iv
STOCK PURCHASE AGREEMENT
Between
AFGL INTERNATIONAL, INC.,
IRENE COHEN TEMPS, INC.,
CORPORATE STAFFING ALTERNATIVES, INC.,
CERTIFIED TECHNICAL STAFFING, INC.,
and
THE STOCKHOLDERS OF
THE COMPANIES
Dated April 10, 1996
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS 1
ARTICLE II. REPRESENTATIONS, COVENANTS, AND WARRANTIES OF THE
COMPANIES
2.01 Organization 4
2.02 Non-contravention 4
2.03 Authorization of Transaction 5
2.04 Subsidiaries 5
2.05 Capitalization 5
2.06 Financial Statements 5
2.07 Absence of Certain Changes or Events 6
2.08 Title and Related Matters 6
2.09 Tax Matters 7
2.10 Litigation and Proceedings 8
2.11 Contracts 8
2.12 Material Contract Defaults 8
2.13 Governmental Authorizations 8
2.14 Compliance With Laws and Regulations 9
2.15 Insurance 9
2.16 Transactions With Affiliates 9
2.17 Labor Relations 9
2.18 Information 9
2.19 Companies Schedules 9
ARTICLE III. REPRESENTATIONS, COVENANTS, AND WARRANTIES OF AFGL
3.01 Organization 10
3.02 Non-contravention 10
3.03 Authorization of Transaction 11
3.04 Subsidiaries 11
3.05 Capitalization 11
3.06 Financial Statements 11
3.07 Absence of Certain Changes or Events 12
3.08 Title and Related Matters 12
3.09 Tax Matters 13
3.10 Litigation and Proceedings 14
3.11 Contracts 14
3.12 Material Contract Defaults 14
3.13 Governmental Authorizations 14
3.14 Information 14
3.15 AFGL Schedules 14
ARTICLE IV. REPRESENTATIONS, COVENANTS AND WARRANTIES OF EACH
STOCKHOLDER
4.01 By Cohen 15
4.02 By Finegan 16
4.03 By List 17
ARTICLE V. SALE OF STOCK
5.01 Sale of Companies Stock 18
5.02 Preliminary Purchase Price 18
5.03 Preparation of Closing Balance Sheet 18
5.04 Adjustment of Preliminary Purchase Price 19
ARTICLE VI. SPECIAL COVENANTS
6.01 Access to Properties and Records 20
6.02 Actions Prior to Closing 20
6.03 Tax Election 21
6.04 Indemnification 23
6.05 Third Person Consents and Certificates 25
6.06 Employment Arrangements 25
6.07 Termination 25
6.08 Payment of Indebtedness 26
6.09 Public Announcement 26
6.10 Reimbursement of Fees 26
6.11 Additional Covenants 27
6.12 Dispute Resolution Procedures 28
ARTICLE VII. CLOSING
7.01 Closing 28
7.02 Closing Events 28
ARTICLE VIII. CONDITIONS PRECEDENT TO OBLIGATIONS OF AFGL
8.01 Accuracy of Representations 29
8.02 Litigation Certificates 29
8.03 No Material Adverse Change 29
8.04 Good Standing 29
8.05 Consents/Agreements 29
8.06 Legal Opinion 29
8.07 Republic Obligation 29
8.08 Balance Sheets 29
8.09 Reimbursement Documents 30
8.10 Other Items 30
ARTICLE IX. CONDITIONS PRECEDENT TO OBLIGATIONS
OF THE COMPANIES AND THE STOCKHOLDERS
9.01 Accuracy of Representations 30
9.02 Litigation Certificate 30
9.03 No Material Adverse Change 30
9.04 Good Standing 30
9.05 Consents/Agreements 30
9.06 Legal Opinion 30
9.07 Republic Obligation 30
9.08 Viva Agreement 31
9.09 Other Items 31
ARTICLE X. MISCELLANEOUS
10.01 Brokers 31
10.02 Governing Law 31
10.03 Notices 31
10.04 Attorneys' Fees 32
10.05 Third Party Beneficiaries 32
10.06 Entire Agreement 32
10.07 Counterparts 32
10.08 Amendment or Waiver 32
10.09 Assignment 32
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, is made and entered into as
of the 10th day of April, 1996, by and between AFGL
INTERNATIONAL, INC., a Nevada corporation, IRENE COHEN TEMPS,
INC., a New York corporation, CORPORATE STAFFING ALTERNATIVES,
INC., a New York corporation, CERTIFIED TECHNICAL STAFFING, INC.,
a New York corporation, and each of the STOCKHOLDERS of the
Companies.
Premises
This Agreement provides for the acquisition by AFGL from the
Stockholders of all of the capital stock of the Companies in
exchange for cash, all on the terms and conditions hereinafter
provided.
Agreement
NOW, THEREFORE, on the stated premises and for and in
consideration of the mutual covenants and agreements hereinafter
set forth and the mutual benefits to the Parties to be derived
herefrom, it is hereby agreed as follows:
ARTICLE I
DEFINITIONS
Accounting Fee has the meaning set forth in
Section 6.10(a), below.
Reimbursement
Actual Difference has the meaning set forth in
Section 6.03(d), below.
Actual Value has the meaning set forth in
Section 5.03(b), below.
Adverse Consequences means all actions, suits, proceedings,
hearings, investigations, charges,
complaints, claims, demands,
injunctions, judgments, orders, decrees,
rulings, damages, dues, penalties,
fines, costs, reasonable amounts paid in
settlement, liabilities, obligations,
taxes, liens, losses, expenses, and
fees, including court costs and
reasonable attorneys' fees and expenses.
Affiliate has the meaning set forth
in Rule 12b-2 of the regulations
promulgated under the Securities
Exchange Act of 1934, as amended.
AFGL is AFGL
International, Inc., a Nevada
corporation and a Party to this
Agreement.
Agreement means this Stock Purchase
Agreement dated April 10, 1996.
Closing means the acts by the
Parties of endorsing, executing, and/or
delivering the Companies Stock,
certificates of officers and Parties,
schedules, and other instruments
provided for in Articles V, VI, VII,
VIII, and IX of this Agreement.
Cohen is Irene Cohen, who is a
stockholder of one or more of the
Companies as stated in the Stockholder
List and a Party to this Agreement.
Closing Balance Sheet has the meaning set forth in Section
5.03(a), below.
Company means any one or more of
ICTI, CSA, or CTS as the context
indicates.
Companies Stock means all of the issued and
outstanding capital stock of each
Company consisting of such classes and
in such amounts stated on the
Stockholder List.
Combined Book Value means the excess of assets over
liabilities as shown on any of the
balance sheets contemplated by Article
V, below.
CSA is Corporate
Staffing Alternatives, Inc., a New York
corporation and a Party to this
Agreement.
CTS is Certified
Technical Staffing, Inc., a New York
corporation and a Party to this
Agreement.
Draft Closing Balance Sheet has the meaning set forth in
Section 5.03(a), below.
Employment Agreement and has the meaning set forth in Section
Audit Reimbursement 6.10(b), below.
Estimated Balance Sheet has the meaning set forth in Section
5.02, below.
Finegan is Elaine Finegan, who is
a stockholder of one or more of the
Companies as stated in the Stockholder
List and a Party to this Agreement.
GAAP means the United
States generally accepted accounting
principles as in effect from time to
time.
High Difference has the meaning set forth in
Section 6.03(d), below.
High Value has the meaning set forth in Section
5.03(b), below.
Historic Companies has the meaning set forth in Section
2.09(a), below.
ICTI is Irene Cohen
Temps, Inc., a New York corporation and
a Party to this Agreement.
Knowledge means actual knowledge
after reasonable investigation and, with
respect to the Companies refers to
knowledge after reasonable investigation
of any Stockholder, director, or officer
of the Companies.
List is Michael List, who
is a stockholder of one or more of the
Companies as stated in the Stockholder
List and a Party to this Agreement.
Low Difference has the meaning set forth in
Section 6.03(d), below.
Low Value has the meaning set forth
in Section 5.03(b), below.
March Balance Sheet has the meaning set forth in
Section 5.02, below.
Material means, when used as an
adjective in conjunction with an event,
condition, circumstance, effect, or
other item, that there is a substantial
likelihood that a reasonable person
would attach importance to the event,
condition, circumstance, effect, or item
in evaluating the business, operations,
properties, assets, or financial
condition of the Party to which it
relates, taken as a whole (which, in the
case of one or more of the Companies,
means the Companies taken as a whole),
and the transactions herein
contemplated.
Preliminary Purchase Price has the meaning set forth in
Section 5.02, below.
Purchase Price has the meaning set forth in Section
5.04, below.
Ordinary Course of Business means the ordinary course of
business consistent with past custom and
practice (including with respect to
quantity and frequency).
Party means any one or more of
AFGL, the Companies, or the Stockholders
as the context indicates.
Person means an individual, a
partnership, a corporation, an
association, a joint stock company, a
trust, a joint venture, an
unincorporated organization, or a
governmental entity (or any department,
agency, or political subdivision
thereof).
Security Interest means any mortgage, pledge, lien,
encumbrance, charge, or other security
interest, other than: (a) mechanic's,
materialmen's, and similar liens; (b)
liens for taxes not yet due and payable
or for taxes that the taxpayer is
contesting in good faith through
appropriate proceedings; (c) purchase
money liens and liens securing rental
payments under capital lease
arrangements; and (d) other liens
arising in the Ordinary Course of
Business and not incurred in connection
with the borrowing of money.
Stockholder(s) is, when singular, either
Cohen, Finegan, or List, and is, when
plural, two or all of such persons as
the context dictates.
Stockholder List means the list prepared and
delivered by the Companies at Closing
stating the authorized capital of each
Company, the number of issued and
outstanding shares of the capital stock
of each Company, and for each
Stockholder the number of such
outstanding shares held, all as of the
date of Closing.
Subsidiary means any corporation with
respect to which a specified Person (or
a Subsidiary thereof) owns a majority of
the common stock or has the power to
vote or direct the voting of sufficient
securities to elect a majority of the
directors.
Tax means any federal,
state, local, or foreign income, gross
receipts, license, payroll, employment,
excise, severance, stamp, occupation,
premium, windfall profits, environmental
(including taxes under Code Section
59A), customs duties, capital stock,
franchise, profits, withholding, social
security (or similar), unemployment,
disability, real property, personal
property, sales, use, transfer,
registration, value added, alternative
or add-on minimum, estimated, or other
tax of any kind whatsoever, including
any interest, penalty, or addition
thereto, whether disputed or not.
Tax Code and Regulations means the Internal Revenue Code of 1986,
as amended, and (where the context so
requires with respect to time), the
Internal Revenue Code of 1954, as
amended, and all regulations promulgated
thereunder.
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.
Viva Agreement means the agreement dated
January 2, 1996, by and between Viva
Temporary Services, Inc., ICTI, AFGL,
and Christy & Viener.
Viva Reimbursement has the meaning set forth in set
forth in Section 6.10(c), below.
Viva Transaction means the acquisition by ICTI of
certain assets of Viva Temporary
Services, Inc., and its affiliates,
pursuant to the Asset Purchase Agreement
dated January 2, 1996.
ARTICLE II
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF THE COMPANIES
As an inducement to, and to obtain the reliance of, AFGL,
the Companies represent and warrant as follows:
Section 2.01 Organization. Each of the Companies is a
corporation duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its incorporation.
Each of the Companies has the corporate power and is duly
authorized, qualified, franchised, and licensed under all
applicable laws, regulations, ordinances, and orders of public
authorities to own all of their respective properties and assets
and to carry on its business in all material respects as it is
now being conducted.
Section 2.02 Non-contravention. Except as disclosed in
the Companies Schedules or contemplated by the Viva Transaction,
the execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated by this Agreement
in accordance with the terms hereof will not: violate any
provision of the articles of incorporation, charter, or bylaws of
any of the Companies; result in the breach of, constitute a
default under, result in the acceleration of, create in any
Person the right to accelerate, terminate, modify, cancel, or
require any notice under, any material agreement, contract,
lease, license, instrument, or other arrangement to which any of
the Companies is a party or by which it is bound or to which any
of its assets is subject; or, violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling,
charge, or other restriction of any government, governmental
agency, or court to which any of the Companies is subject.
Section 2.03 Authorization of Transaction. Each of the
Companies has full power and authority, and has taken all action
required by law, its articles of incorporation and bylaws, and
otherwise to execute and deliver this Agreement and to perform
its obligations hereunder. Without limiting the generality of
the foregoing, the board of directors of each Company has duly
authorized the execution, delivery, and performance of this
Agreement. This Agreement represents the valid and binding
obligation of each Company enforceable against it in accordance
with its terms, except as limited by bankruptcy and insolvency
laws and by other laws affecting the rights of creditors
generally.
Section 2.04 Subsidiaries. None of the Companies has a
Subsidiary.
Section 2.05 Capitalization. The authorized
capitalization of each Company shall be, as of the Closing, as
stated in the Stockholder List. All issued and outstanding
shares of the capital stock of the Companies on the date of
Closing shall be legally issued, fully paid, and non-assessable
and not issued in violation of the pre-emptive or other rights of
any Person. Except as disclosed herein and in the Companies
Schedules, there are no existing options, warrants, calls, or
commitments of any character relating to the authorized and
unissued capital stock of any of the Companies. Except as
disclosed herein and in the Companies Schedules, there are no
outstanding or authorized stock appreciation, phantom stock,
profit participation, or similar rights with respect to any of
the Companies.
Section 2.06 Financial Statements.
(a) The Companies Schedules contain the unaudited
balance sheet of each of the Companies at December 31, 1995
("Balance Sheet Date"), together with the Accountants'
Review Report pertaining thereto, which includes the related
unaudited statement of operations and retained earnings and
cash flows of each of the Companies for the 12 months then
ended,.
(b) All such financial statements have been prepared
in accordance GAAP, which was applied on a consistent basis
throughout the period covered, present fairly as of their
respective dates the financial condition of each of the
Companies and the results of operations of each of the
Companies with adjustments for accrual accounting, are
correct and complete, and are consistent with the books and
records of each of the Companies after taking into account
the adjustments for accrual accounting (which books and
records are correct and complete).
(c) None of the Companies had as of the Balance Sheet
Date any material liabilities or obligations (whether known
or unknown, asserted or unasserted, absolute or contingent,
accrued or unaccrued, liquidated or unliquidated, and due or
to become due), including any liability for Taxes, except
for (i) liabilities set forth on the most recent balance
sheet of each of the Companies, (ii) liabilities disclosed
or arising under this Agreement, the Companies Schedules, or
the documents referred to herein and therein.
(d) All notes and accounts receivable of each of the
Companies are reflected properly on its books and records
and, to the knowledge of each of the Companies, are valid
receivables subject to no material setoffs or counterclaims,
are current and collectible, and will be collected in
accordance with their terms at their recorded amounts,
subject only to the reserve for bad debts, if any, set forth
on the face of the most recent balance sheet of each of the
Companies as adjusted for the passage of time through the
date of this Agreement in accordance with the past custom
and practice of each of the Companies.
Section 2.07 Absence of Certain Changes or Events. Except
in relation to the Viva Transaction and as described herein or in
the Companies Schedules, since the Balance Sheet Date:
(a) There has not been (i) any material adverse change
in the business, operations, properties, assets, or
condition of any of the Companies; or (ii) any damage,
destruction, or loss to any of the Companies (whether or not
covered by insurance) materially and adversely affecting its
business, operations, properties, assets, or financial
condition.
(b) None of the Companies has (except for transactions
specified in clauses (v) through (vii), below, involving
officers, directors, Stockholders, and their Affiliates that
shall be completed by the time of Closing) (i) amended its
articles of incorporation, charter, or bylaws; (ii) declared
or made, or agreed to declare or make, any payment of
dividends or distributions of any assets of any kind
whatsoever to stockholders, or purchased or redeemed, or
agreed to purchase or redeem, any of its capital stock;
(iii) waived any rights of value which in the aggregate are
extraordinary or material considering its business; (iv)
made any material change in its method of management,
operation, or accounting; (v) entered into any other
material transaction; (vi) made any accrual or arrangement
for payment of bonuses or special compensation of any kind
or any severance or termination pay to any Person; or (vii)
made any increase in any profit sharing, bonus, deferred
compensation, insurance, pension, retirement, or other
employee benefit plan, payment, or arrangement made to, for,
or with its officers, directors, Affiliates, or employees,
except in the Ordinary Course of Business.
(c) None of the Companies has (i) granted or agreed to
grant any options, warrants, or other rights for its stocks,
bonds, or other corporate securities calling for the
issuance thereof; (ii) borrowed or agreed to borrow any
funds or incurred, or become subject to, any material
obligation or liability (absolute or contingent), except
liabilities incurred in the Ordinary Course of Business,
including liabilities incurred in connection with the
transactions contemplated by this Agreement; (iii) paid any
material obligation or liability (absolute or contingent)
other than current liabilities reflected in or shown on the
balance sheet of each Company as of the Balance Sheet Date,
and current liabilities incurred since that date in the
Ordinary Course of Business, including, the costs incurred
in connection with the transactions contemplated by this
Agreement; (iv) sold or transferred, or agreed to sell or
transfer, any of its assets, properties, or rights (except
assets, properties, or rights not used or useful in its
business which, in the aggregate, have a value of less than
$1,000), or canceled, or agreed to cancel, any debts or
claims in excess of reserves reflected on the balance sheet
of each Company as of the Balance Sheet Date, and additions
thereto (except debts or claims which, in the aggregate, are
of a value of less than $1,000); or (v) made or permitted
any amendment or termination of any contract, agreement, or
license to which it is a party if such amendment or
termination is material, considering its business.
(d) To the knowledge of any of the Companies, it has
not become subject to any law or regulation which materially
and adversely affects, or in the future may adversely affect
its business as conducted on the date hereof.
Section 2.08 Title and Related Matters. Each of the
Companies has good and marketable title to all of its properties,
interests in properties, and assets, real and personal, which are
reflected in the balance sheet of each Company as of the Balance
Sheet Date, or acquired after that date (except properties,
interests in properties, and assets sold or otherwise disposed of
since such date in the Ordinary Course of Business), free and
clear of all Security Interests, except as disclosed in the
Companies Schedules. Except as set forth in the Companies
Schedules, each of the Companies owns free and clear of any
Security Interests any and all trademarks, service marks,
tradenames, copyrights, procedures, techniques, marketing plans,
business plans, methods of management, intellectual property, and
other information utilized in connection with its business.
Except as set forth in the Companies Schedules, no Person has
any right to, and none of the Companies has received any notice
of infringement of, or conflict with, asserted rights of others
with respect to any marketing rights, trade secrets, know-how,
proprietary techniques, trademarks, service marks, tradenames,
copyrights, or intellectual property, which, if the subject of an
unfavorable decision, ruling, or finding, would have a materially
adverse affect on the business, operations, financial condition,
income, or business of any of the Companies, or any material
portion of their properties, assets, or rights.
Section 2.09 Tax Matters.
(a) Each of the Companies has filed, or will have
filed prior to the Closing, all Tax Returns that it was
required to file as of the date of Closing, except where
extensions were obtained. All such Tax Returns were correct
and complete in all material respects. Up to and including
the date of Closing, each of the Companies, any predecessor
corporation or other corporation whose assets were
transferred or retransferred by any Stockholder to any of
the Companies or any predecessor of the Companies
(including, but not by way of limitation, Americana), and
any direct or indirect corporate asset transferor of any of
the Companies or their predecessors (collectively, the
"Historic Companies"): (i) have always been qualified S
corporations under the Tax Code and Regulations; (ii) have
been S corporations of New York State and New Jersey for all
purposes at all times since such states have recognized such
status under state law; and (iii) have never been, at any
time, a corporation taxable as a regular corporation (non-S
corporation) under the Tax Code and Regulations or for New
York State tax purposes. No claim has ever been made by an
authority in a jurisdiction where any of the Historic
Companies have not or do not file Tax Returns that it is or
may be subject to taxation by that jurisdiction. There are
no Security Interests on any of the assets of any of the
Companies that arose in connection with any failure (or
alleged failure) to pay any Tax.
(b) Each of the Companies has withheld and paid all
Taxes required to have been withheld and paid in connection
with amounts paid or owing to any employee.
(c) To the knowledge of the Companies, no Stockholder
or director or officer (or employee responsible for Tax
matters) of any of the Companies reasonably expects any
authority to assess against any of the Companies any
additional Taxes for any period for which Tax Returns have
been filed. The Companies Schedules include a list of all
federal, state, local, and foreign income Tax Returns filed
with respect to any of the Companies for all taxable periods
ending on or after January 1, 1992, indicates those Tax
Returns that have been audited, and indicates those Tax
Returns that currently are the subject of audit. Each of
the Companies has made available to AFGL correct and
complete copies of all federal state, and local income Tax
Returns, examination reports, and statements of deficiencies
assessed against or agreed to by any of the Companies since
January 1, 1992.
(d) None of the Companies has waived any statute of
limitation in respect of Taxes or agreed to any extension of
time with respect to a Tax assessment or deficiency.
Section 2.10 Litigation and Proceedings. Except as set
forth in the Companies Schedules, there are no material actions,
suits, proceedings, or investigations pending or, to the
knowledge of any of the Companies, threatened by or against it or
affecting its properties, at law or in equity, before any court
or other governmental agency or instrumentality, domestic or
foreign, or before any arbitrator of any kind. None of the
Companies has any knowledge of any material default on its part
with respect to any judgment, order, writ, injunction, decree,
award, or ruling of any court, arbitrator, or governmental agency
or instrumentality.
Section 2.11 Contracts.
(a) All contracts, agreements, franchises, license
agreements, and other commitments to which any of the
Companies is a party or by which its properties are bound
and which are material to its operations are, to the
knowledge of the Companies, valid and enforceable by it in
all material respects, except as limited by bankruptcy and
insolvency laws and by other laws affecting rights of
creditors generally.
(b) Except as included or described in the Companies
Schedules or reflected in the balance sheet of any Company
as of the Balance Sheet Date, and except for any contract or
other arrangement that may be terminated by a Company on not
more than 30 days' notice without any liability and any
other contract under which the executory obligation of the
Companies after the Closing will involve an amount less than
$50,000, none of the Companies is a party to any oral or
written: (i) contract for the employment of any officer or
employee which is not terminable on 30 days or less notice;
(ii) profit sharing, bonus, deferred compensation, stock
option, severance pay, pension benefit or retirement plan,
agreement, or arrangement covered by Title IV of the
Employee Retirement Income Security Act, as amended; (iii)
agreement, contract, or indenture relating to the borrowing
of money; (iv) guaranty of any obligation, other than one on
which it is a primary obligor, for the borrowing of money or
otherwise, excluding endorsements made for collection and
other guaranties of obligations which, in the aggregate, do
not exceed $10,000; (v) consulting or other similar
contracts with an unexpired term of more than one year or
providing for payments in excess of $10,000 in the
aggregate; (vi) collective bargaining agreement; (vii)
agreement with any present or former officer or director; or
(viii) contract, other agreement, or other commitment .
Section 2.12 Material Contract Defaults. Except as
disclosed in the Companies Schedules, none of the Companies is
in default in any material respect under the terms of any
outstanding contract, agreement, lease, or other commitment which
is material to its business, operations, properties, assets, or
business condition, and there is no event of default on the part
of the Companies or other event which, with notice or lapse of
time or both, would constitute a default on the part of the
Companies in any material respect under any such contract,
agreement, lease, or other commitment in respect of which it has
not taken adequate steps to prevent such a default from
occurring.
Section 2.13 Governmental Authorizations. Except as set
forth in the Companies Schedules, the Companies have all material
licenses, franchises, permits, and other governmental
authorizations that are legally required to enable each of them
to conduct its business in all material respects as conducted on
the date hereof. No authorization, approval, consent, or order
of, or registration, declaration, or filing with, any court or
other governmental body is required in connection with the
execution and delivery by the Companies of this Agreement and the
consummation by the Companies of the transactions contemplated
hereby.
Section 2.14 Compliance With Laws and Regulations. The
Companies have complied with all applicable statutes and
regulations of any country, state, provincial, municipal, or
local governmental entity or agency thereof, except to the extent
that noncompliance would not materially and adversely affect the
business, operations, properties, assets, or business condition
of the Companies, and except to the extent non-compliance would
not result in any material liability.
Section 2.15 Insurance. All the insurable properties of
the Companies are insured in accordance with industry standards
against all risks customarily insured against by persons
operating similar properties in localities where such properties
are located and under valid and enforceable policies by insurers
of recognized responsibility.
Section 2.16 Transactions With Affiliates. Set forth in
the Companies Schedules is a description of every material
contract, agreement, or arrangement between any of the Companies
and any Affiliate under which any of the Companies will be
obligated after the Closing.
Section 2.17 Labor Relations. None of the Companies has
had a material work stoppage resulting from labor problems. To
the knowledge of the Companies, no union or other collective
bargaining organization is organizing or attempting to organize
any employee of the Companies.
Section 2.18 Information. The information concerning the
Companies set forth in this Agreement and in the Companies
Schedules is complete and accurate in all material respects and
does not contain any untrue statement of a material fact or omit
to state a material fact required to make the statements made, in
light of the circumstances under which they are made, not
misleading.
Section 2.19 Companies Schedules. Following the signing
and delivery of this Agreement, but in any event not less than 15
days prior to the Closing, the Companies shall make available to
AFGL and the Stockholders, the following documents and
information, which are collectively referred to as the "Companies
Schedules," and both AFGL and the Stockholders will be provided
prior to the Closing all such additional materials and
information as may be reasonably requested, including any
information requested to verify any information furnished:
(a) complete and correct copies of the articles of
incorporation, as amended, and bylaws of each of the
Companies;
(b) the financial statements of the Companies
identified in paragraph 2.06(a);
(c) the income Tax Returns of the Companies identified
in paragraph 2.09(c);
(d) a description of all real property owned and/or
leased by the Companies, together with a description of
every Security Interest in respect thereof;
(e) copies of all material agreements, arrangements,
contracts, or other instruments to which any of the
Companies is a party or by which it or its properties are
bound, together with a description of all oral contracts,
leases, agreements, and other instruments to which any of
the Companies is a party or by which it or its properties
are bound, except for any such items under which none of the
Companies or the Stockholders will have any obligation after
the Closing;
(f) copies of all licenses, permits, and other
governmental authorizations (or requests or applications
therefor) pursuant to which the Companies carry on or
propose to carry on their respective businesses (except
those which, in the aggregate, are immaterial to the present
or proposed business of any of them);
(g) a list of the accounts receivable and notes and
other obligations receivable of the Companies as of the
Balance Sheet Date, or that arose thereafter other than in
the Ordinary Course of Business, indicating the debtor and
amount, and classifying the accounts to show in reasonable
detail the length of time, if any, overdue, and stating the
nature and amount of any refunds, setoffs, reimbursements,
discounts, or other adjustments which are, in the aggregate,
material and due to or claimed by such creditor;
(h) a list of the accounts payable and notes and other
obligations payable of the Companies as of the Balance Sheet
Date or that arose thereafter other than in the Ordinary
Course of Business, indicating the creditor and amount,
classifying the accounts to show in reasonable detail the
length of time, if any, overdue, and stating the nature and
amount of any refunds, setoffs, reimbursements, discounts,
or other adjustments which are, in the aggregate, material
and due or payable to any of the Companies;
(i) a description of any material change in the
business, operations, property, inventory, assets, or
condition of any of the Companies since the Balance Sheet
Date, required to be provided pursuant to Section 2.07
hereof;
(j) a description of transactions with Affiliates
required to be described by Section 2.16; and
(k) a schedule setting forth any other information,
together with any copies of documents, required to be
disclosed in the Companies Schedules by Sections 2.01
through 2.18.
The Companies shall cause the Companies Schedules and the
instruments and data to be delivered to AFGL and the Stockholders
hereunder to be updated after the date of delivery up to and
including the date of Closing.
ARTICLE III
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF AFGL
As an inducement to, and to obtain the reliance of, the
Companies and the Stockholders, AFGL represents and warrants as
follows:
Section 3.01 Organization. AFGL is a corporation, validly
existing, and in good standing under the laws of the state of
Nevada. AFGL has the corporate power and is duly authorized,
qualified, franchised, and licensed under all applicable laws,
regulations, ordinances, and orders of public authorities to own
all of its properties and assets and to carry on its business in
all material respects as it is now being conducted.
Section 3.02 Non-contravention. Except as noted herein or
in the AFGL Schedules, the execution and delivery of this
Agreement does not, and the consummation of the transactions
contemplated by this Agreement in accordance with the terms
hereof will not: violate any provision of the articles of
incorporation, charter, or bylaws of AFGL or its subsidiaries;
result in the breach of, constitute a default under, result in
the acceleration of, create in any Person the right to
accelerate, terminate, modify, cancel, or require any notice
under, any material agreement, contract, lease, license,
instrument, or other arrangement to which any of AFGL and its
Subsidiaries is a party or by which it is bound or to which any
of its assets is subject; or, violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling,
charge, or other restriction of any government, governmental
agency, or court to which any of AFGL and its Subsidiaries is
subject.
Section 3.03 Authorization of Transaction. AFGL has full
power and authority, and has taken all action required by law,
its articles of incorporation and bylaws, and otherwise to
execute and deliver this Agreement and to perform its obligations
hereunder. Without limiting the generality of the foregoing, the
board of directors of AFGL has duly authorized the execution,
delivery, and performance of this Agreement by AFGL. This
Agreement represents the valid and binding obligation of AFGL
enforceable in accordance with its terms, except as limited by
bankruptcy and insolvency laws and by other laws affecting the
rights of creditors generally.
Section 3.04 Subsidiaries. AFGL has three wholly-owned
Subsidiaries, Whitney Partners, Inc., and AFGL, Inc., both
Delaware corporations, and Furash & Company, Inc., a Maryland
corporation.
Section 3.05 Capitalization. The authorized
capitalization of AFGL is 25,000,000 shares, consisting of:
5,000,000 shares of preferred stock, par value $0.001, of which
2,800 shares designated as "Series A 8% Convertible Preferred
Stock," are issued and outstanding, 6,858 shares designated as
"Series B Convertible Preferred Stock" are issued and
outstanding, and 150 shares designated as "Series C 8%
Convertible Preferred Stock" are being offered for sale to a
limited group of investors in an offshore transaction; and
20,000,000 shares are Common Stock, of which 4,597,358 shares are
currently issued and outstanding, and approximately 2,222,223
shares are being offered for sale to a limited group of investors
in a limited offering. All issued and outstanding shares are
legally issued, fully paid, and non-assessable and not issued in
violation of the pre-emptive or other rights of any Person.
Except for 1,332,416 shares of Common Stock reserved for issuance
on conversion of the Series A 8% Convertible Preferred Stock,
685,744 shares of Common Stock reserved for issuance on
conversion of the Series B Convertible Preferred Stock, 795,455
shares of Common Stock reserved for issuance on conversion of the
Series C 8% Convertible Preferred Stock, 3,085,823 shares of
Common Stock reserved for issuance under AFGL's stock incentive
plans, 129,711 shares reserved for issuance under outstanding
warrants, and as disclosed herein and in the AFGL Schedules,
there are no existing options, warrants, calls, or commitments of
any character relating to the authorized and unissued AFGL common
stock, except options, warrants, calls, or commitments, if any,
to which AFGL is not a party and by which it is not bound. There
are no outstanding or authorized stock appreciation, phantom
stock, profit participation, or similar rights with respect to
AFGL.
Section 3.06 Financial Statements.
(a) The AFGL Schedules contain the unaudited
consolidated balance sheet of AFGL at September 30, 1995,
and the related unaudited consolidated statements of
operations and cash flows for the nine months then ended,
including the notes to such statements; and the audited
consolidated balance sheet of AFGL as of December 31, 1994,
and the related audited consolidated statements of
operations and cash flows for each year in the two year
period ended December 31, 1994, together with the notes to
such statements and the opinion of Mortenson & Co., Inc.,
independent accountants, with respect thereto.
(b) All such financial statements have been prepared
in accordance with GAAP on a consistent basis throughout the
periods covered, present fairly as of their respective dates
the financial condition of AFGL and its Subsidiaries and the
results of operations of AFGL and its Subsidiaries, are
correct and complete, and are consistent with the books and
records of AFGL and its Subsidiaries (which books and
records are correct and complete).
(c) AFGL did not have as of the date of its September
30, 1995, balance sheet any material liabilities or
obligations (whether known or unknown, asserted or
unasserted, absolute or contingent, accrued or unaccrued,
liquidated or unliquidated, and due or to become due),
including any liability for Taxes, except for (i)
liabilities set forth on the September 30, 1995, balance
sheet of AFGL, and (ii) liabilities disclosed in this
Agreement or the AFGL Schedules.
(d) All notes and accounts receivable of AFGL and its
Subsidiaries are reflected properly on their books and
records and, to the Knowledge of AFGL, are valid receivables
subject to no material setoffs or counterclaims, are current
and collectible, and will be collected in accordance with
their terms at their recorded amounts, subject only to the
reserve for bad debts, if any, set forth on the face of the
September 30, 1995, balance sheet of AFGL as adjusted for
the passage of time through the date of this Agreement in
accordance with the past custom and practice of AFGL and its
Subsidiaries.
Section 3.07 Absence of Certain Changes or Events. Except
as described herein or in the AFGL Schedules, since the date of
the September 30, 1995, AFGL balance sheet:
(a) There has not been (i) any material adverse change
in the business, operations, properties, assets, or
condition of any of AFGL and its Subsidiaries; or (ii) any
damage, destruction, or loss to any of AFGL and its
Subsidiaries (whether or not covered by insurance)
materially and adversely affecting its business, operations,
properties, assets, or financial condition;
(b) None of AFGL and its Subsidiaries has (i) amended
its articles of incorporation, charter, or bylaws; (ii)
waived any rights of value which in the aggregate are
extraordinary or material considering its business; or,
(iii) entered into any other material transaction;
(c) None of AFGL and its Subsidiaries has (i) granted
or agreed to grant any options, warrants, or other rights
for its stocks, bonds, or other corporate securities calling
for the issuance thereof; (ii) borrowed or agreed to borrow
any funds or incurred, or become subject to, any material
obligation or liability (absolute or contingent), except
liabilities incurred in the Ordinary Course of Business,
including liabilities incurred in connection with the
transactions contemplated by this Agreement; or (iii) made
or permitted any amendment or termination of any contract,
agreement, or license to which it is a party if such
amendment or termination is material, considering its
business.
(d) To the knowledge of any of AFGL and its
Subsidiaries, it has not become subject to any law or
regulation which materially and adversely affects, or in the
future may adversely affect its business as conducted on the
date hereof.
Section 3.08 Title and Related Matters. Each of AFGL and
its Subsidiaries has good and marketable title to all of its
properties, inventory, interests in properties, and assets, real
and personal, which are reflected in the September 30, 1995, AFGL
balance sheet or acquired after that date (except properties,
interests in properties, and assets sold or otherwise disposed of
since such date in the Ordinary Course of Business), free and
clear of all Security Interests, except as disclosed in the AFGL
Schedules. Except as set forth in the AFGL Schedules, each of
AFGL and its Subsidiaries owns free and clear of any Security
Interests any and all trademarks, service marks, tradenames,
copyrights, procedures, techniques, marketing plans, business
plans, methods of management, intellectual property, and other
information utilized in connection with its business. Except as
set forth in the AFGL Schedules, no Person has any right to, and
none of AFGL and its Subsidiaries has received any notice of
infringement of, or conflict with, asserted rights of others with
respect to any marketing rights, trade secrets, know-how,
proprietary techniques, trademarks, service marks, tradenames,
copyrights, or intellectual property, which, if the subject of an
unfavorable decision, ruling, or finding, would have a materially
adverse affect on the business, operations, financial condition,
income, or business of any of AFGL and its Subsidiaries, or any
material portion of its properties, assets, or rights.
Section 3.09 Tax Matters.
(a) Each of AFGL and its Subsidiaries has filed, or
will have filed prior to the Closing, all Tax Returns that
it was required to file as of the date of Closing, except
where extensions were obtained. All such Tax Returns were
correct and complete in all respects. All Taxes owed by any
of AFGL and its Subsidiaries (as shown on any Tax Return)
have been paid. None of AFGL and its Subsidiaries currently
is 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 any of AFGL and its
Subsidiaries does not file Tax Returns that it is or may be
subject to taxation by that jurisdiction. There are no
Security Interests on any of the assets of AFGL that arose
in connection with any failure (or alleged failure) to pay
any Tax.
(b) Each of AFGL and its Subsidiaries has withheld and
paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other
Person.
(c) No AFGL director or officer (or employee
responsible for Tax matters) reasonably expects any
authority to assess against any of AFGL and its Subsidiaries
any additional Taxes for any period for which Tax Returns
have been filed, except as disclosed in the AFGL Schedules.
There is no dispute or claim concerning any Tax liability of
any of AFGL and its Subsidiaries either (i) claimed or
raised by an authority in writing or, (ii) as to which any
of the AFGL directors and officers (and employees
responsible for Tax matters) has knowledge based upon
personal contact with any agent of such authority, except as
disclosed in the AFGL Schedules. The AFGL Schedules include
a list of all federal, state, local, and foreign income Tax
Returns filed with respect to any of AFGL and its
Subsidiaries for taxable periods commencing on or after
January 1, 1992, indicates those Tax Returns that have been
audited, and indicates those Tax Returns that currently are
the subject of audit. AFGL has made available to the
Companies and the Stockholders correct and complete copies
of all federal income Tax Returns, examination reports, and
statements of deficiencies assessed against or agreed to by
any of AFGL and its Subsidiaries since January 1, 1992.
(d) None of AFGL and its Subsidiaries has waived any
statute of limitations in respect of Taxes or agreed to any
extension of time with respect to a Tax assessment or
deficiency.
(e) The unpaid Taxes of AFGL and its Subsidiaries (i)
did not, as of the September 30, 1995, balance sheet of
AFGL, exceed the reserve for Tax liability (rather than any
reserve for deferred Taxes established to reflect timing
differences between book and Tax income) set forth on the
face of said balance sheet, and (ii) do not exceed that
reserve as adjusted for the passage of time through the date
of Closing in accordance with the past custom and practice
of AFGL in filing its Tax Returns.
Section 3.10 Litigation and Proceedings. Except as set
forth in the AFGL Schedules, there are no material actions,
suits, proceedings, or investigations pending or, to the
knowledge of any of AFGL and its Subsidiaries, threatened by or
against it or affecting its properties, at law or in equity,
before any court or other governmental agency or instrumentality,
domestic or foreign, or before any arbitrator of any kind. None
of AFGL and its Subsidiaries has any knowledge of any material
default on its part with respect to any judgment, order, writ,
injunction, decree, award, or ruling of any court, arbitrator, or
governmental agency or instrumentality.
Section 3.11 Contracts. All contracts, agreements,
franchises, license agreements, and other commitments to which
any of AFGL and its Subsidiaries is a party or by which its
properties are bound and which are material to its operations
are, to the knowledge of AFGL, valid and enforceable by it in all
material respects, except as limited by bankruptcy and insolvency
laws and by other laws affecting the rights of creditors
generally.
Section 3.12 Material Contract Defaults. Except as
disclosed in the AFGL Schedules, none of AFGL and its
Subsidiaries is in default in any material respect under the
terms of any outstanding contract, agreement, lease, or other
commitment which is material to its business, operations,
properties, assets, or business condition, and there is no event
of default or other event which, with notice or lapse of time or
both, would constitute a default in any material respect under
any such contract, agreement, lease, or other commitment in
respect of which it has not taken adequate steps to prevent such
a default from occurring.
Section 3.13 Governmental Authorizations. Except as set
forth in the AFGL Schedules, AFGL and its Subsidiaries have all
material licenses, franchises, permits, and other governmental
authorizations that are legally required to enable each of them
to conduct its business in all material respects as conducted on
the date hereof. No material authorization, approval, consent,
or order of, or registration, declaration, or filing with, any
court or other governmental body is required in connection with
the execution and delivery by AFGL of this Agreement and the
consummation by AFGL of the transactions contemplated hereby.
Section 3.14 Information. The information concerning AFGL
and its Subsidiaries set forth in this Agreement and in the AFGL
Schedules is complete and accurate in all material respects and
does not contain any untrue statement of a material fact or omit
to state a material fact required to make the statements made, in
light of the circumstances under which they are made, not
misleading.
Section 3.15 AFGL Schedules. Following the signing and
delivery of this Agreement, but in any event not less than 15
days prior to the Closing, AFGL shall make available to the
Companies and the Stockholders, the following documents and
information, which are collectively referred to as the "AFGL
Schedules," and the Companies and the Stockholders will be
provided prior to the Closing all such additional materials and
information as may be reasonably requested, including any
information requested to verify any information furnished:
(a) complete and correct copies of the articles of
incorporation, as amended, and bylaws of AFGL in effect as
of the date of Closing;
(b) the quarterly reports on Form 10-QSB of AFGL for
the periods ended March 31, June 30, and September 30, 1995;
(c) the annual report on Form 10-KSB of AFGL for the
fiscal year ended December 31, 1994, together with a copy of
AFGL's 1994 Annual Report to shareholders and Information
Statement dated June 7, 1995;
(d) the income Tax Returns of AFGL identified in
paragraph 3.09(c);
(e) a description of any material change in the
business, operations, property, inventory, assets, or
condition of any of AFGL and its Subsidiaries since
September 30, 1995, required to be provided pursuant to
Section 3.07 hereof; and
(f) a schedule setting forth any other information,
together with any copies of documents, required to be
disclosed in the AFGL Schedules by Sections 3.01 through
3.14.
AFGL shall cause the AFGL Schedules and the instruments and data
to be delivered to the Companies and the Stockholders hereunder
to be updated after the date of delivery up to and including the
date of Closing.
ARTICLE IV
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF EACH STOCKHOLDER
As an inducement to, and to obtain the reliance of, AFGL,
each Stockholder makes the following representations and
warranties, each for herself or himself.
Section 4.01 By Cohen. Cohen represents and warrants as
follows:
(a) Except as set forth in the Companies Schedules,
the execution and delivery of this Agreement does not, and
the consummation of the transactions contemplated by this
Agreement in accordance with the terms hereof will not:
result in the breach of, constitute a default under, result
in the acceleration of, create in any Person the right to
accelerate, terminate, modify, cancel, or require any notice
under, any material agreement, contract, lease, license,
instrument, or other arrangement to which Cohen is a party
or by which she is bound; or, violate any constitution,
statute, regulation, rule, injunction, judgment, order,
decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which Cohen is
subject.
(b) Except as set forth in the Companies Schedules,
Cohen has full power and authority, and has taken all action
required by law and otherwise to execute and deliver this
Agreement and to perform her obligations hereunder. This
Agreement represents the valid and binding obligation of
Cohen enforceable against her in accordance with its terms,
except as limited by bankruptcy and insolvency laws and by
other laws affecting the rights of creditors generally.
(c) No authorization, approval, consent, or order of,
or registration, declaration, or filing with, any court or
other governmental body is required in connection with the
execution and delivery by Cohen of this Agreement and the
consummation by her of the transactions contemplated hereby.
(d) Except as set forth in the Companies Schedules,
Cohen is the legal and beneficial owner of the Companies
stock set forth on the Stockholder List, free and clear of
any claims, charges, equities, liens, security interests,
and encumbrances whatsoever, and Cohen has full right,
power, and authority to transfer, assign, convey, and
deliver the Companies Stock; and delivery of such stock at
the Closing will convey to AFGL good and marketable title to
the Companies Stock free and clear of any claims, charges,
equities, liens, Security Interests, and encumbrances
whatsoever.
(e) At all times up to and including the date of
Closing, each of the Companies, any predecessor corporation
or other corporation whose assets were transferred or
retransferred by any Stockholder to any of the Companies or
any predecessor of the Companies (including, but not by way
of limitation, Americana), and any direct or indirect
corporate asset transferor of any of the Historic Companies:
(i) have always been qualified S corporations under the Tax
Code and Regulations; (ii) have been S corporations of New
York State and New Jersey for all purposes at all times
since such states have recognized such status under state
law; and (iii) have never been, at any time, a corporation
taxable as a regular corporation (non-S corporation) under
the Tax Code and Regulations or for New York State tax
purposes.
(f) To the knowledge of Cohen, the information
concerning the Companies and herself set forth in this
Agreement under Article II and this Section 4.01 is complete
and accurate in all material respects and does not contain
any untrue statement of a material fact or omit to state a
material fact required to make the statements made, in light
of the circumstances under which they are made, not
misleading.
Section 4.02 By Finegan. Finegan represents and warrants
as follows:
(a) Except as set forth in the Companies Schedules,
the execution and delivery of this Agreement does not, and
the consummation of the transactions contemplated by this
Agreement in accordance with the terms hereof will not:
result in the breach of, constitute a default under, result
in the acceleration of, create in any Person the right to
accelerate, terminate, modify, cancel, or require any notice
under, any material agreement, contract, lease, license,
instrument, or other arrangement to which Finegan is a party
or by which she is bound; or, violate any constitution,
statute, regulation, rule, injunction, judgment, order,
decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which Finegan
is subject.
(b) Except as set forth in the Companies Schedules,
Finegan has full power , and has taken all action required
by law and otherwise to execute and deliver this Agreement
and to perform her obligations hereunder. This Agreement
represents the valid and binding obligation of Finegan
enforceable against her in accordance with its terms,
except as limited by bankruptcy and insolvency laws and by
other laws affecting the rights of creditors generally.
(c) No authorization, approval, consent, or order of,
or registration, declaration, or filing with, any court or
other governmental body is required in connection with the
execution and delivery by Finegan of this Agreement and the
consummation by her of the transactions contemplated hereby.
(d) Except as set forth in the Companies Schedules,
Finegan is the legal and beneficial owner of the Companies
Stock set forth on the Stockholder List, free and clear of
any claims, charges, equities, liens, security interests,
and encumbrances whatsoever, and Finegan has full right,
power, and authority to transfer, assign, convey, and
deliver the Companies Stock; and delivery of such stock at
the Closing will convey to AFGL good and marketable title to
the Companies Stock free and clear of any claims, charges,
equities, liens, Security Interests, and encumbrances
whatsoever.
(e) At all times up to and including the date of
Closing, each of the Companies, any predecessor corporation
or other corporation whose assets were transferred or
retransferred by any Stockholder to any of the Companies or
any predecessor of the Companies (including, but not by way
of limitation, Americana), and any direct or indirect
corporate asset transferor of any of the Historic Companies:
(i) have always been qualified S corporations under the Tax
Code and Regulations; (ii) have been S corporations of New
York State and New Jersey for all purposes at all times
since such states have recognized such status under state
law; and (iii) have never been, at any time, a corporation
taxable as a regular corporation (non-S corporation) under
the Tax Code and Regulations or for New York State tax
purposes.
(f) To the knowledge of Finegan, the information
concerning the Companies and herself set forth in this
Agreement under Article II and this Section 4.02 is complete
and accurate in all material respects and does not contain
any untrue statement of a material fact or omit to state a
material fact required to make the statements made, in light
of the circumstances under which they are made, not
misleading.
Section 4.03 By List. List represents and warrants as
follows:
(a) Except as set forth in the Companies Schedules,
the execution and delivery of this Agreement does not, and
the consummation of the transactions contemplated by this
Agreement in accordance with the terms hereof will not:
result in the breach of, constitute a default under, result
in the acceleration of, create in any Person the right to
accelerate, terminate, modify, cancel, or require any notice
under, any material agreement, contract, lease, license,
instrument, or other arrangement to which List is a party or
by which he is bound; or, violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government,
governmental agency, or court to which List is subject.
(b) Except as set forth in the Companies Schedules,
list has full power and authority, and has taken all action
required by law and otherwise to execute and deliver this
Agreement and to perform his obligations hereunder. This
Agreement represents the valid and binding obligation of
List enforceable against him in accordance with its terms,
except as limited by bankruptcy and insolvency laws and by
other laws affecting the rights of creditors generally.
(c) No authorization, approval, consent, or order of,
or registration, declaration, or filing with, any court or
other governmental body is required in connection with the
execution and delivery by List of this Agreement and the
consummation by him of the transactions contemplated hereby.
(d) Except as set forth in the Companies Schedules,
List is the legal and beneficial owner of the Companies
Stock set forth on the Stockholder List,, free and clear of
any claims, charges, equities, liens, security interests,
and encumbrances whatsoever, and List has full right, power,
and authority to transfer, assign, convey, and deliver the
Companies Stock; and delivery of such stock at the Closing
will convey to AFGL good and marketable title to the
Companies Stock free and clear of any claims, charges,
equities, liens, Security Interests, and encumbrances
whatsoever.
(e) At all times up to and including the date of
Closing, each of the Companies, any predecessor corporation
or other corporation whose assets were transferred or
retransferred by any Stockholder to any of the Companies or
any predecessor of the Companies (including, but not by way
of limitation, Americana), and any direct or indirect
corporate asset transferor of any of the Historic Companies:
(i) have always been qualified S corporations under the Tax
Code and Regulations; (ii) have been S corporations of New
York State and New Jersey for all purposes at all times
since such states have recognized such status under state
law; and (iii) have never been, at any time, a corporation
taxable as a regular corporation (non-S corporation) under
the Tax Code and Regulations or for New York State tax
purposes.
(f) To the knowledge of List, the information
concerning List and the Companies set forth in this
Agreement under Article II and this Section 4.03 is complete
and accurate in all material respects and does not contain
any untrue statement of a material fact or omit to state a
material fact required to make the statements made, in light
of the circumstances under which they are made, not
misleading.
ARTICLE V
SALE OF STOCK
Section 5.01 Sale of Companies Stock. On and subject to
the terms and conditions of this Agreement, AFGL agrees to
purchase from each of the Stockholders, and each of the
Stockholders agrees to sell to AFGL, all of her or his Companies
Stock for the consideration specified below.
Section 5.02 Preliminary Purchase Price. AFGL agrees to
pay to the Stockholders at the Closing (hereinafter the
"Preliminary Purchase Price"), $8,260,000 plus the amount (the
"Additional Amount") by which the Combined Book Value of the
Companies exceeds $2,100,000 as reflected on a combined balance
sheet of the Companies as of March 31, 1996, prepared by the
Companies, certified by an executive officer of the Companies,
and delivered to AFGL two business days prior to the date of
Closing (the "March Balance Sheet") by (i) a deposit of $100,000
by certified check or by wire transfer of funds to an escrow
account established by Morgan, Lewis & Bockius, LLP, concurrently
with the signing and delivery of this Agreement, which will be
paid over to the Stockholders at Closing, and (ii) cash for the
balance of the Preliminary Purchase Price payable at Closing by
wire transfer or delivery of other immediately available funds.
The Preliminary Purchase Price shall be allocated among the
Stockholders in proportion to their respective holdings of
Companies Stock as set forth in the Stockholder List delivered by
the Stockholders at Closing. In addition to the Preliminary
Purchase Price, AFGL will deposit at Closing by wire transfer or
delivery of other immediately available funds in the escrow
account established under this Section 5.02 (the "Escrowed
Funds"), an amount equal to the difference between the
Preliminary Purchase Price and the Combined Book Value of the
Companies as reflected on a date of Closing combined estimated
balance sheet as of the date of Closing prepared by the Companies
and delivered to AFGL two business days prior to the Closing (the
"Estimated Balance Sheet"). The Preliminary Purchase Price will
be subject to post-Closing adjustment as set forth below in
Sections 5.03, 5.04, and 6.03, as applicable.
Section 5.03 Preparation of Closing Balance Sheet. The
Closing Balance Sheet will be prepared as follows.
(a) Within 45 days following the date of Closing, AFGL
will prepare and deliver to the Stockholders a draft
combined accrual basis balance sheet (the "Draft Closing
Balance Sheet") for the Companies as of the close of
business on the Closing Date (determined on a pro forma
basis as though the Parties had not consummated the
transactions contemplated by this Agreement). AFGL will
prepare the Draft Closing Balance Sheet in accordance with
GAAP applied on a basis consistent with prior periods. If
the Stockholders have any objections to the Draft Closing
Balance Sheet, they will deliver a detailed statement
describing their objections to AFGL within 45 days after
receiving the Draft Closing Balance Sheet. AFGL and the
Stockholders will use reasonable efforts to resolve any such
objections themselves. If AFGL and the Stockholders do not
obtain a final resolution within 30 days after AFGL has
received the statement of objections, however, AFGL and the
Stockholders will select an accounting firm mutually
acceptable to them to resolve any remaining objections. If
AFGL and the Stockholders are unable to agree on the choice
of an accounting firm, they will select a nationally-
recognized accounting firm by lot (after excluding their
respective regular outside accounting firms). The
determination of any accounting firm so selected will be set
forth in writing and will be conclusive and binding upon the
Parties. AFGL will revise the Draft Closing Balance Sheet
as appropriate to reflect the resolution of any objections
thereto pursuant to this paragraph. The "Closing Balance
Sheet" shall mean the Draft Closing Balance Sheet together
with any revisions thereto pursuant to this paragraph.
(b) In the event the Parties submit any unresolved
objections to an accounting firm for resolution as provided
in paragraph (a) of this Section 5.03, AFGL and the
Stockholders will share responsibility for the fees and
expenses of the accounting firm as follows: (i) if the
accounting firm resolves all of the remaining objections in
favor of AFGL (the Combined Book Value so determined from
the Closing Balance Sheet is referred to herein as the "Low
Value"), the Stockholders will be responsible for all of the
fees and expenses of the accounting firm; (ii) if the
accounting firm resolves all of the remaining objections in
favor of the Stockholders (the Combined Book Value so
determined from the Closing Balance Sheet is referred to
herein as the "High Value"), AFGL will be responsible for
all of the fees and expenses of the accounting firm; and
(iii) if the accounting firm resolves some of the remaining
objections in favor of AFGL and the rest of the remaining
objections in favor of the Stockholders (the Combined Book
Value so determined from the Closing Balance Sheet is
referred to herein as the "Actual Value"), the Stockholders
will be responsible for that fraction of the fees and
expenses of the accounting firm equal to (x) the difference
between the High Value and the Actual Value over (y) the
difference between the High Value and the Low Value, and
AFGL will be responsible for the remainder of the fees and
expenses.
(c) AFGL will make the work papers and back-up
materials used in preparing the Draft Closing Balance Sheet,
and the books, records, and financial staff of the
Companies, available to the Stockholders and their
accountants and other representatives at reasonable times
and upon reasonable notice at any time during (i) the
preparation by AFGL of the Draft Closing Balance Sheet, (ii)
the review by the Stockholders of the Draft Closing Balance
Sheet, and (iii) the resolution by the Parties of any
objections thereto.
Section 5.04 Adjustment of Preliminary Purchase Price.
The Preliminary Purchase Price will be adjusted as follows and as
provided in Section 6.03, and the amount as so adjusted by this
Section 5.04 and Section 6.03 is the "Purchase Price":
(a) If the Combined Book Value of the Companies
reflected on the Closing Balance Sheet is equal to or
greater than $2,100,000, but the sum of the cash and
accounts receivable reflected on the Closing Balance Sheet
is less than $2,100,000, the Stockholders will pay to AFGL
the amount equal to the difference between $2,100,000 and
the sum of the cash and accounts receivable reflected on the
Closing Balance Sheet (the "Deficit"), first by release and
delivery to AFGL of the Escrowed Funds and second, to the
extent the Deficit is greater than the Escrowed Funds, by
wire transfer or delivery of other immediately available
funds within three business days after the date on which the
Closing Balance Sheet finally is determined pursuant to
Section 5.03, above. The Stockholders will pay the Deficit
in proportion to their respective holdings of Companies
Stock as set forth on the Stockholder List.
(b) Regardless of the cash and accounts receivable
reflected on the Closing Balance Sheet, if the Combined Book
Value of the Companies as reflected on the Closing Balance
Sheet is less than the Combined Book Value reflected on the
Estimated Balance Sheet (the "Book Value Deficit"), the
Stockholders will pay to AFGL the amount of the Book Value
Deficit, first by release and delivery to AFGL of the
Escrowed Funds and second, to the extent the Book Value
Deficit is greater than the Escrowed Funds, by wire transfer
or delivery of other immediately available funds within
three business days after the date on which the Closing
Balance Sheet finally is determined pursuant to Section
5.03, above. The Stockholders will pay the Book Value
Deficit in proportion to their respective holdings of
Companies Stock as set forth on the Stockholder List.
(c) If the sum of the cash and accounts receivable
reflected on the Closing Balance Sheet is equal to or
greater than $2,100,000, and the Combined Book Value is
greater than the Preliminary Purchase Price, AFGL will pay
(subject to the provisions of Section 6.03) to the
Stockholders the amount equal to the difference between the
Preliminary Purchase Price paid at Closing and the Combined
Book Value (the "Surplus"), first by release and delivery to
the Stockholders of the Escrowed Funds and second, to the
extent the Surplus is greater than the Escrowed Funds by
wire transfer or delivery of other immediately available
funds within three business days after the date on which the
Closing Balance Sheet finally is determined pursuant to
Section 5.03, above. AFGL will pay the Surplus to the
Stockholders in proportion to their respective holdings of
Companies Stock as set forth on the Stockholder List.
ARTICLE VI
SPECIAL COVENANTS
Section 6.01 Access to Properties and Records. AFGL and
each of the Companies will each afford to the officers and
authorized representatives of the other, and to the Stockholders,
full access to its properties, books, and records in order that
each may have full opportunity to make such reasonable
investigation as it shall desire to make of the affairs of the
other, and each will furnish the other with such additional
financial and operating data and other information as to its
business and properties as the other shall from time to time
reasonably request. In this regard, concurrently with the
execution and delivery of this Agreement, AFGL is delivering to
the Stockholders true and correct copies of all letters of
intent, term sheets, and commitment letters related to debt and
equity financing to be obtained by AFGL in connection with the
transactions described in this Agreement, and AFGL covenants and
agrees to update the Stockholders regularly between the date of
this Agreement and the date of Closing on the status of AFGL's
debt and equity financing arrangements, including prompt
notification of any material adverse developments in connection
with such financing arrangements.
Section 6.02 Actions Prior to Closing.
(a) From and after the date of this Agreement, each of
the Companies will: (i) carry on its business in
substantially the same manner as it has heretofore; (ii)
maintain and keep its properties in states of good repair
and condition as at present, except for depreciation due to
ordinary wear and tear and damage due to casualty; (iii)
maintain in full force and effect insurance comparable in
amount and in scope of coverage to that now maintained by
it; (iv) perform in all material respects all of its
obligation under material contracts, leases, and instruments
relating to or affecting its assets, properties, and
business; (v) use commercially reasonable efforts to
maintain and preserve its business organization intact, to
retain its key employees, and to maintain its relationship
with its material suppliers and customers; and (vi) fully
comply with and perform in all material respects all
material obligations and duties imposed on it by all federal
and state laws and all rules, regulations, and orders
imposed by federal or state governmental authorities.
(b) From and after the date of this Agreement until
the date of Closing Date, none of the Companies will : (i)
make any change in its articles of incorporation or bylaws;
(ii) take any action described in Section 2.07 (all except
as permitted therein or as disclosed in the Companies
Schedules); or (iii) enter into or amend any contract,
agreement, or other instrument of any of the types described
in the Companies Schedules, except that the Companies may
enter into or amend any contract, agreement, or other
instrument in the Ordinary Course of Business and terminate
any contract, agreement, or other arrangement with any
officer, director, or Stockholder of the Companies.
(c) Notwithstanding the provisions of this Section
6.02, or any other contrary provision of this Agreement,
AFGL agrees and acknowledges that the Stockholders are
entitled to distribute cash and other property of the
Companies to themselves following the date of this Agreement
and prior to the Closing; provided, that at the time of
Closing the Stockholders reasonably believe in good faith
that the Closing Balance Sheet will show the sum of cash and
accounts receivable of at least $2,100,000, and a Combined
Book Value of at least $2,100,000,
Section 6.03 Tax Election and Certain Tax Matters.
(a) AFGL agrees to prepare, file and pay any tax shown
on any part or full year New York City General Corporation
Income Tax return for any of the Companies for all periods
commencing January 1, 1996; provided, that the New York City
General Corporation Income Tax on the operations of the
Companies from January 1, 1996, through and including the
date of Closing (excluding any gain from the asset sale
resulting from Section 338(h)(10) treatment of the purchase
contemplated hereby under the Tax Code and Regulations, if
any) will be accrued and reflected in the March Balance
Sheet, Estimated Balance Sheet, and Closing Balance Sheet.
(b) AFGL agrees to pay any tax shown on any New York
State Corporation Income Tax Return (Form CT-3-S) for any of
the Companies for the period commencing January 1, 1996
through and including the date of Closing; provided, that
the New York State Corporation Income Tax on the operations
of the Companies from January 1, 1996, through and including
the date of Closing (excluding any gain from the asset sale
resulting from Section 338(h)(10) treatment of the purchase
contemplated hereby under the Tax Code and Regulations, if
any) will be accrued and reflected in the March Balance
Sheet, Estimated Balance Sheet, and Closing Balance Sheet..
(c) The Parties agree and acknowledge that an election
will be made under Section 338(h)(10) of the Tax Code and
Regulations to treat the purchase of the Companies Stock by
AFGL as a sale by the Companies of all of their assets to
AFGL followed by a complete liquidation. At the time the
Draft Closing Balance Sheet is delivered to the Stockholders
under Section 5.03, AFGL will deliver a schedule, including
the Internal Revenue Service Form 8023A (with supporting
schedules), allocating the proposed Purchase Price among the
assets of the Companies. On completion of the Closing
Balance Sheet, the allocation of the Purchase Price will be
finalized in a further schedule delivered to the
Stockholders. Following completion of the Closing Balance
Sheet and final adjustments to the Preliminary Purchase
Price, and as a condition precedent to the payment of any
remaining portion of the Purchase Price under Section
5.04(c), all of the Stockholders shall deliver to AFGL
properly completed and signed forms required to make the
election under Section 338(h)(10). The Parties hereto
further agree to prepare, sign, deliver, and file, any and
all additional tax forms, and take all such further action
as may be reasonably required to make the afore-said
election.
(d) Within 75 days after Closing, the Stockholders
will submit to AFGL an analysis and computation (the
"Computation") describing in detail any circumstance or
transaction which would result in a gain on a sale of the
Companies assets (pursuant to the 338(h)(10) tax election
described above) which would exceed the actual gain on the
sale of stock to AFGL (if the transaction was treated as a
stock sale for tax purposes); provided, that the
Stockholders shall not claim any excessive gain hereunder on
the basis of any circumstance or transaction consisting of
or arising from (i) an exclusion of income from the Tax
Return of any Person; (ii) an excessive or erroneous
deduction on the Tax Return of any Person; (iii) any
computational mistake on the Tax Return of any Person; (iv)
any period during which any of the Historic Companies was
not a valid S corporation under the Tax Code and
Regulations; and (v) any change in basis of the Companies
Stock held by any Stockholder arising from the death of a
prior shareholder of any of the Historic Companies or a
purchase of shares of any of the Historic Companies. If
AFGL has any objections to the Computation, it will deliver
a detailed statement describing its objections to the
Stockholders within 45 days after receiving the Computation.
AFGL and the Stockholders will use reasonable efforts to
resolve any such objections themselves. If AFGL and the
Stockholders do not obtain a final resolution within 30 days
after the Stockholders have received the statement of
objections, however, AFGL and the Stockholders will select
an accounting firm mutually acceptable to them to resolve
any remaining objections. If AFGL and the Stockholders are
unable to agree on the choice of an accounting firm, they
will select a nationally-recognized accounting firm by lot
(after excluding their respective regular outside accounting
firms). The determination of any accounting firm so
selected will be set forth in writing and will be conclusive
and binding upon the Parties. The Stockholders will revise
the Computation as appropriate to reflect the resolution of
any objections thereto pursuant to this paragraph. The
"Inside/Outside Difference" shall mean the excess gain set
forth in the Computation as finally adjusted pursuant to
this paragraph. In the event the Parties submit any
unresolved objections to an accounting firm for resolution
as provided in this paragraph (d), AFGL and the Stockholders
will share responsibility for the fees and expenses of the
accounting firm as follows: (i) if the accounting firm
resolves all of the remaining objections in favor of AFGL
(the Inside/Outside Difference so determined is referred to
herein as the "Low Difference"), the Stockholders will be
responsible for all of the fees and expenses of the
accounting firm; (ii) if the accounting firm resolves all of
the remaining objections in favor of the Stockholders (the
Inside/Outside Difference so determined is referred to
herein as the "High Difference"), AFGL will be responsible
for all of the fees and expenses of the accounting firm; and
(iii) if the accounting firm resolves some of the remaining
objections in favor of AFGL and the rest of the remaining
objections in favor of the Stockholders (the Inside/Outside
Difference so determined is referred to herein as the
"Actual Difference"), the Stockholders will be responsible
for that fraction of the fees and expenses of the accounting
firm equal to (x) the difference between the High Difference
and the Actual Value over (y) the difference between the
High Difference and the Low Difference, and AFGL will be
responsible for the remainder of the fees and expenses.
(e) AFGL agrees to pay to the Stockholders, within 30
days of final determination of the Inside/Outside
Difference, an amount equal to 33.5 % of the Inside/Outside
Difference divided by a gross-up percentage of .665,
allocated among the Stockholders in proportion to their
respective holdings of the Companies' stock as set forth in
the Stockholder List.
(f) The covenant contained in this Section 6.03 shall
survive the Closing and the consummation of the transactions
herein contemplated.
Section 6.04 Indemnification.
(a) All of the representations and warranties of the
Parties contained in this Agreement shall survive the
Closing hereunder and continue in full force and effect for
a period of eighteen months thereafter; provided, however,
that the representations and warranties set forth in
Sections 2.09, 4.01(e), 4.02(e), and 4.03(e), shall survive
the Closing and continue in full force and effect until
expiration of the statute of limitations applicable to all
Tax Returns covering the operations of the Companies for the
year ending December 31, 1996, filed with the applicable
federal, state, and local authorities. In the event any
Party breaches (or in the event any third Person alleges
facts that, if true, would mean any Party has breached) any
of its representations and warranties contained herein,
provided a written claim for indemnification against the
breaching Party is made within any applicable survival
period specified in this paragraph (a) of Section 6.04, then
the breaching Party (the "Indemnifying Party") agrees to
indemnify the other Parties (the "Indemnified Parties") from
and against the entirety of any Adverse Consequences the
Indemnified Parties may suffer through and after the date of
the claim for indemnification (including any Adverse
Consequences the Indemnified Parties may suffer after the
end of any applicable survival period) resulting from,
arising out of, relating to, in the nature of, or caused by
the breach (or the alleged breach); provided, however, that
no Indemnifying Party shall have any obligation to indemnify
any Indemnified Party from and against any Adverse
Consequences resulting from, arising out of, relating to, in
the nature of, or caused by the breach (or alleged breach)
of any representation, warranty, or covenant of the
Indemnifying Party until the Indemnified Parties have
suffered Adverse Consequences by reason of all such breaches
(or alleged breaches) in excess of a $100,000 aggregate
threshold, at which point the Indemnifying Party will be
obligated to indemnify the Indemnified Parties from and
against all such Adverse Consequences that are in excess of
the first $50,000 of Adverse Consequences; provided further,
that the indemnification obligation of each Stockholder when
two or more Stockholders are Indemnifying Parties shall be
apportioned between them on the basis of a fraction, the
numerator of which is the amount of Companies Stock owned by
each indemnifying Stockholder as set forth on the
Stockholder List, and the denominator of which is the total
of the Companies Stock held by all indemnifying Stockholders
as set forth on the Stockholder List; and provided further,
that the maximum obligation to indemnify all Indemnified
Parties from and against Adverse Consequences resulting
from, arising out of, relating to, in the nature of, or
caused by the breach (or alleged breach) of any
representation, warranty, or covenant of the Indemnifying
Party shall not exceed, in the aggregate, the Purchase
Price.
(b) If any third Person shall notify any Indemnified
Party with respect to any matter (a "Third Party Claim")
which may give rise to a claim for indemnification against
any Indemnifying Party under this Section 6.04, then the
Indemnified Party shall promptly notify each Indemnifying
Party thereof in writing; provided, however, that no delay
on the part of the Indemnified Party in notifying any
Indemnifying Party shall relieve the Indemnifying Party from
any obligation hereunder unless (and then solely to the
extent) the Indemnifying Party thereby is prejudiced. Any
Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel
of it choice reasonably satisfactory to the Indemnified
Party so long as (i) the Indemnifying Party notifies the
Indemnified Party in writing within 15 days after the
Indemnified Party has given notice of the Third Party Claim
that the Indemnifying Party will indemnify the Indemnified
Party from and against the entirety of any Adverse
Consequences the Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of, or
caused by the Third Party Claim, (ii) the Indemnifying Party
provides the Indemnified Party with evidence reasonably
acceptable to the Indemnified Party that the Indemnifying
Party will have the financial resources to defend against
the Third Party Claim and fulfill its indemnification
obligations hereunder, (iii) the Third Party Claim involves
only money damages and does not seek an injunction or other
equitable relief, (iv) settlement of, or an adverse judgment
with respect to, the Third Party Claim is not, in the good
faith judgment of the Indemnified Party, likely to establish
a precedential custom or practice materially adverse to the
continuing business interests of the Indemnified Party, and
(v) the Indemnifying Party conducts the defense of the Third
Party Claim actively and diligently. So long as the
Indemnifying Party is conducting the defense of the Third
Party Claim in accordance with this paragraph, the
Indemnified Party may retain separate co-counsel at its sole
cost and expense and participate in the defense of the Third
Party Claim, the Indemnified Party will not consent to the
entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written
consent of the Indemnifying Party (not to be withheld
unreasonably), and the Indemnifying Party will not consent
to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior
written consent of the Indemnified Party (not to be withheld
unreasonably). In the event any of the conditions in
clauses (i) through (v) of this paragraph is or becomes
unsatisfied, the Indemnified Party may defend against, and
consent to the entry of any judgment or enter into any
settlement with respect to, the Third Party Claim in any
manner it reasonably may deem appropriate (and the
Indemnified Party need not consult with, or obtain any
consent from, any Indemnifying Party in connection
therewith), the Indemnifying Party will reimburse the
Indemnified Party promptly and periodically for the costs of
defending against the Third Party Claim (including
reasonable attorneys' fees and expenses), and the
Indemnifying Party will remain responsible for any Adverse
Consequences the Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of, or
caused by the Third Party Claim to the fullest extent
provided in this Section 6.04.
(c) Notwithstanding the provisions of this Section
6.04, no Party may recover for any Adverse Consequences
suffered after the Closing arising from the breach of any
representation or warranty known by the Party to be false or
inaccurate as of the Closing; provided that this limitation
shall not apply to any of the representations and warranties
contained in Sections 2.09, 4.01(e), 4.02(e), and 4.03(e) of
this Agreement.
(d) In the event there is a breach of a representation
or warranty that results in Adverse Consequences to any
Party, such Party shall act reasonably to mitigate any such
Adverse Consequences. The amount recoverable for Adverse
Consequences arising from the breach of any representation
or warranty by an Indemnifying Party shall be reduced by the
amount recovered by the Indemnified Parties from any
insurance or other indemnification arrangements.
(e) The remedy set forth in this Section 6.04 will be
the exclusive remedy for recovering on Adverse Consequences
resulting from the breach of any representations and
warranties set forth in this Agreement, but is not the
exclusive remedy for any default or breach of performance of
a post-Closing covenant or agreement. In no event shall any
Indemnified Party be entitled to set off against any amounts
which are owing or payable to any Indemnifying Party, with
respect to any amount claimed on the basis of any Adverse
Consequences and the indemnification obligation set forth in
this Section 6.04.
Section 6.05 Third Person Consents. The Parties agree to
cooperate with each other in order to obtain any required third
Person consents to this Agreement and the transactions herein
contemplated. In this regard, the Parties acknowledge that AFGL
must obtain the consent of FINOVA Capital Corporation, Merrill
Lynch Financial Services Inc., and True North Communications,
Inc. (formerly Foote, Cone & Belding Communications, Inc.).
Section 6.06 Employment Arrangements. At the Closing,
AFGL and the successor to ICTI shall enter into employment
agreements with Cohen, List, and Ronald Wendlinger in the forms
negotiated by each such individual.
Section 6.07 Termination.
(a) This Agreement may be terminated by the board of
directors of any Party at any time prior to the Closing if:
(i) A Party shall have received notice of
any actual or threatened material action or proceeding
before any court or any governmental body which shall
seek to restrain, prohibit, or invalidate the
transactions contemplated by this Agreement and which,
in the judgment of such board of directors, made in
good faith and based on the advice of its legal
counsel, makes it inadvisable to proceed with the
transactions contemplated by this Agreement;
(ii) There shall have been any change after
the Balance Sheet Date in the assets, properties,
business, or financial condition, of the Companies,
which is reasonably likely to have a material adverse
effect on the value of the Companies taken as a whole,
except any changes disclosed in the Companies
Schedules, which shall be disclosed as soon as any of
the Companies has knowledge of the change;
(iii) There shall have been any change
after the date of the September 30, 1995, AFGL balance
sheet in its assets, properties, business, or financial
condition, which is reasonably likely to have a
material adverse effect on the value of the business,
except any changes disclosed in the AFGL Schedules,
which shall be disclosed as soon as AFGL has knowledge
of the change; or
(iv) Any one or more of the Companies or the
Stockholders shall fail to comply in any material
respect with any of their respective material covenants
or agreements contained in this Agreement or if any of
their respective material representations or warranties
contained herein shall be inaccurate in any material
respect.
In the event of termination pursuant to this Section
6.07(a), no obligation, right, or liability shall arise
hereunder; each Party shall bear all of the expenses
incurred by it in connection with the negotiation, drafting,
and execution of this Agreement and the transactions herein
contemplated; the Companies and the Stockholders shall
refund to AFGL the $100,000 deposit made under Article V of
this Agreement; provided, however, that the preceding
sentence shall not apply in the event of termination upon
(y) any material action against AFGL and its Subsidiaries
described in clause (i) of Section 6.07(a), and (z) any
change in the AFGL balance sheet dated September 30, 1995,
described in clause (iii) of Section 6.07(a).
(b) This Agreement may be terminated by the board of
directors of any Party with respect to clause (iii) below,
and by the board of directors of AFGL with respect to clause
(i) and (ii) below if:
(i) AFGL shall fail to obtain the consents
or waivers required of any third Person for it to
consummate the transactions contemplated by this
Agreement;
(ii) AFGL shall fail to obtain the financing
required to effectuate the purchase of the Companies
Stock under Article V of this Agreement; or
(iii) AFGL shall fail to comply in any
material respect with any of its covenants or
agreements contained in this Agreement or if any of its
representations or warranties contained herein shall be
inaccurate in any material respect.
In the event of termination pursuant to this Section
6.07(b), AFGL shall pay the expenses of all Parties as
provided in Section 6.10, below; the Stockholders shall
retain the $100,000 deposit made under Article V of this
Agreement; and, except as specifically provided in this
Section 6.07(b), no obligation, right, or liability shall
arise hereunder.
Section 6.08 Payment of Indebtedness. At the closing the
stockholders shall deliver a payoff letter from Republic Bank
setting forth the total amount which must be paid to Republic
Bank to pay in full as of the date of Closing all notes and other
obligations payable to Republic Bank on which any of the
Companies is directly liable as a maker or endorser or given its
corporate guaranty, or on which Republic Bank holds a Security
Interest in any of the assets of the Companies (the "Republic
Bank Obligation"). The parties agree and acknowledge that a
portion of the Preliminary Purchase Price shall be paid by wire
transfer of funds required to pay the Republic Bank Obligation in
full as of the date of Closing.
Section 6.09 Public Announcement. The parties covenant
and agree to keep confidential this Agreement and the
transactions contemplated hereby, except as may be required by
applicable law. In the event any party is required by law to
make a disclosure regarding this Agreement and the transactions
contemplated hereby, such party shall obtain the approval of the
other parties before issuing a press release or making any other
public statement, which approval shall not be unreasonably
withheld.
Section 6.10 Reimbursement of Fees. AFGL covenants and
agrees to reimburse the Companies and/or the Stockholders for the
certain fees and other expenses incurred in connection with the
transactions contemplated by this Agreement on the following
terms and conditions.
(a) AFGL shall pay all of the accounting fees incurred
by the Companies in connection with the purchase transaction
contemplated by Article V and the tax matters contemplated
by Section 6.03 of this Agreement, all of which accounting
fees are hereinafter referred to as the "Accounting Fee
Reimbursement". At the time of signing and delivery of this
Agreement, the Companies are delivering to AFGL all billings
for the Accounting Fee Reimbursement previously received by
the Companies showing in reasonable detail the services and
amounts billed, and AFGL is delivering to the Companies 50%
of the Accounting Fee Reimbursement as shown on such bills.
Upon Closing, AFGL shall pay to the Companies the remainder
of the Accounting Fee Reimbursement billed as of the date of
Closing. Subsequent to the Closing, AFGL covenants and
agrees to pay the full amount of post-Closing Accounting Fee
Reimbursements upon receipt of invoices directly from the
accountants; provided, that the obligation of AFGL to pay
Accounting Fee Reimbursements for costs incurred in making
determination of the Inside/Outside Difference under Section
6.03 of this Agreement shall not exceed $12,500.
(b) AFGL shall pay all of the accounting fees incurred
by the Companies in connection with auditing financial
statements of the Companies for any period prior to or
subsequent to the date of Closing and 50% of the costs to
the Stockholders of negotiating and preparing the employment
agreements contemplated by Section 6.06 of this Agreement,
all of which fees are hereinafter referred to as the
"Employment Agreement and Audit Reimbursement." At the time
of signing and delivery of this Agreement, the Companies are
delivering to AFGL all billings for the Employment Agreement
and Audit Reimbursement previously received by the Companies
showing in reasonable detail the services and amounts
billed, and AFGL is delivering as directed by the Companies
50% of the Employment Agreement and Audit Reimbursement as
shown on such bills. Upon Closing, AFGL shall pay to the
Companies and Stockholders remainder of the Employment
Agreement and Audit Reimbursement billed as of the date of
Closing.
(c) At the Closing, AFGL covenants and agrees to
reimburse the Companies for 100% of the fees incurred by the
Companies in connection with the Viva Transaction, which is
herein referred to as the "Viva Fee Reimbursement." The
amount of the Viva Fee Reimbursement payable at Closing is
$25,000.
(d) In the event this Agreement is terminated because
the transactions contemplated hereby are not closed within
the time period stated in Section 7.01, or this Agreement is
terminated on the basis of any material action against AFGL
and its Subsidiaries described in clause (i) of Section
6.07(a), any change in the AFGL balance sheet dated
September 30, 1995, described in clause (iii) of Section
6.07(a), or any of the provisions of Section 6.07(b), AFGL
shall promptly pay to the Companies and Stockholders, as
applicable, the Accounting Fee Reimbursement for all fees
incurred up to and including the date of termination upon
receipt of invoices for such reimbursement, the Employment
Agreement and Audit Reimbursement for all fees incurred up
to and including the date of termination upon receipt of
invoices for such reimbursement, the remaining 50% of the
costs to the Stockholders of negotiating and preparing the
employment agreements contemplated by Section 6.06 of this
Agreement which is not included in the Employment Agreement
and Audit Reimbursement, and all costs incurred by the
Companies in negotiating this Agreement up to and including
the date of termination upon receipt of invoices for such
reimbursement.
Section 6.11 Additional Covenants.
(a) AFGL covenants and agrees to take whatever actions
are necessary to release the Companies and the Stockholders,
officers, and directors of the Companies from any
liabilities incurred in connection with the Viva
Transaction, including delivering the promissory note of
AFGL contemplated by the Viva Agreement.
(b) Each of the Parties hereto covenants and agrees to
disclose to the other Parties prior to Closing any events or
circumstances that give that Party reason to believe that
there may be a breach of any other Parties' representations
and warranties set forth in this Agreement.
(c) Each of the Parties hereto covenants and agrees to
use commercially reasonable efforts to satisfy the
conditions specified in this Agreement to the extent that
such satisfaction shall be within its control.
Section 6.12 Dispute Resolution Procedures. In the event
of dispute between the Parties as to the performance or breach
hereof, this Agreement shall be and remain in full force and
effect and all terms hereof shall continue to be complied with by
both parties, and such dispute shall be resolved in accordance
with the procedures set forth in this section.
(a) If the Parties are unable to resolve a dispute by
good faith negotiation within thirty (30) days after the
dispute arises, the Parties shall attempt in good faith to
resolve the dispute by mediation pursuant to the procedures
of the American Arbitration Association applicable to the
mediation of commercial disputes. If the Parties are unable
to agree on a mediator, the mediator shall be selected
pursuant to the Commercial Mediation Rules of the American
Arbitration Association.
(b) If the dispute or claim has not been resolved by
mediation within thirty (30) days of the initiation thereof,
the dispute shall be resolved by arbitration conducted in
New York City by a single arbitrator pursuant to the
Commercial Arbitration Rules of the American Arbitration
Association then in effect or such other rules as mutually
agreed upon by the Parties. Judgment upon the award
rendered by the arbitrator may be entered in any court
having jurisdiction thereof. Each party shall bear its own
costs and attorneys' fees incurred in connection with
arbitration, except that if the arbitration pertains to any
indemnification obligation of the Stockholders under Section
6.04 with respect to any Adverse Consequence arising from a
breach of the representations and warranties set forth in
Sections 4.01(e), 4.02(e), and 4.03(e), and AFGL prevails in
such arbitration, the Stockholders shall, in addition to
their own costs, bear all of the costs, including attorney's
fees, incurred in connection therewith and in enforcing and
collecting any judgment rendered therein.
ARTICLE VII
CLOSING
Section 7.01 Closing. The Closing of the transactions
contemplated by this Agreement shall occur at 10:00 AM, New York
City time on April 30, 1996, at the offices of AFGL, 850 Third
Avenue, 11th Floor, New York, New York, or on such other date and
at such time and place as the Parties may agree. In the event
the Closing is not held on or before May 31, 1996, and provided
that the Companies and the Stockholders shall not, as of that
time, have breached any of their material covenants,
representations, or warranties, AFGL shall pay the expenses of
all Parties as provided in Section 6.10, above; the Stockholders
shall retain the $100,000 deposit made under Article V of this
Agreement; and, except as specifically provided in this Section
7.01, no obligation, right, or liability shall arise hereunder.
Section 7.02 Closing Events. At the Closing, each of the
respective Parties hereto shall execute, acknowledge, and deliver
(or shall cause to be executed, acknowledged, and delivered) any
and all certificates, financial statements, schedules,
agreements, resolutions, rulings, or other instruments required
by this Agreement to be so delivered at or prior to the Closing,
together with such other items as may be reasonably requested by
the Parties hereto and their respective legal counsel in order to
effectuate or evidence the transactions contemplated hereby.
ARTICLE VIII.
CONDITIONS PRECEDENT TO OBLIGATIONS OF AFGL
The obligations of AFGL under this Agreement are subject to
the satisfaction, at or before the Closing, of the following
conditions:
Section 8.01 Accuracy of Representations. The
representations and warranties made by the Companies and the
Stockholders in this Agreement were true when made and shall be
true as of the date of Closing with the same force and effect as
if such representations and warranties were made at and as of the
date of Closing (except for changes therein permitted by this
Agreement), and each of the Companies and the Stockholders shall
have performed or complied with all covenants and conditions
required by this Agreement to be performed or complied with by
them prior to or at the Closing. AFGL shall be furnished with
certificates signed by a duly authorized officer of each of the
Companies and signed by each Stockholder, each dated the date of
Closing, to the foregoing effect.
Section 8.02 Litigation Certificates. AFGL shall have
been furnished with certificates dated the date of Closing and
signed by a duly authorized officer of each of the Companies and
signed by each Stockholder to the effect that no litigation,
proceeding, investigation, or inquiry is pending which might
result in an action to enjoin or prevent the consummation of the
transactions contemplated by this Agreement.
Section 8.03 No Material Adverse Change. Prior to the
Closing, there shall not have occurred any material adverse
change in the financial condition, business, or operations of the
Companies.
Section 8.04 Good Standing. AFGL shall have received a
certificate of good standing from the Secretary of State of the
state of New York dated as of a date within ten days prior to the
Closing certifying that each of the Companies is in good standing
as a corporation in such state.
Section 8.05 Consents/ Agreements. The Parties shall have
obtained any third Person consents pursuant to Section 6.05.
Section 8.06 Legal Opinion. AFGL shall have received from
counsel to the Companies a legal opinion in the form agreed to by
the Parties prior to Closing.
Section 8.07 Republic Obligation. The Companies and
Stockholders shall take all actions reasonably required to apply
at the Closing a portion of the Preliminary Purchase Price to
repayment of the Republic Bank Obligation in full, and to release
any and all corporate obligations and guarantees given by the
Companies for the Republic Bank Obligation, and all Security
Interests granted to Republic Bank by the Companies thereunder.
Section 8.08 Balance Sheets. The Companies shall have
delivered to AFGL the March Balance Sheet and Estimated Balance
Sheet in accordance with the requirements of Section 5.02 of this
Agreement.
Section 8.09 Reimbursement Documents. The Companies
and/or Stockholders shall have delivered to AFGL billing
statements, invoices, and other documents reasonably required by
AFGL to make payment of the Accounting Fee Reimbursement,
Employment Agreement and Audit Reimbursement, and Viva Fee
Reimbursement in accordance with Section 6.10 at the Closing.
Section 8.10 Other Items. AFGL shall have received such
further documents, certificates, or instruments relating to the
transactions contemplated hereby as AFGL may reasonably request.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANIES
AND STOCKHOLDERS
The obligations of the Companies and the Stockholders under
this Agreement are subject to the satisfaction, at or before the
Closing, of the following conditions:
Section 9.01 Accuracy of Representations. The
representations and warranties made by AFGL in this Agreement
were true when made and shall be true as of the date of Closing
with the same force and effect as if such representations and
warranties were made at and as of the date of Closing (except for
changes therein permitted by this Agreement), and AFGL shall have
performed or complied with all covenants and conditions required
by this Agreement to be performed or complied with by it prior to
or at the Closing. The Companies and the Stockholders shall be
furnished with a certificate, signed by a duly authorized officer
of AFGL and dated the date of Closing, to the foregoing effect.
Section 9.02 Litigation Certificate. The Companies and
the Stockholders shall have been furnished with a certificate
dated the date of Closing and signed by a duly authorized officer
of AFGL to the effect that no litigation, proceeding,
investigation, or inquiry is pending which might result in an
action to enjoin or prevent the consummation of the transactions
contemplated by this Agreement.
Section 9.03 No Material Adverse Change. Prior to the
Closing, there shall not have occurred any material adverse
change in the financial condition, business, or operations of
AFGL and its Subsidiaries.
Section 9.04 Good Standing. The Companies and the
Stockholders shall have received a certificate of good standing
from the Secretary of State of the state of Nevada and a
certificate of authority from the Secretary of State of the state
of New York, each dated as of a date within ten days prior to the
Closing certifying that AFGL is in good standing as a corporation
in such states.
Section 9.05 Consents/ Agreements. The Parties shall have
obtained any third Person consents pursuant to Section 6.05.
Section 9.06 Legal Opinion. The Companies and the
Stockholders shall have received from counsel to AFGL a legal
opinion in the form in the form agreed to by the Parties prior to
Closing.
Section 9.07 Republic Obligation. At the Closing AFGL
shall take all action reasonably required to apply a portion of
the Preliminary Purchase Price to repayment of the Republic
Obligation contemplated by Section 6.08.
Section 9.08 Viva Agreement. At the closing AFGL shall
prepare, sign, and deliver all documents, instruments, and other
agreements required by the terms and provisions of the Viva
Agreement, so that all Companies Stock is released from escrow,
free of any Security Interest, to the Stockholders at Closing.
Section 9.09 Other Items. The Companies and the
Stockholders shall have received such further documents,
certificates, or instruments relating to the transactions
contemplated hereby as they may reasonably request.
ARTICLE X
MISCELLANEOUS
Section 10.01 Brokers. The Parties agree that there were
no finders or brokers involved in bringing the Parties together
or who were instrumental in the negotiation, execution, or
consummation of this Agreement. The Parties each agree to
indemnify the other against any claim by any Person for any
commission, brokerage, or finders' fee arising from the
transactions contemplated hereby based on any alleged agreement
or understanding between the indemnifying Party and such Person,
whether express or implied from the actions of the indemnifying
Party.
Section 10.02 Governing Law. This Agreement shall be
governed by, enforced, and construed under and in accordance with
the laws of the United States of America and, with respect to
matters of state law, with the laws of New York.
Section 10.03 Notices. Any notices or other communications
required or permitted hereunder shall be sufficiently given if in
writing and if personally delivered to it or sent by registered
mail or certified mail, postage prepaid, or by prepaid telegram
addressed as follows:
If to AFGL, to: AFGL INTERNATIONAL, INC.
Attn: Barry S. Roseman
850 Third Avenue, 11th Floor
New York, New York 10022
With copies to: LEHMAN, JENSEN & DONAHUE, L.C.
Attn: Mark E. Lehman
8 East Broadway, Suite 620
Salt Lake City, Utah 84111
If to the Companies or
the Stockholders, to: IRENE COHEN TEMPS, INC.
Attn: Michael List
475 Fifth Avenue, Second Floor
New York, New York 10017
With copies to: MORGAN, LEWIS & BOCKIUS LLP
Attn: Thomas Sharbaugh
2000 One Logan Square
Philadelphia, Pennsylvania 19103
or such other addresses as shall be furnished in writing by any
Party in the manner for giving notices hereunder, and any such
notice or communication shall be deemed to have been given as of
the date so delivered, mailed, or telegraphed.
Section 10.04 Attorneys' Fees. In the event that any Party
institutes any action or suit to enforce this Agreement or to
secure relief from any default hereunder or breach hereof, the
Parties participating in the action or suit shall each bear their
own costs, including attorneys' fees, incurred in connection
therewith and in enforcing or collecting any judgment rendered
therein; provided, that in the event AFGL institutes any action
to enforce any indemnification obligation of the Stockholders
under Section 6.04 with respect to any Adverse Consequence
arising from a breach of the representations and warranties set
forth in Sections 4.01(e), 4.02(e), and 4.03(e), and AFGL
prevails in such action, the Stockholders shall, in addition to
their own costs, bear all of the costs, including attorney's
fees, costs on appeal, and interest from the date of judgment at
the applicable judgment rate, incurred in connection therewith
and in enforcing and collecting any judgment rendered therein.
Section 10.05 Third Party Beneficiaries. This Agreement is
solely between the Parties hereto, and except as specifically
provided no director, officer, stockholder, employee, agent,
independent contractor, or any other Person shall be deemed to be
a third party beneficiary of this Agreement.
Section 10.06 Entire Agreement. This Agreement, including
the exhibits and schedules hereto, represents the entire
agreement between the Parties relating to the subject matter
hereof, including the letter agreement dated October 20, 1995,
which is merged into this Agreement. This Agreement fully and
completely expresses the agreement of the Parties. There are no
other courses of dealing, understandings, agreements,
representations, or warranties, written or oral, except as set
forth herein. None of the Parties hereto is making any
representations or warranties to another Party except to the
extent that the Companies have made representations and
warranties in Article II, AFGL has made representations and
warranties in Article III, and the Stockholders have made
representations and warranties in Article IV.
Section 10.07 Counterparts. This Agreement may be executed
in multiple counterparts, each of which shall be deemed an
original and all of which taken together shall be but a single
instrument.
Section 10.08 Amendment or Waiver. Every right and remedy
provided herein shall be cumulative with every other right and
remedy, whether conferred herein, at law, or in equity, and may
be enforced concurrently herewith, and no waiver by any Party of
the performance of any obligation by the other Parties shall be
construed as a waiver of the same or any other default then,
theretofore, or thereafter occurring or existing. At any time
prior to the Closing, this Agreement may be amended by a writing
signed by all Parties hereto with respect to any of the terms
contained herein, and any term or condition of this Agreement may
be waived or the time for performance hereof may be extended by a
writing signed by the Party or Parties for whose benefit the
provision is intended.
Section 10.09 Assignment. This Agreement shall be binding
upon and in order to the benefit of and by enforceable by the
respective heirs, legal representatives, successors, and
permitted assigns of the parties hereto; provided, however, that
no party hereto shall sign this Agreement or any rights, benefit,
or obligation hereunder without the prior written consent of all
of the parties hereto.
IN WITNESS WHEREOF, the Parties hereto have executed this
Agreement, or caused this Agreement to be executed by their
officers hereunto duly authorized, as of the date first above-
written.
AFGL INTERNATIONAL, INC.
By /s/
Barry S Roseman
Chief Operating Officer
IRENE COHEN TEMPS, INC.
By /s/
Michael List, President
CORPORATE STAFFING ALTERNATIVES,
INC.
By /s/
Irene Cohen, President
CERTIFIED TECHNICAL STAFFING, INC.
By /s/
Michael List, President
STOCKHOLDERS
/s/
Irene Cohen
/s/
Elaine Finegan
/s/
Michael List
AMENDMENT NO. 1 TO
STOCK PURCHASE AGREEMENT
THIS AMENDMENT NO. 1 ("Amendment") to the Stock Purchase
Agreement dated April 10, 1996 ("Agreement") is made and entered
into as of the 30th day of May, 1996, by and between AFGL
INTERNATIONAL, INC., a Nevada corporation, IRENE COHEN TEMPS,
INC., a New York corporation, CORPORATE STAFFING ALTERNATIVES,
INC., a New York corporation, CERTIFIED TECHNICAL STAFFING, INC.,
a New York corporation, each of the STOCKHOLDERS of the Companies
as originally defined in the Agreement, and SEYMOUR COHEN.
Capitalized terms not otherwise defined in this Amendment have
the meaning given them in the Agreement.
Premises
The Agreement provides for the acquisition by AFGL from the
Stockholders of all of the capital stock of the Companies. At
the time the Agreement was entered into, the Companies and
Stockholders anticipated that Seymour Cohen would transfer all of
the capital stock he owns in CSA to other Stockholders prior to
the Closing of the transactions contemplated by the Agreement.
CSA and the Stockholders have since determined not to make said
transfer, so that as of the date of Closing Seymour Cohen will
own shares of the capital stock of CSA. In order to effectuate
the sale of CSA to AFGL, the Parties desire to amend the
Agreement to include Seymour Cohen as a Stockholder, and Seymour
Cohen desires to become a Party to the Agreement in order to
effect the sale of CSA contemplated thereby.
Agreement
NOW, THEREFORE, on the stated premises and for and in
consideration of the mutual covenants and agreements hereinafter
set forth and the mutual benefits to the Parties to be derived
herefrom, it is hereby agreed as follows:
1. Definitions. The definitions set forth in Article I of
the Agreement are hereby amended to add a definition for
"S.Cohen", add a definition for "April Balance Sheet", modify the
definition of "Stockholder(s)", and delete the definition of
"March Balance Sheet", all as follows:
April Balance Sheet has the meaning set forth in Section
5.02, below.
S.Cohen is Seymour Cohen,
who is a stockholder of one or more of
the Companies as stated in the
Stockholder List and a Party to this
Agreement.
Stockholder(s) is, when singular,
either Cohen, Finegan, List, or S.Cohen,
and is, when plural, two or all of such
persons as the context dictates.
The definition for the term "March Balance Sheet" is hereby
deleted.
2. Stockholder Representations and Warranties. Article IV
of the Agreement is hereby amended by the addition of Section
4.04 as follows:
Section 4.04 By S.Cohen. S.Cohen represents and
warrants as follows:
(a) Except as set forth in the Companies
Schedules, the execution and delivery of this Agreement
does not, and the consummation of the transactions
contemplated by this Agreement in accordance with the
terms hereof will not: result in the breach of,
constitute a default under, result in the acceleration
of, create in any Person the right to accelerate,
terminate, modify, cancel, or require any notice under,
any material agreement, contract, lease, license,
instrument, or other arrangement to which S.Cohen is a
party or by which he is bound; or, violate any
constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or
court to which S.Cohen is subject.
(b) Except as set forth in the Companies
Schedules, S.Cohen has full power and authority, and
has taken all action required by law and otherwise to
execute and deliver this Agreement and to perform his
obligations hereunder. This Agreement represents the
valid and binding obligation of S.Cohen enforceable
against him in accordance with its terms, except as
limited by bankruptcy and insolvency laws and by other
laws affecting the rights of creditors generally.
(c) No authorization, approval, consent, or order
of, or registration, declaration, or filing with, any
court or other governmental body is required in
connection with the execution and delivery by S.Cohen
of this Agreement and the consummation by him of the
transactions contemplated hereby.
(d) Except as set forth in the Companies
Schedules, S.Cohen is the legal and beneficial owner of
the Companies Stock set forth on the Stockholder List,,
free and clear of any claims, charges, equities, liens,
security interests, and encumbrances whatsoever, and
S.Cohen has full right, power, and authority to
transfer, assign, convey, and deliver the Companies
Stock; and delivery of such stock at the Closing will
convey to AFGL good and marketable title to the
Companies Stock free and clear of any claims, charges,
equities, liens, Security Interests, and encumbrances
whatsoever.
(e) At all times up to and including the date of
Closing, each of the Companies, any predecessor
corporation or other corporation whose assets were
transferred or retransferred by any Stockholder to any
of the Companies or any predecessor of the Companies
(including, but not by way of limitation, Americana),
and any direct or indirect corporate asset transferor
of any of the Historic Companies: (i) have always been
qualified S corporations under the Tax Code and
Regulations; (ii) have been S corporations of New York
State and New Jersey for all purposes at all times
since such states have recognized such status under
state law; and (iii) have never been, at any time, a
corporation taxable as a regular corporation (non-S
corporation) under the Tax Code and Regulations or for
New York State tax purposes.
(f) To the knowledge of S.Cohen, the information
concerning S.Cohen and the Companies set forth in this
Agreement under Article II and this Section 4.04 is
complete and accurate in all material respects and does
not contain any untrue statement of a material fact or
omit to state a material fact required to make the
statements made, in light of the circumstances under
which they are made, not misleading.
3. Definition of March Balance Sheet..
(a) Article V of the Agreement is hereby amended by
deleting all of Section 5.02 and inserting the following in lieu
thereof:
Section 5.02 Preliminary Purchase Price. AFGL agrees
to pay to the Stockholders at the Closing (hereinafter the
"Preliminary Purchase Price"), $8,260,000 plus the amount
(the "Additional Amount") by which the Combined Book Value
of the Companies exceeds $2,100,000 as reflected on a
combined balance sheet of the Companies as of April 30,
1996, prepared by the Companies, certified by an executive
officer of the Companies, and delivered to AFGL two business
days prior to the date of Closing (the "April Balance
Sheet") by (i) a deposit of $100,000 by certified check or
by wire transfer of funds to an escrow account established
by Morgan, Lewis & Bockius, LLP, concurrently with the
signing and delivery of this Agreement, which will be paid
over to the Stockholders at Closing, and (ii) cash for the
balance of the Preliminary Purchase Price payable at Closing
by wire transfer or delivery of other immediately available
funds. The Preliminary Purchase Price shall be allocated
among the Stockholders in proportion to their respective
holdings of Companies Stock as set forth in the Stockholder
List delivered by the Stockholders at Closing. In addition
to the Preliminary Purchase Price, AFGL will deposit at
Closing by wire transfer or delivery of other immediately
available funds in the escrow account established under this
Section 5.02 (the "Escrowed Funds"), an amount equal to the
difference between the Preliminary Purchase Price and the
Combined Book Value of the Companies as reflected on a date
of Closing combined estimated balance sheet as of the date
of Closing prepared by the Companies and delivered to AFGL
two business days prior to the Closing (the "Estimated
Balance Sheet"). The Preliminary Purchase Price will be
subject to post-Closing adjustment as set forth below in
Sections 5.03, 5.04, and 6.03, as applicable.
(b) All references in the Agreement to the term "March
Balance Sheet" are deemed for all purposes to be "April Balance
Sheet."
4. Acceptance. By the execution hereof, Seymour Cohen
agrees and acknowledges that he is a Stockholder and Party to the
Agreement for all purposes as though he were an original
signatory thereto, makes the representations and warranties set
forth in paragraph 2 of this Amendment and agrees that such
representations and warranties shall be deemed a part of the
Agreement for all purposes, and agrees to be bound by all of the
terms and conditions of the Agreement as amended by this
Amendment.
4. Miscellaneous.
(a) Except as specifically amended by this Amendment, the
Agreement shall be unchanged and remain in full force and effect.
From and after the date of this Amendment, all references to the
Agreement contained herein and in the Agreement shall be deemed
to be references to the Agreement as amended hereby.
(b) This Amendment may be executed in multiple
counterparts, each of which shall be deemed an original and all
of which taken together shall be but a single instrument.
IN WITNESS WHEREOF, the Parties hereto have executed this
Agreement, or caused this Agreement to be executed by their
officers hereunto duly authorized, as of the date first above-
written.
AFGL INTERNATIONAL, INC.
By /s/
Barry S Roseman
Chief Operating Officer
IRENE COHEN TEMPS, INC.
By /s/
Michael List, President
CORPORATE STAFFING ALTERNATIVES,
INC.
By /s/
Irene Cohen, President
CERTIFIED TECHNICAL STAFFING, INC.
By /s/
Michael List, President
STOCKHOLDERS
/s/
Irene Cohen
/s/
Elaine Finegan
/s/
Michael List
/s/
Seymour Cohen