<PAGE> 1
As filed with the Securities and Exchange Commission on May 25, 1995
Registration No. 33-_____
________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
THE REYNOLDS AND REYNOLDS COMPANY
(Exact name of registrant as specified in its charter)
Ohio
(State or other jurisdiction of incorporation or organization)
31-0421120
(I.R.S. Employer Identification No.)
115 South Ludlow Street
Dayton, Ohio 45402
(513) 443-2000
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
ADAM M. LUTYNSKI, ESQ.
The Reynolds and Reynolds Company
115 South Ludlow Street
Dayton, Ohio 45402
(513) 443-2000
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of the Registration Statement
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
----------------------------------------------------------------------------------------------------------------------------
Title of each Amount to be Proposed Proposed Amount of
class of registered maximum maximum registration
securities to offering price aggregate fee*
be registered per share* offering price
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Common Shares 55,392 shares $30.1875 $1,672,146 $576.60
$.625 par value
-----------------------------
<FN>
* Calculated pursuant to Section 6 of the Securities Act of 1933, as amended,
and Rule 457(c) promulgated thereunder based upon the average of the high and
low prices of the Class A Common Shares $.625 par value, on the New York Stock
Exchange on May 24, 1995, as reported in The Wall Street Journal.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said section 8(a),
may determine.
</TABLE>
<PAGE> 2
THE REYNOLDS AND REYNOLDS COMPANY
115 SOUTH LUDLOW STREET
DAYTON, OHIO 45402
(513)443-2000
55,392 Class A Common Shares
($.625 par value)
PROSPECTUS
This Prospectus covers the resale of 55,392 Class A Common Shares, $.625 par
value ("Shares"), of The Reynolds and Reynolds Company (the "Company"), from
time to time on the New York Stock Exchange or in the over-the-counter market
at prices current at the time of sale by John M. Miller and Craig Callaway (the
"Selling Shareholders"). See "SELLING SHAREHOLDERS." The Shares include
rights to purchase from the Company a unit consisting of one one-thousandth of
a share of the Company's Series A Participating Preferred Shares, without par
value, at a price of $80, subject to adjustments under certain circumstances
(individually, a "Right" and collectively, the "Rights"). Since May 17,
1991, the Company issues one Right with each Class A Common Share that becomes
outstanding. The Selling Shareholders hereunder have not entered into any
arrangement or agreements with any broker or dealer for the offering or sale of
the Shares. In any transaction, a Selling Shareholder may be deemed an
"underwriter" as defined in the Securities Act of 1933, as amended. The
Company will receive no part of the proceeds of any such resales.
The Shares are traded on the New York Stock Exchange ("NYSE"). On May 24,
1995, the reported high and low sale prices of the Class A Common Shares on
the NYSE were $30.125 and $30.25 per share.
No person has been authorized in connection with this offering to give any
information or to make any representations, other than as contained in this
Prospectus and, if given or made, such information or representations must not
be relied upon. This Prospectus is not an offer or solicitation in any
jurisdiction to any person to whom such offer may not lawfully be made.
Neither the delivery of this Prospectus nor any sale made hereunder shall,
under any circumstances, create any implication that there has been no change
in the affairs of the Company since the date hereof.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
_________________________
The date of this Prospectus is May 25, 1995.
<PAGE> 3
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, and in accordance therewith, files reports,
proxy and information statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy and information
statements and other information filed by the Company can be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the Commission's
regional offices at 500 West Madison Street, Suite 1400, Chicago, Illinois
60661, and at 7 World Trade Center, Suite 1300, New York, New York 10048; and
copies of such material can be obtained at prescribed rates from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549. The Company's Class A Common Shares are listed on the New York Stock
Exchange and reports, proxy and information statements and other information
concerning the Company can be inspected at such exchange at 20 Broad Street,
New York, New York 10005.
A Registration Statement on Form S-3 under the Securities Act of 1933, as
amended, has been filed by the Company with the Commission with respect to the
Shares. This Prospectus does not contain all the information set forth in such
registration statement, amendments thereto and exhibits thereto which the
Company has filed with the Commission. For further information with respect to
the Company and the securities to which this Prospectus relates, reference is
made to such Registration Statement including the exhibits thereto.
The Company's principal executive offices are located at 115 South Ludlow
Street, Dayton, Ohio 45402, and its telephone number at that address is
513/443-2000.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents, all of which have been filed with the Commission
pursuant to the Securities Exchange Act of 1934, as amended (the "1934 Act"),
are incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K (including financial
statements together with the report of independent certified public
accountants thereon) for the fiscal year ended September 30, 1994
(File Number 0-132).
(b)(1) The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended December 31, 1994 (File Number 0-132).
(b)(2) The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 1995 (File Number 0-132).
(c)(1) The "Description of Registrant's Securities to be Registered" on pages
2 and 3 of the Company's Registration Statement on Form 8-A which
became effective on January 12, 1989 (File No. 1-10147).
(c)(2) The "Description of Registrant's Securities to be Registered" on pages
2 through 6 of the Company's Registration Statement on Form 8-A which
was filed on May 8, 1991 (File No. 1-10147).
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the 1934 Act, subsequent to the date of this Prospectus and prior to
the termination of the offering of the Shares hereunder, shall be deemed to be
incorporated by reference into this Prospectus and to be a part hereof from the
date of filing of any such document. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified by or superseded for purposes of this Prospectus to the extent
that a statement contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Prospectus.
2
<PAGE> 4
A copy of any document or part thereof incorporated by reference in the
registration statement of which this Prospectus constitutes a part (not
including exhibits to the information that is incorporated by reference unless
such exhibits are specifically incorporated by reference into the information
that the registration statement incorporates) shall be provided without charge
to each person, including any beneficial owner, to whom a copy of this
Prospectus is delivered, upon written or oral request made to the Company at
115 South Ludlow Street, Dayton, Ohio 45402, Attention: General Counsel and
Secretary, (513) 443-2000.
SELLING SHAREHOLDERS
Effective March 31, 1995, the Company acquired from Ultimate Prospecting
Services, Inc., a Massachusetts corporation ("Ultimate"), substantially all of
the assets of Ultimate. The purchase price for such assets was paid by
the Company in Class A Common Shares, resales of which are, to the extent
disclosed in the table below, covered by this Prospectus.
The Selling Shareholders named herein have informed the Company that they
desire to be in a position to sell the Shares set forth opposite their names
from time to time on the NYSE or in the over-the-counter market at prices
current at the time of sale. The Selling Shareholders have not entered into
any arrangements or agreements with any broker or dealer for the offering or
sale of the Shares.
<TABLE>
NUMBER OF NUMBER OF
SHARES OWNED SHARES TO BE
AS OF OFFERED FOR OWNER'S
MAY 5, 1995 ACCOUNT
<S> <C> <C> <C>
John M. Miller 1 146 Hupi Road 46,160 46,160
Monterey, Massachusetts 01245
Craig Callaway 2 115 Shady Ridge Court 9,232 9,232
Duluth, Georgia 30136
-------------------------------------------
<FN>
1 John M. Miller has been President and Director of Ultimate for more than three years. John Miller now serves as a General
Manager and Director for the Company.
2 Craig Callaway has been Vice President - Sales of Ultimate for more than three years.
</TABLE>
RECENT DEVELOPMENTS
Effective March 31, 1995, the Company purchased substantially all of the assets
and assumed certain liabilities of Ultimate. Ultimate provided prospect
monitoring and follow-up services to automobile dealers. The Company has
incorporated the Ultimate business into its Customer Marketing Services
Division. The purchase price for the Ultimate assets was $1,500,000, plus the
assumption of certain liabilities. The negotiated purchase price was paid by
delivery of 55,392 shares.
EXPERTS
The financial statements and the related financial statement schedules
incorporated in this Prospectus by reference from the Company's Annual Report
on Form 10-K have been audited by Deloitte & Touche LLP, independent auditors,
as stated in their report, which is incorporated herein by reference, and have
been so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
3
<PAGE> 5
With respect to the unaudited interim financial information for the periods
ended December 31, 1994 and March 31, 1995, which is incorporated herein by
reference, Deloitte & Touche LLP has applied limited procedures in accordance
with professional standards for a review of such information. However, as
stated in their reports included in the Company's Quarterly Report on Form 10-Q
for the quarters ended December 31, 1994 and March 31, 1995, and incorporated
by reference herein, they did not audit and they do not express an opinion on
that interim financial information. Accordingly, the degree of reliance on
their reports on such information should be restricted in light of the limited
nature of the review procedures applied. Deloitte & Touche LLP is not subject
to the liability provisions of Section 11 of the Securities Act of 1933 for
their reports on the unaudited interim financial information because those
reports are not "reports" or a "part" of the Registration Statement prepared or
certified by an accountant within the meaning of Sections 7 and 11 of the Act.
4
<PAGE> 6
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
An estimate of such expenses, none of which shall be borne by the Selling
Shareholders, is as follows:
Registration fee - Securities and Exchange Commission $ 577
Accountants' fees and expenses $ 3,000
Legal fees and expenses $ 6,000
Financial printer fees $ 500
Total $10,077
The Selling Shareholders shall bear brokerage fees incurred in connection with
the resale of the registered securities, as well as any federal or state income
taxes on the proceeds of any such resale.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Pursuant to Section 1701.13(E) of the Ohio Revised Code, the Company is
permitted to indemnify any director, officer, employee or agent of the Company
against costs and expenses incurred in connection with any action, suit or
proceeding brought against any such person by reason of his having served the
Company in such capacity, provided that he meets certain "good faith" tests
provided by law, and provided further that, with respect to suits brought on
behalf of the Company, he is not adjudged to be liable for negligence or
misconduct unless the relevant court finds indemnification to be nevertheless
appropriate in view of all the circumstances. The statute also provides that
in the event an officer or director has been successful on the merits in
defense of any such action, suit or proceeding, such officer or director shall
be indemnified by the Company against actual and reasonable expenses in
connection therewith.
Article Ninth of the Company's Amended Articles of Incorporation provides that,
as more specifically set forth in the Company's Consolidated Code of
Regulations, the Company may provide to any director, officer, other employee
or agent of the Company or any person who serves at the request of the Company
as a director, trustee, other employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, the maximum
indemnification permitted under Section 1701.13(E) of the Ohio Revised Code,
including amendments thereto, or any comparable provisions of any future Ohio
statute.
Paragraph B of Section 1 of Article IX of the Company's Consolidated Code of
Regulations provides for indemnification of directors, officers and employees
of the Company, and persons who, at the request of the Company, act as a
director, trustee, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
actually and reasonably incurred in connection with any action as to which he
was or is or may be made a party by reason of his acting in such capacity,
involving a matter as to which it shall be determined, as provided therein,
that he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Company, and, with respect to any
criminal matter or proceeding, in addition, that he had no reasonable cause to
believe that his conduct was unlawful; provided, however, that in the case of
an action by or in the right of the Company to procure a judgment in its favor,
no such indemnification shall be made in respect of any claim, issue or matter
as to which such person shall have been adjudged liable for negligence or
misconduct in the performance of his duty to the Company unless, and only to
the extent that, the Court of Common Pleas or other court where such action was
brought shall determine such indemnification to be proper.
ITEM 16. EXHIBITS
See Exhibit Index on page 9.
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the Prospectus any facts or
events arising after the effective date of
the registration statement (or the most
recent post-effective amendment thereof)
which, individually or in the aggregate,
represent a fundamental change in the
information set forth in the registration
statement; and
(iii) To include any material information with
respect to the plan of distribution not
previously disclosed in the registration
statement or any material change to such
information in the registration statement.
Provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the information required
to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by
the
5
<PAGE> 7
registrant pursuant to Section 13 or Section 15(d) of
the Securities Exchange Act of 1934 that are
incorporated by reference in this registration
statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new
registration statement relating to the securities
offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act
of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such
liabilities (other than the payment by the registrant of
expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it
is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
6
<PAGE> 8
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dayton, State of Ohio, on May 25, 1995.
THE REYNOLDS AND REYNOLDS COMPANY
By /s/David R. Holmes
------------------------------------------
David R. Holmes, Chairman of the Board,
President and Chief Executive Officer
(Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints David R. Holmes and Adam M. Lutynski, and each of
them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all future amendments to this
Registration Statement and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
/s/David R. Holmes
---------------------------------------------------------
David R. Holmes, Chairman of the Board, President May 25, 1995
and Chief Executive Officer (Principal Executive Officer)
and Director
/s/Dale L. Medford
---------------------------------------------------------
Dale L. Medford, Vice President, Corporate Finance May 25, 1995
and Chief Financial Officer (Principal Financial and
Accounting Officer) and Director
/s/Joseph N. Bausman
---------------------------------------------------------
Joseph N. Bausman, President, Automotive Systems May 25, 1995
Division and Director
/s/David E. Fry
---------------------------------------------------------
Dr. David E. Fry, Director May 25, 1995
/s/Richard H. Grant, Jr.
---------------------------------------------------------
Richard H. Grant, Jr., Chairman of the Steering May 25, 1995
Committee and Director
/s/Richard H. Grant, III
---------------------------------------------------------
Richard H. Grant, III, Director May 25, 1995
/s/Robert C. Nevin
---------------------------------------------------------
Robert C. Nevin, President, Business Forms Division May 25, 1995
and Director
7
<PAGE> 9
/s/Gayle B. Price, Jr.
-------------------------------------------------------
Gayle B. Price, Jr., Director May 25, 1995
/s/William H. Seall
-------------------------------------------------------
William H. Seall, Director May 25, 1995
/s/Kenneth W. Thiele
-------------------------------------------------------
Kenneth W. Thiele, Director May 25, 1995
/s/Martin D. Walker
-------------------------------------------------------
Martin D. Walker, Director May 25, 1995
8
<PAGE> 10
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
(1) Inapplicable
(2) Acquisition Agreement dated March 29, 1995 among The
Reynolds and Reynolds Company; Ultimate Prospecting
Services, Inc. and John M. Miller*
(4)(a) Specimen Certificate for Class A Common Shares ($.625
par value) of the Company incorporated by reference
to Exhibit (4)(c) to the Company's Registration
Statement on Form S-8 filed with the Securities and
Exchange Commission on March 4, 1992 (Registration
No. 33-46222).
(4)(b) Amended and Restated Articles of Incorporation of the
Company, incorporated by reference to Exhibit A to
the Company's definitive proxy statement dated
January 5, 1995, and filed with the Securities and
Exchange Commission.
(4)(c) Consolidated Code of Regulations of the Company,
incorporated by reference to Exhibit B to the
Company's definitive proxy statement dated January 8,
1990, and filed with the Securities and Exchange
Commission.
(4)(d) Shareholder Rights Plan incorporated by reference to
Exhibit 1 to the Company's Form 8-A (File No.
1-10147), which was adopted on May 6, 1991, and filed
with the Securities and Exchange Commission on May 8,
1991.
(5) Opinion of Coolidge, Wall, Womsley & Lombard Co.,
L.P.A., regarding legality of securities*
(8) Inapplicable
(12) Inapplicable
(15) Letter on interim financial information*
(23)(a) Consent of Coolidge, Wall, Womsley & Lombard
(incorporated by reference to Exhibit 5 hereto).
(23)(b) Consent of Deloitte & Touche LLP, independent auditors*
(24) Inapplicable
(25) Inapplicable
(26) Inapplicable
(27) Inapplicable
(28) Inapplicable
(99) Inapplicable
_________________________________________
*Filed herein.
9
<PAGE> 1
Exhibit 2
ACQUISITION AGREEMENT
AMONG
THE REYNOLDS AND REYNOLDS COMPANY,
ULTIMATE PROSPECTING SERVICES, INC.
AND
JOHN M. MILLER
dated as of March 29, 1995
<PAGE> 2
<TABLE>
<S> <C>
TABLE OF CONTENTS
-----------------
1. PURCHASE AND SALE OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
---------------------------
1.1 Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
-----------------
1.2 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
---------
1.3 Books and Records, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
----------------------
1.4 Licenses and Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
--------------------
1.5 Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
-----------
1.6 Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
----------------------
1.7 Other Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
-------------
2. EXCLUDED ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
---------------
3. ASSUMED LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
-------------------
3.1 Executory Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
---------------------
3.2 Balance Sheet Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
-------------------------
3.3 Certain Transaction Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
----------------------------
3.4 Accrued Vacation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
----------------
4. EXCLUDED LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
--------------------
4.1 Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
-----------------------
4.2 Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
--------
4.3 Product Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
-------------------
4.4 Affiliate Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
------------------
4.5 Tax Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
---------------
4.6 Employee-related Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
----------------------------
4.7 Transaction Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
--------------------
4.8 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
---------------
4.9 Other Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
-----------------
5. CONSIDERATION AND DELIVERY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
--------------------------
5.1 Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
-------------
5.2 Delivery of Purchaser's Shares to Seller. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
----------------------------------------
5.3 Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
----------
5.4 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
-----
6. PURCHASER'S SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
------------------
6.1 Issuance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
--------
6.2 Exemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
----------
6.3 Securities Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
------------------
6.4 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
-----------
7. INDIVIDUAL REPRESENTATIONS AND WARRANTIES OF MAJORITY SHAREHOLDER . . . . . . . . . . . . . . . . . . . 7
-----------------------------------------------------------------
7.1 Power and Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
------------------
7.2 No Conflict with Other Agreements or Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
-----------------------------------------
8. REPRESENTATIONS AND WARRANTIES OF SELLER AND MAJORITY SHAREHOLDER . . . . . . . . . . . . . . . . . . . 7
-----------------------------------------------------------------
8.1 Corporate Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
----------------
8.2 No Conflict With Other Agreements or Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
-----------------------------------------
8.3 Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
------------------------------
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8.4 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
------------
8.5 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
--------------------
8.6 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
-----
8.7 Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
----------
8.8 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
---------
8.9 Absence of Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
------------------
8.10 Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
-----------------
8.11 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
-------------
8.12 Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
----------
8.13 Litigation; Compliance with Laws, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
-------------------------------------
8.14 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
---------------
8.15 Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
---------------------
8.16 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
---------
8.17 Title to Properties; Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
---------------------------------
8.18 Intellectual Property Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
---------------------------------
8.19 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
----------------------
8.20 Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
---------------------
8.21 Customers and Suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
-----------------------
8.22 Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
---------------------
8.23 Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
-------------
8.24 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
-----------------
8.25 Intentionally Omitted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
---------------------
8.26 Investment Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
-----------------
8.27 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
----------
9. REPRESENTATIONS AND WARRANTIES OF PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
-------------------------------------------
9.1 Corporate Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
----------------
9.2 No Conflict With Other Agreements or Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
-----------------------------------------
9.3 Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
------------------------------
9.4 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
-----------
9.5 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
----------
10. COVENANTS OF SELLER AND MAJORITY SHAREHOLDERS. . . . . . . . . . . . . . . . . . . . . . . . . . 21
----------------------------------------------
10.1 Conduct of Business Prior to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
------------------------------------
10.2 Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
---------------------
10.3 Other Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
------------------
10.4 Consents, Waivers and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
-------------------------------
10.5 Supplemental Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
-----------------------
10.6 Additional Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
------------------
10.7 Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
--------------------
10.8 Purchaser's Due Diligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
-------------------------
11. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . 23
------------------------------------------------
11.1 Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
---------------
11.2 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
---------
11.3 No Injunction, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
------------------
11.4 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
------------------
11.5 Incumbency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
----------
11.6 Consents, Waivers and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
-------------------------------
11.7 Absence of Material Adverse Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
-----------------------------------
11.8 Certified Resolutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
---------------------
11.9 Pay-off Letters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
---------------
11.10 Title Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
----------------
</TABLE>
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11.11 Basic Corporate Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
-------------------------
11.12 Lessor Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
----------------
11.13 Transaction Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
--------------------
11.14 Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
-----------
11.15 Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
---------------------
11.16 Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
---------------------
11.17 Intellectual Property Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
---------------------------------
11.18 Instruments of Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
-----------------------
11.19 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
------------
11.20 Certain Employee Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
--------------------------
11.21 Agreement with Peter Simonson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
-----------------------------
11.22 Subscription Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
-----------------------
12. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER AND MAJORITY SHAREHOLDER . . . . . . . . . . . . . . . . . . . 26
----------------------------------------------------------------------
12.1 Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
---------------
12.2 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
---------
12.3 Certified Resolutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
---------------------
12.4 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
------------------
12.5 No Injunction, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
------------------
12.6 Consents, Waivers and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
-------------------------------
12.7 Incumbency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
----------
12.8 Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
---------------------
12.9 Employment Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
--------------------
13. MUTUAL COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
----------------
13.1 Pre-closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
-----------
13.2 Tax Reporting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
-------------
13.3 Name. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
----
14. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
-------
14.1 Time and Place . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
--------------
14.2 Transactions at the Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
---------------------------
14.3 Default at Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
------------------
15. EMPLOYEES OF SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
-------------------
16. SURVIVAL OF REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
---------------------------
17. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
-----------
18. CERTAIN EMPLOYEE SETTLEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
----------------------------
19. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
---------------
19.1 Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
------
19.2 Indemnification by Seller and Majority Shareholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
--------------------------------------------------
19.3 Indemnification by Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
----------------------------
19.4 Procedures for Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
------------------------------
19.5 Defense of Third Party Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
-----------------------------
19.6 Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
-----------
</TABLE>
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20. TRANSACTION EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
--------------------
20.1 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 34
-------
20.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 34
--------
21. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 34
-------------
21.1 Accounting Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 34
------------------
21.2 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 35
------
21.3 Assignment; Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 36
--------------------------
21.4 Headings; Exhibits and Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 36
--------------------------------
21.5 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 36
------------
21.6 Integration of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 36
------------------------
21.7 Time of Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 36
---------------
21.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 36
-------------
21.9 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 36
----------
21.10 Partial Illegality or Unenforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 36
--------------------------------------
21.11 Right to Proceed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 37
----------------
21.12 Effect of Investigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 37
-----------------------
21.13 Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 37
-----------
21.14 "Knowledge." . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 38
------------
21.15 "Person." . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 38
---------
21.16 "Best Efforts." . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 38
---------------
21.17 "Including." . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 38
------------
21.18 Singular or Plural . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 38
------------------
22. SELLER'S OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 38
--------------------
23. COVENANT NOT TO COMPETE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 39
-----------------------
23.1 Covenant Not to Compete . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 39
-----------------------
23.2 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 39
-----------
23.3 Equitable Relief. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 39
----------------
23.4 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 40
------------
</TABLE>
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LIST OF EXHIBITS
----------------
<TABLE>
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1.2 Contracts
3.2(a) Acquired Balance Sheet
3.2(b) Excluded Balance Sheet Liabilities
8.2 Certain Exceptions
8.3 Certain Investments; Articles and Bylaws
8.4 Subsidiaries
8.5(a) Financial Statements
8.5(b) Liabilities
8.5(c) Defaults
8.6 Taxes
8.7 Receivables
8.8 Insurance
8.9 Changes
8.10(a) Owned Personal Property
8.10(b) Leased Personal Property
8.10(c) Defects
8.11 Leased Real Property
8.12 Affiliates
8.13 Litigation
8.14 Labor Relations
8.16 Contracts
8.17 Title to Properties; Encumbrances
8.18 Intellectual Property Intangibles
8.19 Employee Benefit Plans
8.21 Customers and Suppliers
8.23 Bank Accounts
10.4 Permitted Encumbrances
11.4 Opinion of Counsel for Seller and Majority Shareholder
11.13 Transaction Expense Confirmations
11.14 Employment and Non-competition Agreement
12.4 Opinion of Counsel for Purchaser
</TABLE>
v
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ACQUISITION AGREEMENT
---------------------
THE REYNOLDS AND REYNOLDS COMPANY ("PURCHASER"), ULTIMATE PROSPECTING
SERVICES, INC. ("SELLER") and JOHN M. MILLER ("MAJORITY SHAREHOLDER") agree as
follows:
RECITALS:
---------
Seller provides a prospect monitoring and follow-up service to automobile
dealers (the "BUSINESS").
Majority Shareholder is the owner of approximately eighty-three percent (83%)
of the issued and outstanding capital stock of Seller.
The parties intend that this agreement (the "AGREEMENT") constitute a plan of
reorganization and that the transfer by Seller of substantially all of its
assets and certain of its liabilities qualify for Federal income tax purposes
as a "reorganization" within the meaning of Section 368(a)(1)(C) of the
Internal Revenue Code of 1986, as amended (the "CODE").
1. PURCHASE AND SALE OF ASSETS. Subject to the terms and conditions of this
Agreement, Purchaser agrees to purchase and Seller agrees to sell effective as
of the Effective Time, all of the rights and assets of Seller used in or useful
to the Business, wherever located, excluding the Excluded Assets (as defined in
Section 2), but including without limitation, the following, as the same may
change in the ordinary course through the Effective Time:
1.1 PERSONAL PROPERTY. All furniture, fixtures, machinery, equipment
(including without limitation computer, telephone and office equipment),
leasehold improvements and other personal property (including without
limitation inventory and fixed assets), and all related warranties
(collectively, the "PERSONAL PROPERTY").
1.2 CONTRACTS. Those contracts, agreements, leases, licenses, purchase
orders, sale orders or commitments, which are identified on Exhibit 1.2 hereto
(individually, a "CONTRACT" and collectively, the "CONTRACTS").
1.3 BOOKS AND RECORDS, ETC. All books, records, accounts, customer lists,
files, catalogues, sales materials, employment records and related materials,
but excluding all of Seller's corporate minute books, stock records and other
documents which are not reasonably of use to Purchaser in the conduct of the
Business (collectively, the "BOOKS AND RECORDS").
1.4 LICENSES AND PERMITS. To the extent permitted under applicable law or
regulation, all licenses, permits, certificates and governmental authorizations
of Seller.
<PAGE> 8
1.5 RECEIVABLES. All accounts, notes or other receivables (collectively, the
"RECEIVABLES").
1.6 INTELLECTUAL PROPERTY. All Intellectual Property Intangibles (as
defined in Section 8.18) including, without limitation, the "Ultimate
Prospecting Services" name, and all goodwill associated with the Intellectual
Property Intangibles.
1.7 OTHER ASSETS. All other assets used in or useful to the Business,
wherever located, tangible or intangible, including cash, cash equivalents and
securities, prepaid expenses, deposits, causes of action and claims and
demands.
The assets described in this Section 1 are collectively referred to in this
Agreement as the "ACQUIRED ASSETS."
2. EXCLUDED ASSETS. Purchaser shall not acquire any right or interest of
Seller in the following assets:
2.1 CERTAIN BALANCE SHEET ASSETS. Those assets identified on the Acquired
Balance Sheet (as defined in Section 3.2) as "Reorganization Costs" and
"Utility Deposits."
2.2 INSURANCE AND RELATED DEPOSITS. All contracts, agreements or
commitments relating to insurance and all rights to refunds or deposits related
to such insurance.
2.3 CERTAIN BOOKS AND RECORDS. Seller's corporate minute books, records and
other documents which are not reasonably of use to Purchaser in the conduct of
the Business.
2.4 CONTRACTS. All contracts, agreements, leases, licenses, purchase
orders, sales orders or commitments not defined in or identified on Exhibit
1.2.
The items described in this Section 2 are collectively referred to in this
Agreement as the "EXCLUDED ASSETS." If, after the Effective Time, Purchaser
receives any Excluded Asset, Purchaser shall promptly deliver the same to
Seller. If, after the Effective Time, Seller or Majority Shareholder receives
any Acquired Asset, Seller or Majority Shareholder, as applicable, shall
promptly deliver the same to Purchaser.
3. ASSUMED LIABILITIES. As of the Effective Time, Purchaser shall assume
responsibility for the performance and satisfaction of:
3.1 EXECUTORY OBLIGATIONS. The executory obligations of Seller under the
Contracts, excluding any obligations or liabilities arising from any breach or
default thereunder by Seller.
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3.2 BALANCE SHEET LIABILITIES. The liabilities of Seller identified in
restated unaudited balance sheet for Seller as of December 31, 1994 (the
"ACQUIRED BALANCE SHEET"), a copy of which is attached hereto as Exhibit
3.2(a), subject to changes in the amount of such liabilities in the ordinary
course or as otherwise authorized by Purchaser from December 31, 1994 to the
Effective Time, but excluding those liabilities which are identified in Exhibit
3.2(b).
3.3 CERTAIN TRANSACTION EXPENSES. Purchaser shall assume Seller's liability
for professional expenses in connection with the negotiation and execution of
this Agreement and solely and directly related to the transfer of the Acqiured
Assets incurred by Seller (as opposed to such expenses incurred by Majority
Shareholder or any employees of Seller), exclusive of any brokers' or agents'
fees or expenses which shall be retained by Seller, up to $75,000 (the
"TRANSACTION EXPENSES").
3.4 ACCRUED VACATION. Purchaser shall assume Seller's accrued vacation
liabilities.
The foregoing items described in this Section 3 are collectively referred to as
the "ASSUMED LIABILITIES".
4. EXCLUDED LIABILITIES. Except as set forth in Section 3 of this Agreement or
as otherwise provided for in Section 24 of this Agreement, Purchaser shall not
assume or become liable for any liabilities of Seller of any kind or character
including without limitation the following:
4.1 UNDISCLOSED LIABILITIES. Except for the executory obligations described
in Sections 3.1, the expenses described in Section 3.3 and the liability
described in Section 3.4, any liabilities or obligations of Seller not
reflected in the Acquired Balance Sheet (as the same may change in the ordinary
course of business through the Effective Time), whether known or unknown,
absolute, contingent or otherwise.
4.2 DEFAULTS. Any obligation or liability arising from or relating to any
breach or default by Seller under any Contract.
4.3 PRODUCT LIABILITIES. Any liability or obligation arising out of or
related to any product produced by or service rendered by Seller prior to the
Effective Time (including without limitation claims for breach of warranty).
4.4 AFFILIATE PAYABLES. Any liabilities of Seller for certain payables
required to be disclosed on Exhibit 8.12 pursuant to Section 8.12(b).
4.5 TAX LIABILITIES. Any liabilities or obligations arising out of or
related to Taxes (as defined in Section 8.6) other than
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those liabilities assumed by Purchaser pursuant to Sections 3.2 and 5.4.
4.6 EMPLOYEE-RELATED LIABILITIES. Except for those liabilities assumed by
Purchaser pursuant to Section 3.2, any liabilities or obligations arising out
of or related to employees or former employees of Seller, including without
limitation liabilities or obligations for unpaid wages, salaries, benefits,
vacation pay, sick pay, or holiday pay, withholding, unemployment or workers
compensation taxes or benefits, and contributions or premiums payable to, under
or with respect to any employee benefit plan or arrangement or obligations
under any self-funded employee benefit plan or arrangement.
4.7 TRANSACTION EXPENSES. Except for those liabilities assumed by Purchaser
pursuant to Section 3.3, any expenses incurred by Seller or Majority
Shareholder in connection with the authorization, preparation, negotiation and
consummation of this Agreement, including without limitation, fees and expenses
of counsel, brokers and accountants.
4.8 EXCLUDED ASSETS. Any liabilities or obligations arising out of or
associated with the Excluded Assets, unless and to the extent assumed by
Purchaser pursuant to Section 3.2.
4.9 OTHER LIABILITIES. Those liabilities identified in Exhibit 8.13.
The items described in this Section 4 are collectively referred to as the
"EXCLUDED LIABILITIES."
5. CONSIDERATION AND DELIVERY.
5.1 CONSIDERATION. The consideration for the Acquired Assets, in addition
to the assumption of the Assumed Liabilities by Purchaser, and subject to
adjustment pursuant to Section 5.3, shall be the number of Purchaser's class A
common shares determined by dividing (a) $1,500,000 (the "BASE VALUE"), by (b)
the Base Price (as defined in this Section), rounded up to the next whole
number (collectively, the "PURCHASER'S SHARES"). "BASE PRICE" means the
average closing price for Purchaser's class A common shares on the New York
Stock Exchange for the thirty (30) trading days ending on March 24, 1995.
immediately preceding the fifth (5th) trading day prior to the Effective Time.
5.2 DELIVERY OF PURCHASER'S SHARES TO SELLER. At the Closing, Purchaser
shall deliver to Seller certificates for the Purchaser's Shares.
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5.3 ADJUSTMENT. The Purchaser's Shares issuable under Section 5.1 shall be
adjusted as follows:
(a) Purchaser shall deliver to Seller and Majority Shareholder, not later
than sixty (60) days after the Effective Time, a balance sheet (the "CLOSING
BALANCE SHEET") for the Acquired Assets and Assumed Liabilities as of the
Effective Time. The Closing Balance Sheet shall be prepared in accordance with
generally accepted accounting principles ("GAAP") and otherwise consistent with
the Acquired Balance Sheet (e.g., accrued vacation shall be an off-balance
sheet item). The Closing Balance Sheet shall be accompanied by Purchaser's
determination of the amount of the adjustment, if any, to the Purchaser's
Shares required by Section 5.3(b). Seller and Majority Shareholder shall have
thirty (30) days from receipt of the Closing Balance Sheet and adjustment
determination to object to either by written notice to Purchaser. If Purchaser
does not receive notice of an objection within such time, the Closing Balance
Sheet and adjustment determination prepared by Purchaser shall be final and
binding on the parties. If Seller and Majority Shareholder timely notify
Purchaser of an objection, the parties shall have ten (10) days from the date
of Seller's notice to resolve the objection. If the parties do not resolve the
objection within such time, the certified public accounting firm of Arthur
Andersen & Co. (the "INDEPENDENT AUDITORS"), shall resolve the objection within
thirty (30) days after expiration of such 10-day period and such resolution
shall be final and binding on the parties. The fees and expenses of the
Independent Auditors shall be borne by Seller and Purchaser in proportion the
respective differences between their positions submitted to the Independent
Auditors and the final determination of the Independent Auditors.
(b) The Base Value shall be reduced dollar-for-dollar by the amount the
Acquired Net Book Value on the Closing Balance Sheet is less than $189,800.
"ACQUIRED NET BOOK VALUE" shall mean the difference of the Acquired Assets less
the Assumed Liabilities as shown on the Closing Balance Sheet. There shall be
no adjustment to the Base Value if the Acquired Net Book Value is greater than
$189,800. The adjustment to the number of Purchaser's Shares issuable pursuant
to Section 5.1 shall be determined by dividing (i) the difference of (A) the
Acquired Net Book Value, less (B) $189,800, by (ii) the Base Price, and
rounding down to the next whole number.
(c) Within ten (10) days after final determination (whether by Seller's and
Majority Shareholder's failure to object, agreement of the parties or
determination by the Independent Auditors), Seller shall pay the adjustment by
either (i) wire transfer of cash in the amount of the adjustment multiplied by
the Base Price or (ii) deliver of certificate(s) for Purchaser's Shares
(together with stock powers sufficient to transfer the required number of
Purchaser's Shares) in the amount of the adjustment (if
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the certificates so surrendered represent more than the amount of the
adjustment, Purchaser shall cause its transfer agent to promptly return to
Seller certificates representing the balance of the Purchaser's Shares
represented by such certificates.) The parties acknowledge that an adjustment
pursuant to this Section 5.3 shall be treated as an adjustment to the purchase
price for the Acquired Assets for all purposes.
5.4 TAXES. Seller shall pay all income taxes arising out of the sale of the
Acquired Assets. Purchaser shall pay all sales, bulk sales or transfer taxes,
recording fees and similar fees or charges arising out of the sale of the
Acquired Assets. Seller shall timely file all Returns (as defined in Section
8.6) for Taxes described in this Section 5.4 (provided that Purchaser shall
have a reasonable opportunity to review and comment upon Returns for Taxes
payable by Purchaser prior to the respective due dates).
6. PURCHASER'S SHARES.
6.1 ISSUANCE. The Purchaser's Shares may be newly issued or treasury
shares, at Purchaser's election, provided that Purchaser will comply with the
following provisions of this Section 6. In any event, all of the Purchaser's
Shares so issued will be duly and validly authorized and issued, fully paid and
nonassessable and, not later than 60 days after the Effective Time, covered by
an effective listing application with the New York Stock Exchange.
6.2 EXEMPTIONS. Seller acknowledges that the parties intend that the
issuance of Purchaser's Shares pursuant to Section 5.1 and the distribution of
the Purchaser's Shares to Seller's shareholders upon the required dissolution
of Seller pursuant to Section 10.9 shall qualify as exempt transactions under
(a) Section 4(2) of the Securities Act of 1933, as amended, and (b) applicable
state securities laws (collectively, the "EXEMPTIONS"). All certificates for
the Purchaser's Shares shall bear the legends restricting the sale, transfer or
disposition of the Purchaser's Shares necessary to assure compliance with the
Exemptions. Such restrictions shall be removed as soon as the listing
application and registration statement contemplated by this Section 6 become
effective.
6.3 SECURITIES FILINGS. Purchaser shall, at its expense, and within sixty
(60) days following the Effective Time, prepare and file with the Securities
and Exchange Commission a registration statement and any amendments (including
post-effective amendments thereto or supplements to any prospectus contained
therein), relating to the resale of the Purchaser's Shares and will use its
best efforts to cause such registration statement and prospectus to become and
remain effective for a period of not less than three (3) years from the
Effective Time.
6.4 COOPERATION. Seller will cooperate (and will cause its shareholders to
cooperate) with Purchaser and provide such
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information in connection with any registration statement, report of sale or
other document reasonably required by Purchaser in the performance of its
obligations under Section 5.1 and this Section 6.
7. INDIVIDUAL REPRESENTATIONS AND WARRANTIES OF MAJORITY SHAREHOLDER. Majority
Shareholder represents and warrants to Purchaser as follows:
7.1 POWER AND CAPACITY. Majority Shareholder has the power and authority to
execute and consummate this Agreement. This Agreement and each other agreement
contemplated hereby which is executed by Majority Shareholder constitute the
valid and legally binding obligations of Majority Shareholder, enforceable in
accordance with their terms, except that enforceability may be limited by
applicable equitable principles or bankruptcy, insolvency, or similar laws
affecting the enforcement of creditors rights generally.
7.2 NO CONFLICT WITH OTHER AGREEMENTS OR LAWS. The execution and
consummation by Majority Shareholder of this Agreement and each other agreement
contemplated hereby which is executed by Majority Shareholder will not (a)
violate the terms of any agreement, instrument, judgment or decree to which
Majority Shareholder is a party or by which Majority Shareholder or any of
Majority Shareholder's properties is bound, (b) be in conflict with, or result
in a breach of or constitute (with giving of notice or lapse of time or both) a
default under any such agreement, instrument, judgment or decree, or (c)
violate any applicable federal, state, local or foreign law, regulation or
order.
8. REPRESENTATIONS AND WARRANTIES OF SELLER AND MAJORITY SHAREHOLDERS. Seller
and Majority Shareholder jointly and severally represent and warrant to
Purchaser as follows:
8.1 CORPORATE ACTION. Seller has taken all action required by its Articles
of Incorporation and Bylaws or otherwise to authorize the execution and
consummation of this Agreement and the other agreements, documents or
instruments to be executed by Seller pursuant to this Agreement (collectively,
the "SELLER AGREEMENTS"). The Seller Agreements will constitute the valid and
legally binding obligations of Seller, enforceable in accordance with their
terms, except that enforceability may be limited by applicable equitable
principles or bankruptcy, insolvency, or similar laws affecting the enforcement
of creditors rights generally.
8.2 NO CONFLICT WITH OTHER AGREEMENTS OR LAWS. Except as set forth on
Exhibit 8.2, the execution and consummation by Seller of the Seller Agreements
will not (a) violate the terms of Seller's Articles of Incorporation or Bylaws
or any instrument, agreement, judgment or decree to which Seller is a party, or
by which Seller or any of its properties is bound, (b) conflict with, result in
a
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breach of or constitute (with giving of notice or lapse of time or both) a
default under any such instrument, agreement, judgment or decree, (c) result in
the creation or imposition of any lien upon Seller or its properties or assets,
or (d) violate any applicable federal, state, local or foreign law, regulation
or order if the result of such violation, conflict, breach, default or lien
would have a material adverse effect on Seller or the Business.
8.3 ORGANIZATION AND QUALIFICATION. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Massachusetts. Seller has full power and authority to carry on its business as
it is now being conducted, to own and lease the properties and assets which it
now owns or leases and to consummate the Seller Agreements. Except for
marketable securities and instruments issued by financial institutions, Seller
does not own any securities of or investment or interest in any other entity or
person other than as described in Exhibit 8.3. Complete and correct copies of
Seller's Articles of Incorporation and Bylaws (including all amendments to
either to date) are attached in Exhibit 8.3.
8.4 SUBSIDIARIES. Seller has no subsidiaries. Seller does not control, and
is not controlled by or under common control with any person, firm,
corporation, partnership, association or entity, and Seller is not a partner or
participant in any partnership or joint venture or other arrangement of any
kind other than as described in Exhibit 8.4.
8.5 FINANCIAL STATEMENTS.
(a) Attached as Exhibit 8.5(a) hereto are copies of (i) the Seller's
December 31, 1994 Balance Sheet and an unaudited profit and loss statement for
Seller from January 1, 1994 to the close of business on December 31, 1994 (such
Balance Sheet and profit and loss statement for such period shall be referred
to herein as the "12/31/94 FINANCIAL STATEMENTS"), and (ii) Seller's annual
financial statements as of December 31, 1993 and December 31, 1992 (such
financial statements are collectively referred to as the "ANNUAL FINANCIAL
STATEMENTS"; the 12/31/94 Financial Statements and the Annual Financial
Statements are collectively referred to as the "FINANCIAL STATEMENTS"). Except
as set forth on Exhibit 8.5(a), the Financial Statements (including the
footnotes thereto) (i) are true and correct in all material respects, (ii) have
been prepared in accordance with GAAP on a consistent basis, (iii) fairly
present the financial condition of Seller as of the respective dates thereof
and the results of operation of Seller for such periods, and (iv) disclose all
material liabilities of Seller required to be disclosed on such financial
statements prepared in accordance with GAAP, whether absolute, contingent,
accrued, or otherwise. Except as disclosed in Exhibit 8.5(a), the Financial
Statements do not contain any items of nonrecurring income or loss
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or other income or loss not earned or incurred in the ordinary course of
business.
(b) Except as disclosed in Exhibit 8.5(b) hereto and except for (i) the
liabilities of Seller disclosed or reserved against in the Acquired Balance
Sheet, (ii) current liabilities incurred in the ordinary course of business
since December 31, 1994, and (iii) executory obligations under contracts,
agreements, leases, licenses, purchase orders and sales orders, to Seller's
knowledge, Seller has no material liability or obligation, whether accrued,
absolute, contingent or otherwise.
(c) Except as disclosed in Exhibit 8.5(c) hereto, no default exists as to
any of the material (either individually or in the aggregate) liabilities of
Seller.
8.6 TAXES. (a) Except as disclosed in Exhibit 8.6 hereto, Seller (a) has
timely filed all foreign, federal, state, and local tax returns, statements or
other filings required of Seller (collectively, the "RETURNS") with respect to
any foreign, federal, state or local taxes, assessments, interest, penalties,
fees or other governmental impositions, including without limitation income,
franchise, retailers' occupation, sales, use, excise, withholding,
unemployment, workers compensation, windfall profits, customs, duties,
property, intangible and transfer taxes (collectively, the "TAXES") related to
or arising in whole or in part out of operation of the Business prior to the
Effective Time or any assets owned or used by Seller prior to the Effective
Time, and (b) paid all Taxes due prior to the Effective Time. Seller has not
received any notice of assessment or proposed assessment with respect to the
Taxes. Seller has not extended the statute of limitations for assessment or
collection of any Taxes. Seller has made all required deposits with respect to
any withholding or other employee-related Taxes. Except for liens for Taxes
accrued but not yet payable, no lien exists on any of the Acquired Assets with
respect to the Taxes.
(b) The acquisition of the Acquired Assets and the assumption of the
Assumed Liabilities will be consummated in accordance with the terms of this
Agreement.
(c) All of the Assumed Liabilities were incurred by the Seller in the
ordinary course of Seller's business.
(d) No consideration other than the Purchaser's Shares and Purchaser's
assumption of the Assumed Liabilities will be issued or transferred, directly
or indirectly, in exchange for the Acquired Assets.
(e) Under no circumstances shall the assumption of the Assumed Liabilities
involve the payment of any money or other property to Seller, nor shall
Purchaser assume liability for any
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expenses of a shareholder of Seller (collectively, the "SHAREHOLDERS" and
individually a "SHAREHOLDER").
(f) The fair market value of the Acquired Assets will equal or exceed the
total amount of the Assumed Liabilities.
(g) There is no plan or intention by Shareholders to sell, exchange, or
otherwise dispose of a number of Purchaser's Shares received after the
transactions contemplated in this Agreement that would reduce the ownership by
the Shareholders of the Purchaser's Shares to a number of shares having a
value, as of the Closing Date, of less than 50 percent of the value of all the
formerly outstanding shares of the Seller as of the same date.
(h) Purchaser will acquire at least 90 percent of the fair market value of
the net assets and at least 70 percent of the fair market value of the gross
assets held by Seller immediately prior to the transactions contemplated in
this Agreement. For purposes of this representation, amounts used by Seller to
pay its reorganization expenses, if any, and all redemptions and distributions
(except for regular, normal dividends) made by the Seller immediately preceding
the transactions contemplated in this Agreement will be included as assets of
Seller held immediately prior to the transactions contemplated in this
Agreement.
(i) To the best of Seller's and Majority Shareholder's knowledge, there
will be and will have been no intercorporate indebtedness existing between
Purchaser and Seller that was issued, acquired or will be settled at a
discount.
(j) Except for those liabilities assumed by Purchaser pursuant to Section
3.3, Seller and Shareholders will pay their respective expenses, if any,
incurred in connection with the transactions contemplated in this Agreement.
(k) Seller is not an "investment company" as defined in Section
368(A)(2)(F) of the Code.
8.7 RECEIVABLES. (a) To Seller's and Majority Shareholder's knowledge,
except as set forth on Exhibit 8.7 hereto, all of the Receivables have been
generated in the ordinary course of business and represent valid debts due and
owing to Seller. Except as set forth in Exhibit 8.7, to Seller's and Majority
Shareholder's knowledge no Receivable is subject to any counterclaim or any
right of setoff. Seller has delivered to Purchaser a detailed aging of the
Receivables as of January 31, 1995.
(b) Except as set forth on Exhibit 8.7, all of the Receivables as of the
Effective Time will be collected on or before September 30, 1995, in the
aggregate recorded amounts thereof (less the sum of (i) the allowance for
doubtful accounts and customer settlements shown on the Closing Balance Sheet,
plus (ii) $10,000).
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8.8 INSURANCE. Except as set forth in Exhibit 8.8, there are no outstanding
requirements or recommendations by any current insurer or underwriter with
respect to the Acquired Assets or otherwise which requires or recommends
changes in the conduct of the Business of, or requires any repairs or other
work to be done with respect to any of the Acquired Assets.
8.9 ABSENCE OF CHANGES. Since December 31, 1994 and except as disclosed on
Exhibit 8.9 hereto and except for the transactions contemplated by the Seller
Agreements, Seller has not:
(a) engaged in any activity other than in the ordinary course (as to both
type and amount), including without limitation, the sale, transfer or
conveyance of any assets, entering into any Contract, the borrowing of any
amounts or the making of or committing to make any capital expenditures in an
aggregate amount greater than $10,000;
(b) suffered any material adverse change in (i) the Business or (ii) the
Acquired Assets, Assumed Liabilities, or Seller's financial condition, and, to
the Seller's and Majority Shareholder's knowledge, no fact or condition exists
or has been threatened, which is reasonably likely to cause such a change in
the future other than facts and circumstances which Seller has previously
expressly and fully disclosed to Purchaser;
(c) incurred or increased the amount subject to any lien, encumbrance or
claim upon any of the Acquired Assets, except for any lien with respect to
taxes not yet due and payable;
(d) discharged or reduced any lien or encumbrance other than as required
by its terms, paid any liability other than current liabilities incurred in the
ordinary course of business and paid in accordance with their terms, or
intentionally delayed payment of any material (alone or in the aggregate)
account payable or other liability of the Business beyond its due date;
(e) incurred any material default in any liability (accrued or otherwise);
(f) made any change adverse to it in the terms of any agreement or
instrument to which it is a party;
(g) declared or made any distribution or other payment to its security
holders, or issued any additional securities or redeemed, purchased or
otherwise acquired any of its securities, or made any change in its capital
structure;
(h) paid any bonus to or granted any increase in the rates of pay or any
increase in the pension, retirement or other benefits of its directors,
officers or other employees, other than normal cost-of-living and merit salary
increases made in accordance
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with regular company policies or as otherwise expressly contemplated by this
Agreement;
(i) introduced any new method of accounting; or
(j) incurred or agreed to incur any material indebtedness or entered into
any material (alone or in the aggregate) capitalized leases.
8.10 PERSONAL PROPERTY.
(a) Except for inventory, Exhibit 8.10(a) hereto sets forth a true and
correct list of all items of Personal Property owned by Seller and all
furniture, fixtures, machinery, equipment, vehicles and other personal property
leased by Seller pursuant to a capitalized lease.
(b) Exhibit 8.10(b) hereto sets forth a true and correct list of all items
of furniture, fixtures, vehicles, machinery, equipment or other personal
property leased by Seller pursuant to an operating lease.
(c) Except as identified in Exhibit 8.10(c) and except for normal wear and
tear, each item of personal property required to be identified in Exhibit
8.10(a) or Exhibit 8.10(b) is in good condition and repair.
8.11 REAL PROPERTY. Exhibit 8.11 hereto sets forth a true and correct list
of all real property leased or used by Seller. Except as set forth in Exhibit
8.11, all improvements thereon are in good condition and repair, normal wear
and tear excepted. Seller does not own any real property.
8.12 AFFILIATES.
(a) Except as set forth in Exhibit 8.12, and except for interests in
publicly-traded entities which in the aggregate do not entitle Majority
Shareholder and any affiliate of Majority Shareholder to more than 5% of the
voting power of the entity, neither the Majority Shareholder nor any affiliate
(as defined in Exhibit 8.12; an "AFFILIATE") of the Majority Shareholder owns,
of record, or beneficially, any outstanding voting securities or other equity
interests, or any other securities exchangeable, convertible or exercisable for
or into, whether or not for any additional consideration, any voting securities
or other equity interests, in any corporation, partnership, joint venture or
other entity (except the Seller) which is involved in or related to the
Business.
(b) Except as set forth in Exhibit 8.12, Seller is not indebted to any
current or former shareholder, Affiliate of any shareholder, or to any
director, officer, employee or agent of the Seller except for amounts due as
normal salaries, wages, benefits
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or reimbursement of ordinary current business expenses, and no current or
former shareholder, Affiliate of any shareholder or director, officer, employee
or agent of Seller is indebted to Seller except for ordinary business expense
advances.
8.13 LITIGATION; COMPLIANCE WITH LAWS, ETC. To Seller's and Majority
Shareholder's knowledge, except as set forth in Exhibit 8.13, there is no
action, claim or investigation pending, or, to Seller's or Majority
Shareholder's knowledge, threatened, against Seller, nor is there any judgment
of any court, governmental agency, instrumentality, or arbitration outstanding
against Seller. Seller has not received any notice of any violation of any
law, regulation or ordinance applicable to the Seller, its properties or assets
(whether owned or leased) or the Business. Except as set forth in Exhibit
8.13, Seller and the Acquired Assets have complied in all respects with all
applicable laws, regulations, covenants, restrictions and ordinances
(including, without limitation, laws, rules, regulations, ordinances and common
law relating to pollution or protection of the environment, pollutants,
contaminants, hazardous or toxic materials, wastes or nuisances, the Americans
with Disabilities Act, laws relating to occupational health and safety, zoning
and land use regulations and restrictions and the terms and conditions of those
licenses, permits, approvals and authorizations which are required to be
identified on Exhibit 8.15), except where the consequences of the failure to
comply would not, alone or in the aggregate, have a material adverse effect on
Seller or the Acquired Assets or Assumed Liabilities.
8.14 LABOR RELATIONS. Except as set forth in Exhibit 8.14:
(a) no labor union represents or purports to represent any employees of
Seller, and during the past three (3) years, Seller has not been the subject of
any union organizational activity or labor dispute;
(b) there are no material controversies pending between Seller and any of
its employees, nor, to Seller's or Majority Shareholder's knowledge, are any
such material controversies threatened;
(c) Seller is not liable for any arrears of wages or taxes or any
penalties for failure to comply with any of the foregoing;
(d) Seller is not a party to nor does it have any obligations under any
written, oral or implied agreement with any person or party regarding the
salary, rates of pay, benefits, or working conditions of any employees, and all
of Seller's employees are terminable at will; and
(e) Seller has no policy or past practice and is not a party to any
agreement relating to payment of any severance or
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similar benefit upon termination of employment, an no employees of Seller will
be entitled to any severance or similar benefit upon termination of employment
as contemplated by Section 15.
8.15 INTENTIONALLY OMITTED.
8.16 CONTRACTS. Except as disclosed in Exhibit 8.16 and except for the
Contracts identified in Exhibit 1.2 and the Employee Benefit Plans identified
in Exhibit 8.19, Seller is not a party or subject to any contracts,
commitments, agreements, leases, purchase orders, sales orders or licenses.
Except as set forth in Exhibit 8.16, to Seller's knowledge all Contracts are in
full force and effect and are valid and binding obligations enforceable against
the parties thereto, except as may be limited by applicable equitable
principles or bankruptcy, insolvency, or similar laws affecting the enforcement
of creditors' rights generally. Correct and complete copies of all Contracts
have been delivered to Purchaser. Except as set forth in Exhibit 8.16, Seller
is not in default under and, to Seller's and Majority Shareholder's knowledge,
no condition exists with respect to Seller which, with notice or the passage of
time, or both, would constitute a default by Seller under any of the Contracts.
Seller is not subject to any agreement requiring it to obtain all or
substantially all of its supply of any goods or services from another person or
to refrain from competing or otherwise offering its services to any person or
in any location. Except as set forth in Exhibit 8.16, Seller is not subject to
any agreement or commitment to deliver or provide any new, modified or enhanced
product or service to any customer or to develop any new or enhanced product or
service. Except as set forth in Exhibit 8.16, none of the Contracts was
entered into, issued or accepted other than in the ordinary course of business.
8.17 TITLE TO PROPERTIES; ENCUMBRANCES. Seller has good and marketable title
to all of the Acquired Assets, free and clear of any liens or encumbrances
except (a) those items disclosed on Exhibit 8.17; and (b) liens for current
personal and real property taxes assessed but not yet due and payable.
8.18 INTELLECTUAL PROPERTY INTANGIBLES.
(a) The following items are described more fully in Exhibit 8.18: all
United States, common law and foreign patents, trademarks, trade names, service
marks and copyrights and all software and inventions, each as owned, licensed
or used by Seller in connection with the Business.
(b) As used in this Agreement, the term "INTELLECTUAL PROPERTY
INTANGIBLES" shall mean (i) those items required to be disclosed by Section
8.18(a) (including all registrations, and, if applicable, goodwill related to
those items) and (ii) any of the following assets of Seller owned or used in
the Business: all mask works, trade secrets, know-how, formulations, trade
dress, designs,
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drawings, logos, technology, mailing lists, inventions, uses of ideas, software
rights, registered, assumed or fictitious business names under which Seller is
conducting the Business, confidential information, and industrial and
commercial property, whether any of the foregoing items described in clause (i)
or (ii) is owned, licensed or held for use, all without geographical limitation
and including, without limitation, the right to infringement and other claims
related thereto.
(c) All agreements to which Seller is a party relating to Intellectual
Property Intangibles, including without limitation research, development,
programming or similar services in connection therewith, are identified in
Exhibit 1.2.
(d) Seller further represents and warrants as follows:
(i) All Intellectual Property Intangibles are
owned by or are licensed to Seller without limitation or encumbrance, and, to
the extent applicable, in good standing and, to Seller's knowledge, without any
challenge.
(ii) To Seller's and Majority Shareholder's
knowledge, the Intellectual Property Intangibles identified in Exhibit 8.18
have been in continuous use since the date of their adoption by Seller and
first use by Seller as shown in Exhibit 8.18.
(iii) All copyrights described in Exhibit 8.18
are original works of authorship of Seller or Seller has acquired all rights
thereto or Seller has a valid license to use the same.
(iv) Any trademarks, service marks or trade
names which have been obtained by Seller through transfer or assignment include
the associated goodwill.
(v) To Seller's and Majority Shareholder's
knowledge, no infringement or unlawful use of any of the Intellectual Property
Intangibles or use of the same or similar item so as to create a likelihood of
confusion has occurred.
(vi) To Seller's and Majority Shareholder's
knowledge, no infringement of any intellectual property rights of any other
party has occurred or results from operation of the Business.
(vii) No proceedings or claims are pending or,
to Seller's knowledge, threatened, with respect to the validity or ownership of
the Intellectual Property Intangibles.
(viii) No present or former employee, officer,
director, shareholder, agent or contractor of Seller has any
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ownership interest, direct or indirect, in any Intellectual Property
Intangibles.
(e) Without in any way limiting the other representations
and warranties contained in this Agreement or the application of the same to
the Software (as defined below), Seller makes the following additional
representations and warranties with respect to the software identified in
Exhibit 8.18 as owned by Seller (the "SOFTWARE"). Except as disclosed in
Exhibit 8.18:
(i) To Seller's and Majority Shareholder's
knowledge, the Software performs in accordance with the documentation and other
written material used in connection with the Software and is free from defects
in programming and operation, is in machine-readable form, contains all current
revisions of such Software, and includes all computer programs, materials,
tapes, know-how, object and source codes related to the Software.
(ii) Neither Seller nor any employee,
contractor, or agent thereof has developed or assisted in the enhancement of
the Software (except for enhancements included in the Software as delivered to
Purchaser pursuant hereto) or the development of any program or product based
on the Software or any part thereof without assigning all of such person's
rights and interest in the same to Seller pursuant to an agreement included in
the Contracts.
(iii) The Software was developed entirely by
employees of Seller during the time they were employees of Seller and the
Software does not include (A) any inventions of the employees prior to the time
they became employees of Seller or (B) any intellectual property of any
previous employer of any such employee.
(iv) No party other than Seller has any
interest in the Software. Seller's development, use, license or exploitation
of the Software does not violate any rights of any other person. Seller does
not have any obligation to compensate any person or entity for the development,
use, license or exploitation of the Software. Except as contemplated by this
Agreement, Seller has not granted any license, option or other rights to
develop, use, sublicense, distribute or exploit in any manner the Software,
regardless of whether requiring the payment of royalties. Seller acknowledges
that all rights in the Software shall be vested in Purchaser from and after the
Closing.
(vi) Seller has taken reasonable efforts to
keep secret the source code for the Software other than for disclosure to
certain employees of, or independent contractors to, Seller in connection with
their services to Seller.
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8.19 EMPLOYEE BENEFIT PLANS.
(a) Exhibit 8.19 contains a list of all plans, policies
and arrangements and contracts, whether written or oral ("EMPLOYEE PLANS"),
including, without limitation, all employee benefit plans as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974 ("ERISA") in effect
at the date hereof providing or relating to any retirement, profit sharing,
stock bonus, stock option,incentive compensation, deferred compensation, fringe
benefit or welfare benefit to or on behalf of employees or former employees of
Seller.
(b) Seller has not received any notice alleging that any
of the Employee Plans has ever not been in compliance with ERISA, the Code, and
all other applicable laws, except for violations thereof which would not in the
aggregate give rise to a material obligation to pay money.
(c) Except as set forth in Exhibit 8.19, to Seller's and
Majority Shareholder's knowledge no person has asserted any claim under which
Seller has any liability under any health insurance, sickness, life insurance,
disability, medical, surgical, hospital, death benefit, or any other Employee
Plan (whether or not disclosed on Exhibit 8.19) maintained by the Seller or to
which Seller is a party or may be bound, or under any worker's compensation or
similar law, which is not fully covered by insurance maintained with
responsible insurers or reserved for under the Acquired Balance Sheet.
(d) Except as otherwise required by COBRA or disclosed on
Exhibit 8.19, Seller does not provide benefits to retirees or former employees.
8.20 INTENTIONALLY OMITTED.
8.21 CUSTOMERS AND SUPPLIERS.
(a) Seller has delivered to Purchaser a list of the Seller's
current customers. Except as identified on Exhibit 8.21, Seller and Majority
Shareholder have no knowledge that any of such customers intends to reduce or
has threatened to reduce materially its purchases from or business dealings
with Seller whether by reason of the consummation of this Agreement or
otherwise.
(b) Seller has delivered to Purchaser a list of Seller's
current suppliers. Except as identified on Exhibit 8.21, Seller and Majority
Shareholder have no knowledge that any of such suppliers intends to alter or
has threatened to alter materially the terms of supply to Seller whether by
reason of the consummation of this Agreement or otherwise.
8.22 INTENTIONALLY OMITTED.
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8.23 BANK ACCOUNTS. Exhibit 8.23 sets forth the name, location and
account number of each bank, trust company, savings and loan association or
other financial institution in which Seller has an account or safe deposit box
and the names of the persons authorized to draw thereon or having access
thereto.
8.24 BOOKS AND RECORDS. To Seller's and Majority Shareholder's
knowledge, all of the Books and Records are true and correct in all material
respects.
8.25 INTENTIONALLY OMITTED.
8.26 INVESTMENT INTENT. Seller and Majority Shareholder
acknowledge that the Purchaser's Shares to be issued pursuant to Section 5.1
will be issued pursuant to the Exemptions, and that Purchaser is relying on the
representations and warranties of Seller and Majority Shareholder in this
Section 8.26 as the basis for Purchaser's determination that the Exemptions are
available. Accordingly, Seller and Majority Shareholder jointly and severally
represent and warrant that:
(a) they are acquiring the Purchaser's Shares for
investment purposes only and without a view to the resale thereof until such
time as such resale has been registered (or exemptions from registration
perfected) under the Act and all applicable state securities laws, and they
will not sell, encumber, dispose or otherwise transfer (collectively,
"TRANSFER") any right or interest in the Purchaser's Shares, whether
voluntarily, by gift, operation of law, testamentary disposition or otherwise,
except for the distribution of the Purchaser's Shares to Majority Shareholder
upon dissolution of Seller or surrender of Purchaser's Shares to Purchaser in
satisfaction of a Purchaser's Shares Adjustment Claim, unless such Transfer has
been registered (or an exemption from registration has been perfected) under
the Act and applicable state securities laws.
(b) Seller and Majority Shareholder are experienced
investors and are aware of the risks inherent in an investment in the
Purchaser's Shares.
(c) Seller and the Majority Shareholders have had access
to such information about Purchaser and its operations as they deem necessary
to evaluate fully an investment in the Purchaser's Shares and Seller and
Majority Shareholder are relying solely on the information provided by their
advisors and information publicly available regarding Purchaser and its
operations and not upon any statement of or information supplied by any
employee, agent, contractor or representative of Purchaser.
(d) Seller is a Massachusetts corporation. Majority
Shareholder is a resident of the State of Massachusetts.
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8.27 DISCLOSURE. No representation or warranty by Seller contained
in this Agreement, and no statement contained in any certificate, exhibit, list
or other instrument furnished by the Seller to Purchaser pursuant to the
provisions hereof contains or will contain any untrue statement of material
fact or omits or will omit to state a material fact necessary in order to make
the statement contained herein or therein in light of the circumstances in
which they are being made not misleading.
9. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents,
warrants and covenants to Seller and Majority Shareholders as follows:
9.1 CORPORATE ACTION. Purchaser has taken all action required by
its Articles of Incorporation and Code of Regulations or otherwise to authorize
the execution and consummation of this Agreement and each other agreement,
document or instrument to be executed by Purchaser pursuant to this Agreement
(collectively, the "PURCHASER AGREEMENTS"). The issuance of the Purchaser's
Shares pursuant to this Agreement has been duly approved by Purchaser's board
of directors. The Purchaser Agreements constitute the valid and legally
binding obligations of Purchaser, enforceable in accordance with their terms,
except that enforceability may be limited by applicable equitable principles or
bankruptcy, insolvency, or similar laws affecting the enforcement of creditors
rights generally.
9.2 NO CONFLICT WITH OTHER AGREEMENTS OR LAWS. The execution and
consummation by Purchaser of the Purchaser Agreements will not (a) violate the
terms of Purchaser's Articles of Incorporation or Code of Regulations or any
instrument, agreement, judgment or decree to which Purchaser is a party, or by
which Purchaser or any of its properties is bound, (b) be in conflict with,
result in a breach of or constitute (with giving of notice or lapse of time or
both) a default under any such instrument, agreement, judgment or decree, (c)
result in the creation or imposition of any lien upon Purchaser or its
properties or assets, or (d) violate any applicable federal, state, local or
foreign law (including without limitation securities laws), regulation or order
if the result of such violation, conflict, breach, default or lien would have a
material adverse affect on Purchaser.
9.3 ORGANIZATION AND QUALIFICATION. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Ohio. Purchaser has full power and authority to carry on its business
as it is now being conducted, to own and lease the properties and assets which
it now owns or leases and to consummate the Purchaser Agreements. Purchaser is
duly qualified to transact business and is in good standing as a foreign
corporation in each jurisdiction in which the ownership of its property or the
conduct of its business requires it to be so qualified as a foreign
corporation, except for jurisdictions in
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which such failure to be so qualified or in good standing would not, alone or
in the aggregate, have a material adverse effect on the financial condition of
Purchaser.
9.4 TAX MATTERS. Purchaser hereby represents, warrants and
covenants as follows with regard to certain tax matters concerning the
transactions contemplated in this Agreement:
(a) The acquisition of the Acquired Assets and the
assumption of the Assumed Liabilities will be consummated in accordance with
the terms of this Agreement.
(b) Purchaser has no plan or intention to redeem or
otherwise reacquire any of the Purchaser's Shares except (i) as may occur
pursuant to the terms and conditions of the Escrow Agreement and (ii) as may
occur through Purchaser's ongoing program of repurchasing its stock from
unidentified sellers in the open market.
(c) Purchaser has no plan or intention to sell or
otherwise dispose of any of the Acquired Assets, except for sales or
dispositions made in the ordinary course of business.
(d) Purchaser does not own, directly or indirectly, nor
has it owned at any time prior to the transactions contemplated in this
Agreement, directly or indirectly, any shares of Seller.
(e) To the best of Purchaser's knowledge, there will be
and will have been no intercorporate indebtedness existing between Purchaser
and Seller that was issued, acquired or will be settled at a discount.
(f) Purchaser will pay its expenses, if any, incurred in
connection with the transactions contemplated in this Agreement.
(g) Following the transactions contemplated in this
Agreement, Purchaser has no plan or intention to discontinue the historic
business of Seller or use a significant portion of the Seller's historic
business assets in a business as contemplated in Treasury Regulation Section
1.368-1(d).
(h) Purchaser is not an "investment company" as defined
in Section 368(a)(2)(F) of the Code.
(i) The Purchaser's Shares issued pursuant to this
Agreement will constitute "voting stock" within the meaning of Section
368(a)(1)(C) of the Code.
(j) No consideration other than the Purchaser's Shares
and Purchaser's assumption of the Assumed Liabilities will be issued or
transferred, directly or indirectly, in exchange for the Acquired Assets.
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(k) Under no circumstances shall the assumption of the
Assumed Liabilities involve the payment of any money or other property to
Seller, nor shall Purchaser assume liability for any expenses of Shareholder.
(l) The fair market value of the Acquired Assets will
equal or exceed the total amount of the Assumed Liabilities.
9.5 DISCLOSURE. No representation or warranty by Purchaser
contained in this Agreement, and no statement contained in any certificate,
exhibit, list or other instrument furnished by the Purchaser to Seller pursuant
to the provisions hereof contains or will contain any untrue statement of
material fact or omits or will omit to state a material fact necessary in order
to make the statement contained herein or therein in light of the circumstances
in which they are being made not misleading.
10. COVENANTS OF SELLER AND MAJORITY SHAREHOLDERS. Seller and Majority
Shareholders covenant and agree with Purchaser as follows:
10.1 CONDUCT OF BUSINESS PRIOR TO CLOSING. Until the Closing, and
unless Purchaser shall otherwise consent in writing or otherwise disclosed in
the Exhibits hereto, Seller shall take the following actions:
(a) operate the Business substantially as previously operated
and only in the ordinary course, and use its best efforts to preserve intact
Seller's goodwill, reputation, present business organization and relationships
with persons having business dealings with it;
(b) maintain all personal property in good order and
condition, reasonable wear and use excepted, and maintain all policies of
insurance covering such properties in effect on the date hereof;
(c) pay Seller's accounts payable and attempt to collect the
Receivables in a manner consistent with past business practices;
(d) comply in all material respects with all laws applicable
to the conduct of the Business; and
(e) maintain Seller's books and records in the usual, regular
and ordinary manner on a basis consistent with past practices.
10.2 INTENTIONALLY OMITTED.
10.3 OTHER TRANSACTIONS. Seller and the Majority Shareholder shall
deal exclusively and in good faith with Purchaser regarding the sale of the
Acquired Assets, the capital stock of Seller or a
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merger involving Seller (a "SALE TRANSACTION") and will not, and will direct
the Seller's officers, directors, financial advisors, accountants, agents and
counsel not to, (i) solicit submission of offers from any person relating to a
Sale Transaction, (ii) participate in any discussions or negotiations
regarding, or furnish any nonpublic information to any person regarding any
Sale Transaction by any person other than Purchaser, or (iii) enter into any
agreement or understanding, whether oral or written, that would have the effect
of preventing consummation of this Agreement. If Seller or Majority
Shareholder or their representatives or agents should receive any proposal for
a Sale Transaction or any inquiry regarding such proposal from a third party,
Seller will promptly so inform Purchaser.
10.4 CONSENTS, WAIVERS AND APPROVALS. The parties shall use their
best efforts to obtain prior to the Closing all consents, waivers, approvals,
and releases of liens or encumbrances necessary to effect the transactions
contemplated herein and the operation of the Business after the Effective Time
in the ordinary course substantially as operated by Seller prior to Closing,
free and clear of any and all liens or encumbrances except those permitted
encumbrances identified in Exhibit 10.4 (the "PERMITTED ENCUMBRANCES"),
including without limitation consent of Seller's lessor to assignment of the
lease for Seller's facility to Purchaser. All such consents, waivers, releases
and approvals will be in writing and in form and substance satisfactory to the
parties, and executed counterparts thereof will be provided to all parties
promptly after receipt thereof.
10.5 SUPPLEMENTAL DISCLOSURE. Each party shall have the continuing
obligation up to and including the Effective Time to supplement promptly or
amend the Exhibits with respect to any matter hereafter arising or discovered
which, if existing or known at the date of this Agreement, would have been
required to be set forth or listed in the Exhibits. For the purpose of the
rights and obligations of the parties hereunder, any such supplemental
disclosure shall be deemed to have been disclosed as of the date of this
Agreement if the parties proceed with the Closing of the transactions
contemplated herein following receipt of such supplemental or amended Exhibits.
10.6 ADDITIONAL REPORTS. Within a reasonable time after they
become available, Seller will deliver to Purchaser copies of all management and
control reports (including agings of accounts receivable, listings of accounts
payable and inventory control reports) and financial statements furnished to
the management of Seller.
10.7 CONDITIONS PRECEDENT. Each party shall use its best efforts
in good faith to satisfy the applicable conditions enumerated in Sections 11
and 12 hereof.
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10.8 PURCHASER'S DUE DILIGENCE. Seller and Majority Shareholders
shall give Purchaser and its counsel, accountants and other representatives
full access during normal business hours to all of the books, records, files,
documents, assets, properties, contracts, and commitments of Seller, provided
that such examinations shall be conducted in such a manner so as not to disrupt
the normal business operations of Seller, and Seller shall furnish Purchaser
with such information concerning the affairs of Seller which Purchaser may
reasonably request, so that Purchaser may have a full opportunity to verify the
representations and warranties contained in this Agreement and to ascertain
such other matters concerning the financial condition, operations, employees,
business or prospects of Seller as Purchaser may deem necessary or appropriate.
Notwithstanding the foregoing, contacts with customer and sales persons and the
content of such contacts, whether written or oral, will be subject to the prior
approval of Seller which shall not be unreasonably withheld, conditioned or
delayed.
10.9 DISTRIBUTION OF PURCHASER'S SHARES. As soon as practicable after
the Effective Time and as part of the transactions contemplated in this
Agreement, Seller shall liquidate and distribute to the Shareholders the
Purchaser's Shares it has received under this Agreement and any of its other
properties in accordance with Section 368(a)(2)(G) of the Code.
11. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER. The obligation of
Purchaser to consummate this Agreement shall be subject to the satisfaction, on
or before the Effective Time, of the following conditions, all or any of which
may be waived by Purchaser in writing (the consequences of Purchaser's waiver
shall be as described in Section 21.11).
11.1 REPRESENTATIONS. The representations and warranties made by
Seller and Majority Shareholder in Sections 7 and 8 hereof shall be true and
correct in all material respects on the Effective Time as though such
representations and warranties had been made on such date and Seller and
Majority Shareholders shall deliver to Purchaser a certificate dated as of the
Effective Time to the foregoing effect.
11.2 COVENANTS. Seller and Majority Shareholder shall have duly
performed all of the covenants, acts and undertakings to be performed by them
on or prior to the Effective Time, and Seller and Majority Shareholder shall
deliver to Purchaser a certificate dated as of the Effective Time to the
foregoing effect.
11.3 NO INJUNCTION, ETC. No proceeding, investigation, or
legislation shall have been instituted, threatened or proposed before any
court, governmental agency or legislative body to enjoin, or prohibit, or to
obtain substantial damages in respect of this Agreement, or which is related to
the Seller, Majority
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Shareholder, the Acquired Assets, the Assumed Liabilities, or which arises out
of the Business.
11.4 OPINION OF COUNSEL. An opinion of counsel for Seller and
Majority Shareholder shall have been delivered to Purchaser, dated as of the
Effective Time, in form and substance reasonably satisfactory to Purchaser and
its counsel and containing substantially similar opinions to those identified
in Exhibit 11.4.
11.5 INCUMBENCY. Seller shall have delivered a certificate of
incumbency executed by the president and secretary of Seller listing each
officer and director of Seller and the persons authorized to execute the Seller
Agreements.
11.6 CONSENTS, WAIVERS AND APPROVALS. Purchaser shall have
received a true and correct copy of each consent, waiver or approval required
to be identified in Exhibit 8.21 hereto or otherwise required pursuant to
Section 10.4.
11.7 ABSENCE OF MATERIAL ADVERSE CHANGES. Since December 31, 1994,
(a) Seller shall not have suffered any material adverse change in its financial
condition, business or the Acquired Assets or Assumed Liabilities not otherwise
described in the Exhibits to this Agreement, and (b) Seller and Majority
Shareholder shall not have taken, omitted, permitted or suffered any
transaction or event described in Section 8.9 hereof which is not described in
Exhibit 8.9 hereto.
11.8 CERTIFIED RESOLUTIONS. Seller shall have delivered to
Purchaser a certificate executed by a duly authorized officer of Seller
containing a true and correct copies of the resolutions duly adopted by the
board of directors and shareholders of Seller approving and authorizing the
Seller Agreements and their consummation. Such officer shall also certify that
such resolutions have not been revoked or modified and remain in full force and
effect.
11.9 PAY-OFF LETTERS. Purchaser shall have received pay-off letters
with respect to all loans included in the Assumed Liabilities confirming the
outstanding balances under those loans and the undertaking by the lenders to
release all collateral therefor upon receipt of the balance and containing such
other terms as Purchaser may reasonably request. Such letters shall not
require the payment of any pre-payment penalty or fee or require any other
undertaking by Purchaser.
11.10 TITLE ASSURANCES. Purchaser shall have received uniform
commercial code and judgment and tax lien searches from all applicable
jurisdictions confirming title to Seller's assets as represented in Section
8.17 (Purchaser shall use its best efforts to obtain the same).
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11.11 BASIC CORPORATE DOCUMENTS. Seller shall have delivered to
Purchaser copies of the Seller's Articles of Incorporation, certified as of a
date within 30 days prior thereto by the Secretary of State of Massachusetts,
Seller's Bylaws, certified as of such a date by Seller's Secretary, certificate
of good standing from the Secretary of State of Massachusetts and the
Massachusetts Department of Revenue.
11.12 LESSOR DOCUMENTS. Purchaser shall have received from the lessor
of Seller's facility the consent required by Section 10.4 and an estoppel
certificate in form reasonably satisfactory to Purchaser confirming the absence
of a default by Seller under the terms of its lease.
11.13 TRANSACTION EXPENSES. Seller shall have delivered to Purchaser
a written confirmation and release in the form of Exhibit 11.13 from each
person to whom Seller is obligated with respect to the Transaction Expenses.
11.14 EMPLOYMENT AGREEMENTS. Majority Shareholder shall have executed
an Employment and Non-competition Agreement in substantially the form of
Exhibit 11.14.
11.15 INTENTIONALLY OMITTED.
11.16 INTENTIONALLY OMITTED.
11.17 INTELLECTUAL PROPERTY INTANGIBLES. Seller shall have ceased to
use in any manner the Intellectual Property Intangibles identified in
Attachment 1 to Exhibit 8.18, except in connection with tax returns, Seller's
liquidation filings with other governmental authorities and for similar
purposes.
11.18 INSTRUMENTS OF TRANSFER. Seller shall have delivered to
Purchaser on the Effective Time such bills of sale, endorsements, assignments
and other instruments of transfer as are provided for herein, or as otherwise
necessary to vest in Purchaser all of Seller's title and rights with respect to
the Acquired Assets, free and clear of all liens or encumbrances (except the
Permitted Encumbrances).
11.19 CERTIFICATES. Seller shall have delivered to Purchaser all such
certificates, dated as of the Effective Time, as Purchaser shall reasonably
request to evidence the fulfillment by Seller, or other satisfaction as of the
Effective Time, of the terms and conditions of this Agreement.
11.20 CERTAIN EMPLOYEE DOCUMENTS. Seller shall have delivered to
Purchaser the Callaway Settlement Agreement and the Weinberger Settlement
Agreement, each as executed by all parties thereto.
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11.21 AGREEMENT WITH PETER SIMONSON. Seller shall have delivered to
Purchaser an agreement with Peter Simonson in substantially the form of Exhibit
11.21.
11.22 SUBSCRIPTION AGREEMENTS. Seller shall have delivered to
Purchaser subscription agreements in the form required by Purchaser to perfect
the Exemptions as executed by Seller and its shareholders.
12. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER AND MAJORITY
SHAREHOLDER. The obligation of Seller and Majority Shareholder to consummate
this Agreement shall be subject to the satisfaction, on or before the Effective
Time, of the following conditions, all or any of which may be waived by Seller
and Majority Shareholder in writing (the consequences of their waiver shall be
as described in Section 21.11).
12.1 REPRESENTATIONS. The representations, warranties and
covenants made by Purchaser in Section 9 hereof shall be true and correct in
all material respects on the Effective Time with the same force and effect as
though such representations, warranties and covenants had been made on and as
of such date and Purchaser shall deliver to Seller and Majority Shareholder a
certificate dated as of the Effective Time to the foregoing effect for
Purchaser.
12.2 COVENANTS. Purchaser shall have duly performed all of the
covenants, acts or undertakings to be performed by Purchaser on or before the
Effective Time, and Purchaser shall deliver to Seller and Majority Shareholder
certificates dated as of the Effective Time to the foregoing effect.
12.3 CERTIFIED RESOLUTIONS. Purchaser shall have delivered to
Seller and Majority Shareholder certificates executed by a duly authorized
officers of Purchaser containing a true and correct copy of resolutions duly
adopted by Purchaser's Board of Directors approving and authorizing the
issuance of the Transaction Shares and the obligations of Purchaser with
respect to registration of the resale thereof pursuant to Section 6 of this
Agreement. Such officers shall also certify that such resolutions have not
been revoked or modified and remain in full force and effect.
12.4 OPINION OF COUNSEL. An opinion of counsel for Purchaser shall
have been delivered to Seller and Majority Shareholder, dated as of the
Effective Time, in form and substance reasonably satisfactory to Seller and its
counsel, and containing the opinions identified in Exhibit 12.4.
12.5 NO INJUNCTION, ETC. No proceeding, investigation or
legislation shall have been instituted, threatened or proposed before any
court, governmental agency or legislative body to
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enjoin, or prohibit, or to obtain substantial damages in respect of this
Agreement.
12.6 CONSENTS, WAIVERS AND APPROVALS. Seller and Majority
Shareholder shall have received a true and correct copy of each consent, waiver
or approval obtained by Purchaser and required for Purchaser's execution and
consummation of this Agreement.
12.7 INCUMBENCY. Purchaser shall have delivered a certificate of
incumbency executed by the president or a vice president and the secretary or
an assistant secretary of Purchaser listing the persons authorized to execute
the Purchaser Agreements and confirming that except for the action of the board
of directors referred to in Section 12.3, no further action by or approval of
the board of directors or shareholders of Purchaser is required under
Purchaser's Articles of Incorporation or Code of Regulations as a condition to
the validity and binding effect of the Purchaser Agreements.
12.8 INTENTIONALLY OMITTED.
12.9 EMPLOYMENT AGREEMENT. Purchaser shall have executed an
Employment and Non-competition Agreement with Majority Shareholder in
substantially the form of Exhibit 11.14.
13. MUTUAL COVENANTS.
13.1 PRE-CLOSING. Each of the parties hereto shall refrain from
taking any action which would render any representation or warranty or covenant
contained in Sections 8 or 9 of this Agreement inaccurate as of the Effective
Time. Each party shall promptly notify the other of any action or proceeding
that shall be instituted or threatened against such party to restrain, prohibit
or otherwise challenge the legality of any transaction contemplated by this
Agreement.
13.2 TAX REPORTING. The parties will file their respective income
tax returns on the basis that the transaction described in and effected by
this Agreement qualifies as a "reorganization" under Section 368(a) of the
Code. The parties will not take a tax return position inconsistent with the
foregoing tax return positions unless such inconsistent position shall arise
out of or through an audit of such returns by the Internal Revenue Service or
other taxing authority and which has been determined by a court of competent
jurisdiction that such inconsistent position should apply. As provided further
in Section 24.4(a), the Purchaser shall notify Majority Shareholder and
Majority Shareholder shall notify the Purchaser, as the case may be, in
writing, as soon as reasonably practicable of any audit adjustment or proposed
audit adjustment by any taxing authority that affects or relates to any of the
items described in the first sentence of this Section 13.2. Seller and
Majority Shareholder shall cooperate with Purchaser to
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enable Purchaser to identify the tax attributes which shall carry over to
Purchaser from Seller under Section 381 of the Code and tax basis information
and shall provide Purchaser with all relevant records related thereto.
13.3 NAME. From and after the Closing Date, Seller shall not use
the names "Ultimate Prospecting Services" or "UPS" or any derivation of either
in the active conduct of any trade or business.
14. CLOSING.
14.1 TIME AND PLACE. The closing (the "CLOSING") shall be held at
the offices of Sullivan & Worcester in Boston, Massachusetts, on March 29,
1995, at 9:00 a.m., or at such other place or time or on such other date as the
parties hereto may mutually agree. For purposes of this Agreement, the
"EFFECTIVE TIME" shall be immediately after the close of business on March 31,
1995.
14.2 TRANSACTIONS AT THE CLOSING. At the Closing, each of the
following transactions shall occur:
(a) Seller and Majority Shareholder shall deliver to
Purchaser the following:
(i) all instruments of transfer, duly executed
and in recordable form, where appropriate, reasonably satisfactory in form and
substance to Purchaser and its counsel;
(ii) the certificates, opinion, agreements and
documents required of Seller and/or the Majority Shareholder described in
Sections 11;
(iii) copies of the consents, waivers and approvals
described in Section 10.4;
(iv) the updated Exhibits required by Section 10.5;
(v) the certificate of Seller and Majority
Shareholder required by Section 21.12; and
(vi) such other evidence of the performance of
all covenants and satisfaction of all conditions required of the Seller and
Majority Shareholder by this Agreement, at or prior to the Closing, as
Purchaser or its counsel may reasonably require.
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(b) Purchaser shall deliver to Seller and Majority
Shareholder the following:
(i) certificates for the Purchaser's Shares
required under Sections 5.2 and the Escrow Agreement shall be delivered to
Seller, Callaway and the Escrow Agent;
(ii) the certificates, opinion, agreements and
documents required of Purchaser described in Section 12;
(iii) copies of the consents, waivers and approvals
described in Section 12.6;
(iv) a certificate of good standing of
Purchaser from the Secretary of State of Ohio as of the most recent practicable
date; and
(v) such other evidence of the performance of all the
covenants and satisfaction of all of the conditions required of the Purchaser
by this Agreement, at or before the Closing, as Seller and Majority Shareholder
or their counsel may reasonably require.
14.3 DEFAULT AT CLOSING. If Seller or Majority Shareholder shall
fail or refuse to consummate the transactions set forth in this Agreement on or
prior to the Effective Time, and if Purchaser shall not then be in material
breach under terms of this Agreement, all other conditions to the Closing shall
have been satisfied and Purchaser shall stand ready, willing and able to make
tender of its deliveries required under Section 14.2, then, in addition to any
other remedies available to Purchaser, Purchaser may invoke any equitable
remedies to cause the consummation of the transactions set forth in this
Agreement, including, without limitation, an action or suit for specific
performance.
15. EMPLOYEES OF SELLER. From the date hereof to the Closing Seller will
use its best efforts to maintain its existing relations with its employees and
not to alter current personnel policies and practices. Immediately prior to
the Effective Time, Seller shall terminate all of its employees and shall
permit Purchaser to hire any of such employees; provided, however, that this
Agreement shall not be construed as an obligation of Purchaser to hire any of
Seller's former employees or to offer any specific terms, benefits or
compensation (this sentence shall not affect Purchaser's obligations under the
Employment Agreement described in Section 11.14).
16. SURVIVAL OF REPRESENTATIONS. All statements contained in the Seller
Agreements or the Purchaser Agreements, as the case may be, shall be deemed
representations and warranties hereunder by Seller, Majority Shareholder or
Purchaser, as the case may be. Except as provided in this Section 16, all
representations and warranties
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made by Seller, Majority Shareholder or Purchaser shall survive until the
second anniversary of the Effective Time. The representations, warranties,
covenants and agreements of the parties in Sections 8.6, 9.4, 10.9, 13.2 and 24
shall survive until the later of (a) 30 days after expiration of the applicable
statutes of limitation and (b) sixty (60) days after final judicial
determination of such tax and the representations in Section 8.17 and the
representations and warranties in Section 7 shall survive for a period of three
(3) years from the Effective Time. No claim for breach of a representation or
warranty (including an Indemnification Claim as defined in Section 19) may be
brought by any person unless written notice of such claim shall have been given
on a prior to the last day of the applicable survival period in this Section 16
(in which event each representation and warranty with respect to any asserted
claim shall survive until such claim is finally resolved and all obligations
with respect thereto are fully satisfied).
17. TERMINATION. This Agreement may be terminated, and the transactions
contemplated herein abandoned (a) by the mutual written consent of Seller and
Purchaser; (b) by either Seller or Purchaser upon the failure of the other to
comply substantially with its or their conditions precedent to Closing and
other obligations set forth herein at or before the Effective Time; or (c)
automatically at 5:00 p.m. Dayton, Ohio time on April 1, 1995, if the Closing
has not been completed by that time. Termination pursuant to this Section
shall relieve the parties of their obligations hereunder with each party
responsible for its own, fees, costs and expenses; provided, however that if
the Agreement is terminated pursuant to (b) or (c) above because one party
fails to use its reasonable best efforts to fulfill its obligations hereunder,
such party shall remain liable to the other party for all losses, costs,
expenses (including attorney's fees) and liabilities incurred by such other
party as a result of such failure; and, provided further, that Purchaser's
obligations to pay certain transaction expenses as set forth in the letter of
intent dated as of January 20, 1995 shall survive.
18. CERTAIN EMPLOYEE SETTLEMENTS.
18.1 CRAIG CALLAWAY. Seller has entered into an Amended and
Restated Majority Shareholder's Agreement and an Amended and Restated
Non-Statutory Stock Option Agreement (and various other agreements)
(collectively, the "CALLAWAY AGREEMENTS") with Craig Callaway ("CALLAWAY").
Prior to the Effective Time, Seller shall have entered into a written agreement
with Callaway in form and substance satisfactory to Purchaser (the "CALLAWAY
SETTLEMENT AGREEMENT") and providing for exercise by Callaway of options to
acquire up to approximately sixteen and seven-tenths percent (16.7%) of the
shares of Seller and terminating the Callaway Agreements. Prior to the
Closing, such options shall have been
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exercised and the parties shall have performed their other obligations under
the Callaway Settlement Agreement.
18.2 GAYE WEINBERGER. Prior to the Closing, Seller shall have
entered into a written agreement with Gaye Weinberger ("WEINBERGER") in form
and substance satisfactory to Purchaser (the "WEINBERGER SETTLEMENT AGREEMENT")
providing for a one-time cash payment to Weinberger of $14,500 as consideration
for a general release of claims, including without limitation any right to the
stock of Seller or to otherwise participate in the proceeds of the sale of
Seller's assets as contemplated by this Agreement. Prior to the Closing, the
parties shall have performed their obligations under the Weinberger Settlement
Agreement.
19. INDEMNIFICATION.
19.1 LOSSES. For purposes of this Section 19, "LOSSES" shall mean
all damages, losses, costs, expenses (including attorneys' fees), interest,
penalties, charges and liabilities.
19.2 INDEMNIFICATION BY SELLER AND MAJORITY SHAREHOLDER. Seller
and Majority Shareholder jointly and severally agree to indemnify, defend and
hold harmless Purchaser from and against any Loss incurred by Purchaser related
to or arising out of (a) the breach of any of the warranties, representations,
covenants or agreements of Seller or Majority Shareholder in the Seller
Agreements, or (b) any Excluded Liability or Excluded Asset.
19.3 INDEMNIFICATION BY PURCHASER. Purchaser agrees to indemnify,
defend and hold harmless Seller and Majority Shareholder from and against any
Loss incurred by any of them related to or arising out of the following: (a)
the breach of any of the warranties, representations, covenants or agreements
of Purchaser in the Purchaser Agreements; (b) any Acquired Asset or Assumed
Liability; (c) licenses, permits or governmental authorizations that should
have been obtained by Seller with respect to the Business or Seller's asset for
any period prior the Effective Time but were not duly obtained; (d) the
Employee Plans; and (e) any warranty or guaranty now in effect issued by Seller
prior the Effective Time or outstanding with respect to the products sold or
services rendered by Seller prior the Effective Time.
19.4 PROCEDURES FOR INDEMNIFICATION. "INDEMNITOR" shall mean the
party against whom indemnity is sought, and "INDEMNITEE" shall mean the party
seeking indemnification.
(a) A claim for indemnification hereunder
("INDEMNIFICATION CLAIM") shall be made by Indemnitee by delivery of a written
declaration to Indemnitor requesting indemnification and specifying the basis
on which indemnification is sought and the amount of asserted Losses and, in
the case of a Third Party Claim (as defined
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in Section 19.5 hereof), containing such other information as Indemnitee shall
have concerning such Third Party Claim.
(b) If the Indemnification Claim involves a Third Party
Claim the procedures set forth in Section 19.5 hereof shall be observed by
Indemnitee and Indemnitor.
(c) If the Indemnification Claim involves a matter other
than a Third Party Claim, the Indemnitor shall have ten (10) days to object to
such Indemnification Claim by delivery of a written notice of such objection to
Indemnitee specifying in reasonable detail the basis for such objection.
Failure to timely so object shall constitute acceptance of the Indemnification
Claim by the Indemnitor and the Indemnification Claim shall be paid in
accordance with Section 19.4(d). If any objection is timely interposed by the
Indemnitor and the dispute is not resolved within fifteen (15) days from the
date Indemnitee receives such objection, such dispute will be resolved as
provided in Section 21.13 of this Agreement.
(d) Upon determination of the amount of an
Indemnification Claim, whether by agreement between Indemnitor and Indemnitee,
by an arbitration award or otherwise, Indemnitor shall pay the amount of such
Indemnification Claim within ten (10) days of the date such amount is
determined.
19.5 DEFENSE OF THIRD PARTY CLAIMS.
(a) Should any claim be made, or suit or proceeding
(including, without limitation, a binding arbitration or an audit by any taxing
authority) be instituted against Indemnitee which, if prosecuted successfully,
would be a matter for which Indemnitee is entitled to indemnification under
this Agreement (a "THIRD PARTY CLAIM"), the obligations and liabilities of the
parties with respect to such Third Party Claim shall be subject to the
following terms and conditions.
(b) Within a reasonable time (i.e., such time as will not
prejudice the contest, defense, litigation, or settlement of a Third Party
Claim) following the receipt of notice of a Third Party Claim, the party
receiving the notice of the Third Party Claim shall (i) notify the other party
of its existence setting forth in writing and with reasonable specificity the
facts and circumstances of which such party has received notice, and (ii) if
the party giving such notice is an Indemnitee, specifying in writing the basis
hereunder upon which the Indemnitee's claim for indemnification is asserted and
tendering defense of the Third Party Claim to Indemnitor. If the defense of a
Third Party Claim is so tendered and within fifteen (15) days thereafter such
tender is accepted without qualification by the Indemnitor as evidenced by
written notice to Indemnitee, then, except as hereinafter provided, the
Indemnitee shall not, and the Indemnitor shall, have the right
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to contest, defend, litigate and settle such Third Party Claim. The Indemnitee
shall have the right to be represented by counsel at its own expense in any
such contest, defense, litigation or settlement conducted by the Indemnitor,
provided that the Indemnitee shall be entitled to reimbursement therefor if the
Indemnitor shall lose its right to contest, defend, litigation and settle the
Third Party Claim as herein provided. The Indemnitor shall lose its right to
contest, defend, litigate and settle the Third Party Claim if it shall fail to
diligently contest the Third Party claim (except in connection with a
settlement thereof in accordance with the terms hereof). So long as the
Indemnitor has not lost its right to defend, contest, litigate and settle as
herein provided, the Indemnitor shall have the exclusive right to contest,
defend and litigate the Third Party Claim and shall have the exclusive right,
in its discretion exercised in good faith, and with the advice of counsel, to
settle any such matter, either before or after the initiation of litigation, at
such time and upon such terms as it deems fair and reasonable, provided that at
least ten (10) days prior to any such settlement, written notice of its
intention to settle shall be given to the Indemnitee. All expenses (including
without limitation attorneys' fees) incurred by the Indemnitor in connection
with the foregoing shall be paid by the Indemnitor. No failure by an
Indemnitor to acknowledge in writing its indemnification obligations under this
Section 19 shall relieve it of such obligations to the extent they exist. If
an Indemnitee is entitled to indemnification against a Third Party Claim, and
the Indemnitor fails to accept or assume the defense of a Third Party claim
pursuant to clause (i) or clause (ii) of this Section 19.5(a), or if, in
accordance with the foregoing, the Indemnitor shall lose its right to contest,
defend, litigate and settle such a Third Party Claim, the Indemnitee shall have
the right, without prejudice to its right of indemnification hereunder, in its
discretion exercised in good faith, and upon the advice of counsel, to contest,
defend and litigate such Third Party Claim, and may, in its discretion
exercised in good faith, and with the advice of counsel, settle such Third
Party Claim, either before or after the initiation of litigation, at such time
and upon such terms as it deems fair and reasonable, provided that at least ten
(10) days prior to any such settlement, written notice of its intention to
settle is given to the Indemnitor.
19.6 LIMITATIONS.
(a) All notices of Loss must be delivered to the
Indemnitor prior to expiration of the applicable periods for the warranties and
representations as set forth in Section 16 hereof.
(b) Notwithstanding anything to the contrary herein,
except for the obligations (the "EXEMPT INDEMNIFICATION OBLIGATIONS") under
Section 19.2 with respect to Excluded Liabilities and breaches of the
representations and warranties contained in Sections 8.6, 8.7(b), 8.17, Seller
and Majority
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Shareholder, as an Indemnitor, shall not have any obligation until the
aggregate of all Losses payable by the Indemnitor to the Indemnitee exceeds
$25,000 (the "FLOOR"). Upon the aggregate of all Losses payable by Seller and
Majority Shareholder (except the Exempt Indemnification Obligations) as
Indemnitor exceeding the Floor, Seller and Majority Shareholder shall be liable
to the Indemnitee on a dollar-for-dollar basis, for the amount above the Floor.
(c) With respect to Losses payable by Seller and Majority
Shareholder in respect of Exempt Indemnification Obligations, Seller and
Majority Shareholder shall be liable for all such Losses from the first dollar
in any event. With respect to Losses payable by Purchaser pursuant to Section
19.3 (including without limitation with respect to Purchaser's obligations
under Section 6.3), all such Losses shall be payable from the first dollar.
(d) The payment of any Loss hereunder shall constitute an
additional adjustment to the purchase price under Section 5.
(e) A Purchaser's Shares Adjustment Claim shall not be an
Indemnification Claim and shall not be subject to the Floor.
(f) Notwithstanding anything to the contrary in this
Section 19, the rights and obligations of the parties with respect to
indemnification for any and all Taxes shall be determined under Section 24.
20. TRANSACTION EXPENSES.
20.1 BROKERS. Purchaser, Seller and Majority Shareholder each
represent and warrant to the other that no broker or finder has acted for it or
them in connection with this Agreement.
20.2 EXPENSES. Except as provided in Sections 3.3 and 17, all
expenses incurred by the parties in connection with or related to the
authorization, preparation, negotiation and consummation of this Agreement and
the agreements, documents or instruments contemplated hereby shall be borne
solely by the party which has incurred the same.
21. MISCELLANEOUS.
21.1 ACCOUNTING RECORDS. From and after the Effective Time,
Seller and the Majority Shareholder and their representatives shall have
reasonable access to all of the Books and Records for the period prior to the
Effective Time, but only to the extent that such access may reasonably be
required by such persons in connection with matters relating to or affected by
the operations of Seller prior to the Effective Time. Such access shall be
afforded by Purchaser upon receipt of reasonable advance notice and
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during normal business hours. Seller and Majority Shareholder shall be solely
responsible for any costs or expenses incurred by them pursuant to this
Section, including with respect to Purchaser, all reimbursable out-of-pocket
costs.
21.2 NOTICE. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed given and
received (a) on the date of delivery when delivered by hand or when transmitted
by confirmed simultaneous telecopy, (b) on the following business day when sent
by receipted overnight courier, or (c) three (3) business days after deposit in
the United States Mail when mailed by registered or certified mail, return
receipt requested, first class postage prepaid, as follows:
(a) If to Seller or Majority Shareholder to:
Ultimate Prospecting Services, Inc.
201 Boston Post Road West
Marlboro, MA 01752
Attn: John M. Miller
Fax: (508) 481-9309
With a copy to:
Ellen Burkhardt, Esq.
c/o Dane & Howe
45 School Street
Boston, MA 02108-3204
Fax: (617) 523-3362
(b) If to Purchaser to:
The Reynolds and Reynolds Company
800 Germantown Street
Dayton, Ohio 45407
ATTN: Mark Brown
Fax: (513) 443-2972
With a copy to:
The Reynolds and Reynolds Company
Karen J. Blackwell, Esq.
800 Germantown Street
Dayton, Ohio 45407
Fax: (513) 443-2094
Any party may change the address to which notices are to be sent to it by
giving written notice of such change of address to the other parties in the
manner above provided for giving notice.
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21.3 ASSIGNMENT; BINDING EFFECT. This Agreement may not be
assigned by any of the parties hereto without the prior written consent of the
other parties hereto. This Agreement shall be binding upon the parties hereto
and their respective permitted successors, assigns and transferees.
21.4 HEADINGS; EXHIBITS AND SCHEDULES. The Section, Subsection
and other headings in this Agreement are inserted solely as a matter of
convenience and for reference, and are not a part of this Agreement. The
Exhibits and Schedules attached hereto are a material part of this Agreement
and are incorporated herein by this reference.
21.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one counterpart has been signed by each party and
delivered to the other party hereto.
21.6 INTEGRATION OF AGREEMENT. This Agreement supersedes all
prior agreements, oral and written, between the parties hereto with respect to
the subject matter hereunder. Neither this Agreement, nor any provision
hereof, may be changed, waived, discharged, supplemented or terminated orally,
but only by an agreement in writing signed by the party against which the
enforcement of such change, waiver, discharge or termination is sought.
21.7 TIME OF ESSENCE. Time is of the essence in this Agreement.
21.8 GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the Commonwealth of
Massachusetts.
21.9 DISCLOSURE. Purchaser, Seller and Majority Shareholder each
agree not to issue any press release or make any public announcement or other
disclosure to competitors, customers, employees or any other person (except to
employees and agents on a need-to-know basis in order to complete transactions
and who agree to bound hereby) concerning this Agreement except as required by
law or with the advance written approval of the other party, which approval
shall not be unreasonably withheld.
21.10 PARTIAL ILLEGALITY OR UNENFORCEABILITY. Wherever possible,
each provision hereof shall be interpreted in such manner as to be effective
under applicable law, but in case any one or more of the provisions contained
herein shall, for any reason, be held to be illegal or unenforceable in any
respect, such illegality or unenforceability shall not affect any other
provisions of this Agreement, and this Agreement shall be construed as if such
illegal or unenforceable provision or provisions had never been contained
herein unless the deletion of such provision or provisions would result in such
a material change as to cause completion of the transactions contemplated
hereby to be unreasonable.
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21.11 RIGHT TO PROCEED. If any of the conditions specified in Section
11 hereof have not been satisfied (provided that such conditions are specified
in the certificate delivered by Seller at Closing), Purchaser shall have the
right to proceed with the transactions contemplated hereby, but Purchaser shall
be deemed to have waived its rights hereunder with respect to such failed
conditions. If any of the conditions specified in Section 12 hereof have not
been satisfied (provided that such conditions are specified in a certificate
delivered by Purchaser at Closing), Seller and Majority Shareholder shall have
the right to proceed with the transactions contemplated hereby, but Seller and
Majority Shareholder shall be deemed to have waived their rights hereunder with
respect to such failed conditions.
21.12 EFFECT OF INVESTIGATION. Any inspection, preparation or
compilation of information or Exhibits or audit of the inventories, properties,
financial condition or other matters relating to the Seller, the Acquired
Assets, the Assumed Liabilities or the Business conducted by or on behalf of
Purchaser pursuant to this Agreement shall in no way limit, affect or impair
the ability of Purchaser to rely upon the representations, warranties,
covenants and agreements of Seller and Majority Shareholder set forth herein.
21.13 ARBITRATION.
(a) Any controversy, dispute or claim arising out of or
relating to this Agreement shall be submitted to arbitration in accordance with
the commercial rules of the American Arbitration Association ("AAA"), by which
each party will be bound.
(b) If the parties have not agreed during their
negotiations on a single arbitrator to whom the controversy, dispute or claim
will be submitted, either party may select an arbitrator and send written
notice to the other party of the selection. The party receiving such notice
will have 10 days from the date such party receives such notice of such
selection to select a second arbitrator and send notice of such to the party
who selected the first arbitrator. Failure to select the second arbitrator and
to send timely notice, as provided above, empowers the arbitrator first
selected to resolve the controversy. If both arbitrators have been duly named,
they will as soon as is reasonably practicable (but within 30 days from the
date the latter of the two arbitrators is named) name a third arbitrator who
shall not be from the Dayton, Ohio or Boston, Massachusetts metropolitan areas.
The provisions of the Federal Rules of Civil Procedure which provide for
discovery shall be applicable to any such arbitration. The parties agree that
such discovery must be completed within six (6) months after the claim has been
filed with the AAA and service on the other party effected.
(c) Any arbitration proceedings will be conducted in
Pittsburgh, Pennsylvania, unless the parties otherwise agree.
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(d) The parties agree to be bound by the decision of the
arbitrator and the decision thereof to be entered into any appropriate court or
other jurisdiction. Unless otherwise provided in this Agreement, the
prevailing party in the arbitration shall be promptly reimbursed for its
reasonable costs and fees (including attorneys' fees) incurred in connection
with the arbitration and shall not be responsible for the costs of arbitration.
21.14 "KNOWLEDGE." For purposes of this Agreement, "to the
best of ________'s knowledge" or "to ______________'s knowledge" shall mean
the actual knowledge of the subject party; provided, further, that each person
which is not a natural person shall be charged with the actual knowledge of its
directors and officers.
21.15 "PERSON." The term "person" shall be broadly interpreted to
include, without limitation, any corporation, partnership, association, limited
liability company, other association, trust or individual.
21.16 "BEST EFFORTS." The use of the term "best efforts" herein shall
in no event require any party to (a) expend funds which are not commercially
reasonable in relation to the transactions contemplated hereby or (b) take, or
cause to be taken, any action which would have a material adverse effect with
respect to it.
21.17 "INCLUDING." Whenever the term "including" is used in this
Agreement, it shall mean "including, without limitation," (whether or not such
language is specifically set forth) and shall not be deemed to limit the range
of possibilities of those items specifically enumerated.
21.18 SINGULAR OR PLURAL. All defined terms used herein shall have
the same meaning, whether used in the singular or plural form, unless the
context clearly requires otherwise.
21.19 BANK OF BOSTON. This Section 21.19 is added for purposes of
amplification. Pursuant to Section 3.2 and as effected by certain written
documents entered into with, by or for the benefit of The First National Bank
of Boston (the "BANK") as of March 29, 1995, Purchaser will assume Seller's
obligations under two term loans and a line of credit loan with the Bank. The
purpose of this Section is to confirm that Purchaser's obligations under
Section 19.3 with respect to Assumed Liabilities specifically includes such
loans as well as the consequences of any technical default thereunder arising
from the assumption of such loans by Purchaser as contemplated by this
Agreement.
22. SELLER'S OBLIGATIONS. Majority Shareholder hereby guarantees the
prompt performance by Seller of its obligations under this Agreement. This
guaranty is one of payment, not collection. Upon the dissolution and
liquidation of Seller, Majority Shareholder shall automatically and without
further action assume all
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obligations of the Seller hereunder and shall receive all rights and benefits
of Seller hereunder; provided, however, that Section 23 shall not apply to the
Majority Shareholder and he shall be subject to the corresponding provisions of
his Employment Agreement.
23. COVENANT NOT TO COMPETE.
23.1 COVENANT NOT TO COMPETE. Seller covenants and agrees that,
prior to the first anniversary of the Effective Time (or, if for any reason
Seller has not dissolved and completely liquidated by such first anniversary,
such period shall be extended to the fifth (5th) anniversary of the Effective
Time), Seller shall not, either directly or indirectly, compete with the
Purchaser in the Subject Business in the United States.
23.2 DEFINITIONS. The following definitions shall apply to this
Section 23:
(a) "COMPETE" shall mean: (i) calling on, soliciting or
accepting as a client or customer, any person that is presently or was a client
or customer of the Business during the twelve (12) month period prior to the
date of this Agreement; or (ii) entering into, or attempting to enter into, the
Subject Business, either alone or in conjunction with any person.
(b) "DIRECT OR INDIRECT" competition shall include (i)
acting (directly through Seller or indirectly through its employees, agents or
contractors), with respect to the Subject Business, as an agent,
representative, consultant, officer, director, independent contractor or
employee of any person that is competing with the Purchaser in the Subject
Business or competing on Seller's own behalf with Purchaser in the Subject
Business, or (ii) participating in any such competing person as an owner,
partner, limited partner, joint venturer, creditor, stockholder, or member.
"Direct" or "indirect" competition shall not include the ownership of voting
securities or other equity interest representing less than 5% (collectively
among Seller, Majority Shareholders, and their Affiliates) of the voting power
of an entity.
(c) "SUBJECT BUSINESS" shall mean those businesses in
which Purchaser is engaged (including the Business) as of the date of this
Agreement with respect to or as a service for any person engaged in the
manufacture, sale, service, repair, rental, lease or other transfer of
automobiles, trucks, motorcycles or farm implements of any kind or parts of any
of the foregoing or the after-market for parts for any of the foregoing.
23.3 EQUITABLE RELIEF. Seller agrees that the duration,
geographical scope and subject matter of this Section 23 are reasonable in
light of all of the facts and circumstances.
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23.4 SEVERABILITY. If any court of competent jurisdiction shall
determine that any provision of this Section 23 is invalid or unenforceable,
such determination shall not affect the other provisions of this Agreement
(including Section 23). The invalid or unenforceable provision shall be
modified to the minimum degree necessary to make such provision valid and
enforceable, and this Agreement shall thereafter be enforced to the fullest
extent possible.
24. TAX INDEMNIFICATION.
24.1 INDEMNIFICATION BY SELLER AND MAJORITY SHAREHOLDER. Seller
and Majority Shareholder joint and severally agree to indemnify, defend, and
hold harmless Purchaser and its successors and assigns from and against: (a)
any and all Taxes and Tax Losses (as defined in Section 24.6) that are Excluded
Liabilities or that arise out of the breach of any representation or
warranty,set forth in Section 8.6 or any covenant set forth in Section 10.9 or
Section 13.2, and (b) any and all Taxes imposed on Seller for all taxable
periods or portions thereof ending on or before the Closing Date (except those
Taxes which are Assumed Liabilities and those sales, transfer and similar Taxes
described in Section 5.4) and all related Tax Losses incurred by Purchaser;
PROVIDED, HOWEVER, that the Taxes and Tax Losses described in this Section 24.1
shall not include the Taxes and Tax Losses described in section 24.2 to the
extent that Purchaser is obligated to indemnify Seller and/or Majority
Shareholder under Section 24.2 for such Taxes and Tax Losses, and nothing in
this Section 24.1 shall reduce, limit, or otherwise affect Purchaser's
obligation to indemnify Seller and/or Majority Shareholder pursuant to Section
24.2.
24.2 INDEMNIFICATION BY PURCHASER. Purchaser agrees to indemnify,
defend, and hold harmless Seller and its successors and assigns from and
against:
(a) any and all sales, use, and similar transfer Taxes
and Tax Losses imposed in connection with any of the transactions contemplated
by this Agreement;
(b) any and all Taxes and Tax Losses imposed on the
Seller (and any liability for such Taxes imposed on Majority Shareholder by
reason of it being the transferee or successor of Seller, including any Tax
Losses incurred by the Majority Shareholder with respect to such Taxes) arising
out of the inaccuracy or breach of any of the Purchaser's representations,
warranties and covenants contained in Section 9.4(b), (c), (g), (h) or (i) or
Section 13.2 of this Agreement if a court of competent jurisdiction determines
that Purchaser's acquisition of the Acquired Assets does not qualify as a
reorganization under Section 368(a) of the Code solely by reason of Purchaser's
breach of any of such representations, warranties or covenants; and
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<PAGE> 47
(c) any and all Taxes and Tax Losses imposed on the
Seller (and any liability for such loss imposed on the Majority Shareholder by
reason of it being the transferee or successor of Seller, including any Tax
Losses incurred by the Majority Shareholder with respect to such Taxes) up to
an amount equal to the Disqualification Tax Benefits if a court of competent
jurisdiction determines that Purchaser's acquisition of the Acquired Assets
does not qualify as a reorganization under Section 368(a) of the Code except by
reason of Seller's and Majority Shareholder's breach of representations,
warranties and covenants contained in Sections 8.6(f), 10.9 or 13.2.
24.3 CALCULATION OF INDEMNITY PAYMENT. Notwithstanding anything to
the contrary herein, the amount of any indemnification payable under this
Section 24 shall be calculated as follows:
(a) In the case of an indemnity payable under Section
24.1 and 24.2(a), the amount of any indemnification payment shall be an amount
which is equal to the sum of (i) the applicable Tax imposed and (ii) the Tax
Losses associated with such Tax.
(b) In the case of an indemnity payable under Section
24.2(b), the amount of any indemnification payment shall be equal to the Tax
Loss plus the excess of (i) the Tax imposed on Seller and Majority Shareholder,
over (ii) the Tax that would have been imposed if the Majority Shareholder had
sold all of his shares in the Seller to Purchaser in a taxable transaction.
(c) In the case of an indemnity payable under Section
24.2(c), the amount of the indemnification payment shall be an amount which is
equal to the sum of (i) the applicable Tax imposed and (ii) the Tax Losses
associated with such Tax; PROVIDED, HOWEVER, that such amount shall not exceed
an amount equal to the Disqualification Tax Benefits.
24.4 TAX CONTESTS.
(a) After the closing, Purchaser shall notify Majority
Shareholder, and Majority Shareholder shall notify Purchaser, as the case may
be, in writing of any written notice of a proposed assessment of Tax or claim
for Tax raised in an audit or administrative or judicial proceeding that, if
determined adversely to the taxpayer, would be grounds for indemnification
under this Section 24. Any failure of one party to give timely notice to the
other pursuant to this Section 24.3 shall preclude any claim for
indemnification for such Tax if such failure materially prejudices such other.
(b) In the event of a proposed assessment of Tax
described in Section 24.1, Seller or Majority Shareholder shall have the sole
right to participate in and control the audit or other proceeding for the
determination of such Tax.
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(c) In the event of a proposed assessment of Tax
described in Section 24.2(a) or (b), Seller and Majority Shareholder shall have
the right to participate in and control the audit or proceeding for the
determination of such Tax. Purchaser shall have the right, at its expense, to
participate in such audit or proceeding, but shall not have any right to
control all or any portion of such audit or proceeding. Notwithstanding any of
the foregoing, Seller and Majority Shareholder shall not settle, compromise or
abandon without Purchaser's prior written consent any claim for Tax described
in Section 24.2(a) or (b).
(d) In the event of a proposed assessment of Tax
described in Section 24.2(c), Seller and Majority Shareholder shall have the
right to participate in and the sole right to control the audit or proceeding
for the determination of such Tax. Purchaser shall have the right, at its
expense, to participate in such audit or proceeding, but shall not have any
right to control all or any portion of such audit or proceeding.
Notwithstanding any of the foregoing, Seller and Majority Shareholder shall not
settle, compromise or abandon without Purchaser's prior written consent any
claim for Tax described in Section 24.2(c).
(e) Seller, Majority Shareholder and Purchaser agree to
cooperate in the defense against or the compromise of a proposed assessment of
Tax described in Section 24.1 or Section 24.2.
24.5 TIME OF PAYMENT. Payment of any Tax or any Tax Losses for
which a party is entitled to indemnification under Section 24.1 or Section 24.2
shall be made on or before the later to occur of (a) five (5) business days
following an agreement between Majority Shareholder and the Purchaser that one
party is obligated to indemnify the other for such Tax, and (b) five (5)
business days before the due date of or the payment of such Tax to the relevant
taxing authority.
24.6 DEFINITIONS. For purposes of this Agreement, the following
terms shall have the following meanings:
(a) "DISQUALIFICATION TAX BENEFITS" means $215,000.
(b) "TAX" or "TAXES" means any and all taxes, fees,
levies, duties, tariffs, imposts, and other charges of any kind (together with
any and all interest, penalties, additions to the tax and additional amounts
imposed with respect thereto) imposed by any government or taxing authority
including, without limitation, taxes or other charges on or with respect to
income and franchises, property, sales, use, employment, social security and
withholding.
(c) "TAX LOSS" means all costs and expenses (including
reasonable attorneys' fees) directly incurred with respect to any Taxes for
which a party is entitled to indemnification under Sections 24.1 and 24.2.
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24.7 FLOOR. Claims for indemnification pursuant to this Section 24
shall not be subject to the Floor and shall be payable from the first dollar.
The parties have executed this Agreement as of this 29th day of March,
1995.
ULTIMATE PROSPECTING SERVICES, INC.
BY John M. Miller
-------------------------------
TITLE: President
----------------------------
THE REYNOLDS AND REYNOLDS COMPANY
BY Mark S. Brown
-------------------------------
TITLE: V. P. Marketing
----------------------------
/s/ John M. Miller
---------------------------------
JOHN M. MILLER
648000\754DMV4.ACQ
3-29-95-1
43
<PAGE> 1
[COOLIDGE WALL WOMSLEY & LOMBARD CORPORATION LETTERHEAD]
Exhibit (5)
May 24, 1995
The Reynolds and Reynolds Company
115 South Ludlow Street
Dayton, Ohio 45402
Gentlemen:
As counsel for The Reynolds and Reynolds Company (the "Company"), we are
familiar with the Amended Articles of Incorporation of the Company under the
laws of the state of Ohio, its Consolidated Code of Regulations, and the
respective actions taken by the Shareholders and by the Board of Directors in
connection therewith, and all subsequent corporate proceedings with respect
thereto.
In addition, we are familiar with the preparation of the Form S-3 Registration
Statement currently being filed with the Securities and Exchange Commission.
We are also acquainted with the business activities of the Company and have
examined corporate minute books, records and such other documents as we have
deemed necessary in order to render to you the following opinion.
Based upon the foregoing, we are of the opinion that:
1. The Company has been duly organized and is a validly existing
corporation in good standing under the laws of the state of Ohio.
2. As of May 24, 1995, the 55,392 Class A Common Shares proposed to be
sold by the Selling Shareholders, as defined in such Registration
Statement have been duly authorized and validly issued, and are
fully paid and nonassessable as described in such Registration
Statement.
<PAGE> 2
[COOLIDGE WALL WOMSLEY & LOMBARD CORPORATION LOGO]
The Reynolds and Reynolds Company
Page 2
May 24, 1995
We hereby consent to the references to our firm in the Registration Statement
on Form S-3 and in the Prospectus constituting a part thereof, and to the use
of this opinion as an exhibit to such Registration Statement.
Very truly yours,
COOLIDGE, WALL, WOMSLEY & LOMBARD
<PAGE> 1
EXHIBIT 15
The Reynolds and Reynolds Company
115 S. Ludlow Street
Dayton, Ohio 45402
We have made a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the unaudited interim financial
information of The Reynolds and Reynolds Company and subsidiaries for the
periods ended December 31, 1994 and March 31, 1995, as indicated in our reports
dated February 7, 1995 and May 11, 1995, respectively; because we did not
perform an audit, we expressed no opinion on that information.
We are aware that our reports referred to above, which were included in your
Quarterly Reports on Form 10-Q for the quarters ended December 31, 1994 and
March 31, 1995, are incorporated by reference in this Registration Statement on
Form S-3.
We also are aware that the aforementioned reports, pursuant to Rule 436(c)
under the Securities Act of 1933, are not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.
DELOITTE & TOUCHE LLP
Dayton, Ohio
May 24, 1995
<PAGE> 1
EXHIBIT 23(B)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
The Reynolds and Reynolds Company on Form S-3 of our report dated November
14, 1994, which includes an explanatory paragraph concerning a change in the
method of accounting for post-retirement benefits other than pensions in 1993
and a change in the method of accounting for income taxes in 1992,
appearing in the Annual Report on Form 10-K of The Reynolds and Reynolds
Company for the year ended September 30, 1994, and to the reference to us under
the heading "Experts" in the Prospectus, which is part of such Registration
Statement.
DELOITTE & TOUCHE LLP
Dayton, Ohio
May 24, 1995
