<PAGE> 1
As filed with the Securities and Exchange Commission on September 27, 1996
--------------------------------------------------------
Registration No. 333-_____
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]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If the Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Security Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------
Title of each class Amount to be Proposed Proposed Amount of
of securities to be registered maximum offering maximum registration fee*
registered price per share* aggregate offering
price
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Common Shares 31,472 shares $26.00 $818,272 $282.16
$.625 par value
- ---------------------------------------------------
</TABLE>
<PAGE> 2
* 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 $.625 par value, on the New York Stock
Exchange on September 24, 1996, as reported in The Wall Street Journal.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said section 8(a),
may determine.
<PAGE> 3
THE REYNOLDS AND REYNOLDS COMPANY
115 SOUTH LUDLOW STREET
DAYTON, OHIO 45402
(513)443-2000
31,472 Class A Common Shares
($.625 par value)
PROSPECTUS
This Prospectus covers the resale of 31,472 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 David J. Wheeler (the "Selling
Shareholder"). See "SELLING SHAREHOLDER." 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
Shareholder hereunder has not entered into any arrangement or agreements with
any broker or dealer for the offering or sale of the Shares. In any transaction,
the 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 September 24,
1996, the reported high and low sale prices of the Class A Common Shares on the
NYSE were $26.375 and $25.625 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 September __, 1996.
<PAGE> 4
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 auditors thereon) for the
fiscal year ended September 30, 1995 (File No. 0-132).
(b)(1) The Company's Quarterly Report on Form 10-Q for the fiscal quarter ended
December 31, 1995 (File No. 0- 132).
(b)(2) The Company's Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 1996 (File No. 0-132).
(b)(3) The Company's Quarterly Report on Form 10-Q for the fiscal quarter ended
June 30, 1996.
(b)(4) The Company's Current Report on Form 8-K which was filed on June 3, 1996
(File No. 0-132).
(b)(5) The Company's Amendment No. 1 to Current Report on Form 8-K which was
filed on August 2, 1996 (File No. 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> 5
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 SHAREHOLDER
On July 1, 1996, the Company acquired the issued and outstanding common stock of
Wheeler Management Associates, Inc., a New Hampshire corporation ("Wheeler").
The purchase price for the stock of Wheeler 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 Shareholder named herein has informed the Company that he desires
to be in a position to sell the Shares set forth opposite his name from time to
time on the NYSE or in the over-the-counter market at prices current at the time
of sale. The Selling Shareholder has not entered into any arrangements or
agreements with any broker or dealer for the offering or sale of the Shares.
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
SHARES OWNED SHARES TO BE
AS OF OFFERED FOR OWNER'S
SEPTEMBER 27, 1996(1) ACCOUNT(1)
<S> <C> <C> <C>
David J. Wheeler(2) 831-A South King Street 31,472 31,472
Leesburg, VA 22075
- ---------------------------------
<FN>
1Certain of those Shares are subject to escrow provisions and may not be
sold until released from such escrow arrangements in the future.
3 David J. Wheeler has been President of Wheeler since Wheeler was
incorporated in October, 1987. Wheeler now serves as a Director for the Company.
</TABLE>
RECENT DEVELOPMENTS
Effective July 1, 1996, the Company acquired the outstanding common stock of
Wheeler via the merger of WMA Acquisition Corporation, a wholly-owned subsidiary
of the Company, into Wheeler. Wheeler was engaged in fixed operations general
consulting for automobile dealerships. The consideration received by the Selling
Shareholder in the merger for his shares of the common stock of Wheeler was
$795,655, plus a contingent future right to receive additional consideration
based upon the performance of the acquired business. The consideration was paid
by delivery of 31,472 shares. A total of 4,720 Shares was deposited into an
escrow fund as security to pay the amount of any purchase price adjustment based
upon the balance sheet of Wheeler.
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.
With respect to the unaudited interim financial information for the period
ended December 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 report
included in the Company's Quarterly Report on Form 10-Q for the quarter ended
December 31, 1995.
3
<PAGE> 6
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 report 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 the report is not a "report" 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> 7
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 $ 282
Accountants' fees and expenses $ 3,000
Legal fees and expenses $ 6,000
Financial printer fees $ 500
Total $ 9,782
The Selling Shareholder 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 8.
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 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.
5
<PAGE> 8
(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> 9
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 September 27, 1996.
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.
<TABLE>
<CAPTION>
<S> <C>
/s/ David R. Holmes
- --------------------------------------------------------------------------- September 27, 1996
David R. Holmes, Chairman of the Board, President
and Chief Executive Officer (Principal Executive Officer)
and Director
/s/ Dale L. Medford
- --------------------------------------------------------------------------- September 27, 1996
Dale L. Medford, Vice President, Corporate Finance
and Chief Financial Officer (Principal Financial and Accounting Officer)
and Director
/s/ Joseph N. Bausman
- --------------------------------------------------------------------------- September 27, 1996
Joseph N. Bausman, President, Automotive Systems Division and Director
/s/ Dr. David E. Fry
- --------------------------------------------------------------------------- September 27, 1996
Dr. David E. Fry, Director
/s/ Richard H. Grant, III
- --------------------------------------------------------------------------- September 27, 1996
Richard H. Grant, III, Director
/s/ Robert C. Nevin
- --------------------------------------------------------------------------- September 27, 1996
Robert C. Nevin, President, Business Systems Division and Director
/s/ Kenneth W. Thiele
- --------------------------------------------------------------------------- September 27, 1996
Kenneth W. Thiele, Director
/s/ Martin D. Walker
- --------------------------------------------------------------------------- September 27, 1996
Martin D. Walker, Director
</TABLE>
7
<PAGE> 10
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
(1) Inapplicable
(2) Acquisition Agreement dated June 7, 1996 among The Reynolds and
Reynolds Company, David J. Wheeler, Wheeler Management Associates,
Inc. and WMA Acquisition.*
(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.
648000\652DEB.s-3
8-16-96-1
8
<PAGE> 1
Exhibit 2
ACQUISITION AGREEMENT
among
DAVID J. WHEELER
WHEELER MANAGEMENT ASSOCIATES, INC.,
THE REYNOLDS AND REYNOLDS COMPANY,
and
WMA ACQUISITION CORPORATION
dated as of June 7, 1996
<PAGE> 2
TABLE OF CONTENTS
-----------------
1. THE MERGER..................................................... 2
1.1 Surviving Corporation................................. 2
1.2 Articles of Incorporation and Bylaws.................. 2
1.3 Directors and Officers................................ 2
1.4 Manner and Basis for Converting Shares................ 2
1.5 Closing Adjustment Escrow Fund........................ 3
1.6 Certificate of Merger................................. 5
1.7 Effect of the Merger.................................. 5
1.8 Further Assurance..................................... 5
2. TRANSACTION SHARES............................................. 5
2.1 Issuance.............................................. 5
2.2 Exemptions............................................ 5
2.3 Securities Filings.................................... 6
2.4 Cooperation........................................... 6
3. REPRESENTATIONS AND WARRANTIES OF COMPANY AND WHEELER.......... 6
3.1 Corporate Action...................................... 6
3.2 No Conflict With Other Agreements or Laws............. 6
3.3 Organization and Qualification........................ 7
3.4 The Acquired Business................................. 7
3.5 Financial Statements.................................. 7
3.6 Taxes................................................. 8
3.7 Receivables........................................... 8
3.8 Insurance............................................. 8
3.9 Absence of Changes.................................... 9
3.10 Personal Property.................................... 10
3.11 Real Property........................................ 10
3.12 Affiliates........................................... 11
3.13 Litigation; Compliance with Laws, Etc................ 11
3.14 Labor Relations...................................... 12
3.15 Licenses and Permits................................. 12
3.16 Contracts............................................ 13
3.17 Title to Properties; Encumbrances.................... 13
3.18 Intellectual Property Intangibles.................... 13
3.19 Employee Benefit Plans............................... 15
3.20 Consents and Approvals............................... 17
3.21 Customers and Suppliers.............................. 17
3.22 Warranties........................................... 17
3.23 Bank Accounts........................................ 17
3.24 Officers and Directors and Certain Authorized
Persons.............................................. 17
3.25 Books and Records.................................... 18
3.26 Environmental Matters................................ 18
i
<PAGE> 3
3.27 Planned Capital Expenditures.......................... 18
3.28 Capitalization........................................ 18
3.29 Disclosure. .......................................... 19
4. REPRESENTATIONS AND WARRANTIES OF THE REYNOLDS COMPANIES.
4.1 Corporate Action; Corporate Power and Authority....... 19
4.2 No Conflict With Other Agreements or Laws............. 19
4.3 Organization.......................................... 19
5. PRE-CLOSING COVENANTS.......................................... 20
5.1 Conduct of Business Prior to Closing.................. 20
5.2 Notification of Certain Changes....................... 20
5.3 Other Transactions.................................... 20
5.4 Consents, Waivers and Approvals....................... 20
5.5 Supplemental Disclosure............................... 20
5.6 Additional Reports.................................... 21
5.7 Conditions Precedent.................................. 21
5.8 Reynolds' Due Diligence............................... 21
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE REYNOLDS
COMPANIES...................................................... 21
6.1 Representations....................................... 21
6.2 Covenants............................................. 21
6.3 No Injunction, Etc.................................... 21
6.4 Opinion of Counsel.................................... 22
6.5 Incumbency; Resignations.............................. 22
6.6 Consents, Waivers and Approvals....................... 22
6.7 Absence of Material Adverse Changes................... 22
6.8 Certified Resolutions................................. 22
6.9 Confirmations......................................... 22
6.10 Title Assurances...................................... 22
6.11 Basic Corporate Documents............................. 22
6.12 Certificate of Merger................................. 23
6.13 Termination of Agreements............................. 23
6.14 Escrow Agreement...................................... 23
6.15 Employment ........................................... 23
6.16 Miscellaneous Agreements.............................. 23
6.17 May 31, 1996 Financial Statements..................... 23
6.18 Adjusted 12/31/95 Balance Sheet....................... 23
6.19 Affiliate Receivables and Payables.................... 23
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF COMPANY................. 23
7.1 Representations True at Closing....................... 23
7.2 Covenants of the Reynolds Companies................... 24
7.3 Certified Resolutions................................. 24
7.4 Opinion of Counsel.................................... 24
ii
<PAGE> 4
7.5 No Injunction, Etc...................................... 24
7.6 Consents, Waivers and Approvals......................... 24
7.7 Incumbency.............................................. 24
7.8 Escrow Agreement........................................ 24
7.9 Certificate of Merger................................... 24
7.10 Miscellaneous Agreements................................ 24
7.11 Employment ............................................. 25
8. MUTUAL COVENANTS................................................. 25
8.1 General................................................. 25
8.2 Tax Matters............................................. 25
9. CLOSING.......................................................... 25
9.1 Time and Place.......................................... 25
9.2 Transactions at the Closing............................. 25
9.3 Default at Closing...................................... 26
10. EMPLOYEES OF THE COMPANY......................................... 26
11. FURTHER COVENANTS................................................ 27
12. SURVIVAL OF REPRESENTATIONS AND AGREEMENTS....................... 27
13. TERMINATION...................................................... 27
14. TRANSACTION EXPENSES............................................. 28
14.1 Brokers................................................. 28
14.2 Expenses................................................ 28
15. INDEMNIFICATION.................................................. 28
15.1 Losses.................................................. 28
15.2 Indemnification by the Company.......................... 28
15.3 Indemnification by the Reynolds Companies............... 28
15.4 Procedures for Indemnification.......................... 28
15.5 Defense of Third Party Claims........................... 29
15.6 Limitations............................................. 31
16. MISCELLANEOUS.................................................... 31
16.1 Accounting Records..................................... 31
16.2 Notice................................................. 32
16.3 Assignment; Binding Effect............................. 32
16.4 Headings; Exhibits and Schedules....................... 32
16.5 Counterparts........................................... 32
16.6 Integration of Agreement............................... 32
16.7 Time of Essence........................................ 32
16.8 Governing Law.......................................... 32
16.9 Disclosure............................................. 33
iii
<PAGE> 5
16.10 Partial Illegality or Unenforceability................. 33
16.11 Singular or Plural..................................... 33
16.12 Effect of Investigation................................ 33
16.13 Arbitration............................................ 33
16.14 "Person.".............................................. 34
16.15 "Best Efforts."........................................ 34
16.16 "Including."........................................... 34
16.17 No Third Party Beneficiaries........................... 34
17. ASSUMPTION OF OBLIGATIONS......................................... 34
18. CERTAIN REPRESENTATIONS OF WHEELER................................ 34
iv
<PAGE> 6
LIST OF SCHEDULES
-----------------
A Definitions
B Disclosure Schedule
C Financial Statements
D Permitted Encumbrances
E Miscellaneous Agreements
F Notices
LIST OF EXHIBITS
----------------
1 Form of Escrow Agreement
2 Contingent Payments
3 Form of Certificate of Merger
4 Adjusted Balance Sheet
5 Form of Employment Agreement
6 Opinion of Counsel to the Company and Wheeler
7 Opinion of Counsel to the Reynolds Companies
<PAGE> 7
ACQUISITION AGREEMENT
---------------------
The Parties agree as follows:
RECITALS:
---------
Unless otherwise indicated in this Agreement, the capitalized terms
used in this Agreement shall have the meanings given them in Schedule A.
Company is a duly organized and incorporated New Hampshire corporation,
and its authorized capital stock consists of 300 common shares, no par value
(the "COMPANY SHARES"), 100 of which are issued and outstanding on the date of
this Agreement.
Acquisition is a duly organized and incorporated New Hampshire
corporation, and its authorized capital stock consists of 1,000 common shares,
no par value (the "ACQUISITION SHARES"), 100 of which are issued and outstanding
and owned by Reynolds as of the date of this Agreement.
The respective boards of directors of Company and Acquisition (i) have
approved the merger of Acquisition with and into Company upon the terms and
subject to the conditions of this Agreement and the Escrow Agreement (the
"MERGER"), and (ii) deem the Merger to be in the best interests of their
respective shareholders.
This Agreement has been approved by Reynolds as the sole shareholder of
Acquisition by written consent in lieu of a meeting and by Wheeler as the sole
shareholder of the Company by written consent in lieu of a meeting.
The Parties intend that this Agreement constitute a plan of
reorganization and that the Merger qualify for Federal income tax purposes as a
"reorganization" within the meaning of Section 368(a) of the Code.
A portion of the Reynolds Shares to be issued to Wheeler under this
Agreement will be placed in an escrow to be maintained by Escrow Agent and will
be subject to possible return to Reynolds under the conditions specified in the
Escrow Agreement and in this Agreement as a mechanism to secure the performance
by Company and Wheeler of their obligations to Reynolds under this Agreement.
The Parties intend that notwithstanding such escrow arrangement, after
the Closing, Wheeler will be considered the beneficial owner of the Reynolds
Shares issued pursuant to this Agreement (except for the Reynolds Shares, if
any, that are returned to Reynolds in accordance with the Escrow Agreement) for
Federal income tax purposes so that such Reynolds Shares will be
<PAGE> 8
treated as received by Wheeler at the Effective Time or upon distribution by
Escrow Agent under the Escrow Agreement, as applicable, for Federal income tax
purposes.
The Parties intend that by virtue of utilizing such escrow arrangement,
no interest income will be imputed under Section 483 (or any other provision) of
the Code to Wheeler upon receipt of Reynolds Shares pursuant to the Escrow
Agreement.
1. THE MERGER.
1.1 SURVIVING CORPORATION. At the Effective Time, Acquisition shall be
merged with and into Company, and the Surviving Corporation shall be governed by
the laws of the state of New Hampshire under the name "Wheeler Management
Associates, Inc." and the separate corporate existence of Acquisition shall
thereupon cease. The Merger shall be completed pursuant to and shall have the
effect provided in the Governing Law.
1.2 ARTICLES OF INCORPORATION AND BYLAWS.
(a) At the Effective Time, the Articles of Incorporation of
Acquisition as in effect immediately prior to the Effective Time shall become
the Articles of Incorporation of the Surviving Corporation.
(b) At the Effective Time, the Bylaws of Acquisition as in
effect immediately prior to the Effective Time shall become the Bylaws of the
Surviving Corporation.
1.3 DIRECTORS AND OFFICERS. The directors and officers of Acquisition
holding office immediately prior to the Effective Time shall become the
directors and officers of the Surviving Corporation until their successors are
duly elected in accordance with the Governing Law.
1.4 MANNER AND BASIS FOR CONVERTING SHARES.
(a) At the Effective Time, the issued shares of capital stock
of Acquisition and the Company (excluding any Company Shares held in the
Company's treasury) shall, automatically and without any action on the part of
the respective holders thereof, be converted into shares of stock of the
Surviving Corporation or into the right to receive Reynolds Shares (and the
contingent right to receive additional Reynolds Shares under certain
circumstances) or be canceled or otherwise disposed of as follows:
(i) Each outstanding Company Share (excluding any
Company Shares held in the Company's treasury) shall be converted into and
become the right to receive the following:
2
<PAGE> 9
(A) that number of Reynolds Shares equal to the
Conversion Rate;
(B) a right to receive additional Reynolds Shares
pursuant to Section 1.5 and the Escrow Agreement; and
(C) a contingent right to receive additional Reynolds
Shares as described in Exhibit 2.
After the Effective Time, Wheeler shall be entitled to receive Reynolds Shares
in exchange for the Merged Shares in the amount set forth in Section
1.4(a)(i)(A) promptly upon surrender to Reynolds of certificates representing
the Merged Shares (in lieu of issuing fractional shares, the aggregate number of
Reynolds Shares to be so issued pursuant to Section 1.4 (a)(i)(A) will be
rounded up to the next whole number). Until so surrendered, each outstanding
certificate representing Merged Shares shall, after the Effective Time, be
deemed for all purposes to represent only the right to receive the consideration
therefor as described in Section 1.4(a)(i).
(ii) Each outstanding Acquisition Share shall be converted
into one common share of the Surviving Corporation, and the shares resulting
from such conversion shall be the only issued and outstanding shares of the
Surviving Corporation.
(b) At the Effective Time, each Company Share held in the treasury of
Company and each option, if any, to acquire from the Company any Company Shares
shall be canceled, and no payment in respect thereof shall be made.
(c) Notwithstanding the foregoing, neither the Escrow Agent nor any
party hereto shall be liable to any holder of Company Shares for any amount paid
to any public official pursuant to any applicable abandoned property, escheat or
similar law.
(d) After the Effective Time, no transfer of any Company Shares
outstanding prior to the Effective Time shall be made on the stock transfer
records of the Surviving Corporation.
1.5 CLOSING ADJUSTMENT ESCROW FUND. Each Merged Share will be converted
pursuant to Section 1.4(a)(i)(B) into the right to receive additional Reynolds
Shares from the Closing Adjustment Escrow Fund as set forth in this Section 1.5.
(a) At the Effective Time, the Reynolds Companies will deposit with
Escrow Agent on behalf of Wheeler the Closing Adjustment Escrow Fund Deposit to
be held in the Closing Adjustment Escrow Fund pursuant to the Escrow Agreement.
3
<PAGE> 10
(b) Reynolds shall deliver the Closing Balance Sheet to
Wheeler not later than sixty (60) days after the Effective Time. Wheeler shall
have fifteen (15) days from receipt of the Closing Balance Sheet to object to
the Closing Balance Sheet or Reynolds' determination of the Closing Adjustment
by written notice to Reynolds. If Reynolds does not receive notice of an
objection within such time, the Closing Balance Sheet and Closing Adjustment
determination prepared by Reynolds shall be final and binding on the parties. If
Wheeler timely notifies Reynolds of an objection, Reynolds and Wheeler shall
have ten (10) days from the date of Wheeler's notice to resolve the objection.
If Reynolds and Wheeler do not resolve the objection within such time, 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. In the event the Independent Auditors resolve all objections in
the manner proposed by one of the parties, the fees and expenses of Independent
Auditors shall be paid solely by the other party. In all other events, Wheeler
and Reynolds shall bear such fees and expenses in proportion to the relative
differences of their respective positions from the final determination of the
Independent Auditors.
(c) The Closing Adjustment shall be determined as provided in
this Section 1.5(c). The Base Value shall be reduced dollar-for-dollar by the
amount the Net Book Value on the Closing Balance Sheet is $15,000 less than the
Net Book Value on the Adjusted 12/31/95 Balance Sheet. The Base Value shall be
increased dollar-for-dollar by the amount the Net Book Value on the Closing
Balance Sheet is $15,000 greater than the Net Book Value on the Adjusted
12/31/95 Balance Sheet. The amount of the Closing Adjustment Escrow Fund Deposit
shall then be redetermined using the Adjusted Base Value. The Closing Adjustment
shall be the difference between the number of Reynolds Shares included in the
Closing Adjustment Escrow Fund as of the date of final determination of the
amount of the Adjusted Base Value and the number of Reynolds Shares to be
included in the Closing Adjustment Escrow Fund Deposit as so redetermined.
(d) Within 10 days after final determination of the Closing
Adjustment pursuant to Section 1.5(c) (whether by agreement of Wheeler and
Reynolds, Wheeler's failure to object to Reynolds' determination or decision of
the Independent Auditors), Reynolds and Wheeler shall jointly issue a Closing
Adjustment Notice. If Reynolds is required to deposit additional Reynolds Shares
as a result of the Closing Adjustment, certificates for such Reynolds Shares
shall accompany the Closing Adjustment Notice. If the Closing Adjustment results
in a reduction in the number of Reynolds Shares in the Closing Adjustment Escrow
Fund, Escrow Agent shall then distribute to Reynolds from the Closing Adjustment
Escrow Fund those Reynolds Shares due to Reynolds as a result of the Closing
4
<PAGE> 11
Adjustment and distribute the balance, if any, to Wheeler (if the balance of the
Closing Adjustment Escrow Fund is insufficient to cover the Closing Adjustment
payable to Reynolds, Wheeler will remain liable for the unpaid amount in excess
of the Closing Adjustment Escrow Fund and certificates for Reynolds Shares equal
to such excess shall be delivered to Reynolds (duly endorsed for transfer to
Reynolds) simultaneously with delivery of the Closing Adjustment Notice to
Reynolds. If the Closing Adjustment results in an increase in the number of
Reynolds Shares in the Closing Adjustment Escrow Fund, Escrow Agent shall then
distribute the Closing Adjustment Escrow Fund (and the additional Reynolds
Shares) to Wheeler.
1.6 CERTIFICATE OF MERGER. As soon as possible after the Closing,
Company and Acquisition will file with the New Hampshire Secretary of State a
certificate of merger in the form attached as Exhibit 4 in accordance with
Section 293-A:11.05 of the Governing Law.
1.7 EFFECT OF THE MERGER. After the Effective Time and pursuant to the
Governing Law: (a) the Surviving Corporation shall possess all rights,
privileges, immunities, powers and purposes of each of Acquisition and Company;
(b) all of the property, real and personal, including causes of action and every
other asset of Acquisition and Company shall vest in the Surviving Corporation
without further act or deed; and (c) the Surviving Corporation shall assume and
be liable for all the liabilities, obligations and penalties of Acquisition and
Company. No liability or obligation due or to become due and no claim or demand
for any cause existing against either Acquisition or Company, or any
shareholder, officer or director thereof, shall be released or impaired by the
Merger and no proceeding, whether civil or criminal, then pending by or against
Acquisition or Company, or any shareholder, officer or director thereof, shall
abate or be discontinued by the Merger, but may be enforced, prosecuted, settled
or compromised as if the Merger had not occurred, or the Surviving Corporation
may be substituted in any such action or proceeding in place of Acquisition or
Company.
1.8 FURTHER ASSURANCE. If, after the Effective Time, the Surviving
Corporation determines that any further documents or assurances are necessary or
desirable to vest, perfect or confirm in the Surviving Corporation title to any
property or rights of Acquisition or Company vested in the Surviving Corporation
as a result of the Merger, Acquisition and Company agree to execute and deliver
all such documents in law and do all things necessary or desirable to vest,
perfect or confirm title to such property or rights in the Surviving Corporation
and otherwise to carry out the purpose of this Agreement. The officers and
directors of Company and the officers and directors of Acquisition are fully
authorized
5
<PAGE> 12
in the name of Company or otherwise to take any and all such action.
2. TRANSACTION SHARES.
2.1 ISSUANCE. The Transaction Shares may be newly issued or treasury
shares, at Reynolds' election, provided that Reynolds will comply with the
following provisions of this Section 2. In any event, all of the Transaction
Shares will be duly and validly authorized and issued, fully paid and
nonassessable and, not later than 60 days after the date issued pursuant to this
Agreement, covered by an effective listing application with the NYSE.
2.2 EXEMPTIONS. The Company and Wheeler acknowledge that the parties
intend that the issuance of Transaction Shares pursuant to this Agreement will
qualify as exempt transactions under, among other provisions: (a) Section 4(2)
of the Securities Act of 1933, as amended, and (b) applicable state securities
laws (collectively, the "EXEMPTIONS"). All certificates for Transaction Shares
will bear the legends restricting the sale, transfer or disposition of the
Transaction Shares necessary to assure compliance with the Exemptions. Such
restrictions will be removed as soon as the applicable listing application(s)
and registration statement(s) contemplated by this Section become effective.
2.3 SECURITIES FILINGS. Reynolds will, at its expense, and within sixty
(60) days following the date any Transaction Shares are issued pursuant to this
Agreement, 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 Transaction Shares and will use its best efforts to cause such
registration statement and prospectus to become and remain effective for the
shorter of (a) a period of not less than three (3) years from the applicable
issue date or (b) the period provided for in Rule 144(k), as amended, to the
Securities Act of 1933.
2.4 COOPERATION. The Company and Wheeler will cooperate with Reynolds
and provide such information in connection with any registration statement,
report of sale or other document reasonably required by Reynolds in the
performance of its obligations under this Section 2.
3. REPRESENTATIONS AND WARRANTIES OF COMPANY AND WHEELER. Except as
expressly set forth to the contrary in the applicable section of the Disclosure
Schedule, the Company and Wheeler represent and warrant to Reynolds as follows:
6
<PAGE> 13
3.1 CORPORATE ACTION. Company has taken all action required by its
Articles of Incorporation and Bylaws or otherwise to authorize the execution and
consummation of the Company Agreements. The Company Agreements will constitute
the valid and legally binding obligations of Company, 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. Company has full power and authority
to execute and consummate the Company Agreements.
3.2 NO CONFLICT WITH OTHER AGREEMENTS OR LAWS. The execution and
consummation by Company of the Company Agreements will not (a) violate the terms
of Company's Articles of Incorporation or Bylaws or any instrument, agreement,
mortgage, judgment, decree, commitment or understanding, written or oral, to
which Company is a party, or by which Company or any of its properties is bound,
(b) conflict with, result in a breach of, constitute (with giving of notice or
lapse of time or both) a default under or give any person any right to
terminate, modify, accelerate or otherwise change the existing obligations of
Company under any such instrument, agreement, mortgage, judgment, decree,
commitment or understanding, (c) result in the creation or imposition of any
Lien upon Company or its properties or assets, or (d) violate any Applicable
Law.
3.3 ORGANIZATION AND QUALIFICATION. Company is a corporation duly
organized, validly existing and in good standing under the laws of New
Hampshire. Company 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 Company Agreements. Company is qualified to
transact business as a foreign corporation in the jurisdictions identified in
Section 3.3 of the Disclosure Schedule and is not required to be so qualified in
any other jurisdiction. Complete and correct copies of Company's Articles of
Incorporation and Bylaws, as amended, are attached to Section 3.3 of the
Disclosure Schedule. Company is not in violation of any of the provisions of its
Articles of Incorporation or Bylaws.
3.4 THE ACQUIRED BUSINESS. As a result of the Merger, the Surviving
Corporation will enjoy direct or indirect beneficial ownership of all of the
assets owned or used by the Company in the Acquired Business. No assets of
Company (or interests therein) have been sold, leased or licensed since December
31, 1995, and (ii) no assets of Company (or interests therein) will be sold,
leased or licensed prior to the Effective Time, except as permitted by Section
5.1 or otherwise with the prior written consent of Reynolds. Except for (i)
marketable securities and (ii) instruments issued by financial institutions,
Company does not own any securities of or investment or interest in any other
entity or
7
<PAGE> 14
person. Company does not control, and is not controlled by or under common
control with any person.
3.5 FINANCIAL STATEMENTS.
(a) Attached as Schedule C are copies of the Financial
Statements. The Financial Statements: (i) are correct and complete, (ii) fairly
present the financial condition of Company as of the respective dates thereof
and the results of operation of Company for such periods, (iii) were prepared in
accordance with GAAP, and (iv) disclose all liabilities of Company as of the
respective dates thereof, whether absolute, contingent, accrued, or otherwise.
The Financial Statements do not contain any items of nonrecurring income or loss
or other income or loss not earned or incurred in the Ordinary Course of
Business.
(b) Except for (i) the liabilities of Company disclosed or
reserved against in the Adjusted 12/31/95 Balance Sheet, (ii) current
liabilities incurred in the Ordinary Course of Business since December 31, 1995,
and (iii) executory obligations under contracts, agreements, leases, licenses,
purchase orders, sales orders and commitments, Company has no liability or
obligation, whether accrued, absolute, contingent or otherwise and whether due
or to become due.
(c) No default exists as to any of the liabilities of
Company.
3.6 TAXES. (a) All Returns required to be filed by or in respect of the
Company, its assets, liabilities or operation of the Acquired Business on or
prior to the date hereof have been properly completed and filed on a timely
basis and in correct form. As of the time of filing, all such Returns correctly
reflected the facts regarding the income, business, assets, operations,
activities, status, or other matters of the Company or any other information
required to be shown thereon. No extension of time within which to file any
Return that has not been filed has been requested or granted.
(b) With respect to all amounts in respect of Taxes imposed on
the Company or for which the Company is or could be liable, whether to taxing
authorities (as, for example, under tax allocation agreements) or other persons
or agencies, with respect to all taxable periods or portions of periods ending
on or before the Effective Time, all Applicable Laws related to Taxes and
agreements have been fully complied with, and all such amounts required to be
paid by the Company to taxing authorities or others on or before the date hereof
have been paid, and all amounts required to be paid after the Effective Time
with respect to the
8
<PAGE> 15
period up to the Effective Time will be fully accrued on the Closing Balance
Sheet.
(c) No Liens exist for Taxes (other than for current Taxes not
yet due and payable) on any of the Company's assets.
(d) Company has not received any notice of assessment or
proposed assessment with respect to Taxes. Wheeler has not received any notice
of assessment or proposed assessment in respect of the Company.
(e) The Company has properly elected to be taxed as a
subchapter "S" corporation for federal income tax purposes. The Company has not
taken or failed to take any action, the result of which is (or could be) the
loss of such status.
3.7 RECEIVABLES. All of the Receivables have been generated in the
Ordinary Course of Business and represent valid debts due and owing to Company.
No Receivable is subject to any counterclaim or any right of setoff. Company has
delivered to Reynolds a detailed aging of the Receivables as of May 31, 1996.
3.8 INSURANCE. Section 3.8 of the Disclosure Schedule contains a true
and correct list of all policies of insurance maintained by Company or covering
any employees or assets of Company. There are no pending claims under any of
such policies and no events have occurred which would give rise to a right to
pursue a claim under any such policy. There are no outstanding requirements or
recommendations by any current insurer or underwriter with respect to any of the
Company's assets or otherwise which requires or recommends changes in the
conduct of the Acquired Business or requires any repairs or other work to be
done with respect to any of the assets owned or used in the Acquired Business.
3.9 ABSENCE OF CHANGES. Since December 31, 1995 and except for the
transactions contemplated by the Company Agreements (specifically including the
transactions contemplated by Section 5.1), Company has not:
(a) engaged in any activity other than in the Ordinary Course,
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
$5,000;
(b) incurred or suffered any change, event or circumstance
which has resulted in or is likely to result in a Company Material Adverse
Effect, and no fact or condition exists, or to Company's Knowledge, has been
threatened, which is reasonably
9
<PAGE> 16
likely to cause or result in a Company Material Adverse Effect in the future;
(c) incurred or increased the amount subject to any
Lien upon any of the Company's assets, except for any Lien with
respect to Taxes not yet due and payable;
(d) discharged or reduced any Lien 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 delayed
payment of any account payable or other liability of the Company beyond its due
date;
(e) incurred any 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 in respect of any Securities, 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;
(i) incurred or agreed to incur any material indebtedness or
liability or entered into any material (alone or in the aggregate) agreement,
contract or commitment;
(j) received any notice of termination of any material con-
tract, agreement, lease, license, purchase order, sales order or commitment; or
(k) granted any license or sublicense of any rights under or
with respect to any Intellectual Property Intangibles.
3.10 PERSONAL PROPERTY.
(a) Except for office supplies and inventory, Section 3.10(a)
of the Disclosure Schedule sets forth a true and correct list of all furniture,
fixtures, furnishings, machinery, equipment, vehicles, leasehold improvements,
goods and other tangible personal property owned by the Company or leased by
Company pursuant to a capitalized lease.
10
<PAGE> 17
(b) Section 3.10(b) of the Disclosure Schedule sets forth a
true and correct list of all furniture, fixtures, furnishings, machinery,
equipment, vehicles, leasehold improvements, goods and other tangible personal
property leased by Company pursuant to an operating lease.
(c) Except for normal wear and tear, each item required to be
identified in Section 3.10(a) or Section 3.10(b) of the Disclosure Schedule is
in good condition and repair.
(d) Each lease for any property required to be disclosed in
Section 3.10(a) or Section 3.10(b) of the Disclosure Schedule is in effect and
no default (or event which with notice, lapse of time or both would constitute a
default) has occurred under any such lease.
3.11 REAL PROPERTY. (a) The Company owns no real property.
(b) Section 3.11(b) of the Disclosure Schedule lists and
describes briefly all real property leased or subleased to the Company. Company
has delivered to Reynolds correct and complete copies of the leases and
subleases of the properties required to be listed in Section 3.11(b) of the
Disclosure Schedule and has provided a description on Section 3.11(b) of the
Disclosure Schedule of the terms of any oral leases. With respect to each lease
and sublease required to be listed in Section 3.11(b) of the Disclosure
Schedule:
(i) no party to the lease or sublease is in breach
or default, and no event has occurred which, with notice or lapse of time, would
constitute a breach or default or permit termination, modification, or
acceleration thereunder;
(ii) there are no disputes, oral agreements, or
forbearance programs in effect as to the lease or sublease;
(iii) with respect to each sublease, the
representations and warranties set forth in subsections (i) and (ii) above
true and correct with respect to the underlying lease;
(iv) Company has not assigned, transferred,
conveyed, mortgaged, deeded in trust, or encumbered any interest in the
leasehold or subleasehold; and
(v) the owner of the facility leased or subleased
has good and marketable title to the parcel of real property, free and clear of
any Lien or other restriction, except for installments of special assessments
not yet delinquent and recorded easements, covenants, and other restrictions
which do not impair the current
11
<PAGE> 18
use, occupancy, or value, or the marketability of title, of the property
subject thereto.
3.12 AFFILIATES.
(a) Neither Wheeler, nor any Affiliate of Wheeler owns, of
record, or beneficially, any voting securities or other equity interests, or any
other securities exchangeable, convertible or exercisable for or into any voting
securities or other equity interests, in any person (except the Company) which
is involved in or related to the Acquired Business.
(b) Company is not indebted to any current or former
shareholder, Affiliate of any shareholder, or to any director, officer,
employee, contractor or agent of Company except for amounts due as normal
salaries, wages, commissions, benefits or reimbursement of ordinary current
business expenses, and no current or former shareholder, Affiliate of any
shareholder or director, officer, employee, contractor or agent of Company is
indebted to Company except for expense advances in the Ordinary Course of
Business.
(c) Company has not performed (and is not obligated to perform
and has not proposed to perform in the future) any service (whether or not
Company was or will be compensated therefor) for any person in which any current
or former shareholder, Affiliate of any shareholder, or any director, officer,
employee, contractor or agent of Company has any equity or proprietary interest
or any option to acquire the same.
3.13 LITIGATION; COMPLIANCE WITH LAWS, ETC. There is no action, claim,
demand, suit, proceeding, arbitration, grievance, citation, summons, subpoena or
investigation (whether civil, criminal, regulatory or otherwise) pending, or, to
Company's Knowledge, threatened, against Company, nor is there any judgment of
any court, governmental agency, instrumentality, or arbitration outstanding
against Company. Company has not received any notice of any violation of any
law, regulation or ordinance applicable to the Company, its properties or assets
(whether owned or leased) or the Acquired Business. Company has complied with
all Applicable Laws. Section 3.13 of the Disclosure Schedule identifies all
claims, demands, rights or choses in action of the Company, including without
limitation all rights under express or implied warranties and policies of
insurance with respect to the Company's assets.
3.14 LABOR RELATIONS. (a) There are no material controversies pending
between Company and any of its current or former employees or contractors,
nor, to Company's Knowledge, have any such material controversies been
threatened. Company is not liable for any
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<PAGE> 19
arrears of wages, commissions or benefits or employment-related Taxes (including
without limitation, withholding) or any penalties for failure to timely pay any
of the foregoing. Company 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, commissions, rates of pay, benefits, or working conditions of any
employees or contractors and all of Company's employees and contractors are
terminable at will. Company has no policy or past practice and is not a party to
any agreement relating to payment of any severance or similar benefit upon
termination of employment or contractor relationship, and no employees or
contractors of Company will be entitled to any severance or similar benefit upon
termination of employment as contemplated by this Agreement.
(b) To Company's Knowledge, (i) Company is not involved in any
transaction or other situation with any employee, officer, director or Affiliate
of Company which may be generally characterized as a "conflict of interest",
including, but not limited to, direct or indirect interests in the business of
competitors, suppliers or customers of the Business, and (ii) no situations
exist with respect to the Business which involved or involves (A) the use of any
corporate funds for unlawful contributions, gifts, entertainment or other
unlawful expenses related to political activity, (B) the making of any direct or
indirect unlawful payments to government officials or others from corporate
funds or the establishment or maintenance of any unlawful or unrecorded funds,
(C) the receipt of any illegal discounts or rebates, or (D) any investigation by
the Securities and Exchange Commission or any other federal, foreign, state or
local government agency or authority.
3.15 LICENSES AND PERMITS. Company has obtained all licenses, permits
and governmental authorizations from all appropriate federal, state, foreign and
other public authorities required in connection with the conduct of the Acquired
Business or ownership or operation of any of the Company's assets. Section 3.15
of the Disclosure Schedule contains a list of each such license, permit or
authorization. Company has complied with the terms and conditions of such
licenses and permits.
3.16 CONTRACTS. Section 3.16 of the Disclosure Schedule identifies all
Contracts. 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 Reynolds. Company is not in
default under and, to Company's Knowledge, no condition exists with respect to
Company which, with notice or the passage of time, or both, would constitute a
default
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by Company under any of the Contracts. Company is not subject to any agreement
and has not made any commitment requiring Company (a) to obtain all or
substantially all of its supply of any product or service from another person,
(b) to maintain the confidentiality of any non-public information of another
person, or (c) to refrain from competing or otherwise offering its services or
products to any person or in any location. Company 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, modified or enhanced
product or service. None of the Contracts was entered into, issued or accepted
other than in the Ordinary Course of Business.
3.17 TITLE TO PROPERTIES; ENCUMBRANCES. Company has good and
marketable title to all of its assets, whether real, personal, tangible or
intangible property, free and clear of any Liens except the Permitted
Encumbrances.
3.18 INTELLECTUAL PROPERTY INTANGIBLES.
(a) All Contracts to which Company is a party relating to
Intellectual Property Intangibles, including without limitation research,
development, programming or similar services in connection therewith, are
identifed in Section 3.18 of the Disclosure Schedule.
(b) Company further represents and warrants as follows:
(i) All Intellectual Property Intangibles are
owned by or are licensed to Company without limitation or encumbrance, and, to
the extent applicable, in good standing and, to Company's Knowledge, without any
challenge.
(ii) All trademarks included in the Intellectual
Property Intangibles have been in continuous use since the date of their
adoption by Company and first use by Company.
(iii) All copyrights included in the Intellectual
Property Intangibles are original works of authorship of Company or Company has
acquired all rights thereto or Company has a valid license to use the same.
(iv) Any trademarks, service marks or trade names
which have been obtained by Company through transfer or assignment include the
associated goodwill.
(v) To Company'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.
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(vi) No infringement of any intellectual property
rights of any other party has occurred or results from operation of
the Acquired Business.
(vii) No proceedings or claims are pending or, to
Company'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 Company has any ownership
interest, direct or indirect, in any Intellectual Property Intangibles.
(c) Without in any way limiting the other representations and
warranties contained in this Agreement or the application of the same to the
Software, Company makes the following additional representations and warranties
with respect to the Software:
(i) Company has delivered to Reynolds complete,
current copies of all user and technical documentation related to the Software.
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 Company nor any employee or any
contractor or agent (directly or through employees or subcontractors or
sub-agents) thereof has developed or assisted in the enhancement of the Software
(except for enhancements included in the Software as delivered to Reynolds
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 Company pursuant to an agreement included in the
Contracts.
(iii) The Software was developed entirely by
employees of Company during the time they were employees of Company and the
Software does not include (A) any inventions of the employees prior to the time
they became employees of Company or (B) any intellectual property of any
previous employer of any such employee.
(iv) No party other than Company has any interest in
the Software. Company's development, use, license or exploitation of the
Software does not violate any rights of any other person. Company does not
have any obligation to compensate any person or entity for the development,
use, license or
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exploitation of the Software. Company 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. Company
acknowledges that all rights in the Software will be vested in Reynolds from and
after the Closing.
(v) Company 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, Company in connection with their
services to Company.
3.19 EMPLOYEE BENEFIT PLANS. (a) Section 3.19 of the Disclosure
Schedule lists each Employee Benefit Plan that the Company maintains, to which
the Company contributes or which covers any of Company's employees.
(i) Each such Employee Benefit Plan (and each
related trust, insurance contract, or fund) complies in form and in operation in
all respects with all Applicable Laws, including ERISA and the Code.
(ii) All required reports and descriptions
(including Form 5500 Annual Reports, Summary Annual Reports, PBGC-1's, and
Summary Plan Descriptions) have been filed or distributed appropriately with
respect to each such Employee Benefit Plan. The requirements of Part 6 of
Subtitle B of Title I of ERISA and of Code Section 4980B have been met with
respect to each such Employee Benefit Plan which is an Employee Welfare Benefit
Plan.
(iii) All contributions (including all employer
contributions and employee salary reduction contributions) which are due have
been paid to each such Employee Benefit Plan which is an Employee Pension
Benefit Plan and all contributions for any period ending on or before the
Effective Time which are not yet due have been paid to each such Employee
Pension Benefit Plan or accrued in accordance with the past custom and practice
of the Company. All premiums or other payments for all periods ending on or
before the Effective Time have been paid with respect to each such Employee
Benefit Plan which is an Employee Welfare Benefit Plan.
(iv) Each such Employee Benefit Plan which is an
Employee Pension Benefit Plan meets the requirements of a "qualified plan" under
Code Section 401(a) and has received, within the last two years, a favorable
determination letter from the Internal Revenue Service.
(v) The market value of assets under each such
Employee Benefit Plan which is an Employee Pension Benefit Plan
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(other than any Multiemployer Plan) equals or exceeds the present value of all
vested and nonvested liabilities thereunder determined in accordance with PBGC
methods, factors, and assumptions applicable to an Employee Pension Benefit Plan
terminating on the date for determination.
(vi) Company has delivered to Reynolds correct and
complete copies of the plan documents and summary plan descriptions, the most
recent determination letter received from the Internal Revenue Service, the most
recent Form 5500 Annual Report, and all related trust agreements, insurance
contracts, and other funding agreements which implement each such Employee
Benefit Plan.
(b) With respect to each Employee Benefit Plan that the
Company maintains or ever has maintained or to which it contributes, ever has
contributed, or ever has been required to contribute:
(i) No such Employee Benefit Plan which is an
Employee Pension Benefit Plan (other than any Multiemployer Plan) has been
completely or partially terminated or been the subject of a Reportable Event as
to which notices would be required to be filed with the PBGC. No proceeding by
the PBGC to terminate any such Employee Pension Benefit Plan (other than any
Multiemployer Plan) has been instituted or, to Company's Knowledge, threatened.
(ii) There have been no Prohibited Transactions
with respect to any such Employee Benefit Plan. No Fiduciary has any liability
for breach of fiduciary duty or any other failure to act or comply in connection
with the administration or investment of the assets of any such Employee Benefit
Plan. No action, suit, proceeding, hearing, or investigation with respect to the
administration or the investment of the assets of any such Employee Benefit Plan
(other than routine claims for benefits) is pending or, to Company's Knowledge,
threatened.
(iii) Company has not incurred or, to Company's
Knowledge, been threatened with any liability to the PBGC (other than PBGC
premium payments) or otherwise under Title IV of ERISA (including any withdrawal
liability) or under the Code with respect to any such Employee Benefit Plan
which is an Employee Pension Benefit Plan.
(c) Company does not contribute to, ever has contributed to,
or ever has been required to contribute to any Multiemployer Plan or has any
liability (including withdrawal liability) under any Multiemployer Plan.
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(d) Company does not maintain nor has it ever maintained or
does not contribute, nor has it ever contributed, nor has it ever been required
to contribute to any Employee Welfare Benefit Plan providing medical, health, or
life insurance or other welfare-type benefits for current or future retired or
terminated employees, their spouses, or their dependents (other than in
accordance with Code Section 4980B).
3.20 CONSENTS AND APPROVALS. No waiver, consent or approval from or
filing with any person or agency (governmental or otherwise) is required for
Company to consummate the Company Agreements without creating a default (or
event which with notice, lapse of time or both would constitute a default) or
liability.
3.21 CUSTOMERS AND SUPPLIERS.
(a) Company has delivered to Reynolds a list of Company's
customers and complete copies of all associated Contracts. To Company's
Knowledge, none of such customers intends to reduce or has threatened to reduce
materially its purchases from or business dealings with Company whether by
reason of the consummation of this Agreement or otherwise.
(b) Company has delivered to Reynolds a list of Company's
suppliers. To Company's Knowledge, none of such suppliers intends to alter or
has threatened to alter materially the terms of supply to Company whether by
reason of the consummation of this Agreement or otherwise.
3.22 WARRANTIES. There are no written or oral warranties or guaranties
now in effect issued by Company or outstanding with respect to the services
rendered by Company prior to the Effective Time, except as set forth in the
Contracts which the Company has previously delivered to Reynolds. There are no
existing, or, to Company's Knowledge, threatened claims against Company related
to such services. Company has no liability with respect to any such warranty or
guaranty, whether known or unknown, absolute, contingent or otherwise and
whether due or to become due.
3.23 BANK ACCOUNTS. Section 3.23 of the Disclosure Schedule sets forth
the name, location and account number of each bank, trust company, savings and
loan association or other financial institution in which Company has an account
or safe deposit box and the names of the persons authorized to draw thereon or
having access thereto.
3.24 OFFICERS AND DIRECTORS AND CERTAIN AUTHORIZED PERSONS. Section
3.24 of the Disclosure Schedule sets forth a complete and accurate list of:
(i) the names of all directors of Company; (ii) the names and offices of all
officers of Company; (iii) the names
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of all persons authorized to borrow money or incur or guarantee indebtedness on
behalf of Company; and (iv) the names of all persons authorized by proxies,
powers of attorney or other instruments to act on behalf of Company (except in
connection with any marketable securities or instruments issued by financial
institutions which securities or instruments are owned by Company).
3.25 BOOKS AND RECORDS. All of the Company's books and records are
correct and complete.
3.26 ENVIRONMENTAL MATTERS. Neither Company nor, to Company's Knowledge
any prior user of any real property owned or used by the Company at any time,
has caused, taken or failed to take any action that has resulted in or may
result in, and is not subject to, any liability or obligation relating to or
arising out of (i) the environmental condition of any such real property, (ii)
the failure to comply with any Environmental Law, or (iii) the past or present
manufacture, production, distribution, use, treatment, storage, disposal,
transport or handling, emission, discharge or release of pollutants,
contaminants, chemicals, industrial, hazardous or toxic materials or wastes.
3.27 PLANNED CAPITAL EXPENDITURES. No work, repair, construction or
capital expenditure is required or planned in respect of the Acquired Business,
including as may be required under Applicable Laws, and Company has not received
any notice of any such requirement.
3.28 CAPITALIZATION.
(a) Section 3.28 of the Disclosure Schedule sets forth the
following: (i) the Securities; and (ii) a list of all issued and outstanding
Securities and the holders thereof.
(b) All of the Securities have been validly authorized and
issued and are fully paid and nonassessable. All options or other rights to
acquire Securities (whether from Company or a shareholder) are identified in
Section 3.28 of the Disclosure Schedule and all Securities have been issued in
compliance with all applicable federal, state and foreign securities laws. The
Company (i) has no issued and outstanding shares of capital stock or other
equity interests of any class or preference, (ii) has not issued any security or
instrument exchangeable, convertible or exercisable for or into, whether or not
for any additional consideration, any Securities, and (iii) there are no
outstanding options, warrants, calls, commitments, or plans by Company to issue
any additional Securities, or to pay any dividends on its capital stock or other
equity interests or to purchase, redeem or retire any Securities or to issue any
securities or investments exchangeable, convertible or
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exercisable for or into, whether or not for any additional consideration,
any Securities of Company.
(c) The documents and instruments containing the terms of all
Securities are identified in Section 3.28 of the Disclosure Schedule and
complete copies of each have been delivered to Reynolds. All shareholders,
repurchase, buy-sell, voting, redemption or other agreements or commitments
relating to the ownership, transfer or voting of any of the Securities are
identified in Section 3.28 of the Disclosure Schedule and complete and correct
copies of each have been delivered to Reynolds.
3.29 DISCLOSURE. No representation or warranty by Company contained in
this Agreement, and no statement contained in any certificate, exhibit, list or
other instrument furnished by the Company to Reynolds 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 not misleading.
4. REPRESENTATIONS AND WARRANTIES OF THE REYNOLDS COMPANIES. The
Reynolds Companies jointly and severally represent and warrant to
Company and Wheeler as follows:
4.1 CORPORATE ACTION; CORPORATE POWER AND AUTHORITY. Each Reynolds
Company has taken all action required by its Articles of Incorporation and
Code of Regulations or Bylaws or otherwise to authorize the execution and
consummation of this Agreement. The Reynolds Companies Agreements constitute
the valid and legally binding obligations of each applicable Reynolds Company,
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. The
Reynolds Companies have the power and authority to execute and consummate the
Reynolds Companies Agreements.
4.2 NO CONFLICT WITH OTHER AGREEMENTS OR LAWS. The execution and
consummation by the Reynolds Companies of the Reynolds Companies Agreements and
each other agreement contemplated hereby will not (a) violate the terms of any
Reynolds Company's Articles of Incorporation or Code of Regulations or Bylaws or
any instrument, agreement, mortgage, judgment, decree, commitment or
understanding, written or oral, to which any Reynolds Company is a party, or by
which either Reynolds Company 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 of any Lien upon any Reynolds Company or
its properties under any such instrument, agreement, mortgage,
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judgment, decree, commitment or understanding, (c) result in the creation or
imposition of any Lien upon any Reynolds Company or its properties or assets, or
(d) violate any Applicable Law.
4.3 ORGANIZATION. Reynolds is a corporation duly organized, validly
existing and in good standing under the laws of the state of Ohio and
Acquisition is a corporation duly organized, validly existing and in good
standing under the laws of the state of New Hampshire. Each Reynolds Company 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 this Agreement.
5. PRE-CLOSING COVENANTS. The Parties covenant and agree as follows:
5.1 CONDUCT OF BUSINESS PRIOR TO CLOSING. Until the Closing, and unless
Reynolds otherwise consents in writing, the Company will operate the Acquired
Business substantially as previously operated and only in the Ordinary Course of
Business. Notwithstanding the preceding sentence, the Company shall take all
actions necessary to transfer to Wheeler the USAAA life insurance policy and the
airplane carried as an asset on the books of the Company conditioned upon
Wheeler assuming all liabilities associated with such airplane including the
related hangar lease and insurance policy. Such transfers and assumptions shall
be completed by June 25, 1996. In addition, the Company shall cause to be
prepared and delivered to Reynolds the Adjusted 12/31/95 Balance Sheet which
eliminates the airplane and all associated liabilities from the 12/31/95 Balance
Sheet.
5.2 NOTIFICATION OF CERTAIN CHANGES. The Company will promptly notify
Reynolds in writing of the occurrence of any of the matters described in
Section 3.9.
5.3 OTHER TRANSACTIONS. Company will deal exclusively and in good faith
with Reynolds regarding a Sale Transaction and will not, and will direct
Company'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 Reynolds, or (iii) enter into any agreement
or understanding, whether oral or written, that would have the effect of
preventing consummation of this Agreement. If Company or its representatives or
agents should receive any proposal for a Sale Transaction or any inquiry
regarding such proposal from a third party, Company will promptly so inform
Reynolds.
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5.4 CONSENTS, WAIVERS AND APPROVALS. Company will obtain prior to the
Closing all consents, waivers, approvals, and releases necessary to effect the
transactions contemplated by this Agreement. All such consents, waivers,
releases and approvals will be in writing and in form and substance satisfactory
to Reynolds.
5.5 SUPPLEMENTAL DISCLOSURE. Company will have the continuing
obligation up to and including the Closing Date to supplement promptly or amend
the Disclosure Schedule with respect to any matter subsequently 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 Disclosure Schedule. Any such
supplemental disclosure will be deemed to have been disclosed as of the date of
this Agreement if Reynolds proceeds with the Closing following receipt of such
supplemental disclosure.
5.6 ADDITIONAL REPORTS. Promptly after they become available, Company
will deliver to Reynolds copies of all management and control reports (including
agings of accounts receivable and listings of accounts payable reports) and
financial statements routinely prepared by Company.
5.7 CONDITIONS PRECEDENT. The Parties will use their best efforts in
good faith to satisfy the conditions set forth in Sections 6 and 7 hereof.
5.8 REYNOLDS' DUE DILIGENCE. Company will give Reynolds and its
counsel, accountants and other representatives full access during normal
business hours to all of the books, records, and assets of Company, provided
that such examinations will be conducted in such a manner so as not to
unreasonably disrupt the normal business operations of Company, and Company will
furnish Reynolds with such information concerning the affairs of Company which
Reynolds may reasonably request, so that Reynolds 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 Company as Reynolds may deem necessary or
appropriate. Company will deliver to Reynolds correct and complete copies of all
documents referred to in the Disclosure Schedule.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE REYNOLDS COMPANIES.
The obligation of the Reynolds Companies to consummate this Agreement will be
subject to the satisfaction, on or before the Closing Date, of the following
conditions, any of which may be waived by the Reynolds Companies in writing.
6.1 REPRESENTATIONS. The representations and warranties made by
Company in Section 3 hereof will be true and correct on the Closing Date as
though such representations and warranties had been
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made on such date and Company will deliver to Reynolds a certificate dated as of
the Closing Date to the foregoing effect.
6.2 COVENANTS. Company will have duly performed all of the covenants,
acts and undertakings to be performed by Company on or prior to the Closing
Date, and Company will deliver to Reynolds a certificate dated as of the Closing
Date to the foregoing effect.
6.3 NO INJUNCTION, ETC. No proceeding, investigation, or legislation
will 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 Company or which
arises out of the Acquired Business.
6.4 OPINION OF COUNSEL. An opinion of counsel for Company will have
been delivered to Reynolds, dated as of the Closing Date, in form and substance
reasonably satisfactory to Reynolds and its counsel and containing the opinions
identified in Exhibit 7.
6.5 INCUMBENCY; RESIGNATIONS. Company shall have delivered a
certificate of incumbency executed by the president and secretary of Company
listing each officer and director of Company and shall further have delivered
the written resignation, effective as of the Effective Time, of each officer and
director of Company.
6.6 CONSENTS, WAIVERS AND APPROVALS. Reynolds shall have received a
true and correct copy of each consent, waiver or approval required to be
identified in Section 3.20 of the Disclosure Schedule or otherwise required
pursuant to Section 5.4.
6.7 ABSENCE OF MATERIAL ADVERSE CHANGES. Since December 30, 1995,
except as disclosed in Section 3.9 of the Disclosure Schedule, Company shall not
have suffered any change in its financial condition, business, property or
assets which materially and adversely affects the Acquired Business.
6.8 CERTIFIED RESOLUTIONS. Company shall have delivered to Reynolds a
certificate executed by a duly authorized officer of Company containing true and
correct copies of the resolutions duly adopted by the board of directors and
shareholders of Company approving and authorizing this Agreement and its
consummation and the other transactions and actions required of Company. Such
officers shall also certify that such resolutions have not been revoked or
modified and remain in full force and effect.
6.9 CONFIRMATIONS. Reynolds shall have received pay-off letters or
balance confirmations in a form satisfactory to Reynolds with respect to all
loans and capital leases of the Company and such other liabilities of the
Company as Reynolds may request.
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Such pay-off letters and confirmations will not require the payment of any
pre-payment penalty or fee or require any other undertaking by Reynolds.
6.10 TITLE ASSURANCES. Reynolds shall have received uniform commercial
code and judgment and tax lien searches from all applicable jurisdictions
confirming title to the Company's assets as represented in Section 3.11.
6.11 BASIC CORPORATE DOCUMENTS. Company shall have delivered to
Reynolds copies of Company's Articles of Incorporation, certified as of a date
within 30 days prior thereto by the Secretary of State of New Hampshire,
Company's Bylaw's or similar document, certified as of such a date by Company's
Secretary, and certificates of good standing (long-form where available) or
authority from the Secretary of State of New Hampshire and those other
jurisdictions required to be identified in Section 3.3 of the Disclosure
Schedule.
6.12 CERTIFICATE OF MERGER. Company shall have delivered to
Reynolds the Certificate of Merger.
6.13 TERMINATION OF AGREEMENTS. Company shall have delivered to
Reynolds evidence reasonably satisfactory to Reynolds of the termination of all
restrictions on transfer or rights of purchase or provisions relating to voting
regarding the Company Shares whether contained in Company's Articles of
Incorporation, Bylaws, a written or oral agreement or otherwise.
6.14 ESCROW AGREEMENT. Company, Wheeler and the Escrow Agent shall
have executed the Escrow Agreement.
6.15 EMPLOYMENT AGREEMENTS. Wheeler will have executed the Employment
Agreement.
6.16 MISCELLANEOUS AGREEMENTS. The necessary persons will have
executed the agreements identified in Schedule E, which agreements shall be in
a form satisfactory to Reynolds.
6.17 MAY 31, 1996 FINANCIAL STATEMENTS. Reynolds will have received a
balance sheet for the Company at May 31, 1996 and a profit and loss statement
for the Company for the period from January 1, 1996 to May 31, 1996. Such
financial statements will be prepared in accordance with GAAP and in a manner
consistent with the Adjusted 12/31/95 Financial Statements, and for purposes of
Section 3.5, the term "Financial Statements" will include such additional
financial statements.
6.18 ADJUSTED 12/31/95 BALANCE SHEET. Reynolds will have received from
the Company the Adjusted 12/31/95 Balance Sheet.
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6.19 AFFILIATE RECEIVABLES AND PAYABLES. Company will have delivered to
Reynolds evidence reasonably satisfactory to Reynolds of the satisfaction of all
receivables and payables to or from Wheeler (provided, that if there is not
sufficient cash to satisfy the loans to the Company by Wheeler described in
Section 3.12 of the Disclosure Schedule, such loans shall be paid within 30 days
after the Effective Time).
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF COMPANY. The obligation of Company to
consummate this Agreement shall be subject to the satisfaction, on or before the
Effective Time, of the following conditions, any of which may be waived by
Company in writing.
7.1 REPRESENTATIONS TRUE AT CLOSING. The representations and warranties
made by the Reynolds Companies in Section 4 hereof shall be true and correct in
all material respects on the Closing Date with the same force and effect as
though such representations and warranties had been made on and as of such date
(except for matters permitted by this Agreement) and Reynolds shall deliver to
Company a certificate dated as of the Closing Date to the foregoing effect for
each of the Reynolds Companies.
7.2 COVENANTS OF THE REYNOLDS COMPANIES. The Reynolds Companies shall
have duly performed all of the covenants, acts or undertakings to be performed
by them on or before the Closing Date, and Reynolds shall deliver to Company
certificates dated as of the Closing Date to the foregoing effect for each of
the Reynolds Companies.
7.3 CERTIFIED RESOLUTIONS. Reynolds shall have delivered to Company
certificates executed by a duly authorized officer containing a true and correct
copy of resolutions duly adopted by Acquisition's Board of Directors and sole
shareholder and Reynolds Board of Directors approving and authorizing this
Agreement and its consummation and a certificate of Reynolds' General Counsel
and Secretary confirming that no action by Reynolds' shareholders is required
for the consummation of this Agreement by Reynolds. Such officers shall also
certify that such resolutions have not been revoked or modified and remain in
full force and effect.
7.4 OPINION OF COUNSEL. An opinion of counsel for Reynolds and
Acquisition shall have been delivered to Company, dated as of the Closing Date,
in form and substance reasonably satisfactory to Company and its counsel, and
containing the opinions identified in Exhibit 6.
7.5 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, which, in the reasonable judgment of Company, would make it
inadvisable to consummate this Agreement.
7.6 CONSENTS, WAIVERS AND APPROVALS. Company shall have received a true
and correct copy of each consent, waiver or approval obtained by the Reynolds
Companies and required for the Reynolds Companies' execution and consummation of
this Agreement.
7.7 INCUMBENCY. Reynolds shall have delivered certificates for each of
the Reynolds Companies executed by a duly authorized officer of the incumbency
of the officers executing this Agreement and any other agreements or documents
contemplated hereunder.
7.8 ESCROW AGREEMENT. The Reynolds Companies and the Escrow Agent
shall have executed the Escrow Agreement.
7.9 CERTIFICATE OF MERGER. Acquisition shall have delivered to Company
the Certificate of Merger described in Section 1.7.
7.10 MISCELLANEOUS AGREEMENTS. The necessary parties shall have
executed the agreements identified in Schedule E.
7.11 EMPLOYMENT AGREEMENT. Reynolds will have executed the Employment
Agreement.
8. MUTUAL COVENANTS.
8.1 GENERAL. Each of the parties hereto will refrain from taking any
action which would render any representation or warranty contained in Sections 3
and 4 of this Agreement inaccurate as of the Closing Date. Each party will
promptly notify the other of any action or proceeding that is instituted or
threatened against such party to restrain, prohibit or otherwise challenge the
legality of any transaction contemplated by this Agreement. Each party will take
such further action as may reasonably be requested by another party to evidence
the consummation of this Agreement.
8.2 TAX MATTERS. The parties will file their respective income tax
returns on the basis that this transaction qualifies as a "reorganization" under
Section 368(a) of the Code. The parties agree that the income or loss of the
Company through the Effective Time shall be determined under normal tax
accounting rules including, without limitation, by an actual closing of the
books as of the Effective Time. The Company shall make a timely filed election
under Section 1362(e)(3)(A) of the Internal Revenue Code to apply the normal tax
accounting rules to determine the income and loss of the Company through the
Effective Date to the extent Section 1362(e) of the Code requiring a pro rata
allocation would otherwise apply. Wheeler agrees to timely consent to any such
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election. The parties will not take a tax return position inconsistent with the
foregoing tax return positions unless such inconsistent position will arise out
of or through an audit of such returns by the Internal Revenue Service or other
taxing authority.
9. CLOSING.
9.1 TIME AND PLACE. The Closing will be held at the offices of Hanes,
Sevilla, Saunders & McCahill on June 27, 1996, at 10:00 a.m., or at such other
place or time or on such other date as the parties hereto may mutually agree.
9.2 TRANSACTIONS AT THE CLOSING. At the Closing, each of the
following transactions will occur:
(a) The Company and Wheeler will deliver to Reynolds the
following:
(i) the Certificate of Merger; and
(ii) the certificates, opinion, agreements,
instruments, documents, consents, waivers, approvals and documents required of
the Company as described in Section 6.
(b) The Reynolds Companies will deliver to Wheeler or Escrow
Agent, as applicable, the following:
(i) certificates for the Closing Shares and the
Escrow Shares required under Sections 1.4 and 1.5 will be delivered to Wheeler
and Escrow Agent, respectively;
(ii) the certificates, opinion, agreements,
consents, waivers and approvals required of the Reynolds Companies
as described in Section 7;
(iii) certificates of good standing of the Reynolds
Companies from the Secretary of State of their respective states of
incorporation as of the most recent practicable date;
(iv) the Certificate of Merger; and
(v) all such certificates, dated as of the
Closing Date, as the Company may reasonably request to evidence the fulfillment
by Reynolds, or other satisfaction as of the Closing Date, of the terms and
conditions of this Agreement.
9.3 DEFAULT AT CLOSING. If the Company and Wheeler fail or refuse to
consummate the transactions set forth in this Agreement on or prior to the
Closing Date, and if the Reynolds Companies are not then in material breach
under terms of this Agreement, all
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other conditions in Section 7 have been satisfied and Reynolds stands ready,
willing and able to make tender of its deliveries required under Section 9.2,
then, in addition to any other remedies available to the Reynolds Companies, the
Reynolds Companies 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. If the Reynolds Companies fail or
refuse to consummate the transaction set forth in this Agreement on or prior to
the Closing Date, and if the Company and Wheeler are not then in material breach
under the terms of this Agreement, all other conditions in Section 6 have been
satisfied and the Company and Wheeler stand ready, willing and able to make
tender of their deliveries required under Section 9.2, then the Company and
Wheeler shall be entitled to exercise any and all remedies available to them at
law or in equity.
10. EMPLOYEES OF THE COMPANY. Nothing in this Agreement shall be construed as or
deemed to be an undertaking by the Reynolds Companies to retain any employees of
Company after the Effective Time, for any period of time, or under any
particular terms and conditions, all of such matters to be at the Reynolds
Companies' discretion. From the date of this Agreement, the Company shall use
its best efforts to retain its current employees and shall not alter the terms
or conditions of employment or change the compensation of or grant or declare
any bonus payable to any employee of the Company, each without the prior written
consent of Reynolds.
11. FURTHER COVENANTS. From and after the Closing, the parties agree, without
further consideration, to execute and deliver promptly such further assignments,
endorsements and other documents, and to take all such further actions, as
either may from time to time reasonably request with respect to the transactions
contemplated by this Agreement, and the fulfillment of any condition precedent
to the obligations of either party waived by that party in order to consummate
the Agreement. The parties also agree to promptly deliver to each other any
assets they receive which properly are the property of the other party or an
affiliate.
12. SURVIVAL OF REPRESENTATIONS AND AGREEMENTS. Except as expressly provided
elsewhere in this Agreement or as provided in this Section 12, all
representations and warranties made by the Company or the Reynolds Companies in
the Company Agreements or the Acquisition Agreements or the Reynolds Agreements,
as applicable, will survive until the third (3rd) anniversary of the Closing
Date. The representations and warranties of the Company in Section 3.6 of this
Agreement will survive until 30 days after expiration of the applicable statutes
of limitation and the representations and
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warranties in Sections 3.1 - 3.4, 3.17 and 3.28 will survive forever. No claim
for breach of a representation or warranty (including an Indemnification Claim
as defined in Section 15) may be brought by any person unless written notice of
such claim will have been given on a prior to the last day of the applicable
survival period in this Section (in which event each representation and warranty
with respect to any asserted claim will survive until such claim is finally
resolved and all obligations with respect thereto are fully satisfied).
13. TERMINATION. This Agreement may be terminated, and the transactions
contemplated herein abandoned (a) by the mutual written consent of the Company
and Reynolds; (b) by either the Company or Reynolds upon the failure of the
other to comply substantially with its or their conditions precedent to Closing
and other obligations set forth herein on or before the Closing Date; or (c)
automatically at 5:00 p.m. Dayton, Ohio time on July 31, 1996, if the Closing
has not been completed by that time. Termination pursuant to this Section will
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 will
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.
14. TRANSACTION EXPENSES.
14.1 BROKERS. Reynolds and the Company and Wheeler each represent and
warrant to the other that no broker or finder has acted for it or them in
connection with this Agreement.
14.2 EXPENSES. All expenses incurred by the parties in connection with
or related to the authorization, preparation, execution and consummation of this
Agreement, including without limitation, all fees and expenses of agents,
representatives, investment bankers, printers, counsel and accountants employed
by any such party, shall be borne by the party incurring the same except that
expenses incurred by Company in excess of $10,000 shall be borne by Wheeler.
15. INDEMNIFICATION.
15.1 LOSSES. For purposes of this Section 15, "LOSSES" will mean all
damages, losses, costs, expenses (including legal,
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accounting and other fees and expenses), interest, penalties, charges and
liabilities.
15.2 INDEMNIFICATION BY THE COMPANY. The Company (pursuant to Section
17, from and after the Effective Time, the Company's obligations under this
Section 15 shall be borne by Wheeler) agrees to indemnify, defend and hold
harmless Reynolds from and against any Loss incurred by either Reynolds Company
related to or arising out of the breach of any of the warranties,
representations, covenants or agreements of the Company in this Agreement.
15.3 INDEMNIFICATION BY THE REYNOLDS COMPANIES. The Reynolds Companies
(including the Surviving Corporation) agree to indemnify, defend and hold
harmless the Company (and, from and after the Effective Time, the Shareholders)
from and against any Loss incurred by any of them related to or arising out of
the breach of any of the warranties, representations, covenants or agreements of
Reynolds in the Reynolds Agreements or the Acquisition Agreements.
15.4 PROCEDURES FOR INDEMNIFICATION. An Indemnification Claim will 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,
containing such other information as Indemnitee will have concerning such Third
Party Claim.
(b) If the Indemnification Claim involves a Third Party Claim
the procedures set forth in Section 15.5 hereof will be observed by Indemnitee
and Indemnitor.
(c) If the Indemnification Claim involves a matter other than
a Third Party Claim, the Indemnitor will 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 will constitute acceptance of the Indemnification Claim by
the Indemnitor and the Indemnification Claim will be paid in accordance with
Section 15.4(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
16.13 of this Agreement.
(d) Upon determination of the amount of an Indemnification
Claim (including a Third Party Claim), whether by agreement between Indemnitor
and Indemnitee, by an arbitration award or otherwise, Indemnitor will pay the
amount of such Indemnification Claim within ten (10) days of the date such
amount is determined.
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15.5 DEFENSE OF THIRD PARTY CLAIMS.
(a) Should any Third Party Claim be made the obligations and
liabilities of the parties with respect to such Third Party Claim will be
subject to this Section 15.5.
(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 will (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, specify 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.
(c) If the defense of a Third Party Claim is so tendered and
within ten (10) days thereafter such tender is accepted without qualification by
the Indemnitor as evidenced by written notice to Indemnitee, then, except as
provided below, the Indemnitee will not, and the Indemnitor will, have the right
to contest, defend, litigate and settle such Third Party Claim. The Indemnitee
will have the right to be represented by counsel of its own choice and at
Indemnitee's expense to participate in any contest, defense, litigation or
settlement conducted by the Indemnitor; provided that the Indemnitee will be
entitled to reimbursement therefor if the Indemnitor loses its right to contest,
defend, litigation and settle the Third Party Claim as provided below.
Notwithstanding the preceding provisions of this Section 15.5, if the Third
Party Claim is asserted against both of Indemnitor and Indemnitee and
representation of both of them by the same counsel would be inappropriate due to
actual or potentially differing interests between them, Indemnitee shall be
entitled to retain the right to contest, defend or litigate such Third Party
Claim as it relates to Indemnitee and will 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 will be given to the Indemnitee. If, pursuant to the preceding sentence,
the Indemnitee so contests, defends, litigates or settles a Third Party Claim,
the Indemnitee will be reimbursed by the Indemnitor for the reasonable
attorneys' fees and other expenses of defending, contesting, litigating and/or
settling the Third Party Claim which are incurred from time to time, promptly
following the presentation
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<PAGE> 38
to the Indemnitor of itemized bills for such attorneys' fees and other expenses.
(d) The Indemnitor will lose its right to contest, defend,
litigate and settle the Third Party Claim if it fails 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 will
have the exclusive right to contest, defend and litigate the Third Party Claim
and will 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 will be given to the
Indemnitee.
(e) All expenses (including without limitation attorneys' fees
and expenses) incurred by the Indemnitor in connection with the foregoing will
be paid by the Indemnitor.
(f) No failure by an Indemnitor to acknowledge in writing its
indemnification obligations under this Section 15 will 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 Section 15.5(c), or if,
in accordance with the foregoing, the Indemnitor loses its right to contest,
defend, litigate and settle such a Third Party Claim, the Indemnitee will 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. If, pursuant to this Section 15.5(f), the Indemnitee so
contests, defends, litigates or settles a Third Party Claim for which it is
entitled to indemnification hereunder, the Indemnitee will be reimbursed by the
Indemnitor for the reasonable attorneys' fees and other expenses of defending,
contesting, litigating and/or settling the Third Party Claim which are incurred
from time to time, promptly following the presentation to the Indemnitor of
itemized bills for such attorneys' fees and other expenses.
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15.6 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 12 hereof.
(b) Notwithstanding anything to the contrary herein, except
for the obligations (the "EXEMPT INDEMNIFICATION OBLIGATIONS") under Section
15.2 with respect to breaches of the representations and warranties contained in
Sections 3.1-3.4, 3.6, 3.17 and 3.28, neither the Company nor the Reynolds
Companies, as an Indemnitor, will have any obligation until the aggregate of all
Losses payable by the Indemnitor to the Indemnitee exceeds the Floor. Upon the
aggregate of all Losses payable by the Indemnitor (except the Exempt
Indemnification Obligations) exceeding the Floor, the Company or the Reynolds
Companies, as applicable, will be liable to the Indemnitee on a
dollar-for-dollar basis, for the amount above the Floor.
(c) With respect to Losses payable in connection with Exempt
Indemnification Obligations, the Company or the Reynolds Companies, as
applicable, will be liable for all such Losses from the first dollar in any
event.
(d) The payment of any Loss hereunder will constitute an
additional adjustment to the number of Reynolds Shares issued in respect of the
Merged Shares.
(e) The remedies provided in this Section 15 are in addition
to, and not in derogation of, any statutory, equitable, or common law remedy any
party may have for breach of any representation, warranty, covenant or agreement
set forth in the Company Agreements, the Acquisition Agreements or the Reynolds
Agreements, as applicable.
16. MISCELLANEOUS.
16.1 ACCOUNTING RECORDS. From and after the Effective Time, Wheeler and
his representatives will have reasonable access to all of the Books and Records
for the period prior to the Closing Date, but only to the extent that such
access may reasonably be required by Wheeler in connection with matters relating
to or affected by the operations of the Company prior to the Closing Date. Such
access will be afforded by Reynolds upon receipt of reasonable advance notice
and during normal business hours.
16.2 NOTICE. All notices, requests, demands and other communications
hereunder will be in writing and will be deemed
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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) five (5) business days
after deposit in the United States Mail when mailed by registered or certified
mail, return receipt requested, first class postage prepaid, when addressed as
set forth in Schedule F. 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.
16.3 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 will be binding upon the parties hereto and their
respective heirs, successors and permitted assigns.
16.4 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.
16.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which will be considered one and the same agreement and
will become effective when one counterpart has been signed by each party and
delivered to the other party hereto.
16.6 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.
16.7 TIME OF ESSENCE. Time is of the essence in this Agreement.
16.8 GOVERNING LAW. This Agreement will be governed by and construed
and enforced in accordance with the laws of the state of New Hampshire as
applied to contracts executed and performed wholly within that state.
16.9 DISCLOSURE. The Reynolds Companies and the Company 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
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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 will not be unreasonably
withheld.
16.10 PARTIAL ILLEGALITY OR UNENFORCEABILITY. Wherever possible, each
provision hereof will be interpreted in such manner as to be effective under
applicable law, but in case any one or more of the provisions contained herein
will, for any reason, be held to be illegal or unenforceable in any respect,
such illegality or unenforceability will not affect any other provisions of this
Agreement, and this Agreement will 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.
16.11 SINGULAR OR PLURAL. All defined terms used herein will have the
same meaning, whether used in the singular or plural form, unless the context
clearly requires otherwise.
16.12 EFFECT OF INVESTIGATION. Any inspection, preparation or
compilation of information or Exhibits or Schedules or audit of the inventories,
properties, financial condition or other matters relating to the Company or the
Acquired Business or the assets or liabilities of the Company conducted by or on
behalf of Reynolds pursuant to this Agreement will in no way limit, affect or
impair the ability of Reynolds to rely upon the representations, warranties,
covenants and agreements of the Company in the Company Agreements.
16.13 ARBITRATION.
(a) Any controversy, dispute or claim arising out of or
relating to this Agreement (except a Closing Adjustment) will be submitted to
arbitration in accordance with the commercial rules of the 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
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reasonably practicable (but within 30 days from the date the latter of the two
arbitrators is named) name a third arbitrator who will not be from the Dayton,
Ohio or Washington, D.C. metropolitan areas, but who shall be the sole
arbitrator to hear and rule upon the matter. The provisions of the Federal Rules
of Civil Procedure which provide for discovery will 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.
(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. The prevailing party in the arbitration will be promptly
reimbursed for its reasonable costs and fees (including attorneys' fees)
incurred in connection with the arbitration and will not be responsible for the
costs of arbitration.
16.14 "PERSON." The term "person" will be broadly interpreted to
include, without limitation, any corporation, partnership, association, limited
liability company, other association, trust or individual.
16.15 "BEST EFFORTS." The use of the term "best efforts" herein will 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.
16.16 "INCLUDING." Whenever the term "including" is used in this
Agreement, it will mean "including, without limitation," (whether or not such
language is specifically set forth) and will not be deemed to limit the range of
possibilities of those items specifically enumerated.
16.17 NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement shall
confer any rights upon any person other than the Parties and their respective
heirs, successors and permitted assigns.
17. ASSUMPTION OF OBLIGATIONS. All obligations of Company under Section 15 to be
performed after the Effective Time shall be assumed and performed by Wheeler.
18. CERTAIN REPRESENTATIONS OF WHEELER. Wheeler represents and warrants as
follows: (a) Wheeler has full power and authority to execute this Agreement and
to transfer and surrender the Company
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Shares owned by him; (b) all outstanding Company Shares owned by Wheeler free
and clear of any liens, claims, restrictions, charges or encumbrances; (c)
Wheeler is acquiring the Reynolds 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 he will not sell, encumber, dispose or
otherwise transfer (collectively, "TRANSFER") any right or interest in the
Reynolds Shares, whether voluntarily, by gift, operation of law, testamentary
disposition or otherwise, except for the distribution of Reynolds Shares to
Reynolds in satisfaction of a Closing Adjustment, unless such Transfer has been
registered (or an exemption from registration has been perfected) under the Act
and applicable state securities laws; (d) Wheeler is an experienced investors
and is aware of the risks inherent in an investment in the Reynolds Shares; (e)
Wheeler has had access to such information about Reynolds and its operations as
it deems necessary to evaluate fully an investment in the Reynolds Shares and
Wheeler is relying solely on the information provided by their advisors and
information publicly available regarding Reynolds and its operations and not
upon any statement of or information supplied by any employee, agent, contractor
or representative of Reynolds; and (f) Wheeler is a resident of the state of
Virginia.
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The parties have executed this Agreement as of this ____ day of June,
1996.
"COMPANY":
WHEELER MANAGEMENT ASSOCIATES, INC.
BY____________________________________
TITLE:________________________________
"REYNOLDS":
THE REYNOLDS AND REYNOLDS COMPANY
BY____________________________________
TITLE:________________________________
"ACQUISITION":
WMA ACQUISITION CORPORATION
BY____________________________________
TITLE:________________________________
"WHEELER"
______________________________________
DAVID J. WHEELER
38
<PAGE> 1
Exhibit 5
September 27, 1996
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 September 27, 1996, the 31,472 Class A Common Shares proposed
to be sold by the Selling Shareholder, 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
The Reynolds and Reynolds Company
September 27, 1996
Page 2
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,
/s/ 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
period ended December 31, 1995 as indicated in our report dated February 12,
1996, because we did not perform an audit, we expressed no opinion on that
information.
We are aware that our report referred to above, which were included in your
Quarterly Reports on Form 10-Q for the quarters ended December 31, 1995 are
incorporated by reference in this Registration Statement on Form S-3.
We also are aware that the aforementioned report, 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.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Dayton, Ohio
September 20, 1996
<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 10,
1995, which includes an explanatory paragraph concerning a change in the method
of accounting for post-retirement benefits other than pensions in 1993
appearing in the Annual Report on Form 10-K of The Reynolds and Reynolds
Company for the year ended September 30, 1995, and to the reference to us under
the heading "Experts" in the Prospectus, which is part of such Registration
Statement.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Dayton, Ohio
September 20, 1996
