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EXHIBIT 2.1
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PLAN OF REORGANIZATION AND
STOCK PURCHASE AGREEMENT
among:
JAVELIN SYSTEMS, INC.
a Delaware corporation;
CCI GROUP, INC.,
a Missouri corporation;
and
THE SHAREHOLDERS OF CCI GROUP, INC.
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Dated as of December 22, 1997
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SECTION 1. ISSUANCE AND EXCHANGE OF PURCHASER COMMON STOCK
FOR THE SHARES; RELATED TRANSACTIONS.............................1
1.1 Issuance and Exchange......................................1
1.2 Legends....................................................1
1.3 Indemnity and Escrow.......................................2
1.4 Closing....................................................2
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND
THE SELLING SHAREHOLDERS.........................................3
2.1 Due Organization; Subsidiaries; Etc........................3
2.2 Certificate of Incorporation and Bylaws; Records...........4
2.3 Capitalization, Etc........................................4
2.4 Financial Statements.......................................5
2.5 Absence of Changes.........................................5
2.6 Title to Assets............................................7
2.7 Receivables; Major Customers...............................8
2.8 Inventory..................................................8
2.9 Equipment, Etc.............................................8
2.10 Real Property..............................................8
2.11 Proprietary Assets.........................................9
2.12 Contracts..................................................9
2.13 Liabilities; Major Suppliers..............................11
2.14 Compliance With Legal Requirements........................11
2.15 Governmental Authorizations...............................12
2.16 Tax Matters...............................................13
2.17 Employee and Labor Matters................................15
2.18 Benefit Plans; ERISA......................................16
2.19 Environmental Matters.....................................18
2.20 Sale of Products; Performance of Services.................19
2.21 Insurance.................................................20
2.22 Related Party Transactions................................21
2.23 Certain Payments, Etc.....................................21
2.24 Proceedings; Orders.......................................22
2.25 Authority; Binding Nature of Agreements...................22
2.26 Non-Contravention; Consents...............................23
2.27 Brokers...................................................24
2.28 Selling Shareholders......................................24
2.29 Full Disclosure...........................................25
2.30 Investment Representations................................26
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PURCHASER.....................27
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3.1 Acquisition of Shares.....................................27
3.2 Due Organization..........................................27
3.3 Capitalization, Etc.......................................27
3.4 Authority; Binding Nature of Agreement....................28
3.5 SEC Filings...............................................28
3.6 Non-Contravention; Consents...............................28
3.7 Brokers...................................................28
SECTION 4. INDEMNIFICATION, ETC............................................29
4.1 Survival of Representations and Warranties................29
4.2 Indemnification by the Selling Shareholders...............29
4.3 Right to Require Cure of Breach...........................30
4.4 No Contribution...........................................30
4.5 Setoff....................................................30
4.6 Nonexclusivity of Indemnification Remedies................30
4.7 Defense of Third Party Claims.............................30
4.8 Exercise of Remedies by Indemnities Other Than Purchaser..31
SECTION 5. MISCELLANEOUS PROVISIONS........................................31
5.1 Further Assurances........................................31
5.2 Fees and Expenses.........................................32
5.3 Attorneys' Fees...........................................32
5.4 Notices...................................................32
5.5 Publicity.................................................33
5.6 Time of the Essence.......................................34
5.7 Headings..................................................34
5.8 Counterparts..............................................34
5.9 Governing Law; Venue......................................34
5.10 Successors and Assigns....................................35
5.11 Remedies Cumulative; Specific Performance.................35
5.12 Waiver....................................................35
5.13 Amendments................................................35
5.14 Severability..............................................36
5.15 Parties in Interest.......................................36
5.16 Entire Agreement..........................................36
5.17 Construction..............................................36
5.18 Selling Shareholders' Agent...............................36
ii.
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EXHIBITS
Exhibit A: Certain Definitions
Exhibit B: Form of Escrow Agreement
Exhibit C: Investor Questionnaire
Exhibit D: Form of ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇, P.C. opinion letter
Exhibit E: Form of Employment Agreement
Exhibit F: Form of ▇▇▇▇▇▇ Godward LLP opinion letter
SCHEDULES
Schedule 1: Selling Shareholders
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PLAN OF REORGANIZATION AND
STOCK PURCHASE AGREEMENT
THIS PLAN OF REORGANIZATION AND STOCK PURCHASE AGREEMENT is entered
into as of December 22, 1997, by and among Javelin Systems, Inc., a Delaware
corporation (the "Purchaser"), CCI GROUP, INC., a Missouri corporation ("the
Company"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, as agent ("Agent") for the Selling Shareholders and
the following persons which constitute all of the shareholders of the Company
(the "Selling Shareholders"): ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇ and
▇▇▇▇▇ ▇▇▇▇▇▇. Certain capitalized terms used in this Agreement are defined on
Exhibit A.
RECITALS
A. The Selling Shareholders collectively own 1,000 shares of the
common stock of the Company (the "Shares"), which constitute all of the
outstanding capital stock of the Company.
B. The Selling Shareholders wish to sell the Shares to the
Purchaser and the Purchaser wishes to purchase the Shares from the Selling
Shareholders upon the terms and conditions set forth in this Agreement.
AGREEMENT
The Purchaser, the Company and the Selling Shareholders, intending to
be legally bound, agree as follows:
SECTION 1. ISSUANCE AND EXCHANGE OF PURCHASER COMMON STOCK FOR THE
SHARES; RELATED TRANSACTIONS.
1.1 ISSUANCE AND EXCHANGE. Subject to the terms and upon the conditions
set forth in this Agreement, and except as otherwise provided by Section 1.3, on
the Closing Date, Purchaser shall issue to each Selling Shareholder the number
of shares of Purchaser Common Stock set forth opposite their names on Schedule 1
attached hereto in exchange for all the Shares owned by such Selling Shareholder
set forth opposite their names on Schedule 1 attached hereto.
1.2 LEGENDS. The shares of Purchaser Common Stock to be issued to each
Selling Shareholder pursuant to this Agreement are being issued pursuant to an
exemption from the registration requirements of the Securities Act of 1933, as
amended (the "Securities Act"), and each certificate representing any of such
shares shall bear the following legend or similar legend deemed appropriate by
the Company:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED,
PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE
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ACT OR IN COMPLIANCE WITH AN EXEMPTION FROM SUCH REGISTRATION
REQUIREMENTS."
1.3 INDEMNITY AND ESCROW. On the Closing Date, Purchaser shall withhold
290,000 of the shares of Purchaser Common Stock (the "Indemnity Shares")
required to be issued to the Selling Shareholders pursuant to Section 1.1(a)
from each Selling Shareholder in the amounts set forth on Schedule 1 attached
hereto. The Indemnity Shares shall be delivered to City National Bank (the
"Escrow Agent") as collateral for the Company's and the Selling Shareholder's
indemnification obligations set forth in Section 4. The Indemnity Shares will be
represented by certificates issued in the names of the Selling Shareholders
according to their respective pro rata percentage of the Indemnity Shares, and
shall be held in escrow by the Escrow Agent to be applied in satisfaction of any
claims made on or before the date that is thirty (30) days after the receipt by
Purchaser of its final audited consolidated financial statements for the fiscal
year ended June 30, 1998. The administration of the Indemnity Shares by the
Escrow Agent shall be conducted pursuant to the terms of an escrow agreement in
the form of Exhibit B attached hereto among Purchaser, the Selling Shareholders
and the Escrow Agent.
1.4 CLOSING.
(a) The closing of the sale of the Shares to the Purchaser (the
"Closing") shall take place at the offices of ▇▇▇▇▇▇ Godward LLP at ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ at 10:00 a.m. California time
on December 22, 1997 or such other place or time as the Purchaser and the Agent
may jointly designate. For purposes of this Agreement: "Scheduled Closing Time"
shall mean the time and date as of which the Closing is required to take place
pursuant to this Section 1.4(a); and "Closing Date" shall mean the time and date
as of which the Closing actually takes place.
(b) At the Closing:
(i) each Selling Shareholder shall deliver to the Purchaser the
stock certificate or certificates representing all of the Shares held by such
Selling Shareholder, duly endorsed (or accompanied by duly executed stock
powers) and the Purchaser shall deliver to such Selling Shareholder a stock
certificate representing the shares of Purchaser Common Stock to be issued to
such Selling Shareholder pursuant to Section 1.1(a) less the Indemnity Shares;
(ii) the Purchaser shall deliver to the Escrow Agent, to be held
in escrow, a stock certificate representing the shares of Purchaser Common Stock
to be withheld pursuant to Section 1.3;
(iii) each Selling Shareholder shall deliver to Purchaser an
executed Investor Qualification Questionnaire in the form of Exhibit C;
(iv) the Purchaser, each Selling Shareholder and the Escrow
Agent shall execute and deliver to the other an Escrow Agreement substantially
in the form of Exhibit B attached hereto (the "Escrow Agreement");
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(v) the Purchaser shall receive an opinion letter from Company
counsel, dated the Closing Date, in the form of Exhibit D.
(vi) the Selling Shareholders shall receive an opinion letter
from Purchaser's counsel, dated the Closing Date in the form of Exhibit F.
(vii) the Purchaser shall receive a certificate of estoppel in a
form acceptable to Purchaser from landlords and/or lenders with respect to owned
or leased real property dated no earlier than three days before the Closing
Date.
(viii) each of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇ and
▇▇▇▇▇ ▇▇▇▇▇▇▇ shall execute and deliver an Employment Agreement substantially in
the form of Exhibit E;
(ix) the Selling Shareholders shall cause to be delivered to the
Purchaser written resignations, effective as of the Closing Date, indicating
that each of the members of the board of directors of the Company has resigned
as a member of the board of directors and, except as contemplated by Section
1.4(b)(viii), each officer of the Company has resigned as an Officer of the
Company; and
(x) each of the Selling Shareholders shall execute and deliver
to the Purchaser such other documents as the Purchaser may reasonably request in
order to facilitate the consummation of the transactions contemplated by this
Agreement.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY And THE SELLING
SHAREHOLDERS
The Company and the Selling Shareholders, jointly and severally,
represent and warrant, to and for the benefit of the Indemnities, that, except
as set forth in the disclosure schedule delivered by the Company and the Selling
Shareholders to the Purchaser on the date of this Agreement (the "Disclosure
Schedule"):
2.1 DUE ORGANIZATION; SUBSIDIARIES; ETC.
(a) The Company and each of its subsidiaries is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Missouri and has all necessary power and authority to conduct its
business in the manner in which its business is currently being conducted and to
own and use its assets in the manner in which its assets are currently owned and
used and to perform its obligations under all Contracts to which the Company or
any of its subsidiaries is a party.
(b) The Company and each of its subsidiaries is not, and has
never been, required to be qualified, authorized, registered or licensed to do
business as a foreign corporation in any jurisdiction other than the
jurisdictions identified in Part 2.1 of the Disclosure Schedule. The Company and
each of its subsidiaries is in good standing as a foreign corporation in each of
the jurisdictions identified in Part 2.1 of the Disclosure Schedule.
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(c) Part 2.1 of the Disclosure Schedule accurately and
completely sets forth as of the date hereof (i) the names of the members of the
Company's board of directors, (ii) the names of the members of each committee of
the Company's board of directors, (iii) the names and titles of the Company's
officers, and (iv) the name of the members of the board of directors, the names
of the members of each committee of the board of directors and the names and
titles of each of the officers of each of the Company's subsidiaries.
(d) Neither the Company nor any of its respective shareholders
has ever approved, or commenced any proceeding or made any election
contemplating, the dissolution or liquidation of the Company or any of its
subsidiaries or the winding up or cessation of any of the Company's or any of
its subsidiaries' business or affairs.
(e) Except as set forth on Part 2.1 of the Disclosure Schedule,
the Company has no subsidiaries, and the Company has never owned, beneficially
or otherwise, any shares or other securities of, or any direct or indirect
interest of any nature in, any Entity.
2.2 CERTIFICATE OF INCORPORATION AND BYLAWS; RECORDS. The Company has
delivered to the Purchaser accurate and complete copies of the articles of
incorporation and bylaws, including all amendments thereto of the Company and
each of its subsidiaries; the stock records of the Company and each of its
subsidiaries, and the minutes and other records of the meetings and other
proceedings (including any actions taken by written consent or otherwise without
a meeting) of the shareholders of the Company and each of its subsidiaries, the
board of directors of the Company and each of its subsidiaries and all
committees of the board of directors of the Company and each of its
subsidiaries. There have been no meetings or other proceedings of the
shareholders of the Company or any of its subsidiaries, the board of directors
of the Company or any of its subsidiaries or any committee of the board of
directors of the Company or any of its subsidiaries that are not fully reflected
in such minutes or other records. There has not been any violation of any of the
provisions of the articles of incorporation of the Company or any of its
subsidiaries or bylaws or of any resolution adopted by the board of directors of
the Company or any of its subsidiaries; and no event has occurred, and no
condition or circumstance exists, that might (with or without notice or lapse of
time) constitute or result directly or indirectly in such a violation. The books
of account, stock records, minute books and other records of each of the Company
and each of its subsidiaries are accurate, up-to-date and complete, and have
been maintained in accordance with sound and prudent business practices.
2.3 CAPITALIZATION, ETC.
(a) The authorized capital stock of the Company consists of
30,000 shares of common stock having a par value of $1.00 per share, of which
1,000 shares (constituting all of the Shares) have been issued and are
outstanding. The Selling Shareholders have, and the Purchaser will acquire at
the Closing, good and valid title to the Shares free and clear of any
Encumbrances. All of the Shares (i) have been duly authorized and validly
issued, (ii) are fully paid and non-assessable, and (iii) have been issued in
full compliance with all applicable securities laws and other applicable Legal
Requirements.
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(b) There is no outstanding subscription, option, call,
warrant or other right (whether or not currently exercisable) to acquire any
shares of the capital stock or other securities of the Company or any of its
subsidiaries; outstanding security, instrument or obligation that is or may
become convertible into or exchangeable for any shares of the capital stock or
other securities of the Company or any of its subsidiaries; Contract under which
the Company or any of its subsidiaries is or may become obligated to sell or
otherwise issue any shares of its capital stock or any other securities; or
condition or circumstance that may directly or indirectly give rise to or
provide a basis for the assertion of a claim by any Person to the effect that
such Person is entitled to acquire or receive any shares of capital stock or
other securities of the Company or any of its subsidiaries. Except as set forth
in Part 2.3(b) of the Disclosure Schedule, neither the Company nor any of its
subsidiaries has ever repurchased, redeemed or otherwise reacquired any shares
of capital stock or other securities.
2.4 FINANCIAL STATEMENTS. The Company has delivered to the Purchaser
the following financial statements and notes (collectively, the "Company
Financial Statements"): the unaudited consolidated balance sheets of the Company
as of December 31, 1996 and the related unaudited consolidated statements of
operations, changes in shareholders' equity and cash flows of the Company for
the years then ended, together with the notes thereto; and the unaudited
consolidated balance sheet of the Company as of November 30, 1997 (the
"Unaudited Interim Balance Sheet"), and the related unaudited consolidated
statement of operations of the Company for the eleven (11) months then ended,
together with the notes thereto. The Company Financial Statements present fairly
the financial condition and assets and liabilities of the Company as of the
respective dates thereof and the results of operations, changes in shareholders'
equity and cash flows of the Company for the periods covered thereby. The
Company Financial Statements have been prepared in accordance with generally
accepted accounting principles, applied on a consistent basis throughout the
periods covered (except that the Unaudited Interim Balance Sheet of the Company
and the related unaudited statements of operations, changes in shareholders'
equity and cash flows do not contain footnotes and are subject to normal and
recurring year-end adjustments, which will not, individually or in the
aggregate, be material in magnitude.)
2.5 ABSENCE OF CHANGES. Except as set forth in Part 2.5 of the
Disclosure Schedule, since November 30, 1997:
(a) there has not been any adverse change in the business,
condition, assets, liabilities, operations, financial performance, net income or
prospects (or in any aspect or portion thereof), of the Company or any of its
subsidiaries and no event has occurred that might have an adverse effect on the
business, condition, assets, liabilities, operations, financial performance, net
income or prospects (or on any aspect or portion thereof) of the Company or any
of its subsidiaries;
(b) there has not been any loss, damage or destruction to, or
any interruption in the use of, any of the Company's assets or the assets of any
of the Company's subsidiaries (whether or not covered by insurance);
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(c) the Company has not (i) declared, accrued, set aside or
paid any dividend or made any other distribution in respect of any shares of
capital stock, or (ii) repurchased, redeemed or otherwise reacquired any shares
of capital stock or other securities;
(d) neither the Company nor any of its subsidiaries has sold
or otherwise issued any shares of capital stock or any other securities;
(e) neither the Company nor any of its subsidiaries has
purchased or otherwise acquired any asset from any other Person, except for
assets acquired by the Company or such subsidiary in the ordinary course of
business and consistent with past practice;
(f) neither the Company nor any of its subsidiaries has leased
or licensed any asset from any other Person;
(g) neither the Company nor any of its subsidiaries has made
any capital expenditure in excess of $25,000;
(h) neither the Company nor any of its subsidiaries has sold
or otherwise transferred, leased or licensed, any asset to any other Person
except for products sold by the Company or such subsidiary from its inventory in
the ordinary course of business and consistent with past practice;
(i) neither the Company nor any of its subsidiaries has
written off as uncollectible, or established any extraordinary reserve with
respect to, any account receivable or other indebtedness;
(j) neither the Company nor any of its subsidiaries has
pledged or hypothecated any of its assets or otherwise permitted any of its
assets to become subject to any Encumbrance;
(k) neither the Company nor any of its subsidiaries has made
any loan or advance to any other Person;
(l) neither the Company nor any of its subsidiaries has (i)
established or adopted any Employee Benefit Plan, or (ii) paid any bonus or made
any profit-sharing or similar payment to, or increased the amount of the wages,
salary, commissions, fringe benefits or other compensation or remuneration
payable to, any of its directors, officers or employees;
(m) neither the Company nor any of its subsidiaries has
entered into, and neither the Company, its subsidiaries nor any of the assets
owned or used by the Company or any of its subsidiaries has become bound by, any
Contract that contemplates or involves the payment of cash or other
consideration in an amount or having a value in excess of $50,000;
(n) no Contract by which the Company or any of its
subsidiaries or any of the assets owned or used by the Company or any of its
subsidiaries is or was bound, or under which
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the Company or any of its subsidiaries has or had any rights or interest, has
been amended or terminated;
(o) neither the Company nor any of its subsidiaries has
incurred, assumed or otherwise become subject to any Liability, other than
accounts payable (of the type required to be reflected as current liabilities in
the "liabilities" column of a balance sheet prepared in accordance with GAAP)
incurred by the Company or any of its subsidiaries in the ordinary course of
business and consistent with past practice;
(p) neither the Company nor any of its subsidiaries has
discharged any Encumbrance or discharged or paid any indebtedness or other
Liability, except for accounts payable that (i) are reflected in the Unaudited
Interim Balance Sheet or have been incurred by the Company or any of its
subsidiaries since December 31, 1996 in the ordinary course of business and
consistent with past practice, and (ii) have been discharged or paid in the
ordinary course of business and consistent with past practice;
(q) neither the Company nor any of its subsidiaries has
forgiven any debt or otherwise released or waived any right or claim;
(r) neither the Company nor any of its subsidiaries has
changed any of its methods of accounting or accounting practices in any respect;
(s) neither the Company nor any of its subsidiaries has
entered into any transaction or taken any other action outside the ordinary
course of business; and
(t) neither the Company nor any of its subsidiaries has
agreed, committed or offered (in writing or otherwise), and has attempted, to
take any of the actions referred to in clauses "(c)" through "(s)" above.
2.6 TITLE TO ASSETS.
(a) the Company and each of its subsidiaries owns, and has
good, valid and marketable title to, all assets purported to be owned by it,
including: all assets reflected on the Unaudited Interim Balance Sheet (except
for inventory sold by the Company since December 1, 1997 in the ordinary course
of business); all assets acquired by the Company and each of its subsidiaries
since December 1, 1997 (except for inventory sold by the Company and each of its
subsidiaries since December 1, 1997 in the ordinary course of business); all
assets referred to in Parts 2.7, 2.8, 2.9 and 2.10 of the Disclosure Schedule
and all of the Company's rights under any Contracts to which the Company or any
of its subsidiaries is a party; and all other assets reflected in the Company's
books and records as being owned by the Company and each of its subsidiaries.
Except as set forth in Part 2.6 of the Disclosure Schedule, all of said assets
are owned by the Company and each of its subsidiaries free and clear of any
Encumbrances.
(b) Part 2.6 of the Disclosure Schedule identifies all assets
that are being leased or licensed to the Company or any of its subsidiaries.
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2.7 RECEIVABLES; MAJOR CUSTOMERS. Part 2.7 of the Disclosure Schedule
provides an accurate and complete breakdown and aging of all accounts
receivable, notes receivable and other receivables of the Company and each of
its subsidiaries as of November 30, 1997. Except as set forth in Part 2.7 of the
Disclosure Schedule, all existing accounts receivable of the Company and each of
its subsidiaries (including those accounts receivable reflected on the Unaudited
Interim Balance Sheet that have not yet been collected and those accounts
receivable that have arisen since December 1, 1997 and have not yet been
collected): represent valid obligations of customers of the Company or any of
its subsidiaries arising from bona fide transactions entered into in the
ordinary course of business. The allowance for doubtful accounts reflected in
the Unaudited Interim Balance Sheet is consistent with the Company's prior
practice and is a reasonable estimate of such accounts. Neither the Company nor
any of its subsidiaries has received any notice or other communication (in
writing or otherwise), or any other information, indicating that any customer,
supplier or other Person may cease dealing with the Company or any of its
subsidiaries or may otherwise reduce the volume of business transacted by such
Person with the Company or any of its subsidiaries below historical levels.
2.8 INVENTORY. Part 2.8 of the Disclosure Schedule provides an accurate
and complete breakdown of all inventory (including raw materials, work in
process and finished goods) of the Company and each of its subsidiaries as of
November 30, 1997. All of the existing inventory of the Company and the
inventory of each of its subsidiaries (including all inventory that is reflected
on the Unaudited Interim Balance Sheet and that has not been disposed of by the
Company since December 1, 1997): is of such quality and quantity as to be usable
and saleable by the Company or any of its subsidiaries in the ordinary course of
business; is free of any defect or deficiency. The inventory levels maintained
by the Company and each of its subsidiaries (i) are not excessive in light of
the normal operating requirements of the Company and each of its subsidiaries
and (ii) are adequate for the conduct and operations of the Company and each of
its subsidiaries in the ordinary course of business.
2.9 EQUIPMENT, ETC.
(a) Part 2.9 of the Disclosure Schedule accurately identifies
all equipment, furniture, fixtures, improvements and other tangible assets
(other than inventory) owned by the Company and each of its subsidiaries, and
accurately sets forth the date of acquisition, original cost and book value of
each of said assets. Part 2.9 of the Disclosure Schedule also accurately
identifies all tangible assets leased to the Company and each of its
subsidiaries. Each asset identified or required to be identified in Part 2.9 of
the Disclosure Schedule: is structurally sound and in good condition and repair
(ordinary wear and tear excepted); complies in all respects with, and is being
operated and otherwise used in full compliance with, all applicable Legal
Requirements; and is adequate for the uses to which it is being put. The assets
identified in Part 2.9 of the Disclosure Schedule are adequate for the conduct
of the business of the Company and each of its subsidiaries in the manner in
which such business is currently being conducted.
2.10 REAL PROPERTY. Neither the Company nor any of its subsidiaries own
any real property or any interest in real property, except for the leaseholds
created under the real property leases identified in Part 2.12 of the Disclosure
Schedule.
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2.11 PROPRIETARY ASSETS.
(a) Except as set forth in Part 2.11 of the Disclosure
Schedule, there is no patent, patent application, trademark (whether registered
or unregistered and whether or not relating to a published work), trademark
application, trade name, fictitious business name, service ▇▇▇▇ (whether
registered or unregistered), service ▇▇▇▇ application, copyright (whether
registered or unregistered) or copyright application that is owned by or
licensed to the Company or any of its subsidiaries or that is otherwise used by
the Company or any of its subsidiaries in their respective businesses.
(b) The Company and each of its subsidiaries has taken
reasonable measures and precautions necessary to protect the confidentiality and
value of each Proprietary Asset identified or required to be identified in Part
2.11 of the Disclosure Schedule. The Company and each of its subsidiaries has
good, valid and marketable title to all of the Proprietary Assets owned by the
Company and each of its subsidiaries, respectively, free and clear of all
Encumbrances, and has a valid right to use and otherwise exploit, and to license
others to use and otherwise exploit, all Proprietary Assets licensed to or used
by the Company or any of its subsidiaries.
(c) The Company and each of its subsidiaries is not
infringing, and has not at any time infringed, or received any notice or other
communication (in writing or otherwise) of any actual, alleged, possible or
potential infringement of, any Proprietary Asset owned or used by any other
Person. To the best Knowledge of the Company and the Selling Shareholders, no
other Person is infringing, and no Proprietary Asset owned or used by any other
Person infringes or conflicts with, any Proprietary Asset owned or used by or
licensed to the Company or any of its subsidiaries.
(d) The Proprietary Assets identified in Part 2.11 of the
Disclosure Schedule constitute all of the Proprietary Assets necessary to enable
the Company and each of its subsidiaries to conduct its business in the manner
in which its business is currently being conducted.
2.12 CONTRACTS.
(a) Part 2.12 of the Disclosure Schedule identifies each
Material Company Contract. The Company has delivered to the Purchaser accurate
and complete copies of all Material Company Contracts identified in Part 2.12 of
the Disclosure Schedule, including all amendments thereto.
(b) Each Material Company Contract is valid and in full force
and effect, and is enforceable by the Company or its subsidiaries, as
applicable, in accordance with its terms.
(c) Except as set forth in Part 2.12 of the Disclosure
Schedule:
(i) to the best Knowledge of the Company and the Selling
Shareholders, no Person has violated or breached, or declared or committed any
default under, any Material Company Contract;
9.
14
(ii) to the best Knowledge of the Company and the Selling
Shareholders, no event has occurred, and no circumstance or condition exists,
that might (with or without notice or lapse of time) (A) result in a violation
or breach of any of the provisions of any Material Company Contract, (B) give
any Person the right to declare a default or exercise any remedy under any
Material Company Contract, (C) give any Person the right to accelerate the
maturity or performance of any Material Company Contract, or (D) give any Person
the right to cancel, terminate or modify any Material Company Contract;
(iii) neither the Company nor any of its subsidiaries has
received any notice or other communication (in writing or otherwise) regarding
any actual, alleged, possible or potential violation or breach of, or default
under, any Material Company Contract; and
(iv) neither the Company nor any of its subsidiaries has
waived any of its rights under any Material Company Contract.
(d) To the best Knowledge of the Company and the Selling
Shareholders, each Person against which the Company or any of its subsidiaries
has or may acquire any rights under any Material Company Contract is solvent and
is able to satisfy all of such Person's current and future monetary obligations
and other obligations and Liabilities to the Company or its subsidiaries as the
case may be.
(e) Except as set forth in Part 2.12 of the Disclosure
Schedule:
(i) neither the Company nor any of its subsidiaries has
ever guaranteed or otherwise agreed to cause, insure or become liable for, and
neither the Company nor any of its subsidiaries has ever pledged any of its
assets to secure, the performance or payment of any obligation or other
Liability of any other Person; and
(ii) neither the Company nor any of its subsidiaries has
ever been a party to or bound by (A) any joint venture agreement, partnership
agreement, profit-sharing agreement, cost-sharing agreement, loss-sharing
agreement or similar Contract, or (B) any Contract that creates or grants to any
Person, or provides for the creation or grant of, any stock option, stock
appreciation right, phantom stock right or similar right or interest that has
not been satisfied in full.
(f) The performance of the Material Company Contracts will not
result in any violation of or failure to comply with any Legal Requirement.
(g) No Person is renegotiating, or has the right to
renegotiate, any amount paid or payable to the Company or any of its
subsidiaries under any Material Company Contract or any other term or provision
of any Material Company Contract.
(h) The Material Company Contracts identified in Part 2.12 of
the Disclosure Schedule constitute all of the Contracts necessary to enable the
Company and each of its subsidiaries to conduct its business in the manner in
which its business is currently being conducted.
10.
15
(i) Part 2.12 of the Disclosure Schedule identifies and
provides an accurate and complete description of each proposed Contract as to
which any bid, offer, written proposal, term sheet or similar document has been
submitted or received by the Company or any of its subsidiaries.
2.13 LIABILITIES; MAJOR SUPPLIERS.
(a) Neither the Company nor any of its subsidiaries has
any Liabilities, except for:
(i) liabilities identified on the Unaudited
Interim Balance Sheet;
(ii) accounts payable (of the type required to be
reflected as current liabilities in the "liabilities" column of a balance sheet
prepared in accordance with GAAP) incurred by the Company or any of its
subsidiaries in the ordinary course of business since December 1, 1997 which do
not in the aggregate exceed $25,000; and
(iii) the Company's, and each of its subsidiaries's,
as the case may be, obligations under the Material Company Contracts listed in
Part 2.12 of the Disclosure Schedule, to the extent that the existence of such
obligations is ascertainable solely by reference to such Contracts.
(b) Part 2.13 of the Disclosure Schedule:
(i) provides an accurate and complete breakdown and
aging of the accounts payable of the Company and each of its subsidiaries as of
November 30, 1997;
(ii) provides an accurate and complete breakdown of
all customer deposits and other deposits held by the Company and each of its
subsidiaries as of the date of this Agreement; and
(iii) provides an accurate and complete breakdown of
the long-term debt of the Company and each of its subsidiaries as of the date of
this Agreement.
(c) Part 2.13 of the Disclosure Schedule accurately
identifies, and provides an accurate and complete breakdown of the amounts paid
to, each supplier or other Person that received (i) more than $100,000 from the
Company or any of its subsidiaries in 1996, or (ii) more than $100,000 from the
Company or any of its subsidiaries in the first three quarters of 1997.
2.14 COMPLIANCE WITH LEGAL REQUIREMENTS.
(a) Except as set forth in Part 2.14 of the Disclosure
Schedule:
(i) the Company and each of its subsidiaries is in
full compliance with each Legal Requirement that is applicable to it or to the
conduct of its business or the ownership or use of any of its assets;
11.
16
(ii) the Company and each of its subsidiaries has at
all times been in full compliance with each Legal Requirement that is or was
applicable to it or to the conduct of its business or the ownership or use of
any of its assets;
(iii) no event has occurred, and no condition or
circumstance exists, that might (with or without notice or lapse of time)
constitute or result directly or indirectly in a violation by the Company or any
of its subsidiaries of, or a failure on the part of the Company or any of its
subsidiaries to comply with, any Legal Requirement; and
(iv) neither the Company nor any of its subsidiaries
has ever received, at any time, any notice or other communication (in writing or
otherwise) from any Governmental Body or any other Person regarding (i) any
actual, alleged, possible or potential violation of, or failure to comply with,
any Legal Requirement, or (ii) any actual, alleged, possible or potential
obligation on the part of any of the Company or any of its subsidiaries to
undertake, or to bear all or any portion of the cost of, any cleanup or any
remedial, corrective or response action of any nature.
(b) the Company and each of its subsidiaries has delivered to
the Purchaser an accurate and complete copy of each report, study, survey or
other document to which the Company and each of its subsidiaries has access that
addresses or otherwise relates to the compliance of the Company and each of its
subsidiaries with, or the applicability to the Company and each of its
subsidiaries of, any Legal Requirement.
(c) To the best Knowledge of the Company and the Selling
Shareholders, no Governmental Body has proposed or is considering any Legal
Requirement that, if adopted or otherwise put into effect, (i) may have an
adverse effect on the business, condition, assets, liabilities, operations,
financial performance, net income or prospects of the Company or any of its
subsidiaries or on the ability of the Company, its subsidiaries or any of the
Selling Shareholders to comply with or perform any covenant or obligation under
this Agreement or any agreement entered into in connection herewith or any of
the agreements contemplated by this Agreement, or (ii) may have the effect of
preventing, delaying, making illegal or otherwise interfering with any of the
transactions contemplated by this Agreement.
2.15 GOVERNMENTAL AUTHORIZATIONS.
(a) Part 2.15 of the Disclosure Schedule identifies: each
Governmental Authorization that is held by the Company or any of its
subsidiaries; and each other Governmental Authorization that, to the best
Knowledge of the Company and the Selling Shareholders, is held by any of the
employees of the Company or any of its subsidiaries and relates to or is useful
in connection with the business of the Company or any of its subsidiaries. The
Company has delivered to the Purchaser accurate and complete copies of all of
the Governmental Authorizations identified in Part 2.15 of the Disclosure
Schedule, including all renewals thereof and all amendments thereto. Each
Governmental Authorization identified or required to be identified in Part 2.15
of the Disclosure Schedule is valid and in full force and effect.
12.
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(b) Except as set forth in Part 2.15 of the Disclosure
Schedule:
(i) the Company, each of its subsidiaries, and their
respective employees are, and their employees have at all times been, in full
compliance with all of the terms and requirements of each Governmental
Authorization identified or required to be identified in Part 2.15 of the
Disclosure Schedule;
(ii) no event has occurred, and no condition or
circumstance exists, that might (with or without notice or lapse of time) (A)
constitute or result directly or indirectly in a violation of or a failure to
comply with any term or requirement of any Governmental Authorization identified
or required to be identified in Part 2.15 of the Disclosure Schedule, or (B)
result directly or indirectly in the revocation, withdrawal, suspension,
cancellation, termination or modification of any Governmental Authorization
identified or required to be identified in Part 2.15 of the Disclosure Schedule;
(iii) neither the Company nor any of its subsidiaries has
ever received, and, to the best Knowledge of the Selling Shareholders, no
employee of the Company or any of its subsidiaries has ever received, any notice
or other communication (in writing or otherwise) from any Governmental Body or
any other Person regarding (A) any actual, alleged, possible or potential
violation of or failure to comply with any term or requirement of any
Governmental Authorization, or (B) any actual, proposed, possible or potential
revocation, withdrawal, suspension, cancellation, termination or modification of
any Governmental Authorization; and
(iv) all applications required to have been filed for the
renewal of the Governmental Authorizations required to be identified in Part
2.15 of the Disclosure Schedule have been duly filed on a timely basis with the
appropriate Governmental Bodies, and each other notice or filing required to
have been given or made with respect to such Governmental Authorizations has
been duly given or made on a timely basis with the appropriate Governmental
Body.
(c) The Governmental Authorizations identified in Part 2.15 of
the Disclosure Schedule constitute all of the Governmental Authorizations
necessary (i) to enable the Company and each of its subsidiaries to conduct its
business in the manner in which its business is currently being conducted, and
(ii) to permit the Company and each of its subsidiaries to own and use its
assets in the manner in which they are currently owned and used.
2.16 TAX MATTERS
(a) Each Tax required to have been paid, or claimed by any
Governmental Body to be payable, by the Company or any of its subsidiaries
(whether pursuant to any Tax Return or otherwise) has been duly paid in full or
on a timely basis. Any Tax required to have been withheld or collected by the
Company or any of its subsidiaries has been duly withheld and collected; and (to
the extent required) each such Tax has been paid to the appropriate Governmental
Body.
13.
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(b) Part 2.16 of the Disclosure Schedule accurately identifies
all Tax Returns required to be filed by or on behalf of the Company or any of
its subsidiaries with any Governmental Body with respect to any taxable period
ending on or before the Closing Date ("the Company Returns"). All the Company
Returns (i) have been or will be filed when due or when permitted to be filed
pursuant to a duly authorized extension of the due date, and (ii) have been, or
will be when filed, accurately and completely prepared in full compliance with
all applicable Legal Requirements. All amounts shown on the Company Returns to
be due on or before the Closing Date, and all amounts otherwise payable in
connection with the Company Returns on or before the Closing Date, have been or
will be paid on or before the Closing Date. The Company has delivered to the
Purchaser accurate and complete copies of all the Company Returns filed since
December 31, 1994.
(c) The Company Financial Statements fully accrue all actual
and contingent liabilities for Taxes with respect to all periods through the
dates thereof in accordance with GAAP. The Company and each of its subsidiaries
will establish, in the ordinary course of business, reserves adequate for the
payment of all Taxes for the period from November 30, 1997 through the Closing
Date, and the Company will disclose the dollar amount of such reserves to the
Purchaser on or prior to the Closing Date.
(d) Each Company Return relating to income Taxes that has been
filed with respect to any period ended on or prior to December 31, 1994 has
either (i) been examined and audited by all relevant Governmental Bodies, or
(ii) by virtue of the expiration of the limitation period under applicable Legal
Requirements, is no longer subject to examination or audit by any Governmental
Body. Part 2.16 of the Disclosure Schedule accurately identifies each
examination or audit of any Company Return that has been conducted since
December 31, 1994. The Company has delivered to the Purchaser accurate and
complete copies of all audit reports and similar documents (to which the Company
has access) relating to the Company Returns. Except as set forth in Part 2.16 of
the Disclosure Schedule, no extension or waiver of the limitation period
applicable to any of the Company Returns has been granted (by the Company or any
other Person), and no such extension or waiver has been requested from the
Company.
(e) Except as set forth in Part 2.16 of the Disclosure
Schedule, no claim or other Proceeding is pending or has been to the best
Knowledge of the Company and the Selling Shareholders threatened against or with
respect to the Company or any of its subsidiaries in respect of any Tax. There
are no unsatisfied Liabilities for Taxes (including liabilities for interest,
additions to tax and penalties thereon and related expenses) with respect to any
notice of deficiency or similar document received by the Company or any of its
subsidiaries. Neither the Company nor any of its subsidiaries has entered into
or become bound by any agreement or consent pursuant to Section 341(f) of the
Code. Neither the Company nor any of its subsidiaries has been, or will be,
required to include any adjustment in taxable income for any tax period (or
portion thereof) pursuant to Section 481 or 263A of the Code or any comparable
provision under state or foreign Tax laws as a result of transactions or events
occurring, or accounting methods employed, prior to the Closing.
14.
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(f) There is no agreement, plan, arrangement or other Contract
covering any employee or independent contractor or former employee or
independent contractor of the Company or any of its subsidiaries that,
individually or collectively, could give rise directly or indirectly to the
payment of any amount that would not be deductible pursuant to Section 280G or
Section 162 of the Code. Neither the Company nor any of its subsidiaries is, or
has ever been, a party to or bound by any tax indemnity agreement, tax sharing
agreement, tax allocation agreement or similar Contract.
2.17 EMPLOYEE AND LABOR MATTERS.
(a) Part 2.17 of the Disclosure Schedule accurately sets
forth, with respect to each employee of the Company and each employee of each of
its subsidiaries (including any employee of the Company or any subsidiary who is
on a leave of absence or on layoff status): the name of such employee and the
date as of which such employee was originally hired by the Company or any of its
subsidiaries; such employee's title, and a description of such employee's duties
and responsibilities; the aggregate dollar amount of the compensation (including
wages, salary, commissions, director's fees, fringe benefits, bonuses,
profit-sharing payments and other payments or benefits of any type) received by
such employee from the Company or any of its subsidiaries with respect to
services performed in 1997; such employee's annualized compensation as of the
date of this Agreement; and each Current Benefit Plan in which such employee
participates or is eligible to participate.
(b) Part 2.17 of the Disclosure Schedule accurately identifies
each former employee of the Company and each former employee of each of its
subsidiaries who is receiving or is scheduled to receive (or whose spouse or
other dependent is receiving or is scheduled to receive) any benefits (whether
from the Company or any of its subsidiaries or otherwise) relating to such
former employee's employment with the Company or any of its subsidiaries, as the
case may be; and Part 2.17 of the Disclosure Schedule accurately describes such
benefits.
(c) Except as set forth in Part 2.17 of the Disclosure
Schedule, neither the Company nor any of its subsidiaries is a party to or bound
by, and has never been a party to or bound by, any employment agreement or any
union contract, collective bargaining agreement or similar Contract.
(d) The employment of each of the employees of the Company and
each of the employees of each of its subsidiaries is terminable by the Company
and each of its subsidiaries, as the case may be, at will. The Company has
delivered to the Purchaser accurate and complete copies of all employee manuals
and handbooks, disclosure materials, policy statements and other materials
relating to the employment of the current and former employees of the Company
and each of its subsidiaries.
(e) To the best Knowledge of the Company and the Selling
Shareholders: no employee of the Company or any of its subsidiaries intends to
terminate his employment with the Company or any of its subsidiaries, as the
case may be; no employee of the Company or any of its subsidiaries has received
an offer to join a business that may be competitive with the business of the
Company or any of its
15.
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subsidiaries; and no employee of the Company or any of its subsidiaries is a
party to or is bound by any confidentiality agreement, noncompetition agreement
or other Contract (with any Person) that may have an adverse effect on (A) the
performance by such employee of any of his duties or responsibilities as an
employee of the Company or any of its subsidiaries, as the case may be, or (B)
the business or operations of the Company or any of its subsidiaries.
(f) Neither the Company nor any of its subsidiaries is
engaged, or has ever been engaged, in any unfair labor practice of any nature.
There has never been any slowdown, work stoppage, labor dispute or union
organizing activity, or any similar activity or dispute, affecting the Company
or any of its subsidiaries or any of their respective employees. There is not
now pending, and to the best Knowledge of the Company and the Selling
Shareholders no Person has threatened to commence, any such slowdown, work
stoppage, labor dispute or union organizing activity or any similar activity or
dispute. No event has occurred, and no condition or circumstance exists, that
might directly or indirectly give rise to or provide a basis for the
commencement of any such slowdown, work stoppage, labor dispute or union
organizing activity or any similar activity or dispute.
2.18 BENEFIT PLANS; ERISA.
(a) Part 2.18 of the Disclosure Schedule identifies and
provides an accurate and complete description of each Current Benefit Plan and
each Past Benefit Plan. Neither the Company nor any of its subsidiaries has ever
established, adopted, maintained, sponsored, contributed to, participated in or
incurred any Liability with respect to any Employee Benefit Plan, except for the
Company Plans identified in Part 2.18 of the Disclosure Schedule; and neither
the Company nor any of its subsidiaries has ever provided or made available any
fringe benefit or other benefit of any nature to any of its employees, except as
set forth in Part 2.18 of the Disclosure Schedule.
(b) No Company Plan: provides or provided any benefit
guaranteed by the Pension Benefit Guaranty Corporation; is or was a
"multiemployer plan" as defined in Section 4001(a)(3) of ERISA; or is or was
subject to the minimum funding standards of Section 412 of the Code or Section
302 of ERISA.
There is no Person that (by reason of common control or otherwise) is or has at
any time been treated together with the Company or any of its subsidiaries as a
single employer within the meaning of Section 414 of the Code.
(c) The Company has delivered to the Purchaser, with respect
to each Company Plan: an accurate and complete copy of such Company Plan and all
amendments thereto (including any amendment that is scheduled to take effect in
the future); an accurate and complete copy of each Contract (including any trust
agreement, funding agreement, service provider agreement, insurance agreement,
investment management agreement or recordkeeping agreement) relating to such
Company Plan; an accurate and complete copy of any description, summary,
notification, report or other document that has been furnished to any employee
of the Company or any of its subsidiaries with respect to such Company Plan; an
accurate and complete copy of any form, report, registration statement or other
document that has been filed with or
16.
21
submitted to any Governmental Body with respect to such Company Plan; and an
accurate and complete copy of any determination letter, notice or other document
that has been issued by, or that has been received by the Company and each of
its subsidiaries from, any Governmental Body with respect to such Company Plan.
(d) Each Current Benefit Plan is being operated and
administered in full compliance with the provisions thereof, and each Company
Plan has at all times been operated and administered in full compliance with the
provisions thereof. Each contribution or other payment that is required to have
been accrued or made under or with respect to any Company Plan has been duly
accrued and made on a timely basis.
(e) Each Current Benefit Plan complies and is being operated
and administered in full compliance with, and each Company Plan has at all times
complied and been operated and administered in full compliance with, all
applicable reporting, disclosure and other requirements of ERISA and the Code
and all other applicable Legal Requirements. Neither the Company nor any of its
subsidiaries has ever incurred any Liability to the Internal Revenue Service or
any other Governmental Body with respect to any Company Plan; and no event has
occurred, and no condition or circumstance exists, that might (with or without
notice or lapse of time) give rise directly or indirectly to any such Liability.
Neither the Company, any of its subsidiaries nor any Person that is or was an
administrator or fiduciary of any Company Plan (or that acts or has acted as an
agent of the Company or any such administrator or fiduciary), has engaged in any
transaction or has otherwise acted or failed to act in a manner that has
subjected or may subject the Company or any of its subsidiaries to any Liability
for breach of any fiduciary duty or any other duty. No Company Plan, and no
Person that is or was an administrator or fiduciary of any Company Plan (or that
acts or has acted as an agent of any such administrator or fiduciary): has
engaged in a "prohibited transaction" within the meaning of Section 406 of ERISA
or Section 4975 of the Code; has failed to perform any of the responsibilities
or obligations imposed upon fiduciaries under Title I of ERISA; or has taken any
action that (A) may subject such Company Plan or such Person to any Tax, penalty
or Liability relating to any "prohibited transaction," or (B) may directly or
indirectly give rise to or serve as a basis for the assertion (by any employee
or by any other Person) of any claim under, on behalf of or with respect to such
Company Plan.
(f) No inaccurate or misleading representation, statement or
other communication has been made or directed (in writing or otherwise) to any
current or former employee of the Company or any of its subsidiaries (i) with
respect to such employee's participation, eligibility for benefits, vesting,
benefit accrual or coverage under any Company Plan or with respect to any other
matter relating to any Company Plan, or (ii) with respect to any proposal or
intention on the part of the Company or any of its subsidiaries to establish or
sponsor any Employee Benefit Plan or to provide or make available any fringe
benefit or other benefit of any nature.
(g) Except as set forth in Part 2.18 of the Disclosure
Schedule, neither the Company nor any of its subsidiaries has advised any of its
employees (in writing or otherwise)
17.
22
that it intends or expects to establish or sponsor any Employee Benefit Plan or
to provide or make available any fringe benefit or other benefit of any nature
in the future.
2.19 ENVIRONMENTAL MATTERS.
(a) Neither the Company nor any of its subsidiaries is liable
or potentially liable for any response cost or natural resource damages under
Section 107(a) of CERCLA, or under any other so-called "superfund" or
"superlien" law or similar Legal Requirement, at or with respect to any site.
(b) Neither the Company nor any of its subsidiaries has ever
received any notice or other communication (in writing or otherwise) from any
Governmental Body or other Person regarding any actual, alleged, possible or
potential Liability arising from or relating to the presence, generation,
manufacture, production, transportation, importation, use, treatment,
refinement, processing, handling, storage, discharge, release, emission or
disposal of any Hazardous Material. No Person has ever commenced or to the best
Knowledge of the Company and the Selling Shareholders threatened to commence any
contribution action or other Proceeding against the Company or any of its
subsidiaries in connection with any such actual, alleged, possible or potential
Liability; and no event has occurred, and no condition or circumstance exists,
that may directly or indirectly give rise to, or result in the Company or any of
its subsidiaries becoming subject to, any such Liability.
(c) Except as set forth in Part 2.19 of the Disclosure
Schedule, neither the Company nor any of its subsidiaries has ever generated,
manufactured, produced, transported, imported, used, treated, refined,
processed, handled, stored, discharged, released or disposed of any Hazardous
Material (whether lawfully or unlawfully). Except as set forth in Part 2.19 of
the Disclosure Schedule, neither the Company nor any of its subsidiaries has
ever permitted (knowingly or otherwise) any Hazardous Material to be generated,
manufactured, produced, used, treated, refined, processed, handled, stored,
discharged, released or disposed of (whether lawfully or unlawfully):
(i) on or beneath the surface of any real property that
is, or that has at any time been, owned by, leased to, controlled by or used by
the Company or any of its subsidiaries;
(ii) in or into any surface water, groundwater, soil or
air associated with or adjacent to any such real property; or
(iii) in or into any well, pit, pond, lagoon,
impoundment, ditch, landfill, building, structure, facility, improvement,
installation, equipment, pipe, pipeline, vehicle or storage container that is or
was located on or beneath the surface of any such real property or that is or
has at any time been owned by, leased to, controlled by or used by the Company
or any of its subsidiaries.
(d) To the best Knowledge of the Company and the Selling
Shareholders, all property that is owned by, leased to, controlled by or used by
the Company or any of its
18.
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subsidiaries, and all surface water, groundwater, soil and air associated with
or adjacent to such property:
(i) is in clean and healthful condition;
(ii) is free of any Hazardous Material and any harmful
chemical or physical conditions; and
(iii) is free of any environmental contamination of any
nature.
(e) To the best Knowledge of the Company and the Selling
Shareholders, each storage tank or other storage container that is or has been
owned by, leased to, controlled by or used by the Company or any of its
subsidiaries, or that is located on or beneath the surface of any real property
owned by, leased to, controlled by or used by the Company or any of its
subsidiaries:
(i) is in sound condition; and
(ii) has been demonstrated by accepted testing
methodologies to be free of any corrosion or leaks.
2.20 SALE OF PRODUCTS; PERFORMANCE OF SERVICES.
(a) Each product that has been sold by the Company
or any of its subsidiaries to any Person:
(i) conformed and complied in all respects with the terms
and requirements of any applicable warranty or other Contract and with all
applicable Legal Requirements; and
(ii) was free of any design defects, construction defects
or other defects or deficiencies at the time of sale.
All repair services and other services that have been performed by the Company
or any of its subsidiaries were performed properly and in full conformity with
the terms and requirements of all applicable warranties and other Contracts and
with all applicable Legal Requirements.
(b) Neither the Company nor any of its subsidiaries will incur
or otherwise become subject to any Liability arising directly or indirectly from
any product manufactured or sold, or any repair services or other services
performed by, the Company or any of its subsidiaries on or at any time prior to
the Closing Date.
(c) No product manufactured or sold by the Company or any of
its subsidiaries has been the subject of any recall or other similar action; and
no event has occurred, and no condition or circumstance exists, that might (with
or without notice or lapse of time) directly or indirectly give rise to or serve
as a basis for any such recall or other similar action relating to any such
product.
19.
24
(d) Except as set forth in Part 2.20 of the Disclosure
Schedule, no customer or other Person has ever asserted or to the best Knowledge
of the Company and the Selling Shareholders threatened to assert any claim
against the Company or any of its subsidiaries (i) under or based upon any
warranty provided by or on behalf of the Company or any of its subsidiaries, or
(ii) under or based upon any other warranty relating to any product sold by the
Company or any of its subsidiaries or any services performed by the Company or
any of its subsidiaries. To the best Knowledge of the Company and the Selling
Shareholders, no event has occurred, and no condition or circumstance exists,
that might (with or without notice or lapse of time) directly or indirectly give
rise to or serve as a basis for the assertion of any such claim.
2.21 INSURANCE.
(a) Part 2.21 of the Disclosure Schedule accurately sets
forth, with respect to each insurance policy maintained by or at the expense of,
or for the direct or indirect benefit of, the Company and each of its
subsidiaries: the name of the insurance carrier that issued such policy and the
policy number of such policy; whether such policy is a "claims made" or an
"occurrences" policy; a description of the coverage provided by such policy and
the material terms and provisions of such policy (including all applicable
coverage limits, deductible amounts and co-insurance arrangements and any
non-customary exclusions from coverage); the annual premium payable with respect
to such policy, and the cash value (if any) of such policy; and a description of
any claims pending, and any claims that have been asserted in the past, with
respect to such policy.
Part 2.21 of the Disclosure Schedule also identifies (1) each pending
application for insurance that has been submitted by or on behalf of the Company
or any of its subsidiaries, and (2) each self-insurance or risk-sharing
arrangement affecting the Company or any of its subsidiaries or any of its
assets. The Company has delivered to the Purchaser accurate and complete copies
of all of the insurance policies identified in Part 2.21 of the Disclosure
Schedule (including all renewals thereof and endorsements thereto) and all of
the pending applications identified in Part 2.21 of the Disclosure Schedule.
(b) Each of the policies identified in Part 2.21 of the
Disclosure Schedule is valid, enforceable and in full force and effect, and has
been issued by an insurance carrier that, to the best Knowledge of the Company
and the Selling Shareholders, is solvent, financially sound and reputable. All
of the information contained in the applications submitted in connection with
said policies was (at the times said applications were submitted) accurate and
complete, and all premiums and other amounts owing with respect to said policies
have been paid in full on a timely basis. The nature, scope and dollar amounts
of the insurance coverage provided by said policies are sufficient to adequately
insure the business, assets, operations, key employees, services and potential
liabilities of the Company and each of its subsidiaries.
(c) Except as set forth in Part 2.21 of the Disclosure
Schedule, there is no pending claim under or based upon any of the policies
identified in Part 2.21 of the Disclosure Schedule; and no event has occurred,
and no condition or circumstance exists, that might (with or
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without notice or lapse of time) directly or indirectly give rise to or serve as
a basis for any such claim.
(d) Neither the Company nor any of its subsidiaries has ever
received: any notice or other communication (in writing or otherwise) regarding
the actual or possible cancellation or invalidation of any of the policies
identified in Part 2.21 of the Disclosure Schedule or regarding any actual or
possible adjustment in the amount of the premiums payable with respect to any of
said policies; any notice or other communication (in writing or otherwise)
regarding any actual or possible refusal of coverage under, or any actual or
possible rejection of any claim under, any of the policies identified in Part
2.21 of the Disclosure Schedule; or any indication that the issuer of any of the
policies identified in Part 2.21 of the Disclosure Schedule may be unwilling or
unable to perform any of its obligations thereunder.
2.22 RELATED PARTY TRANSACTIONS. Except as set forth in Part 2.22 of
the Disclosure Schedule: no Related Party has, and no Related Party has at any
time since December 31, 1994 had, any direct or indirect interest of any nature
in any asset used in or otherwise relating to the business of the Company or any
of its subsidiaries; no Related Party is, or has at any time since December 31,
1994 been, indebted to the Company or any of its subsidiaries; since December
31, 1994, no Related Party has entered into, or has had any direct or indirect
financial interest in, any Contract, transaction or business dealing of any
nature involving the Company or any of its subsidiaries; no Related Party is
competing, or has at any time since December 31, 1994 competed, directly or
indirectly, with the Company or any of its subsidiaries in any market served by
the Company or any of its subsidiaries; no Related Party has any claim or right
against the Company or any of its subsidiaries; and no event has occurred, and
no condition or circumstance exists, that might (with or without notice or lapse
of time) directly or indirectly give rise to or serve as a basis for any claim
or right in favor of any Related Party against the Company or any of its
subsidiaries.
2.23 CERTAIN PAYMENTS, ETC. Neither the Company, any of its
subsidiaries nor any officer, employee, agent or other Person associated with or
acting for or on behalf of the Company or any of its subsidiaries, has at any
time, directly or indirectly: used any corporate funds (i) to make any unlawful
political contribution or gift or for any other unlawful purpose relating to any
political activity, (ii) to make any unlawful payment to any governmental
official or employee, or (iii) to establish or maintain any unlawful or
unrecorded fund or account of any nature; made any false or fictitious entry, or
failed to make any entry that should have been made, in any of the books of
account or other records of the Company or any of its subsidiaries; made any
payoff, influence payment, bribe, rebate, kickback or unlawful payment to any
Person; performed any favor or given any gift which was not deductible for
federal income tax purposes; made any payment (whether or not lawful) to any
Person, or provided (whether lawfully or unlawfully) any favor or anything of
value (whether in the form of property or services, or in any other form) to any
Person, for the purpose of obtaining or paying for (i) favorable treatment in
securing business, or (ii) any other special concession; or agreed, committed,
offered or attempted to take any of the actions described in clauses "(a)"
through "(e)" above.
2.24 PROCEEDINGS; ORDERS.
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(a) Except as set forth in Part 2.24 of the Disclosure
Schedule, there is no pending Proceeding, and to the best Knowledge of the
Company and the Selling Shareholders no Person has threatened to commence any
Proceeding: that involves such Selling Shareholders, the Company or any of its
subsidiaries or that otherwise relates to or might affect the business of the
Company or any of its subsidiaries or any of the assets owned or used by the
Company or any of its subsidiaries (whether or not the Company or any of its
subsidiaries is named as a party thereto); or that challenges, or that may have
the effect of preventing, delaying, making illegal or otherwise interfering
with, any of the transactions contemplated by this Agreement.
Except as set forth in Part 2.24 of the Disclosure Schedule, no event has
occurred, and no claim, dispute or other condition or circumstance exists, that
might directly or indirectly give rise to or serve as a basis for the
commencement of any such Proceeding.
(b) Except as set forth in Part 2.24 of the Disclosure
Schedule, no Proceeding has ever been commenced by or against any Selling
Shareholder, the Company or any of its subsidiaries; and no Proceeding otherwise
involving or relating to any Selling Shareholder, the Company or any of its
subsidiaries has been pending or threatened at any time.
(c) the Company and the Selling Shareholders have delivered to
the Purchaser accurate and complete copies of all pleadings, correspondence and
other written materials to which it, any of its subsidiaries or he has access
that relate to the Proceedings identified in Part 2.24 of the Disclosure
Schedule.
(d) There is no Order to which the Company or any of its
subsidiaries, or any of the assets owned or used by the Company or any of its
subsidiaries, is subject; and no Selling Shareholder is not subject to any Order
that relates to the business of the Company or any of its subsidiaries or any of
the assets owned or used by the Company or any of its subsidiaries.
(e) To the best Knowledge of the Company and the Selling
Shareholders, no officer or employee of the Company or any of its subsidiaries
is subject to any Order that prohibits such officer or employee from engaging in
or continuing any conduct, activity or practice relating to the business of the
Company or any of its subsidiaries.
(f) There is no proposed Order that, if issued or otherwise
put into effect, (i) may have an adverse effect on the business, condition,
assets, liabilities, operations, financial performance, net income or prospects
(or on any aspect or portion thereof) of the Company or any of its subsidiaries
or on the ability of the Company or its subsidiaries or any of the Selling
Shareholders to comply with or perform any covenant or obligation under this
Agreement or any of the transactions contemplated by this Agreement, or (ii) may
have the effect of preventing, delaying, making illegal or otherwise interfering
with any of the transactions contemplated by this Agreement.
2.25 AUTHORITY; BINDING NATURE OF AGREEMENTS.
(a) The Company and each of its subsidiaries has the right,
power and authority to enter into and to perform its obligations under this
Agreement; and the execution,
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delivery and performance by the Company and each of its subsidiaries of this
Agreement have been duly authorized by all necessary action on the part of the
Company and each of its subsidiaries and its shareholders. This Agreement
constitutes the legal, valid and binding obligation of the Company and each of
its subsidiaries, enforceable against the Company and each of its subsidiaries
in accordance with its terms.
(b) Each Selling Shareholder has the absolute and unrestricted
right, power and capacity to enter into and to perform such Selling
Shareholder's obligations under this Agreement and the agreements contemplated
by this Agreement to which such Selling Shareholder is or may become a party.
This Agreement constitutes the legal, valid and binding obligation of each
Selling Shareholder, enforceable against such Selling Shareholder in accordance
with its terms. Upon the execution of each of the other agreements contemplated
by this Agreement at the Closing, each such other agreement will constitute the
legal, valid and binding obligation of each Selling Shareholder, and will be
enforceable against each Selling Shareholder in accordance with its terms.
(c) The spouse of each Selling Shareholder has the absolute
and unrestricted right, power and capacity to execute and deliver and to perform
their obligations under the Spousal Consents being executed by them. Said
Spousal Consents constitute their legal, valid and binding obligations,
enforceable against them in accordance with their terms.
2.26 NON-CONTRAVENTION; CONSENTS. Except as set forth in Part 2.26 of
the Disclosure Schedule, neither the execution and delivery of this Agreement or
any of the agreements contemplated by this Agreement, nor the consummation or
performance of any of the transactions contemplated by this Agreement, will
directly or indirectly (with or without notice or lapse of time):
(a) contravene, conflict with or result in a violation of (i)
any of the provisions of the articles of incorporation or bylaws of the Company
or any of its subsidiaries, or (ii) any resolution adopted by the shareholders
of the Company or any of its subsidiaries, the board of directors or any
committee of the board of directors of the Company or any of its subsidiaries;
(b) contravene, conflict with or result in a violation of, or
give any Governmental Body or other Person the right to challenge any of the
transactions contemplated by this Agreement or to exercise any remedy or obtain
any relief under, any Legal Requirement or any Order to which the Company, any
of its subsidiaries or any of the Selling Shareholders, or any of the assets
owned or used by the Company or any of its subsidiaries, is subject;
(c) cause the Company, any of its subsidiaries, the Purchaser
or any affiliate of the Purchaser to become subject to, or to become liable for
the payment of, any Tax;
(d) cause any of the assets owned or used by the Company or
any of its subsidiaries to be reassessed or revalued by any taxing authority or
other Governmental Body;
(e) contravene, conflict with or result in a violation of any
of the terms or requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel,
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terminate or modify, any Governmental Authorization that is held by the Company
or any of its subsidiaries or any of its employees or that otherwise relates to
the business of the Company or any of its subsidiaries or to any of the assets
owned or used by the Company or any of its subsidiaries;
(f) contravene, conflict with or result in a violation or
breach of, or result in a default under, any provision of any Material Company
Contract;
(g) give any Person the right to (i) declare a default or
exercise any remedy under any Material Company Contract, (ii) accelerate the
maturity or performance of any Material Company Contract, or (iii) cancel,
terminate or modify any Material Company Contract;
(h) contravene, conflict with or result in a violation or
breach of or a default under any provision of, or give any Person the right to
declare a default under, any Contract to which any Selling Shareholder is a
party or by which any Selling Shareholder is bound; or
(i) result in the imposition or creation of any Encumbrance
upon or with respect to any of the Shares or any asset owned or used by the
Company or any of its subsidiaries.
Except as set forth in Part 2.26 of the Disclosure Schedule, neither the
Company, any of its subsidiaries nor any Selling Shareholder was, is or will be
required to make any filing with or give any notice to, or to obtain any Consent
from, any Person in connection with the execution and delivery of this Agreement
or any of the agreements contemplated by this Agreement or the consummation or
performance of any of the transactions contemplated by this Agreement.
2.27 BROKERS. Neither the Company, any of its subsidiaries nor any
Selling Shareholder has agreed or become obligated to pay, or has taken any
action that might result in any Person claiming to be entitled to receive, any
brokerage commission, finder's fee or similar commission or fee in connection
with any of the transactions contemplated by this Agreement.
2.28 SELLING SHAREHOLDERS.
(a) Each Selling Shareholder (i) is the record and beneficial
owner of the Shares, (ii) has good and marketable title to the Shares and (iii)
has the absolute right, power and authority to sell, transfer and deliver the
Shares, in each case free and clear of all Encumbrances. Except for the Shares,
no Selling Shareholder owns any, and there are no, additional shares of capital
stock of the Company issued and outstanding. There are no options, warrants,
rights, calls, commitments or other agreements of any character whatsoever
related to shares owned by any Selling Shareholder.
(b) Each Selling Shareholder: has not, at any time, (A) made a
general assignment for the benefit of creditors, (B) filed, or had filed against
such Selling Shareholder, any bankruptcy petition or similar filing, (C)
suffered the attachment or other judicial seizure of all or a substantial
portion of such Selling Shareholder's assets, (D) admitted in writing such
Selling Shareholder's inability to pay such Selling Shareholder's debts as they
become due,
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(E) been convicted of, or pleaded guilty to, any felony, (F) taken or been the
subject of any action that may have an adverse effect on such Selling
Shareholder's ability to comply with or perform such Selling Shareholder's
covenants or obligations under this Agreement or any of the agreements
contemplated by this Agreement; is subject to any Order that may have an adverse
effect on such Selling Shareholder's ability to comply with or perform such
Selling Shareholder's covenants or obligations under this Agreement or any of
the agreements contemplated by this Agreement, or (G) obtained any loans or
incurred any indebtedness for which any property, assets or securities of the
Company is pledged as collateral and there are no Encumbrances on any of the
properties, assets or securities of the Company imposed in connection with any
indebtedness or other obligations of such Selling Shareholder.
(c) There is no Proceeding pending, and to the best Knowledge
of the Company and the Selling Shareholders no Person has threatened to commence
any Proceeding, that may have an adverse effect on the ability of any Selling
Shareholder to comply with or perform such Selling Shareholder's covenants or
obligations under this Agreement or any of the agreements contemplated by this
Agreement. No event has occurred, and no claim, dispute or other condition or
circumstance exists, that might directly or indirectly give rise to or serve as
a basis for the commencement of any such Proceeding.
2.29 FULL DISCLOSURE.
(a) Neither this Agreement nor any of the agreements
contemplated by this Agreement contains or will contain any untrue statement of
fact; and neither this Agreement nor any of the agreements contemplated by this
Agreement omits or will omit to state any fact necessary to make any of the
representations, warranties or other statements or information contained therein
not misleading.
(b) Except as set forth in Part 2.29 of the Disclosure
Schedule, there is no fact within the Knowledge of the Company or the Selling
Shareholders that (i) may have an adverse effect on the business of the Company
or any of its subsidiaries, condition, assets, liabilities, operations,
financial performance, net income or prospects (or on any aspect or portion
thereof) or on the ability of the Company, any of its subsidiaries or any of the
Selling Shareholders to comply with or perform any covenant or obligation under
this Agreement or any of the agreements contemplated by this Agreement, or (ii)
may have the effect of preventing, delaying, making illegal or otherwise
interfering with any of the transactions this Agreement or any of the agreements
contemplated by this Agreement.
(c) All of the information set forth in the Disclosure
Schedule, and all other information regarding the Company and each of its
subsidiaries and their respective businesses, condition, assets, liabilities,
operations, financial performance, net income and prospects that has been
furnished to the Purchaser or any of its Representatives by or on behalf of the
Company and each of its subsidiaries or any of the Company's Representatives, is
accurate and complete in all respects.
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(d) The Company and the Selling Shareholders have provided the
Purchaser and the Purchaser's Representatives with full and complete access to
all of the records and other documents and data of the Company and each of its
subsidiaries .
2.30 INVESTMENT REPRESENTATIONS. The Selling Shareholder understands
that the shares of Purchaser Common Stock to be issued pursuant to Section 1.1
of this Agreement have not been registered under the Securities Act or qualified
under state securities or "blue sky" laws ("State Securities Laws"). Each
Selling Shareholder also understands that the shares of Purchaser Common Stock
are being issued pursuant to an exemption from registration and/or qualification
contained in the Securities Act and applicable State Securities Laws based in
part upon the Selling Shareholder's representations contained in this Agreement.
Each Selling Shareholder hereby represents and warrants as follows:
(a) SELLING SHAREHOLDER BEAR ECONOMIC RISK. Selling
Shareholder has substantial experience in evaluating the merits and risks of its
investment in the Purchaser and has the capacity to protect its own interests.
Selling Shareholder must bear the economic risk of this investment indefinitely
unless the shares of Purchaser Common Stock are registered pursuant to the
Securities Act, or an exemption from such registration is available. Selling
Shareholder understands that the Company is not obligated to, and has no present
intention to register the shares of Purchaser Common Stock to be issued pursuant
to this Agreement. Selling Shareholder also understands that there is no
assurance that any exemption from registration under the Securities Act will be
available and that, even if available, such exemption may not allow the Selling
Shareholder to transfer all or any portion of the shares of Purchaser Common
Stock under the circumstances, in the amounts or at the times the Selling
Shareholder might propose.
(b) ACQUISITION FOR OWN ACCOUNT. Selling Shareholder is
acquiring the shares of Purchaser Common Stock for Selling Shareholder's own
account and beneficial interest for investment only, and not for sale or with a
view to distribution of the shares of Purchaser Common Stock or any part
thereof, has no present intention of selling (in connection with a distribution
or otherwise), granting any participation in, or otherwise distributing the
same, and does not presently have reason to anticipate a change in such
intention. Selling Shareholder also represents that the entire legal and
beneficial interest of the shares of Purchaser Common Stock be is acquiring
pursuant to this Agreement is being acquired for the account of the Selling
Shareholder only and neither in whole nor in part for any other person, and that
any transfer of the shares of Purchaser Common Stock will be made in compliance
with the Securities Act and all other applicable securities laws.
(c) SELLING SHAREHOLDER CAN PROTECT ITS INTERESTS. Selling
Shareholder represents that by reason of his business or financial experience,
Selling Shareholder has the capacity to protect his own interests in connection
with the transactions contemplated in this Agreement.
(d) COMPANY INFORMATION. Selling Shareholder has had an
opportunity to discuss the Purchaser's business, management and financial
affairs with directors, officers and
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31
management of the Purchaser and has had the opportunity to review the
Purchaser's operations and facilities. Selling Shareholder has also had the
opportunity to ask questions of, and receive answers from, the Purchaser and its
management regarding the terms and conditions of this investment and to obtain
any additional information necessary to verify the accuracy of the information
given the Selling Shareholder. Selling Shareholder acknowledges that he has
received all the information he has requested from the Purchaser and considers
necessary or appropriate for deciding whether to acquire the shares of Purchaser
Common Stock.
(e) RULE 144. Selling Shareholder acknowledges and agrees that
the shares of Purchaser Common Stock issued pursuant to this Agreement must be
held indefinitely unless they are subsequently registered under the Securities
Act or an exemption from such registration is available. Selling Shareholder has
been advised or is aware of the provisions of Rule 144 promulgated under the
Securities Act, which permits limited resale of shares acquired in a private
transaction subject to the satisfaction of certain conditions, including, among
other things, the availability of certain current public information about the
Purchaser, the resale occurring not fewer than one year after a party has
purchased and paid for the security to be sold, the sale being through an
unsolicited "broker's transaction" or in transactions directly with a market
maker (as such term is defined under the Securities Exchange Act of 1934, as
amended) and the number of shares being sold during any three-month period not
exceeding specified limitations.
(f) RESIDENCE. Each Selling Shareholder is a resident of the
State of Missouri.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser represents and warrants, to and for the benefit
of the Selling Shareholder, as follows:
3.1 ACQUISITION OF SHARES. The Purchaser is not acquiring the Shares
with the current intention of making a public distribution thereof.
3.2 DUE ORGANIZATION. The Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all necessary power and authority to conduct its business in the manner
in which its business is currently being conducted and to own and use its assets
in the manner in which its assets are currently owned and used and to perform
its obligations under all Contracts to which the Purchaser is a party.
3.3 CAPITALIZATION, ETC. The authorized capital stock of the Company
consists of 10,000,000 shares of common stock having a par value of $.01 per
share, of which 3,139,650 shares have been issued and are outstanding, and
1,000,000 shares of preferred stock having a par value of $.01 per share, none
of which has ever been issued or is outstanding. The Purchaser has, and each
Selling Shareholder will acquire at the Closing, good and valid title to the
Purchaser Common Stock free and clear of any Encumbrances. All of the Purchaser
Common Stock to be issued to the Selling Shareholders pursuant to this Agreement
(i) will be duly authorized and validly issued, (ii) will be fully paid and
non-assessable, and (iii) will be issued in full compliance with all applicable
securities laws and other applicable Legal Requirements.
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3.4 AUTHORITY; BINDING NATURE OF AGREEMENT. Upon the adoption of
appropriate resolutions by the Purchaser's board of directors:
(a) the Purchaser will have the right, power and authority to
enter into and perform its obligations under this Agreement;
(b) the execution, delivery and performance of this Agreement
by the Purchaser will have been duly authorized by all necessary action on the
part of the Purchaser; and
(c) this Agreement will constitute the legal, valid and
binding obligation of the Purchaser, enforceable against the Purchaser in
accordance with its terms.
3.5 SEC FILINGS. Purchaser has made available to the Company a complete
and accurate copy (excluding copies of exhibits) of each report, schedule,
registration statement and definitive proxy statement filed by Purchaser with
the SEC on or after January 1, 1997 (the "Purchaser SEC Documents"), which are
all the forms, reports and documents required to be filed by Purchaser with the
SEC since January 1, 1997. The Purchaser SEC Documents (i) complied with the
requirements of the Securities Act or the Exchange Act, as the case may be, at
and as of the times they were filed (or, if amended or superseded by a filing
prior to the date of this Agreement, then on the date of such filing); and (ii)
did not at and as of the time they were filed (or, if amended or superseded by a
filing prior to the date of this Agreement, then on the date of such filing)
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
3.6 NON-CONTRAVENTION; CONSENTS. Neither the execution and delivery of
this Agreement or any of the agreements contemplated by this Agreement, nor the
consummation or performance of any of the transactions contemplated by this
Agreement, will directly or indirectly (with or without notice or lapse of
time):
(a) contravene, conflict with or result in a violation of (i)
any of the provisions of the certificate of incorporation or bylaws of the
Purchaser, or (ii) any resolution adopted by the shareholders of the Purchaser,
the board of directors or any committee of the board of directors of the
Purchaser;
(b) contravene, conflict with or result in a violation of, or
give any Governmental Body or other Person the right to challenge any of the
transactions contemplated by this Agreement or to exercise any remedy or obtain
any relief under, any Legal Requirement or any Order to which the Purchaser, or
any of the assets owned or used by the Purchaser, is subject;
3.7 BROKERS. Purchaser has not agreed or become obligated to pay, and
has not taken any action that might result in any Person claiming to be entitled
to receive, any brokerage commission, finder's fee or similar commission or fee
in connection with any of the transactions contemplated by this Agreement.
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4. INDEMNIFICATION, ETC.
4.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
(a) The representations and warranties of the Company and the
Selling Shareholders shall survive the Closing and the sale of the Shares to the
Purchaser; any sale or other disposition of any or all of the Shares by the
Purchaser; and any Acquisition Transaction effected by or otherwise involving
the Purchaser or the Company or any of its subsidiaries and shall expire on the
date that is thirty (30) calendar days following the date of receipt by
Purchaser of its final audited consolidated financial statements for the fiscal
year ended June 30, 1998 (the "Expiration Date"); provided, however, that if, at
any date prior to the Expiration Date, Purchaser (acting in good faith) delivers
to the Agent a written notice alleging the existence of an inaccuracy in or a
breach of any of the representations or warranties made by any Selling
Shareholder or the Company (and setting forth in reasonable detail the basis for
Purchaser's belief that such an inaccuracy or breach may exist) and asserting a
claim for recovery under Section 4.2 based on such alleged inaccuracy or breach,
then the claim asserted in such notice shall survive the Expiration Date until
such date as such claim is fully and finally resolved.
(b) The representations and warranties of the Company and the
Selling Shareholders, and the rights and remedies that may be exercised by the
Indemnities, shall not be limited or otherwise affected by or as a result of any
information furnished to, or any investigation made by or Knowledge of, any of
the Indemnities or any of their Representatives.
(c) For purposes of this Agreement, each statement or other
item of information set forth in the Disclosure Schedule shall be deemed to be a
representation and warranty made by the Company and each of its subsidiaries and
the Selling Shareholders in this Agreement.
4.2 INDEMNIFICATION BY THE SELLING SHAREHOLDERS. The Selling
Shareholders shall, jointly and severally, hold harmless and indemnify each of
the Indemnities from and against, and shall compensate and reimburse each of the
Indemnities for, any Damages which are directly or indirectly suffered or
incurred by any of the Indemnities or to which any of the Indemnities may
otherwise become subject at any time (regardless of whether or not such Damages
relate to any third-party claim) and which arise directly or indirectly from or
as a direct or indirect result of, or are directly or indirectly connected with
any inaccuracy in or breach of any representation or warranty made by the
Company or any of its subsidiaries or the Selling Shareholders in this
Agreement, in the Disclosure Schedule or in any other document delivered or
otherwise made available to the Purchaser or any of its Representatives by or on
behalf of the Company or the Selling Shareholders; provided, however, that the
Selling Shareholders shall not be required to make any indemnification payment
pursuant to this Section 4.2 for any breach of any of his representations and
warranties until such time as the total amount of Damages (including the Damages
arising from such breach and all other Damages arising from any other breach of
any representations or warranties) that have been directly or indirectly
suffered or incurred by any one or more of the Indemnities, or to which any one
or more of the Indemnities has or have otherwise become subject, exceeds $50,000
in the aggregate and at such time as the total amount
29.
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of such Damages exceeds $50,000 in the aggregate the Indemnities shall be
entitled to be indemnified against the full amount of such damages (and not
merely the portion of such Damages exceeding $50,000); provided, further,
however, that the liability of each of the Selling Shareholders for any and all
Damages shall be limited solely to the Indemnity Shares of each such Selling
Shareholder.
4.3 RIGHT TO REQUIRE CURE OF BREACH. Without limiting the generality of
anything contained in Section 4.2, if there is any breach of any representation
or warranty made by the Company or the Selling Shareholders, then the Selling
Shareholders shall be obligated to pay such amounts to the Company and take such
other actions as the Purchaser may in good faith request for the purpose of
causing such breach to be corrected, cured and eliminated in all respects (at no
cost to the Company or the Purchaser).
4.4 NO CONTRIBUTION. Each Selling Shareholder waives, and acknowledges
and agrees that such Selling Shareholder shall not have and shall not exercise
or assert or attempt to exercise or assert, any right of contribution or right
of indemnity or any other right or remedy against the Company in connection with
such indemnification obligation or any other Liability to which such Selling
Shareholder may become subject under this Agreement or the transactions
contemplated hereby.
4.5 SETOFF. In addition to any rights of setoff or other rights that
the Purchaser or any of the other Indemnities may have at common law or
otherwise, the Purchaser shall have the right to set off any amount that may be
owed to any Indemnitee under this Section 4 against any amount otherwise payable
by any Indemnitee to the Selling Shareholders, including, without limitation the
right to set off such Damages against, and cancel, any Indemnity Shares in
accordance with the Escrow Agreement.
4.6 NONEXCLUSIVITY OF INDEMNIFICATION REMEDIES. The indemnification
remedies and other remedies provided in this Section 4 shall not be deemed to be
exclusive. Accordingly, the exercise by any Person of any of its rights under
this Section 4 shall not be deemed to be an election of remedies and shall not
be deemed to prejudice, or to constitute or operate as a waiver of, any other
right or remedy that such Person may be entitled to exercise (whether under this
Agreement, under any other Contract, under any statute, rule or other Legal
Requirement, at common law, in equity or otherwise).
4.7 DEFENSE OF THIRD PARTY CLAIMS. In the event of the assertion or
commencement by any Person of any claim or Proceeding (whether against the
Company, against any other Selling Shareholders or against any other Person)
with respect to which any of the Indemnitors may become obligated to indemnify,
hold harmless, compensate or reimburse any Indemnitee pursuant to this Section
4, the Purchaser shall have the right, at its election, to designate the Agent
to assume the defense of such claim or Proceeding at the sole expense of the
Selling Shareholders. If the Purchaser so elects to designate the Agent to
assume the defense of any such claim or Proceeding:
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(a) the Agent shall proceed to defend such claim or Proceeding
in a diligent manner with counsel satisfactory to the Purchaser;
(b) the Purchaser shall make available to the Agent any
non-privileged documents and materials in the possession of the Purchaser that
may be necessary to the defense of such claim or Proceeding;
(c) the Agent shall keep the Purchaser informed of all
material developments and events relating to such claim or Proceeding;
(d) the Purchaser shall have the right to participate in the
defense of such claim or Proceeding;
(e) the Agent shall not settle, adjust or compromise such
claim or Proceeding without the prior written consent of the Purchaser; and
(f) the Purchaser may at any time (notwithstanding the prior
designation of the Agent to assume the defense of such claim or Proceeding)
assume the defense of such claim or Proceeding. If the Purchaser does not elect
to designate the Agent to assume the defense of any such claim or Proceeding (or
if, after initially designating the Agent to assume such defense, the Purchaser
elects to assume such defense), the Purchaser may proceed with the defense of
such claim or Proceeding on its own. If the Purchaser so proceeds with the
defense of any such claim or Proceeding on its own: (i) all expenses relating to
the defense of such claim or Proceeding (whether or not incurred by the
Purchaser) shall be borne and paid exclusively by the Selling Shareholders; (ii)
the Selling Shareholders shall make available to the Purchaser any documents and
materials in the possession or control of any of the Selling Shareholders that
may be necessary to the defense of such claim or Proceeding; (iii) the Purchaser
shall keep the Agent informed of all material developments and events relating
to such claim or Proceeding; and (iv) the Purchaser shall have the right to
settle, adjust or compromise such claim or Proceeding with the consent of the
Agent; provided, however, that the Agent shall not unreasonably withhold such
consent.
4.8 EXERCISE OF REMEDIES BY INDEMNITIES OTHER THAN PURCHASER. No
Indemnitee (other than the Purchaser or any successor thereto or assign thereof)
shall be permitted to assert any indemnification claim or exercise any other
remedy under this Agreement unless the Purchaser (or any successor thereto or
assign thereof) shall have consented to the assertion of such indemnification
claim or the exercise of such other remedy.
Section 5. MISCELLANEOUS PROVISIONS
5.1 FURTHER ASSURANCES. Each party hereto shall execute and/or cause to
be delivered to each other party hereto such instruments and other documents,
and shall take such other actions, as such other party may reasonably request
(prior to, at or after the Closing) for the purpose of carrying out or
evidencing any of the transactions contemplated by this Agreement.
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5.2 FEES AND EXPENSES.
(a) The Selling Shareholders shall bear and pay all fees,
costs and expenses (including all legal fees and expenses payable to counsel for
the Company) that have been incurred or that are in the future incurred by, on
behalf of or for the benefit of the Company or the Selling Shareholders in
excess of $30,000 in connection with: the negotiation, preparation and review of
any letter of intent or similar document relating to this Agreement or any of
the transactions contemplated by this Agreement; the investigation and review
conducted by the Purchaser and its Representatives with respect to the Company's
business (and the furnishing of information to the Purchaser and its
Representatives in connection with such investigation and review); the
negotiation, preparation and review of this Agreement (including the Disclosure
Schedule), and all certificates, opinions and other instruments and documents
delivered or to be delivered in connection with this Agreement or any of the
transactions contemplated by this Agreement; the preparation and submission of
any filing or notice required to be made or given in connection with, and the
obtaining of any Consent required to be obtained in connection with; and the
consummation and performance of the transactions contemplated by this Agreement.
The Company shall not bear or pay, and the Selling Shareholders shall not permit
the Company to bear or pay, any such fees, costs or expenses in excess of
$30,000 in the aggregate.
(b) Subject to the provisions of Section 4 (including the
indemnification and other obligations of the Selling Shareholders thereunder),
the Purchaser shall bear and pay all fees, costs and expenses (including all
legal fees and expenses payable to ▇▇▇▇▇▇ Godward LLP) that have been incurred
or that are in the future incurred by or on behalf of the Purchaser in
connection with: the negotiation, preparation and review of any letter of intent
or similar document relating to this Agreement or any of the transactions
contemplated by this Agreement; the investigation and review conducted by the
Purchaser and its Representatives with respect to the Company's business; the
negotiation, preparation and review of this Agreement and all certificates,
opinions and other instruments and documents delivered or to be delivered in
connection with the transactions contemplated by this Agreement; and the
consummation and performance of the transactions contemplated by this Agreement.
5.3 ATTORNEYS' FEES. If any legal action or other legal proceeding
relating to this Agreement or any of the transactions contemplated by this
Agreement or the enforcement of any provision of any of this Agreement or any of
the transactions contemplated by this Agreement is brought against any party
hereto, the prevailing party shall be entitled to recover reasonable attorneys'
fees, costs and disbursements (in addition to any other relief to which the
prevailing party may be entitled).
5.4 NOTICES. Any notice or other communication required or permitted to
be delivered to any party under this Agreement shall be in writing and shall be
deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express delivery service or by telecopier) to the
address or telecopier number set forth beneath the name of such party below (or
to such other address or telecopier number as such party shall have specified in
a written notice given to the other parties hereto):
32.
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if to the Company:
CCI Group, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
if to the Agent of the Selling Shareholders:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
CCI Group, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
in either case with a copy to (which shall not
constitute notice):
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇ P.C.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Purchaser:
Javelin Systems, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: 714/223-5138
with a copy to (which shall not constitute notice):
▇▇▇▇▇▇ Godward LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
5.5 PUBLICITY. On and at all times after the Closing Date:
(a) no press release or other publicity concerning this
Agreement or any of the transactions contemplated by this Agreement shall be
issued or otherwise disseminated by or on behalf of the Company or the Selling
Shareholders, and the Company and the Selling
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38
Shareholders shall continue to keep the existence and terms of this Agreement
and the transactions contemplated by this Agreement strictly confidential; and
(b) the Selling Shareholders shall keep strictly confidential, and
shall not use or disclose to any other Person, any non-public document or
other information in the Selling Shareholders' possession that relates directly
or indirectly to the business of the Company or any of its subsidiaries, the
Purchaser or any affiliate of the Purchaser.
5.6 TIME OF THE ESSENCE. Time is of the essence of this
Agreement.
5.7 HEADINGS. The underlined headings contained in this Agreement are
for convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
5.8 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement.
5.9 GOVERNING LAW; VENUE.
(a) This Agreement shall be construed in accordance with, and
governed in all respects by, the internal laws of the State of California
(without giving effect to principles of conflicts of laws).
(b) Any legal action or other legal proceeding relating to
this Agreement or the enforcement of any provision of this Agreement may be
brought or otherwise commenced in any state or federal court located in the
County of Orange, California.
Each party to this Agreement: expressly and irrevocably consents and submits to
the jurisdiction of each state and federal court located in the County of
Orange, California (and each appellate court located in the State of California)
in connection with any such legal proceeding; agrees that each state and federal
court located in the County of Orange, California shall be deemed to be a
convenient forum; and agrees not to assert (by way of motion, as a defense or
otherwise), in any such legal proceeding commenced in any state or federal court
located in the County of Orange, California, any claim that such party is not
subject personally to the jurisdiction of such court, that such legal proceeding
has been brought in an inconvenient forum, that the venue of such proceeding is
improper or that this Agreement or the subject matter of this Agreement may not
be enforced in or by such court.
(c) Each Selling Shareholder agrees that, if any Proceeding is
commenced against any Indemnitee by any Person in or before any court or other
tribunal anywhere in the world, then such Indemnitee may proceed against such
Selling Shareholder in such court or other tribunal with respect to any
indemnification claim or other claim arising directly or indirectly from or
relating directly or indirectly to such Proceeding or any of the matters alleged
therein or any of the circumstances giving rise thereto.
34.
39
(d) Nothing contained in Section 5.9(b) or 5.9(c) shall be
deemed to limit or otherwise affect the right of any Indemnitee to commence any
legal proceeding or otherwise proceed against the Company or the Selling
Shareholders in any other forum or jurisdiction.
5.10 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon: the
Company and its successors and assigns (if any); each Selling Shareholder and
their personal representatives, executors, administrators, estates, heirs,
successors and assigns (if any); and the Purchaser and its successors and
assigns (if any). This Agreement shall inure to the benefit of: the Company; the
Selling Shareholders; the Purchaser; the other Indemnities (subject to Section
4.8); and the respective successors and assigns (if any) of the foregoing. The
Purchaser may freely assign any or all of its rights under this Agreement
(including its indemnification rights under Section 4), in whole or in part, to
any other Person without obtaining the consent or approval of any other party
hereto or of any other Person.
5.11 REMEDIES CUMULATIVE; SPECIFIC PERFORMANCE. The rights and remedies
of the parties hereto shall be cumulative (and not alternative). Each Selling
Shareholder agrees that:
(a) in the event of any breach or threatened breach by such
Selling Shareholder of any covenant, obligation or other provision set forth in
this Agreement, the Purchaser shall be entitled (in addition to any other remedy
that may be available to it) to (i) a decree or order of specific performance or
mandamus to enforce the observance and performance of such covenant, obligation
or other provision, and (ii) an injunction restraining such Breach or threatened
Breach; and
(b) neither the Purchaser nor any other Indemnitee shall be
required to provide any bond or other security in connection with any such
decree, order or injunction or in connection with any related action or
Proceeding.
5.12 WAIVER.
(a) No failure on the part of any Person to exercise any
power, right, privilege or remedy under this Agreement, and no delay on the part
of any Person in exercising any power, right, privilege or remedy under this
Agreement, shall operate as a waiver of such power, right, privilege or remedy;
and no single or partial exercise of any such power, right, privilege or remedy
shall preclude any other or further exercise thereof or of any other power,
right, privilege or remedy.
(b) No Person shall be deemed to have waived any claim arising
out of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such Person; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
5.13 Amendments. This Agreement may not be amended, modified, altered
or supplemented other than by means of a written instrument duly executed and
delivered on behalf of the Purchaser and the Agent.
35.
40
5.14 SEVERABILITY. In the event that any provision of this Agreement,
or the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
5.15 PARTIES IN INTEREST. None of the provisions of this Agreement is
intended to provide any rights or remedies to any Person other than the parties
hereto and their Representatives, the Indemnities and their respective
successors and assigns (if any).
5.16 ENTIRE AGREEMENT. This Agreement and the transactions contemplated
by this Agreement set forth the entire understanding of the parties relating to
the subject matter thereof and supersede all prior agreements and understandings
among or between any of the parties relating to the subject matter thereof.
5.17 CONSTRUCTION.
(a) For purposes of this Agreement, whenever the context
requires: the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; the feminine
gender shall include the masculine and neuter genders; and the neuter gender
shall include the masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to
the effect that ambiguities are to be resolved against the drafting party shall
not be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words "without
limitation."
(d) Except as otherwise indicated, all references in this
Agreement to "Sections" and "Exhibits" are intended to refer to Sections of this
Agreement and Exhibits to this Agreement.
5.18 SELLING SHAREHOLDERS' AGENT.
(a) The Selling Shareholders hereby irrevocably nominate,
constitute and appoint ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (the "Agent") as the agent and true and
lawful attorney-in-fact of the Selling Shareholders, with full power of
substitution, to act in the name, place and stead of the Selling Shareholders
for purposes of executing any documents and taking any actions that the Agent
may, in his sole discretion, determine to be necessary, desirable or appropriate
in connection with the performance of this Agreement or any of the transactions
contemplated hereby. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ hereby accepts his appointment as Agent.
36.
41
(b) The Selling Shareholders hereby grant to the Agent full
authority to execute, deliver, acknowledge, certify and file on behalf of the
Selling Shareholders (in the name of any or all of the Selling Shareholders or
otherwise) any and all documents that the Agent may, in his sole discretion,
determine to be necessary, desirable or appropriate, in such forms and
containing such provisions as the Agent may, in his sole discretion, determine
to be appropriate. Notwithstanding anything to the contrary contained in this
Agreement or any of the agreements contemplated by this Agreement: (i) the
Purchaser shall be entitled to deal exclusively with the Agent on all matters
relating to this Agreement or any of the transactions contemplated by this
Agreement (including all matters relating to any notice to, or any Consent to be
given or action to be taken by, any Selling Shareholder); and (ii) each
Indemnitee shall be entitled to rely conclusively (without further evidence of
any kind whatsoever) on any document executed or purported to be executed on
behalf of any Selling Shareholder by the Agent, and on any other action taken or
purported to be taken on behalf of any Selling Shareholder by the Agent, as
fully binding upon such Selling Shareholder.
(c) The Selling Shareholders recognize and intend that the
power of attorney granted in Section 5.18(a): (i) is coupled with an interest
and is irrevocable; (ii) may be delegated by the Agent; and (iii) shall survive
the death or incapacity of each of the Selling Shareholders.
(d) The Agent shall be entitled to treat as genuine, and as
the document it purports to be, any letter, facsimile, telex or other document
that is believed by his to be genuine and to have been telexed, telegraphed,
faxed or cabled by a Selling Shareholder or to have been signed and presented by
a Selling Shareholder.
(e) If the Agent shall die, become disabled or otherwise be
unable to fulfill his responsibilities hereunder, the Selling Shareholders
shall, within ten days after such death or disability, appoint a successor to
the Agent and immediately thereafter notify the Purchaser of the identity of
such successor. Any such successor shall succeed the Agent as Agent hereunder.
If for any reason there is no Agent at any time, all references herein to the
Agent shall be deemed to refer to the Selling Shareholders.
(f) All expenses incurred by the Agent in connection with the
performance of his duties as Agent shall be borne and paid by the Selling
Shareholders.
37.
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The parties hereto have caused this Plan of Reorganization and Stock
Purchase Agreement to be executed and delivered as of the first date set forth
above.
"PURCHASER": JAVELIN SYSTEMS, INC.
A DELAWARE CORPORATION
By:
---------------------------------
"THE COMPANY": CCI GROUP, INC.,
A MISSOURI CORPORATION
By:
---------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President
"SELLING SHAREHOLDERS":
------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇
------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
38.
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EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
Acquisition Transaction. "Acquisition Transaction" shall mean any
transaction involving:
(a) the sale or other disposition of all or any portion of the
Company's business or assets (other than in the ordinary course of business);
(b) the issuance, sale or other disposition of (i) any capital
stock of the Company, (ii) any option, call, warrant or right (whether or not
immediately execrable) to acquire any capital stock of the Company, or (iii) any
security, instrument or obligation that is or may become convertible into or
exchangeable for any capital stock of the Company; or
(c) any merger, consolidation, business combination, share
exchange, reorganization or similar transaction involving the Company.
AGREEMENT. "Agreement" shall mean the Stock Purchase Agreement to which
this Exhibit A is attached (including the Disclosure Schedule), as it may be
amended from time to time.
BEST EFFORTS. "Best Efforts" shall mean the efforts that a prudent
Person desiring to achieve a particular result would use in order to ensure that
such result is achieved as expeditiously as possible.
CERCLA. "CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act.
CLOSING. "Closing" shall have the meaning specified in Section 1.4 of
the Agreement.
CLOSING DATE. "Closing Date" shall have the meaning specified in
Section 1.4 of the Agreement.
CODE. "Code" shall mean the Internal Revenue Code of 1986, as amended.
COMPANY. "Company" shall mean CCI Group, Inc., a Missouri corporation.
COMPANY FINANCIAL STATEMENTS. "Company Financial Statements" shall have
the meaning specified in Section 2.4 of the Agreement.
COMPANY PLAN. "Company Plan" shall mean any Current Benefit Plan or
Past Benefit Plan of the Company or any of its subsidiaries.
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44
COMPANY RETURNS. "Company Returns" shall have the meaning specified in
Section 2.16 of the Agreement.
CONSENT. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
CONTRACT. "Contract" shall mean any written, oral, implied or other
agreement, contract, understanding, arrangement, instrument, note, guaranty,
indemnity, representation, warranty, deed, assignment, power of attorney,
certificate, purchase order, work order, insurance policy, benefit plan,
commitment, covenant, assurance or undertaking of any nature.
CURRENT BENEFIT PLAN. "Current Benefit Plan" shall mean any Employee
Benefit Plan of the Company or any of its subsidiaries that is currently in
effect and:
(a) that was established or adopted by the Company or any
ERISA Affiliate or is maintained or sponsored by the Company;
(b) in which the Company or any of its subsidiaries
participates;
(c) with respect to which the Company or any of its
subsidiaries or any ERISA Affiliate is or may be required or permitted to make
any contribution; or
(d) with respect to which the Company or any of its
subsidiaries or any ERISA Affiliate is or may become subject to any Liability.
DAMAGES. "Damages" shall include any loss, damage, injury, decline in
value, lost opportunity, Liability, claim, demand, settlement, judgment, award,
fine, penalty, Tax, fee (including any legal fee, expert fee, accounting fee or
advisory fee), charge, cost (including any cost of investigation) or expense of
any nature.
DISCLOSURE SCHEDULE. "Disclosure Schedule" shall mean the schedule
(dated as of the date of the Agreement) delivered to the Purchaser on behalf of
the Company and the Selling Shareholder, a copy of which is attached to the
Agreement and incorporated in the Agreement by reference.
EMPLOYEE BENEFIT PLAN. "Employee Benefit Plan" shall have the meaning
specified in Section 3(3) of ERISA.
ENCUMBRANCE. "Encumbrance" shall mean any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, equity, trust, equitable
interest, claim, preference, right of possession, lease, tenancy, license,
encroachment, covenant, infringement, interference, Order, proxy, option, right
of first refusal, preemptive right, community property interest, legend, defect,
impediment, exception, reservation, limitation, impairment, imperfection of
title, condition or restriction of any nature (including any restriction on the
voting of any security, any restriction on the transfer of any security or other
asset, any restriction on the receipt of any
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income derived from any asset, any restriction on the use of any asset and any
restriction on the possession, exercise or transfer of any other attribute of
ownership of any asset).
ENTITY. "Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, cooperative, foundation, society,
political party, union, company (including any limited liability company or
joint stock company), firm or other enterprise, association, organization or
entity.
ERISA. "ERISA" shall mean the Employee Retirement Income Security Act
of 1974.
ERISA Affiliate. "ERISA Affiliate" shall mean any Person that is, was
or would be treated as a single employer with the Company under Section 414 of
the Code.
GAAP. "GAAP" shall mean generally accepted accounting principles,
applied on a basis consistent with the basis on which the Company Financial
Statements were prepared.
GOVERNMENTAL AUTHORIZATION. "Governmental Authorization" shall mean
any:
(a) permit, license, certificate, franchise, concession,
approval, consent, ratification, permission, clearance, confirmation,
endorsement, waiver, certification, designation, rating, registration,
qualification or authorization that is, has been or may in the future be issued,
granted, given or otherwise made available by or under the authority of any
Governmental Body or pursuant to any Legal Requirement; or
(b) right under any Contract with any Governmental Body.
GOVERNMENTAL BODY. "Governmental Body" shall mean any:
(a) nation, principality, state, commonwealth, province,
territory, county, municipality, district or other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign or other
government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental division, subdivision, department, agency, bureau,
branch, office, commission, council, board, instrumentality, officer, official,
representative, organization, unit, body or Entity and any court or other
tribunal);
(d) multi-national organization or body; or
(e) individual, Entity or body exercising, or entitled to
exercise, any executive, legislative, judicial, administrative, regulatory,
police, military or taxing authority or power of any nature.
HAZARDOUS MATERIAL. "Hazardous Material" shall include:
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(a) any petroleum, waste oil, crude oil, asbestos, urea
formaldehyde or polychlorinated biphenyl;
(b) any waste, gas or other substance or material that is
explosive or radioactive;
(c) any "hazardous substance," "pollutant," "contaminant,"
"hazardous waste," "regulated substance," "hazardous chemical" or "toxic
chemical" as designated, listed or defined (whether expressly or by reference)
in any statute, regulation or other Legal Requirement (including CERCLA, any
other so-called "superfund" or "superlien" law, the Resource Conservation
Recovery Act, the Federal Water Pollution Control Act, the Toxic Substances
Control Act, the Emergency Planning and Community Right-to-Know Act and the
respective regulations promulgated thereunder);
(d) any other substance or material (regardless of physical
form) or form of energy that is subject to any Legal Requirement which regulates
or establishes standards of conduct in connection with, or which otherwise
relates to, the protection of human health, plant life, animal life, natural
resources, property or the enjoyment of life or property from the presence in
the environment of any solid, liquid, gas, odor, noise or form of energy; and
(e) any compound, mixture, solution, product or other
substance or material that contains any substance or material referred to in
clause "(a)", "(b)", "(c)" or "(d)" above.
INDEMNITIES. "Indemnities" shall mean the following Persons:
(a) the Purchaser;
(b) the Purchaser's current and future affiliates (including
the Company);
(c) the respective Representatives of the Persons referred to
in clauses "(a)" and "(b)" above; and
(d) the respective successors and assigns of the Persons
referred to in clauses "(a)", "(b)" and "(c)" above;
provided, however, that (i) the Company shall not be entitled to exercise any
rights as an Indemnitee prior to the Closing, and (ii) the Selling Shareholder
shall not at any time be deemed to be an "Indemnitee."
KNOWLEDGE. An individual shall be deemed to have "Knowledge" of a
particular fact or other matter if:
(a) such individual is actually aware of such fact or other
matter; or
(b) a prudent individual could be expected to discover or
otherwise become aware of such fact or other matter in the course of conducting
a diligent and comprehensive investigation concerning the truth or existence of
such fact or other matter.
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the Company shall be deemed to have "Knowledge" of a particular fact or other
matter if any officer, or employee of the Company has Knowledge of such fact or
other matter.
LEGAL REQUIREMENT. "Legal Requirement" shall mean any federal, state,
local, municipal, foreign or other law, statute, legislation, constitution,
principle of common law, resolution, ordinance, code, edict, decree,
proclamation, treaty, convention, rule, regulation, ruling, directive,
pronouncement, requirement, specification, determination, decision, opinion or
interpretation that is, has been or may in the future be issued, enacted,
adopted, passed, approved, promulgated, made, implemented or otherwise put into
effect by or under the authority of any Governmental Body.
LIABILITY. "Liability" shall mean any debt, obligation, duty or
liability of any nature (including any unknown, undisclosed, unmatured,
unaccrued, unasserted, contingent, indirect, conditional, implied, vicarious,
derivative, joint, several or secondary liability), regardless of whether such
debt, obligation, duty or liability would be required to be disclosed on a
balance sheet prepared in accordance with generally accepted accounting
principles and regardless of whether such debt, obligation, duty or liability is
immediately due and payable.
MATERIAL COMPANY CONTRACT DEFINITION
(a) Part 2.12 of the Disclosure Schedule identifies each
Contract that constitutes a "Material Company Contract." For purposes of this
Agreement, a "Material Company Contract" shall be deemed to be any Contract to
which the Company or any of its subsidiaries is a party:
(i) relating to the employment or engagement of, or
the performance of services by, any employee, consultant or independent
contractor which involves a potential commitment in excess of $60,000 per year;
(ii) relating to the acquisition, transfer, use,
development, sharing or license of any technology or any Proprietary Asset
(except for any Proprietary Asset that is licensed under any third party
software license agreement generally available to the public at a cost of less
than $10,000);
(iii) imposing any restriction on the right or
ability (A) to compete with any other Person, (B) to acquire any product or
other asset or any services from any other Person, to sell any product or other
asset to or perform any services for any other Person or to transact business or
deal in any other manner with any other Person, or (C) to develop or distribute
any technology;
(iv) creating or involving any agency relationship,
distribution arrangement or franchise relationship involving payments or
obligations in excess of $25,000 per year;
(v) relating to the acquisition, issuance or transfer
of any securities;
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(vi) creating or relating to the creation of any
Encumbrance with respect to any asset owned or used by the Company or any of its
subsidiaries having a value in excess of $25,000;
(vii) involving or incorporating any guaranty, any
pledge, any performance or completion bond, any indemnity (other than customary
intellectual property indemnitees for hardware and software), any right of
contribution or any surety arrangement, any of which obligations involve an
obligation in excess of $25,000 per year;
(viii) creating or relating to any partnership or
joint venture or any sharing of revenues, profits, losses, costs or liabilities;
(ix) relating to the purchase or sale of any product
or other asset by or to, or the performance of any services by or for, any
Related Party;
(x) entered into outside the ordinary course of
business;
(xi) that may not be terminated by the Company or any
of its subsidiaries (without penalty) within 60 days after the delivery of a
termination notice by the Company or any of its subsidiaries; and
(xii) contemplating or involving (A) the payment or
delivery of cash or other consideration in an amount or having a value in excess
of $25,000 in the aggregate, or (B) the performance of services having a value
in excess of $25,000 in the aggregate.)
ORDER. "Order" shall mean any:
(a) order, judgment, injunction, edict, decree, ruling,
pronouncement, determination, decision, opinion, verdict, sentence, subpoena,
writ or award that is, has been or may in the future be issued, made, entered,
rendered or otherwise put into effect by or under the authority of any court,
administrative agency or other Governmental Body or any arbitrator or
arbitration panel; or
(b) Contract with any Governmental Body that is, has been or
may in the future be entered into in connection with any Proceeding.
PAST BENEFIT PLAN. "Past Benefit Plan" shall mean any Employee Benefit
Plan (other than a Current Benefit Plan):
(a) of which the Company, any of its subsidiaries or any ERISA
Affiliate has ever been a "plan sponsor" (as defined in Section 3(16)(B) of
ERISA) or that otherwise has at any time been established, adopted, maintained
or sponsored by the Company or by any ERISA Affiliate;
(b) in which the Company, any of its subsidiaries or any ERISA
Affiliate has ever participated;
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49
(c) with respect to which the Company, any of its subsidiaries
or any ERISA Affiliate has ever made, or has ever been required or permitted to
make, any contribution; or
(d) with respect to which the Company, any of its subsidiaries
or any ERISA Affiliate has ever been subject to any Liability.
PERSON. "Person" shall mean any individual, Entity or Governmental
Body.
PROCEEDING. "Proceeding" shall mean any action, suit, litigation,
arbitration, proceeding (including any civil, criminal, administrative,
investigative or appellate proceeding and any informal proceeding), prosecution,
contest, hearing, inquiry, inquest, audit, examination or investigation that is,
has been or may in the future be commenced, brought, conducted or heard by or
before, or that otherwise has involved or may involve, any Governmental Body or
any arbitrator or arbitration panel.
PROPRIETARY ASSET. "Proprietary Asset" shall mean any patent, patent
application, trademark (whether registered or unregistered and whether or not
relating to a published work), trademark application, trade name, fictitious
business name, service ▇▇▇▇ (whether registered or unregistered), service ▇▇▇▇
application, copyright (whether registered or unregistered), copyright
application, maskwork, maskwork application, trade secret, know-how, franchise,
system, computer software, invention, design, blueprint, proprietary product,
technology, proprietary right or other intellectual property right or intangible
asset.
PURCHASER. "Purchaser" shall mean Javelin Systems, Inc., a Delaware
corporation.
RELATED PARTY. Each of the following shall be deemed to be a "Related
Party":
(a) the Selling Shareholder;
(b) each individual who is, or who has at any time been, an
officer of the Company;
(c) each member of the family of each of the individuals
referred to in clauses "(a)" and "(b)" above; and
(d) any Entity (other than the Company) in which any one of
the individuals referred to in clauses "(a)", "(b)" and "(c)" above holds (or in
which more than one of such individuals collectively hold), beneficially or
otherwise, a material voting, proprietary or equity interest.
REPRESENTATIVES. "Representatives" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors and representatives. The
Selling Shareholder and all other Related Parties shall be deemed to be
"Representatives" of the Company.
SCHEDULED CLOSING TIME. "Scheduled Closing Time" shall have the meaning
specified in Section 1.4 of the Agreement.
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50
SELLING SHAREHOLDERS. "Selling Shareholders" shall have the meaning
specified in the introductory paragraph of the Agreement.
SHARES. "Shares" shall have the meaning specified in Recital "A" to the
Agreement.
SPOUSAL CONSENTS. "Spousal Consents" shall mean the Spousal Consents
being executed by the respective spouses of the Selling Shareholder
contemporaneously with the execution and delivery of the Agreement.
TAX. "Tax" shall mean any tax (including any income tax, franchise tax,
capital gains tax, estimated tax, gross receipts tax, value-added tax, surtax,
excise tax, ad valorem tax, transfer tax, stamp tax, sales tax, use tax,
property tax, business tax, occupation tax, inventory tax, occupancy tax,
withholding tax or payroll tax), levy, assessment, tariff, impost, imposition,
toll, duty (including any customs duty), deficiency or fee, and any related
charge or amount (including any fine, penalty or interest), that is, has been or
may in the future be (a) imposed, assessed or collected by or under the
authority of any Governmental Body, or (b) payable pursuant to any tax-sharing
agreement or similar Contract.
TAX RETURN. "Tax Return" shall mean any return (including any
information return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information that
is, has been or may in the future be filed with or submitted to, or required to
be filed with or submitted to, any Governmental Body in connection with the
determination, assessment, collection or payment of any Tax or in connection
with the administration, implementation or enforcement of or compliance with any
Legal Requirement relating to any Tax.
UNAUDITED INTERIM BALANCE SHEET. "Unaudited Interim Balance Sheet"
shall have the meaning specified in Section 2.4 of the Agreement.
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EXHIBIT B
FORM OF ESCROW AGREEMENT
52
EXHIBIT C
INVESTOR QUESTIONNAIRE
53
EXHIBIT D
FORM OF ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇, P.C. OPINION LETTER
54
EXHIBIT E
FORM OF EMPLOYMENT AGREEMENT
55
EXHIBIT F
FORM OF COOLEY GODWARD LLP OPINION LETTER
56
SCHEDULE 1
SELLING SHAREHOLDERS
Shares of Javelin Systems, Inc. Indemnity Shares to be
Shares Of CCI Group, Inc. to be Delivered at Placed in Escrow at
Shareholder Owned Closing Closing
----------- ------------------------- ------------------------------- ----------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 832.0896 278,750 278,750
▇▇▇▇▇▇ ▇▇▇▇ 134.3284 81,000 9,000
▇▇▇▇▇▇▇ ▇▇▇▇ 22.3881 13,500 1,500
▇▇▇▇▇ ▇▇▇▇▇▇ 11.1940 6,750 750
---------- ------- -------
Total 1,000.0000 380,000 290,000