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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): January 31, 1997
Caribiner International, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
1-14234 13-3466655
(Commission File Number) (I.R.S. Employer Identification No.)
16 West 61st Street, New York, NY 10023
(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
December 19, 1996 (the "Blumberg Agreement"), by and among Caribiner
International, Inc. (the "Company"), Blumberg Communications, Inc.
("Blumberg"), and each of the stockholders listed on Schedule A thereto,
on January 31, 1997, the Company completed the acquisition of all of the
outstanding capital stock of Blumberg for a purchase price of $18 million
(subject to adjustment in certain circumstances), consisting of $16.6
million in cash and $1.4 million in the common stock, par value $0.01
per share, of the Company. In connection with the acquisition, the
Company also repaid approximately $3.9 million in outstanding
indebtedness of Blumberg. Blumberg is a provider of audio visual
equipment services, including rentals, sales, design and installation and
consulting through numerous offices in the midwestern and southeastern
United States.
The Company financed the transactions using the Company's
existing available credit facilities with its syndicate of lenders for
which The Chase Manhattan Bank acts as administrative agent.
The Blumberg Agreement is attached as Exhibit 2.1, and such
agreement is incorporated by reference in its entirety herein. The
description of the Blumberg Agreement contained herein is qualified in
its entirety by reference to the Blumberg Agreement.
Attached as Exhibit 99.1 is the Company's press release
announcing, among other things, the signing of the Blumberg Agreement.
Attached as Exhibit 99.2 is the Company's press release announcing, among
other things, the consummation of the transactions contemplated by the
Blumberg Agreement.
(b) Equipment or Other Physical Property
Certain of the assets of Blumberg acquired by the Company
pursuant to the Blumberg Agreement constitute equipment or other physical
property. Such assets have been used by Blumberg in connection with its
audio visual equipment rental business. The Company intends to continue
substantially the same use for such acquired assets.
(c) Exhibits
2.1 Agreement of Purchase and Sale of Stock, dated December 19, 1996,
by and among the Company, Blumberg 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 December 20, 1996.
99.2 Press release, dated February 3, 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: February 12, 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
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2.1 Agreement of Purchase and Sale of Stock, dated
December 19, 1996, by and among Caribiner
International, Inc., Blumberg Communications, 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 December 20, 1996.
99.2 Press Release, dated February 3, 1997.
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AGREEMENT OF PURCHASE
AND SALE OF STOCK
By and Among
CARIBINER INTERNATIONAL, INC.,
BLUMBERG COMMUNICATIONS, INC.
and
EACH OF THE STOCKHOLDERS LISTED ON SCHEDULE A
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December 19, 1996
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TABLE OF CONTENTS
Page
1. Purchase and Sale of Stock.......................................... 1
2. (a) Purchase Price............................................. 1
(b) Purchase Price Adjustment.................................. 2
(c) Escrow Amount.............................................. 3
(d) "Piggyback" Registration Rights............................ 4
(e) Acquisition by Affiliates.................................. 6
3. (a) Closing.................................................... 6
(b) Further Action............................................. 6
4. Sellers' and the Company's Obligations at Closing;
Further Assurances................................................ 8
5. Purchaser's Obligations at Closing.................................. 11
6. Representations and Warranties of Sellers and
the Company....................................................... 12
(a) Organization, Standing and Qualification................... 12
(b) Subsidiaries............................................... 13
(c) Transactions with Certain Persons.......................... 13
(d) Execution, Delivery and Performance of Agreement;
Authority................................................ 14
(e) Capitalization............................................. 14
(f) Ownership of the Company's Capital Stock................... 15
(g) Financial Statements....................................... 15
(h) Absence of Undisclosed Liabilities......................... 16
(i) Taxes...................................................... 16
(j) Absence of Changes or Events............................... 17
(k) Litigation................................................. 19
(l) Compliance with Laws and Other Instruments................. 20
(m) Title to Properties........................................ 20
(n) Insurance.................................................. 20
(o) Territorial Restrictions................................... 21
(p) Intellectual Property...................................... 21
(i) Title........................................... 21
(ii) No Infringement................................. 22
(iii) Licensing Arrangements.......................... 22
(iv) No Intellectual Property Litigation............. 22
(v) Use of Name and Mark............................ 22
(q) Environmental Matters...................................... 23
(i) Permits......................................... 23
(ii) No Violations................................... 23
(iii) Other........................................... 23
(iv) Definitions..................................... 25
(r) No Guaranties.............................................. 27
(s) Receivables................................................ 27
(t) Absence of Certain Business Practices...................... 28
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TABLE OF CONTENTS
(continued)
Page
(u) Disclosure................................................. 28
(v) Labor Disputes............................................. 28
(w) Customers and Accounts..................................... 29
(x) Suppliers; Raw Materials................................... 29
(y) Unbilled Costs and Advance Billings........................ 29
(z) Contracts and Proposals.................................... 30
(aa) Investment Intent.......................................... 31
(bb) Minute Books............................................... 33
(cc) Inventories................................................ 33
(dd) Real Property.............................................. 34
(i) Leases.......................................... 34
(ii) No Proceedings.................................. 34
(iii) Current Use..................................... 34
(ee) Warranty Claims............................................ 35
(ff) Exclusive Dealer Arrangements.............................. 35
7. Representations and Warranties by Purchaser......................... 35
(a) Organization............................................... 35
(b) Execution, Delivery and Performance of Agreement........... 35
(c) Litigation................................................. 36
(d) Investment Intent; Unregistered Shares..................... 36
(e) Financing.................................................. 36
8. Employment Matters; Employment Contracts............................ 36
9. Tax Information; Tax Returns; Disputes; Tax Indemnity............... 41
10. Indemnification..................................................... 43
11. Nature and Survival of Representations and Warranties;
Rules Regarding Indemnification and Other Actions................. 46
12. Conduct of Business Prior to Closing................................ 46
(i) Liabilities..................................... 47
(ii) Litigation...................................... 47
(iii) Compliance with Laws............................ 47
(iv) Continued Effectiveness of Representations
and Warranties................................ 47
13. Access to Information and Documents................................. 48
14. Hart-Scott-Rodino................................................... 48
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TABLE OF CONTENTS
(continued)
Page
15. Conditions Precedent................................................ 49
(a) Conditions to Obligations of Each Party.................... 49
(b) Conditions to Obligations of the Purchaser................. 49
(c) Conditions to Obligations of Sellers and the Company....... 51
16. Financial Statements; Closing Date Balance Sheet.................... 52
17. (a) Termination................................................ 52
(b) Effect of Termination...................................... 53
18. Notices............................................................. 53
19. Miscellaneous....................................................... 54
SCHEDULES
Schedule A - List of Stockholders
Schedule 2(c)(i) - Escrow Agreement
Schedule 4(a)(v) - Opinion of Seller's Counsel
Schedule 4(a)(vi) - Non-Competition Undertaking
Schedule 4(a)(vii) - Blumberg Employment Agreement
Schedule 5(a)(iv) - Opinion of Purchaser's Counsel
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(g) - Financial Statements
Schedule 6(i) - Unpaid Taxes
Schedule 6(j) - Changes or Events
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TABLE OF CONTENTS
(continued)
Schedule 6(k) - Litigation
Schedule 6(l) - Compliance with Laws
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) - 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) - Warranty Claims
Schedule 6(ff) - Exclusive Dealer Arrangements
Schedule 8(b) - Employee Plans
Schedule 8(d) - Benefits to Former Employees
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AGREEMENT OF PURCHASE AND SALE OF STOCK
AGREEMENT (this "Agreement"), dated December 19, 1996, by and among
CARIBINER INTERNATIONAL, INC., a Delaware corporation having its principal
office at 16 West 61st Street, New York, New York 10023 ("Purchaser"), BLUMBERG
COMMUNICATIONS, INC., a Minnesota corporation having its principal office at 525
North Washington Avenue, Minneapolis, Minnesota 55401 (the "Company") and each
of the stockholders listed on Schedule A annexed hereto (collectively,
"Sellers").
W I T N E S S E T H:
WHEREAS, the Company is engaged in the rental, sale, design and
installation of audio visual equipment 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(e) 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,
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 Sellers and the Company, Purchaser agrees, in full payment therefor,
to deliver 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 adjustments as provided in Section 2(b) hereof and the Escrow
Amount (as defined in Section 2(c) hereof):
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(i) the sum of $16,560,000 (less the Escrow Amount (as
hereinafter defined) which shall be deposited in the Escrow
Account (as hereinafter defined)) in the aggregate, by wire
transfer or, at the election of Sellers, 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
Sellers made payable to Purchaser in the respective amounts
equal to the par value per share multiplied by the number of
shares to be issued to each such 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 second (2nd) business day prior to
the Closing, 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
$1,440,000. 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
except as provided in Section 2(d) hereof, 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 19(o) hereof.
(b) Purchase Price Adjustment. (i) The Purchase Price shall be
decreased, if at all, as follows:
In the event that the "Net Assets" of the Company set forth on
the Company's Closing Balance Sheet (as defined in Section
16(a) hereof) are less than the Net Assets set forth on the
Company's Balance Sheet dated May 31, 1996 (the "May 31 Net
Assets Amount"), the Purchase Price shall be decreased, dollar
for dollar, by such amount (the "Purchase Price Reduction
Amount"). For purposes of this Section 2(b)(i) and Section 9
hereof, the term "Net Assets" shall mean assets minus
liabilities determined in accordance with generally accepted
accounting principles consistently applied.
(ii) Promptly following receipt of the Closing Balance Sheet,
Purchaser and Sellers shall mutually determine the net amount
due Sellers or Purchaser, as the case
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may be, in respect of the adjustment pursuant to Section
2(b)(i) hereof, all in accordance with the procedures set
forth in Section 16 hereof. The obligation of the parties
under this Section 2(b) shall survive the Closing. If any sums
due pursuant to this Section 2(b) are later determined to have
been calculated in error, either as a result of a restatement
of the Closing Balance Sheet or otherwise, the obligations of
Purchaser or Sellers, as the case may be, to further adjust
the Purchase Price and remit any sum hereunder shall survive
the payment of any adjustment paid or payable pursuant to this
Section 2(b).
(c) Escrow Amount. (i) From the Cash Portion of Purchase
Price, Purchaser shall deposit the sum of $625,000.00 (the
"Escrow Amount") which shall be paid to Sellers, if at all, in
accordance with Sections 2(c)(ii) and 2(c)(iii) hereof. The
Escrow Amount shall be deposited by Purchaser into a
segregated account (the "Escrow Account") pursuant to an
Escrow Agreement among Purchaser, Sellers and The Chase
Manhattan Bank substantially in the form of Schedule 2(c)(i)
annexed hereto (the "Escrow Agreement"). The Escrow Amount
shall remain in the Escrow Account, subject to the terms of
the Escrow Agreement and the terms hereof, for a period of
eighteen (18) months.
(ii) The Escrow Amount shall be utilized for the purpose of
(A) reducing the Purchase Price pursuant to Section 2(b)
hereof and (B) reimbursing Purchaser for any liability of
Sellers to Purchaser pursuant to Sections 6(i), 8(f), 9 and
the operative indemnification provisions of Section 10 hereof
related to a breach of any such provisions.
(iii) In the event of a reduction in the Purchase Price
pursuant to Section 2(b)(i) hereof, the Purchase Price
Reduction Amount, together with the pro-rata share of the
interest earned on such amount shall be distributed to
Purchaser from the Escrow Account. In the event that there
shall be no reduction in the Purchase Price pursuant to
Section 2(b)(i) hereof, any balance in the Escrow Account in
excess of $500,000 (which is not subject to a reimbursement
obligation pursuant to the terms hereof and the terms of the
Escrow Agreement), shall be distributed to Sellers on a
pro-rata basis based upon the Percentage of Capital Stock
Ownership set forth on Schedule A annexed hereto. The
remainder of the Escrow Amount (after amounts paid to Sellers,
if applicable, in accordance with the immediately preceding
sentence), if any, together with all interest
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earned on such remainder from the Closing Date, shall remain
in the Escrow Account for the balance of the term of the
Escrow Agreement to secure any reimbursement obligation of
Sellers pursuant to Sections 6(i), 8(f), 9 and the operative
indemnification provisions of Section 10 hereof related to a
breach of any such provisions. Upon the termination of the
Escrow Agreement, the remainder of the Escrow Amount, together
with all interest earned on such remainder from the Closing
Date shall be remitted promptly from the Escrow Account to
Sellers on a pro-rata basis based upon the "Percentage of
Capital Stock Ownership" set forth on Schedule A annexed
hereto. If the Purchase Price Reduction Amount exceeds the
Escrow Amount, the Escrow Amount together with all interest
earned thereon from the Closing Date shall be distributed to
Purchaser and Sellers shall remit promptly to Purchaser the
amount by which the Purchase Price Reduction Amount exceeds
the Escrow Amount on a pro-rata basis based upon the
"Percentage of Capital Stock Ownership" set forth on Schedule
A annexed hereto. The federal, state and local income taxes in
respect of the interest earned on the Escrow Amount shall be
borne by the parties to which such interest is paid.
(d) "Piggyback" Registration Rights. (i) If at any time prior
to the second anniversary of the Closing Date, Purchaser
determines to register under the Securities Act any of its
common stock (except in connection with securities to be
issued solely in connection with any acquisition of any entity
or business, shares issuable upon the exercise of stock
options or common stock purchase warrants, securities to be
registered pursuant to an underwritten offering, shares
issuable solely pursuant to employee benefit plans or
securities to be registered on any registration form that does
not permit secondary sales), it must give all Sellers who are
entitled to receive Shares in accordance with Schedule A
hereto (all such Sellers, collectively, the "New
Stockholders") written notice of such proposed registration
(the "Registration Notice") at least thirty (30) days prior to
the filing of the registration statement. In the event that
within fifteen (15) days after the mailing of the Registration
Notice, Purchaser receives written notice (the "Registration
Request Notice") from one or more New Stockholders who
beneficially own in the aggregate in excess of fifty (50%)
percent of all of the Shares issued pursuant to Section
2(a)(ii) above (collectively, the "Acquisition Shares")
advising the
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Purchaser to include on such registration statement fifty
(50%) percent or more of the Acquisition Shares (collectively,
the "Registrable Securities") then the Purchaser shall prepare
and file with the Securities and Exchange Commission (the
"SEC"), on one occasion only, a registration statement and
such other documents, including a prospectus, as may be
necessary in the opinion of counsel to Purchaser in order to
comply with Section 5 of the Securities Act so as to permit a
public offering and sale of the Registrable Securities and any
other securities which the Purchaser may choose to include on
such registration statement. The holders of any Acquisition
Shares not included on an effective registration statement
which includes Registrable Securities shall automatically no
longer have any registration rights whatsoever under this
Section 2(d). Purchaser shall have the right at any time after
it shall have given the Registration Notice (regardless of
whether it shall have received a Registration Request Notice)
not to file any proposed registration statement, or to
withdraw same after filing but prior to effectiveness, in
which event all of the New Stockholders shall continue to have
registration rights under, and subject to the provisions of,
this Section 2(d).
(ii) If necessary to permit the distribution of the
Registrable Securities, Purchaser will use its best efforts to
maintain the effectiveness for up to one hundred eighty (180)
days of the registration statement pursuant to which the
Registrable Securities are being offered, and from time to
time will amend or supplement such registration statement and
the prospectus contained therein as and to the extent
necessary to comply with the Securities Act. The New
Stockholder must notify Purchaser promptly of the completion
of the offering of its Registrable Securities under any such
effective registration statement.
(iii) Whenever under the preceding Sections of this Section
2(d) Purchaser registers any of the Acquisition Shares, it
agrees that it will also do the following:
(A) Furnish to each New Stockholder whose
Acquisition Shares are included on the registration
statement such copies of each preliminary and final
prospectus and any other documents as such New
Stockholder may reasonably request to facilitate
the offering of its Acquisition Shares; and
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(B) Furnish to each New Stockholder whose
Acquisition Shares are included on the
registration statement, upon reasonable request
therefor, a copy of all documents filed with the
SEC.
(iv) Purchaser shall bear all costs and expenses of each
registration contemplated in this Section 2(d) including, but
not limited to, printing, legal and accounting fees and
expenses, SEC and stock exchange filing fees. The New
Stockholder shall pay all underwriting discounts and expenses
of its own counsel and advisors.
(e) 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(e) 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) Purchaser, 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
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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 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.
(iv) Purchaser, Sellers and the Company will coordinate and
cooperate with each other in exchanging such information and
supplying such assistance as may be reasonably required by
Purchaser, Sellers and the Company 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, Purchaser, Sellers and
the Company shall promptly notify the other parties to this
Agreement 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.
(vi) (A) Sellers and the Company hereby authorize
Purchaser, Dames & Moore (or other environmental
consultants) and such subcontractors which Dames &
Moore or such other environmental consultants may
engage to enter upon the 511-513 Meeting Property
(as such term is hereinafter defined) and to
conduct the following tests (collectively, the
"Tests"), at times and dates
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which are reasonably satisfactory to all such
parties: (1) taking soil samples therefrom, (2)
placing ground water well monitors in the ground
water below the property's surface or performing a
geo-probe type test to test the ground water and
(3) such other invasive tests as may be necessary
or recommended by Dames & Moore or other
environmental consultants.
(B) All such testing shall be performed at the sole
cost and expense of Purchaser.
(C) In the event that the written report of Dames &
Moore setting forth the results of the Tests (the
"Phase II Report") concludes that the 511-513
Meeting Property has been impacted by a Release of
any Hazardous Materials (as such terms are
hereinafter defined), Purchaser shall have the
right, at its option, exercisable upon written
notice to Sellers (within ten (10) days of
Purchaser's receipt of the Phase II Report), to
require Sellers and the Company to cause Blumberg
Communications of Florida, Inc. to convey its fee
simple interest in the 511-513 Meeting Property to
an unrelated third party prior to the Closing Date
and, in the event Purchaser makes such election,
Sellers shall cause such conveyance and pay all
transfer taxes and other costs associated
therewith.
4. Sellers' and the Company's Obligations at Closing;
Further Assurances. (a) At the Closing, Sellers and the Company
agree to deliver to (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, effective immediately;
(iii) general releases from Sellers in favor of the Company;
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(iv) certificates (and facsimiles dated within ten (10) days
of the Closing Date) 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;
(v) the opinion of Sellers' counsel, substantially in the form
of Schedule 4(a)(v) annexed hereto;
(vi) the Non-Competition Undertaking (the "Non- Competition
Undertaking") of each of the Sellers, in the form of Schedule
4(a)(vi) annexed hereto (other than Mitchell Brod);
(vii) the Employment Agreement (the "Blumberg Employment
Agreement") between David Blumberg ("Blumberg") and Caribiner,
Inc., a New York corporation and Purchaser's wholly owned
subsidiary ("Caribiner") in the form of Schedule 4(a)(vii)
annexed hereto;
(viii) a certified copy of resolutions adopted by the
Company's Board of Directors and the Sellers authorizing the
execution, delivery and performance of this Agreement;
(ix) a copy of the Company's articles of incorporation, as
amended, certified by the Office of the Secretary of State of
the State of Minnesota, and a true and correct copy of the
by-laws of the Company as certified by the secretary of the
Company;
(x) 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;
(xi) all Consents;
(xii) the Escrow Agreement;
(xiii) evidence of (A) the appointment of a disinterested
person to act as the trustee (the "Disinterested Trustee") of
the Company's Employee Stock Ownership Plan (the "ESOP")
pursuant to which the Disinterested Trustee, in its capacity
as shareholder, authorizes this Agreement and the transactions
contemplated hereby and (B) the resignation of Donald D.
Blumberg as the trustee of the ESOP immediately prior to such
appointment of the Disinterested Trustee.
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<PAGE>
The cost of the appointment of the Disinterested Trustee shall
be borne equally by Purchaser and Sellers up to a maximum
obligation of Purchaser hereunder of $15,000. For these
purposes, a "disinterested person" shall mean a bank, trust
company or any individual or other entity which is not (X) an
employee, officer, director or shareholder of the Company, (Y)
a person who provides services in any capacity, directly or
indirectly, to the Company or (Z) any related person to any of
the foregoing. For purposes hereof, a "related person" shall
mean a spouse, adult lineal descendant, adult spouse of such
lineal descendant, brother, sister and/or spouse of such
brother or sister;
(xiv) resignations of the trustees of the ESOP and the
trustee(s) of Company's 401(K) plan, as Purchaser so
instructs;
(xv) evidence that (A) all requisite voting rights relating to
this Agreement and the transactions contemplated hereby were
exercised by the Disinterested Trustee in accordance with
applicable law and the terms and conditions set forth in the
ESOP, (B) all debts owed by the ESOP to financial institutions
and other parties have been satisfied in full and (C) all
necessary action (corporate or otherwise) shall have been
taken to terminate the ESOP and the accrual of benefits
thereunder prior to the Closing of the transactions
contemplated hereby;
(xvi) delivery of a Fairness Opinion Letter to the
Disinterested Trustee from an investment banking firm which
opinion is acceptable to the Disinterested Trustee and
Purchaser opining as to the adequacy of consideration paid to
the ESOP for the sale of the Stock owned by it pursuant hereto
(the "Fairness Opinion Letter");
(xvii) evidence of the termination of The 1995 Voting Trust
Agreement (the "Trust Agreement") dated as of August 15, 1995
among Denise L. Tendle, Deborah L. Meehan, Janice L. Blumberg,
Carla Horne, Tara Meehan and Mitchell Brod, as the
Shareholders and David L. Blumberg, as the Trustee; and
(xviii) all other documents and instruments required to be
delivered to Purchaser 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
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<PAGE>
and confirmation and take such other action as Purchaser may reasonably deem
necessary or desirable in order to transfer, convey and assign to Purchaser, and
confirm Purchaser's title to, the Stock, to put Purchaser in actual possession
and operating control of all of the business, properties, assets and goodwill of
the Company thereof and to assist Purchaser in exercising all rights with
respect thereto and to take such action and execute such documents or
instruments as may be reasonably requested by Purchaser in connection with any
governmental or regulatory matters or filings required to be made by Purchaser,
including, without limitation, any filings, documents or instruments to be
delivered to the United States Securities and Exchange Commission or any other
Governmental Authority, the New York Stock Exchange, Purchaser's lenders,
auditors or any other appropriate party.
(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, 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 best efforts to obtain such approval or consent after the
Closing Date until such time as such consent or approval has been obtained, and
Sellers will cooperate with Purchaser in any lawful and economically feasible
arrangement to provide that Purchaser shall receive the benefits under any such
instrument, contract, lease or permit or other agreement or arrangement,
provided, that Purchaser shall undertake to pay or satisfy the corresponding
liabilities for the enjoyment of such benefit to the extent Purchaser would have
been responsible therefor hereunder if such consent or approval had been
obtained. Sellers and, prior to the Closing Date, the Company, shall pay and
discharge, and hold Purchaser harmless from and against any and all
out-of-pocket costs of seeking to obtain or obtaining any such consent or
approval whether before or after the Closing Date.
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;
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<PAGE>
(ii) a certified copy of resolutions adopted by the Board of
Directors of Purchaser authorizing the execution, delivery and
performance of this Agreement and Purchaser's Related
Agreements (as defined in Section 7(a) hereof);
(iii) a copy of Purchaser's certificate of incorporation, as
amended, certified by the Office of the Secretary of State of
Delaware, and a true and correct copy of the by-laws of
Purchaser as certified by the secretary of Purchaser;
(iv) an opinion of Purchaser's counsel substantially in the
form of Schedule 5(a)(iv) annexed hereto;
(v) the Blumberg Employment Agreement;
(vi) the Escrow Agreement; and
(vii) 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 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 Sellers and the Company. Except as
to Section 6(f) hereof, as to which each Seller represents only with respect to
the shares of the Company's capital stock owned by such Seller, Sellers and the
Company jointly and severally represent and warrant to Purchaser as follows:
(a) Organization, Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Minnesota; 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 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 the articles of incorporation of the
Company and all amendments
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<PAGE>
thereto, certified as true and correct by the Office of the Secretary of State
of the State of Minnesota, and the by-laws of the Company as presently in
effect, certified as true and correct by the Company's secretary.
(b) Subsidiaries. The Company has no subsidiaries except those
listed on Schedule 6(b) annexed hereto. The Company owns all of the outstanding
capital stock of all of the subsidiaries of the Company listed on Schedule 6(b)
annexed hereto. Except as set forth on Schedule 6(b) annexed hereto, 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 venture or other business enterprise or entity other than as
set forth on Schedule 6(b) annexed hereto. Except as set forth on Schedule 6(b)
annexed hereto, 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. Except as set forth on Schedule 6(b) annexed
hereto, 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
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<PAGE>
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") 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 articles
of incorporation or by-laws or any franchise, mortgage, deed of trust, lease,
license, agreement, Applicable Law, rule or regulation or any order, judgment or
decree to which Sellers, Blumberg 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 require any consent, authorization, approval or any other action by, or any
notice to, or filing or registration with, any Governmental Authority or other
third party. Except as set forth on Schedule 6(d) 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, Blumberg 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, Blumberg 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 Seller's 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 2,500,000 shares, par value $.01 per share, of which 92,234.23
shares are issued and outstanding on the date
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<PAGE>
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. 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.
(f) Ownership of the Company's Capital Stock. Sellers are the
lawful record and beneficial owners of all of the Company's capital stock, free
and clear of any liens, claims, encumbrances or restrictions of any kind.
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 consistently applied and fairly
present the financial position of the Company at such dates and for the periods
then ended:
(i) Audited Consolidated Balance Sheets, and related
consolidated statements of operations, stockholders' equity
and cash flows (including the notes thereto) of the Company
and its subsidiary audited by Charles Bailly & Company, PLLP
as at May 31, 1996, May 31, 1995 and May 31, 1994 and for the
periods then ended; and
(ii) Consolidated Balance Sheet and related income statement
of the Company and its subsidiary prepared by the Company as
at October 31, 1996 and for the five (5) month period then
ended. (The Balance Sheet and related income statement for the
period ended October 31, 1996 is hereinafter referred to as
the "Balance Sheet" and the date October 31, 1996 is
hereinafter referred to as the "Balance Sheet Date").
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<PAGE>
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.
(h) Absence of Undisclosed Liabilities. As of the Balance
Sheet Date, except as reflected in the Balance Sheet or as disclosed on other
Schedules to this Agreement, the Company had no debts, liabilities or
obligations (whether absolute, accrued, contingent or otherwise) of any nature
whatsoever.
(i) Taxes. 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 any Affiliate of the Company, 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 Affiliate 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. 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, to its knowledge, there is no basis for any such deficiency or
claim. 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 interest and penalties thereon and additional thereto whether disputed or
not.
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<PAGE>
(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 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) other than intercompany dividends between the Company
and its subsidiaries which are listed on Schedule 6(j) annexed
hereto, 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;
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<PAGE>
(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) 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;
(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 in excess of an aggregate of $175,000;
(xii) changed its banking or safe deposit arrangements;
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(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 is now likely to have a
materially adverse affect on the Company's condition
(financial or otherwise), properties, assets, liabilities,
operations or prospects including, without limitation, any
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. Except as set forth on Schedule 6(k) annexed
hereto, there is no claim, legal action, suit, arbitration or other legal or
administrative proceeding (or to the Company's and Sellers' knowledge,
governmental investigation) or any order, decree or judgment in progress,
pending or in effect, or to the knowledge of Sellers threatened against or
relating to the Company, its officers or directors (including,
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without limitation, Sellers), its properties, assets or business in connection
with the transactions contemplated by this Agreement, and 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 complied with all
existing laws, rules, regulations, ordinances, orders, judgments and decrees now
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 articles 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.
(m) Title to Properties. The Company has marketable title to
all of the properties and 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 and statutory or other liens which, in the aggregate, are not
material), direct or indirect, whether accrued, absolute, contingent or
otherwise (collectively, the "Encumbrances"). Set forth on Schedule 6(m) annexed
hereto is an accurate and complete list and description 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 having,
individually, a value of less than $1,000; and all Encumbrances to which the
Company is a party or by which it is bound.
(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
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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. Except as set forth on Schedule 6(o) annexed
hereto, Purchaser, solely as a result of its purchase of the Stock from Sellers
pursuant hereto, will 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 design patents, industrial designs and utility
models) and patent applications (including docketed patent
disclosures awaiting filing, reissues, divisions,
continuations-in- part and extensions), patent disclosures
awaiting filing determination, inventions 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 software) and registrations thereof; (D)
mask work and other semiconductor chip rights and
registrations thereof; (E) intellectual property rights
similar to any of the foregoing; (F) 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.
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(ii) No Infringement. To Sellers' and the Company's knowledge,
the conduct of the business of the Company does not 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 the Company, or to the knowledge of
Sellers or the Company, 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 currently 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) Use of Name and Mark. Except as set forth on Schedule
6(p)(v) annexed hereto, there are and
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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 Purchaser's right to use the name and mark
"Blumberg Communications" in the conduct of business as
presenting carried on by the Company.
(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. 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 complied and is in
compliance with all Environmental Permits and all applicable
Environmental Laws pertaining to any real property owned or
leased by the Company. No person has alleged any 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) None of current or past operations of the
Company, or any by-product thereof, and, to the
knowledge of the Sellers and the Company, 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
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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
they do not migrate or endanger or threaten to
endanger public health or welfare, natural
resources or the environment or (3) perform studies
and investigations related to any such Hazardous
Materials (collectively "Remedial Action") needed
to respond to a Release or threatened Release of
any Hazardous Materials.
(B) The Company is not subject to any outstanding
order, judgment, injunction, decree or writ from,
or contractual obligation to or with, any
Governmental Authority or other party in respect of
which Purchaser may be required to incur any
out-of-pocket expenses and reasonable attorneys'
and accountants' fees (collectively, "Losses"),
whether direct or indirect, known or unknown,
current or potential, past, present or future,
imposed by, under or pursuant to Environmental
Laws, including, without limitation, all Losses
related to any Remedial Action, and all fees,
disbursements and expenses of counsel, experts,
personnel and consultants based on, arising out of
or otherwise in respect of: (1) the ownership or
operation of the business 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, or to Sellers' knowledge 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 Costs arising from
the Release or threatened Release of a Hazardous
Materials.
(C) None of the currently or, to the knowledge of
Sellers and the Company, formerly owned or operated
real property used by the
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Company, including any leased real property, is the
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 (to the
best knowledge of Sellers and the Company) proposed
for listing on the National Properties List or the
CERCLA Information System under CERCLA, or any
similar state, local or foreign list.
(D) No work, repair, construction or capital
expenditure is planned or, to the knowledge of
Sellers and the Company, 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, to the knowledge
of Sellers and the Company, 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 Sellers' knowledge, 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.;
(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, including but not limited
to South Carolina Pollution Control Act,
S.C. Code ss.48-1-10 et seq., South Carolina
Hazardous Substances Control Act, S.C. Code
ss.48-43-510 et seq., South Carolina Safe
Drinking Water Act, S.C. Code ss.44-55-10 et
seq., South Carolina Groundwater Use Act,
S.C. Code ss.49-5-10 et seq., South Carolina
Solid Waste Management Act, S.C. Code
ss.44-56-10 et seq., South Carolina
Underground Storage Tanks Bank Act, S.C.
Code ss.44-2-10 et seq., and South Carolina
Infectious Waste Management Act, S.C. Code
ss.44-93-10 et seq.
(3) any federal, state or local legislation
enacted in the future pertaining to safety
or the protection, preservation,
conservation or regulation of the
environment and all related amendments,
implementing regulations and
reauthorizations.
(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")
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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
(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, Blumberg Communications, Inc.
and Blumberg Communications of Florida, Inc.
(r) No Guaranties. Except as set forth on Schedule 6(r)
annexed hereto, 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 which are reflected on
the Balance Sheet and which have arisen since the date thereof, 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, within one hundred eighty (180) days after it arose, without resort
to litigation and without offset or counterclaim, in the aggregate face amounts
thereof net of
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reserves established therefor on the Balance Sheet. Set forth on Schedule 6(s)
annexed hereto are the Company's accounts and trade receivables (as of December
13, 1996).
(t) Absence of Certain Business Practices. Except as set forth
on Schedule 6(t) annexed hereto, neither the Company 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 (A) might subject the Company to any
damage or penalty in any civil, criminal or governmental litigation or
proceeding, (B) if not given in the past, might have had an adverse effect on
the assets, business or operations of the Company or (C) 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 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. 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)
annexed hereto, 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 attempting to represent any employees
employed by the Company. 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 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, which individually or in the aggregate, would be materially
adverse to the business of the Company, (iii) there are no pending labor
negotiations with or union organization efforts by
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<PAGE>
any employees of the Company or with any union representing or attempting to
represent any employees of the Company and (iv) neither Sellers nor the Company
has any actual 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 has 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 5% or more of the Company's gross revenues in either of
its fiscal years ending in 1995 or 1996 or in the five (5) month period ending
October 31, 1996 will cease or has ceased doing business with the Company or
Purchaser as its successor, for any reason, or will or has reduced its payments
to the Company by more than twenty (20%) percent for any reason. Schedule 6(w)
annexed hereto correctly lists the twenty (20) largest clients of the Company
during the fiscal year ended in 1996 and the period commencing June 1, 1996 and
ending December 18, 1996, together with the amount of billings made by the
Company to each such account during each such year or period.
(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 during the twelve
(12) month period ended May 31, 1996 and the period commencing June 1, 1996 and
ended December 18, 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 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 Sellers' knowledge, 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 period commencing June 1, 1996 and ending December
15, 1996.
(y) Unbilled Costs and Advance Billings. All costs incurred on
jobs in process, whether reflected as unbilled costs
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or a reduction of advance billings to clients, reflected on the Company's books
of account as of October 31, 1996 (a true and correct schedule of which is
listed on Schedule 6(y) annexed hereto) were calculated in accordance with
generally accepted accounting principles and the percentage of completion method
of accounting, applied on a basis consistent with the principles used in
preparing the Financial Statements and are realizable in the ordinary course of
business and were incurred in accordance with applicable budgets in respect
thereof.
(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 and (C) a list dated October 29, 1996 of all
material 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), 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, to the knowledge of Sellers and the
Company, any other
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<PAGE>
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) No Seller 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 New Stockholders, and upon reliance thereof, each of the New
Stockholders hereby represents and warrants to Purchaser that:
(i) 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;
(ii) 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 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
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certain public information offices maintained by the SEC or
from Purchaser;
(iii) 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 Seller,
condition any transfer of Shares out of such 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;
(iv) 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 Sellers' intent relative to the acquisition
of the Shares and other related matters set forth herein;
(v) 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 Sellers,
and consequently, the SEC might regard such a transfer as a
deferred sale for which the exemption from registration is not
available;
(vi) 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);
(vii) 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 19(o) hereof which shall state
that the Shares have not been registered under the Act or
applicable state Securities Laws; and
(viii) 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
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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 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 Sellers could
sustain a complete loss with respect to their Shares.
(bb) Minute Books. Since the incorporation of the Company, the
minute books of the Company have been properly kept and maintained in good
order, have been updated on a periodic 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. 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
year. Schedule 6(cc) annexed hereto lists the locations of all Inventories.
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(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, to the knowledge
of Sellers and the Company, 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 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
created by the Company. 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. There are no eminent domain or other
similar proceedings pending or, to the knowledge of Sellers
and the Company, threatened affecting any portion of the
leased real property and there is no proceeding pending or, to
the knowledge of Sellers and the Company, threatened for the
taking or condemnation of any portion of the leased real
property. To the 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
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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) Warranty Claims. Set forth on Schedule 6(ee) annexed
hereto is an accurate and complete list of all warranty claims asserted against
the Company (and which are unresolved) or for which the Company has been advised
that it has responsibilities in respect of its products or services, and except
as set forth on Schedule 6(ee) annexed hereto, the warranties issued by the
Company in respect of its products or services which are outstanding or
unexpired on the date hereof are consistent with the warranties historically
issued by the Company and such outstanding warranties do not pose any unusual
risk to the Company.
(ff) Exclusive Dealer Arrangements. Set forth on Schedule
6(ff) annexed hereto is an accurate and complete list of agreements in respect
of which the Company is an authorized and/or exclusive dealer in respect of the
sale or providing of services in respect of any product. Except as set forth on
Schedule 6(ff) hereto, neither the Company nor any Seller has been notified that
any such 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 and Purchaser's
Related Agreements by Purchaser will, with or without the giving of notice or
the passage of time, or both,
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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) Investment Intent; Unregistered Shares. Purchaser is
acquiring the Stock for investment and not with a view to distribute the Stock.
It is understood and acknowledged that the Stock has not been registered under
the Securities Act or under the Securities Laws of any state and that a
subsequent sale of the Stock may be restricted absent such a registration unless
an exemption is available.
(e) 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.
8. Employment Matters; Employment Contracts. (a) Intentionally Omitted.
(b) Schedule 8(b) 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
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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 twelve
(12) month period ended September 30, 1996 as well as each of
such person's current compensation;
(iii) all material written agreements 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(b) 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 with regard to
said plans and the administration thereof and will be
fulfilled with regard to the termination of any of said plans.
(v) true and correct copies of all documents relating to the
Company's request to the Internal Revenue Service (the "IRS")
for a compliance statement pursuant to the Employee Plans
Voluntary Compliance Resolution Program in connection with the
Company's 401(k) Salary Savings Plan (the "Plan"). The Company
hereby represents and warrants that all action required and
necessary to be taken in order to comply with the IRS's
Compliance Statement have been taken and completed in full.
(c) The execution and performance of this Agreement will not
constitute a stated triggering event under any plan or arrangement which will
result in payment (whether of deferred compensation, or otherwise) becoming due
to any employee or former employee of the Company.
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(d) There exist no obligations or liabilities, including
claims incurred (as defined herein) but not reported under any uninsured plan
providing medical benefits, arising out of or in connection with any employee
benefit plan or arrangement, except to the extent funded or accrued as a
liability. For purposes of the preceding sentence, a medical claim shall be
deemed to be incurred on the date of occurrence of 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(d) 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 of the 401(K)
Plan and the ESOP 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 as such and the Company knows of no
fact which would adversely affect the qualified status of any such plan.
(e) 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.
(f) The Company shall terminate the ESOP and the accrual of
benefits thereunder prior to the Closing of the transactions contemplated
hereby. Sellers hereby indemnify and hold Purchaser and the Company harmless
from any and all loss, cost or expense suffered or incurred by Purchaser or the
Company by reason of (i) the ESOP's participation in the transactions
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contemplated hereby, (ii) the termination of the ESOP, (iii) the distribution of
benefits after the Closing to the plan participants pursuant to the termination
of the ESOP or (iv) any act or failure to act by Sellers or the Disinterested
Trustee pursuant to the obligations imposed on Sellers and the Disinterested
Trustee pursuant to this Section 8(f), including, without limitation, any
liability whatsoever to any participant or former participant, the Department of
Labor or any other person or governmental authority with respect to the ESOP or
the payment or distribution of benefits thereunder. After the Closing, (A)
Sellers and the Disinterested Trustee shall have control of the termination and
liquidation of the ESOP and the distribution of benefits thereunder to the plan
participants, to be accomplished in accordance with all applicable laws and the
terms and conditions of the ESOP, (B) Sellers and the Disinterested Trustee
shall keep Purchaser informed of the progress of the termination and liquidation
of the ESOP, (C) Sellers shall provide Purchaser and its counsel with copies of
all correspondence relating thereto and (D) obtain Purchaser's written consent
prior to taking any action with respect thereto, including, without limitation,
the payment and allocation of benefits to the plan participants. In furtherance
thereof, within sixty (60) days of the Closing, Sellers and the Disinterested
Trustee shall file with the IRS an Application for Determination for Terminating
Plan (Form 5310) and shall distribute plan benefits in accordance therewith upon
the receipt of a favorable determination letter. All legal fees and associated
costs relating to the termination and liquidation of the ESOP incurred by
Sellers and the Disinterested Trustee shall be borne by Sellers.
(g) Except for (i) Blumberg, who shall be subject to the
Blumberg Employment Agreement, and (ii) the rights of persons under agreements
described on Schedule 8(d), 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. Purchaser covenants and agrees to
indemnify and hold the Sellers harmless in connection with any liability
incurred by, threatened or assessed against any of the Sellers in connection
with any layoffs or termination of Company employees on or after the Closing
Date, including, without limitation, any liability relating to the Worker
Adjustment and Retraining Notification Act of 1988 ("WARN") or any state law
relating to employer obligations to employees affected by layoffs, including,
without limitation, any and all backpay, benefits, damages, costs, attorneys'
fees, fines and other liabilities arising under WARN or said state laws with
respect to any Mass Layoff or Plant Closing (each as defined in WARN) or
affecting Company employees.
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(h) Subject to Section 8(g) 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(g) above, Purchaser shall cause the
Company to provide immediate eligibility for an 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) Purchaser acknowledges that the Company is party to that
certain Executive Deferred Compensation Agreement dated January 1, 1995 between
the Company and Donald Blumberg and agrees that Purchaser shall cause the
Company to perform all obligations of the Company under such agreement.
(k) 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.
(l) 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.
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(m) 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.
(n) At the Closing, Caribiner and Blumberg shall execute and
deliver the Blumberg Employment Agreement.
9. Tax Information; Tax Returns; Disputes; Tax Indemnity. (a) After the
Closing Date, Purchaser and Sellers (i) shall provide, or shall cause to be
provided, to and by each other and each other's respective subsidiaries,
affiliates, officers, employees and representatives, such assistance as may
reasonably be requested by any of them 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) 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, or causing to
be provided, 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
(except to the extent that such Taxes are accrued and reflected in Net Assets as
of the Closing Date) all Taxes shown to be due thereon.
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(c) Purchaser and the Company shall prepare and Purchaser
shall file (or cause to be filed) 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 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 (except to the
extent that such Taxes are accrued and reflected in Net Assets as of 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 the Straddle Period, at least ten (10) business days prior to the due date
for the payment of such Taxes, Purchaser shall present Sellers with a schedule
detailing the computation of the Pre-Closing Straddle Period Tax; and within ten
(10) business days after Purchaser presents Sellers with such schedule, Sellers
shall pay (except to the extent that such Taxes are accrued and reflected in Net
Assets on the Closing Date) the Company the amount of the Pre-Closing Straddle
Period Tax as computed by Purchaser. In the event Sellers dispute Purchaser's
computation of 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 to Purchaser and such amount has been paid to Purchaser,
then Purchaser shall promptly refund to Sellers such amount.
(d) Sellers will pay all sales, gains, transfer and
documentary taxes, if any, payable in connection with the sale of Stock to
Purchaser hereunder. Sellers shall prepare and file and the Purchaser shall
cooperate in the filing of all returns relating to any tax described in this
Section 9(d).
(e) Sellers agree to, and shall indemnify Purchaser and the
Company and hold each of them harmless from and against any and all Taxes
imposed on or incurred by the Company (or any other entity which, on or before
the Closing Date, is or was an affiliate thereof), including reasonable legal
fees and expenses incurred by Purchaser or the Company with respect thereto, for
any taxable year or taxable period ending on or prior to the Closing Date
(including any short periods up to and including the Closing Date; but subject
to Sections 9(b) and 9(c) hereof), including, without limitation, any and all
Taxes arising out of the consummation of the transactions contemplated hereby.
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(f) Sellers shall have exclusive control at their sole cost
and expense over any dispute relating to any Tax liability or return of the
Company filed for or with respect to any period ending on or prior to the
Closing Date; provided, however, that Sellers shall keep Purchaser informed of
the progress of any such dispute and Purchaser shall be entitled to participate
therein at its own expense to the extent the same relates to the Company; and
Sellers may settle any or all such disputes, accept any determination as final,
pay any Tax claim or take such other action to contest or concede any Tax
claimed. Purchaser shall cooperate and shall cause its affiliates to cooperate
with Sellers in connection with any and all such disputes and will execute all
lawful, true and correct powers of attorney. Purchaser shall have exclusive
control over any dispute relating to any Tax liability or return of the Company
filed for or with respect to any tax period beginning after the Closing Date or
any tax period including the Closing Date. Sellers shall cooperate with
Purchaser in connection with any and all such disputes and will execute all
lawful, true and correct powers of attorney, affidavits, and other papers
necessary in connection therewith, and will provide Purchaser and/or the Company
with all relevant information in their possession.
(g) 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.
10. Indemnification. (a) Sellers hereby 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 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 Undertaking, which shall be
governed solely by the terms thereof);
(ii) any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including, without
limitation, reasonable legal fees and expenses, incident to
(i) above or (iii) 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
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(iii) 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.
(iv) Any and all loss, liability or damage suffered or
incurred by the Company or Purchaser by reason of any Release
of Hazardous Materials arising from, relating to or otherwise
affecting the real property located at 511-513 Meeting Street,
Charleston, South Carolina (the "511-513 Meeting Property"),
unless the same is caused by Purchaser or the Company after
the Closing Date; provided this Section 10(a)(iv) shall only
be applicable if the 511-513 Meeting Property is transferred
pursuant to Section 3(b)(vi)(C) prior to the Closing Date.
(b) 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;
(ii) any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including, without
limitation, reasonable legal fees and expenses, incident to
(i) above or (iii) below or incurred in investigating or
attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity; and
(iii) 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 or other commission
arising by reason of any services alleged to have been
rendered to or at the instance of Purchaser with respect to
this Agreement or any of the transactions contemplated hereby.
(c) 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
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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) a
breach of a representation, warranty or covenant contained in (i) Section 6(i)
(taxes) hereof, (ii) Section 8(f) (ESOP matters), (iii) Section 9 (tax matters)
nor (B) Sellers' indemnification obligations under Section 10(a)(iv) (511-513
Meeting Property) hereof, and, in such event, the party with the indemnification
obligation thereunder shall indemnify the other party therefor from the first
dollar.
(d) 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.
(e) If a claim by a third party is made against a party hereto
(an "Indemnified Party"), and if an Indemnified Party intends to seek indemnity
with respect thereto under this Section 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; provided, however, that with respect to settlements entered into by
the Indemnifying Party, the Indemnifying Party shall obtain the release of the
claiming party in favor of the Indemnified Party. If the Indemnifying Party
undertakes, conducts and controls the settlement or defense of such claim, the
Indemnifying Party shall permit the Indemnified Party to participate in such
settlement or defense through counsel chosen by the Indemnified Party, providing
that the fees and expenses of such counsel shall be borne by the Indemnified
Party. With respect to indemnification provided for hereunder, the Indemnified
Party shall not pay or settle any such claim so long as the Indemnifying Party
is reasonably contesting any such claim in good faith. Notwithstanding the
immediately preceding sentence, the Indemnified Party shall have the right to
pay or settle any such
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claims, provided that in such event it shall waive any right to indemnity
therefor by the Indemnifying Party.
(f) Subject to the limitations set forth in Sections
10(c)-(e), if the Indemnifying Party does not notify the Indemnified Party
within fifteen (15) days after the receipt of the Indemnified Party's notice of
a claim of indemnity hereunder that it elects to undertake the defense thereof,
the Indemnified Party shall have the right to contest, settle or compromise the
claim in the exercise of its good faith reasonable judgment at the expense of
the Indemnifying Party subject to the other terms and provisions of this Section
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 (18) months after the Closing Date or, with respect to
Taxes, the date upon which the applicable period of limitation on assessment or
refund of any relevant tax has expired; provided that claims asserted pursuant
to an Indemnity Notice 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:
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(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 duly 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. Each of the 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 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. 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 articles 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
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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) 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 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
-48-
<PAGE>
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 or Sellers, as the case may
be) on or prior to the Closing Date of the condition that: the transactions
contemplated hereby shall not have been restrained, enjoined or otherwise
prohibited by any Applicable Law, including any order, injunction, decree or
judgment of any court or other Governmental Authority; no court or other
Governmental Authority shall have determined any Applicable Law to make illegal
the consummation of the transactions contemplated by the Agreement, Purchaser's
Related Agreements or Seller's Related Agreements; and no proceeding with
respect to the application of any such Applicable Law to such effect shall be
pending.
(b) Conditions to Obligations of the Purchaser. All
obligations of the Purchaser hereunder are subject, at the option of Purchaser,
to the fulfillment of each of the following conditions at or prior to the
Closing, and Sellers and the Company shall exert their best efforts to cause
such conditions to be fulfilled:
(i) 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 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
-49-
<PAGE>
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 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)(vi) 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;
(ix) Purchaser shall have received the Phase II Report and
such report shall conclude, in Purchaser's reasonable
judgment, that no Hazardous Materials exist on or under the
511-513 Meeting Property;
(x) Purchaser shall have received evidence of the appointment
of the Disinterested Trustee and the resignation of Donald D.
Blumberg as trustee of the ESOP immediately prior to such
appointment;
(xi) Purchaser shall have received resignations of the
trustee(s) of the ESOP and the trustee(s) of the Company's
401(k) plan, as Purchaser so instructs;
(xii) Purchaser shall have received evidence that (A) all
requisite voting rights relating to this Agreement and the
transactions contemplated hereby were exercised by the
Disinterested Trustee in accordance with applicable law and
the terms and conditions set forth in the ESOP, (B) all debts
owed by the ESOP to financial institutions and other parties
have been satisfied in full, (C) all necessary action
(corporate or otherwise) shall have been taken to terminate
the ESOP and the accrual of benefits thereunder prior to the
Closing of the transactions contemplated hereby and (D) the
Disinterested Trustee shall at the Closing sell, transfer,
convey, assign and deliver to Purchaser the Stock owned by the
ESOP;
(xiii) The Disinterested Trustee shall have received the
Fairness Opinion Letter;
-50-
<PAGE>
(xiv) Purchaser shall have received evidence of the
termination of the Trust Agreement; and
(xv) All filings required pursuant to the HSR Act prior to the
expiration of 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 approvals under the HSR Act and any other necessary
Governmental Approvals.
(vii) All filings required pursuant to the HSR Act prior to
the expiration of or earlier termination of the waiting period
under the HSR Act shall have occurred.
-51-
<PAGE>
16. Financial Statements; Closing Date Balance Sheet. (a) Promptly
following the Closing Date, but in no event later than ninety (90) days
thereafter, Purchaser shall cause the Company to prepare and deliver to Sellers
the Balance Sheet of the Company as at the Closing Date (the "Closing Balance
Sheet"). The Closing Balance Sheet shall be utilized to determine certain of the
adjustments to the Purchase Price to be made in accordance with Section 2(b)
hereof.
(b) Within such ninety (90) day period, the Closing Balance
Sheet shall be audited by Ernst & Young, LLP at the expense of Purchaser, and
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods covered thereby, except as otherwise
expressly noted therein, and shall be complete, accurate and a fair presentation
of the financial condition of the Company as of the dates thereof and the
results of operations for the periods covered thereby.
(c) After receipt of the audited Closing Balance Sheet,
Sellers will have twenty (20) days to object in writing to Purchaser to any or
all of the amounts presented therein and to the calculation of any Purchase
Price Reduction Amount (as defined in Section 2(b) hereof).
(i) In the Sellers do not object, the Closing Balance Sheet
and the Purchase Price Reduction Amount, if any, as originally
prepared and determined under Sections 16(a) and (b) becomes
final and binding on the parties hereto. Sellers failure to
respond within such twenty (20) day period shall also be
deemed to be Sellers approval of the calculation of the
Purchase Price Reduction Amount.
(ii) If Sellers so object to any portion of the Closing
Balance Sheet or the calculation of the Purchase Price
Reduction Amount, Purchaser and Sellers shall promptly attempt
to resolve the differences by having their respective
accounting firms meet. In the event such dispute is not
resolved within thirty (30) days after Sellers' written
objection, the parties agree to promptly submit the matter to
binding arbitration in accordance with Section 19(m) hereof.
17. (a) Termination. This Agreement may be terminated at any time prior
to the Closing Date:
(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
-52-
<PAGE>
pursuant hereto by 5:00 p.m. E.T. on February 28, 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
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 February
28, 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 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 containing any materiality
qualification) as of the date when made or (B) if any of the
conditions precedent set forth herein shall not have been, or
if it becomes apparent that any of such conditions will not be
fulfilled by 5:00 p.m. E.T. on February 28, 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 17(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.
18. Notices. Any and all notices, demands or requests required or
permitted to be given under this Agreement shall be given in writing and sent,
by registered or certified U.S. mail, return receipt requested, by hand, or by
overnight courier, addressed to the parties hereto at their addresses set forth
above or such other addresses as they may from time-to-time designate by written
notice, given in accordance with the terms of this Section, together with copies
thereof as follows:
-53-
<PAGE>
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:
Lindquist & Vennum P.L.L.P.
4200 IDS Center
80 South Eighth Street
Minneapolis, Minnesota 55402-2205
Facsimile no.: (617) 371-3207
Attention: Dennis M. O'Malley, 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.
Notices to Sellers shall be deemed to be sufficient if delivered in accordance
with this Section 18 to Donald Blumberg and David Blumberg at the addresses set
forth on Schedule A hereto.
19. Miscellaneous. (a) This Agreement, including, without limitation,
the schedules and other documents referred to herein, constitutes the entire
agreement of the parties with respect to the subject matter hereof and
supersedes any and all prior agreements, arrangements or understandings with
respect hereto, and may not be modified or amended except by a written agreement
specifically referring to this Agreement signed by all of the parties hereto.
(b) No waiver of any breach or default hereunder shall be
considered valid unless in writing and signed by the party giving such waiver,
and no such waiver shall be deemed a waiver of any subsequent breach or default
of the same or similar nature.
(c) This Agreement shall be binding upon and inure to the
benefit of each corporate party hereto, its successors and assigns, and each
individual party hereto and his heirs, personal representatives, successors and
assigns.
-54-
<PAGE>
(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.
(l) 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.
-55-
<PAGE>
(m) Any dispute concerning the Purchase Price Reduction Amount
shall be resolved by arbitration in the manner provided in this Section 19(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.
(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) Unless the context requires otherwise, the term "Company"
as used in this Agreement shall denote both Blumberg Communications, Inc. and
its wholly-owned subsidiary, Blumberg Communications of Florida, Inc.
(q) For purposes of this Agreement, Sellers' "knowledge" shall
mean the knowledge of Archie Thomas, Donald Blumberg, David Blumberg, Michael
Waterston, Sharon Hinton, Fred Fabian or Gary Gruca.
(r) Each of the Sellers hereby authorize Donald Blumberg or
David Blumberg to execute and deliver on their behalf any and all documents in
connection with this Agreement, including, without limitation, Sellers' Related
Agreements, which documents as executed and delivered by either Donald Blumberg
or David Blumberg shall be binding upon each of the Sellers in accordance with
their respective terms.
-56-
<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
BLUMBERG COMMUNICATIONS, INC.
By: /s/ David L. Blumberg
-----------------------------
David L. Blumberg
President and Chief Executive
Officer
<PAGE>
STOCKHOLDERS:
/s/ David L. Blumberg
-----------------------------
DAVID L. BLUMBERG
/s/ Donald D. Blumberg
-----------------------------
DONALD D. BLUMBERG
BLUMBERG COMMUNICATIONS, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
AND TRUST
By: /s/ Donald D. Blumberg
--------------------------
Name: Donald D. Blumberg
Title: Trustee
/s/ Peter J. Caplow
-----------------------------
PETER J. CAPLOW
/s/ Eugene L. Fritz
-----------------------------
EUGENE L. FRITZ
/s/ C.A. Thomas
-----------------------------
C.A. THOMAS
/s/ Janice L. Blumberg
-----------------------------
JANICE L. BLUMBERG
/s/ Denise L. Tendle
-----------------------------
DENISE L. TENDLE
/s/ Deborah L. Meehan
-----------------------------
DEBORAH L. MEEHAN
/s/ Carla Horne
-----------------------------
CARLA HORNE
/s/ Tara Meehan
----------------------------
TARA MEEHAN
/s/ Mitchell Brod
-----------------------------
MITCHELL BROD
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Number of Shares of Cash Portion of Cash Portion of
Capital Stock of Percentage Capital Purchase Price Purchase Price
Name, Address and Social Security the Company Owned Stock Ownership of Before Deducting After Deducting
Number of Stockholder by Stockholder the Company Escrow Amount Escrow Amount Escrow Amount
- --------------------------------- ------------------- ------------------ ---------------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
David L. Blumberg 7,545 8.36% $ 1,144,800 $ 52,250.00 $1,092,550.00
9912 Bay Vista Estates Blvd.
Orlando, FL 32836
###-##-####
Donald D. Blumberg 33,299 36.90 6,282,000 230,625.00 6,051,375.00
701 Jamestown Lane
Naples, FL 33963
###-##-####
Blumberg Communications, Inc. 26,434.23 29.30 5,274,000 183,125.00 5,090,875.00
Employee Stock Ownership
Plan and Trust
Donald D. Blumberg, Trustee
701 Jamestown Lane
Naples, FL 33963
Peter J. Caplow 500 .55 99,000 3,437.50 95,562.50
101 Arthur Avenue SE
Minneapolis, MN 55414
###-##-####
Eugene L. Fritz 1,000 1.11 199,800 6,937.50 192,862.50
17595 Polk Street NW
Elk River, MN 55330
###-##-####
Robert J. Hartman, Trustee 4,697 5.21 937,800 32,562.50 905,237.50
4200 IDS Center
80 S. 8th Street
Minneapolis, MN 55402
C.A. Thomas 500 .55 99,000 3,437.50 95,562.50
2101 St. Anthony Park
Minneapolis, MN 55418
###-##-####
Janice L. Blumberg 638 .71 127,800 4,437.50 123,362.50
9912 Bay Vista Estates Blvd.
Orlando, FL 32836
###-##-####
Denise L. Tendle 7,084 7.85 1,053,000 49,062.50 1,003,937.50
Deborah L. Meehan 7,084 7.85 1,053,000 49,062.50 1,003,937.50
5624 Cherry Hill Road
Minnetonka, MN 55345
###-##-####
Carla Horne 638 .71 127,800 4,437.50 123,362.50
2347 Pine Woods Circle
Naples, FL 34105
###-##-####
Tara Meehan 638 .71 127,800 4,437.50 123,362.50
3142 Tenth Avenue S.
Minneapolis, MN 55407
###-##-####
Mitchell Brod 177 .19 34,200 1,187.50 33,012.50
1807 Jackson Street NE
Minneapolis, MN 55418
###-##-####
------------------- ------------------ ---------------- ------------- ----------------
------------------- ------------------ ---------------- ------------- ----------------
90,234.23 100.00% $16,560,000 $625,000.00 $15,935,000.00
</TABLE>
<TABLE>
<CAPTION>
Name, Address and Social Security Stock Portion of
Number of Stockholder Purchase Price
- --------------------------------- -----------------
<S> <C>
David L. Blumberg $ 360,000
9912 Bay Vista Estates Blvd.
Orlando, FL 32836
###-##-####
Donald D. Blumberg 360,000
701 Jamestown Lane
Naples, FL 33963
###-##-####
Blumberg Communications, Inc. -0-
Employee Stock Ownership Plan
and Trust
Donald D. Blumberg, Trustee
701 Jamestown Lane
Naples, FL 33963
Peter J. Caplow -0-
101 Arthur Avenue SE
Minneapolis, MN 55414
###-##-####
Eugene L. Fritz -0-
17595 Polk Street NW
Elk River, MN 55330
###-##-####
Robert J. Hartman, Trustee -0-
4200 IDS Center
80 S. 8th Street
Minneapolis, MN 55402
C.A. Thomas -0-
2101 St. Anthony Park
Minneapolis, MN 55418
###-##-####
Janice L. Blumberg -0-
9912 Bay Vista Estates Blvd.
Orlando, FL 32836
###-##-####
Denise L. Tendle 360,000
Deborah L. Meehan 360,000
5624 Cherry Hill Road
Minnetonka, MN 55345
###-##-####
Carla Horne -0-
2347 Pine Woods Circle
Naples, FL 34105
###-##-####
Tara Meehan -0-
3142 Tenth Avenue S.
Minneapolis, MN 55407
###-##-####
Mitchell Brod -0-
1807 Jackson Street NE
Minneapolis, MN 55418
###-##-####
-----------------
-----------------
$1,440,000
</TABLE>
<PAGE>
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
CARIBINER INTERNATIONAL ANNOUNCES DEFINITIVE AGREEMENT TO ACQUIRE
BLUMBERG COMMUNICATIONS FOR $18 MILLION
-- Creates One of Nation's Leading Providers of Audio Visual Equipment
Services and Hotel Audio Visual Outsourcing Services --
-Company is Awarded Seven-Year Contract with Starwood Lodging Corporation-
NEW YORK, December 20, 1996 -- Caribiner International, Inc.
(NYSE: CWC) today announced that it has signed a definitive agreement to
acquire Blumberg Communications, Inc. for $18 million, consisting of
$16.6 million in cash and $1.4 million in Caribiner common stock, plus
the repayment of approximately $5.5 million in outstanding indebtedness.
The acquisition will expand Caribiner's leading position as a provider of
audio visual equipment rentals and related staging services, including
hotel audio visual outsourcing services. This acquisition strengthens
Caribiner's position as one of the largest providers of audio visual
equipment rental and hotel audio visual outsourcing services in the
nation. The acquisition will also expand Caribiner's client base and
overall package of business communications services.
Blumberg provides audio visual equipment services, including
rental, sales, design, installation and consulting through numerous
offices in the Midwest and Southeast. Blumberg recorded approximately $42
million in revenue during its fiscal year ended May 31, 1996. The
combination of Blumberg and Total Audio Visual Services (TAVS), which was
acquired by Caribiner in September, 1996, will significantly expand the
geographic reach of Caribiner's audio visual services. The acquisition is
expected to close in early 1997, subject to certain closing conditions.
Commenting on the announcement, Raymond S. Ingleby, Chairman
and Chief Executive Officer of Caribiner, stated, "Building on
Caribiner's industry leadership, this transaction reflects our focus on
acquiring quality companies that will add value to our broad package of
business communications services. The combination of Blumberg and TAVS
will create one of the largest audio visual equipment rental and services
businesses in the nation. This acquisition highlights our position as a
leading consolidator in the fragmented business communications services
market. Blumberg will extend our geographic reach and provide us with the
opportunity to cross-promote our services to current and future clients.
"Since our acquisition of TAVS last September, we have
benefited from the integration of audio visual services into our other
service offerings. In addition to developing a broader service platform
to attract new clients, we can now utilize our own audio visual equipment
in the production of meetings and events, rather than outsourcing through
other companies."
<PAGE>
Caribiner also announced today that TAVS has been awarded a
seven-year contract to provide on-site audio visual equipment rental and
services to Starwood Lodging Corporation, an owner of various hotel
properties throughout the nation. The agreement provides for the
establishment of technical support operations in a minimum of 30 Starwood
properties in approximately 28 cities in 15 states and the District of
Columbia. In addition, the agreement provides that TAVS will be a future
provider of choice for new Starwood properties. Starwood owns
business-oriented hotel properties, including hotels such as DoubleTree,
Embassy Suites, Radisson, Westin and Marriott.
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 a leading international
producer of meetings, events, 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 in Atlanta, Boston,
Columbia (MD), Columbia (SC), Dallas, Detroit, Houston, Los Angeles, New
York, Orlando, Rolling Meadows (IL), San Francisco and White Plains (NY)
in North America, as well as in London, Dubai and Hong Kong.
Caribiner International, Inc. is listed on The New York Stock
Exchange and trades under the symbol CWC.
###
For further information, contact:
Arthur F. Dignam Diana Brainerd/Chris Plunkett
Chief Financial Officer Brainerd Communicators, Inc.
Caribiner International, Inc. 212-986-6667
212-541-5300
<PAGE>
EXHIBIT 99.2
FOR IMMEDIATE RELEASE
CARIBINER INTERNATIONAL, INC. REPORTS RESULTS FOR
FIRST QUARTER OF FISCAL 1997
-- Company Also Announces Completion of Acquisition
of Blumberg Communications --
NEW YORK, N.Y., February 3, 1997 -- Caribiner International, Inc. (CWC:
NYSE) today reported its financial results for the three month period
ended December 31, 1996.
Financial highlights (in thousands, except share data) are as follows:
Three Months Ended December 31,
1996 1995 % Change
---- ---- --------
Revenue $ 52,659 $ 20,407 158%
EBITDA(a) 3,479 518 572%
Operating income 1,770 (86) --
Net Income 737 (898) --
Earnings (loss) per share 0.08 (0.07)(b) --
Average shares outstanding 9,632,959 6,620,004 (b)
(a) EBITDA is defined as earnings before interest, taxes,
depreciation and amortization.
(b) Pro forma loss per common share for the period presented
assumes conversion of the Company's convertible note and all
outstanding shares of preferred stock into common stock
(which, in each case, occurred on March 15, 1996) as if such
conversions occurred on October 1, 1995. Pro forma loss per
common share assumes the elimination of interest expense
incurred on the convertible note during the period presented.
For the three months ended December 31, 1996, revenue
increased $32.3 million or 158 percent, to $52.7 million, from $20.4
million in the three months ended December 31, 1995. EBITDA (earnings
before interest, taxes, depreciation and amortization) for the three
month period ended December 31, 1996 increased $3.0 million or 572
percent to $3.5 million from $0.5 million in the comparable period of
1995. Net income for the three months ended December 31, 1996 increased
$1.6 million to $0.7 million from a loss of $0.9 million in the
comparable period of 1995.
<PAGE>
Caribiner also announced today that it has completed the
previously announced acquisition of Blumberg Communications, Inc. for $18
million (subject to certain adjustments), consisting of $16.6 million in
cash and $1.4 million in Caribiner common stock, plus the repayment of
approximately $3.9 million in outstanding indebtedness. Blumberg is a
provider of audio visual equipment services, including rentals, sales,
design, installation and consulting through numerous offices in the
Midwest and Southeast. Blumberg's operations will be integrated into
Caribiner's Total Audio Visual Services division.
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, Dubai and Hong Kong.
Caribiner International, Inc. is listed on The New York Stock
Exchange and trades under the symbol CWC.
###
For further information, contact:
Arthur F. Dignam Diana Brainerd/Chris Plunkett
Chief Financial Officer Brainerd Communicators, Inc.
Caribiner International, Inc. 212-986-6667
212-541-5300
