Exhibit 2.1
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MERGER AGREEMENT AND PLAN OF REORGANIZATION
dated as of April 8, 1998
by and among
ICC TECHNOLOGIES, INC.
RARE MEDIUM ACQUISITION CORP.
(a subsidiary of ICC Technologies, Inc.)
RARE MEDIUM, INC.
and
the FOUNDING STOCKHOLDERS named herein
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TABLE OF CONTENTS
Page
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1. THE MERGER...............................................................................4
2. CONVERSION OF STOCK......................................................................5
3. DELIVERY OF MERGER CONSIDERATION AND OTHER DELIVERIES....................................6
4. CLOSING..................................................................................7
5. REPRESENTATIONS AND WARRANTIES OF COMPANY AND
FOUNDING STOCKHOLDERS....................................................................7
6. REPRESENTATIONS OF ICC AND NEWCO........................................................31
7. COVENANTS PRIOR TO CLOSING..............................................................35
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE FOUNDING
STOCKHOLDERS AND THE COMPANY............................................................40
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF ICC AND NEWCO....................................41
10. COVENANTS AFTER CLOSING.................................................................44
11. INDEMNIFICATION.........................................................................47
12. TERMINATION OF AGREEMENT................................................................50
13. NONDISCLOSURE OF CONFIDENTIAL INFORMATION...............................................51
14. [Intentionally Deleted].................................................................52
15. REGISTRATION RIGHTS.....................................................................52
16. GENERAL.................................................................................54
Exhibit A Form of Certificate of Merger
Exhibit B Merger Consideration to be Paid to Stockholders
Exhibit C Form of Promissory Note
Exhibit D Form of Security Agreement
Exhibit E Form of Pledge Agreement
Exhibit F Certificate and Certificate of Incorporation and Bylaws for ICC
and NEWCO*
Exhibit G Form of Opinion of Counsel to ICC
Exhibit H List of Individuals Entering Into Employment Agreements
Exhibit I Form of Opinion of Counsel to COMPANY and Stockholders
Exhibit J Form of Escrow Agreement
Exhibit K List of Stockholders and their Addresses
Exhibit L Form of Appointment of Stockholder Representative
Exhibit M Form of Non Founder Agreement
Exhibit N Form of ICC Guaranty
*To be supplied by Secretary of State of Delaware and New York, respectively
MERGER AGREEMENT AND PLAN OF REORGANIZATION
THIS MERGER AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is
made as of the 8th of April, 1998, by and among ICC TECHNOLOGIES, INC., a
Delaware corporation ("ICC"), RARE MEDIUM ACQUISITION CORP., a New York
corporation ("NEWCO"), RARE MEDIUM INC., a New York corporation (the "COMPANY"),
and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇ (the "FOUNDING STOCKHOLDERS"). The FOUNDING STOCKHOLDERS are the
principal Stockholders of the COMPANY.
WHEREAS, NEWCO is a corporation duly organized and existing under the
laws of the State of New York, having been incorporated on April 8, 1998, solely
for the purpose of completing the transactions set forth herein, and is a
wholly-owned subsidiary of ICC;
WHEREAS, the respective Boards of Directors of NEWCO and the COMPANY
(which together are hereinafter collectively referred to as "Constituent
Corporations") deem it advisable and in the best interests of the Constituent
Corporations and their respective stockholders that NEWCO merge with and into
the COMPANY pursuant to this Agreement and the provisions of the laws of the
State of New York (the "Merger"), and in furtherance thereof have approved the
Merger;
WHEREAS, the parties hereto intend that the transaction described herein
qualify as a tax-free reorganization under Section 368 of the Internal Revenue
Code of 1986, as amended (the "Code");
WHEREAS, unless the context otherwise requires, capitalized terms used
in this Agreement or in any schedule attached hereto and not otherwise defined
herein shall have the following meanings for all purposes of this Agreement:
"Acquired Party" means the COMPANY and any subsidiary of the Company.
"Acquisition Transaction" has the meaning set forth in Section 7.4.
"Affiliates" has the meaning set forth in Section 5.8.
"Certificate of Merger" means the Certificate of Merger with respect to
the Merger substantially in the form attached as Exhibit A hereto or with such
changes therein as may be required by applicable state law.
"Average Closing Price" means the average closing price per share as
reported by the Wall Street Journal for ICC Stock computed for the 60-day
calendar period ending on the 12-month anniversary of the Closing Date.
"Balance Sheet Date" means December 31, 1997.
"Charter Documents" has the meaning set forth in Section 5.1.
"Closing" has the meaning set forth in Section 4.
"Closing Date" has the meaning set forth in Section 4.
"Code" has the meaning set forth in the third recital of this Agreement.
"COMPANY" has the meaning set forth in the first paragraph of this
Agreement.
"COMPANY Stock" has the meaning set forth in Section 2.1.
"Constituent Corporations" has the meaning set forth in the second
recital of this Agreement.
"Effective Time of the Merger" means the time as of which the Merger
becomes effective, which the parties hereto contemplate to occur on the Closing
Date.
"Environmental Requirements" has the meaning set forth in Section 5.13.
"Escrow Agreement" has the meaning set forth in Section 3.4.
"Expiration Date" has the meaning set forth in Section 5(A).
"Founding Stockholders" has the meaning set forth in the first paragraph
of this Agreement.
"Hazardous Materials" has the meaning set forth in Section 5.13(b).
"ICC" has the meaning set forth in the first paragraph of this
Agreement.
"ICC Charter Documents" has the meaning set forth in Section 6.1.
"ICC Stock" means the common stock, par value $.01 per share, of ICC.
"Intellectual Property" means all trademarks, service marks, trade
dress, trade names, patents and copyrights and any registration or application
for any of the foregoing, and any trade secret, invention, process, know-how,
computer software, technology systems, product design or product packaging.
"Material Adverse Effect" has the meaning set forth in Section 5.1.
"Material Contract" means any lease, instrument, agreement, license or
permit set forth on Schedule 5.12, 5.13, 5.14, 5.15, 5.16, 5.18 or 5.19 or any
other material agreement to which the COMPANY is a party or by which its
properties are bound.
"Merger" means the merger of NEWCO with and into the COMPANY pursuant to
this Agreement and the applicable provisions of the laws of the State of New
York.
"Merger Consideration" has the meaning set forth in Section 3.1.
(2)
"NEWCO" has the meaning set forth in the first paragraph of this
Agreement.
"NEWCO STOCK" means the common stock, par value $.01 per share, of
NEWCO.
"Note" means that certain promissory note in the principal amount of
$22,200,000, which promissory note comprises a portion of the Merger
Consideration due the Stockholders under this Agreement, a form of which is
attached hereto as Exhibit C.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
"1933 Act" means the Securities Act of 1933, as amended.
"Plans" has the meaning set forth in Section 5.19.
"Qualified Plans" has the meaning set forth in Section 5.20.
"Returns" has the meaning set forth at the end of Section 5.22.
"Schedule" means each Schedule attached hereto, which shall reference
the relevant sections of this Agreement, on which parties hereto disclose
information as part of their respective representations, warranties and
covenants.
"SEC" means the United States Securities and Exchange Commission.
"Statutory Liens" has the meaning set forth in Section 7.3(e).
"FOUNDING STOCKHOLDERS" has the meaning set forth in the first paragraph
of this Agreement.
"Stockholders" means all of the stockholders of the COMPANY, including
the FOUNDING STOCKHOLDERS.
"Stockholder Representative" means ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, appointed by the
Stockholders pursuant to that certain Appointment of Stockholder Representative,
a form of which is attached hereto as Exhibit L, who shall act as the
Stockholders' Representative with respect to (i) all payments due and owing to
the Stockholders under the Note and (ii) all ICC Stock which comprises a portion
of the Merger Consideration delivered to the Stockholders under this Agreement
and held in escrow pursuant to the Escrow Agreement.
"Surviving Corporation" shall mean the COMPANY as the surviving party in
the Merger.
"Tax" or "Taxes" has the meaning set forth at the end of Section 5.22.
"Taxing Authority" has the meaning set forth at the end of Section 5.22.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants herein
contained, the parties hereto hereby agree as follows:
(3)
1. THE MERGER
1.1 Delivery and Filing of Certificate of Merger. The Constituent
Corporations will cause the Certificate of Merger to be signed, verified and
filed with the Secretary of State of the State of New York, and stamped receipt
copies of such filing to be delivered to ICC on or before the Closing Date.
1.2 Effective Time of the Merger. At the Effective Time of the Merger
and subject to the terms and conditions of this Merger and the applicable
provisions of the New York Business Corporation Law (the "New York Law"), NEWCO
shall be merged with and into the COMPANY in accordance with the Certificate of
Merger, the separate existence of NEWCO shall cease and the COMPANY shall be the
surviving party in the Merger. At the Effective Time of the Merger, the effect
of the Merger otherwise shall be as provided in the applicable provisions of the
New York Law.
Without limiting the generality of the foregoing, and subject thereto,
at the Effective Time of the Merger, all the property, rights, privileges,
powers and franchises of the COMPANY and NEWCO shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the COMPANY and NEWCO
shall become the debts, liabilities and duties of the Surviving Corporation. The
Merger will be effected in a single transaction.
1.3 Certificate of Incorporation, By-laws and Board of Directors of
Surviving Corporation. At the Effective Time of the Merger:
(a) The Certificate of Incorporation of the COMPANY then in
effect shall be the Certificate of Incorporation of the
Surviving Corporation until amended as provided by law;
(b) The By-laws of the COMPANY then in effect shall be the
By-laws of the Surviving Corporation until amended as
provided by law;
(c) The Board of Directors of the Surviving Corporation shall
be comprised of seven members, consisting of ▇▇▇▇▇ ▇.
▇▇▇▇▇ ("▇▇▇▇▇"), ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (or if any
of Messrs. Gross, ▇▇▇▇▇ or ▇▇▇▇▇ are unable to serve for
any reason whatsoever then such other nominees of ICC in
lieu thereof which are approved by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
("▇▇▇▇▇▇"), which approval shall not be unreasonably
withheld, ▇▇▇▇▇▇ and three independent members nominated
by ▇▇▇▇▇▇ which are approved by Gross, which approval
shall not be unreasonably withheld, until their
respective successors are elected or appointed and
qualified in accordance with the terms of the By-laws of
the Surviving Corporation; the Board of Directors of the
Surviving Corporation shall hold office subject to the
provisions of the New York Law, the Certificate of
Incorporation and By-laws of the Surviving Corporation;
and
(4)
(d) ▇▇▇▇▇▇ shall be appointed President and Secretary of the
Surviving Corporation and shall serve as such subject to
the provisions of the Certificate of Incorporation and
By-laws of the Surviving Corporation, until his or her
successor is duly elected and qualified. The Board of
Directors of the Surviving Corporation shall appoint such
other officers of the Surviving Corporation as it
determines from time to time.
1.4 Certain Information With Respect to the Capital Stock of the
COMPANY, ICC and NEWCO. The respective designations and numbers of outstanding
shares and voting rights of each class of outstanding capital stock of the
COMPANY, ICC and NEWCO as of the date of this Agreement are as follows:
(a) the authorized and outstanding capital stock of the
COMPANY is as set forth on Schedule 1.4 hereto;
(b) the authorized capital stock of ICC consists of
50,000,000 shares of Common Stock, $.01 par value per
share, of which 21,520,000 shares are issued and
outstanding and 66,227 shares are held in treasury; and
(c) the authorized capital stock of NEWCO consists of 1,000
shares of NEWCO Stock, of which 1 share is issued and
outstanding and beneficially owned by ICC.
2. CONVERSION OF STOCK
2.1 Manner of Conversion. At the Effective Time of the Merger, the
manner of converting the issued and outstanding shares of (i) capital stock of
the COMPANY ("COMPANY Stock") and (ii) NEWCO Stock into shares of (x) ICC Stock
and (y) common stock of the Surviving Corporation, respectively, shall be as
follows:
As of the Effective Time of the Merger:
(a) all the COMPANY Stock issued and outstanding immediately
prior to the Effective Time of the Merger will be
canceled and extinguished and, by virtue of the Merger
and without any action on the part of the holder thereof,
automatically shall be converted into and shall be deemed
to represent, with respect to each Stockholder of the
COMPANY, (1) the right to receive certificates
representing the number of shares of ICC Stock set forth
on Exhibit B hereto with respect to such Stockholder, (2)
the right to receive the amount of cash set forth on
Exhibit B hereto with respect to such Stockholder, and
(3) the right to receive a beneficial interest in that
portion of the principal amount of the Note set forth on
Exhibit B hereto with respect to such Stockholder,
together with accrued interest, due under the Note in the
form attached hereto as Exhibit C, which is to be
delivered by the Surviving Corporation at Closing,
provided that such principal
(5)
amount due under the Note shall be subject to adjustment
upward as set forth in Section 3.3 hereof;
(b) all shares of COMPANY Stock that are held by the COMPANY
as treasury stock shall be canceled and retired and no
shares of ICC Stock or other consideration shall be
delivered or paid in exchange therefor; and
(c) all the NEWCO Stock issued and outstanding immediately
prior to the Effective Time of the Merger shall, by
virtue of the Merger and without any action on the part
of ICC, automatically be converted into one fully paid
and non-assessable share of common stock of the Surviving
Corporation, which Surviving Corporation shall issue its
shares to ICC, which shares shall constitute all of the
issued and outstanding shares of common stock of the
Surviving Corporation immediately after the Effective
Time of the Merger.
All ICC Stock received by the Stockholders upon the Effective
Time of the Merger pursuant to this Agreement shall, except for restrictions on
resale or transfer described in Section 5.34 hereof, have the same rights as all
the other shares of outstanding ICC Stock by reason of the provisions of the
Certificate of Incorporation of ICC or as otherwise provided by Delaware General
Corporation Law (the "Delaware Law"). All voting rights of such ICC Stock
received by the Stockholders shall be fully exercisable by the Stockholders and
the Stockholders shall not be deprived nor restricted in exercising those
rights. At the Effective Time of the Merger, ICC shall have no class of capital
stock issued and outstanding other than the ICC Stock.
3. DELIVERY OF MERGER CONSIDERATION AND OTHER DELIVERIES
3.1 At the Effective Time of the Merger and on the Closing Date the
Stockholders, who are the holders of all outstanding certificates representing
shares of COMPANY Stock, shall, in consideration of and upon surrender of such
certificates, receive the respective number of shares of ICC Stock (a portion of
which shares of ICC Stock shall be held in escrow pursuant to Section 3.4
hereof, subject to adjustment in accordance with the indemnification provisions
set forth in Section 11 hereof), and the amount of cash set forth on Exhibit B
hereto with respect to such Stockholder, and the Stockholder Representative
shall receive, on behalf of the Stockholders in accordance with the terms and
conditions of the Appointment of Stockholder Representative, the executed Note,
the principal amount of which is subject to adjustment upward as set forth in
Section 3.3 hereof (collectively, the "Merger Consideration"). The Note shall be
guaranteed by ICC pursuant to an ICC Guaranty in the form of Exhibit N attached
hereto and secured by (i) the assets of the Surviving Corporation pursuant to a
Security Agreement in the form of Exhibit D attached hereto, and (ii) ICC's
pledge of the capital stock of the Surviving Corporation held by ICC pursuant to
a Pledge Agreement in the form of Exhibit E attached hereto. The cash portion of
the Merger Consideration shall be paid by wire transfer in accordance with the
wire instructions provided by the Stockholders at Closing. As aforesaid, the
aggregate Merger Consideration, and thus the Merger Consideration payable to
each Stockholder, is subject to adjustment as set forth in Section 3.3 and
Section 11 hereof.
(6)
3.2 At the Closing, each Stockholder of the Company shall deliver to ICC
and delivery of the Merger Consideration to such Stockholders shall be
conditioned upon receipt of, the certificates representing COMPANY Stock, duly
endorsed in blank by the Stockholder, or accompanied by stock powers duly
endorsed in blank, with signatures guaranteed by a national or state chartered
bank or other financial institution, and with all necessary Transfer Tax and
other revenue stamps, acquired at the Stockholders' expense, affixed and
canceled. The Stockholders shall promptly cure any deficiencies with respect to
the endorsement of the stock certificates or other documents of conveyance with
respect to such COMPANY Stock or with respect to the stock powers accompanying
any COMPANY Stock.
3.3 In the event the Average Closing Price of the ICC Stock is less than
$3.00 per share as of the first anniversary of the Closing Date (the "Note
Adjustment Date"), the principal amount due under the Note shall be adjusted as
of the Note Adjustment Date by adding to the principal amount due under the Note
the amount determined by multiplying (i) 4,269,300 (which number represents the
aggregate number of shares of ICC Stock to be issued to all of the Stockholders
of the COMPANY as of the date of the Merger, which number will be
proportionately adjusted for any subdivision, combination or reclassification of
the outstanding shares of ICC Stock, including any stock split or stock
dividend, which occurs between the date of this Agreement and Closing) by (ii)
the difference obtained by subtracting the Average Closing Price from $3.00 (the
"Note Adjustment"), and ICC shall execute any and all amendments to the Note to
effect the Note Adjustment as set forth in this Section 3.3.
3.4 When delivering the shares of ICC Stock required by Section 3.1
above, and notwithstanding any provision therein to the contrary, ICC shall
withhold from each Stockholder and deliver to the Escrow Agent (as defined in
the Escrow Agreement referenced below) such number of shares of ICC Stock set
forth on Exhibit B hereto adjacent to each Stockholder's name under the caption
"ICC Stock - Escrow", which shares represent such Stockholder's pro rata share
of an aggregate of 2,000,000 shares of the ICC Stock delivered to the
Stockholders pursuant to this Agreement, which are to be held and distributed by
the Escrow Agent pursuant to the terms of this Agreement and the Escrow
Agreement, a form of which is attached hereto as Exhibit J (the "Escrow
Agreement").
4. CLOSING
The Closing of the transactions contemplated by this Agreement will be
held at the offices of ICC's counsel, Mesirov ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇,
LLP, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ on a date mutually agreed to by
ICC and the Company. On the Closing Date (i) the Certificate of Merger shall be
filed with the Secretary of State of the State of New York so that it shall
become effective and the Merger shall thereby be effected, and (ii) all
transactions contemplated by this Agreement, including the conversion and
delivery of shares and the delivery of Merger Consideration which the
Stockholders shall be entitled to receive pursuant to the Merger, shall occur.
The date on which the actions described in the preceding clauses (i) and (ii)
occur shall be referred to as the "Closing Date."
5. REPRESENTATIONS AND WARRANTIES OF COMPANY AND FOUNDING STOCKHOLDERS
(7)
(A) Representations and Warranties of the COMPANY and the FOUNDING
STOCKHOLDERS
Each of the COMPANY and the FOUNDING STOCKHOLDERS jointly and severally
represents and warrants that all of the following representations and warranties
in this Section 5(A) are true at the date of this Agreement and shall be true at
the time of the Closing Date, and that such representations and warranties shall
survive the Closing Date for a period of twelve months (the last day of such
period being the "Expiration Date"), except that the representations and
warranties set forth in Section 5.22 hereof shall survive until such time as the
statute of limitations period has run for all tax periods ended on or prior to
the Closing Date, which shall be deemed to be the Expiration Date for Section
5.22. For purposes of this Section 5, the term "COMPANY" shall mean and refer to
the COMPANY and all of its subsidiaries, if any.
5.1 Due Organization. The COMPANY is a corporation duly incorporated,
validly existing and in good standing under the laws of the state of its
incorporation, and is duly authorized and qualified to do business under all
applicable laws, regulations, ordinances and orders of public authorities to
carry on its business in the places and in the manner as now conducted, to own
or hold under lease the properties and assets it now owns or holds under lease,
and to perform all of its obligations under the Material Contracts; is duly
qualified in the jurisdictions listed in Schedule 5.1 and there are no other
jurisdictions in which the conduct of the COMPANY's business or activities or
its ownership of assets requires any other qualification under applicable law,
the absence of which would have a materially adverse effect on the COMPANY's
business, condition (financial or other), properties, business prospects, or
financial results (as used herein with respect to the COMPANY, or with respect
to any other person, a "Material Adverse Effect"). True, complete and correct
copies of the Certificate of Incorporation and By-laws, each as amended, of the
COMPANY (the "Charter Documents") are all attached to Schedule 5.1. The minute
books and stock records of the COMPANY, as heretofore made available to ICC, are
correct and complete in all material respects. The most recent minutes of the
COMPANY, which are dated no earlier than 10 business days prior to the date
hereof, affirm and ratify all prior acts of the COMPANY and of its officers and
directors on behalf of the COMPANY.
5.2 Authorization. The representatives of the COMPANY executing this
Agreement have the authority to execute and deliver this Agreement and to
perform its obligations hereunder. The execution and delivery of this Agreement
by the COMPANY and performance by the COMPANY of its obligations under this
Agreement and the consummation by the COMPANY of the transactions contemplated
hereby have been duly authorized by all necessary corporate action in accordance
with applicable law and the Certificate of Incorporation and By-Laws of the
COMPANY on the part of the COMPANY and the FOUNDING STOCKHOLDERS. This Agreement
constitutes the valid and binding obligation of the COMPANY, enforceable in
accordance with its terms.
5.3 Capital Stock of the COMPANY. The authorized capital stock of the
COMPANY is as set forth in Section 1.4(i). All of the issued and outstanding
shares of capital stock of the COMPANY are owned by the FOUNDING STOCKHOLDERS
and the other Stockholders of the COMPANY in the amounts set forth
(8)
on Schedule 5.3 and, except as set forth on Schedule 5.3, are owned free and
clear of all liens, security interests, pledges, charges, voting trusts,
restrictions, encumbrances and claims of every kind. All of the issued and
outstanding shares of capital stock of the COMPANY have been duly authorized and
validly issued, are fully paid and nonassessable, are owned of record and
beneficially by the FOUNDING STOCKHOLDERS and the other Stockholders of the
COMPANY and were offered, issued, sold and delivered by the COMPANY in
compliance with all applicable state and Federal laws concerning the issuance of
securities. The COMPANY and the FOUNDING STOCKHOLDERS have full right, power and
authority to exchange the COMPANY Stock as provided herein without obtaining the
consent or approval of any other person or Governmental Authority. Except as set
forth on Schedule 5.3:
(a) the execution and delivery by the COMPANY and the
FOUNDING STOCKHOLDERS of this Agreement,
(b) the performance by the COMPANY of its obligations
hereunder, and
(c) the consummation of the transactions contemplated
hereunder, do not require the COMPANY or the FOUNDING
STOCKHOLDERS to obtain any consent, approval, waiver of
any acceleration, termination or other right or remedy or
action of or by, or make any filing with or give any
notice to any other party (collectively, the "Consents").
As used in this Agreement, "Governmental Authority" shall
mean the United States or any state, local or foreign
government, or any subdivision, agency or authority
thereof. Further, none of such shares were issued in
violation of the preemptive rights of any past or present
stockholder.
5.4 Transactions in Capital Stock: Organization Accounting. Except as
set forth on Schedule 5.4, the COMPANY has not acquired any COMPANY Stock since
January 1, 1994. Except as set forth on Schedule 5.4, (i) no option, warrant,
call, conversion right or commitment of any kind exists which obligates the
COMPANY to issue any of its authorized but unissued capital stock or its
treasury stock; (ii) the COMPANY has no obligation (contingent or otherwise) to
purchase, redeem or otherwise acquire any of its equity securities or any
interests therein or to pay any dividend or make any distribution in respect
thereof; and (iii) neither the voting stock structure of the COMPANY nor the
relative ownership of shares among any of the FOUNDING STOCKHOLDERS has been
altered or changed in contemplation of the Merger and/or the ICC Plan of
Organization. Schedule 5.4 also includes complete and accurate copies of all
stock option or stock purchase plans, including a list of all outstanding
options, warrants or other rights to acquire shares of the COMPANY Stock and a
description of the material terms of such outstanding options, warrants or other
rights.
5.5 No Bonus Shares. Except as set forth on Schedule 5.5, none of the
shares of COMPANY Stock was issued pursuant to awards, grants or bonuses.
5.6 Subsidiaries. Schedule 5.6 attached hereto lists the name of each
of the COMPANY's subsidiaries and sets forth the number and class of the
authorized capital stock of each of the COMPANY's
(9)
subsidiaries and the number of shares of each of the COMPANY's subsidiaries
which are issued and outstanding, all of which shares (except as set forth on
Schedule 5.6) are owned by the COMPANY, free and clear of all liens, security
interests, pledges, voting trusts, equities, restrictions, encumbrances and
claims of every kind. Except as set forth on Schedule 5.6, the COMPANY does not
presently own, of record or beneficially, or control, directly or indirectly,
any capital stock, securities convertible into capital stock or any other equity
interest in any corporation, association or business entity nor is the COMPANY,
directly or indirectly, a participant in any joint venture, partnership or other
non-corporate entity.
5.7 Predecessor Status: etc. Set forth on Schedule 5.7 is a list of all
names of all predecessor companies of the COMPANY, including the names of any
entities acquired by the COMPANY (by stock purchase, merger or otherwise) or
owned by the COMPANY or from which the COMPANY previously acquired material
assets. Except as disclosed on Schedule 5.7, the COMPANY has not been a
subsidiary or division of another corporation or a part of an acquisition which
was later rescinded.
5.8 Spin-off by the COMPANY. Except as set forth on Schedule 5.8, there
has not been any sale, spin-off or split-up of material assets of either the
COMPANY or any other person or entity that directly, or indirectly through one
or more intermediaries, controls, or is controlled by, or is under common
control with, the COMPANY ("Affiliates") since January 1, 1994.
5.9 Financial Statements. Except as set forth on Schedule 5.9, the
COMPANY has delivered to ICC (as Schedule 5.9 except with respect to the
statements of cash flows referenced in paragraph 5.9(b) below which shall be
delivered as soon as practicable following Closing, but in any event within 30
days following Closing) copies of the following financial statements (the
"Financial Statements").
(a) Audited Balance Sheets, Income Statements, Statements of
Stockholders' Equity and Statements of Cash Flows at and
for the years ended December 31, 1995, 1996 and 1997.
(b) Unaudited Balance Sheets, Income Statements, Statements
of Stockholders' Equity, and Statements of Cash Flows for
the three months ended March 31 , 1998 and 1997.
Each of the Financial Statements is accurate and complete in all
material respects, is consistent with the books and records of the COMPANY
(which, in turn, are accurate and complete in all material respects) and fairly
presents the COMPANY's financial condition, assets and liabilities as of their
respective dates and the results of operations and cash flows for the periods
related thereto in accordance with GAAP, consistently applied among the periods
which are the subject of the Financial Statements, except unaudited interim
financial statements which were or are subject to normal and recurring year-end
adjustments which were not and are not expected to be material in amount and the
addition of required footnotes thereto.
5.10 Liabilities and Obligations. The COMPANY has delivered to ICC an
accurate list (which is set forth on Schedule 5.10) as of the Balance Sheet Date
of (i) all liabilities of the COMPANY which are not reflected on the balance
sheet of the COMPANY at the Balance Sheet
(10)
Date or otherwise reflected in the COMPANY Financial Statements at the Balance
Sheet Date, (ii) any material liabilities of the COMPANY (including but not
limited to all liabilities in excess of $10,000) and (iii) all loan agreements,
indemnity or guaranty agreements, bonds, mortgages, liens, pledges or other
security agreements to which the COMPANY is a party. Except as set forth on
Schedule 5.10, since the Balance Sheet Date, the COMPANY has not incurred any
material liabilities of any kind, character and description, whether accrued,
absolute, secured or unsecured, contingent or otherwise, other than liabilities
incurred in the ordinary course of business. The COMPANY has also set forth on
Schedule 5.10, in the case of those contingent liabilities related to pending or
threatened litigation, or other liabilities which are not fixed or are being
contested, the following information:
(a) a summary description of the liability and has provided
ICC's counsel with: (i) copies of all relevant
documentation relating thereto; (ii) amounts claimed and
any other action or relief sought; and (iii) name of
claimant and all other parties to the claim, suit or
proceeding;
(b) the name of each court or agency before which such claim,
suit or proceeding is pending;
(c) the date such claim, suit or proceeding was instituted;
and
(d) a good faith and reasonable estimate of the maximum
amount, if any, which is likely to become payable with
respect to each such liability. If no estimate is
provided, the estimate shall for purposes of this
Agreement be deemed to be zero.
5.11 Accounts and Notes Receivable. The COMPANY has delivered to ICC an
accurate list (which is set forth on Schedule 5.11) of the accounts and notes
receivable of the COMPANY as of the Balance Sheet Date, including any such
amounts which are not reflected in the balance sheet as of the Balance Sheet
Date, and including receivables from and advances to employees and the FOUNDING
STOCKHOLDERS. Within ten (10) days prior to Closing, the COMPANY shall provide
ICC (x) an accurate list of all outstanding receivables obtained subsequent to
the Balance Sheet Date and (y) an aging of all such accounts and notes
receivable showing amounts due in 30 day aging categories (the "A/R Aging
Reports"). Except to the extent reflected on Schedule 5.11 or as disclosed by
the COMPANY to ICC in a writing accompanying the A/R Aging Reports, as the case
may be, the COMPANY has no actual knowledge or any reason to believe that any of
the accounts, notes, and other receivables shown on Schedule 5.11 and on the A/R
Aging Reports is not or shall not be, collectible in the amounts shown (in the
case of the accounts and notes receivable set forth on Schedule 5.11, net of
reserves reflected in the balance sheet as of the Balance Sheet Date).
5.12 Intellectual Property; Permits and Intangibles.
(a) The COMPANY owns or has licenses to all Intellectual
Property the absence of any of which would have a
Material Adverse Effect, and the COMPANY has delivered to
ICC an accurate list (which is set forth on
(11)
Schedule 5.12(a)) of all material Intellectual Property
owned or used by the COMPANY. Each item of Intellectual
Property owned or used by the COMPANY is valid and in
full force and effect. Except as set forth on Schedule
5.12(a), all right, title and interest in and to each
item of Intellectual Property is owned by the COMPANY and
is not subject to any license except as set forth on
Schedule 5.12(a), royalty arrangement or pending or
threatened claim or dispute. To the COMPANY's knowledge,
none of the Intellectual Property owned or used by the
COMPANY nor any product sold or licensed by the COMPANY,
infringes any Intellectual Property right of any other
entity and to the COMPANY's knowledge, no Intellectual
Property owned by the COMPANY is infringed upon by any
other entity.
(b) The COMPANY holds all licenses, franchises, permits and
other governmental authorizations the absence of any of
which could have a Material Adverse Effect, and the
COMPANY has delivered to ICC an accurate list and summary
description (which is set forth on Schedule 5.12(b)) of
all such licenses, franchises, permits and other
governmental authorizations, including permits, titles,
licenses, franchises and certificates (it being
understood and agreed that a list of all environmental
permits and other environmental approvals is set forth on
Schedule 5.13). To the knowledge of the COMPANY, the
licenses, franchises, permits and other governmental
authorizations listed on Schedules 5.12(b) and 5.13 are
valid, and the COMPANY has not received any notice that
any governmental authority intends to cancel, terminate
or not renew any such license, franchise, permit or other
governmental authorization. The COMPANY has conducted and
is conducting its business in compliance with the
requirements, standards, criteria and conditions set
forth in the licenses, franchises, permits and other
governmental authorizations listed on Schedules 5.12(b)
and 5.13 and is not in violation of any of the foregoing
except where such non-compliance or violation would not
have a Material Adverse Effect. Except as specifically
provided in Schedule 5.12(a) or 5.12(b), the transactions
contemplated by this Agreement will not (i) to the
COMPANY's knowledge result in the infringement by the
COMPANY of any Intellectual Property right of any other
entity, (ii) infringe any Intellectual Property listed on
Schedule 5.12(a), or (iii) result in a default under or a
breach or violation of, or adversely affect the rights
and benefits afforded to the COMPANY by, any licenses,
franchises, permits or government authorizations listed
on Schedule 5.12(b).
5.13 Environmental Matters.
(a) Except as set forth on Schedule 5.13, to the COMPANY's
knowledge,
(12)
(i) the COMPANY is and at all times has been in full
compliance with, and has not been in violation of
or liable under, all Environmental Requirements,
and
(ii) the COMPANY possesses all required permits,
licenses and certificates, and has filed all
notices or applications required thereby. As used
herein, "Environmental Requirements" shall mean
all applicable federal, state and local laws,
rules, regulations, ordinances and requirements
relating to pollution and protection of the
environment, all as amended or hereafter amended.
(b) Except as disclosed on Schedule 5.13:
(i) the COMPANY has not been subject to, or received
any notice of any private, administrative or
judicial action, or notice of any intended
private, administrative or judicial action
relating to the presence or alleged presence of
Hazardous Materials in, under or upon any real
property currently or formerly owned, leased or
used by (A) the COMPANY or (B) any other person
that has, at any time, disposed of Hazardous
Materials on behalf of the COMPANY;
(ii) to the COMPANY's knowledge, it does not have any
basis for any such notice or action; and
(iii) there are no pending or, to the knowledge of the
COMPANY, threatened actions or proceedings
(or-notices of potential actions or proceedings)
from any Governmental Authority or any other
entity regarding any matter relating to health,
safety or protection of the environment.
"Hazardous Materials" for purposes of this Agreement shall
include, without limitation: (A) hazardous materials, hazardous substances,
extremely hazardous substances or hazardous wastes, as those terms are defined
by the Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. ss.9601 et seq. ("CERCLA"), the Resource Conservation and Recovery Act,
42 U.S.C. ss.6901 et seq. ("RCRA"), and any other Environmental and Safety
Requirements; (B) petroleum, including, without limitation, crude oil or any
faction thereof which is liquid at standard conditions of temperature and
pressure (60 degrees Fahrenheit and 14.7 pounds per square inch absolute); (C)
any radioactive material, including, without limitation, any source, special
nuclear, or by-product material as defined in 42 U.S.C. ss.2011 et seq.; and (D)
asbestos in any form or condition.
(c) To the COMPANY's knowledge, there are and have been no
past or present events, conditions, circumstances,
activities, practices, incidents or actions which could
reasonably be expected to interfere with or prevent
continued compliance with any Environmental Requirements,
give rise to
(13)
any legal obligation or liability, or otherwise form the
basis of any claim, action, suit, proceeding, hearing or
investigation against or involving the COMPANY or any
real property presently or previously owned or used by
the COMPANY under any Environmental Requirements or
related common law theories, except as identified on
Schedule 5.13.
(d) Schedule 5.13 sets forth the name and principal place of
business of every off-site waste disposal organization,
and each of the haulers, transporters or cartage
organization engaged now or in the preceding three years
by the COMPANY to dispose of Hazardous Materials to any
such off-site waste disposal location on behalf of the
COMPANY or any of its predecessors.
5.14 Personal Property. The COMPANY has delivered to ICC an accurate
list (which is set forth on Schedule 5.14) of (x) all personal property included
(or that will be included) in "depreciable plant, property and equipment" (or
similarly named line item) on the balance sheet of the COMPANY as of the Balance
Sheet Date, (y) all other personal property owned by the COMPANY with a value
individually in excess of $10,000 (i) as of the Balance Sheet Date and (ii)
acquired since the Balance Sheet Date and (z)all leases and agreements in
respect of personal property, including, in the case of each of (x), (y) and
(z), (1) true, complete and correct copies of all such leases have been provided
to ICC's counsel, (2) a listing of the capital costs of all such assets which
are subject to capital leases and (3) an indication as to which assets are
currently owned, or, to the COMPANY's knowledge, were formerly owned, by
FOUNDING STOCKHOLDERS or affiliates of the COMPANY or FOUNDING STOCKHOLDERS.
Except as set forth on Schedule 5.14, (i) all personal property with a value
individually in excess of $10,000 used by the COMPANY in its business is either
owned by the COMPANY or leased by the COMPANY pursuant to a lease included on
Schedule 5.14, (ii) all of the personal property listed on Schedule 5.14 is in
good working order and condition, ordinary wear and tear excepted, and (iii) all
leases and agreements included on Schedule 5.14 are in full force and effect and
constitute valid and binding agreements of the COMPANY, and to the COMPANY's
knowledge, of the other parties (and their successors) thereto in accordance
with their respective terms.
5.15 Significant Customers. The COMPANY has delivered to ICC an
accurate list (which is set forth on Schedule 5.15) of all significant
customers, it being understood and agreed that a "significant customer," for
purposes of this Section 5.15, means a customer (or person or entity)
representing 5% or more of the COMPANY's 1997 annual revenues as of the Balance
Sheet Date. Except to the extent set forth on Schedule 5.15 and except to the
extent of the completion of performance of customer contracts in the ordinary
course of business in accordance with the applicable terms thereof, none of the
COMPANY's significant customers has canceled a contract with the COMPANY and
neither the COMPANY nor any FOUNDING SHAREHOLDER has any knowledge of any
dispute or claim concerning any significant customer or that any significant
customer has any plans to terminate its relationship with the COMPANY, or any
reason to believe that a significant customer may not continue such relationship
with the COMPANY following the Closing Date.
Except as listed or described on Schedule 5.15 as of or on the
date hereof, neither the COMPANY is a party to or bound by, nor does there exist
any, Contracts relating to or in any
(14)
way affecting the operation or ownership of the COMPANY's business that are of a
type described below:
(a) any collective bargaining arrangement with any labor
union or any such agreement currently in negotiation or
proposed;
(b) any contract for capital expenditures or the acquisition
or construction of fixed assets for or in respect to real
property other than in the COMPANY's ordinary course of
business in excess of $25,000;
(c) any contract with a term in excess of one year for the
purchase, maintenance, acquisition, sale or furnishing of
materials, supplies, merchandise, machinery, equipment,
parts or other property or services (except that the
COMPANY need not list any such contract made in the
ordinary course of business) which requires aggregate
future payments of greater than $50,000;
(d) any contract relating to the borrowing of money, or the
guaranty of another person's borrowing of money,
including, without limitation, all notes, mortgages,
indentures and other obligations, agreements and other
instruments for or relating to any lending or borrowing,
including assumed indebtedness;
(e) any contract granting any person a Lien on any of the
assets of the COMPANY, in whole or in part;
(f) any contract for the cleanup, abatement or other actions
in connection with Hazardous Materials (as defined in
Section 5.13), the remediation of any existing
environmental liabilities or relating to the performance
of any environmental audit or study;
(g) any contract granting to any person a first-refusal,
first-offer or similar preferential right to purchase or
acquire any of the assets of the COMPANY's business other
than in the ordinary course of business;
(h) any contract under which the COMPANY is
(i) a lessee or sublessee of any machinery, equipment,
vehicle or other tangible personal property or real
property, or
(ii) a lessor of any real property or tangible personal
property owned by the COMPANY, in either case having an
original value in excess of $50,000;
(i) any contract providing for the indemnification of any
officer, director, employee or other person, where such
indemnification may exceed the sum of $50,000;
(15)
(j) any joint venture or partnership contract; and
(k) any other contract with a term in excess of one year,
whether or not made in the ordinary course of business,
which involves payments in excess of $50,000.
The COMPANY has provided ICC with a true and complete copy of
each written Material Contract, including all amendments or other modifications
thereto. Except as set forth on Schedule 5.15, each Material Contract is a valid
and binding obligation of the COMPANY, enforceable in accordance with its terms,
and is in full force and effect. Except as set forth on Schedule 5.15, the
COMPANY has performed all obligations required to be performed by it under each
Material Contract and neither the COMPANY nor, to the knowledge of the COMPANY,
any other party to any Contract, is (with or without the lapse of time or the
giving of notice or both) in breach or default in any material respect
thereunder; and there exists no condition which, to the knowledge of the
COMPANY, would constitute a breach or default thereunder. The COMPANY has not
been notified that any party to any Material Contract intends to cancel,
terminate, not renew or exercise an option under any Material Contract, whether
in connection with the transactions contemplated hereby or otherwise.
5.16 Real Property. Schedule 5.16(a) includes a list of all real
property owned by the COMPANY (i) as of the Balance Sheet Date and (ii) acquired
since the Balance Sheet Date, and all other real property, if any, used by the
COMPANY in the conduct of its business. The COMPANY has good and insurable title
to the real property owned by it, including that reflected on Schedule 5.14,
subject to no mortgage, pledge, lien, conditional sale agreement, encumbrance or
charge, except for:
(i) liens reflected on Schedule 5.10 or 5.15 as
securing specified liabilities (with respect to
which no default by the COMPANY exists);
(ii) liens for current taxes not yet due and payable
and assessments not in default;
(iii) easements for utilities serving the property only;
and
(iv) easements, covenants and restrictions and other
exceptions to title shown of record in the office
of the County Clerks in which the properties,
assets and leasehold estates are located which do
not adversely affect the current use of the
property.
Attached to Schedule 5.16(a) are true, complete and correct
copies of all title reports and title insurance policies currently in possession
of the COMPANY with respect to real property owned by the COMPANY.
(b) Schedule 5.16(b) includes an accurate list of real
property leased by the COMPANY and an indication as to
which such properties, if any, are
(16)
currently owned, or were formerly owned, by FOUNDING
STOCKHOLDERS or Affiliates of the COMPANY or FOUNDING
STOCKHOLDERS. Counsel to ICC has been provided with true,
complete and correct copies of all leases and agreements
in respect of such real property leased by the COMPANY.
Except as set forth on Schedule 5.16(b), all of such
leases included on Schedule 5.16(b) are in full force and
effect and constitute valid and binding agreements of the
COMPANY and, to the COMPANY'S knowledge, of the parties
(and their successors) thereto in accordance with their
respective terms.
5.17 Insurance.
(a) The COMPANY has delivered to ICC:
(i) true and complete copies of all policies of
insurance to which the COMPANY is a party or under
which the COMPANY, or any director of the COMPANY,
is or has been covered at any time within two
years preceding the date of this Agreement;
(ii) true and complete copies of all pending
applications for policies of insurance; and
(iii) any statement by the auditor of the COMPANY's
financial statements with regard to the adequacy
of such entity's coverage or of the reserves for
claims.
(b) Schedule 5.17(b) describes:
(i) any self-insurance arrangement by or affecting the
COMPANY, including any reserves established
thereunder;
(ii) any contract or arrangement, other than a policy
of insurance, for the transfer or sharing of any
risk by the COMPANY; and
(iii) all obligations of the COMPANY to third parties
with respect to insurance (including such
obligations under leases and service agreements),
and identifies the policy under which such
coverage is provided.
(c) Schedule 5.17(c) sets forth, by year, for the current
policy year and each of the preceding two policy years:
(i) a summary of the loss experience under each
policy;
(ii) a statement describing each claim under an
insurance policy for an amount in excess of
$25,000, which sets forth:
(17)
(a) the name of the claimant;
(b) a description of the policy by insurer,
type of insurance and period of coverage;
and
(c) the amount and a brief description of the
claim; and
(iii) a statement describing the loss experience for all
claims that were self-insured, including the
number and aggregate cost of such claims.
(d) Except as set forth on Schedule 5.17(d):
(i) All policies to which the COMPANY is a party or
that provide coverage to the COMPANY:
(a) are valid, outstanding and enforceable;
(b) taken together, provide adequate insurance
for the assets of the COMPANY;
(c) are sufficient for compliance with all
legal requirements and Contracts to which
the COMPANY is a party or by which it is
bound;
(d) will continue in full force and effect
following the Closing;
(ii) the COMPANY has not received (A) any refusal of
coverage or any notice that a defense will be
afforded with reservation of rights, or (B) any
notice of cancellation or any other indication
that any insurance policy is no longer in full
force or effect or will not be renewed or that the
issuer of any policy is not willing or able to
perform its obligations thereunder;
(iii) the COMPANY has paid all premiums due, and has
otherwise performed all of its obligations, under
each policy to which it is a party or that
provides coverage to it or any director thereof.
(iv) the COMPANY has given notice to the insurer of all
claims that may be insured thereby.
5.18 Compensation: Employment Agreements: Organized Labor Matters. The
COMPANY has delivered to ICC an accurate list (which is set forth on Schedule
5.18) showing all officers, directors and key employees of the COMPANY, listing
all employment agreements with such officers, directors and key employees and
the rate of compensation (and the portions thereof attributable to salary, bonus
and other compensation, respectively) of each of such persons as of (i) the
Balance Sheet Date and (ii) the date hereof. The COMPANY has provided
(18)
to ICC true, complete and correct copies of any employment agreements for
persons listed on Schedule 5.18. Since the Balance Sheet Date, there have been
no increases in the compensation payable or any special bonuses to any officer,
director, key employee or other employee, except ordinary salary increases
implemented on a basis consistent with past practices.
Except as set forth on Schedule 5.18, there is no, and within the
last three years the COMPANY has not experienced any, strike, picketing,
boycott, work stoppage or slowdown, other labor dispute, union organizational
activity, allegation, charge or complaint of unfair labor practice, employment
discrimination or other matters relating to the employment of labor, pending or,
to the COMPANY's knowledge, threatened against the COMPANY; nor is there any
basis for any such allegation, charge or complaint. Except as set forth on
Schedule 5.18, to the knowledge of the COMPANY, none of the employees of any
critical subcontractor utilized by the COMPANY are represented by a labor union.
There is no request directed to the COMPANY for union or similar representation
pending and, to the COMPANY's knowledge, no question concerning representation
has been raised. To the COMPANY's knowledge, there is no grievance pending which
might have a Material Adverse Effect on the COMPANY nor any which might have a
Material Adverse Effect on any arbitration proceeding arising out of any union
agreement. There are no arbitration awards, court orders, orders of the National
Labor Relations Board or private settlement agreements which in any way alter,
amend or clarify any union agreement or which restrict or otherwise impact the
COMPANY's ability to act with respect to the employees covered by any union
agreement in the future. To the COMPANY's knowledge, no key employee and no
group of employees has any plans to terminate employment with the COMPANY. The
COMPANY has complied in all material respects with all applicable laws relating
to the employment of labor, including provisions thereof relating to wages,
hours, equal opportunity, collective bargaining and the payment of social
security and other taxes. The COMPANY is not liable for any arrears of wages or
any taxes or penalties for failure to comply with any such laws, ordinances or
regulation.
5.19 Employee Plans. The COMPANY has delivered to ICC an accurate
schedule (which is set forth on Schedule 5.19) showing all employee benefit
plans of COMPANY, including all employment agreements and other agreements or
arrangements containing "golden parachute" or other similar provisions, and
deferred compensation agreements, together with true, complete and correct
copies of such plans, agreements and any trusts related thereto, and
classifications of employees covered thereby as of the Balance Sheet Date.
Except for the employee benefit plans, if any, described on Schedule 5.19, the
COMPANY does not sponsor, maintain or contribute to any plan, program, fund or
arrangement that constitutes an "employee pension benefit plan," nor has the
COMPANY any obligation to contribute to or accrue or pay any benefits under any
deferred compensation or retirement funding arrangement on behalf of any
employee or employees (such as, for example, and without limitation, any
individual retirement account or annuity, any "excess benefit plan" (within the
meaning of Section 3(36) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) or any non-qualified deferred compensation arrangement).
For the purposes of this Agreement, the term "employee pension benefit plan"
shall have the same meaning as is given that term in Section 3(2) of ERISA. The
COMPANY has not sponsored, maintained or contributed to any employee pension
benefit plan other than the plans set forth on Schedule 5.19, nor is the COMPANY
(19)
required to contribute to any retirement plan pursuant to the provisions of any
collective bargaining agreement establishing the terms and conditions or
employment of any of COMPANY's employees.
The COMPANY is not now, nor can it as a result of its past
activities become, liable to the Pension Benefit Guaranty Corporation or to any
multiemployer employee pension benefit plan under the provisions of Title IV of
ERISA.
All employee benefit plans listed on Schedule 5.19 and the
administration thereof are in substantial compliance with their terms and all
applicable provisions of ERISA and the regulations issued thereunder, as well as
with all other applicable federal, state and local statutes, ordinances and
regulations.
All accrued contribution obligations of the COMPANY with respect
to any plan listed on Schedule 5.19 have either been fulfilled in their entirety
or are fully reflected on the balance sheet of the COMPANY as of the Balance
Sheet Date.
5.20 Compliance with ERISA. All such plans listed on Schedule 5.19 that
are intended to qualify (the "Qualified Plans") under Section 401 (a) of the
Code are and have been so qualified and have been determined by the Internal
Revenue Service to be so qualified, and copies of such determination letters are
included as part of Schedule 5.19 hereof. Except as disclosed on Schedule 5.20,
all reports and other documents required to be filed with any governmental
agency or distributed to plan participants or beneficiaries (including, but not
limited to, actuarial reports, audits or tax returns) have been timely filed or
distributed, and copies thereof are included as part of Schedule 5.19 hereof.
Neither the FOUNDING STOCKHOLDERS, any such plan listed on Schedule 5.19, nor
the COMPANY has engaged in any transaction prohibited under the provisions of
Section 4975 of the Code or Section 406 of ERISA. No such Plan listed on
Schedule 5.19 has incurred an accumulated funding deficiency, as defined in
Section 412(a) of the Code and Section 302(1) of ERISA; and the COMPANY has not
incurred any liability for excise tax or penalty due to the Internal Revenue
Service nor any liability to the Pension Benefit Guaranty Corporation. The
COMPANY further represents that:
(a) there have been no terminations, partial terminations or
discontinuance of contributions to any such Qualified
Plan intended to qualify under Section 401(a) of the Code
without notice to and approval by the Internal Revenue
Service;
(b) no such plan listed on Schedule 5.19 subject to the
provisions of Title IV of ERISA has been terminated;
(c) there have been no "reportable events" (as that phrase is
defined in Section 4043 of ERISA) with respect to any
such plan listed on Schedule 5.19,
(d) the COMPANY has not incurred liability under Section 4062
of ERISA; and
(20)
(e) no circumstances exist pursuant to which the COMPANY
could have any direct or indirect liability whatsoever
(including, but not limited to, any liability to any
multiemployer plan or the PBGG under Title IV of ERISA or
to the Internal Revenue Service for any excise tax or
penalty, or being subject to any statutory lien to secure
payment of any such liability) with respect to any plan
now or heretofore maintained or contributed to by any
entity other than the COMPANY that is, or at any time
was, a member of a "controlled group" (as defined in
Section 412(n)(6)(B) of the Code) that includes the
COMPANY.
5.21 Conformity with Law: Litigation. Except as set forth on Schedule
5.13 or 5.21, the COMPANY has complied with all laws, rules, regulations, writs,
injunctions, decrees, and orders applicable to it or to the operation of its
business (collectively, "Laws") and has not received any notice of any alleged
claim or threatened claim, violation of, liability or potential responsibility
under, any such Law which has not heretofore been cured and for which there is
no remaining liability other than those not having a Material Adverse Effect.
Without limiting the generality of the foregoing, the COMPANY has complied with
all applicable federal, state and local Laws relating to antitrust and trade
regulations.
Except to the extent set forth on Schedule 5.10 or 5.13 or as set
forth on Schedule 5.21 (which shall disclose the parties to, nature of, and
relief sought for each matter to be disclosed on Schedule 5.21):
(a) There is no suit, action, proceeding, investigation,
claim or order pending or, to the COMPANY's knowledge,
threatened against either the COMPANY or any employee
plan, or any fiduciary of any such plan or, to the
knowledge of the COMPANY, pending or threatened against
any of the officers, directors or employees of the
COMPANY with respect to its business or proposed business
activities which is material to the COMPANY, or to which
the COMPANY is otherwise a party, or which may affect
either the COMPANY, its assets or its business, before
any court, or before any Governmental Authority
(collectively, "Claims"); nor, to the COMPANY's
knowledge, is there any basis for any such Claims.
(b) The COMPANY is not subject to any judgment, order or
decree of any court or Governmental Authority; the
COMPANY has not received any opinion or memorandum from
legal counsel to the effect that it is exposed, from a
legal standpoint, to any liability or disadvantage which
may be material to its business. The COMPANY is not
engaged in any legal action to recover monies due it or
for damages sustained by it.
(c) The COMPANY's current insurance is believed to be
adequate to cover all pending or threatened Claims, if
any, the COMPANY has given all required notice of such
Claims to its appropriate insurance carrier(s) and/or all
such claims have been fully reserved for on the financial
statements of the COMPANY as delivered to ICC pursuant to
the terms of
(21)
this Agreement. Schedule 5.21 lists the insurer for each
Claim covered by insurance or designates each Claim, or
portion of each Claim, as uninsured and the individual
and aggregate policy limits for the insurance covering
each insured Claim and the applicable policy deductibles
for each insured Claim.
Schedule 5.21 sets forth all closed litigation matters (other
than workers compensation claims) to which the COMPANY was a party during the
three years preceding the Closing, the date such litigation was commenced and
concluded, and the nature of the resolution thereof (including amounts paid in
settlement or judgment).
5.22 Taxes. Except as set forth on Schedule 5.22:
(a) All Returns required to have been filed by or with
respect to the COMPANY with any Taxing Authority have
been duly filed, and each such Return correctly and
completely reflects the Tax liability and all other
information required to be reported thereon. All Taxes
(whether or not shown on any Return) owed by the COMPANY,
any subsidiary (individually, the "Acquired Party" and
collectively, the "Acquired Parties") have been paid.
(b) To the knowledge of the COMPANY and the FOUNDING
STOCKHOLDERS, the provisions for Taxes due by the COMPANY
and any subsidiaries (as opposed to any reserve for
deferred Taxes established to reflect timing differences
between book and Tax income) in the COMPANY's Financial
Statements are sufficient for all unpaid Taxes, being
current taxes not yet due and payable, of such Acquired
Party.
(c) No Acquired Party is a party to any agreement extending
the time within which to file any Return. No claim has
ever been made by any Taxing Authority in a jurisdiction
in which an Acquired Party does not file Returns that it
is or may be subject to taxation by that jurisdiction.
(d) Each Acquired Party has withheld and paid all Taxes
required to have been withheld and paid in connection
with amounts paid or owing to any employee, creditor,
independent contractor or other third party.
(e) No Acquired Party reasonably believes that any Taxing
Authority will assess any additional Taxes against or in
respect of it for any past period. There is no dispute or
claim concerning any Tax liability of any Acquired Party
either (i) claimed or raised by any Taxing Authority or
(ii) otherwise known to any Acquired Party. No issues
have been raised in any examination by any Taxing
Authority with respect to any Acquired Party which, by
application of similar principles, reasonably could be
expected to result in a proposed deficiency for any other
period not so examined. Schedule 5.22(v) attached hereto
lists all federal, state, local and foreign
(22)
income Tax Returns filed by or with respect to any
Acquired Party for all taxable periods ended on or after
January 1, 1991, indicates those Returns, if any, that
have been audited, and indicates those Returns that
currently are the subject of audit. Each Acquired Party
has delivered to ICC complete and correct copies of all
federal, state, local and foreign income Tax Returns
filed by, and all Tax examination reports and statements
of deficiencies assessed against or agreed to by, such
Acquired Party since January 1, 1991.
(f) No Acquired Party has waived any statute of limitations
in respect of Taxes or agreed to any extension of time
with respect to any Tax assessment or deficiency.
(g) No Acquired Party has made any payments, is obligated to
make any payments, or is a party to any agreement that
under certain circumstances could require it to make any
payments, that are not deductible under Section 280G of
the Code.
(h) No Acquired Party is a party to any Tax allocation or
sharing agreement.
(i) None of the assets of any Acquired Party constitutes
tax-exempt bond financed property or tax-exempt use
property, within the meaning of Section 168 of the Code.
No Acquired Party is a party to any "safe harbor lease"
that is subject to the provisions of Section 168(f)(8) of
the Internal Revenue Code as in effect prior to the Tax
Reform Act of 1986, or to any "long-term contract" within
the meaning of Section 460 of the Code.
(j) No Acquired Party is a "consenting corporation" within
the meaning of Section 341(f)(1) of the Code, or
comparable provisions of any state statutes, and none of
the assets of any Acquired Party is subject to an
election under Section 341(f) of the Code or comparable
provisions of any state statutes.
(k) No Acquired Party is a party to any joint venture,
partnership or other arrangement that is treated as a
partnership for Federal Income Tax purposes.
(1) There are no accounting method changes or proposed or
threatened accounting method changes, of any Acquired
Party that could give rise to an adjustment under Section
481 of the Code for periods after the Closing Date.
(m) No Acquired Party has received any written ruling of a
Taxing Authority related to Taxes or entered into any
written and legally binding agreement with a Taxing
Authority relating to Taxes.
(23)
(n) Each Acquired Party has disclosed (in accordance with
Section 6662(d)(2)(B)(ii) of the Code) on its Federal
Income Tax Returns all positions taken therein that could
give rise to a substantial understatement of Federal
Income Tax within the meaning of Section 6662(d) of the
Code.
(o) No Acquired Party has any liability for Taxes of any
person other than such Acquired Party (i) as a transferee
or successor, (ii) by contract or (iii) otherwise.
(p) There currently are no limitations on the utilization of
the net operating losses, built-in losses, capital
losses, Tax credits or other similar items of any
Acquired Party (collectively, the "Tax Losses") under (i)
Section 382 of the Code, (ii) Section 383 of the Code,
(iii) Section 384 of the Code, (iv) Section 269 of the
Code.
(q) At the Balance Sheet Date, the Acquired Parties had
aggregate Tax Losses for Federal Income Tax purposes as
described on Schedule 5.22(xvii) attached hereto.
(r) The COMPANY is not an investment company as defined in
Section 351(e)(1) of the Code.
(s) The fair market value of the assets of the COMPANY
exceeds the sum of its liabilities, plus the amount of
liabilities, if any, to which the assets are subject.
(t) The COMPANY is not under the jurisdiction of a court in a
Title 11 or similar case within the meaning of Section
351(e)(2) of the Code.
For purposes of this Section 5.22, the following definitions
shall apply:
"Returns" means any returns, reports or statements (including any
information returns) required to be filed for purposes of a particular Tax with
any Taxing Authority or governmental agency.
"Tax" or "Taxes" means all Federal, state, local or foreign net
or gross income, gross receipts, net proceeds, sales, use, ad valorem, value
added, franchise, bank shares, withholding, payroll, employment, excise,
property, deed, stamp, alternative or add-on minimum, environmental or other
taxes, assessments, duties, fees, levies or other governmental charges of any
nature whatsoever, whether disputed or not, together with any interest,
penalties, additions to tax or additional amounts with respect thereto.
"Taxing Authority" means any governmental agency, board, bureau,
body, department or authority of any United States federal, state or local
jurisdiction or any foreign jurisdiction, having jurisdiction with respect to
any Tax.
(24)
5.23 No Violations. The COMPANY is not in violation of any Charter
Document. Neither the COMPANY nor, to the knowledge of the COMPANY or the
FOUNDING STOCKHOLDERS, any other party thereto, is in default under any Material
Contract; and, except as set forth on Schedule 5.23, (a) the rights and benefits
of the COMPANY under the Material Contracts will not be adversely affected by
the transactions contemplated hereby and (b) the execution of this Agreement and
the performance by the COMPANY and the FOUNDING STOCKHOLDERS of their
obligations hereunder and the consummation by the COMPANY and the FOUNDING
STOCKHOLDERS of the transactions contemplated hereby will not result in any
violation or breach of, or constitute a default under, any of the terms or
provisions of the Material Contracts, the Charter Documents, or any provision of
any Law, rule, regulation, order, permit, judgment, injunction, decree or other
decision of any court or other tribunal or any Governmental Authority. Except as
set forth on Schedule 5.23, none of the Material Contracts requires notice to,
or the consent or approval of, any governmental agency or other third party with
respect to any of the transactions contemplated hereby in order to remain in
full force and effect and consummation of the transactions contemplated hereby
will not give rise to any right to termination, cancellation or acceleration or
loss of any right or benefit. Except as set forth on Schedule 5.23, none of the
Material Contracts prohibits the use or publication by the COMPANY, ICC or NEWCO
of the name of any other party to such Material Contracts, and none of the
Material Contracts prohibits or restricts the COMPANY from freely providing
services to any other customer or potential customer of the COMPANY, ICC, NEWCO.
5.24 Government Contracts. Except as set forth on Schedule 5.24, the
COMPANY is not a party to any governmental contract subject to price
redetermination or renegotiation.
5.25 Business Conduct. Except as set forth on Schedule 5.25, since
December 31, 1997, the COMPANY has conducted its business only in the ordinary
course consistent with past custom and practices and has incurred no liabilities
other than in the ordinary course of business consistent with past custom and
practices. Except as forth on Schedule 5.25, since December 31, 1997, there has
not been any:
(a) Material adverse change in the COMPANY's operations,
condition (financial or otherwise), operating results,
assets, liabilities, employee or customer relations or
business prospects;
(b) Damage, destruction or loss of any property owned by the
COMPANY or used in the operation of the business, whether
or not covered by insurance, having a replacement cost of
fair market value in excess of $50,000 affecting the
COMPANY's property, financial status or business;
(c) Voluntary or involuntary sale, transfer, surrender,
abandonment or other disposition of any kind by the
COMPANY of any assets or property rights (tangible or
intangible), having a replacement cost or fair market
value in excess of $50,000, except in each case the sale
of inventory and collection of accounts in the ordinary
course of business consistent with past custom and
practices;
(25)
(d) Strike, picketing, boycott, work stoppage, union
organizational activity, allegation, charge or complaint
of employment discrimination, other labor dispute or
similar occurrence that might reasonably be expected to
materially affect the COMPANY or its business;
(e) Loan or advance by the COMPANY to any party other than
sales to customers on credit in the ordinary course of
business consistent with past custom and practices;
(f) Notice (formal or otherwise) of any liability, potential
liability or claimed liability relating to environmental
matters;
(g) Declaration, setting aside, or payment of any dividend or
other distribution in respect to the COMPANY's capital
stock, any direct or indirect redemption, purchase, or
other acquisition of such stock, or the payment of
principal or interest on any note, bond, debt instrument
or debt to any Affiliate;
(h) Incurrence of debts, liabilities or obligations except
current liabilities incurred in connection with or for
services rendered or goods supplied in the ordinary
course of business consistent with past custom and
practices, liabilities on account of taxes and
governmental charges by not penalties, interest or fines
in respect thereof, and obligations or liabilities
incurred by virtue of the execution of this Agreement;
(i) Issuance by the COMPANY of any notes, bonds, or other
debt securities or any equity securities or securities
convertible into or exchangeable for any equity
securities;
(j) Cancellation, waiver or release by the COMPANY of any
debts, rights or claims, except in each case in the
ordinary course of business consistent with past custom
and practices;
(k) Amendment of the COMPANY's Certificate of Incorporation
or By-Laws;
(1) Amendment or termination of any Material Contract, other
than expiration of such contract in accordance with its
terms;
(m) Change in accounting principles, methods or practices
(including, without limitation, any change in
depreciation or amortization policies or rates) utilized
by the COMPANY;
(n) Discharge or satisfaction of any material liability,
encumbrance or payment of any material obligation or
liability, other than current liabilities paid in the
ordinary course of business consistent with past custom
and practices or cancellation of any debts or claims;
(26)
(o) Sale or assignment by the COMPANY of any tangible assets
other than in the ordinary course of business;
(p) Capital expenditures or commitments therefor by the
COMPANY other than in the ordinary course of business in
excess of $50,000 in the aggregate;
(q) Charitable contributions or pledges by the COMPANY in
excess of $25,000 in the aggregate;
(r) Mortgage, pledge or other encumbrance of any asset of the
COMPANY other than in the ordinary course of business;
(s) Adoption, amendment or termination of any employee
benefit pension plan;
(t) Increase in the benefits provided under any employee
benefit pension plan; or
(u) An occurrence or event not included in clauses (a)
through (t) that has resulted or might be expected to
result in a material adverse change in the COMPANY's
operations, condition (financial or otherwise), operating
results, assets, liabilities, employee, customer or
supplier relations or business prospects.
5.26 Deposit Accounts; Powers of Attorney. The COMPANY has delivered to
ICC an accurate schedule (which is set forth on Schedule 5.26) as of the date of
this Agreement of:
(a) the name of each financial institution in which the
COMPANY has accounts or safe deposit boxes;
(b) the names in which the accounts or boxes are held;
(c) the type of account and account number; and
(d) the name of each person authorized to draw thereon or
have access thereto.
Schedule 5.26 also sets forth the name of each person,
corporation, firm or other entity holding a general or special power of attorney
from the COMPANY and a description of the terms of such power of attorney.
5.27 Validity of Obligations. The execution and delivery of this
Agreement by the COMPANY and the performance of the transactions contemplated
herein have been duly and validly authorized by the Board of Directors of the
COMPANY and this Agreement has been duly and validly authorized by all necessary
corporate action and is a legal, valid and binding obligation of the COMPANY and
each of the FOUNDING STOCKHOLDERS.
(27)
5.28 Relations with Governments. The COMPANY has not made, offered or
agreed to offer anything of value to any governmental official, political party
or candidate for government office nor has it otherwise taken any action which
would cause the COMPANY to be in violation of the Foreign Corrupt Practices Act
of 1977, as amended, or any law of similar effect.
5.29 Disclosure. This Agreement, including the schedules hereto,
together with all other documents and information made available to ICC and its
representatives in writing pursuant hereto or thereto, present fairly the
business and operations of the COMPANY for the time periods with respect to
which such information was requested. The COMPANY'S rights under the documents
delivered pursuant hereto would not be materially adversely affected by, and no
statement made herein would be rendered untrue in any material respect by, any
other document to which the COMPANY is a party, or to which its properties are
subject, or by any other fact or circumstance regarding the COMPANY (which fact
or circumstance was, or should reasonably, after due inquiry, have been known to
the COMPANY) that is not disclosed pursuant hereto or thereto.
5.30 Prohibited Activities. Except as set forth on Schedule 5.30, the
COMPANY has not, between the Balance Sheet Date and the date hereof, taken any
of the actions set forth in Section 7.3.
5.31 Affiliate Transactions. Schedule 5.31 sets forth the parties to
and the date, nature and amount of (A) each transaction involving the transfer
of any cash, property or rights in which the amount involved individually or
collectively exceeded $60,000 to or from the COMPANY from, to, or for the
benefit of any Affiliate or former Affiliate of the COMPANY ("Affiliate
Transactions") during the period commencing January 1, 1994 through the date
hereof and (B) any existing commitments of the COMPANY to engage in the future
in any Affiliate Transactions. Each Affiliate Transaction was effected on terms
equivalent to those which would have been established in an arms'-length
negotiation, except as disclosed on Schedule 5.31.
5.32 Brokers' Fees. Neither COMPANY nor any Stockholder has dealt with
any broker, finder or intermediary in connection with the transactions
contemplated by this Agreement, and no person is entitled to any brokerage or
finder's fee, commission or other compensation on account of any dealings with
COMPANY or any Stockholder.
5.33 Misrepresentation. To the knowledge of the COMPANY and the
FOUNDING STOCKHOLDERS, none of the representations and warranties set forth in
this Agreement or in any of the certificates, schedules, exhibits, lists,
documents, exhibits, or other instruments delivered, or to be delivered, by the
COMPANY or the FOUNDING STOCKHOLDERS as contemplated by any provision hereof,
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained herein or therein not
misleading.
(B) Representations and Warranties of the FOUNDING STOCKHOLDERS
Each FOUNDING STOCKHOLDER severally with respect to himself alone
represents and warrants that the representations and warranties set forth below
are true as of the
(28)
date of this Agreement and, subject to Section 7.8 hereof, shall be true on the
Closing Date, and that the representations and warranties set form in Sections
5.34 through 5.38 shall survive until the Expiration Date.
5.34 Securities Act Representations. Each FOUNDING STOCKHOLDER alone,
or together with such FOUNDING STOCKHOLDER's "purchase representative" (as
defined in Rule 501(h) promulgated under the ▇▇▇▇ ▇▇▇):
(a) acknowledges and agrees that (x) the shares of ICC Stock
to be delivered to such FOUNDING STOCKHOLDER pursuant to
this Agreement have not been and will not be registered
under the 1933 Act, and therefore, may not be sold,
transferred or otherwise conveyed without compliance with
the 1933 Act or pursuant to an exemption therefrom and
(y) the ICC Stock to be acquired by such FOUNDING
STOCKHOLDER pursuant to this Agreement is being acquired
solely for its own account, for investment purposes only,
and with no present intention of distributing, selling or
otherwise disposing of the ICC Stock in connection with a
distribution;
(b) acknowledges and agrees that it knows and understands
that an investment in the ICC Stock is a speculative
investment which involves a high degree of risk of loss;
(c) represents and warrants that it is able to bear the
economic risk of an investment in the ICC Stock acquired
pursuant to this Agreement, can afford to sustain a total
loss of such investment and has such knowledge and
experience in financial and business matters that it is
capable of evaluating the merits and risks of the
proposed investment in the ICC Stock.
(d) represents and warrants that it has had an adequate
opportunity to review and to ask questions and receive
answers concerning any and all matters relating to the
transactions described in this Agreement.
(e) represents and warrants that it has had an adequate
opportunity to ask questions and receive answers
concerning (i) the background and experience of the
current and proposed officers and directors of ICC, (ii)
the plans for the operations of the business of ICC, and
(iii) any plans for additional acquisitions and the like;
(f) represents and warrants that it is either an "accredited
investor" (as defined in Rule 501(a) promulgated under
the ▇▇▇▇ ▇▇▇) or, after taking into consideration the
information and advice provided to such FOUNDING
STOCKHOLDER, has the requisite knowledge and experience
in financial and business matters to be capable of
evaluating the merits and risks of an investment in the
ICC Stock;
(29)
(g) represents and warrants that, to its knowledge, there
have been no general or public solicitations or
advertisements or other broadly disseminated disclosures
(including, without limitation, any advertisements,
article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over
television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation
or advertising) by or on behalf of ICC regarding an
investment in the ICC Stock; and
(h) acknowledges and agrees that the ICC Stock shall bear the
following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE SHARES
HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, ASSIGNED, EXCHANGED,
TRANSFERRED, ENCUMBERED, PLEDGED, DISTRIBUTED, APPOINTED OR OTHERWISE DISPOSED
OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER
THE ACT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND ANY
APPLICABLE STATE SECURITIES LAWS AND, IF REQUIRED BY ICC TECHNOLOGIES, INC., AN
OPINION OF COUNSEL ACCEPTABLE TO ICC TECHNOLOGIES, INC. AND ITS COUNSEL STATING
THAT REGISTRATION IS NOT REQUIRED UNDER THE ACT.
Such FOUNDING STOCKHOLDER acknowledge that the effect of the
foregoing legend, among other things, is or may be to limit or destroy the value
of the certificate for purposes of sale or use as loan collateral. Such FOUNDING
STOCKHOLDER consents that "stop transfer" instructions may be noted against the
ICC Stock.
5.35 Authority. Such FOUNDING STOCKHOLDER has the full legal right,
power and authority to enter into this Agreement. Such FOUNDING STOCKHOLDER owns
beneficially and of record all of the shares of the COMPANY Stock identified on
Schedule 5.35 as being owned by such FOUNDING STOCKHOLDER, and, except as set
forth on Schedule 5.35, such COMPANY Stock is owned free and clear of all liens,
security interests, pledges, charges, voting trusts, restrictions, encumbrances
and claims of every kind.
5.36 Preemptive Rights. Such FOUNDING STOCKHOLDER does not have, or
hereby waives, any preemptive or other right to acquire shares of COMPANY Stock
or ICC Stock that such STOCKHOLDER has or may have had other than rights of any
FOUNDING STOCKHOLDER to acquire ICC Stock pursuant to this Agreement.
5.37 No Intention to Dispose of ICC Stock. No FOUNDING STOCKHOLDER has
any current plan or intention, or is under any binding commitment or contact, to
sell, exchange or otherwise dispose of shares of ICC Stock received pursuant to
Section 3.1.
(30)
6. REPRESENTATIONS OF ICC AND NEWCO
ICC and NEWCO jointly and severally represent and warrant that all of
the following representations and warranties in this Section 6 are true at the
date of this Agreement and shall be true on the Closing Date, and that such
representations and warranties shall survive the Closing Date for a period of
one year (the last day of such period being the "ICC Expiration Date").
6.1 Due Organization. ICC and NEWCO are each corporations duly
incorporated, validly existing and in good standing under the laws of the state
of their incorporation, and are duly authorized and qualified to do business
under all applicable laws, regulations, ordinances and orders of public
authorities to carry on their businesses in the places and in the manner as now
conducted, to own or hold under lease the properties and assets they now own or
hold under lease, and to perform all of their obligations under any material
agreement to which they are a party or by which their properties are bound; are
duly qualified in the jurisdictions listed in Schedule 6.1 and there are no
other jurisdictions in which the conduct of ICC's and NEWCO'S business or
activities or their ownership of assets requires any other qualification under
applicable law, the absence of which would have a materially adverse effect on
either ICC's or NEWCO's business. True, complete and correct copies of the
Certificate of Incorporation and By-laws, each as amended, of ICC and NEWCO (the
"ICC Charter Documents") are all attached hereto as Exhibit F. The minute books
and stock records of each of ICC and NEWCO as heretofore made available to the
COMPANY, are correct and complete in all material respects. The most recent
minutes of each ICC and NEWCO, which are dated no earlier than 10 business days
prior to the date hereof, affirm and ratify all prior acts of ICC and NEWCO, as
the case may be, and of their respective officers and directors.
6.2 Authorization. Subject to approval and ratification of the Board of
Directors of ICC, the respective representatives of ICC and NEWCO executing this
Agreement have the authority to execute and deliver this Agreement and to bind
ICC and NEWCO to perform their respective obligations hereunder. Subject to
approval and ratification of the Board of Directors of ICC, the execution and
delivery of this Agreement by ICC and NEWCO and the performance by ICC and NEWCO
of their respective obligations under this Agreement and the consummation by ICC
and NEWCO of the transactions contemplated hereby have been duly authorized by
all necessary corporate action by each in accordance with applicable law and the
Certificate of Incorporation and By-Laws of ICC and NEWCO, as the case may be.
This Agreement constitutes the valid and binding obligation of ICC and NEWCO,
enforceable in accordance with its terms.
6.3 Transaction Not a Breach. Neither the execution and delivery of
this Agreement nor its performance will violate, conflict with, or result in a
breach of any provision of any Law, rule, regulation, order, permit, judgment,
injunction, decree or other decision of any court or other tribunal or any
Governmental Authority binding on ICC or NEWCO or conflict with or result in the
breach of any of the terms, conditions or provisions of the ICC Charter
Documents or of any contract, agreement, mortgage or other instrument or
obligation of any nature to which ICC or NEWCO is a party or by which ICC or
NEWCO is bound.
6.4 Misrepresentation. None of the representations and warranties set
forth in this Agreement or in any of the certificates, schedules, exhibits,
lists, documents, exhibits, or other instruments delivered, or to be delivered,
to the COMPANY as contemplated by any provision
(31)
hereof, contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained herein or therein not
misleading.
6.5 Capital Stock. The entire authorized capital stock of ICC consists
of 50,000,000 shares, $.01 par value per share, of Common Stock, of which
21,520,000 shares were issued and outstanding as of March 26, 1998. All of the
issued and outstanding shares of ICC Stock have been duly authorized, and are
validly issued, fully paid, and nonassessable. The ICC Stock to be issued to the
FOUNDING STOCKHOLDERS as provided in this Agreement shall, upon such issuance,
be validly issued, fully paid and nonassessable.
6.6 Subsidiaries. Schedule 6.6 attached hereto lists the name of each
of ICC's and NEWCO's direct and indirect subsidiaries and sets forth the number
and class of the authorized capital stock of ICC's and NEWCO's subsidiaries and
the number of shares of each of ICC's and NEWCO's subsidiaries which are issued
and outstanding prior to the Merger, all of which shares (except as set forth on
Schedule 6.6) are owned by ICC and NEWCO, as the case may be, free and clear of
all liens, security interests, pledges, voting trusts, equities, restrictions,
encumbrances and claims of every kind. Except as set forth on Schedule 6.6, ICC
and NEWCO do not presently own, of record or beneficially, or control, directly
or indirectly, any capital stock, securities convertible into capital stock or
any other equity interest in any corporation, association or business entity nor
is ICC or NEWCO, as the case may be, directly or indirectly, a participant in
any joint venture, partnership or other non-corporate entity.
6.7 Broker's Fees. ICC hereby represents that, except for ▇▇▇▇▇▇
▇▇▇▇▇▇, ICC has not dealt with any broker, finder or intermediary in connection
with the transactions contemplated by this Agreement, and no person other than
▇▇▇▇▇▇ ▇▇▇▇▇▇ is entitled to any brokerage or finder's fee, commission or other
compensation on account of any dealings with COMPANY. Such fee will be paid by
ICC at Closing.
6.8 Filings with the SEC. ICC has filed an Annual Report on Form 10-K
for the fiscal year ended December 31, 1997 (the "Annual Report") with the SEC
as required under the 1934 Act. The Annual Report has complied with the 1934 Act
in all material respects.
6.9 Financial Statements. The financial statements included in or
incorporated by reference in the Annual Report (including the related notes and
schedules) have been prepared in accordance with GAAP applied on a consistent
basis throughout the periods covered thereby and present fairly the financial
condition of ICC as of the indicated dates and the results of operations of ICC
for the indicated periods.
6.10 Liabilities and Obligations. ICC has delivered to the COMPANY an
accurate list (which is set forth on Schedule 6.10) as of December 31, 1998
("ICC Balance Sheet Date") of (i) all liabilities of ICC which are not reflected
on the balance sheet of ICC at the ICC Balance Sheet Date or otherwise reflected
in the ICC Financial Statements at the ICC Balance Sheet Date, and (ii) all loan
agreements, indemnity or guaranty agreements, bonds, mortgages, liens, pledges
or other security agreements to which ICC is a party. Except as set forth on
Schedule 6.10, since the ICC Balance Sheet Date, the COMPANY has not incurred
any material liabilities of any kind, character and description, whether
accrued, absolute, secured or unsecured, contingent or
(32)
otherwise, other than liabilities incurred in the ordinary course of business.
ICC has also set forth on Schedule 6.10, in the case of those contingent
liabilities related to pending or threatened litigation, or other liabilities
which are not fixed or are being contested, the following information:
(a) a summary description of the liability and has provided
the COMPANY's counsel with: (i) copies of all relevant
documentation relating thereto; (ii) amounts claimed and
any other action or relief sought; and (iii) name of
claimant and all other parties to the claim, suit or
proceeding;
(b) the name of each court or agency before which such claim,
suit or proceeding is pending;
(c) the date such claim, suit or proceeding was instituted;
and
(d) a good faith and reasonable estimate of the maximum
amount, if any, which is likely to become payable with
respect to each such liability. If no estimate is
provided, the estimate shall for purposes of this
Agreement be deemed to be zero.
6.11 Environmental Matters.
(a) Except as set forth on Schedule 6.11, to ICC's knowledge,
(i) ICC is and at all times has been in full
compliance with, and has not been in violation of
or liable under, all Environmental Requirements,
and
(ii) ICC possesses all required permits, licenses and
certificates, and has filed all notices or
applications required thereby. As used herein,
"Environmental Requirements" shall mean all
applicable federal, state and local laws, rules,
regulations, ordinances and requirements relating
to pollution and protection of the environment,
all as amended or hereafter amended.
(b) Except as disclosed on Schedule 6.11:
(i) ICC has not been subject to, or received any
notice of any private, administrative or judicial
action, or notice of any intended private,
administrative or judicial action relating to the
presence or alleged presence of Hazardous
Materials in, under or upon any real property
currently or formerly owned, leased or used by (A)
ICC or (B) any other person that has, at any time,
disposed of Hazardous Materials on behalf of ICC;
(ii) to ICC's knowledge, it does not have any basis for
any such notice or action; and
(33)
(iii) there are no pending or, to the knowledge of ICC,
threatened actions or proceedings (or-notices of
potential actions or proceedings) from any
Governmental Authority or any other entity
regarding any matter relating to health, safety or
protection of the environment.
(c) To ICC's knowledge, there are and have been no past or
present events, conditions, circumstances, activities,
practices, incidents or actions which could reasonably
be expected to interfere with or prevent continued
compliance with any Environmental Requirements, give
rise to any legal obligation or liability, or otherwise
form the basis of any claim, action, suit, proceeding,
hearing or investigation against or involving ICC or any
real property presently or previously owned or used by
ICC under any Environmental Requirements or related
common law theories, except as identified on Schedule
6.11.
(d) Schedule 6.11 sets forth the name and principal place of
business of every off-site waste disposal organization,
and each of the haulers, transporters or cartage
organization engaged now or in the preceding three years
by ICC to dispose of Hazardous Materials to any such
off-site waste disposal location on behalf of ICC or any
of its predecessors.
6.12 Litigation. Except to the extent set forth on Schedule 6.12 (which
shall disclose the parties to, nature of, and relief sought for each matter to
be disclosed on Schedule 6.12):
(a) There is no suit, action, proceeding, investigation,
claim or order pending or, to ICC's knowledge, threatened
against either ICC or any employee plan, or any fiduciary
of any such plan or, to the knowledge of ICC, pending or
threatened against any of the officers, directors or
employees of ICC with respect to its business or proposed
business activities which is material to ICC, or to which
ICC is otherwise a party, or which may affect either ICC,
its assets or its business, before any court, or before
any Governmental Authority (collectively, "Claims"); nor,
to ICC's knowledge, is there any basis for any such
Claims.
(b) ICC is not subject to any judgment, order or decree of
any court or Governmental Authority; ICC has not received
any opinion or memorandum from legal counsel to the
effect that it is exposed, from a legal standpoint, to
any liability or disadvantage which may be material to
its business. ICC is not engaged in any legal action to
recover monies due it or for damages sustained by it.
(c) ICC's current insurance is believed to be adequate to
cover all pending or threatened Claims, if any, ICC has
given all required notice of such Claims to its
appropriate insurance carrier(s) and/or all such claims
have been fully reserved for on the financial statements
of ICC as delivered to
(34)
the COMPANY pursuant to the terms of this Agreement.
Schedule 6.12 lists the insurer for each Claim covered
by insurance or designates each Claim, or portion of
each Claim, as uninsured and the individual and
aggregate policy limits for the insurance covering each
insured Claim and the applicable policy deductibles for
each insured Claim.
Schedule 6.12 sets forth all closed litigation matters (other
than workers compensation claims) to which ICC was a party during the three
years preceding the Closing, the date such litigation was commenced and
concluded, and the nature of the resolution thereof (including amounts paid in
settlement or judgment).
6.13 Taxes. Except as set forth on Schedule 6.13, all Returns required
to have been filed by or with respect to ICC with any Taxing Authority have been
duly filed, and each such Return correctly and completely reflects the Tax
liability and all other information required to be reported thereon. All Taxes
(whether or not shown on any Return) owed by ICC and any subsidiary have been
paid.
7. COVENANTS PRIOR TO CLOSING
7.1 Access and Cooperation: Due Diligence.
(a) Between the date of this Agreement and the Closing Date,
the COMPANY will afford to the officers and authorized
representatives of ICC access to all of the COMPANY's
sites, properties, books and records and will furnish
ICC with such additional financial and operating data
and other information as to the business and properties
of the COMPANY as ICC may from time to time reasonably
request. The COMPANY and its FOUNDING STOCKHOLDERS and
agents will cooperate with ICC and its representatives,
including ICC's auditors and counsel, in the provision
of requested information and the preparation of any
documents or other material which may be required in
connection with the transactions contemplated by this
Agreement. ICC, NEWCO, the FOUNDING STOCKHOLDERS and the
COMPANY will treat all information obtained in
connection with the negotiation and performance of this
Agreement or the due diligence investigations conducted
with respect hereto as confidential in accordance with
the provisions of Section 13 hereof. Notwithstanding
anything contained herein to the contrary, ICC and NEWCO
will conduct their due diligence with respect to COMPANY
as described hereunder in a reasonable manner and during
regular business hours; moreover, NEWCO and its agents
shall be restricted to performing such due diligence
through ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ in his capacity as President of
COMPANY, or his designees, and ICC and NEWCO each
covenant to initiate all requests for information
through ▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
(b) Between the date of this Agreement and the Closing Date,
ICC will afford to the officers and authorized
representatives of the COMPANY access to
(35)
all of ICC's and NEWCO's sites, properties, books and
records and will furnish the COMPANY with such
additional financial and operating data and other
information as to the business and properties of ICC and
NEWCO as the COMPANY may from time to time reasonably
request. ICC and NEWCO will cooperate with the COMPANY,
its representatives, auditors and counsel in the
preparation of any documents or other material which may
be required in connection with the transactions
contemplated by this Agreement. Notwithstanding anything
herein to the contrary, COMPANY will conduct its due
diligence with respect to ICC and NEWCO as described
hereunder in a reasonable manner and during regular
business hours. The COMPANY will cause all information
obtained in connection with the negotiation and
performance of this Agreement to be treated as
confidential in accordance with the provisions of
Section 13 hereof.
7.2 Conduct of Business Pending Closing. Between the date of this
Agreement and the Closing Date, the COMPANY will, except as set forth on
Schedule 7.2:
(a) carry on its business in the ordinary course
substantially as conducted heretofore and not introduce
any new method of management, operation or accounting;
(b) maintain its properties and facilities, including those
held under leases, in as good working order and condition
as at present, ordinary wear and tear excepted;
(c) perform in all material respects its obligations under
agreements relating to or affecting its assets,
properties or rights;
(d) keep in full force and effect present insurance policies
or other comparable insurance coverage;
(e) maintain and preserve its business organization intact
and use its best efforts to retain its present key
employees and relationships with suppliers, customers and
others having business relations with the COMPANY;
(f) maintain compliance with all permits, laws, rules and
regulations, consent orders, and all other orders of
applicable courts, regulatory agencies and similar
governmental authorities;
(g) maintain present debt and lease instruments in accordance
with their respective terms and not enter into new or
amended debt or lease instruments, provided that debt
and/or lease instruments may be replaced if such
replacement instruments are on terms at least as
favorable to the COMPANY as the instruments being
replaced; and
(36)
(h) except in the ordinary course of business or as required
by Law or contractual obligations or other understandings
or arrangements existing on the date hereof, the COMPANY
will not (i) increase in any manner the base compensation
of, or enter into any new bonus or incentive agreement or
arrangement with, any of the employees engaged in the
COMPANY's business, (ii) pay or agree to pay any
additional pension, retirement allowance or other
employee benefit to any such employee, whether past or
present, (iii) enter into any new employment, severance,
consulting, or other compensation agreement with any
existing employee engaged in the COMPANY's business, (iv)
amend or enter into a new employee benefit plan (except
as required by Law) or amend or enter into a new
collective bargaining agreement (except as required by
this Agreement), or (v) engage in any Affiliate
Transaction.
7.3 Prohibited Activities. Except as disclosed on Schedule 7.3, between
the date hereof and the Closing Date, the COMPANY will not, without the prior
written consent of ICC:
(a) make any change in its Certificate of Incorporation or
By-laws;
(b) grant or issue any securities, options, warrants, calls,
conversion rights or commitments of any kind relating to
its securities of any kind other than in connection with
the exercise of options or warrants listed on Schedule
5.4;
(c) declare or pay any dividend, or make any distribution in
respect of its stock whether now or hereafter
outstanding, or purchase, redeem or otherwise acquire or
retire for value any shares of its stock or engage in any
transaction that will significantly affect the cash
reflected on the balance sheet of the COMPANY as of
December 31, 1997.
(d) enter into any contract or commitment or incur or agree
to incur any liability or make any capital expenditure,
except if it is in the ordinary course of business
(consistent with past practice) and involves an amount
not in excess of $ 10,000;
(e) create, assume or permit to exist any mortgage, pledge or
other lien or encumbrance upon any assets or properties
whether now owned or hereafter acquired, except (1) with
respect to purchase money liens incurred in connection
with the acquisition of equipment with an aggregate cost
not in excess of $ 10,000 necessary or desirable for the
conduct of the business of the COMPANY, (2) (A) liens for
taxes either not yet due or being contested in good faith
and by appropriate proceedings (and for which adequate
reserves have been established and are being maintained)
or (B) materialmen's, mechanics', workers', repairmen's,
employees' or other like liens arising in the ordinary
course of business (the liens set forth in clause (2)
being referred to herein as "Statutory Liens"), or (3)
liens set forth on Schedule 5.10 or 5.15 hereto;
(37)
(f) sell, assign, lease or otherwise transfer or dispose of
any property or equipment except in the ordinary course
of business;
(g) negotiate for the acquisition of any business or the
start-up of any new business;
(h) merge or consolidate or agree to merge or consolidate
with or into any other corporation;
(i) waive any material right or claim of the COMPANY,
provided that the COMPANY may negotiate and adjust bills
in the course of good faith disputes with customers in a
manner consistent with past practice, provided, further,
that such adjustments shall not be deemed to be included
on Schedule 5.11 unless specifically listed thereon;
(j) commit a material breach, materially amend or terminate
any material contract, agreement, permit, license or
other right to which the COMPANY is a party or as to
which it is a beneficiary; or
(k) enter into any other transaction outside the ordinary
course of its business or prohibited hereunder.
7.4 No Shop. In consideration of the substantial expenditure of time,
effort and expense undertaken by ICC and COMPANY in connection with their due
diligence reviews and the preparation and execution of this Agreement, ICC,
NEWCO, the COMPANY, its subsidiaries and the FOUNDING STOCKHOLDERS agree that
neither they nor their respective officers, directors, investment bankers,
attorneys, accountants or other representatives or agents, or employees will,
after the execution of this Agreement until the earlier of (i) the termination
of this Agreement or (ii) the Closing Date, directly or indirectly, solicit,
encourage, negotiate or discuss with any third party (including by way of
furnishing any information concerning ICC, NEWCO, or the COMPANY) any
acquisition proposal relating to or affecting ICC, NEWCO or the COMPANY or any
part of them, or any direct or indirect interests in ICC, NEWCO or the COMPANY,
whether by purchase of assets or stock, purchase of interests, merger or other
transaction ("Acquisition Transaction"), and that the each such party will
promptly advise the other parties of the terms of any communications or written
material related thereto, and shall provide such parties with copies of any such
written materials. Notwithstanding the foregoing, the COMPANY acknowledges and
agrees that the foregoing provisions shall not apply to ICC's interest in or the
assets of ICC Desiccant Technologies, Inc., Fresh Air Solutions, L.P. or
Advanced Technologies, Inc., each of which is a direct or indirect subsidiary of
ICC.
7.5 Notice to Bargaining Agents. Prior to the Closing Date, the COMPANY
shall satisfy any requirement for notice of the transactions contemplated by
this Agreement under applicable collective bargaining agreements. Set forth on
Schedule 7.5 is any and all proof that any such required notice has been sent.
(38)
7.6 Agreements. The FOUNDING STOCKHOLDERS and the COMPANY shall
terminate (i) any stockholders' agreements, voting agreements, voting trusts,
options, warrants and employment agreements between the COMPANY and any employee
listed on Schedule 5.18 hereto and (ii) any existing agreement between the
COMPANY and any Stockholder, on or prior to the Closing Date. A list of such
termination agreements is set forth on Schedule 7.6 and copies of each such
agreement have been provided to counsel for ICC.
7.7 Notification of Certain Matters. The FOUNDING STOCKHOLDERS and the
COMPANY shall give prompt notice to ICC of (i) the occurrence or non-occurrence
of any event the occurrence or non-occurrence of which would cause any
representation or warranty of the COMPANY or the FOUNDING STOCKHOLDERS contained
herein to be untrue or inaccurate in any material respect at or prior to the
Closing and (ii) any material failure of any FOUNDING STOCKHOLDER or the COMPANY
to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by such person hereunder. ICC and NEWCO shall give prompt
notice to the COMPANY of (i) the occurrence or nonoccurrence of any event the
occurrence or non-occurrence of which would cause any representation or warranty
of ICC or NEWCO contained herein to be untrue or inaccurate in any material
respect at or prior to the Closing and (ii) any material failure of ICC or NEWCO
to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder. The delivery of any notice pursuant to this
Section 7.7 shall not be deemed to (i) modify the representations or warranties
hereunder of the party delivering such notice (ii) modify the conditions set
forth in Sections 8 and 9, or (iii) limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
7.8 Further Assurances. The parties hereto agree to execute and
deliver, or cause to be executed and delivered, such further instruments or
documents or take such other action as may be reasonably necessary or convenient
to carry out the transactions contemplated hereby.
7.9 Approval of Merger Agreement; No Dissenters' Rights. Each of the
FOUNDING STOCKHOLDERS agrees to vote all of its shares of the COMPANY Stock in
favor of the Merger and all other transactions contemplated by this Agreement,
and further agrees not to exercise his or her dissenters' rights under the New
York Law.
7.10 Finalize Schedules.
(a) Prior to the Closing Date, the COMPANY and the FOUNDING
STOCKHOLDERS shall deliver to ICC those Schedules referred to in Section 5(A)
hereof and in any other section of this Agreement which are required to be
delivered by them. Subject to Section 9.21 hereof, notwithstanding the first
paragraph of Section 5(A), in the event any of the Schedules delivered pursuant
to this paragraph contain any changes from Schedules previously delivered
hereunder ("Company Revised Schedules") said Company Revised Schedules will not
be deemed a breach as to the representations and warranties being true as of the
date of this Agreement.
(b) Prior to the Closing Date, ICC shall deliver to the COMPANY
and the FOUNDING STOCKHOLDERS those Schedules referred to in Section 6 hereof.
Subject to
(39)
Section 8.11 hereof, notwithstanding the first paragraph of Section 6, in the
event any of the Schedules delivered pursuant to this paragraph contain any
changes from Schedules previously delivered hereunder ("ICC Revised Schedules")
said ICC Revised Schedules will not be deemed a breach as to the representations
and warranties of ICC set forth in Section 6 being true as of the date of this
Agreement.
7.11 Finalize Exhibits. The parties hereto acknowledge and agree that
the documents set forth in Exhibits A, C, D, E, G, H, I, J, L, M, and N to this
Agreement are complete in form and substance, in all material respects, and that
the parties shall negotiate in good faith to finalize the terms of the documents
set forth in such Exhibits to this Agreement prior to the Closing Date.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE FOUNDING
STOCKHOLDERS AND THE COMPANY
The obligations of the FOUNDING STOCKHOLDERS and the COMPANY with
respect to actions to be taken on the Closing Date and, to the extent specified
in this Section 8, on the Closing Date are subject to the satisfaction or waiver
on or prior to the Closing Date, as the case may be, of all of the conditions
set forth in this Section 8. As of the Closing Date, all conditions not
satisfied shall be deemed to have been waived by the COMPANY and the FOUNDING
STOCKHOLDERS unless such parties have objected by notifying ICC in writing of
such objection on or before the consummation of the transactions on the Closing
Date, except that no such waiver shall be deemed to affect the survival of the
representations and warranties of ICC and NEWCO contained in Section 6 hereof.
8.1 Representations and Warranties. All representations and warranties
of ICC and NEWCO contained in Section 6 shall be true and correct in all
material respects as of the Closing Date as though such representations and
warranties had been made as of that time; and a certificate to the foregoing
effect dated the Closing Date and signed by the Chairman of the Board, President
or any Vice President of ICC shall have been delivered to the COMPANY and the
FOUNDING STOCKHOLDERS.
8.2 Performance of Obligations. All of the terms, covenants and
conditions of this Agreement to be complied with and performed by ICC and NEWCO
on or before the Closing Date shall have been duly complied with and performed
in all material respects on or before the Closing Date; and certificates to the
foregoing effect dated the Closing Date and signed by the Chairman of the Board,
President or any Vice President of ICC shall have been delivered to the COMPANY
and the FOUNDING STOCKHOLDERS.
8.3 No Litigation. No action or proceeding before a court or any other
governmental agency or body shall have been instituted or threatened to restrain
or prohibit the Merger.
8.4 Opinion of Counsel. The COMPANY shall have received an opinion from
counsel for ICC, dated the Closing Date, substantially in the form annexed
hereto as Exhibit G.
(40)
8.5 Consents and Approvals. All necessary consents of and filings
required to be obtained or made by ICC or NEWCO with any governmental authority
or agency relating to the consummation of the transactions contemplated herein
shall have been obtained and made.
8.6 Good Standing Certificates. ICC and NEWCO each shall have delivered
to the COMPANY good standing certificates, dated as of a date no earlier than 10
days prior to the Closing Date, duly issued by the Secretary of State in which
each of ICC and NEWCO are duly organized and in each state in which ICC or NEWCO
is authorized to do business, showing that each of ICC and NEWCO is in good
standing and authorized to do business and that all state franchise and/or
income tax returns and taxes for ICC and NEWCO, respectively, for all periods
prior to the Closing have been filed and paid.
8.7 Secretary's Certificate. The COMPANY shall have received a
certificate or certificates, dated the Closing Date and signed by the secretary
of ICC and of NEWCO, certifying the truth and correctness of attached copies of
the ICC's and NEWCO's respective Certificates of Incorporation (including
amendments thereto), By-Laws (including amendments thereto), and resolutions of
the boards of directors and, if required, the Stockholders of ICC and NEWCO
approving ICC's and NEWCO's entering into this Agreement and the consummation of
the transactions contemplated hereby.
8.8 Employment Agreements. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and other employees of the
COMPANY set forth on Exhibit H shall have entered into employment agreements
with the entity to employ them, effective as of the Effective Time, in form and
substance acceptable to ICC and the employees.
8.9 ICC Board of Directors/Officers. The Board of Directors of ICC
shall be comprised of seven members, consisting of Gross, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇ (or if any of Messrs. Gross, ▇▇▇▇▇ or ▇▇▇▇▇ are unable to serve for any
reason whatsoever then such other nominees of ICC in lieu thereof which are
approved by ▇▇▇▇▇▇, which approval shall not be unreasonably withheld, ▇▇▇▇▇▇
and three independent members nominated by ▇▇▇▇▇▇ which are approved by Gross,
which approval shall not be unreasonably withheld. In addition, ▇▇▇▇▇▇ shall
have been elected to the offices of President and Chief Executive Officer of
ICC.
8.10 Finalize Exhibits. The documents contained in Exhibits ▇, ▇, ▇, ▇,
▇, ▇, ▇, ▇, ▇, ▇, and N hereof shall have been finalized in a form and substance
acceptable to the COMPANY and the FOUNDING STOCKHOLDERS.
8.11 Finalized Exhibits. The Schedules of ICC referenced in Article 5
of this Agreement shall be delivered to the COMPANY and the FOUNDING
STOCKHOLDERS in a form and substance acceptable to the COMPANY and the FOUNDING
STOCKHOLDERS.
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF ICC AND NEWCO
The obligations of ICC and NEWCO with respect to actions to be taken on
the Closing Date, are subject to the satisfaction or waiver on or prior to the
Closing Date, of all of the conditions set forth in this Section 9. As of the
Closing Date, all conditions not satisfied shall be
(41)
deemed to have been waived by ICC and NEWCO unless such parties have objected by
notifying the COMPANY and the FOUNDING STOCKHOLDERS in writing of such objection
on or before the consummation of the transactions on the Closing Date, except
that no such waiver shall be deemed to affect the survival of the
representations and warranties of the COMPANY and the FOUNDING STOCKHOLDERS
contained in Section 5 hereof.
9.1 Representations and Warranties. All the representations and
warranties of the FOUNDING STOCKHOLDERS and the COMPANY contained in this
Agreement shall be true and correct in all material respects as of the Closing
Date with the same effect as though such representations and warranties had been
made on and as of such date; and a certificate to the foregoing effect dated the
Closing Date and signed by the President of the COMPANY and by each of the
FOUNDING STOCKHOLDERS shall have delivered to ICC.
9.2 Performance of Obligations. All of the terms, covenants and
conditions of this Agreement to be complied with or performed by the FOUNDING
STOCKHOLDERS and the COMPANY on or before the Closing Date shall have been duly
performed or complied with in all material respects on or before the Closing
Date; and a certificate to the foregoing effect dated the Closing Date and
signed by the President of the COMPANY and by each of the FOUNDING STOCKHOLDERS
shall have delivered to ICC.
9.3 No Litigation. No action or proceeding before a court or any other
governmental agency or body shall have been instituted or threatened to restrain
or prohibit the Merger and no governmental agency or body shall have taken any
other action or made any request of ICC as a result of which the management of
ICC deems it inadvisable to proceed with the transactions hereunder.
9.4 Secretary's Certificate. ICC shall have received a certificate or
certificates, dated the Closing Date and signed by the secretary of the COMPANY,
certifying the truth and correctness of attached copies of the COMPANY's
Certificate of Incorporation (including amendments thereto), By-Laws (including
amendments thereto), and resolutions of the board of directors and the
Stockholders of the COMPANY approving the COMPANY's entering into this Agreement
and the consummation of the transactions contemplated hereby.
9.5 No Material Adverse Change. As of the Closing Date, no event or
circumstance shall have occurred with respect to the COMPANY which would
constitute a Material Adverse Effect, and the COMPANY shall not have suffered
any material loss or damages to any of its properties or assets, whether or not
covered by insurance, which change, loss or damage materially affects or impairs
the ability of the COMPANY to conduct its business.
9.6 Stockholders' Release. The FOUNDING STOCKHOLDERS shall have
delivered to ICC an instrument dated the Closing Date releasing the COMPANY from
any and all (i) claims of the FOUNDING STOCKHOLDERS against the COMPANY and ICC
and (ii) obligations of the COMPANY and ICC to the FOUNDING STOCKHOLDERS, except
for x) items specifically identified on Schedule 5.10 as being claims of or
obligations to the FOUNDING STOCKHOLDERS, (y) continuing obligations to the
FOUNDING
(42)
STOCKHOLDERS relating to their employment by the COMPANY and (z) obligations
arising under this Agreement or the transactions contemplated hereby.
9.7 Termination of Related Party Agreements. Except as set forth on
Schedule 9.7, all existing agreements between the COMPANY and any Stockholder of
the COMPANY or any employee of the COMPANY listed on Schedule 5.18 hereto and
referenced in Section 7.6 shall have been terminated effective prior to or as of
the Closing Date.
9.8 Opinion of Counsel. ICC shall have received an opinion from Counsel
to the COMPANY and the FOUNDING STOCKHOLDERS, dated the Closing Date,
substantially in the form annexed hereto as Exhibit I, which form shall be
deemed to include any additional opinions by such counsel or separate counsel
retained by the COMPANY covering matters customary under the circumstances,
including without limitation, opinions covering the COMPANY's intellectual
property.
9.9 Consents and Approvals. All necessary consents of and filings with
any governmental authority or agency relating to the consummation of the
transactions contemplated herein shall have been obtained and made and all
consents and approvals of third parties listed on Schedule 5.23 shall have been
obtained.
9.10 Good Standing Certificates. The COMPANY shall have delivered to
ICC a certificate, dated as of a date no earlier than five days prior to the
Closing Date, duly issued by the Secretary of State of New York and, unless
waived by ICC, from the appropriate governmental authority in each state in
which the COMPANY is authorized to do business, showing the COMPANY is in good
standing and authorized to do business and that all state franchise and/or
income tax returns and taxes for the COMPANY for all periods prior to the
Closing have been filed and paid.
9.11 Employment Agreements. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and other employees of the
COMPANY set forth on Exhibit H shall have entered into employment agreements
with the entity to employ them, effective as of the Effective Time, in form and
substance acceptable to ICC and the employees.
9.12 FIRPTA Certificate. Each FOUNDING STOCKHOLDER shall have delivered
to ICC a certificate to the effect that he or she is not a foreign person
pursuant to Section 1.1445-2(b) of the Treasury regulations.
9.13 Review. Based upon a review, conducted through its authorized
representatives, of the practices and procedures of the COMPANY including, but
not limited to, compliance with contracts and federal, state and local laws and
regulations governing the respective operations of the COMPANY, and the
methodology used to construct future revenues models, ICC shall not have found
any matter which would have a materially adverse effect on ICC or the COMPANY or
on the prospects of successfully completing the Merger.
(43)
9.14 Satisfaction. All actions, proceedings, instruments and documents
required to carry out this Agreement or incidental hereto and all other related
legal matters shall have been approved by counsel to ICC.
9.15 Approval of Merger by Board of Directors. The Merger and the other
transactions contemplated by this Agreement shall have been approved by the
Board of Directors of ICC.
9.16 Independent Fairness Opinion. ICC shall have received the opinion
of ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated to the effect that, as of the date of
delivery of such opinion, the Merger Consideration to be paid to the FOUNDING
STOCKHOLDERS is fair from a financial point of view to the holders of ICC Stock.
9.17 Approval of Merger Agreement; No Dissenters' Rights. Each of the
Stockholders of the COMPANY shall have voted all of his or her shares of the
COMPANY Stock in favor of the Merger and all other transactions contemplated by
this Agreement, and shall not have exercised his or her dissenters' rights under
the New York Law.
9.18 Minority Stock Purchase Agreement. Each of the Stockholders of the
Company, other than the FOUNDING STOCKHOLDERS, shall have executed and delivered
that certain Minority Agreement in the form attached hereto as Exhibit M.
9.19 ICC Board of Directors. The Board of Directors of ICC shall be
comprised of seven members, consisting of Gross, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (or
if any of Messrs. Gross, ▇▇▇▇▇ or ▇▇▇▇▇ are unable to serve for any reason
whatsoever then such other nominees of ICC in lieu thereof which are approved by
▇▇▇▇▇▇, which approval shall not be unreasonably withheld, ▇▇▇▇▇▇ and three
independent members nominated by ▇▇▇▇▇▇ which are approved by Gross, which
approval shall not be unreasonably withheld. In addition, ▇▇▇▇▇▇ shall have been
elected to the offices of President and Chief Executive Officer of ICC.
9.20 Finalized Exhibits. The documents contained in Exhibits A, C, D,
E, G, H, I, J, K, L, M, and N hereof shall have been finalized in a form and
substance acceptable to ICC.
9.21 Finalized Schedules. The Schedules of the COMPANY and the FOUNDING
STOCKHOLDERS referenced in Section 5(A) and in any other section of this
Agreement which are required to be delivered by them under this Agreement shall
be delivered to ICC in a form and substance acceptable to ICC.
9.22 Document Deliveries. All documents required to be delivered by the
Company and the Founding Stockholders shall have been delivered to ICC in form
and substance reasonably acceptable to ICC.
10. COVENANTS AFTER CLOSING
10.1 Release From Guarantees: Repayment of Certain Obligations. ICC
shall use its best efforts to have the FOUNDING STOCKHOLDERS released from any
and all guarantees on any indebtedness that they personally guaranteed and from
any and all pledges of assets that they pledged to secure such indebtedness for
the benefit of the COMPANY, with all such guarantees
(44)
on indebtedness being assumed by ICC, if necessary to achieve such releases. In
the event that ICC cannot obtain such releases from the lenders of any such
guaranteed indebtedness on or prior to 180 days subsequent to the Closing Date,
ICC shall pay off or otherwise refinance or retire such indebtedness.
10.2 Preparation and Filing of Tax Returns.
(a) The COMPANY shall, if possible, file or cause to be filed
all separate Returns of any Acquired Party for all
taxable periods that end on or before the Closing Date.
Each Stockholder shall pay or cause to be paid all Tax
liabilities (in excess of all amounts already paid with
respect thereto or properly accrued or reserved with
respect thereto on the COMPANY Financial Statements)
shown by such Returns to be due.
(b) ICC shall file or cause to be filed all separate Returns
of, or that include, any Acquired Party for all taxable
periods ending after the Closing Date.
(c) Each party hereto shall, and shall cause its subsidiaries
and affiliates to, provide to each of the other parties
hereto such cooperation and information as any of them
reasonably may request in filing any Return, amended
Return, or claim for refund, determining a liability for
Taxes, or a right to refund of Taxes, or in conducting
any audit or other proceeding in respect of Taxes. Such
cooperation and information shall include providing
copies of all relevant portions of relevant Returns,
together with relevant accompanying schedules and
relevant work papers, relevant documents relating to
rulings or other determinations by Taxing Authorities and
relevant records concerning the ownership and Tax basis
of property, which such party may possess. Each party
shall make its employees reasonably available on a
mutually convenient basis at its cost to provide
explanation of any documents or information so provided.
Subject to the preceding sentence, each party required to
file Returns pursuant to this Agreement shall bear all
costs of filing such Returns.
10.3 Preservation of Employee Benefit Plans. Following the Closing
Date, ICC shall not terminate any health insurance, life insurance, 401(k) or
any other employee benefit plan listed on Schedule 5.19 in effect at the COMPANY
until such time as ICC is able to replace such plan with a plan that is
applicable to ICC and all of its then existing subsidiaries. ICC shall have no
obligation to provide replacement plans that have the same terms and provisions
as the existing plans, provided, that any new health insurance plan shall
provide for coverage for preexisting conditions.
10.4 ICC Board. Throughout the term of ICC's Employment Agreement with
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ICC will use its best efforts to cause the officers and
directors of ICC to vote their shares of ICC Stock in favor of the nominees to
the ICC Board referenced in Sections 8.9 and 9.18 hereof and to recommend such
nominees for shareholder approval at shareholders meetings from time to time.
(45)
10.5 ICC Restructuring.
(a) As soon as practicable following the Closing, but in no
event later than 180 days following the Closing Date, ICC
shall use its best efforts to cause a "spin-off", through
a dividend distribution to ICC's stockholders, of ICC's
entire interest in ICC Desiccant Technologies, Inc., a
wholly-owned subsidiary of ICC which, through its
interest in Fresh Air Solutions, L.P., a Pennsylvania
limited partnership, is engaged in the business of
designing, manufacturing and marketing, desiccant-based
climate control systems and holds a 20% passive interest
in Engelhard HexCare, L.P., a desiccant and heat exchange
rotor manufacturer (the "Spin-Off"). Subject to Section
10.5(c) below, immediately after the completion of the
Spin-Off, the sole assets and liabilities of ICC and its
subsidiaries shall be those assets and liabilities
relating to RareMedium and its business. ICC shall not
enter into or engage in any other business, except as
determined from time to time by the Board of Directors.
(b) As soon as practicable following the Closing, but in any
event no sooner than ICC's next annual meeting of
stockholders to be held within 180 days following the
Closing Date, ICC shall submit for stockholder approval
an amendment to its charter to change the name of ICC to
"RareMedium, Inc." and will use its best efforts to cause
its Board of Directors to approve and recommend for
approval such amendment to the stockholders of ICC.
Further, ICC shall, as soon as practicable following the
Closing, cause its stock trading symbol to be changed to
a symbol reasonably satisfactory to ▇▇▇▇▇▇.
(c) Notwithstanding Section 10.5(a) above, as soon as
practicable following the Closing, ICC shall lease
administrative office space and engage a staff of two
persons in addition to ▇▇▇▇▇ ▇. ▇▇▇▇▇ within the Greater
Philadelphia area, all as reasonably determined by ▇▇▇▇▇
▇. ▇▇▇▇▇, who will act as Chairman of the Board of
Directors of ICC following the Closing.
(d) In the event ICC is unable to effectuate the Spin-Off
within 180 days following the Closing Date due to issues
relating to compliance with federal or state securities
laws or other legal or accounting requirements, or for
any other reason which is not within the reasonable
control of ICC or which would cause ICC to incur
unreasonable expense, such failure shall not constitute a
breach of this Agreement.
(e) Following the Closing, ICC will allocate approximately $4
million of available cash of ICC for use as working
capital for the business of the COMPANY.
10.6 ICC Stock Options. Following the Closing ICC shall use its best
efforts to reserve a reasonably sufficient number of shares of ICC Stock to be
available for the grant of options to
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employees of the Surviving Corporation under ICC's stock option plans as
determined by ICC's Board of Directors from time to time and, if necessary in
order to do so, cause the Board to recommend an increase in the availability of
such shares to the shareholders for their approval at the next annual meeting of
shareholders of ICC.
11. INDEMNIFICATION
The FOUNDING STOCKHOLDERS, ICC and NEWCO each make the following
covenants that are applicable to them, respectively:
11.1 General Indemnification by the Stockholders. The FOUNDING
STOCKHOLDERS covenant and agree that they, jointly and severally, will
indemnify, defend, protect and hold harmless ICC, NEWCO, the COMPANY and the
Surviving Corporation at all times, from and after the date of this Agreement
until the Expiration Date, from and against all claims, damages, actions, suits,
proceedings, demands, assessments, adjustments, costs and expenses (including
specifically, but without limitation, reasonable attorneys' fees and reasonable
expenses of investigation) incurred by ICC, NEWCO, the COMPANY or the Surviving
Corporation as a result of or arising from (i) any breach of the representations
and warranties of the FOUNDING STOCKHOLDERS or the COMPANY set forth herein or
on the schedules or certificates delivered in connection herewith, (ii) any
breach of any agreement on the part of the FOUNDING STOCKHOLDERS or the COMPANY
under this Agreement, (iii) the matters described on Schedule 11.1 relating to
specifically identified matters such as ongoing claims and/or litigation or (iv)
any Tax imposed upon or relating to any third party for a pre-Closing Date
period, including, in each case, any such Tax for which an Acquired Party may be
liable under Section 1.1502-6 of the Treasury Regulations (or any similar
provisions of federal, state, local or foreign law), as a transferee or
successor, by contract or otherwise; provided, however, that no FOUNDING
STOCKHOLDER shall be liable for any indemnification obligation pursuant to this
Section 11.1 to the extent attributable to a breach of any representation,
warranty or agreement made herein individually by any other FOUNDING
STOCKHOLDER.
11.2 Indemnification by ICC. ICC covenants and agrees that it will
indemnify, defend, protect and hold harmless the FOUNDING STOCKHOLDERS at all
times from and after the date of this Agreement until the ICC Expiration Date,
from and against all claims, damages, actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses (including specifically, but
without limitation, reasonable attorneys' fees and expenses of investigation)
incurred by the FOUNDING STOCKHOLDERS as a result of or arising from (i) any
breach by ICC or NEWCO of its representations and warranties set forth herein or
on the schedules or certificates delivered in connection herewith, (ii) any
breach of any agreement on the part of ICC or NEWCO under this Agreement, (iii)
any liability which the FOUNDING STOCKHOLDERS may incur due to ICC's or NEWCO's
failure to be responsible for the liabilities and obligations of the COMPANY as
provided in Section 1 hereof (except to the extent that ICC or NEWCO has claims
against the FOUNDING STOCKHOLDERS by reason of such liabilities); or (iv) the
matters described on Schedule 11.2(iv) relating to specifically identified
matters.
11.3 Third Person Claims. Promptly after any party hereto (hereinafter
the "Indemnified Party") has received notice of or has knowledge of any claim by
a person not a
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party to this Agreement ("Third Person"), of the commencement of any action or
proceeding by a Third Person for which the Indemnified Party seeks
indemnification, the Indemnified Party shall, as a condition precedent to a
claim with respect thereto being made against any party obligated to provide
indemnification pursuant to Section 11.1 or 11.2 hereof (hereinafter the
"Indemnifying Party"), give the Indemnifying Party written notice of such claim
or the commencement of such action or proceeding. Such notice shall state the
nature and the basis of such claim and a reasonable estimate of the amount
thereof. The Indemnifying Party shall have the right to defend and settle, at
its own expense and by its own counsel, any such matter so long as the
Indemnifying Party pursues the same in good faith and diligently, provided that
the Indemnifying Party shall not settle any criminal proceeding without the
written consent of the Indemnified Party, such consent not to be unreasonably
withheld or delayed. If the Indemnifying Party undertakes to defend or settle,
it shall promptly notify the Indemnified Party of its intention to do so, and
the Indemnified Party shall cooperate, at the Indemnifying Party's expense, with
the Indemnifying Party and its counsel in the defense thereof and in any
settlement thereof. Such cooperation shall include, but shall not be limited to,
furnishing the Indemnifying Party with any books, records or information
reasonably requested by the Indemnifying Party that are in the Indemnified
Party's possession or control. All Indemnified Parties shall endeavor to use the
same counsel, which shall be the counsel selected by the Indemnifying Party,
provided that if counsel to the Indemnifying Party shall have a conflict of
interest in the opinion of such counsel that prevents counsel for the
Indemnifying Party from representing the Indemnified Party, the Indemnified
Party shall have the right to participate in such matter through counsel of its
own choosing and the Indemnifying Party will reimburse the Indemnified Party for
the reasonable expenses of its counsel and experts. After the Indemnifying Party
has notified the Indemnified Party of its intention to undertake to defend or
settle any such asserted liability, and for so long as the Indemnifying Party
diligently pursues such defense, the Indemnifying Party shall not be liable for
any additional legal expenses incurred by the Indemnified Party in connection
with any defense or settlement of such asserted liability, except (i) as set
forth in the preceding sentence and (ii) to the extent such participation is
requested by the Indemnifying Party, in which event the Indemnified Party shall
be reimbursed by the Indemnifying Party for reasonable additional legal expenses
and out-of-pocket expenses. If the Indemnifying Party desires to accept a final
and complete settlement of any such Third Person claim and the Indemnified Party
refuses to consent to such settlement, then the Indemnifying Party's liability
under this Section with respect to such Third Person claim shall be limited to
the amount so offered in settlement to said Third Person plus all indemnifiable
costs and expenses incurred to date, the Indemnifying Party shall be relieved of
its duty to defend and shall tender the Third Person claim back to the
Indemnified Party, who shall thereafter, at its own expense, be responsible for
the defense and negotiation of such Third Person claim. If the Indemnifying
Party does not undertake to defend such matter to which the Indemnified Party is
entitled to indemnification hereunder, or fails diligently to pursue such
defense, the Indemnified Party may undertake such defense through counsel of its
choice, at the cost and expense of the Indemnifying Party, and the Indemnified
Party may settle such matter, and the Indemnifying Party shall reimburse the
Indemnified Party for the amount paid in such settlement and any other
liabilities or expenses incurred by the Indemnified Party in connection
therewith, provided, however, that under no circumstances shall the Indemnified
Party settle any Third Person claim without the written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld or delayed.
All settlements hereunder shall effect a
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complete release of the Indemnified Party, unless the Indemnified Party
otherwise agrees in writing. The parties hereto will make appropriate
adjustments for any Tax benefits, Tax detriments or insurance proceeds in
determining the amount of any indemnification obligation under this Section,
provided that no indemnifying party shall be obligated to seek any payment
pursuant to the terms of any insurance policy.
11.4 Exclusive Remedy. Indemnification provided for in this Section 11
shall (except as prohibited by ERISA) be the sole and exclusive remedy in any
action seeking damages or any other form of monetary relief brought by any party
to this Agreement against another party, provided that nothing herein shall be
construed to limit the right of a party, in a proper case, to seek injunctive
relief for a breach of this Agreement.
11.5 Limitations on Indemnification. ICC, NEWCO, the Surviving
Corporation and the other persons or entities indemnified pursuant to Section
11.1 or 11.2 shall not assert any claim other than a Third Person claim for
indemnification hereunder against the FOUNDING STOCKHOLDERS until such time as,
and solely to the extent that, the aggregate of all claims which such persons
may have against the FOUNDING STOCKHOLDERS shall exceed $50,000 (the
"Indemnification Threshold"), provided, however, that ICC, NEWCO, the Surviving
Corporation and the other persons or entities indemnified pursuant to Section
11.1 may assert and shall be indemnified for any claim under Section 11.l(iii)
or 11.1(iv) at any time, regardless of whether the aggregate of all claims which
such persons may have against any FOUNDING STOCKHOLDER or all FOUNDING
STOCKHOLDERS exceeds the Indemnification Threshold, it being understood that the
amount of any such claim under Section 11.1(iii) or 11.1(iv) shall not be
counted towards the Indemnification Threshold. The FOUNDING STOCKHOLDERS shall
not assert any claim for indemnification hereunder against ICC or NEWCO or the
Surviving Corporation until such time as, and solely to the extent that, the
aggregate of all claims which FOUNDING STOCKHOLDERS may have against ICC, NEWCO
or the Surviving Corporation shall exceed the Indemnification Threshold,
provided, however, that the FOUNDING STOCKHOLDERS and the other persons or
entities indemnified pursuant to Section 11.2 may assert and shall be
indemnified for any claim under Section 11.2(iv) at any time, regardless of
whether the aggregate of all claims which such persons may have against ICC or
NEWCO exceeds the Indemnification Threshold, it being understood that the amount
of any such claim under Section 11.2(iv) shall not be counted towards such
Indemnification Threshold. No person shall be entitled to indemnification under
this Section 11 to the extent that such person's claim for indemnification is
directly or indirectly related to a breach by such person of any representation,
warranty, covenant or other agreement set forth in this Agreement.
Indemnity obligations hereunder shall be satisfied, in the case
of indemnification of ICC, NEWCO and the Surviving Corporation through the
release from escrow of ICC Stock pursuant to the Escrow Agreement, or in the
case of indemnification of the FOUNDING STOCKHOLDERS, by ICC's delivery of ICC
Stock or cash at its sole election. For purposes of calculating the value of the
ICC Stock received by or released from escrow on behalf of a FOUNDING
STOCKHOLDER (for purposes of determining the Indemnification Threshold and the
amount of any indemnity paid), ICC Stock shall be valued at the greater of (i)
$3.00 per share or (ii) the Average Closing Price. Upon the Expiration Date, a
portion of the ICC Stock which continues to be held in escrow, if any, which is
reasonably sufficient to cover any identified
(49)
claims asserted by ICC prior to the Expiration Date shall continue to be held in
escrow until such claims are satisfied or otherwise resolved provided, however,
that in no event shall shares valued in excess of $6,000,000 be required to be
held in escrow following the Expiration Date. All additional ICC Stock held in
escrow, if any, shall be released to the FOUNDING STOCKHOLDERS. In calculating
the number of shares sufficient to cover such indemnified claims, the value of
such shares shall be as determined above.
Notwithstanding any other term of this Agreement (except the
proviso to this sentence), no FOUNDING STOCKHOLDER shall be liable under this
Section 11 for an amount which exceeds the value of its pro rata share (based
upon their percentage common stock ownership in the COMPANY prior to the Merger)
of the ICC Stock placed into escrow hereunder, provided, that a FOUNDING
STOCKHOLDER's indemnification obligations pursuant to Sections 11.1(iii) and
(iv) shall not be limited. The parties acknowledge and understand that any
indemnity claim related to the representations and warranties made by the
individual FOUNDING STOCKHOLDERS in Sections 5.34 through 5.37, shall be made
only against such individual FOUNDING STOCKHOLDER's portion of the ICC Stock
held in escrow; the remainder of the indemnity claims shall be applied on a pro
rata basis to all the FOUNDING STOCKHOLDERS. For purposes of calculating the
value of the ICC Stock for purposes of indemnity claims hereunder, the ICC Stock
shall be valued as set forth in the preceding paragraph.
12. TERMINATION OF AGREEMENT
12.1 Termination. This Agreement may be terminated at any time prior to
the Closing Date solely:
(a) by mutual consent of the boards of directors of ICC and
the COMPANY;
(b) by the FOUNDING STOCKHOLDERS or the COMPANY (acting
through its board of directors), on the one hand, or by
ICC (acting through its board of directors), on the other
hand, if the transactions contemplated by this Agreement
to take place at the Closing shall not have been
consummated by April 30, 1998, unless the failure of such
transactions to be consummated is due to the willful
failure of the party seeking to terminate this Agreement
to perform any of its obligations under this Agreement to
the extent required to be performed by it prior to or on
the Closing Date; or
(c) by the FOUNDING STOCKHOLDERS or the COMPANY, on the one
hand, or by ICC, on the other hand, if a material breach
or default shall be made by the other party in the
observance or in the due and timely performance of any of
the covenants, agreements or conditions contained herein,
and the curing of such default shall not have been made
on or before the earlier of the Closing Date or April 30,
1998.
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12.2 Liabilities in Event of Termination. The termination of this
Agreement will in no way limit any obligation or liability of any party based on
or arising from a breach or default by such party with respect to any of its
representations, warranties, covenants or agreements contained in this Agreement
including, but not limited to, legal and audit costs and out of pocket expenses.
13. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
13.1 FOUNDING STOCKHOLDERS. The FOUNDING STOCKHOLDERS recognize and
acknowledge that they had in the past, currently have, and in the future may
have, access to certain confidential information of the COMPANY and/or ICC, such
as operational policies, and pricing and cost policies that are valuable,
special and unique assets of the COMPANY's and/or ICC's respective businesses.
The FOUNDING STOCKHOLDERS agree that they will not disclose such confidential
information to any person, firm, corporation, association or other entity for
any purpose or reason whatsoever, except (a) to authorized representatives of
ICC who need to know information in connection with the transactions
contemplated hereby, who have been informed of the confidential nature of such
information and who have agreed to keep such information confidential as
provided hereby, (b) following the Closing, such information may be disclosed by
the FOUNDING STOCKHOLDERS as is required in the course of performing their
duties for ICC or the Surviving Corporation and (c) to counsel and other
advisers, provided that such advisers (other than counsel) agree to the
confidentiality provisions of this Section 13.1, unless (i) such information
becomes known to the public generally through no fault of any such FOUNDING
STOCKHOLDERS, (ii) disclosure is required by law or the order of any
governmental authority under color of law, provided, that prior to disclosing
any information pursuant to this clause (ii), the FOUNDING STOCKHOLDERS shall
give prior written notice thereof to ICC and provide ICC with the opportunity to
contest such disclosure, or (iii) the disclosing party reasonably believes that
such disclosure is required in connection with the defense of a lawsuit against
the disclosing party. In the event of a breach or threatened breach by any of
the FOUNDING STOCKHOLDERS of the provisions of this Section 13, ICC shall be
entitled to an injunction restraining such FOUNDING STOCKHOLDERS from
disclosing, in whole or in part, such confidential information. Nothing herein
shall be construed as prohibiting ICC from pursuing any other available remedy
for such breach or threatened breach, including the recovery of damages. In the
event the transactions contemplated by this Agreement are not consummated, the
FOUNDING STOCKHOLDERS shall have none of the above-mentioned restrictions on
their ability to disseminate confidential information with respect to the
COMPANY.
13.2 ICC and NEWCO. ICC and NEWCO recognize and acknowledge that they
had in the past and currently have access to certain confidential information of
the COMPANY, such as operational policies, and pricing and cost policies that
are valuable, special and unique assets of the COMPANY's business. ICC and NEWCO
agree that, prior to the Closing, or if the Transactions contemplated by this
Agreement are not consummated, they will not disclose such confidential
information to any person, firm, corporation, association or other entity for
any purpose or reason whatsoever, except (a) to the FOUNDING STOCKHOLDERS and to
authorized representatives of the COMPANY, and (b) to counsel and other
advisers, provided that such advisors (other than counsel) agree to the
confidentiality provisions of this Section
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14.1, unless (i) such information becomes known to the public generally through
no fault of ICC or NEWCO, (ii) disclosure is required by law or the order of any
governmental authority under color of law, provided, that prior to disclosing
any information pursuant to this clause (ii), ICC and NEWCO shall, if possible,
give prior written notice thereof to the COMPANY and the FOUNDING STOCKHOLDERS
and provide the COMPANY and the FOUNDING STOCKHOLDERS with the opportunity to
contest such disclosure, or (iii) the disclosing party reasonably believes that
such disclosure is required in connection with the defense of a lawsuit against
the disclosing party. In the event of a breach or threatened breach by ICC or
NEWCO of the provisions of this Section, the COMPANY and the FOUNDING
STOCKHOLDERS shall be entitled to an injunction restraining ICC and NEWCO from
disclosing, in whole or in part, such confidential information. Nothing herein
shall be construed as prohibiting the COMPANY and the FOUNDING STOCKHOLDERS from
pursuing any other available remedy for such breach or threatened breach,
including the recovery of damages.
13.3 Damages. Because of the difficulty of measuring economic losses as
a result of the breach of the foregoing covenants in Sections 13.1 and 13.2, and
because of the immediate and irreparable damage that would be caused for which
they would have no other adequate remedy, the parties hereto agree that, in the
event of a breach by any of them of the foregoing covenants, the covenant may be
enforced against the other parties by injunctions and restraining orders.
13.4 Survival. The obligations of the parties under this Section 13
shall survive the termination of this Agreement for a period of five years from
the Closing Date.
14. [Intentionally Deleted]
15. REGISTRATION RIGHTS
15.1 Registration Rights. ICC will use its best efforts to register for
re-sale under the 1933 Act any ICC Stock which is delivered as payment of
interest due under the terms of the Note (the "Interest Shares"), as soon as
practicable following the issuance of the Interest Shares, but in any event no
later than 180 days following the issuance of the Interest Shares. In addition,
within 180 days following the Closing Date ICC will use its best efforts to
engage an underwriter to conduct a secondary public offering of ICC Stock on
terms reasonably acceptable to the Board of Directors of ICC, and in the event
of such engagement ICC shall give each of the Stockholders prompt written notice
of its intent to do so. Upon the written request of any of the Stockholders of
the COMPANY given within 30 days after receipt of such notice, ICC shall cause
to be included in such registration up to that Stockholder's number of
Registerable Shares (hereinafter defined) such that ICC shall only be required
to register in the aggregate up to 1,000,000 shares of ICC Stock issued to all
of the Stockholders of the COMPANY upon the Merger pursuant to this Agreement
which the Stockholders so request, provided that ICC shall have the right to
reduce the number of shares included in such registration to the extent that
inclusion of such shares could, in the opinion of tax counsel to ICC or its
independent auditors, jeopardize the status of the transactions contemplated
hereby as a tax-free organization. Of such shares of ICC Stock which may be
included in such registration, each Stockholder of the COMPANY will be entitled
to request inclusion of that number of shares of ICC Stock received as Merger
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Consideration in the Merger which is equal to (x) the number of shares of ICC
Stock received by such Stockholder in the Merger divided by the aggregate number
of shares of ICC Stock constituting Merger Consideration issued by ICC upon the
Merger (4,269,300 shares), multiplied by (y) 1,000,000 ( the "Registerable
Shares"). In addition, if ICC is advised in writing in good faith by any
managing underwriter of an underwritten offering of the securities being offered
pursuant to any such registration statement under this Section 15.1 that the
number of shares to be sold by persons other than ICC is greater than the number
of such shares which can be offered without adversely affecting the offering,
ICC may reduce pro rata the number of shares offered for the accounts of such
persons (based upon the number of shares proposed to be sold by each such
person) to a number deemed satisfactory by such managing underwriter. In the
event that ICC is unable to engage the underwriter and commence a secondary
offering as described above within 180 days following the Closing Date, then
thereafter ICC shall use its best efforts to register the Registriable Shares of
each Stockholder for resale under the 1933 Act on Form S-3 or other appropriate
form determined by ICC and to keep such registration statement effective as long
as possible thereafter but at least through the one-year anniversary of the
Closing Date. The Shareholders will cooperate in the preparation of such
registration statement and will execute and deliver any documents reasonably
required by ICC in order to effectuate such registration. ICC will pay all
expenses in connection with the preparation and filing of the registration
statement, provided that such expenses will not include any legal fees or
brokerage commissions paid by the Stockholders in connection with the sale of
ICC stock under such registration statement.
15.2 Registration Procedures. All expenses incurred in connection with
the registrations under this Article 15 (including all registration, filing,
qualification, legal, printer and accounting fees, but excluding underwriting
commissions and discounts), shall be borne by ICC. In connection with
registrations under Section 15.1, ICC shall (i) use its best efforts to prepare
and file with the SEC as soon as reasonably practicable, a registration
statement with respect to the ICC Stock and use its best efforts to cause such
registration to promptly become and remain effective for a period of at least
120 days (or such shorter period during which the Stockholders shall have sold
all ICC Stock which they requested to be registered); (ii) use its best efforts
to register and qualify the ICC Stock covered by such registration statement
under applicable state securities laws as the holders shall reasonably request
for the distribution of the ICC Stock; and (iii) take such other actions as are
reasonable and necessary to comply with the requirements of the 1933 Act and the
regulations thereunder.
15.3 Underwriting Agreement. In connection with each registration
pursuant to Sections 15.1 and 15.2 covering an underwritten registered public
offering, ICC and each participating holder agree to enter into a written
agreement with the managing underwriters in such form and containing such
provisions as are customary in the securities business for such an arrangement
between such managing underwriters and companies of ICC's size and investment
stature, including indemnification provisions.
15.4 Availability Rule 144. ICC covenants that it will use its best
efforts to file the reports required to be filed by ICC under the 1933 Act and
the 1934 Act, so as to enable any Stockholder to sell ICC Stock pursuant to Rule
144 under the 1933 Act. In connection with any sale by any holder of any ICC
Stock pursuant to Rule 144 under the 1933 Act, ICC shall
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cooperate with such Stockholder to facilitate the timely preparation and
delivery after such sale of stock certificates not bearing any 1933 Act
restrictive legend.
15.5 Market Standoff. In consideration of the granting to the
Stockholders of the registration rights under this Section 15, the Stockholders
agree that they will not sell, transfer or otherwise dispose of, including
without limitation through put or short sale arrangements, shares of ICC Stock
in the 10 days prior to the effectiveness of any registration of ICC Stock for
sale to the public and for up to 90 days following the effectiveness of such
registration, provided that all directors, executive officers and holders of
more than five percent of the outstanding ICC stock agree to the same
restrictions; and further provided that, with respect to the first public
offering of shares of the ICC Stock within one year following the Closing, the
Stockholders shall have been afforded a meaningful opportunity to include shares
in such registration after any reduction by reason of underwriters' advice.
16. GENERAL
16.1 Cooperation. The COMPANY, the FOUNDING STOCKHOLDERS, ICC and NEWCO
shall each deliver or cause to be delivered to the other on the Closing Date,
and at such other times and places as shall be reasonably agreed to, such
additional instruments as the other may reasonably request for the purpose of
carrying out this Agreement. The FOUNDING STOCKHOLDERS will cooperate and use
their reasonable efforts to have the present officers, directors and employees
of the COMPANY cooperate with ICC on and after the Closing Date in furnishing
information, evidence, testimony and other assistance in connection with any Tax
Return filing obligations, actions, proceedings, arrangements or disputes of any
nature with respect to matters pertaining to all periods prior to the Closing
Date.
16.2 Successors and Assigns. This Agreement and the rights of the
parties hereunder may not be assigned (except by operation of law) and shall be
binding upon and shall inure to the benefit of the parties hereto, the
successors of ICC, NEWCO, and the COMPANY and the heirs and legal
representatives of the FOUNDING STOCKHOLDERS.
16.3 Entire Agreement. This Agreement (including the Schedules,
exhibits and annexes attached hereto) and the documents delivered pursuant
hereto constitute the entire agreement and understanding among the FOUNDING
STOCKHOLDERS, the COMPANY, NEWCO and ICC and supersede any prior agreement and
understanding relating to the subject matter of this Agreement. This Agreement,
upon execution, constitutes a valid and binding agreement of the parties hereto
enforceable in accordance with its terms and may be modified or amended only by
a written instrument executed by the FOUNDING STOCKHOLDERS, the COMPANY, NEWCO
and ICC, acting through their respective officers or trustees, duly authorized
by their respective boards of directors. Any disclosure made on any Schedule
delivered pursuant hereto shall be deemed to have been disclosed for purposes of
any other Schedule required hereby, provided that the COMPANY and the FOUNDING
STOCKHOLDERS shall make a good faith effort to cross reference disclosure, as
necessary or advisable, between related Schedules.
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16.4 Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
16.5 Expenses.
(a) Whether or not the transactions herein contemplated shall
be consummated, ICC will pay the fees, expenses and
disbursements of ICC and its agents, representatives,
accountants and counsel incurred in connection with the
subject matter of this Agreement and any amendments
thereto, including all costs and expenses incurred in the
performance and compliance with all conditions to be
performed by ICC under this Agreement.
(b) Whether or not the transactions herein contemplated shall
be consummated, COMPANY and FOUNDING STOCKHOLDERS will
pay the fees, expenses and disbursements of COMPANY and
FOUNDING STOCKHOLDERS and their respective agents,
representatives, accountants and counsel incurred in
connection with the subject matter of this Agreement and
any amendments thereto, including all costs and expenses
incurred in the performance and compliance with all
conditions to be performed by COMPANY and FOUNDING
STOCKHOLDERS under this Agreement, including the fees and
expenses of accountants, legal counsel, and any other
person or entity retained by COMPANY or FOUNDING
STOCKHOLDERS, as the case may be.
(c) Each FOUNDING STOCKHOLDER acknowledges that he, and not
the COMPANY or ICC, will pay all Taxes due upon receipt
of the Merger Consideration payable pursuant to Section 3
hereof, and will assume all Tax risks and liabilities of
such FOUNDING STOCKHOLDER in connection with the
transactions contemplated hereby.
16.6 Notices. All notices or communications required or permitted
hereunder shall be in writing and may be given by depositing the same in United
States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested, or by delivering the same
in person to an officer or agent of such party.
(a) If to ICC, or NEWCO, addressed to them at:
▇▇▇▇▇ ▇. ▇▇▇▇▇, Chairman
ICC Technologies, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with copies to:
(55)
Mesirov ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
(b) If to the FOUNDING STOCKHOLDERS, addressed to them at
their addresses set forth on Exhibit K, with copies to
such counsel as is set forth with respect to each
STOCKHOLDER on such Exhibit K;
(c) If to the COMPANY, addressed to it at:
RareMedium, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
and marked "Personal and Confidential"
with copies to:
▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
or to such other address or counsel as any party hereto shall specify pursuant
to this Section 16.6 from time to time.
16.7 Governing Law. This Agreement shall be construed in accordance
with the laws of the State of Delaware, except that matters herein within the
purview of the matters covered by the New York Business Corporation Law shall be
governed by such corporation law, in each case without reference to conflicts of
laws principles.
16.8 Exercise of Rights and Remedies. Except as otherwise provided
herein, no delay of or omission in the exercise of any right, power or remedy
accruing to any party as a result of any breach or default by any other party
under this Agreement shall impair any such right, power or remedy, nor shall it
be construed as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.
16.9 Reformation and Severability. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
possible, be modified in such manner as to be valid, legal and enforceable but
so as to most nearly retain the intent of the parties, and if such modification
is not possible, such provision shall be severed from this Agreement, and in
either case the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby.
(56)
16.10 Remedies Cumulative. No right, remedy or election given by any
term of this Agreement shall be deemed exclusive but each shall be cumulative
with all other rights, remedies and elections available at law or in equity.
16.11 Captions. The headings of this Agreement are inserted for
convenience only, shall not constitute a part of this Agreement or be used to
construe or interpret any provision hereof.
16.12 Amendments and Waivers. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived only with the
written consent of ICC, NEWCO, the COMPANY and FOUNDING STOCKHOLDERS. Any
amendment or waiver effected in accordance with this Section 16.12 shall be
binding upon each of the parties hereto, any other person receiving ICC Stock in
connection with the Merger and each future holder of such ICC Stock.
16.13 Tax Free Reorganization. The parties hereto intend for the Merger
to qualify as a tax free reorganization within the meaning of Section 368 and
related sections of the Code and the Regulations thereunder. Nevertheless,
notwithstanding anything contained herein to the contrary, the parties hereto
acknowledge and agree that (i) such qualification shall not be a condition to
the obligations of any of the parties hereto to consummate the transactions
contemplated hereunder, and (ii) ICC and NEWCO shall have no obligation to take
any action (except as expressly provided under the terms of this Agreement) to
cause the Merger to qualify as a reorganization under Section 368 of the Code.
16.14 Press Releases. Prior to the Closing, the content and timing of
all press releases and other public statements relating to this Agreement, shall
at all times be subject to the prior mutual agreement of ICC and COMPANY.
Notwithstanding the foregoing, in the event that ICC or the COMPANY determines
that it is legally required to make a disclosure relating to this Agreement,
after adequate notice, as soon as reasonably possible, it shall endeavor in good
faith to obtain the consent of the other party, which consent shall not be
unreasonably withheld, to any
(57)
such disclosure. In the event such consent cannot be secured, the other party
shall be permitted to make its disclosure, but such disclosure shall be limited
to those matters legally required.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
ICC TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman
RAREMEDIUM ACQUISITION CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
RARE MEDIUM, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and CEO
FOUNDING STOCKHOLDERS:
/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇
------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
(58)
EXHIBIT B
MERGER CONSIDERATION TO BE PAID TO FOUNDING STOCKHOLDERS
Aggregate consideration to be paid to FOUNDING STOCKHOLDERS and the
other Stockholders of the COMPANY on the Closing Date:
$10,000,000 in cash, 4,269,300 shares of Common Stock of ICC, and
Promissory Note issued to the Stockholder Representative in the principal amount
of $22,200,000 to be distributed as follows: Consideration to be paid to and to
be deposited in escrow by each Stockholder shall be in proportion to his or her
ownership of shares of RareMedium:
ICC Stock in Escrow
Name of ICC Stock -------------------- Portion of Note
Stockholder Cash Delivered (2,000,000 aggregate ----------------
----------- ---- --------- shares) (principal amt.)
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ $ 897,982.86 203,779 179,597 8.9798%
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ $ 897,982.86 203,779 179,597 8.9798%
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ $ 897,982.86 203,779 179,597 8.9798%
▇▇▇▇▇ ▇. ▇▇▇▇▇ $ 897,982.86 203,779 179,597 8.9798%
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ $ 897,982.86 203,779 179,597 8.9798%
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ $ 44,899.14 10,189 8,980 0.4490%
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ $ 44,899.14 10,189 8,980 0.4490%
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ $ 44,899.14 10,189 8,980 0.4490%
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ $ 44,899.14 10,189 8,980 0.4490%
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ $ 44,899.14 10,189 8,980 0.4490%
H. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ $ 26,939.49 6,114 5,387 0.2694%
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ $ 89,798.29 20,378 17,959 0.8980%
Growth Capital $ 206,536.06 46,870 41,307 2.0654%
Partners Media Fund
▇▇▇▇▇ ▇▇▇▇▇▇▇ $ 35,919.31 8,151 7,183 0.3592%
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ $ 44,899.14 10,189 8,979 0.4490%
▇▇▇▇▇ ▇▇▇▇▇▇ $1,450,412.94 329,142 290,083 14.5041%
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇/ $3,431,084.75 778,616 686,217 34.3108%
▇▇▇▇▇ ▇▇▇▇▇▇
Partnership
Totals $9,999,999.98 2,269,300 2,000,000 99.9999%
------
EXHIBIT C
FORM OF PROMISSORY NOTE
THE PAYMENT OF PRINCIPAL AND INTEREST ON THIS NOTE IS SUBJECT TO CERTAIN
INCREASES PURSUANT TO PROVISIONS SET FORTH IN A MERGER AGREEMENT AND PLAN OF
REORGANIZATION, DATED AS OF APRIL 8, 1998, AS AMENDED FROM TIME TO TIME (THE
"MERGER AGREEMENT") AMONG THE MAKER OF THIS NOTE AND CERTAIN OTHER PERSONS. THIS
NOTE WAS ORIGINALLY ISSUED ON APRIL 15, 1998 AND HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR STATE SECURITIES LAWS.
THIS NOTE WAS ISSUED TO THE HOLDER (AS HEREAFTER DEFINED) AND MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
(EACH SUCH ACTION, A "TRANSFER"), UNLESS (A) SUCH TRANSFER COMPLIES WITH THE
PROVISIONS SET FORTH HEREIN AND IN THE MERGER AGREEMENT, COPIES OF WHICH WILL BE
FURNISHED TO THE HOLDER HEREOF WITHOUT CHARGE UPON WRITTEN REQUEST THEREFOR, (B)
EITHER (1) THE TRANSFER IS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, OR
(2) THE MAKER (OR ITS SUCCESSORS OR ASSIGNS) SHALL HAVE BEEN FURNISHED WITH AN
OPINION OF COUNSEL, WHICH OPINION OF COUNSEL SHALL BE REASONABLY SATISFACTORY TO
THE MAKER (OR ITS SUCCESSORS OR ASSIGNS), TO THE EFFECT THAT NO REGISTRATION IS
REQUIRED BECAUSE OF THE AVAILABILITY OF AN EXEMPTION FROM REGISTRATION UNDER THE
ACT AND THE RULES AND REGULATIONS IN EFFECT THEREUNDER, AND (C) SUCH TRANSFER
SHALL BE IN COMPLIANCE WITH ANY APPLICABLE STATE OR FOREIGN SECURITIES OR "BLUE
SKY LAWS".
RARE MEDIUM, INC. ("RMI")
SECURED PROMISSORY NOTE (the "Note")
$22,200,000 Principal Amount April 15, 1998
FOR VALUE RECEIVED, the undersigned, Rare Medium, Inc. a New York
corporation ("Maker"), does hereby promise to pay to the order of the former
stockholders of Maker listed on Exhibit A attached hereto and made a part hereof
(each a "Holder" and collectively the "Holders"), the aggregate principal sum of
Twenty-Two Million Two Hundred Thousand Dollars ($22,200,000) (the "Principal")
in lawful money of the United States of America; such Principal to be paid in
part to each Holder in the amount set forth opposite its name on Exhibit A
attached hereto and made a part hereof. Each Holder (i) owns an undivided
interest in this Note and (ii) possesses all of the same rights as the other
Holders of the Note hereunder in proportion to the amount of the original
Principal set forth opposite its name on Exhibit A bears to $22,200,000 and has
agreed by separate instruction of even date herewith (the "Appointment of
Stockholder Representative") that ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ be appointed as Stockholder
Representative to exercise all rights and remedies, and to take all actions,
available to the Holders hereunder, at his sole discretion. All capitalized
terms used herein without definitions shall have the meanings ascribed to them
in the Merger Agreement, unless the context clearly requires to the contrary.
1. Interest. Interest shall accrue on the unpaid Principal
balance from time to time outstanding hereunder at an annual rate equal to the
prime rate charged by PNC Bank, N.A. from time to time, computed daily on the
basis of a 360-day year, for the number of actual days elapsed
during which the Principal is outstanding from the date of this Note until the
entire indebtedness evidenced by this Note (i.e., Principal and accrued
interest) is paid in full.
2. Payments. Subject to earlier payments, including Prepayments
(hereinafter defined), payments hereunder will be made by the Maker to the
Holder, as follows:
(a) Interest payments on the outstanding principal hereunder
shall be in the form of cash or shares of common stock of ICC Technologies,
Inc., a Delaware corporation ("ICC"), $.01 par value per share (the "ICC
Stock"), at the election of Maker, and shall be due and payable on a semi-annual
basis, the first such interest payment to be made to Holder on October 1, 1998,
and thereafter on each six-month anniversary thereof. Notwithstanding the
foregoing, the interest payments hereunder may consist of ICC Stock only to the
extent that the Fair Market Value (as hereafter defined) of the ICC Stock
constituting the interest payments hereunder does not exceed the amount which is
equal to sixty percent (60%) of the interest payment due, unless, as of the date
of its issuance to Holder, the ICC Stock has been registered for re-sale under
the Securities Act of 1933, as amended. For purposes of this subparagraph, "Fair
Market Value" means
(i) the number of shares of ICC Stock constituting the
applicable interest payment multiplied by
(ii) the average closing price per share of the ICC
Stock as reported in the Wall Street Journal for the ten trading days
immediately preceding the date the applicable interest payment is due; and
(b) A principal payment in the amount of $11,100,000 shall
be made on April 15, 2000 (the "First Installment"), and the balance of the
principal due and owing shall be paid on April 15, 2001 (the "Final
Installment"), together with any accrued and unpaid interest on such remaining
Principal amount. The Principal amount of this Note shall be subject to increase
as set forth in Section 3.3 of the Merger Agreement. One-half of the amount of
such upward adjustment, if any, shall be added to the Principal amount maturing
on the date of the First Installment and one-half of such adjustment amount
shall be added to the Principal amount maturing on the date of the Final
Installment.
3. Security Agreement; Guaranty. This Note is secured by the
assets of Maker (as set forth in that certain Security Agreement by and between
Maker and the Stockholder Representative of even date herewith), and is subject
to that certain Guaranty by ICC, of even date herewith, which Guaranty is in
turn secured by all of the issued and outstanding shares of common stock of
Maker held by ICC and pledged pursuant to Article 1 of that certain Pledge
Agreement dated as of the date hereof. Reference is made to the Security
Agreement and the Pledge Agreement
(2)
for a description of the security interest, the nature and extent of the
security, and the rights and restrictions of Maker and the Stockholder
Representative.
4. Default. In the event (a) Maker fails to make a required
payment on the date due under this Note, Holder shall notify Maker and ICC (ICC
is also sometimes referred to herein as the "Guarantor") in writing in the
manner set forth in Section 16.6 of the Merger Agreement, (b) of a material
breach of the Security Agreement by Maker, or a material breach of the Pledge
Agreement or Guaranty by ICC, or (c) of the insolvency, failure in business or
appointment of a receiver to take charge of the business or property of Maker or
the commission of an act of bankruptcy, the making a general assignment for the
benefit of creditors or the filing of any petition in bankruptcy by or against
any such party or for relief under the Federal Bankruptcy Code, as amended, or
under any other laws, whether federal or state, for the relief of debtors, now
or hereafter existing, unless the same is dismissed within sixty (60) days after
the filing thereof. Maker or Guarantor shall have ten (10) Business Days (a
Business Day includes Monday through Friday, excluding legal holidays) from the
date of written notification to cure any default related to outstanding payment
due. Maker or Guarantor shall have thirty (30) Business Days from the date of
written notification to cure any non-monetary defaults. Should payment or
default not be cured within 10 or 30 Business Days following written notice, as
the case may be, or any event specified in clause (c) occurs and is not
dismissed within the period provided therein, Maker shall be in default under
this Note ("Default").
(a) Remedies Upon Default. At any time after a Default has
occurred, Holder may, unless the Default has theretofore been cured, avail
itself of any remedy available to Holder at law or in equity and at Holder's
option, declare the entire outstanding Principal balance of this Note, together
with all interest accrued and unpaid hereon and all other amounts due hereunder,
to be forthwith due and payable, whereupon this Note and all such accrued
interest and other amounts shall become and be forthwith due and payable without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by Maker. Notwithstanding the foregoing, if any of the
voluntary events described in clause (4) (c) above shall occur, the entire
unpaid Principal amount of this Note together with all interest accrued and
unpaid hereunder and all such other amounts due hereunder shall automatically
become due and payable without presentment, demand, protest or notice of any
kind, all of which are hereby expressly waived by Maker.
(b) Costs and Expenses. If a Default occurs, then, in
addition to any and all other relief to which the Holder may be entitled, the
Holder shall be entitled to recover any and all costs, expenses and fees
reasonably incurred by the Holder to enforce this Note or otherwise collect the
indebtedness evidenced by this Note, including, but not limited to, reasonable
attorney's fees and court costs.
(3)
5. Litigation. The Parties agree that any other controversy,
claim or dispute arising out of or relating to the terms and conditions of this
Agreement shall be resolved by a court of competent jurisdiction of any New York
State court or Federal court sitting in the Southern District of New York, and
hereby consent to service of process by certified mail directed to the parties
at the address set forth in Section 7 hereof and service so made shall be deemed
to be completed three days after the same shall have been posted as aforesaid.
THE PARTIES HEREBY WAIVE TRIAL BY JURY IN ANY LEGAL PROCEEDING INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR
OTHERWISE) IN ANY WAY ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
RELATIONSHIP EVIDENCED HEREBY.
6. Mandatory and Other Prepayments. Notwithstanding anything
herein to the contrary, in the event that (i) ICC or Maker closes a secondary
offering or other financing which results in net proceeds to ICC or Maker, as
the case may be, of $50,000,000 or more, Maker shall within five (5) business
days following receipt of such proceeds prepay all amounts due under this Note,
or (ii) ICC or Maker closes a secondary offering or other financing which
results in net proceeds to ICC or Maker, as the case may be, of at least
$20,000,000 but less than $50,000,000, Maker shall within five (5) business days
following receipt of such proceeds prepay that portion of the amounts due under
this Note which is equal to forty percent (40%) of the amount of proceeds of
such offering or financing which exceeds $20,000,000. Maker also reserves the
right to make non-mandatory payments of Principal or interest before they are
due without penalty or premium. Any payment made before it is due for any reason
shall be known as a "Prepayment". All Prepayments shall first be applied towards
accrued and unpaid interest, then on the Principal amount due on the First
Installment until fully paid, then applied toward the Principal amount due on
the Final Installment.
7. Notices. All notices, demands and requests of any kind which
either party may be required or may desire to serve upon the other party hereto
in connection with this Note shall be delivered only by courier or other means
of personal service which provides written verification of receipt or by
registered or certified mail return receipt requested which includes Federal
Express or similar service (the "Notice"). Any such Notice or demand so
delivered by registered or certified mail shall be deposited in the United
States mail, or in the case of courier, deposited with the courier, with postage
or delivery charges thereon fully prepaid. All Notices shall be addressed to the
parties to be served as follows:
(4)
If to Maker: With Copies to:
Rare Medium, Inc. ▇▇▇▇▇ ▇. ▇▇▇▇▇, Chairman
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ICC Technologies, Inc.
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esquire
Mesirov ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Holder:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, Esquire
Stockholder Representative ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ &
▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Service of any such notice or demand so made shall be deemed complete on the day
of actual delivery thereof as shown by the addressee's registry, certification
receipt or other evidence of receipt or first rejection. Either party hereto may
from time to time by notice in writing served upon the other as aforesaid
designate a different mailing address or a different or additional person to
which all such notices or demands hereafter are to be addressed.
8. Assignment. The Maker hereof may not assign its indebtedness
and responsibilities hereunder without the prior written consent of the Holder,
which consent shall not be unreasonably withheld. This Note is not assignable by
Holder without the written consent of Maker, which consent shall not be
unreasonably withheld.
9. General Provisions. This Note shall be interpreted, construed
and enforced in accordance with the substantive laws of the State of New York,
without regard to conflicts. This Note may be changed only by an agreement in
writing signed by Maker and Holder. If any provisions of this Note shall be
found invalid, the remaining terms shall be binding and effective.
(5)
No delay or omission on the part of the Stockholder
Representative in exercising any right hereunder shall operate as a waiver of
such right or of any other right under this Note. A waiver on any one occasion
shall not be construed as a waiver of any such right or remedy on any future
occasion.
Witness the hand and seal of the undersigned.
RARE MEDIUM, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman
(6)
EXHIBIT D
FORM OF SECURITY AGREEMENT
SECURITY AGREEMENT
This SECURITY AGREEMENT, dated as of April 15, 1998 (the "Agreement") is
entered into by and among RARE MEDIUM INC., a New York corporation (the
"Debtor"), and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, in his capacity as Stockholder Representative,
as such term is defined in the Appointment of Stockholder Representative of even
date herewith (the "Stockholder Representative"), for the benefit of each of the
former stockholders of Debtor listed on Exhibit A attached hereto (collectively
referred to herein as the "Secured Parties").
R E C I T A L S
A. Pursuant to that certain Merger Agreement and Plan of Reorganization,
dated as of April 8, 1998 (the "Merger Agreement"), by and among Debtor, ICC
Technologies, Inc., a Delaware corporation ("ICC"), RareMedium Acquisition
Corp., and certain of the Secured Parties, Debtor has become indebted to the
Secured Parties for the aggregate principal sum of Twenty Two Million Two
Hundred Thousand Dollars ($22,200,000), together with accrued interest thereon,
all as more particularly set forth in that certain Secured Promissory Note dated
as of the date hereof, executed by Debtor in favor of the Stockholder
Representative for the benefit of the Secured Parties (the "RMI Note").
B. As security for the prompt and complete payment of the indebtedness
evidenced by the RMI Note, Debtor has agreed to grant to the Stockholder
Representative for the benefit of the Secured Parties a security interest in the
Collateral as hereinafter defined.
C. In connection with the issuance of the RMI Note, the Stockholder
Representative and the Secured Parties have entered into that certain
Appointment of Stockholder Representative dated as of the date hereof (as
amended, modified or supplemented from time to time, the "Appointment of
Stockholder Representative"), pursuant to which the Stockholder Representative
has agreed to act on behalf of and for the benefit of the Secured Parties with
respect to this Security Agreement, the RMI Note and the Stock Pledge Agreement
by and between ICC and the Stockholder Representative of even date herewith.
D. All capitalized terms used herein but not otherwise defined herein shall
have the meaning ascribed to them in the Merger Agreement, unless the context
clearly requires the contrary.
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
and agreements hereinafter contained, the parties hereto hereby agree as
follows:
ARTICLE I
SECURITY INTEREST
1.1. Grant of Security Interest. In order to secure full and prompt
performance of all Obligations (as hereinafter defined) under the RMI Note, the
Debtor hereby grants to the Secured Parties a first priority security interest
and lien ("Security Interest") in and to that certain property described on
Schedule 1.1 attached hereto (the "Collateral") wherever located, now existing
or hereafter acquired, subject to no other liens and encumbrances. With respect
to each particular item of Collateral, the Security Interest herein granted
shall attach immediately upon Debtor's execution hereof or as soon as Debtor
acquires rights in and to such item of Collateral.
1.2. Collateral Interests. The parties to this Agreement and to the
Appointment of Stockholder Representative contemplate that the Stockholder
Representative will hold on behalf of the Secured Parties proportionate security
interests in the Collateral. As provided in the Appointment of Stockholder
Representative, each individual member of the Secured Parties shall have an
undivided security interest in the Collateral, and shall have equal priority
with respect to any claims to the Collateral. No individual member of the
Secured Parties will have a priority interest in the Collateral, and
distributions of Collateral shall be made on a pro rata basis.
1.3. Obligation To Be Secured. The Security Interest herein granted shall
secure the prompt and complete payment and performance, satisfaction and
discharge of all obligations, whether principal, interest, fees, expenses or
otherwise ("Obligations") in favor of the Stockholder Representative acting on
behalf of and for the benefit of the Secured Parties arising under the RMI Note,
any renewals or extensions thereof or amendments thereto and the obligations of
Debtor under this Agreement.
1.4. Fees and Expenses. The Security Interest herein granted shall also
secure the payment and reimbursement of all reasonable sums and expenses,
including reasonable attorneys' fees, court costs and collection and receivers'
expenses, advanced or incurred by the Stockholder Representative in connection
with the protection of the Security Interest herein granted, the preservation or
disposition of the Collateral (or any part thereof) or the enforcement by
Stockholder Representative of the obligation to be secured.
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
2.1. Representations and Warranties of Debtor. The Debtor hereby represents
and warrants to the Stockholder Representative and the Secured Parties and
agrees that:
(A) Title to Collateral. Except for the Security Interest granted by
this Agreement, the Debtor has good title to all and every part of the
Collateral, subject only to those rights and encumbrances set forth on Schedule
5.10 of the Merger Agreement and any other liens, claims or encumbrances against
Debtor arising prior to the Effective Time of the Merger and which have or have
not been disclosed by Debtor and the Founding Stockholders to ICC on a schedule
to the Merger Agreement.
(B) Financing Statements. The Debtor will execute all necessary
financing statements in forms satisfactory to the Stockholder Representative and
will further execute all other related instruments reasonably required by
Stockholder Representative necessary to perfect the security interest granted
hereby.
2
(C) Sale, Lease, or Disposition of Collateral. The Debtor will not,
without the prior written consent of Stockholder Representative, which shall not
be unreasonably withheld, sell, contract to sell, lease, encumber, transfer or
dispose of the Collateral or any interest in it, until final termination of this
Security Agreement, except in the ordinary course of business, upon a merger of
Debtor with and into ICC, and as set forth in 2.1(H) hereof.
(D) Protection of Collateral. The Debtor will keep the Collateral in
good operating condition and repair (subject to normal wear and tear and
obsolescence).
(E) Financial Reporting. The Debtor will maintain its books, accounts
and records in the usual and ordinary manner, and in a manner that fairly and
correctly reflects its income, expenses, assets and liabilities in accordance
with GAAP on a basis consistent with prior years.
(F) Legal Compliance. The Debtor will substantially comply with all
Federal, state, local and other governmental (domestic and foreign) laws,
statutes, ordinances, rules, regulations, orders, writs, injunctions, decrees,
awards or other requirements of any court or other governmental or other
authority or body applicable to it or its properties and assets or to the
conduct of its business.
(G) Taxes and Assessments. The Debtor will pay promptly when due all
taxes and assessments on the Collateral, or any part of the Collateral, or for
its use and operation, except for taxes and assessments contested in good faith.
(H) Location and Identification. The Debtor will keep the Collateral
separate and identifiable and located either at the address shown above or at
the respective addresses set forth in the Merger Agreement, or at such locations
notice of which will be provided to Debtor except that Debtor shall have the
right to remove the Collateral from that address upon thirty (30) days notice to
Stockholder Representative, and in such event Debtor will cooperate in making
any required filings related thereto, for as long as this Security Agreement
remains in effect.
(I) Reimbursement of Expenses. At the option of Stockholder
Representative and upon providing notice in the manner set forth in Section 5.8
hereof, Stockholder Representative may discharge taxes, liens, or other related
costs, or perform or cause to be performed for and on behalf of the Debtor any
actions and conditions, obligations, or covenants hereunder that the Debtor has
failed or refused to perform, and may pay for the repair, maintenance, and
preservation of the Collateral. Any and all reasonable sums expended by
Stockholder Representative under this paragraph, including but not limited to
reasonable attorneys' fees, court costs, agent's fees, or commissions, or any
other costs or expenses, shall be payable to Stockholder Representative at the
place designated in the RMI Note and shall be secured by this Security
Agreement.
(J) Payment. The Debtor will pay the RMI Note in accordance with the
terms and provisions thereof and will promptly repay all sums expended by
Stockholder Representative in accordance with the terms and provisions of this
Security Agreement. On full payment by the
3
Debtor of all indebtedness secured hereunder, this Security Agreement shall
expire, Stockholder Representative's Security Interest in the Collateral shall
terminate, and Stockholder Representative will join in executing all necessary
termination statements in form satisfactory to the Debtor.
(K) Change of Residence or Place of Business. The Debtor will provide
30 days advance notice to Stockholder Representative of any change of the
Debtor's residence, chief place of business, or place where records concerning
the Collateral are kept.
(L) Waiver. Stockholder Representative's acceptance of partial or
delinquent payments, or the failure of Stockholder Representative to exercise
any right or remedy, shall not constitute a waiver of any obligation of the
Debtor or right of Stockholder Representative and shall not constitute a waiver
of any other similar default that occurs later.
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ARTICLE III
EVENTS OF DEFAULT
3.1. Events of Default. The occurrence and continuance of any of the
following shall constitute an event of default ("Event of Default") hereunder:
(A) Default Under the RMI Note. A Default under the RMI Note (as
"Default" is defined therein).
(B) Breach of this Agreement and Other Transaction Documents. The
material breach of any representation, warranty, covenant or term of Debtor
contained in this Agreement, which is not cured within thirty (30) Business Days
(as defined in the RMI Note) after prior written notice thereof is delivered to
Debtor by Stockholder Representative.
(C) Bankruptcy. The insolvency or appointment of a receiver to take
charge of the business or property of Debtor or Guarantor, the commission of an
act of bankruptcy, the making of a general assignment for the benefit of
creditors or the filing of any petition in bankruptcy by Debtor or Guarantor or
for relief under the Federal Bankruptcy Code, as amended, or under any other
laws, whether federal or state, for the relief of debtors, now or hereafter
existing, or the filing of any involuntary petition in bankruptcy against Debtor
or Guarantor, unless the same is dismissed within sixty (60) days after the
filing thereof.
(D) Dissolution. The cessation of Debtor's business operations.
ARTICLE IV
REMEDIES UPON OCCURRENCE OF DEFAULT EVENT
4.1. Remedies of Stockholder Representative.
(A) Upon an Event of Default. Upon the occurrence and continuation of
any Event of Default hereunder, Stockholder Representative may, upon notifying
the Debtor, in the manner set forth in Section 5.8 hereof, to act as
attorney-in-fact for the benefit of Debtor and proceed to enforce payment and
exercise any and all of the rights and remedies provided under Article 9 of the
Uniform Commercial Code ("UCC"), as enacted in the State of New York, as well as
other rights and remedies either at law or in equity possessed by the secured
parties, including the right (i) for and in the name, place, and stead of the
Debtor to execute endorsements, assignments, or other instruments of conveyance
or transfer with respect to all or any of the Collateral, (ii) to receive,
endorse, and collect all checks made payable to the order of the Debtor
representing any distribution in respect of the Collateral or any part thereof
and to give full discharge for the same, and (iii) to cause all or any of the
Collateral to be transferred into his name or that of nominee or nominees (the
same being solely for the purpose of a Stockholder Representative's taking
possession of the Collateral, as permitted under Section 9-503 of the UCC, and,
without further action, shall not be deemed an exercise of Stockholder
Representative's right to accept the Collateral as a discharge of any of the
obligations secured hereby or an abandonment of Debtor's obligation with respect
to any deficiency under Section 9-505 of the UCC). The Debtor recognizes that
the Stockholder Representative may be compelled to resort to one or more private
sales of the Collateral to a restricted group of purchasers which will be
obliged to agree, among other things, to acquire securities for their own
account for investment and not with a view to the distribution or resale
thereof. The Debtor acknowledges and agrees that any such private sale may
result in prices and
5
other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall not
be deemed to have been made in other than a commercially reasonable manner by
reason of such circumstances.
(B) Sale of Collateral. Upon the occurrence and continuation of any
Event of Default hereunder and upon fifteen (15) calendar days' prior written
notice to the Debtor, which the Debtor hereby acknowledges to be sufficient,
commercially reasonable and proper, sell, lease or otherwise dispose of any or
all of the Collateral at any time and from time to time at public or private
sale, with or without advertisement thereof and apply the proceeds of any such
sale first to the Stockholder Representative's expenses in preparing the
Collateral for sale (including reasonable attorneys' fees), second to the
complete satisfaction of the RMI Note, pro rata to the Secured Parties, third to
any other obligations secured by this Agreement, and fourth, the balance, if
any, remaining after the payment in full of the obligations secured hereby shall
be paid over to Debtor or its designee. The Debtor waives the benefit of any
marshalling doctrine with respect to the Stockholder Representative's exercise
of its rights hereunder. The Debtor grants a royalty-free license to the
Stockholder Representative for all patents, service marks, trademarks,
tradenames, copyrights, computer programs and other intellectual property and
proprietary rights sufficient to permit Stockholder Representative to exercise
all rights granted to Stockholder Representative under this Section.
(C) Exercise of Rights. Notwithstanding any other provisions of this
Agreement, upon any Event of Default, the rights and remedies under this
Agreement may be exercised only by Stockholder Representative. Further,
Stockholder Representative agrees that all notices required to be delivered
under Article 9, including without limitation, notice of time of any public sale
or the time after which a private sale or other intended disposition is to take
place, shall be delivered not less than twenty (20) days prior to any such
action, and such notice shall be deemed commercially reasonable notice for all
purposes hereunder.
ARTICLE V
MISCELLANEOUS
5.1. Applicable Law and Venue. This Agreement shall be construed under and
in accordance with the Uniform Commercial Code as enacted in the State of New
York and other applicable laws of the State of New York.
5.2. Binding on Successors. This Agreement shall be binding on and inure to
the benefit of the parties hereto, the Secured Parties, and their respective
heirs, executors, administrators, legal representatives, successors and assigns
as permitted by this Agreement.
5.3. Attorneys' Fees. Should any legal action based in contract law be
commenced between the parties to this Agreement concerning the Collateral, this
Agreement, or the rights and duties of either party in relation to them, the
prevailing party shall be entitled to a reasonable sum for reimbursement for
attorneys' fees and legal expenses.
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5.4. Entire Agreement. This Agreement, and all instruments or documents
delivered pursuant hereto or thereto, together with all exhibits thereto,
contain the entire understanding and agreement of the parties hereto with
respect to the subject matter hereof and may not be altered or amended except by
the written agreement of the parties hereto.
5.5. Severability. Should any one or more provisions of this Agreement be
determined to be illegal or unenforceable, all other provisions of this
Agreement nevertheless shall be effective.
5.6. Terminology. Where the context or construction requires, all words
applied in the plural shall be deemed to have been used in the singular and vice
versa, and the neuter shall include the masculine and feminine.
5.7. Headings. The headings of the several paragraphs hereof are included
only for the convenience of reference and are not intended to govern, construe
or modify any provisions of the several paragraphs hereof.
5.8. Notices. All written notices, demands and requests of any kind which
either party may be required or may desire to serve upon the other party hereto
in connection with this Agreement shall be delivered only by courier or other
means of personal service which provides written verification of receipt or by
registered or certified mail return receipt requested, which also includes
Federal Express or similar service (The "Notice"). Any such notice or demand so
delivered by registered or certified mail or courier shall be deposited in the
United States mail, or in the case of courier, deposited with the courier, with
postage thereon fully prepaid. All notices shall be addressed to the parties to
be served as follows:
If to Stockholder Representative: Copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, Esquire
c/o Rare Medium, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
If to ICC: Copies to:
▇▇▇▇▇ ▇. ▇▇▇▇▇, Chairman ▇▇▇▇▇▇▇ ▇▇▇▇▇, Esquire
ICC Technologies, Inc. Mesirov ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
7
Service of any such notice or demand so made shall be deemed complete on the day
of actual delivery thereof as shown by the addressee's registry, certification
receipt or other evidence of receipt or upon first rejection. Either party
hereto may from time to time by notice in writing served upon the other as
aforesaid designate a different mailing address or a different or additional
person to which all such notices or demands hereafter are to be addressed.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day
and year first above written.
RARE MEDIUM, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
Stockholder Representative, ON BEHALF OF the
Secured Parties
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Schedule 1.1
The Collateral
All tangible and intangible personal property of the Debtor of whatever
kind or nature, wherever located, whether now existing or hereafter acquired,
including but not limited to:
(a) all accounts, accounts receivable, rights under contracts, chattel
paper, instruments, and all obligations due the Debtor for goods sold or to be
sold, consigned or leased or to be leased, or services rendered or to be
rendered;
(b) all leases and rental agreements for personal property between the
Debtor as lessor (whether by origination or derivation) and any and all persons
or parties as lessee(s), and all rentals, purchase option amounts, and other
sums due thereunder; and all inventory, equipment, goods and property subject to
such leases and rental agreements and all accessions, parts and tools attached
thereto or used therewith and all of the Debtor's residual or reversionary
rights therein;
(c) all machinery, equipment, furniture, fixtures, tools, motor
vehicles, and all accessories, parts and equipment therewith, whether or not the
same shall be deemed affixed to real property, and all other tangible personal
property ("Equipment");
(d) all general intangibles, which term shall have the meaning given to
it in the Uniform Commercial Code and shall additionally include but not be
limited to all contract rights, tax refunds, patents, trademarks, service marks,
tradenames, copyrights and other intellectual property and proprietary rights;
(e) all additions, replacements, attachments, accretions, accessions,
components and substitutions to or for any Equipment;
(f) all property of the Debtor, including without limitation, monies,
securities, instruments, chattel paper and documents, which at any time the
Stockholder Representative shall have or have the right to have in its
possession, or which is in transit to it (pursuant to the terms of a letter of
credit or otherwise) and, independent of and in addition to the Secured Parties'
rights of setoff (which the Debtor acknowledges), the balance of any account or
any amount which may be owing from time to time by the Secured Parties to the
Debtor.
(g) all books and records evidencing or relating to the foregoing,
including, without limitation, billing records of every kind and description,
customer lists, data storage and processing media, software and related
material, including computer programs, computer tapes, cards, disks and
printouts, and including any of the foregoing which are in the possession of any
affiliate or any computer service bureau;
(h) all proceeds in whatever form and wherever located, which term
shall have the meaning given to it in the Uniform Commercial Code and shall
additionally include but not be limited to, whatever is received upon the use
lease, sale, exchange, collection or other utilization or any disposition of any
of the collateral described in subparagraphs (a) through (g) above, whether case
or noncash, and including without limitation, rental or lease payments,
accounts, chattel paper, instruments, goods, documents, contract rights, general
intangibles, equipment, inventory and insurance proceeds; and all such proceeds
of the foregoing.
Notwithstanding the foregoing, the Collateral shall not include any portion of
the aforementioned property which is either (i) held by the Debtor as a
fiduciary under applicable state law or regulation, or (ii) acquired by the
Debtor as a result of any future merger, acquisition or consolidation, where a
lien thereon is given in consideration of or in connection with such future
merger, acquisition or consolidation, provided such transaction is either
approved or consented to by Stockholder Representative, or is a bona fide
transaction with an "Affiliate" (as said term is defined in the Merger
Agreement) of Debtor.
2
EXHIBIT E
FORM OF PLEDGE AGREEMENT
STOCK PLEDGE AGREEMENT
STOCK PLEDGE AGREEMENT, dated as of April 15, 1998, made by ICC
TECHNOLOGIES, INC., a Delaware corporation ("ICC" or "Pledgor") and delivered to
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, in his capacity as Stockholder Representative, as such term is
defined in the Appointment of Stockholder Representative of even date herewith
("Pledgee" or "Stockholder Representative"), for the benefit of each of the
former stockholders of Rare Medium, Inc., a New York corporation ("Rare
Medium"), listed on Exhibit "A" attached hereto and made a part hereof
(collectively, the "Secured Parties").
R E C I T A L S
A. Pursuant to that certain Merger Agreement and Plan of Reorganization,
dated as of April 8, 1998 (the "Merger Agreement"), by and among Rare Medium,
ICC, RareMedium Acquisition Corp. and certain of the Secured Parties, Rare
Medium has become indebted to the Secured Parties for the aggregate principal
sum of Twenty Two Million Two Hundred Thousand Dollars ($22,200,000), together
with accrued interest thereon, all as more particularly set forth in that
certain Secured Promissory Note (the "RMI Note") dated as of the date hereof,
executed by Rare Medium in favor of the Stockholder Representative for the
benefit of the respective Secured Parties.
B. ICC has guaranteed the Obligations as defined in Section 1.3 below
pursuant to the terms of that certain Guaranty of even date herewith by ICC
("ICC Guaranty"). As security for the ICC Guaranty and the prompt and complete
payment of the Obligations, Pledgor has agreed to pledge the Pledged Collateral
(as defined below), to the Stockholder Representative for the benefit of the
Secured Parties.
C. In connection with the issuance of the RMI Note, the Stockholder
Representative and the Secured Parties have entered into that certain
Appointment of Stockholder Representative dated as of the date hereof (as
amended, modified or supplemented from time to time, the "Appointment of
Stockholder Representative"), pursuant to which the Stockholder Representative
has agreed to act on behalf of and for the benefit of the Secured Parties with
respect to this Stock Pledge Agreement, the RMI Note and the Security Agreement
of even date herewith between Rare Medium and the Stockholder Representative for
the benefit of the Secured Parties.
D. All capitalized terms used herein but not otherwise defined herein shall
have the meaning ascribed to them in the Merger Agreement, unless the context
clearly requires the contrary.
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
and agreements hereinafter contained, the parties hereto hereby agree as
follows:
ARTICLE I
SECURITY INTEREST
1.1. Pledge. In order to secure the full performance of all Obligations (as
hereinafter defined) under the RMI Note, Pledgor hereby grants to the Secured
Parties a security interest in the following property (collectively, the
"Pledged Collateral") as follows:
(A) all shares of capital stock of the Surviving Corporation, which
shares are represented by Stock Certificate No. 26 of the Surviving Corporation,
representing one share issued in the name of Pledgor; and
(B) all stock, options, other securities, instruments, other dividends
or rights of any kind or nature and distributions with respect thereto; and
(C) all proceeds of any kind or nature of the foregoing.
1.2. Pledged Collateral Interests. The parties to this Agreement and to the
Appointment of Stockholder Representative contemplate that the Stockholder
Representative will hold on behalf of the Secured Parties to effectuate each
Secured Party's proportionate interest in the Pledged Collateral, proportionate
security interests in the Pledged Collateral. As provided in the Appointment of
Stockholder Representative, each individual member of the Secured Parties shall
have an undivided security interest in the Pledged Collateral, and shall have
equal priority with respect to any claims to the Pledged Collateral. No
individual member of the Secured Parties will have a priority interest in the
Pledged Collateral, and no individual member of the Secured Parties shall share
in any distribution of Pledged Collateral in excess of his or her pro rata share
of default consideration due.
1.3. Obligation to be Secured. This Agreement secures the payment and
performance of all obligations, whether principal, interest, fees, expenses or
otherwise ("Obligations"), in favor of the Secured Parties arising under the RMI
Note, any renewals, modifications or extensions thereof or amendments thereto,
the obligations of Pledgor under this Agreement and Rare Medium's obligations
under the Security Agreement.
1.4. Delivery of Pledged Collateral. Pledgor shall deliver the Pledged
Collateral to the Stockholder Representative and such certificate shall be in
suitable form for transfer by delivery, or shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to the Stockholder Representative. The Stockholder Representative
shall have the right at any time to exchange the certificate[s] or instrument[s]
representing or evidencing Pledged Collateral for certificate[s] or
instrument[s] of smaller or larger denominations.
1.5. Fees and Expenses. The security interest herein granted shall also
secure the payment and reimbursement of all reasonable sums and expenses,
including reasonable attorneys' fees, court costs and collection and receivers'
expenses, advanced or incurred by the Stockholder Representative in connection
with the protection of the security interest herein granted, the preservation or
disposition of the Pledged Collateral (or any part thereof) or the enforcement
by the Stockholder Representative of the obligation to be secured.
ARTICLE II
REPRESENTATIONS AND WARRANTIES; CERTAIN RIGHTS
2.1. General Representations, Warranties and Covenants. Pledgor represents
and warrants to the Stockholder Representative, for the benefit of the Secured
Parties, and agrees that:
2
(A) Title to Pledged Collateral. Except for the security interest
granted by this Agreement and, any liens, claims or encumbrances against any of
the Secured Parties arising prior to the Effective Time of the Merger affecting
their shares of stock in Debtor and which have or have not been disclosed by
Rare Medium and the Founding Stockholders to ICC on any schedule to the Merger
Agreement or Non-Founder Agreement, Pledgor has all right, title and interest in
and to all and every part of the Pledged Collateral, free and clear of all
liens, claims, and other encumbrances of every nature whatsoever. The securities
included in the Pledged Collateral are duly and validly issued, and duly and
validly pledged hereunder under applicable laws, and Pledgor will defend the
Secured Parties' interest therein against the claims and demands of all persons
or entities. The security interest granted hereby represents a valid lien on the
Pledged Collateral in favor of the Stockholder Representative (for the benefit
of the Secured Parties), superior and prior to the rights of all third persons
or entities.
(B) Reimbursement of Expenses. At the option of the Stockholder
Representative and upon providing Notice in the manner set forth in Section 5.8
hereof, the Stockholder Representative may discharge taxes, liens, or other
related costs, or perform or cause to be performed for and on behalf of Pledgor
any actions and conditions, obligations, or covenants hereunder that Pledgor has
failed or refused to perform. Any and all reasonable sums expended by the
Stockholder Representative under this paragraph, including but not limited to
reasonable attorneys' fees, court costs, agent's fees, or commissions, or any
other costs or expenses, shall be payable at the place designated in the RMI
Note and shall be secured by this Stock Pledge Agreement.
(C) Payment. Rare Medium will pay the RMI Note and any renewal,
modification or extension of it and any other indebtedness secured by this
Agreement in accordance with the terms and provisions of the RMI Note and will
promptly repay all sums expended by the Stockholder Representative in accordance
with the terms and provisions of this Stock Pledge Agreement. On full payment by
or on behalf of Rare Medium of all indebtedness secured hereunder (and the
expiration of any applicable period during which any such payments may be
subject to recoupment, repayment, or forfeiture under any applicable bankruptcy
or insolvency laws), this Stock Pledge Agreement shall expire and the Secured
Parties' security interest in the Pledged Collateral shall terminate, and the
Stockholder Representative will return any Pledged Collateral heretofore
delivered and join in executing all necessary termination statements in form
satisfactory to Pledgor.
(D) Change of Residence or Place of Business. Pledgor will promptly
notify the Stockholder Representative of any change of Pledgor's chief place of
business or place where records concerning the Pledged Collateral are kept.
(E) Waiver. The Stockholder Representative's acceptance of partial or
delinquent payments, or the failure of the Stockholder Representative to
exercise any right or remedy, shall not constitute a waiver of any obligation of
Pledgor or right of the Stockholder Representative and shall not constitute a
waiver of any other similar default that occurs later.
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(F) No Issuance of Stock. Pledgor shall not permit Rare Medium, or any
subsidiaries owned or controlled by Rare Medium, to issue any additional shares
of stock, of any class or series, or options, warrants or other rights
exercisable for, or convertible into, shares of stock of Rare Medium, during the
term of this Agreement.
(G) Financing Statement. Pledgor will join in executing all necessary
financing statements in forms satisfactory to the Stockholder Representative and
will further execute all other related instruments reasonably required by the
Stockholder Representative.
(H) [Intentionally Deleted.]
(I) Stock Power. Pledgor has delivered to the Stockholder
Representative, a stock power or equivalent instrument of assignment or
endorsement with respect to each security included in the Pledged Collateral,
executed in blank together with the certificate or other evidence of each
security included in the Pledged Collateral (or will deliver upon any securities
becoming subject to the lien granted under this Agreement).
(J) No Liens. Without the prior written consent of the Pledgee, the
Pledgor shall not (i) sell, assign, transfer, exchange, or otherwise dispose of,
or grant any option with respect to, the Pledged Collateral, except in the event
of a merger of RareMedium with and into ICC, or (ii) create, incur or permit to
exist any lien or option in favor of, or any claim of any Person with respect
to, any of the Pledged Collateral, or any interest therein, except for the lien
provided for by this Stock Pledge Agreement.
(K) Further Assurances. At any time and from time to time, upon the
written request of the Pledgee, the Pledgor will promptly and duly execute and
deliver such further instruments and documents and take such further actions as
the Pledgee may reasonably request for the purposes of obtaining or preserving
the full benefits of this Stock Pledge Agreement and of the rights and powers
herein granted.
2.2. Voting Rights; Dividends; Etc.
(A) Continuance of Pledgor's Rights. So long as no Event of Default
(defined below) shall have occurred and be continuing:
(1) Pledgor shall be entitled to exercise any and all of its voting
and other consensual rights pertaining to the Pledged Collateral or any part
thereof for any purpose not inconsistent with the terms of this Agreement.
(2) Pledgor shall be entitled to receive and retain free and clear
of the security interest of Stockholder Representative hereunder any and all
dividends, interest, and other distributions paid to Pledgor in respect of the
Pledged Collateral or any part thereof, except that (a) any and all dividends,
interest, or other distributions paid or payable other than in cash in respect
of, and instruments and other property received, receivable or otherwise
distributed in respect of, or in exchange for, any Pledged
4
Collateral, shall also constitute Pledged Collateral and shall be promptly
delivered to Stockholder Representative in conformity with Section 1.4, and (b)
any and all:
(i) dividends, interest, or other distributions paid or payable
in cash in respect of any Pledged Collateral in connection with a partial or
total liquidation or dissolution or in connection with a reduction of capital,
capital surplus or paid-in-surplus, and
(ii) cash paid, payable or otherwise distributed in respect of
principal of, or in redemption of, or in exchange for, any Pledged Collateral
received by Pledgor shall be so received in trust for the benefit of Stockholder
Representative, be segregated from the other property or funds of Pledgor, and
be forthwith delivered to Stockholder Representative in the same form as so
received (with any necessary endorsement) to be held as cash collateral and
applied as provided in Section 4.1(C).
(3) Stockholder Representative shall execute and deliver (or cause
to be executed and delivered) to Pledgor all such proxies and other instruments
as Pledgor may reasonably request for the purpose of enabling Pledgor to
exercise its respective voting and other rights which it is entitled to exercise
pursuant to paragraph (1) above and to receive the dividends, interest, and
other distributions which it is authorized to receive and retain pursuant to
subparagraph (2) above.
(B) Rights Upon an Event of Default. Upon the occurrence and during the
continuance of an Event of Default:
(1) All rights of Pledgor to exercise the voting and other
consensual rights which it would otherwise be entitled to exercise pursuant to
Section 2.2(A)(1) and to receive the dividends, interest, and other
distributions which it would otherwise be authorized to receive and retain
pursuant to Section 2.2(A)(2) shall cease, and all such rights shall thereupon
become vested in Stockholder Representative who shall thereupon have the sole
right to exercise such voting and other consensual rights and to receive such
dividends, interest, and other distributions.
(2) All dividends, interest, and other distributions which are
received by Pledgor contrary to the provisions of paragraph (1) of this Section
2.2(B) shall be received in trust for the benefit of Stockholder Representative,
shall be forthwith paid over to Stockholder Representative in the same form as
so received (with any necessary endorsement) to be held as cash collateral and
applied as provided in Section 4.1(C).
ARTICLE III
EVENTS OF DEFAULT
3.1. Events of Default. The occurrence and continuance of any of the
following shall constitute an event of default ("Event of Default") hereunder:
5
(A) Default Under RMI Note. A Default under the RMI Note or the
Security Agreement (as default is defined therein).
(B) Breach of This Agreement. The material breach of any
representation, warranty, covenant or term of Pledgor contained in this
Agreement which is not cured within thirty (30) Business Days (as defined in the
RMI Note) after prior written notice thereof is delivered to Pledgor by
Stockholder Representative.
(C) Bankruptcy. The insolvency or appointment of a receiver to take
charge of the business or property of Pledgor or the commission of an act of
bankruptcy, the making of a general assignment for the benefit of creditors or
the filing of any petition in bankruptcy by or against any such party or for
relief under the Federal Bankruptcy Code, as amended, or under any other laws,
whether federal or state, for the relief of debtors, now or hereafter existing,
unless the same is dismissed within sixty (60) days after the filing thereof.
(D) Dissolution. The cessation of Pledgor's business operations.
ARTICLE IV
REMEDIES UPON OCCURRENCE OF DEFAULT EVENT
4.1. Remedies of Stockholder Representative on Behalf of the Secured
Parties.
(A) Remedies Upon Event of Default. Upon the occurrence and
continuation of any Event of Default hereunder, the Stockholder Representative
may, upon notifying Pledgor, in the manner set forth in Section 5.8 hereof,
proceed to enforce payment and exercise any and all of the rights and remedies
provided under Article 9 of the Uniform Commercial Code ("UCC"), as enacted in
the State of New York, as well as other rights and remedies either at law or in
equity possessed by the Stockholder Representative, including the right (i) for
and in the name, place, and stead of the Pledgor to execute endorsements,
assignments, or other instruments of conveyance or transfer with respect to all
or any of the Pledged Collateral, (ii) to receive, endorse, and collect all
checks made payable to the order of the Pledgor representing any distribution in
respect of the Pledged Collateral or any part thereof and to give full discharge
for the same, and (iii) to cause all or any of the Pledged Collateral to be
transferred into his name or that of nominee or nominees (the same being solely
for the purpose of a Stockholder Representative's taking possession of the
Pledged Collateral, as permitted under Section 9-503 of the UCC, and, without
further action, shall not be deemed an exercise of Stockholder Representative's
right to accept the Pledged Collateral as a discharge of any of the obligations
secured hereby or an abandonment of Pledgor's obligation with respect to any
deficiency under Section 9-505 of the UCC). The Pledgor recognizes that the
Stockholder Representative may be compelled to resort to one or more private
sales of the Pledged Collateral to a restricted group of purchasers which will
be obliged to agree, among other things, to acquire such securities for their
own account for investment and not with a view to the distribution or resale
thereof. The Pledgor acknowledges and agrees that any such private sale may
result in prices and other terms less favorable than if such sale were a public
sale and, notwithstanding such circumstances, agrees that any
6
such private sale shall not be deemed to have been made in other than a
commercially reasonable manner by reason of such circumstances. The Stockholder
Representative shall be under no obligation to delay a sale of any of the
Pledged Collateral for the period of time necessary to permit the applicable
company to register such securities for public sale under the Securities Act of
1933, or under applicable state securities laws, even if the applicable company
would agree to do so.
(B) Exercise of Remedies. Notwithstanding any other provisions of this
Agreement, upon any Event of Default, the rights and remedies under this
Agreement may be exercised only by the Stockholder Representative. Further, the
Stockholder Representative agrees that all notices required to be delivered
under such Article 9, including without limitation, notice of time of any public
sale or the time after which a private sale or other intended disposition is to
take place, shall be delivered not less than fifteen (15) days prior to any such
action, and such notice shall be deemed commercially reasonable notice for all
purposes hereunder, provided, however, that the foregoing agreement shall not
prohibit the Stockholder Representative from disposing of Collateral upon lesser
notice for any type of Collateral for which lesser notice is permitted under and
in accordance with UCC Section 9-504(3).
(C) Cash and Proceeds. Any cash held by Stockholder Representative as
Pledged Collateral and all cash proceeds received by Stockholder Representative
in respect of any sale of, collection from, or other realization on all or any
part of the Pledged Collateral may, in the discretion of Stockholder
Representative, be held by Stockholder Representative as collateral for, and/or
then or at any time thereafter applied in whole or in part by Stockholder
Representative against, all or any part of the RMI Note, but in accordance with
the provisions set forth in Section 4.1D below.
(D) Application of Proceeds. Except as otherwise provided herein, all
money that the Stockholder Representative shall receive in accordance with these
provisions, whether by sale of the Pledged Collateral or otherwise, shall be
applied in the following manner. First, to the payment of all costs and expenses
(whether of the Stockholder Representative, his counsel, or agents) incurred in
connection with the administration and enforcement of or the preservation of any
rights under the RMI Note, this Agreement or the Security Agreement, including
all costs, expenses, liabilities, and damages of any kind incurred in connection
with litigation involving third parties with respect to the Pledged Collateral
and/or exercising and performing any of the rights set forth in this Agreement;
Second, to the payment of the Obligations, pro rata to the Secured Parties;
Third, to any other obligations secured by this Agreement; and Fourth, the
balance, if any, remaining after payment in full of the obligations secured
hereby shall be paid over to the Pledgor or its designee.
ARTICLE V
MISCELLANEOUS
5.1. Applicable Law. This Agreement shall be construed under and in
accordance with the Uniform Commercial Code as enacted in the State of New York
and other applicable laws of the State of New York.
7
5.2. Binding on Successors. This Agreement shall be binding on and inure to
the benefit of the parties and their respective heirs, executors,
administrators, legal representatives, successors and assigns as permitted by
this Agreement.
5.3. Attorneys' Fees. Should any legal action based in contract law be
commenced between the parties to this Agreement concerning the Pledged
Collateral, this Agreement, or the rights and duties of any party in relation to
them, the prevailing party shall be entitled to reimbursement for reasonable
attorneys' fees and legal expenses.
5.4. Entire Agreement. This Agreement, and all instruments or documents
delivered pursuant hereto or thereto, together with all exhibits and schedules
thereto, contain the entire understanding and agreement of the parties hereto
with respect to the subject matter hereof and may not be altered or amended
except by the written agreement of the parties hereto.
5.5. Severability. Should any one or more provisions of this Agreement be
determined to be illegal or unenforceable, all other provisions of this
Agreement nevertheless shall be effective.
5.6. Terminology. Where the context or construction requires, all words
applied in the plural shall be deemed to have been used in the singular and vice
versa, and the neuter shall include the masculine and feminine.
5.7. Headings. The headings of the several paragraphs hereof are included
only for the convenience of reference and are not intended to govern, construe
or modify any provisions of the several paragraphs hereof.
8
5.8. Notices. All notices, demands and requests of any kind which any party
may be required or may desire to serve any other party hereto in connection with
this Agreement shall be delivered only by courier or other means of personal
service which provides written verification of receipt or by registered or
certified mail return receipt requested which shall also include Federal Express
or similar service (The "Notice"). Any such notice or demand so delivered by
registered or certified mail or courier shall be deposited in the United States
mail, or in the case of courier, deposited with the courier, with postage
thereon fully prepaid. All notices shall be addressed to the parties to be
served as follows:
If to Stockholder Representative: Copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, Esquire
c/o Rare Medium, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
If to ICC: Copies to:
▇▇▇▇▇ ▇. ▇▇▇▇▇, Chairman ▇▇▇▇▇▇▇ ▇▇▇▇▇, Esquire
ICC Technologies, Inc. Mesirov ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Service of any such notice or demand so made shall be deemed complete on the day
of actual delivery thereof as shown by the addressee's registry, certification
receipt or other evidence of receipt or upon first rejection. Any party hereto
may from time to time by notice in writing served upon the other as aforesaid
designate a different mailing address or a different or additional person to
which all such notices or demands hereafter are to be addressed.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day
and year first above written.
ICC TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman
Stockholder Representative, on behalf of
the Secured Parties
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
9
EXHIBIT M
FORM OF NON FOUNDER AGREEMENT
NON-FOUNDER AGREEMENT
THIS NON-FOUNDER AGREEMENT is made as of April 15th, 1998, by and among ICC
TECHNOLOGIES, INC., a Delaware corporation ("ICC"), RAREMEDIUM ACQUISITION
CORP., a New York corporation ("NEWCO") and each of the undersigned stockholders
of RARE MEDIUM, INC., a New York corporation (the "Company"), (each individually
a "STOCKHOLDER" and collectively, the "STOCKHOLDERS").
WHEREAS, each STOCKHOLDER is a record and beneficial owner of shares of the
capital stock of the COMPANY;
WHEREAS, ICC is the sole stockholder of NEWCO;
WHEREAS, the respective stockholders and Boards of Directors of NEWCO and
the COMPANY deem it advisable and in their best interests that NEWCO merge with
and into the COMPANY pursuant to a Merger Agreement and Plan of Reorganization,
dated as of April 8, 1998 (the "Merger Agreement") by and among ICC, NEWCO, the
COMPANY and the stockholders named therein (the "FOUNDING STOCKHOLDERS), and the
applicable provisions of the laws of the State of New York (the "Merger");
WHEREAS, ICC, the COMPANY and the FOUNDING STOCKHOLDERS, desire for each
STOCKHOLDER to enter into this Agreement; and
WHEREAS, capitalized terms used herein that are not otherwise defined shall
have the same meaning given such terms as set forth in the Merger Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt, adequacy
and sufficiency of which are hereby acknowledged and in consideration of the
premises and of the mutual agreements, representations, warranties, provisions
and covenants herein contained, the parties hereto hereby agree as follows:
1. DELIVERY OF MERGER CONSIDERATION
1.1. At the Effective Time of the Merger and on the Closing Date each share
of capital stock of the COMPANY owned by each STOCKHOLDER shall be canceled and
extinguished and, by virtue of the Merger and without any action on the part of
the holder thereof, automatically shall be converted into and shall be deemed to
represent, with respect to each STOCKHOLDER, (1) the right to receive
certificates representing the number of shares of ICC Stock set forth on Exhibit
B of the Merger Agreement with respect to such STOCKHOLDER, (2) the right to
receive the amount of cash set forth on Exhibit B of the Merger Agreement with
respect to such STOCKHOLDER, and (3) the right to receive a beneficial interest
in that portion of the principal amount of the Note set forth on Exhibit B of
the Merger Agreement with respect to such STOCKHOLDER, together with accrued
interest, due under the Note in the form attached to the Merger Agreement as
Exhibit C, which is to be delivered by the Surviving
Corporation at Closing, provided that such principal amount due under the Note
shall be subject to adjustment upward as set forth in Section 3.3 of the Merger
Agreement;
1.2. All ICC Stock received by the STOCKHOLDERS upon the Effective Time of
the Merger pursuant to this Agreement shall, except for restrictions on resale
or transfer described in Section 2.4 hereof, have the same rights as all the
other shares of outstanding ICC Stock by reason of the provisions of the
Certificate of Incorporation of ICC or as otherwise provided by Delaware General
Corporation Law (the "Delaware Law"). All voting rights of such ICC Stock
received by the STOCKHOLDERS shall be fully exercisable by the STOCKHOLDERS and
the STOCKHOLDERS shall not be deprived nor restricted in exercising those
rights.
1.3. At the Effective Time of the Merger and on the Closing Date the
STOCKHOLDERS, who are the holders of certificates representing the number of
shares of COMPANY Stock set forth on Schedule 5.3 of the Merger Agreement,
shall, in consideration of and upon surrender of such certificates, receive the
Merger Consideration consisting of the respective number of shares of ICC Stock
(a portion of which shares of ICC Stock shall be held in escrow pursuant to
Section 3.4 of the Merger Agreement, subject to adjustment in accordance with
the indemnification provisions set forth in Section 6 hereof), and the amount of
cash set forth opposite each Stockholder's name on Exhibit B of the Merger
Agreement with respect to such STOCKHOLDER, and the Stockholder Representative
shall receive, on behalf of the STOCKHOLDERS in accordance with the terms and
conditions of the Appointment of Stockholder Representative, the executed Note,
the principal amount of which is subject to adjustment upward as set forth in
Section 3.3 of the Merger Agreement. The Note shall be guaranteed by ICC
pursuant to an ICC Guaranty in the form of Exhibit N of the Merger Agreement and
secured by (i) the assets of the Surviving Corporation pursuant to a Security
Agreement in the form of Exhibit D of the Merger Agreement, and (ii) ICC's
pledge of the capital stock of the Surviving Corporation held by ICC pursuant to
a Pledge Agreement in the form of Exhibit E of the Merger Agreement. The cash
portion of the Merger Consideration shall be paid by wire transfer in accordance
with the wire instructions provided by the STOCKHOLDERS or by COMPANY check at
Closing. As aforesaid, the aggregate Merger Consideration, and thus the Merger
Consideration payable to each STOCKHOLDER, is subject to adjustment as set forth
in Section 3.3 of the Merger Agreement and Section 6 hereof.
1.4. At the Closing, each STOCKHOLDER shall deliver to ICC, and delivery of
the Merger Consideration to such STOCKHOLDERS shall be conditioned upon receipt
of, the certificates representing COMPANY Stock, duly endorsed in blank by the
STOCKHOLDER, or accompanied by stock powers duly endorsed in blank, with
signatures guaranteed by a national or state chartered bank or other financial
institution, and with all necessary Transfer Tax and other revenue stamps,
acquired at the STOCKHOLDERS' expense, affixed and canceled. The STOCKHOLDERS
agree to promptly cure any deficiencies with respect to the endorsement of the
stock certificates or other documents of conveyance with respect to such COMPANY
Stock or with respect to the stock powers accompanying any COMPANY Stock.
2
1.5. The STOCKHOLDERS agree to abide by and be bound by the terms of
Section 3.4 of the Merger Agreement with respect to the delivery of shares of
ICC Stock to the Escrow Agent, respectively.
2. REPRESENTATIONS AND WARRANTIES OF EACH STOCKHOLDER
Each STOCKHOLDER severally represents and warrants to ICC that the
representations and warranties set forth below are true and correct as of the
date of this Agreement and shall be true and correct at the time of the Closing
Date.
2.1. Authority: Ownership. Such STOCKHOLDER has the full legal right, power
and authority to enter into this Agreement. Such STOCKHOLDER owns beneficially
and of record all of the shares of the COMPANY Stock identified on Schedule 5.3
of the Merger Agreement as being owned by such STOCKHOLDER, and except as set
forth on Schedule 5.3, such COMPANY Stock is owned free and clear of all liens,
security interests, pledges, charges, voting trusts, restrictions, encumbrances
and claims of every kind. Other than as set forth on Schedule 5.3 of the Merger
Agreement, such STOCKHOLDER does not own of record or otherwise beneficially own
any other shares of capital stock of the COMPANY.
2.2. Preemptive Rights. Such STOCKHOLDER does not have, or hereby waives,
any preemptive or other right to acquire shares of COMPANY Stock or ICC Stock
that such STOCKHOLDER has or may have had other than rights of such STOCKHOLDER
to acquire ICC Stock upon the Merger becoming effective pursuant to this
Agreement and the Merger Agreement.
2.3. No Intention to Dispose of ICC Stock. Such STOCKHOLDER represents and
warrants that it does not have any contract, undertaking, agreement or
arrangement with any Person to self transfer or pledge the ICC Stock (or any
part thereof) which such STOCKHOLDER has acquired hereunder and such STOCKHOLDER
does not have any present plans or intentions to enter into any such contract,
undertaking, agreement or arrangement.
2.4. Securities Act Representations.
Each STOCKHOLDER alone, or together with such STOCKHOLDER's "purchaser
representative" (as defined in Rule 501(h) promulgated under the ▇▇▇▇ ▇▇▇)
represents and warrants that it:
(a) understands and agrees that (x) the shares of ICC Stock to be
delivered to such STOCKHOLDER pursuant to this Agreement have not been and will
not be registered under the l933 Act, and therefore, may not be sold,
transferred or otherwise conveyed without compliance with the 1933 Act or
pursuant to an exemption therefrom and (y) the ICC Stock to be acquired by such
STOCKHOLDER pursuant to this Agreement is being acquired solely for its own
account, for investment purposes only, and with no present intention of
distributing, selling or otherwise disposing of the ICC Stock in connection with
a distribution;
3
(b) understands and knows that an investment in the ICC Stock is a
speculative investment which involves a high degree of risk of loss;
(c) is able to bear the economic risk of an investment in the ICC
Stock acquired pursuant to this Agreement, can afford to sustain a total loss of
such investment and has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of the proposed
investment in the ICC Stock;
(d) has had an adequate opportunity to review and to ask questions and
receive answers concerning any and all matters relating to the transactions
described in (i) this Agreement, and (ii) the Merger Agreement;
(e) has had an adequate opportunity to ask questions and receive
answers concerning (i) the background and experience of the current and proposed
officers and directors of ICC and the COMPANY, (ii) the plans for the operations
of the business of ICC and the COMPANY, and (iii) any plans for additional
acquisitions and the like;
(f) is either an "accredited investor" (as defined in Rule 501(a)
promulgated under the ▇▇▇▇ ▇▇▇) or, after taking into consideration the
information and advice provided to such STOCKHOLDER, has the requisite knowledge
and experience in financial and business matters to be capable of evaluating the
merits and risks of an investment in the ICC Stock;
(g) agrees that there have been no general or public solicitations or
advertisements or other broadly disseminated disclosures (including, without
limitation, any advertisement, article, notice or other communication published
in any newspaper, magazine or similar media or broadcast over television or
radio, or any seminar or meeting whose attendees have been invited by any
general solicitation or advertising) by or on behalf of ICC regarding an
investment in the ICC Stock; and
(h) understands and agrees that the ICC Stock shall bear the following
legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"). THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT
BE SOLD, ASSIGNED, EXCHANGED, TRANSFERRED, ENCUMBERED, PLEDGED,
DISTRIBUTED, APPOINTED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER THE ACT
OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND
ANY APPLICABLE STATE SECURITIES LAWS AND, IF REQUIRED BY ICC
TECHNOLOGIES, INC., AN OPINION OF COUNSEL ACCEPTABLE TO ICC
TECHNOLOGIES, INC. AND ITS COUNSEL STATING THAT REGISTRATION IS
NOT REQUIRED UNDER THE ACT.
4
Such STOCKHOLDER acknowledges that the effect of the foregoing legend, among
other things, is or may be to limit or destroy the value of the certificate for
purposes of sale or use as loan collateral. Such STOCKHOLDER consents that "stop
transfer" instructions may be noted against the ICC Stock.
3. REPRESENTATIONS AND WARRANTIES OF ICC
ICC and NEWCO jointly and severally represent and warrant to each
STOCKHOLDER that all of the following representations and warranties in this
Section 3 are true and correct at the date of this Agreement and shall be true
and correct at the time of the Closing Date.
3.1. Due Organization. ICC and NEWCO are each corporations duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, and are duly authorized and qualified to do business under all
applicable laws, regulations, ordinances and orders of public authorities to
carry on their business in the places and in the manner as now conducted, to own
or hold under lease the properties and assets they now own or hold under lease,
and to perform all of their obligations under any material agreement to which
they are a party or by which their properties are bound. ICC and NEWCO are
qualified to do business as a foreign corporations in the jurisdictions listed
in Schedule 6.1 to the Merger Agreement.
3.2. Authorization. The representatives of ICC and NEWCO executing this
Agreement have the authority to execute and deliver this Agreement and to bind
ICC and NEWCO to perform their obligations hereunder. The execution and delivery
of this Agreement by ICC and NEWCO and the performance by ICC and NEWCO of their
obligations under this Agreement and the consummation by ICC and NEWCO of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action by them in accordance with applicable law and the Certificate
of Incorporation and Bylaws of ICC and NEWCO. Each share of ICC Stock to be
issued to such STOCKHOLDER on the Closing Date will be duly and validly
authorized and issued, free and clear of all liens, claims and other
encumbrances and fully paid and nonassessable. This Agreement constitutes the
valid and binding obligation of ICC and NEWCO, enforceable in accordance with
its terms.
3.3. Transaction Not a Breach. Neither the execution and delivery of this
Agreement nor its performance will violate, conflict with, or result in a breach
of any provision of any law rule. regulation, order, permit, judgment,
injunction, decree or other decision of any court or other tribunal or any
Governmental Authority binding on ICC or NEWCO or conflict with or result in the
breach of any of the terms, conditions or provisions of the Certificate of
Incorporation or the Bylaws of ICC or NEWCO or of any contract, agreement,
mortgage or other instrument or obligation of any nature to which ICC or NEWCO
is a party or by which ICC or NEWCO is bound.
5
4. CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH STOCKHOLDER
The obligations of each STOCKHOLDER with respect to actions to be taken on
the Closing Date are subject to the satisfaction or waiver on or prior to the
Closing Date, of all of the conditions set forth in this Section 4. As of the
Closing Date, all conditions not satisfied shall be deemed to have been waived
by such STOCKHOLDER unless it has objected by notifying ICC in writing of such
objection on or before consummation of the transactions on the Closing Date,
except that no such waiver shall be deemed to affect the survival of the
representations and warranties of ICC and NEWCO contained in Section 3 hereof.
4.1. Representations and Warranties. All representations and warranties of
ICC and NEWCO contained in Section 3 shall be true and correct in all material
respects as of the Closing Date as though such representations and warranties
had been made as of that time.
4.2. Performance of Obligations. All of the terms, covenants and conditions
of this Agreement and the Merger Agreement to be complied with and performed by
ICC and NEWCO on or before the Closing Date shall have been duly complied with
and performed in all material respects on or before the Closing Date, as the
case may be.
4.3. No Litigation. No action or proceeding before a court or any other
Governmental Authority or body shall have been instituted or threatened to
restrain or prohibit the transactions contemplated by this Agreement and the
Merger Agreement.
5. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF ICC
The obligations of ICC and NEWCO with respect to actions to be taken on the
Closing Date, are subject to the satisfaction or waiver on or prior to the
Closing Date, of all of the conditions set forth in this Section 5. As of the
Closing Date, all conditions not satisfied shall be deemed to have been waived
by ICC and NEWCO unless they have objected by notifying each STOCKHOLDER in
writing of such objection on or before the consummation of the transactions on
the Closing Date, respectively, except that no such waiver shall be deemed to
affect the survival of the representations and warranties of each STOCKHOLDER
contained in Section 2 hereof.
5.1. Representations and Warranties. All the representations and warranties
of each STOCKHOLDER contained in this Agreement shall be true and correct in all
material respects as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date.
5.2. Performance of Obligations. All of the terms, covenants and conditions
of this Agreement to be complied with or performed by each STOCKHOLDER and all
of the terms, covenants and conditions of the Merger Agreement to be complied
with or performed by the Company and each Founding Stockholder on or before the
Closing Date shall have been duly performed or complied with in all material
respects on or before the Closing Date.
6
5.3. No Litigation. No action or proceeding before a court or any other
Governmental Authority or body shall have been instituted or threatened to
restrain or prohibit the transactions contemplated by this and the Merger
Agreement.
5.4. STOCKHOLDER'S Release. Each STOCKHOLDER shall have delivered to ICC an
instrument dated the Closing Date releasing the COMPANY from any and all (i)
claims prior to the Closing Date of such STOCKHOLDER against the COMPANY and
(ii) obligations prior to the Closing Date of the COMPANY to such STOCKHOLDER,
except for (x) items specifically identified on Schedule 5.4 to this Agreement
as being claims of or obligations to such STOCKHOLDER and (y) obligations
arising under this Agreement or the transactions contemplated hereby.
5.5. Approval of Merger Agreement; No Dissenters' Rights. Each of the
STOCKHOLDERS and FOUNDING STOCKHOLDERS shall have voted all of his or her shares
of the COMPANY Stock in favor of the Merger and all other transactions
contemplated by this Agreement and the Merger Agreement, and shall not have
exercised his or her dissenters' rights under the New York Law.
5.6. FIRPTA Certificate. Each STOCKHOLDER shall have delivered to ICC a
certificate to the effect that it is not a foreign person pursuant to Section
1.1445-2(b) of the Treasury regulations.
5.7. Satisfaction. All actions, proceedings, instruments and documents
required to carry out the Merger Agreement and this Agreement or incidental
thereto or hereto and all other related legal matters shall have been approved
by counsel to ICC.
6. INDEMNIFICATION
Each STOCKHOLDER and ICC each make the following covenants that are
applicable to them, respectively:
6.1. General Indemnification by each STOCKHOLDER. The STOCKHOLDERS covenant
and agree that they, jointly and severally, will indemnify, defend, protect and
hold harmless ICC, NEWCO, the Surviving Corporation and the COMPANY at all
times, from and after the date of this Agreement until the Expiration Date, from
and against all claims, damages, actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses (including specifically, but
without limitation, reasonable attorneys' fees and reasonable expenses of
investigation) incurred by ICC, NEWCO, the Surviving Corporation or the COMPANY
as a result of or arising from (i) any breach of the representations and
warranties of such STOCKHOLDER set forth herein, (ii) any breach of any
agreement on the part of such STOCKHOLDER under this Agreement, (iii) any breach
of the representations and warranties of the Founding Stockholders or the
COMPANY set forth in the Merger Agreement or on the schedules or certificates
delivered in connection therewith, (iv) any breach of any agreement on the part
of the FOUNDING STOCKHOLDERS or the COMPANY under the Merger Agreement, (v) the
matters described on Schedule 11.1 to the Merger Agreement relating to
7
specifically identified matters such as ongoing claims and/or litigation or
(vi) any Tax imposed upon or relating to any third party for a pre-Closing Date
period, including, in each case, any such Tax for which an Acquired Party may be
liable under Section 1.1502-6 of the Treasury Regulations (or any similar
provisions of federal, state, local or foreign law), as a transferee or
successor, by contract or otherwise; provided, however, that no STOCKHOLDER
shall be liable for any indemnification obligation pursuant to this Section 6.1
to the extent attributable to a breach of any representation, warranty or
agreement made herein individually by any other STOCKHOLDER or made in the
Merger Agreement individually by any Founding Stockholder.
6.2. Indemnification by ICC. ICC covenants and agrees that it will
indemnify, defend, protect and hold harmless the STOCKHOLDERS at all times from
and after the date of this Agreement until the ICC Expiration Date, from and
against all claims, damages, actions, suits, proceedings, demands, assessments,
adjustments, costs and expenses (including specifically, but without limitation,
reasonable attorneys' fees and expenses of investigation) incurred by the
STOCKHOLDERS as a result of or arising from (i) any breach by ICC of its
representations and warranties set forth herein, (ii) any breach of any
agreement on the part of ICC under this Agreement, (iii) any breach by ICC or
NEWCO of its representations and warranties set forth in the Merger Agreement or
on the schedules or certificates delivered in connection therewith, (iv) any
breach of any agreement on the part of ICC or NEWCO under the Merger Agreement,
(v) any liability which the STOCKHOLDERS may incur due to ICC's or NEWCO's
failure to be responsible for the liabilities and obligations of the COMPANY as
provided in Section 1 of the Merger Agreement (except to the extent that ICC or
NEWCO has claims against the STOCKHOLDERS by reason of such liabilities), or
(vi) the matters described on Schedule 11.2(iv) to the Merger Agreement relating
to specifically identified matters.
6.3. Third Person Claims. Promptly after any party hereto (hereinafter the
"Indemnified Party") has received notice of or has knowledge of any claim by a
person not a party to this Agreement ("Third Person"), of the commencement of
any action or proceeding by a Third Person for which the Indemnified Party
seeking indemnification, the Indemnified Party shall, as a condition precedent
to a claim with respect thereto being made against any party obligated to
provide indemnification pursuant to Section 6.1 or 6.2 hereof (hereinafter the
"Indemnifying Party"), give the Indemnifying Party written notice of such claim
or the commencement of such action or proceeding. Such notice shall state the
nature and the basis of such claim and a reasonable estimate of the amount
thereof. The Indemnifying Party shall have the right to defend and settle, at
its own expense and by its own counsel, any such matter so long as the
Indemnifying Party pursues the same in good faith and diligently, provided that
the Indemnifying Party shall not settle any criminal proceeding without the
written consent of the Indemnified Party, such consent not to be unreasonably
withheld or delayed. If the Indemnifying Party undertakes to defend or settle,
it shall promptly notify the Indemnified Party of its intention to do so, and
the Indemnified Party shall cooperate, at the Indemnifying Party's expense, with
the Indemnifying Party and its counsel in the defense thereof and in any
settlement thereof. Such cooperation shall include, but shall not be limited to,
furnishing the Indemnifying Party with any books, records or information
reasonably requested by the Indemnifying Party that are in the Indemnified
Party's possession or control. All Indemnified Parties shall endeavor to use the
same
8
counsel, which shall be the counsel selected by the Indemnifying Party, provided
that if counsel to the Indemnifying Party shall have a conflict of interest in
the opinion of such counsel that prevents counsel for the Indemnifying Party
from representing the Indemnified Party, the Indemnified Party shall have the
right to participate in such matter through counsel of its own choosing and the
Indemnifying Party will reimburse the Indemnified Party for the reasonable
expenses of its counsel and experts. After the Indemnifying Party has notified
the Indemnified Party of its intention to undertake to defend or settle any such
asserted liability, and for so long as the Indemnifying Party diligently pursues
such defense, the Indemnifying Party shall not be liable for any additional
legal expenses incurred by the Indemnified Party in connection with any defense
or settlement of such asserted liability, except (i) as set forth in the
preceding sentence and (ii) to the extent such participation is requested by the
Indemnifying Party, in which event the Indemnified Party shall be reimbursed by
the Indemnifying Party for reasonable additional legal expenses and
out-of-pocket expenses. If the Indemnifying Party desires to accept a final and
complete settlement of any such Third Person claim and the Indemnified Party
refuses to consent to such settlement, then the Indemnifying Party's liability
under this Section with respect to such Third Person claim shall be limited to
the amount so offered in settlement to said Third Person, plus all indemnifiable
costs and expenses incurred to date, the Indemnifying Party shall be relieved of
its duty to defend and shall tender the Third Person claim back to the
Indemnified Party, who shall thereafter, at its own expense, be responsible for
the defense and negotiation of such Third Person claim. If the Indemnifying
Party does not undertake to defend such matter to which the Indemnified Party is
entitled to indemnification hereunder, or fails diligently to pursue such
defense, the Indemnified Party may undertake such defense through counsel of its
choice, at the cost and expense of the indemnifying Party, and the Indemnified
Party may settle such matter, and the Indemnifying Party shall reimburse the
Indemnified Party for the amount paid in such settlement and any other
liabilities or expenses incurred by the Indemnified Party in collection
therewith, provided, however that under no circumstances shall the Indemnified
Party settle any Third Person claim without the written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld or delayed.
All settlements hereunder shall effect a complete release of the Indemnified
Party, unless the Indemnified Party otherwise agrees in writing. The parties
hereto will make appropriate adjustments for any Tax benefits, Tax detriments or
insurance proceeds in determining the amount of any indemnification obligation
under this Section, provided that no indemnifying party shall be obligated to
seek any payment pursuant to the terms of any insurance policy.
6.4. Exclusive Remedy. The indemnification provided for in this Section 6
shall (except as prohibited by ERISA) be the exclusive remedy in any action
seeking damages or any other form of monetary relief brought by any party to
this Agreement against another party; provided, that, nothing herein shall be
construed to limit the right of a party, in a proper case, to seek injunctive
relief for a breach of this Agreement.
6.5. Limitations on Indemnification.
(a) ICC, NEWCO, the Surviving Corporation and the other persons or entities
indemnified pursuant to Section 6.1 or 6.2 shall not assert any claim other than
a Third Person
9
claim for indemnification hereunder against the STOCKHOLDERS until such time as,
and solely to the extent that, the aggregate of all claims which such persons
may have against the FOUNDING STOCKHOLDERS under the Merger Agreement and the
Stockholders under this Agreement shall exceed $50,000 (the "Indemnification
Threshold"), provided, however, that ICC, NEWCO, the Surviving Corporation and
the other persons or entities indemnified pursuant to Section 6.1 may assert and
shall be indemnified for any claim under Section 6.l(v) or 6.1(vi) at any time,
regardless of whether the aggregate of all claims which such persons may have
against any FOUNDING STOCKHOLDER or other STOCKHOLDER or all FOUNDING
STOCKHOLDERS and STOCKHOLDERS exceeds the Indemnification Threshold, it being
understood that the amount of any such claim under Section 6.1(v) or 6.1(vi)
shall not be counted towards the Indemnification Threshold. The STOCKHOLDERS
shall not assert any claim for indemnification hereunder against ICC or NEWCO or
the Surviving Corporation until such time as, and solely to the extent that, the
aggregate of all claims which FOUNDING STOCKHOLDERS and the STOCKHOLDERS may
have under the Merger Agreement and this Agreement against ICC, NEWCO or the
Surviving Corporation shall exceed the Indemnification Threshold, provided,
however, that the FOUNDING STOCKHOLDERS and the STOCKHOLDERS and the other
persons or entities indemnified pursuant to Section 6.2 may assert and shall be
indemnified for any claim under Section 6.2(vi) at any time, regardless of
whether the aggregate of all claims which such persons may have against ICC or
NEWCO exceeds the Indemnification Threshold, it being understood that the amount
of any such claim under Section 6.2(vi) shall not be counted towards such
Indemnification Threshold. No person shall be entitled to indemnification under
this Section 6 to the extent that such person's claim for indemnification is
directly or indirectly related to a breach by such person of any representation,
warranty, covenant or other agreement set forth in this Agreement.
(b) Indemnity obligations hereunder shall be satisfied, in the case of
indemnification of ICC, NEWCO and the Surviving Corporation through the release
from escrow of ICC Stock pursuant to the Escrow Agreement, or in the case of
indemnification of the STOCKHOLDERS, by ICC's delivery of ICC Stock or cash at
its sole election. For purposes of calculating the value of the ICC Stock
received by or released from escrow on behalf of a STOCKHOLDER (for purposes of
determining the Indemnification Threshold and the amount of any indemnity paid),
ICC Stock shall be valued at the greater of (i) $3.00 per share or (ii) the
Average Closing Price. Upon the Expiration Date, a portion of the ICC Stock
which continues to be held in escrow, if any, which is reasonably sufficient to
cover any identified claims asserted by ICC prior to the Expiration Date shall
continue to be held in escrow until such claims are satisfied or otherwise
resolved, provided, however, that in no event shall shares valued in excess of
$6,000,000 be required to be held in escrow following the Expiration Date. All
additional ICC Stock held in escrow, if any, shall be released to the
STOCKHOLDERS. In calculating the number of shares sufficient to cover such
indemnified claims, the value of such shares shall be as determined above.
(c) Notwithstanding any other term of this Agreement (except the proviso to
this sentence), no STOCKHOLDER shall be liable under this Section 6 for an
amount which exceeds the value of its pro rata share (based upon their
percentage common stock ownership in the
10
COMPANY prior to the Merger) of the ICC Stock placed into escrow hereunder
provided that a STOCKHOLDER's indemnification obligations pursuant to Sections
6.1(v) and (vi) shall not be limited. The parties acknowledge and understand
that any indemnity claim related to the representations and warranties made by
the individual STOCKHOLDERS in Section 4 hereof shall be made only against such
individual STOCKHOLDER's portion of the ICC Stock held in escrow; the remainder
of the indemnity claims shall be applied on a pro rata basis to all the
STOCKHOLDERS hereunder and the FOUNDING STOCKHOLDERS under the Merger Agreement.
For purposes of calculating the value of the ICC Stock for purposes of indemnity
claims hereunder, the ICC Stock shall be valued as set forth in the preceding
paragraph.
7. TERMINATION OF AGREEMENT
This Agreement shall automatically terminate without the taking of any
action by the parties hereto upon the termination of the Merger Agreement in
accordance with its terms.
8. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
Each STOCKHOLDER agrees and acknowledges to abide by and be bound by the
terms and provisions of Sections 13.1, 13.3, and 13.4 of the Merger Agreement.
9. [INTENTIONALLY DELETED]
10. REGISTRATION RIGHTS
Each STOCKHOLDER shall have those registration rights, with respect to the
Registrable Shares of ICC Stock and Interest Shares received by it hereunder, as
are granted and identified in Section 15 of the Merger Agreement and agrees to
abide by and be bound by the terms and provisions of Section 15 of the Merger
Agreement.
11. GENERAL
11.1. Cooperation. Each STOCKHOLDER and ICC shall deliver or cause to be
delivered to the other on the Closing Date, and at such other times and places
as shall be reasonably agreed to, such additional instruments as the other may
reasonably request for the purpose of carrying out this Agreement and the Merger
Agreement.
11.2. Successors and Assigns. This Agreement and the rights of the parties
hereunder may not be assigned (except by operation of law) and shall be binding
upon and shall inure to the benefit of the parties hereto, the successors of
ICC, NEWCO and the COMPANY and the heirs and legal representatives of each
STOCKHOLDER.
11.3. Entire Agreement. This Agreement and the documents delivered pursuant
hereto constitute the entire agreement and understanding between each
STOCKHOLDER and ICC and NEWCO and supersedes any prior agreement and
understanding relating to the subject matter of this Agreement. This Agreement,
upon execution, constitutes a valid and binding agreement of
11
the parties hereto enforceable in accordance with its terms and may be modified
or amended only by a written instrument executed by each STOCKHOLDER and ICC and
NEWCO, acting through their respective officers or trustees, duly authorized by
their respective boards of directors. Each STOCKHOLDER represents that it has
reviewed this Agreement with its advisors and has discussed to its satisfaction
the terms and provisions of this Agreement with such advisors.
11.4. Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
11.5. Expenses. Each of the parties hereto shall be responsible for its own
fees, expenses and disbursements and for the fees, expenses and disbursements of
their agents, representatives, accountants and counsel which have been incurred
in connection with the subject matter of this Agreement. In addition and not in
limitation of the foregoing, each STOCKHOLDER acknowledges that it, and not the
COMPANY, ICC or NEWCO, will pay all Taxes due upon receipt of the consideration
payable pursuant to Section 1 hereof, and will assume all Tax risks and
liabilities of such STOCKHOLDER in connection with the transactions contemplated
hereby.
11.6. Notices. All notices or communications required or permitted
hereunder shall be in writing and shall be deemed to have been given when
personally delivered or upon receipt if sent by first class certified mail,
return receipt requested or the next business day if sent by telefax (receipt
confirmed and followed up by one of the other delivery methods discussed herein
as well), or upon delivery if sent by express mail, in each case postage prepaid
and addressed as follows:
(a) If to ICC or NEWCO:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Chairman
with copies to:
Mesirov ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
(b) If to a STOCKHOLDER, addressed to such STOCKHOLDER at the address
set forth on Schedule K to the Merger Agreement.
11.7. Governing Law. This Agreement shall be construed in accordance with
the choice of law provisions set forth in Section 16.7 of the Merger Agreement.
12
11.8. Exercise of Rights and Remedies. Except as otherwise provided herein,
no delay of or omission in the exercise of any right, power or remedy accruing
to any party as a result of any breach or default by any other party under this
Agreement shall impair any such right, power or remedy, nor shall it be
construed as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.
11.9. Reformation and Severability. In case any provision of this Agreement
shall be invalid, illegal or unenforceable, it shall, to the extent possible, be
modified in such manner as to be valid, legal and enforceable but so as to most
nearly retain the intent of the parties, and if such modification is not
possible, such provision shall be severed from this Agreement, and in either
case the validity, legality and enforceability of the remaining provisions of
this Agreement shall not in any way be affected or impaired thereby.
11.10. Remedies Cumulative. No right, remedy or election given by any term
of this Agreement shall be deemed exclusive but each shall be cumulative with
all other rights, remedies and elections available at law or in equity.
11.11. Survival. ICC's and each STOCKHOLDER'S respective covenants, duties
and obligations under this Agreement shall survive the Closing Date.
11.12. Interpretation. The headings of this Agreement are inserted for
convenience only, shall not constitute a part of this Agreement or be used to
construe or interpret any provision hereof. The use of the masculine, feminine
or neuter gender herein are interchangeable and shall not limit any provision of
this Agreement.
13
11.13. Tax Free Reorganization. The parties hereto intend for the Merger to
qualify as a tax free reorganization within the meaning of Section 368 and
related sections of the Code and the Regulations thereunder. Nevertheless,
notwithstanding anything contained herein or the Merger Agreement to the
contrary, the parties hereto acknowledge and agree that (i) such qualification
shall not be a condition to the obligations of any of the parties hereto to
consummate the transactions contemplated hereunder and under the Merger
Agreement, and (ii) ICC and NEWCO shall have no obligation to take any action
(except as expressly provided under the terms of this Agreement) to cause the
Merger to qualify as a reorganization under Section 368 of the Code.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
ICC TECHNOLOGIES, INC.
By:
------------------------------
Name:
Title:
RAREMEDIUM ACQUISITION CORP.
By:
------------------------------
Name:
Title:
STOCKHOLDERS:
----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Address: ▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Address: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(Signatures continued on next page)
14
----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Address:
----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Address: ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Address: ▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
Address: ▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
----------------------------------
Name: H. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Address: ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
WAKEFIELD PARTNERS
By:
------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Address: c/o Wakefield Partners
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
(Signatures continued on next page)
15
GROWTH CAPITAL PARTNERS MEDIA FUND
By:
------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Address: ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Address: ▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Address: ▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇/▇▇▇▇▇ ▇▇▇▇▇▇
PARTNERSHIP
By:
------------------------------
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇
16
Joinder to Merger Agreement
To induce ICC to consummate the transactions under the Merger Agreement,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ hereby acknowledges and agrees, intending to be legally bound
hereby, that, in addition to the Non-Founder Agreement he agrees to be bound by
all of the terms and provisions of the Merger Agreement dated as of April 8,
1998 by and among ICC, NEWCO, the Company and the Founding Stockholders, which
are binding upon the FOUNDING STOCKHOLDERS named therein, to the same extent as
if ▇▇. ▇▇▇▇▇▇ had been named as a FOUNDING STOCKHOLDER therein and was a
signatory thereto.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
EXHIBIT N
FORM OF ICC GUARANTY
GUARANTY
This GUARANTY ("Guaranty") is entered into as of April 15th, 1998, by ICC
Technologies, Inc., a Delaware corporation ("Guarantor"), and delivered to ▇▇▇▇▇
▇. ▇▇▇▇▇▇, in his capacity as the Stockholder Representative ("Stockholder
Representative"), as such term is defined in the Appointment of Stockholders
Representative of even date herewith for the benefit of each of the former
stockholders of Rare Medium, Inc., a New York corporation ("RMI") listed on
Exhibit "A" attached hereto and made a part hereof (collectively, the "Payees"
and individually, a "Payee").
R E C I T A L S
A. Guarantor, Rare Medium Acquisition Corp., a wholly-owned New York
subsidiary of Guarantor ("RAC"), RMI and certain of the Payees have entered into
that certain Merger Agreement and Plan of Reorganization, dated as of April 8,
1998 (the "Merger Agreement"), pursuant to which RAC shall merge with and into
RMI.
B. All capitalized terms used herein without definition shall have the
meaning ascribed to them in the Merger Agreement unless the context clearly
requires to the contrary.
C. Pursuant to the terms of the Merger Agreement, the Merger Consideration
shall consist in part of that certain Secured Promissory Note of even date
herewith delivered by RMI in the aggregate principal amount of Twenty Two
Million Two Hundred Thousand Dollars ($22,200,000) (the "RMI Note").
D. A condition to acceptance of the RMI Note is that all obligations,
whether principal, interest, fees, expenses or otherwise, in favor of the
Stockholder Representative acting on behalf of and for the benefit of the Payees
arising under the RMI Note and any and all renewals, extensions, amendments or
modifications thereof or thereto (the "Guaranteed Obligations"), be guaranteed
by Guarantor.
E. A further condition to acceptance of the RMI Note is that RMI grant to
payees, who are acting through the Stockholder Representative pursuant to that
certain appointment of Stockholder Representative of even date herewith, a
security interest in and to the assets of RMI described in that certain Security
Agreement, dated as of even date herewith ("Security Agreement"), and that
Guarantor shall pledge all of the common stock it holds in RMI pursuant to the
terms of that certain Stock Pledge Agreement dated as of even date herewith
("Stock Pledge Agreement"), all to further secure the Guaranteed Obligations;
F. Guarantor is willing to guarantee the full payment and performance of
the Guaranteed Obligations and expects to benefit from the making of this
Guaranty.
NOW, THEREFORE, in consideration of the covenants set forth in the Merger
Agreement, the RMI Note, the Stock Pledge Agreement and the Security Agreement
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, Guarantor agrees to guarantee the full payment and
performance of the Guaranteed Obligations in accordance with the following terms
and conditions:
1.1 Guarantor hereby irrevocably, absolutely and unconditionally guarantees
to the Stockholder Representative, for the benefit of the Payees, or any and all
permitted transferees that RMI shall timely pay and perform all of the
Guaranteed Obligations in full. Payment shall be made in any coin or currency
which at the time of
payment is legal tender in the United States of America for public and private
debts. The obligation of Guarantor hereunder is absolute and unconditional. This
Guaranty is a guaranty of prompt and punctual payment and performance and is not
merely a guaranty of collection. Notwithstanding the foregoing, in the event
that RMI shall not perform its obligations pursuant to the terms of the RMI
Notes, Guarantor shall be entitled to copies of all notices to RMI as required
pursuant to the terms of the RMI Note and an opportunity to cure any default of
RMI as set forth in any such notice within the time provided in the RMI Notes.
1.2 The obligations of the Guarantor hereunder are primary and independent
of the obligations of RMI under the RMI Note, and the Guarantor shall perform
such obligations for the benefit of the Payees and the Stockholder
Representative and/or pay to the Stockholder Representative the amount of the
RMI Notes (to the extent of all principal, accrued interest and other amounts
owing under the RMI Notes) together with all interest, fees, expenses, including
reasonable attorneys fees, and other amounts incurred to enforce and collect on
this Guaranty.
1.3 Guarantor acknowledges and agrees that by virtue of this Guaranty,
Guarantor has specifically assumed any and all risks of a bankruptcy or
reorganization case or proceeding with respect to RMI, and that any modification
of the RMI Notes or the Guaranteed Obligations in any bankruptcy or
reorganization case concerning RMI shall not affect the obligations of Guarantor
to pay and perform under the RMI Notes and all Guaranteed Obligations in
accordance with its original terms as though no such bankruptcy or
reorganization case had occurred, subject to the terms of Paragraph 2.1 below,
and subject further to the right of the Guarantor to cure any default of RMI in
the manner referred to in Paragraph 1.1 above. Furthermore, to the extent that
Guarantor would be deemed an "insider" of RMI (as defined in ▇▇▇▇▇▇▇ ▇▇▇ ▇▇
▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code), Guarantor hereby irrevocably waives and releases
RMI from all "claims" (as defined in ▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇
Code) for which Guarantor is or would be at any time entitled.
1.4 Notwithstanding anything to the contrary stated herein, the liability
of the Guarantor to the Payees hereunder shall not exceed the sum of the
Guaranteed Obligations, less any amounts previously paid by RMI or the Guarantor
to the Payee under the terms of the RMI Notes or otherwise towards the
Guaranteed Obligations hereunder.
2.1 Following the Stockholder Representative's receipt of notice from the
Guarantor and/or RMI that the Guarantor and RMI are no longer affiliated or
related entities, Stockholder Representative and Payees shall not, without
providing prior written notice to the Guarantor: (a) supplement, modify, amend,
extend (including extensions beyond the original term thereof), renew,
accelerate, waive, discharge or otherwise change the time for payment or the
terms of the RMI Note or any part thereof or any additional security or
guaranties now or hereafter held thereof; (b) enter into or give any agreement,
approval or consent with respect to the RMI Note or any part thereof or any
additional security or guaranties now or hereafter held thereof; (c) accept new
or additional instruments, documents or agreements in exchange for or relative
to the RMI Note or any part thereof; (d) accept partial payments on the RMI Note
in connection with the right of recoupment, as provided in the RMI Note unless
the Stockholder Representative shall provide Guarantor with a copy of such claim
of recoupment accompanying such payment; (e) receive and hold additional
security or guaranties for the RMI Note or any part thereof; (f) settle, release
(by operation of law or otherwise), liquidate and/or fail to enforce the RMI
Note; (g) release (by operation of law or otherwise), reconvey, terminate,
waive,
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abandon, and/or fail to enforce any other security or guaranties now or
hereafter held for the RMI Note or any part thereof; (h) substitute, exchange,
amend or alter any other security or guaranty now or hereafter held for the RMI
Note or any part thereof, whether or not the security or guaranty received upon
the exercise of such power is of a character or value the same as the character
or value of the item of security or guaranty so affected; and/or (i) release (by
operation of law or otherwise) any person from any personal liability with
respect to the RMI Note or any part thereof.
3.1 The Stockholder Representative may enforce this Guaranty as to the
Guarantor and independently of any other remedy or security which the
Stockholder Representative may at any time have in connection with the RMI Note.
Guarantor expressly waives any right to require the Stockholder Representative
to proceed against RMI, any other guarantor or any collateral provided by any
other person and agrees that the Stockholder Representative may proceed against
Guarantor and/or any collateral in such order as it shall determine in its sole
and absolute discretion. The rights of the Stockholder Representative created or
granted herein, and the enforceability of this Guaranty at all times shall
remain effective to guarantee the full amount of all Guaranteed Obligations,
even though the Guaranteed Obligations, including any part thereof or any other
security or guaranty therefor, may be or hereafter become invalid or otherwise
unenforceable as against RMI or any other guarantor and whether or not RMI or
any other guarantor shall have any personal liability with respect thereto.
Guarantor expressly waives any and all defenses now or hereafter arising or
asserted by reason of (a) any lack of authority, death, disability or other
incapacity of any party executing the RMI Note on behalf of RMI, any other
guarantor or any other person with respect to the RMI Note; (b) the cessation
for any cause whatsoever of the liability of RMI or any other guarantor (other
than by reason of the full payment and performance of the RMI Note); (c) any
failure of the Stockholder Representative to marshal assets in favor of
Guarantor or any other guarantor or any other person; (d) any act or omission of
the Stockholder Representative or others that directly, indirectly, by operation
of law or otherwise results in or aids the discharge or release of RMI, any
other guarantor or any security or guaranties now or hereafter held for the RMI
Note or any part thereof; (e) any law which provides that the obligation of a
surety or guarantor must neither be larger in amount nor in other respects more
burdensome than that of the principal or which reduces a surety's or guarantor's
obligation in proportion to the principal obligation; (f) any failure of the
Stockholder Representative to file or enforce a claim in any bankruptcy or other
proceeding with respect to any person; (g) the avoidance of any lien in favor of
the Stockholder Representative for any reason; (h) any bankruptcy, insolvency,
reorganization, arrangement, readjustment of debt, liquidation or dissolution
proceeding commenced by or against any person, including any discharge of, or
bar or stay against collecting the RMI Note in or as a result of any such
proceeding; (i) any action taken by the Stockholder Representative that is
authorized by this Paragraph 3.1 or any other provision of this Guaranty; or (j)
any lack of presentment or demand for payment, protest or notice of nonpayment
and dishonor, or other notices or demands of any kind or character in the event
of a default under the RMI Note, except as provided pursuant to the terms of the
RMI Note.
4.1 Guarantor warrants and agrees that each of the waivers and consents set
forth herein is made after consultation with legal counsel and with full
knowledge of its significance and consequences, with the understanding that
events giving rise to any defense or rights waived may diminish, destroy or
otherwise adversely affect rights which Guarantor otherwise may have against
RMI, the Stockholder Representative, the Payees,
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or others, or against collateral, and that, under the circumstances, each waiver
and consent herein given is reasonable and not contrary to public policy or law.
5.1 The amount of Guarantor's liability and all rights, powers and remedies
of the Stockholder Representative hereunder and under any other agreement now or
hereafter in force between the Stockholder Representative or the Payees and
Guarantor, including any other guaranty executed by Guarantor relating to any
indebtedness of RMI to the Payees, shall be cumulative and not alternative, and
such rights, powers and remedies shall be in addition to all rights, powers and
remedies given to the Payees or Stockholder Representative by law. This Guaranty
is in addition to and exclusive of the guaranty of any other guarantor of any
indebtedness of RMI to the Payees.
6.1 The obligations of Guarantor hereunder are independent of the
obligations of RMI, and in the event of default hereunder, a separate action or
actions may be brought and prosecuted against Guarantor whether or not RMI is
joined therein or a separate action or actions are brought against RMI. The
Stockholder Representative may maintain successive actions for other defaults.
The Payees' or Stockholder Representative's rights hereunder shall not be
exhausted by its exercise of any of its right or remedies or by any such action
or by any number or successive actions until and unless all sums owing to the
Payees in connection with the RMI Note have been paid in full and all other
obligations hereby guaranteed have been fully performed.
7.1 Should any one or more of the provisions of this Guaranty be determined
to be illegal or unenforceable, all other provisions shall nevertheless be
effective to the fullest extent permitted by law.
8.1 Upon the payment in full to the Payees of all Guaranteed Obligations
and the full payment or performance by the Guarantor of all indebtedness and
obligations arising hereunder in favor of the Payees, this Guaranty shall be of
no further force or effect.
9.1 No provisions of this Guaranty or right of the Payees hereunder can be
waived nor can Guarantor be released from any of Guarantor's obligations
hereunder, except by a writing duly executed by the Stockholder Representative
or the Payees.
10. When the context and construction so require, all words used in the
singular herein shall be deemed to have been used in the plural and the
masculine shall include the feminine and neuter and vice versa. The word
"person" as used herein shall include any individual, company, firm,
association, partnership, corporation, trust or other legal entity of any kind
whatsoever.
11. This Guaranty shall be governed by and construed in accordance with the
laws of the State of New York. Any judicial proceeding brought against Guarantor
with respect to this Guaranty may be brought in any state or federal court of
competent jurisdiction, and, by execution and delivery of this Guaranty,
Guarantor accepts for itself and in connection with its properties, generally
and unconditionally, the nonexclusive jurisdiction of the aforesaid courts, and
irrevocably agrees to be bound by any final judgment rendered thereby in
connection with this Guaranty.
12. Notices. All notices, demands and requests of any kind which either
party may be required or may desire to serve upon the other party hereto in
connection with this Agreement shall be delivered only by courier or other means
of personal service,
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which provides written verification of receipt, or by registered or certified
mail return receipt requested (the "Notice"). Any such Notice or demand so
delivered by registered or certified mail or courier shall be deposited in the
United States mail, or in the case of courier, deposited with the courier, with
postage thereon fully prepaid. All Notices shall be addressed to the parties to
be served as follows:
If to Stockholder Representative: Copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, Esquire
c/o Rare Medium, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
If to ICC: Copies to:
▇▇▇▇▇ ▇. ▇▇▇▇▇, Chairman ▇▇▇▇▇▇▇ ▇▇▇▇▇, Esquire
ICC Technologies, Inc. Mesirov ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Service of any such notice or demand so made shall be deemed complete on the day
of actual delivery thereof as shown by the addressee's registry, certification
receipt or other evidence of receipt or upon first rejection. Either party
hereto may from time to time by notice in writing served upon the other as
aforesaid designate a different mailing address or a different or additional
person to which all such notices or demands hereafter are to be addressed.
GUARANTOR
ICC TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman
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