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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): July 3, 1997
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 Stock, dated
May 29, 1997, as amended by the First Amendment thereto, dated as of June
27, 1997 (as amended, the "Bauer Agreement"), by and among Caribiner
International, Inc. (the "Company"), Bauer Audio Visual, Inc. ("Bauer"),
and each of the stockholders listed on Schedule A thereto, on July 3,
1997, the Company completed the acquisition of all of the outstanding
capital stock of Bauer. Consideration paid for the acquisition consisted
of approximately $14.6 million in cash and the issuance of 167,762 shares
of the Company's common stock, par value $0.01 per share (the "Common
Stock") with an aggregate value of approximately $4.6 million (based on
the average of the closing price of the Common Stock for the 30 business
days immediately preceding the third business day prior to May 29, 1997).
In addition, in connection with the consummation of the transactions
contemplated by the Bauer Agreement the Company repaid approximately $7.0
million in outstanding long-term indebtedness of Bauer and $4.8 million
of outstanding short-term indebtedness of Bauer. Bauer is a provider of
audio visual equipment services, including audio visual equipment rentals
and hotel audio visual outsourcing services, throughout the United
States.
The Company financed the transactions contemplated by the
Bauer Agreement from the Company's existing available credit facilities
with its syndicate of lenders for which The Chase Manhattan Bank, N.A.
acts as administrative agent.
The Bauer Agreement is attached as Exhibit 2.1, and such
agreement is incorporated by reference in its entirety herein. The
description of the Bauer Agreement contained herein is qualified in its
entirety by reference to the Bauer Agreement.
Attached as Exhibit 99.1 is the Company's press release
announcing, among other things, the signing of the Bauer Agreement.
Attached as Exhibit 99.2 is the Company's press release announcing the
consummation of the transactions contemplated by the Bauer Agreement.
(b) Equipment or Other Physical Property
Certain of the assets of Bauer acquired by the Company
pursuant to the Bauer Agreement constitute equipment or other physical
property. Such assets have been used by Bauer in connection with its
audio visual equipment rental 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 Bauer 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 August, 1997.
(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 Bauer Agreement that is required to be filed pursuant
to the instructions to Form 8-K. Such pro forma
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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 August, 1997.
(c) Exhibits
2.1 Agreement of Purchase and Sale of Stock, dated as of May 29, 1997,
as amended by the First Amendment thereto, dated June 27, 1997, by
and among the Company, Bauer and each of the stockholders listed
on Schedule A thereto (schedules omitted -- the Company agrees to
furnish a copy of any schedule to the Commission upon request).
99.1 Press release, dated May 30, 1997.
99.2 Press release, dated July 7, 1997.
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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: July 17, 1997 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
2.1 Agreement of Purchase and Sale of Stock, dated as of
May 29, 1997, as amended by the First Amendment
thereto, dated June 27, 1997, by and among Caribiner
International, Inc., Bauer Audio Visual, Inc. and
each of the stockholders listed on Schedule A thereto
(schedules omitted -- the Company agrees to furnish a
copy of any schedule to the Commission upon request).
99.1 Press Release, dated May 30, 1997.
99.2 Press Release, dated July 7, 1997.
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AGREEMENT OF PURCHASE
AND SALE OF STOCK
By and Among
CARIBINER INTERNATIONAL, INC.,
BAUER AUDIO VISUAL, INC.
and
EACH OF THE STOCKHOLDERS LISTED ON SCHEDULE A
May 29, 1997
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TABLE OF CONTENTS
Page
1. Purchase and Sale of Stock 1
2. (a) Purchase Price 1
(b) Purchase Price Adjustments 2
(c) Holdback 3
(d) Acquisition by Affiliates 4
3. (a) Closing 4
(b) Further Action 4
4. Sellers' and the Company's Obligations at Closing;
Further Assurances 5
5. Purchaser's Obligations at Closing 9
6. Representations and Warranties of Principal Sellers and
the Company 10
(a) Organization, Standing and Qualification 10
(b) Subsidiaries 10
(c) Transactions with Certain Persons. 11
(d) Execution, Delivery and Performance of Agreement;
Authority 11
(e) Capitalization 12
(f) Ownership of the Company's Capital Stock 13
(g) Financial Statements. 13
(h) Absence of Undisclosed Liabilities 14
(i) Taxes 14
(j) Absence of Changes or Events 15
(k) Litigation 18
(l) Compliance with Laws and Other Instruments 18
(m) Title to Properties 18
(n) Insurance 19
(o) Territorial Restrictions 19
(p) Intellectual Property 19
(i) Title 19
(ii) No Infringement 20
(iii) Licensing Arrangements 20
(iv) No Intellectual Property Litigation 21
(v) Due Registration, Etc 21
(vi) Use of Name and Mark 21
(q) Environmental Matters 22
(i) Permits 22
(ii) No Violations 22
(iii) Other 22
(iv) Definitions 24
(r) No Guaranties 26
(s) Receivables 26
(t) Absence of Certain Business Practices 26
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TABLE OF CONTENTS
(continued)
Page
(u) Disclosure 27
(v) Labor Disputes 27
(w) Customers and Accounts 28
(x) Suppliers; Raw Materials 28
(y) Unbilled Costs and Advance Billings 29
(z) Contracts and Proposals 29
(aa) Investment Intent 30
(bb) Minute Books; Bank Accounts 32
(cc) Inventories 33
(dd) Real Property 33
(i) Leases 33
(ii) No Proceedings 34
(iii) Current Use 34
(ee) Warranties 34
(ff) Exclusive Dealer Arrangements 34
7. Representations and Warranties by Purchaser 35
(a) Organization 35
(b) Execution, Delivery and Performance of Agreement 35
(c) Litigation 36
(d) Financing 36
(e) Financial Condition 36
8. Employment Matters; Employment Contracts 36
9. Tax Information; Tax Returns; Disputes; Tax Indemnity. 40
10. Indemnification 42
11. Nature and Survival of Representations and Warranties;
Rules Regarding Indemnification and Other Actions 45
12. Conduct of Business Prior to Closing 46
(i) Liabilities 46
(ii) Litigation 46
(iii) Compliance with Laws 46
(iv) Continued Effectiveness of Representations
and Warranties 46
13. Access to Information and Documents 47
14. Hart-Scott-Rodino 48
15. Conditions Precedent 48
(a) Conditions to Obligations of Each Party 48
(b) Conditions to Obligations of the Purchaser 49
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TABLE OF CONTENTS
(continued)
Page
(c) Conditions to Obligations of Sellers and
the Company 50
16. (a) Termination 50
(b) Effect of Termination 51
17. Notices 51
18. Miscellaneous 52
SCHEDULES
Schedule A - List of Stockholders
Schedule 2(b) - Hotel Indebtedness
Schedule 2(c)(i) - Escrow Agreement
Schedule 4(a)(iii) - General Releases
Schedules 4(a)(vi)(a)-(f) - Non-Competition Undertakings
Schedule 6(a) - States where Seller is
Qualified to do Business
Schedule 6(b) - Subsidiaries
Schedule 6(c) - Transactions with Certain Persons
Schedule 6(d) - Conflicts
Schedule 6(e) - Capitalization
Schedule 6(f) - List of Stockholders
Schedule 6(g) - Financial Statements
Schedule 6(h) - Undisclosed Liabilities
Schedule 6(i) - Unpaid Taxes
Schedule 6(j) - Changes or Events
Schedule 6(k) - Litigation
Schedule 6(l) - Compliance with Laws
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TABLE OF CONTENTS
(continued)
Schedule 6(m) - Encumbered Assets
Schedule 6(n) - Insurance
Schedule 6(o) - Territorial Restrictions
Schedule 6(p)(i) - Intellectual Property
Schedule 6(p)(iii) - Licensing Agreements
Schedule 6(p)(v) - Due Registration, Etc.
Schedule 6(p)(vi) - Use of Name and Mark Restrictions
Schedule 6(q)(i) - Environmental Permits
Schedule 6(q)(iii) - Environmental Exceptions
Schedule 6(r) - Guaranties
Schedule 6(s) - Accounts and Trade Receivables
Schedule 6(t) - Certain Business Practices
Schedule 6(v) - Labor Disputes
Schedule 6(w) - Customers and Accounts
Schedule 6(x) - Suppliers
Schedule 6(y) - Unbilled Costs and Advance Billings
Schedule 6(z) - Contracts and Proposals
Schedule 6(bb) - List of Directors and Officers of
the Company
Schedule 6(cc) - Obsolete/Discontinued Inventory
Schedule 6(dd) - Real Property Leases
Schedule 6(ee) - Warranties
Schedule 6(ff) - Exclusive Dealer Arrangements
Schedule 8(a) - Employee Plans
Schedule 8(c) - Benefits to Former Employees
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TABLE OF CONTENTS
(continued)
Schedule 18(l) - Commission, Finder's Fee, Brokerage
Fee
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AGREEMENT OF PURCHASE
AND SALE OF STOCK
By and Among
CARIBINER INTERNATIONAL, INC.,
BAUER AUDIO VISUAL, INC.
and
EACH OF THE STOCKHOLDERS LISTED ON SCHEDULE A
May 29, 1997
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AGREEMENT OF PURCHASE AND SALE OF STOCK
AGREEMENT OF PURCHASE AND SALE OF STOCK (this "Agreement"), dated May
29, 1997, by and among CARIBINER INTERNATIONAL, INC., a Delaware corporation
having its principal office at 16 West 61st Street, New York, New York 10023
("Purchaser"), BAUER AUDIO VISUAL, INC., a Texas corporation having its
principal office at 1607 West Mockingbird Lane, Dallas, Texas 75235-5072 (the
"Company") and each of the stockholders listed on Schedule A annexed hereto
(collectively, "Sellers" and, individually, a "Seller").
W I T N E S S E T H:
WHEREAS, the Company is engaged in the rental and sale of audio visual
equipment throughout the United States and in Mexico and the providing of
services in connection with the foregoing; and
WHEREAS, Sellers are the owners of the number of shares of capital
stock of the Company set forth opposite their respective names on Schedule A
annexed hereto, representing in the aggregate all of the issued and outstanding
shares of capital stock of the Company, and Sellers desire to sell to Purchaser,
and Purchaser desires to purchase from Sellers, all of the issued and
outstanding shares of capital stock of the Company 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 stock and the manner of carrying the same into effect, the
parties hereto hereby agree as follows:
1. Purchase and Sale of Stock. Subject to and upon the terms and
conditions set forth in this Agreement, at the Closing (as hereinafter defined),
Sellers will sell, transfer, convey, assign and deliver to Purchaser (or a
designated affiliate of Purchaser as contemplated by Section 2(d) hereof), and
Purchaser will purchase all of the issued and outstanding shares of capital
stock (the "Stock") of the Company.
2. (a) Purchase Price. In consideration of the sale, transfer,
conveyance, assignment and delivery of the Stock by Sellers to Purchaser,
certain Sellers entering into the Non-Competition Undertaking (as defined in
Section 4(a)(vi) hereof) and in reliance upon the representations and warranties
made herein by Ted R. Meredith, the Meredith Family Limited Partnership and
Skylar Cunningham (collectively, the "Principal Sellers" and, individually, a
"Principal Seller") and the Company, Purchaser agrees, in full payment therefor,
to deliver
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to Sellers the following purchase price (the "Purchase Price") payable to
Sellers by delivery at the Closing or at such other time as provided herein,
subject to (A) adjustments, if any, as provided in Section 2(b) hereof and (B)
the Holdback (as defined in Section 2(c) hereof):
(i) the sum of $13,875,000 (plus the aggregate Par Value Amount (as
defined in Section 2(a)(ii) hereof) and less the Holdback, which is
to be deposited in the Account (as defined in Section 2(c) hereof))
in the aggregate, by wire transfer or certified or official bank
checks drawn on a bank which is a member of the New York Clearing
House Association, payable to the order of Sellers in the respective
amounts set forth as the "Cash Portion of Purchase Price" on
Schedule A annexed hereto; and
(ii) upon Purchaser's receipt of checks from each of the Principal
Sellers made payable to Purchaser in the respective amounts (each, a
"Par Value Amount") equal to the par value per share multiplied by
the number of shares to be issued to each such Principal Seller, in
consideration for the issuance of a certificate or certificates
representing the Shares (as hereinafter defined) such number of
shares (the "Shares") of common stock, par value $.01 per share, of
Purchaser (the "Common Stock") which, when multiplied by the average
of the closing price of the Common Stock as reported in The Wall
Street Journal for the thirty (30) business days immediately
preceding the third (3rd) business day prior to the date of this
Agreement, shall equal the respective amounts listed as "Stock
Portion of Purchase Price" set forth on Schedule A annexed hereto
and the aggregate of which shall equal $4,625,000, adjusted, as
applicable, for any stock split or stock dividend involving the
Common Stock that is effective between the first day of the thirty
(30) business day period referred to above and the Closing. It is
expressly understood and agreed that the Shares have not been
registered under Section 5 of the Securities Act of 1933, as amended
(the "Securities Act"), and Purchaser shall have no obligation to
register the Shares, and the Shares shall bear a restrictive legend
substantially in the form set forth in Section 18(o) hereof.
(b) Purchase Price Adjustments. The Purchase Price (i) shall be
increased, dollar for dollar, by the amount by which the amount of
long term indebtedness of the Company on the Closing Date is less
than $7,500,000 and (ii) shall be decreased, dollar for dollar, by
the amount by which the amount of long term indebtedness of
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the Company on the Closing Date exceeds $7,500,000. Purchaser and
Sellers shall mutually determine, on the Closing Date, the reduction
or increase in the Purchase Price, as the case may be. For purposes
of this Section 2(b), the term "long term indebtedness" shall mean
all indebtedness of the Company (as certified by the Chief Financial
Officer of the Company at the Closing) including, without
limitation, (a) pursuant to the Company's Credit Agreement
(hereinafter defined in Section 15(c)(vii) hereof) including the
current portion thereof (other than the revolving credit portion of
such facility), (b) pursuant to all capital leases to which the
Company or Bauer S.A. (as defined in Section 4(a)(xv) hereof) is a
party, and (c) all other indebtedness of the Company for borrowed
money (including, without limitation, purchase money debt and debt
created pursuant to notes, agreements and other debt instruments),
but excluding (x) any long term indebtedness secured by, and
obtained in connection with, purchases of equipment acquired in
connection with the performance of new hotel contracts with
customers of the Company entered into after December 31, 1996 (which
indebtedness is set forth on Schedule 2(b) hereof through the date
hereof) and (y) trade payables incurred in the ordinary course of
business in respect of which no note or other debt instrument has
been entered into by the Company or Bauer S.A. For purposes of this
Section 2(b), indebtedness of the Company shall include
indebtedness of Bauer S.A. Sellers and the Company hereby covenant
and agree that neither the Company nor Bauer S.A. shall pay any long
term indebtedness other than in accordance with scheduled required
payments and the Company shall not prepay any such long term
indebtedness between the date hereof and the Closing. If any sums
due pursuant to this Section 2(b) are later determined to have been
calculated in error, the obligations of Purchaser or Sellers, as the
case may be, to further adjust the Purchase Price shall survive the
Closing Date.
(c) Holdback. From the Cash Portion of the Purchase Price set forth
in Section 2(a)(i) hereof payable to Principal Sellers, Purchaser
shall holdback the sum of $500,000.00 (the "Holdback"), which shall
be deposited by Purchaser into an escrow account pursuant to an
Escrow Agreement among Purchaser, Principal Sellers and The Chase
Manhattan Bank, NA ("Chase"), 600 Fifth Avenue, New York, New York
10020 substantially in the form of Schedule 2(c)(i) annexed hereto
(the "Escrow Agreement"). The Holdback shall be paid to Principal
Sellers, if at all, in accordance with the terms of the
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Escrow Agreement but, in any event, no sooner than twelve (12)
months from the date of Closing.
(d) Acquisition by Affiliates. Notwithstanding anything to the
contrary in this Agreement, Purchaser may cause the Stock to be
acquired by one (1) or more affiliates of Purchaser; provided,
however, that Purchaser shall remain liable for all obligations of
Purchaser hereunder. The term "affiliates" as used in this Section
2(d) shall have the same meaning as set forth under the definition
of "affiliates" in Rule 405 of the Securities Act.
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 15
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) Sellers and the Company 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) Sellers and the Company 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 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 (collectively, the "Governmental Authority" or
"Governmental Authorities"); and (B) orders, decisions, injunctions,
judgments, awards and decrees of or agreements with any Governmental
Authority (collectively, the "Applicable Laws") in connection with
this Agreement, the sale and transfer of the Stock pursuant to this
Agreement and
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the consummation of the other transactions contemplated hereby.
(iii) Sellers and the Company, as promptly as practicable, will use
all reasonable efforts to obtain, or cause to be obtained, all
consents of any Governmental Authority and of any third party
(collectively, the "Consents") necessary to be obtained in order to
consummate the sale and transfer of the Stock pursuant to this
Agreement and the consummation of the other transactions
contemplated hereby. Notwithstanding anything to the contrary
contained in this Agreement, Sellers shall not be liable or
responsible for nor shall they have any obligation to obtain any
Consent following the Closing.
(iv) Sellers and the Company will coordinate and cooperate with
Purchaser in exchanging such information and supplying such
assistance as may be reasonably required by Purchaser pursuant to
Applicable Laws in connection with this Agreement, Sellers' Related
Agreements, Purchaser's 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, Sellers and the Company, on
the one hand, and Purchaser, on the other hand, 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
15 hereof.
4. Sellers' and the Company's Obligations at Closing; Further
Assurances. (a) At the Closing, Sellers and the Company agree to deliver, or
cause to be delivered, to Purchaser (and, as applicable, execute):
(i) stock certificates representing the Stock, duly endorsed in
blank, with signatures guaranteed by a commercial bank satisfactory
to Purchaser, and with all necessary stock transfer stamps attached;
(ii) resignations of such of the directors and officers of the
Company and any Affiliate (as hereinafter defined) thereof as shall
have been requested by Purchaser (as opposed to resignations of
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employment) which requests shall be at least three (3) days prior to
Closing, effective immediately, which resignations shall include a
statement that the Company is not indebted or obligated to the
resigning party in any way whatsoever, or at the option of Seller
and the Company, the Company may remove such officers who fail to
submit their resignation upon request;
(iii) general releases from Sellers and any spouse of any Seller in
favor of the Company, in the form of Schedule 4(a)(iii) annexed
hereto;
(iv) certificates as to the good standing of the Company, and its
payment of franchise taxes and filing of required reports, from the
appropriate officials of the jurisdictions in which the Company is
incorporated or qualified and authorized to do business as a foreign
corporation all dated within thirty (30) days of the Closing;
(v) the opinion of Sellers', the Company's and the Company's
subsidiaries' counsel, customary in form and substance for
transactions of the type contemplated by this Agreement;
(vi) the Non-Competition Undertaking (the "Non-Competition
Undertakings") of each of the Principal Sellers, John Sweeney
("Sweeney"), John Rissi ("Rissi") and Spencer Williams ("Williams"),
in the forms of Schedules 4(a)(vi)(a) - (f) annexed hereto;
(vii) the Employment Agreement (the "Cunningham Employment
Agreement") between Skylar Cunningham ("Cunningham") and Caribiner,
Inc., a New York corporation and Purchaser's wholly owned subsidiary
("Caribiner"), the Employment Agreement (the "Sweeney Employment
Agreement") between Sweeney and Caribiner, the Employment Agreement
(the "Rissi Employment Agreement") between Rissi and Caribiner and
the Employment Agreement between Williams and Caribiner (the
"Williams Employment Agreement" and together with the Cunningham
Employment Agreement, the Sweeney Employment Agreement and the Rissi
Employment Agreement, the "Employment Agreements") in forms to be
agreed by the parties thereto;
(viii) a certified copy of resolutions adopted by the Company's
Board of Directors and Sellers, if necessary, authorizing the
execution, delivery and performance of this Agreement;
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(ix) a copy of the Company's certificate of incorporation, as
amended, certified by the Office of the Secretary of State of the
State of Texas, and a true and correct copy of the by-laws of the
Company as certified by the secretary of the Company;
(x) a copy of the certificate of incorporation, as amended, of each
subsidiary of the Company, certified by the office of the Secretary
of State of its incorporation (or other applicable governing body),
and a true and correct copy of the by-laws of each such subsidiary
as certified by the secretary of each such subsidiary;
(xi) such filings as are necessary and other required submissions in
connection therewith under the HSR Act with respect to the
transactions contemplated pursuant to this Agreement;
(xii) the certificate required pursuant to Section 15(b)(iv) hereof;
(xiii) all Consents;
(xiv) the Escrow Agreement;
(xv) stock certificates representing those shares of capital stock
of Bauer Audio Visual S.A. de C.V. ("Bauer S.A.") which are owned by
Ted R. Meredith ("Meredith") and/or any other party other than the
Company, duly endorsed in blank, with signatures guaranteed by a
commercial bank satisfactory to Purchaser, and with all necessary
transfer stamps attached;
(xvi) evidence satisfactory to Purchaser of the revocation or
cancellation of all existing powers of attorney granted or recorded
by Bauer S.A. and the due authorization by the stockholders of Bauer
S.A. of such revocation or cancellation together with copies of
applicable notices to the notaries that originally authorized such
powers, if required by Mexican law;
(xvii) evidence satisfactory to Purchaser of the termination of that
certain Shareholders' Agreement dated as of January 31, 1995 among
Meredith, Cunningham, Sweeney, Warren Abraham ("Abraham"), Hyndman
("Hyndman"), Barbara Miller ("Miller"), Williams, George Strong
("Strong") and the Company;
(xviii) evidence satisfactory to Purchaser of the termination of
that certain Shareholders' Agreement
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dated December 31, 1992 between Cunningham and Meredith;
(xix) evidence satisfactory to Purchaser of the termination of that
certain Stock Pledge Agreement dated as of January 31, 1995 among
Meredith, Sweeney, Williams, Abraham, Hyndman, Miller and Strong;
(xx) evidence satisfactory to Purchaser of the termination of that
certain Shareholders' Agreement dated January 31, 1997 among
Meredith, Cunningham, Rissi, James Dobson ("Dobson") and the
Company;
(xxi) evidence satisfactory to Purchaser of the termination
of that certain Stock Pledge Agreement dated as of January 31, 1997
among Meredith, Rissi and Dobson; and
(xxii) all other documents and instruments required to be delivered
to Purchaser by Sellers and the Company pursuant to this Agreement.
(b) At any time and from time to time after the Closing, at
Purchaser's request and expense, without further consideration, Sellers shall
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 or desirable (i) in order to transfer, convey and
assign to Purchaser, and confirm Purchaser's title to, the Stock and (ii) to put
Purchaser in actual possession and operating control of all of the business,
properties, assets and goodwill of the Company thereof. In addition thereto,
Seller shall take such action and execute such documents or instruments as may
be reasonably requested by Purchaser, and as may be reasonably necessary, 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 (the "SEC") or any other Governmental Authority, the New York Stock
Exchange, Purchaser's lenders, auditors or any other appropriate party.
(c) Notwithstanding anything to the contrary in this Agreement, this
Agreement shall not constitute an agreement to assign or transfer any
instrument, contract, lease, permit or other agreement 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 the Company thereunder;
any transfer or assignment to Purchaser by Sellers of any interest under any
such instrument, contract,
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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, Sellers shall continue to use reasonable efforts to
obtain such approval or consent after the Closing Date until such time as such
consent or approval has been obtained.
5. Purchaser's Obligations at Closing. (a) At the Closing, Purchaser
agrees to deliver, or cause to be delivered, as the case may be, to Sellers
(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;
(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, customary in form and
substance for transactions of the type contemplated by this
Agreement;
(v) the Employment Agreements;
(vi) the Escrow Agreement and confirmation by Chase of the
establishment of the Escrow Account (as defined in the Escrow
Agreement) and the deposit of the Holdback pursuant thereto;
(vii) the certificate required pursuant to Section 15(c)(iii)
hereof;
(viii) the certificates representing the Shares to be delivered
hereunder;
(ix) the resignation of Meredith as a trustee under the Company's
401(K) plan or any other benefit plan; and
(x) all other documents and instruments required to be delivered
to Sellers pursuant to the provision of this Agreement.
(b) At any time and from time to time after the Closing, at
Sellers' request and expense, Purchaser shall execute
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and deliver such other additional instruments as Sellers 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.
6. Representations and Warranties of Principal Sellers and the
Company. Except with respect to Section 6(f) hereof (but only to the extent
that such representations and warranties relate to Sellers and only in respect
of each such Seller (and not jointly, but only severally) and not the Company)
as to which each Seller represents and warrants to Purchaser, Principal Sellers
and the Company jointly and severally represent and warrant to Purchaser as
follows:
(a) Organization, Standing and Qualification. The Company and each
subsidiary of the Company, as the case may be, (i) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas or the laws of the state or country of its incorporation, as the case may
be; (ii) has all requisite corporate power and authority and is entitled to
carry on its 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 (iii) is duly qualified,
licensed and in good standing as a foreign 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 the Company. The Company has delivered to
Purchaser true and complete copies of (i) the certificate of incorporation of
the Company and all amendments thereto, certified as true and correct by the
Office of the Secretary of State of the State of Texas, (ii) the certificate of
incorporation of each subsidiary of the Company and all amendments thereto,
certified as true and correct by the Secretary of State of the state of its
incorporation (or other applicable governing body), (iii) the by-laws of the
Company as presently in effect, certified as true and correct by the Company's
secretary and (iv) the by-laws of each subsidiary of the Company as presently in
effect, certified as true and correct by such subsidiary's secretary. For
purposes of Section 6, 8, 9 and 10 hereof, the term "Company" shall be deemed to
include each subsidiary of the Company unless the context requires otherwise.
(b) Subsidiaries. Except as set forth on Schedule 6(b) annexed hereto,
(i) the Company has no subsidiaries; (ii) the Company owns all of the
outstanding capital stock of all of the subsidiaries of the Company listed on
Schedule 6(b) annexed hereto; (iii)the Company has no interest, directly or
indirectly, and has no commitment to purchase any interest, directly or
indirectly, in any other corporation or in any partnership, joint
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venture or other business enterprise or entity; (iv) the business carried on by
the Company has not been conducted through any other direct or indirect
subsidiary or affiliate of any present or former shareholder of the Company; and
(v) there are no securities of any subsidiary of the Company directly or
indirectly convertible, exercisable or exchangeable for any of the capital stock
of any subsidiary of the Company, including, but not limited to, any options,
warrants, rights, agreements, understandings or commitments, vested or unvested,
of any nature whatsoever relating to the capital stock of any subsidiary of the
Company.
(c) Transactions with Certain Persons. Except as set forth on Schedule
6(c) annexed hereto, the Company 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 the
Company), in the ordinary course of business or otherwise (i) any shareholder of
the Company, or (ii) any person, firm, partnership, corporation or other entity
which, directly or indirectly, alone or together with others, controls, is
controlled by or is under common control with the Company or any shareholder of
the Company (an "Affiliate") or in which any of the Sellers has an ownership or
beneficial interest of greater than ten (10%) percent. Except as set forth on
Schedule 6(c) annexed hereto, the Company does not owe any amount to, or have
any contract with or commitment to, any of its shareholders, directors,
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 the Company.
Except as set forth on Schedule 6(c) annexed hereto, no part of the property or
assets of Sellers are used by the Company. Except as set forth on Schedule 6(c)
annexed hereto, no part of the property or assets of the Company are used by
Sellers for their personal benefit or any purpose not related to the business of
the Company.
(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 Sellers are
a party required to be delivered by Sellers pursuant to Section 4(a) hereof
(which documents are hereinafter sometimes collectively referred to as "Sellers'
Related Agreements") (i) 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 the Company's certificate of
incorporation or by-laws or any
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<PAGE>
franchise, mortgage, deed of trust, lease, license, agreement, Applicable Law,
rule or regulation or any order, judgment or decree to which Sellers or the
Company, as the case may be, are a party or by which any of them may be bound or
materially or adversely affected or (ii) 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, in any case, which, if
not obtained, would have a material adverse effect upon the Company. Except as
set forth on Schedule 6(d) annexed hereto, no other party, including, without
limitation, any present or former partner, shareholder in common with, or
employee of the Company or Sellers have, may or will have any right to any of
Sellers' interest in the Company or the proceeds of the sale of the Stock.
Except as set forth on Schedule 6(d) annexed hereto, no Consent is required to
be obtained or made by Sellers or the Company in connection with the execution
and delivery of this Agreement or the Sellers' Related Agreements and to
consummate the transactions contemplated hereby. Sellers and the Company each
have the full power and authority to enter into this Agreement and, as
applicable, Sellers' Related Agreements and to carry out the transactions
contemplated hereby, as applicable, all proceedings required to be taken by them
to authorize and approve the execution, delivery and performance of this
Agreement and Sellers' Related Agreements have been properly taken, and this
Agreement and Sellers' Related Agreements constitute valid and binding
obligations of Sellers and the Company, 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 law
affecting creditors' rights generally. The execution, delivery and performance
of this Agreement and Sellers' Related Agreements have been duly authorized, to
the extent required by Applicable Law and by all requisite corporate and
shareholder action of Sellers, if necessary.
(e) Capitalization. The authorized capital of the Company consists
of one million (1,000,000) shares, par value $.001219512 per share, of which
eighty thousand (80,000) shares are issued and outstanding on the date hereof.
All of the shares of capital stock of the Company have been duly authorized and
validly issued and are fully paid and non-assessable. All of the presently
authorized, issued and outstanding shares of capital stock of the Company are
owned by Sellers in the amounts set forth on Schedule 6(f) annexed hereto.
Except as otherwise disclosed on Schedule 6(e) annexed hereto, there are no
outstanding subscriptions, rights, options, warrants, calls, contracts, demands,
commitments, convertible securities or other agreements or arrangements of any
character or nature whatsoever under which the Company or Sellers are or may
become obligated to issue, assign or transfer any shares of the capital stock of
the Company.
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<PAGE>
(f) Ownership of the Company's Capital Stock. Except as set forth on
Schedule 6(f) annexed hereto, Sellers are the lawful record and beneficial
owners of all of the Company's capital stock set forth opposite their names on
Schedule 6(f) annexed hereto, free and clear of any liens, claims, encumbrances
or restrictions of any kind. Except as set forth on Schedule 6(f) annexed
hereto, neither the Company nor the Sellers nor any of their respective
Affiliates is a party to or otherwise subject to any agreement, understanding or
arrangement regarding the transfer, sale, disposition, purchase, acquisition or
voting of the Stock. Upon the delivery thereof to Purchaser at Closing, together
with executed stock transfer forms in respect thereof, Purchaser will acquire
good, marketable and valid title to the Stock free and clear of any liens,
claims, encumbrances or restrictions of any kind.
(g) Financial Statements. Sellers have delivered to Purchaser copies
(initialled by the Company's secretary and identified with a reference to this
Section 6(g)) of the following financial statements (hereinafter, collectively,
the "Financial Statements"), copies of which are annexed hereto as Schedule
6(g), all of which are true, accurate and correct, and have been prepared in
good faith from the books and records of the Company in conformity with
generally accepted accounting principles ("GAAP"), in each case consistently
applied and fairly present the financial position and results of operations of
the Company at such dates and for the periods then ended:
(i) Consolidated Balance Sheets, and related statements of income,
shareholders' equity and cash flows (including the notes thereto) of
the Company audited by Ernst & Young LLP as at December 31, 1996,
December 31, 1995 and December 31, 1994 and for the periods then
ended; and
(ii) Unaudited Consolidated Balance Sheets and related statements of
income, shareholders' equity and cash flows (including the notes
thereto, if any) of the Company prepared by the Company as at March
31, 1997 and for the three (3) month period then ended. (The Balance
Sheet and related income statement for the period ended March 31,
1997 is hereinafter referred to as the "Balance Sheet" or the "March
31 Balance Sheet" and the date March 31, 1997 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 or as set forth on Schedule 6(g)
annexed hereto.
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<PAGE>
(h) Absence of Undisclosed Liabilities. As of the Balance Sheet
Date, except as (i) reflected in the Balance Sheet or (ii) disclosed in the
notes thereto or (iii) set forth on Schedule 6(h) annexed hereto or (iv)
disclosed elsewhere in this Agreement or in the Schedules annexed hereto, the
Company had no debts, liabilities or obligations (whether absolute, accrued,
contingent or otherwise) of any nature whatsoever.
(i) Taxes. (i) Except as set forth on Schedule 6(i) annexed hereto,
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 the Company or Bauer S.A.,
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 the Company
or any subsidiary of the Company with respect to employees'
withholding taxes have been duly made, except for the current
reporting period which will be paid when due. Except as set forth on
Schedule 6(i) annexed hereto, the Company 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. Except as
set forth on Schedule 6(i) annexed hereto, 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 the Company.
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
Internal Revenue Code of 1986, as amended (the "Code")), real
property, gains tax, personal property, ad valorem, intangibles,
rent, 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
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<PAGE>
interest and penalties thereon and additional thereto whether
disputed or not.
(ii) Except as set forth on Schedule 6(i) annexed hereto, there are
no tax sharing agreements or arrangements or tax indemnity
agreements between the Company and any other person.
(iii) Except as set forth on Schedule 6(i) annexed hereto, the
Company has never been an includable corporation in any affiliated
group of corporations within the meaning of Section 1504 of the Code
(or any other similar provision of state, local or foreign law).
(iv) The Company has not filed a consent pursuant to the collapsible
corporation provisions of Section 341(f) of the Code (or any similar
provision of state, local or foreign law) or agreed to have Section
341(f)(2) of the Code or any similar provision of state, local or
foreign law) apply to any disposition of any asset owned by the
Company.
(v) The Company has no liability for the Taxes of any person (A)
under Section 1.1502-6 of the Treasury Regulations promulgated under
the Code (or any similar provision of state, local or foreign law),
(B) as a transferee or successor, (C) by contract or (D) otherwise.
(j) Absence of Changes or Events. Except as set forth on Schedule
6(j) annexed hereto, since the Balance Sheet Date, the Company has conducted its
business only in the ordinary course and 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 Company;
(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
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<PAGE>
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) declared or made any payment of dividends or other
distribution to its shareholders or upon or in respect of any shares
of its capital stock, or purchased, retired or redeemed, or
obligated itself to purchase, retire or redeem, any of its shares of
capital stock or other securities;
(iv) 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;
(v) 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;
(vi) 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 its assets, properties,
operations or prospects;
(vii) to the best knowledge of Sellers and the Company, 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;
(viii) 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;
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<PAGE>
(ix) made any material 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 shareholder, director, officer,
employee, salesman, distributor or agent of the Company;
(x) issued or sold any shares of its capital stock or other
securities, or issued, granted or sold any options, rights or
warrants with respect thereto, or acquired any capital stock or
other securities of any corporation or any interest in any business
enterprise, or otherwise made any loan or advance to or investment
in any person, firm or corporation;
(xi) made any capital expenditures or capital additions or
betterments;
(xii) changed its banking or safe deposit arrangements;
(xiii) instituted, settled or agreed to settle any litigation,
action or proceeding before any court or governmental body relating
to the Company or its property;
(xiv) failed to replenish its inventories and supplies in a normal
and customary manner consistent with its prior practice 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
inconsistent with its prior practice or, if so, consistent with
prudent business practices prevailing in the industry;
(xv) suffered any change, event or condition which, in any case or
in the aggregate, has had or may have a materially adverse affect on
the Company's condition (financial or otherwise), properties,
assets,
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<PAGE>
liabilities, operations or prospects including, without limitation,
any material adverse change in the Company's revenues, costs, levels
of committed business or relations with its employees, agents,
customers or suppliers;
(xvi) 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 hereby; or
(xvii) 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 (xvi) above.
(k) Litigation. Schedule 6(k) annexed hereto sets forth a complete
list and an accurate description of all claims, charges, legal actions, suits,
arbitrations or other legal or administrative proceedings (or governmental
investigations) and any order, decree or judgment in progress, pending or in
effect, or, to the best knowledge of Sellers, threatened against or relating to
the Company, its officers or directors (including, without limitation, Sellers),
its properties, assets or business in connection with the transactions
contemplated by this Agreement, and except as set forth on such schedule,
Sellers do not know of any basis for the same.
(l) Compliance with Laws and Other Instruments. Except as set forth
in Schedule 6(l) annexed hereto, the Company has materially complied with all
existing laws, rules, regulations, ordinances, orders, judgments and decrees
applicable to its business, properties or operations. Neither the ownership nor
use of the Company's assets or properties nor the conduct of its business
conflicts with the rights of any other person, firm or corporation, or 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, law, ordinance, rule or
regulation, or any order, judgment or decree to which it is a party or by which
it may be bound or affected, in any case, which would have a material adverse
effect on the Company.
(m) Title to Properties. The Company has good, marketable and
insurable title to all of the properties and
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assets it owns and uses in its business or purports to own, including, without
limitation, those reflected in its books and records and in the Balance Sheet.
Except as set forth on Schedule 6(m) annexed hereto, none of such properties and
assets are subject to any loan agreement, conditional sale or title retention
agreement, equipment obligation, lease purchase agreement, mortgage, indenture,
pledge, security agreement, guaranty, 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 (collectively,
"Encumbrances"). Set forth on Schedule 6(m) annexed hereto is an accurate and
complete computer listing of all machinery, tools, equipment, motor vehicles and
other tangible personal property (other than supplies), owned, leased or used by
the Company, except for items individually having a value of less than $1,000.
(n) Insurance. Set forth on Schedule 6(n) annexed hereto is an
accurate and complete list and description of all fire, theft, casualty,
liability and other insurance policies procured by the Company, specifying with
respect to each such policy the name of the insurer, the risk insured against,
the limits of coverage, the deductible amount (if any), the premium rate and the
date through which coverage will continue by virtue of premium already paid.
Except as set forth on Schedule 6(n) annexed hereto, all insurance policies
relating to the Company are in full force and effect, and all premiums due
thereon have been paid. Set forth on Schedule 6(n) annexed hereto, is a
description of all open claims made by the Company under any policy of insurance
and all claims which in the opinion of the Company reasonably formed and held,
should or could be made under any such policy.
(o) Territorial Restrictions. Except as set forth on Schedule 6(o)
annexed hereto, the Company is not restricted by any written agreement or
understanding with any party from carrying on the business conducted by the
Company anywhere in the world. Purchaser, solely as a result of its purchase of
the Stock from Sellers pursuant hereto, will, to the knowledge of Sellers, not
thereby become restricted in carrying on the business conducted by the Company
anywhere in the world.
(p) Intellectual Property.
(i) Title. Schedule 6(p)(i) annexed hereto contains a complete and
correct list of all United States and foreign: (A) patents
(including, without limitation, design patents, industrial designs
and utility models) and patent applications (including, without
limitation, docketed patent disclosures awaiting filing, reissues,
divisions, continuations-in-part and extensions),
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patent disclosures awaiting filing determination, inventions and
improvements thereto; (B) trademarks, service marks, trade names,
trade dress, logos, business and product names, slogans, and
registrations and applications for registration thereof; (C)
copyrights (including, without limitation, software) and
registrations thereof; (D) inventions, processes, 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") that is owned by the Company (the "Owned
Intellectual Property") other than (1) inventions, trade secrets,
processes, formulas, compositions, designs and confidential business
and technical information and (2) Intellectual Property that is not
registered or subject to application for registration. The Company
owns or has the exclusive right to use pursuant to license,
sublicense, agreement or permission all Owned Intellectual Property,
free from any Encumbrances 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 Company's
business as now being conducted.
(ii) No Infringement. The conduct of the business of the Company
does not, to the best knowledge of Sellers and the Company, infringe
or otherwise conflict with any rights of any person in respect of
any Intellectual Property.
(iii) Licensing Arrangements. Schedule 6(p)(iii) annexed hereto sets
forth all material agreements, arrangements or laws (A) pursuant to
which the Company 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 the Company has 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(p)(iii) annexed hereto (x) are
in full force and effect in accordance with their terms and no
default exists thereunder by
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the Company or by any other party thereto, (y) are free and clear
of all liens, and (z) do not contain any change in control or other
terms or conditions that will become applicable or inapplicable as a
result of the consummation of the transactions contemplated by this
Agreement. Sellers and the Company have delivered to the Purchaser
true and complete copies of all licenses and arrangements (including
amendments) set forth on Schedule 6(p)(iii) annexed hereto. All
royalties, license fees, charges and other amounts payable by, on
behalf of, to, or for the account of, the Company in respect of any
Intellectual Property are disclosed in the Financial Statements.
(iv) No Intellectual Property Litigation. No claim or demand has
been made nor is there any proceeding that is pending, or to the
knowledge of Sellers or the Company, threatened, which (A)
challenges the rights of the Company in respect of any Intellectual
Property, (B) asserts that the Company is infringing or otherwise in
conflict with, or is, except as set forth on Schedule 6(p)(iii)
annexed 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(p)(iii) annexed 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.
(v) Due Registration, Etc. As set forth on Schedule 6(p)(v) annexed
hereto, the Owned Intellectual Property has been duly registered
with, filed in or issued by, as the case may be, the United State
Patent and Trademark Office, United States Copyright Office or such
other filing offices.
(vi) Use of Name and Mark. Except as set forth on Schedule 6(p)(vi)
annexed hereto, there are and immediately after the Closing will be,
no contractual restrictions or limitations pursuant to any orders,
decisions, injunctions, judgments, awards or decrees of any
Governmental Authority on the Company's or, to the knowledge of the
Sellers, on the Purchaser's right to use the name and mark "Bauer
Audio Visual" in the conduct of business as presently carried on by
the Company.
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(q) Environmental Matters.
(i) Permits. All federal, state and local permits, licenses,
registrations, consents, orders, administrative consent orders,
certificates, approvals or other authorizations necessary for the
conduct of the Company's 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 Materials (as hereinafter
defined) (collectively, the "Environmental Permits") are identified
on Schedule 6(q)(i) annexed hereto, and the Company currently holds,
and at all times has held, all such Environmental Permits necessary
to the Company, where the failure to obtain such Environmental
Permits would have a material adverse effect on the Company. The
Company 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 the Company is a potentially responsible party under CERCLA
(as hereinafter defined) or any other Environmental Laws (as
hereinafter defined).
(ii) No Violations. The Company has materially complied and is in
material compliance with all Environmental Permits and all
applicable Environmental Laws pertaining to any real property owned
or leased by the Company. The Company and Sellers know of no person
who has alleged any material violation by the Company of any
Environmental Permits or any Environmental Laws relating to the
Company or such real property.
(iii) Other. Except as set forth on Schedule 6(q)(iii) annexed
hereto:
(A) To the knowledge of the Company and Sellers,
none of the current or past operations of the
Company, or any by-product thereof, and none of the
currently or formerly owned or operated property or
assets of the Company, including, without
limitation, 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 Materials;
(2) prevent the Release or threatened Release of
Hazardous Materials so that
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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 related to any such Hazardous Materials
(collectively "Remedial Action") or to take any other
action as may be needed or mandated to respond to a
Release or threatened Release of any Hazardous
Materials, which, in the aggregate, will have a material
adverse effect on the Company.
(B) The Company 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 or the Company may be required to
incur any out-of-pocket expenses or 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,
any Losses related to any Remedial Action, and any
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 of the
Company, or any real properties, assets, equipment
or facilities, owned or leased by the Company; (2)
the environmental conditions existing on the
Closing Date on, under or above the real
properties, assets, equipment or facilities
currently or previously owned, leased or operated
by the Company or any of the Company's predecessors
or Affiliates; and (3) expenditures necessary to
cause any real property or any aspect of the
Company 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 Losses arising
from the Release or threatened Release of a
Hazardous Material, which, in the aggregate, would
have a material adverse effect on the Company.
(C) To the knowledge of the Company and Sellers,
none of the currently or formerly owned or operated
real property used by the Company, including any
leased real property, is the
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subject of federal, state or local enforcement actions
or investigations or any Remedial Action under any
Environmental Laws. The Company has not transported
or arranged for the transportation (directly or
indirectly) of any Hazardous Materials relating to
the assets of the Company or such real property to
any location that is, listed or proposed for
listing on the National Properties List or the
CERCLA 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 planned or, to the best knowledge of the
Company and Sellers, is required in respect of the
assets of the Company pursuant to or to comply with any
Environmental Law, nor has the Company received any
notice of any such requirement, except for such work,
repair, construction or capital expenditure as is not
material to the Company and is in the ordinary course
of business.
(E) The Company has not caused or suffered to occur any
Release of Hazardous Materials at, under, above or
within any currently or formerly owned or operated real
property used by the Company, including, without
limitation, any leased real property.
(F) To the best knowledge of the Company and Sellers,
no Hazardous Materials exist upon or under any of the
real property (owned or leased by the Company) on the
date hereof.
(iv) Definitions.
(A) As used in this Agreement, the term
Environmental Law means:
(1) any federal statute, law, code, rule,
regulation, ordinance, order, standard,
permit, license or requirement (including
consent decrees, judicial decisions and
administrative orders) together with all
related amendments, implementing
preservation, conservation or regulation of
the environment, regulations and
reauthorizations, pertaining to safety or
the
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protection, preservation, conservation
or regulation of the environment including
but no limited to: the Comprehensive
Environmental Response, Compensation and
Liability Act, 42 U.S.C.ss.9601 et seq.
("CERCLA"); the Resource Conservation and
Recovery Act, 42 U.S.C.ss.6901 et seq.
("RCRA"); the Toxic Substances Control Act,
15 U.S.C.ss.2601 et seq.; the Clean Air Act,
42 U.S.C.ss.7401 et seq.; and the Clean
Water Act, 33 U.S.C.ss.1251 et seq.; and
(2) any state or local statue, law, code, rule,
regulation, ordinance, order, standard, permit,
license or requirement (including consent decrees,
judicial decisions and administrative orders)
together with all reauthorizations, pertaining to
safety or the protection, preservation,
conservation or regulation of the environment.
(B) As used in this Agreement, the term Hazardous
Materials means:
(1) "hazardous substances," as defined by CERCLA;
(2) "hazardous wastes," as defined by RCRA;
(3) any pollutant or contaminant, or hazardous,
dangerous or toxic chemical, material, waste or
substance ("pollutant") within the meaning of the
Environmental Laws, which Environmental Laws
prohibit, limit or otherwise regulate the use,
exposure, release, generation, manufacture, sale,
transport, handling, storage, treatment, reuse,
presence, disposal or recycling of such pollutant;
(4) petroleum, crude oil or any fraction of
petroleum or crude oil;
(5) any radioactive material, including any
source, special nuclear or by-product material, as
defined at 42 U.S.C.ss.2011 et seq., and amendments
thereto and reauthorizations thereof;
(6) asbestos-containing materials in any form or
condition ("ACM"); and
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<PAGE>
(7) polychlorinated biphenyls ("PCB").
(C) Release shall mean the releasing, disposing,
injecting, spilling, leaking, leaching, pumping,
dumping, emitting, escaping, employing, seeping,
disposal, migration, transporting, placing of the like,
including, without limitation, the moving of any
Hazardous Materials through, into or upon, any land,
soil, surface water, or air, or otherwise enter into
the environment.
(v) The term "the Company" when used in this Section 6(q) shall
mean, for all purposes, Bauer Audio Visual, Inc. and any Affiliate
thereof.
(r) No Guaranties. Except as set forth on Schedule 6(r), none of
the obligations or liabilities of the Company is guaranteed by any other
person, firm or corporation, nor has the Company guaranteed the obligations or
liabilities of any other person, firm or corporation.
(s) Receivables. Except as set forth on Schedule 6(s) annexed
hereto, all accounts and trade receivables of the Company (net of applicable
reserves on the Balance Sheet or thereafter established in accordance with the
Company's past practices and in conformity with GAAP) which are reflected on the
Balance Sheet and which have arisen since the date thereof through the date of
Closing, have arisen only from bona fide transactions in the ordinary course of
the Company's business and shall be (or have been) fully collected when due, or
in the case of each account receivable (net of applicable reserves on the
Balance Sheet or thereafter established in accordance with the Company's past
practices and in conformity with GAAP), within one hundred twenty (120) days
after it arose, without resort to litigation and without offset or counterclaim,
in the aggregate face amounts thereof; provided, however, that the Principal
Sellers shall not be deemed to be in breach of the foregoing representation and
warranty to the extent that four (4%) percent of such accounts receivable are
not collected within one hundred twenty (120) days after such accounts
receivable arose, provided that the same are collected within one hundred eighty
(180) days after they arose. Except as set forth on Schedule 6(s) annexed
hereto, none of the Company's accounts and trade receivables, or any rights with
respect thereto, have been pledged, factored or otherwise transferred to any
party or are otherwise encumbered in any way. Set forth on Schedule 6(s) annexed
hereto are the Company's accounts and trade receivables (as of March 31, 1997),
together with an aging report as to each such listed receivable which has been
outstanding for more than sixty (60) days.
(t) Absence of Certain Business Practices. Except as set forth on
Schedule 6(t) annexed hereto, neither the Company
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<PAGE>
nor, to the knowledge of Sellers, any officer, employee or agent of the Company,
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, supplier, governmental employee or other person who is or may be in a
position to help or hinder the business of the Company (or assist the Company in
connection with any actual or proposed transaction) which (i) might subject the
Company to any damage or penalty in any civil, criminal or governmental
litigation or proceeding, (ii) if not given in the past, might have had an
adverse effect on the assets, business or operations of the Company or (iii) if
not continued in the future, might adversely affect the assets, business,
operations or prospects or which might subject the Company to suit or penalty in
any private or governmental litigation or proceeding.
(u) Disclosure. No representation or warranty by the Company or the
Principal Sellers contained in this Agreement or in any other document furnished
or to be furnished by the Company or Sellers 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 or necessary in order to provide a
prospective purchaser of the Stock with adequate information as to the Company
and its condition (financial or otherwise), properties, assets, liabilities,
business and prospects and the Company and Sellers have disclosed to Purchaser
in writing all material adverse facts known to them related to the financial
condition, assets, liabilities and business of the Company. 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.
(v) Labor Disputes. Except as set forth on Schedule 6(v), the
Company 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, to the best knowledge of Sellers, attempting to represent any
employees employed by the Company. The Company has complied with all collective
bargaining agreements ("Collective Bargaining Agreements") to which it is a
party and otherwise complied with all related requirements (as well as any
requirement under applicable trust agreement) to fund or otherwise make
contributions in respect of all benefit funds to which it is required to fund or
make contributions, including, without limitation, all pension, welfare and
benefit funds ("Related Funds"). Except as set forth on Schedule 6(v) annexed
hereto, with respect to the business of the Company (i) no work stoppage by
employees of the Company has occurred and is continuing or, to
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<PAGE>
the best knowledge of the Company or Sellers, is threatened, (ii) neither
Sellers nor the Company has any actual knowledge of any pending or threatened
charges against the Company of unfair labor practices or discrimination based on
age, race or sex, (iii) there are no pending labor negotiations with or, to the
best knowledge of the Company or Sellers, union organizing efforts by any
employees of the Company or with any union representing or attempting to
represent any employees of the Company and there have been no such negotiations
or organization efforts in the past three (3) years and (iv) neither Sellers nor
the Company has any knowledge of employee grievances which in the aggregate
would be material and adverse to the business of the Company that have not been
settled or otherwise resolved to the satisfaction of the Company and the
employees.
(w) Customers and Accounts. Except as set forth on Schedule 6(w)
annexed hereto, neither Sellers nor the Company have any knowledge or
information that any person or entity whose payments to the Company, whether
alone or together with any party actually known by Sellers to be such person's
Affiliate, accounted for 2% or more of the Company's gross revenues in its
fiscal year ending in 1996 or in the three (3) month period ending March 31,
1997 (a "2% Customer") will cease or has ceased doing business with the Company
or Purchaser as its successor, for any reason, or a 2% Customer will or has
reduced its revenues to the Company by more than twenty (20%) percent for any
reason. As of the date hereof, Schedule 6(w) annexed hereto correctly lists the
ten (10) largest clients of the Company during the fiscal year ended in 1996 and
the three (3) month period ending March 31, 1997, together with the amount of
billings and estimated gross profits with respect thereto (calculated on a basis
consistent with the Financial Statements) made by the Company to each such
account during each such year or period. Notwithstanding anything to the
contrary contained in this Agreement, Sellers shall not be liable for any
customer of the Company which ceases doing business with the Company following
the date hereof except that the foregoing shall not alleviate Sellers of the
responsibility to notify Purchaser prior to the Closing of any notice, written
or oral, the Company or any such Sellers receive from any 2% Customer that it
intends to cease doing business with the Company or limit by more than twenty
(20%) percent such 2% Customer's revenues to the Company.
(x) Suppliers; Raw Materials. Schedule 6(x) annexed hereto sets
forth (i) the names and addresses of all suppliers from which the Company
ordered raw materials, supplies, equipment, merchandise and other goods and
services with an aggregate purchase price for each supplier of $50,000 or more
during the twelve (12) month period ended December 31, 1996 and (ii) the amount
for which each supplier invoiced the Company during such period. Neither the
Company nor Sellers have received any notice or have any reason to believe that
there has
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<PAGE>
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 or services to Purchaser at
any time after the Closing on terms and conditions similar to those used in its
current sales, subject to general and customary price increases. To the best
knowledge of the Company and Sellers, no supplier of the Company described in
clause (i) of the first sentence of this Section 6(x) 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. Schedule 6(x)
annexed hereto also lists the twenty (20) largest vendors to the Company in
terms of cash payments made during the 1996 fiscal year and the three (3) month
period ending March 31, 1997.
(y) 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, net of applicable reserves, reflected on the Company's
books of account as of March 31, 1997 (a true and correct schedule of which is
listed on Schedule 6(y) annexed hereto) are realizable in the ordinary course of
business and were calculated in accordance with generally accepted accounting
principles and the completed contract method of accounting, applied on a basis
consistent with the principles used in preparing the Financial Statements.
(z) Contracts and Proposals.
(i) Schedule 6(z) annexed hereto contains (A) a complete and correct
list of all agreements, contracts, licenses, commitments and other
instruments and arrangements (whether written or oral) by which the
Company is bound other than those which (1) are terminable by the
Company on thirty (30) days' notice without penalty and do not
relate to the Company's business (as opposed to services provided to
the Company), or (2) require annual payments of less than $10,000
singly or $100,000 in the aggregate ("Contracts"), (B) the written
anticipated revenues and costs for each written or oral Contract and
scheduled completion dates with respect to each job that is yet to
be completed and the Company and Sellers have no reason to believe
that any of such jobs will not be completed or that the anticipated
profitability with respect thereto will not be realized and (C) as
of April 30, 1997, a list of all outstanding proposals, or other
writings prepared in an effort to obtain business, prepared by the
Company, or on the Company's behalf, and forwarded to prospective
clients or customers (the "Proposals"). Notwithstanding anything to
the contrary contained in this Section 6(z),
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<PAGE>
Principal Sellers make no representation or warranty that any such
Proposals or the anticipated revenues will materialize or that the
costs will be as set forth on such schedule.
(ii) The Company 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(z) 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 the Company or any other party
thereto except as set forth in Schedule 6(z) 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 Sellers' Related
Agreements. None of the Company's existing or completed Contracts is
subject to mandatory renegotiation with any governmental body.
Except as set forth in Schedule 6(z), 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 Sellers' Related Agreements or the consummation of the
transactions contemplated thereby.
(iv) None of the Sellers has an outstanding power of attorney in
favor of any party relating to the Company.
(aa) Investment Intent. In order to induce Purchaser to issue the
Shares to the Principal Sellers, and upon reliance thereof, each Principal
Seller hereby represents and warrants to Purchaser that:
(i) he has such knowledge and experience in financial and business
matters such that he is capable of evaluating the merits and risks
of the acquisition of the Shares;
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<PAGE>
(ii) the Shares are being acquired solely for his own account, for
investment purposes only and not with a view towards the
distribution or resale to others and he has no present commitment or
arrangement providing for the distribution thereof;
(iii) he is an "accredited investor" as such term is defined in Rule
501 of Regulation D promulgated under the Act;
(iv) his decision to receive the Shares as partial consideration
hereunder is not based on any promotional, marketing or sales
materials, and he and his representatives have been afforded, prior
to the entering into of this Agreement and the receipt of the
Shares, the opportunity to ask questions of, and to receive answers
from, Purchaser and its management, and has had access to all
documents and information which he deems material to a decision to
receive the Shares hereunder. Each of the Principal Sellers
acknowledges and understands that Purchaser is a public reporting
company, that annual, quarterly and other reports are, from time to
time, filed by Purchaser with the SEC under the Securities Exchange
Act of 1934, as amended, and that he can obtain a copy of any such
report from the SEC, without charge, either electronically or from
certain public information offices maintained by the SEC or from
Purchaser;
(v) he will not transfer any Shares unless such Shares are
registered under the Securities Act, and under any applicable state
securities or "blue sky" laws (collectively, the "Securities Laws"),
or unless an exemption is available under such Securities Laws, and
that Purchaser may, if it chooses, where an exemption from
registration is claimed by a Principal Seller, condition any
transfer of Shares out of such Principal Seller's name on an opinion
of Purchaser's counsel to the effect that the proposed transfer is
being effected in accordance with, and does not violate, an
applicable exemption from registration under the Securities Laws;
(vi) he acknowledges, understands and appreciates that the Shares
have not been registered under Section 5 of the Securities Act, by
reason of a claimed exemption under the provisions of such Act and a
similar exemption to the registration provisions of applicable state
securities laws, all of which depends, in large part, upon the
representations as to each of the Principal Sellers' intent relative
to the
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<PAGE>
acquisition of the Shares and other related matters set forth
herein;
(vii) he understands it is the view of the SEC that, among other
things, an acquisition with a present intent to distribute or resell
would represent an acquisition with an intent inconsistent with the
representations herein made by Principal Sellers, and consequently,
the SEC might regard such a transfer as a deferred sale for which
the exemption from registration is not available;
(viii) he understands, acknowledges, and appreciates that Purchaser
is relying upon, and it is entitled to rely upon, all of the
representations and warranties contained in this Section 6(aa);
(ix) he agrees and consents to the placement of a legend on the
certificate(s) representing the Shares substantially in the form set
forth in Section 17(o) hereof which shall state that the Shares have
not been registered under the Act or applicable state Securities
Laws; and
(x) he understands, acknowledges, and agrees that no return on
investment, whether through distributions, appreciation,
transferability or otherwise, and no performance by, through or of
Purchaser, has been promised, assured, represented or warranted by
Purchaser with respect to the Shares, or by any director, officer,
employee, agent or representative thereof and while the common stock
of Purchaser is presently listed and traded on the New York Stock
Exchange, the Shares to be received under this Agreement are not
registered under applicable federal or state securities laws, and
thus may not be sold, conveyed, assigned or transferred unless
registered under such laws or unless an exemption from registration
is available under such laws, and therefore, there is no present
public or other market for such Shares, nor can there be any
assurance that the common stock of Purchaser will continue to be
listed and traded on the New York Stock Exchange or on any other
organized market or quotation system, and Principal Sellers may not
be able to liquidate their investment in the event of an emergency
or otherwise, the transferability of the Shares is severely limited,
and, as such, each of the Principal Sellers could sustain a complete
loss with respect to their Shares.
(bb) Minute Books; Bank Accounts. Since January 1, 1992, the minute
books and other statutory books of the Company
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have been properly kept and maintained in good order, have been updated on a
periodic, regular basis. True and correct copies of the minute books and other
statutory books of the Company have been previously provided to Purchaser.
Schedule 6(bb) annexed hereto contains a complete and accurate list of the names
of all of the Company's directors and officers, the name of each bank in which
the Company has an account or safe deposit box and the names of all persons
authorized to draw thereon or have access thereto.
(cc) Inventories. All inventory of equipment held for sale or rent,
spare parts, replacement and component parts, and office and other supplies
(collectively, "Inventories") are of good and usable quality in all material
respects and except as set forth on Schedule 6(cc) annexed hereto, do not
include obsolete or discontinued items other than encountered in the ordinary
course of the business of the Company. Except as set forth on Schedule 6(cc)
annexed 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
Company at the lower of cost or market value determined in accordance with
generally accepted accounting principles consistently applied and (iii) no
write-down in inventory has been made or should have been made pursuant to
generally accepted accounting principles consistently applied during the past
two (2) years. Schedule 6(cc) annexed hereto lists the locations of all
Inventories.
(dd) Real Property.
(i) Leases. Schedule 6(dd) annexed hereto contains a complete and
correct list of all real estate leases (the "Leases") pursuant to
which the Company occupies or uses real property in connection with
its business, setting forth the address, landlord and tenant for
each Lease. The Company 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. Neither the Company nor the landlord under any
of the Leases is (or upon the consummation of the transactions
contemplated hereby, will be) 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. None of the Leases have been pledged, mortgaged,
assigned, modified or amended by the Company. Each
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Lease grants the tenant under the Lease the exclusive right to use
and occupy the demised premises thereunder. The Company has good and
valid title to the leasehold estate under each Lease free and clear
of all liens. The Company enjoys peaceful and undisturbed possession
under its respective Leases for the leased real property. Except as
set forth on Schedule 6(dd) annexed hereto, no consent is required
by any landlord, lessor, ground lessor, mortgagee, or other party
holding any interest in connection with or in respect of any of the
Leases, by virtue of the transactions contemplated hereby.
(ii) No Proceedings. To the best knowledge of Sellers and the
Company, 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.
To the best knowledge of Sellers and the Company, there is no writ,
injunction, decree, order of judgment outstanding, nor any action,
claim, suit or proceeding relating to the ownership, lease, use,
occupancy 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 Company's 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.
(ee) Warranties. Set forth on Schedule 6(ee) annexed hereto is an
accurate and complete list of all warranties issued by the Company in respect of
its products or services which are outstanding or unexpired on the date hereof,
the product, services or project with respect to which such warranty is
applicable, the consideration paid for such product, services or project and the
remaining time period until expiration of such warranty.
(ff) Exclusive Dealer Arrangements. Set forth on Schedule 6(ff)
annexed hereto is an accurate and complete list by manufacturer, product,
service and territory of all products and/or services in respect of which the
Company is an authorized and/or exclusive dealer in respect of the sale or
providing of
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services in respect of any product. Set forth in Schedule 6(ff) annexed hereto
are accurate and complete copies of several exclusive dealer arrangements to
which the Company is currently a party, the terms and conditions of which are
substantially similar to those exclusive dealer arrangements to which the
Company is a party and for which copies have not been set forth on Schedule
6(ff) annexed hereto. All exclusive dealer arrangements to which the Company is
a party (the "Arrangements") are in full force and effect and enforceable
against each party thereto. There does not exist under any Arrangement 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 the Company or any other party thereto except as set forth on Schedule 6(ff)
annexed hereto and except for such events or conditions that, individually and
in the aggregate, (i) have not had or resulted in, and will not have or result
in a Material Adverse Effect and (ii) has not and will not materially impair the
ability of Sellers to perform their obligations under this Agreement and under
the Sellers' Related Agreements. None of the Company's existing or completed
Arrangements is subject to mandatory renegotiation with any governmental body.
Except as set forth on Schedule 6(ff) annexed hereto, no consent of any third
party is required under any Arrangement as a result of or in connection with,
and the enforceability of any Arrangement will not be affected in any manner by,
the execution, delivery and performance of this Agreement or any of the Sellers'
Related Agreements or the consummation of the transactions contemplated thereby.
Except as set forth on Schedule 6(ff) hereto, neither the Company nor the
Sellers has been notified that any of the Arrangements are due to expire or be
terminated for any reason.
7. Representations and Warranties by Purchaser. Purchaser represents
and warrants to Sellers 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
Sellers 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
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and Purchaser's 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, 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 Purchaser to authorize the execution, delivery and
performance of this Agreement and Purchaser's Related Agreements have been
properly taken, and this Agreement and Purchaser's Related Agreements constitute
the valid and binding obligations of Purchaser, enforceable in accordance with
their respective 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. The Shares, when issued, will
be validly issued and non-assessable.
(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 and Purchaser does not know or have any
reason to be aware of any basis for the same.
(d) Financing. Purchaser has sufficient funds, or has obtained
binding written commitments from responsible banks or financial institutions to
provide any required financing in an aggregate amount not less than the Purchase
Price, which funds will be available on the Closing Date.
(e) Financial Condition. Since the filing of Purchaser's quarterly
report on Form 10-Q for the three (3) month period ending March 31, 1997, there
is no circumstance or event involving Purchaser which would have a material
adverse effect on Purchaser's financial condition or results of operations;
provided, however, that the representation and warranty contained in this
Section 7(e) shall not survive the Closing for any purpose whatsoever and is set
forth herein solely for purposes of determining the satisfaction of the
condition set forth in Section 15(b)(i) hereof and not for the purposes of
imposing damages on Purchaser.
8. Employment Matters; Employment Contracts. Principal Sellers and
the Company, jointly and severally, represent and
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warrant to Purchaser as follows: (a) Schedule 8(a) annexed hereto contains:
(i) an accurate and complete list and description of all collective
bargaining agreements, employment and consulting agreements,
executive compensation plans, bonus plans, deferred compensation
agreements, employee stock options or stock purchase plans and 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 the Company is a party
or is bound;
(ii) the names and current annual salary rates of all persons who
are currently employed by the Company 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, 1996 as
well as each of such person's current compensation;
(iii) a form of written agreement, which is substantially similar to
most executed independent contractor agreements of the Company,
providing for the services of an independent contractor to which the
Company is a party or by which it is bound; and
(iv) true and correct copies of all employee retirement plans,
pension plans, welfare plans and all employee benefits covering the
Company's employees (and any summary plan descriptions in effect for
such plans and benefits). Except as set forth on Schedule 8(a)
annexed 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 in all material respects with regard to said plans and the
administration thereof and will be fulfilled with regard to the
termination of any of said plans.
(b) The execution and performance of this Agreement will not
constitute a stated triggering event under any plan or arrangement which will
result in a parachute or other payment (whether of deferred compensation, or
otherwise) becoming due to any employee or former employee of the Company.
(c) 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
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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 an injury, the diagnosis of an illness, or any other event
giving rise to such claim or series of related claims. Except as set forth on
Schedule 8(c) annexed hereto, no plan provides health, medical, death or
survivor benefits to any former employee of the Company 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 the Company nor has the Company ever maintained a multi-employer
plan. With respect to any plan or trust created thereunder, no event has
occurred which would subject the Company, directly or indirectly, by reason of
an indemnity obligation or otherwise, to any tax imposed under Section 4975 of
the Code or any civil penalty imposed under Section 502 of ERISA. There have not
been any "reportable events" as such term is defined Section 4043(b) of ERISA
with respect to any plan. Each plan of the Company has received a valid
qualification letter from the IRS that each such plan is "qualified" within the
meaning of Section 401(a) of the Code and that its trust is tax exempt under
Section 501(a) of the Code. Each such plan has been maintained and administered
in all material respects as such and the Company knows of no fact which would
adversely affect the qualified status of any such plan.
(d) There has not been any (i) termination of any "defined benefit
plan" within the meaning of ERISA maintained by the Company or any person, firm,
or corporation (each being referred to herein as an "ERISA Affiliate") which is
under "common control" (within the meaning of Paragraph 4001(b) of ERISA) with
the Company, 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 the
Company or any ERISA Affiliate of the intention to commence or seek the
commencement of any such proceeding.
(e) Except for Cunningham, Sweeney, Rissi and Williams who shall be
subject to the Cunningham Employment Agreement, the Sweeney Employment
Agreement, the Rissi Employment Agreement and the Williams Employment Agreement,
respectively, Purchaser shall have the right, but not the obligation, from and
after the Closing Date, to continue to offer "at will" employment to personnel
employed by the Company on the Closing Date, on terms and conditions acceptable
to Purchaser.
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(f) 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.
(g) No person or entity that was engaged by the Company as an
independent contractor can or will be characterized or deemed to be an employee
of the Company under applicable laws, statutes, rules, regulations and
administrative proceedings for any purpose whatsoever, including, without
limitation, for purposes of federal, state and local income taxation, workers'
compensation and unemployment insurance and retirement plan eligibility.
(h) Subject to Section 8(e) above, Purchaser shall cause the
Company to recognize and credit all service by the Company's employees with the
Company prior to the Closing for purposes of eligibility and vesting under any
employee benefit plan, program or policy established or maintained by the
Company subsequent to the Closing, and for purposes of benefit accrual under any
such employee benefit plan, program or policy other than a defined benefit
pension plan as defined in Section 414(j) of the Code.
(i) Subject to Section 8(e) above, Purchaser shall cause the Company
to provide immediate eligibility for and continue coverage on and after the
Closing Date, for all employees of the Company and other persons who are
entitled to group health coverage under the Company's health program immediately
prior to the Closing Date, under a group health plan (as defined in Section
5000(b)(1) of the Code) sponsored by the Company and/or Purchaser on and after
that date on substantially the same basis and terms as such plans made available
to Purchaser's other employees (provided that any increase in benefits available
to the employees of the Company shall be made as soon as practicable after the
Closing Date), except that such plan or plans shall not preclude coverage by
reason of any conditions pre-existing at the time of Closing, and Purchaser
shall cause the Company to fulfill its obligation to provide continuation of
health coverage under Section 4980B of the Code and under applicable state law
(i) to all former employees of the Company, their spouses and their dependents
and (ii) all other persons, who as of or after the Closing Date, are entitled
under the applicable law to such coverage.
(j) 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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(k) The Company has not closed any plant or facility, effectuated
any layoffs of employees or implemented any early retirement, separation or
window program within the past five (5) years, nor has the Company planned or
announced any such action or program effective prior to the Closing Date. The
Company is in compliance with its obligations pursuant to the Worker Adjustment
and Retraining Notification Act of 1988, and all other notification and
bargaining obligations arising under any collective bargaining agreement,
statute or otherwise. The Company is in compliance with its obligations pursuant
to the Immigration Reform and Control Act of 1986.
(l) At the Closing, Caribiner and Cunningham shall execute and
deliver the Cunningham Employment Agreement, Caribiner and Sweeney shall execute
and deliver the Sweeney Employment Agreement, Caribiner and Rissi shall execute
and deliver the Rissi Employment Agreement and Williams and Caribiner will
execute and deliver the Williams Employment Agreement.
9. Tax Information; Tax Returns; Disputes; Tax Indemnity. (a) After the
Closing Date, (i) Sellers shall provide such assistance as may reasonably be
requested by Purchaser in connection with the preparation of any tax return, the
conduct of any audit or the defense of any litigation or other proceeding with
respect to any Tax liability of the Company for any period prior to or including
the Closing Date or for any Straddle Period (as defined below) and (ii)
Purchaser shall retain, or shall cause to be retained, for the appropriate
period any records or information that may be relevant to any such return or
audit. The assistance provided for in this Section shall include providing such
information as might reasonably be expected to be of use in connection with any
such return, audit, litigation or proceeding. All such materials and information
shall be held in confidence by the recipient thereof and shall not be disclosed
by the recipient in any manner whatsoever and shall not be used by the recipient
other than in connection with such return, audit or litigation without the
written consent of the supplier of the information, except as required by law.
The term "audit" as used in this Section 9 shall include any inquiry,
examination or other conduct of any taxing authority or any judicial or
administrative proceedings.
(b) The Company shall prepare and timely file (or cause to be
prepared and timely filed) for all taxable periods ending on or before the
Closing Date, all tax returns required to be filed after the Closing Date with
respect to which the Company or the assets of the Company are liable or
otherwise in any way subject; and Sellers shall be responsible for and shall pay
all such Taxes, to the extent such Taxes exceed Taxes accrued on the Balance
Sheet or Taxes that would have otherwise been properly accrued in accordance
with the Company's past practices and in conformity with GAAP for the period
beginning April 1, 1997 and
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<PAGE>
ending on the Closing Date as evidenced by a tax certificate delivered by the
Company to Purchaser on the Closing Date certified as true, correct and complete
by the Chief Financial Officer of the Company (the "Tax Certificate").
(c) Purchaser and the Company shall prepare and the Company shall
file on a timely basis all tax returns of the Company for any taxable period
beginning before and ending after the Closing Date (a "Straddle Period"); and
Sellers shall, to the extent Sellers' share of such Taxes exceed Taxes accrued
on the Balance Sheet or on the Tax Certificate, be responsible for (and shall
pay) the Taxes shown to be due thereon to the extent attributable to the portion
of such taxable period ending on and including the Closing Date and Purchaser
shall be responsible for the balance of such Taxes due thereon. Any Taxes for a
Straddle Period with respect to the Company shall be apportioned between Sellers
and Purchaser based on the actual operations of the Company during the portion
of such period ending on the Closing Date (the "Pre-Closing Straddle Period")
and the portion of such period beginning on the date following the Closing Date
and for purposes of this Section 9, each portion of such period shall be deemed
to be a taxable period. With respect to any Taxes for any period ending on or
before the Closing Date which are the subject of Section 9(b) hereof
("Pre-Closing Tax") or for the Straddle Period, Purchaser shall deliver to
Sellers copies of any such tax returns that are required to be filed after the
Closing Date prior to the filing thereof (but Purchaser's failure to do so shall
not affect Sellers' obligations hereunder or impose any liability on Purchaser)
in the event that Sellers are responsible for the payment of any Taxes shown to
be due thereon. Purchaser shall present Sellers with a schedule detailing the
computation of the portion, if any, of the Pre-Closing Tax or the Pre-Closing
Straddle Period Tax for which Sellers are responsible (the "Tax Schedule"); and
within ten (10) business days after Purchaser presents Sellers with the Tax
Schedule, Sellers shall pay the Company the amount of such tax. In the event
Purchaser fails to deliver copies of such tax returns to Sellers prior
to the filing thereof, Purchaser shall, nevertheless, deliver such tax returns
to Sellers on or prior to the date upon which it delivers the Tax Schedule to
Sellers. In the event Sellers dispute Purchaser's computation of the Pre-Closing
Tax or the Pre-Closing Straddle Period Tax, Sellers shall not be relieved of
their obligation to pay, in the first instance, any such disputed amount. If
upon such resolution it is determined that any of such disputed amount was not
payable by Sellers to Purchaser and such amount has been paid by Sellers to
Purchaser, then Purchaser shall promptly refund to Sellers such amount.
(d) Sellers will pay all sales, transfer and documentary taxes, if
any, payable in connection with the sale of Stock to Purchaser hereunder.
Sellers shall prepare and file and
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the Purchaser shall cooperate in the filing of all returns relating to any tax
described in this Section 9(d).
(e) Sellers shall not be entitled to any refunds or credits of
Taxes, or interest and penalties received by the Company attributable to Taxable
Periods (or portions thereof) ending on or prior to the Closing Date or for any
Straddle Period.
10. Indemnification. (a) Principal Sellers (and all Sellers in the
case of a breach of a representation or warranty in Section 6(f) hereof
attributable solely to such Seller) and the Company hereby, jointly and
severally (in the case of Principal Sellers, and severally, but not jointly in
the case of all other Sellers), indemnify and agree to defend and hold 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 loss, liability or damage suffered or incurred by
the Company or Purchaser by reason of any untrue representation,
breach of warranty or nonfulfillment of any covenant by Sellers or,
prior to the Closing Date, by the Company contained herein or in any
certificate, document or instrument delivered by Sellers or the
Company to Purchaser hereunder (except the Employment Agreements and
the Non-Competition Undertakings, which shall be governed solely by
the terms thereof);
(ii) the amount of any and all receivables of the Company which are
not collected in accordance with the provisions contained in Section
6(s) hereof;
(iii) any and all loss, liability or damage suffered or incurred by
the Company or Purchaser in respect of or in connection with any
liabilities of the Company or Sellers not set forth on the Balance
Sheet or otherwise permitted hereunder;
(iv) any and all debts, liabilities or obligations of the Company or
Sellers, direct or indirect, fixed, contingent or otherwise, arising
out of any act, transaction, circumstance or state of facts which
occurred or existed on or before the Closing Date, whether or not
then known, due or payable;
(v) any and all loss, liability or damage suffered or incurred by
the Company by reason of any claim or portion thereof not covered by
insurance in connection with that certain action pending in Federal
District Court for the Southern District of New York entitled
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Jeannette Aponte v. Bauer Audio Visual Services, Inc., or any
successor or related action (the "Aponte Action");
(vi) any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including, without
limitation, reasonable legal fees and expenses, incident to (i) -
(v) above or (vii) below or incurred in investigating or attempting
to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity; and
(vii) 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
Sellers or the Company with respect to this Agreement or any of the
transactions contemplated hereby.
(b) In the event that the Closing occurs, Sellers shall not be
entitled to contribution or any other payments from the Company for any amounts
that Sellers are obligated to pay pursuant to this Agreement or under applicable
law.
(c) Purchaser shall indemnify, defend and hold Sellers harmless
from, against and in respect of (and shall, subject to the other provisions of
this Agreement, on demand reimburse them for):
(i) any and all loss, liability or damage suffered or incurred by
Sellers 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 Sellers hereunder (except under the
Cunningham Employment Agreement);
(ii) any and all liabilities or obligations of Sellers assumed by
Purchaser hereunder;
(iii) any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including, without
limitation, reasonable legal fees 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 Sellers by reason of or in connection with any claim for
finder's fee or brokerage
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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.
(d) Sellers, on the one hand, and Purchaser, on the other hand,
shall not be required to indemnify the other under this Section 10 or be liable
under Section 11 hereof unless the aggregate amounts for which indemnity would
otherwise be due thereunder exceeds $100,000 (the "Indemnification Basket"), in
which case Sellers, on the one hand, or 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 10. Notwithstanding the
foregoing to the contrary, the Indemnification Basket shall not apply to a
breach of a representation, warranty or covenant contained in (i) Section 6(i)
(taxes) hereof and (ii) Section 9 (tax matters) and, in such event, Sellers
obligation thereunder shall indemnify Purchaser therefor from the first dollar.
Purchaser shall assign to Sellers any receivables that Sellers actually
reimburse Purchaser for on account of a breach of the representation or warranty
set forth in Section 6(s) hereof or pursuant to Section 10(a)(ii).
(e) Any indemnifiable liability or reimbursement under this
Section 10 shall be limited to the amount of actual 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.
(f) 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 10, the Indemnified Party shall promptly
notify the party required to indemnify the Indemnified Party pursuant to this
Section 10 (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, but reasonably acceptable to the Indemnified Party, the settlement or
defense thereof, and the Indemnified Party shall cooperate with it in connection
therewith including execution of all lawful, true and correct powers of attorney
as reasonably required by the Indemnifying Party; provided, however, that with
respect to settlements entered into by the Indemnifying Party, the Indemnifying
Party shall obtain the release of the claiming
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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.
(g) Notwithstanding anything to the contrary contained in this
Agreement or any agreement executed in connection with this Agreement (except
the Cunningham Employment Agreement and the Non-Competition Undertakings, which
shall be governed solely by the terms thereof), the maximum aggregate liability
of the Sellers pursuant to the indemnification provisions contained in this
Agreement shall be limited to the Purchase Price, as adjusted pursuant to
Section 2(b) hereof.
(h) Subject to the limitations set forth in Sections 10(d)-(g), 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 10.
11. 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 to this Agreement (and in any schedule or exhibit
annexed 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 as provided in
Section 11(b) hereof and shall be subject to Section 10 hereof.
(b) No claim shall be made or enforced against an Indemnifying
Party, whether pursuant to Section 10 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 Indemnifying Party
not later than eighteen
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(18) months after the Closing Date or, (i) with respect to any claim arising
under any Collective Bargaining Agreements (as defined in Section 6(v)) and
Related Funds (as defined in Section 6(v)), the date upon which the applicable
statute of limitations has expired, or, (ii) in the case of Taxes, the date upon
which the applicable period of limitation on assessment or refund of any
relevant tax has expired or (iii) in the case of the Aponte Action upon final
disposition of such action and the expiration of any applicable appeal period;
provided that claims asserted pursuant to an Indemnity Notice 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.
12. Conduct of Business Prior to Closing. (a) Prior to the Closing, the
Company shall conduct its business and affairs only in the ordinary course and
consistent with its prior practice and shall maintain, keep and preserve its
business and properties in good condition and repair and maintain insurance
thereon in accordance with present practices, and Sellers and the Company will
use their best efforts to preserve the business of the Company, to keep
available to Purchaser the services of the Company's present officers and
employees, to preserve for the benefit of Purchaser the goodwill of the
Company's suppliers and customers and others having business relations with it,
including, without limitation, the following:
(i) Liabilities. Consistent with past practice, the Company shall
pay or discharge its current liabilities when the same become due
and payable, except for such liabilities as may be subject to a good
faith dispute or counterclaim.
(ii) Litigation. Sellers and the Company shall promptly notify
Purchaser of any lawsuits, claims, proceedings or investigations
which after the date hereof are commenced or, to the knowledge of
Sellers or the Company, threatened against the Company or against
any shareholder, officer, employee, consultant or agent with respect
to the Company or the transactions contemplated by this Agreement.
(iii) Compliance with Laws. Sellers and the Company will take such
action as may be necessary to materially comply with all laws,
statutes, rules and regulations applicable to it as they relate to
the conduct of the Company's business.
(iv) Continued Effectiveness of Representations and Warranties.
Principal Sellers and the Company shall use his or its best efforts
to conduct the business of the Company in such a manner so that the
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representations and warranties contained in Section 6 hereof shall
continue to be true and correct on and as of the Closing Date as if
made on and as of the Closing Date. Principal Sellers and the
Company 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 of their
representations, warranties, covenants or agreements contained in
this Agreement.
(b) Without limiting the generality of Section 12(a) hereof, prior
to the Closing, Sellers or the Company will not without Purchaser's prior
written approval:
(i) change the Company's certificate of incorporation or by-laws or
merge or consolidate or obligate the Company to do so with or into
any other entity;
(ii) enter into any contract, agreement, commitment or other
understanding or arrangement which is not in the ordinary course of
the business of the Company; 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), (v), (viii), (ix), (x),
(xi), (xii), (xiv), (xv) and (xvi) of Section 6(j) 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.
(c) Principal Sellers and the Company 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.
13. Access to Information and Documents. So long as this Agreement is
in effect, Sellers and the Company will give Purchaser and Purchaser's
attorneys, accountants, consultants, employees, agents and other representatives
full access to the Company's personnel and all properties, documents, contracts,
information, books, work papers and records of the Company and will furnish
Purchaser with copies of such documents (certified by the Company's officers if
so requested) and with such information with respect to all properties, assets,
books, contracts, commitments, reports and records 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 Company's business, and
Purchaser will not
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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, Sellers and the Company will permit Purchaser and its attorneys,
accountants, consultants, employees, agents and other representatives reasonable
access to such personnel of the Company 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 Company and the above-mentioned documents, records, and
information any owned or leased real property for purposes of performing
environmental assessments.
14. Hart-Scott-Rodino. As soon as practicable after the execution of
this Agreement, the Company 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, on the one hand, and the Company and Sellers, on the
other hand, 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, on the one hand, and the Company and Sellers, on the other hand, 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, on the one hand, and the Company and Sellers on the other hand, agree
not to take any action which might materially and adversely affect the obtaining
of such consents, permits, authorizations, approvals and waivers.
15. 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 and Sellers) 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 by the Agreement, Purchaser's Related Agreements or
Sellers' Related Agreements; and no proceeding with respect to the application
of any such Applicable Law to such effect shall be pending.
-48-
<PAGE>
(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
Sellers and the Company shall exert their best efforts to cause such conditions
to be fulfilled:
(i) Unless otherwise provided herein, all representations and
warranties of Sellers and the Company contained herein or in any
document delivered pursuant hereto shall be true and correct in all
material respects when made and, unless otherwise provided herein,
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 Sellers or by the Company 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 the
Company.
(iv) There shall be delivered to Purchaser a certificate executed by
the President and Secretary of the Company and by each of the
Sellers, dated the date of the Closing, certifying the conditions
set forth in paragraphs (i), (ii) and (iii) of this Section 15(b)
have been fulfilled.
(v) All documents required to be delivered to Purchaser pursuant to
Section 4 of this Agreement or otherwise in connection with this
Agreement at or prior to the Closing shall have been so delivered.
(vi) Purchaser shall have received an opinion of Sellers' counsel,
dated the date of the Closing, substantially in accordance with
Schedule 4(a)(v) annexed hereto.
(vii) Purchaser and the Company shall have obtained the necessary
approvals under the HSR Act and any other necessary Governmental
Approvals.
(viii) Purchaser shall have received all Consents; and
-49-
<PAGE>
(ix) All filings required pursuant to the HSR Act prior to the
expiration or earlier termination of the waiting period under the
HSR Act shall have occurred.
(c) Conditions to Obligations of Sellers and the Company. All
obligations of Sellers and the Company at the Closing are subject, at the option
of Sellers and the Company, 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 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 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 the Company a certificate executed
by the President and Secretary of Purchaser, dated the date of the
Closing, certifying the conditions set forth in paragraphs (i) and
(ii) of this Section 15(c) have been fulfilled.
(iv) Sellers 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.
(v) All documents required to be delivered to the Company at or
prior to the Closing shall have been so delivered.
(vi) Purchaser and the Company shall have obtained the necessary
Governmental Approvals.
(vii) The Company, or Purchaser on its behalf, shall have paid or
otherwise satisfied all obligations under that certain Second
Amended and Restated Credit Agreement (the "Credit Agreement"),
dated November 9, 1995, as amended, between the Company and NBD Bank
and obtained the release of the Principal Sellers from any guarantee
pursuant to the Credit Agreement.
16. (a) Termination. This Agreement may be terminated at any time
prior to the Closing Date:
-50-
<PAGE>
(i) by the written agreement of Purchaser and the Company;
(ii) by either the Company 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 June 23, 1997,
unless such date shall be extended by the mutual written consent of
the Company and Purchaser.
(iii) by the Purchaser by written notice to the Company if (A) the
representations and warranties of the Company or the Principal
Sellers 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 July 10, 1997, 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 the Sellers or the Company 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 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 July
10, 1997, unless such failure shall be due to the failure of the
Company or Sellers 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 Section 16(a) hereof, this Agreement
shall become null and void and have no further force and 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 for any liability resulting from such party's breach of this
Agreement.
17. 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,
-51-
<PAGE>
return receipt requested, by hand, or by overnight courier, addressed to the
parties hereto at their addresses set forth above (or on Schedule A annexed
hereto) 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 Sellers or the Company, with a copy to:
Gardere & Wynne, L.L.P.
3000 Thanksgiving Tower
1601 Elm Street, Suite 3000
Dallas, Texas 75201-4761
Facsimile no.: (214) 999-4667
Attention: Julian D. Nihill, Esq.
(In addition, without constituting notice hereunder, the parties shall use
reasonable efforts to send by facsimile to counsel for the party to whom notice
is to be sent copies of all notices sent by such party). 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.
18. Miscellaneous. (a) This Agreement, including, without limitation,
the schedules and other documents referred to herein, together with that certain
confidentiality agreement dated January 22, 1997 between the Company and
Purchaser hereto, 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, and may not be modified or
amended except by a written agreement (the "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
-52-
<PAGE>
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.
(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) Except as otherwise provided herein or in agreements delivered
in connection with this Agreement, all legal, accounting and other costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party or parties incurring the same.
(g) 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.
(h) 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.
(i) 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.
(j) All schedules attached hereto shall be incorporated by
reference herein as if set forth herein in full.
(k) The Company and Sellers agree that, without the prior written
consent of Purchaser, unless otherwise required by law, none of such parties
shall 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 hereafter in the event the transactions contemplated hereby are
not consummated as provided herein.
-53-
<PAGE>
(l) Except as set forth on Schedule 18(l) annexed hereto, the
Company and Sellers, 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.
(m) Any dispute concerning the Holdback shall be resolved by
arbitration in the manner provided in this Section 18(m). Such disputes shall be
resolved by binding arbitration commenced and conducted in accordance with the
then applicable rules of commercial arbitration of the American Arbitration
Association in an arbitration commenced and held before a single arbitrator.
Judgment upon the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof. The location of the arbitration shall be in a
location to be mutually agreed upon among the parties. The parties hereto
irrevocably consent to the exclusive jurisdiction of all Federal and State
courts in New York County, New York in connection with any other proceedings
brought by Sellers, Purchaser, the Company or the respective heirs, personal
representatives, successors or assigns, in connection with this Agreement.
(n) This Agreement is not intended to, and shall not confer any
rights upon, any parties other than the express parties hereto.
(o) Each certificate representing the Shares shall contain a
restrictive legend on their reverse side substantially in the following form:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR QUALIFIED UNDER APPLICABLE STATE SECURITIES
LAWS. THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE MAY
NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED
(I) IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AND
QUALIFICATION IN EFFECT WITH RESPECT THERETO UNDER THE SECURITIES
ACT AND UNDER ANY APPLICABLE STATE SECURITIES LAW OR (II) UNLESS AN
OPINION OF CARIBINER INTERNATIONAL, INC.'S COUNSEL THAT SUCH
REGISTRATION AND QUALIFICATION IS NOT REQUIRED UNDER APPLICABLE
FEDERAL AND STATE SECURITIES LAWS AND THERE IS AN EXEMPTION
THEREFROM.
(p) Notwithstanding anything to the contrary contained in this
Agreement, the liability of Sellers (other than
-54-
<PAGE>
the Principal Sellers who shall be liable as otherwise set forth herein) shall
be limited to liability arising out of a breach of the representations and
warranties set forth in Section 6(f) hereof, in which case the liability of such
Sellers (other than the Principal Sellers) shall be limited to the proceeds
actually received by such Sellers (other than the Principal Sellers). The
foregoing shall not, however, limit Purchaser's rights and remedies for a
Seller's failure to comply with the provisions of Sections 1, 4 and 18 hereof.
-55-
<PAGE>
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/ Arthur F. Dignam
--------------------------
Arthur F. Dignam
Executive Vice President
BAUER AUDIO VISUAL, INC.
By:/s/ Ted R. Meredith
--------------------------
Ted R. Meredith
Chief Executive Officer
STOCKHOLDERS:
/s/ Ted R. Meredith
--------------------------------
Ted R. Meredith
Meredith Family Limited Partnership
By:/s/ Ted R. Meredith
--------------------------
/s/ James Dobson
--------------------------------
James Dobson
/s/ John Rissi
--------------------------------
John Rissi
/s/ Skylar Cunningham
--------------------------------
Skylar Cunningham
/s/ John Sweeney
--------------------------------
John Sweeney
/s/ Spencer Williams
--------------------------------
Spencer Williams
<PAGE>
/s/ Warren Abraham
--------------------------------
Warren Abraham
/s/ John Hyndman
--------------------------------
John Hyndman
/s/ Barbara Miller
--------------------------------
Barbara Miller
/s/ George Strong
--------------------------------
George Strong
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Cash Portion of
Number of Total Portion of Purchase Price
Shares of Purchase Price Before Deducting
Capital Stock Percentage (Not Including Holdback (Not
Name, Address and Social of the Company Capital Stock Section 2(b) Including Section
Security Number of Owned by Ownership of Purchase Price 2(b) Purchase
Stockholder Stockholder the Company Increase) Price Increase)
- ------------------------- -------------- ------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Ted R. Meredith 15,000 18.75% $ 3,468,750 $ 2,570,119.02
3510 Turtle Creek #5D
Dallas, TX 75219
SS# ###-##-####
Meredith Family Limited 50,200 62.75% $11,608,750 $ 8,601,302.63
Partnership
3510 Turtle Creek #5D
Dallas, TX 75219
James Dobson 400 0.50% $ 92,500 $ 92,500.00
307 Blanco Circle
Southlake, TX 76092
SS# ###-##-####
John Rissi 400 0.50% $ 92,500 $ 92,500.00
8638 E. Via Montoya
Scottsdale, AZ 85255
SS# ###-##-####
Skylar Cunningham 12,000 15.00% $ 2,775,000 $ 2,056,089.71
1605 King's Court
Southlake, TX 76092
SS# ###-##-####
John Sweeney 800 1.00% $ 185,000 $ 185,000.00
40 Seedling Dr.
Holland, PA 18966
SS# ###-##-####
Spencer Williams 400 0.50% $ 92,500 $ 92,500.00
1024 Creek Crossing
Coppell, TX 75019
SS# ###-##-####
Warren Abraham 200 0.25% $ 46,250 $ 46,250.00
75 Old Mill Drive
Media, PA 19063
SS# ###-##-####
John Hyndman 200 0.25% $ 46,250 $ 46,250.00
6319 Brook Lake Dr.
Dallas, TX 75248
SS# ###-##-####
Barbara Miller 200 0.25% $ 46,250 $ 46,250.00
10219 Dale Crest Dr.
Dallas, TX 75229
SS# ###-##-####
George Strong 200 0.25% $ 46,250 $ 46,250.00
417 Vista Noche Dr.
Lewisville, TX 75067
SS# ###-##-####
======= ======== =========== ==============
TOTAL 80,000 100.00% $18,500,000 $13,875,011.36
<CAPTION>
Cash Portion of
Purchase Price
After Deducting
Holdback Amount
(Not Including
Name, Address and Social Section 2(b) Section 2(b) Number of
Security Number of Purchase Price Purchase Stock Portion of Purchaser
Stockholder Holdback Amount Increase) Price Increase Purchase Price Shares Issue
------------------------ --------------- --------------- -------------- ---------------- ------------
<S> <C> <C> <C> <C> <C>
Ted R. Meredith $ 97,150.26 $ 2,472,968.76 $133,266.25 $ 898,630.98 32,596
3510 Turtle Creek #5D
Dallas, TX 75219
SS# ###-##-####
Meredith Family Limited $325,129.53 $ 8,276,173.10 $445,997.70 $3,007,447.37 109,089
Partnership
3510 Turtle Creek #5D
Dallas, TX 75219
James Dobson $ 0 $ 92,500.00 $ 3,553.77 $ 0 --
307 Blanco Circle
Southlake, TX 76092
SS# ###-##-####
John Rissi $ 0 $ 92,500.00 $ 3,553.77 $ 0 --
8638 E. Via Montoya
Scottsdale, AZ 85255
SS# ###-##-####
Skylar Cunningham $ 77,720.21 $ 1,978,369.50 $106,613.00 $ 718,910.29 26,077
1605 King's Court
Southlake, TX 76092
SS# ###-##-####
John Sweeney $ 0 $ 185,000.00 $ 7,107.53 $ 0 --
40 Seedling Dr.
Holland, PA 18966
SS# ###-##-####
Spencer Williams $ 0 $ 92,500.00 $ 3,553.77 $ 0 --
1024 Creek Crossing
Coppell, TX 75019
SS# ###-##-####
Warren Abraham $ 0 $ 46,250.00 $ 1,776.88 $ 0 --
75 Old Mill Drive
Media, PA 19063
SS# ###-##-####
John Hyndman $ 0 $ 46,250.00 $ 1,776.88 $ 0 --
6319 Brook Lake Dr.
Dallas, TX 75248
SS# ###-##-####
Barbara Miller $ 0 $ 46,250.00 $ 1,776.88 $ 0 --
10219 Dale Crest Dr.
Dallas, TX 75229
SS# ###-##-####
George Strong $ 0 $ 46,250.00 $ 1,776.88 $ 0 --
417 Vista Noche Dr.
Lewisville, TX 75067
SS# ###-##-####
=========== ============== =========== ============= ========
TOTAL $500,000.00 $13,375,011.36 $710,753.31 $4,624,988.64 167,762
</TABLE>
<PAGE>
EXHIBIT 2.1
FIRST AMENDMENT TO AGREEMENT OF PURCHASE
AND SALE OF STOCK
This First Amendment to Agreement of Purchase and Sale of Stock ("First
Amendment"), dated as of June 27, 1997, by and among Caribiner International,
Inc., Bauer Audio Visual, Inc., the Meredith Family Limited Partnership, Ted R.
Meredith, Skylar Cunningham, James Dobson, John Rissi, John Sweeney, Warren
Abraham, John Hyndman, Barbara Miller, Spencer Williams and George Strong
(collectively, the "Parties").
WHEREAS, the Parties have previously entered into that certain
Agreement of Purchase and Sale of Stock dated May 29, 1997 ("Purchase
Agreement") (unless otherwise defined herein, terms with their initial letter
capitalized shall have the meanings assigned to such terms in the Purchase
Agreement);
WHEREAS, the Purchase Agreement provides for certain dates after which
the Purchase Agreement may be terminated by certain Parties;
WHEREAS, the Parties desire to amend the Purchase Agreement to provide
for a later termination date and certain other amendments;
NOW THEREFORE, the Parties hereto hereby agree as follows:
1. Amendment of Purchase Agreement. By executing this First
Amendment each of the Parties agree that the Purchase Agreement is hereby
amended in the following respect:
(a) The dates of "June 23, 1997" and "July 10, 1997" in
Section 16 of the Purchase Agreement are hereby replaced with the date of
"August 2, 1997."
(b) Sections 10(a)(iii), 10(a)(iv) and 10(c)(ii) of the
Purchase Agreement are hereby deleted in their entirety.
2. Binding Effect. This First Amendment shall be binding upon
the Parties, together with their respective spouses, executors, administrators,
successors, personal representatives, heirs and assigns.
3. Counterparts. This First Amendment may be executed in any
number of counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
4. Ratification of Purchase Agreement. Except as modified
hereby, the Purchase Agreement is hereby ratified and affirmed and remains in
full force and effect in all respects.
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have duly executed this First
Amendment as of the date first above written.
Caribiner International, Inc.
By: /s/ Arthur F. Dignam
--------------------------------
Name: Arthur F. Dignam
Title: Executive Vice President
Bauer Audio Visual, Inc.
By: /s/ Ted R. Meredith
--------------------------------
Name: Ted R. Meredith
Title: Chief Executive Officer
Meredith Family Limited Partnership
By: Ted R. Meredith, L.L.C.
By: /s/ Ted R. Meredith
---------------------------
Name: Ted R. Meredith
/s/ Ted R. Meredith
------------------------------------
Ted R. Meredith
/s/ Skylar Cunningham
------------------------------------
Skylar Cunningham
/s/ John Sweeney
------------------------------------
John Sweeney
/s/ Warren Abraham
------------------------------------
Warren Abraham
/s/ John C. Hyndman
------------------------------------
John Hyndman
/s/ Barbara J. Miller
------------------------------------
Barbara Miller
<PAGE>
/s/ Spencer Williams
------------------------------------
Spencer Williams
/s/ George Strong
------------------------------------
George Strong
/s/ James Dobson
------------------------------------
James Dobson
/s/ John Rissi
------------------------------------
John Rissi
<PAGE>
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
CARIBINER INTERNATIONAL ANNOUNCES DEFINITIVE AGREEMENT
TO ACQUIRE BAUER AUDIO VISUAL, INC. FOR $26.3 MILLION
- Also Announces Acquisition of Watts-Silverstein, Inc., a Business
Communications Services Company Specializing in Digital Media Consulting and
Production -
NEW YORK, May 30, 1997 -- Caribiner International, Inc. (NYSE:
CWC) today announced that it has signed a definitive agreement to
acquire Bauer Audio Visual, Inc. for $26.3 million, consisting of
approximately $13.9 million in cash, $4.6 million in Caribiner common
stock and the repayment of approximately $7.8 million in outstanding
long term indebtedness. The Bauer acquisition expands Caribiner's
leading position as a national provider of audio visual equipment
services, including hotel audio visual outsourcing services, staging
and show services and audio visual equipment rentals, sales and
installations.
Founded in 1952, Bauer Audio Visual, Inc. is one of the
nation's oldest and largest providers of audio visual equipment rentals
and hotel audio visual outsourcing services. Bauer currently services
75 hotel properties located throughout the US, including Hawaii, and
Mexico. Bauer will be integrated into Caribiner's Total Audio Visual
Services (TAVS) division, which Caribiner acquired in September 1996.
Upon completion of the Bauer acquisition, Skylar Cunningham, Bauer's
President and Chief Operating Officer, will become Senior Vice
President of TAVS. The acquisition is expected to close in June, 1997,
subject to the satisfaction of certain closing conditions, including
the expiration or early termination of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976.
Commenting on the announcement, Raymond S. Ingleby, Chairman
and Chief Executive Officer of Caribiner, stated, "The Bauer
acquisition represents another major strategic addition to TAVS'
operations. With 45 years of experience and an excellent record of
client service, Bauer is recognized as a leader in the audio visual
services business. With the previous acquisitions of TAVS, Blumberg and
Projexions and the announced acquisition of Bauer, we have established
a nationwide leadership position in the hotel audio visual outsourcing
and audio visual equipment rental, sales and installation markets
within a short period of time. In addition, together with our recent
acquisition of Show Solutions, the acquisition of Bauer will strengthen
our capabilities in the areas of staging and show services. As we
integrate Bauer's operations into TAVS, we will enter several new
markets, including Mexico, adding to our already comprehensive
geographic coverage. We will also gain access to new clients and
increase Caribiner's opportunities to cross-promote its services."
Caribiner also announced that it has acquired
Watts-Silverstein, Inc., a Seattle-based business communications
services company, specializing in digital media
<PAGE>
consulting and production. The acquisition will result in the
establishment of a Seattle-based digital media group within Caribiner.
In connection with the Watts-Silverstein acquisition, Bruce
Silverstein, a co-founder of Watts-Silverstein, has been appointed
senior vice president and general manager of Caribiner's new digital
media group in Seattle. Charles Watts, a co-founder of
Watts-Silverstein, has been appointed vice president and executive
creative director of Caribiner's Seattle office.
Commenting on the Watts-Silverstein acquisition, Mr. Ingleby
stated, "This acquisition is another example of our focus on
strengthening our overall package of business communications services
through the addition of established providers with synergistic
resources. Watts-Silverstein and its management will significantly
strengthen our presence on the West Coast, introduce us to a number of
large clients and enhance our digital media creation and production
capabilities. Both the Bauer and Watts-Silverstein acquisitions
highlight our ongoing mission to strengthen our overall package of
business communications services and consolidate our position in the
business communications services market."
Caribiner International, Inc. is a leading international
producer of meetings, events and training programs and a provider of
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 throughout
the United States, as well as in London, Australia, Dubai, Hong Kong
and New Zealand.
Certain statements contained herein are forward-looking
statements that are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements involve known and unknown risks and uncertainties which may
cause the Company's actual results in future periods or plans for
future periods to differ materially from what is currently anticipated.
Those risks include, among others, general competitive factors, the
Company's ability to successfully complete and integrate its
acquisitions and to implement operational improvements in its acquired
businesses and the seasonality and episodic nature of the Company's
business.
Caribiner International, Inc. is listed on The New York Stock
Exchange and trades under the symbol CWC.
###
For further information, contact:
Arthur F. Dignam Chris Plunkett/Mike Smargiassi
Chief Financial Officer Brainerd Communicators, Inc.
Caribiner International, Inc. 212-986-6667
212-541-5300
<PAGE>
EXHIBIT 99.2
FOR IMMEDIATE RELEASE
CARIBINER INTERNATIONAL COMPLETES ACQUISITIONS OF BAUER
AUDIO VISUAL, INC. FOR $26.3 MILLION
NEW YORK, July 7, 1997 -- Caribiner International, Inc. (NYSE:
CWC) today announced that it has completed the previously announced
acquisition of Bauer Audio Visual, Inc. for $26.3 million, consisting
of approximately $14.7 million in cash, $4.6 million in Caribiner
common stock and the repayment of approximately $7.0 million in
outstanding long term indebtedness. The Bauer acquisition expands
Caribiner's leading position as a national provider of audio visual
equipment services, including hotel audio visual outsourcing services,
staging and show services and audio visual equipment rentals, sales and
installations.
Caribiner International, Inc. is a leading international
producer of meetings, events and training programs and a provider of
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 throughout
the United States, as well as in London, Australia, Dubai, Hong Kong
and New Zealand.
Caribiner International, Inc. is listed on The New York Stock
Exchange and trades under the symbol CWC.
###
For further information, contact:
Arthur F. Dignam Chris Plunkett/Mike Smargiassi
Chief Financial Officer Brainerd Communicators, Inc.
Caribiner International, Inc. 212-986-6667
212-541-5300
