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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 12, 1996
Caribiner International, Inc.
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
1-14234 13-3466655
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(Commission File Number) (I.R.S. Employer Identification No.)
16 West 61st Street, New York, NY 10023
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 541-5300
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(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets
(a) Pursuant to an Agreement of Purchase and Sale of Assets, dated
September 12, 1996 (the "TAVS Agreement"), by and between Caribiner
International, Inc. (the "Company") and General Electric Capital Computer
Leasing Corporation ("GECCLC"), the Company has agreed to acquire for a
purchase price of approximately $28 million in cash certain of the assets
of the Total Audio Visual Services ("TAVS") operating division, of GECCLC.
TAVS is a provider of audio visual equipment rentals and staging
services, as well as hotel audio visual outsourcing services, in the
United States.
The consummation of the transactions contemplated by the TAVS
Agreement is expected to take place in late-September or early-October,
1996, subject to customary closing conditions, including, without
limitation, the expiration or early termination of the waiting period
imposed by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended. The TAVS Agreement will terminate if all the conditions to closing
have not been satisfied or waived by November 30, 1996.
The Company expects to finance the transactions contemplated by the
TAVS Agreement from the Company's (i) working capital (which, in part,
includes funds raised in the Company's initial public offering of Common
Stock completed on March 15, 1996) and (ii) existing available credit
facilities with Chemical Bank (now known as The Chase Manhattan Bank).
The TAVS Agreement is attached as Exhibit 2.1, and such agreement is
incorporated by reference in its entirety herein. The description of the
TAVS Agreement contained herein is qualified in its entirety by reference
to the TAVS Agreement.
Attached as Exhibit 99.1 is the Company's press release announcing the
transactions contemplated by the TAVS Agreement.
(b) Equipment or Other Physical Property
Certain of the assets of GECCLC acquired by the Company pursuant to
the TAVS Agreement constitute equipment or other physical property. Such
assets have been used by GECCLC in connection with its audio visual
equipment rental and staging services business. The Company intends to
continue substantially the same use for such acquired assets.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
It is currently impracticable for the Company to file with this Form
8-K the historical financial information of TAVS required to be filed
pursuant to the instructions to Form 8-K. Such financial information will
be filed by amendment not later than 60 days after the date on which this
Form 8-K must be filed, and the Company expects such financial information
to be available in November, 1996.
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(b) Pro Forma Financial Information
It is currently impracticable for the Company to file with this Form
8-K the pro forma financial information relative to the transactions
contemplated by the TAVS Agreement that is required to be filed pursuant
to the instructions to Form 8-K. Such pro forma financial information will
be filed by amendment not later than 60 days after the date on which this
Form 8-K must be filed, and the Company expects such financial information
to be available in November, 1996.
(c) Exhibits
2.1 Agreement of Purchase and Sale of Assets, dated September 12, 1996,
by and between the Company and GECCLC (schedules omitted (other than
Schedules 2(c), 2(c)(i) and 6(bb)) -- the Company agrees to
furnish a copy of any schedule to the Commission upon request).
99.1 Press release, dated September 12, 1996.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, Caribiner International, Inc. has caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
Dated: September 26, 1996 CARIBINER INTERNATIONAL, INC.
By: /s/ Arthur F. Dignam
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Name: Arthur F. Dignam
Title: Executive Vice President,
Chief Financial and Administrative
Officer
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INDEX TO EXHIBITS
Exhibit Description Page
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2.1 Agreement of Purchase and Sale of Assets, dated September 12,
1996, by and between Caribiner International, Inc. (the
"Company") and General Electric Capital Computer Leasing
Corporation (schedules omitted (other than Schedules 2(c),
2(c)(i) and 6(bb)) -- the Company agrees to furnish a copy
of any schedule to the Commission upon request).
99.1 Press Release, dated September 12, 1996.
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<PAGE>
================================================================================
AGREEMENT OF PURCHASE
AND SALE OF ASSETS
By and Between
CARIBINER INTERNATIONAL, INC.,
and
GENERAL ELECTRIC CAPITAL COMPUTER LEASING CORPORATION
================================================================================
September 12, 1996
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TABLE OF CONTENTS
Page
----
1. (a) Purchase and Sale of Assets.......................................1
(b) Assumed Liabilities..............................................4
(c) Excluded Assets. ...............................................5
(d) Acquisition by Subsidiaries......................................5
(e) Consent of Third Parties.........................................5
2. (a) Purchase Price....................................................6
(b) Allocation of Purchase Price.....................................6
(c) Purchase Price Adjustments.......................................7
3. (a) Closing..........................................................7
(b) Further Action...................................................7
4. (a) Seller's Obligations at the Closing; Covenants; Further
Assurances......................................................8
(c) Liability for Transfer Taxes....................................11
(d) Use of Business Name............................................11
(e) Further Assurances..............................................11
5. Purchaser's Obligations at the Closing................................12
6. Representations and Warranties of Seller .............................12
(a) Organization, Standing and Qualification........................12
(b) Subsidiaries....................................................13
(c) Transactions with Certain Persons...............................13
(d) Execution, Delivery and Performance of Agreement;
Authority......................................................13
(e) Capitalization..................................................14
(f) Financial Statements............................................14
(g) Absence of Undisclosed Liabilities..............................15
(h) Taxes...........................................................15
(i) Absence of Changes or Events....................................16
(j) Litigation......................................................18
(k) Compliance with Laws and Other Instruments......................19
(l) Title to Properties.............................................19
(m) Schedules.......................................................19
(n) Contracts.......................................................21
(o) Territorial Restrictions........................................22
(p) Inventories.....................................................23
(q) Customers.......................................................23
(r) Suppliers; Raw Materials........................................23
(s) Intellectual Property...........................................24
(i) Title....................................................24
(ii) Transfer.................................................24
(iii) No Infringement..........................................24
(iv) Licensing Arrangements...................................24
(v) No Intellectual Property Litigation......................25
(vi) Use of Name and Mark.....................................25
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TABLE OF CONTENTS
(continued)
Page
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(t) Insurance.......................................................25
(u) Real Property...................................................25
(i) Leases...................................................25
(ii) No Proceedings...........................................26
(iii) Current Use..............................................26
(v) Environmental Matters...........................................26
(i) Permits..................................................26
(ii) No Violations............................................27
(iii) Other....................................................27
(iv) Definitions..............................................29
(w) No Guaranties...................................................30
(x) Receivables.....................................................30
(y) Absence of Certain Business Practices...........................30
(z) Disclosure......................................................30
(aa) Labor Matters; Labor Disputes...................................30
(bb) Unbilled Costs and Advance Billings.............................31
7. Representations and Warranties by Purchaser...........................31
(a) Organization....................................................31
(b) Execution, Delivery and Performance of Agreement................31
(c) Litigation......................................................32
8. Employment Matters....................................................32
9. Conduct of Business Prior to Closing..................................34
(i) Liabilities..............................................34
(ii) Litigation...............................................34
(iii) Compliance with Laws.....................................34
(iv) Continued Effectiveness of Representations
and Warranties..........................................34
10. Access to Information and Documents...................................35
11. Bulk Sales Compliance.................................................36
12. Conditions Precedent..................................................37
(a) Conditions to Obligations of Each Party..........................37
(b) Conditions to Obligations of the Purchaser.......................37
(c) Conditions to Obligations of Seller..............................38
13. Indemnification.......................................................39
14. Nature and Survival of Representations and Warranties;
Rules Regarding Indemnification and Other Actions.....................41
15. Financial Statements; Closing Date Balance Sheet......................42
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TABLE OF CONTENTS
(continued)
Page
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16. Hart-Scott-Rodino.....................................................43
17. (a) Software License and Support Agreement; Continuing
Services Agreement.............................................43
(b) Software License and Support Agreement..........................43
(c) Continuing Services Agreement...................................43
18. (a) Termination.....................................................44
(b) Effect of Termination...........................................44
19. Notices...............................................................45
20. Expenses..............................................................45
21. Miscellaneous.........................................................45
SCHEDULES
Schedule 1(a)(ii) - Bill of Sale
Schedule 1(a)(xv) - Fixed Assets
Schedule 1(b) - Assumed Liabilities
Schedule 1(c) - Excluded Assets
Schedule 2(b) - Allocation of Purchase Price
Schedule 2(c) - Purchase Price Adjustments
Schedule 2(c)(i) - Tangible Assets
Schedule 4(a)(vi) - Opinion of Seller's Counsel
Schedule 4(a)(vii) - Non-Competition Undertaking
Schedule 4(a)(viii) - Lease Assignment
Schedule 4(a)(ix) - Personal Property Assignment
Schedule 4(a)(x) - Intellectual Property Assignment
Schedule 4(a)(xv) - Referral Agreement
Schedule 4(a)(xvi) - Purchase Agreement Guaranty
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TABLE OF CONTENTS
(continued)
Schedule 4(a)(xviii) - Assignment of Goot Acquisition
Agreement
Schedule 4(a)(xiii)(1) - Letter from Seller to Goot re:
Assignment
Schedule 5(a)(iv) - Opinion of Purchaser's Counsel
Schedule 6(a) - States where Seller is
Qualified to do Business
Schedule 6(c) - Transactions with Certain Persons
Schedule 6(d) - Conflicts
Schedule 6(f) - Financial Statements
Schedule 6(h) - Unpaid Taxes
Schedule 6(i) - Changes or Events
Schedule 6(i)(ix) - August 7, 1996 Budget for the Business
Schedule 6(j) - Litigation
Schedule 6(k) - Compliance with Laws
Schedule 6(l) - Encumbered Assets
Schedule 6(m) - List of Property and Agreements
Schedule 6(m)(v) - Casualty Insurance
Schedule 6(n) - Contracts
Schedule 6(n)(iii) - Excluded Contracts
Schedule 6(p) - Obsolete/Discontinued Inventory
Schedule 6(q) - Customers
Schedule 6(r) - Suppliers
Schedule 6(s) - Intellectual Property
Schedule 6(s)(vi) - Use of Name Restrictions
Schedule 6(t) - Insurance Claims
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TABLE OF CONTENTS
(continued)
Page
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Schedule 6(u) - Real Property Leases
Schedule 6(v)(i) - Environmental Permits
Schedule 6(v)(iii) - Environmental Exceptions
Schedule 6(y) - Certain Business Practices
Schedule 6(bb) - Unbilled Costs and Advance Billings
Schedule 8(b) - Employee Plans
Schedule 8(f) - Retained Employees
Schedule 17(a) - Software License and Support Agreement
Schedule 17(a)(i) - Software Side Letter
Schedule 17(b) - Continuing Services Agreement
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<PAGE>
AGREEMENT OF PURCHASE AND SALE OF ASSETS
AGREEMENT (this "Agreement"), dated September 12, 1996, by and between
CARIBINER INTERNATIONAL, INC., a Delaware corporation having its principal
office at 16 West 61st Street, New York, New York 10023 ("Purchaser") and
GENERAL ELECTRIC CAPITAL COMPUTER LEASING CORPORATION, a California corporation
having its principal office at 6875 Jimmy Carter Boulevard, Norcross, Georgia
30071 ("Seller").
W I T N E S S E T H:
WHEREAS, Seller, through its "Total Audio Visual Services" division, is
engaged in the rental and sale of audio visual equipment and the providing of
related services (the "Business"); and
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to
purchase from Seller, certain assets constituting substantially all of the
Business on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, and in order to set forth the terms and conditions of the purchase
and sale of assets and the manner of carrying the same into effect, the parties
hereto hereby agree as follows:
1. (a) Purchase and Sale of Assets. Except as set forth on Schedule 1(c)
annexed hereto, subject to and upon the terms and conditions set forth in this
Agreement, Seller agrees to sell, transfer, convey, assign and deliver to
Purchaser (or a designated subsidiary of Purchaser as contemplated by subsection
(d) hereof), and Purchaser agrees to purchase, receive and take assignment of
(or to cause one or more of its subsidiaries to purchase), at the Closing (as
defined in Section 3 hereof), all of the business, assets, properties, goodwill
and rights of the Business as a going concern, of every nature, kind and
description, tangible and intangible, wheresoever located and whether or not
carried or reflected on the books and records of Seller, relating to or used or
held for use in connection with the Business (hereinafter sometimes collectively
called "Seller's Assets"), including, without limitation:
(i) all right, title and interest in and to any and all United States
and foreign: (A) patents (including design patents, industrial designs
and utility models) and patent applications (including docketed patent
disclosures awaiting filing, reissues, divisions,
continuations-in-part and extensions), patent disclosures awaiting
filing determination, inventions
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and improvements thereto; (B) trademarks, service marks, trade names
(including, without limitation, any trade names acquired by Seller in
connection with its acquisition of the Business), trade dress, logos,
business and product names, slogans, and registrations and
applications for registration thereof; (C) copyrights (including
software) and registrations thereof; (D) inventions, processes,
designs, formulae, trade secrets, know-how, industrial models,
confidential and technical information, manufacturing, engineering and
technical drawings, product specifications and confidential business
information; (E) mask work and other semiconductor chip rights and
registrations thereof; (F) intellectual property rights similar to any
of the foregoing; (G) copies and tangible embodiments thereof (in
whatever form or medium, including electronic media)(collectively,
"Intellectual Property");
(ii) the assets referred to in the form of Bill of Sale as set forth
in Schedule 1(a)(ii) annexed hereto;
(iii) the assets reflected on the Balance Sheet referred to in Section
6(f) hereof, with only such disposition of such assets as shall have
occurred in the ordinary course of the Business between the Balance
Sheet Date (as defined in Section 6(f) hereof) and the Closing;
(iv) all machinery, equipment, fixtures, leasehold improvements,
furniture, furnishings, automobiles, trucks, vehicles, parts and other
tangible personal property (including, but not limited to, any of the
foregoing purchased subject to any conditional sales or title
retention agreement in favor of any other party);
(v) all rights in and to inventory of equipment held for sale or rent,
spare parts, replacement and component parts, and office and other
supplies ("Inventories"), including Inventories held at any location
for Seller and Inventories previously purchased and in transit to
Seller;
(vi) all rights in and to Inventories (including, but not limited to,
products hereafter returned or repossessed and unpaid, Seller's rights
of rescission, replevin, reclamation and rights to stoppage in
transit);
(vii) all rights (including, but not limited to, any and all
Intellectual Property rights) in and to the products and services
sold, rented or leased and in and
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to any products or other Intellectual Property rights under research
or development prior to or on the Closing Date;
(viii) all of the rights of the Seller under all Contracts (as defined
in Section 6(n) hereof) and, including, without limitation, any right
to receive payment for products sold or services rendered, and to
receive goods and services, pursuant to such Contracts and to assert
claims and take other rightful actions in respect of breaches,
defaults and other violations of such Contracts;
(ix) all credits, prepaid expenses, deferred charges, return
allowances, advance payments, security deposits and prepaid items;
(x) all books, records, manuals and other materials (in any form or
medium), including, without limitation, all records and materials
maintained by Seller in respect of the Business, advertising matter,
catalogues, price lists, correspondence, mailing lists, lists of
customers, distribution lists, photographs, production data, sales and
promotional materials and records, purchasing materials and records,
manufacturing and quality control records and procedures, blueprints,
research and development files, records, data and laboratory books,
Intellectual Property disclosures, media materials and plates,
accounting records, and sales order files;
(xi) to the extent their transfer is permitted by law, all consents,
approvals, authorizations, waivers, permits, grants, franchises,
concessions, agreements, licenses, exemptions or orders of regulation,
certificate, declaration or filing with, or report or notice to any
entity issued, executed, delivered or otherwise made to or for the
benefit of the Business and/or Seller's Assets, including all
applications thereof (collectively, the "Consents") including, but not
limited to, the Consent (the "Governmental Approval") of any nation,
or government, any state or other political subdivision thereof, any
entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, including,
without limitation, any government authority, agency, department,
board, commission or instrumentality of the United States, any state
of the United States or any political subdivision thereof, and any
tribunal or arbitrator(s) of competent jurisdiction, and any
self-regulatory organization
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(collectively, the "Governmental Authority" or "Governmental
Authorities);
(xii) all rights to choses in action, causes of action, claims and
rights of recovery or setoff, lawsuits, judgments, claims and demands
of any nature available to or being pursued by the Seller with respect
to the Business or the ownership, use, function or value of any of
Seller's Assets whether arising by way of counterclaim or otherwise;
(xiii) all guarantees, warranties, indemnities and similar rights in
favor of the Seller with respect to any of Seller's Assets or the
Business;
(xiv) accrued sales (in respect of outstanding proposals or
work-in-process), commitments, proposals, Contracts, understandings or
commitments, whether oral or written, to perform services, advanced
billings and unbilled costs (as set forth on Schedule 6(bb) annexed
hereto);
(xv) the fixed assets (the "Fixed Assets") listed on Schedule 1(a)(xv)
annexed hereto and as provided on the Balance Sheet; and
(xvi) accounts and notes receivable of Seller (except for those
accounts receivable listed on Schedule 1(c) hereto which constitute
Excluded Assets (as hereinafter defined)).
(b) Assumed Liabilities.
(i) Seller's Assets shall be conveyed free and clear of all
liabilities, obligations, liens, claims and encumbrances, excepting
only those liabilities, obligations, liens, claims and encumbrances
which are expressly to be assumed by Purchaser hereunder. Purchaser
(or, without limiting the obligations of Purchaser hereunder, a
designated subsidiary of Purchaser as contemplated by subsection (d)
hereof) shall assume at the Closing, and thereafter timely pay,
perform or discharge, when due, the "Assumed Liabilities," except to
the extent that any of such Assumed Liabilities have been paid or
satisfied as of the Closing Date. As used herein, the term "Assumed
Liabilities" shall mean the liabilities set forth on Schedule 1(b)
annexed hereto.
(ii) Purchaser (or a designated subsidiary of Purchaser as
contemplated by subsection (d) hereof) shall not and does not assume
any liabilities,
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obligations or commitments of Seller, other than the Assumed
Liabilities, and Seller shall be solely responsible, without
limitation, for the following:
(A) Legal, accounting, brokerage and finder's fees and income,
excise or real estate or other Transfer Taxes (as defined in
Section 4(c)) or other expenses incurred by Seller in connection
with this Agreement or the consummation of the transactions
contemplated hereby;
(B) Debts, liabilities or obligations of any nature to any past
or present shareholder of Seller;
(C) Any domestic, federal, state or local or foreign income,
franchise, excise, use, property, payroll or similar or other
Taxes (as defined in Section 6(h) hereof)(or penalties and
interest thereon) imposed on Seller including, without
limitation, those due as a result of the operation of the
Business through the Closing Date; and
(D) Except as Purchaser shall have otherwise agreed herein,
liabilities and obligations of Seller, if any, accruing prior to,
on or after the Closing Date relating to Seller's employment of
any of Seller's employees, including, without limitation,
compensation, severance payments, if any, contributions to
employee benefit plans, workers' compensation or other insurance
claims.
(c) Excluded Assets. Seller's Assets do not include, and specifically
exclude, the items set forth on Schedule 1(c) annexed hereto (hereinafter
referred to as the "Excluded Assets").
(d) Acquisition by Subsidiaries. Notwithstanding anything to the
contrary in this Agreement, Purchaser may cause the Seller's Assets to be
acquired by, and the Assumed Liabilities to be assumed by, one or more
subsidiaries of Purchaser; provided, however, that no such acquisition or
assumption shall relieve Purchaser of its obligations hereunder.
(e) Consent of Third Parties. Notwithstanding anything to the contrary
in this Agreement, but subject, nevertheless, to Section 12 hereof, this
Agreement shall not constitute an agreement to assign or transfer any
Governmental Approval, instrument, Contract, lease, permit or other agreement
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or arrangement or any claim, right or benefit arising thereunder or resulting
therefrom if an assignment or transfer or an attempt to make such an assignment
or transfer without the consent of a third party would constitute a breach or
violation thereof or affect adversely the rights of Purchaser or Seller
thereunder; any transfer or assignment to Purchaser by Seller of any interest
under any such instrument, Contract, lease, permit or other agreement or
arrangement that requires the consent or approval of a third party shall be made
subject to such consent or approval being obtained. In the event any such
consent or approval is not obtained on or prior to the Closing Date, Seller
shall continue to use best efforts to obtain such approval or consent after the
Closing Date until such time as such consent or approval has been obtained, and
Seller will cooperate with Purchaser in any lawful and economically feasible
arrangement to provide that Purchaser shall receive the interest of Seller in
the benefits under any such instrument, Contract, lease or permit or other
agreement or arrangement, including performance by Seller as agent, if
economically feasible, provided, that Purchaser shall undertake to pay or
satisfy the corresponding liabilities for the enjoyment of such benefit to the
extent Purchaser would have been responsible therefor hereunder if such consent
or approval had been obtained. Seller shall pay and discharge, any and all
out-of-pocket costs of seeking to obtain or obtaining any such consent or
approval whether before or after the Closing Date. Nothing in this Section 1(e)
shall be deemed a waiver by Purchaser of its right to have received on or before
the Closing an effective assignment of all of the Seller's Assets nor shall this
Section 1(e) be deemed to constitute an agreement to exclude from the Seller's
Assets any assets described in Section 1(a) hereof.
2. (a) Purchase Price. In consideration of the sale, transfer, conveyance,
assignment and delivery of Seller's Assets by Seller to Purchaser, and in
reliance upon the representations and warranties made herein by Seller,
Purchaser agrees, in full payment therefor, to deliver to Seller at the Closing
or at such other time as provided herein, subject to (i) adjustments as provided
in Section 2(c) hereof and (ii) the Holdback (as defined in Section 2(d)
hereof), the sum of $35,000,000 by wire transfer or certified or official bank
check drawn on a bank which is a member of the New York Clearing House
Association payable to the order of Seller (the "Purchase Price").
(b) Allocation of Purchase Price. The Purchase Price payable pursuant
to Section 2(a) hereof shall be allocated as provided on Schedule 2(b) annexed
hereto. The parties hereto agree to use such allocation for purposes of filing
Internal Revenue Service Form 8594 (Asset Acquisition Statement under Section
1060) pursuant to the provisions of the Internal Revenue Code of 1986, as
amended (the "Code").
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(c) Purchase Price Adjustments. The Purchase Price shall be increased
or decreased in accordance with the adjustments contemplated by, and more fully
described on, Schedule 2(c) annexed hereto.
3. (a) Closing. The closing of the transactions contemplated under this
Agreement (the "Closing") shall take place at the offices of Zukerman Gore &
Brandeis, LLP, 900 Third Avenue, New York, New York 10022 as soon as practicable
but in any event no earlier than five (5) business days following the
satisfaction or waiver of all conditions precedent set forth in Section 12
hereof, or at such other time and place as the parties may agree. The day on
which the Closing actually takes place is herein sometimes referred to as the
"Closing Date."
(b) Further Action. (i) Seller and Purchaser agree to use all
reasonable good faith efforts to take all actions and to do all things
necessary, proper or advisable to consummate the transactions
contemplated hereby by the Closing Date.
(ii) Seller and Purchaser will, as promptly as practicable, file or
supply, or cause to be filed or supplied, all applications,
notifications and information required to be filed or supplied
pursuant to all applicable provisions of (A) constitutions, treaties,
statutes, laws (including common law), rules, regulations, ordinances,
codes or orders of any Governmental Authority, (B) Governmental
Approvals and (C) orders, decisions, injunctions, judgments, awards
and decrees of or agreements with any Governmental Authority
(collectively, the "Applicable Laws") in connection with this
Agreement, the Related Agreements (as hereinafter defined in Section
7(b) hereof), the sale and transfer of the Seller's Assets pursuant to
this Agreement and the consummation of the other transactions
contemplated hereby.
(iii) Seller and Purchaser, as promptly as practicable, will use all
reasonable efforts to obtain, or cause to be obtained, all Consents
(including, without limitation, all Governmental Approvals and any
Consents required under any Contract) necessary to be obtained in
order to consummate the sale and transfer of Seller's Assets pursuant
to this Agreement and the consummation of the other transactions
contemplated hereby.
(iv) Seller and Purchaser will coordinate and cooperate with each
other in exchanging such information and supplying such assistance as
may be reasonably required pursuant to Applicable Laws in
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connection with this Agreement, the Related Agreements and the
consummation of the other transactions contemplated hereby, including,
but not limited to, all filings necessary pursuant to the
Hart-Scott-Rodino Antitrust Improvement Act of 1976 (the "HSR Act"),
or any successor law, and the regulations and rules issued pursuant to
the HSR Act or any successor law.
(v) At all times prior to the Closing, Seller and Purchaser, as the
case may be, shall promptly notify the other in writing upon becoming
aware of any fact, condition, event or occurrence that will or may
result in the failure to satisfy any of the conditions precedent to
the transactions contemplated by this Agreement as set forth in
Section 12 hereof.
(vi) Seller and Purchaser shall use their respective good faith
reasonable efforts to enter into such agreements and other
arrangements (including sublicenses and subleases) as are necessary to
ensure that Purchaser receives benefits under the Contracts set forth
on Schedule 6(n) hereto and the other agreements to be transferred to
Purchaser hereunder that are the same as received under the Contracts
prior to the Closing or as contemplated to be received after the
Closing.
4. (a) Seller's Obligations at the Closing; Covenants; Further Assurances.
At the Closing, Seller agrees to deliver to Purchaser (and, as applicable,
execute):
(i) a Bill of Sale duly executed by Seller in substantially the form
of Schedule 1(a)(ii) hereto;
(ii) such other good and sufficient deeds, bills of sale,
endorsements, assignments, documents of title and other instruments of
conveyance, assignment and transfer, in form and substance reasonably
satisfactory to Purchaser's counsel, as shall be effective to vest in
Purchaser good title to Seller's Assets;
(iii) all contracts, files and other data (including, without
limitation, lists of orders and computer disks and tapes) and
documents pertaining to Seller's Assets;
(iv) a certified copy of resolutions adopted by Seller's Board of
Directors authorizing the execution, delivery and performance of this
Agreement;
(v) a copy of Seller's certificate of incorporation, as amended,
certified by the Office of the Secretary of State of the State of
California, and
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a true and correct copy of the by-laws of Seller as certified by the
secretary of Seller;
(vi) the opinion of Seller's counsel, substantially in the form of
Schedule 4(a)(vi) annexed hereto;
(vii) the Non-Competition Undertaking of Seller, General Electric
Capital Corporation and General Electric Company and its Affiliates
(the "Non- Competition Undertaking"), in the form of Schedule
4(a)(vii) annexed hereto;
(viii) approvals in respect of and an assignment and assumption
agreement for the Leases (as defined in Section 6(u) hereof) in
substantially the form of Schedule 4(a)(viii) annexed hereto (the
"Lease Assignment");
(ix) an assignment and assumption agreement for the equipment leases
in substantially the form of Schedule 4(a)(ix) annexed hereto (the
"Personal Property Assignment");
(x) an assignment agreement for the Intellectual Property in
substantially the form of Schedule 4(a)(x) annexed hereto (the
"Intellectual Property Assignment");
(xi) all Consents, including, without limitation, those necessary in
connection with the Lease Assignment, the Personal Property Assignment
and the Intellectual Property Assignment;;
(xii) such filings as are necessary and other required submissions in
connection therewith under the HSR Act with respect to the
transactions as provided under Section hereof;
(xiii) the Software License and Support Agreement between Purchaser
and Seller (the "Software License and Support Agreement") a copy of
which is annexed hereto as Schedule 17(a) and that certain side letter
relating to the Software License and Support Agreement (the "Software
Side Letter") a copy of which is annexed hereto as Schedule 17(a)(i);
(xiv) the Continuing Services Agreement between Purchaser and Seller
(the "Continuing Services Agreement") a copy of which is annexed
hereto as Schedule 17(b);
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(xv) the Referral Agreement between Purchaser and Seller in
substantially the form of Schedule 4(a)(xv) annexed hereto(the
"Referral Agreement");
(xvi) the Purchase Agreement Guaranty between Purchaser and Seller in
substantially the form of Schedule 4(a)(xvi) annexed hereto (the
"Purchase Agreement Guaranty");
(xvii) Governmental Approvals;
(xviii) an assignment by Seller to Purchaser of the rights pursuant to
(A) Article VII of that certain Acquisition Agreement (the "Goot
Acquisition Agreement") among Total Audio Visual Services, Inc.,
Steven B. Goot ("Goot") and Seller dated August 16, 1994 and (B)
Section 5 of that certain Continuing Employment Agreement dated July
5, 1996 between Seller and Goot (the "Employment Agreement"),
substantially in the form of Schedule 4(a)(xviii) annexed hereto; and
that certain letter annexed hereto as Schedule 4(a)(xviii)(1) which
Seller shall execute and deliver to Purchaser for forwarding to Goot;
and
(xix) all other documents and instruments required to be delivered to
Purchaser pursuant to the provisions of this Agreement.
(b) Seller agrees that from and after the Closing Date Purchaser shall
have the right and authority to bill and collect for its own account all
billings in respect of the accounts receivable of the Business and
work-in-process that are being transferred to Purchaser as provided herein as
well as, but in such case for Seller's account, pursuant to Schedule 2(c), those
accounts receivable listed on Schedule 1(c) hereto which constitute Excluded
Assets (the "Excluded Receivables"). Seller agrees that it will promptly
transfer and deliver to Purchaser any cash or other property which Seller may
receive in respect of such billings, except to the extent that such billings
constitute Excluded Assets, in which case Seller shall provide Purchaser with
prompt notice of the receipt thereof. Notwithstanding anything to the contrary
contained in Schedule 2(c) hereto, in the event that Purchaser is unable to
collect and remit to Seller within 120 days following the date upon which the
same are due, any Excluded Receivables that, as indicated on the AR Analysis (as
defined in Section 15(c) hereof) attached to the Closing Balance Sheet (as
defined in Section 15(c) hereof), are as of the Closing Date outstanding for
less than sixty (60) days (the "Purchaser Receivables"), Purchaser shall pay
promptly to Seller any such Purchaser Receivables; provided, however, that if
the payor of any such Purchaser Receivables is delinquent, as of the Closing
Date, in the payment of any other receivables due Seller for more than ninety
(90) days, such receivables that are
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outstanding for less than sixty (60) days shall not qualify for purposes hereof
as Purchaser Receivables. Upon payment of any Purchaser Receivables, Purchaser
shall thereupon become entitled to seek to collect by any lawful means any
amounts paid to Seller, as well as costs of collection, in respect of such
Purchaser Receivables.
(c) Liability for Transfer Taxes. Seller shall be responsible for the
timely payment of all income, sales (including, without limitation, bulk sales),
use, value added, documentary, stamp, gross receipts, registration, transfer,
conveyance, excise, recording, license and other similar Taxes (as defined in
Section 6(h) hereof) and fees (collectively, "Transfer Taxes"), arising out of
or in connection with or attributable to the transactions effected pursuant to
this Agreement and the Related Agreements. Seller shall prepare and timely file
all tax returns required to be filed in respect of Transfer Taxes (including,
without limitation, all notices required to be given with respect to bulk sales
taxes), provided that Purchaser shall be permitted to prepare any such tax
returns that are the primary responsibility of Purchaser under Applicable Law.
Purchaser's preparation of any such tax returns shall be subject to Seller's
approval, which approval shall not be unreasonably withheld or delayed.
(d) Use of Business Name. After the Closing, Seller will not, directly
or indirectly, use or do business, or allow any Affiliate to use or do business,
or assist any third party in using or doing business, under the names and marks
"Total Audio Visual Services" or "TAVS" (or any other name confusingly similar
to such names and marks or any variation thereof).
(e) Further Assurances. At any time and from time to time after the
Closing, at Purchaser's request and expense, without further consideration,
Seller agrees to execute and deliver such other additional instruments of sale,
transfer, conveyance, assignment and confirmation and take such other action as
Purchaser may reasonably deem necessary in order to transfer, convey and assign
to Purchaser Seller's Assets, subject to this Agreement, to put Purchaser in
control thereof and to assist Purchaser in exercising all of Seller's rights
with respect thereto and to take such action and execute such documents or
instruments as may be reasonably requested by the Purchaser in connection with
any governmental or regulatory matters or filings required to be made by
Purchaser, including, without limitation, any filings, documents or instruments
to be delivered to the United States Securities and Exchange Commission or any
other Governmental Authority, the New York Stock Exchange, Purchaser's lenders,
auditors or any other appropriate party.
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5. Purchaser's Obligations at the Closing. (a) At the Closing, Purchaser
agrees to deliver to Seller (and, as applicable, execute):
(i) the Purchase Price as provided in Section 2 hereof;
(ii) a certified copy of resolutions adopted by the Board of Directors
of Purchaser authorizing the execution, delivery and performance of
this Agreement and the Related Agreements;
(iii) a copy of Purchaser's certificate of incorporation, as amended,
certified by the Office of the Secretary of State of Delaware, and a
true and correct copy of the by-laws of Purchaser as certified by the
secretary of Purchaser;
(iv) an opinion of Purchaser's counsel substantially in the form of
Schedule 5(a)(iv) annexed hereto;
(v) the Personal Property Assignment;
(vi) the Lease Assignment; and
(vii) all other documents and instruments required to be delivered to
Seller pursuant to the provisions of this Agreement.
(b) At any time and from time to time after the Closing, at Seller's
request and expense, Purchaser shall execute and deliver such other additional
instruments as Seller may reasonably deem necessary to evidence Purchaser's
obligations under this Agreement, and Purchaser agrees to take such actions as
may be reasonably necessary to carry out the purposes and intentions of this
Agreement. For a reasonable period of time following the Closing, Purchaser
shall provide Seller with reasonable access to all books and records of Seller
that are delivered to Purchaser hereunder relating to the Business and Seller's
Assets and the period through the Closing Date.
6. Representations and Warranties of Seller . Seller represents and
warrants to Purchaser, as of the date of this Agreement and as of the Closing
Date, as follows:
(a) Organization, Standing and Qualification. Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
State of California; has all requisite corporate power and authority and is
entitled to carry on the Business as now being conducted and to own, lease or
operate its properties in the places where such business is now conducted and
such properties are now owned, leased or operated; and is duly qualified,
licensed and in good standing as a foreign
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corporation authorized to do business in the states listed on Schedule 6(a)
annexed hereto, which are the only states where the failure to be so qualified
would have a material adverse effect on the condition, financial or otherwise,
of Seller. Seller has delivered to Purchaser true and complete copies of the
certificate of incorporation of Seller and all amendments thereto, certified as
true and correct by the Office of the Secretary of State of the State of
California, and the by-laws of Seller as presently in effect, certified as true
and correct by Seller's secretary.
(b) Subsidiaries. The Business has no subsidiaries or divisions. The
Business has not been conducted through any other direct or indirect subsidiary,
division (other than that which constitutes the Business) or any Affiliate (as
hereinafter defined) of any present or former shareholder of Seller.
(c) Transactions with Certain Persons. Except as set forth on Schedule
6(c) annexed hereto, Seller has not directly or indirectly, purchased, leased
from others or otherwise acquired any property or obtained any services from, or
sold, leased to others or otherwise disposed of any property or furnished any
services to, or otherwise dealt with (except with respect to remuneration for
services rendered as a director, officer or employee of Seller), in the ordinary
course of business or otherwise (i) any shareholder of Seller, or (ii) any
person, firm or corporation which, directly or indirectly, alone or through one
or more intermediaries controls, is controlled by, or is under common control
with Seller or any shareholder of Seller (an "Affiliate"). Except as set forth
on Schedule 6(c) hereto, Seller as it relates to the Business does not owe any
amount to, or have any contract with or commitment to, any of its officers,
employees or consultants (other than compensation for current services not yet
due and payable and reimbursement of expenses arising in the ordinary course of
business), and none of such persons owes any amount to Seller. Except as set
forth on Schedule 6(c) hereto, no part of the property or assets of an Affiliate
of Seller is used in connection with the Business.
(d) Execution, Delivery and Performance of Agreement; Authority.
Except as set forth on Schedule 6(d) annexed hereto, neither the execution,
delivery nor performance of this Agreement and all other agreements to which
Seller is a party required to be delivered by Seller pursuant to Section 4(a)
hereof (which documents are sometimes herein collectively referred to as
"Seller's Related Agreements") will, with or without the giving of notice or the
passage of time, or both, conflict with, result in a default, right to
accelerate or loss of rights under, or result in the creation of any lien,
charge or encumbrance pursuant to any provision of Seller's certificate of
incorporation or by-laws or any franchise, mortgage, deed of trust, lease,
license, Contract, agreement, Applicable Law, rule or regulation or any order,
judgment or decree to which Seller is
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a party or by which any of them may be bound or materially or adversely affected
or require any consent, authorization, approval or any other action by, or any
notice to or filing or registration with, any Governmental Authority or other
third party. Except as set forth on Schedule 6(d) hereto, no Governmental
Approval or other Consent is required to be obtained or made by Seller in
connection with the execution and delivery of this Agreement or Seller's Related
Agreements or the consummation of the transactions contemplated thereby. Seller
has the full power and authority to enter into this Agreement and Seller's
Related Agreements and to carry out the transactions contemplated hereby all
proceedings required to be taken by them to authorize and approve the execution,
delivery and performance of this Agreement and Seller's Related Agreements have
been properly taken, and this Agreement and Seller's Related Agreements
constitute valid and binding obligations of Seller, enforceable in accordance
with their terms, except that such enforcement may be subject to the effect of
any applicable bankruptcy, insolvency, reorganization, moratorium and similar
laws affecting creditors' rights generally. The execution, delivery and
performance of this Agreement and Seller's Related Agreements have been duly
authorized, to the extent required by Applicable Law and by all requisite
corporate and shareholder action of Seller.
(e) Capitalization. All of the presently authorized, issued and
outstanding shares of capital stock of Seller is owned by the General Electric
Capital Corporation, a New York corporation (the "Shareholder").
(f) Financial Statements. The books of account of Seller, as they
relate to or affect the Business and the Seller's Assets, are sufficient to
prepare the Financial Statements in accordance with generally accepted
accounting principles consistently applied by Seller ("GAAP"). Seller has
delivered to Purchaser copies of the following financial statements (hereinafter
collectively called the "Financial Statements"), copies of which are attached as
Schedule 6(f) hereof, all of which are true, accurate and correct, and have been
prepared in good faith from the books and records of Seller in conformity with
GAAP and fairly present the financial position of the Business at such dates:
(i) Balance Sheet, and related statements of income and retained
earnings and cash flows (including the notes thereto) in respect of
the Business prepared by Seller as at December 31, 1994 and December
31, 1995 and for the periods then ended; and
(ii) Balance Sheet and related income statement in respect of the
Business prepared by Seller as at July 31, 1996 and for the period
then ended. (The Balance Sheet and related income statement for the
period ended
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<PAGE>
July 31, 1996 is hereinafter referred to as the "Balance Sheet" and
the date July 31, 1996 is hereinafter referred to as the "Balance
Sheet Date".)
Such Financial Statements do not contain any items of special or
nonrecurring income or any other income not earned in the ordinary course of
business except as expressly specified therein. All equipment and Inventories on
the Financial Statements are fairly stated net of all required obsolescence
reserves. Seller is not aware of any material modifications that should be made
to the Financial Statements in order to make them to be in conformity with GAAP.
(g) Absence of Undisclosed Liabilities. As of the Balance Sheet Date,
except as reflected or reserved against on the Balance Sheet, the Business had
no debts, liabilities or obligations (whether absolute, accrued, contingent or
otherwise) of any nature whatsoever.
(h) Taxes. Except as set forth on Schedule 6(h) annexed hereto, (i)
all Taxes imposed by the United States or by any foreign country or by any
state, municipality, subdivision or instrumentality of the United States or of
any foreign country, or by any other taxing authority, which are due or payable
by Seller or any Affiliate of Seller in respect of the Business, and all
interest and penalties thereon, whether disputed or not, have been paid in full;
all tax returns required to be filed in connection therewith have been
accurately prepared and duly and timely filed prior to the expiration of any
available extension periods, and all deposits required by law to be made by
Seller or any Affiliate of Seller in respect of the Business with respect to
employees' withholding taxes have been duly made, except for the current
reporting period which will be paid when due; (ii) Seller is not currently
delinquent in the payment of any foreign or domestic tax, assessment or
governmental charge or deposit and has no tax deficiency or claim outstanding,
or, to its knowledge, proposed or assessed against it, and there is no basis for
any such deficiency or claim; (iii) there is not now in force any extension of
time with respect to the date on which any tax return was or is due to be filed
by or with respect to Seller other than the federal and state corporate income
and franchise tax returns for the period ending December 31, 1995, or any waiver
or agreement by it for the extension of time for the assessment of any Tax. As
used in this Agreement, "Taxes" shall include, without limitation, all federal,
state, provincial, local, foreign or other income, alternative minimum,
accumulated earnings, add-on, personal holding company, franchise, capital
stock, net worth, capital, profits, gross receipt, value added, sales, use,
goods and services, transaction, excise customs duties, transfer, conveyance,
mortgage, registration, stamp, documentary, recording, premium, charges, fees,
severance, environmental (including, taxes under Section 59A of the Code), real
property, personal property, ad valorem, intangibles, rent,
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occupancy, license, occupational, employment, unemployment insurance, social
security, disability, workers' compensation, payroll, withholding, estimated or
other similar tax, duty or other governmental charge or assessment or deficiency
thereof, including all interest and penalties thereon and additional thereto
whether disrupted or not.
(i) Absence of Changes or Events. Except as set forth on Schedule 6(i)
annexed hereto, since the Balance Sheet Date, Seller has conducted the Business
only in the ordinary course and, in respect of the Business, has not:
(i) incurred any obligation or liability, absolute, accrued,
contingent or otherwise, whether due or to become due, except current
liabilities for trade or business obligations in the ordinary course
of business and consistent with its prior practice, none of which
liabilities, in any case or in the aggregate, materially and adversely
affects the business, properties, assets, liabilities or condition,
financial or otherwise, of the Business;
(ii) discharged or satisfied any lien, charge or encumbrance other
than those then required to be discharged or satisfied, or paid any
obligation or liability, absolute, accrued, contingent or otherwise,
whether due or to become due, other than current liabilities shown on
the Balance Sheet and current liabilities incurred since the Balance
Sheet Date in the ordinary course of business and consistent with its
prior practice;
(iii) mortgaged, pledged or subjected to lien, charge, security
interest or any other encumbrance or restriction any of its property,
business or assets, tangible or intangible;
(iv) sold, transferred, leased to others or otherwise disposed of any
of its assets except in the ordinary course of business, or cancelled
or compromised any debt or claim, or waived or released any right of
substantial value;
(v) received any notice of termination of any contract, lease or other
agreement or suffered any damage, destruction or loss (whether or not
covered by insurance) which, in any case or in the aggregate, has had
a materially adverse effect on the Seller's Assets, or the properties,
operation of the Business;
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<PAGE>
(vi) encountered any labor union organizing activity, had any actual
or threatened employee strikes, work stoppages, slow-downs or
lock-outs or had any material change in its relations with its
employees, agents, customers or suppliers;
(vii) transferred or granted any rights under, or entered into any
settlement regarding the breach or infringement of, any United States
or foreign license, patent, copyright, trademark, trade name,
invention or similar rights, or modified any existing rights with
respect thereto;
(viii) made any change in the rate of compensation, commission, bonus
or other direct or indirect remuneration payable, or paid or agreed or
orally promised to pay conditionally or otherwise, any material bonus,
extra compensation, pension or severance or vacation pay, to any
officer, employee, salesman, distributor or agent of the Business;
(ix) made any capital expenditures or capital additions or betterments
(including, without limitation, any such items purchased for rental to
third parties) in excess of an aggregate of $800,000, which are in
conformity with the Budget (attached hereto as Schedule 6(i)(ix)
hereto;
(x) changed its banking or safe deposit arrangements;
(xi) instituted, settled or agreed to settle any litigation, action or
proceeding before any court or governmental body relating to the
Business or its property;
(xii) failed to replenish its supplies in a normal and customary
manner consistent with its prior practice and prudent business
practices prevailing in the industry, or made any purchase commitment
in excess of the normal, ordinary and usual requirements of its
business or at any price in excess of the then current market price or
upon terms and conditions more onerous than those usual and customary
in the industry, or made any material change in its selling, pricing,
advertising or personnel practices
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<PAGE>
inconsistent with its prior practice or, if so, consistent with
prudent business practices prevailing in the industry;
(xiii) suffered any change, event or condition which, in any case or
in the aggregate, has had or may have a materially adverse affect on
Seller's condition (financial or otherwise), properties, assets,
liabilities or operations including, without limitation, any
materially adverse change in Seller's revenues, costs, levels of
committed business or relations with its employees, agents, customers
or suppliers;
(xiv) entered into any transaction, contract or commitment other than
in the ordinary course of business or paid or agreed to pay any legal,
accounting, brokerage, finder's fee, taxes or other expenses in
connection with or incurred any severance pay obligations by reason
of, this Agreement or the transactions contemplated thereby; or
(xv) entered into any agreement or made any commitment, whether
written or oral, to take any of the types of action described in
subparagraphs (i) through (xv) above.
(j) Litigation. Except as set forth on Schedule 6(j) annexed hereto,
there is no claim, legal action, suit, arbitration or other legal or
administrative proceeding (or to the best knowledge of Seller's Personnel (as
hereinafter defined), governmental investigation) or any order, decree or
judgment in progress, pending or in effect, or to the knowledge of Seller's
Personnel threatened against or relating to the Business, its employees, agents
or officers, its properties, assets or business in connection with the
transactions contemplated by this Agreement, and Seller has no reason to be
aware of any basis for the same. For purposes of this Agreement, Seller's
Personnel shall mean D. Michael Upton, Lawrence Golen, James Lane, Michael Ford,
Michael G. Clair, Gus Bowsell, Richard J. Kobelt, Andrew L. Halasz, Randall W.
Raddatz, Stephanie Jones Smith, Shiela Lowden, Angela Newsom, David Harrington
and Matthew P. Drain. Seller makes no representation or warranty with respect to
any proceeding which has been filed but not served upon any such party provided
that such party is unaware of any such proceeding or any threat to commence any
such proceeding. Except as set forth on Schedule 6(j) hereto, no citations,
fines or penalties have been asserted against Seller relating to the Business
under any Environmental Law (as defined in Section 6(v)(iv)(A)) or any foreign,
federal, state or local law relating to occupational health or safety.
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(k) Compliance with Laws and Other Instruments. Except as set forth in
Schedule 6(k) annexed hereto, Seller has complied in all material respects with
all existing Applicable Laws, rules, regulations, ordinances, orders, judgments
and decrees now or hereafter applicable to the Business as presently conducted.
Neither the ownership nor use of Seller's Assets nor the conduct of the Business
violates, or with or without the giving of notice or the passage of time, or
both, will violate, conflict with or result in a default, right to accelerate or
loss of rights under, any terms or provisions of its certificate of
incorporation or by-laws as presently in effect, or any lien, encumbrance,
mortgage, deed of trust, lease, license, agreement, understanding, Applicable
Law, ordinance, rule or regulation, Government Approval, or any order, judgment
or decree to which it is a party or by which it may be bound or affected.
(l) Title to Properties. Except as set forth on Schedule 6(l) hereto,
Seller has good title to all of Seller's Assets. Except as set forth on Schedule
6(l) annexed hereto, none of Seller's Assets are subject to any mortgage,
pledge, lien, charge, security interest, encumbrance, restriction, lease,
license, easement, liability or adverse claim of any nature whatsoever
(excluding trade and account payables), direct or indirect, whether accrued,
absolute, contingent or otherwise. Seller has not sold, transferred, assigned or
otherwise conveyed any right, title or interest in or to any of the Business'
customer lists or any rights thereto.
(m) Schedules. Attached hereto as Schedule 6(m) is a separate
schedule, except as otherwise indicated, as of the date of this Agreement,
containing an accurate and complete list and description of the following items
relating to the Business:
(i) All real property in which Seller has an ownership, leasehold or
other interest or which is used by Seller in connection with the
operation of the Business, together with a description of each lease,
sublease, license or any other instrument under which Seller claims or
holds such leasehold or other interest or right to the use thereof or
pursuant to which Seller has assigned, sublet or granted any rights
therein, identifying the parties thereto, the rental or other payment
terms, expiration date and cancellation, renewal terms and any other
material terms thereof.
(ii) As of a date no earlier than August 31, 1996, Seller's accounts
and trade receivables together with detailed information as to each
such listed receivable which has been outstanding for more than 60
days.
(iii) All machinery, tools, equipment, motor vehicles and other
tangible personal property (other than supplies), owned, leased or
used by Seller except for
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items having, individually, a value of less than $1,000 which do not,
in the aggregate, have a total value of more than $10,000, setting
forth with respect to all such listed property of all leases, liens,
claims, encumbrances, charges, restrictions, covenants and conditions
relating thereto, identifying the parties thereto, the rental or other
payment terms, expiration date and cancellation, renewal terms and any
other material terms thereof.
(iv) All Intellectual Property wholly or partially owned, held or
licensed by Seller or used in the operation of Seller's business.
(v) Intentionally Deleted.
(vi) All material written agreements providing for the services of an
independent contractor relating to the Business.
(vii) All Contracts, agreements, commitments or licenses relating to
patents, trademarks, trade names, copyrights, inventions, processes,
know how, formulae or trade secrets relating to the Business.
(viii) All loan agreements, indentures, mortgages, pledges,
conditional sale or title retention agreements, security agreements,
equipment obligations, guaranties, leases or lease purchase agreements
relating to the Business.
(ix) All Contracts, agreements and commitments, whether or not fully
performed, in respect of the issuance, sale or transfer of the capital
stock, bonds or other securities of Seller or pursuant to which Seller
has acquired any substantial portion of its business or Seller's
Assets.
(x) All Contracts, agreements, commitments or other understandings or
arrangements relating to the Business to which Seller is a party but
excluding (A) purchase and sales orders and commitments made in the
ordinary course of business, (B) Contracts entered into in the
ordinary course of business, and (C) Contracts not entered into in the
ordinary course of business which are terminable by Seller on less
than 90 days' notice without any penalty or consideration.
(xi) All collective bargaining agreements, employment and consulting
agreements, executive compensation plans, bonus plans, deferred
compensation agreements, employee pension plans or retirement plans,
employee stock options or stock purchase plans and
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group life, health and accident insurance and other employee benefit
plans, agreements, arrangements or commitments, whether or not legally
binding, including, without limitation, holiday, vacation, Christmas
and other bonus practices, to which Seller is a party or is bound
which relate to the operation of the Business.
(xii) The names and current annual salary rates of all persons
(including independent commission agents) who are currently employed
by Seller in the Business showing separately for each such person the
amount paid or payable as salary, bonus payments and any indirect
compensation for the year ended December 31, 1995 as well as each of
such person's current compensation and projected bonus or other
compensation for the current year.
(xiii) The names of all of Seller's directors and officers; the name
of each bank in which Seller, as and for the Business, has an account
or safe deposit box and the names of all persons authorized to draw
thereon or have access thereto.
All of the Contracts, agreements, leases, licenses and commitments required to
be listed on Schedule 6(m) (other than those which have been fully performed)
are, to the best knowledge of Seller's Personnel, valid and binding, enforceable
in accordance with their respective terms, in full force and effect and, except
as otherwise specified on Schedule 6(m), validly assignable to Purchaser without
the consent of any other party so that, after the assignment thereof to
Purchaser pursuant hereto, Purchaser will be entitled to the full benefits
thereof except that such enforcement may be subject to the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium and similar law
affecting creditors' rights generally. Except as disclosed on Schedule 6(m),
there is not, to the best knowledge of Seller's Personnel, under any material
Contract, agreement, lease, license or commitment any existing default, or event
which, after notice or lapse of time, or both, would constitute a default or
result in a right to accelerate or loss of rights. None of Seller's existing or
completed contracts, related to the Business, is subject to renegotiation with
any governmental body. True and complete copies of all such written Contracts,
agreements, leases, licenses and other documents listed on Schedule 6(m)
(together with any and all amendments thereto) have been delivered to Purchaser
and a summary of any oral Contracts or agreements required to be listed on
Schedule 6(m) has been described thereon.
(n) Contracts.
(i) Schedule 6(n) annexed hereto contains (A) a complete and correct
list of all agreements, contracts,
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licenses, commitments and other instruments and arrangements (whether
written or oral) by which Seller is bound and which represents either
(1) an asset being acquired hereunder, or (2) an Assumed Liability
hereunder ("Contracts") and (B) a list of all outstanding proposals,
or other writings prepared in an effort to obtain business, relating
to the Business prepared by Seller, or on Seller's behalf, and
forwarded to prospective clients or customers (the "Proposals").
(ii) Seller has delivered to Purchaser complete and correct copies of
all written Contracts, together with all amendments thereto, including
(A) an accurate descriptions of all material terms of all oral
Contracts and (B) all Proposals, set forth or required to be set forth
in Schedule 6(n) hereto.
(iii) All Contracts are in full force and effect and enforceable
against each party thereto. There does not exist under any Contract
any event of default or event or condition that, after notice or lapse
of time or both, would constitute a violation, breach or event of
default thereunder on the part of Seller or any other party thereto
except as set forth in Schedule 6(n)(iii) annexed hereto and except
for such events or conditions that, individually and in the aggregate,
(A) has not had or resulted in, and will not have or result in a
default or an event which, after notice or lapse of time, or both,
would constitute a default or result in a right to accelerate a loss
of right (a "Material Adverse Effect") and (B) has not and will not
materially impair the ability of Seller to perform its obligations
under this Agreement and under the Seller's Related Agreements. Except
as set forth in Schedule 6(n)(iii), no consent of any third party is
required under any Contract as a result of or in connection with, and
the enforceability of any Contract will not be affected in any manner
by, the execution, delivery and performance of this Agreement or any
of the Seller's Related Agreements or the consummation of the
transactions contemplated thereby.
(iv) Seller has no outstanding power of attorney in favor of any party
relating to the Business.
(o) Territorial Restrictions. The Business is not restricted by any
written agreement or understanding with any party from carrying on the Business
anywhere in the world. Purchaser, solely as a result of its purchase of the
Business from Seller pursuant hereto and the assumption of the Assumed
Liabilities, will not thereby become restricted in carrying on the Business
anywhere in the world.
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(p) Inventories. Except for items of Inventory that in the ordinary
course of the Business are being repaired, all Inventories are of good and
usable quality in all material respects. Except as set forth on Schedule 6(p)
hereto, (i) all Inventories that are finished goods are saleable or rentable as
current inventories at the current prices thereof in the ordinary course of
business, (ii) all Inventories are recorded on the books of the Business at the
lower of cost or market value determined in accordance with GAAP and (iii) no
write-down in inventory has been made or should have been made pursuant to GAAP
during the past two (2) years. Schedule 6(p) hereto lists the locations of all
Inventories.
(q) Customers. Schedule 6(q) annexed hereto sets forth (i) the names
and addresses of all customers of the Business that ordered goods and services
from the Business with an aggregate value for each such customer of $10,000.00
or more during the twelve (12) month period ended July 31, 1996 and (ii) the
amount for which each such customer was invoiced during such period. Seller has
not received notice nor has any reason to believe that any of these scheduled
customers (A) has ceased, or will cease, to use the products, goods or services
of the Business, or (B) has substantially reduced or will substantially reduce,
the use of the products, goods or services of the Business. To the best
knowledge of Seller's Personnel, no customer described in clause (i) of the
first sentence of this Section 6(q) has threatened to take any action described
in the preceding sentence as a result of the consummation of the transactions
contemplated by this Agreement and Seller's Related Agreements.
(r) Suppliers; Raw Materials. Schedule 6(r) annexed hereto sets
forth (i) the names and addresses of all suppliers (including, with limitation,
Seller and any Affiliates thereof) from which the Business ordered raw
materials, supplies, equipment, merchandise and other goods and services with an
aggregate purchase price for each supplier of $10,000.00 or more during the
twelve (12) month period ended July 31, 1996 and (ii) the amount for which each
supplier invoiced the Business during such period. Seller has not received any
notice or have any reason to believe that there has been any material adverse
change in the price of such raw materials, supplies, merchandise and other goods
or services, or that any such supplier will not sell raw materials, supplies,
merchandise and other goods to Purchaser at any time after the Closing Date on
terms and conditions similar to those used in its current sales, subject to
general and customary price increases. To the best knowledge of Seller's
Personnel, no supplier of the Business described in clause (i) of the first
sentence of this Section 6(r) has otherwise threatened to take any action
described in the preceding sentence as a result of the consummation of the
transactions contemplated by this Agreement and Seller's Related Agreements.
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(s) Intellectual Property.
(i) Title. Schedule 6(s) annexed hereto contains a complete and
correct list of all Intellectual Property that is owned by Seller and
primarily related to, used in, held for use in connection with, or
necessary for the conduct of, or otherwise material to the Business
(the "Owned Intellectual Property") other than (A) inventions, trade
secrets, processes, formulas, compositions, designs and confidential
business and technical information and (B) Intellectual Property that
is both not registered or subject to application for registration and
not material to the Business. Except as set forth on Schedule 6(s)
hereof, the Seller owns or has the exclusive right to use pursuant to
license, sublicense, agreement or permission all Owned Intellectual
Property, free from any Liens and free from any requirement of any
past, present or future royalty payments, license fees, charges or
other payments, or conditions or restrictions whatsoever. The Owned
Intellectual Property comprise all of the Intellectual Property
necessary for Purchaser to conduct and operate the Business as now
being conducted by Seller.
(ii) Transfer. Except as set forth in Schedule 6(s) hereof,
immediately after the Closing, Purchaser will own all of the Owned
Intellectual Property and will have a right to use all Intellectual
Property, free from any liens and on the same terms and conditions as
in effect prior to the Closing.
(iii) No Infringement. The conduct of the Business does not infringe
or otherwise conflict with any rights of any Person in respect of any
Intellectual Property.
(iv) Licensing Arrangements. Schedule 6(s) annexed hereto sets forth
all material agreements, arrangements or laws (A) pursuant to which
Seller has licensed Intellectual Property to, or the use of
Intellectual Property is otherwise permitted (through non-assertion,
settlement or similar agreements or otherwise) by, any other party and
(B) pursuant to which Seller has, for the operation of the Business,
had Intellectual Property licensed to it, or has otherwise been
permitted to use Intellectual Property. All of the agreements or
arrangements set forth on Schedule 6(s) hereto (x) are in full force
and effect in accordance with their terms and no default exists
thereunder by Seller, or to the knowledge of Seller, by any other
party thereto, (y) are free and clear of all liens, and (z) do not
contains any change in control or other terms or conditions that will
become applicable or
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inapplicable as a result of the consummation of the transactions
contemplated by this Agreement. Seller has delivered to the Purchaser
true and complete copies of all licenses and arrangements (including
amendments) set forth on Schedule 6(s) hereto. All royalties, license
fees, charges and other amounts payable by, on behalf of, to, or for
the account of, Seller in respect of any Intellectual Property are
disclosed in the Financial Statements.
(v) No Intellectual Property Litigation. No claim or demand has been
made nor is there any proceeding that is pending, or to the knowledge
of Seller, threatened, which (A) challenges the rights of Seller in
respect of any Intellectual Property, (B) asserts that Seller is
infringing or otherwise in conflict with, or is, except as set forth
on Schedule 6(s) hereto, required to pay any royalty, license fee,
charge or other amount with regard to, any Intellectual Property, or
(C) claims that any default exists under any agreement or arrangement
listed on Schedule 6(s) hereto. None of the Intellectual Property is
subject to any outstanding order, ruling, decree, judgment or
stipulation by or with any court, arbitrator, or administrative
agency.
(vi) Use of Name and Mark. Except as set forth in Schedule 6(s)(vi)
annexed hereto, there are and immediately after the Closing will be,
no contractual restriction or limitations pursuant to any orders,
decisions, injunctions, judgments, awards or decrees of any
Governmental Authority on the Purchaser's right to use the name and
mark "Total Audio Visual Services" or "TAVS" in the conduct of the
Business as presently carried on by Seller.
(t) Insurance. All insurance policies relating to the Business and/or
Seller's Assets are in full force and effect, and all premiums due thereon have
been paid. Seller has complied in all material respects with the terms and
provisions of such policies. The insurance coverage provided by such policies is
adequate and customary for the Business. Schedule 6(t) annexed hereto sets out
all open claims made by Seller under any policy of insurance and all claims
which in the opinion of Seller reasonably formed and held, should or could be
made under any such policy.
(u) Real Property.
(i) Leases. Schedule 6(u) annexed hereto contains a complete and
correct list of all real estate leases including all amendments,
modifications, supplements and extensions thereof (the "Leases") to be
transferred
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to and assumed by Purchaser with respect to obligations arising from
and after the Closing Date setting forth the address, landlord and
tenant for each Lease. Seller has delivered to the Purchaser correct
and complete copies of the Leases. Each Lease is legal, valid,
binding, enforceable, and in full force and effect, except as may be
limited by bankruptcy, insolvency, reorganization and similar
Applicable Laws affecting creditors generally and by the availability
of equitable remedies. Seller is not in default, violation or breach
in any respect under any Lease, and no event has occurred and is
continuing that constitutes or, with notice or the passage of time or
both, would constitute a default, violation or breach in any respect
under any Lease. Except as set forth on Schedule 6(u) hereto, none of
the Leases have been pledged, mortgaged, assigned, modified or amended
by Seller. Subject to the terms of the applicable Lease, each Lease
grants the tenant under the Lease the exclusive right to use and
occupy the demised premises thereunder. Seller has good and valid
title to the leasehold estate under each Lease free and clear of all
liens. Seller enjoys peaceful and undisturbed possession under its
respective Leases for the leased real property.
(ii) No Proceedings. There are no eminent domain or other similar
proceedings pending or threatened affecting any portion of the leased
real property and there is no proceeding pending or threatened for the
taking or condemnation of any portion of the leased real property.
There is no writ, injunction, decree, order of judgment outstanding,
nor any action, claim, suit or proceeding, pending or threatened,
relating to the ownership, lease, use, occupance or operation by any
person of any of the leased real property.
(iii) Current Use. The use and operation of the real property in the
conduct of the Business does not violate in any material respect any
instrument of record or agreement affecting the real property. There
is no violation of any covenant, condition, restriction, easement or
order of any Governmental Authority having jurisdiction over such
property or of any other person entitled to enforce the same affecting
the real property or the use or occupancy hereof. No damage or
destruction has occurred with respect to any of the real property.
(v) Environmental Matters.
(i) Permits. All federal, state and local permits, licenses,
registrations, consents, orders,
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administrative consent orders, certificates, approvals or other
authorizations necessary for the conduct of the Business as currently
conducted or previously conducted under any law relating to pollution
or protection of the environment, human health and safety, or to any
emission, discharge, generation, processing, storage, holding,
abatement, existence, Release (as hereinafter defined), threatened
Release or transportation of Hazardous Substance (as hereinafter
defined) (collectively, the "Environmental Permits") are identified on
Schedule 6(v)(i) annexed hereto, and the Seller currently holds, and
at all times has held, all such Environmental Permits necessary to the
Business, and all such Environmental Permits shall be validly
transferred to Purchaser on the Closing Date. Seller will cooperate
with Purchaser for the transfer of any Environmental Permit. In
connection with the Business, Seller has not been notified by any
relevant Governmental Authority that any Environmental Permit will be
modified, suspended, cancelled or revoked, or cannot be renewed in the
ordinary course of business or that Seller is a potentially
responsible party under CERCLA (as hereinafter defined) or any other
Environmental Laws (as hereinafter defined).
(ii) No Violations. In connection with the Business, Seller has
complied and is in compliance in all material respects with all
Environmental Permits and all applicable Environmental Laws pertaining
to the leased real property and the Business. No Person has alleged
any violation by Seller of any Environmental Permits or any
Environmental Laws relating to the Business or the leased real
property.
(iii) Other. Except as set forth on Schedule 6(v)(iii) annexed hereto:
(A) None of current or past operations, or any by-product
thereof, and none of the currently or formerly owned or operated
property or asset of Seller used in the Business, including,
without limitation, the Seller's Assets and the leased real
property, are related to or subject to any investigation or
evaluation by any Governmental Authority, as to whether any
action is required to (1) clean up, remove, treat or in any way
remediate any Hazardous Substance; (2) prevent the Release or
threatened Release of Hazardous Substances so that they do not
migrate or endanger or threaten to endanger public health or
welfare, natural resources or the environment or (3) perform
studies, investigations and care
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related to any such Hazardous Substances (collectively "Remedial
Action") is needed to respond to a Release or threatened Release
of any Hazardous Substances.
(B) In connection with the Business, Seller is not subject to any
outstanding order, judgment, injunction, decree or writ from, or
contractual or other obligation to or with, any Governmental
Authority or other party in respect of which Purchaser may be
required to incur any out-of-pocket expenses and reasonable
attorneys' and accountants' fees (collectively, "Losses"),
whether direct or indirect, known or unknown, current or
potential, past, present or future, imposed by, under or pursuant
to Environmental Laws, including, without limitation, all Losses
related to any Remedial Action, and all fees, disbursements and
expenses of counsel, experts, personnel and consultants based on,
arising out of or otherwise in respect of: (1) the ownership or
operation of the Business, leased real property or any other real
properties, assets, equipment or facilities, by Seller, or any
predecessor of Seller or any Affiliate; (2) the environmental
conditions existing on the Closing Date on, under, above, or
about any leased real property or any other real properties,
assets, equipment or facilities currently or previously owned,
leased or operated by Seller, or any of its predecessors or
Affiliates; and (3) expenditures necessary to cause any leased
real property or any aspect of the Business to be in compliance
with any and all requirements of Environmental Laws as of the
Closing Date, including, without limitation, all Environmental
Permits issued under or pursuant to such Environmental Laws
(collectively "Environmental Liabilities") and Costs arising from
the Release or threatened Release of a Hazardous Substance.
(C) None of the currently or formerly owned or operated real
property used in the Business, including any leased real
property, is, and Seller, in connection with the Business, has
not transported or arranged for the transportation (directly or
indirectly) of any Hazardous Substances relating to the Seller's
Assets or the Real Property to any location that is, listed or
proposed for listing on the National Properties List or the
CERCLA
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Information System under CERCLA, or any similar state, local or
foreign list, or the subject of federal, state or local
enforcement actions or investigations or any Remedial Action
under any Environmental Laws.
(D) No work, repair, construction or capital expenditure is
required or planned in respect of the Seller's Assets pursuant to
or to comply with any Environmental Law, nor has Seller, in
connection with the Business, received any notice of any such
requirement, except for such work, repair, construction or
capital expenditure as is not material to the Business and is in
the ordinary course of business.
(E) In connection with the Business, Seller has not caused or
suffered to occur any Release of Hazardous Substances at, under,
above or within any currently or formerly owned or operated real
property used in the Business, including, without limitation, any
leased real property.
(iv) Definitions.
(A) Environmental Law shall include, without limitation: (1) the
Comprehensive Environment Response, Compensation and Liability
Act, as amended ("CERCLA"), the Resource Conservation and
Recovery Act, the Clean Air Act, the Clean Water Act and the
Occupation Safety and Health Act and (2) all other requirements
pertaining to reporting, licensing, permitting, investigation or
remediation of emissions, discharges, Releases or threatened
Releases of Hazardous Substances into the air, surface water,
ground water or land or relating to the manufacture, processing,
distribution, use, sale, transfer, receipt, storage, disposal,
transport or handling of Hazardous Substances.
(B) Hazardous Substances shall mean any substance which is toxic,
explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic or otherwise hazardous which is regulated
by any Governmental Authority or Environmental Law.
(C) Release shall mean the releasing, disposing, injecting,
spilling, leaking, leaching, pumping, dumping, emitting,
escaping, employing, seeping, disposal, migration,
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transporting, placing of the like, including, without limitation,
the moving of any Hazardous Substance through, into or upon, any
land, soil, surface water, or air, or otherwise enter into the
environment.
(w) No Guaranties. None of the obligations or liabilities of Seller
relating to the Business is guaranteed by any other person, firm or corporation.
There are no outstanding letters of credit, surety bonds or similar instruments
of Seller in connection with the Business or the Seller's Assets.
(x) Receivables. All accounts and trade receivables of the Business
which are reflected on the Balance Sheet, and all such receivables which have
arisen since the date thereof, have arisen only from bona fide transactions in
the ordinary course of the Business and have been fully collected when due
except to the extent reserved against on the Financial Statements.
(y) Absence of Certain Business Practices. Except as set forth on
Schedule 6(y) annexed hereto, neither Seller and its officers, employees and
agents, nor any other person acting on its behalf, has, directly or indirectly,
given or agreed to give any gift or similar benefit, of a material nature to any
customer of the Business, supplier of the Business, governmental employee or
other person who is or may be in a position to help or hinder the Business (or
assist Seller in connection with any actual or proposed transaction) which might
subject Seller to any damage or penalty in any criminal or governmental
litigation or proceeding
(z) Disclosure. No representation or warranty by Seller contained in
this Agreement or in any Seller's Related Agreements or any other document
furnished or to be furnished by Seller in connection herewith or pursuant hereto
contains or will contain any untrue statement of a material fact, or omits or
will omit to state any material fact required to make the statements herein or
therein contained not misleading in any material respect. The representations
and warranties contained in this Section 6 shall not be affected or deemed
waived by reason of the fact that Purchaser and/or its representatives knew or
should have known that any such representation or warranty is or might be
inaccurate in any respect.
(aa) Labor Matters; Labor Disputes. As related to the Business, Seller
is not a party to or bound by any collective bargaining agreement and there are
no labor unions or other organizations representing, purporting to represent or
attempting to represent any employees employed in the operation of the Business.
With respect to the Business of Seller (i) no work stoppage by employees of
Seller has occurred and is continuing or is threatened, (ii) Seller has no
actual knowledge of any pending
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or threatened charges or claims against Seller of unfair labor practices or
discrimination based on age, race or sex, which individually or in the
aggregate, would be materially adverse to the Business, (iii) there are no
pending labor negotiations with or union organization efforts by any employees
of Seller or with any union representing or attempting to represent any
employees of Seller and (iv) Seller has no actual knowledge of employee
grievances which in the aggregate would be material and adverse to the Business
that have not been settled or otherwise resolved to the satisfaction of Seller
and the employees.
(bb) Unbilled Costs and Advance Billings. All costs incurred on jobs
in process, whether reflected as unbilled costs or a reduction of advance
billings to clients or customers, reflected on the Balance Sheet and listed on
Schedule 6(bb) annexed hereto were calculated in accordance with GAAP and are
realizable in the ordinary course of business and were incurred in accordance
with applicable budgets in respect thereof.
7. Representations and Warranties by Purchaser. Purchaser represents and
warrants to Seller, as of the date hereof and as of the Closing Date, as
follows:
(a) Organization. Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
full corporate power and authority to enter into this Agreement and all other
agreements to which Purchaser is a party required to be delivered by Purchaser
pursuant to Section 5(a) hereof (which documents are hereinafter sometimes
collectively referred to as "Purchaser's Related Agreements") and to carry out
the transactions contemplated by this Agreement. Purchaser has delivered to
Seller copies of Purchaser's certificate of incorporation, and all amendments
thereto, and the by-laws of Purchaser as presently in effect, each certified as
true and correct by Purchaser's secretary.
(b) Execution, Delivery and Performance of Agreement. Neither the
execution, delivery nor performance of this Agreement and Purchaser's Related
Agreements (which together with the Seller's Related Agreements shall be
referred to collectively as the "Related Agreements") by Purchaser will, with or
without the giving of notice or the passage of time, or both, conflict with,
result in a default, right to accelerate or loss of rights under, or result in
the creation of any lien, charge or encumbrance pursuant to any provision of
Purchaser's certificate of incorporation or by-laws or any franchise, mortgage,
deed of trust, lease, license, agreement, understanding, Applicable Law,
ordinance, rule or regulation or any order, judgment or decree to which
Purchaser is a party or by which it may be bound or affected. Purchaser has the
full power and authority to enter into this Agreement and to carry out the
transactions contemplated hereby, all proceedings required to be taken by
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Purchaser to authorize the execution, delivery and performance of this Agreement
have been properly taken, and this Agreement constitutes the valid and binding
obligation of Purchaser, enforceable in accordance with its terms, except that
such enforcement may be subject to the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium and similar law affecting creditors'
rights generally.
(c) Litigation. There is no claim, legal action, suit, arbitration,
governmental investigation or other legal or administrative proceeding, nor any
order, decree or judgment in progress, pending or in effect or, to Purchaser's
knowledge, threatened against or relating to Purchaser in connection with or
relating to the transactions contemplated by this Agreement and the Purchaser's
Related Agreements referred to herein, and Purchaser does not know or have any
reason to be aware of any basis for the same.
8. Employment Matters. (a) Seller shall be responsible for, and shall
discharge, all obligations with respect to currently existing salary, wages,
bonuses, commissions and other compensation, group insurance claims, medical
benefits reimbursable by Seller under existing medical reimbursement policies,
severance and all other benefits accrued through the Closing Date to all
employees of Seller and any such costs arising after the Closing Date under the
terms of any of the foregoing attributable to employment prior to the Closing
Date.
(b) Schedule 8(b) annexed hereto contains true and correct copies of
all employee retirement plans, welfare plans and all employee benefits covering
Seller's employees (and any summary plan descriptions in effect for such plans
and benefits). Except as set forth on Schedule 8(b) hereto, all requirements of
Applicable Law, including, without limitation, the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") and the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA"), have been fulfilled with
regard to said plans and the administration thereof and will be fulfilled with
regard to the termination of any of said plans.
(c) The execution and performance of this Agreement will not
constitute a stated triggering event under any plan or arrangement which will
result in payment (whether of deferred compensation, or otherwise) becoming due
to any employee or former employee of the Seller.
(d) There exist no obligations or liabilities, including claims
incurred (as defined herein) but not reported under any uninsured plan providing
medical benefits, arising out of or in connection with any employee benefit plan
or arrangement, except to the extent funded or accrued as a liability. For
purposes of the preceding sentence, a medical claim shall be deemed to be
incurred on the date of occurrence of
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an injury, the diagnosis of an illness, or any other event giving rise to such
claim or series of related claims. No plan provides health, medical, death or
survivor benefits to any former employee of Seller in connection with the
Business or beneficiary thereof, except to the extent required under any state
insurance law providing for a conversion option, COBRA or other COBRA type
rights under a group insurance policy or under Section 601 of ERISA. There are
no multi-employer plans covering any employee of Seller nor has Seller ever
maintained a multi-employer plan.
(e) There has not been any (i) termination of any "defined benefit
plan" within the meaning of ERISA maintained by Seller or any Affiliate which is
under "common control" (within the meaning of Paragraph 4001(b) of ERISA) with
Seller except to the extent that such "defined benefit plan" was fully funded on
the date of termination sufficient to pay all plan liabilities and no liability
in respect thereof exists (or shall exist) to the Pension Benefit Guaranty
Corporation, (ii) commencement of any proceeding to terminate any such plan
pursuant to ERISA, or otherwise or (iii) written notice given to Seller or any
Affiliate of the intention to commence or seek the commencement of any such
proceeding.
(f) Purchaser shall offer employment to the personnel employed by
Seller immediately prior to the Closing in connection with the Business listed
on Schedule 6(f) annexed hereto, provided that all such employees shall, except
as Purchaser or any such employee may otherwise agree, be offered employment on
an "at will" basis for no specific period of time upon terms and conditions
similar to those now governing their current employment with Seller as listed on
Schedule 6(m)(xii) hereto, including compensation of an amount not less than
such employees currently receive as set forth on Schedule 6(m)(xii) hereto
provided that benefits to be provided to such employees by Purchaser may be
modified to conform to those benefits Purchaser now or hereinafter provides to
its other employees. Purchaser shall be under no obligation, except as set forth
above, to employ any such persons, continue such employment or to provide any
severance or other payment to any of such employees upon termination of the
employment of any of such employees. In this connection, for a period of three
(3) years from the date of this Agreement, Seller shall not offer employment to
any of the persons set forth on Schedule 6(f) hereto offered employment by
Purchaser under the terms of this Paragraph (f).
(g) Nothing in this Agreement, whether express or implied, is intended
to confer upon any employee or his legal representative any rights or remedies
of any nature or kind whatsoever under or by reason of this Agreement including,
without limitation, any rights of employment.
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(h) From and after the Closing Date, the Seller shall remain solely
responsible for any and all workers' compensation benefits liabilities to or in
respect of any employees relating to or arising in connection with any and all
claims for workers' compensation benefits arising in connection with any
occupational injury or disease occurring or existing on or prior to the Closing
Date.
9. Conduct of Business Prior to Closing. (a) Prior to the Closing, Seller
shall conduct its business and affairs, relating to the Business, only in the
ordinary course and consistent with its prior practice and shall maintain, keep
and preserve Seller's Assets and properties in good condition and repair and
maintain insurance thereon in accordance with present practices, and Seller will
use its best efforts to preserve the Business and organization of Seller intact,
to keep available to Purchaser the services of Seller's present officers and
employees, relating to the Business, to preserve for the benefit of Purchaser
the goodwill of the Business' suppliers and customers and others having business
relations with it, including, without limitation, the following:
(i) Liabilities. Consistent with past practice, Seller shall pay or
discharges it current liabilities as they relate to the Business when
the same become due and payable, except for such liabilities as may be
subject to a good faith dispute or counterclaim.
(ii) Litigation. Seller shall promptly notify Purchaser of any
lawsuits, claims, proceedings or investigations which after the date
hereof are commenced on or, to the knowledge of Seller, threatened
against Seller or against any officer, employee, consultant or agent
with respect to the Business or the transactions contemplated by this
Agreement.
(iii) Compliance with Laws. Seller will take such action as may be
necessary to duly comply in all material respects with all laws,
statutes, rules and regulations applicable to it as they relate to the
conduct of the Business.
(iv) Continued Effectiveness of Representations and Warranties. Seller
shall use its best efforts to conduct the Business in such a manner so
that the representations and warranties contained in Section 6 shall
continue to be true and correct on and as of the Closing Date as if
made on and as of the Closing Date. Seller shall promptly give to
Purchaser notice of any event, condition or circumstance occurring
from the date hereof through the Closing Date which would constitute a
violation or breach by it of the
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representations, warranties, covenants or agreements contained in this
Agreement.
(b) Without limiting the generality of the Subsection (a) hereof,
prior to the Closing, Seller will not without Purchaser's prior written
approval:
(i) change its certificate of incorporation or by- laws or merge or
consolidate or obligate itself to do so with or into any other entity;
(ii) enter into any contract, agreement, commitment or other
understanding or arrangement except for those of the type which would
not have to be listed and described under subparagraph (x) of Section
6(m) hereof; or
(iii) perform, take any action or incur or permit to exist any of the
acts, transactions, events or occurrences of the type described in
subparagraphs (i), (ii), (iii), (iv), (vii), (viii), (ix), (x), (xi),
(xii), (xiv), and (xv) of Section 6(i) hereof which would have been
inconsistent with the representations and warranties set forth therein
had the same occurred after the Balance Sheet Date and prior to the
date hereof, except that as to subparagraph (ix) of Section 6(i), the
amount of $800,000 contained therein shall be replaced for purposes of
this Section 10(b)(iii) with the sum of $300,000 per thirty (30) day
period.
(c) Seller shall give Purchaser prompt written notice of any change in
any of the information contained in the representations and warranties made in
Section 6 hereof or the Schedules referred to therein which occurs prior to the
Closing.
10. Access to Information and Documents. (a) Until the Closing Date, Seller
will give Purchaser and Purchaser's attorneys, accountants, consultants,
employees, agents and other representatives full access, to the extent related
to the Business, to Seller's personnel and all properties, documents, contracts,
information, books, work papers and records of Seller and will furnish Purchaser
with copies of such documents (certified by Seller's officers if so requested)
and with such information with respect to all properties, assets, books,
contracts, commitments, reports and records relating to the Business as
Purchaser may from time to time request, including, without limitation, such
books, records, documents and any other information relating to any predecessor
to the business of the Business, and Purchaser will not improperly disclose the
same. Any such furnishing of such information to Purchaser or any investigation
by Purchaser shall not affect Purchaser's right to rely on any representations
and warranties made in this Agreement. In addition, Seller will permit Purchaser
and its
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attorneys, accountants, consultants, employees, agents and other representatives
reasonable access to such personnel of Seller during normal business hours as
may be necessary or useful to the Purchaser in its review of the properties,
assets and business affairs of the Business and the above-mentioned documents,
records, and information and the leased real property for purposes of performing
environmental assessments.
(b) Seller will retain all books and records relating to the Business
for seven (7) years (the "Retention Period") in accordance with Seller's record
retention policies as presently in effect. During the Retention Period, Seller
shall not dispose of or permit the disposal of any such books and records not
required to be retained under such policies without first giving sixty (60)
days' prior written notice to Purchaser offering to surrender the same to
Purchaser at Purchaser's expense. Seller agrees to cooperate with Purchaser and
shall furnish or make available to Purchaser such books and records and any and
all other assistance as Purchaser may reasonably request relating to any matter
relating to Taxes or a governmental inquiry of investigation during the
Retention Period.
(c) Purchaser agrees to furnish or make available to Seller such
information, documents or records as is reasonably necessary for Seller to (i)
prepare tax returns Seller is required to file in connection with the ownership
and sale of the Seller's Assets and the Business and (ii) respond to audits,
obtain refunds and participate in any proceedings related to the Taxes for the
periods prior to the Closing Date. All such information, documents or records
provided pursuant to this Section 10(c) shall be kept confidential by the Seller
and shall not be disclosed by Seller in any manner whatsoever and shall not be
used by Seller other than in connection with such returns, audits, refunds or
proceedings without the prior written consent of Purchaser. Seller shall
reimburse Purchaser for all reasonable out-of-pocket costs and other expenses
incurred by Purchaser in providing such assistance and shall bear all costs
and/or expenses incurred in connection with the providing of such assistance by
any third party. The term "audit" as used in this Section 10(c) shall include
any inquiry, examinations or other conduct of any taxing authority or any
judicial or administrative proceedings.
11. Bulk Sales Compliance. Purchaser hereby waives compliance by Seller
with the provisions of any applicable bulk sales statutes of any state, and
Seller warrants and agrees to pay and discharge when due all claims of creditors
which could be asserted against Purchaser by reason of such non-compliance to
the extent that such liabilities are not specifically assumed by Purchaser under
this Agreement.
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12. Conditions Precedent.
(a) Conditions to Obligations of Each Party. The obligations of the
parties to consummate the transactions contemplated hereby shall be subject to
the fulfillment (or waiver by Purchaser or Seller, as the case may be,) on or
prior to the Closing Date of the condition that: the transactions contemplated
hereby shall not have been restrained, enjoined or otherwise prohibited by any
Applicable Law, including any order, injunction, decree or judgment of any court
or other Governmental Authority; no court or other Governmental Authority shall
have determined any Applicable Law to make illegal the consummation of the
transactions contemplated hereby or the Related Agreements; no proceeding with
respect to the application of any such Applicable Law to such effect shall be
pending.
(b) Conditions to Obligations of the Purchaser. All obligations of the
Purchaser hereunder are subject, at the option of Purchaser, to the fulfillment
of each of the following conditions at or prior to the Closing, and Seller shall
exert its best efforts to cause such conditions to be fulfilled:
(i) All representations and warranties of Seller contained herein or
in any document delivered pursuant hereto shall be true and correct in
all material respects when made and shall be deemed to have been made
again at and as of the date of the Closing, and shall then be true and
correct in all material respects except if any such applicable
representation or warranty is already qualified as to materiality.
(ii) All covenants, agreements and obligations required by the terms
of this Agreement to be performed by Seller at or before the Closing
shall have been duly and properly performed in all material respects.
(iii) Since the date of this Agreement, there shall not have occurred
any material adverse change in the condition (financial or otherwise),
business, properties, assets or prospects of Seller as it relates to
the Business.
(iv) There shall be delivered to Purchaser a certificate executed by
the President and Secretary of Seller, dated the date of the Closing,
certifying the conditions set forth in paragraphs (i), (ii) and (iii)
of this Section 12(b) have been fulfilled.
(v) All documents required to be delivered to Purchaser at or prior to
the Closing shall have been so delivered.
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(vi) Purchaser shall have received an opinion of Seller's counsel,
dated the date of the Closing, substantially in accordance with
Schedule 4(a)(vi) annexed hereto.
(vii) Seller shall have obtained all Consents of third parties as
described in Section 1(e) hereof necessary to be obtained in order to
transfer or assign to Purchaser all Governmental Approvals,
agreements, instruments, licenses, Contracts, Leases, other leases and
arrangements of Seller (other than such as are immaterial purchase and
sales orders in the ordinary course of business).
(viii) Purchaser and Seller shall have obtained the necessary
approvals under the HSR Act and any other necessary Governmental
Approvals.
(ix) The expiration of or earlier termination of the waiting period
under the HSR Act shall have occurred.
(c) Conditions to Obligations of Seller. All obligations of Seller at
the Closing are subject, at the option of Seller, to the fulfillment of each of
the following conditions at or prior to the Closing, and Purchaser shall exert
its best efforts to cause each such condition to be so fulfilled:
(i) All representations and warranties of Purchaser contained herein
or in any document delivered pursuant hereto shall be true and correct
in all material respects except if any such applicable representation
or warranty is already qualified as to materiality when made and shall
be deemed to have been made again at and as of the date of the
Closing, and shall then be true and correct in all material respects.
(ii) All covenants, agreements and obligations required by the terms
of this Agreement to be performed by Purchaser at or before the
Closing shall have been duly and properly performed in all material
respects.
(iii) There shall be delivered to Seller a certificate executed by the
President and Secretary of Purchaser, dated the date of the Closing,
certifying the conditions set forth in paragraphs (a) and (b) of this
Section 12(c) have been fulfilled.
(iv) Seller shall have received an opinion of Purchaser's counsel,
dated the date of the Closing, substantially in accordance with
Schedule 5(a)(iv) annexed hereto.
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(v) All documents required to be delivered to Seller at or prior to
the Closing shall have been so delivered.
(vi) Purchaser and Seller shall have obtained the necessary approvals
under the HSR Act and any other necessary Governmental Approvals.
(vii) The expiration of or earlier termination of the waiting period
under the HSR Act shall have occurred.
13. Indemnification. (a) Seller hereby indemnifies, defends and holds
Purchaser harmless from, against and in respect of (and shall, subject to the
other provisions of this Agreement, on demand reimburse Purchaser for):
(i) any and all actual loss, liability or damage suffered or incurred
by Purchaser by reason of any untrue representation, breach of
warranty or nonfulfillment of any covenant by Seller contained herein
or in any certificate, document or instrument delivered by Seller to
Purchaser hereunder (except the Non-Competition Undertaking, which
shall be governed solely by the terms thereof);
(ii) any and all actual loss, liability or damage suffered or incurred
by Purchaser in respect of or in connection with any liabilities of
Seller, except for the Assumed Liabilities (including, without
limitation, bulk sales, taxes and liabilities relating to the Excluded
Assets);
(iii) any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including, without
limitation, reasonable legal fees, court costs and expenses, incident
to (i) or (ii) above or (iv) below or incurred in investigating or
attempting to avoid the same or to oppose the imposition thereof, or
in enforcing this indemnity; and
(iv) any and all loss, liability or damage suffered or incurred by
Purchaser by reason of or in connection with any claim for finder's
fee or brokerage or other commission arising by reason of any services
alleged to have been rendered to or at the instance of Seller with
respect to this Agreement or any of the transactions contemplated
hereby.
(b) Purchaser shall indemnify, defend and hold Seller harmless from,
against and in respect of (and shall, subject to the other provisions of this
Agreement, on demand reimburse them for):
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(i) any and all actual loss, liability or damage suffered or incurred
by Seller by reason of or resulting from any untrue representation,
breach of warranty or non-fulfillment of any covenant or agreement by
Purchaser contained herein or in any certificate, document or
instrument delivered to Seller hereunder;
(ii) any and all actual loss, liability or damage suffered or incurred
by Seller in respect of or in connection with Purchaser's failure to
timely pay any of the Assumed Liabilities including, without
limitation, obligations arising from and after the Closing Date under
those certain equipment leases listed in the Personal Property
Assignment;
(iii) any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including, without
limitation, reasonable legal fees, court costs and expenses, incident
to (i) or (ii) above or (iv) below or incurred in investigating or
attempting to avoid the same or to oppose the imposition thereof, or
in enforcing this indemnity; and
(iv) any and all actual loss, liability or damage suffered or incurred
by Seller by reason of or in connection with any claim for finder's
fee or brokerage or other commission arising by reason of any services
alleged to have been rendered to or at the instance of Purchaser with
respect to this Agreement or any of the transactions contemplated
hereby.
(c) Seller, on the one hand, and the Purchaser, on the other hand,
shall not be required to indemnify the other under this Section 13 or be liable
under Section 14 hereof unless the aggregate amounts for which indemnity would
otherwise be due thereunder exceeds $100,000 (the "Indemnification Basket"), in
which case Seller, on the one hand, or the Purchaser, on the other hand, shall,
as the case may be, be responsible for all such indemnifiable amounts in excess
of the Indemnification Basket due pursuant to this Section 13 up to a maximum
amount equal to the Purchase Price (the "Indemnification Cap"). Notwithstanding
the foregoing to the contrary, neither the Indemnification Basket nor the
Indemnification Cap shall apply to a breach of a representation or warranty
contained in Section 6(h) (taxes) hereof or Seller's obligations under Section
11 (Bulk Sales Compliance) hereof and, in any such event, Seller shall indemnify
Purchaser therefor from the first dollar and to an unlimited amount.
(d) Any indemnifiable liability or reimbursement under this Section 13
shall be limited to the amount of actual
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damages (of any nature) subject to indemnification actually sustained by a party
hereto, net of any applicable insurance payments actually received, other
reimbursement or tax benefit actually realized by such party.
(e) If a claim by a third party is made against a party hereto (an
"Indemnified Party"), and if an Indemnified Party intends to seek indemnity with
respect thereto under this Section 13, the Indemnified Party shall promptly
notify the party required to indemnify the Indemnified Party pursuant to this
Section 13 (an "Indemnifying Party") of such claim (the "Indemnity Notice");
provided, however, that failure by an Indemnified Party to notify an
Indemnifying Party of such claim shall not effect the Indemnified Party's right
to seek indemnification so long as the Indemnifying Party is not materially
prejudiced by such failure to have been notified of such claim. The Indemnifying
Party shall have ten (10) days after receipt of the Indemnity Notice to
undertake, conduct and control, through counsel of its own choosing and at its
expense, the settlement or defense thereof, and the Indemnified Party shall
cooperate with it in connection therewith; provided, however, that with respect
to settlements entered into by the Indemnifying Party, the Indemnifying Party
shall obtain the release of the claiming party in favor of the Indemnified
Party. If the Indemnifying Party undertakes, conducts and controls the
settlement or defense of such claim, the Indemnifying Party shall permit the
Indemnified Party to participate in such settlement or defense through counsel
chosen by the Indemnified Party, providing that the fees and expenses of such
counsel shall be borne by the Indemnified Party. With respect to indemnification
provided for hereunder, the Indemnified Party shall not pay or settle any such
claim so long as the Indemnifying Party is reasonably contesting any such claim
in good faith. Notwithstanding the immediately preceding sentence, the
Indemnified Party shall have the right to pay or settle any such claims,
provided that in such event it shall waive any right to indemnity therefor by
the Indemnifying Party.
(f) Subject to the limitations set forth in Sections 13(c)-(e), if the
Indemnifying Party does not notify the Indemnified Party within fifteen (15)
days after the receipt of the Indemnified Party's notice of a claim of indemnity
hereunder that it elects to undertake the defense thereof, the Indemnified Party
shall have the right to contest, settle or compromise the claim in the exercise
of its good faith reasonable judgment at the expense of the Indemnifying Party
subject to the other terms and provisions of this Section 13.
14. Nature and Survival of Representations and Warranties;
Rules Regarding Indemnification and Other Actions.
(a) All statements, representations, warranties and indemnities made
by each of the parties hereto (and in any
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schedule or exhibit hereto) are and shall be true and correct as of the date
hereof and as of the Closing Date, and each of them shall survive the Closing
for the period provided in Section 14(b) hereof and shall be subject to Section
13 hereof.
(b) No claim shall be made by or enforced against any party hereto,
whether pursuant to Section 13 hereof or by an action at law or any other action
including, but not limited to, a claim of a breach of a representation and
warranty (collectively, "Other Action") unless and to the extent that the
Indemnity Notice or notice of an Other Action shall have been given by the party
seeking indemnification or instituting an Other Action to the other party not
later than 36 months after the Closing Date or, with respect to taxes, the date
upon which the applicable period of limitation on assessment or refund of any
relevant tax has expired; provided that claims asserted pursuant to an Indemnity
Notice or notice of an Other Action prior to the expiration of the applicable
survival period shall survive until such claim shall be resolved and payment in
respect thereof, if any is owing, shall be made.
15. Financial Statements; Closing Date Balance Sheet. (a) Seller shall
deliver to Purchaser the Balance Sheets of the Business as at December 31, 1993,
1994 and 1995 and the related consolidated statements of operations,
stockholders' equity and cash flows for the fiscal years ended on each such
date, audited and reported upon by Ernst & Young, LLP, including in each case
the notes thereto or such other financial statements as shall be required to
comply with the rules promulgated under Rule 3-05 of Regulation S-X
(collectively, the "Audited Financial Statements"). The Audited Financial
Statements shall be delivered to Purchaser no later than forty-five (45) days
after the date of the execution of this Agreement.
(b) Seller shall cause to be delivered to Purchaser, on or before
October 21, 1996, unaudited balance sheets of the Business as at September 30,
1996 and the unaudited related consolidated statements of operations,
stockholders' equity and cash flows for the nine (9) month period ended on
September 30, 1996, all of which shall be certified by an appropriate officer of
Seller and prepared in accordance with GAAP consistently applied throughout the
period covered by the September 30, 1996 financial data except as otherwise
expressly noted therein (the "September 30 Financials").
(c) Promptly following the Closing Date, but in no event later than
ninety (90) days from the Closing Date, Seller shall deliver to Purchaser the
audited (as provided for in Section 15(d) hereof) Balance Sheet of the Business
as at the Closing Date including, without limitation, the taking of a physical
inventory and an aging analysis which shall be consistent with the amount of the
receivables shown on the Closing Balance Sheet (as herein defined) (the "AR
Analysis") of
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accounts receivable (the "Closing Balance Sheet"). The Closing Balance Sheet
shall be utilized to determine certain of the adjustments to the Purchase Price
to be made in accordance with Schedule 2(c) hereof.
(d) The Audited Financial Statements and the Closing Balance Sheet
shall each be audited by Ernst & Young, LLP at the expense of Purchaser, and
prepared in accordance with GAAP consistently applied throughout the periods
covered thereby, except as otherwise expressly noted therein, and, together with
the September 30 Financials, shall be complete, accurate and a fair presentation
of the financial condition of the Business as of the dates thereof and the
results of operations for the periods covered thereby. Seller shall provide full
access to Ernst & Young, LLP and otherwise fully cooperate with such auditors in
connection with their examination of the books and records of Seller in
connection with the preparation of Audited Financial Statements and the Closing
Balance Sheet and such cooperation shall include, without limitation, execution
by an appropriate officer of Seller of the required representation letters to
Ernst & Young, LLP in respect of such financial statements.
16. Hart-Scott-Rodino. As soon as practicable after the execution of this
Agreement, Seller and Purchaser shall make their respective filings, and shall
thereafter promptly make any other required submissions in connection therewith
under the HSR Act with respect to the transactions contemplated by this
Agreement. Purchaser and Seller shall cooperate with one another in respect of,
and shall diligently pursue the obtaining of all governmental consents, permits,
authorizations, approvals, and waivers required in connection with the
transaction contemplated hereby including, without limitation, those required
under the HSR Act. Purchaser and Seller will prosecute all such filings with all
reasonable diligence and will diligently oppose any objection to, appeals from,
or petitions to stay or reconsider such governmental consents, permits,
authorizations, approvals and waivers. Purchaser and Seller both agree not to
take any action which might materially and adversely affect the obtaining of
such consents, permits, authorizations, approvals and waivers.
17. (a) Software License and Support Agreement; Continuing Services
Agreement.
(b) Software License and Support Agreement. At the Closing, Seller and
the Shareholder shall deliver to Purchaser the Software License and Support
Agreement, a copy of which is annexed hereto as Schedule 17(a) and the Software
Side Letter, a copy of which is annexed hereto as Schedule 17(a)(i).
(c) Continuing Services Agreement. At the Closing, Seller and the
Shareholder shall deliver to Purchaser the
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Continuing Services Agreement, a copy of which is annexed hereto as Schedule
17(b).
18. (a) Termination. This Agreement may be terminated at any time prior to
the Closing Date:
(i) by the written agreement of Purchaser and Seller;
(ii) by either Seller or Purchaser by written notice to the other
party if the transactions contemplated hereby shall not have been
consummated pursuant hereto by 5:00 p.m. E.T. on November 30, 1996,
unless such date shall be extended by the mutual written consent of
Seller and Purchaser.
(iii) by the Purchaser by written notice to Seller if (A) the
representations and warranties of Seller shall not have been true and
correct in all respects (in the case of any representation or warranty
without any materiality qualification) as of the date when made or (B)
if any of the conditions precedent set forth herein shall not have
been, or if it becomes apparent that any of such conditions will not
be fulfilled by 5:00 p.m. E.T. on November 30, 1996, unless such
failure shall be due to the failure of Purchaser to perform or comply
with any of the covenants, agreements or conditions hereof to be
performed or complied with by it prior to the Closing; or
(iv) by Seller by written notice to Purchaser if (A) the
representations and warranties of Purchaser shall not have been true
and correct in all respects (in the case of any representation or
warranty containing any materiality qualification) as of the date when
made or (B) if any of the conditions precedent set forth herein shall
not have been, or if it becomes apparent that any of such conditions
will not be fulfilled by 5:00 p.m. E.T. on November 30, 1996, unless
such failure shall be due to the failure of Seller to perform or
comply with any of the covenants, agreements or conditions hereof to
be performed or complied with by it prior to the Closing.
(b) Effect of Termination. In the event of the termination of this
Agreement pursuant to the provisions of paragraph (a) of this Section, this
Agreement shall become void and have no effect, without any liability in respect
hereof or of the transactions contemplated hereby on the part of any party
hereto, or any of the directors, officers, employees, agents, consultants,
representatives, advisers, stockholders or Affiliates of any party hereto,
except as specified in Section 20
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hereof and except for any liability resulting from such party's breach of this
Agreement.
19. Notices. Any and all notices, demands or requests required or permitted
to be given under this Agreement shall be given in writing and sent, by
registered or certified U.S. mail, return receipt requested, by hand, or by
overnight courier, addressed to the parties hereto at their addresses set forth
above or such other addresses as they may from time-to-time designate by written
notice, given in accordance with the terms of this Section, together with copies
thereof as follows:
In the case of Purchaser, with a copy to:
Zukerman Gore & Brandeis, LLP
900 Third Avenue
New York, New York 10022-4728
Facsimile no.: (212) 223-6433
Attention: Jeffrey D. Zukerman, Esq.
In the case of Seller, with a copy to:
GE Capital Technology Management Services
6875 Jimmy Carter Boulevard, Suite 3200
Norcross, GA 30071
Facsimile no.: (770) 246-6322
Attention: Mr. D. Michael Upton
Notice given as provided in this Section shall be deemed effective: (i) on the
date hand delivered, (ii) on the first business day following the sending
thereof by overnight courier, and (iii) on the seventh calendar day (or, if it
is not a business day, then the next succeeding business day thereafter) after
the depositing thereof into the exclusive custody of the U.S. Postal Service.
20. Expenses. Seller and Purchaser each shall bear their respective
expenses, costs and fees (including, without limitation, attorneys' and (except
as otherwise provided in this Agreement or a Schedule hereto) auditors' fees) in
connection with the transactions contemplated hereby, including the preparation,
execution and delivery of this Agreement and compliance herewith, whether or not
the transactions contemplated hereby shall be consummated.
21. Miscellaneous. (a) This Agreement, including, without limitation, the
schedules and other documents referred to herein, constitutes the entire
agreement of the parties with respect to the subject matter hereof and
supersedes any and all prior agreements, arrangements or understandings with
respect hereto,
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and may not be modified or amended except by a written agreement specifically
referring to this Agreement signed by all of the parties hereto.
(b) No waiver of any breach or default hereunder shall be considered
valid unless in writing and signed by the party giving such waiver, and no such
waiver shall be deemed a waiver of any subsequent breach or default of the same
or similar nature.
(c) This Agreement shall be binding upon and inure to the benefit of
each corporate party hereto, its successors and assigns, and each individual
party hereto and his heirs, personal representatives, successors and assigns.
(d) The section headings contained herein are for the purposes of
convenience only and are not intended to define or limit the contents of said
sections nor affect the meaning or interpretation of this Agreement.
(e) Each party hereto shall cooperate, shall take such further action
and shall execute and deliver such further documents as may be reasonably
requested by any other party in order to carry out the provisions and purposes
of this Agreement.
(f) This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original but all of which taken together shall
constitute one and the same instrument.
(g) This Agreement and all amendments hereto shall be governed by,
construed and enforced in accordance with the internal laws of the State of New
York without reference to principles of conflict of laws.
(h) If any provision of this Agreement shall be held invalid or
unenforceable, such invalidity or unenforceability shall attach only to such
provision, only to the extent it is invalid or unenforceable, and shall not in
any manner affect or render invalid or unenforceable any other severable
provision of this Agreement, and this Agreement shall be carried out as if any
such invalid or unenforceable provision were not contained herein.
(i) All schedules attached hereto shall be incorporated by reference
herein as if set forth herein in full.
(j) Seller, on the one hand, and Purchaser, on the other hand, agree
that, without the prior written consent of the other, unless otherwise required
by Applicable Law, neither it nor its Affiliates shall not make or permit to be
made any announcement of any kind about this Agreement or the transactions
contemplated hereby, either prior to the Closing Date or any time
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hereafter in the event the transactions contemplated hereby are not consummated
as provided herein.
(k) Seller, on the one hand, and Purchaser, on the other hand,
represent and warrant to the other that there is no obligation to pay any
commission, finder's fee, broker's fee or similar charge in connection with the
transactions provided for in this Agreement, resulting from any agreements or
other action of such representing party.
(l) This Agreement is not intended to, and shall not confer any rights
upon, any parties other than the express parties hereto.
(m) Either party shall have the right to make non-material
modifications to disclosure schedules attached to this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
CARIBINER INTERNATIONAL, INC.
By: /s/ Raymond S. Ingleby
----------------------------------
Raymond S. Ingleby
Chairman and Chief
Executive Officer
GENERAL ELECTRIC CAPITAL
COMPUTER LEASING CORPORATION
By: /s/ D. Michael Upton
----------------------------------
Name: D. Michael Upton
Title:
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SCHEDULE 2(c)
Purchase Price Adjustments
The Purchase Price shall be increased or decreased, as the case may be, by
reference and after giving effect, to the following:*
(a) Tangible Assets. In the event the "tangible assets" of the Business set
forth on the Closing Balance Sheet (i) exceed the amount set forth on Schedule
2(c)(i) annexed hereto (the "Tangible Projected Amount"), the Purchase Price
shall be increased, dollar for dollar, by the amount of such excess or (ii) are
less than the Tangible Projected Amount the Purchase Price shall be decreased,
dollar for dollar, by the amount that tangible assets of the Business as set
forth on the Closing Balance Sheet are less than the Tangible Projected Amount.
For purposes of this Schedule 2(c), the term "tangible assets" shall include all
of the items listed on Schedule 2(c)(i).
(b) Receivables. The Purchase Price shall be decreased, dollar for dollar,
by the amount of the account and trade receivables of the Business derived in
respect of business completed prior to the Closing Date (the "Closing
Receivables Reduction Amount"). For purposes of determining that portion of the
Purchase Price to be paid at the Closing, the Closing Receivables Reduction
Amount shall be determined by reference to a true and correct schedule of
receivables certified by an appropriate officer of Seller as of a date no
earlier than thirty (30) days prior to the Closing Date. The actual amount of
the Closing Receivables Reduction Amount shall be determined by reference to the
Closing Balance Sheet and any further adjustment in Purchase Price resulting
from any variance in the Closing Receivables Reduction Amount and the amount of
receivables on the Closing Balance Sheet shall be made. Notwithstanding the
foregoing to the contrary, all such receivables that give rise to such reduction
in Purchase Price shall, nevertheless, be collected by Purchaser in the ordinary
course of the Business, held solely for the account of Seller, and, upon
receipt, promptly remitted to Seller. Purchaser shall be under no obligation to
commence litigation or bring any action against any client or customer of the
Business in order to collect such receivables and Purchaser shall not, except as
otherwise provided in Section 4(b) of the Purchase Agreement, be responsible or
otherwise liable to Seller for any reason, provided it acts in
- ----------
* Capitalized terms used in this Schedule that are not otherwise defined
herein shall have the meanings given to them in the Agreement and the
Schedules attached thereto.
<PAGE>
good faith, by virtue of any failure of any party to promptly pay any such
receivables to Purchaser for the Seller's account.
(c) Advance Billings. The Purchase Price shall be decreased, dollar for
dollar, by the amount of the advance billings listed on Schedule 6(bb) of this
Agreement. The actual amount of the advance billings shall be determined by
reference to the Closing Balance Sheet. If the advance billings determined by
reference to the Closing Balance Sheet are greater or less than those listed on
Schedule 6(bb), the Purchase Price shall be decreased or increased, as the case
may be, dollar for dollar, by such change in the amount of the advance billings.
(d) Payment of Sums Due. Promptly following receipt of the Closing Balance
Sheet, Purchaser and Seller shall mutually determine the net amount due Seller
or Purchaser, as the case may be, in respect of the adjustments pursuant to (a),
(b) and (c) above. Within fifteen (15) days following such determination the
party obligated to make a payment in respect of the net amount of such
adjustments (set forth (a), (b) and (c) above) shall remit such sum to the party
entitled to receive payment. The obligation of the parties under this Schedule
2(c), which is, and shall be deemed to be, an integral part of this Agreement
shall survive the Closing. If any sums due pursuant to this Schedule 2(c) are
later determined to have been calculated in error, either as a result of a
restatement of the Closing Balance Sheet or otherwise, the obligations of the
Purchaser or the Seller, as the case may be, to further adjust the Purchase
Price shall survive the payment of any adjustments paid or payable pursuant to
this Schedule 2(c).
<PAGE>
SCHEDULE 2(c)(i)
TANGIBLE ASSETS
For the Period
GE Capital/Total Audio Visual Services Assets Ended 4/30/96
Current Assets
Accounts Receivable $ 10,100,129.46
Allowance for Doubtful Accounts $ (25,305.27)
Employee Purchases $ 9,567.09
Employee Advances $ 200.00
Resale Inventory $ 856,953.23
---------------
Total Current Assets $10,941,544.51
Fixed Assets (Net of Amortization)
Leasehold Improvements $ 1,379,622.60
Vehicles $ 98,397.56
Furniture & Fixtures $ 1,361,674.16
Undistributed Expenditures $ 6,722.28
Rental Inventory $ 8,565,547.37
---------------
Total Fixed Assets $11,411,963.97
Other Assets
Prepaid Commissions $ 502,131.87
Prepaid Rent $ 26,912.37
---------------
Total Other Assets $ 529,044.24
-------------
Total Assets for Sale(1) $22,882,552.72
==============
- --------
1 Cash, receivables and total Goodwill have been classified by this agreement as
"Excluded Assets," and, as such, are disclosed in Schedule 1(c).
<PAGE>
Schedule 6(bb)
ADVANCE BILLINGS AS OF 8/31/96
Client Amount
------ ------
[Names of Clients intentionally omitted] $ 10,831.17
$ 67,845.00
$ 15,155.01
$ 96,838.40
$ 51,211.20
$ 20,989.18
$ 19,000.00
$ 40,917.30
$ 47,000.00
$ 11,000.00
$ 19,040.00
$ 29,375.76
$ 70,532.70
$ 23,850.00
$ 40,583.29
$ 10,000.00
----------------
Total Advance Billings $ 574,169.01
<PAGE>
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
CARIBINER INTERNATIONAL ANNOUNCES DEFINITIVE AGREEMENT TO ACQUIRE TOTAL AUDIO
VISUAL SERVICES FROM GE CAPITAL FOR APPROXIMATELY $28 MILLION
-- Extends Capabilities to the Estimated $1.5 Billion Audio Visual
Equipment Services Market --
-- Strengthens and Expands Package of Business Communications Services --
NEW YORK, September 12, 1996 -- Caribiner International, Inc. (NYSE: CWC)
today announced that it has signed a definitive agreement to acquire Total Audio
Visual Services (TAVS) from GE Capital Services for approximately $28 million in
cash. TAVS is a leading provider of audio visual equipment rentals and staging
services, as well as hotel audio visual outsourcing services in the United
States. TAVS had 1995 revenues of approximately $46 million. The acquisition is
expected to close in late-September, subject to customary closing conditions,
including Hart-Scott-Rodino approval.
Commenting on the announcement, Raymond S. Ingleby, Chairman and Chief
Executive Officer of Caribiner, stated, "This is our ninth acquisition in the
past three years and our largest to date. Since we became a public company last
March, we have aggressively grown our business communications services
capabilities and client base through acquisitions and internal development.
Reflecting on this strategy, the acquisition of TAVS will significantly broaden
Caribiner's product offerings. It will enable us to provide a fuller range of
meetings services to our clients. These services can now range from audio visual
equipment rental to both small and large scale business events, in addition to
our other services which include training, exhibit design and related business
communications services.
"Like the overall business communications industry, the audio visual
equipment rental market and the hotel audio visual outsourcing market are both
highly fragmented. We believe that potential synergies exist between Caribiner's
existing business and TAVS, specifically the utilization of TAVS' equipment for
any of our Caribiner-produced meetings and events and the cross referral of
customers between the businesses. In fact, we see tremendous opportunities
resulting from the lead generation for Caribiner through TAVS' large base of
hotels under contract. We will also gain increased capacity to provide our
current and prospective clients with value-added services through one inclusive,
in-house package.
"TAVS will retain its name and operate as a separate division of Caribiner
International, Inc. As a separate division, we will seek to obtain national
leadership in the audio visual market and anticipate making further acquisitions
that will strengthen our package of resources and expand our international and
domestic presence."
<PAGE>
In connection with this agreement, Caribiner International and GE Capital
Technology Management Services will enter into a five-year marketing alliance in
which both companies will identify and collaborate on the development of
business opportunities for their respective client bases including all GE
business units on a global basis.
"This is a great opportunity for the TAVS team. Being a part of Caribiner
International will enable TAVS to be part of a broad scope communications
organization. This addition will give Caribiner International the strength and
capability to enhance their market leadership," said Michael S. Ford, President
of GE Capital Technology Management Services.
GE Capital Services Technology Management Services, headquartered in
Norcross, GA, is a GE Capital Services company that provides desktop services,
network integration and enterprise-wide outsourcing to help customers more
cost-effectively control and manage their technology investments.
GE Capital Services, which has assets of over US$185 billion, is a diverse
financial services company with 26 specialized businesses. A wholly-owned
subsidiary of General Electric Company, GE Capital Services, also based in
Stamford, provides equipment management, mid-market and specialized financing,
specialty insurance and a variety of consumer services, such as car leasing,
home mortgages and credit cards, to businesses and individuals around the world.
GE is a diversified manufacturing, technology and services company with
operations worldwide.
Caribiner International, Inc. is a leading national producer of meetings,
events, training programs and related business communications services that
enable businesses to inform, sell to and train their sales forces, dealers,
franchisees, partners, stockholders and employees. Caribiner's clients include
some of the world's largest companies. The Company has offices in Atlanta,
Boston, Chicago, Dallas, Detroit, Houston, Los Angeles, New York, San Francisco
and White Plains (NY) in North America, as well as in London, Dubai and Hong
Kong.
Caribiner International, Inc. is listed on The New York Stock Exchange and
trades under the symbol CWC.
###
For further information, contact:
Arthur Dignam
Chief Financial Officer
Caribiner International, Inc.
212-541-5300
Diana Brainerd/Chris Plunkett
Brainerd Communicators, Inc.
212-986-6667
Neal McGarity
GE Capital Services
203-961-2290
