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RESTATED AGREEMENT AND PLAN OF MERGER
By and Among
SARATOGA BEVERAGE GROUP, INC.
ROWALE CORP.
and
THE FRESH JUICE COMPANY, INC.
Dated as of October 13, 1998
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RESTATED AGREEMENT AND PLAN OF MERGER
RESTATED AGREEMENT AND PLAN OF MERGER dated as of October 13,
1998, by and among Saratoga Beverage Group, Inc., a Delaware corporation
("Parent"), Rowale Corp., a Delaware corporation and wholly owned subsidiary of
Parent ("Sub"), and The Fresh Juice Company, Inc., a Delaware corporation (the
"Company").
WHEREAS, Parent, Sub and the Company previously entered into
an agreement and plan of merger, dated as of August 14, 1998 (the "First
Agreement"); and
WHEREAS, the Board of Directors of Parent and the Company have
determined to amend the terms of the First Agreement; and
WHEREAS, the Boards of Directors of Parent and the Company
have determined that it is in the best interests of their respective companies
and their stockholders to consummate the business combination transaction
provided for herein in which Sub will, subject to the terms and conditions set
forth herein, merge with and into the Company (the "Merger"); and
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties and covenants in connection with the Merger.
NOW, THEREFORE, in consideration of the mutual covenants;
representations, warranties and agreements contained herein, and intending to be
legally bound hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.01 THE MERGER. Subject to the terms and conditions of this Agreement,
in accordance with the Delaware General Corporation Law ("DGCL"), at the
Effective Time (as hereinafter defined), Sub shall merge with and into the
Company. The Company shall become the surviving corporation (hereinafter
sometimes called the "Surviving Corporation") in the Merger, and shall continue
its corporate existence under the laws of the State of Delaware. The name of the
Surviving Corporation shall be The Fresh Juice Company, Inc. Upon consummation
of the Merger, the separate corporate existence of Sub shall terminate.
1.02 PLAN OF MERGER. This Agreement shall constitute an agreement of
merger for purposes of the DGCL.
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1.03 EFFECTIVE TIME. As promptly as practicable after all of the
conditions set forth in Article VII shall have been satisfied or, if
permissible, waived by the party entitled to the benefit of the same, the
Company and Sub shall duly execute and file a certificate of merger (the
"Certificate of Merger") with the Secretary of State of the State of Delaware
(the "Delaware Secretary") in accordance with Section 251 of the DGCL. The
Merger shall become effective on the date (the "Effective Date") and at such
time (the "Effective Time") as the Certificate of Merger is filed with the
Delaware Secretary or at such later date and time as is specified in the
Certificate of Merger.
1.04 EFFECT OF THE MERGER. At the Effective Time, the effect of the
Merger shall be as provided herein and as set forth in Section 259 of the DGCL.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time, (i) all the property, rights, privileges, powers and franchises
of Sub shall vest in the Surviving Corporation, (ii) all debts, liabilities,
obligations, restrictions, disabilities and duties of Sub and the Company shall
become the debts, liabilities, obligations, restrictions, disabilities and
duties of the Surviving Corporation and (iii) the Surviving Corporation shall
become a wholly owned subsidiary of Parent.
1.05 CONVERSION OF COMPANY COMMON STOCK.
(a) At the Effective Time, each share of the common stock, par
value $.01 per share, of the Company (the "Company Common Stock")
issued and outstanding immediately prior to the Effective Time (other
than (i) shares of Company Common Stock held in the Company's treasury
or directly or indirectly by Parent, Sub or the Company, and (ii)
Dissenting Shares (as such term is defined in Section 1.06 hereof))
shall, by virtue of this Agreement and without any action on the part
of the holder thereof, be converted into the right to receive and be
exchangeable for $2.244 per share in cash (the "Cash Per Share Price")
and 0.33 shares of Class A Common Stock, par value $.01 per share (the
"Parent Common Stock"), of Parent (the "Stock Per Share Price" and,
together with the Cash Per Share Price, the "Per Share Price"). By way
of example, a holder of 1,000 shares of Company Common Stock will
receive $2,244.00 in cash and 330 shares of Parent Common Stock.
(b) Each share of Company Common Stock converted into the Per
Share Price pursuant to this Article I shall no longer be outstanding
and shall automatically be canceled and shall cease to exist, and each
certificate (each a "Certificate," and collectively, the
"Certificates") previously representing any such shares of Company
Common Stock shall thereafter represent the right to receive (i) cash
equal to the Cash Per Share Price multiplied by the number of shares of
Company Common Stock represented by such Certificate and (ii) shares of
Parent Common Stock equal to the Stock Per Share Price multiplied by
the number of shares of Company Common Stock represented by such
Certificate (in the aggregate, the "Merger Consideration") or the right
to perfect their right to receive payment for their shares pursuant to
the DGCL and Section 1.06 hereof. Certificates previously representing
shares of Company Common Stock shall be exchanged for the Merger
Consideration upon the surrender of such Certificates in accordance
with Section 2.02 hereof, without any interest
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thereon, subject to applicable law and the provisions of this Agreement
relating to Dissenting Shares (as hereinafter defined).
(c) If, between the date of this Agreement and the date of
payment of any portion of the Merger Consideration payable hereunder,
the outstanding shares of Parent Common Stock shall be changed into a
different number of shares by reason of any reclassification,
recapitalization or exchange of shares or if a stock split,
combination, stock dividend, stock rights or extraordinary dividend
thereon shall be declared with a record date within said period, the
Stock Per Share Price shall be correspondingly adjusted. No fractional
shares of Parent Common Stock will be issued and, in lieu thereof, any
stockholder entitled to receive a fractional share of Parent Common
Stock shall be paid in cash an amount equal to the value of such
fractional shares, which shall be calculated as the fraction of the
share of Parent Common Stock that would otherwise be issued multiplied
by $3.35.
(d) The Company (i) will grant no additional options or
restricted stock or similar rights under its 1996 Incentive Stock
Option Plan (the "Option Plan") or otherwise on or after the date of
this Agreement and (ii) has suspended, pending the termination of this
Agreement without the Merger being consummated, the Option Plan without
prejudice to the rights of the holder of options awarded pursuant
thereto. The Company will use reasonable diligence and timely efforts
to obtain the consent of each holder of an option or restricted stock
right (whether or not then exercisable or vested) to the cancellation
or conversion into shares of Company Common Stock of his, her or its
options or warrants in exchange for, at the Effective Time, a number of
shares of Parent Common Stock equal to (A) the Stock Per Share Price
(B) multiplied by the difference between $3.35 and the exercise price
thereof, (C) divided by $1.106, and (D) multiplied by the number of
shares of Company Common Stock subject thereto. By way of example, a
holder of options to purchase 1,000 shares of Company Common Stock at
an exercise price of $3.00 will receive 104 shares of Parent Common
Stock.
(e) Each share of Company Common Stock held in the treasury of
the Company, and each share of Company Common Stock owned directly or
indirectly by Parent, Sub or the Company, shall be canceled and retired
without payment of any consideration therefor. Each share of common
stock, par value $.01 per share, of Sub issued and outstanding
immediately prior to the Effective Time shall be converted into one
validly issued, fully paid and nonassessable share of common stock, par
value $.01 per share, of the Surviving Corporation.
1.06 RIGHTS WITH RESPECT TO DISSENTING SHARES.
(a) Notwithstanding anything in this Agreement to the contrary
and unless otherwise provided by applicable law, shares of Company
Common Stock that are issued and outstanding immediately prior to the
Effective Time and that are owned by stockholders who have properly
exercised and perfected their rights of appraisal within the meaning of
Section
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262 of the DGCL (the "Dissenting Shares"), shall not be converted into
the right to receive the Per Share Price, unless and until such
stockholders shall have failed to perfect or shall have effectively
withdrawn or lost their right of appraisal and payment under applicable
law. If any such stockholder shall have failed to perfect or shall have
effectively withdrawn or lost such right of appraisal, each share of
Company Common Stock held by such stockholder shall thereupon be deemed
to have been converted into the right to receive and become
exchangeable for the Per Share Price, at the Effective Time, pursuant
to Section 1.05(a) hereof.
(b) The Company shall give Parent (i) prompt notice of any
demands for appraisal received by the Company, withdrawals of such
demands, and any other instruments served in connection with such
demands pursuant to the DGCL and received by the Company and (ii) the
opportunity to direct all negotiations and proceedings with respect to
demands for appraisal under the DGCL consistent with the obligations of
the Company thereunder. The Company shall not, except with the prior
written consent of Parent, (x) make any payment with respect to any
demands for appraisal, (y) offer to settle or settle any such demands
or (z) waive any failure to timely deliver a written demand for
appraisal in accordance with the DGCL.
1.07 CERTIFICATE OF INCORPORATION. Unless otherwise agreed to by the
parties prior to the Effective Time, at and after the Effective Time, the
Certificate of Incorporation of Sub shall be the Certificate of Incorporation of
the Surviving Corporation, until thereafter amended as provided by law and the
Certificate of Incorporation.
1.08 BYLAWS. Unless otherwise agreed to by the parties prior to the
Effective Time, at and after the Effective Time, the Bylaws of Sub shall be the
Bylaws of the Surviving Corporation, until thereafter amended as provided by
law, the Certificate of Incorporation of the Surviving Corporation and such
Bylaws.
1.09 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. As of the
Effective Time, the board of directors of the Surviving Corporation shall
consist of one (1) member whom shall be designated by Parent in writing prior to
the Effective Time. The director so designated shall hold office in accordance
with the Certificate of Incorporation and Bylaws of the Surviving Corporation
until his or her respective successors are duly elected or appointed and
qualified. The board of directors of the Surviving Corporation shall elect the
officers of the Surviving Corporation.
1.10 BOARD OF DIRECTORS OF PARENT. As of the Effective Time, the board
of directors of Parent shall be the Board of Directors in office prior to the
Effective Time, plus one (1) designee of the Company. The directors in office
shall hold office in accordance with the Certificate of Incorporation and Bylaws
of the Parent until his or her respective successor(s) is (are) duly elected or
appointed and qualified. The designee of the Company to the Board of Directors
of Parent shall not serve after the 1999 Annual Meeting of Stockholders of
Parent unless such designee is nominated
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by the Nominating Committee of the Board of Directors of Parent. The board of
directors of the Parent shall elect the officers of the Parent.
1.11 ADDITIONAL ACTIONS. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any further assignments
or assurances in law or any other acts are necessary or desirable (a) to vest,
perfect or confirm, of record or otherwise, in the Surviving Corporation, title
to and possession of any property or right of the Company acquired or to be
acquired by reason of, or as a result of, the Merger, or (b) otherwise to carry
out the purposes of this Agreement, the Company and its proper officers and
directors shall be deemed to have granted to the Surviving Corporation an
irrevocable power of attorney to execute and deliver all such proper deeds,
assignments and assurances in law and to do all acts necessary or proper to
vest, perfect or confirm title to and possession of such property or rights in
the Surviving Corporation and otherwise to carry out the purposes of this
Agreement; and the proper officers and directors of the Surviving Corporation
are fully authorized in the name of the Company or otherwise to take any and all
such action.
1.12 COMPANY ACTION. The Company represents and warrants that (i) the
Board of Directors of the Company has duly approved the execution of this
Agreement, and the Merger, and has resolved to recommend approval of the Merger
by the Company's stockholders, (ii) the persons or entities listed on Exhibit
A-1 attached hereto own an aggregate of 2,688,889 issued and outstanding shares
of Company Common Stock and (iii) each such person or entity listed on Exhibit A
has executed and delivered a Voting, Standstill and Proxy Agreement, in
substantially the form annexed hereto as Exhibit B (the "Voting Agreement").
1.13 PARENT ACTION. Parent represents and warrants that (i) each of the
Board of Directors of Parent and Sub has duly approved the execution of this
Agreement, and the Merger, and has resolved to recommend approval of the Merger
by Parent's stockholders, (ii) the persons listed on Exhibit A-2 attached hereto
own an aggregate of 371,325 issued and outstanding shares of Parent Common Stock
and 522,955 issued and outstanding shares of Parent Class B Common Stock (as
hereinafter defined) and (iii) each such person listed on Exhibit A-2 has
executed and delivered the Voting Agreement, in substantially the form annexed
hereto as Exhibit B.
1.14 BOGEN AGREEMENT AND ▇▇▇▇▇ AGREEMENT. ▇▇▇▇▇▇ ▇▇▇▇▇, Parent and the
Company shall have entered into an Employment Termination, Non-Competition and
Consulting Agreement, in substantially the form annexed hereto as Exhibit C (the
"Bogen Agreement"). ▇▇▇▇▇▇ ▇▇▇▇▇, Parent and the Company shall have entered into
an Employment Termination and Non-Competition Agreement, in substantially the
form annexed hereto as Exhibit D (the "▇▇▇▇▇ Agreement").
1.15 FINANCING; EQUITY FINANCING. Parent has delivered to the Company a
commitment letter or letters (the "Commitment Letter(s)"), in form and on terms
reasonably satisfactory to the Company, from a responsible financing source or
sources, indicating its or their willingness, subject to the conditions set
forth therein, to lend (the "Financing") Parent an amount sufficient, together
with Parent's cash and cash equivalents, to fund the Cash Per Share Price plus
expenses related to the
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transactions contemplated hereby. In addition, Parent intends to issue such
number of shares of its common stock to investors, which may include one or more
non-officer directors or other affiliates of the Company, as is necessary to
consummate the Financing.
ARTICLE II
PAYMENT OF MERGER CONSIDERATION
2.01 PARENT TO MAKE CASH AVAILABLE. On or prior to the Effective Time,
Parent shall deposit, or shall cause to be deposited, with American Stock
Transfer & Trust Company or such other bank or trust company selected by Parent
and reasonably acceptable to the Company (the "Exchange Agent"), in trust for
the benefit of the holders of Certificates, for exchange in accordance with this
Article II, sufficient cash to pay in full the cash payments (such cash being
hereinafter referred to as the "Exchange Fund") to be issued pursuant to Section
1.05 and paid pursuant to Section 2.02(a) in exchange for outstanding shares of
Company Common Stock.
2.02 EXCHANGE OF SHARES.
(a) As soon as practicable after the Effective Time, and in no
event later than three (3) business days thereafter, the Exchange Agent
shall (and Parent shall cause the Exchange Agent to so) mail to each
holder of record of a Certificate or Certificates a form letter of
transmittal and instructions for use in effecting the surrender of the
Certificates in exchange for (i) cash equal to the Cash Per Share Price
multiplied by the number of shares of Company Common Stock represented
by such Certificate or Certificates and (ii) shares of Parent Common
Stock equal to the Stock Per Share Price multiplied by the number of
shares of Company Common Stock represented by such Certificate or
Certificates, plus in each case cash in lieu of fractional shares of
Parent Common Stock, valued in accordance with Section 1.05(c) hereof.
Such letter of transmittal and instructions shall be in the form agreed
to by Parent and the Company prior to the Closing. Upon surrender of a
Certificate for exchange and cancellation to the Exchange Agent,
together with such letter of transmittal, duly executed, the holder of
such Certificates shall be entitled to receive in exchange therefor a
check representing the amount of cash which such holder has the right
to receive in respect of the Certificate so surrendered pursuant to the
provisions of this Article II, and the Certificate so surrendered shall
forthwith be canceled. No interest will be paid or accrued on the cash
paid for the Company Common Stock, unpaid dividends and distributions,
if any, payable to holders of Certificates. Notwithstanding the time of
surrender of the Certificates, record holders ("Record Holders") of
Company Common Stock shall be deemed stockholders of Parent for all
purposes from the Effective Time, except that Parent shall withhold the
payment of dividends from any Record Holder until such Record Holder
effects the exchange of Certificates for Parent Common Stock. (Such
Record Holder shall receive such withheld dividends, without interest,
upon effecting the share exchange.)
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(b) After the Effective Time, there shall be no transfers on
the stock transfer books of the Company of the shares of Company Common
Stock which were issued and outstanding immediately prior to the
Effective Time.
(c) Any portion of the Exchange Fund that remains unclaimed by
the stockholders of the Company for six (6) months after the Effective
Time shall be transferred to the Surviving Corporation. Any
stockholders of the Company who have not theretofore complied with this
Article II shall thereafter look only to Parent and the Surviving
Corporation for payment of their Merger Consideration, without any
interest thereon. Notwithstanding the foregoing, none of the Surviving
Corporation, the Company, Parent, Sub, the Exchange Agent or any other
person shall be liable to any former holder of shares of Company Common
Stock for any amount properly delivered to a public official pursuant
to applicable abandoned property, escheat or similar laws.
(d) In the event any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and,
if required by Parent, the posting by such person of a bond in such
amount as Parent may direct as indemnity against any claim that may be
made against it with respect to such Certificate, the Exchange Agent
will issue in exchange for such lost, stolen or destroyed Certificate,
the Merger Consideration deliverable in respect thereof pursuant to
this Agreement.
2.03 LISTING OF SHARES. Parent shall cause the Parent Common Stock to
be issued in connection with the Merger to be listed on Nasdaq SmallCap Market
or any other national securities exchange or quotation system, if any, upon
which the Parent Common Stock is trading or is being quoted at the Effective
Time.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Sub as
follows, subject only to the exceptions specifically disclosed under appropriate
section headings in the Company's schedules:
3.01 CORPORATE ORGANIZATION.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
The Company has the corporate power and authority to own or lease all
of its properties and assets and to carry on its business as it is now
being conducted, and is duly licensed or qualified to do business in
each jurisdiction in which the nature of the business conducted by it
or the character or location of the properties and assets owned or
leased by it makes such licensing or qualification necessary, except
where
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the failure to be so licensed or qualified would not have a Material
Adverse Effect (as defined below) on the Company. As used in this
Agreement, the term "Material Adverse Effect" means, with respect to
Parent, the Company or the Surviving Corporation, as the case may be,
any change or effect that is or is reasonably expected to be materially
adverse to the business, properties, assets, liabilities, financial
condition or results of operations of such party and its Subsidiaries,
taken as a whole. As used in this Agreement, the word "Subsidiary"
means any corporation, partnership or other organization, whether
incorporated or unincorporated, which is or was consolidated with such
party or with which such party is or was consolidated for financial
reporting purposes. The Certificate of Incorporation and Bylaws of the
Company, copies of which have previously been delivered to Parent, are
true and complete copies of such documents as in effect as of the date
of this Agreement.
(b) Except as set forth on Schedule 3.01, the Company has no
direct or indirect Subsidiaries. Except as set forth on Schedule 3.01,
the Company does not own, control or hold with the power to vote,
directly or indirectly of record, beneficially or otherwise, any
capital stock or any equity or ownership interest in any corporation,
partnership, associate, joint venture or other entity, except for less
than five percent (5%) of any equity security registered under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
(c) The minute books of each of the Company and its
Subsidiaries contains true, accurate and complete records of all
meetings and other corporate actions held or taken by its stockholders
and board of directors (including committees thereof).
3.02 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of
30,000,000 shares of Company Common Stock and 7,000,000 shares of
preferred stock, par value $.01 per share ("Company Preferred Stock").
As of the date of this Agreement, there are (x) 6,467,731 shares of
Company Common Stock issued and outstanding and (y) such shares of
Company Common Stock issuable upon exercise of outstanding options or
warrants as set forth in Schedule 3.02 annexed hereto. No Company
Preferred Stock has ever been issued. Except as set forth on Schedule
3.02, all of the issued and outstanding shares of Company Common Stock
have been duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights with no personal liability
attaching to the ownership thereof. The authorized and issued and
outstanding capital stock of each Subsidiary of the Company is set
forth on Schedule 3.02. All of the issued and outstanding shares of
capital stock of each Subsidiary of the Company are owned by the
Company, have been duly authorized and validly issued and are fully
paid, non-assessable and free of preemptive rights with no personal
liability attaching to the ownership thereof. Except as set forth in
Schedule 3.02 hereto, the Company does not have and is not bound by any
outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of any
shares of Company Common Stock or any other equity security of the
Company or any of its Subsidiaries or any securities representing the
right to purchase or otherwise receive any
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shares of Company Common Stock or any other equity security of the
Company or any of its Subsidiaries other than as provided for in this
Agreement. There are no bonds, debentures, notes or other indebtedness
of the Company having the right to vote (or convertible into, or
exchangeable for securities having the right to vote) on any matters on
which stockholders of the Company may vote.
(b) Except as contemplated herein or disclosed on Schedule
3.02 hereto, there are no agreements or understandings, with respect to
the voting of any shares of Company Common Stock or capital stock of
any Subsidiary of the Company or which restrict the transfer of such
shares, to which the Company or any of its Subsidiaries is a party and,
to the knowledge of the Company, there are no such agreements or
understandings to which the Company or any of its Subsidiaries is not a
party with respect to the voting of any such shares or which restrict
the transfer of such shares, other than applicable federal and state
securities laws.
(c) All dividends on Company Common Stock which have been
declared prior to the date of this Agreement have been paid in full.
3.03 AUTHORITY; NO VIOLATION.
(a) The Company has full corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and
the consummation by the Company of the transactions contemplated by
this Agreement have been duly and validly approved by the Board of
Directors of the Company. Subject to the requirements of applicable
law, the Board of Directors of the Company has directed that this
Agreement and the transactions contemplated hereby be submitted to the
Company's stockholders for approval at a meeting of such stockholders
(the "Company Stockholder Meeting") and has voted to recommend to its
stockholders that its stockholders approve and adopt this Agreement and
the transactions contemplated thereby and, except for the adoption of
this Agreement by the requisite vote of the Company's stockholders and
the filing of the Certificate of Merger, no other corporate proceedings
on the part of the Company are necessary to approve this Agreement and
to consummate the transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by the Company and
(assuming the due authorization, execution and delivery by Parent and
Sub) constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
(b) Except as set forth in Schedule 3.03 hereto, neither the
execution and delivery of this Agreement by the Company, nor the
consummation by the Company of the transactions contemplated hereby,
nor compliance by the Company with any of the terms or provisions
hereof, will (i) violate, conflict with or result in a breach of any
provision of the Certificate of Incorporation or Bylaws of the Company,
(ii) assuming that the consents and approvals referred to in Section
3.04 hereof are duly obtained, (x) violate any statute, code,
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ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to the Company or any of its Subsidiaries, or any
of their respective properties or assets, or (y) violate, conflict
with, result in a breach of any provisions of or the loss of any
benefit under, constitute a default (or any event, which, with notice
or lapse of time, or both would constitute a default) under, result in
the termination of or a right of termination or cancellation under,
accelerate the performance required by, or result in the creation of
any lien, pledge, security interest, charge or other encumbrance upon
any of the properties or assets of the Company or any of its
Subsidiaries under any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which the Company or any
of its Subsidiaries is a party, or by which the Company or any of its
Subsidiaries or any of their respective properties or assets may be
bound or affected, except (in the case of clause (y) above) for such
violations, conflicts, beaches or defaults which, either individually
or in the aggregate, will not have a Material Adverse Effect on the
Company.
3.04 CONSENTS AND APPROVALS. Except for (a) the filing with the
Securities and Exchange Commission (the "SEC") of a Registration Statement on
Form S-4 registering the issuance of the shares of Parent Common Stock to be
issued in connection with the Merger and containing a joint proxy statement in
definitive form relating to the Company Stockholder Meeting and the Parent
Stockholder Meeting (as hereinafter defined) and the transactions contemplated
hereby (the "Registration Statement") and the declaration of the effectiveness
thereof by the SEC, (b) the approval of this Agreement by the requisite vote of
the stockholders of the Company and Parent, respectively, (c) the filing of the
Certificate of Merger with the Delaware Secretary pursuant to the DGCL to effect
the Merger and (d) such filings, authorizations, consents or approvals as may be
set forth in Schedule 3.04 hereto, no consents or approvals of, or filings or
registrations with, any court, administrative agency or commission or other
governmental authority or instrumentality (each a "Governmental Entity") or with
any third party are necessary in connection with the execution and delivery by
the Company of this Agreement and the consummation by the Company of the Merger
and the other transactions contemplated hereby.
3.05 FINANCIAL STATEMENTS.
(a) The Company has previously delivered to Parent copies of
the audited consolidated balance sheets of the Company as of November
30, 1995, November 30, 1996 and November 30, 1997, and the related
consolidated statements of income, changes in stockholders' equity and
cash flows for the fiscal years 1996 through 1997, inclusive, included
in the Company's Annual Report on Form 10-KSB for the fiscal year ended
November 30, 1997 filed with the SEC under the Exchange Act. The
Company has also previously delivered to Parent copies of the unaudited
consolidated balance sheets of the Company as of May 31, 1998, and the
related unaudited consolidated statements of income and cash flows for
the six months ended May 31, 1998, included in the Company's Quarterly
Report on Form 10-QSB for the quarter ended May 31, 1998 filed with the
SEC under the Exchange Act. The audited consolidated financial
statements and unaudited consolidated interim financial
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statements of the Company and its Subsidiaries included or incorporated
by reference in the Company SEC Reports (as hereinafter defined) filed
on or after November 30, 1995 have been prepared in accordance with
generally accepted accounting principles ("GAAP") consistently applied
during the periods involved (except as may be indicated in the notes
thereto or, in the case of the unaudited statements, as permitted by
Form 10-QSB), complied as of their respective dates in all material
respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, and fairly
present the consolidated financial position of the Company and its
Subsidiaries as of the dates thereof and the consolidated income and
retained earnings and sources and applications of funds for the periods
then ended (subject, in the case of any unaudited interim financial
statements, to the absence of footnotes required by GAAP and normal
year-end adjustments).
(b) Except as set forth on Schedule 3.05(b) hereto for
liabilities incurred since May 31, 1998 in the ordinary course of
business consistent with past practice and as otherwise set forth on
Schedule 3.05(b) hereto, the Company does not have any liabilities or
obligations of any nature whatsoever (whether absolute, accrued,
contingent or otherwise) which are not adequately reserved or reflected
on the balance sheet of the Company included in its Quarterly Report on
Form 10-QSB for the quarter ended May 31, 1998, except for liabilities
or obligations which in the aggregate do not exceed $100,000, and there
do not exist any circumstances that could reasonably be expected to
result in such liabilities or obligations.
3.06 FAIRNESS OPINION. The Company has received the opinion of
Ladenburg ▇▇▇▇▇▇▇▇ & Company to the effect that, as of the date of such opinion,
the Per Share Price is fair to the Company's stockholders from a financial point
of view, and such opinion has not been amended or rescinded as of the date of
this Agreement.
3.07 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
Schedule 3.07 hereto, since May 31, 1998, there has not been any Material
Adverse Effect on the Company (including without limitation any loss of
employees or customers that has had a Material Adverse Effect, or that is
reasonably likely to have a Material Adverse Effect, on the Company) and, to the
best knowledge of the Company, no fact or condition exists which will cause such
a Material Adverse Effect on the Company in the future.
3.08 LEGAL PROCEEDINGS. Except as set forth in Schedule 3.08 hereto,
neither the Company nor any of its Subsidiaries is a party to any, and there are
no pending or, to the best knowledge of the Company, threatened, legal,
administrative, arbitral or other proceedings, claims, actions or governmental
or regulatory investigations of any nature against or affecting the Company or
any of its Subsidiaries or any property or asset of the Company or any of its
Subsidiaries, before any court, arbitrator or administrative, Governmental
Entity, domestic or foreign, which would, either individually or in the
aggregate, have a Material Adverse Effect on the Company, and no facts or
circumstances have come to the Company's attention which have caused it to
believe that such a claim, action, proceeding or investigation against or
affecting the Company or any of its Subsidiaries
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could reasonably be expected to occur. Neither the Company nor any of its
Subsidiaries nor any property or asset of the Company or any of its Subsidiaries
is subject to any order, writ, judgment, injunction, decree, determination or
award which restricts its ability to conduct business in any area in which it
presently does business or has or could reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect on the Company.
3.09 TAXES AND TAX RETURNS.
(a) For purposes of this Agreement, the terms "Tax" and
"Taxes" shall mean any and all taxes, charges, fees, levies or other
assessments, including, without limitation, all net income, gross
income, gross receipts, premium, sales, use, ad valorem, value added,
transfer, franchise, profits, license, withholding, payroll,
employment, excise, estimated, severance, stamp, occupation, property
or other taxes, fees, assessments or charges of any kind whatsoever,
together with any interest and any penalties (including penalties for
failure to file in accordance with applicable information reporting
requirements), and additions to tax by any authority, whether federal,
state, or local or domestic or foreign. The term "Tax Return" shall
mean any report, return, form, declaration or other document or
information required to be supplied to any authority in connection with
Taxes. The term "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(b) Each of the Company and its Subsidiaries (the "Taxpayers")
has filed all Tax Returns that were required to be filed. All such Tax
Returns were when filed, and continue to be, correct and complete in
all material respects. All Taxes owed by the Taxpayers (whether or not
shown on any Tax Return) have been timely paid. Except as set forth on
Schedule 3.09(b) annexed hereto, none of the Taxpayers currently is the
beneficiary of any extension of time within which to file any Tax
Return. No claim has ever been made by an authority in a jurisdiction
where any of the Taxpayers does not file Tax Returns that it is or may
be subject to taxation by that jurisdiction. There are no liens with
respect to Taxes on any of the assets or property of any of the
Taxpayers, except for liens with respect to Taxes not yet payable.
(c) Each of the Taxpayers has withheld or collected and paid
all Taxes required to have been withheld or collected and paid in
connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder, an other third party, or otherwise.
(d) There is no dispute or claim concerning any Tax Liability
of any of the Taxpayers either (A) claimed or raised by any authority
in writing or (B) as to which any of the Taxpayers or the directors and
officers (and employees responsible for Tax matters) of any of the
Taxpayers has knowledge. There are no proceedings with respect to Taxes
pending, except as set forth on Schedule 3.09(d) annexed hereto.
(e) Schedule 3.09(e) annexed hereto sets forth an accurate,
correct and complete list of all federal, state, local, and foreign Tax
Returns filed with respect to the Taxpayers for
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taxable periods ended on or after November 30, 1991, indicates those
Tax Returns that have been audited and indicates those Tax Returns that
currently are the subject of audit. The Company has delivered to the
Parent correct and complete copies of all federal income Tax Returns,
examination reports, and statements of deficiencies assessed against or
agreed to by or on behalf of any of the Taxpayers since December 1,
1991. To the knowledge of the Taxpayers and their directors and
officers (and employees responsible for Tax matters), no other audit or
investigation with respect to Taxes is pending or has been threatened.
(f) None of the Taxpayers have waived any statute of
limitations in respect of Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency.
(g) None of the assets of any of the Taxpayers are assets that
Sub or the Parent is or shall be required to treat as being owned by
another person pursuant to the provisions of Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended and in effect immediately
before the enactment of the Tax Reform Act of 1986, or is "tax-exempt
use property" within the meaning of Section 168(h)(1) of the Code.
(h) None of the Taxpayers has agreed to make, nor is it
required to make, any adjustments under Section 481(a) of the Code by
reason of a change in accounting method or otherwise.
(i) None of the Taxpayers is a party to any contract,
arrangement or plan that has resulted or would result, separately or in
the aggregate, in the payment of any "excess parachute payments" within
the meaning of Section 280G of the Code, or the payment of any
consideration which would not be deductible by reason of Section 162(m)
of the Code.
(j) None of the Taxpayers has been a United States real
property holding corporation within the meaning of Code Section
897(c)(2) during the applicable period specified in Code Section
897(c)(1)(A)(ii).
(k) None of the Taxpayers is a party to any agreement, whether
written or unwritten, providing for the payment of Tax liabilities,
payment for Tax losses, entitlements to refunds or similar Tax matters.
(l) No ruling with respect to Taxes relating to any of the
Taxpayers has been requested by or on behalf of the Taxpayers.
(m) None of the Taxpayers (A) has never been a member of an
affiliated group (within the meaning of Section 1504 of the Code, or
any similar group as defined for state, local or foreign tax purposes)
filing a consolidated federal (or combined or unitary state, local or
foreign) income Tax Return or (B) has any liability for the taxes of
any Person (other than the Taxpayers) under Reg. Section 1.1502-6 (or
any similar provision of state, local or foreign Law), as a transferee
or successor, by contract, or otherwise.
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(n) The unpaid Taxes of the Taxpayers (A) did not, as of the
most recent fiscal quarter end, exceed the reserves for Tax liability
(rather than any reserve for deferred Taxes established to reflect
timing differences between book and Tax income) on their respective
books at such time and (B) do not exceed that reserve as adjusted for
the passage of time through the Effective Date in accordance with the
past custom and practice of the Taxpayers in filing their Tax Returns.
(o) Schedule 3.09 sets forth the following information with
respect to each of the Company and its Subsidiaries as of the most
recent practicable date (as well as on an estimated pro forma basis as
of the Effective Date giving effect to the consummation of the
transactions contemplated hereby): (A) the basis of each of the Company
and its Subsidiaries in its assets; and (B) the amount of any net
operating loss, net capital loss, unused investment or other credit,
unused foreign tax, or excess charitable contribution allocable to each
of the Company and its Subsidiaries.
(p) None of the Company or its Subsidiaries has filed an
election, consent or agreement under Section 341(f) of the Code.
(q) For purposes of this Section 3.09, references to the
Taxpayers shall also refer to any predecessor companies.
3.10 EMPLOYEE BENEFIT PLANS.
(a) Schedule 3.10 hereto sets forth a true and complete list
of all Plans maintained or contributed to by the Company or any of its
Subsidiaries during the five (5) years preceding this Agreement. The
term "Plans" for purposes of this Article III means all employee
benefit plans, arrangements or agreements that are maintained or
contributed to, or that were maintained or contributed to at any time
during the five (5) years preceding the date of this Agreement, by the
Company or any of its Subsidiaries, or by any trade or business,
whether or not incorporated (an "ERISA Affiliate"), all of which
together with the Company would be deemed a "single employer" within
the meaning of Section 4001 of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA").
(b) The Company has heretofore delivered to Parent true and
complete copies of each of the Plans and all related documents,
including but not limited to (i) all required Forms 5500 and all
related schedules for such Plans (if applicable) for each of the last
two (2) years, (ii) the actuarial report for such Plan (if applicable)
for each of the last two (2) years, and (iii) the most recent
determination letter from the IRS (if applicable) for such plan.
(c) (i) Except as may be provided in Schedule 3.10 hereto,
each of the Plans has been operated and administered in all material
respects in accordance with applicable laws, including but not limited
to ERISA and the Code, (ii) each of the Plans intended to be
"qualified" within meaning of Section 401(a) of the Code has been
maintained so as to qualify
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from the effective date of such Plan to the Effective Time, (iii) with
respect to each Plan which is subject to Title IV of ERISA, the present
value of "benefit liabilities" (within the meaning of Section
4001(a)(16) of ERISA) under such Plan, based upon the actuarial
assumptions currently used by the Plan for IRS funding purposes did
not, as of its latest valuation date, exceed the then current value of
the assets of such Plan allocable to such accrued benefits, and there
has been no "accumulated funding deficiency" (whether or not waived),
(iv) no Plan provides benefits, including without limitation death,
medical or other benefits (whether or not insured), with respect to
current or former employees of the Company, any of its Subsidiaries or
any ERISA Affiliate beyond their retirement or other termination of
service, other than (u) coverage mandated by applicable law, (v) life
insurance death benefits payable in the event of the death of a covered
employee, (w) disability benefits payable to disabled former employees,
(x) death benefits or retirement benefits under any "employee pension
plan," as that term is defined in Section 3(2) of ERISA, (y) deferred
compensation benefits accrued as liabilities on the books of the
Company, any of its Subsidiaries or any ERISA Affiliate or (z) benefits
the full cost of which is borne by the current or former employee (or
his beneficiary), (v) with respect to each Plan subject to Title IV of
ERISA no liability under Title IV of ERISA has been incurred by the
Company, any of its Subsidiaries or any ERISA Affiliate that has not
been satisfied in full, no condition exists that presents a material
risk to the Company, any of its Subsidiaries or any ERISA Affiliate of
incurring a material liability to or on account of such Plan, and there
has been no "reportable event" (within the meaning of Section 1013 of
ERISA and the regulations thereunder), (vi) none of the Company, any of
its Subsidiaries or any ERISA Affiliate has ever maintained or
contributed to a "multiemployer pension plan," as such term is defined
in Section 3(37) of ERISA, (vii) all contributions or other amounts
payable by the Company or any of its Subsidiaries as of the Effective
Time with respect to each Plan in respect of current or prior plan
years have been paid or accrued in accordance with GAAP and Section 412
of the Code, (viii) none of the Company, any of its Subsidiaries or any
ERISA Affiliate has engaged in a transaction in connection with which
the Company, any of its Subsidiaries or any ERISA Affiliate has any
material liability for either a civil penalty assessed pursuant to
Section 409 or 502(i) of ERISA or a tax imposed pursuant to Section
4975 or 4976 of the Code, (ix) consummation of the transactions
contemplated hereby will not cause any amounts payable under any of the
Plans to fail to be deductible for federal income tax purposes under
Sections 280G or 162(m) of the Code, and (x) there are no pending or,
to the best knowledge of the Company, threatened or anticipated claims
(other than routine claims for benefits) by, on behalf of or against
any of the Plans or any trusts related thereto.
(d) With respect to any Plan that is a welfare plan (within
the meaning of Section 3(1) of ERISA (i) no such Plan is funded through
a "welfare benefit fund," as such term is defined in Section 419(a) of
the Code, and (ii) each such Plan complies in all material respects
with the applicable requirements of Section 4980B(f) of the Code, Part
6 of Subtitle B of Title I of ERISA and any applicable state
continuation coverage requirements ("COBRA").
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(e) Except as prohibited by law (including Section 411(d)(6)
of the Code), each Plan may be amended, terminated, modified or
otherwise revised by the Company, any of its Subsidiaries or its ERISA
Affiliates as of the Effective Time to eliminate, without material
effect, any and all future benefit accruals under any Plan (except
claims incurred under any welfare plan).
(f) Except as set forth on Schedule 3.10, since May 31, 1998,
neither the Company nor any of its Subsidiaries has entered into,
adopted or amended in any respect any collective bargaining agreement
or adopted or amended any bonus, profit sharing, compensation, stock
option, pension, retirement, deferred compensation, insurance or other
similar plan, agreement, trust, fund or arrangement for the benefit of
employees (whether or not legally binding).
3.11 SEC REPORTS. The Company has previously delivered to Parent an
accurate and complete copy of each (a) final registration statement, prospectus,
report, schedule and definitive proxy statement of the Company filed since
January 1, 1993 with the SEC pursuant to the Exchange Act or the Securities Act
of 1933, as amended (the "Securities Act") (collectively, the "Company SEC
Reports"), and (b) communication mailed by or on behalf of the Company to its
stockholders since January 1, 1993. The Company has timely filed (either by the
required filing date or pursuant to Rule 12b-25 promulgated under the Exchange
Act) all Company SEC Reports and other documents required to be filed by it
under the Securities Act and the Exchange Act and, as of their respective dates,
all Company SEC Reports complied with all of the rules and regulations of the
SEC with respect thereto. As of their respective dates, no such Company SEC
Reports or communications contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances in which
they were made, not misleading. The Company has made available to Parent true
and complete copies of all amendments and modifications to all agreements,
documents and other instruments which previously had been filed with the SEC by
the Company and which are currently in effect.
3.12 COMPANY INFORMATION.
The information supplied by the Company relating to the Company and its
Subsidiaries contained in the Registration Statement to be sent to the
stockholders of the Company in connection with the Company Stockholder Meeting,
or in any other document filed with any other regulatory agency in connection
herewith, will not contain, on the date of mailing of the Registration Statement
and on the date of the Company Stockholder Meeting, any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
in which they are made, not false or misleading or necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Company Stockholder Meeting which shall have become false or
misleading. The Registration Statement will comply in all material respects with
the provisions of the Securities Act and the Exchange Act and the rules and
regulations thereunder and the rules and regulations of the SEC with respect
thereto.
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Nothing in this Section 3.12 relates to any information concerning Parent or Sub
or their businesses, contracts, litigation, stockholders, directors or officers.
3.13 COMPLIANCE WITH APPLICABLE LAW; CERTAIN AGREEMENTS. Except as set
forth in Schedule 3.13 hereto, each of the Company and its Subsidiaries holds
all material licenses, franchises, permits and authorizations necessary for the
lawful conduct of its business under and pursuant to all, and has complied with
and is not in conflict with, or in default or violation of any (a) statute,
code, ordinance, law, rule, regulation, order, writ, judgment, injunction or
decree, published policies and guidelines of any Governmental Entity, applicable
to the Company or Subsidiary or by which any property or asset of the Company or
Subsidiary is bound or affected or (b) any note, bond, mortgage, indenture, deed
of trust, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or Subsidiary is a party or by
which the Company or Subsidiary or any property or asset of the Company or
Subsidiary is bound or affected, except for any such non-compliance, conflicts,
defaults or violations that would not, individually or in the aggregate, have a
Material Adverse Effect; and the Company neither knows of, nor has received
notice of, any material violations of any the above. In addition to the
foregoing, the Company has in place, and is in compliance with, plans regarding
Hazard Analysis Critical Control Points for each facility of the Company.
3.14 CERTAIN CONTRACTS.
(a) Except as set forth in Schedule 3.14 hereto, neither the
Company nor any of its Subsidiaries is a party to or bound by any
contract, arrangement, commitment or understanding (whether written or
oral): (i) with respect to the employment of any director, officer or
employee, or with respect to the employment of any consultant which
cannot be terminated with a payment of less than $25,000, (ii) which,
upon the consummation of the transactions contemplated by this
Agreement, will result in any payment (whether of severance pay or
otherwise) becoming due from the Company or any of its Subsidiaries to
any officer or employee thereof, (iii) which is a material contract (as
defined in Item 601(b)(10) of Regulation S-B of the SEC) to be
performed after the date of this Agreement that has not been filed or
incorporated by reference in the Company SEC Reports, (iv) which is a
consulting or other agreement (including agreements entered into in the
ordinary course and data processing, software programming and licensing
contracts) not terminable on ninety (90) days or less notice and
involves the payment of more than $25,000 per annum, (v) which
restricts the conduct of any line of business by the Company or any of
its Subsidiaries, (vi) with or to a labor union or guild (including any
collective bargaining agreement), or (vii) (including any stock option
plan, stock appreciation rights plan, restricted stock plan or stock
purchase plan) any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence
of any of the transactions contemplated by this Agreement, or the value
of any of the benefits of which will be calculated on the basis of any
of the transactions contemplated by this Agreement. The Company has
previously delivered to Parent true and complete copies of all
employment, consulting and deferred compensation agreements which are
in writing and to which the Company is a party. Each contract,
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arrangement, commitment or understanding of the type described in this
section is referred to herein as a "Company Contract".
(b) Except as set forth in Schedule 3.14(b) hereto, (i) each
Company Contract is legal, valid and binding upon the Company or a
Subsidiary of the Company, as the case may be, assuming due
authorization of the other party or parties thereto, and in full force
and effect, (ii) the Company or Subsidiary, as the case may be, has in
all material respects performed all obligations required to be
performed by it to date under each such Company Contract, and (iii) no
event or condition exists which constitutes or, after notice or lapse
of time or both, would constitute, a default on the part of the Company
or Subsidiary, as the case may be, under any such Company Contract.
(c) Neither the Company nor its Subsidiaries has made any
express warranty to any person or entity with respect to any product it
manufactures or sells or has manufactured or sold or has made or agreed
to make any indemnification payment, or replacement with respect to any
product warranty claim, except for (i) the warranties and/or
agreement(s) to indemnify or replace product of which true and correct
copies have been delivered to Parent, (ii) the warranties applicable
under the Uniform Commercial Code as in effect from time to time in the
jurisdictions in which its products are sold and (iii) any other
warranties under other state or federal laws.
3.15 AGREEMENTS WITH REGULATORY AGENCIES. Neither the Company nor any
of its Subsidiaries is subject to any cease-and-desist or other order issued by,
or is a party to any written agreement, consent agreement or memorandum of
understanding, commitment letter or similar undertaking (each a "Regulatory
Agreement") with any Regulatory Agency or other Governmental Entity that
restricts the conduct of its business in any material respect, nor has the
Company or any of its Subsidiaries been notified by any Regulatory Agency or
other Governmental Entity that it is considering issuing or requesting any
Regulatory Agreement.
3.16 ENVIRONMENTAL MATTERS.
(a) The Company and its Subsidiaries are, and have been, in
material compliance with all applicable environmental laws and with all
rules, regulations, standards and requirements of the United States
Environmental Protection Agency (the "EPA") and of state and local
agencies with jurisdiction over pollution or protection of the
environment.
(b) There is no suit, claim, action or proceeding pending or,
to the best knowledge of the Company, threatened, before any
Governmental Entity or other forum in which the Company or any of its
Subsidiaries have been or, with respect to threatened proceedings, may
be named as a defendant, responsible party or potentially responsible
party (i) for alleged noncompliance (including by any predecessor),
with any environmental law, rule, regulation, standard or requirement
or (ii) relating to the release into or presence in the Environment (as
hereinafter defined) of any Hazardous Materials (as hereinafter
defined) or Oil (as hereinafter
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defined) whether or not occurring at or on a site owned, leased or
operated by the Company or any of its Subsidiaries.
(c) Neither the Company nor any of its Subsidiaries has
received any notice regarding a matter on which a suit, claim, action
or proceeding as described in subsection (b) of this Section 3.16 could
reasonably be based. No facts or circumstances have come to the
Company's attention which have caused either to believe that a material
suit, claim, action or proceeding as described in subsection (b) of
this Section 3.16 could reasonably be expected to occur.
(d) Except as set forth in the Environmental Site Assessment
Reports described in Schedule 3.16(d) hereto, during the period of the
ownership or operation by the Company or any of its Subsidiaries of any
of their respective current properties, there has been no release or
presence in the Environment of Hazardous Material or Oil in, on, under
or affecting such property. To the best knowledge of the Company, prior
to the period of the ownership or operation by the Company or any of
its Subsidiaries of any of their respective current properties or any
previously owned or operated properties, there was no release or
presence in the Environment of Hazardous Material or Oil in, on, under
or affecting any such property.
(e) The following definitions apply for purposes of this
Agreement: (i) "Hazardous Material" means any pollutant, contaminant,
or hazardous substance or hazardous material as defined in or pursuant
to the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. Section 9601 et seq., or any other federal, state or
local environmental law, regulation or requirement; (ii) "Oil" means
oil or petroleum of any kind or origin or in any form, as defined in or
pursuant to the Federal Clean Water Act, 33 U.S.C. Section 1251 et
seq., or any other federal, state or local environmental law,
regulation or requirement; and (iii) "Environment" means any soil,
surface waters, groundwaters, stream sediments, surface or subsurface
strata, and ambient air and any other environmental medium.
3.17 PROPERTIES.
(a) Schedule 3.17 hereto contains a true, complete and correct
list and a brief description (including carrying value) of all real
properties owned by the Company or any of its Subsidiaries. Except as
set forth in Schedule 3.17 hereto, the Company or its Subsidiaries has
good and marketable title to all the real property and other property
owned by it and included in the balance sheet of the Company for the
period ended May 31, 1998, and owns such property subject to no
encumbrances, liens, mortgages, security interests, pledges or title
imperfections except for (i) those items that secure liabilities that
are reflected in such balance sheet or the notes thereto, (ii)
statutory liens for amounts not yet delinquent or which are being
contested in good faith, (iii) with respect to owned real property,
title imperfections noted in title reports, and (iv) those items that
do not, individually or in the aggregate, have a Material Adverse
Effect on the Company or which do not and will not interfere with the
use
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of the property as currently used or contemplated to be used by the
Company or its Subsidiaries, or the conduct of the business of the
Company or its Subsidiaries.
(b) Neither the Company nor any of its Subsidiaries has
received any notice of a material violation of any applicable zoning or
environmental regulation, ordinance or other law, order, regulation or
requirement relating to its operations or its properties and, to the
knowledge of the Company, there is no such violation. Except as set
forth in Schedule 3.17 hereto, all buildings and structures owned and
used by the Company or any of its Subsidiaries conform in all material
respects with all applicable ordinances, codes or regulations, except
to the extent such noncompliance does not or will not have a Material
Adverse Effect on the Company and which does not or will not interfere
with the use of any property as currently used or contemplated to be
used by the Company or its Subsidiaries, or the conduct of the business
of the Company or its Subsidiaries. Except as set forth in Schedule
3.17 hereto, to the knowledge of the Company, all buildings and
structures leased and used by the Company or any of its Subsidiaries
conform in all material respects with all applicable ordinances, codes
or regulations, except to the extent such noncompliance does not or
will not have a Material Adverse Effect on the Company and which does
not or will not interfere with the use of any property as currently
used or contemplated to be used by the Company or its Subsidiaries, or
the conduct of the business of the Company or its Subsidiaries.
(c) Schedule 3.17 contains a true, complete and correct list
of all leases pursuant to which the Company or any of its Subsidiaries
leases any real or personal property, either as lessee or as lessor
(the "Company Leases"). Assuming due authorization of the other party
or parties thereto, each of the Company Leases is valid and binding on
the Company or Subsidiary, as the case may be, and, to the best of the
Company's knowledge, valid and binding on and enforceable against all
other respective parties to such leases, in accordance with their
respective terms. Except to the extent such breaches, defaults or
events of default do not or will not have a Material Adverse Effect on
the Company and which do not or will not interfere with the use of any
property as currently used or contemplated to be used by the Company or
its Subsidiaries, or the conduct of the business of the Company or its
Subsidiaries, there are not under such Company Leases any existing
breaches, defaults or events of default by the Company or any of its
Subsidiaries, nor has the Company or any of its Subsidiaries received
notice of, or made a claim with respect to, any breach or default by
any other party to such Company Leases. Each of the Company and its
Subsidiaries enjoys quiet and peaceful possession of all such leased
properties occupied by it as lessee.
(d) All of the real properties, leasehold improvements and
items of equipment and other material personal property owned, leased,
or licensed by the Company or any of its Subsidiaries, or in which any
of those parties hold an interest, are in good maintenance, repair and
operating condition, ordinary wear and tear excepted, are adequate for
the purpose for which they are now being or are anticipated to be used,
and, to the best of the Company's knowledge, are free from any material
defects.
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3.18 INSURANCE. The Company has made available to Parent true and
complete copies of all material policies of insurance of the Company or any of
its Subsidiaries currently in effect. All of the policies relating to insurance
maintained by the Company or any of its Subsidiaries with the respect to its
material properties and the conduct of its business in any material respect (or
any comparable policies entered into as a replacement thereof) are in full force
and effect and neither the Company nor any of its Subsidiaries has received any
notice of cancellation with respect thereto. All life insurance policies on the
lives of any of the current and former officers of the Company or any of its
Subsidiaries which are maintained by the Company or any of its Subsidiaries or
which are otherwise included as assets on the books of the Company (i) are, or
will at the Effective Time be, owned by the Company or any of its Subsidiaries,
free and clear of any claims thereon by the officers or members of their
families, except with respect to the death benefits thereunder, as to which the
Company agrees that there will not be an amendment prior to the Effective Time
without the consent of Parent, and (ii) are accounted for properly on the books
of the Company in accordance with GAAP. The Company does not have any material
liability for unpaid premium or premium adjustments not properly reflected on
the Company's May 31, 1998 balance sheet. The Company and its Subsidiaries have
been and are adequately insured with respect to their respective property and
the conduct of their respective business in such amounts and against such risks
as are substantially similar in kind and amount to that customarily carried by
parties similarly situated who own properties and engage in businesses
substantially similar to that of the Company (including without limitation
liability insurance and blanket bond insurance). All claims under any policy or
bond have been duly and timely filed.
3.19 TRANSACTIONS WITH CERTAIN PERSONS. Except as disclosed in the
Company SEC Reports or otherwise set forth on Schedule 3.19 hereto, since April
1, 1996, neither the Company nor any of its Subsidiaries has entered into any
transaction or series of transactions, in which the amount involved exceeded
$10,000, with any executive officer, director or greater-than-5% stockholder of
the Company or any "associate" (as defined in Rule 14a-1 under the Exchange Act)
of any such officer or director or "affiliates" (as defined in Rule 144(a)(1) of
the Securities Act) of any such officer, director or stockholder.
3.20 LABOR MATTERS. Neither the Company nor any of its Subsidiaries is
a party to any collective bargaining or other labor union or guild contract nor
has the Company or any of its Subsidiaries been approached since November 30,
1997 by any collective bargaining or other labor union or guild seeking to enter
into a contract with the Company or any of its Subsidiaries. There is no pending
or, to the best knowledge of the Company, threatened, labor dispute, strike or
work stoppage against the Company or any of its Subsidiaries which may interfere
with the business activities of the Company or any of its Subsidiaries. None of
the Company, any of its Subsidiaries or their respective representatives or
employees has committed any unfair labor practices in connection with the
operation of the business of the Company or any of its Subsidiaries, and there
is no pending or, to the best knowledge of the Company, threatened charge or
complaint against the Company or any of its Subsidiaries by the National Labor
Relations Board or any comparable state agency. Except as set forth on Schedule
3.20 hereto, to its knowledge, neither the Company nor its Subsidiaries has
hired any illegal aliens as employees. To its knowledge, neither the Company nor
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its Subsidiaries has discriminated on the basis of race, age, sex or otherwise
in its employment conditions or practices with respect to its employees. There
are no race, age, sex or other discrimination complaints pending, or, to the
knowledge of the Company, threatened against the Company or any of its
Subsidiaries by any employee, former or current, before any domestic (federal,
state or local) or foreign board, department, commission or agency nor, to the
knowledge of the Company, does any basis therefor exist. There are no pending
or, to the knowledge of the Company, threatened representation questions
respecting any employees.
3.21 INTELLECTUAL PROPERTY. The Company and its Subsidiaries own or
possess valid and binding licenses and other rights to use without payment of
any material amount all material patents, copyrights, trade secrets, trade
names, service marks, trademarks, software and other intellectual property used
in its business, which are set forth in Schedule 3.21 hereto; neither the
Company nor any of its Subsidiaries has received any notice of conflict with
respect thereto that asserts the right of others. The Company and its
Subsidiaries have performed in all material respects all the obligations
required to be performed by it with respect to the items of intellectual
property set forth in Schedule 3.21 hereto and are not in default under any
contract, agreement, arrangement or commitment relating to any of the foregoing.
3.22 SUBSTANTIAL SUPPLIERS AND CUSTOMERS. Except as set forth on
Schedule 3.22 hereto, since November 30, 1997, none of the top ten (10)
suppliers (by dollar volume) or the top ten (10) customers (by dollar volume) of
the Company and its Subsidiaries, taken as a whole, has substantially reduced
the use or supply of the products or goods made available for purchase by the
Company or its Subsidiaries in their business or has ceased, or threatened to
cease, to use or to supply such products or goods, and the Company does not have
any reason to believe that any such supplier or customer will do so.
3.23 BROKER'S FEES. Neither the Company nor any of its officers or
directors, has employed any broker or finder or incurred any liability for any
broker's fees, commissions or finder's fees in connection with any of the
transactions contemplated by this Agreement, except pursuant to an agreement
dated June 5, 1998, as amended by a letter agreement dated October 7, 1998,
between the Company and Ladenburg ▇▇▇▇▇▇▇▇ & Company.
3.24 DISCLOSURE. No representation or warranty contained in this
Agreement or any schedule to this Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements herein or therein, in light of the circumstances in which they are
made, not misleading.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub hereby represent and warrant to the Company as follows:
4.01 CORPORATE ORGANIZATION.
(a) Each of Parent and Sub is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware. Each of Parent and Sub has the corporate power and authority
to own or lease all of its properties and assets and to carry on its
business as it is now being conducted, and is duly licensed or
qualified to do business in each jurisdiction in which the nature of
the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or
qualified would not have a Material Adverse Effect on Parent. The
Certificate of Incorporation and Bylaws of each of Parent and Sub,
copies of which have previously been delivered to the Company, are true
and complete copies of such documents as in effect as of the date of
this Agreement.
(b) Parent has no direct or indirect Subsidiaries other than
Sub and is the sole stockholder of Sub. Sub has no direct or indirect
Subsidiaries. Neither Parent nor Sub owns, controls or holds with the
power to vote, directly or indirectly of record, beneficially or
otherwise, any capital stock or any equity or ownership interest in any
corporation, partnership, association, joint venture or other entity,
except for (i) Parent's ownership of Sub, (ii) Parent's ownership of
Company Common Stock and (iii) less than five percent (5%) of any
equity security registered under the Exchange Act.
(c) The minute books of each of Parent and Sub contain true,
complete and accurate records of all meetings and other corporate
actions held or taken by their respective stockholders and boards of
directors (including committees of their respective boards of
directors).
4.02 CAPITALIZATION.
(a) The authorized capital stock of Parent consists of
50,000,000 shares of Parent Common Stock, 2,000,000 shares of Class B
common stock, par value $.01 per share ("Parent Class B Common Stock"),
of Parent and 5,000,000 shares of preferred stock, par value $.01 per
share, of Parent. As of September 15, 1998, 2,646,139 shares of Parent
Common Stock, 522,955 shares of Parent Class B Common Stock and no
shares of preferred stock of Parent were issued and outstanding. As of
September 15, 1998, options and warrants exercisable to purchase
559,839 and 30,000 shares of Parent Common Stock, respectively, were
outstanding, and a promissory note convertible into 428,571 shares of
Parent Common Stock was outstanding. All of the issued and outstanding
shares of Parent
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Common Stock have been duly authorized and validly issued and are fully
paid, nonassessable and free of preemptive rights with no personal
liability attaching to the ownership thereof.
(b) The authorized capital stock of Sub consists of 1,500
shares of common stock, without par value ("Sub Common Stock"), of Sub.
As of the date hereof, 100 shares of Sub Common Stock are outstanding.
All of the issued and outstanding shares of capital stock of Sub are
owned by Parent, have been duly authorized and validly issued and are
fully paid, non-assessable and free of preemptive rights with no
personal liability attaching to the ownership thereof.
(c) Except as described in Section 4.02(a) hereof, neither
Parent nor Sub has or is bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character
calling for the purchase or issuance of any shares of Parent Common
Stock, Sub Common Stock or any other equity security of Parent or Sub
or any securities representing the right to purchase or otherwise
receive any shares of Parent Common Stock, Sub Common Stock or any
other equity security of Parent or Sub other than as provided for in
this Agreement. Except as described in Section 4.02(a) hereof, there
are no bonds, debentures, notes or other indebtedness of Parent or Sub
having the right to vote (or convertible into, or exchangeable for
securities having the right to vote) on any matters on which
stockholders of Parent or Sub may vote.
(d) Except as contemplated herein, there are no agreements or
understandings, with respect to the voting of any shares of Parent
Common Stock or Sub Common Stock or which restrict the transfer of such
shares, to which Parent or Sub is a party and, to the knowledge of
Parent, there are no such agreements or understandings to which Parent
or Sub is not a party with respect to the voting of any such shares or
which restrict the transfer of such shares, other than applicable
federal and state securities laws.
(e) All dividends on Parent Common Stock or Sub Common Stock
which have been declared prior to the date of this Agreement have been
paid in full.
4.03 AUTHORITY; NO VIOLATION.
(a) Each of Parent and Sub have full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement by Parent and Sub and the consummation by Parent and Sub of
the transactions contemplated hereby have been duly and validly
approved by the Board of Directors of Parent and Sub, respectively.
Except for the filing of the Certificate of Merger, no other corporate
proceedings on the part of Parent or Sub are necessary to approve this
Agreement and to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Parent
and Sub and (assuming the due authorization, execution and delivery by
the Company) constitutes a valid and binding obligation of Parent and
Sub, enforceable against Parent and Sub in accordance with its terms.
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(b) Neither the execution and delivery of this Agreement by
each of Parent and Sub, nor the consummation by either Parent or Sub,
as the case may be, of the transactions contemplated hereby, nor
compliance by either Parent or Sub with any of the terms or provisions
hereof, will (i) violate, conflict with or result in a breach of any
provision of the Certificate of Incorporation or Bylaws of Parent, or
Sub, as the case may be, or (ii)(x) violate any statute, code,
ordinance, rule, regulations, judgment, order, writ, decree or
injunction applicable to the Parent or Sub or any of their respective
properties or assets, or (y) violate, conflict with, result in a breach
of any provisions of or the loss of any benefit under, constitute a
default (or any event which, with notice or lapse of time, or both,
would constitute a default) under, result in the termination of or a
right of termination or cancellation under, accelerate the performance
required by, or result in the creation of any lien, pledge, security
interest, charge or other encumbrance upon any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which
Parent or Sub is a party, or by which they or any of their respective
properties or assets may be bound or affected, except (in the case of
clause (y) above) for such violations, conflicts, breaches or defaults
which, either individually or in the aggregate, will not have a
Material Adverse Effect on Parent.
4.04 CONSENTS AND APPROVALS. Except for (a) the filing with the SEC of
the Registration Statement and the declaration of the effectiveness thereof by
the SEC, (b) the approval of this Agreement by the requisite vote of the
stockholders of Parent and the Company, respectively, and (c) the filing of the
Certificate of Merger with the Delaware Secretary pursuant to the DGCL to effect
the Merger, no consents or approvals of or filings or registrations with any
Governmental Entity or with any third party are necessary in connection with the
execution and delivery by Parent and Sub of this Agreement and the consummation
by Parent and Sub of the Merger and the other transactions contemplated hereby.
4.05 BROKER'S FEES. Neither Parent nor Sub, nor any of their respective
officers or directors, has employed any broker or finder or incurred any
liability for any broker's fee, commission or finder's fee in connection with
any of the transactions contemplated by this Agreement, except as set forth in
Schedule 4.05 hereto.
4.06 FINANCIAL STATEMENTS.
(a) Parent has previously delivered to the Company copies of
the audited consolidated balance sheets of the Company as of December
31, 1995, December 31, 1996 and December 31, 1997, and the related
consolidated statements of income, changes in stockholders' equity and
cash flows for the fiscal years 1996 through 1997, inclusive, included
in the Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1997 filed with the SEC under the Exchange Act. Parent has
also previously delivered to the Company copies of the unaudited
consolidated balance sheets of Parent as of June 30, 1998, and the
related unaudited consolidated statements of income and cash flows for
the quarter ended June 30, 1998, included in Parent's Quarterly Report
on Form 10-QSB for the quarter
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ended June 30, 1998 filed with the SEC under the Exchange Act. The
audited consolidated financial statements and unaudited consolidated
interim financial statements of Parent and its Subsidiaries included or
incorporated by reference in the Parent SEC Reports (as hereinafter
defined) filed on or after December 31, 1995 have been prepared in
accordance with GAAP consistently applied during the periods involved
(except as may be indicated in the notes thereto or, in the case of the
unaudited statements, as permitted by Form 10-QSB), complied as of
their respective dates in all material respects with applicable
accounting requirements and the published rules and regulations of the
SEC with respect thereto, and fairly present the consolidated financial
position of Parent and its Subsidiaries as of the dates thereof and the
consolidated income and retained earnings and sources and applications
of funds for the periods then ended (subject, in the case of any
unaudited interim financial statements, to the absence of footnotes
required by GAAP and normal year-end adjustments).
(b) Except for liabilities incurred since June 30, 1998 in the
ordinary course of business consistent with past practice, Parent does
not have any liabilities or obligations of any nature whatsoever
(whether absolute, accrued, contingent or otherwise) which are not
adequately reserved or reflected on the balance sheet of Parent
included in its Quarterly Report on Form 10-QSB for the quarter ended
June 30, 1998, except for liabilities or obligations which in the
aggregate do not exceed $50,000, and there do not exist any
circumstances that could reasonably be expected to result in such
liabilities or obligations.
4.07 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since June 30, 1998, there
has not been any Material Adverse Effect on Parent (including without limitation
any loss of employees or customers that has had a Material Adverse Effect, or
that is reasonably likely to have a Material Adverse Effect, on Parent) and, to
the best knowledge of Parent, no fact or condition exists which will cause such
a Material Adverse Effect on Parent in the future.
4.08 LEGAL PROCEEDINGS. Except as set forth in Schedule 4.08 hereto,
neither Parent nor Sub is a party to any, and there are no pending or, to the
best knowledge of Parent, threatened, legal, administrative, arbitral or other
proceedings, claims, actions or governmental or regulatory investigations of any
nature against or affecting Parent or Sub or any property or asset of Parent or
Sub, before any court, arbitrator or administrative, Governmental Entity,
domestic or foreign, which would, either individually or in the aggregate, have
a Material Adverse Effect on Parent, and no facts or circumstances have come to
Parent's attention which have caused it to believe that such a claim, action,
proceeding or investigation against or affecting Parent or Sub could reasonably
be expected to occur. Neither Parent nor Sub nor any property or asset of Parent
or Sub is subject to any order, writ, judgment, injunction, decree,
determination or award which restricts its ability to conduct business in any
area in which it presently does business or has or could reasonably be expected
to have, either individually or in the aggregate, a Material Adverse Effect on
Parent.
4.09 TAXES AND TAX RETURNS.
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(a) Each of Parent and its Subsidiaries (the "Parent
Taxpayers") has filed all Tax Returns that were required to be filed.
All such Tax Returns were when filed, and continue to be, correct and
complete in all material respects. All Taxes owed by the Parent
Taxpayers (whether or not shown on any Tax Return) have been timely
paid. Except as set forth on Schedule 4.09(a) annexed hereto, none of
the Parent Taxpayers currently is the beneficiary of any extension of
time within which to file any Tax Return. No claim has ever been made
by an authority in a jurisdiction where any of the Parent Taxpayers
does not file Tax Returns that it is or may be subject to taxation by
that jurisdiction. There are no liens with respect to Taxes on any of
the assets or property of any of the Parent Taxpayers, except for liens
with respect to Taxes not yet payable.
(b) Each of the Parent Taxpayers has withheld or collected and
paid all Taxes required to have been withheld or collected and paid in
connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder, an other third party, or otherwise.
(c) There is no dispute or claim concerning any Tax Liability
of any of the Parent Taxpayers either (A) claimed or raised by any
authority in writing or (B) as to which any of the Parent Taxpayers or
the directors and officers (and employees responsible for Tax matters)
of any of the Parent Taxpayers has knowledge. There are no proceedings
with respect to Taxes pending.
(d) Schedule 4.09(a) annexed hereto sets forth an accurate,
correct and complete list of all federal, state, local, and foreign Tax
Returns filed with respect to the Parent Taxpayers for taxable periods
ended on or after December 31, 1992, indicates those Tax Returns that
have been audited and indicates those Tax Returns that currently are
the subject of audit. Parent has delivered to the Company correct and
complete copies of all federal income Tax Returns, examination reports,
and statements of deficiencies assessed against or agreed to by or on
behalf of any of the Parent Taxpayers since January 1, 1993. To the
knowledge of the Parent Taxpayers and their directors and officers (and
employees responsible for Tax matters), no other audit or investigation
with respect to Taxes is pending or has been threatened.
(e) None of the Parent Taxpayers have waived any statute of
limitations in respect of Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency.
(f) None of the Parent Taxpayers has agreed to make, nor is it
required to make, any adjustments under Section 481(a) of the Code by
reason of a change in accounting method or otherwise.
(g) None of the Parent Taxpayers is a party to any agreement,
whether written or unwritten, providing for the payment of Tax
liabilities, payment for Tax losses, entitlements to refunds or similar
Tax matters.
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(h) No ruling with respect to Taxes relating to any of the
Parent Taxpayers has been requested by or on behalf of the Parent
Taxpayers.
(i) None of the Parent Taxpayers is a party to any contract,
arrangement or plan that has resulted or would result, separately or in
the aggregate, in the payment of any "excess parachute payments" within
the meaning of Section 280G of the Code, or the payment of any
consideration which would not be deductible by reason of Section 162(m)
of the Code.
(j) Except as set forth on Schedule 4.09(j), none of the
Parent Taxpayers (A) has never been a member of an affiliated group
(within the meaning of Section 1504 of the Code, or any similar group
as defined for state, local or foreign tax purposes) filing a
consolidated federal (or combined or unitary state, local or foreign)
income Tax Return or (B) has any liability for the taxes of any Person
(other than the Parent Taxpayers) under Reg. Section 1.1502-6 (or any
similar provision of state, local or foreign Law), as a transferee or
successor, by contract, or otherwise.
(k) The unpaid Taxes of the Parent Taxpayers (A) did not, as
of the most recent fiscal quarter end, exceed the reserves for Tax
liability (rather than any reserve for deferred Taxes established to
reflect timing differences between book and Tax income) on their
respective books at such time and (B) do not exceed that reserve as
adjusted for the passage of time through the Effective Date in
accordance with the past custom and practice of the Parent Taxpayers in
filing their Tax Returns.
(l) None of Parent or Sub has filed an election, consent or
agreement under Section 341(f) of the Code.
(m) For purposes of this Section 4.09, references to the
Parent Taxpayers shall also refer to any predecessor companies.
4.10 EMPLOYEE BENEFIT PLANS.
(a) Schedule 4.10 hereto sets forth a true and complete list
of all Plans maintained or contributed to by Parent or Sub during the
five (5) years preceding this Agreement. The term "Plans" for purposes
of this Article IV means all employee benefit plans, arrangements or
agreements that are maintained or contributed to, or that were
maintained or contributed to at any time during the five (5) years
preceding the date of this Agreement, by Parent or Sub, or by any ERISA
Affiliate, all of which together with Parent would be deemed a "single
employer" within the meaning of Section 4001 of ERISA.
(b) Parent has heretofore delivered to the Company true and
complete copies of each of the Plans and all related documents,
including but not limited to (i) all required Forms 5500 and all
related schedules for such Plans (if applicable) for each of the last
two (2) years,
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(ii) the actuarial report for such Plan (if applicable) for each of the
last two (2) years, and (iii) the most recent determination letter from
the IRS (if applicable) for such plan.
(c) (i) Each of the Plans has been operated and administered
in all material respects in accordance with applicable laws, including
but not limited to ERISA and the Code, (ii) each of the Plans intended
to be "qualified" within meaning of Section 401(a) of the code has been
maintained so as to qualify from the effective date of such Plan to the
Effective Time, (iii) with respect to each Plan which is subject to
Title IV of ERISA, the present value of "benefit liabilities" (within
the meaning of Section 4001(a)(16) of ERISA) under such Plan, based
upon the actuarial assumptions currently used by the Plan for IRS
funding purposes did not, as of its latest valuation date, exceed the
then current value of the assets of such Plan allocable to such accrued
benefits, and there has been no "accumulated funding deficiency"
(whether or not waived), (iv) no Plan provides benefits, including
without limitation death, medical or other benefits (whether or not
insured), with respect to current or former employees of Parent, Sub or
any ERISA Affiliate beyond their retirement or other termination of
service, other than (u) coverage mandated by applicable law, (v) life
insurance death benefits payable in the event of the death of a covered
employee, (w) disability benefits payable to disabled former employees,
(x) death benefits or retirement benefits under any "employee pension
plan," as that term is defined in Section 3(2) of ERISA, (y) deferred
compensation benefits accrued as liabilities on the books of Parent,
Sub or any ERISA Affiliate or (z) benefits the full cost of which is
borne by the current or former employee (or his beneficiary), (v) with
respect to each Plan subject to Title IV of ERISA no liability under
Title IV of ERISA has been incurred by Parent, Sub or any ERISA
Affiliate that has not been satisfied in full, no condition exists that
presents a material risk to Parent, Sub or any ERISA Affiliate of
incurring a material liability to or on account of such Plan, and there
has been no "reportable event" (within the meaning of Section 1013 of
ERISA and the regulations thereunder), (vi) none of Parent, Sub or any
ERISA Affiliate has ever maintained or contributed to a "multiemployer
pension plan," as such term is defined in Section 3(37) of ERISA, (vii)
all contributions or other amounts payable by Parent or Sub as of the
Effective Time with respect to each Plan in respect of current or prior
plan years have been paid or accrued in accordance with GAAP and
Section 412 of the Code, (viii) none of Parent, any of its Subsidiaries
or any ERISA Affiliate has engaged in a transaction in connection with
which Parent, Sub or any ERISA Affiliate has any material liability for
either a civil penalty assessed pursuant to Section 409 or 502(i) of
ERISA or a tax imposed pursuant to Section 4975 or 4976 of the Code,
(ix) consummation of the transactions contemplated hereby will not
cause any amounts payable under any of the Plans to fail to be
deductible for federal income tax purposes under Sections 280G or
162(m) of the Code, and (x) there are no pending or, to the best
knowledge of Parent, threatened or anticipated claims (other than
routine claims for benefits) by, on behalf of or against any of the
Plans or any trusts related thereto.
(d) With respect to any Plan that is a welfare plan (within
the meaning of Section 3(1) of ERISA (i) no such Plan is funded through
a "welfare benefit fund," as such term is
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defined in Section 419(a) of the Code, and (ii) each such Plan complies
in all material respects with the applicable requirements of Section
4980B(f) of the Code, Part 6 of Subtitle B of Title I of ERISA and any
applicable state COBRA requirements.
(e) Except as prohibited by law (including Section 411(d)(6)
of the Code), each Plan may be amended, terminated, modified or
otherwise revised by Parent, Sub or its ERISA Affiliates as of the
Effective Time to eliminate, without material effect, any and all
future benefit accruals under any Plan (except claims incurred under
any welfare plan).
(f) Since December 31, 1997, neither Parent nor Sub has
entered into, adopted or amended in any respect any collective
bargaining agreement or adopted or amended any bonus, profit sharing,
compensation, stock option, pension, retirement, deferred compensation,
insurance or other similar plan, agreement, trust, fund or arrangement
for the benefit of employees (whether or not legally binding).
4.11 SEC REPORTS. Parent has previously delivered to the Company an
accurate and complete copy of each (a) final registration statement, prospectus,
report, schedule and definitive proxy statement of Parent filed since Parent's
initial public offering in June 1993 with the SEC pursuant to the Exchange Act
or the Securities Act (collectively, the "Parent SEC Reports"), and (b)
communication mailed by or on behalf of the Parent to its stockholders since
June 1, 1993. Parent has timely filed (either by the required filing date or
pursuant to Rule 12b-25 promulgated under the Exchange Act) all Parent SEC
Reports and other documents required to be filed by it under the Securities Act
and the Exchange Act and, as of their respective dates, all Parent SEC Reports
complied with all of the rules and regulations of the SEC with respect thereto.
As of their respective dates, no such Parent SEC Reports or communications
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances in which they were made, not
misleading. Parent has made available to the Company true and complete copies of
all amendments and modifications to all agreements, documents and other
instruments which previously had been filed with the SEC by Parent and which are
currently in effect. Since June 30, 1998, there has not been any Material
Adverse Effect on Parent and, to the best knowledge of Parent, no fact or
condition exists which will, or is reasonably likely to, cause such a Material
Adverse Effect on Parent in the future.
4.12 PARENT AND SUB INFORMATION. The information supplied by Parent and
Sub relating to Parent and Sub contained in the Registration Statement to be
sent to the stockholders of Parent in connection with the Parent Stockholder
Meeting, or in any other document filed with any other regulatory agency in
connection therewith, will not contain, on the date of mailing of the
Registration Statement and on the date of the Parent Stockholder Meeting, any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances in which they are made, not false or misleading or
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Parent Stockholder Meeting which shall have
become false or misleading. The Registration Statement will comply in all
material respects with the provisions of the Securities Act
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and the Exchange Act and the rules and regulations thereunder and the rules and
regulations of the SEC with respect thereto. Nothing in this Section 4.12
relates to any information concerning the Company, its Subsidiaries or their
respective business, contracts, litigation, stockholders, directors or officers.
4.13 COMPLIANCE WITH APPLICABLE LAW; CERTAIN AGREEMENTS. Each of Parent
and Sub holds all material licenses, franchises, permits and authorizations
necessary for the lawful conduct of its business under and pursuant to all, and
has complied with and is not in conflict with, or in default or violation of any
(a) statute, code, ordinance, law, rule, regulation, order, writ, judgment,
injunction or decree, published policies and guidelines of any Governmental
Entity, applicable to Parent or Sub or by which any property or asset of Parent
or Sub is bound or affected or (b) any note, bond, mortgage, indenture, deed of
trust, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Parent or Sub is a party or by which Parent or
Sub or any property or asset of Parent or Sub is bound or affected, except for
any such non-compliance, conflicts, defaults or violations that would not,
individually or in the aggregate, have a Material Adverse Effect; and Parent
neither knows of, nor has received notice of, any material violations of any the
above.
4.14 CERTAIN CONTRACTS.
(a) Neither Parent nor Sub is a party to or bound by any
contract, arrangement, commitment or understanding (whether written or
oral): (i) which, upon the consummation of the transactions
contemplated by this Agreement, will result in any payment (whether of
severance pay or otherwise) becoming due from Parent or Sub to any
officer or employee thereof, (ii) which is a material contract (as
defined in Item 601(b)(10) of Regulation S-B of the SEC) to be
performed after the date of this Agreement that has not been filed or
incorporated by reference in the Parent SEC Reports, (iii) which
restricts the conduct of any line of business by Parent or Sub, (iv)
with or to a labor union or guild (including any collective bargaining
agreement), or (v) (including any stock option plan, stock appreciation
rights plan, restricted stock plan or stock purchase plan) any of the
benefits of which will be increased, or the vesting of the benefits of
which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement, or the value of any of the benefits of
which will be calculated on the basis of any of the transactions
contemplated by this Agreement. Parent has previously delivered to the
Company true and complete copies of all employment, consulting and
deferred compensation agreements which are in writing and to which
Parent or Sub is a party. Each contract, arrangement, commitment or
understanding of the type described in this section is referred to
herein as a "Parent Contract".
(b) (i) Each Parent Contract is legal, valid and binding upon
Parent or Sub, as the case may be, assuming due authorization of the
other party or parties thereto, and in full force and effect, (ii)
Parent or Sub has in all material respects performed all obligations
required to be performed by it to date under each such Parent Contract,
and (iii) no event or condition exists which constitutes or, after
notice or lapse of time or both, would constitute, a default on the
part of Parent or Sub under any such Parent Contract.
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(c) Neither Parent nor Sub has made any express warranty to
any person or entity with respect to any product it manufactures or
sells or has manufactured or sold or has made or agreed to make any
indemnification payment, or replacement with respect to any product
warranty claim, except for (i) the warranties and/or agreement(s) to
indemnify or replace product of which true and correct copies have been
delivered to the Company, (ii) the warranties applicable under the
Uniform Commercial Code as in effect from time to time in the
jurisdictions in which its products are sold and (iii) any other
warranties under other state or federal laws.
4.15 AGREEMENTS WITH REGULATORY AGENCIES. Neither Parent nor Sub is
subject to any cease-and-desist or other order issued by, or is a party to any
Regulatory Agreement with any Regulatory Agency or other Governmental Entity
that restricts the conduct of its business in any material respect, nor has
Parent or Sub been notified by any Regulatory Agency or other Governmental
Entity that it is considering issuing or requesting any Regulatory Agreement.
4.16 ENVIRONMENTAL MATTERS.
(a) Parent and Sub are, and have been, in material compliance
with all applicable environmental laws and with all rules, regulations,
standards and requirements of the EPA and of state and local agencies
with jurisdiction over pollution or protection of the environment.
(b) There is no suit, claim, action or proceeding pending or,
to the best knowledge of Parent, threatened, before any Governmental
Entity or other forum in which Parent or Sub have been or, with respect
to threatened proceedings, may be named as a defendant, responsible
party or potentially responsible party (i) for alleged noncompliance
(including by any predecessor), with any environmental law, rule,
regulation, standard or requirement or (ii) relating to the release
into or presence in the Environment of any Hazardous Materials or Oil
whether or not occurring at or on a site owned, leased or operated by
Parent or Sub.
(c) Neither Parent nor Sub has received any notice regarding a
matter on which a suit, claim, action or proceeding as described in
subsection (b) of this Section 4.16 could reasonably be based. No facts
or circumstances have come to Parent's attention which have caused
either to believe that a material suit, claim, action or proceeding as
described in subsection (b) of this Section 4.16 could reasonably be
expected to occur.
(d) During the period of the ownership or operation by Parent
or Sub of any of their respective current properties, there has been no
release or presence in the Environment of Hazardous Material or Oil in,
on, under or affecting such property. To the best knowledge of Parent,
prior to the period of the ownership or operation by Parent or Sub of
any of their respective current properties or any previously owned or
operated properties, there was no release or presence in the
Environment of Hazardous Material or Oil in, on, under or affecting any
such property.
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4.17 PROPERTIES.
(a) Schedule 4.17(a) hereto contains a true, complete and
correct list and a brief description (including carrying value) of all
real properties owned by Parent or Sub. Parent or Sub has good and
marketable title to all the real property and other property owned by
it and included in the balance sheet of Parent for the period ended
June 30, 1998, and owns such property subject to no encumbrances,
liens, mortgages, security interests, pledges or title imperfections
except for (i) those items that secure liabilities that are reflected
in such balance sheet or the notes thereto, (ii) statutory liens for
amounts not yet delinquent or which are being contested in good faith,
(iii) with respect to owned real property, title imperfections noted in
title reports, and (iv) those items that do not, individually or in the
aggregate, have a Material Adverse Effect on Parent or which do not and
will not interfere with the use of the property as currently used or
contemplated to be used by Parent or Sub, or the conduct of the
business of Parent or Sub.
(b) Neither Parent nor Sub has received any notice of a
material violation of any applicable zoning or environmental
regulation, ordinance or other law, order, regulation or requirement
relating to its operations or its properties and, to the knowledge of
Parent, there is no such violation. All buildings and structures owned
and used by Parent or Sub conform in all material respects with all
applicable ordinances, codes or regulations, except to the extent such
noncompliance does not or will not have a Material Adverse Effect on
Parent and which does not or will not interfere with the use of any
property as currently used or contemplated to be used by Parent or Sub,
or the conduct of the business of Parent or Sub. To the knowledge of
Parent, all buildings and structures leased and used by Parent or Sub
conform in all material respects with all applicable ordinances, codes
or regulations, except to the extent such noncompliance does not or
will not have a Material Adverse Effect on Parent and which does not or
will not interfere with the use of any property as currently used or
contemplated to be used by Parent or Sub, or the conduct of the
business of Parent or Sub.
(c) Schedule 4.17(c) contains a true, complete and correct
list of all leases pursuant to which Parent or Sub leases any real or
personal property, either as lessee or as lessor (the "Parent Leases").
Assuming due authorization of the other party or parties thereto, each
of the Parent Leases is valid and binding on Parent or Sub, as the case
may be, and, to the best of Parent's knowledge, valid and binding on
and enforceable against all other respective parties to such leases, in
accordance with their respective terms. Except to the extent such
breaches, defaults or event of default do not or will not have a
Material Adverse Effect on Parent and which do not or will not
interfere with the use of any property as currently used or
contemplated to be used by Parent or Sub, or the conduct of the
business of Parent or Sub, there are not under such Parent Leases any
existing breaches, defaults or events of default by Parent or Sub, nor
has Parent or Sub received notice of, or made a claim with respect to,
any breach or default by any other party to such Parent Leases. Each of
Parent and Sub enjoys quiet and peaceful possession of all such leased
properties occupied by it as lessee.
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(d) All of the real properties, leasehold improvements and
items of equipment and other material personal property owned, leased,
or licensed by Parent or Sub, or in which any of those parties hold an
interest, are in good maintenance, repair and operating condition,
ordinary wear and tear excepted, are adequate for the purpose for which
they are now being or are anticipated to be used, and, to the best of
Parent's knowledge, are free from any material defects.
4.18 INSURANCE. Parent has made available to the Company true and
complete copies of all material policies of insurance of Parent or Sub currently
in effect. All of the policies relating to insurance maintained by Parent or Sub
with the respect to its material properties and the conduct of its business in
any material respect (or any comparable policies entered into as a replacement
thereof) are in full force and effect and neither Parent nor Sub has received
any notice of cancellation with respect thereto. All life insurance policies on
the lives of any of the current and former officers of Parent or Sub which are
maintained by Parent or Sub or which are otherwise included as assets on the
books of Parent (i) are, or will at the Effective Time be, owned by Parent or
Sub, free and clear of any claims thereon by the officers or members of their
families, except with respect to the death benefits thereunder, as to which
Parent agrees that there will not be an amendment prior to the Effective Time
without the consent of the Company, and (ii) are accounted for properly on the
books of Parent in accordance with GAAP. Parent does not have any material
liability for unpaid premium or premium adjustments not properly reflected on
Parent's June 30, 1998 balance sheet. Parent and Sub have been and are
adequately insured with respect to their respective property and the conduct of
their respective business in such amounts and against such risks as are
substantially similar in kind and amount to that customarily carried by parties
similarly situated who own properties and engage in businesses substantially
similar to that of Parent (including without limitation liability insurance and
blanket bond insurance). All claims under any policy or bond have been duly and
timely filed.
4.19 TRANSACTIONS WITH CERTAIN PERSONS. Except as disclosed in the
Parent SEC Reports, neither Parent nor Sub has entered into any transaction with
any executive officer, director or greater- than-5% stockholder of Parent or any
"associate" (as defined in Rule 14a-1 under the Exchange Act) of any such
officer or director or "affiliates" (as defined in Rule 144(a)(1) of the
Securities Act) of any such officer, director or stockholder.
4.20 LABOR MATTERS. Neither Parent nor Sub is a party to any collective
bargaining or other labor union or guild contract nor has Parent or Sub been
approached since December 31, 1997 by any collective bargaining or other labor
union or guild seeking to enter into a contract with Parent or Sub. There is no
pending or, to the best knowledge of Parent, threatened, labor dispute, strike
or work stoppage against Parent or Sub which may interfere with the business
activities of Parent or Sub. None of Parent, Sub or their respective
representatives or employees has committed any unfair labor practices in
connection with the operation of the business of Parent or Sub, and there is no
pending or, to the best knowledge of Parent, threatened charge or complaint
against Parent or Sub by the National Labor Relations Board or any comparable
state agency. To its knowledge, neither Parent nor Sub has discriminated on the
basis of race, age, sex or otherwise in its employment conditions or practices
with respect to its employees. There are no race, age, sex or other
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discrimination complaints pending, or, to the knowledge of Parent, threatened
against Parent or Sub by any employee, former or current, before any domestic
(federal, state or local) or foreign board, department, commission or agency
nor, to the knowledge of Parent, does any basis therefor exist. There are no
pending or, to the knowledge of Parent, threatened representation questions
respecting any employees.
4.21 INTELLECTUAL PROPERTY. Parent and Sub own or possess valid and
binding licenses and other rights to use without payment of any material amount
all material patents, copyrights, trade secrets, trade names, service marks,
trademarks, software and other intellectual property used in its business, which
are set forth in Schedule 4.21 hereof; neither Parent nor Sub has received any
notice of conflict with respect thereto that asserts the right of others. Parent
and Sub have performed in all material respects all the obligations required to
be performed by it with respect to the items of intellectual property set forth
in Schedule 4.21 hereof and are not in default under any contract, agreement,
arrangement or commitment relating to any of the foregoing.
4.22 SUBSTANTIAL SUPPLIERS AND CUSTOMERS. Since December 31, 1997, none
of the top ten (10) suppliers (by dollar volume) or the top ten (10) customers
(by dollar volume) of Parent has substantially reduced the use or supply of the
products or goods made available for purchase by Parent and Sub in their
business or has ceased, or threatened to cease, to use or to supply such
products or goods, or, nor does Parent have any reason to believe that any such
supplier or customer will do so.
4.23 FINANCIAL ABILITY TO PERFORM. Parent has delivered to the Company
prior to the date of this Agreement a letter from a financing source acceptable
to the Company regarding its commitment to fund an amount sufficient to pay the
Merger Consideration. As of the date of this Agreement, Parent knows of no
reason that the financing source will not be able to consummate the Financing.
4.24 DISCLOSURE. No representation or warranty contained in this
Agreement contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements herein, in light of the
circumstances in which they are made, not misleading. No information material to
the Merger and which is necessary to make Parent's and Sub's representations and
warranties hereto contained not misleading, has been withheld from, or has not
been delivered in writing to the Company.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.01 COVENANTS OF THE COMPANY. During the period from the date of this
Agreement and continuing until the Effective Time, except as expressly
contemplated or permitted by this Agreement or with the prior written consent of
Parent, the Company shall (and shall cause its Subsidiaries to)
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carry on its business in the ordinary course consistent with past practice. The
Company will (and shall cause its Subsidiaries to) use all reasonable efforts to
(x) preserve its business organization, (y) keep available the present services
of its employees and (z) preserve for itself and Parent the goodwill of the
customers of the Company and its Subsidiaries and others with whom business
relationships exist. Without limiting the generality of the foregoing, and
except as otherwise contemplated by this Agreement or consented to in writing by
Parent, the Company shall not (and shall cause its Subsidiaries not to):
(a) declare or pay any dividends on, or make other
distributions in respect of, any of its capital stock;
(b) (i) split, combine or reclassify any shares of its capital
stock; or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of
its capital stock except upon the exercise or fulfillment of rights or
options issued or existing pursuant to employee benefit plans, programs
or arrangements, all to the extent outstanding and in existence on the
date of this Agreement, or (ii) repurchase, redeem or otherwise
acquire, any shares of the capital stock of the Company, or any
securities convertible into or exercisable for any shares of the
capital stock of the Company;
(c) except in connection with the exercise of any of the
options or warrants of the Company outstanding as of the date of this
Agreement, issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock or any
securities convertible into or exercisable for, or any rights, warrants
or options to acquire, any such shares, or enter into any agreement
with respect to any of the foregoing;
(d) amend its Certificate of Incorporation or Bylaws;
(e) except as set forth on Schedule 5.01(e), make any capital
expenditures in excess of $50,000 individually, or $150,000 in the
aggregate;
(f) enter into any new line of business;
(g) (i) acquire or agree to acquire, by merging or
consolidating with, or by purchasing a substantial equity interest in
or a substantial portion of the assets of or by any other manner, any
business or any corporation, partnership, association or other business
organization or division thereof or (ii) otherwise acquire any assets,
other than in the ordinary course of business, which would be material
to the Company and its Subsidiaries, taken as a whole;
(h) take any action that is intended or would result in any of
its representations and warranties set forth in this Agreement being or
becoming untrue, or in any of the conditions to the Merger set forth in
Article VII not being satisfied, or in breach of any provision of this
Agreement except, in every case, as may be required by applicable law;
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(i) change its methods of accounting in effect at November 30,
1997, except as required by changes in GAAP or regulatory accounting
principles as concurred to by the Company's independent auditors;
(j) except as set forth on Schedule 5.01(j), (i) except as
required by applicable law or to maintain qualification pursuant to the
Code, (x) enter into, adopt, amend, renew or terminate any Plan or any
agreement, arrangement, plan or policy between the Company or any of
its Subsidiaries and one or more of its current or former directors,
officers or employees or (y) increase in any manner compensation or
fringe benefits of any director, officer or employee or pay any benefit
not required by any plan or agreement as in effect as of the date
hereof (including, without limitation, the granting of stock options,
stock appreciation rights, restricted stock, restricted stock units or
performance units or shares); provided, however, that the Company or
its Subsidiaries may increase the compensation of non-officer employees
in the ordinary course of business consistent with past practice; or
(ii) except for the Bogen Agreement or the ▇▇▇▇▇ Agreement, enter into,
modify or renew any employment, severance or other agreement with any
director, officer or employee of the Company or any of its Subsidiaries
or establish, adopt, enter into, or amend any collective bargaining,
bonus, profit sharing, thrift, compensation, stock option, restricted
stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement providing for any benefit to any director, officer or
employee (whether or not legally binding);
(k) other than (i) as set forth on Schedule 5.01(k), (ii) in
the ordinary course of business consistent with past practice or (iii)
to refinance existing debt with indebtedness under the Company's
revolving credit facility, incur any indebtedness for borrowed money,
assume, guarantee, endorse or otherwise as an accommodation become
responsible for the obligations of any other individual, corporation or
other entity;
(l) other than (i) as set forth on Schedule 5.01(l) or (ii) in
the ordinary course of business consistent with past practice, sell,
lease, encumber, assign or otherwise dispose of, or agree to sell,
lease, encumber, assign or otherwise dispose of, any of its material
assets, properties or other rights or agreements;
(m) make any Tax election or settle or compromise any material
federal, state, local or foreign Tax liability;
(n) pay, discharge or satisfy any claim, liability or
obligation, other than the payment, discharge or satisfaction in the
ordinary course of business and consistent with past practice or as
incurred in connection with the Merger and the transactions expressly
contemplated hereby, subject to the limitation on fees set forth in
Section 8.03(a) hereof, of liabilities reflected or reserved against in
the balance sheet for the fiscal year ended November 30, 1997, or
subsequently incurred in the ordinary course of business and consistent
with past practice;
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(o) except as set forth on Schedule 5.01(o), enter into or
renew amend or terminate, or give notice of a proposed renewal
amendment or termination, or make any commitment with respect to,
regardless of whether consistent with past practices, any lease,
contract, agreement or commitment (i) involving an aggregate payment by
or to the Company of more than $100,000, (ii) having a term of one year
or more from the time of execution or (iii) outside of the ordinary
course of business consistent with past practices;
(p) waive any material right, whether in equity or at law; or
(q) agree to do any of the foregoing.
5.02 COVENANTS OF PARENT AND SUB. During the period from the date of
this Agreement and continuing until the Effective Time, except (i) as expressly
contemplated or permitted by this Agreement or the Commitment Letter(s) or (ii)
with the prior written consent of the Company, Parent shall (and shall cause Sub
to) carry on its business in the ordinary course consistent with past practice.
Parent will (and shall cause Sub to) use all reasonable efforts to (x) preserve
its business organization, (y) keep available the present services of its
employees and (z) preserve for itself the goodwill of the customers of Parent
and Sub and others with whom business relationships exist. Without limiting the
generality of the foregoing, and except as otherwise contemplated by this
Agreement or Schedule 5.02 hereto or consented to in writing by the Company,
Parent shall not (and shall cause Sub not to):
(a) declare or pay any dividends on, or make other
distributions in respect of, any of its capital stock;
(b) split, combine or reclassify any shares of its capital
stock; or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of
its capital stock except upon the exercise or fulfillment of rights or
options issued or existing pursuant to employee benefit plans, programs
or arrangements, all to the extent outstanding and in existence on the
date of this Agreement or currently contemplated to be implemented on
or prior to the Closing Date;
(c) except in connection with the exercise of any of the
options or warrants of Parent outstanding as of the date of this
Agreement, issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock or any
securities convertible into or exercisable for, or any rights, warrants
or options to acquire, any such shares, or enter into any agreement
with respect to any of the foregoing;
(d) amend its Certificate of Incorporation or Bylaws;
(e) enter into any new line of business;
(f) (i) acquire or agree to acquire, by merging or
consolidating with, or by purchasing a substantial equity interest in
or a substantial portion of the assets of or by any
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other manner, any business or any corporation, partnership, association
or other business organization or division thereof or (ii) otherwise
acquire any assets, other than in the ordinary course of business,
which would be material to Parent;
(g) take any action that is intended or would result in any of
its representations and warranties set forth in this Agreement being or
becoming untrue, or in any of the conditions to the Merger set forth in
Article VII (including, without limitation, Section 7.01(d) hereof
relating to the Financing) not being satisfied, or in breach of any
provision of this Agreement except, in every case, as may be required
by applicable law;
(h) change its methods of accounting in effect at December 31,
1997, except as required by changes in GAAP or regulatory accounting
principles as concurred to by the Company's independent auditors;
(i) other than in the ordinary course of business consistent
with past practice, incur any indebtedness for borrowed money, assume,
guarantee, endorse or otherwise as an accommodation become responsible
for the obligations of any other individual, corporation or other
entity;
(j) sell, lease, encumber, assign or otherwise dispose of, or
agree to sell, lease, encumber, assign or otherwise dispose of, any of
its material assets, properties or other rights or agreements;
(k) make any Tax election or settle or compromise any material
federal, state, local or foreign Tax liability;
(l) waive any material right, whether in equity or at law; or
(m) agree to do any of the foregoing.
5.03 NO SOLICITATION; NON-DISCLOSURE.
(a) None of the Company, any of its Subsidiaries or any of
their respective directors, officers, employees, representatives,
agents and advisors or other persons controlled by the Company shall
solicit or hold discussions or negotiations with, or assist or provide
any information to, any person, entity or group (other than Parent, Sub
and their affiliates and representatives) concerning any merger,
business combination, disposition of a significant portion of its
assets, or acquisition of a significant portion of its capital stock or
similar transactions involving the Company; provided, however, that the
Board of Directors of the Company may furnish or cause to be furnished
such information to, and may participate in such discussions or
negotiations with, persons or entities who have made a bona fide
proposal if the Board of Directors of the Company believes, in good
faith, after consultation with its financial and legal advisors, that
such bona fide proposal represents a transaction
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which is more favorable to the Company's stockholders from a financial
point of view and is subject only to reasonable conditions of closing
which shall include financing terms reasonably satisfactory to the
Company and, in the opinion of counsel to the Board of Directors of the
Company, the fiduciary duty of the Board of Directors under applicable
law requires it to furnish or cause to be furnished such information
and/or participate in such discussions or negotiations (a "Superior
Offer"). The Company will promptly communicate to Parent, Sub and their
affiliates and representatives the terms of any proposal, discussion,
negotiation or inquiry relating to a merger or disposition of a
significant portion of its capital stock or assets or similar
transaction involving the Company and the identity of the party making
such proposal or inquiry, which it may receive with respect to any such
transaction. In the event that the Board of Directors of the Company
receives what it determines, based on the opinion of counsel to the
Board of Directors of the Company, to be a Superior Offer, the Board of
Directors may vote to recommend such Superior Offer rather than
pursuing the consummation of the transactions contemplated hereunder or
withdraw, modify or amend its recommendation of this Agreement and the
Merger, thus terminating this Agreement in accordance with Section
8.01(h) hereof, but any such termination may occur only (i) within
twenty-one (21) days after such Superior Offer is received and (ii)
upon two (2) full business days prior notice to Parent.
(b) No party (or its representatives, agents, counsel,
accountants or investment bankers) hereto shall disclose to any third
party, other than either party's representatives, agents, counsel,
accountants or investment bankers or the potential lenders previously
disclosed to the Company and Parent in writing, any confidential or
proprietary information about the business, assets or operations of the
other parties to this Agreement or the transactions contemplated
hereby, except as may be required by applicable law. Disclosure of such
information by the Company or Parent with respect to obtaining
financing shall be made only if the recipient executes a reasonable and
appropriate agreement to hold such information confidential. The
parties hereto agree that the remedy at law for any breach of the
requirements of this subsection will be inadequate and that any breach
would cause such immediate and permanent damage as would be impossible
to ascertain, and, therefore, the parties hereto agree and consent that
in the event of any breach of this subsection, in addition to any and
all other legal and equitable remedies available for such breach,
including a recovery of damages, the non-breaching parties shall be
entitled to obtain preliminary or permanent injunctive relief without
the necessity of proving actual damage by reason of such breach and, to
the extent permissible under applicable law, a temporary restraining
order may be granted immediately on commencement of such action.
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ARTICLE VI
ADDITIONAL AGREEMENTS
6.01 REGULATORY MATTERS.
(a) The parties hereto shall cooperate with each other and use
all reasonable efforts promptly to prepare and file all necessary
documentation, to effect all applications, notices, petitions and
filings, and to obtain as promptly as practicable all permits,
consents, approvals and authorizations of all third parties and
Governmental Entities which are necessary or advisable to consummate
the transactions contemplated by this Agreement (including without
limitation the Merger). The Company and Parent shall have the right to
review in advance, and to the extent practicable each will consult with
the other on, in each case subject to applicable laws relating to the
exchange of information, all the information relating to the Company,
Parent or Sub, as the case may be, which appear in any filing made with
or written materials submitted to, any third party or any Governmental
Entity in connection with the transactions contemplated by this
Agreement. In exercising the foregoing right, each of the parties
hereto shall act reasonably and as promptly as practicable. The parties
hereto agree that they will consult with each other with respect to the
obtaining of all permits, consents, approvals and authorizations of all
third parties and Governmental Entities necessary or advisable to
consummate the transactions contemplated by this Agreement and each
party will keep the other apprised of the status of matters relating to
completion of the transactions contemplated herein.
(b) Parent (or Sub as the case may be) shall, upon request,
furnish the Company with all information concerning themselves, their
respective directors, officers and stockholders and such other matters
as may be reasonably necessary or advisable in connection with the
Registration Statement made by or on behalf of the Company in
connection with the Merger and the other transactions contemplated
hereby.
(c) Parent (or Sub as the case may be) and the Company shall
promptly furnish each other with copies of written communications
received by Parent, Sub or the Company, as the case may be, from, or
delivered by any of the foregoing to, any Governmental Entity in
respect of the transactions contemplated hereby.
6.02 SECURITIES LAWS MATTERS.
(a) As soon as reasonably practicable after the date hereof,
Parent shall file the Registration Statement with the SEC under the
Exchange Act. Parent shall use all reasonable efforts to have the
Registration Statement cleared by the SEC as promptly as practicable
after such filing.
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(b) Parent, Sub and the Company shall cooperate with each
other in the preparation of the Registration Statement, and each shall
notify the other of the receipt of any comments of the SEC with respect
to the Registration Statement and of any requests by the SEC for any
amendment or supplement thereto or for additional information and shall
provide to the other parties promptly copies of all correspondence
between the party or any representative or agent of the party and SEC.
Each party shall review the Registration Statement prior to its being
filed with the SEC and shall review all amendments and supplements to
the Registration Statement and all responses to requests for additional
information and replies to comments prior to their being filed with, or
sent to, the SEC. The parties agree to use all reasonable efforts,
after consultation with each other, to respond promptly to all such
comments of and requests by the SEC.
(c) Each of Parent and the Company further agrees to cause the
applicable proxy statement contained in the Registration Statement and
all required supplements thereto to be mailed to its stockholders
entitled to vote at the Parent Stockholder Meeting or the Company
Stockholder Meeting, as the case may be, at the earliest practicable
time.
6.03 COMPANY STOCKHOLDER MEETING; PARENT STOCKHOLDER MEETING.
(a) In order to consummate the Merger, the Company shall take
all steps necessary to duly call, give notice of, convene and hold the
Company Stockholder Meeting as soon as reasonably practicable for the
purpose of voting upon the approval of this Agreement and the
transactions contemplated hereby and shall use all reasonable efforts
to obtain such approval and adoption. Subject to Sections 5.03 or 6.11
hereof, the Company shall, through its Board of Directors, recommend to
its stockholders approval of this Agreement and the transactions
contemplated hereby.
(b) In order to consummate the Merger, Parent shall take all
steps necessary to duly call, give notice of, convene and hold the
Parent Stockholder Meeting as soon as reasonably practicable for the
purpose of voting upon the approval of the issuance of the shares of
Parent Common Stock in the Merger and shall use all reasonable efforts
to obtain such approval and adoption. Parent shall, through its Board
of Directors, recommend to its stockholders approval of the issuance of
the shares of Parent Common Stock in the Merger.
6.04 ACCESS TO INFORMATION.
(a) Upon reasonable notice to the Chief Executive Officers of
the parties and subject to applicable laws relating to the exchange of
information, the parties shall afford each other's officers, employees,
counsel, accountants, agents, advisors and other authorized
representatives, access, during normal business hours of the person(s)
to whom access is required, during the period prior to the Effective
Time, to all its properties, books, contracts, commitments and records
and, during such period, make available to the other party (i) when
applicable, a copy of each report, schedule, registration statement and
other document filed
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or received by it during such period pursuant to the requirements of
federal securities laws (other than reports or documents which are not
permitted to be disclosed under applicable law), (ii) copies of all
periodic reports regularly received by senior management, and (iii) all
other information concerning its business, properties, assets and
personnel as either party may reasonably request.
(b) In addition to any other confidentiality covenants and
obligations imposed under this Agreement, the parties agree to comply
with the confidentiality agreement dated as of March 30, 1998 between
Parent and the Company, as amended by that certain letter agreement
dated April 24, 1998 between Parent and the Company (the
"Confidentiality Agreement"), which is incorporated herein by
reference.
6.05 LEGAL CONDITIONS TO MERGER. Each of Parent, Sub and the Company
shall use all reasonable efforts (a) to take, or cause to be taken, all actions
necessary, proper or advisable to comply promptly with all legal requirements
which may be imposed on such party with respect to the Merger and, subject to
the conditions set forth in Article VII hereof, to consummate the transactions
contemplated by this Agreement and (b) to obtain (and to cooperate with the
other party to obtain) any consent, authorization, order or approval of or any
exemption by, any Governmental Entity and any other third party which is
required to be obtained by Parent, Sub or the Company in connection with the
Merger and the other transactions contemplated by this Agreement.
6.06 ADDITIONAL AGREEMENTS. If at any time after the Effective Time any
further action is necessary or desirable to carry out the purpose of this
Agreement or to vest the Surviving Corporation with full title to all
properties, assets, rights, approvals, immunities and franchises of any of the
parties to the Merger, the proper officers and directors of each party to this
Agreement shall take all such necessary action as may be reasonably requested by
the Company or Parent (without additional cost to them).
6.07 DISCLOSURE SUPPLEMENTS. Prior to the Effective Time, each party
will supplement or amend the Schedules hereto delivered in connection with the
execution of this Agreement to reflect any matter which, if existing, occurring
or known at the date of this Agreement, would have been required to be set forth
or described in such Schedules or which is necessary to correct any information
in such Schedules which has been rendered inaccurate thereby. No supplement or
amendment to such Schedules shall have any effect for the purposes of
determining satisfaction of the conditions set forth in Sections 7.02(a) hereof
or the compliance by the Company with the covenants set forth in Section 5.01
hereof or for the purposes of determining satisfaction of the conditions set
forth in Sections 7.03(a) hereof or the compliance by Parent or Sub with the
covenants set forth in Section 5.02 hereof.
6.08 CURRENT INFORMATION.
(a) During the period from the date of this Agreement to the
Effective Time, each of the Company and Parent will cause its Chief
Executive Officer or one or more of his or her
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designated representatives to be available to confer from time to
time with representatives of the other and to report the general
status of their ongoing operations. Each such party will promptly
notify the other party of any material change in the normal course of
its business and of any governmental complaints, investigations or
hearings or the institution of significant litigation involving them
or their subsidiaries or properties and will keep the other party
reasonably informed of such events.
(b) To the extent not covered by paragraph (a) above, the
Company shall give prompt notice to Parent, and Parent shall give
prompt notice to the Company, of (i) the occurrence or non-occurrence
of any event which would be reasonably likely to cause any
representation or warranty contained in this Agreement to be untrue
or inaccurate and (ii) any failure of Parent, Sub or the Company, as
the case may be, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it under this
Agreement; provided, however, that the delivery of any notice
pursuant to this paragraph (b) shall not limit or otherwise affect
the remedies available hereunder to the party receiving such notice.
6.09 NO INCONSISTENT ACTIONS. Prior to the Effective Time, except as
otherwise permitted by this Agreement, no party will enter into any transaction
or make any agreement or commitment and will use reasonable efforts not to
permit any event to occur, which could reasonably be anticipated to result in
(x) a denial of the regulatory approvals referred to in Section 7.01(b) or (y)
the imposition of any condition or requirement that would materially adversely
affect the economic or business benefits to the Surviving Corporation of the
transactions contemplated by this Agreement.
6.10 INDEMNIFICATION OF DIRECTORS.
(a) From and after the Effective Time, Parent and Surviving
Corporation shall each defend, indemnify and advance costs and
expenses (including reasonable attorneys' fees, disbursements and
expenses) and hold harmless each present and former director and
officer of the Company or its Subsidiaries determined as of the
Effective Time (the "Indemnified Parties"), against any costs or
expenses (including reasonable attorneys' fees), judgments, fines,
losses, claims, damages, settlements or liabilities (collectively,
"Costs") incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative
or investigative, arising after the Effective Time and out of or
pertaining to matters existing or occurring at or prior to the
Effective Time, including without limitation, the authorization of
this Agreement and the transactions contemplated hereby, whether
asserted or claimed prior to, at or after the Effective Time, to the
fullest extent that the Company would have been permitted under
Delaware law and its certificate of incorporation or by-laws in
effect on the date hereof to indemnify such person (and also advance
expenses as incurred to the fullest extent permitted under applicable
law provided the person to whom expenses are advanced provides an
undertaking to repay such advances if it is ultimately determined
that such person is not entitled to indemnification); provided that
any determination required by law to be made with respect to whether
an officer's or director's conduct complies with the standards set
forth under Delaware law and the Company's
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certificate of incorporation and by-laws as of the date hereof shall
be made by independent counsel selected jointly by Parent and the
Indemnified Party.
(b) In the event of any claim, action, suit, proceeding or
investigation in which indemnification pursuant to Section 6.10(a) is
sought (whether arising before or after the Effective Time), (i)
Parent shall have the right to assume the defense thereof and Parent
shall not be liable to any Indemnified Parties for any legal expenses
of other counsel or any other expenses subsequently incurred by such
Indemnified Parties in connection with the defense thereof, except
that if Parent elects not to assume such defense or counsel for the
Indemnified Parties advises that there are issues which raise
conflicts of interest between Parent and the Indemnified Parties, the
Indemnified Parties may retain counsel satisfactory to them and
reasonably satisfactory to Parent, and Parent shall pay the
reasonable fees and expenses of such counsel for the Indemnified
Parties promptly as statements therefor are received; provided,
however, that Parent shall be obligated pursuant to this paragraph
(b) to pay for only one firm of counsel for all Indemnified Parties
in any jurisdiction unless the use of one counsel for such
Indemnified Parties would present such counsel with a conflict of
interest, (ii) the Indemnified Parties will cooperate in the defense
of any such matter unless counsel for the Indemnified Parties advises
that there are issues which raise conflicts of interest making such
cooperation inadvisable and (iii) Parent shall not be liable for any
settlement effected without its prior written consent (which shall
not be unreasonably withheld); and provided further that Parent shall
not have any obligation hereunder to any Indemnified Party when and
if a court of competent jurisdiction shall ultimately determine, and
such determination shall have become final and nonappealable, that
the indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable law. If a court of
competent jurisdiction determines that the indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by
applicable law, then Parent shall provide indemnification to the
maximum extent and in such manner as is permissible under applicable
law. If such indemnity is completely unavailable with respect to any
Indemnified Party, Parent and the Indemnified Party shall contribute
to the amount payable in such proportion as is appropriate to reflect
relative faults and benefits.
(c) For a period of six (6) years following the Effective
Time, Parent will provide to the persons who served as directors or
officers of Company or any of the Company's Subsidiaries on or before
the Effective Time, insurance against liabilities and claims (and
related expenses) made against them resulting from their service as
such prior to the Effective Time. Such coverage may be provided by
means of an extended reporting period endorsement to the policy
presently issued to the Company by the present carrier for the
Company, or by such other means which shall provide substantially
equivalent coverage to the persons.
6.11 FIDUCIARY OBLIGATIONS. Notwithstanding anything in this
Agreement to the contrary, the Company shall not be required to take, or cause
to be taken, or fail to take any actions or to do, or cause to be done or fail
to do any things which may be contrary to the fiduciary obligations of
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persons who are directors of the Company, or are acting pursuant to the exercise
of the directors' fiduciary obligations, as determined in good faith by a
majority of the directors of the Company, based as to legal matters on the
advice of its legal counsel.
6.12 FINANCING.
(a) Parent shall use all reasonable good faith efforts to
consummate the Financing and Parent will keep the Purchaser apprised
of the status of matters relating to completion of the Financing.
Parent shall raise the amount in cash equity required by the terms of
the Commitment Letter(s).
(b) In the event that the Financing is not consummated and
a claim, action, suit or proceeding is sought by Parent against the
financing source or sources for failure to consummate the Financing
(i) Parent shall offer the Company the right to join in such claim,
action, suit or proceeding, (ii) Parent and the Company shall
cooperate in any such claim, action, suit or proceeding, and (iii)
Parent and the Company shall share equally in all costs and in all
recoveries in any such claim, action, suit or proceeding. Nothing
contained herein shall obligate (A) Parent to pursue any such claim,
action, suit or proceeding or (B) the Company to participate in any
such claim, action, suit or proceeding.
ARTICLE VII
CONDITIONS PRECEDENT
7.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction at or prior to the Closing of the following conditions:
(a) STOCKHOLDER APPROVAL. This Agreement and the
transactions contemplated hereby shall have been approved and adopted
by the affirmative vote of the stockholders of the Company, to the
extent required by Delaware law and the Company's Certificate of
Incorporation. The issuance of the shares of Parent Common Stock in
the Merger shall have been approved and adopted by the affirmative
vote of the stockholders of Parent, to the extent required by
Delaware law and Parent's Certificate of Incorporation.
(b) REGULATORY APPROVALS. All necessary approvals,
authorizations and consents of all Governmental Entities required to
consummate the transactions contemplated hereby shall have been
obtained and shall remain in full force and effect and all statutory
waiting periods in respect thereof shall have expired or been
terminated (all such approvals and the expiration of all such waiting
periods being referred to herein as the "Requisite Regulatory
Approvals").
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(c) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No order,
injunction or decree issued by any court or agency of competent
jurisdiction or other legal restraint or prohibition (an
"Injunction") preventing the consummation of the Merger or any of the
other transactions contemplated by this Agreement shall be in effect
and no proceeding initiated by any Governmental Entity seeking an
injunction shall be pending. No statute, rule, regulation, order,
injunction or decree shall have been enacted, entered, promulgated or
enforced by any Governmental Entity which prohibits, restricts or
makes illegal consummation of the Merger, or any of the other
transactions contemplated by this Agreement.
(d) FINANCING. The Financing shall have been consummated in
accordance with the proposal set forth in the Commitment Letter(s).
7.02 CONDITIONS TO OBLIGATIONS OF PARENT AND SUB. The obligation of
Parent and Sub to effect the Merger is also subject to the satisfaction or
waiver by Parent and Sub, at or prior to the Effective Time, of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company set forth in this Agreement shall be true
and correct as of the date of this Agreement and (except to the
extent such representations and warranties speak as of an earlier
date) as of the Closing Date as though made on and as of the Closing
Date. Parent shall have received a certificate signed on behalf of
the Company by its Chief Executive Officer and Chief Financial
Officer to the foregoing effect.
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company
shall have performed in all material respects all obligations
required to be performed by it under this Agreement at or prior to
the Closing Date, and Parent shall have received a certificate signed
on behalf of the Company by its Chief Executive Officer and Chief
Financial Officer to such effect.
(c) CONSENTS UNDER AGREEMENTS. The consent, approval,
waiver or amendment (with financial covenants) of each person (other
than the Governmental Entities referred to in Section 7.01(b)) whose
consent or approval shall be required in order to permit the
succession by the Surviving Corporation pursuant to the Merger to any
obligation, right or interest of the Company under any material loan
or credit agreement, note, mortgage, indenture, lease, license or
other agreement or instrument shall have been obtained and shall be
reasonably satisfactory to Parent.
(d) LEGAL OPINION. Parent shall have received the legal
opinion of Bourne, ▇▇▇▇ & ▇▇▇▇▇▇, counsel to the Company, dated the
Closing Date, covering such matters as Parent and Sub shall
reasonably request.
(e) FIRPTA. The Company shall have delivered to the Parent
and Sub an affidavit, dated as of the Effective Date, pursuant to
Sections 897 and 1445 of the Code in
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substantially the form set forth in Exhibit E hereto, and shall have
complied with the notice requirements set forth in Treasury
Regulation Section 1.897-2(h)(2).
(f) BOGEN AGREEMENT AND ▇▇▇▇▇ AGREEMENT. The Bogen
Agreement and the ▇▇▇▇▇ Agreement shall be in full force and effect
as of the Effective Time, and the employment agreements of ▇▇▇▇▇▇
▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇ with the Company shall have been terminated in
all respects, except as expressly contemplated by the Bogen Agreement
and the ▇▇▇▇▇ Agreement, respectively.
(g) DISSENTING SHARES. Dissenting Shares shall constitute
not more than five percent (5%) of the issued and outstanding shares
of Company Common Stock as of the record date for the Company
Stockholder Meeting.
(h) FIVE LOG REDUCTION. The Company shall be in compliance
with the requirements of the Food Labeling: Warning and Notice
Statement; Labeling of Juice Products; Final Rule promulgated by the
United States Food and Drug Administration through in-plant
validation of five (5) log reduction without use of pasteurization,
which compliance will eliminate any requirement for a warning label.
7.03 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligations of the
Company to effect the Merger is also subject to the satisfaction, or waiver by
the Company, at or prior to the Closing of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Parent and Sub set forth in this Agreement shall be
true and correct of the date of this Agreement and (except to the
extent such representations and warranties speak as of an earlier
date) as of the Closing Date as though made on and as of the Closing
Date. The Company shall have received a certificate signed on behalf
of Parent and Sub by their respective Chief Executive Officers and
Chief Financial Officers to the foregoing effect.
(b) PERFORMANCE OF OBLIGATIONS OF PARENT AND SUB. Parent
and Sub shall have each performed in all material respects all
obligations required to be performed by them; under this Agreement at
or prior to the Closing Date, and the Company shall have received a
certificate signed on behalf of Parent and Sub by their respective
Chief Executive Officers and Chief Financial Officers to such effect.
(c) CONSENTS UNDER AGREEMENTS. The consent, approval,
waiver or amendment (with financial covenants) of each person (other
than the Governmental Entities referred to in Section 7.01(b)) whose
consent or approval shall be required in order to permit the
succession by the Surviving Corporation pursuant to the Merger to any
obligation, right or interest of Parent or Sub under any material
loan or credit agreement, note, mortgage, indenture, lease, license
or other agreement or instrument, shall have been obtained and shall
be reasonably satisfactory to the Company.
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(d) SEC REGISTRATION; LISTING OF SHARES. The Registration
Statement shall have been declared effective by the SEC and shall not
be subject to a stop order or any threatened stop order, and the
issuance of the Parent Common Stock shall have been qualified in
every state where such qualification is required under the applicable
state securities laws. The Parent Common Stock to be issued in
connection with the Merger shall have been included for quotation on
the Nasdaq SmallCap Market or any other national securities exchange,
or quotation system, if any, upon which the Parent Common Stock is
trading or being quoted at the Effective Time.
(e) FAIRNESS OPINION. The Company shall have received the
written opinion of Ladenburg ▇▇▇▇▇▇▇▇ & Company to the effect that,
as of the date of such opinion, the Per Share Price is fair to the
Company's stockholders from a financial point of view, and such
opinion shall not have been amended or rescinded as of the Effective
Time.
(f) LEGAL OPINION. The Company shall have received the
legal opinion of ▇▇▇▇▇▇▇ Berlin Shereff ▇▇▇▇▇▇▇▇, LLP, counsel to
Parent and Sub, dated the Closing Date, covering such matters as the
Company shall reasonably request.
(g) INSURANCE. The Company shall have received evidence,
reasonably satisfactory to it, that Parent shall have obtained the
insurance referred to in Section 6.10(c) hereof or, after giving ten
(10) days' prior written notice to Parent, shall have obtained the
insurance referred to in Section 6.10(c) hereof.
(h) PROVISION OF THE EXCHANGE FUND. Parent shall have made
available to the Exchange Agent the Exchange Fund described in
Section 2.01 hereof.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.01 TERMINATION. This Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time, whether before or after
approval of the matters presented in connection with the Merger by the
stockholders of the Company and Parent:
(a) by mutual consent of Parent and the Company in a
written instrument, if the Board of Directors of each so determines
by a vote of a majority of the members of its entire Board;
(b) by either Parent or the Company upon written notice to
the other party (i) at least thirty (30) days after the date on which
any request or application for a regulatory approval required to
consummate the Merger shall have been denied or withdrawn at the
request or recommendation of the Governmental Entity which must grant
such requisite
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regulatory approval, unless within the thirty (30) day period
following such denial or withdrawal a petition for rehearing or an
amended application has been filed with the applicable Governmental
Entity; provided, however, that no party shall have the right to
terminate this Agreement pursuant to this Section 8.01(b)(i) if such
denial or request or recommendation for withdrawal shall be due to
the failure of the party seeking to terminate this Agreement to
perform or observe the covenants and agreements of such party set
forth herein, or (ii) if any Governmental Entity of competent
jurisdiction shall have issued a final nonappealable order enjoining
or otherwise prohibiting the consummation of any of the transactions
contemplated by this Agreement;
(c) by either Parent or the Company if the Merger shall not
have been consummated on or before the later of (i) if the Company
has mailed the proxy statement contained in the Registration
Statement to its stockholders on or prior to December 31, 1998, the
thirtieth (30th) day after the Company has mailed the proxy statement
or, if later, five (5) days after the Company Stockholder Meeting and
(ii) December 31, 1998, unless the failure of the Closing to occur by
such date shall be due to the failure of the party seeking to
terminate this Agreement to perform or observe in any material
respect the covenants and agreements of such party set forth herein;
(d) by the Company (provided that the Company shall not be
in material breach of any of its obligations under Section 6.03) if
any approval of the stockholders of the Company required for the
consummation of and Merger shall not have been obtained by reason of
the failure to obtain the required vote at a duly held meeting of
stockholders or at any adjournment or postponement thereof;
(e) by either Parent or the Company (provided that the
terminating party is not then in material breach of any
representation, warranty, covenant or other agreement contained
herein) if there shall have been a material breach of any of the
representations or warranties set forth in this Agreement on the part
of the other party, (i) which breach (if susceptible to cure) is not
cured within twenty (20) business days following written notice to
the party committing such breach, or (ii) which breach, by its
nature, cannot be cured;
(f) by either Parent or the Company (provided that the
terminating party is not then in material breach of any
representation, warranty, covenant or other agreement contained
herein) if there shall have been a material breach of any of the
covenants or agreements set forth in this Agreement on the part of
the other party, (i) which breach (if susceptible to cure) shall not
have been cured within twenty (20) business days following receipt by
the breaching party of written notice of such breach from the other
party hereto, or (ii) which breach, by its nature, cannot be cured;
(g) by Parent, if the Board of Directors of the Company
does not publicly recommend, as required by Section 6.03 hereof, in
the Registration Statement that the Company's stockholders approve
and adopt this Agreement or, if after recommending in the
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Registration Statement that stockholders approve and adopt this
Agreement, the Board of Directors of the Company shall have
withdrawn, modified or amended such recommendation in any respect
materially adverse to Parent;
(h) by the Company, if the Board of Directors of the
Company votes to recommend a Superior Offer rather than pursuing the
consummation of the transactions contemplated hereunder or, if after
recommending in the Registration Statement that stockholders approve
and adopt this Agreement and the Merger, the Board of Directors of
the Company shall have withdrawn, modified or amended such
recommendation in order to recommend a Superior Offer; provided,
however, that the Company shall notify Parent at least two (2) full
business days prior to the exercise of its termination rights under
this Section 8.01(h); or
(i) by either Parent or the Company (provided that the
terminating party is not then in material breach of any
representation, warranty, covenant or other agreement contained
herein) after a reasonable and objective determination that any of
the conditions in Section 7.01 or 7.02, in the case of a termination
by Parent, or that any of the conditions in Section 7.01 or 7.03, in
the case of a termination by the Company, have not been satisfied or
cured within the time frames required by such sections or are
incapable of being satisfied or cured, as the case may be, by the
later of (i) if the Company has mailed the proxy statement contained
in the Registration Statement to its stockholders on or prior to
December 31, 1998, the thirtieth (30th) day after the Company has
mailed the proxy statement or, if later, five (5) days after the
Company Stockholder Meeting and (ii) December 31, 1998.
8.02 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either Parent or the Company as provided in Section 8.01, this
Agreement shall forthwith become void and have no effect except Sections
6.04(b), 6.12(b) and 8.03 shall survive any termination of this Agreement, and
there shall be no further obligation on the part of Parent, Sub, the Company, or
their respective officers or directors except for the obligations under such
provisions. Notwithstanding anything to the contrary contained in this
Agreement, no party shall be relieved or released from any liabilities or
damages arising out of its intentional breach of any provision of this
Agreement; provided, however, that no claim for intentional breach shall survive
the Closing.
8.03 EXPENSES; TERMINATION FEE.
(a) If the Merger is not consummated, all costs and
expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring
such expense, provided that nothing contained herein shall limit
Parent's rights under Section 8.03(b) hereof. If the Merger is
consummated, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be borne by
Parent; provided, however, that Parent shall not be required to pay
more than an aggregate of $495,000 for the out-of-pocket expenses of
the Company and its advisors, including without limitation legal
counsel, investment advisors and accountants (but excluding the out-
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of pocket expenses of the financial printer with respect to the
Registration Statement and the proposed proxy filing already incurred
by the Company).
(b) In order to induce Parent to enter into this Agreement
and to reimburse Parent for incurring the costs and expenses related
to entering into this Agreement and consummating the transactions
contemplated by this Agreement, in the event that (i) the
transactions contemplated by this Agreement are not consummated as a
result of any failure to satisfy the conditions set forth in Sections
7.01(a) (as to the Company's stockholders), 7.02(b) or 7.02(f) of
this Agreement or (ii) the Company terminates this Agreement and, at
the time of termination, the Board of Directors of the Company has
received a Superior Offer and such Superior Offer is accepted by the
Company within twelve (12) months after the termination of this
Agreement), the Company shall pay Parent an amount equal to
$1,500,000 (inclusive of out-of-pocket expenses) in connection with
the transactions contemplated by this Agreement.
(c) In order to induce the Company to enter into this
Agreement and to reimburse the Company for incurring the costs and
expenses related to entering into this Agreement and consummating the
transactions contemplated by this Agreement, in the event that (i)
the transactions contemplated by this Agreement are not consummated
as a result of any failure to satisfy the conditions set forth in
Sections 7.01(a) (as to the Parent's stockholders) or 7.03(b) of this
Agreement or (ii) Parent terminates this Agreement and, at the time
of termination, the Board of Directors of Parent has received an
offer to be acquired by a third party and Parent accepts such offer
within twelve (12) months after the termination of this Agreement),
Parent shall pay the Company an amount equal to $750,000 (inclusive
of out-of-pocket expenses) in connection with the transactions
contemplated by this Agreement.
(d) In order to induce the Company to enter into this
Agreement, in the event that the transactions contemplated by this
Agreement are not consummated for reasons other than as a result of
any failure to satisfy the conditions set forth in Sections 7.01(a)
(as to the Company's stockholders), 7.02(a), 7.02(b), 7.02(c),
7.02(e), 7.02(f), 7.02(g) or 7.02(h) of this Agreement, Parent hereby
covenants and agrees that it will not directly or indirectly acquire
an entity which manufactures fresh juices within twelve (12) months
after the termination or failure to consummate of this Agreement.
8.04 AMENDMENT. Subject to compliance with applicable law, this
Agreement may be amended by the parties hereto, by action taken or authorized by
their respective Boards of Directors, at any time before or after approval of
the matters presented in connection with the Merger by the stockholders of the
Company; provided, however, that, after approval by the stockholders of the
Company, no amendment shall be made which reduces or changes the amount or form
of the consideration to be delivered to the stockholders of the Company without
the approval of a majority of the stockholders of the Company. This Agreement
may not be amended except by an instrument in writing signed on behalf of each
of the parties hereto.
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8.05 EXTENSION; WAIVER. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Board of
Directors, may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party, but such
extension or waiver shall nor operate as a waiver of, or estoppel with respect
to, any subsequent or other failure.
ARTICLE IX
GENERAL PROVISIONS
9.01 CLOSING. Subject to the terms and conditions of this Agreement,
the closing of the Merger (the "Closing") will take place at such date, time and
place as is mutually agreed upon by the Company and Parent, which shall be not
more than three (3) business days after the satisfaction of the conditions set
forth in Article VII hereof. The date on which such Closing takes place is
referred to herein as the "Closing Date."
9.02 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Notwithstanding any term or provision of this Agreement to the contrary and
regardless of any investigation made by any party, none of the representations,
warranties, covenants and agreements in this Agreement or otherwise made or
delivered pursuant to, or in connection with, this Agreement, the Merger or any
related transactions shall survive the Closing Date, except for those covenants
and agreements contained or referenced in the Bogen Agreement or the ▇▇▇▇▇
Agreement and in the Confidentiality Agreement.
9.03 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed given when delivered personally or telecopied
(with confirmation from recipient), three (3) days after mailed by registered or
certified mail (return receipt requested) or on the day delivered by an express
courier (with confirmation from recipient) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to Parent or Sub, to:
Saratoga Beverage Group, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
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▇▇▇▇▇▇▇ Berlin Shereff ▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Company, to:
The Fresh Juice Company, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Bourne, ▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
P.O. Box 690
Summit, New Jersey 07902-0690
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
9.04 INTERPRETATION. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." The phrases "the date of this Agreement," "the date hereof" and
terms of similar import, unless the context otherwise requires, shall be deemed
to be October 13, 1998.
9.05 COUNTERPARTS. This Agreement may be executed in counterparts,
all of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each of the parties and
delivered to the other parties, it being understood that all parties need not
sign the same counterpart.
9.06 ENTIRE AGREEMENT. This Agreement (including the documents and
the instruments referred to herein), the Voting Agreement, the Bogen Agreement,
the ▇▇▇▇▇ Agreement, the Confidentiality Agreement and the Option Agreement by
and between Parent and ▇▇▇▇▇▇ ▇▇▇▇▇ constitute the entire agreement and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof.
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9.07 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without regard to any
applicable to conflicts of law.
9.08 ENFORCEMENT OF AGREEMENT. The parties hereto agree that
irreparable damage would occur in the event that the provisions contained in
Sections 5.03, 6.04(b), or 8.03 of this Agreement were not performed in
accordance with its specific terms or were otherwise breached. It is accordingly
agreed that the parties shall be entitled to an injunction or injunctions to
prevent breaches of Sections 5.03, 6.04(b) or 8.03 of this Agreement and to
enforce specifically the terms and provisions thereof in any court of the United
States or any court located in the State of New York (if such injunction or
enforcement action is instituted by the Company) or the State of New Jersey (if
such injunction or enforcement action is instituted by Parent), this being in
addition to any other remedy to which they are entitled at law or in equity. In
the event Parent institutes an action to enforce the provisions of 8.03(b) of
this Agreement, the prevailing party in such action shall be entitled to all
documented, out of pocket costs and expenses, without limitation.
9.09 SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is deemed to be so broad as to be unenforceable, the provision shall
be interpreted to be only so broad as is enforceable.
9.10 PUBLICITY. Except as otherwise required by law or the rules of
the National Association of Securities Dealers, so long as this Agreement is in
effect, none of Parent, Sub or the Company shall, or shall permit any of their
Subsidiaries to, issue or cause the publication of any press release or other
public announcement with respect to, or otherwise make any public statement
concerning, the transactions contemplated by this Agreement without the consent
of the other party, which consent shall nor be unreasonably withheld.
9.11 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise)
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without the prior written consent of the other parties. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns. Except
as otherwise expressly provided herein, this Agreement (including the documents
and instruments referred to herein) is not intended to confer upon any person
other than the parties hereto any rights or remedies hereunder.
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the date first above written.
SARATOGA BEVERAGE GROUP, INC.
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
Title: President and
Chief Executive Officer
ROWALE CORP.
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
THE FRESH JUICE COMPANY, INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Executive Officer
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EXHIBIT A-1
COMPANY STOCKHOLDERS
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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EXHIBIT A-2
PARENT STOCKHOLDERS
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
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EXHIBIT B
RESTATED VOTING, STANDSTILL AND PROXY AGREEMENT
This Restated Voting, Standstill and Proxy Agreement (the
"Agreement") is made and entered into as of October 13, 1998 by and among THE
FRESH JUICE COMPANY, INC., a Delaware corporation (the "Company"), the
stockholders of the Company whose names and addresses are set forth on the
signature pages hereto (the "Company Stockholders"), SARATOGA BEVERAGE GROUP,
INC., a Delaware corporation ("Saratoga"), and the stockholders of Saratoga
whose names and addresses are set forth on the signature pages hereto (the
"Saratoga Stockholders").
WHEREAS, the Company, the Company Stockholders and Saratoga
previously entered into a voting, standstill and proxy agreement, dated as of
August 14, 1998 (the "First Agreement"); and
WHEREAS, the parties hereto have determined to amend the
terms of the First Agreement; and
WHEREAS, the Company, Saratoga and Rowale Corp., a
wholly-owned subsidiary of Saratoga ("Sub"), entered into, as of the date
hereof, a Restated Agreement and Plan of Merger (the "Merger Agreement"; terms
used herein and not otherwise defined are used herein as defined in the Merger
Agreement), pursuant to which Sub will merge with and into the Company (the
"Merger") and each share of common stock, $.01 par value per share, of the
Company ("Company Common Stock") would be converted into the right to receive
cash and shares of Class A common stock, $.01 par value per share, of Saratoga
("Class A Common Stock"); and
WHEREAS, each of the Company Stockholders owns the number
of shares of Company Common Stock set forth opposite his name on Schedule A
annexed hereto (collectively, the "Company Securities" and, with respect to the
Company Securities owned by a specific Company Stockholder, the "Company
Stockholder's Securities"); and
WHEREAS, each of the Saratoga Stockholders owns the number
of shares of Class A Common Stock and shares of Class B common stock, $.01 par
value per share, of Saratoga ("Class B Common Stock") set forth opposite his or
her name on Schedule B annexed hereto (collectively, the "Saratoga Securities"
and, with respect to the Saratoga Securities owned by a specific Saratoga
Stockholder, the "Saratoga Stockholder's Securities"); and
WHEREAS, execution and delivery of this Agreement by the
Company Stockholders and by the Saratoga Stockholders is a condition to the
execution and delivery of the Merger Agreement by Saratoga and Sub, and by the
Company, respectively.
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NOW, THEREFORE, in order to induce Saratoga, Sub and the
Company to enter into the Merger Agreement and in consideration of the mutual
covenants and agreements set forth herein, the parties hereto agree as follows:
1. Term. This Agreement (except for Section 3(e) hereof)
shall expire on the earlier of (i) the Effective Date (as defined in the Merger
Agreement) or (ii) the termination of the Merger Agreement by any party thereto
pursuant to the terms thereof.
2. Covenants of the Saratoga Stockholders.
(a) Each Saratoga Stockholder agrees to vote all
of his or her Saratoga Securities for the approval of the issuance of
shares of Class A Common Stock in the Merger.
(b) Except in accordance with the provisions of
this Agreement or as expressly set forth in the Merger Agreement,
each Saratoga Stockholder agrees, until the termination of this
Agreement, not to:
(i) sell, transfer, pledge, assign or
otherwise dispose of, or enter into any contract, option or
other arrangement or understanding with respect to the
sale, transfer, pledge, assignment or other disposition of,
any Saratoga Securities; or
(ii) deposit any Saratoga Securities
into a voting trust, enter into a voting agreement or
otherwise grant any voting rights to any other person or
entity with respect to any such securities.
(c) Until such time as this Agreement is
terminated, each Saratoga Stockholder agrees to take any actions as
reasonably requested by the Company or Saratoga, within his or her
power, as are necessary or appropriate to enable Saratoga and Sub to
satisfy the conditions precedent set forth in the Merger Agreement to
the Company's obligations to consummate the Merger, and to use her
reasonable efforts to cause Saratoga and Sub to satisfy such
conditions precedent; provided, however, that such Saratoga
Stockholder shall not be required to pay any moneys or incur any
liability in connection with the foregoing.
3. Covenants of the Company Stockholders.
(a) Each Company Stockholder agrees to vote all
of his currently owned shares of Company Common Stock for the
approval of the Merger, the Merger Agreement (in the form executed as
of the date hereof, with such changes thereto as the parties to the
Merger Agreement may agree prior to such changes), and the
transactions contemplated therein.
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(b) Each Company Stockholder, in his capacity as
such, further agrees to convert, at the Closing, all in-the-money
options and warrants to purchase shares of Company Common Stock into
the cash and shares of Class A Common Stock in accordance with
Section 1.05(d) of the Merger Agreement.
(c) Except in accordance with the provisions of
this Agreement or as expressly set forth in the Merger Agreement,
each Company Stockholder agrees, until the termination of this
Agreement, not to:
(i) sell, transfer, pledge, assign or
otherwise dispose of, or enter into any contract, option or
other arrangement or understanding with respect to the
sale, transfer, pledge, assignment or other disposition of,
any Company Securities; or
(ii) deposit any Company Securities into a
voting trust, enter into a voting agreement or otherwise
grant any voting rights to any other person or entity with
respect to any Company Securities.
(d) Until such time as this Agreement is
terminated, each Company Stockholder agrees to take any actions as
reasonably requested by the Company or Saratoga, within his power as
are necessary or appropriate to enable the Company to satisfy the
conditions precedent set forth in the Merger Agreement to Saratoga's
obligations to consummate the Merger, and to use his best efforts to
cause the Company to satisfy such conditions precedent; provided,
however, that such Company Stockholder shall not be required to pay
any moneys or incur any liability in connection with the foregoing.
(e) In addition, for a period commencing on the
date of this Agreement and ending on the earlier to occur of (i) the
third anniversary of the Effective Date or (ii) the termination of
the Merger Agreement by any party thereto pursuant to the terms
thereof, each Company Stockholder hereby agrees that, without the
prior written consent of Saratoga, he will not, directly or
indirectly, through one or more intermediaries or otherwise,
participate in any transaction in which one or more parties have done
or seek to do any of the following: (i) purchase or acquire, or agree
to purchase or acquire, any shares of capital stock or other
securities of Saratoga; (ii) solicit, or encourage any other person
to solicit, proxies or consents of stockholders of Saratoga, or
become a "participant" or otherwise engage in any "solicitation" (as
such terms are defined under Regulation 14A of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), with respect
to any matter in opposition to the recommendation of a majority of
the members of the Board of Directors of Saratoga then in office;
(iii) acquire or affect, or seek to acquire or affect, control of
Saratoga, or influence or seek to influence the management of
Saratoga, or directly or indirectly participate in or encourage the
formation of any group seeking to influence management or to displace
or modify the
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composition of the Board of Directors of Saratoga; (iv) join a
partnership, limited partnership, syndicate or other group within the
meaning of Section 13(d) of the Exchange Act for the purpose of
acquiring, holding or disposing of any shares of capital stock or
other securities of Saratoga; (v) initiate, propose or otherwise
solicit stockholders for the approval of one or more stockholder
proposals with respect to Saratoga, as described in Rule 14a-8 under
the Exchange Act, irrespective of whether Rule 14a-8 under the
Exchange Act is applicable; or (vi) seek to modify the terms of this
paragraph.
4. Representations and Warranties of the Saratoga
Stockholders. Each Saratoga Stockholder represents and warrants to the Company
as follows:
(a) the Saratoga Stockholder owns such Saratoga
Securities of record or beneficially free and clear of any lien,
security interest, encumbrance or other adverse claim;
(b) such Saratoga Stockholder's Securities set
forth on Schedule B hereto are the only securities of Saratoga owned
of record or beneficially by such Saratoga Stockholder or in which
such Saratoga Stockholder has any interest; and
(c) such Saratoga Stockholder has the right,
power and authority to execute and deliver this Agreement and to
perform his or her obligations hereunder; such execution, delivery
and performance will not violate any applicable law, rule or
regulation or any outstanding agreement or instrument to which such
Saratoga Stockholder is a party; and this Agreement constitutes a
legal, valid and binding agreement on the part of such Saratoga
Stockholder enforceable against such Saratoga Stockholder in
accordance with its terms.
5. Representations and Warranties of Saratoga. Saratoga
represents and warrants to the Company that the execution and delivery of this
Agreement by Saratoga and the performance by it of its obligations hereunder
have been duly authorized by all necessary corporate action, do not violate the
terms of its Certificate of Incorporation, its By-Laws, any law, rule or
regulation or any outstanding agreement or instrument to which it is a party or
is bound or subject to, and this Agreement constitutes a legal, valid and
binding agreement on its part.
6. Representations and Warranties of the Company
Stockholders. Each Company Stockholder represents and warrants to Saratoga as
follows:
(a) such Company Stockholder owns such Company
Stockholder's Securities of record or beneficially free and clear of
any lien, security interest, encumbrance or other adverse claim;
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(b) such Company Stockholder's Securities set
forth on Schedule A hereto are the only securities of the Company
owned of record or beneficially by such Company Stockholder or in
which such Company Stockholder has any interest, and, except as set
forth on Schedule A, such Company Stockholder has no right to acquire
any other securities of the Company; and
(c) such Company Stockholder has the right, power
and authority to execute and deliver this Agreement and to perform
his obligations hereunder; such execution, delivery and performance
will not violate any applicable law, rule or regulation or any
outstanding agreement or instrument to which such Company Stockholder
is a party; and this Agreement constitutes a legal, valid and binding
agreement on the part of such Company Stockholder enforceable against
such Company Stockholder in accordance with its terms.
7. Representations and Warranties of the Company. The
Company represents and warrants to Saratoga that the execution and delivery of
this Agreement by the Company and the performance by it of its obligations
hereunder have been duly authorized by all necessary corporate action, do not
violate the terms of its Articles of Incorporation, its By-Laws, any law, rule
or regulation or any outstanding agreement or instrument to which it is a party
or is bound or subject to, and this Agreement constitutes a legal, valid and
binding agreement on its part.
8. Saratoga Proxy.
(a) Each Saratoga Stockholder hereby irrevocably
makes, constitutes and appoints the Company to act as such Saratoga
Stockholder's true and lawful proxy and attorney-in-fact in the name
and on behalf of such Saratoga Stockholder, with full power to
appoint a substitute or substitutes to vote all of his or her
Saratoga Securities for the approval of the issuance of the shares of
Class A Common Stock as set forth in Section 2(a) hereof (subject to
Section 18 hereof). By giving this proxy, each such Saratoga
Stockholder hereby revokes any other proxy granted by such Saratoga
Stockholder to vote any of such Saratoga Stockholder's Securities
with respect to such matters. This proxy, and the power of attorney
and all authority contained herein, shall become effective as to any
Saratoga Stockholder only upon the failure of such Saratoga
Stockholder to vote or consent with respect to his or her shares in
accordance with Section 2(a) hereof, following notice to such
Saratoga Stockholder to that effect.
(b) All power and authority hereby conferred is
coupled with an interest and is irrevocable, shall not be terminated
by any act of such Saratoga Stockholder or by operation of law, by
lack of appropriate power or authority, or by the occurrence of any
other event or events and shall be binding upon all beneficiaries,
heirs at law, legatees, distributees, successors, assigns and legal
representatives of such Saratoga Stockholder. If after the execution
of this Agreement any Saratoga Stockholder shall cease to have
appropriate power or authority, or if any other such event or events
shall occur, the
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Company is nevertheless authorized and directed to vote the Saratoga
Securities in accordance with the terms of this Agreement as if such
lack of appropriate power or authority or other event or events had
not occurred and regardless of notice thereof.
(c) Each Saratoga Stockholder agrees to use all
good faith efforts to cause any record owner of Saratoga Securities
of which such Saratoga Stockholder is the beneficial owner to grant
to the Company a proxy of the same effect as that contained herein.
Subject to the proviso set forth in Section 2(c) hereof, each
Saratoga Stockholder shall perform such further acts and execute such
further documents as may be required to vest in the Company the power
to vote the Saratoga Stockholder's Securities during the term of the
proxy granted herein.
9. Company Proxy.
(a) Each Company Stockholder hereby irrevocably
makes, constitutes and appoints Saratoga to act as such Company
Stockholder's true and lawful proxy and attorney-in-fact in the name
and on behalf of such Company Stockholder to vote all of his, her or
its shares of Company Common Stock for the approval of the Merger,
the Merger Agreement and the transactions contemplated therein as set
forth in Section 3(a) hereof (subject to Section 18 hereof). By
giving this proxy, each such holder of Company Common Stock hereby
revokes any other proxy granted by such Company Stockholder to vote
any of such Company Stockholder's Securities with respect to such
matters. This proxy, and the power of attorney and all authority
contained herein, shall become effective as to any Company
Stockholder only upon the failure of such Company Stockholder to vote
or consent with respect to his shares in accordance with Section 3(a)
hereof, following notice to such Company Stockholder to that effect.
(b) All power and authority hereby conferred is
coupled with an interest and is irrevocable, shall not be terminated
by any act of such Company Stockholder or by operation of law, by
lack of appropriate power or authority, or by the occurrence of any
other event or events and shall be binding upon all beneficiaries,
heirs at law, legatees, distributees, successors, assigns and legal
representatives of such Company Stockholder. If after the execution
of this Agreement any Company Stockholder shall cease to have
appropriate power or authority, or if any other such event or events
shall occur, Saratoga is nevertheless authorized and directed to vote
the Company Securities in accordance with the terms of this Agreement
as if such lack of appropriate power or authority or other event or
events had not occurred and regardless of notice thereof.
(c) Each Company Stockholder agrees to use all
good faith efforts to cause any record owner of Company Securities of
which such Company Stockholder is the beneficial owner to grant to
Saratoga a proxy of the same effect as that contained herein. Subject
to the proviso set forth in Section 3(d) hereof, each Company
Stockholder shall perform such further acts and execute such further
documents as may be required to vest
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in Saratoga the power to vote the Company Stockholder's Securities
during the term of the proxy granted herein.
10. Further Assurances. Subject to the provisos set forth
in Sections 2(d) and 3(d) hereof, each party hereto shall perform such further
acts and execute such further documents as may reasonably be required to carry
out the provisions of this Agreement.
11. Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any party hereto
(whether by operation of law or otherwise) without the prior written consent of
the other parties hereto.
12. Specific Performance. The parties agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof, this being in addition to
any other remedy to which they are entitled at law or in equity.
13. Notices. All notices or other communications required
or permitted hereunder shall be in writing and shall be deemed duly given when
delivered in person or by telecopier, cable, telex or telegram or three (3) days
after mailed by certified mail, postage prepaid, addressed as follows:
To the Company or to the Company Stockholders:
The Fresh Juice Company, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Bourne, ▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
P.O. Box 690
Summit, New Jersey 07902-0690
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
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To Saratoga or to the Saratoga Stockholders:
Saratoga Beverage Group, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ Berlin Shereff ▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
14. Effect of Invalidity. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be unenforceable, such
provision shall be interpreted to be only so broad as is enforceable.
15. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
16. Governing Law; Jurisdiction. This Agreement shall be
governed by and construed in accordance with the laws of the Delaware without
giving effect to the conflicts of laws principles thereof.
17. Binding Effect: Benefits. This Agreement shall inure to
the benefit of and shall be binding upon the parties hereto and their respective
heirs, legal representatives, successors and assigns. Nothing in this Agreement,
expressed or implied, is intended to or shall confer on any person other than
the parties hereto and their respective heirs, legal representatives and
successors and permitted assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
18. Merger Agreement Amendments. No amendment to the Merger
Agreement after the date hereof shall alter or affect the rights granted to the
Company and Saratoga hereunder.
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19. Supersession. This Agreement supersedes and replaces
the First Agreement with respect to the subject matter hereof.
IN WITNESS WHEREOF, the Company, the Company Stockholders, Saratoga
and the Saratoga Stockholders have executed this Agreement or caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as the case may be, as of the date first above written.
THE FRESH JUICE COMPANY, INC.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Executive Officer
SARATOGA BEVERAGE GROUP, INC.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: President and Chief Executive
Officer
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
Stockholders
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SCHEDULE A
NUMBER OF SHARES OF
NAME COMPANY CAPITAL STOCK
---- ---------------------
▇▇▇▇▇▇ ▇▇▇▇▇ 1,361,248
▇▇▇▇▇▇ ▇▇▇▇▇ 1,232,708
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 77,667*
▇▇▇▇▇▇▇ ▇▇▇▇▇ 17,266**
2,688,889 shares
6,467,731 total shares
41.6%
All above based on 10-KSB for 11-30-97 and review of subsequent Form 4s and 5s.
* 237,857 options and warrants backed out of 10-KSB 11-30-97 numbers
** 50,000 options out of 10-KSB 11/30/97 numbers
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SCHEDULE B
NAME NUMBER OF SARATOGA SECURITIES
---- -----------------------------
▇▇▇▇▇ ▇▇▇▇▇▇ 20,345 shares of Class A Common Stock
167,960 shares of Class B Common Stock
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 51,000 shares of Class A Common Stock
345,995 shares of Class B Common Stock
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ 300,000 shares of Class A Common Stock
EXHIBIT C
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October 13, 1998
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: Amendment of Employment Agreement
Dear ▇▇▇▇▇:
Pursuant to the proposed transaction (the "Transaction")
between The Fresh Juice Company, Inc. ("Fresh Juice") and Saratoga Beverage
Group, Inc. ("Saratoga"), wherein a newly formed, wholly owned subsidiary of
Saratoga will merge (the "Merger") with and into Fresh Juice, it will be a
condition to the consummation of the Transaction that you and Fresh Juice amend,
and you hereby to amend, the Employment Agreement between Fresh Juice and you,
dated as of March 31, 1996 (the "Employment Agreement"), as follows:
1. Effective as of and subject to the date of consummation
of the Merger (the "Closing Date") you hereby agree to resign from all positions
held by you as an officer, director and employee of Fresh Juice and each of its
subsidiaries.
2. Effective as of and subject to the Closing Date, you
hereby waive all amounts (including payments and benefits) due to you under
Sections 6, 14, 15 and 16 of the Employment Agreement, except for (i) the
payment of the sum of $500,000 in cash on the Closing Date, (ii) the issuance of
149,254 shares of Class A common stock, par value $.01 per share, of Saratoga on
the Closing Date, (iii) the provision at no cost to you of the automobile
currently utilized by you for a period of two years (with insurance and
maintenance) following the Closing Date, and (iv) the provision at no cost to
you of health or other group insurance pursuant to plans which are in effect or
which are instituted after the date hereof for executive officers or employees
generally of Fresh Juice for a period of two years following the Closing Date.
The shares of Class A common stock will be registered at closing.
3. Effective as of and subject to the Closing Date, you
hereby agree (i) to extend the term of Section 24.2 of the Employment Agreement
from one year to two years following the Closing Date and (ii) to delete the
word "citrus" before the phrase "juice beverage industry" from Section 24.2(i)
and Section 24.2(ii).
4. Upon your receipt of the cash and stock referenced in
clauses (i) and (ii) of paragraph 2 above, you hereby agree to terminate the
Employment Agreement in all respects other than Section 24 of the Employment
Agreement which section, as amended by this letter agreement, shall survive the
termination of the Employment Agreement.
5. Effective as of and subject to the Closing Date, you
hereby agree to become a full-time consultant to Saratoga and Fresh Juice during
the one year period following the Closing Date in exchange for the sum of
$300,000, payable monthly in arrears over said one year period. Full time is
defined for purposes of this letter as not more than 1,000 hours in total. You
shall perform such consulting services, if any, as shall be reasonably requested
by the President/Chief Executive Officer of Saratoga or the Board of Directors
of Saratoga. The above consulting fees shall be due and payable on an
unconditional basis, regardless whether
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Saratoga determines to make use of the full 1,000 hours of time available,
except that this consulting relationship may be terminated for cause (defined as
(i) conviction of a felony or crime involving moral turpitude, or (ii) wilful
malfeasance or willful refusal to perform consulting services reasonably
requested, or (iii) death or disability, which would prevent you from being a
full-time consultant). In the event of a termination of the consulting
relationship by Saratoga other than for cause, Saratoga shall remain obligated
to pay the full balance due and owing on the $300,000 consulting fee at the time
of termination. You shall not be required to perform consulting services outside
of the Newark facility or at your home on Staten Island, except that you agree
that reasonable out-of-state travel may be required (consistent with your past
two years' employment). Any business travel shall include reimbursement for
travel and lodging (consistent with your past two years' employment). This
consulting agreement and the mutual agreement of the parties with respect
thereto constitutes a distinct and separate agreement, separate and apart from
the other provisions of this letter or the agreements embodied herein. For
example, the payments due and owing under the separate provisions of paragraphs
2, 4 and 6 shall not be affected by any failure to perform under this consulting
agreement (as embodied in this paragraph 5).
6. Effective as of and subject to the Closing Date, Fresh
Juice hereby agrees to pay $15,000 toward your legal fees and expenses to
▇▇▇▇▇▇▇, Del Deo, Dolan, Griffinger & ▇▇▇▇▇▇▇▇▇, attention ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
7. Effective as of and subject to the Closing Date, you
will be appointed as a member of the Board of Directors of Saratoga (with all
associated compensation payable to non-employee directors) until the 1999 Annual
Meeting of Stockholders of Saratoga.
8. This letter agreement supersedes and replaces the letter
agreement dated August 12, 1998 among the parties hereto with respect to the
subject matter hereof.
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Kindly indicate your acceptance of the foregoing by signing
in the space provided below.
Very truly yours,
THE FRESH JUICE COMPANY, INC.
By:/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Vice President
Accepted and agreed to as of
October 13, 1998
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
SARATOGA BEVERAGE GROUP, INC.
By:/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
President and Chief Executive Officer
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EXHIBIT D
THE FRESH JUICE COMPANY, INC.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
October 13, 1998
▇▇▇▇▇▇ ▇▇▇▇▇
▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: Amendment of Employment Agreement
Dear ▇▇▇▇▇:
Pursuant to the proposed transaction (the "Transaction")
between The Fresh Juice Company, Inc. ("Fresh Juice") and Saratoga Beverage
Group, Inc. ("Saratoga"), wherein a newly formed, wholly owned subsidiary of
Saratoga will merge (the "Merger") with and into Fresh Juice, it will be a
condition to the consummation of the Transaction that you and Fresh Juice amend,
and you hereby agree to amend, the Employment Agreement between Fresh Juice and
you, dated as of March 31, 1996 (the "Employment Agreement"), as follows:
1. Effective as of and subject to the date of the
consummation of the Merger (the "Closing Date") you hereby agree to resign from
all positions held by you as an officer, director and employee of Fresh Juice
and each of its subsidiaries.
2. Effective as of and subject to the Closing Date, you
hereby waive all amounts (including payments and benefits) due to you under
Sections 6, 14, 15 and 16 of the Employment Agreement, except for (i) the
payment of the sum of $250,000 in cash referenced in paragraph 3 below on the
Closing Date, (ii) the provision at no cost to you of the Cadillac automobile
currently utilized by you for a period of one year (with insurance and
maintenance) following the Closing Date, and (iii) the provision at no cost to
you of health or other group insurance pursuant to plans which are in effect or
which are instituted after the date hereof for executive officers or employees
generally of Fresh Juice for a period of one year following the Closing Date.
3. Effective as of and subject to the Closing Date, in
consideration of the payment of the sum of $250,000 in cash, you hereby agree
(i) to extend the term of Section 24.2 (Agreement Not to Compete) from one year
to three years and (ii) to delete the word "citrus" before the phrase "juice
beverage industry" from Section 24.2(i) and Section 24.2(ii).
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4. Upon your receipt of the sum of $250,000 in cash
referenced in paragraph 3 above and payment of your compensation, expenses and
benefits on account of services provided through the Closing Date, you hereby
agree to terminate the Employment Agreement in all respects other than Section
24 of the Employment Agreement, which Section, as amended by this letter
agreement, shall survive the termination of the Employment Agreement.
5. You hereby agree to terminate the Option Agreement,
dated as of March 16, 1998, by and between you and Saratoga.
6. You hereby acknowledge and agree that those certain
options granted by Fresh Juice to you in the amount of (i) 100,000 shares on
October 27, 1988 under Fresh Juice's Incentive Stock Option Plan and (ii) 60,000
shares, are all ineffective, null and void.
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Kindly indicate your acceptance of the foregoing by signing
in the space provided below.
Very truly yours,
THE FRESH JUICE COMPANY, INC.
By:/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Vice President
Accepted and agreed to as of
October 13, 1998
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
SARATOGA BEVERAGE GROUP, INC.
By:/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
President and Chief Executive Officer
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EXHIBIT E
STATEMENT THAT STOCK OF THE FRESH JUICE COMPANY, INC. IS NOT A
U.S. REAL PROPERTY INTEREST
To: Saratoga Beverage Group, Inc.
Please be advised that pursuant to your request, we advise you that
as of [EFFECTIVE DATE], ownership interests in The Fresh Juice Company, Inc.
were not U.S. real property interests for purposes of Treasury Regulations
Section 1.897-2(g)(1)(ii) and (h)(1)(i).
The undersigned responsible officer of The Fresh Juice Company, Inc.,
hereby certifies under penalties of perjury that this Statement is correct to
his knowledge and belief, and that he has authority to sign this Statement on
behalf of the Corporation.
The Fresh Juice Company, Inc.
By: ______________________________
Name:
Title:
Date:_____________________________
Based on: Reg. Section 1.897-2(g)(1)(ii), (h)(1)(i).
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