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AGREEMENT AND PLAN OF MERGER
dated as of November 23, 1999
by and among
LIBERTY GROUP HOLDINGS, INC.,
f/k/a
BIO-RESPONSE, INC.,
BR ACQUISITION CORP.
and
LIBERTY FOOD GROUP, LTD.
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS...............................................................1
SECTION 1.1 Definitions................................................1
ARTICLE II
THE MERGER................................................................4
SECTION 2.1 The Merger.................................................4
SECTION 2.2 Closing; Effective Time....................................4
SECTION 2.3 Effect of the Merger.......................................5
SECTION 2.4 Certificate of Incorporation; Directors and Officers.......5
SECTION 2.5 Conversion of Securities...................................5
SECTION 2.6 Tax Consequences...........................................6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND MERGER SUB..............6
SECTION 3.1 Corporate Existence and Power..............................6
SECTION 3.2 Certificate of Incorporation and By-Laws; Minute Books.....6
SECTION 3.3 Corporate Authority........................................6
SECTION 3.4 Capitalization.............................................7
SECTION 3.5 The Shares.................................................7
SECTION 3.6 No Conflict; Required Filings and Consents.................7
SECTION 3.7 SEC Filings; Financial Statements..........................8
SECTION 3.8 Absence of Certain Changes or Events.......................8
SECTION 3.9 Absence of Litigation......................................9
SECTION 3.10 No Violation of Government Orders or Laws..................9
SECTION 3.11 Agreements.................................................9
SECTION 3.12 Tax Matters...............................................10
SECTION 3.13 Employee Benefit Plans....................................11
SECTION 3.14 Employment Agreements.....................................11
SECTION 3.15 Insurance.................................................11
SECTION 3.16 Intellectual Property and Related Contracts...............12
SECTION 3.17 Absence of Undisclosed Liabilities........................12
SECTION 3.18 Changes...................................................12
SECTION 3.19 Real Property and Leases..................................12
SECTION 3.20 Merger Sub................................................12
SECTION 3.21 State Takeover Statutes...................................13
SECTION 3.22 Brokers...................................................13
SECTION 3.23 Disclosure................................................13
SECTION 3.25 Activities................................................13
SECTION 3.26 Capital Stock.............................................13
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF LIBERTY................................14
SECTION 4.1 Corporate Existence and Power.............................14
SECTION 4.2 Certificate of Incorporation and Bylaws; Minute Books.....14
SECTION 4.3 Corporate Authority.......................................14
SECTION 4.4 Capitalization............................................14
SECTION 4.5 No Conflict; Required Filings and Consents................15
SECTION 4.6 Financial Statements......................................15
SECTION 4.7 Absence of Certain Changes or Events......................15
SECTION 4.8 Absence of Litigation.....................................16
SECTION 4.9 No Violation of Government Orders or Laws.................16
SECTION 4.10 Agreements................................................16
SECTION 4.11 Tax Matters...............................................16
SECTION 4.12 Employee Benefit Plans....................................17
SECTION 4.13 Employment Agreements.....................................18
SECTION 4.14 Insurance.................................................18
SECTION 4.15 Intellectual Property and Related Contracts...............18
SECTION 4.16 Absence of Undisclosed Liabilities........................18
SECTION 4.17 Changes...................................................18
SECTION 4.18 Real Property and Leases..................................19
SECTION 4.19 State Takeover Statutes...................................19
SECTION 4.20 Brokers...................................................19
SECTION 4.21 Disclosure................................................19
ARTICLE V
CONDITIONS PRECEDENT TO CLOSING..........................................19
SECTION 5.1 Conditions Precedent to Obligations of Liberty............19
SECTION 5.2 Conditions Precedent to Obligations of the Company........22
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS................................23
SECTION 6.1 Forbearance...............................................23
SECTION 6.2 Obligations of Merger Sub.................................24
ARTICLE VII
ADDITIONAL AGREEMENTS....................................................25
SECTION 7.1 Access to Information.....................................25
SECTION 7.2 Legal Conditions to Transactions..........................26
SECTION 7.3 Further Assurances........................................26
SECTION 7.4 Advice of Changes.........................................26
SECTION 7.5 Transaction Expenses......................................26
SECTION 7.6 Public Announcements......................................27
SECTION 7.7 Transfer and Similar Taxes................................27
SECTION 7.8 D&O Insurance.............................................27
SECTION 7.9 Closing Covenant..........................................27
SECTION 7.10 Rule 14f-1 Compliance.....................................27
SECTION 7.11 Brokers...................................................27
SECTION 7.12 No Solicitation...........................................28
ARTICLE VIII
MISCELLANEOUS............................................................28
SECTION 8.1 Termination and Amendment.................................28
SECTION 8.2 Entire Agreement; Survival of Provisions..................29
SECTION 8.3 Communications............................................29
SECTION 8.4 Execution in Counterparts.................................29
SECTION 8.5 Binding Effect; Assignment................................29
SECTION 8.6 Governing Law.............................................30
SECTION 8.7 Severability of Provisions................................30
SECTION 8.8 Headings..................................................30
SECTION 8.9 Shares Transfer Expenses and Taxes........................30
SECTION 8.10 Waiver of Jury Trial......................................30
SECTION 8.11 Absence of Third Party Beneficiary Rights.................30
INDEX OF EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit A - Section 253 Merger Certificate
Exhibit B - Certificate of Incorporation and By-Laws of the
Surviving Corporation
Exhibit C - Lock-Up Letter
Exhibit D - Escrow Agreement
Exhibit E - Indemnification Agreement
Exhibit F - Opinion of ▇▇▇▇▇▇▇▇ Ronon LLP
Exhibit G - Investment Agreements
SCHEDULES
Schedule 3.4 - Capitalization
Schedule 3.22 - Brokers
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of November 23, 1999 (the
"Agreement"), by and among Liberty Group Holdings, Inc., f/k/a Bio-Response,
Inc., a Delaware corporation (the "Company"), BR Acquisition Corp., a Delaware
corporation and a wholly owned subsidiary of the Company (the "Merger Sub"), and
Liberty Food Group, Ltd., a Delaware corporation ("Liberty").
RECITALS
WHEREAS, Liberty and the Company desire that Liberty merge with and
into the Merger Sub with the Merger Sub being the surviving corporation and a
wholly owned subsidiary of the Company as contemplated hereby (the "Merger");
WHEREAS, the Company, Merger Sub and Liberty desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger;
WHEREAS, for Federal income tax purposes, it is intended that the
Merger shall qualify as a tax-free reorganization under the provisions of
Section 368(a)(2)(D) of the Internal Revenue Code of 1986, as amended (the
"Code");
WHEREAS, the Board of Directors of the Company has approved, and
deemed it advisable and in the best interest of its stockholders, that in
connection with the Merger the Company issue to the stockholders of Liberty that
number of shares of common stock of the Company which will give such
stockholders an aggregate of not less than 87.4% of the issued and outstanding
capital stock of the Company on a fully-diluted basis, all on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. As used in this Agreement, and unless the
context clearly requires a different meaning, the following terms have the
following meanings:
"Act" means the Securities Act of 1933, as amended, or any successor
act or statute regulating the transactions contemplated hereby that were
formerly regulated under the Act that may be enacted after the date hereof and
the rules and regulations thereunder.
"Agreement" means this Agreement, as the same may be amended,
supplemented or modified in accordance with the terms hereof.
"Balance Sheet Date" has the meaning provided therefor in Section
3.12(a)(ii) of this Agreement.
"Business Day" means a day in which the New York branch of the
Federal Reserve Bank is open for business during its normal hours of operation.
"By-Laws" means the By-Laws of the Company in effect on the date
hereof.
"Capston" has the meaning provided therefor in Section 7.5 of this
Agreement.
"Certificate of Incorporation" means the Certificate of
Incorporation of the Company in effect on the date hereof.
"Certificate of Merger" has the meaning provided therefor in
Section 2.2 of this Agreement.
"Closing" has the meaning provided therefor in Section 2.2 of this
Agreement.
"Closing Date" has the meaning provided therefor in Section 2.2 of
this Agreement.
"Code" has the meaning provided therefor in the Recitals of this
Agreement.
"Commission" means the Securities and Exchange Commission or any
similar agency then having jurisdiction to enforce the Act.
"Common Stock" means the common stock, par value $.004 per share,
of the Company.
"Company" has the meaning provided therefor in the Preamble of this
Agreement.
"Confidential Information" has the meaning provided therefor in
Section 7.1(b) of this Agreement.
"DGCL" means the Delaware General Corporation Law.
"Effective Time" has the meaning provided in Section 2.2 of this
Agreement.
"Employment Agreements" means the (i) Employment Agreement between
Liberty and ▇▇▇▇▇ ▇▇▇▇ and (ii) Employment Agreement between Liberty and ▇▇▇▇▇▇
▇▇▇▇.
"ERISA" has the meaning provided therefor in Section 3.13 of this
Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor act or statute regulating the transactions
contemplated hereby that were formerly regulated under the Act that may be
enacted after the date hereof and the rules and regulations thereunder.
"GAAP" means United States generally accepted accounting
principles.
"Governmental Entity" has the meaning provided therefor in Section
3.10 of this Agreement.
"Intellectual Property" has the meaning provided therefor in
Section 3.16 of this Agreement.
"Legal Proceeding" means any action, suit, litigation, arbitration,
proceeding (including any civil, criminal, administrative, investigative or
appellate proceeding), hearing, inquiry, audit, examination or investigation
commenced, brought, conducted or heard by or before, or otherwise involving, any
court or other Governmental Entity or otherwise.
"Legal Requirement" means any federal, state, local, municipal,
foreign or other law, statute, constitution, principal of common law,
resolution, ordinance, code, edict, decree, rule, regulation, ruling or
requirement issued, enacted, adopted, promulgated, implemented or otherwise put
into effect by or under the authority of any Governmental Entity or otherwise.
"Liberty" has the meaning provided therefor in the Preamble of this
Agreement.
"Liens" means mortgages, pledges, security interests, conditional
and installment sale agreements, encumbrances, charges, options, rights of first
refusal, claims, preferential arrangements or restrictions of any kind,
limitations on voting rights, and other encumbrances of any kind, nature or
character, including, without limitation, any restriction on the use, voting,
transfer, receipt of income or other exercise of any attributes of ownership.
"Merger" has the meaning provided therefor in the Recitals to this
Agreement.
"NASD" means the National Association of Securities Dealers.
"Options" means the options granted to (i) ▇▇▇▇▇ ▇▇▇▇ pursuant to
the Option Agreement between Liberty and ▇▇▇▇▇ ▇▇▇▇ and (ii) ▇▇▇▇▇▇ ▇▇▇▇
pursuant to the Option Agreement between Liberty and ▇▇▇▇▇▇ ▇▇▇▇.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint stock company,
unincorporated organization or government or other agency or political
subdivision thereof.
"Preferred Stock" means the preferred stock, par value $.004 per
share, of the Company.
"Revival Date" means December 26, 1996, the effective date of the
revival of the Certificate of Incorporation pursuant to the Certificate of
Renewal, Revival, Extension and Restoration duly filed by the Company with the
Secretary of State of the State of Delaware on said date.
"SEC Reports" has the meaning provided therefor in Section 3.7 of
this Agreement.
"Section 253 Merger Certificate" means the Certificate of Merger
between the Company and a wholly owned subsidiary of the Company effectuating
the change in the name of the Company in the form of Exhibit A attached hereto.
"Shares" means the 4,500,000 shares of Common Stock to be issued to
the stockholders of Liberty in the Merger.
"Surviving Corporation" has the meaning provided therefor in
Section 2.1 of this Agreement.
"Taxes" means all taxes, charges, fees, duties, levies, or other
similar assessments imposed by any federal, state, local or foreign Governmental
Entity, including, but not limited to, income, gross receipts, excise, property,
sales, gain, use, license, capital stock, transfer, franchise, payroll,
withholding, social security or other taxes, including any interest or penalties
attributable thereto.
"Tax Return" shall mean any return, report or information return
(including any related or supporting information) filed with any taxing
authority with respect to Taxes.
"Third Party Purchase" has the meaning provided therefor in Section
7.12 of this Agreement.
"Transfer Taxes" has the meaning provided therefor in Section 7.7
of this Agreement.
The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms.
ARTICLE II
THE MERGER
SECTION 2.1 The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, at the Effective Time, Liberty shall be
merged with and into the Merger Sub in accordance with the provisions of Section
251 of the DGCL. Following the Merger: (i) the separate corporate existence of
Liberty shall cease; (ii) the Merger Sub shall continue as the surviving
corporation in the Merger (the "Surviving Corporation") and shall continue to be
governed by the laws of the State of Delaware; (iii) the Surviving Corporation
shall continue to be a wholly owned subsidiary of the Company; and (iv) the
Company shall change its name to "Liberty Holdings Corporation".
SECTION 2.2 Closing; Effective Time. The closing of the Merger (the
"Closing") will take place at 10:00 a.m. (New York time) on November 23, 1999,
which date shall not be later than one (1) Business Day after the satisfaction
or waiver of the conditions set forth in Sections 5.1 and 5.2 at the offices of
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the date on
which the Closing shall occur being referred to in this Agreement as the
"Closing Date"), provided, however, that notwithstanding anything contained
herein to the contrary, (i) the resignation of the current director of the
Company and the appointment of the ▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇ as replacement
directors thereof shall not occur until the expiration of the ten (10) day
period commencing with the mailing to the Commission and the stockholders of the
Company a statement in compliance with Rule 14f-1 under the Exchange Act and
(ii) the Certificate of Amendment shall not be filed with the Secretary of State
of the State of Delaware until an information statement in compliance with
Section 14(c) of the Exchange Act and the rules and regulations promulgated
thereunder has been sent to the stockholders of the Company. Contemporaneously
with or as promptly as practicable after the Closing, a certificate of merger
(the "Certificate of Merger") shall be duly prepared and acknowledged by the
Surviving Corporation and thereafter filed with the Secretary of State of the
State of Delaware, in such form as is required by, and executed in accordance
with the relevant provisions of, the DGCL. The Merger shall become effective
upon the filing of the Certificate of Merger with the Secretary of State of the
State of Delaware (the date and time of such filing being the "Effective Time").
Promptly after the filing of the Certificate of Merger, the Company shall file
the Section 253 Merger Certificate.
SECTION 2.3 Effect of the Merger. At the Effective Time, the effect
of the Merger shall be as provided in this Agreement and in the applicable
provisions of the DGCL. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time all the property, rights, privileges,
powers and franchises of the Merger Sub and Liberty shall vest in the Surviving
Corporation, including without limitation the Employment Agreements (which shall
be assumed by the Surviving Corporation and assigned to the Company), and all
debts, liabilities, obligations, restrictions, disabilities and duties of the
Company and Merger Sub shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the Surviving Corporation.
SECTION 2.4 Certificate of Incorporation; Directors and Officers.
The certificate of incorporation and by-laws of the Surviving Corporation shall
be substantially as set forth on Exhibit B attached hereto. The directors and
officers of the Surviving Corporation immediately after the Effective Time shall
be ▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇.
SECTION 2.5 Conversion of Securities. (1) At the Effective Time, by
virtue of the Merger and without any action on the part of Liberty, Merger Sub,
the Company or any of the stockholders thereof, all the issued and outstanding
shares of Liberty shall be converted to the Shares and the issued and
outstanding shares of Liberty shall be canceled and retired and shall cease to
exist.
(2) All rights with respect to the common stock of Liberty under
the Options shall be converted into and become rights with respect to Common
Stock, and the Company shall assume each Option in accordance with the terms of
the stock option agreements by which such options are evidenced. From and after
the Effective Time, (i) each Option assumed by the Company may be exercised
solely for shares of Common Stock, (ii) the number of shares of Common Stock
subject to each Option shall be equal to the number of shares of Common Stock
subject to such Option immediately prior to the Effective Time, (iii) any
restriction on the exercise of any Option shall continue in full force and
effect and the term, exercisability and other provisions of such Option shall
otherwise remain unchanged; provided, however, that each such Option shall, in
accordance with its terms, be subject to further adjustment as appropriate to
reflect any stock split, reverse stock split, stock dividend, subdivision,
reclassification, reorganization, business combination or similar transaction
subsequent to the Effective Time. The Company and Liberty shall take all action
that may be necessary (under the stock option agreements pursuant to which
Options are outstanding) to effectuate the provisions of this Section 2.5(b) and
to ensure that, from and after the Effective Time, holders of Options have no
rights with respect thereto other than those specifically provided herein.
Promptly after the Effective Time, the Company shall file with the Commission a
registration statement on Form S-8 relating to the shares of Common Stock
issuable with respect to the Options assumed by the Company in accordance with
this Section 2.5(b).
SECTION 2.6 Tax Consequences. For federal income tax purposes, the
Merger is intended to constitute a reorganization within the meaning of Section
368(a)(2)(D) of the Code. The parties to this Agreement hereby adopt this
Agreement as a "plan of reorganization" within the meaning of Sections
1.368-2(g) and 1.368-3(a) of the United States Treasury Regulations.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND MERGER SUB
A. The Company hereby represents and warrants to Liberty and
its stockholders that:
SECTION 3.1 Corporate Existence and Power. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and is duly qualified to do business as a foreign
corporation in each additional jurisdiction where such qualification is
necessary. The Company has all requisite power and authority (corporate and
otherwise) to own its properties and to carry on its business as now being
conducted and is duly licensed or qualified and in good standing as a foreign
corporation in each jurisdiction in which it is required to be so licensed or so
qualified, and to execute, deliver and perform its obligations under this
Agreement and to consummate the transactions contemplated hereby. Other than
Merger Sub, the Company does not directly or indirectly own any equity or other
ownership interest in, or any interest convertible into or exchangeable or
exercisable for, any equity or similar interest in, any Person.
SECTION 3.2 Certificate of Incorporation and By-Laws; Minute Books.
The Company has delivered to Liberty true, correct and complete copies of the
Certificate of Incorporation and By-laws. The Company is not in violation of any
provision of either the Certificate of Incorporation or By-Laws. The minute
books of the Company contain a complete summary of all actions by the directors
and stockholders of the Company since the Revival Date and reflect all
transactions referred to in such minutes accurately in all respects.
SECTION 3.3 Corporate Authority. The Company has all necessary
power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by the Company and the consummation
by the Company of the transactions contemplated herein have been duly and
validly authorized by all necessary action and no other corporate proceedings on
the part of the Company are necessary to authorize this Agreement or to
consummate the transactions contemplated by this Agreement, including, without
limitation, the approval and adoption of this Agreement by the holders of a
majority of the issued and outstanding shares of Common Stock (other than, (i)
with respect to the election of ▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇ to the Board of
Directors of the Company, the filing with the Commission and the mailing to the
stockholders of the Company a statement complying in all material respects with
the requirements of Rule 14f-1 under the Exchange Act and (ii) with respect to
the change in the name of the Company, the filing of the Certificate of
Amendment). This Agreement has been duly and validly executed and delivered by
the Company and, assuming the due authorization, execution and delivery by
Liberty, constitutes the legal, valid and binding obligation of the Company
enforceable against it in accordance with its terms.
SECTION 3.4 Capitalization. (a) The Company's entire authorized
capital stock consists of 25,000,000 shares of Common Stock and 5,000,000 shares
of Preferred Stock. On the date of this Agreement and on the Closing Date, there
will be (a) 650,000 shares of Common Stock issued and outstanding, (b) no shares
of Common Stock reserved for issuance upon exercise of warrants, options or
other securities convertible or exercisable into Common Stock or Preferred
Stock, (c) no shares reflected on the books and records of the Company as
treasury shares, and (d) no shares of Preferred Stock issued or outstanding. All
of the shares of Common Stock which were issued after the Revival Date are duly
authorized and validly issued, fully paid and nonassessable, and were issued in
compliance with all federal and state rules and regulations governing the
issuance of securities, including, without limitation, the Act, NASD, and
applicable state securities laws. Schedule 3.4 attached hereto reflects the
ownership of all the issued and outstanding shares of capital stock of the
Company. None of the outstanding shares of Common Stock were issued in violation
of any preemptive rights. There will, on the Closing Date, be no outstanding
options, warrants, rights to subscribe to, calls or commitments of any character
(including, without limitation, registration rights) relating to, or securities
or rights convertible into, or exercisable for, shares of capital stock of the
Company, or contracts, commitments or arrangements obligating the Company to
issue additional shares of its capital stock or options, warrants or rights to
purchase or acquire any shares of its capital stock, other than the issuance of
Common Stock at the Closing described in Schedule 3.22 attached hereto. There
are no outstanding contractual obligations of the Company to repurchase, redeem,
or otherwise acquire any shares or any capital stock or any other security,
instrument or right to acquire any equity interest of the Company or to provide
funds to, or make any investment (in the form of a loan, capital contribution or
otherwise) in the Company or any other Person. There are no agreements or
understandings with respect to the voting, sale, transfer, preemptive rights,
rights of first refusal, rights of first offer, proxy or registration of any
shares of capital stock of the Company.
SECTION 3.5 The Shares. When issued and delivered in accordance
with this Agreement, the Shares issued hereunder will be duly authorized,
validly issued and outstanding, fully paid for and non-assessable, free and
clear of all Liens, and exempt from registration under the Act pursuant to
Section 4(2) thereof, and under applicable state securities and "blue sky" laws.
The shares of Common Stock issuable upon the Options, when issued after the
Effective Date in accordance with their terms thereof, will be duly authorized,
validly issued and outstanding, fully paid for and non-assessable, free and
clear of all Liens, and exempt from registration under the Act pursuant to
Section 4(2) thereof, and under applicable state securities and "blue sky" laws.
SECTION 3.6 No Conflict; Required Filings and Consents. The
execution and delivery of this Agreement by the Company do not, and the
performance of this Agreement by the Company will not: (i) conflict with or
violate the Certificate of Incorporation and By-Laws; (ii) conflict with or
violate any law, rule, regulation, order, judgment or decree applicable to the
Company or by which any of its property or asset is bound or affected; or (iii)
result in any breach of or constitute a default (or an event which with notice
or lapse of time or both would become a breach or default), or give to others
any right of termination, amendment, acceleration or cancellation of, or result
in the creation of a Lien on any property or assets of the Company. The
execution and delivery of this Agreement by the Company does not, and the
performance of this Agreement by the Company will not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
Person, including without limitation, any Governmental Entity or the
stockholders of the Company, other than the approval of the Merger by the
Company as the sole stockholder of Merger Sub (which approval shall be obtained
prior to the Closing Date).
SECTION 3.7 SEC Filings; Financial Statements.
(1) The Company has filed all forms, reports and documents
required to be filed by it with the Commission between October 1979 and the date
of this Agreement (such forms, reports and other documents between October 1979
and the date hereof are referred to herein, collectively, as the "SEC Reports").
The SEC Reports: (i) complied in all material respects with the requirements of
the Act and the Exchange Act, as the case may be, and the rules and regulations
thereunder, including, without limitation, Items 401 through 404 of Regulation
S-K; and (ii) except to the extent that information contained in any SEC Reports
has been revised or superseded by a later-filed SEC Report, did not at the time
they were filed contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.
(2) The audited financial statements of the Company included
in the SEC Reports comply as to form in all material respects with applicable
accounting requirements and with the rules and regulations of the Commission
with respect thereto and have been prepared in accordance with GAAP applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present the financial position of the Company as at
the date thereof and the results of its operations and cash flows for the
periods then ended. The unaudited financial statements included in any SEC
Report comply as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the Commission with
respect thereto, and such unaudited financial statements fairly present the
financial position of the Company as at the date thereof and the results of its
operations and cash flows for the periods then ended in conformity with GAAP
applied on a basis substantially consistent with that of the audited financial
statements included in the SEC Reports, subject to normal year-end audit
adjustments. Between June 30, 1999 and the date of this Agreement, the Company
has not incurred any liability or obligation of any nature (whether accrued,
absolute, contingent or otherwise) which would be required to be reflected on a
balance sheet, or in the notes thereto, prepared in accordance with GAAP, except
for liabilities and obligations incurred in connection with this transaction
which in the aggregate do not exceed $5,000.
SECTION 3.8 Absence of Certain Changes or Events. Between March 31,
1999 and the date of this Agreement, except as contemplated by this Agreement or
disclosed in the most current SEC Report of the Company prior to the date of
this Agreement, the Company has not (i) conducted any business or entered into
any commitment, oral or written, of any nature whatsoever, including, without
limitation, with respect to its capital stock; (ii) any declaration, setting
aside or payment of any dividend or distribution in respect of its capital stock
or any redemption, purchase or other acquisition of any of its securities, other
than the cancellation of the 150,000 and 32,094 shares of Common Stock issued to
▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇, respectively; (iii) established any bonus,
insurance, severance, deferred compensation, pension, retirement, profit
sharing, stock option (including, without limitation, the granting of stock
options, stock appreciation rights, performance awards, or restricted stock
awards), stock purchase or other employee benefit plan, or any other increase in
the compensation payable or to become payable to any officer or employee, or
(iv) any agreement, commitment or arrangement for the Company to do any of the
foregoing actions prior to or on the Closing Date.
SECTION 3.9 Absence of Litigation. There is no Legal Proceeding
pending or, to the best knowledge of the Company, threatened against the
Company, or any property or asset of the Company. Neither the Company nor any of
its properties or assets is subject to any order, writ, judgment, injunction,
decree, determination or award.
SECTION 3.10 No Violation of Government Orders or Laws. There are
no pending or, to the knowledge of the Company, threatened investigations, by
any Federal, state, local, foreign or other governmental department, commission,
board, bureau, agency or instrumentality (each, a "Governmental Entity") with
respect to the Company or with respect to the activities of any officer or
director thereof. (i) There are no actions or proceedings pending or, to the
knowledge of the Company, threatened against the Company before any court or
before any Governmental Entity, (ii) there are no outstanding domestic or
foreign judgments, decrees or orders against the Company, (iii) to the knowledge
of the Company, the Company is not in violation of, and has not received any
claim or notice that it is in violation of, any Legal Requirement or any
Federal, state, local or foreign laws, statutes, rules, regulations or orders
promulgated or judgments entered by any Governmental Entity; and (iv) there are
no actions pending or, to the knowledge of the Company, threatened against any
director or officer of the Company alleging a breach of such persons' fiduciary
duties.
SECTION 3.11 Agreements. The Company is not a party to or bound by
any written, oral or implied contact, agreement, license, lease or other
commitment, including, without limitation: (i) loan agreements, credit lines,
promissory notes, mortgages, pledges, guarantees, security agreements, factoring
agreements and other agreements relating to indebtedness for borrowed money;
(ii) real property leases; (iii) personal property leases; (iv) trademark or
other Intellectual Property licenses; (v) employment, management, or severance
agreements; (vi) contracts or other agreements to undertake capital expenditures
or to acquire any property; (vii) pledges, guarantees, contracts or other
agreements to loan money or to extend credit; (viii) contracts or other
agreements which would restrict the Company from issuing the Shares; (ix)
contracts or other agreements involving any consultant or other Person who acts
for or on behalf of the Company; (x) contracts or other agreements involving the
sale of any of the assets or properties or the grant to any person of any
preferential right to purchase any of the assets or properties of the Company,
or any letter of intent or other arrangement regarding the issuance of any
capital stock, or securities convertible into, any capital stock of the Company;
(xi) contracts or other agreements pursuant to which the Company agrees to share
or otherwise indemnify the tax liability of any party; (xii) contracts or other
agreements or arrangements between the Company and any of its officers,
directors, agents (including legal counsel and accountants) or affiliates; or
(xiii) contracts or agreements pursuant to which there is either a current or
future obligation to make any payments or other commitments to any party or
related group of parties.
SECTION 3.12 Tax Matters.
(1) (1) Since the Revival Date, the Company has (x) duly filed
(or there has been filed on its behalf) with the appropriate governmental
authorities all Tax Returns required to be filed by it, and all such Tax Returns
are true, correct and complete and (y) timely paid (or there has been paid on
its behalf) all Taxes due or claimed to be due from it by any taxing authority;
(2) The reserves for current Taxes (determined in
accordance with GAAP consistently applied) reflected in the financial statements
in the SEC Reports are adequate for the payment of all Taxes incurred or which
may be incurred by the Company through the date thereof. Since the date of the
balance sheet of the Company including in the Company=s Form 10-QSB filed for
the quarter ended June 30, 1999 (the "Balance Sheet Date"), the Company has not
incurred any liability for Taxes;
(3) Since the Revival Date, the Company has
complied in all respects with all applicable Legal Requirements relating to the
payment and withholding of Taxes (including withholding of Taxes pursuant to
Sections 1441 and 1442 of the Code or similar provisions under any foreign Legal
Requirements) and has, within the time and manner prescribed by any Legal
Requirements, withheld and paid over to the proper governmental authorities all
amounts required to be withheld and paid over under all applicable Legal
Requirements;
(4) There are no Liens for Taxes upon the assets or
properties of any of the Company except for statutory liens for Taxes not yet
due;
(5) There are no outstanding waivers or comparable
consents regarding the application of the statute of limitations with respect
to any Taxes or Tax Returns of any of the Company;
(6) The Company has not requested an extension of
time within which to file any Tax Return in respect of any taxable year, which
Tax Return has not since been filed;
(7) To the knowledge of the Company, no federal,
state, local or foreign audits or other administrative proceedings have formally
commenced or are presently pending with regard to any Taxes or Tax Returns of or
including the Company, and no notification has been received by either the
Company that such an audit or other proceeding is pending or threatened with
respect to any Taxes due from or with respect to the Company or any Tax Return
filed by or with respect to the Company;
(8) The Company has not changed any method of
accounting, received a ruling from any taxing authority or signed an agreement
with any taxing authority which would have an adverse effect on the Company;
(9) No deficiency for any Tax has been assessed
with respect to the Company which has not been paid in full;
(10) The Company has no obligation under any Tax
sharing agreement or similar contract or arrangement or has a potential
liability or obligation to any Person as a result of, or pursuant to, any such
agreement, contract or arrangement (other than customary agreements to indemnify
lenders or security holders) with respect to Taxes other than of the Company;
(11) The Company is not a party to any agreement,
plan, contract or arrangement that would result, separately or in the aggregate,
in the payment of any "excess parachute payments" within the meaning of Section
280G of the Code;
(12) Since the Revival Date, no jurisdiction where
the Company does not file a Tax Return has made a claim that the Company is
required to file a Tax Return for such jurisdiction;
(13) No power of attorney which is currently in
force has been granted by or with respect to the Company with respect to any
matter relating to Taxes; and
(14) Since the Revival Date, no closing agreement
pursuant to Section 7121 of the Code (or any predecessor provision) or any
similar provision of Legal Requirement has been entered into by or with respect
to the Company.
(2) The Company has previously delivered or made available to
Liberty, complete and accurate copies of each of: (x) all audit reports, letter
rulings, technical advice memoranda relating to United States federal, state,
local and foreign Taxes due from or with respect to the Company, (y) United
States federal Tax Returns, and those state, local or foreign Tax Returns filed
by the Company for the Calendar Years ended December 31, 1996, 1997 and 1998,
and (z) any closing agreements entered into by the Company with any taxing
authority in each case existing on the date hereof. The Company will deliver or
make available to Liberty all materials with respect to the foregoing for all
matters arising after the date hereof.
SECTION 3.13 Employee Benefit Plans. The Company does not have any
employees, consultants, subcontractors, agents or Persons to which it owns
compensation of any nature whatsoever. Accordingly, the Company does not have
any deferred compensation or other bonus or other incentive compensation, stock
purchase, stock option and other equity compensation plan, program, agreement or
arrangement; severance or termination pay, medical, surgical, hospitalization,
life insurance and other "welfare" plan, fund or program (within the meaning of
Section 3(l) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")).
SECTION III.14 Employment Agreements. There are no employment,
consulting, severance or indemnification contracts or agreements between the
Company, on the one hand, and any other Person, director, officer or other
employee of the Company, on the other hand.
SECTION 3.15 Insurance. The Company does not have any insurance
policies of any kind, including directors' and officers' liability insurance,
maintained by or for the direct or indirect benefit of the Company.
SECTION 3.16 Intellectual Property and Related Contracts. The
Company does not own or license any trademarks (including common law names and
marks and federally registered names and marks), trade names, service names,
copyrights, patents, technology, know-how and processes (collectively,
"Intellectual Property") or any computer software, computer firmware, computer
hardware (whether general or special purpose) or other similar or related items
of automated, computerized or software systems.
SECTION 3.17 Absence of Undisclosed Liabilities. The Company does
not have any liabilities (whether absolute, accrued or contingent) required to
be disclosed on a balance sheet prepared in accordance with GAAP.
SECTION 3.18 Changes. Since the date of the filing of the Company=s
1998 Form 10-KSB for its fiscal year ended December 31, 1998 except (i) as set
forth in the SEC Reports or (iii) as otherwise provided by this Agreement:
(1) there has been no change in the business or
operations of the Company;
(2) except as permitted by this Agreement, there has been no
direct or indirect redemption, purchase or other acquisition of any shares of
Company capital stock, or any declaration, setting aside or payment of any
dividend or other distribution by the Company in respect of its capital stock,
or any issuance of any shares of capital stock of the Company (other than
pursuant to the exercise of options and warrants pursuant to their terms), or
any grant to any Person of any option to purchase or other right to acquire
shares of capital stock of the Company or any stock split or other change in the
Company's capitalization;
(3) the Company has not entered into or agreed to enter into
any contract or other arrangement with any of its officers, directors,
contractors, agents or representatives or otherwise paid any compensation
thereto;
(4) the Company has not (i) entered into any bonus, incentive
compensation, deferred compensation, profit sharing, retirement, pension, group
insurance or other benefit plan or (ii) made any contribution to any such plan;
and
(5) the Company has not made any change in accounting methods,
principles or practices affecting its assets, liabilities or business.
SECTION 3.19 Real Property and Leases. The Company does not (i)
have title to any properties or assets, (ii) own or lease any real property, or
(iii) own, lease or have the legal right to use any property or assets.
SECTION 3.20 Merger Sub. Merger Sub has been formed for the sole
purpose of effectuating the Merger. Accordingly, Merger Sub has no assets,
liabilities, obligations, commitments, management, operations or function, other
than as specifically provided for in this Agreement.
SECTION 3.21 State Takeover Statutes. The Board of Directors of the
Company has approved this Agreement and the consummation of the transactions
contemplated hereby and such approval constitutes approval of such transactions
by the Board of Directors of the Company under the provisions of Section 203 of
the DGCL such that Section 203 of the DGCL does not restrict the transactions
contemplated hereby.
SECTION 3.22 Brokers. Except as set forth in Schedule 3.22, no
broker, investment banker, financial advisor or other Person is entitled to any
broker=s, finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based on
arrangements made by or on behalf of the Company.
SECTION 3.23 Disclosure. Neither this Agreement nor any
certificates, instruments or other documents delivered by the Company or Merger
Sub or its representatives to Liberty and its representatives in connection with
this Agreement or the transactions contemplated hereby, contains any untrue
statement of a fact or omits to state a fact required to be contained herein or
therein or necessary in order to make the statements herein or therein, in light
of the circumstances in which they were made, not misleading.
B. Merger Sub hereby represents to Liberty and its stockholders
that:
SECTION 3.24 Merger Sub. Merger Sub has been formed for the sole
purpose of effectuating the Merger. Accordingly, Merger Sub has no assets,
liabilities, obligations, commitments, management, operations or function, other
than as specifically provided for in this Agreement.
SECTION 3.25 Activities. Since the date of its incorporation,
Merger Sub has not engaged in any activities other than the execution of this
Agreement and Merger Sub will not engage in any activities other than those in
connection with or as contemplated by this Agreement.
SECTION 3.26 Capital Stock. Merger Sub=s entire authorized capital
stock consists of 3,000, $0.01 shares of common stock. On the date of this
Agreement and on the Closing Date, there will be (a) 100 shares of common stock
issued and outstanding, all of which shall be solely owned by the Company, (b)
no shares of common stock reserved for issuance upon exercise of warrants,
options or other securities convertible or exercisable into common stock or
preferred stock, (c) no shares reflected on the books and records of Merger Sub
as treasury shares, and (d) no shares of preferred stock issued or outstanding.
All of the outstanding shares of common stock of Merger Sub are duly authorized
and validly issued, fully paid and nonassessable, and were issued in compliance
with all federal and state rules and regulations governing the issuance of
securities, including, without limitation, the Act, NASD, and applicable state
securities laws. There will, on the Closing Date, be no outstanding options,
warrants, rights to subscribe to, calls or commitments of any character
(including, without limitation, registration rights) relating to, or securities
or rights convertible into, or exercisable for, shares of capital stock of
Merger Sub, or contracts, commitments or arrangements obligating Merger Sub to
issue additional shares of its capital stock or options, warrants or rights to
purchase or acquire any shares of its capital stock. There are no outstanding
contractual obligations of Merger Sub to repurchase, redeem, or otherwise
acquire any shares or any capital stock or any other security, instrument or
right to acquire equity interest in Merger Sub or to provide funds to, or make
any investment (in the form of a loan, capital contribution or otherwise) in
Merger Sub or any other Person. There are no agreements or understandings with
respect to the voting, sale, transfer, preemptive rights, rights of first
refusal, rights of first offer, proxy or registration of any shares of capital
stock of Merger Sub.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF LIBERTY
Liberty hereby represents and warrants to the Company and Merger
Sub that:
SECTION 4.1 Corporate Existence and Power. Liberty is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and is duly qualified to do business as a foreign corporation
in each additional jurisdiction where such qualification is necessary. Liberty
has all requisite power and authority (corporate and otherwise) to own its
properties and to carry on its business as now being conducted and is duly
licensed or qualified and in good standing as a foreign corporation in each
jurisdiction in which it is required to be so licensed or so qualified, and to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. Liberty does not directly or
indirectly own any equity or other ownership interest in, or any interest
convertible into or exchangeable or exercisable for, any equity or similar
interest in, any Person.
SECTION 4.2 Certificate of Incorporation and Bylaws; Minute Books.
Liberty has delivered to the Company true, correct and complete copies of the
certificate of incorporation and bylaws of Liberty. Liberty is not in violation
of any provision of either its certificate of incorporation or bylaws. The
minute books of Liberty contain a complete summary of all actions by the
directors and stockholders of Liberty and reflect all transactions referred to
in such minutes accurately in all respects.
SECTION 4.3 Corporate Authority. Liberty has all necessary power
and authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by Liberty and the consummation by Liberty of the
transactions contemplated herein have been duly and validly authorized by all
necessary corporate action and no other corporate proceedings on the part of
Liberty are necessary to authorize this Agreement or to consummate the
transactions contemplated by this Agreement, including, without limitation, the
approval and adoption of this Agreement by the holders of a majority of the
issued and outstanding shares of common stock of Liberty. This Agreement has
been duly and validly executed and delivered by Liberty and, assuming the due
authorization, execution and delivery by the other parties hereto, constitutes
the legal, valid and binding obligation of Liberty enforceable against Liberty
in accordance with its terms.
SECTION 4.4 Capitalization. Liberty's entire authorized capital
stock consists of 40,000,000 shares of common stock and 10,000,000 shares of
preferred stock. On the date of this Agreement and on the Closing Date, there
will be (a) 3,304,500 shares of common stock issued and outstanding, (b) no
shares of common stock reserved for issuance upon exercise of warrants, options
or other securities convertible or exercisable into common stock or preferred
stock except pursuant to the Options, (c) no shares reflected on the books and
records of Liberty as treasury shares, and (d) no shares of preferred stock
issued or outstanding. All of the outstanding shares of common stock are duly
authorized and validly issued, fully paid and nonassessable, and were issued in
compliance with all federal and state rules and regulations governing the
issuance of securities, including, without limitation, the Act, NASD, and
applicable state securities laws. The shares of common stock are owned by Willow
Road Trust, ▇▇▇▇▇▇▇ Road Trust, Steel II Trust, ▇▇▇▇▇▇ City Trust, Potomac River
Trust, Great Falls Trust, ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇ and Herschey and ▇▇▇▇▇ ▇▇▇▇.
None of the outstanding shares of common stock were issued in violation of any
preemptive rights. There will, on the Closing Date, be no outstanding options,
warrants, rights to subscribe to, calls or commitments of any character
(including, without limitation, registration rights) relating to, or securities
or rights convertible into, or exercisable for, shares of capital stock of
Liberty, or contracts, commitments or arrangements obligating Liberty to issue
additional shares of its capital stock or options, warrants or rights to
purchase or acquire any shares of its capital stock, other than the Options.
There are no outstanding contractual obligations of Liberty to repurchase,
redeem, or otherwise acquire any shares or any capital stock or any other
security, instrument or right to acquire any equity interest of Liberty or to
provide funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in Liberty or any other Person. There are no
agreements or understandings with respect to the voting, sale, transfer,
preemptive rights, rights of first refusal, rights of first offer, proxy or
registration of any shares of capital stock of Liberty.
SECTION 4.5 No Conflict; Required Filings and Consents. The
execution and delivery of this Agreement by Liberty do not, and the performance
of this Agreement by Liberty will not: (i) conflict with or violate any of the
certificate of incorporation and by-laws of Liberty; (ii) conflict with or
violate any law, rule, regulation, order, judgment or decree applicable to
Liberty or by which any property or asset of Liberty is bound or affected; or
(iii) result in any breach of or constitute a default (or an event which with
notice or lapse of time or both would become a breach or default) under, or give
to others any right of termination, amendment, acceleration or cancellation of,
or result in the creation of a Lien on any property or asset of Liberty. The
execution and delivery of this Agreement by Liberty does not, and the
performance of this Agreement by Liberty will not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
Person, including without limitation, any Governmental Entity, which will not be
obtained prior to the Closing Date.
SECTION 4.6 Financial Statements. Since Liberty was incorporated in
June 1999 and it has no assets or operations, there are no financial statements
of Liberty between June 30, 1999 and the date of this Agreement. Liberty has not
incurred any liability or obligation of any nature (where accrued, absolute,
contingent or otherwise) which would be required to be reflected on a balance
sheet, or in the notes thereto, prepared in accordance with GAAP, except for
liabilities and obligations incurred in connection with this transaction which
in the aggregate do not exceed $5,000.
SECTION 4.7 Absence of Certain Changes or Events. Between June 1999
and the date of this Agreement, except as contemplated by this Agreement, other
than the Employment Agreements and Options, Liberty has not (i) conducted any
business or entered into any commitment, oral or written, or any nature
whatsoever, including, without limitation, with respect to its capital stock,
(ii) any declaration, setting aside or payment of any dividend or distribution
in respect of its capital stock or any redemption, purchase or other acquisition
of any of its securities; (iii) established any bonus, insurance, severance,
deferred compensation, pension, retirement, profit sharing, stock option
(including, without limitation, the granting of stock options, stock
appreciation rights, performance awards, or restricted stock awards), stock
purchase or other employee benefit plan, or any other increase in the
compensation payable or to become payable to any officer or employee, or (iv)
any agreement, commitment or arrangement for Liberty to do any of the foregoing
actions prior to or on the Closing Date.
SECTION 4.8 Absence of Litigation. There is no Legal Proceeding
pending or, to the best knowledge of Liberty, threatened against Liberty, or any
property or asset of Liberty. Neither Liberty nor any property or asset of
Liberty is subject to any order, writ, judgment, injunction, decree,
determination or award.
SECTION 4.9 No Violation of Government Orders or Laws. There are no
pending or, to the knowledge of Liberty, threatened investigations, by any
Governmental Entity with respect to Liberty or with respect to the activities of
any officer or director thereof. (i) There are no actions or proceedings pending
or, to the knowledge of Liberty, threatened against Liberty before any court or
before any Governmental Entity, (ii) there are no outstanding domestic or
foreign judgments, decrees or orders against Liberty, (iii) to the knowledge of
Liberty, Liberty is not in violation of, and has not received any claim or
notice that it is in violation of, any Legal Requirement or any Federal, state,
local or foreign laws, statutes, rules, regulations or orders promulgated or
judgments entered by any Governmental Entity; and (iv) there are no actions
pending or, to the knowledge of Liberty, threatened against any director or
officer of Liberty alleging a breach of such persons= fiduciary duties.
SECTION 4.10 Agreements. Other than the Employment Agreements and
Options, Liberty is not a party to or bound by any written, oral or implied
contact, agreement, license, lease or other commitment, including, without
limitation: (i) loan agreements, credit lines, promissory notes, mortgages,
pledges, guarantees, security agreements, factoring agreements and other
agreements relating to indebtedness for borrowed money; (ii) real property
leases; (iii) personal property leases; (iv) trademark or other Intellectual
Property licenses; (v) employment, management, or severance agreements; (vi)
contracts or other agreements to undertake capital expenditures or to acquire
any property; (vii) pledges, guarantees, contracts or other agreements to loan
money or to extend credit; (viii) contracts or other agreements which would
restrict Liberty from issuing the Shares; (ix) contracts or other agreements
involving any consultant or other Person who acts for or on behalf of Liberty;
(x) contracts or other agreements involving the sale of any of the assets or
properties or the grant to any person or any preferential right to purchase any
of the assets or properties of Liberty, or any letter of intent or other
arrangement regarding the issuance of any capital stock, or securities
convertible into, any capital stock of either Liberty; (xi) contracts or other
agreements pursuant to which Liberty agrees to share or otherwise indemnify the
tax liability or any party; (xii) contracts or other agreements or arrangements
between Liberty, and any of its respective officers, directors, agents
(including legal counsel and accountants) or affiliates; or (xiii) contracts or
agreements pursuant to which there is either a current or future obligation to
make any payments or other commitments to any party or related group of parties.
SECTION 4.11 Tax Matters.
(1) (1) Liberty has (x) duly and timely filed (or there has been
filed on its behalf) with the appropriate governmental authorities all tax
Returns required to be filed by it, and all such tax Returns are true, correct
and complete and (y) timely paid (or there has been paid on its behalf ) all
Taxes due or claimed to be due from it by any taxing authority;
(2) Liberty has complied in all respects with all applicable
Legal Requirements relating to the payment and withholding of Taxes (including
without the Taxes pursuant to Sections 1441 and 1442 of the Code or similar
provisions under any foreign Legal Requirements) and has, within the time and
manner prescribed by any Legal Requirements, withheld and paid over to the
proper governmental authorities all amounts required to be withheld and paid
over under all applicable Legal Requirements;
(3) There are no Liens for Taxes upon the assets or properties
of any of Liberty except for statutory liens for Taxes not yet due;
(4) There are no outstanding waivers or comparable consents
regarding the application of the statute of limitations with respect to any
Taxes or Tax Returns of any of Liberty;
(5) Liberty has not requested an extension of time within
which to file any Tax Return in respect of any taxable year, which Tax Return
has not since been filed;
(6) To Liberty=s knowledge, no federal, state, local or
foreign audits or other administrative proceedings have formally commenced or
are presently pending with regard to any Taxes or Tax Returns of or including
Liberty, and no notification has been received by either Liberty that such an
audit or other proceeding is pending or threatened with respect to any Taxes due
from or with respect to Liberty or any Tax Return filed by or with respect to
Liberty;
(7) Liberty has not changed any method of accounting, received
a ruling from any taxing authority or signed an agreement with any taxing
authority which would have an adverse effect on Liberty;
(8) No deficiency for any Tax has been assessed with respect
to Liberty which has not been paid in full;
(9) Liberty has no obligation under any Tax sharing agreement
or similar contract or arrangement or has a potential liability or obligation to
any Person as a result of, or pursuant to, any such agreement, contract or
arrangement (other than customary agreements to indemnify lenders or security
holders) with respect to Taxes other than of Liberty;
(10) No jurisdiction where Liberty does not file a Tax Return
has made a claim that Liberty is required to file a Tax Return for such
jurisdiction;
(11) No power of attorney which is currently in force has been
granted by or with respect to Liberty with respect to any matter relating to
Taxes; and
(12) No closing agreement pursuant to Section 7121 of the Code
(or any predecessor provision) or any similar provision of Legal Requirement has
been entered into by or with respect to Liberty.
SECTION 4.12 Employee Benefit Plans. Liberty does not have any
employees, consultants, subcontractors, agents or Persons to which it owns
compensation of any nature whatsoever other than ▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇.
Accordingly, Liberty does not have any deferred compensation or other bonus or
other incentive compensation, stock purchase, stock option and other equity
compensation plan, program, agreement or arrangement; severance or termination
pay, medical, surgical, hospitalization, life insurance and other "welfare"
plan, fund or program (within the meaning of Section 3(1) of ERISA other than as
contemplated by the Employment Agreements and Options.
SECTION 4.13 Employment Agreements. Other than the Employment
Agreements, there are no employment, consulting, severance or indemnification
contracts or agreements between Liberty, on the one hand, and any other Person,
director, officer or other employee of Liberty, on the other hand.
SECTION 4.14 Insurance. Liberty does not have any insurance
policies of any kind, including directors= and officers= liability insurance,
maintained by or for the direct or indirect benefit of Liberty.
SECTION 4.15 Intellectual Property and Related Contracts. Liberty
does not own or license any Intellectual Property or any computer software,
computer firmware, computer hardware (whether general or special purpose) or
other similar or related items of automated, computerized or software systems.
SECTION 4.16 Absence of Undisclosed Liabilities. Liberty does not
have any liabilities (whether absolute, accrued or contingent) required to be
disclosed on a balance sheet prepared in accordance with GAAP.
SECTION 4.17 Changes. Since June 1999, except as otherwise provided
by this Agreement, the Employment Agreements and Options:
(1) there has been no change in the business or operations of
Liberty;
(2) except as permitted by this Agreement, there has been no direct
or indirect redemption, purchase or other acquisition of any shares of Company
capital stock, or any declaration, setting aside or payment of any dividend or
other distribution by Liberty in respect of its capital stock, or any issue of
any shares of capital stock of Liberty (other than pursuant to the exercise of
options and warrants pursuant to their terms), or any grant to any Person of any
option to purchase or other right to acquire shares of capital stock of Liberty
or any stock split or other change in Liberty=s capitalization;
(3) Liberty has not entered into or agreed to enter into any
contract or other arrangement with any of its officers, directors, contractors,
agents or representatives or otherwise paid any compensation thereto;
(4) Liberty has not (i) entered into any bonus, incentive
compensation, deferred compensation, profit sharing, retirement, pension, group
insurance or other benefit plan or (ii) made any contribution to any such plan;
and
(5) Liberty has not made any change in accounting methods,
principles or practices affecting its assets, liabilities or business.
SECTION 4.18 Real Property and Leases. Liberty does not (i) hold
title to any real properties or assets, (ii) own or lease any real property, or
(iii) own, lease or have the legal right to use any real property or assets.
SECTION 4.19 State Takeover Statutes. The Board of Directors of
Liberty has approved this Agreement and the consummation of the transactions
contemplated hereby and such approval constitutes approval of such transactions
by the Board of Directors of Liberty under the provisions of Section 203 of the
DGCL such that Section 203 of the DGCL does not restrict the transactions
contemplated hereby.
SECTION 4.20 Brokers. No broker, investment banker, financial
advisor or other Person is entitled to any broker=s, finder=s, financial
advisor=s or other similar fee or commission in connection with the transactions
contemplated by this Agreement based on arrangements made by or on behalf of
Liberty.
SECTION 4.21 Disclosure. Neither this Agreement nor any
certificates, instruments or other documents delivered by Liberty or its
representatives to Liberty and its representatives in connection with this
Agreement or the transactions contemplated hereby, contains any untrue statement
of a fact or omits to state a fact required to be contained herein or therein or
necessary in order to make the statements herein or therein, in light of the
circumstances in which they were made, not misleading.
ARTICLE V
CONDITIONS PRECEDENT TO CLOSING
SECTION 5.1 Conditions Precedent to Obligations of Liberty. The
obligations of Liberty hereunder are subject to the satisfaction of the
following conditions on or before the Closing Date:
(1) The representations and warranties made by the Company and
Merger Sub herein shall be true and correct in all material respects on and as
of the Closing Date with the same effect as though such representations and
warranties had been made on and as of the Closing Date (except where the
specific representation or warranty by its terms applies to an earlier date).
(2) The Company and Merger Sub shall have performed and
complied in all respects with all covenants, agreements and conditions set forth
herein which are required to be performed or complied with by it on or prior to
Closing Date.
(3) The purchase of and exchange for the Shares to be issued
by the Company hereunder shall not (i) be prohibited by any applicable law or
governmental regulation (including without limitation Regulation S, T, U or X of
the Board of Governors of the Federal Reserve System), (ii) subject the
stockholders of Liberty to any penalty or other condition pursuant to any
applicable law or governmental regulation, (iii) be prohibited by the laws or
regulations of any jurisdiction to which it is subject or (iv) be permanently
enjoined at the Closing Date.
(4) All authorizations, consents, approvals, permits and
licenses and filings with, by or in respect of any Governmental Entity required
to be taken, given or obtained that are necessary in connection with the
transactions contemplated herein and in the other documents related hereto,
shall have been taken, given or obtained, be in full force and effect and not be
subject to any pending proceedings or appeals, administrative, judicial or
otherwise.
(5) All consents and approvals to be obtained by the Company
or Merger Sub from third parties (including licensors, lessors and others)
hereto that are necessary in connection with the transactions contemplated
herein and in the other documents related hereto, shall have been given or
obtained and be in full force and effect.
(6) Liberty and its representatives shall have completed their
due diligence of the Company to its satisfaction, which for the avoidance of any
doubt shall be in its sole and absolute discretion.
(7) On or before the Closing Date, Liberty and/or its
stockholders shall have received all of the following from the Company in form
and substance satisfactory to them:
(1) Certificates representing the Shares shall be issued
in the name of Willow Road Trust, ▇▇▇▇▇▇▇ Road Trust, Steel II
Trust, ▇▇▇▇▇▇ City Trust, Potomac River Trust and Great Falls
Trust;
(2) Certificate of the President of the Company dated as
of the date of Closing certifying (A) as to the accuracy of
Section 5.1 (a) and (b) above; (B) as to the Certificate of
Incorporation, recently certified by the Secretary of State of
Delaware as duly filed and currently in full force and effect;
(C) as to the By-Laws; (D) absence of amendments to the
Certificate of Incorporation and By-laws since the date of the
last amendment shown on the official evidence as to filed
constituent documents furnished pursuant to (vi) below; (E)
resolutions, of the board of directors of the Company duly
authorizing the execution, delivery and performance of this
Agreement and the other documents executed in connection with
this Agreement to which it is a party, including without
limitation, the Section 253 Merger Certificate and the
Indemnification Agreements referred to in Section (g)(viii)
below, and the absence of other resolutions relating thereto;
and (F) the incumbency and signature of the individuals
authorized to execute and deliver documents on the Company's
behalf;
(3) Certificate of the President of the Merger Sub dated
as of the date of Closing certifying (A) as to the accuracy of
Section 5.1 (a) and (b) above; (B) as to its certificate of
incorporation, recently certified by the Secretary of State of
Delaware as duly filed and currently in full force and effect;
(C) as to its by-laws; (D) absence of amendments to such
certificate of incorporation and by-laws since the date of the
last amendment shown on the official evidence as to filed
constituent documents furnished pursuant to (vi) below; (E)
resolutions, of the board of directors of the Merger Sub duly
authorizing the execution, delivery and performance of this
Agreement and the other documents executed in connection with
this Agreement to which it is a party and absence of other
resolutions relating thereto; and (F) the incumbency and
signature of the individuals authorized to execute and deliver
documents on the Merger Sub's behalf;
(4) Resignation of the current officers and directors of
the Company and Merger Sub (as evidenced by letters of
resignation of such persons delivered at the Closing), and the
due election of ▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇ as replacement
members of the Board of Directors of the Company and Merger
Sub and as Chairman and President, respectively, of the
Company and Merger Sub; provided, however, that (y) the term
of office of ▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇ as directors of the
Company will become effective ten (10) days after mailing to
the Commission and the stockholders of the Company a statement
in compliance with Rule 14f-1 under the Exchange Act and (z)
the resignation of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as the sole director of the
Company shall be effective only upon the expiration of said
ten-day period;
(5) The Lock-up Letters, executed by each of Art Beroff,
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇, in the form attached hereto as
Exhibit C;
(6) Official evidence dated no more than three days
prior to the Closing Date from appropriate governmental
authorities of appropriate domestic jurisdictions for the
Company and Merger Sub as to constituent documents on file,
good standing, payment of franchise taxes and qualification to
do business of the Company and Merger Sub, as the case may be;
(7) The Escrow Agreement, duly executed by Capston, in
the form attached hereto as Exhibit D;
(8) The Indemnification Agreement duly executed by the
Company in favor of ▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇, in the form
attached hereto as Exhibit E;
(9) The Certificate of Merger and the Section 253 Merger
Certificate, duly prepared and executed in proper form for
filing with the Secretary of State of the State of Delaware;
and
(10) An opinion addressed to Liberty and its
stockholders and dated the Closing Date of ▇▇▇▇▇▇▇▇ Ronon LLP,
counsel to the Company, with respect to certain corporate
matters and substantially in the form of Exhibit F attached
hereto.
(8) There shall not have occurred (1) any general suspension
of trading in, or limitation on prices for, securities on the NASD for a period
in excess of two Business Days (excluding suspension or limitation resulting
solely from physical damage or interference with such exchanges or related to
market conditions), (2) a declaration of a banking moratorium or any suspension
of payments, lending or the extension of credit generally in respect of banks in
the United States (whether or not mandatory), (3) any decline in either the Dow
▇▇▇▇▇ Industrial Average or the Standard & Poor's Index of 500 Industrial
Companies by an amount in excess of 25% measured from the close of business on
the date hereof or (4) in the case of any of the foregoing existing at the time
of the execution hereof, a material acceleration or worsening thereof.
SECTION 5.2 Conditions Precedent to Obligations of the Company and
Merger Sub. The obligations of the Company and Merger Sub hereunder are subject
to the satisfaction of the following conditions on or before the Closing Date:
(1) The representations and warranties made by Liberty herein
shall be true and correct in all material respects on and as of the Closing Date
with the same effect as though such representations and warranties have been
made on and as of the Closing Date (except where the specific representation or
warranty by its terms applies to an earlier date).
(2) Liberty shall have performed and complied in all respects
with all covenants, agreements and conditions set forth herein which are
required to be performed or complied with by it on or prior to the Closing Date.
(3) The purchase of and payment for the Shares hereunder shall
not (i) be prohibited by any applicable law or governmental regulation
(including without limitation Regulation S, T, U or X of the Board of Governors
of the Federal Reserve System), (ii) be prohibited by the laws or regulations of
any jurisdiction to which the Company is subject or (iii) be permanently
enjoined at the Closing Date.
(4) All authorizations, consents, approvals, permits and
licenses and filings with, by or in respect of any federal, state, local or
foreign governmental authority, agency, court or other body required to be
taken, given or obtained that are necessary in connection with the transactions
contemplated herein and in the other documents related hereto, shall have been
taken, given or obtained, be in full force and effect and not be subject to any
pending proceedings or appeals, administrative, judicial or otherwise.
(5) All consents and approvals to be obtained by Liberty from
third parties (including licensors, lessors and others) that are necessary in
connection with the transactions contemplated herein and in the other documents
related hereto, shall have been given or obtained and be in full force and
effect.
(6) On or before the Closing Date, the Company shall have
received all of the following from Liberty in form and substance satisfactory to
the Company:
(1) Certificates representing all the issued and
outstanding share capital of Liberty;
(2) a Certificate of the President of Liberty, dated as
of the date of Closing certifying (A) as to the accuracy of
Section 5.2(a) and (b); (B) the certificate of incorporation
of Liberty, recently certified by the Secretary of State of
Delaware as duly filed and currently in full force and effect;
(C) by-laws of Liberty; (D) absence of amendments to
constituent documents of such person (in the case of any such
documents of such person filed with a governmental authority,
since the date of the last amendment shown on the official
evidence as to filed constituent documents finished pursuant
to (iv) below; (E) resolutions, of the board of directors and
stockholders of Liberty duly authorizing the execution,
delivery and performance of this Agreement and the other
documents executed in connection with this Agreement to which
it is a party and absence of other resolutions relating
thereto; and (F) the incumbency and signature of the
individuals authorized to execute and deliver documents on
such person=s behalf;
(3) The Investment Agreements from each of the
stockholders of Liberty in the form of Exhibit G attached
hereto; and
(4) Official evidence dated no more than three days
prior to the Closing Date evidence from appropriate
governmental authorities of appropriate domestic jurisdictions
for Liberty as to constituent documents on file, good
standing, payment of franchise taxes and qualification to do
business of Liberty; and
(5) Payment in full in immediately available funds of
the balance of the expense allowance contemplated in Section
7.5 by certified check or money order or wire transfer to the
Company=s account at First Union National Bank ABA No.
▇▇▇▇▇▇▇▇▇; Account No. 2090001541712.
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 6.1 Forbearance. During the period from the date of this
Agreement to the Closing Date, neither the Company nor the Merger Sub shall,
without the prior written consent of Liberty:
(1) adjust, split, combine or reclassify any of its capital
stock; make, declare or pay any dividend or make any other distribution on, or
directly or indirectly redeem, purchase or otherwise acquire, any shares of its
capital stock or any securities or obligations convertible into or exchangeable
for any shares of its capital stock; issue, deliver or sell any shares of its
capital stock or any securities convertible into or exercisable for, or any
rights, options or warrants to acquire, any such shares or securities (whether
for cash or property), except for the cancellation of 150,000 and 32,094 shares
of Common Stock currently held by ▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇, respectively;
(2) sell, lease, transfer, or otherwise dispose of, any of its
properties or assets;
(3) incur or assume any liabilities or incur any indebtedness
for borrowed money, assume, guarantee, endorse or otherwise as an accommodation
become responsible for the obligations of any other Person;
(4) make any acquisition or investment either by purchase of
stock or securities, merger or consolidation, contributions to capital, property
transfers, or purchases of any property or assets of any other Person;
(5) compensate in any manner any of its employees, agents or
representatives or pay any bonus, pension or retirement allowance to any
employee or become a party to, amend or commit itself to any pension,
retirement, profit-sharing or welfare benefit plan or agreement or employment
agreement with or for the benefit of any employee or accelerate the vesting of
any stock options or other stock-based compensation;
(6) except as otherwise permitted elsewhere in this Section
6.1, engage or participate in any transaction or incur or sustain any
obligation;
(7) settle or commence any Legal Proceeding;
(8) amend the Certificate of Incorporation or By-Laws;
(9) take any action that is intended or may reasonably be
expected to result in any of its representations and warranties set forth in
this Agreement being or becoming untrue in any respect at any time prior to the
Closing Date, or in any of the conditions to the transactions contemplated
hereby set forth in Article V not being satisfied or in violation of any
provision of this Agreement;
(10) enter into any agreement or perform any transaction;
or
(11) agree to, or make any commitment to, take any of the
actions prohibited by this Section 6.1.
SECTION 6.2 Obligations of Merger Sub. The Company shall take any
and all action necessary to (i) cause Merger Sub to perform its obligations
under this Agreement and (ii) to ensure that Merger Sub takes no action other
than activities necessary in connection with the Merger.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1 Access to Information.
(1) Upon reasonable notice, the Company shall afford to the
representatives of Liberty during normal business hours during the period prior
to the Closing Date, access to all its properties, books, contracts, commitments
and records, and to its officers, employees, accountants, counsel and other
representatives and, during such period, the Company shall make available to the
other party all information concerning their business, properties and personnel
as such other party may reasonably request. The Company shall not be required to
provide access to or to disclose information where such access or disclosure
would, in the opinion of such counsel, waive the attorney-client privilege of
the institution in possession or control of such information or contravene any
law, rule, regulation, order, judgment, or decree. The parties hereto will make
appropriate substitute disclosure arrangements under circumstances in which the
restrictions of the preceding sentence apply.
(2) All confidential information furnished by the Company to
Liberty pursuant to this Agreement (the "Confidential Information") shall be
treated as the sole property of the Company and, if this Agreement shall be
terminated, Liberty shall upon request promptly return to the Company all of
such written information. Each party hereto receiving Confidential Information
shall keep confidential all such information, will use such information solely
for the purpose of evaluating the transactions contemplated by this Agreement
and shall not directly or indirectly use such information for any competitive or
other commercial purpose.
(3) The obligation to keep Confidential Information as such
shall not apply to (i) any information which (A) was already in the receiving
party=s possession on a non-confidential basis prior to the disclosure thereof
by the furnishing party, (B) was then generally known to the public other than
as a result of disclosure by the receiving party in violation of the provisions
hereof, or (C) was disclosed to the receiving party by a third party not bound
by any obligation of confidentiality or (ii) disclosures made as required by
law. If the receiving party is requested or required (by oral question or
request for information or documents in legal proceedings, interrogatories,
subpoena, civil investigative demand or similar process) to disclose any
information concerning the receiving party, the receiving party will promptly
notify the furnishing party of such request or requirement so that the
furnishing party may seek an appropriate protective order and/or waive the
receiving party=s compliance with the provisions or this Agreement. It is
further agreed that, if in the absence of a protective order or the receipt of a
waiver hereunder the receiving party is nonetheless, in the opinion of counsel,
compelled to disclose information concerning the furnishing party to any
tribunal or governmental body or agency or else stand liable for contempt or
suffer other censure or penalty, the receiving party may disclose such
information to such tribunal or governmental body or agency to the extent
necessary to comply with such order as advised by counsel without liability
hereunder.
(4) Each receiving party understands and agrees that the
furnishing party will suffer immediate, irreparable harm in the event such
receiving party fails to comply with any of its obligations of confidentiality
under this Agreement, that monetary damages will be inadequate to compensate the
furnishing party for such breach and that such furnishing party shall be
entitled to specific performance as a remedy for any such breach without the
necessity of posting a bond or proving special damages. Such remedy shall not be
deemed to be the exclusive remedy in the event of breach of this Agreement by
any receiving party, but shall be in addition to all other remedies available to
the furnishing party at law or in equity.
(5) No investigation by either of the parties or their
respective representatives shall affect the representations, warranties,
covenants or agreements of the other set forth herein. No representations or
warranties are made by the Company, Liberty, or any affiliate thereof except as
expressly set forth in this Agreement and the Schedules hereto.
SECTION 7.2 Legal Conditions to Transactions. Subject to the terms
and conditions of this Agreement, each of the Company and Liberty shall use
their reasonable good faith efforts (i) to take, or cause to be taken, all
actions necessary, proper or advisable to comply promptly with all legal
requirements which may be imposed on such party with respect to the transactions
contemplated hereby and, subject to the conditions set forth in Article V
hereof, to consummate the transactions contemplated by this Agreement and (ii)
to obtain (and to cooperate with the other parties to obtain) any consent,
authorization, order or approval of, or any exemption by, any third
party(including any governmental agency) which is required to be obtained by the
Company or Liberty in connection with the transactions contemplated by this
Agreement.
SECTION 7.3 Further Assurances. In case at any time after the
Closing Date any further action, or the execution and delivery of any additional
documents or instruments, is necessary or desirable to carry out the purposes of
this Agreement, the parties hereto shall take such actions and execute and
deliver such additional documents and instruments as may be reasonably requested
by the other party hereto.
SECTION 7.4 Advice of Changes. Each of the parties hereto shall
promptly advise the other parties hereto of any change or event which,
individually or in the aggregate with other such changes or events, would or
would be reasonably likely to cause or constitute a breach of any of its
representations, warranties or covenants contained herein. From time to time
prior to the Closing, each party hereto shall promptly supplement or amend the
disclosure schedules attached hereto relating to such party, to reflect any
matter which, if existing, occurring or known at the date of this Agreement,
would have been required to be set forth or described in such disclosure
schedules or which is necessary to correct any information in such disclosure
schedules which has been rendered inaccurate thereby. No supplement or amendment
to such disclosure schedules shall have any effect for the purpose of
determining the accuracy of any party=s representations and warranties contained
herein, the satisfaction of any of the conditions in Article V hereof, or the
compliance by any party with its covenants or agreements contained herein.
SECTION 7.5 Transaction Expenses. Each party hereto shall bear its
own expenses relating to the transactions contemplated hereby, including all
fees of their counsel and accountants, whether or not the transaction is
consummated; provided that upon the Closing, Liberty shall pay to Capston
Network Company, a Delaware corporation ("Capston"), a non-accountable expense
allowance in the amount of the balance of the $175,000 (which is in addition to
the $25,000 Liberty has already paid Capston prior to the date hereof) not paid
to Capston prior to the Closing Date. Said non-accountable expense allowance in
the amount of $200,000 is to reimburse Capston for a portion of its
out-of-pocket expenses, including legal, accounting and other professional fees
advanced or to be paid by Capston in connection with the restoration of the
Company=s corporate charter, the filing of the Company=s reports, proxy
statements and other documents with the Commission and the other expenses
associated with the maintenance of the Company as a current reporting company
pursuant to the Exchange Act.
SECTION 7.6 Public Announcements. None of the parties hereto shall
make any announcement or disclosure of the transactions contemplated hereby
without the prior consent of the other.
SECTION 7.7 Transfer and Similar Taxes. Notwithstanding any other
provision of this Agreement to the contrary, the Company shall assume and
promptly pay all sales, use, privilege, transfer, documentary, gains, stamp,
duties, recording and similar Taxes and fees (including any penalties, interest
or additions) imposed upon any party incurred in connection with the
transactions contemplated by this Agreement (collectively, the "Transfer
Taxes"), and the Company shall, at its own expense, procure any stock transfer
stamps required by, and accurately file all necessary Tax Returns and other
documentation with respect to, any Transfer Tax.
SECTION 7.8 D&O Insurance. For not less than six years after the
Closing Date, the Company or its successors and assigns shall, to the extent
available on commercially reasonable terms, maintain in effect directors' and
officers' liability insurance covering ▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇.
SECTION 7.9 Closing Covenant. The parties hereto agree to act in
good faith in taking any and all commercially reasonable actions necessary to
facilitate the Closing and the other transactions contemplated by this
Agreement, including, without limitation, the satisfaction of the respective
closing conditions of the parties set forth herein.
SECTION 7.10 Rule 14f-1 Compliance. As promptly as practicable
following the date hereto, the Company shall file with the Commission and mail
to the stockholders of the Company a statement meeting the requirements of Rule
14f-1 under the Exchange Act with respect to the appointment of ▇▇▇▇▇ ▇▇▇▇ and
▇▇▇▇▇▇ ▇▇▇▇ as replacement members of the Board of Directors of the Company.
SECTION 7.11 Brokers.
(1) The Company shall indemnify and hold Liberty, its directors,
officers, stockholders, employees, representatives and agents harmless against
and with respect to all claims for brokerage or other commissions relative to
the transactions contemplated by this Agreement, based on any agreements,
arrangements, or understandings claimed to have been made by Liberty with any
third party.
(2) Liberty shall indemnify and hold the Company harmless against
and with respect to all claims for brokerage or other commissions relative to
the transactions contemplated by this Agreement, based on any agreements,
arrangements or understandings claimed to have been made by the Company or any
of its agents or affiliates with any third party.
SECTION 7.12 No Solicitation. Upon execution and delivery of this
Agreement until the Closing, the Company shall not, directly or indirectly,
through any director, officer, employee, agent, representative or otherwise (i)
solicit, initiate or encourage the submission of any inquiries, proposals or
offers from any Person relating to a merger, consolidation or tender or exchange
offer or other business combination involving the Company or any transaction
involving the capital stock of the Company or Merger Sub (collectively, a "Third
Party Purchase"); (ii) consider or accept any agreement, arrangement or
understanding with respect to a Third Party Purchase; (iii) participate in any
discussion, negotiations or other communications regarding any Third Party
Purchase; (iv) furnish to any Person other than Liberty and its representatives
any information concerning the Company; (v) grant, issue or agree to grant or
issue to any Person: (a) any direct or indirect interest in the Company or (b)
any right or option to acquire any such interest; or (vi) cooperate in any way,
assist or participate in, facilitate or encourage any effort or attempt by any
Person other than Liberty to seek to do any of the foregoing.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Termination and Amendment.
(1) Termination. This Agreement may be terminated at any time
prior to the Closing Date:
(1) by mutual consent of Liberty, the Company and
Merger Sub in a written instrument;
(2) by Liberty if the transactions contemplated hereby
shall not have been consummated on or before November 23,
1999, unless the failure of the Closing to occur by such date
shall be due to the failure of Liberty to perform or observe
the covenants and agreements of Liberty set forth herein; and
(3) by Liberty or the Company, provided that the
terminating party is not then in breach of any representation,
warranty, covenant or other agreement contained herein, if the
other party shall have breached in any material respect (i)
any of the covenants or agreements made by such other party
herein or (ii) any of the representations or warranties made
by such other party herein; provided, however, that neither
party shall have the right to terminate this Agreement
pursuant to this Section 8.1 unless the breach of any
representation or warranty, together with all other such
breaches, would involve a claim in excess of $100,000 and such
breach is not cured within ten (10) days following written
notice to the party committing such breach, or which breach,
by its nature, cannot be cured prior to the Closing.
(20 Effect of Termination. In the event of the termination of
this Agreement by any party as provided in this Section 8.1, this Agreement
shall forthwith become void and have no effect, and neither Liberty nor the
Company shall have any liability of any nature whatsoever hereunder, or in
connection with the transactions contemplated hereby, except that (i) Sections
7.1(b), (c) and (d) shall survive any termination of this Agreement, (ii)
notwithstanding anything to the contrary contained in this Agreement, neither
Liberty nor the Company shall be relieved or released from any liabilities or
damages arising out of its willful breach of any provision of this Agreement and
(iii) all expense allowances and other fees paid to Capston prior to the date of
termination, including without limitation, the $25,000 paid to Capston prior to
the date hereof and all other amounts paid to Capston hereafter, shall be
credited dollar for dollar against any future payment or expense allowance due
to Capston with respect to another transaction between Liberty or its affiliates
and any other company controlled or represented by Capston, Art Beroff or any of
its stockholders, directors, officers or affiliates.
(30 Amendment; Extension; Waiver. The parties hereto may (i)
amend any provision of this Agreement, (ii) extend the time for the performance
of any of the obligations or other acts of the other parties hereto, (iii) waive
any inaccuracies in the representations and warranties contained herein or in
any document delivered pursuant hereto, and (iv) waive compliance with any of
the agreements or conditions contained herein. Any agreement on the part of a
party hereto to any such amendment, extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party, but any
extension or waiver or failure to insist on strict compliance with an
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure. No failure or
delay by a party in exercising any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy.
SECTION 8.2 Entire Agreement; Survival of Provisions. This
Agreement constitutes the entire agreement of the parties with respect to the
transactions contemplated hereby and supersedes all prior agreements and
understandings with respect thereto. All of the covenants of the parties made
herein shall remain operative and in full force and effect regardless of
acceptance of any of the Shares and payment therefor.
SECTION 8.3 Communications. All notices, demands and other
communications provided for hereunder shall be in writing, and, if to Liberty
shall be given by registered or certified mail, return receipt requested,
telecopy, nationally recognized overnight air courier service or personal
delivery, addressed to Liberty at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
attention ▇▇▇▇▇ ▇▇▇▇, telecopier no. (▇▇▇) ▇▇▇-▇▇▇▇, or to such other address of
Liberty may designate to the Company in writing, with a copy to ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ LLP, ▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, telecopier no. (212)
889-7577, Attention: ▇▇▇▇▇ ▇▇▇▇▇, Esq., and, if to the Company, shall be given
by similar means to the Company at ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇, attention ▇▇▇▇▇ ▇▇▇▇▇▇, telecopier no. (▇▇▇) ▇▇▇-▇▇▇▇ or to such other
address as the Company may designate in writing, and any such notice shall be
deemed given when delivered.
SECTION 8.4 Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto on
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same Agreement.
SECTION 8.5 Binding Effect; Assignment. The rights and obligations
of the parties under this Agreement may not be assigned to any other Person
without the prior written consent of the other parties hereto. This Agreement
shall be binding upon and inure to the parties hereto and their respective
successors and permitted assigns.
SECTION 8.6 Governing Law. This Agreement shall be deemed to be a
contract made under the laws of the State of New York, and for all purposes
shall be construed in accordance with the laws of said State, without regard to
principles of conflict of laws. Each of the parties hereto agrees to submit to
the jurisdiction of the federal or state courts located in the City of New York
in any action or proceeding arising out of or relating to this Agreement.
SECTION 8.7 Severability of Provisions. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 8.8 Headings. The Article and Section headings used or
contained in this Agreement are for convenience of reference only and shall not
affect the construction of this Agreement.
SECTION 8.9 Shares Transfer Expenses and Taxes. The Company shall
pay any and all stamp, transfer and other similar Taxes payable or determined to
be payable, if any, in connection with the original issuance of the Shares, and
shall save and hold Liberty and its affiliates harmless from and against any and
all liabilities with respect to or resulting from any delay in paying, or
omission to pay, such Taxes.
SECTION 8.10 Waiver of Jury Trial. The parties hereto hereby
irrevocably waive all right to a trial by jury in any action, proceeding or
counterclaim arising out of or relating to this Agreement or the transactions
contemplated hereby or thereby.
SECTION 8.11 Absence of Third Party Beneficiary Rights. Except as
otherwise expressly provided for herein, the provisions of this Agreement are
solely for the benefit of the parties hereto and no provision of this Agreement
is intended, nor will any provision be interpreted, to provide or create any
third party beneficiary rights or any other rights of any kind in any
stockholder, creditor, customer, lessor, lessee, licensor, licensee, employee or
any other Person.
[REMAINDER OF PAGE INTENTIONALLY OMITTED;
SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers hereunto duly authorized, as of the
date first above written.
LIBERTY GROUP HOLDINGS, INC.,
f/k/a BIO-RESPONSE, INC.
By:
Name:
Title:
BR ACQUISITION CORP.
By:
Name:
Title:
LIBERTY FOOD GROUP, LTD.
By:
Name:
Title: