Certificates of Merger. The
date and time of such effectiveness are referred to herein as the
"Effective Time".
(c) Deliveries by Sellers and Company. At the Closing, Sellers and
the Company shall deliver to Publicker the documents contemplated
by Section 4.
(d) Deliveries by Publicker. At the Closing, Publicker shall deliver
to Sellers or the Company (as applicable) the documents
contemplated by Section 5.
(f) CONDITIONS TO PUBLICKER'S AND ACQUISITION SUB'S OBLIGATIONS.
The obligations of Publicker and Acquisition Sub to effect the
Closing shall be subject to the satisfaction at or prior to the Closing of the
following conditions, any one or more of which may be waived by Publicker (on
behalf of itself and Acquisition Sub):
(a) Opinion of Counsel. Publicker and Acquisition Sub shall have
received an opinion of Johnson, Blakely, Pope, Bokor, Ruppel &
Burns, P.A., counsel to Sellers and the Company, dated the Closing
Date, in substantially the form of Exhibit B.
(b) No Injunction. There shall not be in effect any injunction, order
or decree of a court of competent jurisdiction that prohibits or
delays consummation of any part of the Contemplated Transactions,
or that will require any divestiture by Publicker as a result of
the Merger.
(c) Representations, Warranties and Agreements. (a) The
representations and warranties of the Company, Sellers and
Management Sellers set forth in this Agreement shall be true and
correct in all material respects as of the date of this Agreement
and as of the Closing Date, (b) each of the Company and Sellers
shall have performed and complied in all material respects with
the agreements contained in this Agreement required to be
performed and complied with by it prior to or at the Closing, and
(c) Publicker shall have received separate certificates to the
foregoing effect signed by the Chief Executive Officer of the
Company (with respect to the Company), Sellers other than
Management Sellers (with respect to themselves) and Management
Sellers (with respect to themselves).
(d) Litigation. No action or proceeding shall have been instituted by
any Governmental Body and, at what would otherwise have been the
Closing Date, remain pending to restrain or prohibit any part of
the Contemplated Transactions or to seek any divestiture or to
revoke or suspend any license, permit, order or approval by reason
of any or all of the Contemplated Transactions; nor shall any
Governmental Body have notified any party to this Agreement or any
of their respective Affiliates that consummation of any part of
the Contemplated Transactions would constitute a violation of the
laws of any jurisdiction or that it intends to commence an action
or proceeding to restrain or prohibit any part of the Contemplated
Transactions or to require such divestiture, revocation or
suspension; unless, in either such case, such Governmental Body
shall have withdrawn such notice and abandoned such action or
proceeding.
(e) Approvals. All licenses, authorizations, consents, orders and
regulatory approvals of Governmental Bodies or Persons, as
applicable, necessary for the consummation of the Contemplated
Transactions shall have been obtained and shall be in full force
and effect.
(f) Certificates of Merger. Prior to the Effective Time, each of the
Certificates of Merger shall be accepted for filing with the
Secretary of State of the State of Florida and the Secretary of
State of the State of Delaware, as applicable.
(g) Employment Agreements. The Surviving Corporation shall have
entered into an employment agreement with each of Marc
Postlewaite, Kim Vogel, Steve Ewald and Vince Poole substantially
in the form of Exhibit C.
(h) FIRPTA Certificate. The Company shall have delivered to Publicker
(a) a properly executed FIRPTA Notification Letter, substantially
in the form of Exhibit J, which states that shares of capital
stock of the Company do not constitute "United States real
property interest" under Section 897(c) of the Code, for purposes
of satisfying Publicker's obligations under Treasury Regulation
Section 1.1445-2(c)(3), and (b) as agent for the Company, a form
of notice to the Internal Revenue Service in accordance with the
requirements of Treasury Regulation Section 1.897-2(h)(2) and
substantially in the form of Exhibit J, along with written
authorization for Publicker to deliver such form of notice to the
Internal Revenue Service on behalf of the Company upon the
Closing.
(i) Shareholder Approval. The requisite number of shareholders of the
Company under the FBCA shall have approved this Agreement and the
Contemplated Transactions in accordance with the FBCA, after their
receipt of private placement materials or other information that
Publicker determines are necessary for the Contemplated
Transactions to comply with applicable securities laws.
(j) Financial Statements. The financial statements delivered to
Publicker pursuant to Section 9.15 shall not reveal, in
Publicker's good faith judgment, any material variations from the
Financial Statements, other than the items set forth on Schedule
4.10.
(k) Accounts Receivable. The accounts receivable aging delivered to
Publicker pursuant to Section 9.15 shall not reveal, in
Publicker's good faith judgment, any material variations from the
accounts receivable aging set forth on Schedule 6.6.
(l) Proceedings Satisfactory. All certificates, opinions and other
documents to be delivered by the Company or Sellers and all other
matters to be accomplished by the Company or Sellers prior to or
at the Closing shall be satisfactory in the reasonable judgment of
Publicker and Acquisition Sub and their counsel.
(g) CONDITIONS TO THE COMPANY'S OBLIGATIONS.
The obligations of the Company to effect the Closing shall be
subject to the satisfaction at or prior to the Closing of the following
conditions, any one or more of which may be waived by the Company:
(a) Opinion of Counsel. The Company shall have received from
Publicker an opinion of Kaye, Scholer, Fierman, Hays & Handler,
LLP, counsel to Publicker and Acquisition Sub, dated the Closing
Date, in substantially the form of Exhibit D.
(b) No Injunction. There shall not be in effect any injunction, order
or decree of a court of competent jurisdiction that prohibits or
delays consummation of any part of the Contemplated Transactions,
or that will require any divestiture by Publicker as a result of
the Merger.
(c) Representations, Warranties and Agreements. (a) The
representations and warranties of Publicker and Acquisition Sub
set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and as of the
Closing Date, (b) each of Publicker and Acquisition Sub shall have
performed and complied in all material respects with the
agreements contained in this Agreement required to be performed
and complied with by it prior to or at the Closing and (c) the
Company shall have received a certificate to the foregoing effect
signed by an authorized officer of each of Publicker and
Acquisition Sub.
(d) Litigation. No action or proceeding shall have been instituted by
any Governmental Body and, at what would otherwise have been the
Closing Date, remain pending to restrain or prohibit any part of
the Contemplated Transactions or to seek any divestiture or to
revoke or suspend any license, permit, order or approval by reason
of any or all of the Contemplated Transactions; nor shall any
Governmental Body have notified any party to this Agreement or any
of their respective Affiliates that consummation of any part of
the Contemplated Transactions would constitute a violation of the
laws of any jurisdiction or that it intends to commence an action
or proceeding to restrain or prohibit any part of the Contemplated
Transactions or to require such divestiture, revocation or suspen-
sion; unless, in either such case, such Governmental Body shall
have withdrawn such notice and abandoned such action or
proceeding.
(e) Employment Agreements. The Surviving Corporation shall have
entered into an employment agreement with each of Marc
Postlewaite, Kim Vogel, Steve Ewald and Vince Poole substantially
in the form of Exhibit C.
(f) Option Agreements. Publicker shall have delivered to each of the
individuals set forth on Schedule 5.6 an option to purchase the
number of Publicker Shares set forth opposite their name on said
schedule pursuant to a stock option agreement substantially in the
form of Exhibit E-2.
(g) Shareholder Approval. The requisite number of shareholders of the
Company under the FBCA shall have approved this Agreement and the
Contemplated Transactions in accordance with the FBCA, after their
receipt of private placement materials or other information that
Publicker determines are necessary for the Contemplated
Transactions to comply with applicable securities laws.
(h) Proceedings Satisfactory. All certificates, opinions and other
documents to be delivered by Publicker and Acquisition Sub and all
other matters to be accomplished by Publicker and Acquisition Sub
prior to or at the Closing shall be satisfactory in the reasonable
judgment of the Company and its counsel.
(h) REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND MANAGEMENT SELLERS.
The Company and Management Sellers hereby jointly and severally
represent and warrant to Publicker and Acquisition Sub as follows:
(a) Organization and Good Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of
the State of its incorporation. The Company (a) has all requisite
corporate power to own, operate and lease its properties and carry
on its business as the same is now being conducted and (b) is
qualified to do business as a foreign corporation in each
jurisdiction set forth in Schedule 6.1. Neither the location of
its property nor the conduct of its business requires the Company
to be qualified to do business as a foreign corporation in any
state, other than those in which it is so qualified, where the
failure to so qualify would have a Material Adverse Effect. The
Company has delivered to Publicker true and complete copies of the
articles or certificate of incorporation and bylaws of the
Company.
(b) Capitalization of the Company; Subsidiaries.
(a) The authorized capital stock of the Company consists of
10,000,000 shares of common stock, no par value per share,
of which 6,367,765.06 shares are issued and outstanding.
The outstanding Company Shares have been duly authorized and
validly issued and are fully paid and nonassessable and are
owned of record and, to the knowledge of Management Sellers,
beneficially as shown on Schedule 6.2(a). The outstanding
Company Shares were issued in conformity with applicable
laws and not in violation of any preemptive rights of any
Person.
(b) The Company does not have and has never had any
Subsidiaries.
(c) Except as set forth on Schedule 6.2(c), there are no
outstanding subscriptions, options, rights, warrants, con-
vertible securities or other agreements (other than this
Agreement) or calls, demands or commitments of any kind
relating to the issuance, sale or transfer of any capital
stock of the Company. None of the items set forth on
Schedule 6.2(c) will survive the Closing.
(c) Authority; Absence of Conflict.
(a) The Company has full corporate authority to execute, deliver
and perform this Agreement and each other agreement,
document or instrument required to be delivered by it hereby
or in connection herewith (collectively, the "Company
Documents") and to consummate the Contemplated Transactions.
The execution, delivery and performance by the Company of
the Company Documents and the consummation of the
Contemplated Transactions has been duly authorized by the
board of directors of the Company and, on the Closing Date,
will be duly authorized by the shareholders of the Company,
and no other corporate proceedings on the part of the
Company are necessary to authorize the Company Documents or
the Contemplated Transactions. This Agreement has been, and
each other Company Document when executed and delivered in
accordance with this Agreement will be, duly executed and
delivered by the Company. This Agreement constitutes, and
each of the other Company Documents when executed and
delivered in accordance with this Agreement will constitute,
a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms.
(b) Neither the execution and delivery of the Company Documents,
nor the consummation of the Contemplated Transactions will
(i) violate, be in conflict with or constitute a default (or
an event which, with notice or lapse of time or both, would
constitute a default) under, or provide the basis of
termination of, or cause the acceleration of the performance
required by, any agreement, commitment or instrument to
which the Company is a party or by which any of its prop-
erties or assets is bound or (ii) violate any statute or law
or any judgment, decree, order, regulation or rule of any
court or other Governmental Body applicable to the Company,
or (iii) result in any Encumbrance upon any of the
properties or assets of the Company under any agreement,
commitment or instrument to which the Company is a party or
by which the Company or any of its properties or assets may
be bound, or (iv) violate or be in conflict with any
provision of the certificate or articles of incorporation or
bylaws of the Company.
(d) Consents and Approvals. Schedule 6.4 lists (i) all consents,
approvals and authorizations of, and declarations, filings and
registrations with, any Governmental Body and (ii) all consents of
other Persons (including, but not limited to, any party to a lease
or other agreement or commitment of the Company), which are
required by or on behalf of the Company in connection with the
execution, delivery and performance of the Company Documents or
the consummation of the Contemplated Transactions.
(e) Financial Statements. The Company has delivered to Publicker
(a) an unaudited balance sheet of the Company at December 31,
1997, and the related unaudited profit and loss statement for the
fiscal year then ended and (b) an unaudited balance sheet of the
Company at August 31, 1998, and the related unaudited profit and
loss statement for the nine months then ended (collectively the
"Financial Statements"). The Financial Statements have been
prepared on a modified cash basis and fairly present the financial
position of the Company at the respective dates thereof and for
the periods referred to therein, subject to the exceptions set
forth on Schedule 6.5.
(f) Accounts Receivable. The accounts receivable of the Company
(a) are bona fide accounts receivable created in the ordinary and
usual course of business in connection with bona fide transactions
and consistent with past practice, (b) as of August 31, 1998,
except as set forth on Schedule 6.6, are current and (c) have been
properly accrued in accordance with GAAP and any reserves or
allowances for doubtful accounts have been properly accrued in
accordance with GAAP.
(g) Title to Property; Encumbrances. The Company owns no real
property other than the facilities identified on Schedule 6.7.
The Company has good and marketable title to such facilities, free
of any Encumbrances other than Permitted Encumbrances. The
Company has delivered or made available to Publicker true and
complete copies of the deeds and other instruments by which the
Company acquired such real property and all title insurance
policies, opinions, abstracts and surveys which relate to such
real property and are in the possession of the Company. Except
for Permitted Encumbrances, the Company has good title to all of
the material personal property reflected as being owned by it on
the balance sheets included in the Financial Statements (except
for personal property sold or otherwise disposed of since the
dates of such balance sheets (as applicable) in the ordinary
course of business). As used herein, "Permitted Encumbrances"
means (a) those Encumbrances disclosed on the balance sheets
included in the Financial Statements or the notes thereto;
(b) statutory liens for current taxes or assessments not yet due
or delinquent or the validity of which are being contested in good
faith by appropriate proceedings (a list of all such proceedings
as of the date of this Agreement being included on Schedule 6.7);
(c) mechanics', carriers', workers', repairmen's and other similar
liens arising or incurred in the ordinary course of business with
respect to charges not yet due and payable; (d) recorded easements
for public utilities serving the Company's real property;
(e) zoning, building and other similar restrictions; and (f) such
other Encumbrances, if any, which do not materially detract from
the value of or interfere with the present use, or any use
presently anticipated by the Company, or materially and adversely
affect the marketability of the property subject thereto or
affected thereby.
(h) Leased Property. Schedule 6.8 sets forth a true and complete list
of, and the Company has delivered or made available to Publicker
true and complete copies of, each lease under which the Company is
a lessee or lessor (other than leases for personal property having
a value per item or aggregate payments of less than $10,000 per
annum). There is not, with respect to any such lease, any
existing event of default, or event which (with notice or lapse of
time or both) would constitute an event of default, on the part of
the Company, and the Company has not received any written notice
of any such event. The Company enjoys peaceful and undisturbed
possession under each such lease. None of the rights of the
Company under any lease set forth on Schedule 6.8 will be subject
to termination or modification and no consent or approval of any
third party is required under such leases as a result of the
consummation of the Contemplated Transactions.
(i) Intellectual Property Rights.
(a) Schedule 6.9(a) contains a true and complete list of all
Intellectual Property (as defined in clause (m) below),
including without limitation, applications, filings and
registrations with or in any Governmental Body having
jurisdiction over such subject matter. All such
applications, filings and registrations have been duly
filed, and those registrations which have issued are validly
existing and in full force and effect and all required
maintenance and annuity fees have been paid in full. With
respect to all U.S. registered service and trademarks,
Section 8 and 15 declarations, where applicable, have been
timely filed and accepted. No service or trademarks listed
on Schedule 6.9(a) have been abandoned.
(b) Except as specifically set forth on Schedule 6.9(b), the
Company has good and marketable title to all Intellectual
Property and Technology (as defined in clause (m) below),
free and clear of all Encumbrances and without payment of
any royalties, license fees or other amounts.
(c) Except as specifically set forth on Schedule 6.9(c), (i)
there are no licenses, agreements, obligations or other
commitments by which the Company may be bound from or with
third parties under which the Company uses, has the right to
use or exercises any rights with respect to any Intellectual
Property or Technology and (ii) there are no judicial
orders, decrees, judgments or stipulations restricting the
Company's use or right to use any Intellectual Property or
Technology.
(d) Except as set forth on Schedule 6.9(d), the Company has not
received (and the Company has no knowledge of) any notice,
claim or allegation from any other party challenging the
right of the Company to use, possess, transfer, convey or
otherwise dispose of any Intellectual Property or
Technology. Except as set forth on Schedule 6.9(d), there
is no interference, opposition, cancellation, reexamination
or other contest proceeding, action, claim, dispute or claim
of infringement, misappropriation or other violation of any
intellectual property or other proprietary rights of any
other party. The Company's use of the Intellectual Property
and Technology, past and present, has not and does not
violate or infringe upon the rights of any other party or
constitute a breach of any agreement, obligation, promise or
commitment by which the Company may be bound or constitute a
violation of any laws, regulations, ordinances, codes or
statutes in any jurisdiction.
(e) Except as set forth on Schedule 6.9(e), no licenses or other
rights have been granted and the Company has no obligation
to grant licenses with respect to any Intellectual Property
or Technology. No claims have been made by or against the
Company of any violation or infringement by others of any
rights with respect to any Intellectual Property or
Technology. The Company is not aware of any such claim
which the Company may have the right or a reasonable basis
to make or assert.
(f) Except as set forth on Schedule 6.9(f), the Intellectual
Property and Technology includes all rights and interests
necessary to conduct the business of the Company as it is
currently conducted, and such rights will not be adversely
affected by the Company or any other party claiming under or
through the Company or otherwise in connection with or
arising from the execution and delivery of this Agreement or
the Contemplated Transactions.
(g) To the knowledge of the Company, all statements and
representations made by the Company in any pending
Intellectual Property applications, filings and
registrations were true in all material respects as of the
time they were made.
(h) To the knowledge of the Company, all documentation,
specifications, designs and other informational materials
which describe the operation, functions and technical
characteristics applicable to the Intellectual Property and
Technology are true and complete and faithfully and
accurately reflect the Intellectual Property and Technology
to which same relates.
(i) To the knowledge of the Company, the Company has taken all
actions reasonably necessary to ensure that (I) there are no
protections, encryption, security or lock-out devices,
whether triggered by the passage of time, the use or
operation of the Intellectual Property and Technology,
remotely or otherwise which might in any way interrupt,
discontinue or otherwise adversely affect the Intellectual
Property and Technology or the Company's use thereof; and
(II) there are no so-called computer viruses, worms, trap or
back doors, Trojan horses or any other instructions, codes,
programs, data or materials which could improperly,
wrongfully and/or without the authorization of the Company,
interfere with the operation or use of the Intellectual
Property and Technology.
(j) To the knowledge of the Company, except as set forth in
Schedule 6.9(j), (i) all authorship in the computer
software, documentation, software design, technical and
functional specifications created by the Company and used in
products or services created by the Company (excluding
software owned by others that is part of hardware purchased
by the Company for use in its products or services) is
original and (ii) all computer software and related
documentation manuals contained or used in products of
(including, without limitation, documentation and product
and user manuals) or services provided by the Company are
owned by or licensed to the Company and such licenses
provide the Company with the right to sublicense or
otherwise authorize use of the licensed subject matter to
their customers and authorized third party users.
(k) To the knowledge of the Company, except as set forth in
Schedule 6.9(k), (i) all computer software created by
employees of the Company within the scope of their
employment by the Company and used in Company products or
services and all original copyrightable authorship therein
is owned by the Company; (ii) all rights in all inventions
and discoveries made, written, developed or conceived by
current or former employees, independent contractors or
consultants of the Company during the course of their
employment (or other retention) by the Company and material
to the business of the Company or made, written, developed
or conceived with the use or assistance of the Company's
facilities or resources and which are the subject of one or
more patents or applications for patents have been assigned
in writing to the Company; (iii) the policy of the Company
requires each employee of the Company to sign documents
confirming that he or she assigns to the Company all
Intellectual Property and Technology rights made, written,
developed or conceived by him or her during the course of
his or her employment (or other retention) by the Company
and relating to the business of the Company or made,
written, developed or conceived with the use or assistance
of the Company's facilities or resources to the extent that
ownership of any such Intellectual Property or Technology
rights does not vest in the Company by operation of law, and
to the extent that any employee of the Company has not
executed such documents, the Company will require such
employee to execute such documents at or before the Closing;
and (iv) all Intellectual Property and Technology rights
made, written, developed or conceived by each employee,
independent contractor or consultant of the Company during
the course of his or her employment (or other retention) by
the Company and material to the business of the Company have
been assigned or licensed to the Company.
(l) Except as set forth in Schedule 6.9(l), the Company believes
that it has taken all reasonable and practicable steps to
protect and preserve the confidentiality of all Intellectual
Property and Technology not subject to copyright or patent
("Confidential IP Information"). The Company believes that
all use by the Company of Confidential IP Information not
owned by the Company has been and is pursuant to the terms
of a written agreement between the Company and the owner of
such Confidential IP Information, or is otherwise lawful.
(m) "Intellectual Property" shall mean all intellectual property
rights, common law, statutory or otherwise, domestic and
foreign, including, without limitation, patents (including
all reissues, divisions, continuations and extensions),
service marks, trademarks, trade names, brand, product and
service names, and all logos and distinctive identifications
of the Company, its products and services, copyrights and
mask works as well as all applications for any and all of
the foregoing, licenses and other contractual rights and
other such property and intangible rights owned, used or
held for use by the Company, together with the goodwill of
the business of the Company in connection with all of the
foregoing. "Technology" shall mean all formulae,
algorithms, processes, methods, procedures, designs, ideas,
strategic and other business plans, research records,
inventions and all records of the foregoing, test,
engineering and technical data, know-how, proprietary
information and methodologies, trade secrets, technology,
communications and associated peripheral devices and
resources, computer software, programs and code, both object
and source, in whatever form and media, all databases,
specifications and other information processing tangible and
intangible items, owned, used or held for use by the Company
with respect to the business of the Company.
(j) Buildings, Plants and Equipment.
(a) The buildings, plants and structures of the Company are
adequate for the uses to which they are being put. The
personal property owned or leased by the Company is adequate
and in a condition sufficient to permit the Company to
conduct its business in the same manner as it is conducted
on or has been conducted prior to the date of this
Agreement.
(b) The Company has not received notification since January 1,
1996 that the Company is in violation of any applicable
building, zoning, health or other law, ordinance or
regulation (other than those covered by Section 6.21) in
respect of its buildings, plants or structures or their
operation, and there exists no such violation which could
reasonably be expected to interfere with the present use of
the buildings, plants or structures.
(k) Rights and Assets Sufficient. The rights, properties and
assets owned by or leased or licensed to the Company include all
rights, properties and other assets necessary to permit the Company
to conduct its business in the same manner as it is conducted on, or
has been conducted immediately prior to, the date of this Agreement.
(l) Books and Records. The books and records of the Company, all of
which have been made available to Publicker, set forth in all
material respects transactions affecting the Company, and such
books and records have been properly kept and maintained and are
complete and correct.
(m) Litigation. There is no investigation by any Governmental Body of
which Management Sellers are aware or any Proceeding pending or,
to the knowledge of Management Sellers, threatened by or on behalf
of any Governmental Body or Person against the Company or its
business or assets. To the knowledge of Management Sellers, no
basis exists for any such Proceeding. There are no existing
judgments, orders, writs, injunctions, awards or decrees of any
court or other Governmental Body against the Company or its
business or assets.
(n) Tax Matters. Except as otherwise disclosed on Schedule 6.14:
(a) The Company has, at all times since its formation,
qualified as an S corporation (as defined under
Section 1361(a)(1) of the Code) for federal, state and
local tax purposes and has timely and properly made
all elections necessary to obtain (or retain) such S
corporation status. The Company has timely filed or
caused to be timely filed all Tax Returns that are or
were required to be filed by or with respect to it
pursuant to applicable legal requirements. All such
Tax Returns are true, correct and complete.
Management Sellers have delivered or made available to
Publicker copies of, and Schedule 6.14(a) contains a
complete and accurate list of, all such Tax Returns
relating to income or franchise taxes filed since
December 31, 1994. The Company has paid all Taxes
that have or may have become due pursuant to those Tax
Returns or otherwise, or pursuant to any assessment
received by Sellers or the Company, except such Taxes,
if any, as are listed on Schedule 6.14(a) and are
being contested in good faith and as to which adequate
reserves have been provided in the audited balance
sheet included in the Financial Statements. The
Company has not been a member of a group of
corporations and has not owned 80 percent or more of
any shares of stock of any other corporation.
(b) The Tax Returns of the Company have been audited by
the Internal Revenue Service or other relevant
Governmental Body or are closed by the applicable
statute of limitations for all taxable years through
December 31, 1994. Schedule 6.14(b) contains a
complete and accurate list of all audits of all such
Tax Returns, including a reasonably detailed
description of the nature and outcome of each audit.
No adjustments have been proposed with respect to the
Tax Returns filed by the Company for all taxable years
since December 31, 1994. None of Sellers or the
Company has given or been requested to give waivers or
extensions (or is or would be subject to a waiver or
extension given by any other Person) of any statute of
limitations relating to the payment of Taxes by it or
for which it may be liable.
(c) The charges, accruals, and reserves with respect to
Taxes on the books of the Company are adequate and are
at least equal to the Company's liability for Taxes.
There exists no proposed tax assessment against the
Company except as disclosed in the audited balance
sheet included in the Financial Statements. No
consent to the application of Section 341(f)(2) of the
Code has been filed with respect to any property or
assets held, acquired, or to be acquired by the
Company. All Taxes that the Company is or was
required by legal requirements to withhold or collect
have been duly withheld or collected and, to the
extent required, have been paid to the proper
Governmental Body.
(d) There is no tax sharing agreement that will require
any payment by the Company after the date of this
Agreement.
(e) No property of the Company (i) is subject to a tax
benefit transfer lease subject to the provisions of
former Section 168(f)(8) of the Internal Revenue Code
of 1954, (ii) is "tax-exempt use property" within the
meaning of Section 168(h) of the Code, or (iii)
secures any debt the interest on which is exempt from
tax under Section 103 of the Code.
(f) The Company is not and has not been a United States
real property holding corporation within the meaning
of Section 897(c)(2) of the Code.
(g) There is no agreement, plan, arrangement or other
contract covering any employee or independent
contractor or former employee or former independent
contractor of the Company that could give rise to the
payment of any amount that could not be deductible
pursuant to Section 280G of the Code.
(h) The Company (i) has complied with all applicable legal
requirements relating to information reporting with
respect to payments made to third parties and the
withholding of and payment of withheld Taxes, (ii) has
timely withheld from employee wages and other payments
and paid over to the proper Governmental Bodies all
amounts required to be so withheld and paid over for
all periods under all applicable legal requirements,
and (iii) has duly collected and remitted any sales,
value-added and similar Taxes required to be collected
and remitted.
(i) There are no pending, proposed, or, to the knowledge
of Management Sellers, threatened, audits, judicial
proceedings, assessments or deficiencies with respect
to Taxes of the Company. There is no pending,
proposed, or, to the knowledge of Management Sellers,
threatened, claim by any Governmental Body in any
jurisdiction in which any of the Sellers or the
Company does not pay Taxes or file Tax Returns that
any such Seller or the Company is required to pay
Taxes or file Tax Returns.
(j) The Company has not and is not required to make any
adjustment under Section 481(a) of the Code or any
comparable provision of state, local or foreign law.
(k) The Company is a "United States Person," as defined in
Section 7701(a)(30) of the Code.
(l) No liens for Taxes exist with respect to the assets,
income or operations of the Company.
(m) Except as set forth on Schedule 6.14(m), the Company
does not have in effect any tax election for federal
income tax purposes under Section 108, 168, 338, 441,
471, 1017, 1033, 1502 or 4977 of the Code.
(o) Absence of Certain Changes or Events. Except as contemplated by
this Agreement and except as set forth on Schedule 6.15, the
Company has not, since December 31, 1997:
(a) declared or paid any dividend or made any other
payment or distribution in respect of its capital
stock;
(b) purchased, redeemed, issued, sold or otherwise
acquired or disposed of, either directly or
indirectly, any of its capital stock or reclassified,
split up or otherwise changed any of its capital stock
or granted or entered into any options, warrants or
calls or other rights to purchase or convert any
obligation into any of its capital stock;
(c) amended its articles or certificate of incorporation
or bylaws;
(d) borrowed any funds or incurred, assumed or acquired
any obligation or liability (contingent or otherwise)
in the individual amount of more than $10,000 or in
the aggregate amount of more than $10,000;
(e) paid, discharged or satisfied any claim, liability or
obligation in excess of $10,000 (whether fixed or
contingent), other than in the ordinary course of
business, or failed to pay or otherwise satisfy any
material claims, liabilities or obligations on a basis
and within the time consistent with past practice;
(f) made any loans, advances or capital contributions to,
or investments in, any Person in the individual amount
of more than $10,000;
(g) settled any Proceeding against the Company or its
business or assets for an amount in excess of $10,000;
(h) except for adjustments made in the ordinary course of
business, canceled or compromised any debts or claims,
or waived or released any rights which, in the
aggregate, exceed $10,000;
(i) sold, assigned, transferred, conveyed, leased,
pledged, encumbered or otherwise disposed of or agreed
to sell, assign, transfer, convey, lease, pledge or
otherwise dispose of any material portion of its
assets or properties, or any other material right,
except for sales of inventory in the ordinary course
of business;
(j) damaged, destroyed or lost any asset or property of
the Company, whether or not covered by insurance,
where such damage, destruction or loss could
reasonably be expected to have a Material Adverse
Effect;
(k) transferred or granted any right under any patent,
registered trademark, trade name, copyright (including
any pending application therefor), service mark, trade
secret, license or other intellectual or industrial
property right owned or used by it in its business;
(l) made or granted any increase in the compensation of
its employees or directors, or entered into any
employment, severance or similar agreement with any of
its directors or employees;
(m) purchased or entered into any material transaction,
contract or commitment to purchase raw materials or
supplies other than in the ordinary course of
business;
(n) granted or extended any power of attorney or acted as
guarantor, surety, co-signer, endorser, co-maker,
indemnitor or otherwise in respect of the obligation
of any Person other than through endorsements of
negotiable instruments in the ordinary course of
business;
(o) written off or been required by GAAP to write off any
accounts receivable in excess of $10,000 in the
aggregate;
(p) written down or been required by GAAP to write down
inventory in excess of $10,000 in the aggregate;
(q) merged or consolidated with or into any other Person;
or
(r) agreed or otherwise committed, whether in writing or
otherwise, to do any of the foregoing.
(p) Labor.
(a) Except as set forth in Schedule 6.16(a), the Company is not
conducting its business in violation of any applicable
statute, law, regulation or rule of any Governmental Body
relating to employment or labor, including, without
limitation, those statutes, laws, regulations or rules
relating to wages, hours, labor relations, collective
bargaining, unemployment insurance, workers' compensation,
equal employment opportunity and the payment and withholding
of Taxes. Except as set forth in Schedule 6.16(a), no union
or other collective bargaining unit has been certified as
representing any of the employees of the Company nor has the
Company agreed to recognize any union or other collective
bargaining unit. Except as set forth in Schedule 6.16(a),
there are no labor disputes pending or, to the knowledge of
Management Sellers, threatened, involving strikes, work
stoppages, slowdowns or lockouts. There are no grievance
proceedings, claims of unfair labor practices or
representation election petitions filed or, to the knowledge
of Management Sellers, threatened to be filed with the
National Labor Relations Board against the Company. To the
knowledge of Management Sellers, there is no union
representation or organizing effort pending or threatened
against the Company.
(b) Schedule 6.16(b) lists all employees of the Company,
including such employees' names, job title and current
compensation.
(q) Employee Benefits; ERISA.
(a) Except as set forth in Schedule 6.17(a), the Company
(i) does not maintain or contribute to or have any
obligation with respect to, and none of the employees of the
Company are covered by, any bonus, deferred compensation,
severance pay, pension, profit-sharing, retirement,
insurance, stock purchase, stock option, or other fringe
benefit plan, arrangement or practice, written or otherwise,
or any other "employee benefit plan," as defined in
Section 3(3) of ERISA, whether formal or informal
(collectively, "Plans"), and (ii) is not a party to any
contract for the employment of any employee of the Company
or any other person who renders services to the Company.
None of the Plans is a "multiemployer plan," as defined in
Section 3(37) of ERISA, (a "Multiemployer Plan") or a funded
welfare benefit plan, as defined in Section 419 of the Code.
The Company does not have any agreement or commitment to
create any additional Plan, enter into any additional
employment agreement or to modify or change any existing
Plan or employment agreement.
(b) With respect to each Plan, the Company has heretofore
delivered or made available to Publicker true, correct and
complete copies of (i) all documents which comprise the most
current version of each of such Plan, including any related
trust agreements, insurance contracts, or other funding or
investment agreements and any amendments thereto, and
(ii) with respect to each Plan that is an "employee benefit
plan," as defined in Section 3(3) of ERISA, (A) the two most
recent Annual Reports (Form 5500 Series) and accompanying
schedules for each Plan for which such a report is required,
(B) the most current summary plan description (and any
summary of material modifications), (C) the two most recent
certified financial statements for each of the Plans for
which such a statement is required or was prepared, (D) the
Forms PBGC-1 filed in each of the two most recent plan years
for each of the Plans for which such form was required to be
filed, and (E) for each Plan intended to be "qualified"
within the meaning of Section 401(a) of the Code, the
current Internal Revenue Service determination letter issued
with respect to such Plan. Except as set forth in
Schedule 6.17(b), none of the Plans has been or will be
amended prior to the Closing Date.
(c) The Company has performed and complied in all material
respects with all of its obligations under and with respect
to the Plans and each of the Plans has, at all times, in
form, operation and administration complied in all material
respects with its terms, and, where applicable, the
requirements of all applicable laws. Each Plan which is
intended to be "qualified" within the meaning of
Section 401(a) of the Code has been determined by the
Internal Revenue Service to be so qualified and, to the
knowledge of Management Sellers, nothing has occurred which
reasonably could be expected to adversely affect such
qualified status.
(d) There are no unpaid contributions due prior to the date
hereof with respect to any Plan that are required to have
been made under the terms of the Plan or any applicable law.
With respect to each plan subject to Section 412 of the Code
maintained for employees of the Company or any of its ERISA
Affiliates, there has occurred no failure to meet the
minimum funding standards of Section 412 of the Code
(whether or not waived in accordance with Section 412(d) of
the Code) or failure to make by its due date a required
installment under Section 412(m) of the Code.
(e) With respect to each "employee pension benefit plan," as
defined in Section 3(2) of ERISA, in which the Company or
any of its ERISA Affiliates participates or has participated
at any time in the last five years (i) neither the Company
nor any of its ERISA Affiliates has withdrawn from such plan
during a plan year in which it was a "substantial employer,"
as defined in Section 4001(a)(2) of ERISA, where such
withdrawal could result in liability of such substantial
employer pursuant to Section 4062(e) or 4063 of ERISA, (ii)
neither the Company nor any of its ERISA Affiliates has
filed a notice of intent to terminate any such plan or
adopted any amendment to treat any such plan as terminated,
(iii) the Pension Benefit Guaranty Corporation ("PBGC") has
not instituted proceedings to terminate any such plan, (iv)
no other event or condition has occurred which might
constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to
administer, any such plan, (v) no accumulated funding
deficiency, whether or not waived, exists with respect to
any such plan, and no condition has occurred or exists which
by the passage of time would be expected to result in an
accumulated funding deficiency as of the last day of the
current plan year of any such plan, (vi) all required
premium payments to the PBGC have been paid when due, (vii)
no reportable event, as described in Section 4043 of ERISA,
has occurred with respect to any such plan, other than
reportable events for which the notice requirements have
been waived by regulation, and (viii) no amendment with
respect to which security is required under Section 307 of
ERISA has been made or is reasonably expected to be made.
(f) With respect to each Plan that is subject to the provisions
of Title I, Subtitle B, Part 3 of ERISA, (i) the actuarial
present value (based on the actuarial assumptions used in
the most recent actuarial valuation) of vested and nonvested
"benefit liabilities," as defined in Section 4001(a)(16) of
ERISA, (calculated on a termination basis using assumptions
promulgated by the PBGC and taking into account all
contingent and subsidized benefits) of each such Plan,
determined as of the most recent valuation date for each
such plan, did not exceed the fair market value of the
assets of such Plan as of such date, and (ii) since the most
recent valuation date for each such Plan, there has been no
amendment or change to such Plan that would increase the
amount of benefit liabilities thereunder and, to the
knowledge of Management Sellers, there has been no event or
occurrence that would materially increase or decrease the
value of such assets or liabilities.
(g) The Company has no obligation to provide health benefits or
other non-pension benefits to retired or other former
employees, except as specifically required by Section 4980B
of the Code or Part 6 of Title I of ERISA or as set forth on
Schedule 6.17(g).
(h) Neither the Company nor any other "disqualified person" or
"party in interest," as defined in Section 4975 of the Code
and Section 3(14) of ERISA, respectively, has engaged in any
"prohibited transaction," as defined in Section 4975 of the
Code or Section 406 of ERISA, with respect to any Plan, nor
have there been any fiduciary violations under ERISA which
could subject the Company (or any officer, director or
employee thereof) to any material penalty or tax under
Section 502(i) of ERISA or Sections 4971 and 4975 of the
Code.
(i) Except as set forth in Schedule 6.17(i), with respect to any
Plan: (i) no filing, application or other matter is pending
with the Internal Revenue Service, the PBGC, the United
States Department of Labor or any other Governmental Body,
(ii) there is no action, suit or claim pending (nor, to the
knowledge of Management Sellers, any basis for such a
claim), other than routine claims for benefits, and
(iii) there are no outstanding liabilities for taxes,
penalties or fees.
(j) The Company has not incurred any liability or taken any
action and none of Management Sellers has any knowledge of
any action or event that could cause any one of them to
incur any liability (i) under Section 412 of the Code or
Title IV of ERISA with respect to any "single-employer plan"
(as defined in Section 4001(a)(15) of ERISA), (ii) on
account of a partial or complete withdrawal (as defined in
Sections 4203 and 4205 of ERISA, respectively) with respect
to any Multiemployer Plan, or (iii) on account of unpaid
contributions to any Multiemployer Plan.
(k) Neither the execution and delivery of this Agreement by the
Company or Sellers nor the consummation of any or all of the
Contemplated Transactions by it will: (i) entitle any
current or former employee of the Company to severance pay,
unemployment compensation or any similar payment, (ii)
accelerate the time of payment or vesting or increase the
amount of any compensation due to any such employee or
former employee, or (iii) directly or indirectly result in
any payment made or to be made to or on behalf of any person
to constitute a "parachute payment" within the meaning of
Section 280G of the Code.
(r) Insurance. Schedule 6.18 sets forth a true, correct and complete
list of all insurance policies of any kind or nature currently
maintained by or on behalf of the Company and relating to its
business and/or assets, indicating the type of coverage, name of
insured, name of insurance carrier or underwriter, premium there-
on, policy limits and expiration date of each policy. Management
Sellers have delivered or made available to Publicker true and
complete copies of such insurance policies. Such insurance
policies provide, in the reasonable judgment of Management
Sellers, adequate insurance coverage for the business and assets
of the Company in light of present insurance market conditions.
All such insurance policies are in full force and effect, and the
Company is not in default with respect to its obligations under
any such insurance policy. There are no retroactive or
retrospective premium adjustments with respect to such insurance
policies. The Company has not had any insurance coverage canceled
or denied by any carrier or received any written notice of
cancellation or nonrenewal by any carrier, in either case since
January 1, 1995.
(s) Material Agreements.
(a) Schedule 6.19 contains a true and complete list, and the
Company has delivered or made available to Publicker true
and complete copies, of the following agreements, contracts
or instruments to which the Company is a party or by which
the Company is bound (collectively, the "Material
Agreements"):
(a) each contract that is executory in whole or in
part and involves performance of services or
delivery of goods or materials (A) by the
Company of an amount or value in excess of
$10,000 or (B) to the Company of an amount or
value in excess of $10,000;
(b) each contract that is executory in whole or in
part and was not entered into in the ordinary
course of business and that involves
expenditures or receipts of the Company in
excess of $10,000;
(c) other than licensing agreements entered into in
connection with product sales in the ordinary
course of the Company's business, each licensing
agreement or any other contract with respect to
patents, trademarks, copyrights, or other
Intellectual Property or Technology, including
contracts with current or former employees,
consultants, or contractors regarding the
appropriation or the non-disclosure of any of
the Intellectual Property or Technology;
(d) each collective bargaining agreement and any
other contract to or with any labor union or
other employee representative of a group of
employees;
(e) each joint venture, partnership, and any other
contract (however named) involving a sharing of
profits, losses, costs or liabilities by the
Company with any other Person;
(f) each contract containing covenants that in any
way purport to restrict the business activity of
the Company or limit the freedom of the Company
to engage in any line of business or to compete
with any Person;
(g) each contract providing for payments to or by
any Person based on sales, purchases, or
profits, other than direct payments for goods;
(h) each power of attorney that is currently
effective and outstanding granted by and
relating to the Company;
(i) each contract that is executory in whole or in
part and involves capital expenditures in excess
of $10,000;
(j) each written warranty, guaranty, and/or other
similar undertaking with respect to contractual
performance extended by the Company other than
in the ordinary course of business;
(k) each contract with any employee, director or
officer; and
(l) each contract relating to indebtedness of the
Company for borrowed money and each contract
relating to the guarantee by the Company of
indebtedness of any Person for borrowed money.
(b) Each of the Material Agreements is in full force and effect
and constitutes a valid and binding obligation of the
Company and, to the knowledge of Management Sellers, the
other party thereto. The Company is not in breach or
default thereunder, and no event has occurred and no
condition or state of facts exists which, with the passage
of time or the giving of notice or both, would constitute
such a default or breach by the Company or, to the knowledge
of Management Sellers, by any such other party. The Company
has not received written notice of such a breach or default
or event or condition.
(t) Compliance with Law; Licenses.
(a) The operation of the business of the Company has been
conducted in all respects in accordance with all applicable
laws, regulations and other requirements of all Governmental
Bodies. The Company has not since January 1, 1995 received
any notification from any Governmental Body of any asserted
present or past failure by it to comply with any such laws,
regulations or other requirements.
(b) The Company has obtained all licenses, permits,
certificates, consents and approvals from Governmental
Bodies (the "Licenses") that are necessary for the business
and operations of the Company. All such Licenses are listed
in Schedule 6.20(b) and are in full force and effect, and no
written notice of any violation of any License has been
received by the Company.
(u) Environmental Matters.
(a) Except as set forth on Schedule 6.21(a), there is no civil,
criminal, or administrative action, suit, demand, claim,
hearing, notice or demand letter, notice of violation,
investigation, or proceeding pending or, to the knowledge of
Management Sellers, threatened against the Company relating
in any way to Contamination of, or to any Release of any
Hazardous Substance whether at, on, from or to, the
Facilities or elsewhere, or to any violation of any
Environmental Law.
(b) Except as set forth on Schedule 6.21(b), no underground or
aboveground tank which has been used to store any Hazardous
Substance is, was during the Company's ownership, operation
or possession of any of the Facilities or, to the knowledge
of Management Sellers, was prior to the Company's ownership,
operation or possession of any of the Facilities, located at
any of the Facilities.
(c) Except as set forth on Schedule 6.21(c), the Company has not
committed any material violation of any requirement of any
Environmental Law with respect to its activities.
(d) Except as set forth on Schedule 6.21(d), there has been no
Release of any Hazardous Substance at, on or to the
Facilities or Release of any Hazardous Substance by the
Company elsewhere.
(e) Except as set forth on Schedule 6.21(e), no polychlorinated
biphenyls (PCBs) or asbestos or other Hazardous Substance is
present on or at, or is in any equipment or fixtures located
on or at, the Facilities.
(f) Management Sellers have delivered to Publicker true and
complete copies and results of any reports, studies,
analyses, tests or monitoring possessed or initiated by
Management Sellers or the Company pertaining to Hazardous
Substances in or on the Facilities or concerning compliance
by Management Sellers or the Company with Environmental
Laws.
(v) Transactions with Related Parties. The Company is not a party to
any contract, lease or commitment which, were the Company a
"Registrant" under the Securities Act, would be required to be
disclosed pursuant to Item 404(a) or (c) of Regulation S-K as
promulgated by the Securities and Exchange Commission, and there
are no loans outstanding to or from any Person specified in Item
404(a) from or to the Company.
(w) Bank Accounts. Schedule 6.23 hereto sets forth a true, correct
and complete list of the names and addresses of all banks and
other financial institutions in which the Company maintains an
account, deposit or safe-deposit box, together with the names of
all persons authorized to draw on these accounts or deposits or to
have access to these boxes.
(x) No Brokers or Finders. Sellers and the Company have not, and
their respective officers, directors or employees have not,
employed any broker or finder or incurred any liability for any
brokerage or finder's fee or commissions or similar payment in
connection with any of the Contemplated Transactions.
(y) Year 2000 Compliance. The Company's Information Technology (as
defined below) is designed to be used prior to, during, and after
the calendar year 2000, and such Information Technology used
during each such time period will accurately receive, provide and
process date/time data (including calculating, comparing and
sequencing) from, into and between the 20th and 21st centuries,
including the years 1999 and 2000, and leap year calculations, and
will not malfunction, cease to function, or provide invalid or
incorrect results as a result of date/time data, to the extent
that other Information Technology, used in combination with the
Company's Information Technology, properly exchanges date/time
data with it. For purposes of this Section 6.25, "Information
Technology" shall mean computer software, computer firmware,
computer hardware (whether general or specific purpose), and other
similar or related items of automated, computerized, and/or
software systems.
(z) Absence of Undisclosed Liabilities. Except as set forth on
Schedule 6.26, the Company does not have any liabilities or
obligations (whether known or unknown, absolute, accrued,
contingent or otherwise and whether due or to become due) other
than those liabilities and obligations (a) set forth or adequately
provided for in the audited balance sheet included in the
Financial Statements, (b) not required to be set forth in such
balance sheet under GAAP or (c) incurred since the date of such
balance sheet in the ordinary course of business consistent with
past practice.
(aa) No Material Adverse Change. Since the date of the audited balance
sheet included in the Financial Statements, there has not been any
Material Adverse Effect and no event has occurred and no condition
exists which could reasonably be expected to result in a Material
Adverse Effect.
(bb) Disclosure. No representation or warranty of the Company or
Management Sellers in this Agreement omits to state a material
fact necessary to make the statements herein, in light of the
circumstances in which they were made, not misleading.
(cc) Knowledge Defined. As used in this Section 6, "knowledge of
Management Sellers" means the actual knowledge of Management
Sellers and "knowledge of the Company" means the actual knowledge
of Marc Postlewaite, Kim Vogel and Ron Smith, Esq., intellectual
property counsel to the Company.
(i) REPRESENTATIONS AND WARRANTIES OF SELLERS.
Each Seller hereby severally and not jointly represents and
warrants, with respect to only such Seller, to Publicker and Acquisition Sub
as follows:
(a) Organization and Good Standing. With respect to a Seller that is
a corporation, such Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State
of its incorporation. With respect to a Seller that is a
partnership, such Seller is a partnership duly formed, validly
existing and in good standing under the laws of the State of its
formation. Each Seller (other than a natural person) has
delivered to Publicker true and complete copies of its certificate
or articles of incorporation, by-laws, certificate of partnership,
partnership agreement, declaration of trust or other
organizational documents.
(b) Authority. Each Seller (other than a natural person) has full
corporate, partnership or trust (as the case may be) authority to
execute, deliver and perform this Agreement and each other
agreement, document or instrument required to be delivered by it
hereby or in connection herewith (collectively, the "Seller
Documents") and to consummate the Contemplated Transactions. Each
Seller (including a trustee of a trust that is a Seller) that is a
natural person has the right, capacity and all requisite authority
to execute, deliver and perform the Seller Documents and to
consummate the Contemplated Transactions. The execution, delivery
and performance by each Seller (other than a natural person or a
trust) of the Seller Documents and the consummation of the
Contemplated Transactions has been duly authorized by all
necessary corporate or partnership (as the case may be) action of
such Seller. This Agreement has been, and each other Seller
Document when executed and delivered in accordance with this
Agreement will be, duly executed and delivered by each Seller.
This Agreement constitutes, and each of the other Seller Documents
when executed and delivered in accordance with this Agreement will
constitute, a valid and binding obligation of each Seller,
enforceable against such Seller in accordance with its terms.
(c) Absence of Conflict. Neither the execution, delivery or
performance of the Seller Documents nor the consummation of the
Contemplated Transactions will (a) violate any provision of the
certificate or articles of incorporation, bylaws, certificate of
partnership, partnership agreement, declaration of trust or other
organizational document of each Seller (other than a natural
person) or (b) violate any statute or law or any judgment, decree,
order, regulation or rule of any court or other Governmental Body
applicable to each Seller.
(d) Title to Company Shares. All of the Company Shares beneficially
owned by each Seller are set forth opposite such Seller's name on
Schedule 6.2(a). Each Seller has good and valid title to the
Company Shares set forth opposite its name on Schedule 6.2(a) and
owns beneficially and of record such Company Shares free and clear
of all Encumbrances.
(e) Investment Representations.
(a) Each Seller who is identified on Schedule 7.5 as an
"Accredited Investor" is an "Accredited Investor" within the
meaning of Rule 501 under the Securities Act, and each
Seller who is identified on Schedule 7.5 as not being an
"Accredited Investor" has, alone or with its "Purchaser
Representative(s)" (within the meaning of Rule 501 under the
Securities Act) identified on Schedule 7.5, such knowledge
and experience in financial and business matters that such
Seller is capable of evaluating the merits and risks of an
investment in the Merger Consideration.
(b) The Merger Consideration to be received by each Seller
pursuant to this Agreement will be held by such Seller for
its own account for the purpose of investment and not with a
present view to or for sale in connection with any
distribution thereof.
(c) The information furnished by each Seller in the investor
questionnaire delivered to Publicker prior to the date of
this Agreement was true and complete as of the date of such
questionnaire and is currently true and complete.
(d) Each Seller's financial position is such that it can afford
to bear the economic risk of holding the Merger
Consideration it receives pursuant to this Agreement for an
indefinite period of time, and each Seller can afford to
suffer the complete loss of its investment in such Merger
Consideration.
(e) Each Seller has been provided an opportunity to ask
questions of, and has received answers thereto satisfactory
to such Seller from, Publicker and its representatives
regarding the business and affairs of Publicker and such
other information as it desired in order to evaluate an
investment in the Merger Consideration.
(f) Each Seller understands that the shares comprising the
Merger Consideration to be received by it pursuant to this
Agreement have not been registered under the Securities Act
or applicable state securities laws in reliance upon
specific exemptions from registration thereunder. Each
Seller agrees that the Merger Consideration to be received
by it pursuant to this Agreement may not be sold, offered
for sale, exchanged, transferred, pledged or otherwise
disposed of except pursuant to a registration statement
under the Securities Act or pursuant to an exemption from
the registration requirements of the Securities Act and in
compliance with state securities laws, and the shares
comprising the Merger Consideration will bear a legend to
such effect.
(g) For purposes of this Section 7.5, the term "Merger
Consideration" refers only to the Merger Consideration
consisting of Publicker Shares and includes any additional
Publicker Shares issuable in lieu of any fractional
Publicker Shares issuable as part of the Merger
Consideration.
(f) Tax Matters. No Seller is a foreign person subject to withholding
under Section 1445 of the Code and the regulations promulgated
thereunder.
(j) REPRESENTATIONS AND WARRANTIES OF PUBLICKER.
Publicker hereby represents and warrants to the Company and
Sellers as follows:
(a) Organization and Good Standing. Each of Publicker and Acquisition
Sub is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation. Each
of Publicker and Acquisition Sub (a) has all requisite corporate
power to own, operate and lease its properties and carry on its
business as the same is now being conducted and (b) is qualified
to do business as a foreign corporation in each jurisdiction set
forth in Schedule 8.1. Neither the location of its property nor
the conduct of its business requires Publicker or Acquisition Sub
to be qualified to do business as a foreign corporation in any
state, other than those in which it is so qualified, where the
failure to so qualify would have a materially adverse effect on
the business, operations, results of operations or financial
condition of Publicker and its Subsidiaries taken as a whole.
(b) Capitalization of the Company.
(a) The authorized capital stock of Publicker consists of (i)
40,000,000 shares of common stock, $0.10 par value per
share, of which 13,291,597 shares are issued and outstanding
as of September 30, 1998, (ii) 136,566 shares of preferred
stock, without par value, of which no shares are issued and
outstanding as of September 30, 1998 and (iii) 1,000,000
shares of Class A preferred stock, without par value, of
which no shares are issued and outstanding as of September
30, 1998. The Publicker Shares comprising the Merger
Consideration and any additional Publicker Shares issuable
in lieu of any fractional Publicker Shares issuable pursuant
to this Agreement have been duly authorized and, when issued
and delivered in accordance with this Agreement, will be
validly issued and fully paid and nonassessable and will be
issued in conformity with applicable laws and not in
violation of any preemptive rights of any Person. Upon
delivery to Sellers of the Publicker Shares comprising the
Merger Consideration or any additional Publicker Shares
issuable in lieu of any fractional Publicker Shares issuable
pursuant to this Agreement in accordance with this
Agreement, Sellers will acquire such Merger Consideration or
such additional Publicker Shares free and clear of all
Encumbrances.
(b) Except as set forth on Schedule 8.2, as of September 30,
1998 there are no outstanding subscriptions, options,
rights, warrants, convertible securities or other agreements
(other than this Agreement) or calls, demands or commitments
of any kind relating to the issuance, sale or transfer of
any capital stock of Publicker.
(c) Authority Relative to Agreement; Compliance with Other
Instruments; Absence of Conflict. Each of Publicker and
Acquisition Sub has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement
and each agreement, document or instrument required to be
delivered by it hereby or in connection herewith (collectively,
the "Publicker Documents"). The execution, delivery and
performance by Publicker and Acquisition Sub of each of the
Publicker Documents to which it is a party, and the consummation
by Publicker and Acquisition Sub of the Contemplated Transactions,
have been duly authorized by all necessary corporate action on the
part of Publicker and Acquisition Sub and (a) do not require the
consent, waiver, approval, permit, license or authorization of, or
any declaration or filing with, any Person or other Governmental
Body, (b) do not violate any statute or law or any judgment,
decree, order, regulation or rule of any court or other
Governmental Body applicable to Publicker or Acquisition Sub,
(c) do not violate, conflict with or constitute a default (or an
event which, with notice or lapse of time or both, would
constitute a default) under, or provide the basis of termination
of, or cause the acceleration of the performance required by, or
result in the creation of any Encumbrance upon any of the
properties or assets of Publicker or Acquisition Sub under, any
material agreement, commitment or instrument to which Publicker or
Acquisition Sub is a party or by which any of its assets or
properties may be bound and (d) do not violate or conflict with
any provision of the articles or certificate of incorporation or
bylaws of Publicker or Acquisition Sub.
(d) Binding Agreement. This Agreement has been, and each other
Publicker Document (to which it is a party) when executed and
delivered in accordance with this Agreement will be, duly executed
and delivered by Publicker and Acquisition Sub. This Agreement
constitutes, and each such other Publicker Document when executed
and delivered in accordance with this Agreement will constitute,
legal and valid obligations of Publicker and Acquisition Sub
enforceable against each of them in accordance with their terms.
(e) Litigation. There is no legal, administrative, arbitral or other
proceeding by or before any Governmental Body pending or, to the
knowledge of Publicker, threatened against Publicker or
Acquisition Sub, nor to the knowledge of Publicker is there any
pending investigation by any Governmental Body, which would give
any third party the right to enjoin or rescind the Contemplated
Transactions or otherwise prevent Publicker or Acquisition Sub
from complying with the terms and provisions of this Agreement.
(f) No Brokers or Finders. Neither Publicker, Acquisition Sub nor any
of their officers, directors or employees have employed any broker
or finder or incurred any liability for any brokerage or finder's
fee or commissions or similar payment in connection with any of
the Contemplated Transactions.
(g) Reports. Publicker has furnished to the Company a true and
complete copy of each statement, report, registration statement
(with the prospectus in the form filed pursuant to Rule 424(b) of
the Securities Act), definitive proxy statement, and other filings
filed with the Securities and Exchange Commission by Publicker
since January 1, 1998, and, prior to the Closing Date, Publicker
will have furnished the Company with true and complete copies of
any additional statements, reports and documents filed with the
Securities and Exchange Commission by Publicker prior to the
Closing Date (collectively, the "Publicker SEC Documents"). All
documents required to be filed as exhibits to the Publicker SEC
Documents have been filed. The Publicker SEC Documents include
all statements, reports and documents required to be filed by
Publicker pursuant to the Exchange Act and the Securities Act. As
of their respective filing dates, the Publicker SEC Documents
complied in all material respects with the requirements of the
Exchange Act and the Securities Act, as applicable, and none of
the Publicker SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements made therein,
in light of the circumstances in which they were made, not
misleading, except to the extent corrected by a subsequently filed
Publicker SEC Document. The financial statements of Publicker and
its Subsidiaries, including the notes thereto, included in the
Publicker SEC Documents (the "Publicker Financial Statements"),
complied as to form in all material respects with applicable
accounting requirements and with the published rules and
regulations of the Securities and Exchange Commission with respect
thereto as of their respective dates (except as may be indicated
in the notes thereto or, in the case of unaudited statements
included in Quarterly Reports on Form 10-Q, as permitted by Form
10-Q of the Securities and Exchange Commission). The Publicker
Financial Statements fairly present the consolidated financial
condition, operating results and cash flows of Publicker and its
Subsidiaries at the dates and during the periods indicated therein
in accordance with GAAP (subject, in the case of unaudited
statements, to normal recurring year-end adjustments and the
absence of notes.
(h) Disclosure. No representation or warranty of Publicker in this
Agreement omits to state a material fact necessary to make the
statements herein, in light of the circumstances in which they
were made, not misleading.
(i) Knowledge Defined. As used in this Section 8, "knowledge" of
Publicker means the actual knowledge of James Weis and Antonio
DeLise.
(k) FURTHER AGREEMENTS OF THE PARTIES.
(a) Expenses. Publicker, the Company and Sellers shall bear their own
respective expenses incurred in connection with all obligations
required to be performed by each of them under this Agreement;
provided, however, the Surviving Corporation shall bear the
reasonable fees and disbursements of counsel to the Company and
Sellers which shall not exceed in the aggregate more than $31,575
(unless a higher amount is approved by Publicker).
(b) Access Prior to the Closing.
(a) Between the date of this Agreement and the Closing Date,
Management Sellers shall, and shall cause the Company to,
(i) give Publicker and its authorized representatives full
and complete access to all properties, personnel, facilities
and offices of the Company and to the books and records of
the Company (and permit Publicker to make copies thereof),
(ii) permit Publicker to make inspections thereof, (iii)
cause its officers and employees to furnish Publicker with
such financial information and operating data and other
information with respect to the business and properties of
the Company other than proprietary formulations and
processes, and to discuss with Publicker and its authorized
representatives the affairs of the Company, all as Publicker
may from time to time reasonably request for the purposes of
this Agreement during normal business hours and with
reasonable notice to Management Sellers and the Company.
(b) Between the date of this Agreement and the Closing Date,
Publicker shall hold and shall cause its officers,
directors, employees, representatives, consultants and
advisors to hold in strict confidence, unless compelled to
disclose by judicial or administrative process or, in the
opinion of its counsel, by other requirements of law, all
documents and information furnished to Publicker by Sellers
or the Company or their respective representatives in
connection with the Contemplated Transactions and will not
release or disclose such information to any other person,
except its auditors, attorneys, financial advisors and other
consultants, agents and advisors in connection with the
consummation of the Contemplated Transactions. If the
Closing does not occur (i) such confidence shall be
maintained by Publicker, and Publicker shall cause such
other persons to maintain such confidence, except to the
extent such information comes into the public domain through
no fault of Publicker or any Person to whom Publicker
released or disclosed such information and (ii) upon the
request of Sellers, Publicker shall promptly return to
Sellers any written materials it has received from Sellers,
the Company or their respective representatives, together
with all copies thereof.
(c) Public Disclosure or Communications. Between the date of this
Agreement and the Closing Date, except to the extent required by
law, (a) neither Publicker, on the one hand, nor Sellers or the
Company, on the other hand, shall issue any press release or
public announcement of any kind concerning the Contemplated
Transactions without the consent of the other, and in the event
any such public announcement, release or disclosure is required by
law, the parties will consult prior to the making thereof and use
their best efforts to agree upon a mutually satisfactory text; (b)
Publicker shall not, and shall not permit its representatives,
consultants and agents to, communicate with customers, suppliers
or employees of the Company with respect to the Contemplated
Transactions or the business of the Company without the prior
written consent of Management Sellers; and (c) Publicker shall not
communicate with any government official with respect to the
Company or Sellers or the Contemplated Transactions without the
prior consent of Management Sellers.
(d) Conduct of Business of the Company. Except as contemplated by
this Agreement, between the date of this Agreement and the Closing
Date, the Company shall conduct its business in the ordinary
course and use its reasonable efforts to preserve substantially
intact its business organization, keep available the services of
its present officers and employees and preserve in all material
respects its present business relationships and goodwill. In
addition, except as otherwise expressly provided in this
Agreement, between the date of this Agreement and the Closing
Date, the Company shall not:
(a) amend its articles or certificate of incorporation or
by-laws;
(b) issue, sell or otherwise dispose of any of its capital
stock, or create or suffer to be created any Encum-
brance thereon, or reclassify, split up or otherwise
change any of its capital stock, or grant or enter
into any options, covenants or calls or other rights
to purchase or convert any obligation into any of its
capital stock;
(c) organize any Subsidiary or acquire any capital stock
of any Person or any equity or ownership interest in
any business;
(d) incur or guarantee any indebtedness for borrowed money
in the individual amount of more than $10,000, or in
the aggregate amount of more than $50,000, except in
the ordinary course of business, for leases entered
into in the ordinary course of business or to the
extent required to obtain performance bonds;
(e) pay, discharge or satisfy any claim, liability or
obligation in excess of $10,000 (whether fixed or
contingent), other than in the ordinary course of
business; provided, however, that the Company may,
prior to the Closing Date, apply all or any portion of
its cash and cash equivalents to pay down any
indebtedness;
(f) make or grant any increases in salaries, bonuses or
other remuneration to employees of the Company;
(g) sell, assign, transfer, convey, lease, pledge,
encumber or otherwise dispose of or agree to sell,
assign, transfer, convey, lease, pledge, encumber or
otherwise dispose of any portion of its assets or
properties, or any other right, except for fair con-
sideration in the ordinary course of business;
(h) enter into any agreement or commitment having a term
in excess of one year, except in the ordinary course
of business consistent with past practice;
(i) cancel any debts or affirmatively waive any claims or
rights of substantial value, except for cancellations
made or waivers granted in the ordinary course of
business, which, in the aggregate, are not material;
(j) declare or pay any dividend or make any other payment
or distribution in respect of its capital stock;
(k) make capital expenditures which exceed by more than
$10,000 in the aggregate the existing capital
expenditure commitments disclosed on Schedule 6.19 and
other existing capital expenditure commitments not
required to be disclosed thereon; or
(l) in any other manner, modify, change or otherwise alter
the fundamental nature of the business of the Company
as presently conducted.
(e) No Negotiation. Until the Closing or such earlier time, if any,
as this Agreement is terminated pursuant to Section 13, Sellers
will not, and will cause the Company not to, directly or
indirectly solicit, initiate, or encourage any inquiries or
proposals from, discuss or negotiate with, provide any non-public
information to, or consider the merits of any unsolicited
inquiries or proposals from, any Person (other than Publicker)
relating to any transaction involving the sale of the business or
assets (other than in the ordinary course of business) of the
Company, or any of the capital stock of the Company, or any
merger, consolidation, business combination, or similar
transaction involving the Company.
(f) Regulatory Matters. In addition to filings required by the HSR
Act, Sellers, Publicker and the Company shall (a) file with
applicable Governmental Bodies the applications and related
documents required to be filed by them (and prosecute diligently
any related proceedings) in order to consummate the Contemplated
Transactions and (b) co-operate with the other as may reasonably
be requested in connection with the foregoing.
(g) Payment of Certain Indebtedness. Immediately after the Closing,
Publicker shall, on behalf of the Company, pay in full the
following obligations of the Company, by wire transfer of
immediately available funds to the accounts specified on Schedule
9.7: (a) $100,000 (plus accrued and unpaid interest thereon at the
rate of 7.25% per annum) owed to NationsBank; (b) $291,868.20
(plus accrued and unpaid interest thereon which, at August 31,
1998, was $15,307.97) owed to Marc Postlewaite; and (c) $50,000
(plus accrued and unpaid interest thereon which, at August 31,
1998, was $1,186.81) owed to Jerry Coleman. Such advances by
Publicker shall be deemed to be intercompany loans from Publicker
to the Company. The Company and Sellers hereby acknowledge that
Publicker advanced $300,000 to the Company on September 18, 1998
for the Company's operating expenses pursuant to a promissory note
substantially in the form of Exhibit F.
(h) Benefits Matters. After the Closing Date, employees of the
Company shall be eligible to participate in the Publicker
Industries Inc. 1993 Long Term Incentive Plan at the discretion of
Publicker's compensation committee. After the Closing Date,
employees of the Company shall be eligible to participate in
Publicker's 401(k) Plan.
(i) Technology Committee. Promptly after the Closing Date, Publicker
shall establish a Technology Committee to advise Publicker's board
of directors in developing strategic business plans for Publicker
and its subsidiaries and shall appoint Management Sellers or their
designees to this Technology Committee.
(j) Shareholder Approval. Prior to the Closing, the Company shall
call and hold a special meeting of shareholders of the Company, or
circulate to the shareholders of the Company a form of written
consent of shareholders of the Company in lieu of a special
meeting, for the purpose of approving the execution, delivery and
performance of this Agreement and all other documents to be
delivered pursuant to this Agreement and the consummation of the
Contemplated Transactions. The Company shall use its best efforts
to secure the vote or consent of shareholders of the Company
required by the FBCA to effect the Merger.
(k) Management Sellers Approval. Management Sellers hereby
acknowledge their execution and delivery to Publicker on the date
of this Agreement of a Voting Agreement in the form of Exhibit I.
(l) S-8 Registration. Within 90 days after the Closing Date,
Publicker shall file one or more registration statements on Form
S-8 (or any successor form) under the Securities Act relating to
the Publicker Shares issuable upon the exercise of options granted
in accordance with Sections 2.3(f) and 5.6.
(m) Stock Options. In the event that any of the individuals listed on
Schedule 9.13 forfeit any of the options to purchase Publicker
Shares set forth opposite his name issued pursuant to Section 5.6
as a result of termination of such individual's employment with
the Surviving Corporation prior to the date such options become
exercisable, within five Business Days after the date of such
forfeiture Publicker shall grant to (a) Marc Postlewaite an option
to purchase 65.76% of the Publicker Shares issuable upon exercise
of such forfeited option (rounded up to the nearest whole number
of Publicker Shares), provided Marc Postlewaite is employed by the
Surviving Corporation on the date of forfeiture and (b) Kim Vogel
an option to purchase 34.24% of the Publicker Shares issuable upon
exercise of such forfeited option (rounded down to the nearest
whole number of Publicker Shares), provided Kim Vogel is employed
by the Surviving Corporation on the date of forfeiture. Any
options granted to Marc Postlewaite or Kim Vogel under this
section 9.13 shall be pursuant to a stock option agreement
substantially in the form of Exhibit E-2. Within a reasonable
time after any such grant of options to purchase Publicker Shares
to Marc Postlewaite and/or Kim Vogel, Publicker shall file one or
more registration statements on Form S-8 (or any successor form)
under the Securities Act relating to the Publicker Shares issuable
upon the exercise of such options, subject to eligibility
requirements for use of such registration form.
(n) Private Placement Materials. Between the date of this Agreement
and the Closing Date, the Company shall cooperate with and assist
Publicker in the preparation of all private placement materials
that Publicker believes are necessary in order for the
Contemplated Transactions to comply with applicable securities
laws, including without limitation cooperation with respect to an
audit of the financial statements of the Company.
(o) Financial Statements. Prior to the Closing Date, the Company
shall deliver to Publicker (a) an unaudited balance sheet of the
Company at September 30, 1998, and the related unaudited profit
and loss statement for the nine months then ended, and (b) a
balance sheet of the Company at December 31, 1997, and the related
profit and loss statement for the fiscal year then ended, together
with the audit reports thereon of Arthur Andersen LLP. The
foregoing financial statements shall be prepared in accordance
with GAAP and shall fairly present the financial position of the
Company at the respective dates thereof and for the financial
periods then ended. In addition, prior to the Closing Date, the
Company shall deliver to Publicker a schedule of aging of the
accounts receivable of the Company as of the Closing Date.
(p) Updated Schedules. Within seven days after the date of this
Agreement, the Company may deliver to Publicker revised Schedules
to this Agreement (the "Revised Schedules") solely to correct any
inadvertent errors made on the Schedules delivered on the date of
this Agreement. The Revised Schedules shall be deemed to replace
the Schedules to this Agreement delivered on the date of this
Agreement only if (a) the Revised Schedules are in form and
substance satisfactory to Publicker, in Publicker's good faith
judgment, and (b) Publicker and the Company agree in writing to
the Revised Schedules. In the event that the Revised Schedules
are not satisfactory to Publicker in its good faith judgment,
Publicker may terminate this Agreement in accordance with Section
13.
(l) TRANSFER RESTRICTIONS.
(a) Transfer Restrictions on Publicker Shares.
(a) Transfer Restrictions. The Publicker Shares to be received
by Sellers pursuant to this Agreement (such shares
collectively, the "Restricted Publicker Securities") shall
be transferable only if sold pursuant to a registration
statement under the Securities Act and any applicable state
securities or blue sky laws, or pursuant to an exemption
from the registration requirements of the Securities Act and
applicable state securities or blue sky laws.
(b) Legend. Each certificate representing the Restricted
Publicker Securities shall bear a legend in substantially
the following form:
"The securities represented by this
certificate have not been registered under
the Securities Act of 1933, as amended, or
under the securities or blue sky laws of
any state, and may not be sold, or
otherwise transferred, in the absence of
such registration or an exemption
therefrom under such Act and under any
such applicable state laws."
Each certificate representing such Restricted Publicker Securities shall bear
this restrictive legend unless the restrictions on transfer provided for in
this Section 10.1 shall have ceased and terminated as to such Restricted
Publicker Securities.
(c) Termination of Restrictions. The restrictions imposed by
this Section 10.1 upon the transferability of the Restricted
Publicker Securities shall cease and terminate as to any
particular Restricted Publicker Securities and any
securities issued in exchange therefor or upon transfer
thereof when, in the opinion of counsel reasonably
acceptable to Publicker, such restrictions are no longer
required in order to assure compliance with the Securities
Act, or when such Restricted Publicker Securities have been
registered under the Securities Act. Whenever any of such
restrictions shall cease and terminate as to any Restricted
Publicker Securities, the holder thereof shall be entitled
to receive from Publicker, without expense, new certificates
not bearing the legend set forth in Section 10.1(b).
(b) Lock-Up on Publicker Shares.
(a) Lock-Up. During the period commencing on the Effective Date
and ending on the first anniversary of the Closing Date (the
"Lock-Up Period"), each Employee Seller shall not, directly
or indirectly, sell, exchange, assign, transfer, pledge,
encumber or otherwise dispose of any Publicker Shares it
receives pursuant to this Agreement.
(b) Volume Limitations. After the Lock-Up Period until the
second anniversary of the Closing Date, each Employee Seller
may sell, exchange, assign, transfer, pledge, encumber or
otherwise dispose of, from time to time, Publicker Shares it
receives pursuant to this Agreement only in an amount no
greater than the amount permitted under Rule 144(e)(1)
promulgated under the Securities Act (whether or not the
transfer is made pursuant to Rule 144, Rule 144(e)(1)
applies to the Employee Seller making the transfer or the
Employee Seller is an "affiliate" of Publicker within the
meaning of Rule 144).
(c) Stop Transfer Orders. Each Employee Seller authorizes
Publicker to cause the transfer agent for Publicker Shares
to decline to transfer and/or to note stop transfer
restrictions on the transfer books and records of Publicker
with respect to any Publicker Shares for which such Employee
Seller is the record holder.
(d) Legend. Each certificate representing the Publicker Shares
received by Employee Sellers pursuant to this Agreement
shall, in addition to the legend described in Section
10.1(b), bear a legend in substantially the following form:
"The securities represented by this
certificate are subject to certain
transfer restrictions contained in an
Agreement and Plan of Merger, dated
October 30, 1998 (the "Merger Agreement"),
among the holder of the securities
represented by this certificate, Tritheim
Technologies, Inc., certain other
security-holders thereof, Publicker
Industries Inc. ("Publicker") and
Publicker Smart Card Acquisition Co. A
copy of the Merger Agreement is on file at
the principal office of Publicker.
Neither this certificate nor the
securities evidenced by this certificate
nor any portion thereof or interest herein
may be sold, exchanged, assigned,
transferred, pledged, encumbered or
otherwise disposed of in violation of the
Merger Agreement, and any such purported
transfer shall be null, void and of no
effect."
Each certificate representing the Publicker Shares received by Employee
Sellers pursuant to this Agreement shall bear this restrictive legend unless
the restrictions on transfer provided for in this Section 10.2 shall have
ceased and terminated as to such Publicker Shares. Whenever any of such
restrictions shall cease and terminate as to any such Publicker Shares, the
holder thereof shall be entitled to receive from Publicker, without expense,
new certificates not bearing the legend set forth in Section 10.2(d).
(m) REGISTRATION RIGHTS.
(a) Intentionally omitted.
(b) Incidental Registration.
(a) If at any time after the Closing Date Publicker proposes to
register any equity securities under the Securities Act for
sale to the public (other than pursuant to a registration
statement on Form S-4 or Form S-8 (or any successor forms)
or any other forms not available for registering Registrable
Publicker Shares for sale to the public), either for
Publicker's account or for the account of others, Publicker
shall, not less than 30 nor more than 90 days prior to the
proposed date of filing of a registration statement under
the Securities Act, give written notice to all Holders of
its intention to do so. Upon the written request of any
Holder given within 20 days after transmittal by Publicker
of such notice, Publicker will use its best efforts to cause
the Registrable Publicker Shares requested to be registered
to be so registered under the Securities Act. A request
pursuant to this Section 11.2(a) shall state the number of
Registrable Publicker Shares requested to be registered and
the intended method of disposition thereof. The rights
granted in this Section 11.2(a) shall apply in each case
where Publicker proposes to register equity securities
regardless of whether such rights may have been exercised
previously.
(b) Nothing in this Agreement shall be deemed to require
Publicker to proceed with any registration of its securities
pursuant to Section 11.2 after giving the notice provided in
Section 11.2(a).
11.2A Shelf Registration. After the Closing Date, Publicker shall
use its reasonable efforts to cause its outstanding Publicker Shares to be
listed on a national securities exchange or to be included in an automated
quotation system of a national securities association, subject to applicable
listing or entry requirements, to enable Publicker to be eligible to use a
registration statement on Form S-3 (or any successor form) for the purpose of
registering resales of Registrable Publicker Shares. Within a reasonable time
after becoming eligible to use a registration statement on Form S-3 (or any
successor form) for the purpose of registering resales of Registrable
Publicker Shares, Publicker shall give Holders notice of such eligibility and
shall prepare and file with the Securities and Exchange Commission a
registration statement on such form for the offering on a continuous or
delayed basis in the future of up to 100% of the Registrable Publicker Shares
outstanding as of the date prior to the date of filing with the Securities and
Exchange Commission (the "Shelf Registration Statement") and shall use its
best efforts to have the Registration Statement declared effective as promptly
as practicable. The Shelf Registration Statement and any form of prospectus
included therein or prospectus supplement relating thereto shall reflect such
plan of distribution or method of sale as Holders may from time to time notify
Publicker. Publicker shall use its best efforts to keep the Shelf
Registration Statement continuously effective for the period beginning on the
date on which the Shelf Registration Statement is declared effective and
ending on the first to occur of (a) the first date that all such Registrable
Publicker Shares have been sold (whether pursuant to the Shelf Registration
Statement, under Rule 144 promulgated under the Securities Act or otherwise)
or (b) the delivery to Publicker of a written opinion from counsel to
Publicker reasonably acceptable to Publicker and the Holders to the effect
that the Registrable Publicker Shares covered by the Shelf Registration
Statement may be sold without registration under the Securities Act or
applicable state law and without restriction as to the volume and timing of
such sales. During the period during which the Shelf Registration Statement
must be kept effective, Publicker shall supplement or make amendments to the
Shelf Registration Statement, if required by the Securities Act, or if
reasonably requested by a Holder or an underwriter of Registrable Publicker
Shares, to reflect any specific plan of distribution or method of sale, and
shall use its best efforts to have such supplements and amendments declared
effective, if required, as soon as practicable after filing thereof with the
Securities and Exchange Commission.
(c) Limitation on Registration Requirement.
(a) Publicker shall have the right to postpone for up to 75 days
any registration required pursuant to Section 11.2A if
Publicker determines in good faith (and so certifies to
Holders) that the filing of such registration statement
would require the disclosure of non-public material
information the disclosure of which would have a material
adverse effect on Publicker or would otherwise adversely
affect any proposal or plan by Publicker to engage in any
acquisition of assets (other than in the ordinary course of
business) or any merger, consolidation, tender offer or
similar transaction.
(d) Registration Procedures. If and whenever Publicker is required by
the provisions of this Section 11 to use its best efforts to
effect the registration of any securities under the Securities
Act, Publicker will within the time periods provided herein:
(a) prepare and file with the Securities and Exchange
Commission a registration statement with respect to
such securities and use its best efforts to cause such
registration statement to become and remain effective
for a period of time required for the disposition of
such securities by the holders thereof;
(b) prepare and file with the Securities and Exchange
Commission such amendments and supplements to such
registration statement and the prospectus used in
connection therewith as may be necessary to keep such
registration statement effective and to comply with
the provisions of the Securities Act with respect to
the sale or other disposition of all securities
covered by such registration statement until the
earlier of such time as all of such securities have
been disposed of and the date which is 90 days after
the date of initial effectiveness of such registration
statement (or, with respect to the Shelf Registration
Statement, until such time as specified in
Section 11.2A);
(c) furnish to each seller and to each duly authorized
underwriter of each seller such number of authorized
copies of a prospectus, including copies of a
preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other
documents as such seller or underwriter may reasonably
request in order to facilitate the public sale or
other disposition of the securities owned by such
seller;
(d) use its best efforts to register or qualify the
securities covered by such registration statement
under such securities or blue sky laws of such
jurisdictions as each seller shall request, and do any
and all other acts and things which may be necessary
under such securities or blue sky laws to enable such
seller to consummate the public sale or other
disposition in such jurisdictions of the securities to
be sold by such seller, except that Publicker shall
not for any such purpose be required to qualify to do
business in any jurisdiction wherein it is not
qualified or to file any general consent to service of
process in any such jurisdiction;
(e) with respect to any underwritten offering, use
reasonable efforts to furnish, at the request of any
seller, to the underwriters, on the date that such
seller's securities are delivered to the underwriters
for sale pursuant to such registration, (i) an opinion
of the independent counsel representing Publicker for
the purposes of such registration addressed to such
underwriters, in such form and content as the
underwriters may reasonably request and are customary
for transactions of this type, and (ii) a letter from
the independent certified public accountants of
Publicker addressed to the underwriters stating that
they are independent certified public accountants
within the meaning of the Securities Act and that, in
the opinion of such accountants, the financial
statements and other financial data of Publicker
included in the registration statement or the
prospectus, or any amendment or supplement thereto,
comply as to form in all material respects with the
applicable accounting requirements of the Securities
Act and covering such other matters as are customarily
covered in accountant's "comfort" letters;
(f) with respect to any underwritten offering, enter into
an underwriting agreement in customary form for a
transaction of this type;
(g) provide and cause to be maintained a transfer agent
and registrar for all Registrable Publicker Shares
covered by such registration statement from and after
a date not later than the effective date of such
registration statement;
(h) notify the Holders of Registrable Publicker Shares
included in such registration statement, at any time
when a prospectus relating thereto covered by such
registration statement is required to be delivered
under the Securities Act, of the happening of any
event as a result of which the prospectus included in
such registration statement, as then in effect,
includes an untrue statement of a material fact or
omits to state a material fact required to be stated
therein or necessary to make the statements therein
not misleading in the light of the circumstances then
existing and, at the request of such Holders, properly
prepare and furnish to such Holders a reasonable
number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, as
thereafter delivered to purchasers of such securities,
such prospectus shall not include an untrue statement
of a material fact or omit to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading in light of the
circumstances under which they were made;
(i) use its best efforts to list all Registrable Publicker
Shares covered by such registration statement on any
securities exchange on which the Publicker Shares are
then listed; and
(j) otherwise use its best efforts to comply with all
applicable rules and regulations of the Securities and
Exchange Commission, and make available to its
security holders, as soon as reasonably practicable,
but not later than 18 months after the effective date
of the registration statement, an earnings statement
covering the period of at least 12 months beginning
with the first full calendar month after the effective
date of such registration statement, which earnings
statement shall satisfy the provisions of
Section 11(a) of the Securities Act.
(e) Expenses. All expenses incurred in effecting the registrations
provided for in this Section 11 (excluding underwriters' discounts
and commissions, which shall be borne pro rata by those Holders
for whom Registrable Publicker Shares are being registered and -
fees of counsel to Holders which shall be borne by such Holders),
including without limitation all registration and filing fees
(including all expenses incident to filing with the Nasdaq Stock
Market or any securities exchange), printing expenses, fees and
disbursements of counsel for Publicker, fees of Publicker's
independent auditors and accountants, expenses of any audits
incident to or required by any such registration and expenses of
complying with the securities or blue sky laws of any
jurisdictions pursuant to Section 11.4(d), shall be paid by
Publicker.
(f) Marketing Restrictions.
(a) If (i) any Holder(s) wish(es) to register any Registrable
Publicker Shares in a registration made pursuant to
Section 11.2A, (ii) the offering proposed to be made by such
Holder or Holders is to be an underwritten public offering,
(iii) Publicker or one or more holders of securities other
than Registrable Publicker Shares to whom Publicker has
granted registration rights wish to register securities in
such registration and (iv) the managing underwriters of such
public offering furnish a written opinion that the total
amount of securities to be included in such offering would
exceed the maximum amount of securities (as specified in
such opinion) which can be marketed in such offering at a
price which such Holders are prepared to sell and without
materially and adversely affecting such offering, then the
rights of Holders, Publicker and the holders of other
securities with registration rights to participate in such
offering shall be in the following order of priority:
First: The Holders having the right to include such
securities in such registration shall be entitled to participate in
proportion to the number of Registrable Publicker Shares requested to be
registered by each such Holder; and then
Second: Publicker and all holders of securities other than
Registrable Publicker Shares having the right to include such securities
in such registration shall be entitled to participate pro rata among
themselves in accordance with the number of securities requested to be
registered by Publicker and each such holder.
(b) If (i) any Holder requests registration of Registrable
Publicker Shares under Section 11.2, (ii) the offering
proposed to be made is to be an underwritten public offering
and (iii) the managing underwriters of such public offering
furnish a written opinion that the total amount of
securities to be included in such offering would exceed the
maximum amount of securities (as specified in such opinion)
which can be marketed at a price reasonably related to the
then current market value of such securities and without
materially and adversely affecting such offering, then the
rights of Publicker, Holders and holders of other securities
having the right to include such securities in such
registration to participate in such offering shall be in the
following order of priority:
First: Publicker and all holders of securities other than
Registrable Publicker Shares having the right to request such
registration pursuant to a demand right (or otherwise initiate such
registration) shall be entitled to participate in accordance with the
number of securities requested to be registered by Publicker and each
such holder and in accordance with the registration rights of each such
holder; and then
Second: All other holders of securities, including Holders
of Registrable Publicker Shares, having the right to include such
securities in such registration shall be entitled to participate pro
rata among themselves in accordance with the number of securities
requested to be registered by each such holder;
and no securities (issued or unissued) other than those registered and
included in the underwritten offering shall be offered for sale or other
disposition by Holders in a transaction which would require registration under
the Securities Act until the expiration of 180 days after the effective date
of the registration statement in which Registrable Publicker Shares were
included pursuant to Section 11.2 or such shorter period as may be acceptable
to Publicker.
(g) Time Limitations; Termination of Rights. Notwithstanding anything
contained in this Section 11, the rights to registration under
this Section 11 shall terminate as to any particular Registrable
Publicker Shares when (i) such Registrable Publicker Shares shall
have been effectively registered under the Securities Act and sold
by the holder thereof in accordance with such registration, (ii)
such Registrable Publicker Shares shall have been sold in
compliance with Rule 144 promulgated under the Securities Act or
otherwise in a public transaction or (iii) written opinions from
counsel reasonably acceptable to Publicker and the holder of such
Registrable Publicker Shares, to the effect that such Registrable
Publicker Shares may be sold without registration under the
Securities Act or applicable state law and without restriction as
to the volume and timing of such sales, shall have been received
from either counsel to Publicker or counsel to the holders
thereof.
(h) Compliance with Rule 144. At all times during which this
Agreement is effective, Publicker shall file with the Securities
and Exchange Commission, in a timely manner, all reports and other
documents required to be filed by Publicker with the Securities
and Exchange Commission pursuant to the Exchange Act.
(i) Indemnification by Publicker. In the event of any registration
under the Securities Act of any Registrable Publicker Shares
pursuant to this Section 11, Publicker hereby agrees to execute an
agreement with any underwriter participating in the offering
thereof containing such underwriter's standard representations and
indemnification provisions and to indemnify and hold harmless each
Holder disposing of Registrable Publicker Shares, each Person, if
any, who controls such Holder within the meaning of the Securities
Act and each other Person (including each underwriter and each
Person who controls such underwriter) who participates in the
offering of Registrable Publicker Shares, against any losses,
claims, damages or liabilities, joint or several, to which such
Holder, controlling Person or participating Person may become
subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or proceedings in respect
thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in any
registration statement under which the Registrable Publicker
Shares are registered under the Securities Act, in any preliminary
prospectus or final prospectus contained therein, or in any
amendment or supplement thereto, or arise out of or are based upon
the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each such Holder,
controlling Person and participating Person for any legal or other
expenses reasonably incurred in connection with investigating or
defending any such loss, claim, damage, liability or proceeding;
provided, however, that Publicker will not be liable in any case
to any such Holder, controlling Person or participating Person to
the extent that any loss, claim, damage or liability results from
any untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, preliminary
or final prospectus or amendment or supplement in reliance upon
and in conformity with information furnished to Publicker by any
Holder or any other Person who participates as an underwriter in
the offering or sale of such securities, specifically for use in
the preparation thereof; provided, further, however, that the
indemnity set forth in this Section 11.9 shall not inure to the
benefit of any such Holder, controlling Person or participating
Person on account of any loss, claim, damage or liability arising
from the sale of Registrable Publicker Shares to any Person by a
Holder or participating Person if any Holder or participating
Person failed to deliver a copy of such preliminary prospectus or
final prospectus (as then amended or supplemented) to that person
within the time required by applicable securities laws and the
untrue statement or alleged untrue statement of any material fact
or omission or alleged omission to state a material fact in a
prospectus was corrected in the preliminary or final prospectus or
amended or supplemented prospectus which the Holder or
participating Person failed to deliver, unless such failure of
delivery resulted from Publicker's failure to deliver to the
Holders and participating Persons such corrected prospectus in the
requisite quantity and on a timely basis to permit proper delivery
thereof. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of any Holder
disposing of Registrable Publicker Shares or any such underwriter
or controlling Person and shall survive the transfer of such
securities by such Holder and the expiration or termination of the
registration rights granted under this Section 11 pursuant to
Section 11.7.
(j) Indemnification by Holder.
(a) As a condition of Publicker's obligation under this
Section 11 to effect any registration under the Securities
Act, there shall be delivered to Publicker an agreement or
agreements duly executed by each Holder for whom Registrable
Publicker Shares are to be so registered, whereby such
Holder agrees to indemnify and hold harmless (in the same
manner as set forth in Section 11.9 above) Publicker, each
person referred to in clause (1), (2) or (3) of
Section 11(a) of the Securities Act in respect of the
registration statement and each other person, if any, who
controls Publicker within the meaning of the Securities Act,
with respect to any untrue statement or alleged untrue
statement of any material fact contained in the registration
statement under which the Registrable Publicker Shares are
to be registered under the Securities Act, in any
preliminary prospectus or final prospectus contained therein
or in any amendment or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading,
which, in each case, is made in or omitted from the
registration statement, preliminary or final prospectus or
amendment or supplement in reliance upon and in conformity
with information furnished to Publicker by such Holder
specifically for use in the preparation thereof. Such
indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of Publicker or
any person indemnified by virtue of this Section 11.10 and
shall survive the transfer of such securities by such Holder
and the expiration or termination of the registration rights
granted under this Section 11 pursuant to Section 11.7.
(b) At the request of the managing underwriter in connection
with any underwritten offering of Publicker's securities,
each Holder for whom Registrable Publicker Shares are being
registered shall enter into an indemnity agreement in
customary form with such underwriter.
(k) Contribution. If the indemnification provided for in Section 11.9
or 11.10 from the indemnifying party is unavailable to an
indemnified party hereunder, or is insufficient to hold harmless
an indemnified party, in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then the indemnifying
party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and indemnified parties
in connection with the actions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of such
indemnifying party and indemnified parties shall be determined by
reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such
indemnifying party or indemnified parties, and the parties'
relative intent, knowledge, access to information and opportunity
to correct or prevent such untrue statement or omission. The
amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include any legal or other fees or
expenses reasonably incurred by such party in connection with any
investigation or proceeding.
The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section 11.11 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding
paragraph. No Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any indemnifying party who was not guilty of such fraudulent
misrepresentation.
(l) Notification of and Participation in Actions. The procedures
described in Sections 12.3 and 12.4 shall apply to any claim
covered by this Section 11. All indemnification obligations of
the parties hereto shall survive any termination of the
registration rights granted under this Section 11 pursuant to Sec-
tion 11.7.
(m) Underwriting Requirements.
(a) In the event of an underwritten offering of Publicker's
securities, each Holder for whom Registrable Publicker
Shares are being registered pursuant to Section 11.2 or
Section 11.2A shall, as a condition to inclusion of such
Registrable Publicker Shares in such registration, execute
and deliver to the underwriter(s) an underwriting agreement
in customary form. The underwriter(s) shall be selected (i)
by the Holders requesting registration of Registrable
Publicker Shares, in the case of a registration pursuant to
Section 11.2A (which underwriters shall be acceptable to
Publicker) or (ii) by Publicker, in the case of a
registration pursuant to Section 11.2.
(b) At the request of the managing underwriter in connection
with any underwritten offering of Publicker's securities,
the Holders for whom Registrable Publicker Shares are being
registered shall enter into customary "lock-up" agreements.
(n) Furnish Information. It shall be a condition precedent to the
obligations of Publicker to take any action pursuant to Section 11
that Holders requesting registration of Registrable Publicker
Shares furnish to Publicker such information regarding them, the
Registrable Publicker Shares held by them and the intended method
of disposition of such securities as Publicker shall reasonably
request and as shall be required in connection with the action to
be taken by Publicker.
(o) Permitted Transfers. The registration rights granted to Sellers
(other than Employee Sellers) under this Section 11 may only be
transferred to a transferee who acquires Registrable Publicker
Shares from any Seller (other than an Employee Seller), is a
permitted transferee under Section 10 and is either (i) the spouse
or member of the immediate family of a Seller (other than an
Employee Seller); (ii) a trust for the benefit of a Seller (other
than an Employee Seller) or any member of such Seller's immediate
family; or (iii) a corporation, partnership or other entity the
only owners of which are one or more Sellers (other than Employee
Sellers) and members of their immediate families; provided that
any transferring Seller gives written notice at the time of such
transfer to Publicker stating the name and address of the
transferee and identifying the Registrable Publicker Shares so
transferred, accompanied by a signature page to this Agreement
pursuant to which such transferee agrees to be bound by the terms
and conditions of this Section 11.
(p) Put Rights.
(a) Put Rights. If the Shelf Registration Statement is not
declared effective within six months after the Closing Date,
each of the Holders listed on Schedule 11.16 (the "Put
Holders") shall have the right to request that Publicker
purchase all or part of the Publicker Shares held by such
Put Holder which were received by such Put Holder as
consideration in the Merger pursuant to this Agreement ("Put
Shares") for a cash purchase price per Publicker Share equal
to the Fair Market Value on the Put Date (as defined below)
of one Publicker Share, in accordance with the terms of this
Section 11.16.
(b) Exercise of Put. To exercise its put rights under Section
11.16(a), a Put Holder shall give notice of its put request
(the "Put Notice") to Publicker at any time after its put
rights become exercisable under Section 11.16(a) and prior
to the earlier of (i) the first date upon which the Shelf
Registration Statement is declared effective and (ii) the
date upon which a written opinion from counsel reasonably
acceptable to Publicker and such Put Holder, to the effect
that such Put Holder's Put Shares may be sold without
registration under the Securities Act or applicable state
law and without restriction as to volume and timing of
sales, shall have been received from either counsel to
Publicker or counsel to such Put Holder. The closing of
Publicker's purchase of the Put Shares shall occur at such
place, date and time as is determined by Publicker, provided
that the place, date and time shall be no earlier than three
Busines Days after the Put Notice and no later than seven
Business Days after the Put Notice. The Put Notice shall
specify the total number of Put Shares requested to be
purchased by Publicker.
(c) Conditions to Closing of Put. The obligation of Publicker
to purchase any Put Shares is subject to the condition that
no preliminary or permanent injunction or other order by a
court of competent jurisdiction prohibiting or otherwise
restraining such sale shall be in effect. Each Put Holder
and Publicker shall use its best efforts to make all filings
and registrations with, and to obtain all consents,
approvals, orders or authorizations of, any Governmental
Body, if any, required in connection with the sale of such
Put Holder's Put Shares under this Section 11.16.
(d) Closing of Option. At the closing of any purchase by
Publicker of Put Shares (such date and time referred to
herein as the "Put Date"), (i) the selling Put Holder shall
deliver to Publicker (A) stock certificates representing the
Put Shares duly endorsed for transfer to Publicker, or
accompanied by stock powers duly endorsed in blank, with all
requisite documentary tax stamps affixed thereto and (B) a
simple sale agreement, in form and substance satisfactory to
Publicker, containing representations and warranties similar
to those contained in Sections 7.1, 7.2, 7.3 and 7.4 and
(ii) Publicker shall deliver to such Put Holder a check
payable to the order of such Put Holder in the amount of the
purchase price determined in accordance with Section
11.16(a).
(n) INDEMNIFICATION AND RELATED MATTERS; SELLERS' RELEASE; TAX MATTERS.
(a) Indemnification.
(a) Indemnification by Management Sellers.
(a) Each of the Management Sellers shall jointly and
severally indemnify and hold harmless Publicker
and its agents, representatives, employees,
officers, directors, stockholders, controlling
persons and Affiliates (collectively, the
"Publicker Indemnitees"), and shall reimburse
the Publicker Indemnitees, for any loss,
liability, claim, damage or expense (including,
but not limited to, costs of investigation and
defense and reasonable attorneys' fees), whether
or not involving a third-party claim
(collectively, "Damages"), arising from or in
connection with (A) any inaccuracy in any of the
representations and warranties of the Company or
any Management Seller in this Agreement (other
than in Section 7 which is covered in
Section 12.1(b)) or in any certificate or other
document required to be delivered by any
Management Seller or the Company pursuant to
this Agreement or referred to in this Agreement
or in any such other certificate or document,
(B) any failure of the Company or any Management
Seller to perform or comply with any agreement
to be performed or complied with by it in this
Agreement, (C) any claim by any Person for
brokerage or finder's fees or similar payments
in connection with any of the Contemplated
Transactions as the result of brokers, finders
or investment bankers retained by any Seller or
the Company, (D) any subscription, option or
other right of any kind (whether absolute or
contingent, known or unknown, matured or
unmatured) of Harold E. Taylor or his successors
or assigns relating to the issuance of any
capital stock of the Company, which arises from
or relates to the conduct of the business or the
operations of the Company on or prior to the
Closing Date or any agreements (whether or not
in writing) with the Company or any of its
officers, directors, employees or agents entered
into on or prior to the Closing Date or
(E) Publicker's enforcement of the
indemnification provisions contained herein.
(b) Each of Management Sellers shall jointly and
severally indemnify, defend, protect, reimburse
and hold harmless Publicker, the other Publicker
Indemnitees and the Company for or from any
Damages (including, without limitation,
reasonable contractors' and consultants' fees)
relating to any portion of the Facilities or to
any other property incurred by, imposed upon, or
commenced or asserted against any Publicker
Indemnitee or the Company at any time, resulting
in whole or in part from, or related in any way
to, (x) the Release of a Hazardous Substance at
or on the Facilities or by the Company
elsewhere, (y) any condition existing at or on
the Facilities that gives rise to a liability
under an Environmental Law or (z) a violation of
an Environmental Law by the Company, in each
case on or prior to the Closing Date.
(c) Each Management Seller may satisfy its liability
under this Section 12.1(a) by delivering to
Publicker that number of Publicker Shares
received by such Management Seller to such
indemnification payment date pursuant to this
Agreement having an aggregate Fair Market Value
on the date of delivery to Publicker pursuant to
this Section 12.1(a)(iii) equal to such
Management Seller's liability. Notwithstanding
the foregoing, (A) the indemnifying Management
Sellers shall have no liability to Publicker
under Section 12.1(a)(i)(A) or (B) or
Section 12.1(a)(ii) until the aggregate amount
of all Damages under such Sections exceeds
$25,000 and then only for all such Damages in
excess of such amount and (B) the maximum
liability of each Management Seller pursuant to
this Section 12.1(a) shall not exceed in the
aggregate the lesser of (1) all of the Publicker
Shares received by such Management Seller to the
indemnification payment date pursuant to this
Agreement, if such Management Seller chooses to
deliver such shares to Publicker pursuant to
this Section 12.1(a)(iii) and (2) the Fair
Market Value, on the date on which the shares
were received by such Management Seller, of the
Publicker Shares received by such Management
Seller to such indemnification payment date
pursuant to this Agreement. The limitations set
forth in this Section 12.1(a)(iii) shall not
apply to any Management Seller to the extent of
Damages arising from fraud on the part of such
Management Seller.
(b) Indemnification by Sellers. Each of the Sellers shall
severally and not jointly indemnify and hold harmless
Publicker and the other Publicker Indemnitees, and shall
reimburse Publicker and the other Publicker Indemnitees, for
any Damages arising from or in connection with (i) any
inaccuracy in any of the representations and warranties of
such Seller in Section 7 of this Agreement or in any
certificate or other document required to be delivered by
such Seller pursuant to this Agreement, (ii) any failure of
such Seller to perform or comply with any agreement to be
performed or complied with by it in this Agreement, or
(iii) Publicker's enforcement of the indemnification
provisions contained herein. Each Seller may satisfy its
liability under this Section 12.1(b) by delivering to
Publicker that number of Publicker Shares received by such
Seller to such indemnification payment Date pursuant to this
Agreement having an aggregate Fair Market Value on the date
of delivery to Publicker pursuant to this Section 12.1(b)
equal to such Seller's liability. Notwithstanding the
foregoing, (A) no indemnifying Seller shall have any
liability to Publicker under clause (i) or (ii) of this
Section 12.1(b) until the aggregate amount of all Damages
under such clauses exceeds $10,000 and then only for all
such Damages in excess of such amount, and (B) the maximum
liability of each Seller pursuant to this Section 12.1(b)
shall not exceed in the aggregate the lesser of (1) all of
the Publicker Shares received by such Seller to the
indemnification payment date pursuant to this Agreement, if
such Seller chooses to deliver such shares to Publicker
pursuant to this Section 12.1(b) and (2) the Fair Market
Value, on the date on which the shares were received by such
Seller, of the Publicker Shares received by such Seller to
such indemnification payment date pursuant to this
Agreement. The limitations set forth in this
Section 12.1(b) shall not apply to any Seller to the extent
of Damages arising from fraud on the part of such Seller.
(c) Indemnification by Publicker. Publicker shall indemnify and
hold harmless the Sellers (the "Seller Indemnitees"), and
shall reimburse the Seller Indemnitees, for any Damages
arising from or in connection with (i) any inaccuracy in any
of the representations and warranties of Publicker in this
Agreement or in any certificate or other document required
to be delivered by Publicker pursuant to this Agreement or
referred to in this Agreement or in any such other
certificate or document, (ii) any failure by Publicker or
Acquisition Sub to perform or comply with any agreement to
be performed or complied with by it in this Agreement, (iii)
any claim by any Person for brokerage or finder's fees or
similar payments in connection with any of the Contemplated
Transactions as the result of brokers, finders or investment
bankers retained by Publicker, or (iv) the Seller
Indemnitees' enforcement of the indemnification provisions
contained herein. Notwithstanding the foregoing, (A)
Publicker shall have no liability under clause (i) or (ii)
of this Section 12.1(c) until the aggregate amount of all
Damages under such clauses exceeds $25,000 and then only for
all such Damages in excess of such amount and (B) the
maximum liability of Publicker pursuant to this
Section 12.1(c) shall not exceed the Fair Market Value on
the Closing Date of the aggregate Merger Consideration paid
by Publicker pursuant to this Agreement. The limitations
set forth in this Section 12.1(c) shall not apply to
Publicker to the extent of Damages arising from fraud on the
part of Publicker.
(b) Survival of Representations and Warranties. The representations
and warranties of the Company, Management Sellers, Sellers and
Publicker contained in this Agreement shall survive the Closing;
provided, that a party shall have no liability (for
indemnification or otherwise) for a breach of any representation
or warranty or breach of covenant or obligation to be performed
and complied with prior to the Closing Date, unless on or before
the date that is the 18-month anniversary of the Closing Date such
party is given notice asserting a claim with respect thereto and
specifying the factual basis of the claim and extent of the
Damages in reasonable detail. Notwithstanding the foregoing, (a)
indemnification claims under Section 12.1(a)(i) for breach of the
representations in Sections 6.2(a), 6.2(c), 6.14, 6.17 and 6.21
may be made by Publicker at any time, (b) indemnification claims
under Section 12.1(b) for breach of the representations in
Section 7.4 may be made by Publicker at any time, (c)
indemnification claims made under Section 12.1(a)(i)(B),
12.1(b)(ii) or 12.1(c)(ii) for covenants or obligations to be
performed and complied with after the Closing Date may be made at
any time, (d) indemnification claims under Sections 12.1(a)(i)(C),
(D) and (E), 12.1(a)(ii), 12.1(b)(iii) and 12.1(c)(iii) and (iv)
may be made at any time and (d) nothing in this Section 12.2 shall
limit or otherwise affect the rights of either party under
Section 11 or 12.6.
(c) Procedure for Indemnification -- Third Party Claims. Promptly
after receipt by an indemnified party under Section 12.1(a),
12.1(b) or 12.1(c) or Section 11.9 or 11.10 of oral or written
notice of a claim or the commencement of any proceeding against
it, such indemnified party shall, if a claim in respect thereof is
to be made against an indemnifying party under such Section, give
written notice to the indemnifying party of the commencement
thereof, but the failure so to notify the indemnifying party shall
not relieve it of any liability that it may have to any
indemnified party except to the extent the indemnifying party
demonstrates that the defense of such action is prejudiced
thereby. In case any such proceeding shall be brought against an
indemnified party and it shall give notice to the indemnifying
party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall
wish (unless the indemnifying party is also a party to such
proceeding and the indemnified party determines in good faith that
joint representation would be inappropriate) to assume the defense
thereof with counsel reasonably satisfactory to such indemnified
party and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such
indemnified party under such Section for any fees of other counsel
or any other expenses with respect to the defense of such
proceeding, in each case, subsequently incurred by such
indemnified party in connection with the defense thereof. If an
indemnifying party assumes the defense of such proceeding, (a) no
compromise or settlement thereof may be effected by the
indemnifying party without the indemnified party's reasonable
consent unless (i) there is no finding or admission of any
violation of law or any violation of the rights of any Person and
no effect on any other claims that may be made against the
indemnified party and (ii) the sole relief provided is monetary
damages that are paid in full by the indemnifying party and (b)
the indemnifying party shall have no liability with respect to any
compromise or settlement thereof effected without its reasonable
consent. If notice is given to an indemnifying party of the
commencement of any proceeding and it does not, within 15 Business
Days after the indemnified party's notice is given, give notice to
the indemnified party of its election to assume the defense
thereof, the indemnifying party shall be bound by any
determination made in such action or any compromise or settlement
thereof effected by the indemnified party. Notwithstanding the
foregoing, if an indemnified party determines in good faith that
there is a reasonable probability that a proceeding may adversely
affect it or its Affiliates other than as a result of monetary
damages, such indemnified party may, by notice to the indemnifying
party, assume the exclusive right to defend, compromise or settle
such proceeding, but the indemnifying party shall not be bound by
any determination of a proceeding so defended or any compromise or
settlement thereof effected without its consent (which shall not
be unreasonably withheld).
(d) Procedure for Indemnification -- Other Claims. A claim for
indemnification for any matter not involving a third-party claim
may be asserted by notice to the party from whom indemnification
is sought.
(e) Company's and Sellers' Releases. If the Closing shall occur:
(a) Each Seller hereby releases and forever discharges
Publicker, the Company and each of their respective
agents, representatives, employees, officers,
directors, stockholders, controlling persons and
Affiliates (individually a "Releasee" and
collectively, "Releasees") from any and all claims,
demands, Proceedings, causes of action, orders,
obligations, contracts, agreements, debts and
liabilities whatsoever, whether known or unknown,
suspected or unsuspected, both at law and in equity,
which each Seller now has, have ever had or may
hereafter have against the respective Releasees
arising contemporaneously with or prior to the Closing
Date or on account of or arising out of any matter,
cause or event occurring contemporaneously with or
prior to the Closing Date; provided, however, that
nothing contained in this Section 12.5(a) shall
operate to release (i) any obligation of the Company
disclosed in this Agreement (on a Schedule or
otherwise) or (ii) any obligations of Publicker or the
Company arising under this Agreement or under any
agreement contemplated by this Agreement;
(b) Each of the Company and Sellers hereby releases and
forever discharges any and all claims, demands,
Proceedings and causes of action against Publicker and
the other Publicker Indemnitees arising out of,
incidental to, or in any manner connected with
Contamination existing at or in the Facilities, or any
portion thereof or elsewhere, with any Release of a
Hazardous Substance at or on the Facilities or
elsewhere, or with any violation of an Environmental
Law, in each case occurring on or prior to the Closing
Date; and
(c) each of the Company and Sellers (as the case may be)
hereby irrevocably covenants to refrain from, directly
or indirectly, asserting any claim or demand, or
commencing, instituting or causing to be commenced,
any proceeding of any kind against (i) any Releasee
based upon any matter purported to be released under
Section 13.5(a) or (ii) any Publicker Indemnitee based
upon any matter purported to be released under
Section 12.5(b).
(f) Tax Matters.
(a) Sellers shall pay all transfer, documentary, sales, use,
registration, stamp, value-added and other similar Taxes
(including all applicable real estate transfer taxes),
including any penalties, interest and additions to tax,
incurred in connection with the Contemplated Transactions
other than the issuance of Publicker Shares hereunder, with
respect to which Publicker shall pay such Taxes.
(b) Sellers shall file or cause to be filed all Tax Returns for
the taxable periods of the Company ending on or prior to the
Closing Date. In the case of any taxable period of the
Company that begins prior to and ends after the Closing
Date, Publicker shall cause to be prepared and filed any
required Tax Returns. Each of Sellers and Publicker shall
cause all Tax Returns addressed in this Section 12.6(b) to
be prepared in accordance with the methodology used in prior
taxable years, except as otherwise required by legal
requirements.
(c) Sellers will pay, and will indemnify and hold harmless
Publicker, its Affiliates, the Surviving Corporation and the
Company from and against, (i) any Taxes imposed upon the
Company or the Surviving Corporation for any taxable period
ending on or prior to the Closing Date and (ii) Taxes
imposed upon the Company or the Surviving Corporation in
connection with the Contemplated Transactions. Unless
otherwise provided herein, the Closing Date shall be treated
as the last day of a taxable period whether or not any
taxable period actually ends on such date. Sellers'
obligations under this Section 12.6(c) shall not be limited
in any way by Section 12.1(a), Section 12.1(b) or Section
12.2.
(d) Sellers and Publicker shall each provide the other with such
assistance as may be reasonably requested (including making
employees reasonably available to provide information or
testimony) in connection with the preparation of any Tax
Return, any Seller Tax Controversies (as defined in Section
12.6(e)), or the determination of liability for Taxes with
respect to the Company or the Surviving Corporation.
(e) (i) Publicker shall, in the event that Publicker receives
written notice of any examination, claim, proposed
settlement, proposed adjustment or related matter with
respect to any Taxes for which Publicker may be indemnified
hereunder (the "Seller Tax Controversies"), promptly notify
Sellers thereof; provided, however, that failure to give
such notification shall not affect the indemnification
provided hereunder except to the extent Sellers shall have
been actually prejudiced as a result of such failure.
Sellers shall be entitled at their sole discretion and
expense to handle, control and compromise or settle the
Seller Tax Controversies, and shall reasonably inform
Publicker of the progress of the Seller Tax Controversies;
provided, however, that Sellers shall not settle or
compromise any Seller Tax Controversy in a manner that would
adversely affect any unindemnified Tax liability of
Publicker, any of its Affiliates, the Surviving Corporation
or the Company without the consent of Publicker, such
consent not to be withheld unreasonably.
(ii) Sellers shall, in the event any Seller receives written
notice of any examination, claim, proposed settlement, proposed adjustment or
related matter with respect to Taxes attributable to the Company or the
Surviving Corporation, promptly notify Publicker thereof.
(o) TERMINATION.
(a) Termination Procedures. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time as
follows:
(a) by written agreement of Publicker, Acquisition Sub and
the Company (duly authorized by their Boards of
Directors) at any time;
(b) by Publicker, by notice to the Company at any time, if
satisfaction of any of the conditions specified in
Section 4 becomes impossible and such condition has
not been waived by Publicker;
(c) by the Company, by notice to Publicker at any time, if
satisfaction of any of the conditions specified in
Section 5 becomes impossible and such condition has
not been waived by the Company;
(d) by Publicker, by notice to the Company if the
conditions to Publicker's and Acquisition Sub's
obligations set forth in Section 4 have not been
satisfied or waived by Publicker by December 15, 1998;
(e) by the Company by notice to Publicker, if the
conditions to the Company's obligations set forth in
Section 5 have not been satisfied or waived by the
Company by December 15, 1998; or
(f) by Publicker, by notice to the Company, if any of the
Revised Schedules delivered to Publicker pursuant to
Section 9.16 are not in form and substance
satisfactory to Publicker, in Publicker's good faith
judgment.
(b) Effect of Termination. In the event that this Agreement is
terminated pursuant to Section 13.1, this Agreement shall
terminate without any liability or further obligation of any party
to another, except for the obligations of Publicker, the Company
and Sellers under Section 9.1 and Publicker under Section 9.2(b),
which obligations shall survive termination; provided, however,
that if this Agreement is terminated by a party because of the
breach of this Agreement by the other party or because one or more
of the conditions to the terminating party's obligations under
this Agreement is not satisfied as a result of the other party's
failure to comply with its obligations under this Agreement, the
terminating party's right to pursue all legal remedies will
survive such termination unimpaired.
(p) THE SELLERS' AGENT.
(a) Authorization of the Sellers' Agent. Marc Postlewaite hereby is
appointed, authorized and empowered to act, as a representative,
on behalf of Sellers (Marc Postlewaite, acting in such
representative capacity shall be referred to herein as the
"Sellers' Agent"), in connection with any and all activities to be
performed by or on behalf of Sellers under this Agreement and each
other agreement, document, instrument or certificate referred to
herein or the Contemplated Transactions (including, without
limitation, in connection with any and all claims for
indemnification brought under Section 12), for the purposes and
with the powers and authority set forth herein or in such other
agreement, document, instrument or certificate, which shall
include, without limitation, the power and authority:
(a) to execute and deliver amendments or modifications to
this Agreement (including, without limitation, the
Exhibits and Schedules) as the Sellers' Agent, in his
sole discretion, may deem necessary or desirable;
(b) to execute and deliver such notices, waivers and
consents in connection with this Agreement and the
consummation of the Contemplated Transactions as the
Sellers' Agent, in his sole discretion, may deem
necessary or desirable;
(c) to receive any notices and other documents on behalf
of Sellers pursuant to this Agreement; and
(d) to make, execute, acknowledge and deliver all such
other agreements, notices, requests, instructions,
certificates, stock powers, letters and other
writings, and, in general, to do any and all things
and to take any and all action that the Sellers'
Agent, in his sole and absolute discretion, may
consider necessary or proper or convenient in
connection with or to carry out the activities
described in this Section 14.1 and the Contemplated
Transactions.
The grant of authority provided for in this Section 14.1:
(i) is coupled with an interest and being granted, in part, as an
inducement to Publicker and Acquisition Sub to enter into this Agreement
and the other agreements, documents, instruments and certificates
contemplated hereby and shall be irrevocable and survive the death,
incompetency, bankruptcy or liquidation of any Seller and shall be
binding on any successor thereto; and (ii) shall survive any permitted
assignment by a Seller of the whole or any fraction of his or her
interest hereunder.
(b) Compensation; Exculpation; Indemnity.
(a) The Sellers' Agent shall not be entitled to any fee,
commission or other compensation for the performance of its
services as such, but shall be entitled to receive from
Sellers the payment of all of its expenses incurred as
Sellers' Agent.
(b) In dealing with this Agreement and any instruments,
agreements or documents relating hereto, and in exercising
or failing to exercise all or any of the powers conferred
upon the Sellers' Agent hereunder, (i) the Sellers' Agent
assumes and shall incur no responsibility whatsoever to any
Seller by reason of any error in judgment or other act or
omission performed or omitted hereunder or in connection
with this Agreement or any such other agreement, instrument
or document, excepting only responsibility for any act or
failure to act which represents gross negligence or willful
misconduct, and (ii) the Sellers' Agent shall be entitled to
rely on the advice of counsel, public accountants or other
independent experts experienced in the matter at issue, and
any error in judgment or other act or omission of the
Sellers' Agent pursuant to such advice shall in no event
subject the Sellers' Agent to liability to any Seller.
(c) Each Seller, severally, shall indemnify the Sellers' Agent
against all damages, liabilities, claims, obligations, costs
and expenses, including reasonable attorneys', accountants'
and other experts' fees and the amount of any judgment
against them, of any nature whatsoever, arising out of or in
connection with any claim, investigation, challenge, action
or proceeding or in connection with any appeal thereof,
relating to the acts or omissions of the Sellers' Agent
under this Agreement or otherwise. The foregoing
indemnification shall not be deemed exclusive of any other
right to which the Sellers' Agent may be entitled apart from
the provisions hereof. The foregoing indemnification shall
not apply in the event of any action or proceeding which
finally adjudicates the liability of the Sellers' Agent for
its gross negligence or willful misconduct.
(d) All of the indemnities, immunities and powers granted to the
Sellers' Agent under this Agreement shall survive the
Closing and/or any termination of this Agreement.
(c) Notices. Any notice given to the Sellers' Agent pursuant to this
Agreement or any other agreement, document, instrument or
certificate contemplated hereby shall constitute effective notice
to all Sellers. Publicker, Acquisition Sub, the Surviving
Corporation and any other Person may rely on any notice, consent,
election or other communication received from the Sellers' Agent
as if such notice, consent, election or other communication had
been received from all Sellers.
(d) Resignation or Removal; Successor Agent.
(a) The Sellers' Agent may resign upon 20 days' prior written
notice to Publicker, the Surviving Corporation and each
Seller, provided, that no such resignation may take effect
unless a successor Sellers' Agent shall have been duly
appointed and shall have accepted such appointment and
notice thereof shall have been given as set forth in Section
14.4(b). Any successor Sellers' Agent shall be a natural
person.
(b) Upon the resignation of the Agent, Sellers shall appoint a
successor Sellers' Agent by written consent of Sellers
holding 51% of the outstanding Company Shares immediately
prior to the Effective Time, and any successor Sellers'
Agent so appointed shall constitute the Sellers' Agent as
provided in this Section 14 to the same effect as if such
successor Sellers' Agent had been named in this Section 14.
Sellers shall give Publicker and the Surviving Corporation
written notice of the appointment of and acceptance of
appointment by the successor to such Sellers' Agent,
including a copy of the written consent of Sellers relating
thereto, the executed acceptance of appointment by the
successor to such Sellers' Agent, and the successor Sellers'
Agent's address (including telephone and telecopy numbers)
as soon as practicable after any such appointment. The
Sellers' Agent shall give Publicker and the Surviving
Corporation written notice of the resignation of such
Sellers' Agent as well as of the appointment of and
acceptance of appointment by the successor to such Sellers'
Agent, including the executed acceptance of appointment by
the successor to such Sellers' Agent and the successor
Sellers' Agent's address (including telephone and telecopy
numbers) as soon as practicable after any such resignation
and appointment. Any such resignation or appointment shall
not be effective against Publicker or the Surviving
Corporation until such notices shall have been given.
(q) MISCELLANEOUS.
(a) Entire Agreement. This Agreement (together with the certificates,
agreements, Exhibits, Schedules, instruments and other documents
required to be delivered hereunder) contains, and is intended as,
a complete statement of all of the terms and the arrangements
between the parties with respect to the matters provided for,
supersedes any previous agreements and understandings between the
parties with respect to those matters, and cannot be changed or
terminated orally. Neither party makes, and each party hereby
expressly disclaims reliance upon, any representations or
warranties with respect to the Contemplated Transactions other
than those set forth in this Agreement or in any certificate,
agreement, Exhibit, Schedule, instrument or other document
required to be delivered hereunder.
(b) Governing Law. This Agreement shall be governed by and construed
in accordance with the law of the State of New York without regard
to the conflicts of law provisions thereof.
(c) Jurisdiction; Service of Process. Any action or proceeding
seeking to enforce any provision of, or based on any right arising
out of, this Agreement may be brought against any of the parties
in the courts of the State of New York, County of New York, or, if
it has or can acquire jurisdiction, in the United States District
Court for the Southern District of New York, and each of the
parties consents to the jurisdiction of such courts (and of the
appropriate appellate courts) in any such action or proceeding and
waives any objection to venue laid therein. Process in any action
or proceeding referred to in the preceding sentence may be served
on any party anywhere in the world.
(d) Headings. The Section headings contained in this Agreement are
solely for the purpose of reference, are not part of the agreement
of the parties and shall not in any way affect the meaning or
interpretation of this Agreement. All references in this
Agreement to Sections, Schedules and Exhibits are to sections,
schedules and exhibits to this Agreement, unless otherwise
indicated.
(e) Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed given (a) when
delivered personally, (b) when transmitted by telecopier (receipt
confirmed), provided that a copy is sent at about the same time by
registered mail, return receipt requested, (c) on the fifth
Business Day following mailing by registered mail, return receipt
requested, or (d) on the next Business Day following deposit with
an overnight delivery service of national reputation, in each case
to the addressee at the following addresses or telecopier numbers
(or to such other addresses, telex number or telecopier number as
a party may specify by notice given to the other party pursuant to
this provision):
If to the Company, to:
Tritheim Technologies, Inc.
101 West Court Street
Tarpon Springs, Florida 34689
Attention: President
Telecopier No.:
with a copy to:
Johnson, Blakely, Pope, Boker, Ruppel & Burns, P.A.
911 Chestnut Street
P.O. Box 1368
Clearwater, Florida 34617
Attention: Michael T. Cronin, Esq.
Telecopier No.: (727) 441-8617
If to Sellers, to:
c/o Mr. Marc Postlewaite
Sellers' Agent
Tritheim Technologies, Inc.
101 West Court Street
Tarpon Springs, Florida 34689
Telecopier No.:
with a copy to:
Johnson, Blakely, Pope, Boker, Ruppel & Burns, P.A.
911 Chestnut Street
P.O. Box 1368
Clearwater, Florida 34617
Attention: Michael T. Cronin, Esq.
Telecopier No.: (727) 441-8617
If to Management Sellers:
Mr. Marc Postlewaite and Mr. Kim Vogel
Tritheim Technologies, Inc.
101 West Court Street
Tarpon Springs, Florida 34689
Telecopier No.:
with a copy to:
Johnson, Blakely, Pope, Boker, Ruppel & Burns, P.A.
911 Chestnut Street
P.O. Box 1368
Clearwater, Florida 34617
Attention: Michael T. Cronin, Esq.
Telecopier No.: (727) 441-8617
If to Publicker, to:
Publicker Industries Inc.
One Post Road
Fairfield, Connecticut 06430
Attention: President
Telecopier No.: (203) 255-3109
with a copy to:
Kaye, Scholer, Fierman, Hays & Handler, LLP
425 Park Avenue
New York, New York 10022
Attention: Joel I. Greenberg, Esq.
Telecopier No.: (212) 836-8689
(f) Binding Effect; Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective
successors and permitted assigns. Nothing in this Agreement shall
create or be deemed to create any third party beneficiary rights
in any person or entity not party to this Agreement. No
assignment of this Agreement or of any rights or obligations
hereunder may be made by either party (by operation of law or
otherwise) without the prior written consent of the other (which
consent shall not be unreasonably withheld) and any attempted
assignment without the required consent shall be void.
(g) Additional Parties. On the Closing Date, one or more additional
Persons may become party to this Agreement as additional Sellers
under this Agreement by delivering to Publicker, Acquisition Sub
and the Company a duly executed counterpart signature page to this
Agreement and a supplement to Schedule 7.5 with respect to such
Person. Any Person who delivers such an executed signature page
and schedule supplement in accordance with this Section 15.7 shall
become a Seller under this Agreement and as such shall be deemed
to make all of the representations and warranties of a Seller
hereunder and shall be subject to all of the rights and
obligations of a Seller hereunder from and after the date of such
delivery. Prior to delivery of an executed signature page to this
Agreement and schedule supplement in accordance with this Section
15.7, a Person shall not be considered a party to this Agreement
and shall have no rights under this Agreement as a Seller or
otherwise.
(h) Amendment; Waiver. To the extent permitted by applicable law,
this Agreement may be amended by action taken by or on behalf of
the respective boards of directors of Publicker, Acquisition Sub
and the Company at any time; provided, however, that no amendment
shall be made which under the DGCL or FBCA would require the
further approval of the shareholders of Acquisition Sub or the
Company (as the case may be) without obtaining such approval.
This Agreement may be amended only by a writing signed by
Publicker, Acquisition Sub, the Company and each Seller who has
delivered a signature page to this Agreement prior to such
amendment date. No amendment of this Agreement shall be required
to (a) effect the addition of any Person as a Seller under this
Agreement (or the modification of Schedule 7.5 in connection
therewith) in accordance with Section 15.7 or (b) effect the
replacement of any Schedule to this Agreement in accordance with
Section 9.16. Any provision of this Agreement may be waived at
any time by a writing signed by the party which is entitled to the
benefits thereof.
(i) Further Assurances. Each of the parties hereto agrees that it
will, from time to time after the date of this Agreement, execute
and deliver such other certificates, documents and instruments and
take such other action as may be reasonably requested by any of
the other parties to carry out the Contemplated Transactions.
(j) Severability. The invalidity of any provision of this Agreement
shall not affect any other provision of this Agreement, which
shall remain in full force and effect.
(k) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
instrument as of the date and year first above written.
PUBLICKER: PUBLICKER INDUSTRIES INC.
By: /s/ James J.Weis
Name: James J. Weis
Title: President and Chief
Executive Officer
ACQUISITION SUB: PUBLICKER SMART CARD ACQUISITION CO.
By: /s/ James J.Weis
Name: James J. Weis
Title: President
COMPANY: TRITHEIM TECHNOLOGIES, INC.
By: /s/ W. Marc Postlewaite
Name: W. Marc Postlewait
Title: President
SELLERS: SEE SEPARATE SIGNATURE PAGES WHICH FOLLOW
SELLERS' SIGNATURE PAGE
The undersigned shareholder of Tritheim Technologies, Inc. or
holder of options to purchase capital stock of Tritheim Technologies, Inc.
hereby agrees to be a party to the above Agreement and Plan of Merger in the
capacity of a Seller and, accordingly, hereby makes all of the representations
and warranties of a Seller under said agreement and agrees to be bound by all
of the obligations of a Seller under said agreement.
Date: October 30, 1998
For a Seller that is a natural person:
/s/ W. Marc Postlewaite_________
Signature
W. Marc Postlewaite_____________
Print name as signed
For a Seller that is not a natural person:
Print name of Seller entity
By:_______________________
Signature
___________________________
Print name of person signing
___________________________
Print title of person signing
SELLERS' SIGNATURE PAGE
The undersigned shareholder of Tritheim Technologies, Inc. or
holder of options to purchase capital stock of Tritheim Technologies, Inc.
hereby agrees to be a party to the above Agreement and Plan of Merger in the
capacity of a Seller and, accordingly, hereby makes all of the representations
and warranties of a Seller under said agreement and agrees to be bound by all
of the obligations of a Seller under said agreement.
Date: October 30, 1998
For a Seller that is a natural person:
/s/ Kim Vogel___________
Signature
Kim Vogel _____________
Print name as signed
For a Seller that is not a natural person:
________________________________
Print name of Seller entity
By:_____________________________
Signature
________________________________
Print name of person signing
________________________________
Print title of person signing
SELLERS' SIGNATURE PAGE
The undersigned shareholder of Tritheim Technologies, Inc. or
holder of options to purchase capital stock of Tritheim Technologies, Inc.
hereby agrees to be a party to the above Agreement and Plan of Merger in the
capacity of a Seller and, accordingly, hereby makes all of the representations
and warranties of a Seller under said agreement and agrees to be bound by all
of the obligations of a Seller under said agreement.
Date: October 30, 1998
For a Seller that is a natural person:
/s/ Vincent T. Poole___________
Signature
Vincent T. Poole ____________
Print name as signed
For a Seller that is not a natural person:
________________________________
Print name of Seller entity
By:_____________________________
Signature
________________________________
Print name of person signing
________________________________
Print title of person signing