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MERGER AGREEMENT AND PLAN OF REORGANIZATION
among
SM ACQUISITION COMPANY,
J/B ACQUISITION COMPANY,
WHEELS SPORTS GROUP, INC.,
SYNERGY MARKETING, INC.
and
J/B PRESS PASS, INC.
Dated as of October 3, 1997
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MERGER AGREEMENT AND PLAN OR REORGANIZATION
TABLE OF CONTENTS
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ARTICLE I 1
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II 4
2.1 The Mergers . . . . . . . . . . . . . . . . . . . . . 4
2.2 Effect of the Mergers . . . . . . . . . . . . . . . . 4
2.3 Consummation of the Mergers . . . . . . . . . . . . . 5
2.4 Articles of Incorporation; By-Laws; Directors
and Officers . . . . . . . . . . . . . . . . . . . . 5
2.5 Conversion of Securities . . . . . . . . . . . . . . 6
2.6 Mergers Consideration . . . . . . . . . . . . . . . . 7
2.7 No Adjustments . . . . . . . . . . . . . . . . . . . 7
2.8 Fees . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III 8
REPRESENTATIONS AND WARRANTIES OF TARGETS . . . . . . . . . . . . . 8
3.1 Organization and Qualification of the Targets;
No Other Business . . . . . . . . . . . . . . . . . . 8
3.2 Organization and Qualification of the Partnership . . 9
3.3 Authorization . . . . . . . . . . . . . . . . . . . . 9
3.4 No Conflicting Agreements . . . . . . . . . . . . . . 10
3.5 Compliance with Applicable Law . . . . . . . . . . . 10
3.6 Material Misstatements or Omissions . . . . . . . . . 10
3.7 Consents and Approvals . . . . . . . . . . . . . . . 10
3.8 Subsidiaries . . . . . . . . . . . . . . . . . . . . 11
3.9 Litigation . . . . . . . . . . . . . . . . . . . . . 11
3.10 Brokers . . . . . . . . . . . . . . . . . . . . . . . 11
3.11 Ownership . . . . . . . . . . . . . . . . . . . . . . 11
3.12 License Agreements . . . . . . . . . . . . . . . . . 12
3.13 Intellectual Property . . . . . . . . . . . . . . . . 12
3.14 Significant Customers . . . . . . . . . . . . . . . . 12
3.15 Contracts . . . . . . . . . . . . . . . . . . . . . . 13
3.16 Compliance with Environmental Laws . . . . . . . . . 13
3.17 Financial Statements . . . . . . . . . . . . . . . . 13
3.18 Absence of Undisclosed or Contingent
Liabilities . . . . . . . . . . . . . . . . . . . . . 14
3.19 No Material Adverse Changes . . . . . . . . . . . . . 14
3.20 Absence of Developments . . . . . . . . . . . . . . . 14
3.21 Title to Properties . . . . . . . . . . . . . . . . . 15
3.22 Tax Matters . . . . . . . . . . . . . . . . . . . . . 16
3.23 Tax Notices . . . . . . . . . . . . . . . . . . . . . 17
3.24 Employees . . . . . . . . . . . . . . . . . . . . . . 18
3.25 Employee Benefit Plans . . . . . . . . . . . . . . . 18
3.26 Gifts . . . . . . . . . . . . . . . . . . . . . . . . 19
3.27 Employee Health and Safety . . . . . . . . . . . . . 19
3.28 Representations Concerning the Share
Consideration . . . . . . . . . . . . . . . . . . . . 20
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3.29 Representations as to Knowledge . . . . . . . . . . . . 21
ARTICLE IV 21
REPRESENTATIONS AND WARRANTIES OF ACQUIRORS AND PARENT . . . . . . 21
4.1 Organization and Qualification of the
Acquirors and the Parent . . . . . . . . . . . . . . 21
4.2 Authorization . . . . . . . . . . . . . . . . . . . . 22
4.3 No Conflicting Agreements . . . . . . . . . . . . . . 22
4.4 Compliance with Applicable Law . . . . . . . . . . . 22
4.5 Material Misstatements or Omissions . . . . . . . . . 22
4.6 Consents and Approvals . . . . . . . . . . . . . . . 23
4.7 Subsidiaries . . . . . . . . . . . . . . . . . . . . 23
4.8 Litigation . . . . . . . . . . . . . . . . . . . . . 23
4.9 Brokers . . . . . . . . . . . . . . . . . . . . . . . 23
4.10 Financial Statements and Periodic Reports . . . . . . 24
4.11 Absence of Undisclosed or Contingent
Liabilities . . . . . . . . . . . . . . . . . . . . . 24
4.12 No Material Adverse Changes . . . . . . . . . . . . . 25
4.13 Absence of Developments . . . . . . . . . . . . . . . 25
4.14 Tax Matters . . . . . . . . . . . . . . . . . . . . . 25
4.15 Tax Notices . . . . . . . . . . . . . . . . . . . . . 28
4.16 Employees . . . . . . . . . . . . . . . . . . . . . . 28
4.17 Employee Benefit Plans . . . . . . . . . . . . . . . 29
4.18 Gifts . . . . . . . . . . . . . . . . . . . . . . . . 30
4.19 Employee Health and Safety . . . . . . . . . . . . . 30
4.20 Representations as to Knowledge . . . . . . . . . . . 30
ARTICLE V 30
PRE-CLOSING COVENANTS . . . . . . . . . . . . . . . . . . . . . . . 30
5.1 Inspection of Properties and Books; Confidentiality . 31
5.2 Other Contracts . . . . . . . . . . . . . . . . . . . 32
5.3 Ongoing Operation . . . . . . . . . . . . . . . . . . 32
5.4 Indebtedness . . . . . . . . . . . . . . . . . . . . 32
5.5 Records . . . . . . . . . . . . . . . . . . . . . . . 32
5.6 Corporate Organization . . . . . . . . . . . . . . . 32
5.7 Distributions or Dividends . . . . . . . . . . . . . 33
5.8 Notice of Breach . . . . . . . . . . . . . . . . . . 33
5.9 Nondisclosure . . . . . . . . . . . . . . . . . . . . 33
5.10 Insurance . . . . . . . . . . . . . . . . . . . . . . 33
5.11 Preservation of Business . . . . . . . . . . . . . . 33
5.12 No Negotiations . . . . . . . . . . . . . . . . . . . 34
5.13 Best Efforts . . . . . . . . . . . . . . . . . . . . 34
5.14 Additional Disclosure . . . . . . . . . . . . . . . . 34
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ARTICLE VI 35
POST-CLOSING COVENANTS . . . . . . . . . . . . . . . . . . . . . . 35
6.1 Further Assurances . . . . . . . . . . . . . . . . . 35
6.2 Litigation Support . . . . . . . . . . . . . . . . . 35
6.3 Tax Distributions to Partners . . . . . . . . . . . . 35
ARTICLE VII 37
CONDITIONS PRECEDENT TO CLOSING . . . . . . . . . . . . . . . . . . 37
7.1 Conditions Precedent to Obligations of the Targets . 37
7.2 Conditions Precedent to Obligations of the
Acquirors and the Parent . . . . . . . . . . . . . . 40
ARTICLE VIII 43
SURVIVAL OF REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . 43
ARTICLE IX 43
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . 43
9.1 Indemnification . . . . . . . . . . . . . . . . . . . 43
9.2 Limitation of Liability . . . . . . . . . . . . . . . 45
9.3 Method of Asserting Claims . . . . . . . . . . . . . 45
9.4 Payment of Claim . . . . . . . . . . . . . . . . . . 46
9.5 Other Rights and Remedies . . . . . . . . . . . . . . 47
ARTICLE X 47
AMENDMENT, TERMINATION AND BREACH . . . . . . . . . . . . . . . . . 47
10.1 Amendment and Modification . . . . . . . . . . . . . 47
10.2 Termination and Abandonment . . . . . . . . . . . . . 47
ARTICLE XI 48
CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
11.1 Closing . . . . . . . . . . . . . . . . . . . . . . . 48
11.2 The Targets' Deliveries at Closing . . . . . . . . . 48
11.3 The Acquirors' Deliveries at Closing . . . . . . . . 49
ARTICLE XII 50
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
12.1 Notice . . . . . . . . . . . . . . . . . . . . . . . 51
12.2 Entire and Sole Agreement . . . . . . . . . . . . . . 51
12.3 Successors and Assigns . . . . . . . . . . . . . . . 52
12.4 Expenses . . . . . . . . . . . . . . . . . . . . . . 52
12.5 Severability . . . . . . . . . . . . . . . . . . . . 52
12.6 Governing Law . . . . . . . . . . . . . . . . . . . . 52
12.7 Counterparts . . . . . . . . . . . . . . . . . . . . 52
12.8 Amendments . . . . . . . . . . . . . . . . . . . . . 53
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12.9 No Third Party Beneficiary . . . . . . . . . . . . . . 53
12.10 Headings . . . . . . . . . . . . . . . . . . . . . . 53
12.11 Disputes . . . . . . . . . . . . . . . . . . . . . . 53
12.12 Delivery of Exhibits and Schedules . . . . . . . . . 54
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MERGER AGREEMENT AND PLAN OF REORGANIZATION
Agreement, dated October 3, 1997 (the "Agreement"), among SM Acquisition
Company, a North Carolina corporation ("ACQ1"), J/B Acquisition Company, a
North Carolina corporation ("ACQ2" and, collectively with ACQ1, "Acquirors"),
Wheels Sports Group, Inc., a North Carolina corporation ("Parent"), Synergy
Marketing, Inc., a Texas corporation ("SMI") and J/B Press Pass, Inc., a
Delaware corporation ("J/B" and, collectively with SMI, "Targets").
Victor H. Shaffer and Robert Bove ("SMI Seller") own all of the
outstanding securities of SMI, which at the Closing will consist of 1,000
shares of common stock, $.01 par value (the "SMI Common Shares"). Peter T.
Joseph, Ronald N. Beck and Neal K. Aronson (collectively, "J/B Seller" and,
collectively with SMI Seller, "Sellers") own all of the outstanding securities
of J/B, which at the Closing will consist of 1,000 shares of common stock, $.01
par value (the "J/B Common Shares"). The Targets are the partners of Press
Pass Partners, a Delaware general partnership (the "Partnership"). The parties
wish to provide for the merger of SMI with and into ACQ1 and the merger of J/B
with and into ACQ2 on the terms and conditions of this Agreement. This
Agreement constitutes a plan of reorganization within the meaning of Section
368 of the Code.
The parties, intending to be legally bound hereby, agree as follows:
ARTICLE I
DEFINITIONS
The following terms used in this Agreement shall, unless the context requires
otherwise, have the meanings designated below:
ACQ1 has the meaning given to it in the preamble.
ACQ2 has the meaning given to it in the preamble.
Acquirors has the meaning given to it in the preamble.
Bove Agreement means the Employment Agreement to be entered into by and
between Acquirors and Robert Bove in the form attached hereto as Exhibit
11.2(g)(ii).
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Cash Consideration has the meaning given to it in Article 2.6.
Claim Notice has the meaning given to it in Article 9.3(a).
Closing has the meaning given to it in Article 11.1.
Closing Date has the meaning given to it in Article 11.1.
Code means the Internal Revenue Code of 1986, as amended.
Communication has the meaning given to it in Article 5.9.
Constituent Corporations has the meaning given to it in Article 2.2.
Damages means any and all damages, claims, deficiencies, losses and
expenses, as further defined in Article 9.1.
Effective Time has the meaning given to it in Article 2.3.
ERISA means the Employee Retirement Income Security Act of 1974, as
amended, and any regulations, rules or orders promulgated thereunder.
Evaluation Material means the documents, financial statements,
information and materials which shall be delivered in connection with the due
diligence review conducted by the respective parties.
Indemnified Party has the meaning given to it in Article 9.1.
Indemnifying Party has the meaning given to it in Article 9.1.
Intellectual Property has the meaning given to it in Article 3.15.
J/B has the meaning given to it in the preamble.
J/B Constituent Corporations has the meaning given to it in Article 2.2.
J/B Common Shares has the meaning given to it in the preamble.
J/B Merger has the meaning given to it in Article 2.1.
J/B Seller has the meaning given to it in the preamble.
J/B Surviving Corporation has the meaning given to it in Article 2.1.
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License Agreements means those agreements by and between the Partnership
and various NASCAR drivers, NASCAR team owners, basketball players, football
players and other persons pursuant to which the Partnership has the right to
produce and sell trading cards and other collectibles or merchandise bearing
the name, picture and/or autograph of such persons.
Loss has the meaning given to it in Article 9.1.
Mergers has the meaning given to it in Article 2.1.
Mergers Consideration has the meaning given to it in Article 2.6.
Note has the meaning given it in Article 2.6(b).
Note Consideration has the meaning given to it in Article 2.6.
Notice Period has the meaning given to it in Article 9.1.
OSHA means the Occupational Safety and Health Act of 1970, as amended,
and any regulations, rules or orders promulgated thereunder.
Parent has the meaning given to it in the preamble.
Parent Common Stock has the meaning given to it in Article 2.5.
Parent Financial Statements has the meaning given to it in Article 4.11.
Partners' 1997 Taxes has the meaning given to it in Article 6.3.
Partnership has the meaning given to it in the preamble.
Partnership Financial Statements has the meaning given to it in Article
3.19.
Registration Rights Agreement means the Registration Rights Agreement to
be entered into as of the Closing in the form attached hereto as Exhibit
11.3(b).
Sellers has the meaning given to it in the preamble.
Shaffer Agreement means the Employment Agreement to be entered into by
and between Acquirors and Victor H. Shaffer in the form attached hereto as
Exhibit 11.2(g)(i).
Share Consideration has the meaning given to it in Article 2.6.
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SMI has the meaning given to it in the preamble.
SMI Constituent Corporations has the meaning given to it in Article 2.2.
SMI Common Shares has the meaning given to it in the preamble.
SMI Merger has the meaning given to it in Article 2.1.
SMI Seller has the meaning given to it in the preamble.
SMI Surviving Corporation has the meaning given to it in Article 2.1.
Surviving Corporations has the meaning given to it in Article 2.1.
Tax or Taxes has the meaning given to it in Article 3.25.
Tax Return means any return, declaration, report, claim for refund or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
ARTICLE II
THE MERGERS
2.1 THE MERGERS. At the Effective Time, in accordance with, and
subject to the conditions set forth in, this Agreement:
(a) SMI shall be merged with and into ACQ1 (the "SMI Merger"),
the separate existence of SMI shall cease, and ACQ1 shall continue as
the surviving corporation (sometimes referred to as the "SMI Surviving
Corporation"); and
(b) J/B shall be merged with and into ACQ2 (the "J/B Merger"
and, collectively with the SMI Merger, "Mergers"), the separate
existence of J/B shall cease, and ACQ2 shall continue as the surviving
corporation (sometimes referred to as the "J/B Surviving Corporation"
and, collectively with the SMI Surviving Corporation, the "Surviving
Corporations").
2.2 EFFECT OF THE MERGERS. When the Mergers have been effected, (i)
the separate existence of SMI and ACQ1 shall cease and SMI Surviving
Corporation shall succeed, without other
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transfer, to all of the rights, privileges, powers, immunities, purposes,
franchises (both public and private) and property of each of SMI and ACQ1 (the
"SMI Constituent Corporations") and shall be subject to all of the obligations
and liabilities of the SMI Constituent Corporations in the same manner as if
the SMI Surviving Corporation had itself incurred them, and (ii) the separate
existence of J/B and ACQ2 shall cease and J/B Surviving Corporation shall
succeed, without other transfer, to all of the rights, privileges, powers,
immunities, purposes, franchises (both public and private) and property of each
of J/B and ACQ2 (the "J/B Constituent Corporations" and, collectively with the
SMI Constituent Corporations, the "Constituent Corporations") and shall be
subject to all of the obligations and liabilities of the J/B Constituent
Corporations in the same manner as if the J/B Surviving Corporation had itself
incurred them. Any claim existing or action or proceeding pending by or
against any of the Constituent Corporations may be enforced as if the Mergers
had not taken place. All rights of creditors and all liens upon the property
of each of the Constituent Corporations shall be unimpaired.
2.3 CONSUMMATION OF THE MERGERS. On the Closing Date, the parties
will cause the Mergers to be consummated by delivering to the office of the
Secretary of State of the States of Delaware and North Carolina (in the case of
the J/B Merger) and the States of Delaware and Texas (in the case of the SMI
Merger) certificates of merger and other documents in such form as is required
by, and executed, acknowledged and accompanied by an officer's certificate of
each of the Constituent Corporations in accordance with, the relevant
provisions of the applicable state law (the time of the delivery for filing
thereof is the "Effective Time").
2.4 ARTICLES OF INCORPORATION; BY-LAWS; DIRECTORS AND OFFICERS . The
Articles of Incorporation of SMI Surviving Corporation shall be the Articles of
Incorporation of ACQ1 and the By-Laws of SMI Surviving Corporation shall be the
By-Laws of ACQ1, as in effect immediately prior to the Effective Time, until
thereafter amended as provided therein. The directors of ACQ1
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immediately prior to the Effective Time will be the directors of SMI Surviving
Corporation, and the officers of ACQ1 immediately prior to the Effective Time
will be the officers of SMI Surviving Corporation, in each case until their
successors are elected and qualified. The Articles of Incorporation of J/B
Surviving Corporation shall be the Articles of Incorporation of ACQ2 and the
By-Laws of J/B Surviving Corporation shall be the By-Laws of ACQ2, as in effect
immediately prior to the Effective Time, until thereafter amended as provided
therein. The directors of ACQ2 immediately prior to the Effective Time will be
the directors of J/B Surviving Corporation, and the officers of ACQ2
immediately prior to the Effective Time will be the officers of J/B Surviving
Corporation, in each case until their successors are elected and qualified.
2.5 CONVERSION OF SECURITIES. At the Effective Time, by virtue of
the Mergers and without any action on the part of the Targets, the Acquirors,
the Surviving Corporations or any shareholder of the foregoing:
(a) The securities of the Targets outstanding immediately
prior to the Effective Time shall be canceled and extinguished and be
converted into and become a right to receive from the Surviving
Corporations, cash, the Note and common stock, $.01 par value ("Parent
Common Stock"), of the Parent, all as described in Section 2.6 herein
(the "Mergers Consideration").
(b) Each share of common stock, $1.00 par value, of ACQ1
issued and outstanding immediately prior to the Effective Time shall be
converted into and become one validly issued, fully paid and
nonassessable share of common stock, $1.00 par value, of SMI Surviving
Corporation.
(c) Each share of common stock, $1.00 par value, of ACQ2
issued and outstanding immediately prior to the Effective Time shall be
converted into and become one
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validly issued, fully paid and nonassessable share of common stock,
$1.00 par value, of J/B Surviving Corporation.
2.6 MERGERS CONSIDERATION. At the Effective Time, the Sellers shall
receive from the Surviving Corporations the aggregate consideration of
$8,200,000 (the "Mergers Consideration"), without any interest thereon. The
Mergers Consideration consists of three components: cash consideration, note
consideration, and share consideration, as follows:
(a) The aggregate cash consideration shall be $3,000,000 (the
"Cash Consideration"), and shall be paid in full by the Surviving
Corporations to Sellers at the Closing, in immediately available funds
by wire transfers to such accounts of Sellers as Sellers shall give
written notice to the Acquirors at least one business day prior to
Closing.
(b) The aggregate note consideration shall be $1,000,000 (the
"Note Consideration"), evidenced by promissory notes (each a "Note" and
collectively, the "Notes"), payable to each SMI Seller and J/B Seller,
respectively, in the aggregate principal amount of $1,000,000.
(c) The aggregate share consideration shall be 600,000 shares
of Parent Common Stock, representing $4,200,000 worth of Parent Common
Stock at an agreed value of $7.00 per share (the "Share Consideration").
(d) The Cash Consideration, Note Consideration and Share
Consideration shall each be allocated between SMI Seller and J/B Seller
in the same proportions for each type of consideration as J/B may direct
in writing prior to the Closing.
2.7 NO ADJUSTMENTS. There shall be no adjustment (increase or
decrease) in the Mergers Consideration by reason of any increase or decrease in
the net assets, net worth, earnings or any other standard of value of the
Targets. Nothing in this Section 2.7 shall limit either the
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representations and warranties of the Targets in this Agreement or any remedy
available to the Targets or the Surviving Corporations with respect thereto.
2.8 FEES. Article V notwithstanding, the Partnership may pay legal,
accounting and brokerage fees incurred in connection with the transactions
contemplated hereby in an amount not exceeding $400,000 as approved by SMI and
J/B. The Cash Consideration shall be reduced by the amount of such payments.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF TARGETS
The Targets represent and warrant as follows:
3.1 ORGANIZATION AND QUALIFICATION OF THE TARGETS; NO OTHER BUSINESS.
(a) SMI is a corporation duly organized, validly existing and
in good standing under the laws of the State of Texas, and is duly
qualified and authorized to do business and is in good standing in each
jurisdiction, if any, in which the nature of the business conducted by
it or the properties owned, leased or operated by it makes such
qualification necessary. SMI has all requisite corporate power and
authority to execute and deliver this Agreement and to perform its
obligations hereunder. Copies of the Articles of Incorporation and
Bylaws of SMI, which have been delivered to Acquirors and attached
hereto as Exhibits 3.1(a)(i) and 3.1(a)(ii), are complete and correct,
and SMI is not in default under or in violation of any provision of the
Articles of Incorporation or Bylaws. SMI has not engaged in any
business other than as a general partner of the Partnership and has no
assets or liabilities other than its general partnership interest in the
Partnership and liabilities arising from its status as a general partner
of the Partnership.
(b) J/B is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, and is duly
qualified and authorized to do business
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and is in good standing in each jurisdiction, if any, in which the nature of
the business conducted by it or the properties owned, leased or operated by it
makes such qualification necessary. J/B has all requisite corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. Copies of the Certificate of Incorporation and Bylaws of J/B, which
have been delivered to Acquirors and attached hereto as Exhibits 3.1(b)(i) and
3.1(b)(ii), are complete and correct, and J/B is not in default under or in
violation of any provision of the Certificate of Incorporation or Bylaws. J/B
has not engaged in any business other than as a general partner of the
Partnership and has no assets or liabilities other than its general partnership
interest in the Partnership and liabilities arising from its status as a
general partner of the Partnership.
3.2 ORGANIZATION AND QUALIFICATION OF THE PARTNERSHIP. The
Partnership is a general partnership duly organized, validly existing and in
good standing under the laws of the State of Delaware, and is duly qualified
and authorized to do business and is in good standing in each jurisdiction, if
any, in which the nature of the business conducted by it or the properties
owned, leased or operated by it makes such qualification necessary. The
Partnership has all requisite power and authority to own, lease and operate its
properties and to carry on its business as now being conducted. A copy of the
Partnership Agreement of the Partnership, which has been delivered to Acquirors
and attached hereto as Exhibit 3.2, is complete and correct, and neither the
Partnership nor the partners of the Partnership are in default under or in
violation of any provision of the Partnership Agreement. The Partnership's
minute book (containing the records of all meetings of the partners and any
management committees of the Partnership), as delivered to Acquirors, is
correct and complete.
3.3 AUTHORIZATION. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly and
validly authorized by the Targets and this Agreement constitutes the valid and
binding obligation of the Targets enforceable in accordance
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with its terms. Attached hereto as Exhibit 3.3 are Certificates which shall
evidence the approval and authorization of this Agreement by the Board of
Directors and shareholders of each Target.
3.4 NO CONFLICTING AGREEMENTS. The execution and delivery of this
Agreement by the Targets does not, and consummation by the Targets of the
transactions contemplated hereby will not, (a) violate any existing term or
provision of any law, regulation, order, writ, judgment, injunction or decree
applicable to either Target or the Partnership, or (b) conflict with or result
in a breach of any of the terms, conditions or provisions of the charter
documents of either Target or the Partnership or, except as set forth in
Exhibit 3.4, of any agreement or instrument to which either Target or the
Partnership is a party.
3.5 COMPLIANCE WITH APPLICABLE LAW. Except as set forth in Exhibit
3.5, the Targets have not received any notice or information of any violation,
probable violation or default by the Targets under any applicable law,
regulation or order of any governmental department, commission, board or agency
or instrumentality, domestic or foreign, having jurisdiction over the Targets'
operations which could materially adversely affect the Targets' business,
operations, financial condition, properties or assets, or the ability to
consummate the transactions contemplated hereby.
3.6 MATERIAL MISSTATEMENTS OR OMISSIONS. No representation or
warranty of the Targets in this Agreement nor any other document or certificate
furnished to Acquirors by or on behalf of the Targets in connection with this
Agreement contains any untrue statement of a material fact, or omits to state
any material fact necessary to make the statements contained herein or therein,
in light of the circumstances in which they were made, not misleading.
3.7 CONSENTS AND APPROVALS. Except as set forth in Exhibit 3.7, the
execution and delivery by the Targets of this Agreement, and the performance by
the Targets of their obligations hereunder, do not require the Partnership to
obtain any consent, approval, agreement, or action of, or make any filing with
or give any notice to, any corporation, person, entity, or firm or any public,
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governmental or judicial authority except (i) such as have been duly obtained
or made, as the case may be, and or will be duly obtained and made and in full
force and effect as of the Closing, and (ii) those as to which the failure to
obtain would have no material adverse effect on the transactions contemplated
hereby. The Targets make no representation with regard to any requirement to
file or register with a governmental body respecting federal or state
securities laws by reason of the issuance of securities in the Mergers.
3.8 SUBSIDIARIES. The Partnership does not own, have an ownership
interest in, or control any corporation, partnership, proprietorship or other
entity.
3.9 LITIGATION. Except as described in Exhibit 3.9 attached hereto,
there are no actions, proceedings or investigations pending or, to the Targets'
knowledge, threatened against the Targets or the Partnership before any court
or administrative agency which could result in any material adverse change in
the operations or financial condition of the Partnership other than as
identified therein.
3.10 BROKERS. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by the Targets directly
with representatives of the Acquirors, without the intervention of any person
in such manner as to give rise to any valid claim by any person against the
Acquirors for a finder's fee, brokerage commission, or similar payment, except
for a fee payable to Caleb Kramer, which shall be paid by Sellers. All rights
of indemnity under Article IX hereof shall apply to any claim relating to a
Loss (hereinafter defined) arising out of this Agreement for any fee,
commission or similar payment.
3.11 OWNERSHIP. The Partnership is the owner, beneficially and of
record, of all of the assets identified on Exhibit 3.11 hereto, free and clear
of all liens, encumbrances, security agreements, equities, options, claims,
charges and restrictions, except as otherwise described on Exhibit 3.11 hereto.
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3.12 LICENSE AGREEMENTS. Attached hereto as Exhibit 3.12 is a
complete and accurate list of all persons with whom the Partnership has a
License Agreement. Also stated on Exhibit 3.12 is the termination date of each
License Agreement. Except as described on Exhibit 3.12, all such License
Agreements are valid and enforceable contracts or agreements and are not
currently, and will not be at Closing, in default or materially impaired in any
manner. The Partnership has not received any notices of default with respect
to any License Agreement or, if such notice has been received, a copy of any
such notice has been provided in writing to the Acquirors.
3.13 INTELLECTUAL PROPERTY. Exhibit 3.13 to this Agreement is a
schedule of all trade names, trademarks, service marks, copyrights, computer
software (other than software generally available from commercial sources),
source code and their registrations, owned by the Targets and the Partnership
or in which the Targets and the Partnership have any right or license, or for
which the Targets and the Partnership have made application, together with a
brief description of each (hereinafter collectively the "Intellectual
Property"). The Targets and the Partnership have not infringed, and by its use
of its Intellectual Property, to the Targets' knowledge, is not now infringing
on any United States or foreign trade name, trademark, service mark or
copyright belonging to any other person, firm or corporation.
3.14 SIGNIFICANT CUSTOMERS. Exhibit 3.14 to this Agreement sets forth
a complete and accurate list of all customers or accounts of the Partnership
which individually accounted for 5% or more of the Partnership's total revenues
during (i) the year ended December 31, 1996 or (ii) the six months ended June
30, 1997. The Partnership has not received notice during the 30-day period
immediately preceding the date hereof from any of these customers or accounts
that such customer intends to cease doing business with the Partnership, or
materially alter the amount of the business that they are presently doing with
the Partnership in the near future.
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3.15 CONTRACTS. Except as set forth in Exhibit 3.15, the Partnership
is not a party to, nor are the properties of the Partnership bound by, any
contract, distributorship agreement, license agreement, agency agreement or
output or requirements agreement, or any other agreement, indenture, mortgage,
deed of trust, lease, security agreement, loan agreement or instrument which
the Acquirors would succeed to and are material to the business of the
Partnership.
3.16 COMPLIANCE WITH ENVIRONMENTAL LAWS. The Partnership owns no real
property and has been at all times prior hereto, and presently is, to the
Partnership's knowledge, in compliance in all material respects with all
federal and state environmental statutes or laws concerning environmental
protection and the use or disposal of hazardous substances.
3.17 FINANCIAL STATEMENTS. The Targets have delivered to the
Acquirors copies of the Partnership's balance sheet at December 31, 1996, 1995
and 1994 and the related statements of revenues and cash flows for the years
then ended, all of which have been audited by Cheshier & Fuller, L.L.P., and
the Partnership's unaudited balance sheet at June 30, 1997 and the unaudited
statements of revenues and cash flows for the six months then ended
(collectively, the "Partnership Financial Statements"). The Partnership
Financial Statements are based upon the information contained in the books and
records of the Partnership and fairly present the financial condition of the
Partnership as at the respective dates thereof and results of operations for
the periods referred to therein, all in accordance with generally accepted
accounting principals consistently applied throughout the periods involved,
except that the interim statements do not include notes and are subject to
year-end and audit adjustments. The monthly unaudited financial statements
generated by the Partnership from and after June 30, 1997 will be prepared on a
basis consistent with the methods and procedures used to prepare the
Partnership Financial Statements. If requested by the Acquirors, the
Partnership will deliver such monthly unaudited financial statements to the
Acquirors
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from and after the period ended June 30, 1997 within 30 days after the end of
each month from the date hereof to Closing.
3.18 ABSENCE OF UNDISCLOSED OR CONTINGENT LIABILITIES. The
Partnership has no liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise, or due or to become due of the type required to be
reflected on a balance sheet prepared in accordance with generally accepted
accounting principles) except current liabilities incurred in the ordinary
course of business or as otherwise set forth in the Partnership Financial
Statements, the monthly unaudited financial statements which may be delivered
pursuant to Article 3.17 or on Exhibit 3.18 attached hereto.
3.19 NO MATERIAL ADVERSE CHANGES. Since June 30, 1997, and except as
otherwise disclosed on Exhibit 3.19 hereto, (i) the Partnership has not made
any distribution or payment of cash or other assets to its partners and (ii)
there has been no change materially adverse to the Partnership in its assets,
financial condition, gross profit, operating results, customer, employee or
supplier relations or business condition.
3.20 ABSENCE OF DEVELOPMENTS. From August 20, 1997 and until Closing,
the Partnership has and will:
(a) Conduct its business and operations only in the regular
and ordinary course; maintain reasonable business insurance; commit no
waste of its assets; not create or suffer to exist any material lien,
charge or encumbrance on any asset or incur any indebtedness for
borrowed money (other than in the ordinary course) which is secured by
its assets; and will use its best efforts to maintain and preserve its
business organization intact and maintain its relationships with
suppliers, employees, customers and others;
(b) Refrain from making capital expenditures or commitments
for additions to the property, plant or equipment in an amount in excess
of $25,000, except as otherwise have been approved in writing by the
Acquirors;
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(c) Refrain from paying any form of compensation to its
employees or consultants except for non-bonus compensation in accordance
with compensation levels and practices which are in effect as of the
date of this Agreement and except that the Partnership may pay special
bonuses to employees not exceeding $100,000 in the aggregate in
connection with the transactions contemplated by this Agreement;
(d) Refrain from making any distribution or payment of cash or
other assets to any partner of the Partnership; provided, however, that
the Partnership may distribute cash to its partners in amounts and at
such times as may be necessary for the partners or their respective
shareholders to pay their state and federal income tax liabilities on
income of the Partnership through the Closing Date. The amount of
distributions for the payment of taxes made in accordance with this
Article 3.20(d) shall be subject to post-closing adjustment in
accordance with Article 6.3; and
(e) Maintain title to, and refrain from making or permitting,
any transfer, sale, pledge, lien or encumbrance on, or other disposition
of assets of the Partnership.
3.21 TITLE TO PROPERTIES. The Targets and the Partnership do not own
any real property. The office lease to which the Partnership is a party, a
true and complete copy of which is attached hereto as Exhibit 3.21, is in full
force and effect, and the Partnership holds a valid and existing leasehold
interest in such lease for the term set forth in such lease. Such lease shall
not have been modified in any material respect except to the extent that such
modifications are disclosed in writing delivered to the Acquirors. The
Partnership is not in default, and no circumstances exist which, if unremedied
would, either with or without notice or the passage of time or both, result in
a default under such lease, nor is the Partnership in default under the lease.
The tenant improvements and fixed assets which are necessary for the conduct of
the Partnership's businesses are in good condition and repair, ordinary wear
and tear excepted, and are usable in the ordinary course of business.
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There are no defects in such assets or other conditions relating thereto which,
in the aggregate, materially adversely affect the operation or value of such
assets. The Partnership owns, or leases under valid leases, all equipment and
other tangible assets necessary for the conduct of its business.
3.22 TAX MATTERS.
(a) The Targets and the Partnership have filed all Tax Returns
that they have been required to file. All such Tax Returns were correct
and complete in all material respects. All Taxes owed by the Targets
and the Partnership (whether or not shown on any Tax Return) have been
paid or provision for the payment of Taxes that have or may have become
due pursuant to those Tax Returns has been made, except such Taxes, if
any, as are being contested in good faith and as to which adequate
reserves (determined in accordance with generally accepted accounting
principals) have been provided. To Targets' knowledge no claim has ever
been made by an authority in a jurisdiction where the Targets or the
Partnership do not file Tax Returns that they are or may be subject to
taxation by that jurisdiction. There are no encumbrances on any of the
assets of the Targets or the Partnership that arose in connection with
any failure (or alleged failure) to pay any Taxes.
(b) The Targets and the Partnership have withheld and paid or
made provision for the payment of all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor or other third party.
(c) To Targets' knowledge, there is no basis for any authority
to assess any additional Taxes for any period for which Tax Returns have
been filed by the Targets or the Partnership. To Targets' knowledge,
there is no dispute or claim concerning any liability for Taxes of the
Targets or the Partnership claimed or raised by any authority in
writing. The Targets and the Partnership have delivered to the
Acquirors correct and complete copies of
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all federal Tax Returns, examination reports, and statements of
deficiencies filed, assessed against or agreed to by the Targets or the
Partnership since January 1, 1993.
3.23 TAX NOTICES. Except as set forth on Exhibit 3.23 hereto, no
deficiency for any Taxes has been proposed, asserted or assessed against the
Targets or the Partnership by the appropriate tax authorities that has not been
resolved and paid in full. Except as set forth on Exhibit 3.23 hereto, no
waiver, extension or comparable consent has been given by the Targets or the
Partnership regarding the application of the statute of limitations with
respect to any Taxes outstanding, nor is any request for any such waiver or
consent pending. Except as described in Exhibit 3.23 hereto, there has been no
tax audit or other administrative proceeding or court proceeding with respect
to any Taxes, nor is any such Tax audit or other proceeding pending, nor has
there been any notice to the Targets or the Partnership by any taxing authority
regarding any such Tax audit or other proceeding or, to the knowledge of the
Targets, is any such Tax audit or other proceeding threatened with regard to
any Taxes. To Targets' knowledge, there are no claims or disputes concerning
the Partnership's liability for Taxes which would exceed the estimated reserves
established on the Partnership's books and records. For the purposes hereof,
the term "Taxes" means all taxes, charges, fees, levies or other assessments,
including without limitation, all net income, gross income, gross receipts,
sales, use, ad valorem, transfer, franchise, profits, license, withholding,
payroll, employment, workmen's compensation, social security, unemployment,
excise, estimated, severance, stamp, occupation, property or other taxes,
customs, duties, fees, assessments or charges of any kind whatsoever including,
without limitation, all interest and penalties thereon, and additions to tax or
additional amounts imposed by any taxing authority, domestic or foreign.
3.24 EMPLOYEES. Except as described on Exhibit 3.24, (a) to Targets'
knowledge, no executive employee of the Partnership and no group of the
Partnership's employees has any plan or intention to terminate his, her or its
employment following the Closing; (b) the Partnership has
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complied in all material respects with all laws relating to the employment of
labor, including provisions thereof relating to wages, hours, equal
opportunity, collective bargaining and the payment of social security and other
taxes; (c) the Partnership has no known material labor relations problem
pending and believes that its labor relations are satisfactory; (d) there are
no workmen's compensation, sexual harassment, discrimination or claims pending
against the Partnership nor is the Partnership aware of any facts that would
give rise to such claims; (e) to the Targets' knowledge, no employee of the
Partnership is subject to any secrecy or non-competition agreement or any other
agreement or restriction of any kind that would impede in any way the ability
of such employee to carry out fully all activities of such employee in
furtherance of the business of the Partnership; and (f) to Targets' knowledge,
no employee or former employee of the Partnership has any claim with respect to
any intellectual property rights of the Partnership.
3.25 EMPLOYEE BENEFIT PLANS.
(a) Except as described on Exhibit 3.25, with respect to all
employees and former employees of the Partnership and all dependents and
beneficiaries of such employees and former employees, (i) the
Partnership does not maintain or contribute to any non-qualified
deferred compensation or retirement plans, contracts or arrangements,
(ii) the Partnership does not maintain or contribute to any qualified
defined contribution plans as defined in Section 3(34) of ERISA or
Section 414(i) of the Code, (iii) Partnership does not maintain or
contribute to any qualified defined benefit plans as defined in Section
3(35) of ERISA or Section 414(j) of the Code, and (iv) the Partnership
does not maintain or contribute to any employee welfare benefit plans as
defined in Section 3(1) of ERISA.
(b) To the extent required (either as a matter of law or to
obtain the intended tax treatment and tax benefits), all employee
benefit plans, as defined in Section 3(3) of ERISA, which the
Partnership does maintain or to which it does contribute (collectively,
the "Plans")
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comply in all material respects with the requirements of ERISA and the
Code. With respect to the Plans, (i) all required contributions which
are due have been made and a proper accrual has been made for all
contributions due in the current fiscal year, (ii) there are no actions,
suits or claims pending, other than routine uncontested claims for
benefits, and (iii) there have been no prohibited transactions as
defined in Section 406 of ERISA or Section 4975 of the Code.
(c) The Partnership does not contribute (and has not ever
contributed) to any multi-employer plan, as defined in Section 3(37) of
ERISA. The Partnership has no actual or potential liabilities under
Section 4201 of ERISA for any complete or partial withdrawal from a
multi-employer plan. The Partnership has no actual or potential
liability to provide death or medical benefits after separation from
employment, other than health care continuation benefits described in
Section 4980B of the Code.
3.26 GIFTS. Neither the Partnership nor any of its partners,
employees or agents has made or agreed to make improper or illegal gifts of
money, other property or similar benefits (other than incidental gifts of
articles of nominal value) to any actual or potential customer, supplier,
governmental employee, political party, candidate for office, governmental
agency or instrumentality or any other person in a position to assist or hinder
the Partnership in connection with any actual or proposed business transaction.
3.27 EMPLOYEE HEALTH AND SAFETY. The Partnership has not violated and
has no liability, and has not received a notice or charge asserting any
violation of or liability under, OSHA or any other federal or state acts
(including rules and regulations thereunder) regulating or otherwise affecting
employee health and safety except where such violation or liability would not
have a material adverse effect on the business or financial condition of the
Partnership.
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3.28 REPRESENTATIONS CONCERNING THE SHARE CONSIDERATION. The Targets
make the following representations and warranties with respect to the Share
Consideration:
(a) Parent Common Stock is being acquired for the account of
each Seller for investment purposes only, not for the account of any
other person and not with a view to distribution, assignment or resale
to any person other than the shareholders of each Seller. The Sellers
will not sell, hypothecate or otherwise transfer such Parent Common
Stock unless (i) such Parent Common Stock is registered under the
Securities Act of 1933, as amended ("Act"), and registered or qualified
for sale under applicable state securities laws, or (ii) the Parent has
received a written opinion of counsel (which opinion is satisfactory to
the Parent) that an exemption from the registration or qualification
requirements of the Act is available.
(b) The Targets understand and agree that certificates
representing such Parent Common Stock will contain the following
restrictive legend:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR DISPOSED
OF EXCEPT IN COMPLIANCE WITH THE SECURITIES ACT OF 1933,
APPLICABLE STATE SECURITIES LAWS AND THE APPLICABLE RULES AND
REGULATIONS THEREUNDER.
(c) Each of the Sellers has received and has carefully
reviewed the representations made by the Acquirors and the Parent in
this Agreement and all Exhibits and documents delivered by the Acquirors
and the Parent to Sellers hereunder. All documents and information
which the Sellers have requested have been delivered by the Acquirors
and the Parent. The Sellers have been afforded the opportunity to
discuss the current and proposed future business operations of the
Acquirors and the Parent with the officers and other representatives of
the Acquirors and the Parent. In evaluating the suitability of an
investment in the Parent Common Stock, the Sellers have not relied upon
any representations or other
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26
information from the Acquirors or the Parent or any person acting on
behalf other than set forth in this Agreement or delivered to Sellers in
accordance with the terms of this Agreement. The Sellers have carefully
considered and have, to the extent they believe appropriate, obtained
the advice of their legal, tax, accounting and financial advisors
concerning the suitability of an investment in the Parent Common Stock
and have determined that the Parent Common Stock is a suitable
investment.
3.29 REPRESENTATIONS AS TO KNOWLEDGE. The representations and
warranties contained in this Article III which are made to the "knowledge" of a
specified person are required to be made in good faith.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ACQUIRORS AND PARENT
Acquirors and the Parent represent and warrant as follows:
4.1 ORGANIZATION AND QUALIFICATION OF THE ACQUIRORS AND THE PARENT.
Each of the Acquirors and the Parent is a corporation duly organized, validly
existing and in good standing under the laws of the State of North Carolina,
and is duly qualified and authorized to do business and is in good standing in
each jurisdiction, if any, in which the nature of the business conducted by it
or the properties owned, leased or operated by it makes such qualification
necessary. Each of the Acquirors and the Parent has all requisite power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. Copies of the Articles of Incorporation and Bylaws of each of the
Acquirors and the Parent, which have been delivered to Sellers and attached
hereto as Exhibit 4.1(a), are complete and correct, and each of the Acquirors
and the Parent is not in default under or in violation of any provision of the
Articles of Incorporation or Bylaws. Each of the Acquirors' and the Parent's
minute books (containing the records of all meetings of the shareholders, Board
of Directors and any management committees), as delivered to Sellers, are
correct and complete.
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4.2 AUTHORIZATION. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly and
validly authorized by each of the Acquirors and the Parent and this Agreement
constitutes the valid and binding obligation of each of the Acquirors and the
Parent enforceable in accordance with its terms. Attached hereto as Exhibit
4.2 is a Certificate which shall evidence the approval and authorization of
this Agreement by the Board of Directors and Shareholders of each of the
Acquirors and the Parent.
4.3 NO CONFLICTING AGREEMENTS. The execution and delivery of this
Agreement by each of the Acquirors and the Parent does not, and consummation by
each of the Acquirors and the Parent of the transactions contemplated hereby
will not, (a) violate any existing term or provision of any law, regulation,
order, writ, judgment, injunction or decree applicable to each of the Acquirors
and the Parent, or (b) conflict with or result in a breach of any of the terms,
conditions or provisions of the Articles of Incorporation or Bylaws of each of
the Acquirors and the Parent or of any agreement or instrument to which any of
the Acquirors or the Parent is a party.
4.4 COMPLIANCE WITH APPLICABLE LAW. Except as set forth in Exhibit
4.4, each of the Acquirors and the Parent has not received any notice or
information of any violation, probable violation or default by any of the
Acquirors or the Parent under any applicable law, regulation or order of any
governmental department, commission, board or agency or instrumentality,
domestic or foreign, having jurisdiction over any of the Acquirors' or the
Parent's operations which could materially adversely affect the Acquirors' or
Parent's business, operations, financial condition, properties or assets, or
the ability to consummate the transactions contemplated hereby.
4.5 MATERIAL MISSTATEMENTS OR OMISSIONS. No representation or
warranty of any Acquiror or Parent in this Agreement nor any other document or
certificate furnished to Sellers by or on behalf of each of the Acquirors and
the Parent in connection with this Agreement contains any untrue
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statement of a material fact, or omits to state any material fact necessary to
make the statements contained herein or therein, in light of the circumstances
in which they were made, not misleading.
4.6 CONSENTS AND APPROVALS. The execution and delivery by each of
the Acquirors and the Parent of this Agreement, and the performance by each of
the Acquirors and the Parent of its obligations hereunder, does not require
each of the Acquirors and the Parent to obtain any consent, approval,
agreement, or action of, or make any filing with or give any notice to, any
corporation, person, entity, or firm or any public, governmental or judicial
authority except (i) such as have been duly obtained or made, as the case may
be, and or will be duly obtained and made and in full force and effect as of
the Closing, and (ii) those as to which the failure to obtain would have no
material adverse effect on the transactions contemplated hereby.
4.7 SUBSIDIARIES. Except as set forth in Exhibit 4.7 attached
hereto, the Acquirors do not own, have an ownership interest in, or control any
corporation, partnership, proprietorship or other entity.
4.8 LITIGATION. Except as described in Exhibit 4.8 attached hereto,
there are no actions, proceedings or investigations pending or threatened
against the Acquirors or the Parent before any court or administrative agency
which could result in any material adverse change in the operations or
financial condition of the Acquirors or the Parent other than as identified
therein.
4.9 BROKERS. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by the Acquirors
directly with representatives of Sellers, without the intervention of any
person in such manner as to give rise to any valid claim by any person against
Sellers for a finder's fee, brokerage commission, or similar payment. All
rights of indemnity under Article IX hereof shall apply to any claim relating
to a Loss (hereinafter defined) arising out of this Agreement for any fee,
commission or similar payment.
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4.10 FINANCIAL STATEMENTS AND PERIODIC REPORTS. The Acquirors have
delivered to Sellers copies of the following documents: definitive Prospectus
of Parent dated April 16, 1997; Quarterly Reports of Parent on Form 10-QSB for
each of the quarters ended March 31, 1997 and June 30, 1997; and Current Report
of Parent on Form 8-K filed with the Securities and Exchange Commission on or
about July 14, 1997 (the Prospectus, Quarterly Report and the Current Report
collectively, the "SEC Reports") The SEC Reports comply in all material
respects with the applicable requirements of the Act and the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder, and
do not contain a material misstatement of fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading. The consolidated financial statements of the Parent contained in
the SEC Reports are referred to herein as the "Parent Financial Statements".
The Parent Financial Statements are based upon the information contained in the
books and records of the Parent and fairly present the consolidated financial
condition of the Parent as at the dates thereof and results of operations for
the periods referred to therein, all in accordance with generally accepted
accounting principals consistently applied throughout the periods involved.
The unaudited monthly consolidated financial statements generated by the Parent
from and after June 30, 1997 will be prepared on a basis consistent with the
methods and procedures used to prepare the Parent Financial Statements. If
requested by Sellers, Acquirors or the Parent will deliver such unaudited
monthly consolidated financial statements to Sellers from and after the period
ended June 30, 1997 within 30 days after the end of each month from the date
hereof to Closing.
4.11 ABSENCE OF UNDISCLOSED OR CONTINGENT LIABILITIES. Acquirors and
the Parent have no liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise of the type required to be reflected on a balance
sheet prepared in accordance with generally accepted accounting principals, or
due or to become due) except current liabilities incurred in the ordinary
course of
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business or as otherwise set forth in the SEC Reports, the Parent Financial
Statements, the unaudited monthly consolidated financial statements which may
be delivered pursuant to Article 4.10 or on Exhibit 4.11 attached hereto.
4.12 NO MATERIAL ADVERSE CHANGES. Since June 30, 1997, there has been
no change materially adverse to Acquirors or the Parent in their assets,
financial condition, gross profit operating results, customer, employee or
supplier relations, business condition or prospects, except as otherwise
disclosed on Exhibit 4.12 hereto.
4.13 ABSENCE OF DEVELOPMENTS. From August 20, 1997 and until Closing,
and except as otherwise required or contemplated by the proposed transactions
of Acquirors and the Parent as set forth on Exhibit 5.3 attached hereto,
Acquirors and the Parent have and will conduct their business and operations
only in the regular and ordinary course; maintain reasonable business
insurance; commit no waste of assets; not dispose or otherwise change the
nature of any assets except to the extent that cash or accounts receivable are
increased; not create or suffer to exist any material lien, charge or
encumbrance on any asset or incur any indebtedness for borrowed money (other
than in the ordinary course) which is secured by its assets; and will use its
best efforts to maintain and preserve its business organization intact and
maintain its relationships with suppliers, employees, customers and others.
4.14 TAX MATTERS.
(a) Acquirors and the Parent have filed all Tax Returns that
they have been required to file. All such Tax Returns were correct and
complete in all respects. All Taxes owed by the Acquirors and the
Parent (whether or not shown on any Tax Return) have been paid or
provision for the payment of Taxes that have or may have become due
pursuant to those Tax Returns has been made, except such Taxes, if any,
as are being contested in good faith and as to which adequate reserves
(determined in accordance with generally accepted
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accounting principals) have been provided. Neither Acquirors nor the
Parent is currently the beneficiary of any extension of time within
which to file any Tax Return. No claim has ever been made by an
authority in a jurisdiction where Acquirors or the Parent do not file
Tax Returns that they are or may be subject to taxation by that
jurisdiction. There are no encumbrances on any of the assets of the
Acquirors or the Parent that arose in connection with any failure (or
alleged failure) to pay any Taxes.
(b) The Acquirors and the Parent have withheld and paid or
made provision for the payment of all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor or other third party.
(c) There is no basis for any authority to assess any
additional Taxes for any period for which Tax Returns have been filed by
the Acquirors or the Parent. There is no dispute or claim concerning
any liability for Taxes of the Acquirors or the Parent claimed or raised
by any authority in writing.
(d) No stock of either Acquirors will be issued in the
Mergers.
(e) Parent is and will be, through the time of the Mergers, in
control of Acquirors within the meaning of Section 368(c) of the Code.
(f) Parent has no plan or intention to cause either Acquiror
after the Mergers to issue additional shares of the stock or either
Acquiror that would result in Parent losing control of either Acquiror
within the meaning of Section 368(c) of the Code.
(g) Parent has no plan or intention to reacquire any of its
stock issued in the Mergers.
(h) Acquirors were formed solely for the purpose of engaging
in the transactions contemplated by this Agreement. Parent is the
direct owner of all of the outstanding stock
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of each Acquiror. Parent has no plan or intention after the Mergers to
liquidate either Acquiror; to merge either Acquiror into another
corporation; to make any extraordinary distribution in respect of its
stock in either Acquiror; to sell or otherwise dispose of the stock of
either Acquiror; or to cause either Acquiror to sell or otherwise
dispose of any of the assets of the Targets acquired in the Mergers,
except for dispositions made in the ordinary course of business or
transfers described in Section 368(a)(2)(c) of the Code.
(i) As of the Effective Date, there will be no options,
warrants or other rights, agreements, arrangements, or commitments to
which either Acquiror is a party of any character relating to the issued
or unissued capital stock of, or other equity interests in, either
Acquiror or obligating either Acquiror to grant, issue, or sell any
shares of the capital stock of, or other equity interests in, either
Acquiror, by sale, lease, license or otherwise. There are no
obligations, contingent or otherwise, of either Acquiror to repurchase,
redeem or otherwise acquire any shares of the capital stock of either
Acquiror.
(j) As of the date hereof and the Effective Date, except for
obligations or liabilities incurred in connection with its incorporation
or organization and the transactions contemplated by this Agreement,
Acquirors have not and will not have incurred, directly or indirectly,
through any subsidiary or affiliate, any obligations or liabilities or
engaged in any business activities of any type or kind whatsoever or
entered into any agreements or arrangements with any person.
(k) Immediately after the Mergers, Parent intends to cause
each Acquiror to continue the historic business of Targets or use a
significant portion of the historic business assets of Targets in a
business.
(l) Neither Acquirors nor Parent is an investment company as
defined in Section 368(a)(2)(F)(iii) and (iv) of the Code.
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4.15 TAX NOTICES. Except as set forth on Exhibit 4.15 attached
hereto, no deficiency for any Taxes has been proposed, asserted or assessed
against Acquirors or the Parent that has not been resolved and paid in full.
No waiver, extension or comparable consent has been given by Acquirors or the
Parent regarding the application of the statute of limitations with respect to
any Taxes outstanding, nor is any request for any such waiver or consent
pending. Except as described in Exhibit 4.15 hereto, there has been no tax
audit or other administrative proceeding or court proceeding with respect to
any Taxes, nor is any such Tax audit or other proceeding pending, nor has there
been any notice to Acquirors or the Parent by any taxing authority regarding
any such Tax audit or other proceeding or, to the best knowledge of Acquirors
or the Parent, is any such Tax audit or other proceeding threatened with regard
to any Taxes. Acquirors and the Parent do not expect the assessment of any
additional Taxes and are not aware of any unresolved questions, claims or
disputes concerning the liability for Taxes which would exceed the estimated
reserves established for on their respective books and records.
4.16 EMPLOYEES. Except as described on Exhibit 4.16 attached hereto,
(a) to the Acquirors' and the Parent's knowledge, no executive employee of the
Acquirors or the Parent and no group of the Acquirors' or the Parent's
employees has any plan or intention to terminate his, her or its employment
following the Closing; (b) the Acquirors and the Parent have complied in all
material respects with all laws relating to the employment of labor, including
provisions thereof relating to wages, hours, equal opportunity, collective
bargaining and the payment of social security and other taxes; (c) the
Acquirors and the Parent have no known material labor relations problem pending
and believes that their labor relations are satisfactory; (d) there are no
workmen's compensation, sexual harassment, discrimination or claims pending
against the Acquirors or the Parent nor are the Acquirors and the Parent aware
of any facts that would give rise to such claims; (e) to the Acquirors' and the
Parent's knowledge, no employee of the Acquirors or the Parent is subject to
any secrecy
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or non-competition agreement or any other agreement or restriction of any kind
that would impede in any way the ability of such employee to carry out fully
all activities of such employee in furtherance of the business of the Acquirors
or the Parent; and (f) to the Acquirors' and the Parent's knowledge, no
employee or former employee of the Acquirors or the Parent has any claim with
respect to any intellectual property rights of the Acquirors or the Parent.
4.17 EMPLOYEE BENEFIT PLANS.
(a) Except as described on Exhibit 4.17, with respect to all
employees and former employees of the Acquirors and the Parent and all
dependents and beneficiaries of such employees and former employees, (i)
the Acquirors and the Parent do not maintain or contribute to any non-
qualified deferred compensation or retirement plans, contracts or
arrangements, (ii) the Acquirors and the Parent do not maintain or
contribute to any qualified defined contribution plans as defined in
Section 3(34) of ERISA or Section 414(i) of the Code, (iii) the
Acquirors and the Parent do not maintain or contribute to any qualified
defined benefit plans as defined in Section 3(35) of ERISA or Section
414(j) of the Code, and (iv) the Acquirors and the Parent do not
maintain or contribute to any employee welfare benefit plans as defined
in Section 3(1) of ERISA.
(b) To the extent required (either as a matter of law or to
obtain the intended tax treatment and tax benefits), all employee
benefit plans, as defined in Section 3(3) of ERISA, which the Acquirors
and the Parent do maintain or to which they contribute (collectively,
the "Plans") comply in all material respects with the requirements of
ERISA and the Code. With respect to the Plans, (i) all required
contributions which are due have been made and a proper accrual has been
made for all contributions due in the current fiscal year, (ii) there
are no actions, suits or claims pending, other than routine uncontested
claims for benefits,
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and (iii) there have been no prohibited transactions as defined in
Section 406 of ERISA or Section 4975 of the Code.
(c) The Acquirors and the Parent do not contribute (and have
not ever contributed) to any multi-employer plan, as defined in Section
3(37) of ERISA. The Acquirors and the Parent have no actual or
potential liabilities under Section 4201 of ERISA for any complete or
partial withdrawal from a multi-employer plan. The Acquirors and the
Parent have no actual or potential liability to provide death or medical
benefits after separation from employment, other than health care
continuation benefits described in Section 4980B of the Code.
4.18 GIFTS. None of Acquirors, the Parent or any of their officers,
directors, employees or agents has made or agreed to make improper or illegal
gifts of money, other property or similar benefits (other than incidental gifts
of articles of nominal value) to any actual or potential customer, supplier,
governmental employee, political party, candidate for office, governmental
agency or instrumentality or any other person in a position to assist or hinder
Purchaser in connection with any actual or proposed business transaction.
4.19 EMPLOYEE HEALTH AND SAFETY. The Acquirors and the Parent have
not violated and have no liability, and have not received a notice or charge
asserting any violation of or liability under, OSHA or any other federal or
state acts (including rules and regulations thereunder) regulating or otherwise
affecting employee health and safety.
4.20 REPRESENTATIONS AS TO KNOWLEDGE. The representations and
warranties contained in this Article IV which are made to the "knowledge" of a
specified person are required to be made in good faith.
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ARTICLE V
PRE-CLOSING COVENANTS
Each party hereby covenants and agrees that, between the date hereof and
the Closing, it will comply with the provisions of this Article V, except to
the extent the other party may otherwise consent in writing.
5.1 INSPECTION OF PROPERTIES AND BOOKS; CONFIDENTIALITY. Each party
shall assist any individual or individuals designated by the other party with
reasonable prior notice to visit or inspect any property, at reasonable times
acceptable to both parties, including books of accounts and records, to make
extracts or copies of such books and records and to discuss its affairs,
finances and accounts, and shall use its best efforts to obtain access to its
accountants' work papers. As a condition to the Closing, the parties
acknowledge and agree that each party shall furnish to the other Evaluation
Material which shall be used in connection with a due diligence review. The
parties agree that they shall treat the Evaluation Material confidentially, and
shall not disclose to any party, except as otherwise set forth herein, the
Evaluation Material or any information set forth therein; provided, however,
that each party is authorized to disclose the Evaluation Material to its
investment banker, lawyers and accountants. Each party shall instruct its
officers, directors, partners, employees, agents or representatives of the
confidential nature of the Evaluation Material and shall be responsible for
insuring that the Evaluation Material is kept confidential by such persons. In
the event the Closing is not consummated, all Evaluation Material shall be
returned to the respective party, within ten days of a request therefor, with
the understanding that the receiving party shall retain no copies of the
Evaluation Material and shall not disclose to any other person the Evaluation
Material or information contained therein, with the exception of (i)
information which becomes generally available to the public other than as a
result of disclosure by the receiving party, (ii) information included in the
Evaluation Material which is first disclosed by a third party not bound by a
confidentiality agreement with either party, (iii) information required to be
disclosed in any
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registration statement or periodic report under the disclosure requirements of
applicable federal and state securities laws, or (iv) information which a party
may be compelled to disclose by judicial or administrative process or other
requirements of law.
5.2 OTHER CONTRACTS. Except in the ordinary course of business,
neither party shall enter into or become subject to any agreement, transaction,
or commitment which would restrict or in any way impair the obligation or
ability of such party to comply with all of the material terms of this
Agreement.
5.3 ONGOING OPERATION. Except for certain transactions proposed to
be entered into by the Acquirors and the Parent, as set forth on Exhibit 5.3
attached hereto, each party shall carry on its business in the ordinary course,
in substantially the same manner as heretofore conducted and in accordance in
all material respects with all applicable laws, rules and regulations and such
party's past custom and industry practice.
5.4 INDEBTEDNESS. Except as may be contemplated in connection with
the transactions identified on Exhibit 5.3, the parties will not create, incur,
assume, guarantee or otherwise become liable with respect to any indebtedness
related or connected with, or secured by, its assets, except in the ordinary
course of its business. Sellers will not sell, pledge, encumber or otherwise
subject the assets of the Targets to any claim or indebtedness without the
Acquirors' prior written consent.
5.5 RECORDS. Each party shall maintain its books, accounts and
records in the usual, regular and ordinary manner.
5.6 CORPORATE ORGANIZATION. Parent will not amend its Articles of
Incorporation or Bylaws or otherwise alter its corporate existence or powers.
ACQ1 will not amend its Articles of Incorporation or Bylaws or otherwise alter
its corporate existence or powers. ACQ2 will not amend its Articles of
Incorporation or Bylaws or otherwise alter its corporate existence or powers.
SMI will not amend its Articles of Incorporation or Bylaws or otherwise alter
its corporate existence in any
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manner which would impair its ability to complete all of the transactions
contemplated hereby. J/B will not amend its Certificate of Incorporation or
Bylaws or otherwise alter its corporate existence in any manner which would
impair its ability to complete all of the transactions contemplated hereby.
The Partnership will not amend its Partnership Agreement or otherwise alter its
existence in any manner which would impair its ability to complete all of the
transactions contemplated hereby.
5.7 DISTRIBUTIONS OR DIVIDENDS. Except as may be permitted by
Article 3.20(d), the Parent, Acquirors and the Partnership will not declare or
pay any dividend, distribution or payment to their partners or shareholders, as
the case may be, or repurchase any shares of their capital stock or their
partnership interests, without the prior written consent of the other party.
5.8 NOTICE OF BREACH. Each party, in the event of and promptly after
becoming aware of the occurrence or threatened occurrence of any event which
would cause or constitute a breach of any warranty, representation, covenant or
agreement of such party contained herein, shall give prompt notice in writing
of such event or threatened event to the other party and use commercially
reasonable efforts to promptly remedy such breach or threatened breach.
5.9 NONDISCLOSURE. The parties agree that the contents and timing of
any publicity release, public notice filing or any other communication (a
"Communication"), whether written or oral, identifying this proposed
transaction shall be agreed upon in advance by the parties.
5.10 INSURANCE. The parties shall not cancel or terminate their
current insurance policies or cause any of the coverage thereunder to lapse,
unless simultaneously with such termination, cancellation or lapse, replacement
policies providing coverage equal to or greater than the coverage under the
cancelled, terminated or lapsed policies for substantially similar premiums are
in full force and effect.
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5.11 PRESERVATION OF BUSINESS. Each party and its respective
officers, directors, partners and employees shall (i) use commercially
reasonable efforts to preserve intact such party's business organization and
goodwill, keep available the services of its key officers and employees and
maintain satisfactory relationships with suppliers, distributors, customers and
others with whom it has business relationships, and (ii) promptly notify the
other party of any emergency or other change in the normal course of its
business or in the operation of its properties and of any governmental or third
party complaints, investigations or hearings (or communications indicating that
the same may be contemplated) if such emergency, change, complaint,
investigation or hearing would be material, individually or in the aggregate,
to its business, operations or financial condition or its ability to consummate
the transactions contemplated by this Agreement.
5.12 NO NEGOTIATIONS. Neither the Sellers nor any of their employees
or agents shall cause the Targets or the Partnership to, directly or
indirectly, solicit, initiate or encourage submission of any proposal or offer
from any person or entity (including any of its employees) relating to any
recapitalization, merger, consolidation or acquisition or the purchase of all
or a material portion of the assets of, or any equity interest in, the Targets
or the Partnership, or any similar transaction or business combination
involving the Targets or the Partnership, or participate in any negotiations
regarding, or furnish to any other person, any information with respect to, or
otherwise cooperate in any way with, or assist or participate in, facilitate or
encourage, any effort or attempt by any other person or entity to do or seek
any of the foregoing.
5.13 BEST EFFORTS. Each party agrees to use commercially reasonable
efforts to satisfy its respective requirements and conditions to Closing and to
consummate the transactions provided for herein as expeditiously as possible.
Neither party will take or knowingly permit to be taken any action that would
be in breach of the terms or provisions of this Agreement or that would cause
any of its representations and warranties contained herein to be or become
untrue.
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5.14 ADDITIONAL DISCLOSURE. From the date of this Agreement to and
including the Closing Date, each party promptly upon the occurrence thereof,
will advise the other party of each event subsequent to the date hereof which
would have had to be disclosed on their respective schedules or exhibits to
this Agreement had it occurred prior to the date hereof.
ARTICLE VI
POST-CLOSING COVENANTS
The parties agree as follows with respect to the period following the
Closing.
6.1 FURTHER ASSURANCES. In case at any time within 12 months after
the Closing any further action is necessary or desirable to carry out the
purposes of this Agreement, each party will take such further action (including
the execution and delivery of such further instruments and documents) as the
other party reasonably may request, all at the sole cost and expense of the
requesting party (unless the requesting party is entitled to indemnification
therefor under Article IX).
6.2 LITIGATION SUPPORT. In the event and for so long as any party
actively is contesting or defending against any action, suit, proceedings,
hearing, investigation, charge, complaint, claim or demand in connection with
(a) any transaction contemplated by this Agreement, or (b) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act or transaction on or prior to the Closing Date
involving the Targets or the Partnership, the other party (to the extent it was
actively involved in or has documents pertaining to the matter at issue) will
cooperate with it and its counsel in the contest or defense, make available
their personnel, and provide such testimony and access to their books and
records as shall be reasonably requested in connection with the contest or
defense, all at the sole cost and expense of the contesting or defending party
(unless the contesting or defending party is entitled to indemnification
therefor under Article IX).
6.3 TAX DISTRIBUTIONS TO PARTNERS. The parties contemplate that, in
accordance with Articles 3.20(d) and 5.7, the Partnership shall make certain
cash distributions to the Targets and the
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Targets shall make distributions to their shareholders in an amount equal to
the assumed state and federal income tax liabilities of the Targets and their
shareholders on income of the Partnership which is earned from January 1, 1997
through the Closing Date (such liabilities are referred to as the "Partners'
1997 Taxes"). Such distributions shall be subject to post-closing adjustment
as follows:
(a) As soon as practicable following the Closing Date, the
Sellers shall prepare and deliver to the Surviving Corporations a final
written calculation of the Partners' 1997 Taxes (the "Sellers
Calculation") based on the highest marginal rates applicable to income
of that type for an individual who is a citizen and resident of the
United States and a resident of the City and State of New York and, in
the case of Targets' income, franchise tax at the highest marginal rate
applicable to corporations incorporated in and doing business in the
State of Texas. Within ten (10) days of its receipt of the Sellers
Calculation, each of the Surviving Corporations shall notify Sellers
that it either accepts and agrees with the Sellers Calculation, in which
case the Sellers Calculation shall be final for purposes of this Article
6.3, or that it disagrees with the Sellers Calculation. In the event
each of the Surviving Corporations disagrees with the Sellers
Calculation, then the parties shall submit relevant accounting and tax
records to Coopers & Lybrand (the "Tax Accountants"). The Tax
Accountants shall promptly perform their own calculation of the
Partners' 1997 Taxes (the "Accountants' Calculation") on the basis set
forth in the first sentence of this paragraph. A copy of the
Accountants' Calculation shall be delivered to the parties and shall be
final for purposes of this Article 6.3.
(b) In the event the final calculation of Partners' 1997 Taxes
is greater than total distributions actually made by the Partnership to
its partners during 1997 (excluding any such distributions in respect of
a prior year), then the Parent shall pay to Sellers an amount equal to
such difference. In the event the final calculation of Partners' 1997
Taxes is less than total
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distributions actually made by the Partnership to its partners during
1997 (excluding distributions made in respect of a prior year), then the
Sellers shall pay to the Surviving Corporations an amount equal to such
difference. Any payment required pursuant to this Article 6.3(b) shall
be made to or by the Sellers in proportion to the distributions received
by them during 1997 (excluding distributions made in respect of a prior
year) within twenty (20) days of the parties' receipt of the Sellers
Calculation or, if applicable, the Accountants' Calculation.
(c) Any tax liabilities which result from the transactions
contemplated by this Agreement shall not be considered in calculating
Partners' 1997 Taxes.
(d) SMI Seller shall prepare and cause to be filed any SMI Tax
Return required to be filed as of or for periods ending on or before the
Closing Date. J/B Seller shall prepare and cause to be filed any J/B
Tax Return required to be filed as of or for periods ending on or before
the Closing Date. The Sellers shall prepare and cause to be filed any
Partnership Tax Return required to be filed as of or for periods ending
on or before the Closing Date. The Tax Returns shall be prepared on a
basis consistent with prior Tax Returns for such entities. The
Acquirors and the Parent shall take all such actions as the Sellers may
reasonably request in order to expedite or facilitate the filing of such
Tax Returns, including, but not limited to signing such Tax Returns (to
the extent necessary) and making the books and records of the Targets,
Partnership and Surviving Corporations available to the Sellers.
ARTICLE VII
CONDITIONS PRECEDENT TO CLOSING
7.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TARGETS. The
obligations of the Targets to consummate and effect this Agreement are subject
to the satisfaction in all material respects, on
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or before the Closing Date, of the following conditions (unless waived by the
Targets in writing in the manner provided in Paragraph 7.1(d) hereof):
(a) Representations and Warranties of the Acquirors and the
Parent; Performance by the Acquirors and the Parent. (i) The
representations and warranties of the Acquirors and the Parent set forth
in Article VI hereof shall (except where stated to be as of an earlier
date) be accurate in all material respects on and as of the Closing as
though made on and as of the Closing, except for any changes resulting
from activities or transactions which may have taken place after the
date hereof which are expressly permitted or contemplated by this
Agreement or which have been entered into in the ordinary course of
business and are not expressly prohibited by this Agreement; (ii) the
Acquirors and the Parent shall have performed all obligations and
complied with all covenants required to be performed or to be complied
with by the Acquirors and the Parent under this Agreement prior to or at
the Closing Date including the delivery of all documents required at the
Closing; and (iii) Sellers shall have received a certificate dated the
Closing and signed by the President of each Acquiror and the Parent to
the effect that the representations and warranties made by each Acquiror
and the Parent in this Agreement are true and accurate in all material
respects as of the Closing (or, where applicable, as of the earlier
specified date), which certificate shall be in the form of Exhibit
7.1(a).
(b) Action. All action necessary to authorize the Mergers and
the execution, delivery and performance of this Agreement by each
Acquiror and the Parent and the consummation of the transactions
contemplated hereby shall have been duly and validly taken by each
Acquiror and the Parent. Each Acquiror and the Parent shall have
furnished Sellers with copies of all consents or resolutions adopted or
executed by each Acquiror and
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the Parent in connection with such actions, certified by the Secretary
of each Acquiror and the Parent.
(c) No Action or Proceeding. As of the Closing, no action or
proceeding by any public authority or person shall be pending before any
court or administrative body or overtly threatened to restrain, enjoin
or otherwise prevent the consummation of this Agreement, the Mergers or
the transactions contemplated herein. There shall not be threatened,
instituted or pending any action or proceeding, before any court or
governmental authority or agency, domestic or foreign, (i) challenging
or seeking to make illegal, or to delay or otherwise directly or
indirectly restrain or prohibit, the consummation of the transactions
contemplated hereby or seeking to obtain material damages in connection
with such transactions, (ii) seeking to invalidate or render
unenforceable any material provision of this Agreement or any of the
other agreements attached hereto as Exhibits or Schedules, or otherwise
contemplated hereby, (iii) seeking relief against the Acquirors or the
Parent under any federal or state law or regulation relating to
bankruptcy, insolvency, reorganization or moratorium or creditors'
rights generally, or (iv) otherwise relating to and materially adversely
affecting the transactions contemplated hereby.
(d) Waiver of Conditions Precedent. Sellers may waive any or
all of the conditions precedent set forth in this Article VIII, either
prospectively or retroactively, by giving written notice of such waiver
to the Acquirors and the Parent. No waiver of any condition precedent
pursuant to this paragraph 7.1(d) shall, unless otherwise expressly
stated in such written notice of waiver, extend to any covenant or
agreement contained herein or to any other condition precedent.
(e) Opinion of Counsel. Sellers shall have received from
counsel to the Acquirors and the Parent, an opinion dated the Closing,
in the form of Exhibit 7.1(e).
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(f) Miscellaneous. No party shall have initiated action
seeking monetary damages or claims in connection with, or seeking to
prohibit or enjoin the transactions described in this Agreement.
(g) Mergers.
(i) All appropriate steps shall have been taken by the
parties hereto such that upon the filing of the documents
described in Section 2.3, the Mergers shall be properly
consummated in accordance with applicable state law.
(ii) The Mergers Consideration shall concurrently be
paid and distributed to Sellers in accordance with Section 2.6.
(h) Consents. Messrs. Jeff Gordon and Dale Earnhardt shall
have consented, to the extent required under their License Agreements
with the Partnership, to the Mergers.
(i) Other Documents. The form and substance of the
Registration Rights Agreement and the Notes shall be satisfactory to
Sellers.
7.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRORS AND THE
PARENT. The obligation of the Acquirors and the Parent to consummate and
effect this Agreement are subject to the satisfaction in all material respects,
on or before the Closing Date, of the following conditions (unless waived by
the Acquirors and the Parent in writing in the manner provided in paragraph
7.2(f) hereof):
(a) Representations and Warranties of the Targets; Performance
by the Targets. (i) The representations and warranties of the Targets
set forth in Article III hereof shall (except where stated to be as of
an earlier date) be accurate in all material respects on and as of the
Closing as though made on and as of the Closing, except for any changes
resulting from activities or transactions which may have taken place
after the date hereof which are expressly permitted or contemplated by
this Agreement or which have been entered into in
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the ordinary course of business and are not expressly prohibited by this
Agreement; (ii) the Targets shall have performed all obligations and
complied with all covenants required to be performed or to be complied
with by them under this Agreement prior to the Closing; and (iii) the
Acquirors shall have received a certificate dated as of the Closing and
signed by the President of each Target to the effect that the
representations and warranties made by such Target in this Agreement are
true and accurate in all material respects as of the Closing (or, where
applicable, as of the earlier specified date) in the form attached as
Exhibit 7.2(a).
(b) Action. All action necessary to authorize the
Mergers and the execution, delivery and performance of this Agreement by
the Targets and the consummation of the transactions contemplated hereby
shall have been duly and validly taken by the Targets. Each Target
shall have furnished Acquirors with copies of all consents or
resolutions adopted or executed by such Target in connection with such
actions, certified by the Secretary of such Target.
(c) No Action or Proceeding. As of the Closing, no action or
proceeding by any public authority or person shall be pending before any
court or administrative body or overtly threatened to restrain, enjoin
or otherwise prevent the consummation of this Agreement, the Mergers or
the transactions contemplated herein. There shall not be threatened,
instituted or pending any action or proceeding, before any court or
governmental authority or agency, domestic or foreign, (i) challenging
or seeking to make illegal, or to delay or otherwise directly or
indirectly restrain or prohibit, the consummation of the transactions
contemplated hereby or seeking to obtain material damages in connection
with such transactions, (ii) seeking to invalidate or render
unenforceable any material provision of this Agreement or any of the
other agreements attached hereto as Exhibits or Schedules,
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or otherwise contemplated hereby, or (iii) otherwise relating to and
materially adversely affecting the transactions contemplated hereby.
(d) No Adverse Changes. There shall have been no event or
change occurring between the execution of this Agreement and the Closing
which in the aggregate has a material adverse effect on the business,
operations, financial condition or properties of the Targets or the
Partnership.
(e) Litigation. There shall be no actions, proceedings or
investigations pending or threatened against the Targets or their
officers or directors before any court, any administrative agency or
administrative officer or executive, which could result in any material
adverse change in the business, operations, financial condition or
properties of the Targets or the Partnership.
(f) Waiver of Conditions Precedent. The Acquirors may waive
any or all of the conditions precedent set forth in this Article 8.2,
either prospectively or retroactively, by giving written notice of such
waiver to the Targets. No waiver of any condition precedent pursuant to
this paragraph 7.2(f) shall, unless otherwise expressly stated in such
written notice of waiver, extend to any other covenant or agreement
contained herein or to any other condition precedent.
(g) Opinion of Counsel. The Acquirors shall have received
from counsel to the Targets and the Partnership an opinion dated the
Closing, in the form of Exhibit 7.2(g).
(h) Financing. (Deleted)
(i) Miscellaneous. No party shall have initiated action
seeking monetary damages or claims in connection with, or seeking to
prohibit or enjoin the transactions described in this Agreement.
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(j) Mergers. All appropriate steps have been taken by the
parties hereto such that upon the filing of the documents described in
Section 2.3, the Mergers shall be properly consummated in accordance
with applicable state law.
(k) Consents. Messrs. Jeff Gordon and Dale Earnhardt shall
have consented, to the extent required under their License Agreements
with the Partnership, to the Mergers.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations and warranties made by the respective parties in
this Agreement or in a certificate executed and delivered in connection with
the transactions contemplated hereby shall survive the Closing for a period of
one year. All representations and warranties made herein or pursuant hereto
shall be deemed to be material and to have been relied upon by the parties
hereto, notwithstanding any investigation heretofore or hereinafter made by or
on behalf of the parties prior to the Closing, provided, however, that no legal
remedy, at law or in equity, for indemnification or otherwise shall be
available with respect to any loss, liability, or breach of agreement or
warranty or misrepresentation if the party alleging such loss, liability,
breach, or misrepresentation had actual knowledge of the existence, nature and
extent thereof on the Closing and, despite such knowledge, proceeded with the
Closing without objection.
ARTICLE IX
INDEMNIFICATION
9.1 INDEMNIFICATION. Subject to the provisions of Article VIII and
this Article IX, Sellers agree to indemnify in respect of, and hold the
Surviving Corporations and the Surviving Corporations' officers, directors,
shareholders, employees and agents harmless against, any and all damages,
claims, deficiencies, losses, and expenses to the extent not reimbursed by
applicable insurance (collectively "Damages") resulting from (i) any material
misrepresentation, breach of warranty, or nonfulfillment or failure to perform
any covenant or agreement on the part of the Targets
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made as a part of or contained in this Agreement or in any certificate executed
and delivered pursuant to this Agreement or in connection with the transactions
contemplated hereby, except for Damages resulting from any such
misrepresentation, breach of warranty or nonfulfillment or failure to perform
any such covenant or agreement known to the Acquirors or the Parent and waived
in writing by the Acquirors or the Parent as of the Closing. Subject to the
provisions of Article VIII and this Article IX, the Acquirors and the Parent
agree to indemnify in respect of, and hold Sellers and their employees,
officers, directors shareholders and agents harmless against, any and all
Damages resulting from (i) any material misrepresentation, breach of warranty,
or nonfulfillment or failure to perform any covenant or agreement on the part
of the Acquirors or the Parent made as a part of or contained in this Agreement
or in any certificate executed and delivered pursuant to this Agreement or in
connection with the transactions contemplated hereby, except for Damages
resulting from any such misrepresentation, breach of warranty or nonfulfillment
or failure to perform any such covenant or agreement known to the Targets and
waived in writing by the Targets as of the Closing. The party claiming
indemnification hereunder is hereinafter referred to as the "Indemnified Party"
and the party against whom such claims are asserted hereunder is hereinafter
referred to as the "Indemnifying Party". Damages for which a claim or action
may be asserted hereunder are hereinafter referred to as a "Loss". The
liability of the respective Sellers hereunder shall be several and in
proportion to the amount of Mergers Consideration received by each Seller. The
aggregate liability of each Seller hereunder shall be limited to the amount of
Mergers Consideration received by such Seller. In the case of a material
misrepresentation or breach of warranty in Section 3.1, only those Sellers who
are shareholders of the Target to which such material misrepresentation or
breach of warranty relates shall have liability with respect thereto and, as
among them, such liability shall be several and in proportion to the amount of
Mergers Consideration received with respect to shares of such Target.
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9.2 LIMITATION OF LIABILITY. Neither party shall be liable to the
other party to this Agreement except to the extent that the aggregate amount of
Losses for which they would otherwise (but for this provision) be liable under
this Article IX exceeds in the aggregate the sum of $100,000 and then only to
the extent of such excess.
9.3 METHOD OF ASSERTING CLAIMS. All claims for indemnification by
any Indemnified Party under this Article IX shall be asserted and resolved as
follows:
(a) In the event that any claim or demand for which an
Indemnifying Party would be liable to an Indemnified Party hereunder is
asserted against or sought to be collected from such Indemnified Party
by a third party, said Indemnified Party shall, within thirty (30) days
of such claim or demand being made, notify the Indemnifying Party of
such claim or demand, specifying the nature of and specific basis for
such claim or demand and the amount or the estimated amount thereof to
the extent then feasible (the "Claim Notice"). The estimate of Loss
contained in the Claim Notice shall not limit the amount of the
Indemnifying Party's ultimate liability under the claim. The
Indemnifying Party shall not be obligated to indemnify the Indemnified
Party with respect to any such claim or demand if the Indemnified Party
fails to notify the Indemnifying Party thereof in accordance with the
provisions of this Agreement within said thirty (30) day period. The
Indemnifying Party shall have 30 days from the personal delivery or
mailing of the Claim Notice (the "Notice Period") to notify the
Indemnified Party (i) whether or not the liability of the Indemnifying
Party to the Indemnified Party hereunder with respect to such claim or
demand is disputed, and (ii) whether or not the Indemnifying Party
desires, at the sole cost and expense of the Indemnifying Party, to
defend the Indemnified Party against such claim or demand; provided,
however, that any Indemnified Party is hereby authorized prior to and
during the Notice Period to file any motion, answer or other pleading
which it shall deem necessary or appropriate to protect its
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interests or those of the Indemnifying Party and not unreasonably
prejudicial to the Indemnifying Party. In the event that the
Indemnifying Party notifies the Indemnified Party within the Notice
Period that it desires to defend the Indemnified Party against such
claim or demand, then, except as hereinafter provided, the Indemnifying
Party shall have the right to defend by all appropriate proceedings,
which proceedings shall be promptly settled or prosecuted by it to a
final conclusion. If the Indemnified Party desires to participate in,
but not control, any such defense or settlement it may do so at its sole
cost and expense. If requested by the Indemnifying Party, the
Indemnified Party agrees to cooperate with the Indemnifying Party and
its counsel in contesting any claim or demand which the Indemnifying
Party elects to contest, or, if appropriate and related to the claim in
question, in making any counterclaim against the person asserting the
third party claim or demand, or any cross complaint against any person
but in any such case at the sole cost and expense of the Indemnifying
Party. No claim may be settled without the consent of the Indemnifying
Party, unless such settlement includes the complete release of the
Indemnifying Party.
(b) In the event any Indemnified Party should have a claim
against any Indemnifying Party hereunder which does not involve a claim
or demand being asserted against or sought to be collected from it by a
third party, the Indemnified Party shall send a Claim Notice with
respect to such claim to the Indemnifying Party. If the Indemnifying
Party has disputed such claim, as provided above, such dispute shall be
resolved by arbitration as provided in Article 12.11.
9.4 PAYMENT OF CLAIM. Upon the determination of the liability of an
Indemnifying Party reached in accordance with Article 9.1, 9.2 and 9.3, as the
case may be, and notice thereof to the Indemnifying Party, the Indemnifying
Party shall within thirty (30) days after receipt of such notice pay to the
Indemnified Party the amount of such liability. In the case of a Seller as an
Indemnifying
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Party, any such liability may be satisfied, at the option of such Seller, in
cash, Notes Consideration (valued at principal plus interest) or Share
Consideration (valued at $7.00 per share), or a combination thereof, provided
that the amount paid in Notes Consideration and Share Consideration may not
exceed 12.2% and 51.22%, respectively, of the aggregate amount of such
liability.
9.5 OTHER RIGHTS AND REMEDIES. The indemnification rights of the
parties under this Article IX shall be the exclusive remedies for any
misrepresentation, breach of warranty or failure to fulfill any agreement or
covenant hereunder on the part of any party hereto and each of the parties
hereby waives any right it may have (whether at law, in equity or otherwise) to
any other remedy, except that nothing herein shall limit any right to obtain
specific performance or other equitable remedy with respect to any covenant in
this Agreement to be performed after the Closing.
ARTICLE X
AMENDMENT, TERMINATION AND BREACH
10.1 AMENDMENT AND MODIFICATION. This Agreement may be amended,
modified or supplemented only by an instrument in writing, executed after the
date hereof, making specific reference to this Article and to each Article and
paragraph hereof to which such amendment, modification or supplement applies,
which document shall be signed by an authorized officer or partner of each
party.
10.2 TERMINATION AND ABANDONMENT. This Agreement may be terminated
and the transactions provided for by this Agreement may be abandoned without
liability on the part of any party to any other party:
(a) At any time before the Closing Date, by written agreement
of the Acquirors, the Parent and the Sellers;
(b) Commencing five days prior to Closing and until the
Closing, by the Acquirors and the Parent, if any of the conditions
provided for in Section 7.2 of this Agreement have
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not been met and if satisfaction of any of the conditions is or becomes
impossible and has not been waived by the Acquirors and the Parent in
writing; or
(c) Commencing five days prior to Closing and until the
Closing, by the Targets, if any of the conditions of Section 7.1 of this
Agreement have not been met and if satisfaction of any of the conditions
is or becomes impossible and has not been waived by the Targets in
writing; and
In the event of the termination and abandonment of this Agreement by any
party in the manner expressly permitted by this Article X, written notice shall
forthwith be given to the other party, and each party shall be solely
responsible to pay its own expenses incident to the negotiation and preparation
of this Agreement and the transactions contemplated hereunder (except as may
otherwise be provided herein). In the event this Agreement is terminated
pursuant to this Article X, Articles 5.1 (only as to confidentiality), 12.4,
12.6 and 12.11 shall survive termination.
ARTICLE XI
CLOSING
11.1 CLOSING. The closing of this Agreement (the "Closing") shall
take place at the offices of Wheels Sports Group at 10:00 A.M. on or before
November 28, 1997 (the "Closing Date"), unless a later time and date is
mutually agreed upon by the parties hereto. The Acquirors shall have the right
to extend the Closing through December 31, 1997 upon the payment of $100,000 to
Targets on or before November 28, 1997.
11.2 THE TARGETS' DELIVERIES AT CLOSING. At the Closing, Targets
shall deliver or cause to be delivered the following to the Acquirors all of
which shall be reasonably satisfactory in form and substance to the Acquirors
and its counsel:
(a) Opinion of Counsel. An opinion from Kaye, Scholer,
Fierman, Hays & Handler, LLP, counsel to the Targets and the
Partnership, dated the Closing Date, in the form of Exhibit 7.2(g).
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(b) Resolutions. Certified copy of resolutions of the Board
of Directors and shareholders of each Target authorizing the execution
and delivery of this Agreement, the Mergers and the other transactions
contemplated under this Agreement.
(c) Employment Agreements. The Shaffer Agreement and Bove
Agreement executed by Victor Shaffer and Robert Bove, respectively, in
the forms attached hereto as Exhibits 11.2(g)(i) and 11.2(g)(ii).
(d) Delivery of Corporate and Business Records. All corporate
and business records which may reasonably be expected to be necessary or
relevant to the Surviving Corporations after the Closing.
(e) Officers' Certificates in the forms described in Article
7.2 of this Agreement.
(f) Other Documents. Such other documents, instruments,
certificates and agreements, as the Acquirors and their counsel may
reasonably request.
11.3 THE ACQUIRORS' DELIVERIES AT CLOSING. At the Closing, the
Acquirors shall deliver or cause to be delivered the following to Sellers all
of which shall be in a form reasonably acceptable to Sellers and their counsel:
(a) Mergers Consideration. The Mergers Consideration referred
to in Article 2.6, consisting of the Cash Consideration, Note
Consideration and Share Consideration.
(b) The Registration Rights Agreement in the form attached
hereto as Exhibit 11.3(b).
(c) Opinion of Counsel. An opinion from Berliner Zisser
Walter & Gallegos, P.C., counsel to the Acquirors and the Parent, dated
the Closing Date, in the form of Exhibit 7.1(e).
(d) Resolutions. Certified copy of resolutions of the Board
of Directors and Shareholders of each of the Acquirors and the Parent
authorizing the execution and delivery
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of this Agreement, Notes and Registration Rights Agreement, the Mergers,
and the other transactions contemplated hereby.
(e) Officers' Certificates in the forms described in Article
7.1 of this Agreement.
(f) Employment Agreements. The Shaffer Agreement and Bove
Agreement, in each case executed by the Surviving Corporations.
(g) Other Documents. Such other documents, instruments,
certificates and agreements including without limitation, if assumed,
the assumption of the lease, as the Targets and their counsel may
reasonably request.
ARTICLE XII
MISCELLANEOUS
12.1 NOTICE. All notices and communications required or permitted to
be given hereunder shall be in writing, signed by the sender, and delivered by
personal delivery overnight courier service or by registered or certified mail
to:
If to the Acquirors, the
Parent or the Surviving
Corporations: Howard L. Correll, Jr., President
Wheels Sports Group, Inc.
1368 Salisbury Road
Mocksville, North Carolina 27028
With a copy to: Robert W. Walter, Esq.
Berliner Zisser Walter
& Gallegos, P.C.
1700 Lincoln Street, Suite 4700
Denver, Colorado 80203-4547
If to the Targets, the
Partnership or Sellers: Victor H. Shaffer
Press Pass Partners
14800 Quorum Drive, Suite 420
Dallas, Texas 75240
With a copy to: Joel I. Greenberg, Esq.
Kaye, Scholer, Fierman, Hays & Handler, LLP
425 Park Avenue
New York, New York 10022
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or such other address as shall have been furnished in writing. Receipt by, or
filing with, the respective parties of any communications shall be deemed to
have occurred for the purpose of this Agreement, when personally delivered, or
next business day if sent by overnight courier, or two days after deposit
thereof, postage prepaid, properly addressed, in the United States mail.
12.2 ENTIRE AND SOLE AGREEMENT. This Agreement, including all
Exhibits and schedules hereto (which by this reference shall incorporate herein
all such Exhibits and schedules as if more fully set forth herein), constitutes
the entire agreement between the parties and as of Closing supersedes all
agreements, representations, warranties, statements, promises and
understandings, whether oral or written, with respect to the subject matter
hereof. After Closing neither party shall be bound by or charged with any oral
or written agreements, representations, warranties, statements, promises or
understandings not specifically set forth in this Agreement or in the
certificates or documents delivered in connection herewith.
12.3 SUCCESSORS AND ASSIGNS. Except as otherwise provided in this
Agreement, all covenants and agreements of the parties contained in this
Agreement shall be binding upon and inure to the benefit of the respective
successors and permitted assigns of the parties hereto. This Agreement may not
be assigned by any party hereto without the prior express written consent of
the other parties hereto.
12.4 EXPENSES. Whether or not the transactions contemplated hereby
shall be consummated, each party shall be solely responsible for payment of all
expenses incurred by it in connection with the consummation of this Agreement
and the transactions contemplated hereunder except as otherwise provided
herein.
12.5 SEVERABILITY. Should any one or more of the provisions of this
Agreement be determined to be illegal or unenforceable, all other provisions of
this Agreement shall be given effect
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separately from the provision or provisions determined to be illegal or
unenforceable and shall not be affected thereby.
12.6 GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of Delaware without
regard to conflicts of laws principles.
12.7 COUNTERPARTS. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be an original, but all of which
together shall constitute one and the same Agreement.
12.8 AMENDMENTS. Neither this Agreement nor any term hereof may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing in accordance with paragraph 11.1 hereof.
12.9 NO THIRD PARTY BENEFICIARY. The terms and provisions of this
Agreement are intended solely for the benefit of the parties hereto, and it is
not the intention of the parties to confer third-party beneficiary rights upon
any other person or entity.
12.10 HEADINGS. The headings in this Agreement are for purposes of
convenience and easy reference only and shall not limit or otherwise affect the
meaning hereof.
12.11 DISPUTES. In the event of any dispute which arises between the
parties and which relates to the subject matter of this Agreement, the parties
acknowledge and agree that any such dispute shall be submitted for binding
arbitration in Washington, D.C. in accordance with the rules and procedures
established by the American Arbitration Association or, if such association is
not then in existence, an independent association of arbitrators which may be
designated by agreement of the parties. In the event the parties are unable to
agree on an independent association of arbitrators from which arbitrators may
be drawn, either party may apply to a court of competent jurisdiction for
appointment of arbitrators, however, such application will only be made in the
event the American Arbitration Association is not then in existence. The
arbitrator(s) shall make detailed written findings
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to support their award. The prevailing party in any such arbitration
proceeding shall be awarded such costs and expenses (including reasonable
attorney's and expert witness' fees) as were incurred by the prevailing party
as a result of the institution and prosecution of the arbitration proceeding,
as well as all costs and expenses (including reasonable attorney's and expert
witness fees) to enter judgment upon or enforce any such award including all
appellate proceedings.
12.12 DELIVERY OF EXHIBITS AND SCHEDULES. All Exhibits and schedules
to be delivered by either of the parties hereto upon execution of this
Agreement which are not so delivered shall be delivered to the other party not
later than 20 days from the date of the execution of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
ACQUIRORS:
SM ACQUISITION COMPANY
By: /s/ Howard L. Correll
----------------------------------
Howard L. Correll, President
J/B ACQUISITION COMPANY
By: /s/ Howard L. Correll
----------------------------------
Howard L. Correll, President
PARENT:
WHEELS SPORTS GROUP, INC.
By: /s/ Howard L. Correll
----------------------------------
Howard L. Correll, Chairman and
President
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TARGETS:
SYNERGY MARKETING, INC.
By: /s/ Victor H. Shaffer
---------------------------
J/B PRESS PASS, INC.
By: /s/ Ronald N. Beck
---------------------------
SELLERS:
The Sellers hereby agree to be
bound only for purposes of
Article 3.28 and Article IX.
/s/ Victor H. Shaffer
-------------------------------
SMI Seller
/s/ Robert Bove
-------------------------------
SMI Seller
/s/ Ronald N. Beck
-------------------------------
J/B Seller
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SELLERS:
The Sellers hereby agree to be
bound only for purposes of
Article 3.28 and Article IX.
/s/ Peter T. Joseph
------------------------------
J/B Seller
Peter T. Joseph
/s/ Neal Aronson
------------------------------
J/B Seller
Neal Aronson
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TABLE OF ATTACHMENTS
EXHIBIT DESCRIPTION
------- ---------------------------------------------
3.1(a)(i) Articles of Incorporation of SMI
3.1(a)(ii) Bylaws of SMI
3.1(b)(i) Certificate of Incorporation of J/B
3.1(b)(ii) Bylaws of J/B
3.2 Partnership Agreement of Partnership
3.3 Approval Certificates of Targets
3.4 Conflicting Agreements of Targets
3.5 Noncompliance with Applicable Law by Targets
3.7 Consents and Approvals of Targets
3.9 Litigation of Targets
3.11 Assets of Partnership
3.12 License Agreements of Partnership
3.13 Intellectual Property of Targets and Partnership
3.14 Significant Customers of Partnership
3.15 Contracts of Partnership
3.18 Liabilities not on Financial Statements of Partnership
3.19 Material Adverse Changes to Partnership
3.21 Leases of Partnership
3.23 Tax Notices of Targets and Partnership
3.24 Employment Matters of Partnership
3.25 Employee Benefit Plans of Partnership
4.1(a) Articles of Incorporation and Bylaws of each Acquiror
and Parent
4.2 Approval Certificates of Acquirors and Parent
4.4 Noncompliance with Applicable Law by Acquirors and
Parent
4.7 Subsidiaries of Acquirors and Parent
4.8 Litigation of Acquirors and Parent
4.11 Liabilities Not on Financial Statements of Acquirors and
Parent
4.12 Material Adverse Changes to Acquirors and Parent
4.13 Absence of Developments
4.15 Tax Notices of Acquirors and Parent
4.16 Employment Matters of Acquirors and Parent
4.17 Employee Benefit Plans of Acquirors and Parent
5.3 Proposed Transactions of Acquirors and Parent
7.1(a) Form of Certificate of Acquirors and Parent
7.1(e) Opinion of Counsel of Acquirors and Parent
7.2(a) Form of Certificate of Targets
7.2(g) Opinion of Counsel of Targets and Partnership
11.2(g)(i) Employment Agreement for Victor H. Shaffer
11.2(g)(ii) Employment Agreement for Robert Bove
11.3(b) Registration Rights Agreement
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