EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger ("Agreement"), dated December 14,
1995, is among Core Industries Inc, a Nevada corporation ("Core"), and CMB
Industries, a California corporation ("CMB"), and the undersigned shareholders
of CMB (the "Shareholders").
Recitals
A. CMB is based in Fresno, California, and is a manufacturer of water
valves for various applications including environmental protection, irrigation,
waterworks, plumbing, and fireline and industrial markets (the "Business").
B. The Boards of Directors of Core and CMB have deemed it advisable and
in the best interests of their respective companies and such companies'
shareholders that CMB be merged with and into Core (the "Merger") and,
accordingly, have approved this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth in this Agreement, the parties agree as follows:
1. The Merger.
1.1 Terms of the Merger.
(a) Subject to the terms and conditions of this Agreement, CMB
will be merged with and into Core, which will be, and is sometimes referred to
as, the "Surviving Corporation." Upon such Merger, the separate corporate
existence of CMB will cease, and the Surviving Corporation will have all the
rights and liabilities of each of CMB and Core.
(b) The closing of the Merger (the "Closing") will occur on
the day on which all conditions to the Closing are satisfied or duly waived,
unless the parties hereto agree otherwise. The date of the Closing is referred
to hereinafter as the "Closing Date." Notwithstanding anything in this Agreement
to the contrary or the actual filing date of any certificate in respect of the
Merger, from and after the close of business on November 24, 1995 (the
"Effective Date"), all sales and related transactions in the ordinary course of
business shall be conducted by CMB as the agent for and on behalf of Core in
respect of the Business. Accordingly, on the Closing Date, Core shall be
entitled to receive the proceeds from such sales, and Core shall have the risk
of loss with respect to the collection of such proceeds to the extent not
collected prior to the Closing. Thus, as between the parties, (i) the sales and
business of CMB will be deemed to have been transacted by Core from and after
the Effective Date and (ii) Core will be deemed to have borne the risk of loss
with respect to the proceeds of such sales from and after the Effective Date;
provided, however, that this Section 1.1(b) shall not be interpreted as limiting
the meaning or scope of any representations and warranties made by CMB and the
Shareholders in this Agreement, including those set forth in Article 2 hereof.
(c) Simultaneously with the Closing, CMB and Core will (i)
execute and file all necessary certificates and documents with appropriate
governmental agencies or authorities and (ii) take such other actions as
required under applicable law to effectuate the Merger.
(d) Consistent with the other terms of this Agreement, the
parties intend that, for federal income tax purposes, the Merger will qualify as
a tax-free reorganization under Section 368 of the Internal Revenue Code of
1986, as amended (the "Code").
(e) The Articles of Incorporation of Core will be the Articles
of Incorporation of the Surviving Corporation.
(f) Upon the Closing and without any further action on the
part of Core or CMB, the By-Laws of Core will be the By-Laws of the Surviving
Corporation and thereafter may be amended or repealed in accordance with their
terms or the Articles of Incorporation of Core and as provided by law.
(g) The directors of Core upon the Closing will be the
directors of the Surviving Corporation, until the earlier of their (i)
resignation, (ii) removal or (iii) respective successors are duly elected and
qualified, as the case may be.
(h) The officers of Core upon the Closing will be the officers
of the Surviving Corporation until the earlier of their (i) resignation, (ii)
removal or (iii) respective successors are duly appointed and qualified, as the
case may be.
1.2 Merger Consideration and Conversion of Shares.
(a) For purposes of this Agreement, the following terms will
have the following meanings:
(i) "Aggregate Merger Shares" the 857,283 shares of
Core Common Stock to be issued by Core to the Shareholders as part of
the Merger Consideration.
(ii) "CMB Bank Debt" means the outstanding aggregate
indebtedness of CMB for all borrowed money, from, banks, financial
institutions and others, including without limitation, ▇▇▇▇▇ Fargo
Bank, National Association ("Bank") pursuant to that certain Credit
Agreement entered into as of July 15, 1994 by and between CMB and Bank,
as amended by that certain First Amendment to Credit Agreement entered
into as of January 27, 1995 and that certain Second Amendment to Credit
Agreement entered into as of June 15, 1995. CMB Bank Debt does not
include any trade debt of CMB, the Shareholder Debt, or capital leases
or tax liabilities of CMB.
(iii) "CMB Capital Stock" means all of the shares of
the capital stock, whether common or preferred, of CMB outstanding as
of the Closing Date, together with
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all options, warrants or rights to purchase or otherwise acquire any
CMB Capital Stock, regardless of whether vested or unvested.
(iv) "Core Common Stock" means the common stock, par
value $1.00, of Core.
(v) "Merger Shares" means the quotient of the
Aggregate Merger Shares divided by the aggregate number of shares of
CMB Capital Stock.
(vi) "Promissory Notes" means the promissory notes
issued by Core in favor of the Shareholders, as of the Effective Date,
in the form attached hereto as Exhibit 1.2(a)(vi), in the aggregate
face amount of $4,980,000 (but in the separate face amounts shown on
Schedule 1.2(a)(vi)) and increased by the product of the Aggregate
Merger Shares and the cash dividends paid per share of Core Common
Stock, during the period from the Effective Date to the Closing Date,
subject to adjustment as follows: (A) if the CMB Bank Debt is less than
the Targeted Bank Debt, the aggregate face amount of the Promissory
Notes will be increased by a sum equal to the difference between the
Targeted Bank Debt and the CMB Bank Debt; and (B) if the CMB Bank Debt
is more than the Targeted Bank Debt such aggregate face amount will be
reduced by a sum equal to the difference between the CMB Bank Debt and
the Targeted Bank Debt; provided, further, that the adjustments
described in (A) and (B) above shall be determined as of the Closing
Date.
(vii) "Targeted Bank Debt" means $5,586,663.
(b) The consideration to be paid by the Company in the Merger
will be the Merger Consideration (as defined in Section 1.2(c)(iii) herein).
Notwithstanding anything in this Agreement to the contrary, no fractional shares
of Core Common Stock will be issued. In lieu thereof, a person otherwise
entitled to a fractional share of Core Common Stock will instead be entitled to
a cash payment equal to the fraction of such share multiplied by the Per Share
Price.
(c) Except as otherwise provided, upon the Closing, the
outstanding shares of CMB Capital Stock will be cancelled and retired and will
cease to exist and will be converted into:
(i) the Aggregate Merger Shares;
(ii) a contingent right to receive payment(s) ("Earn
Out Payments") determined in accordance with the attached Schedule
1.2(c)(ii), (notwithstanding anything herein to the contrary, such
contingent rights will be governed solely by the terms of this
Agreement, including the attached Schedule 1.2(c)(ii), and will not be
represented by any certificate or other instrument or documents); and
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(iii) payees' interest in the Promissory Notes
consistent with Section 1.2(a)(vi) hereof Collectively, (i), (ii) and
(iii) of this subparagraph (c) will be referred to as the "Merger
Consideration".
(d) By virtue of the Merger and without any further action,
every share of CMB Capital Stock and every option and warrant, whether exercised
or unexercised, or right to convert into or to acquire any shares of CMB Capital
Stock, outstanding as of the Closing, except as specifically provided for in
this Section 1.2 or Section 1.7, will be cancelled and retired and will cease to
exist and will not be converted into stock or other securities, or the right to
acquire stock or other securities, of the Surviving Corporation or into cash or
the right to receive cash.
(e) Notwithstanding anything to the contrary in this
Agreement, the maximum amount that Core will be required to pay to or for the
benefit of the holders of CMB Capital Stock, and options and warrants to acquire
CMB Capital Stock, assuming that there are no dissenting shareholders pursuant
to applicable law, will be the Merger Consideration.
1.3 Exchange of Certificates.
(a) At the Closing, the certificates representing shares of
CMB Capital Stock ("Certificate" or "Certificates") will be exchanged for the
Merger Consideration.
(b) Until surrendered and exchanged in accordance with Section
1.3(a), each Certificate will, after the Closing, represent solely the right to
receive that portion of the Merger Consideration for the number of shares of CMB
Capital Stock evidenced by such Certificate and will have no other rights From
and after Closing Date, the Surviving Corporation will be entitled to treat a
Certificate or Certificates that have not yet been surrendered for exchange as
having been converted, notwithstanding any failure to Surrender such Certificate
or Certificates.
(c) Except as provided for in the Promissory Notes, no
interest will accrue or be payable on any Merger Consideration.
(d) In lieu of any fractional shares, holders of shares of CMB
Capital Stock otherwise entitled to fractional shares of the Core Common Stock
will be entitled to receive a cash payment in an amount equal to the fraction of
such share of the Core Common Stock otherwise issuable multiplied by the Per
Share Price.
(e) Upon the Closing, the stock transfer books of CMB will be
closed and no transfer of CMB Capital Stock will thereafter be made. If, after
the Closing Date, a Certificate or Certificates representing any such Shares are
presented, they will be cancelled, retired and exchanged as provided in this
Agreement.
1.4 Further Assurances. Each party and its officers and
directors will execute and make all proper documents and do all things necessary
or proper to vest title in any property
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or rights of CMB in the Surviving Corporation or otherwise to carry out the
purposes of this Agreement.
1.5 Board of Directors. CMB, acting through its Board of
Directors, has or will:
(a) give notice to and bold a meeting of its shareholders, or
otherwise solicit the required consent of such shareholders, for the purpose of
adopting and approving this Agreement and all agreements and documents executed
and/or delivered in connection with this Agreement or the Merger (collectively,
including this Agreement, the "Merger Agreements"), and the Merger and the other
transactions contemplated by the Merger Agreements (the "Transactions");
(b) recommend, through its Board of Directors, such
shareholder approval; and
(c) use its best efforts to obtain the necessary vote or
written consent of its shareholders required by applicable law in favor of
adoption and approval of the Merger Agreements and the Transactions.
1.6 Registration. Prior to January 31, 1996, and as provided
for in more detail in Section 4.5, Core will file with the Securities and
Exchange Commission a S-3 Registration Statement pursuant to which the Core
Common Stock to be issued to the Shareholders, in connection with the Merger,
will be registered.
1.7 Dissenters' Rights; Effect of Acceptance of the Merger
Consideration.
(a) Notwithstanding anything to the contrary in this
Agreement, any shares of CMB Capital Stock outstanding immediately prior to the
Closing held by a holder who has demanded and perfected the right for appraisal
of such shares in accordance with applicable law and who, as of the Closing
Date, has not effectively withdrawn or lost such right to such appraisal will
not be converted into or represent a right to receive the Merger Consideration,
but such holder will be entitled only to such rights as are granted by
applicable law.
(b) CMB will give the Company prompt written notice of any
documents or communications served pursuant to applicable law or otherwise
received by CMB relating to any shareholder's rights of appraisal or dissent.
(c) CMB will not, except with the prior written consent of
Core, make any payment with respect to any demands for appraisals of any shares
of CMB Capital Stock, offer to settle or settle any such demands or approve any
withdrawal of any such demands Such consent will not be unreasonably withheld by
the Company.
2. Representations, Warranties and Covenants of CMB and the
Shareholders. CMB and each of ▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (collectively,
the "Principal Shareholders"),
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jointly and severally, represent, warrant and covenant to Core, as of the date
of this Agreement and through and including the Effective Date and the Closing
Date, as follows:
2.1 Organization; Qualification. CMB is a corporation duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite power and authority to
own, lease and operate its properties and to carry on its business as now being
conducted CMB is duly qualified or licensed and is in good standing to do
business in each jurisdiction in which the nature of the business conducted by
it has made its qualification or licensing a legal requirement and where the
failure to be so qualified or licensed would have a material adverse effect on
the business, prospects, assets or condition (financial or otherwise) of CMB.
2.2 Jurisdictions of Qualification. Schedule 2.2 is a true and
complete list of each jurisdiction in which CMB is, as of the date hereof,
qualified or licensed to do business.
2.3 No Subsidiaries or Other Investments or Interests. CMB
does not have or own, or have any right to acquire, directly or indirectly, any
securities or other direct or indirect ownership or other interest in any
corporation or other entity.
2.4 Capitalization.
(a) As of the date of this Agreement, the authorized capital
stock of CMB consists of 10,000 shares of common stock, without par value, of
which 6,650 shares are issued and outstanding. All the outstanding shares of CMB
Capital Stock are duly authorized, validly issued, fully paid, nonassessable and
free of preemptive rights Schedule 2.4 is a true and complete list of all
persons or entities who beneficially own any of the issued and outstanding
shares of CMB Capital Stock, and the number of each such shares owned by such
persons or entities.
(b) Except as set forth in Schedule 2.4, there are no voting
trusts or other agreements, understandings, subscription, option, warrant, call,
right, convertible security, contract, commitment, understanding or arrangement
relating to the issuance, sale, delivery or transfer of any securities of CMB.
2.5 Authority Relative to the Merger Agreements.
(a) The Board of Directors of CMB (i) has approved the Merger
Agreements and the Transactions, (ii) has authorized the execution, delivery and
performance of the Merger Agreements and (iii) has directed that the Merger
Agreements and consummation of the Transactions be submitted to the shareholders
of CMB for approval and adoption at a meeting or by written consent. No other
corporate authorizations or proceedings on the part of CMB (other than the
approval by the shareholders of CMB of the Merger Agreement and consummation of
the Transactions) are necessary to authorize this Agreement or to consummate any
of the Transactions.
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(b) Each of the Merger Agreements to which CMB is a party has
been duly and validly executed and delivered by CMB and constitutes a valid and
binding agreement of CMB, enforceable against CMB in accordance with their
respective terms.
(c) CMB has the power and authority to enter into the Merger
Agreements and, upon appropriate vote or consent of its shareholders in
accordance with applicable law and Section 1.5 above, to consummate the
Transactions.
2.6 No Conflicts; Consents. Except as identified in Schedule
2.6, neither the execution and delivery of the Merger Agreements, nor the
consummation of the Transactions, nor compliance by CMB with any of the
provisions of the Merger Agreements, will:
(a) violate any provision of the Articles of Incorporation or
Bylaws of CMB or any statute, code, ordinance, rule, regulation, judgment,
order, writ, decree or injunction applicable to CMB or any of its properties or
assets;
(b) violate, or conflict with, or result in a breach of any
provision of, or constitute a default under, or any event which, with or without
due notice or lapse of time, or both, would constitute a default under, or
result in the termination of, or accelerate the performance required by, or
result in the creation of any Lien (as defined in Section 2.9(a)) upon any of
the properties or assets of CMB under, any note, bond, mortgage, indenture, deed
of trust, license, lease, agreement or other instrument or obligation to which
CMB is a party, or by which CMB or any of its properties or assets may be bound
or affected, including, without limitation, any agreement, arrangement,
document, policy or obligation disclosed or required to be disclosed in any of
the Exhibits or Schedules to this Agreement, except where such default,
termination, acceleration, or creation of a Lien would not have a material
adverse effect on the Merger or the business, prospects, assets, properties or
condition (financial or otherwise) of CMB; or
(c) require any consent, approval, authorization or permit of
or from, or filing with or notification to, any court, government, governmental
authority or other regulatory or administrative agency or commission, domestic
or foreign (each, a "Governmental Entity"), except (i) filing articles and
certificates of merger pursuant to the laws of any state, (ii) filings under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), or (iii) consents, approvals, authorizations, permits, filings or
notifications which, if not obtained or made, will not, individually or in the
aggregate, have a material adverse effect on the Merger or the business,
prospects, assets, properties or condition (financial or otherwise) of CMB.
2.7 Anti-Takeover Laws Inapplicable. There are no
anti-takeover laws, including, without limitation, any "fair price,"
"moratorium," "control share acquisition" or other form of anti-takeover law,
statute or regulation, applicable to or in connection with any of the Merger
Agreements or any of the Transactions.
2.8 Real Property. As of the Effective Date, CMB will not
beneficially own or have any right to acquire any real property.
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2.9 Personal Property.
(a) Except as disclosed on Schedule 2.9(a) and (i) statutory
liens that were created, in the ordinary course of business and do not
materially detract from the value of the affected assets or materially impair
the use thereof in the operation of the business of CMB and (ii) leased
interests in property owned by others and leased interests in property leased to
others, CMB has good and marketable title to, and the right to use, all of the
personal property reflected in the Financial Statements (as defined in Section
2.14 hereof), or acquired since the date of such financial statements, free and
clear of all liens, security interests, charges and claims ("Liens").
(b) CMB has maintained its real property, personal property,
buildings, fixtures and structures in a reasonable, businesslike manner. Except
as provided in Schedule 2.9(b), there are no defects in such personal property
and such personal property is in good operating condition and repair (ordinary
wear and tear excepted), except where the failure of such personal property to
be in good operating condition would not have a material adverse effect on the
business, prospects, assets or condition (financial or otherwise) of CMB.
2.10 Real and Personal Property Leases. Schedule 2.10 is a
true and complete list of all leases of real or personal property to which CMB
is a party, whether as lessor or lessee.
2.11 Licenses and Permits. Schedule 2.11 is a true and
complete list of all licenses, franchises, permits, registrations and other
authorizations, and all applications therefor (collectively, the "Permits"), of
any Governmental Entity necessary to, or required by, CMB in the conduct of its
business except those which the failure to obtain would not have a material
adverse effect on the business, assets, prospects or condition (financial or
otherwise) of CMB. Except as described in Schedule 2.11, CMB has maintained all
of the Permits in full force and effect, and is in compliance with the terms and
conditions of the Permits and has not, as of the date hereof, received notice or
have knowledge of any violation thereof CMB has the continued unrestricted right
to use the Permits CMB has not received any notice that any revocation or
limitation of any of the Permits is threatened or pending.
2.12 Certain Transactions.
(a) Other than distributions to shareholders of CMB, salaries
and benefits to officers and directors of CMB and loans from and to CMB and its
shareholders, interest on any such loans, and expense reimbursements in the
ordinary course of business and not material in the aggregate to CMB, Schedule
2.12(a) is a true and complete list and brief description of all contracts or
other transactions entered into or agreed to within three years of the date of
this Agreement, and all currently effective contracts and other transactions, in
each case, involving CMB with respect to which any officer, director, employee
or shareholder of CMB, or any person related to any of the foregoing by blood or
marriage, is or was a party or is or was in any other way involved. True and
complete copies of all such contracts and all documentation relating to such
transactions, including, without limitation, all amendments thereto and
modifications thereof, have been delivered to the Company.
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(b) Schedule 2.12(b) is a true and complete list and
description of all suppliers of products or services to CMB, and of all
customers of CMB who have received products or services from CMB, in each case
aggregating more than $25,000.00 in any of calendar years 1993 or 1994 or the
period from January 1, 1995 to September 30, 1995, together with the dollar
amounts purchased for each of such years and nine month period.
2.13 Compliance with Applicable Law. Except as provided in
Schedule 2.13, the business and activities of CMB (a) are presently being
conducted in compliance with all requirements of law and all requirements of
Governmental Entities having jurisdiction over CMB, and (b) were not conducted
in violation of any of such laws or such requirements since the incorporation of
CMB, except where the failure to comply with such requirements or any violations
do not, and in so far as reasonably can be foreseen will not, have a material
adverse effect on the business, prospects, assets or condition (financial or
otherwise) of CMB. CMB has not failed to file with any Governmental Entity or
other third party any statement, report, information or form required by any
applicable law, regulation or order and where the failure to file will have a
material adverse effect on the business, prospects, assets or condition
(financial or otherwise) of CMB. To the best knowledge of CMB and the Principal
Shareholders, there is no pending or threatened change of any law, regulation,
order, license or permit, including without limitation, the Permits; which could
adversely affect the business, prospects, assets, properties or condition
(financial or otherwise) of CMB. Except as provided in Schedule 2.13, CMB has
not, since the incorporation of CMB, received a notice of violation of, or to
the best knowledge of CMB and the Principal Shareholders, been threatened with a
charge of violating, or been under investigation with respect to a possible
violation of, any provision of any law, regulation or decree, which has not been
complied with, rescinded or resolved or the statute of limitations expired.
Except as set forth in Schedule 2.13, no investigation or review by any
Governmental Entity concerning any such possible violation by CMB is pending or,
to the best knowledge of CMB and the Principal Shareholders, threatened, nor has
any Governmental Entity indicated an intention to conduct the same.
2.14 Financial Statements.
(a) CMB has previously delivered to Core true and complete
copies of audited financial statements of CMB as of December 31, 1994 and
December 31, 1993, including balance sheets as of such respective dates and
statements of income for fiscal years ended on such dates, and an audited
balance sheet of CMB as of October 27, 1995 (the "Closing Balance Sheet"),
together with the notes to such financial statements and balance sheet
(collectively, the "Audited Statements") and true and complete copies of
unaudited financial statements of CMB, including balance sheets and statements
of income, for the dates and periods shown on the attached Schedule 2.14 (the
"Interim Statements"). The Audited Statements and the Interim Statements are
collectively referred to herein as the "Financial Statements".
(b) The Financial Statements are true and complete and in
accordance with the books and records of CMB. The Audited Statements have been
prepared in accordance with GAAP and applied on a basis consistent with such
statements for prior periods (except as may
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be indicated in the notes thereto). Subject to customary year-end and audit
adjustments in the case of the Interim Statements, (i) each of the balance
sheets included in the Financial Statements fairly presents, as of its date, the
financial condition and assets and liabilities of CMB; and (ii) each of the
income statements and statements of changes in financial position included in
the Financial Statements fairly presents the results of operations of CMB for
the relevant period.
(c) Except as set forth in Schedule 2.14(c), CMB has not
written off, nor will it write off prior to the Closing Date, any account, note
or other receivable or other asset set forth on the Closing Balance Sheet or
otherwise relating to any period ending after the Effective Date.
2.15 Receivables. All account, note and other receivables of
CMB shown in any of the Financial Statements arose in the ordinary course of
business at the aggregate amounts thereof and are valid and collectible, net of
the allowance for doubtful accounts set forth on the Financial Statements, and
the statements of aging of accounts receivable in CMB's internally generated
financial statements previously provided to Core are true and accurate in all
material respects. Except as set forth on Schedule 2.15, none of the receivables
of CMB is subject to any offset, recoupment, setoff or counter-claim and, to the
best knowledge of CMB and the Principal Shareholders, there are no facts or
circumstances, whether asserted or unasserted, that could give rise to any such
claim. Except as set forth on Schedule 2.15, no receivables are contingent upon
performance of any obligation or contract. Except as set forth on Schedule 2.15,
no person or entity has any Lien on any of such receivables, and no agreement
for deduction or discount has been made with respect to any of such receivables.
All accounts, notes and other receivables of CMB, whether or not reflected on
any of the Financial Statements, are valid obligations of the debtor and have
arisen only in the ordinary course of business and, to the best knowledge of CMB
and the Principal Shareholders, in accordance with the debtor's normal credit
policies.
2.16 Absence of Undisclosed Liabilities. To the best knowledge
of CMB and the Principal Shareholders, CMB does not have any claim, liability,
commitment, obligation or indebtedness, whether as primary obligor, guarantor or
otherwise, and whether accrued, absolute, contingent or otherwise, known or
unknown, and whether due or to become due, including, without limitation, any
such claim, liability, commitment, obligation or indebtedness relating to taxes,
interest or penalties, whether foreign, state, federal, local or otherwise,
other than (a) those reflected in the Financial Statements, if required by GAAP
to be reflected on a balance sheet, (b) routine accounts payable incurred by CMB
in the ordinary course of business since the Effective Date, (c) those disclosed
in Schedule 2.16, or (d) those which would not, individually or in the
aggregate, have a material adverse effect on the business, prospects, assets or
condition (financial or otherwise) of CMB.
2.17 Guarantees. Except as set forth on Schedule 2.17, CMB
does not have any power of attorney outstanding or any obligation or liability
as guarantor, surety, consignor, endorser, co-maker, indemnitor or in any other
capacity in respect to the obligations of any person, corporation, partnership,
joint venture, association, organization or other entity.
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2.18 Tax Matters.
(a) CMB has provided the Company with true and complete copies
of each federal, state, local and foreign income tax return and state sales and
use tax return filed by CMB.
(b) CMB has duly and timely filed all tax or tax information
returns, reports, declarations, or information statements with respect to any
taxes for any taxable period (collectively, "Tax Returns"). The Shareholders
will prepare or cause to be prepared, file or cause to be filed, in a manner
consistent with prior years and applicable laws and regulations, all Tax Returns
required to be filed for all taxable periods of CMB ending on or before December
31, 1995, including a final federal income tax return on IRS Form 11205, a final
California income tax return and a final income tax return of any other state or
locality in which CMB is required to file such returns and, with respect to all
of which, Core shall cooperate by providing access to the Shareholders and their
accountants to the CMB books and records necessary to prepare such returns.
Except as set forth on Schedule 2.18(b), CMB has duly paid all taxes payable, or
claimed to be payable, at any time to any federal, state, county, local, foreign
or other taxing authority in respect of any taxable period, including, without
limitation, any penalty or interest relating to any of such taxes.
(c) Except for those withholdings set forth on Schedule
2.18(c), all taxes which CMB was required by law to withhold or collect have
been duly withheld or collected and, to the extent required, have been paid over
to the proper Governmental Entities on a timely basis, including, without
limitation, all taxes in connection with amounts owing to employees, creditors,
independent contractors and third parties.
(d) Except as set forth on Schedule 2.18(d), none of the tax
returns of CMB has been examined by the Internal Revenue Service (the "IRS"),
any other taxing authority or any other Governmental Entity, and no inquiry with
respect to CMB's taxes or tax returns is being made or has been made by the IRS,
any other taxing authority or any other Governmental Entity. Except as set forth
on Schedule 2.18(d), no state of facts exists which could constitute grounds for
any material tax liability with respect to CMB or any of its properties or
assets. There are no outstanding agreements or waivers extending the statutory
period of limitations applicable to any tax return of CMB for any period.
(e) CMB has not made any payments nor is it obligated to make
any payments that would not be deductible under Section 280G of the Code. CMB
has not made, nor is CMB required to make, any adjustment under Section 481(a)
of the Code by reason of a change in accounting methods or otherwise.
(f) CMB has not at any time consented under Section 341(f)(1)
of the Code to have the provisions of Section 341(f)(2) of the Code apply to any
sale of its capital stock.
(g) CMB has not filed, and will not file through the Closing
Date, any state or local Tax Returns on a unitary or combined basis with any
other person.
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(h) CMB has properly elected under Section 1362(a) of the Code
to be treated as an S Corporation, within the meaning of Section 1361(a) of the
Code, for all of its taxable years beginning January 1, 1986 and will continue
to qualify as an S Corporation within the meaning of the Code at all times up to
the Closing Date and, accordingly, has and will have no liability for federal
income taxes with respect to any taxable period.
2.19 Absence of Certain Changes or Events. Except as set forth
in Schedule 2.19, or as otherwise provided in this Agreement, since October 27,
1995, CMB has conducted its business in the usual and customary manner, in the
ordinary course and consistent with past practices and, without limiting the
generality of the foregoing:
(a) CMB has not made any change in its Articles of
Incorporation, Bylaws or authorized securities. CMB has not (i) issued or sold
any stock, securities or options, warrants to purchase, scrip, rights to
subscribe for, calls or commitments of any character whatsoever relating, to any
shares of capital stock, bonds or other securities of CMB, (ii) purchased or
entered into any arrangement or contract with respect to the purchase or voting
of shares of its capital stock, (iii) entered into any call, demand, contract,
understanding or arrangement with respect to any shares of its capital stock,
bonds or other securities, (iv) adjusted, split, combined or reclassified any of
its capital stock, bonds or other securities, or (v) made any other changes in
its capital structure.
(b) CMB has not borrowed any amount and has not incurred,
assumed, become subject to or guaranteed any liability, whether absolute or
contingent.
(c) CMB has not made any changes in its practices or methods
of accounting.
(d) CMB has not made any change in or introduced any pension,
retirement, profit sharing or bonus arrangement or other employee welfare,
benefit arrangement or other Benefit Plan (as defined in Section 2.24).
(e) CMB has not suffered any material adverse change in its
business, prospects, operations, operating results, properties, assets,
liabilities, working capital, reserves, earnings or condition (financial or
otherwise), except for events or conditions of a general economic nature or of
industry-wide application.
(f) CMB has not suffered any event or condition of any
character which, either individually or in the aggregate, would likely
materially adversely affect its business, prospects, operations, operating
results, properties, assets, liabilities, working capital, reserves, earnings or
condition (financial or otherwise), except for events or conditions of a general
economic nature or of industry-wide application.
(g) Other than in the ordinary course of business, CMB has not
suffered any damage, destruction or loss, whether covered by insurance or not.
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(h) CMB has not declared, set aside, made or paid any
dividend, distribution or payment, whether in cash, stock, property or any
combination thereof, with respect to any of its securities (including, without
limitation, CMB Capital Stock) or otherwise for the benefit of any shareholders,
nor has it reclassified any of such securities (including, without limitation,
CMB Capital Stock).
(i) CMB has not instituted any change with respect to the
management or supervisory personnel of CMB. CMB has used its best efforts to
preserve intact all of its business organizations and to retain the services of
its officers and key employees.
(j) Since December 31, 1994, CMB has not increased any salary,
wages, compensation or fringe or other benefits payable or to become payable to
its officers, directors or employees, except for any such increases that are
required by state or federal minimum wage terms, except as described on the
attached Schedule 2.19.
(k) The Board of Directors of CMB has not adopted any
resolution giving to any holder of CMB Capital Stock appraisal, dissenters' or
similar rights.
(1) No amendment has been made to any Benefit Plan (as defined
in Section 2.24) and no arrangement has been adopted which would be a "Benefit
Plan."
(m) CMB has not made any tax election nor has it settled or
compromised any income or other tax liability or refund.
(n) CMB has not paid, discharged or satisfied any claim,
liability or obligation, whether absolute, accrued, asserted or unasserted,
contingent or otherwise, other than the payment, discharge or satisfaction, in
the ordinary course of business consistent with past practices or in accordance
with their terms, of liabilities reflected or reserved against in the balance
sheet of CMB for the period ended October 27, 1995.
(o) CMB has not entered into, amended, modified or terminated
any material agreement, commitment or transaction other than in the ordinary
course of business.
(p) CMB has not made any provision for price discounts,
markdowns or other special considerations in respect of its goods or services.
(q) CMB has not written off any account, note or other
receivable or portion thereof as uncollectible, other than in the ordinary
course of business.
(r) CMB has not sold, transferred, leased, mortgaged, pledged,
subjected to any Lien or otherwise disposed of any of its properties or assets,
real, personal or mixed, tangible or intangible, other than in the ordinary
course of business.
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(s) CMB has not experienced any shortage of supplies which
would have a material adverse effect on the business, prospects, assets,
condition (financial or otherwise) or operations of CMB.
(t) CMB has not entered into any agreement or understanding to
do any of the foregoing.
2.20 Certain Agreements. Except as set forth on Schedule 2.20,
CMB is not a party to, nor is it negotiating in respect of, any oral or written
agreement or commitment which creates a liability or obligation on the part of
CMB or a third party in excess of $25,000.00.
2.21 Patents, Trademarks and Similar Rights. Except as
indicated on Schedule 2.21, CMB is the sole owner, free from any Liens, of all
patents, trademarks, service marks, trade names, copyrights, licenses,
processes, designs, formulas, computer programs, trade secrets, source codes and
object codes, inventions, product manufacturing instructions, technology,
research and development, intellectual property rights, know-how and other
rights (including any registrations and applications for registration for any of
the foregoing) that are owned or used by CMB or that are necessary or
appropriate for the operation of its business as presently conducted or as
proposed to be conducted and the absence of which would have a material adverse
effect on the business, prospects, assets, condition (financial or otherwise) or
operations of CMB (each, a "Proprietary Right" and collectively, the
"Proprietary Rights"). Schedule 2.21 accurately and completely identifies all of
the Proprietary Rights, including the jurisdictions in which they have been
registered or in which applications for registration have been filed.
2.22 Contracts Relating to the Proprietary Rights.
(a) Schedule 2.22(a) contains a true and complete list and
description of all contracts, oral or written, pursuant to which CMB has
authorized any person or entity to use, or pursuant to which any person or
entity has the right to use, any of the Proprietary Rights owned or used by CMB,
including, without limitation, on a temporary or trial basis.
(b) Schedule 2.22(b) contains a true and complete list and
description of all royalty or contingent compensation arrangements or other
contracts, oral or written, regarding or pertaining to any Proprietary Right.
2.23 Status of the Proprietary Rights. Except as noted in
Schedule 2.23 and except for matters or claims which would not have a material
adverse effect on the business, prospects, assets, condition (financial or
otherwise) or operations of CMB:
(a) No Proprietary Right presently being used, licensed or
sold, or contemplated to be used, licensed or sold, by CMB infringes on or, to
the best knowledge of CMB and the Principal Shareholders, is infringed by any
rights owned or held by any other person or entity.
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(b) There is no pending or threatened claim or litigation
against CMB or any other person or entity contesting or, if decided adversely,
affecting the right of CMB to use, license or sell any Proprietary Right.
(c) To the best knowledge of CMB and the Principal
Shareholders, no pending or proposed patent, trademark, service ▇▇▇▇, trade
name, copyright, license, process, design, formula, computer program, trade
secret, source code or object code, invention, product manufacturing
instruction, technology, research and development, intellectual property right,
know-how or other right presently being licensed, sold or employed, or proposed
to be licensed, sold or employed, by any person or entity infringes on, or may
infringe on, or adversely affects, or may adversely affect, any Proprietary
Right, nor is there any pending or proposed statute, law, rule, regulation,
standard or code that may adversely affect any Proprietary Right presently being
used, licensed or sold, or proposed to be used, licensed or sold, by CMB.
(d) CMB uses and has used its best efforts to secure and
maintain its rights in the Proprietary Rights.
2.24 ERISA Compliance.
(a) Schedule 2.24(a) contains a list and brief description of
all "employee pension benefit plans" (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) (sometimes
referred to herein as "Pension Plans"), all "employee welfare benefit plans" (as
defined in Section 3(1) of ERISA) and all other bonus, pension, profit sharing,
deferred compensation, incentive compensation, stock ownership, stock purchase,
stock option, stock bonus, phantom stock, retirement, vacation, severance,
disability, death benefit, welfare, Christmas bonus, hospitalization, medical or
other plan, arrangement or understanding, whether or not legally binding,
providing benefits to any current or former employee, officer or director of
CMB, or maintained or contributed to by CMB for the benefit of any employee,
officer or director of CMB currently or within the last five years
(collectively, "Benefit Plans").
(b) On or prior to the date of this Agreement, CMB has
delivered to the Company true and complete copies of (i) each Benefit Plan or,
in the case of any unwritten Benefit Plan, descriptions thereof, (ii) the most
recent annual report on Form 5500 filed with the IRS with respect to each
Benefit Plan, if any such report was required, (iii) the most recent summary
plan description for each Benefit Plan for which such summary plan description
is required, (iv) each trust agreement and group annuity contract relating to
any Benefit Plan, and (v) the most recent actuarial report relating to any
Benefit Plan.
(c) Except as disclosed in Schedule 2.24(c), all Pension Plans
have been the subject of determination letters from the IRS to the effect that
such Pension Plans are qualified and exempt from federal income taxes, and no
such determination letter has been revoked nor has revocation been threatened,
nor has any such Pension Plan been amended since the date of
15
its most recent determination letter or application therefor in any respect that
could adversely affect its qualification or increase its costs.
(d) Except as disclosed on Schedule 2.24(d), no Pension Plan
that CMB maintains, or to which CMB is or was previously obligated to
contribute, had, as of the respective last annual valuation date for each such
Pension Plan, any "unfunded benefit liabilities," based on actuarial assumptions
which have been furnished to Core. None of the Pension Plans has an "accumulated
funding deficiency," whether or not waived. None of CMB, any officer of CMB nor
any of the Benefit Plans which are subject to ERISA, including, without
limitation, the Pension Plans, or any trusts created thereunder, or any trustee
or administrator thereof, has engaged in a "prohibited transaction" or any other
breach of fiduciary responsibility that could subject CMB or any officer of CMB
to the tax or penalty on prohibited transactions or to any liability under
ERISA. Except as disclosed on Schedule 2.24(d), (i) neither any of such Pension
Plans nor any of such trusts have been terminated, nor has there been any
"reportable event" with respect to which the 30-day notice requirement has not
been waived and CMB is not aware of any other reportable events with respect
thereto during the last five years; and (ii) CMB has never had an obligation to
contribute to a "multiemployer plan" as defined in Section 3(37) of ERISA. No
liability to the Pension Benefit Guaranty Corporation (the "PBGC") has been or
is expected to be incurred with respect to any Benefit Plan by reason of a
Benefit Plan termination. The PBGC has not instituted proceedings to terminate
any Benefit Plan. Except as noted on Schedule 2.24(d), there is no Benefit Plan
to which Title IV of ERISA applies which has terminated and whose "date of
termination" occurred after September 1, 1974 or any such Benefit Plan to which
Tide IV of ERISA applies which has partially terminated. No event has occurred,
and there exists no condition or set of circumstances which presents a material
risk of the termination or partial termination of any such Benefit Plan, which
could result in a liability on the part of CMB to the PBGC.
(e) With respect to any Benefit Plan that is an employee
welfare benefit plan, except as disclosed in Schedule 2.24(e), (i) no such
Benefit Plan is unfunded or funded through a welfare benefits fund, (ii) each
such Benefit Plan that is a group health plan complies in all material respects
with the applicable requirements of the Code and the Social Security Act and
(iii) each such Benefit Plan, including, without limitation, any such plan
covering retirees or other former employees, may be amended or terminated
without liability to the Surviving Corporation, Core or CMB on or at any time
after the Effective Date of the Merger.
(f) Each Benefit Plan and all related trust or other
agreements conform in form and operation to, and comply with, all applicable
laws and regulations, including, without limitation, ERISA and the Code, and all
reports or information relating to each such Benefit Plan required to be filed
with any Governmental Entity or disclosed to participants have been timely filed
and disclosed.
(g) Except as disclosed in Schedule 2.24(g) the consummation
of the Transactions will not (i) entitle any current or former employee of CMB
to severance pay,
16
unemployment compensation or any other payment, or (ii) accelerate the time of
payment or vesting or increase the amount of compensation due to any such
employee or former employee.
(h) CMB has not announced a plan to create or amend, nor does
it have any legally binding commitment to create or amend, any Benefit Plan or
to create any new arrangement which would be a Benefit Plan.
(i) All insurance premiums with respect to any Benefit Plan,
including, without limitation, premiums to the PBGC, have been paid in full.
Except as disclosed on Schedule 2.24(i), there are no retrospective adjustments
provided for under any insurance contracts maintained pursuant to any Benefit
Plan with regard to policy years or other periods ending on or before the
Effective Date of the Merger.
(j) No Benefit Plan, or the deduction of any contributions
thereto by CMB, has been the subject of audit by the IRS or the Department of
Labor, and no litigation or asserted claims exist against CMB or any Benefit
Plan or fiduciary with respect thereto, other than such benefit claims as are
made in the normal operation of a Benefit Plan. To the best knowledge of CMB and
the Principal Shareholders, there are no facts which could give rise to any
action, suit, grievance, arbitration or other claim in connection with any
Benefit Plan..
(k) With respect to any Benefit Plan which covers current or
former employees, officers or directors who are not residents of the United
States of America, any references in this Section 2.24 to ERISA, the Code or any
other applicable law will be read to mean any applicable law of similar import
for the jurisdiction in which such individuals reside.
2.25 Labor and Employment-Related Matters.
(a) Except as set forth in Schedule 2.25(a) and except for
matters which would not have a material adverse effect on the business,
prospects, assets or condition (financial or otherwise) of CMB, CMB is in
compliance with all federal, state, local, foreign and other laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours, and there are no arrears in the payment of wages, taxes,
unemployment insurance contributions or workers' compensation assessments or
penalties.
(b) None of the employees of CMB is represented by any labor
union. There is no pending question, petition, claim or assertion or any
organizational campaign concerning representation of any employees of CMB. CMB
is not a party to or bound by any collective bargaining agreement. There is no
pending litigation or other proceeding or, to the best knowledge of CMB and the
Principal Shareholders, basis for any unasserted claim against CMB by any
employee or group of employees of CMB, including, without limitation, claims for
contract, tort, discrimination, employee benefits, wrongful termination or any
common law or statutory claims.
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(c) CMB has provided the Company with a true and complete list
of the payroll of CMB as of the date of this Agreement. Except as set forth on
Schedule 2.25(c), CMB has not entered into any agreement, made any
representation or taken any action that could cause any of its employees to be
terminable other than at-will, with or without cause, or to be entitled to the
payment of any severance or other obligation or liability, except as provided
generally to employees pursuant to applicable state or federal law.
(d) CMB has not entered into any agreement which is
inconsistent with the following: any ideas, inventions or other intellectual
property rights conceived, created, developed or enhanced while any person or
entity was acting as an employee or independent contractor of CMB or any of its
affiliates or of any customer of CMB, whether by or with the help of such
employee or independent contractor or otherwise, is the sole and exclusive
property of CMB, or of a customer of CMB in cases in which such customer has a
written agreement with CMB so providing, and will be, from and after the Closing
Date, the sole and exclusive property of the Surviving Corporation.
(e) Each employee of CMB is not under any applicable law,
rule, regulation or guideline, an employee or a "leased employee" of any other
person or entity, including, without limitation, any customer of CMB.
(f) CMB has deducted and remitted to the relevant Government
Entities all income taxes, unemployment insurance contributions and other taxes
or amounts which it is required to deduct and remit to any Government Entity and
CMB has made all required filing in respect thereof.
2.26 Insurance. Schedule 2.26 is a true and complete list of
all policies of liability, fire, workers' compensation and other forms of
insurance owned or held by or for the benefit of CMB or its properties or
assets, including, without limitation, any self insurance, specifying any notice
or other information possessed by CMB regarding possible claims under,
cancellation of or premium increases thereon. All current premiums have been
paid with respect to all of such policies. Each of such policies is underwritten
by unaffiliated insurers and is sufficient for all applicable requirements of
law.
2.27 Legal Proceedings, Etc. Except as set forth in Schedule
2.27, there are no legal, administrative, arbitration or other actions, suits or
proceedings or governmental claims or investigations or proceedings of any
customer advisory board or similar organization pending or, to the knowledge of
CMB, threatened against, or brought by or on behalf of, CMB or affecting its
business, prospects, assets, properties or condition (financial or otherwise).
Except as set forth in Schedule 2.27, CMB and its properties or assets are not
subject to any order, decree, injunction or judgment, whether entered by
consent, stipulation or otherwise, before or in connection with, any
Governmental Entity. Without limiting the generality of the foregoing, except as
set forth in Schedule 2.27, there are no products' liability claims, warranty
claims or other claims whatsoever which, if decided adversely, would have a
material adverse effect on any of the businesses, prospects, assets, properties
or condition (financial or otherwise) of CMB.
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2.28 Environmental Matters. Except as expressly disclosed in
the attached Schedule 2.28:
(a) CMB has not used, generated, transported, stored, treated,
manufactured, refined, handled, produced, processed or disposed of Hazardous
Materials (as defined below) on, from or affecting its real property, personal
property, buildings, fixtures and structures (collectively, the "Property") in
any manner which violates any Environmental Laws (as defined below); and, no
prior owner of the Property or any existing or prior tenant, sub-tenant or
occupant of the Property has used, generated, transported, stored, treated,
manufactured, refined, handled, produced, processed or disposed of Hazardous
Materials on, from or affecting the Property in any manner which violates any
Environmental Laws.
(b) CMB has not received any notice, claim, order or directive
concerning any violations (or is aware of any existing violations) of any
Environmental Laws at, in, or from the Property; and there have been no
lawsuits, proceedings, citations, notices of violations, settlements, claims or
actions commenced or threatened concerning Hazardous Materials on, from or
affecting the Property or CMB by any person.
(c) No Hazardous Materials have been released into or
deposited upon or below the surface of the Property or into any water on or
about or below the surface of the Property.
(d) There are no underground tanks located in or under the
Property.
(e) No asbestos or urea formaldehyde was used in constructing
the improvements on the Property or is incorporated into such improvements or
the appurtenances thereto.
(f) The Property has not been used as a landfill or for the
deposit of waste material.
(g) As used herein, "Hazardous Materials" shall mean any
substance: (i) the presence of which requires investigation or remediation under
any federal, state or local statute, regulation, ordinance, order, action,
policy or common law; or (ii) which is or becomes defined as a "chemical
substance," "hazardous chemical," "air contaminant," "hazardous waste,"
"hazardous substance," "pollutant," or "contaminant" under any federal, state or
local statute, regulation, rule or ordinance or amendments thereto including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. Section 9601 et seq.), the Emergency Planning and
Community, Right-To-Know Act 942 U.S.C. Section 11001 et seq.), the Occupational
Safety and Health Act (29 U.S.C. Section 651 et seq.), the Hazard Communication
Standard (29 C.F.R. Section 1910.1200), and/or the Resource Conservation and
Recovery Act (42 U.S.C. Section 6901 et seq.); or (iii) which is toxic,
explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic, or otherwise hazardous and is or becomes regulated by any
governmental authority, agency, department, commission, board, agency or
instrumentality of the United States, the State of California, any
19
local government or any political subdivision thereof; or (iv) except as
disclosed in Schedule 2.28, the presence of which upon, about, adjacent to, or
beneath the Property at any time prior to Closing Date causes or threatens to
cause a nuisance upon the Property or poses or threatens to pose a hazard to the
health or safety of persons or to the environment on, or about, adjacent to or
in the vicinity of the Property; (v) that is, or could be characterized as, a
contaminant or irritant by any governmental authority; or (vi) that is
petroleum, its constituents, distillates, including gasoline, or its
by-products.
(h) "Environmental Laws" means all applicable present and
future statutes, regulations, rules, ordinances, codes, licenses, permits,
orders, approvals, plans, authorizations, concessions, franchises, and similar
items, of all governmental agencies, departments, commissions, boards, bureaus,
local governments, and political subdivisions thereof and all applicable
judicial, administrative, and regulatory decrees, judgments, and orders relating
to the protection of human health or the environment, including, without
limitation: (i) all requirements pertaining to reporting, licensing, permitting,
investigation, and remediation of any actual or threatened escape, dispersal,
seepage, migration, emission, discharge, or release of Hazardous Materials, or
hazardous or toxic substances, materials or wastes whether solid, liquid, or
gaseous in nature, anywhere, including, without limitation, into the air,
surface water, groundwater, soils, interior of a building or structure, or upon
or into the land, or relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of Hazardous Materials,
chemical substances, pollutants, contaminants, or hazardous or toxic substances,
materials, or wastes, whether solid, liquid, or gaseous in nature; and (ii) all
requirements pertaining to the protection of the health and safety of employees
or the public.
2.29 Finder's Fees. Except as set forth on Schedule 2.29, no
broker, finder or other person or entity is entitled to any brokerage fee,
commission or finder's fee in connection with any of the Merger Agreements or
any of the Transactions on account of any actions or agreements of CMB, the
Shareholders or any of its or their representatives.
2.30 CMB's Board of Directors' Action. To the extent permitted
by applicable law, the Board of Directors of CMB, by consent in lieu of a
meeting or at a meeting duly called and held, has by the requisite vote of all
directors present or otherwise acting (a) determined that the Merger Agreements
to which CMB is a party and the Transactions are advisable and in the best
interests of CMB and its shareholders, (b) resolved to recommend the approval of
the Merger Agreements and the Transactions by the holders of CMB Capital Stock
and directed that the Merger Agreements and the Transactions be submitted for
consideration by the holders of CMB Capital Stock at a special meeting of such
holders and (c) adopted a resolution to elect not to be subject to any takeover
law, including without limitation, those described in Section 2.7 above, that
may purport to be applicable to or in connection with any of the Merger
Agreements or any of the Transactions.
2.31 Enforceability and Status of the Contracts. Except as
disclosed on Schedule 2.31, each contract, lease, insurance policy or other item
listed in or set forth on or required to be listed in or set forth on any
Exhibit or Schedule to this Agreement, including, without
20
limitation, Schedule 2.10, Schedule 2.12(a), Schedule 2.20, Schedule 2.22(a),
Schedule 2.22(b), Schedule 2.24(a) or Schedule 2.26 (collectively, the
"Contracts"), is valid and enforceable and in full force and effect. There is no
default under any of the Contracts, or any event which, with or without due
notice or lapse of time or both, would constitute such a default, except as
disclosed on Schedule 2.32 or where such default would not have a material
adverse effect on the business, prospects, assets or condition (financial or
otherwise) of CMB. CMB and each other party to any of the Contracts has fully
paid and performed all of its obligations and duties accrued or due under all of
the Contracts. True and complete copies of all of the Contracts, including,
without limitation, all amendments thereto and modifications thereof, have been
delivered or made available to Core prior to the date of this Agreement. None of
the Contracts will be affected by, or terminate or lapse by reason of, any of
the Merger Agreements or any of the Transactions.
2.32 Product Warranty. The aggregate expenses incurred by CMB,
during the fiscal year ended December 31, 1994, for replacement or repair
thereof or other damages based upon failure of such products to comply with the
applicable warranties of CMB did not exceed $130,000. Except for any warranty,
guaranty, or other indemnity implied by law, no product manufactured by CMB
prior to the Closing Date is subject to any guaranty, warranty, or other
indemnity, beyond the applicable terms and conditions of sale or lease as set
forth in Schedule 2.32.
2.33 Product Liability. No person or entity has asserted any
claim or has threatened to assert any claim, which, if successful, would result
in a liability for CMB arising out of any injury to individuals or property as a
result of the ownership, possession, or use of any product manufactured by CMB
prior to the Closing Date.
2.34 Disclosure. There is no fact or circumstance known to CMB
which materially adversely affects, or which in the future may materially
adversely affect, the business, prospects, assets, condition (financial or
otherwise) or operations of CMB, which fact or circumstance has not been set
forth in this Agreement or the Schedules to this Agreement. No representation or
warranty by CMB in any of the Merger Agreements and no statement contained in
any document, including, without limitation, the financial statements and
disclosure schedules, certificate or other writing furnished or to be furnished
by or on behalf of CMB pursuant to or in connection with any of the Merger
Agreements or any of the Transactions contains any untrue statement of a
material fact or omits any material fact necessary to make the statements herein
or therein, in light of the circumstances under which they were made, not
misleading.
3. Representations, Warranties and Covenants of Core. Core represents,
warrants and covenants to CMB and the Shareholders, as of the date of this
Agreement and through and including the Effective Date and the Closing Date, as
follows:
3.1 Organization; Qualification. Core is a corporation duly
incorporated, validly existing and in good standing under the laws of its state
of incorporation and has all
21
requisite power and authority to own, lease and operate its properties and to
carry on its business as now being conducted. Core is duly qualified or licensed
and is in good standing to do business in each jurisdiction in which the nature
of the business conducted by it has made its qualification or licensing a legal
requirement.
3.2 Authority Relative to the Merger Agreements.
(a) The Board of Directors of Core has approved the Merger
Agreements (including the Promissory Notes) and the Transactions and has
authorized the execution, delivery and performance of the Merger Agreements. No
other corporate authorizations or proceedings on the part of Core or the Company
are necessary to consummate any of the Transactions.
(b) Each of the Merger Agreements (including the Promissory
Notes) to which Core is a party has been duly and validly executed and delivered
by Core, and constitute valid and binding agreements of Core, enforceable
against it in accordance with their respective terms.
(c) Core has the power and authority to enter into the Merger
Agreements (including the Promissory Notes) and to consummate the Transactions.
(d) The Aggregate Merger Shares, upon their issuance in
accordance with the terms of this Agreement, will be duly authorized, validly
issued, fully paid and nonassessable, and issued in compliance with applicable
federal and state laws..
3.3 No Conflicts; Consents. Except as identified in Schedule
3.3, neither the execution and delivery of the Merger Agreements, nor the
consummation of the Transactions, nor compliance by Core with any of the
provisions of the Merger Agreements, will:
(a) violate any provision of the corporate charter or bylaws
of Core or any statute, code, ordinance, rule, regulation, judgment, order,
writ, decree or injunction applicable to Core or any of its properties or
assets;
(b) violate, or conflict with, or result in a breach of any
provision of, or constitute a default under, or any event which, with or without
due notice or lapse of time, or both, would constitute a default under, or
result in the termination of, or accelerate the performance required by, or
result in the creation of any Lien upon any of the properties or assets of Core
under, any note, bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which Core is a party, or by
which Core or any of its properties or assets may be bound or affected,
including, without limitation, any agreement, arrangement, document, policy or
obligation disclosed or required to be disclosed in any of the Exhibits or
Schedules to this Agreement; or
(c) require any consent, approval, authorization or permit of
or from, or filing with or notification to, any Governmental Entity, except (i)
filing articles and certificates of merger pursuant to the laws of any state,
(ii) filings required under the securities or blue sky laws
22
of the various states, (iii) filings under the HSR Act, or (iv) consents,
approvals, authorizations, permits, filings or notifications which, if not
obtained or made, will not, individually or in the aggregate, have a material
adverse effect on the Merger or the business, prospects, assets, properties or
condition (financial or otherwise) of Core.
3.4 Capitalization. As of the date of this Agreement, the
authorized capital stock of Core consists of 100,000 shares of preferred stock,
$1.00 par value, of which none are outstanding, and 20,000,000 shares of common
stock, $1.00 par value, of which 11,237,172 shares are issued and outstanding as
of August 31, 1995 (including 1,410,160 shares which are Treasury Shares). All
the outstanding shares of Core Capital Stock are duly authorized, validly
issued, fully paid, nonassessable and free of preemptive rights.
3.5 SEC Reports. Core has filed all forms, reports and
documents required to be filed by Core with the Securities and Exchange
Commission ("SEC") relating to periods ending on and after August 31, 1993
(collectively, "Core's SEC Reports"). Core's SEC Reports have complied in all
material respects with all applicable requirements of the Securities Act of
1933, as amended (the "Securities Act," and Securities Exchange Act of 1934, as
amended (the "Exchange Act.") As of their respective dates, none of Core's SEC
Reports, including any financial statements or schedules included or
incorporated by reference therein, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated or incorporated
by reference therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. Core has
heretofore delivered to CMB, in the form filed with the SEC, those of Core's SEC
Reports identified in the attached Schedule 3.5.
3.6 Disclosure Materials.
(a) Any information which is provided by Core about Core
("Core Disclosure Materials") to CMB for inclusion in the disclosure materials
prepared by CMB pursuant to Section 4.5 will be true in all material respects.
(b) There is no fact or circumstance known to Core which
materially adversely affects, or which in the future materially adversely
affects, the business, prospects, assets or condition (financial or otherwise)
or operations of Core, which fact or circumstance has not been set forth in this
Agreement, the Schedules to this Agreement, or Core's SEC Reports or the Core
Disclosure Materials. None of the information contained in the Core Disclosure
Materials or any representation or warranty of Core in any of the Merger
Agreements contains any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading in any material respect.
3.7 Finder's Fees. Except as set forth on Schedule 3.7, no
broker, finder or other person or entity is entitled to any brokerage fee,
commission or finder's fee in connection
23
with any of the Merger Agreements or any of the Transactions on account of any
actions or agreements of Core or any representatives of Core.
4. Covenants of the Parties.
4.1 Due Diligence. Prior to the date of this Agreement, Core
and its representatives have conducted a review of certain materials made
available to them by or on behalf of CMB. From the date of this Agreement
through the Closing Date, CMB and its officers, directors, employees and agents,
has and will give to Core, its counsel, accountants and other authorized
representatives, full access to all of CMB's assets, properties, personnel,
technology and technical information, books of account, leases, agreements,
commitments and records, and will furnish Core and its representatives with all
such information concerning CMB as Core may request. No investigation by Core or
any of its representatives will relieve CMB or any Shareholder from any
liability under or in connection with any of the Merger Agreements or any of the
Transactions or affect, in any manner, the representations, warranties,
covenants or agreements of CMB under any of the Merger Agreements or any other
term or condition of any of the Merger Agreements.
4.2 Acquisition Proposals.
(a) Neither CMB nor any of the Shareholders will, nor will CMB
nor any of the Shareholders authorize or permit any officer, director or
employee of or any investment banker, financial advisor, attorney or other
advisor or representative of CMB or any Shareholder to, directly or indirectly,
(i) solicit, initiate or encourage the submission of any Acquisition Proposal
(as defined in subsection (c) below), (ii) enter into any agreement with respect
to any Acquisition Proposal, or (iii) participate in any discussions or
negotiations regarding, or furnish to any person or entity any information with
respect to, or take any other action to facilitate any inquiries or the making
of any proposal that constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal. Without limiting the foregoing, it is understood that any
violation of this Section 4.2(a) by any employee, director or officer of CMB or
any Shareholder or any investment banker, financial advisor, attorney or other
advisor retained by CMB or any Shareholder, whether or not such person is
purporting to act on behalf of CMB or any Shareholder or otherwise, will be
deemed to be a breach of this Section 4.2(a) by CMB or such Shareholder.
(b) CMB and each of the Shareholders will promptly advise Core
orally and in writing of any Acquisition Proposal or any inquiry with respect
to, or which could lead to, any Acquisition Proposal, the terms and conditions
of such inquiry or Acquisition Proposal (including financial) and the identity
of the person or entity making any such Acquisition Proposal or inquiry. CMB and
each of the Shareholders will keep Core fully informed of the status and details
of any such Acquisition Proposal or inquiry.
24
(c) "Acquisition Proposal" means any proposal for a merger or
other business combination involving CMB or to acquire in any manner, directly
or indirectly, including, without limitation, through any reverse acquisition in
which CMB is the acquirer in form, (i) a material equity interest in CMB, (ii)
any material amount of any security of CMB that has power to vote, approve or
consent to any corporate action or (iii) any assets of CMB that could not be
sold by CMB in the ordinary course of business.
4.3 Supplemental Information and Documents. From time to time
prior to the Closing Date, CMB and each of the Shareholders will deliver to Core
supplemental or other information and documents concerning events, facts or
circumstances subsequent to the date of this Agreement which could render any
statement, representation, warranty, covenant or other agreement in any of the
Merger Agreements or any information contained in any Exhibit or Schedule
inaccurate or incomplete or which documents would have been required to have
been delivered if existing prior to the date of this Agreement. The obligations
of CMB and each of the Shareholders pursuant to this Section 4.3 will not limit
or affect any right or remedy Core might otherwise have under any of the Merger
Agreements or otherwise with respect to any such supplemental or other
information or documents, including, without limitation pursuant to Section 5 or
Section 7 below. CMB and each of the Shareholders will cooperate, and will cause
its employees to cooperate, with Core and all of its representatives with
respect to making available all information requested by Core and its
representatives.
4.4 Filings. If required, the parties have filed or will file,
as applicable, with the United States Department of Justice (the "Department")
and the Federal Trade Commission (the "FTC") notifications with respect to this
Agreement and the Merger pursuant to the HSR Act. The parties will promptly
comply with any request by the Department or the FTC for additional documents or
information. The parties will prepare and give or make any necessary notices or
filings under any other federal, state, local, foreign or other laws, rules and
regulations which may be required in connection with any of the Merger
Agreements or any of the Transactions.
4.5 Private Placement Information, Registration of Merger
Shares.
(a) Core, at its expense, shall prepare a private placement
memorandum or similar document (the "PPM") and shall deliver the PPM to CMB for
delivery to the Shareholders prior to the Closing. Core will include in the PPM
copies of any of Core's SEC Reports described in Rule 502(b)(2)(ii)(B) and (C)
of Regulation D under the Securities Act, which have not previously been
provided to the Shareholders, and such other information concerning Core, its
business and assets and Merger Shares as Core deems necessary or appropriate
(such SEC Reports and other information being referred to as the "Core PPM
Information"). CMB shall have exclusive responsibility for preparing, or causing
its counsel to prepare, and delivering to Core in writing for inclusion in the
PPM all other information to be included in the PPM (the "CMB PPM Information"),
for the accuracy and completeness of the CMB PPM Information and for the timely
delivery of the PPM to Shareholders of CMB.
25
(b) Core, at its expense, shall prepare and, on or before
January 31, 1996, file with the SEC a Registration Statement (the "Registration
Statement") on Form S-3, or other appropriate form, for the offering and sales
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
by the Shareholders of the Merger Shares to be issued to the Shareholders in the
Merger. The section of the Registration Statement entitled "Plan of
Distribution" shall be prepared in accordance with the requirements of Item 508
of Regulation S-K promulgated under the Securities Act. Notwithstanding any
other provision of this Agreement or the "Plan of Distribution" contained in the
Registration Statement, the selling Shareholders shall agree to limitations on
resale set forth in Section 2(d) of the Standstill Agreement (as defined in
Section 5.1 (n-1) hereof; provided, however, that the foregoing restriction
shall not apply to and shall not be taken into account for purposes of
determining whether any other transfer complies with the foregoing restriction
(i) any transfer by will or the laws of intestacy, (ii) any transfer by a trust
which is a Shareholder to the beneficiaries of such trust, (iii) any transfer by
a Shareholder to another Shareholder, (iv) any transfer by a Shareholder to such
Shareholders' or lineal descendants of such Shareholder or (v) any transfer by a
Shareholder to a trust of the beneficial interests in which are owned by one or
more of the members of the group consisting of the Shareholder and the
individuals described in the preceding clause (iv). Core will have exclusive
responsibility for the preparation, filing, accuracy, and completeness of the
Registration Statement, and any amendments or supplements thereto except as to
information therein and any amendments or supplements thereto, that the
Shareholders shall have furnished in writing to Core expressly for inclusion in
the Registration Statement or any amendment or supplement thereto. Core shall
furnish to the 'Shareholders, for their review and comment, copies of the
Registration Statement and any amendment or supplement thereto, in the forms
proposed to be filed by Core, not less than five business days prior to the
filing thereof with the SEC, and the Shareholders shall advise Core in writing
of any recommended changes to the Registration Statement or any amendment or
supplement thereto within three business days following receipt of such
documents from Core. Core will furnish to the Shareholders, copies of the
Registration Statement, any prospectus relating to the Registration Statement
(as amended or supplemented from time to time, a "Prospectus"), and any
amendments or supplements thereto, in the forms filed, immediately upon the
filing of such documents with the SEC, together with any other documents that
the Shareholders reasonably request in order to facilitate the disposition of
the Merger Shares registered pursuant to the Registration Statement. Core shall
use its reasonable best efforts to comply with all applicable rules and
regulations of the SEC and shall make available to the Shareholders, as soon as
reasonably practicable (but not more than 18 months) after the effective date of
the Registration Statement, an earnings statement that satisfies the provisions
of Section 11(a) of the Securities Act; provided, however, that Core shall be
deemed to have complied with this sentence if it has complied with Rule 158
promulgated under the Securities Act.
(c) Core will use its reasonable best efforts to respond to
any comments of the SEC with respect to the Registration Statement and to cause
the Registration Statement to become effective by January 31, 1996 or as soon as
possible thereafter, but in no event shall such Registration Statement not be
effective by May 31, 1996. CMB and Core shall cooperate with each other and
provide to each other in writing all information necessary in order to prepare
the
26
PPM and the Registration Statement and shall each provide promptly to the other
party in writing any information that such party may obtain that could
necessitate amending any such document. Core will notify the Shareholders
promptly of the receipt of any comments from the SEC or its staff or any other
government official and of any requests by the SEC or its staff or any other
government official for any amendment or supplement to the Registration
Statement or for additional information and will supply the Shareholders with
copies of all correspondence between Core or any of its representatives, on the
one hand, and the SEC or its staff or any other government official, on the
other hand, with respect thereto.
(d) Core covenants that the PPM, the Registration Statement,
each Prospectus, and any amendment or supplement thereto (other than the CMB PPM
Information and any information that CMB, any Shareholder, or any of their
respective representatives shall have furnished in writing to Core expressly for
inclusion in any such document) (A) will comply in all material respects with
the Securities Act and the Exchange Act and (B) will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements contained therein,
in light of the circumstances under which they are made, not misleading.
(e) CMB and each of the Principal Shareholders covenant that
the CMB PPM Information and the information supplied or to be supplied in
writing to Core by CMB or any of its representatives or the Shareholders
expressly for inclusion in the Registration Statement, each Prospectus, and any
amendment or supplement thereto, will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(f) Each Shareholder, as a condition to the inclusion in the
Registration Statement of the Merger Shares to be issued to such Shareholder in
the Merger, hereby covenants that the information supplied or to be supplied in
writing to Core by such Shareholder or any of his or her representatives
expressly for inclusion in the Registration Statement, each Prospectus, and any
amendment or supplement thereto, will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(g) Until the first to occur of (i) the expiration of three
years after the Closing Date, and (ii) the sale of all Merger Shares covered by
the Registration Statement, Core shall promptly prepare and file with the SEC
any amendments, post-effective amendments, and supplements to the Registration
Statement or each Prospectus and shall use its reasonable best efforts to take
all actions that are necessary or appropriate to keep the Registration Statement
effective and current and to comply with the provisions of the Securities Act
with respect to the disposition of all Merger Shares covered by the Registration
Statement. If the Registration Statement as from time to time in effect includes
an untrue statement of a material fact or fails to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing or if a post-effective
amendment to the
27
Registration Statement or a supplement to any Prospectus relating to the
Registration Statement is required, Core shall immediately notify each
Shareholder and shall promptly prepare and file with the SEC and furnish to each
Shareholder a supplement or amendment to the Registration Statement or the
Prospectus included therein so that, as thereafter delivered to purchasers of
the Shareholders' shares of Merger Shares covered by the Registration Statement,
such Prospectus will not contain any untrue statement of any material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading in light of the
circumstances then existing.
(h) Core shall notify each Shareholder immediately upon (i)
the effectiveness of the Registration Statement, (ii) the issuance or threatened
issuance of any stop order or other order preventing or suspending the use of
any Prospectus, (iii) any suspension or threatened suspension of the use of any
Prospectus in any state, (iv) any proceedings commenced or threatened to be
commenced by the SEC or any state securities commission that would result in the
issuance of such stop order or other order preventing or suspending the use of
any Prospectus, or (v) any request by the SEC to supplement or amend any
Prospectus after the effectiveness of the Registration Statement. Core shall use
its reasonable best efforts to prevent or promptly remove any stop order or
other order preventing or suspending the use of any Prospectus and to comply
with any such request by the SEC to amend or supplement such Prospectus.
(i) Core shall use its reasonable best efforts by January 31,
1996, or as soon as possible thereafter, but in no event later than May 31,
1996, to qualify the Merger Shares to be issued and delivered to the
Shareholders in the Merger for resale by the Shareholders under the securities
or blue-sky laws of the State of California and use its reasonable best efforts
by January 31, 1996, or as soon as possible thereafter, but in no event later
than May 31, 1996, to cause all of the Merger Shares to be issued and delivered
to the Shareholders in the Merger to be listed on the New York Stock Exchange.
(j) Core shall be responsible for all expenses incurred by
Core in complying with this Section 4.5, including all registration,
qualification, and filing fees, printing expenses, fees and disbursements of
counsel for Core, applicable blue-sky fees and expenses, and the expense of any
special audits incident to or required by the registration contemplated hereby.
(k) Core shall file with the SEC in a timely manner all
reports and other documents required to be filed by Core under the Securities
Act and the Exchange Act.
(l) Core's obligations under this Section 4.5 with respect to
registration of Merger Shares shall be conditioned upon each Shareholder's
compliance with the following:
(i) The Shareholder shall cooperate with Core in
connection with the preparation of the Registration Statement, and for
so long as Core is obligated to keep a Registration Statement
effective, the Shareholder will provide to Core, in writing, for use in
the Registration Statement, reasonably promptly after a request by
Core, all information
28
relating to the Selling Shareholder as may be necessary to enable Core
to prepare the Registration Statement and to maintain the currency and
effectiveness thereof.
(ii) The Shareholder shall permit Core and its
representatives and agents to examine such documents and records and
shall supply such information relating to the Shareholder as they may
reasonably request in connection with the offering or other
distribution of the Merger Shares registered pursuant to the
Registration Statement in which the Shareholder proposes to
participate.
(iii) During such time as the Shareholder may be
engaged in a distribution of the Merger Shares registered pursuant to
the Registration Statement, the Shareholder will comply with all
applicable laws including Rules 10b-6 and 10b-7 promulgated under the
Exchange Act and pursuant thereto will, among other things: (A) not
engage in any stabilization activity in connection with the securities
of Core in contravention of such rules; (B) distribute the Merger
Shares registered pursuant to the Registration Statement owned by such
selling Shareholder solely in the manner described in the Registration
Statement; (C) cause to be furnished to each agent or broker-dealer, to
or through whom the Merger Shares registered pursuant to the
Registration Statement owned by such Shareholder may be offered, or to
the offeree if an offer is made directly by the Shareholder, such
copies of each Prospectus (as amended and supplemented to such date)
and documents incorporated by reference therein as may be required by
applicable stock exchange rules, or law; and (D) not bid for or
purchase any securities of Core or attempt to induce any person to
purchase any securities of Core in any manner prohibited under the
Exchange Act.
(m) Core shall indemnify, defend, and hold harmless each
selling Shareholder, and each underwriting and selling broker of any of the
Merger Shares that is the subject of the Registration Statement, and each other
Person, if any, who controls any of the foregoing within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act (collectively, the
"Shareholder Indemnified Parties"), against any losses, claims, damages, or
liabilities (collectively, "Losses"), joint or several, to which any Shareholder
Indemnified Party may become subject under the Securities Act or the Exchange
Act or otherwise, insofar as such Losses (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the PPM, the Registration Statement or a Prospectus,
or any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that Core will not indemnify or hold harmless any Shareholder Indemnified Party
from or against such Losses if the untrue statement, omission or allegation
thereof upon which such Losses are based (x) was in the CMB PPM Information or
was made in reliance upon and in conformity with written information provided by
CMB or any Shareholder Indemnified Party or their respective representatives
specifically for use or inclusion in the PPM, the Registration Statement or any
Prospectus, or (y) was made in any Prospectus used after such time as Core
provided notice to such Shareholder pursuant to Section 4.5(e), or (z) was made
in any Prospectus used after such time as the obligation of Core hereunder to
keep
29
the Registration Statement effective and current has expired or been suspended
hereunder. Core shall promptly reimburse each Shareholder Indemnified Party for
any legal or any other expenses reasonably incurred by any of them in connection
with investigating or defending any such Losses or actions in respect thereof.
The procedures for indemnification shall be as provided in Article 6 hereof.
(n) Notwithstanding anything in this Agreement to the
contrary, nothing in this Section 4.5 shall be deemed to commit, require or in
any way obligate the Shareholders, or any one of them, to transfer, sell or
otherwise distribute all or any part of the Merger Shares to be issued to the
Shareholders in the Merger.
4.6 Compliance with the Securities Act. CMB will obtain a
written agreement from each current director, officer and holder of five percent
or more of the CMB Capital Stock or of the total equity in CMB, in a form
reasonably acceptable to Core, that such person will not sell or in any other
way reduce such person's risk relative to any shares of the Core Common Stock
received in connection with the Merger, until the end of the three months from
the Closing Date or the date the 5-3 registration contemplated by Section 4.5 is
effective. CMB will deliver such written agreements to Core on or prior to the
Closing.
4.7 Certain Litigation. CMB will give Core the opportunity to
participate in the defense or settlement of any litigation against CMB or its
officers or directors relating to any of the Merger Agreements or any of the
Transactions; provided, however, that no settlement will be agreed to without
Core's written consent, which will not be unreasonably withheld.
4.8 Real Estate. As of a date prior to the Effective Date, CMB
shall cause the building and land used by it in its operations (the "Real
Estate") to be transferred to an entity owned by the Shareholders; and, as of
the Effective Date, the Real Estate shall be leased to a subsidiary of Core
pursuant to a lease in the form of the attached Exhibit 4.8 (the "Lease").
4.9 Shareholders Debt. CMB's total indebtedness to the
Shareholders as of the Effective Date (the "Shareholders Debt") will be paid by
Core at the Closing.
4.10 Shareholder Distributions. An amount equal to the
Shareholders' accrued income tax liability arising from CMB's earnings from
January 1, 1995 through the Effective Date (which is estimated by CMB to be
$200,000 by such date) and an amount equal to CMB's Accumulated Adjustments
Accounts account as defined in Section 1368(e)(i) of the Internal Revenue Code
of 1986, as amended, (which is estimated by CMB to be $500,000) will be
distributed by CMB to the Shareholders prior to the Closing; provided, however,
that such accrued income tax liability shall be determined by CMB on a basis
consistent with prior periods.
4.11 Certain Fees. Core shall be responsible for and pay up to
$750,000, for broker fees incurred by CMB and up to $500,000 to ▇▇▇▇ ▇▇▇▇▇▇ for
services rendered. Such amounts will be payable by Core at Closing unless
different arrangements are negotiated by Core with the applicable broker or ▇▇▇▇
▇▇▇▇▇▇, as the case may be.
30
4.12 Best Efforts. Subject to the terms and conditions in this
Agreement, each party will use its best efforts to do or cause to be done all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective, as soon as reasonably practicable, all of the
terms and conditions of the Merger Agreements and the Transactions, including,
without limitation, the obtaining of all consents, authorizations, orders and
approvals of any third party, whether private or governmental, required in
connection with such party's execution, delivery or performance of the Merger
Agreements and the Transactions, and the satisfaction of all other conditions to
the Closing set forth in Section 5, and each party will cooperate with the other
in all of the foregoing. The parties will use their best efforts to consummate
and make effective the Transactions as soon as practicable following
satisfaction of the conditions to the Closing set forth in Section 5.
5. Conditions to Closing.
5.1 Conditions Precedent to Obligations of Core. The
obligations of Core under this Agreement are subject to the satisfaction of the
following conditions at or prior to the Closing Date:
(a) No action or proceeding will have been instituted or
threatened against CMB which materially affects or may materially affect its
business, prospects, assets, properties or condition (financial or otherwise).
No action or proceeding will have been instituted or threatened by any
Governmental Entity or other person or entity before any court, arbitrator or
Governmental Entity to restrain, prevent, condition or obtain material damages
in respect of any of the Merger Agreements or any of the Transactions, which, in
the opinion of Core, makes it inadvisable to consummate such Transactions.
(b) All actions, undertakings, covenants or agreements
required pursuant to any of the Merger Agreements to be performed by CMB or the
Shareholders on or prior to the Closing Date have been so performed or complied
with in all material respects.
(c) All representations and warranties made by CMB or the
Shareholders in any of the Merger Agreements are true and correct in all
material respects at and as of the Effective Date and the Closing Date, with the
same force and effect as though such representations and warranties had been
made at and as of the Effective Date and the Closing Date, except as expressly
permitted by this Agreement or as otherwise agreed to in writing by Core, and
Core will not have discovered any material error, misstatement or omission in
any of such representations or warranties. The President of CMB will deliver to
Core a Certificate, dated as of the Closing Date, signed by him, certifying as
to the matters covered by this Sections 5.1(b) and (c).
(d) All actions required to be taken by or on the part of CMB
to authorize the execution, delivery and performance of the Merger Agreements by
CMB and the consummation of the Transactions will have been duly and validly
taken by the Board of Directors and
31
shareholders of CMB, and Core will have received copies of the resolutions
evidencing such authorization certified by the Secretary of CMB.
(e) Core will have received from ▇▇▇▇▇▇, White & ▇▇▇▇▇▇,
counsel to CMB, an opinion in the form of Exhibit 5.1(e).
(f) All courts of law, Governmental Entities and other third
parties, the consent, authorization or approval of which is necessary under any
applicable law, rule, order or regulation or under any contract, commitment or
other agreement of CMB, for the consummation by CMB of the Transactions, will
have consented to, authorized, permitted or approved such Transactions.
(g) The holders of not more than 10% of CMB Capital Stock will
have perfected statutory appraisal, dissenters' or similar rights to which such
holders may be entitled under applicable law in connection with the Merger.
(h) The Merger Agreements and the Transactions will have been
approved by the holders of the CMB Capital Stock in accordance with CMB's
Articles of Incorporation, Bylaws and applicable law.
(i) CMB will have furnished Core with such certificates of its
officers or others and with such other documents to evidence fulfillment of the
conditions set forth in this Section 5.1 as Core may reasonably request.
(j) CMB will have obtained from each person or entity who is
described in Section 4.6 the written agreement provided for in such Section.
(k) CMB will have executed and delivered all other documents
reasonably requested by Core or otherwise necessary or appropriate for the
consummation of any of the Transactions, including, without limitation, all
documents required to be executed and/or delivered by or on behalf of CMB at or
prior to the Closing pursuant to this Agreement.
(l) Core's subsidiary will have entered into the Lease, and
Core will have executed and delivered to the landlord Core's Guarantee of
certain tenant obligations thereunder.
(m) There has been no adverse change in the business,
prospects, operations or condition (financial or otherwise) of CMB or any event,
condition, occurrence, action taken or omission made which, either individually
or in the aggregate, might adversely affect the business, prospects, operations
or condition (financial or otherwise) of CMB.
(n) Each of the Shareholders will have entered into with Core
a Standstill Agreement in the form of Exhibit 5.1(p)-1 (the "Standstill
Agreement") and a Confidentiality and Noncompete Agreement in the form of
Exhibit 5.1(p)-2 (the "Noncompete Agreement").
32
(o) The Shareholders Debt does not exceed $2,984,089.
5.2 Conditions Precedent to Obligations of CMB. The
obligations of CMB under this Agreement are subject to the satisfaction of the
following conditions at or prior to the Closing Date:
(a) No action or proceeding will have been instituted or
threatened against Core which materially affects or may materially affect its
business, prospects, assets, properties or condition (financial or otherwise).
No action or proceeding will have been instituted or threatened by any
Governmental Entity or other person or entity before any court, arbitrator or
Governmental Entity to restrain, prevent, condition or obtain material damages
in respect of any of the Merger Agreements or any of the Transactions, which, in
the opinion of CMB, makes it inadvisable to consummate such Transactions.
(b) All actions, undertakings, covenants or agreements
required pursuant to any of the Merger Agreements to be performed by Core on or
prior to the Closing Date have been so performed or complied with in all
material respects.
(c) All representations and warranties made by Core in any of
the Merger Agreements are true and correct in all material respects at and as of
the Effective Date and the Closing Date, with the same force and effect as
though such representations and warranties had been made at and as of the
Effective Date and the Closing Date, except as expressly permitted by this
Agreement or as otherwise agreed to in writing by CMB, and CMB will not have
discovered any material error, misstatement or omission in any of such
representations or warranties. An officer of Core will deliver to CMB a
Certificate, dated as of the Closing Date, signed by him or her, certifying as
to the matters covered by Sections 5.2(b) and (c).
(d) All action required to be taken by or on the part of Core
to authorize the execution, delivery and performance of the Merger Agreements by
Core and the consummation of the Transactions will have been duly and validly
taken by the Board of Directors of Core, and CMB will have received copies of
the resolutions evidencing such authorization certified by the Secretary of
Core.
(e) The Shareholders Debt will have been paid in immediately
available funds.
(f) CMB will have received from ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and
▇▇▇▇, counsel to Core, an opinion in the form of Exhibit 5.2(f).
(g) All courts of law, Governmental Entities and other third
parties, the consent, authorization or approval of which is necessary under any
applicable law, rule, order or regulation or under any contract, commitment or
other agreement of Core and Core, for the consummation by Core and Core of the
Transactions, will have consented to, authorized, permitted or approved such
Transactions.
33
(h) Core will have furnished CMB with such certificates of its
officers and with such other documents to evidence fulfillment of the
obligations set forth in this Section 5.2 as CMB may reasonably request.
(i) Core will have executed and delivered all other documents
reasonably requested by CMB or otherwise necessary or appropriate for the
consummation of any of the Transactions, including, without limitation, all
documents required to be executed and/or delivered by or on behalf of Core at or
prior to the Closing pursuant to this Agreement.
(j) There has been no adverse change in the business,
prospects, operations or condition (financial or otherwise) of Core or any
event, condition, occurrence, action taken or omission made which, either
individually or in the aggregate, might adversely affect the business,
prospects, operations or condition (financial or otherwise) of Core.
(k) Core will have entered into a Standstill Agreement with
each Shareholder and Core will have entered into a Noncompete Agreement with
each Shareholder.
5.3 Conditions Precedent to Obligations of Each Party. The
respective obligations of each party to effect the Merger are subject to the
satisfaction of the following conditions at or prior to the Closing:
(a) The issuance and potential issuance of any shares of Core
Common Stock in connection with the Merger will have been registered or exempt
under applicable law, including, without limitation, the Securities Act, the
Exchange Act, and all other applicable state securities and blue sky laws.
(b) The waiting period applicable to the consummation of the
Merger under the HSR Act will have expired or been terminated, if the HSR is
applicable in connection with the Merger.
(c) No final, nonappealable injunction or other order by any
Governmental Entity which prevents the consummation of the Merger will have been
issued and remain in effect.
6. Indemnification.
6.1 Indemnifiable Losses. During the period following the
Closing Date, the Principal Shareholders, on the one hand, and, Core, on the
other hand (each referred to as an "Indemnitor") will, jointly and severally,
indemnify Core, in the case of the Principal Shareholders, and the Shareholders,
in the case of Core, and its or their respective directors, officers, advisers,
subsidiaries (including CMB Acquisition, Inc., in the case of indemnification by
the Principal Shareholders), affiliates, agents, successors and assigns
(collectively, the "Indemnitees"), and save and hold the Indemnitees harmless
from and against any damage, liability, loss, claim, cost, debt, expense,
obligation, tax, assessment, lawsuit or deficiency of any
34
kind or nature, fixed, actual, accrued or contingent, liquidated or
unliquidated, including, without limitation, attorneys' fees and other actual
costs and expenses incident to proceedings or investigations or the defense of
any of the foregoing, whether or not litigation has commenced (each, a "Loss")
arising out of, resulting from or relating to:
(a) any breach of any representation or warranty of such
Indemnitor in any of the Merger Agreements, as of the date of this Agreement,
and through and including the Effective Date and the Closing Date;
(b) any failure of such Indemnitor to duly perform or observe
any term, provision, covenant or agreement to be performed or observed by such
Indemnitor pursuant to any of the Merger Agreements;
(c) only as to the Principal Shareholders as Indemnitors and
Core as the Indemnitee, (i) any action, proceeding, event or circumstances set
forth on Schedule 2.28; (ii) aggregate expenses, incurred from and after the
Effective Date for replacement or repair of products invoiced by CMB prior to
the Closing Date or other damages based upon the failure of such products to
comply with the applicable warranties of CMB ("Product Warranty Expenses"), in
excess of $220,000 in either of the first two years following the Closing Date;
provided, however, that any amounts paid in respect of a given year pursuant to
(iii) of this Section 6.1(c) shall be deducted from any amounts otherwise
payable pursuant to section 6.1(c)(ii) for such year; (iii) any expenses arising
from or related to the matter described at item 1 of Schedule 2.16 (the
"Colorado Springs Project"), to the extent of the lesser of (A) the amount of
such expenses, or (B) the excess of the amount of Product Warranty Expenses
(including those relating to the Colorado Springs Project) over $110,000, in
either of the first two years following the Closing Date; (iv) any liabilities
or obligations arising from or related to the lease, described at item 3 of
Schedule 2.10, for any period after December 31, 1995; and (v) any liabilities
or obligations arising from or related to the plans described at item 1(a) and
(b) of Schedule 2.24.
(d) only as to the Principal Shareholders as Indemnitors and
Core as the Indemnitee, except as set forth on Schedule 6.1(d), any severance,
termination or similar costs or expenses paid or payable by the Surviving
Corporation to any director, officer, employee, agent, representative or
independent contractor of CMB, which costs or expenses arise in connection with
any act taken, omission made or agreement or arrangement entered into, or
committed to be entered into, by or on behalf of CMB;
(e) only as to the Principal Shareholders as Indemnitors and
Core as the Indemnitee, (i) any claim by any purported holder of any of the CMB
Capital Stock or of any option, whether exercised or unexercised, or any right
to convert into or to acquire any shares of the CMB Capital Stock, to any
amounts with respect thereto greater than the payments, if any, to which such
purported holder is entitled pursuant to Section 1.2 or 1.7 of this Agreement or
as to the treatment of any such holder; or (ii) any claim, loss, damage, costs,
expenses or liabilities as a result of any Hazardous Materials on, over, under,
from or affecting, as of or prior to the Closing Date, the Property or the soil,
water, vegetation, persons or animals thereon or
35
thereabout, including without limitation, any related personal injury (including
wrongful death) or property damage or any lawsuit brought or threatened,
settlement reached or government order relating to any such Hazardous Material
and/or any violation of any Environmental Laws; and
(f) only as to Core as Indemnitor and the Shareholders as
Indemnitees:
(i) any income tax liability of CMB and the
Shareholders arising during the period from the Effective Date to the
Closing Date, from sales of CMB in respect of the Business during such
period; provided, however, that, for purposes of Core's indemnity
obligations hereunder, any such tax liability shall be calculated in
accordance with, and limited by, the CMB accrual rates for taxes which
have been disclosed in writing by CMB to Core; and
(ii) any claim, loss, damage, costs, expenses or
liabilities as a result of any Hazardous Materials on, over, under,
from or affecting the Property or the soil, water, vegetation, persons
or animals thereon or thereabout, subsequent to the Closing Date,
including without limitation, any related personal injury (including
wrongful death) or property damage or any lawsuit brought or
threatened, settlement reached or government order relating to any such
Hazardous Material and/or any related violation of any Environmental
Laws by Core; provided, however, that such Hazardous Materials, and/or
any related violation of any Environmental Laws, arise from the
operation of the Business by Core subsequent to the Closing Date.
6.2 Claim Procedure for Indemnitee Claims.
(a) If an Indemnitee has any claim against the Indemnitors
pursuant to any of the Merger Agreements for which it seeks a remedy under this
Article 6, it will give written notice thereof to Core or the agent
representative selected by the Principal Shareholders (the "Shareholders
Agent"), as the case may be, including in such notice a brief description of the
facts upon which such claim is based and, to the extent known, the amount
thereof; provided, that the failure to give any such notice will not affect the
Indemnitee's right to obtain indemnity therefor to the extent that such failure
does not materially prejudice the Indemnitor.
(b) If, after the amount of the claim is specified by the
Indemnitee, the Indemnitor objects to any such claim, it may give written notice
to the Indemnitee within 10 Business Days, defined in subsection (c), of the
later of (i) receipt of the Indemnitee's notice of claim or (ii) the
specification by the Indemnitee of the amount of the claim, advising the
Indemnitee of its objection. If no such notice is timely received from the
Indemnitor by the Indemnitee, the Indemnitee will be entitled to payment in the
amount of the Loss arising out of the claim specified in its notice of claim. If
the Indemnitor advises the Indemnitee within such period that it objects to the
claim, the Indemnitee and the Indemnitor will promptly meet and use their best
efforts to settle the dispute in writing. If the Indemnitee and the Indemnitor
are unable to reach agreement within thirty days after the Indemnitor objects to
the claim, then the Indemnitee may pursue its or his legal remedies as' to the
disputed portion of such claim.
36
(c) A "Business Day" will mean any day, other than a Saturday,
Sunday or other day on which NBD Bank, N.A., in Detroit, Michigan, or its
successor, is not open for business.
6.3 Claim Procedure for Third Party Claims. If a claim by a
third party is made against an Indemnitee for which the Indemnitee is entitled
to indemnification under this Article 6, the Indemnitee will notify the
Indemnitor in writing of such claim. Such notice will set forth such information
with respect to such claim as is then known by the Indemnitee. As long as the
Indemnitee proceeds in good faith, the Indemnitee will have the right, but not
the obligation, to undertake to conduct, control, defend, settle and/or
compromise any such claim through counsel of its own choosing, at its exclusive
discretion and may recover its Losses as provided in this Article 6, and the
Indemnitor will cooperate fully with the Indemnitee in connection therewith.
6.4 Limitations. The following limitations shall apply with
respect to the Indemnitor's obligations arising under Section 6.1:
(a) the Indemnitor shall have no obligations under Section 6.1
until the aggregate amount of all claims to which indemnification is sought
thereunder exceeds $25,000;
(b) except as provided in this Section 6.4, the liability of
the Principal Shareholders, on the one hand, in the aggregate and Core, on the
other, (i) pursuant to Section 6.1, shall not exceed the sum of $3,000,000; and
(ii) pursuant to Sections 6.1(c)(i), 6.1(e)(ii) and 6.1 (f)(ii), or for any
breach or inaccuracy of Section 2.28, shall not exceed the amount of the Merger
Consideration reduced in the case of the Principal Shareholders, on the one
hand, and Core, on the other, as Indemnitor, by any amount paid by the landlord
or tenant, respectively, under the Lease with respect to any indemnification of
the tenant or landlord, respectively, under Sections 10.2, 10.4 or 10.5 and
Section 10.7, respectively, of the Lease;
(c) the Indemnitor shall have no obligations under Section 6.1
as to any claim thereunder which is not asserted in writing within two years of
the Closing Date; and
(d) notwithstanding anything herein to the contrary, the
limitations set forth in (i) Section 6.4(b)(i) and (c) hereof shall not apply to
claims which arise from the breach or inaccuracy of any representation or
warranty set forth in Sections 2.4, 2.5, 2.9(a), 2.13, 2.18, 3.2, 3.5 or 3.6
hereof or which involve fraud or intentional misrepresentation on the part of
Indemnitor; and (ii) in Section 6.4(c) hereof shall not apply to claims which
are brought under Section 6.1(c)(i), Section 6.1(e)(i) or Section 6.1(f)(ii) or
which arise from the breach or inaccuracy of any representation or warranty set
forth in Section 2.28 hereof.
37
7. Termination; Amendment.
7.1 Termination. This Agreement may be terminated at any time
on or prior to the Closing Date, whether before or after approval of the Merger
by the Shareholders, as follows:
(a) by mutual written consent of Core and CMB, properly
authorized by their respective Boards of Directors; or
(b) by Core or CMB (i) if the Closing has not occurred on or
prior to January 31, 1996, unless the failure of such occurrence is due to the
failure of the party seeking to terminate this Agreement pursuant to this
Section 7.1(b) to perform or observe the representations, warranties, covenants,
conditions and agreements to be performed or observed by it on or before the
Closing Date; or (ii) if this Agreement is not approved by the requisite vote of
the Shareholders; provided, however, that CMB will be entitled to terminate this
Agreement on this basis only if it has fully complied with the provisions of
this Agreement; or
(c) by Core (i) if at the time of such termination there has
occurred or arisen any change as described in Section 2.19(e) or (f), or (ii) if
there has been any breach in any material respect of any representation,
warranty, covenant or obligation of CMB under any of the Merger Agreements and
such breach has not been remedied within 5 Business Days after receipt by CMB of
notice in writing from Core specifying the nature of such breach and requesting
that it be remedied; or
(d) by CMB, if there has been any breach in any material
respect of any representation, warranty, covenant or obligation of Core under
any of the Merger Agreements and such breach has not been remedied within 5
Business Days after receipt by Core of notice in writing from CMB specifying the
nature of such breach and requesting that it be remedied; or
(e) by Core, if CMB fails to recommend, or withdraws or
modifies in a manner adverse to Core its recommendation, to CMB's shareholders
to approve any of the Merger Agreements or any of the Transactions; or
(f) by Core, if any person, corporation, partnership or other
entity or "group" (as defined in Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder) other than Core or any of its affiliates
or a group of which CMB or any of such Affiliates is a member, becomes the
"beneficial owner" (as defined in Section 13(d) of the Exchange Act and the
rules and regulations promulgated thereunder) of more than 25% of the then
outstanding shares of CMB Common Stock.
7.2 Effect of Termination. In the event of termination of this
Agreement pursuant to Sections 7.1(a) or (b) (subject to the limitation), no
party will have any liability or further obligation to the other party, except
as provided in Section 9.10. Any termination pursuant to the other provisions of
Section 7.1 will not affect the terminating party's right to
38
pursue all remedies available under applicable law arising from the other
party's misrepresentation, breach or failure to satisfy the conditions as
provided in any of the Merger Agreements.
7.3 Amendment, Waiver, Etc. Subject to applicable law and this
Section 7.3, at any time prior to the consummation of the Merger, whether before
or after approval of the Transactions by the Shareholders, CMB and Core may, by
action authorized by their respective Boards of Directors, (a) amend this
Agreement, (b) extend the time for the performance of any of the obligations or
other acts of any other person or entity, (c) waive any inaccuracies in the
representations or warranties contained in any of the Merger Agreements, or (d)
waive compliance with any of the agreements or conditions contained in Section
5. This Agreement may not be amended except by a writing signed by all of the
parties by persons authorized to execute such writing. Any agreement of a party
to any extension or waiver will be valid only if set forth in a writing signed
on behalf of such party by a person authorized to execute such writing, but any
waiver or failure to insist on strict compliance with any obligation, covenant,
agreement or condition will not operate as a waiver of, or estoppel with respect
to, any subsequent or other failure.
8. Closing. On the Closing Date, the parties will take such actions and
execute and deliver such documents as are described in this Agreement,
including, without limitation, in this Section 8, and will take such further
actions and execute and deliver such other documents as the other party may
reasonably request or as otherwise necessary or appropriate for the consummation
of any of the Transactions.
8.1 Deliveries by Core. Core will execute and/or deliver or
cause to be executed and/or delivered:
(a) Articles and/or Certificates of Merger to be filed in
respect of the Merger;
(b) officers' certificates as provided in Section 5.2(c);
(c) an opinion of counsel as provided in Section 5.2(f);
(d) a Registration and Standstill Agreement between Core and
each Shareholder;
(e) a Noncompete Agreement with each Shareholder;
(f) the Merger Consideration and the repayment of the
Shareholders' Debt, as provided in this Agreement; and
(g) evidence of the payment by Core of the amounts required by
Section 4.11.
39
8.2 Deliveries by CMB. CMB will execute and/or deliver or
cause to be executed and/or delivered:
(a) Articles and/or Certificates of Merger to be filed in
respect of the Merger;
(b) certified Articles of Incorporation with respect to CMB;
(c) good standing certificates with respect to CMB;
(d) resignations, in form and substance acceptable to Core, of
the directors and officers of CMB;
(e) a certificate of the Secretary of CMB in such form and
substance as Core may request relating to bylaws, resolutions, incumbency of
officers and such other matters as Core may reasonably request;
(f) officers' certificates as provided in Section 5.1(c);
(g) an opinion of counsel as provided in Section 5.1(e);
(h) a Standstill Agreement between each Shareholder and Core;
and
(i) a Noncompete Agreement between each Shareholder and Core.
9. Miscellaneous.
9.1 Shareholders' Agent.
(a) The Shareholders will be represented under the Merger
Agreements by the Shareholders' Agent. By voting for the Merger and/or accepting
any of the Merger Consideration, each of the Shareholders, and by execution and
delivery of this Agreement, CMB, irrevocably constitutes and appoints the
Shareholder's Agent as the true and lawful agent and attorney-in-fact of the
Shareholders to act on their behalf as provided in this Agreement, including,
without limitation, to take any action deemed by it necessary or appropriate to
carry out the provisions of, and to determine the rights of the Shareholders
under, any of the Merger Agreements. The Shareholders' Agent is so designated as
the sole and exclusive agent of the Shareholders for all purposes related to any
of the Merger Agreements or any of the Transactions, including, without
limitation, (i) service of process upon any of the Shareholders, (ii) receipt of
all notices on behalf of any of the Shareholders and (iii) representation of any
of the Shareholders with respect to the Merger or any litigation, arbitration or
other transaction contemplated by any of the Merger Agreements, including,
without limitation, the defense, settlement or compromise of any claim, action
or proceeding for which any Shareholder may be obligated to indemnify any
Indemnitee pursuant to Section 6 of this Agreement or which may be brought
against any Shareholder to enforce such indemnity, and the Shareholders may act,
and by voting for the
40
Merger and/or accepting any of the Merger Consideration, each of the
Shareholders agrees that it will act, only through the Shareholder's Agent.
(b) Upon the Closing and thereafter, the Surviving Corporation
will be entitled to rely on the Shareholders' Agent's authority as the agent of
the Shareholders for all purposes under or in connection with any of the Merger
Agreements or any of the Transactions and will have no liability for any such
reliance.
(c) The Shareholders may not revoke the authority of the
Shareholders' Agent unless the Shareholders' Agent notifies Core at least 60
days in advance of such revocation and appoints a new Shareholders' Agent to
serve in its place.
(d) By voting for the Merger and/or accepting any of the
Merger Consideration, each Shareholder hereby ratifies and confirms, and hereby
agrees to ratify and confirm, any action taken by the Shareholders' Agent in the
exercise of the power-of-attorney granted to the Shareholders' Agent pursuant to
this Section 9.1, which power-of-attorney is irrevocable and will survive the
death, incapacity or incompetence of such Shareholders.
(e) The Shareholders' Agent (i) will not be liable to any of
the Shareholders for any action taken in accordance with the written consent of
the Shareholders who, prior to the Merger, owned a majority of the shares of the
CMB Capital Stock, or for any error of judgment, act done or omitted by it in
good faith or mistake of fact or law unless caused by its own gross negligence
or willful misconduct; (ii) will be entitled to treat as genuine any letter or
other document furnished by Core or any Shareholder to be genuine and to have
been signed and presented by the proper party or parties; and (iii) will be
reimbursed by the Shareholders for counsel fees and other out-of-pocket expenses
incurred by it in connection with any of the Merger Agreements.
(f) The Shareholders' Agent may be removed by a majority vote
or consent of the Shareholders on the basis of the CMB Capital Stock. In the
event of the death or removal of the Shareholders' Agent, a new Shareholders'
Agent will be elected by a majority vote or consent of the Shareholders on the
basis of CMB Capital Stock. The Shareholders' Agent will promptly inform Core in
writing upon the election of a new Shareholders' Agent. If at any time there
will not be a Shareholders' Agent or the Shareholders will fail to appoint a
Shareholders' Agent, then either the Surviving Corporation or a Shareholder may
have a court of competent jurisdiction appoint a Shareholders' Agent.
9.2 Governing Law. This Agreement will be governed by and
construed in accordance with the laws of the State of California, without regard
to principles of conflicts of laws.
9.3 Counterparts. This Agreement may be executed in
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
41
9.4 Interpretation. The headings contained in this Agreement
are solely for the purposes of reference, are not part of the agreement of the
parties and will not in any way affect the meaning or interpretation of this
Agreement.
9.5 Entire Agreement. This Agreement, including, without
limitation, the Exhibits, Schedules, documents, certificates and instruments
referred to in this Agreement, embodies the entire agreement and understanding
of the parties with respect to its subject matter. There are no restrictions,
promises, representations, warranties, covenants or undertakings, other than
those expressly set forth or referred to in this Agreement. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to its subject matter, including, without limitation, the Letter of
Intent dated October 10, 1995, between Core and CMB.
9.6 Severability. If any provision of this Agreement is
determined to be illegal or invalid, such illegality or invalidity will have no
effect on the other provisions of this Agreement, and all other provisions of
this Agreement will remain valid, operative and enforceable.
9.7 Notices. Any notice or other communication required or
which may be given under this Agreement will be sufficient if in writing and
delivered personally, telecopied or telexed, mailed, certified, registered or
first class mail, postage prepaid, or sent by overnight courier, and will be
deemed given when so delivered personally, telecopied or telexed, if mailed, two
days after the date of mailing, or if sent by overnight courier, one day after
the date of sending, as follows, or at such other addresses as the addressee may
from time to time designate in writing pursuant to this Section 9.7:
To Core: Core Industries Inc
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
42
To CMB: CMB Industries
c/o O'Brien Properties
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
with a copy to: ▇▇▇▇▇▇, White & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇
To Shareholders' ▇▇▇▇▇ ▇. ▇▇▇▇▇
Agent: c/o Cooper, White & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇
9.8 No Waiver. No waiver of any breach of any agreement or
provision contained in any of the Merger Agreements will be deemed a waiver of
any preceding or succeeding breach thereof or of any other agreement or
provision contained in any of the Merger Agreements. No extension of time for
performance of any obligation or act will be deemed an extension of time for the
performance of any other obligation or act.
9.9 Successors and Assigns. This Agreement will be binding
upon and inure to the benefit of the parties to this Agreement and their
respective successors, but will not be assignable by any party except by
operation of law.
9.10 Press Releases. On or before the Closing, no party will
issue or authorize to be issued any press release or similar announcement
concerning any of the Merger Agreements or any of the Transactions without the
prior approval of the other party; provided, however, that Core will be
permitted to make such disclosures as necessary to comply with any applicable
securities laws, stock exchange policies or NYSE policies.
9.11 Remedies Cumulative. Rights and remedies provided by this
Agreement are cumulative and in addition to any other rights and remedies which
any party may have under any other agreement, including, without limitation,
under any of the other Merger Agreements, at law or in equity. In addition, the
rights and remedies of any party arising out of, or otherwise in respect of, any
inaccuracy in, omission from, or breach of, any representation, warranty,
covenant or agreement contained in any of the Merger Agreements will in no way
be limited by the fact that the act, omission, occurrence or other state of
facts upon which any claim of any
43
such inaccuracy or breach is based may also be the subject matter of any other
representation, warranty, covenant, agreement, Schedule or Exhibit contained in
any other agreement between the parties, including, without limitation, any of
the other Merger Agreements, as to which there is no inaccuracy, omission or
breach.
9.12 Fees and Expenses. Except as expressly provided in this
Agreement, each party will bear its own fees and expenses incurred in connection
with the Merger Agreements and the Transactions, including, without limitation,
attorneys fees, investment banking or finder's fees, brokerage or financial
advisor fees and accounting fees, regardless of whether any of the Transactions
are consummated.
9.13 No Construction Against Drafter. The Merger Agreements
have been reviewed by the parties and their counsel and are being entered into
among competent persons, who are experienced in business and represented by
counsel. Therefore, any ambiguous language in any of such agreements will not
necessarily be construed against any particular party as the drafter of such
language.
9.14 Parties in Interest. With the exception of the parties to
this Agreement, there will exist no right of any person to claim a beneficial
interest in any of the Merger Agreements or any rights by virtue of any of the
Merger Agreements.
* * * *
44
The parties have caused this Agreement to be executed by their duly
authorized officers as of the date first written above.
CORE INDUSTRIES, INC. CMB INDUSTRIES,
a Nevada corporation a California corporation
By:/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------- ------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: Executive Vice President Its: Secretary
SHAREHOLDERS:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
- -------------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇
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45
Exhibits and Schedules
to
Agreement and Plan of Merger
dated
December 14, 1995
among
Core Industries Inc
and
CMB Industries
Exhibit No. Description
1. Exhibit 1.2(a)(vii) Form of Promissory Note
2. Exhibit 4.8 Real Estate Lease
3. Exhibit 5.1(e) CMB Counsel's Opinion
4. Exhibit 5.1(p)-1 Registration and Standstill Agreement
5. Exhibit 5.1(p)-2 Confidentiality and NonCompete Agreement
6. Exhibit 5.2(f) Company Counsel's Opinion
Schedule No. Description
1. Schedule 1.2(a)(vi) Face Amounts of Notes
2. Schedule 1.2(c)(ii) Earn Out Payments
3. Schedule 2.2 Jurisdictions
4. Schedule 2.4 CMB Shareholders and Matters Relating to Shares
5. Schedule 2.6 Conflicts, Consents
6. Schedule 2.9(a) Liens
7. Schedule 2.9(b) Property Defects
8. Schedule 2.10 Leases
9. Schedule 2.11 Licenses and Permits
10. Schedule 2.12(a) Related Party Transactions
11. Schedule 2.12(b) Suppliers and Customers
12. Schedule 2.13 Compliance with Applicable Law
13. Schedule 2.14 Financial Statements
14. Schedule 2.14(c) Write-Offs
15. Schedule 2.15 Contingent Receivables
16. Schedule 2.16 Liabilities
17. Schedule 2.17 Guarantees
18. Schedule 2.18(b) Tax Payments
19. Schedule 2.18(d) Tax Liabilities
20. Schedule 2.19 Certain Changes or Events
46
21. Schedule 2.20 Third Party Agreements
22. Schedule 2.21 Patents, Trademark & Other Proprietary Rights
23. Schedule 2.22(a) Authorized Uses of Proprietary Rights
24. Schedule 2.22(b) Royalty Arrangements
25. Schedule 2.23 Infringements
26. Schedule 2.24(a) Employee Pension Benefit Plans
27. Schedule 2.24(c) Exceptions to Qualified Pension Plans
28. Schedule 2.24(d) Unfunded Employee Benefit Liabilities
29. Schedule 2.24(e) Unfunded Employee Welfare Liabilities
30. Schedule 2.24(i) Retrospective Adjustments
31. Schedule 2.25(a) Labor and Employment Compliance
32. Schedule 2.25(c) Employment Agreements
33. Schedule 2.26 Insurance
34. Schedule 2.27 Legal Proceedings
35. Schedule 2.28 Environmental Matters
36. Schedule 2.29 Finder's Fees
37. Schedule 2.31 Enforceability and Status of Contracts
38. Schedule 2.32 Product Warranty
39. Schedule 3.3 Conflicts, Consents
40. Schedule 3.7 Finder's Fee
DET07/35202.1
47