SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) JANUARY 10, 1997
HOSPITALITY WORLDWIDE SERVICES, INC.
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(Exact Name of Registrant as Specified in Charter)
NEW YORK 0-23054 11-3096379
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
509 MADISON AVENUE, SUITE 1114, NEW YORK, NEW YORK 10022
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (212) 223-0699
N/A
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Pursuant to an Agreement and Plan of Merger dated as of
January 9, 1997 (the "Merger Agreement"), by and among The Leonard Parker
Company, a Florida corporation ("LPC"), Leonard Parker, Douglas Parker, Bradley
Parker, Philip Parker, Mitchell Parker and Gregg Parker (the "LPC
Stockholders"), LPC Acquisition Corp., a Florida corporation ("Acquisition
Corp.") and Hospitality Worldwide Services, Inc., a New York corporation (the
"Registrant"), on January 10, 1997, Acquisition Corp., a newly formed
wholly-owned subsidiary of the Registrant merged with and into LPC (the
"Merger"). As the result of the Merger, LPC became a wholly-owned subsidiary of
the Registrant. The LPC Stockholders received an aggregate of 1,250,000 newly
issued shares of the Registrant's Common Stock, $.01 par value, and 200,000
newly issued shares of the Registrant's Redeemable Convertible Preferred Stock,
stated value $25 per share. The consideration paid to the LPC Stockholders was
determined by negotiations among the parties and was based on the value of the
business of LPC on an ongoing basis.
LPC is a purchasing company for the hospitality industry that
acts as agent for the purchase of goods and services for its customers which
include major hotel and management companies worldwide. LPC purchases furniture,
fixtures and equipment, kitchen supplies, linens and uniforms, guestroom
amenities, and other supplies to meet its customers' requirements for new hotel
openings and major renovations. The Registrant intends to continue the business
of LPC. LPC's revenues for the fiscal year ended December 31, 1996 were
approximately $45,000,000.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
It is impracticable to provide the required financial statements at
this time. The required financial statements will be filed as an amendment to
this Form 8-K as soon as they become available, but in no event later than March
26, 1997.
(b) Pro Forma Financial Information.
It is impracticable to provide the required pro forma financial
information at this time. The required pro forma financial information will be
filed as an amendment to this Form 8- K as soon as it becomes available, but in
no event later than March 26, 1997.
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(c) Exhibits.
2 Agreement and Plan of Merger, dated as of January
9, 1997, by and among The Leonard Parker Company, a
Florida corporation, Leonard Parker, Douglas
Parker, Bradley Parker, Philip Parker, Mitchell
Parker and Gregg Parker, Hospitality Worldwide
Services, Inc., a New York corporation and LPC
Acquisition Corp. a Florida corporation.
3 Certificate of Incorporation of Hospitality
Worldwide Services, Inc., as amended.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
HOSPITALITY WORLDWIDE SERVICES, INC.
Dated: January 24, 1997 By: /S/ HOWARD G. ANDERS
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Name: Howard G. Anders
Title: Executive Vice President
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EXHIBIT INDEX
2 Agreement and Plan of Merger, dated as of January
9, 1997, by and among The Leonard Parker Company, a
Florida corporation, Leonard Parker, Douglas
Parker, Bradley Parker, Philip Parker, Mitchell
Parker and Gregg Parker, Hospitality Worldwide
Services, Inc., a New York corporation and LPC
Acquisition Corp. a Florida corporation.
3 Certificate of Incorporation of Hospitality
Worldwide Services, Inc., as amended.
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EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
By and Among
The Leonard Parker Company,
Leonard Parker, Douglas Parker, Bradley Parker, Philip Parker,
Mitchell Parker and Gregg Parker,
LPC Acquisition Corp. and
Hospitality Worldwide Services, Inc.
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Dated as of January 9, 1997
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of
January 9, 1997, by and among The Leonard Parker Company, a Florida corporation
("LPC"), Leonard Parker, Douglas Parker, Bradley Parker, Philip Parker, Mitchell
Parker and Gregg Parker (each a "LPC Stockholder" and collectively, the "LPC
Stockholders"), and Hospitality Worldwide Services, Inc., a New York corporation
(the "Parent") and LPC Acquisition Corp., a Florida corporation and a
wholly-owned subsidiary of the Parent ("Acquisition Corp").
W I T N E S S E T H:
WHEREAS, the Board of Directors of LPC, the Parent and
Acquisition Corp. have determined that it is desirable and in the best interests
of their respective corporations and shareholders for Acquisition Corp. to merge
with and into LPC and each of them has unanimously approved this Agreement and
the transactions contemplated hereby; and
WHEREAS, upon the terms and subject to the conditions
hereinafter set forth: (a) Acquisition Corp. shall be merged with LPC (the
"Merger"), and LPC shall be the surviving corporation; (b) the issued and
outstanding shares of common stock of Acquisition Corp. shall be converted into
shares of LPC's common stock; (c) the issued and outstanding shares of common
stock of LPC shall be converted into shares of the Parent's common stock and
preferred stock; and
WHEREAS, it is intended that the Merger shall qualify as a
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986 (the "Code") and that this Agreement shall constitute a "plan of
reorganization."
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, and mutual covenants and agreements herein
contained, the parties hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 THE MERGER. At the Effective Time (as defined in
Section 1.2) and subject to and upon the terms and conditions of this Agreement
and in accordance with the Florida Business Corporation Act (the "Act"),
Acquisition Corp. shall be merged with and into LPC, the separate corporate
existence of Acquisition Corp. shall cease, and following the Merger, LPC shall
continue as the surviving corporation (as such, the "Surviving Corporation").
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SECTION 1.2 EFFECTIVE TIME. As promptly as practicable after
the satisfaction or waiver of the conditions set forth in Articles VII and VIII,
the parties hereto shall cause the Merger to be consummated by filing Articles
of Merger with the Secretary of State of the State of Florida, in such form as
is required by, and executed in accordance with, the relevant provisions of the
Act. The time of filing the Articles of Merger with the Secretary of State of
the State of Florida shall be the "Effective Time."
SECTION 1.3 EFFECT OF THE MERGER. At the Effective Time, the
Merger shall be effective as provided in the applicable provisions of the Act.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time all the property, rights, privileges, powers and franchises of
Acquisition Corp. shall vest in LPC, and all debts, liabilities and duties of
Acquisition Corp. shall become the debts, liabilities and duties of LPC. From
and after the Effective Time, the Surviving Corporation shall be a wholly-owned
subsidiary of the Parent.
SECTION 1.4 SUBSEQUENT ACTIONS. If, at any time after the
Effective Time, the Surviving Corporation shall consider or be advised that any
deeds, bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to perfect, confirm, record or otherwise vest in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of Acquisition Corp. acquired or to be acquired by
the Surviving Corporation as a result of, or in connection with, the Merger, or
otherwise to carry out this Agreement, the officers and directors of the
Surviving Corporation shall be authorized to execute and deliver, in the name
and on behalf of Acquisition Corp., all such deeds, bills of sale, assignments
and assurances, and to take and do, in the name and on behalf of Acquisition
Corp., all such other actions and things as may be necessary or desirable to
perfect, confirm, record or otherwise vest any and all right, title and interest
in, to and under such rights, properties or assets in the Surviving Corporation,
or otherwise to carry out this Agreement.
SECTION 1.5 ARTICLES OF INCORPORATION; BY-LAWS; DIRECTORS AND
OFFICERS. (i) The Articles of Incorporation of Acquisition Corp., as in effect
immediately before the Effective Time, shall be the Articles of Incorporation of
the Surviving Corporation until thereafter amended as provided by law and such
Articles of Incorporation; PROVIDED, HOWEVER, that Article One of the Articles
of Incorporation of Acquisition Corp. shall be amended to read as follows:
FIRST: The name of the corporation is The Leonard Parker Company.
(ii) The By-Laws of Acquisition Corp., as in effect
immediately before the Effective Time, shall be the By-Laws of the Surviving
Corporation until thereafter amended as provided by law,
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the Articles of Incorporation of the Surviving Corporation or such By-Laws.
(iii) The directors of Acquisition Corp. immediately before
the Effective Time will be the initial directors of the Surviving Corporation,
and the officers of Acquisition Corp. immediately before the Effective Time will
be the initial officers of the Surviving Corporation, in each case until their
successors are elected or appointed and qualified. If, at the Effective Time, a
vacancy shall exist on the Board of Directors or in any office of the Surviving
Corporation, such vacancy may thereafter be filled in the manner provided by the
Act and the By-Laws of the Surviving Corporation.
SECTION 1.6 CONVERSION OF SECURITIES. As of the Effective
Time, by virtue of the Merger and without any action on the part of LPC,
Acquisition Corp., the Parent or the holder of any of the following securities:
(i) Each share of common stock, par value $.01 per share, of
Acquisition Corp. issued and outstanding immediately before the Effective Time
shall be converted into one fully paid and non-assessable shares of common
stock, $.01 par value per share of LPC.
(ii) The outstanding shares (the "Shares") of common stock,
par value $10 per share, of LPC (the "LPC Common Stock") issued and outstanding
immediately before the Effective Time shall be converted into an aggregate of
(a) 1,250,000 fully paid and non-assessable shares of common stock, $.01 par
value per share of the Parent (the "Parent Common Stock"); and (b) 200,000 fully
paid and non-assessable shares of preferred stock, stated value $25 per share of
the Parent (the "Parent Preferred Stock" and together with the Parent Common
Stock, the "Merger Consideration") as set forth on SCHEDULE 1.7.
(iii) Each share of LPC Common Stock held in the treasury of
LPC immediately before the Effective Time shall be canceled and extinguished and
no payment or other consideration shall be made with respect thereto.
SECTION 1.7 DELIVERY OF MERGER CONSIDERATION.
(i) At or prior to the Closing Date, the Parent will issue and
contribute to the capital of Acquisition Corp. a sufficient number of shares of
each of the Parent Common Stock and the Parent Preferred Stock to enable it to
pay the Merger Consideration in full, in accordance with the terms of this
Agreement.
(ii) On the terms and subject to the conditions set forth in
this Agreement, at the Closing, Acquisition Corp. shall
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deliver to the LPC Stockholders the Merger Consideration, by delivering to each
LPC Stockholder certificates representing the number of shares of the Parent
Common Stock and the Parent Preferred Stock as set forth in SCHEDULE 1.7.
SECTION 1.8 FRACTIONAL SHARES. Notwithstanding any other
provision hereof, if the number of shares of the Parent Common Stock and the
Parent Preferred Stock to which a LPC Stockholder shall be entitled as Merger
Consideration includes a fraction of a share, the number of shares to which he
shall be entitled shall be rounded to the next lower or higher number of shares,
depending on whether such fraction of a share is less than one-half a share or
greater than or equal to one-half a share.
ARTICLE II
CLOSING
Subject to the satisfaction or waiver of all conditions to the
parties' obligations to consummate the Merger set forth herein a closing (the
"Closing") of the Merger shall take place at 10:00 a.m. on January 9, 1997 at
the offices of Olshan Grundman Frome & Rosenzweig LLP, 505 Park Avenue, New
York, New York 10022, or at such other time and place as LPC, the LPC
Stockholders, Acquisition Corp. and the Parent shall agree (the date and time of
such Closing being herein referred to as the "Closing Date").
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF LPC AND THE LPC STOCKHOLDERS
LPC and each of the LPC Stockholders (as to himself only, with
respect to Section 3.3) represents and warrants to Acquisition Corp. and the
Parent as follows:
Section 3.1 CORPORATE ORGANIZATION; REQUISITE AUTHORITY TO
CONDUCT BUSINESS; ARTICLES OF INCORPORATION AND BY-LAWS. LPC and its
Subsidiaries (as defined hereinafter) are corporations duly organized, validly
existing and in good standing under the laws of their respective jurisdictions
of incorporation. LPC and its Subsidiaries have provided Acquisition Corp. with
true and complete copies of their respective articles of incorporation
(certified by the appropriate public official in the jurisdiction of
incorporation) and By-laws (certified by the Secretary of LPC or such
Subsidiary) as in effect on the date hereof. Prior to the Closing, the minute
books of LPC and its Subsidiaries will be delivered to the Parent, and will
contain true and complete records of all meetings and consents in lieu of
meeting of the Boards of Directors and of the stockholders of LPC and its
Subsidiaries since the date of LPC's inception, which accurately reflect in all
material respects all transactions referred to in such minutes and consents in
lieu of meeting. LPC and its Subsidiaries have all
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corporate power and authority to own, operate and lease its and their properties
and to carry on their respective businesses as the same are now being conducted,
and are duly qualified or licensed to do business and are in good standing as
foreign corporations in every jurisdiction in which the conduct of its or their
business or the ownership or leasing of their respective properties requires
them to be so qualified or licensed, except where the failure to be so qualified
or licensed, individually or in the aggregate, will not have a material adverse
effect on the business as presently conducted, properties, assets, liabilities,
financial condition or operations of LPC and its Subsidiaries, taken as a whole
(an "LPC Material Adverse Effect").
Section 3.2 CAPITALIZATION AND SHAREHOLDINGS. The authorized
capital stock of LPC consists of 100 shares of LPC Common Stock, 100 of which
are issued and outstanding on the date hereof. The capital stock of LPC is duly
authorized and all issued capital stock has been duly and validly issued and is
fully paid and non-assessable and free of preemptive rights. LPC does not have
outstanding, and is not bound by or subject to, any subscription, option,
warrant, call, right, contract, commitment, agreement, understanding or
arrangement to issue any additional shares of capital stock of LPC, including
any right of conversion or exchange under any outstanding security or other
instrument, and no shares are reserved for issuance for any purpose.
Section 3.3 STOCKHOLDER APPROVAL OF MERGER. The LPC
Stockholders have voted to approve this Agreement and the transactions
contemplated hereby.
Section 3.4 SUBSIDIARIES, ETC. (a) Except as set forth on
SCHEDULE 3.4(A), as of the Closing LPC will own of record and beneficially all
of the outstanding shares of capital stock of each of the corporations set forth
on SCHEDULE 3.4(A) (individually, a "Subsidiary," and collectively, the
"Subsidiaries"). As of the Closing, LPC will own all the shares of capital stock
of the Subsidiaries and all of such shares will have been duly authorized,
validly issued, fully paid and nonassessable, and will be owned by LPC, free and
clear of all liens, encumbrances, charges, claims, restrictions or rights or
interests of others of any kind. No options, warrants or other rights to
purchase or otherwise acquire any authorized but unissued shares of capital
stock or other equity interests of any of the Subsidiaries or any security
convertible into shares of capital stock or other equity interests of any of the
Subsidiaries will be outstanding or reserved for issuance.
(b) The LPC Stockholders own of record and beneficially the
outstanding shares of capital stock of each of the corporations set forth on
SCHEDULE 3.4(B) (individually, a "Sister Company," and collectively, the "Sister
Companies." Except as set forth on SCHEDULE 3.4(B), the LPC Stockholders own all
the shares of capital
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stock of the Sister Companies and all of such shares have been duly authorized,
validly issued, fully paid and nonassessable, and are owned by the LPC
Stockholders, free and clear of all liens, encumbrances, charges, claims,
restrictions or rights or interests of others of any kind. Except as provided in
SCHEDULE 3.8 AND SECTION 6.8(E) hereof, no options, warrants or other rights to
purchase or otherwise acquire the equity interests of any of the LPC
Stockholders in the Sister Companies exists. The transfer of the equity
interests of the LPC Stockholders in the Sister Companies, or the benefits
thereof, to LPC will not conflict with or result in a default under any
agreement, contract or commitment of the Sister Companies and the transfer of
the capital stock of the Sister Companies, or the benefits thereof, to LPC will
not conflict with or result in a default under any agreement, contract or
commitment of the Sister Companies.
Section 3.5 AUTHORITY RELATIVE TO AND VALIDITY OF THIS
AGREEMENT. LPC has full corporate power and authority to execute and deliver
this Agreement and the Employment Agreements (as defined below) (this Agreement,
together with the Employment Agreements, the "LPC Agreements") and to assume and
perform all of its obligations thereunder. The execution and delivery of the LPC
Agreements by LPC and the performance by LPC of its obligations thereunder have
been duly authorized by its Board of Directors and stockholders and no further
authorization on the part of LPC is necessary to authorize the execution and
delivery by it of, and the performance of its obligations under, the LPC
Agreements. There are no corporate, contractual, statutory or other restrictions
of any kind upon the power and authority of LPC to execute and deliver the LPC
Agreements and to consummate the transactions contemplated hereunder and
thereunder and no action, waiver or consent by any federal, state, municipal or
other governmental department, commission or agency ("Governmental Authority")
is necessary to make the LPC Agreements valid instruments binding upon LPC in
accordance with their respective terms. This Agreement has been duly executed
and delivered by LPC and constitutes, and each Employment Agreement (each an
"Employment Agreement" and collectively, the "Employment Agreements"), when
executed and delivered by LPC, Leonard Parker ("Leonard Parker"), Douglas
Parker, Bradley Parker, Philip Parker and Mitchell Parker, respectively, in
accordance with its terms, will constitute, legal, valid and binding obligations
of LPC, enforceable in accordance with its terms, except (i) as such
enforceability may be limited by or subject to any bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally, (ii) as such obligations are subject to general principles of equity,
(iii) as rights to indemnity may be limited by federal or state securities laws
or by public policy and (iv) with respect to the enforceability of covenants
against competition.
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Section 3.6 REQUIRED FILINGS AND CONSENTS; NO CONFLICT.
Neither LPC nor any Subsidiary is required to submit any notice, report or other
filing with any Governmental Authority in connection with the execution,
delivery or performance of the LPC Agreements. The execution, delivery and
performance of the LPC Agreements by LPC and the consummation of the
transactions contemplated hereby and thereby do not and will not (a) conflict
with or violate any law, regulation, judgment, order or decree binding upon LPC
or any Subsidiary, (b) conflict with or violate any provision of its articles of
incorporation or Bylaws, or (c) conflict with or result in a breach of any
condition or provision of, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or result in the
creation or imposition of any lien, charge or encumbrance upon any properties or
assets of LPC or any Subsidiary pursuant to, or cause or permit the acceleration
prior to maturity of any amounts owing under, any indenture, loan agreement,
mortgage, deed of trust, lease, contract, license, franchise or other agreement
or instrument to which LPC or any Subsidiary is a party or which is or purports
to be binding upon LPC or any Subsidiary or by which any of their respective
properties are bound, except for conflicts, breaches, defaults, events of
default or impositions that would not have an LPC Material Adverse Effect. The
execution, delivery and performance of the LPC Agreements by LPC and the
consummation of the transactions contemplated hereby and thereby will not result
in the loss of any license, franchise, legal privilege or permit possessed by
LPC or any Subsidiary or give a right of termination to any party to any
agreement or other instrument to which LPC or any Subsidiary is a party or by
which any of their respective properties are bound, except for losses or rights
of termination that would not have an LPC Material Adverse Effect.
Section 3.7 FINANCIAL STATEMENTS. The following financial
statements, together with the notes thereto, reviewed by [auditors], independent
public accountants have been previously delivered to Acquisition Corp. and the
Parent (collectively the "Financial Statements"):
(i) balance sheets of LPC as of December 31, 1994 and 1995
(the "Balance Sheets"); and
(ii) statements of income and retained earnings for the twelve
month periods ended December 31, 1994 and 1995 (the "Income
Statements").
(iii) statements of cash flows for the twelve month periods
ended December 31, 1994 and 1995 (the "Cash Flow Statements").
The Financial Statements and notes thereto fairly present in
all material respects the financial condition, results of operations and cash
flows of LPC as of the dates thereof with
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respect to the Balance Sheets and as to the periods then ended with respect to
the Income Statements and Cash Flow Statements and have been prepared in
accordance with generally accepted accounting principles ("GAAP") consistently
applied. Except as disclosed on SCHEDULE 3.7 hereto, LPC had at December 31,
1995 no liability or obligation of any kind or manner, either liquidated,
unliquidated, direct, accrued, absolute, contingent or otherwise, whether due or
to become due, except as incurred in the ordinary course of business, which were
required to be reflected by GAAP in the Financial Statements and which were not
accurately reflected in the Financial Statements and which would have an LPC
Material Adverse Effect.
Excluding the operations of Parker Reorder Corporation, a
Florida corporation ("Parker Reorder"), income from operations for LPC and the
Sister Companies for the year ended December 31, 1996 is reasonably expected to
be $2,000,000.00, prior to special year-end bonuses paid for approximately the
same amount and the expenses of the transactions contemplated by this Agreement
to the extent such expenses are attributable to the year ended December 31,
1996.
Section 3.8 ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as
set forth in SCHEDULE 3.8, since December 31, 1995, there has not been, with
respect to LPC or any Subsidiary, (i) any change or event that has caused an LPC
Material Adverse Effect; (ii) any strike, picketing, work slowdown or labor
disturbance; (iii) any material damage, destruction or loss (whether or not
covered by insurance) with respect to any assets or properties; (iv) any
redemption or other acquisition by it of LPC Common Stock or any declaration or
payment of any dividend or other distribution in cash, stock or property with
respect thereto; (v) any entry into any material commitment or transaction
(including, without limitation, any borrowing or capital expenditure) other than
in the ordinary course of business or as contemplated by this Agreement; (vi)
any transfer, assignment or sale of, or rights granted under, any material
leases, licenses, agreements, patents, trademarks, trade names, copyrights or
other assets other than those transferred, assigned, sold or granted in the
ordinary course of business and consistent with past practice; (vii) any
mortgage, pledge, security interest or imposition of any other encumbrance on
any assets or properties except in the ordinary course of business; any payment
of any debts, liabilities or obligations ("Liabilities") of any kind other than
Liabilities currently due; (viii) any cancellation of any debts or claims or
forgiveness of amounts owed to LPC; or (ix) any change in accounting principles
or methods (except insofar as may have been required by a change in U.S. GAAP).
Except as set forth in SCHEDULE 3.8, since December 31, 1995, LPC has conducted
its business only in the ordinary course and in a manner consistent with past
practice and has not made any material change in the conduct of its business or
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operations except as agreed to in writing by the Parent or otherwise disclosed
herein.
Section 3.9 TAXES AND TAX RETURNS. (a) For purposes of this
Agreement, (i) the term "Taxes" shall mean all taxes, charges, fees, levies or
other assessments, including, without limitation, income, gross receipts,
excise, property, sales, license, payroll and franchise taxes, imposed by the
United States, or any state, local or foreign government or subdivision or
agency thereof whether computed on a unitary, combined or any other basis; and
such term shall include any interest and penalties or additions to tax; and (ii)
the term "Tax Return" shall mean any report, return or other information
required to be filed with, supplied to or otherwise made available to a taxing
authority in connection with Taxes.
(b) LPC and each Subsidiary have (i) duly filed with the
appropriate taxing authorities all Tax Returns required to be filed by or with
respect to LPC or such Subsidiary, as the case may be, or are properly on
extension and all such duly filed Tax Returns are true, correct and complete in
all material respects, and (ii) paid in full or made adequate provisions for on
its Balance Sheet (in accordance with GAAP) all Taxes shown to be due on such
Tax Returns. There are no liens for Taxes upon the assets of LPC or any
Subsidiary except for statutory liens for current Taxes not yet due and payable
or which may thereafter be paid without penalty or are being contested in good
faith. Except as set forth on Schedule 3.9, neither LPC nor any Subsidiary has
received any notice of audit, is, to their knowledge, undergoing any audit of
its Tax Returns, or has received any notice of deficiency or assessment from any
taxing authority with respect to liability for Taxes of LPC or such Subsidiary
which has not been fully paid or finally settled. There have been no waivers of
statutes of limitations by LPC or any Subsidiary with respect to any Tax Returns
which relate to LPC or such Subsidiary, as the case may be. Neither LPC nor any
Subsidiary has filed a request with the Internal Revenue Service for changes in
accounting methods within the last two years which change would effect the
accounting for tax purposes, directly or indirectly, of LPC or such Subsidiary.
(c) Each of the LPC Stockholders has duly (i) filed with the
appropriate taxing authorities all Tax Returns required to be filed by him with
respect to LPC or any Subsidiary, if such corporation was an S Corporation prior
to the consummation of the transactions contemplated by this Agreement, or are
properly on extension, and all such duly filed Tax Returns are true, correct and
complete in all material respects and (ii) paid in full or made adequate
provision for all Taxes shown to be due on such Tax Returns.
Section 3.10 EMPLOYEE BENEFIT PLANS. SCHEDULE 3.10 hereto
comprises a listing of each bonus, stock option, stock
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purchase, benefit, profit sharing, savings, retirement, liability, insurance,
incentive, deferred compensation, and other similar fringe or employee benefit
plans, programs or arrangements for the benefit of or relating to, any employee
of, or independent contractor or consultant to, and all other compensation
practices, policies, terms or conditions, whether written or unwritten (the "LPC
Employee Plans") which LPC or any Subsidiary presently maintains, to which LPC
or any Subsidiary presently contributes or under which LPC or any Subsidiary has
any liability and which relate to employees or independent contractors of LPC or
any such Subsidiary. The LPC Employee Plans administered by LPC or any
Subsidiary have been administered in all material respects in accordance with
all requirements of applicable law and terms of each such plan. Each LPC
Employee Plan that is required or intended to be qualified under applicable law
or registered or approved by a governmental agency or authority, has been so
qualified, registered or approved by the appropriate governmental agency or
authority and, to the best of LPC's knowledge, nothing has occurred since the
date of the last qualification, registration or approval to adversely affect, or
cause, the appropriate governmental agency or authority to revoke such
qualification, registration or approval. All contributions (including premiums)
in material amounts required by law or contract to have been made or accrued by
LPC or any such Subsidiary under or with respect to any LPC Employee Plan have
been paid or accrued by LPC or such Subsidiary, as the case may be. Without
limiting the foregoing, there are no material unfunded liabilities under any LPC
Employee Plan. Neither LPC nor any Subsidiary has received notice of any
investigation, litigation or other enforcement action against LPC or such
Subsidiary with respect to any of the LPC Employee Plans. There are no pending
actions, suits or claims by former or present employees of LPC or any Subsidiary
(or their beneficiaries) with respect to LPC Employee Plans or the assets or
fiduciaries thereof (other than routine claims for benefits).
(a) Each "employee pension benefit plan," as defined in
section 3(2) of ERISA, maintained by LPC or any of its subsidiaries or any trade
or business (whether or not incorporated) which is under common control, or
which is treated as a single employer, with LPC or any of its subsidiaries under
section 414(b), (c), (m) or (o) of the Code ("LPC ERISA Affiliate") or to which
LPC or any LPC ERISA Affiliate contributed or is obligated to contribute
thereunder (the "LPC Pension Plans"), is listed on SCHEDULE 3.10(A). All such
plans that are intended to qualify under section 401 ET SEQ. of the Code do so
qualify, the trusts maintained pursuant thereto (the "LPC Pension Trusts") that
are intended to be exempt from federal income taxation under section 501 of the
Code are so exempt, and LPC has received a determination letter from the IRS
with respect to each such LPC Pension Plan and each such LPC Pension Trust to
the effect that such LPC Pension Plan is qualified and such LPC Pension Trust is
exempt. No such determination letter has been revoked, no revocation has been
threatened and nothing has
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occurred with respect to the operation of any LPC Pension Plan that could
reasonably be expected to cause such revocation. Except as described on SCHEDULE
3.10(A), none of the LPC Pension Plans or LPC Pension Trusts have been amended
since the effective date of each respective determination letter.
(b) Each "employee welfare benefit plan," as defined in
section 3(1) of ERISA, each other employee benefit arrangement or payroll
practice, including, without limitation, all severance pay, sick leave, vacation
pay, salary continuation for disability, retirement, deferred compensation,
bonus, long-term incentive, stock option, stock purchase, hospitalization,
medical insurance, life insurance, and scholarship plans or programs maintained
by LPC or any of its subsidiaries or to which LPC or any of its subsidiaries
contributed or is obligated to contribute thereunder (all such plans being
hereinafter referred to as the "LPC Employee Benefit Plans") and each trust
maintained pursuant to an LPC Employee Benefit Plan (the "LPC Benefit Trusts")
is listed on SCHEDULE 3.10(B). LPC has received a determination letter from the
IRS with respect to each LPC Employee Benefit Trust that is intended to be
exempt from federal taxation under section 501 of the Code. No such
determination letter has been revoked, no revocation has been threatened, and
nothing has occurred with respect to the operation of any LPC Employee Benefit
Trust that could reasonably be expected to cause such revocation. Except as
described on SCHEDULE 3.10(B), none of the LPC Employee Benefit Trusts have been
amended since the effective date of each respective determination letter.
(c) LPC has delivered to Parent (i) a true, correct, and
complete copy of each LPC Pension Plan, including copies of all amendments made
since the most recent favorable determination letter, or LPC Employee Benefit
Plan, or, in the case of any unwritten LPC Employee Benefit Plan, descriptions
thereof; (ii) copies of the three most recent annual reports (Form 5500 series)
filed with the IRS with respect to each LPC Pension Plan or LPC Employee Benefit
Plan for which such report is required by applicable law, including, without
limitation, all schedules thereto and all financial statements with attached
opinions of independent accountants; (iii) the most recent summary plan
description for each LPC Pension Plan or LPC Employee Benefit Plan for which
such a summary plan description is required by applicable Law; (iv) each trust
agreement and insurance or annuity contract relating to any LPC Pension Plan or
LPC Employee Benefit Plan; and (v) each service agreement and other
administrative contract relating to any LPC Pension Plan or LPC Employee Benefit
Plan.
(d) Except as described on SCHEDULE 3.10(D), neither LPC nor
any LPC ERISA Affiliate has ever contributed to any multi-employer pension plan
subject to section 413 of the Code, or multiple welfare arrangement, as defined
in section 3(40) of ERISA.
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(e) There is no violation of ERISA, the Code or other
applicable law with respect to the filing of reports, returns, and other similar
documents required to be filed with any governmental agency with respect to any
LPC Pension Plan or LPC Employee Benefit Plan. All reports, returns or similar
documents required to be distributed to any LPC Pension Plan or LPC Employee
Benefit Plan participant have been timely distributed.
(f) The LPC Pension Plans and LPC Employee Benefit Plans have
been maintained and administered in accordance with their terms and with all
provisions of ERISA, the Code and other applicable Law, and neither LPC nor any
of its subsidiaries or any "party-in-interest" or "disqualified person" with
respect to the LPC Pension Plans and the LPC Employee Benefit Plans has engaged
in a "prohibited transaction" within the meaning of section 4975 of the Code or
section 406 of ERISA. LPC and each LPC ERISA Affiliate has performed all of its
obligations currently required to have been performed under all LPC Pension
Plans and LPC Employee Benefit Plans. No event has occurred that could subject
LPC, any LPC ERISA Affiliate or any LPC Pension Trust or LPC Employee Benefit
Trust, as applicable, to any tax liability arising under section 511 of the Code
that has not been timely paid. LPC and all LPC ERISA Affiliates have complied
with all obligations imposed by section 4980B of the Code.
(g) None of LPC, any trustee, administrator or other fiduciary
has engaged in any transaction or acted in a manner that could, or failed to act
so as to, subject LPC or any fiduciary to any liability for breach of fiduciary
duty under ERISA or other applicable Law. With respect to any LPC Pension Plan
and LPC Employee Benefit Plan, LPC Pension Trust or LPC Employee Benefit Trust,
no insurance contract, annuity contract, or other agreement or arrangement will
impose a penalty, discount, sales charge, or other reduction on account of the
withdrawal of assets from such organization or the change in investment or such
assets.
(h) Except as disclosed on SCHEDULE 3.10(H), there has been no
"reportable event" as that term is defined in section 4043 of ERISA and the
regulations thereunder with respect to the LPC Pension Plans subject to Title IV
of ERISA that would require the giving of notice or any event requiring
disclosure under section 404(c)(3)(C) or 4063(a) of ERISA.
(i) Except as disclosed on SCHEDULE 3.10(I), neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any payment becoming due to
any employee or group of employees; (ii) increase any benefits otherwise payable
under any LPC Employee Benefit Plan or LPC Pension Plan; or (iii) result in the
acceleration of the time of payment or vesting of any such benefits. Except as
disclosed on SCHEDULE 3.10(I), there are no severance agreements, employment
agreements, or consulting agreements between LPC and any
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employee or any individual which provide for payments over a period in excess of
one year or which when aggregated with all such agreements or arrangements
provides for total payments in excess of $100,000. True, correct and complete
copies of all such severance agreements, employment agreements and consulting
agreements have been provided to Parent.
(j) Except as disclosed on SCHEDULE 3.10(J) hereto, no stock
or other security issued by LPC or any of its subsidiaries forms or has formed a
part of the assets of any LPC Pension Plan or LPC Employee Benefit Plan within
the last five years.
(k) Except as disclosed on SCHEDULE 3.20(K), all contributions
to, and payments from, each LPC Pension Plan and LPC Employee Benefit Plan that
have been required to be made in accordance with the terms of such plans and,
when applicable, section 302 of ERISA or section 412 of the Code, have been
timely made; (ii) there has been no application for or waiver of the minimum
funding standards of section 412 of the Code with respect to the LPC Pension
Plan; and (iii) none of the LPC Pension Plans has an "accumulated funding
deficiency" within the meaning of section 412(a) of the Code as of the end of
the most recently completed plan year. As of the most recent valuation date for
each LPC Pension Plan that is a "defined benefit pension plan," as defined in
section 3(35) of ERISA (hereinafter a "Defined Benefit Plan"), there was not any
amount of "unfunded benefit liability." LPC is not aware of any facts or
circumstances that could change the funded status of any such Defined Benefit
Plan. LPC has furnished Parent with the most recent actuarial report or
valuation with respect to each Defined Benefit Plan.
(l) Except as disclosed on SCHEDULE 3.10(L), all premium
payments due to the Pension Benefit Guaranty Corporation pursuant to section
4007 of ERISA prior to the date hereof have been timely paid.
(m) Except as disclosed on SCHEDULE 3.10(M), there are no
investigations by any Governmental Authority, other claims, suits or proceedings
against or involving any LPC Pension Plan or LPC Employee Benefit Plan, and no
events of default that could give rise to liability to LPC or any LPC ERISA
Affiliate.
(n) Except as disclosed on SCHEDULE 3.10(N), no employee or
former employee of LPC or any LPC ERISA Affiliate is, by reason of such
employee's or former employee's employment, entitled to receive any benefits,
including without limitation, death or medical benefits (whether or not insured)
beyond retirement or other termination of employment, other than (i) death or
retirement benefits under an LPC Pension Plan; or (ii) continuation coverage
pursuant to section 4980B of the Code.
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(o) Except as disclosed on SCHEDULE 3.10(O), neither LPC nor
any of its subsidiaries has incurred, nor, after the Closing, will LPC or the
Parent incur, any liability under Sections 106(b)(1), 162(i)(2) or 4980B of the
Code with respect to any failure to comply by LPC or any of its subsidiaries
with the continuation health care coverage requirements of Section 162(k)/4980B
of the Code and Sections 601 and 608 of ERISA, which failure occurs with respect
to any person who is or was a qualified beneficiary of an Employee (as defined
in Section 162(k)(7)(B)/4980B(g)(1) of the Code).
Section 3.11 TITLE TO PROPERTY. LPC and each Subsidiary have
good and marketable title, or valid leasehold rights (in the case of leased
property), to all real property and all personal property owned or leased by
them or used by them in the operation of their respective businesses, free and
clear of all encumbrances, excluding (i) liens for taxes, fees, levies, imposts,
duties or governmental charges of any kind which are not yet delinquent or are
being contested in good faith by appropriate proceedings which suspend the
collection thereof; (ii) liens for mechanics, materialmen, laborers, employees,
suppliers or other which are not yet delinquent or are being contested in good
faith by appropriate proceedings; (iii) liens created in the ordinary course of
business in connection with the leasing or financing of office, computer and
related equipment and supplies; (iv) easements and similar encumbrances
ordinarily created for fuller utilization and enjoyment of property; and (v)
liens or defects in title or leasehold rights that either individually or in the
aggregate do not and will not have an LPC Material Adverse Effect. All of such
owned or leased property with a value in excess of $10,000 is listed on SCHEDULE
3.11 hereto, as well as a brief description of each such property, which if
leased shall include the termination date and the conditions of renewal of such
lease.
Section 3.12 TRADEMARKS, PATENTS AND COPYRIGHTS. SCHEDULE 3.12
hereto sets forth all patents, trademarks, copyrights, service marks and trade
names, all applications for any of the foregoing, and all permits, grants and
licenses or other rights running to or from LPC or any Subsidiary relating to
any of the foregoing ("LPC Rights"). There are no other patents, trademarks,
copyrights, service marks or trade names which are material to the business of
LPC or any Subsidiary as presently conducted. To the best of their knowledge,
LPC and each Subsidiary have the right to use, free and clear of any claims or
rights of others, all trade secrets, know-how, processes, technology, blue
prints and designs utilized in or incident to its business as presently
conducted ("Trade Secrets") and such use does not infringe on any patent,
trademark, copyright, service mark or trade name. Except as set forth on
SCHEDULE 3.12 hereto, LPC nor any Subsidiary has received notice of any
adversely held patent, invention, trademark, copyright, service mark or trade
name of any other person or notice of any claim of any other person relating to
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any of the LPC Rights set forth on SCHEDULE 3.12 hereto or any Trade Secret of
LPC or any Subsidiary and neither LPC nor any Subsidiary know of any basis for
any such charge or claim. All Trade Secrets are protected against the use of
such Trade Secrets by other persons to an extent and in a manner customary in
the industries in which LPC operates. To the best of their knowledge, there is
no present or threatened use or encroachment of any Trade Secret which could
result in an LPC Material Adverse Effect.
Section 3.13 LEGAL PROCEEDINGS, CLAIMS, INVESTIGATIONS, ETC.
Except as set forth on SCHEDULE 3.13, there is no legal, administrative,
arbitration or other action or proceeding or governmental investigation pending,
or to the knowledge of LPC, threatened, against LPC, any Subsidiary, or any
director, officer or any employee of LPC or any Subsidiary relating to the
business of LPC or any Subsidiary. Neither LPC nor any Subsidiary have been
informed of any violation of or default under, any laws, ordinances,
regulations, judgments, injunctions, orders or decrees (including without
limitation, any immigration laws or regulations) of any court, governmental
department, commission, agency, instrumentality or arbitrator applicable to the
business of LPC or any Subsidiary. Neither LPC nor any Subsidiary is currently
subject to any material judgment, order, injunction or decree of any court,
arbitral authority, administrative agency or other governmental authority.
Section 3.14 INSURANCE. SCHEDULE 3.14 hereto sets forth a list
and brief description of all existing insurance policies maintained by LPC and
each Subsidiary pertaining to their respective business properties, personnel or
assets. Neither LPC nor any Subsidiary is in default with respect to any
provision contained in any insurance policy, and has not failed to give any
notice or present any claim under any insurance policy in due and timely
fashion. Except as set forth on SCHEDULE 3.14 hereto, all such policies shall
have been delivered prior to the Closing to the Parent and are in full force and
effect. All payments with respect to such policies are current and neither LPC
nor any Subsidiary has received any notice threatening a suspension, revocation,
modification or cancellation of any such policy.
Section 3.15 MATERIAL CONTRACTS. (a) Except as set forth in
SCHEDULE 3.15 hereto, neither LPC nor any Subsidiary is a party to and is bound
by any contract or has any commitment (including contracts or commitments
pertaining to employment), whether written or oral which has a term in excess of
one year and will result in payments in excess of $10,000 or require material
performance on the part of LPC or any such Subsidiary. Each of the contracts and
commitments set forth in SCHEDULE 3.15 hereto and each of the other material
contracts and commitments to which LPC and each Subsidiary is a party, is valid
and existing, in full force and effect and enforceable in accordance with its
terms (subject to laws affecting creditors' rights and equitable
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principles) and there is no material default or claim of default against LPC or
any Subsidiary or any notice of termination with respect thereto. To the extent
required thereby, LPC and each Subsidiary have complied in all material respects
with all requirements of, and performed all of its obligations under, such
contracts and commitments. In addition, no other party to any such contract or
commitment is, to the best of LPC's knowledge, in default under or in breach of
any material term or provision thereof, and there exists no condition or event
which, after notice or lapse of time or both, would constitute a material
default by any party to any such contract or commitment. Copies of all the
written documents and a synopsis of all oral contracts and commitments described
in SCHEDULE 3.15 hereto have heretofore been made available to the Parent and
are true and complete and include all amendments and supplements thereto and
modifications thereof to and including the date hereof.
(b) Except as set forth in SCHEDULE 3.15 hereto, neither LPC
nor any Subsidiary is a party to any oral or written (i) agreement with any
consultant, executive officer or other key employee the benefits of which are
contingent, or the terms of which are materially altered, upon the occurrence of
the transactions contemplated by this Agreement, or (ii) agreement or plan,
including any stock option plan and the like, any of the benefits of which will
be increased, or the vesting of the benefits of which will be accelerated, by
the occurrence of the transactions contemplated by this Agreement.
Section 3.16 CERTAIN TRANSACTIONS. Except for the Employment
Agreements and except as set forth in SCHEDULE 3.16 hereto, neither LPC, nor any
Subsidiary, nor any officer, director or any employee of LPC or any Subsidiary,
nor any member of any such person's immediate family is presently a party to any
material transaction with LPC or any Subsidiary relating to the business of LPC
or any Subsidiary, including without limitation, any contract, agreement or
other arrangement (i) providing for the furnishing of services by, (ii)
providing for the rental of real or personal property from, or (iii) otherwise
requiring payments to (other than for services as officers, directors or
employees of LPC or any Subsidiary), any such person or any corporation,
partnership, trust or other entity in which any such person has a substantial
interest as a stockholder, officer, director, trustee or partner.
Section 3.17 INVENTORY. All inventory of LPC and each
Subsidiary, reflected in the Balance Sheets, consists of a quality and quantity
usable and salable in the ordinary course of business except to the extent
reflected therein. The quantities of all inventory of LPC and each Subsidiary
are reasonable for its business and consistent with past practice.
Section 3.18 RECEIVABLES. All Accounts Receivable of LPC
reflected on the Balance Sheets and which continue to be
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outstanding, and all Accounts Receivable arising subsequent to the date of such
Balance Sheets, represent good and valid Accounts Receivable which arose in the
ordinary course of LPC's business.
Section 3.19 BROKER. No broker, finder or investment banker is
entitled to any brokerage or finder's fee or other commission in connection with
the transactions contemplated hereby based on the arrangements made by or on
behalf of LPC or the LPC Stockholders.
Section 3.20 ENVIRONMENTAL MATTERS. (a) Neither LPC nor any
Subsidiary is the subject of, or, to their knowledge, being threatened to be the
subject of (i) any enforcement proceeding, or (ii) any investigation, brought in
either case under any Federal, state or local environmental law, rule,
regulation, or ordinance at any time in effect or (iii) any third party claim
relating to environmental conditions on or off the properties of LPC or any
Subsidiary. Neither LPC nor any Subsidiary has been notified that it must obtain
any permits and licenses or file documents for the operation of its business
under federal, state and local laws relating to pollution protection of the
environment. Except as set forth in SCHEDULE 3.20 hereto, neither LPC nor any
Subsidiary has been notified of any conditions on or off the properties of LPC
or any Subsidiary which will give rise to any liabilities of LPC or any
Subsidiary, under any Federal, state or local environmental law, rule,
regulation or ordinance, or as the result of any claim of any third party. For
the purposes of this Section 3.20, an investigation shall include, but is not
limited to, any written notice received by LPC or any Subsidiary which relates
to the onsite or offsite disposal, release, discharge or spill of any waste,
waste water, pollutant or contaminants.
(b) Except as set forth in SCHEDULE 3.20 hereto, there are no
toxic wastes or other toxic or hazardous substances or materials, pollutants or
contaminants which LPC or any Subsidiary (or, to the best of LPC's knowledge,
any previous occupant of LPC's or any Subsidiary's facilities) has used, stored
or otherwise held in or on any of the facilities of LPC or any Subsidiary,
which, are present at or have migrated from the facilities, whether contained in
ambient air, surface water, groundwater, land surface or subsurface strata. The
facilities have been maintained by LPC and each Subsidiary in material
compliance with all environmental protection, occupational, health and safety or
similar laws, ordinances, restrictions, licenses, and regulations. Neither LPC
nor any Subsidiary has disposed of or arranged (by contract, agreement or
otherwise) for the disposal of any material or substance that was generated or
used by LPC or any Subsidiary at any off-site location that has been or is
listed or proposed for inclusion on any list promulgated by any Governmental
Authority for the purpose of identifying sites which pose a danger to health and
safety. To the best of the knowledge of LPC and each Subsidiary, there have been
no environmental studies, reports and analyses made
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or prepared in the last five years relating to the facilities of LPC or any
Subsidiary. Neither LPC nor any Subsidiary has installed any underground storage
tanks in any of its facilities and, to the best of LPC's knowledge, none of such
facilities contain any underground storage tanks.
Section 3.21 ILLEGAL PAYMENTS. Neither LPC nor any Subsidiary
has, directly or indirectly, paid or delivered any fee, commission or other sum
of money or item of property, however characterized, to any finder, agent,
government official or other party, in the United States or any other country,
which is in any manner related to the business or operations of LPC, which LPC
knows or has reason to believe to have been illegal under any federal, state or
local laws or the laws of any other country having jurisdiction. Neither LPC nor
any Subsidiary has participated, directly or indirectly, in any boycotts
affecting any of its actual or potential customers.
Section 3.22 COMPLIANCE WITH LAW. LPC and each Subsidiary have
complied in all material respects with all laws, rules, regulations, arbitral
determinations, orders, writs, decrees and injunctions which are applicable to
or binding upon LPC and each Subsidiary or their properties, except where such
failure would not cause an LPC Material Adverse Effect.
Section 3.23 BUSINESS RELATIONSHIPS. Although there can be no
assurance that such relationships or arrangements will continue, neither LPC nor
any Subsidiary have any material business relationship or arrangements of any
nature whatsoever which it knows or has reason to believe will not be available
to LPC or any Subsidiary, following the consummation of the transactions
contemplated hereby, on substantially the same terms or conditions as they are
currently available to LPC and each such Subsidiary.
Section 3.24 SUPPLIERS AND CUSTOMERS. Except as set forth in
SCHEDULE 3.24, no material supplier or customer of LPC or any Subsidiary has
during the past twelve months cancelled or otherwise terminated its services or
supplies to LPC nor any Subsidiary or its use or purchase of LPC's or any
Subsidiary's products or services, as the case may be, or has communicated any
threat to LPC's or any Subsidiary's management to do so. Neither LPC nor any
Subsidiary has knowledge that any material supplier or customer intends to
cancel or otherwise terminate its relationship with LPC or any Subsidiary or the
usage or purchase of the products of LPC or any Subsidiary or that the
transactions contemplated by this Agreement will result in any such termination.
Notwithstanding the foregoing, LPC has completed projects during the past 12
months which will not be renewed.
Section 3.25 FULL DISCLOSURE. All schedules and annexes to
this Agreement (collectively, "Documents") delivered by or on behalf of LPC or
any Subsidiary pursuant to this Agreement
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are true and complete in all material respects and are authentic. No
representation or warranty of LPC or the LPC Stockholders contained in this
Agreement, and no Document furnished by or on behalf of LPC, any Subsidiary or
the LPC Stockholders to the Parent pursuant to this Agreement, contains an
untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements made, in the context in
which made, not materially false or misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE LPC STOCKHOLDERS
Each LPC Stockholder individually hereby represents and
warrants to the Parent, with respect to such LPC Stockholder as follows:
Section 4.1 CAPITALIZATION. Each LPC Stockholder owns the
number of shares of LPC Common Stock as set forth next to his name under the
column "LPC Shares Held" on SCHEDULE 1.7 hereto, free and clear of all liens,
claims or encumbrances. Each LPC Stockholder has full right, power, legal
capacity and authority to transfer and deliver the Shares pursuant to this
Agreement.
Section 4.2 AUTHORITY RELATIVE TO AND VALIDITY OF THIS
AGREEMENT. This Agreement and the Registration Rights Agreement (the
"Registration Rights Agreement", and together with this Agreement, the "LPC
Stockholders' Agreements") have been duly executed and delivered by each of the
LPC Stockholders and constitute the legal, valid and binding obligations of such
LPC Stockholder, enforceable in accordance with their terms, except (i) as such
enforceability may be limited by or subject to any bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally, (ii) as such obligations are subject to general principles of equity
and (iii) as rights to indemnity may be limited by federal or state securities
laws or by public policy. Neither the execution and delivery by the LPC
Stockholder of the LPC Stockholders' Agreements, nor the consummation of the
transactions contemplated thereby, will violate any provision of law, any order
of any court or other agency of government, or any judgment, award or decree or
any indenture, agreement or other instrument to which each LPC Stockholder is a
party, or by which he or any of his properties or assets is bound or affected,
or result in a breach of or constitute (with due notice or lapse of time or
both) a default under any such indenture, agreement or other instrument, or
result in the creation or imposition of any lien, charge or encumbrance of any
nature whatsoever upon any of the properties or assets of such LPC Stockholder.
Section 4.3 BROKERS' OR FINDERS' FEES. All negotiations
relative to the LPC Stockholders' Agreements and the
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transactions contemplated hereby have been carried out by the LPC Stockholders
directly with Acquisition Corp. and the Parent, without the intervention of any
person on behalf of the LPC Stockholders in such manner as to give rise to any
claim by any person against Acquisition Corp. or the Parent for a finder's fee,
brokerage commission or similar payment.
Section 4.4 LPC STOCKHOLDERS' ADDRESSES, ACCESS TO
INFORMATION, EXPERIENCE, ETC.
(a) The address set forth on the signature pages of this
Agreement is each LPC Stockholder's true and correct business, residence or
domicile address. Each LPC Stockholder has received and read and is familiar
with the LPC Stockholders' Agreements. Each LPC Stockholder has had an
opportunity to ask questions of and receive answers from representatives of the
Parent concerning the terms and conditions of this transaction. Each LPC
Stockholder has substantial experience in evaluating non-liquid investments such
as the Merger Consideration and is capable of evaluating the merits and risks of
an investment in the Parent.
(b) Each LPC Stockholder acknowledges that he has had an
opportunity to evaluate all information regarding the Parent as he has deemed
necessary or desirable in connection with the transactions contemplated by this
Agreement, has independently evaluated the transactions contemplated by this
Agreement and has reached his own decision to enter into this Agreement.
Section 4.5 PURCHASE ENTIRELY FOR OWN ACCOUNT. The Merger
Consideration to be received by each LPC Stockholder pursuant to the terms
hereof will be acquired for investment for each Seller's own account, not as a
nominee or agent, and not with a view to the resale or distribution of any part
thereof. The LPC Stockholders each have no present plan or arrangement to
dispose of the Merger Consideration in any manner.
Section 4.6 RESTRICTED SECURITIES. Each LPC Stockholder
understands that the Merger Consideration he is receiving is characterized as
"restricted securities" under the federal securities laws inasmuch as they are
being acquired in a transaction not involving a public offering and that under
such laws and applicable regulations such securities may be resold without
registration under the Securities Act of 1933, as amended (the "Securities Act")
only in certain limited circumstances. In this regard, each LPC Stockholder
represents that he is familiar with Rule 144 promulgated under the Securities
Act ("Rule 144"), as presently in effect, and understands the resale limitations
imposed thereby and by the Securities Act.
Section 4.7 LEGENDS. It is understood that the certificates
evidencing the Parent Common Shares and the Parent Preferred Shares may bear a
legend substantially as follows:
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"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE AND MAY NOT
BE TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER THE
ACT SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO AND THEY
SHALL HAVE BEEN REGISTERED OR QUALIFIED FOR SALE UNDER THE
APPROPRIATE STATE SECURITIES LAWS OR (II) IN THE OPINION OF
COUNSEL TO THE CORPORATION, REGISTRATION AND QUALIFICATION
UNDER THE ACT AND THE SECURITIES LAWS OF THE APPROPRIATE STATE
IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER."
The legend referred to above shall be removed by the Parent
from any certificate at such time as the holder of the shares represented by the
certificate delivers an opinion of counsel reasonably satisfactory to the Parent
to the effect that such legend is not required in order to establish compliance
with any provisions of the Securities Act, or at such time as the holder of such
shares satisfies the requirements of Rule 144(k) under the Securities Act,
provided that the Parent has received from the holder a written representation
that (i) such holder is not an affiliate of the Parent and has not been an
affiliate of the Parent during the preceding three (3) months, (ii) such holder
has beneficially owned the shares represented by the certificate for a period of
at least three (3) years or such shorter period as required by Rule 144(k), and
(iii) such holder otherwise satisfies the requirements of Rule 144(k) as then in
effect with respect to such shares.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF
ACQUISITION CORP. AND THE PARENT
Acquisition Corp. and the Parent hereby represent and warrant
to LPC and the LPC Stockholders as follows:
Section 5.1 CORPORATE ORGANIZATION; REQUISITE AUTHORITY TO
CONDUCT BUSINESS; ARTICLES OF INCORPORATION AND BY- LAWS. Each of Acquisition
Corp. and the Parent is a corporation duly organized, validly existing and in
good standing under the laws of the State of Florida and the State of New York,
respectively. Each of Acquisition Corp. and the Parent have provided LPC with
true and complete copies of their respective articles of incorporation
(certified by the appropriate public official in the jurisdiction of
incorporation) and By-laws (certified by the Secretary of Acquisition Corp. and
the Parent) as in effect on the date hereof. Acquisition Corp. and the Parent
have all corporate power and authority to own, operate and lease their
properties and to carry on their respective businesses as the same are now being
conducted, and are duly qualified or licensed to do business and are in good
standing as foreign corporations in
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every jurisdiction in which the conduct of their business or the ownership or
leasing of their respective properties requires them to be so qualified or
licensed, except where the failure to be so qualified or licensed, individually
or in the aggregate, will not have a material adverse effect on the business,
properties, prospects, assets, liabilities, financial condition or operations of
Acquisition Corp. and the Parent, taken as a whole (a "Material Adverse
Effect"). Each of Acquisition Corp. and the Parent has full corporate power and
authority to enter into this Agreement and the Parent has full corporate power
and authority to enter into the Registration Rights Agreement (together with
this Agreement, the "Parent's Agreements") to perform their respective
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby; and each of the Parent's Agreements has been
duly authorized and approved by the Board of Directors of the Parent and no
further action on its part or on the part of its shareholders is necessary to
authorize the execution and delivery by it of, and the performance of its
obligations under, the Parent's Agreements. In addition, this Agreement has been
duly authorized and approved by the Board of Directors of Acquisition Corp.
There are no corporate, contractual, statutory or other restrictions of any kind
upon the power and authority of Acquisition Corp. or the Parent to execute and
deliver this Agreement and the Parent's Agreements, respectively and to
consummate the transactions contemplated hereunder and thereunder and no action,
waiver or consent by any Governmental Authority is necessary to make this
Agreement and the Parent's Agreements valid instruments binding upon Acquisition
Corp. and the Parent, respectively, in accordance with their respective terms.
Section 5.2 EXECUTION AND DELIVERY. Acquisition Corp. and the
Parent are not required to submit any notice, report or other filing with any
Governmental Authority in connection with the execution, delivery or performance
of this Agreement and the Parent's Agreements, respectively. This Agreement has
been duly executed and delivered by Acquisition Corp. and the Parent and
constitutes the legal, valid and binding obligations of Acquisition Corp. and
the Parent, enforceable against Acquisition Corp. and the Parent in accordance
with its terms, except (i) as such enforceability may be limited by or subject
to any bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally, (ii) as such obligations are subject to
general principles of equity and (iii) as rights to indemnity may be limited by
federal or state securities laws or by public policy.
Section 5.3 STOCKHOLDER APPROVAL OF MERGER. The Parent, the
sole stockholder of Acquisition Corp. has voted to approve this Agreement and
the transactions contemplated hereby and no approval of the shareholders of
Parent is required to approve this Agreement and the transactions contemplated
hereby.
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Section 5.4 NO CONFLICTS; ABSENCE OF DEFAULTS. The execution,
delivery and performance of this Agreement and the Parent's Agreements by
Acquisition Corp. and the Parent, respectively and the consummation of the
transactions contemplated hereby and thereby does not and will not conflict with
or violate (a) the Certificate of Incorporation or By-laws of Acquisition Corp.
or the Parent or (b) any agreement governing the organization, management,
business or affairs of Acquisition Corp. or the Parent or, in any material
respect, any agreement or instrument to which Acquisition Corp. or the Parent
may be a party or by which the Parent (or any of their respective properties) is
bound, or (c) any material law, administrative regulation or rule or court
order, judgment or decree applicable to Acquisition Corp. or the Parent; nor
will the execution and delivery of this Agreement or the consummation of the
transaction contemplated hereby constitute a material breach of, or any event of
default under, any material contract or agreement to which the Acquisition Corp.
or the Parent is bound, or by which Acquisition Corp. or the Parent (or any of
their respective properties) may be bound or affected.
Section 5.5 INVESTMENT. (a) Acquisition Corp. is acquiring the
Shares solely for its own account as an investment and not with a view to any
distribution or resale thereof within the meanings of such terms under the
Securities Act.
(b) Each of Acquisition Corp. and the Parent acknowledges that
it has had an opportunity to evaluate all information regarding LPC as it has
deemed necessary or desirable in connection with the transactions contemplated
by this Agreement, has independently evaluated the transactions contemplated by
this Agreement and has reached its own decision to enter into this Agreement.
Each of Acquisition Corp. and the Parent has received and read and is familiar
with the LPC Stockholders' Agreements. Each of Acquisition Corp. and the Parent
has had an opportunity to ask questions of and receive answers from
representatives of LPC and the LPC Stockholders concerning the terms and
conditions of this transaction. Each of Acquisition Corp. and the Parent has
substantial experience in evaluating non-liquid investments and is capable of
evaluating the merits and risks of an investment in LPC.
Section 5.6 CAPITALIZATION. The authorized capital stock of
the Parent consists of (i) 20,000,000 shares of Common Stock and (ii) 3,000,000
shares of preferred stock, par value $.01 per share, none of which are issued
and outstanding. As of September 30, 1996, 7,200,655 shares of Parent Common
Stock are issued and outstanding. The capital stock of the Parent is duly
authorized and all issued capital stock has been duly and validly issued and is
fully paid and nonassessable and free of preemptive rights. Except as set forth
on SCHEDULE 5.6, the Parent does not have outstanding, and is not bound by or
subject to, any subscription, option, warrant, call, right, contract,
commitment,
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agreement, understanding or arrangement to issue any additional shares of
capital stock of the Parent, including any right of conversion or exchange under
any outstanding security or other instrument, and no shares are reserved for
issuance for any purpose.
Section 5.7 SEC REPORTS AND FINANCIAL STATEMENTS. The Parent
has filed with the Securities and Exchange Commission (the "SEC"), and has
heretofore made available to the LPC Stockholders true and complete copies of
all forms, reports, schedules, statements and other documents required to be
filed by it under the Securities Act and the Securities and Exchange Act of
1934, as amended (the "Exchange Act") (as such documents have been amended or
supplemented since the time of their filing, collectively, the "SEC Reports").
As of their respective dates, the SEC Reports (including without limitation, any
financial statements or schedules included therein) (a) did not contain any
untrue statement of a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading, and (b) complied in all material respects
with the applicable requirements of the Securities Act and Exchange Act (as the
case may be) and all applicable rules and regulations of the SEC promulgated
thereunder. Each of the consolidated financial statements included in the SEC
Reports has been prepared from, and are in accordance with, the books and
records of the Parent, comply in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto, have been prepared in accordance with U.S. GAAP applied on
a consistent basis during the periods involved (except as may be indicated in
the notes thereto) and fairly present in all material respects the consolidated
results of operations and cash flows (and changes in financial position, if any)
of the Parent as at the dates thereof or for the periods presented therein.
Section 5.8 NO UNDISCLOSED LIABILITIES. Except as described in
the SEC Reports, the Parent has no debts, liabilities or obligations of any
kind, whether liquidated, unliquidated, direct, accrued, absolute, contingent or
otherwise, whether due or to become due, except as incurred in the ordinary
course of business, that would have a material adverse effect on the Parent.
Section 5.9 BROKER. Other than with respect to a fee required
to be paid to Resource Holdings Associates, L.P. in connection with the
transactions contemplated hereunder, which fee will be borne by Parent
exclusively, no broker, finder or investment banker is entitled to any brokerage
or finder's fee or other commission in connection with the transactions
contemplated hereby based upon the arrangements made by or on behalf of
Acquisition Corp. or the Parent.
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Section 5.10 AUTHORITY RELATIVE TO AND VALIDITY OF THIS
AGREEMENT. Each of Acquisition Corp. and Parent has full corporate power and
authority to execute and deliver this Agreement and to assume and perform all of
its obligations hereunder. The execution and delivery of the this agreement by
Acquisition Corp. and Parent and the performance by Acquisition Corp. and Parent
of their obligations hereunder have been duly authorized by their Boards of
Directors and no further authorization on the part of Acquisition Corp. and
Parent or their shareholders is necessary to authorize the execution and
delivery by them of, and the performance of their obligations under, this
Agreement. There are no corporate, contractual, statutory or other restrictions
of any kind upon the power and authority of Acquisition Corp. and Parent to
execute and deliver this Agreement and to consummate the transactions
contemplated hereunder and no action, waiver or consent by any governmental
authority is necessary to make this Agreement a valid instrument binding upon
Acquisition Corp. and Parent in accordance with its terms. This Agreement has
been duly executed and delivered by Acquisition Corp. and Parent and constitutes
a valid and binding obligation of Acquisition Corp. and Parent, enforceable in
accordance with its terms, except (i) as such enforceability may be limited by
or subject to any bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally, (ii) as such obligations are
subject to general principles of equity and (iii) as rights to indemnity may be
limited by federal or state securities laws or by public policy.
Section 5.11 REQUIRED FILINGS AND CONSENTS; NO CONFLICT.
Neither Acquisition Corp. nor Parent is required to submit any notice, report or
other filing with any Governmental Authority in connection with the execution,
delivery or performance of this Agreement. The execution, delivery and
performance of this Agreement by Acquisition Corp. and Parent and the
consummation of the transactions contemplated hereby do not and will not (a)
conflict with or violate any law, regulation, judgment, order or decree binding
upon Acquisition Corp. or Parent, (b) conflict with or violate any provision of
their articles of incorporation or Bylaws, or (c) conflict with or result in a
breach of any condition or provision of, or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
result in the creation or imposition of any lien, charge or encumbrance upon any
properties or assets of Acquisition Corp. or Parent pursuant to, or cause or
permit the acceleration prior to maturity of any amounts owing under, any
indenture, loan agreement, mortgage, deed of trust, lease, contract, license,
franchise or other agreement or instrument to which Acquisition Corp. or Parent
is a party or which is or purports to be binding upon Acquisition Corp. or
Parent or by which any of their respective properties are bound, except for
conflicts, breaches, defaults, events of default or impositions that would not
have a Material Adverse Effect. The execution, delivery and performance of this
Agreement by
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Acquisition Corp. and Parent and the consummation of the transactions
contemplated hereby and thereby will not result in the loss of any license,
franchise, legal privilege or permit possessed by Acquisition Corp. or Parent or
give a right of termination to any party to any agreement or other instrument to
which Acquisition Corp. or Parent is a party or by which any of their respective
properties are bound, except for losses or rights of termination that would not
have a Material Adverse Effect.
Section 5.12 ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as
set forth in SCHEDULE 5.12, since October 1, 1996, there has not been, with
respect to the Parent, (i) any change or event that has caused a Material
Adverse Effect; (ii) any strike, picketing, work slowdown or labor disturbance;
(iii) any material damage, destruction or loss (whether or not covered by
insurance) with respect to any assets or properties; (iv) any redemption or
other acquisition by it of Parent Common Stock or any declaration or payment of
any dividend or other distribution in cash, stock or property with respect
thereto; (v) any entry into any material commitment or transaction (including,
without limitation, any borrowing or capital expenditure) other than in the
ordinary course of business or as contemplated by this Agreement; (vi) any
transfer, assignment or sale of, or rights granted under, any material leases,
licenses, agreements, patents, trademarks, trade names, copyrights or other
assets other than those transferred, assigned, sold or granted in the ordinary
course of business and consistent with past practice; (vii) any mortgage,
pledge, security interest or imposition of any other encumbrance on any assets
or properties except in the ordinary course of business; any payment of any
debts, liabilities or obligations ("Liabilities") of any kind other than
Liabilities currently due; (viii) any cancellation of any debts or claims or
forgiveness of amounts owed to Parent; or (ix) any change in accounting
principles or methods (except insofar as may have been required by a change in
U.S. GAAP). Except as set forth in SCHEDULE 5.12, since October 1, 1996, Parent
has conducted its business only in the ordinary course and in a manner
consistent with past practice and has not made any material change in the
conduct of its business or operations except as agreed to in writing by LPC or
otherwise disclosed herein.
Section 5.13 TAXES AND TAX RETURNS. (a) For purposes of this
Agreement, (i) the term "Taxes" shall mean all taxes, charges, fees, levies or
other assessments, including, without limitation, income, gross receipts,
excise, property, sales, license, payroll and franchise taxes, imposed by the
United States, or any state, local or foreign government or subdivision or
agency thereof whether computed on a unitary, combined or any other basis; and
such term shall include any interest and penalties or additions to tax; and (ii)
the term "Tax Return" shall mean any report, return or other information
required to be filed with, supplied to or otherwise made available to a taxing
authority in connection with Taxes.
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(b) Parent has (i) duly filed with the appropriate taxing
authorities all Tax Returns required to be filed by or with respect to Parent,
or are properly on extension and all such duly filed Tax Returns are true,
correct and complete in all material respects, and (ii) paid in full or made
adequate provisions for on its Balance Sheet (in accordance with GAAP) all Taxes
shown to be due on such Tax Returns. There are no liens for Taxes upon the
assets of Parent for statutory liens for current Taxes not yet due and payable
or which may thereafter be paid without penalty or are being contested in good
faith. Parent has not received any notice of audit, is, to its knowledge,
undergoing any audit of its Tax Returns, or has received any notice of
deficiency or assessment from any taxing authority with respect to liability for
Taxes of Parent which has not been fully paid or finally settled. There have
been no waivers of statutes of limitations by Parent with respect to any Tax
Returns which relate to Parent, as the case may be. Parent has not filed a
request with the Internal Revenue Service for changes in accounting methods
within the last two years which change would effect the accounting for tax
purposes, directly or indirectly, of Parent.
Section 5.14 EMPLOYEE BENEFIT PLANS. SCHEDULE 5.14 hereto
comprises a listing of each bonus, stock option, stock purchase, benefit, profit
sharing, savings, retirement, liability, insurance, incentive, deferred
compensation, and other similar fringe or employee benefit plans, programs or
arrangements for the benefit of or relating to, any employee of, or independent
contractor or consultant to, and all other compensation practices, policies,
terms or conditions, whether written or unwritten (the "Parent Employee Plans")
which Parent presently maintains, to which Parent presently contributes or under
which Parent has any liability and which relate to employees or independent
contractors of Parent. The Parent Employee Plans administered by Parent have
been administered in all material respects in accordance with all requirements
of applicable law and terms of each such plan. Each Parent Employee Plan that is
required or intended to be qualified under applicable law or registered or
approved by a governmental agency or authority, has been so qualified,
registered or approved by the appropriate governmental agency or authority and,
to the best of Parent's knowledge, nothing has occurred since the date of the
last qualification, registration or approval to adversely affect, or cause, the
appropriate governmental agency or authority to revoke such qualification,
registration or approval. All contributions (including premiums) in material
amounts required by law or contract to have been made or accrued by Parent or
any such Subsidiary under or with respect to any Parent Employee Plan have been
paid or accrued by Parent, as the case may be. Without limiting the foregoing,
there are no material unfunded liabilities under any Parent Employee Plan.
Neither Parent has received notice of any investigation, litigation or other
enforcement action against Parent with respect to any of the Parent Employee
Plans. There are no pending actions, suits or claims by former or present
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employees of Parent (or their beneficiaries) with respect to Parent Employee
Plans or the assets or fiduciaries thereof (other than routine claims for
benefits).
(a) Each "employee pension benefit plan," as defined in
section 3(2) of ERISA, maintained by Parent or any of its subsidiaries or any
trade or business (whether or not incorporated) which is under common control,
or which is treated as a single employer, with Parent or any of its subsidiaries
under section 414(b), (c), (m) or (o) of the Code ("Parent ERISA Affiliate") or
to which Parent or any Parent ERISA Affiliate contributed or is obligated to
contribute thereunder (the "Parent Pension Plans"), is listed on SCHEDULE
5.14(A). All such plans that are intended to qualify under section 401 ET SEQ.
of the Code do so qualify, the trusts maintained pursuant thereto (the "Parent
Pension Trusts") that are intended to be exempt from federal income taxation
under section 501 of the Code are so exempt, and Parent has received a
determination letter from the IRS with respect to each such Parent Pension Plan
and each such Parent Pension Trust to the effect that such Parent Pension Plan
is qualified and such Parent Pension Trust is exempt. No such determination
letter has been revoked, no revocation has been threatened and nothing has
occurred with respect to the operation of any Parent Pension Plan that could
reasonably be expected to cause such revocation. Except as described on SCHEDULE
5.14(A), none of the Parent Pension Plans or Parent Pension Trusts have been
amended since the effective date of each respective determination letter.
(b) Each "employee welfare benefit plan," as defined in
section 3(1) of ERISA, each other employee benefit arrangement or payroll
practice, including, without limitation, all severance pay, sick leave, vacation
pay, salary continuation for disability, retirement, deferred compensation,
bonus, long-term incentive, stock option, stock purchase, hospitalization,
medical insurance, life insurance, and scholarship plans or programs maintained
by Parent or any of its subsidiaries or to which Parent or any of its
subsidiaries contributed or is obligated to contribute thereunder (all such
plans being hereinafter referred to as the "Parent Employee Benefit Plans") and
each trust maintained pursuant to an Parent Employee Benefit Plan (the "Parent
Benefit Trusts") is listed on SCHEDULE 5.14(B). Parent has received a
determination letter from the IRS with respect to each Parent Employee Benefit
Trust that is intended to be exempt from federal taxation under section 501 of
the Code. No such determination letter has been revoked, no revocation has been
threatened, and nothing has occurred with respect to the operation of any Parent
Employee Benefit Trust that could reasonably be expected to cause such
revocation. Except as described on SCHEDULE 5.14(B), none of the Parent Employee
Benefit Trusts have been amended since the effective date of each respective
determination letter.
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(c) Parent has delivered to LPC (i) a true, correct, and
complete copy of each Parent Pension Plan, including copies of all amendments
made since the most recent favorable determination letter, or Parent Employee
Benefit Plan, or, in the case of any unwritten Parent Employee Benefit Plan,
descriptions thereof; (ii) copies of the three most recent annual reports (Form
5500 series) filed with the IRS with respect to each Parent Pension Plan or
Parent Employee Benefit Plan for which such report is required by applicable
law, including, without limitation, all schedules thereto and all financial
statements with attached opinions of independent accountants; (iii) the most
recent summary plan description for each Parent Pension Plan or Parent Employee
Benefit Plan for which such a summary plan description is required by applicable
Law; (iv) each trust agreement and insurance or annuity contract relating to any
Parent Pension Plan or Parent Employee Benefit Plan; and (v) each service
agreement and other administrative contract relating to any Parent Pension Plan
or Parent Employee Benefit Plan.
(d) Except as described on SCHEDULE 5.14(D), neither Parent
nor any Parent ERISA Affiliate has ever contributed to any multi-employer
pension plan subject to section 413 of the Code, or multiple welfare
arrangement, as defined in section 3(40) of ERISA.
(e) There is no violation of ERISA, the Code or other
applicable law with respect to the filing of reports, returns, and other similar
documents required to be filed with any governmental agency with respect to any
Parent Pension Plan or Parent Employee Benefit Plan. All reports, returns or
similar documents required to be distributed to any Parent Pension Plan or
Parent Employee Benefit Plan participant have been timely distributed.
(f) The Parent Pension Plans and Parent Employee Benefit Plans
have been maintained and administered in accordance with their terms and with
all provisions of ERISA, the Code and other applicable Law, and neither Parent
nor any of its subsidiaries or any "party-in-interest" or "disqualified person"
with respect to the Parent Pension Plans and the Parent Employee Benefit Plans
has engaged in a "prohibited transaction" within the meaning of section 4975 of
the Code or section 406 of ERISA. Parent and each Parent ERISA Affiliate has
performed all of its obligations currently required to have been performed under
all Parent Pension Plans and Parent Employee Benefit Plans. No event has
occurred that could subject Parent, any Parent ERISA Affiliate or any Parent
Pension Trust or Parent Employee Benefit Trust, as applicable, to any tax
liability arising under section 511 of the Code that has not been timely paid.
Parent and all Parent ERISA Affiliates have complied with all obligations
imposed by section 4980B of the Code.
(g) None of Parent, any trustee, administrator or other
fiduciary has engaged in any transaction or acted in a manner that could, or
failed to act so as to, subject Parent or any fiduciary
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to any liability for breach of fiduciary duty under ERISA or other applicable
Law. With respect to any Parent Pension Plan and Parent Employee Benefit Plan,
Parent Pension Trust or Parent Employee Benefit Trust, no insurance contract,
annuity contract, or other agreement or arrangement will impose a penalty,
discount, sales charge, or other reduction on account of the withdrawal of
assets from such organization or the change in investment or such assets.
(h) Except as disclosed on SCHEDULE 5.14(H), there has been no
"reportable event" as that term is defined in section 4043 of ERISA and the
regulations thereunder with respect to the Parent Pension Plans subject to Title
IV of ERISA that would require the giving of notice or any event requiring
disclosure under section 404(c)(3)(C) or 4063(a) of ERISA.
(i) Except as disclosed on SCHEDULE 5.14(I), neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any payment becoming due to
any employee or group of employees; (ii) increase any benefits otherwise payable
under any Parent Employee Benefit Plan or Parent Pension Plan; or (iii) result
in the acceleration of the time of payment or vesting of any such benefits.
Except as disclosed on SCHEDULE 5.14(I), there are no severance agreements,
employment agreements, or consulting agreements between Parent and any employee
or any individual which provide for payments over a period in excess of one year
or which when aggregated with all such agreements or arrangements provides for
total payments in excess of $100,000. True, correct and complete copies of all
such severance agreements, employment agreements and consulting agreements have
been provided to Parent.
(j) Except as disclosed on SCHEDULE 5.14(J) hereto, no stock
or other security issued by Parent or any of its subsidiaries forms or has
formed a part of the assets of any Parent Pension Plan or Parent Employee
Benefit Plan within the last five years.
(k) Except as disclosed on SCHEDULE 5.14(K), all contributions
to, and payments from, each Parent Pension Plan and Parent Employee Benefit Plan
that have been required to be made in accordance with the terms of such plans
and, when applicable, section 302 of ERISA or section 412 of the Code, have been
timely made; (ii) there has been no application for or waiver of the minimum
funding standards of section 412 of the Code with respect to the Parent Pension
Plan; and (iii) none of the Parent Pension Plans has an "accumulated funding
deficiency" within the meaning of section 412(a) of the Code as of the end of
the most recently completed plan year. As of the most recent valuation date for
each Parent Pension Plan that is a "defined benefit pension plan," as defined in
section 3(35) of ERISA (hereinafter a "Defined Benefit Plan"), there was not any
amount of "unfunded benefit liability." Parent is not aware of any facts or
circumstances that could change the funded status of any such Defined Benefit
Plan. Parent has
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furnished Parent with the most recent actuarial report or valuation with respect
to each Defined Benefit Plan.
(l) Except as disclosed on SCHEDULE 5.14(L), all premium
payments due to the Pension Benefit Guaranty Corporation pursuant to section
4007 of ERISA prior to the date hereof have been timely paid.
(m) Except as disclosed on SCHEDULE 5.14(M), there are no
investigations by any Governmental Authority, other claims, suits or proceedings
against or involving any Parent Pension Plan or Parent Employee Benefit Plan,
and no events of default that could give rise to liability to Parent or any
Parent ERISA Affiliate.
(n) Except as disclosed on SCHEDULE 5.14(N), no employee or
former employee of Parent or any Parent ERISA Affiliate is, by reason of such
employee's or former employee's employment, entitled to receive any benefits,
including without limitation, death or medical benefits (whether or not insured)
beyond retirement or other termination of employment, other than (i) death or
retirement benefits under an Parent Pension Plan; or (ii) continuation coverage
pursuant to section 4980B of the Code.
(o) Except as disclosed on SCHEDULE 5.14(O), neither Parent
nor any of its subsidiaries has incurred, nor, after the Closing, will Parent or
the Parent incur, any liability under Sections 106(b)(1), 162(i)(2) or 4980B of
the Code with respect to any failure to comply by Parent or any of its
subsidiaries with the continuation health care coverage requirements of Section
162(k)/4980B of the Code and Sections 601 and 608 of ERISA, which failure occurs
with respect to any person who is or was a qualified beneficiary of an Employee
(as defined in Section 162(k)(7)(B)/4980B(g)(1) of the Code).
Section 5.15 TITLE TO PROPERTY. Except as set forth on
SCHEDULE 5.15, Parent has good and marketable title, or valid leasehold rights
(in the case of leased property), to all real property and all personal property
owned or leased by it or used by it in the operation of its businesses, free and
clear of all encumbrances, excluding (i) liens for taxes, fees, levies, imposts,
duties or governmental charges of any kind which are not yet delinquent or are
being contested in good faith by appropriate proceedings which suspend the
collection thereof; (ii) liens for mechanics, materialmen, laborers, employees,
suppliers or other which are not yet delinquent or are being contested in good
faith by appropriate proceedings; (iii) liens created in the ordinary course of
business in connection with the leasing or financing of office, computer and
related equipment and supplies; (iv) easements and similar encumbrances
ordinarily created for fuller utilization and enjoyment of property; and (v)
liens or defects in title or leasehold rights that either individually or in the
aggregate do
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not and will not have a Material Adverse Effect. All of such owned or leased
property with a value in excess of $10,000 is listed on SCHEDULE 5.15 hereto, as
well as a brief description of each such property, which if leased shall include
the termination date and the conditions of renewal of such lease.
Section 5.16 TRADEMARKS, PATENTS AND COPYRIGHTS. SCHEDULE 5.16
hereto sets forth all patents, trademarks, copyrights, service marks and trade
names, all applications for any of the foregoing, and all permits, grants and
licenses or other rights running to or from Parent relating to any of the
foregoing ("Parent Rights"). There are no other patents, trademarks, copyrights,
service marks or trade names which are material to the business of Parent as
presently conducted. To the best of its knowledge, Parent has the right to use,
free and clear of any claims or rights of others, all trade secrets, know-how,
processes, technology, blue prints and designs utilized in or incident to its
business as presently conducted ("Trade Secrets") and such use does not infringe
on any patent, trademark, copyright, service mark or trade name. Except as set
forth on SCHEDULE 5.16 hereto, Parent has not received notice of any adversely
held patent, invention, trademark, copyright, service mark or trade name of any
other person or notice of any claim of any other person relating to any of the
Parent Rights set forth on SCHEDULE 5.16 hereto or any Trade Secret of Parent
and Parent does not know of any basis for any such charge or claim. All Trade
Secrets are protected against the use of such Trade Secrets by other persons to
an extent and in a manner customary in the industries in which Parent operates.
To the best of their knowledge, there is no present or threatened use or
encroachment of any Trade Secret which could result in a Material Adverse
Effect.
Section 5.17 LEGAL PROCEEDINGS, CLAIMS, INVESTIGATIONS, ETC.
Except as set forth on SCHEDULE 5.17, there is no legal, administrative,
arbitration or other action or proceeding or governmental investigation pending,
or to the knowledge of Parent, threatened, against Parent, or any director,
officer or any employee of Parent relating to the business of Parent. Parent has
not been informed of any violation of or default under, any laws, ordinances,
regulations, judgments, injunctions, orders or decrees (including without
limitation, any immigration laws or regulations) of any court, governmental
department, commission, agency, instrumentality or arbitrator applicable to the
business of Parent. Parent is not currently subject to any material judgment,
order, injunction or decree of any court, arbitral authority, administrative
agency or other governmental authority.
Section 5.18 INSURANCE. SCHEDULE 5.18 hereto sets forth a list
and brief description of all existing insurance policies maintained by Parent
pertaining to its business properties, personnel or assets. Parent is not in
default with respect to any provision contained in any insurance policy, and has
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not failed to give any notice or present any claim under any insurance policy in
due and timely fashion. Except as set forth on SCHEDULE 5.18 hereto, all such
policies shall have been delivered prior to the Closing to Parent and are in
full force and effect. All payments with respect to such policies are current
and Parent has not received any notice threatening a suspension, revocation,
modification or cancellation of any such policy.
Section 5.19 MATERIAL CONTRACTS. (a) Except as set forth in
SCHEDULE 5.19 hereto, Parent is not a party to and is bound by any contract or
has any commitment (including contracts or commitments pertaining to
employment), whether written or oral which has a term in excess of one year and
will result in payments in excess of $10,000 or require material performance on
the part of Parent. Each of the contracts and commitments set forth in SCHEDULE
5.19 hereto and each of the other material contracts and commitments to which
Parent is a party, is valid and existing, in full force and effect and
enforceable in accordance with its terms (subject to laws affecting creditors'
rights and equitable principles) and there is no material default or claim of
default against Parent or any notice of termination with respect thereto. To the
extent required thereby, Parent has complied in all material respects with all
requirements of, and performed all of its obligations under, such contracts and
commitments. In addition, no other party to any such contract or commitment is,
to the best of Parent's knowledge, in default under or in breach of any material
term or provision thereof, and there exists no condition or event which, after
notice or lapse of time or both, would constitute a material default by any
party to any such contract or commitment. Copies of all the written documents
and a synopsis of all oral contracts and commitments described in SCHEDULE 5.19
hereto have heretofore been made available to the LPC and are true and complete
and include all amendments and supplements thereto and modifications thereof to
and including the date hereof.
(b) Except as set forth in SCHEDULE 5.19 hereto, Parent is not
a party to any oral or written (i) agreement with any consultant, executive
officer or other key employee the benefits of which are contingent, or the terms
of which are materially altered, upon the occurrence of the transactions
contemplated by this Agreement, or (ii) agreement or plan, including any stock
option plan and the like, any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence of the
transactions contemplated by this Agreement.
Section 5.20 CERTAIN TRANSACTIONS. Except as set forth in
SCHEDULE 5.20 hereto, neither any officer, director or any employee of Parent,
nor any member of any such person's immediate family is presently a party to any
material transaction with Parent relating to the business of Parent, including
without limitation, any contract, agreement or other arrangement (i) providing
for the furnishing of services by, (ii) providing for the rental of real or
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personal property from, or (iii) otherwise requiring payments to (other than for
services as officers, directors or employees of Parent), any such person or any
corporation, partnership, trust or other entity in which any such person has a
substantial interest as a stockholder, officer, director, trustee or partner.
Section 5.21 ENVIRONMENTAL MATTERS. (a) Parent is not the
subject of, or to its knowledge being threatened to be the subject of (i) any
enforcement proceeding, or (ii) any investigation, brought in either case under
any Federal, state or local environmental law, rule, regulation, or ordinance at
any time in effect or (iii) any third party claim relating to environmental
conditions on or off the properties of Parent. Parent has not been notified that
it must obtain any permits and licenses or file documents for the operation of
its business under federal, state and local laws relating to pollution
protection of the environment. Except as set forth in SCHEDULE 5.21 hereto,
Parent has not been notified of any conditions on or off the properties of
Parent which will give rise to any liabilities of Parent, under any Federal,
state or local environmental law, rule, regulation or ordinance, or as the
result of any claim of any third party. For the purposes of this Section 5.20,
an investigation shall include, but is not limited to, any written notice
received by Parent which relates to the onsite or offsite disposal, release,
discharge or spill of any waste, waste water, pollutant or contaminants.
(b) Except as set forth in SCHEDULE 5.21 hereto, there are no
toxic wastes or other toxic or hazardous substances or materials, pollutants or
contaminants which Parent (or, to the best of Parent's knowledge, any previous
occupant of Parent's facilities) has used, stored or otherwise held in or on any
of the facilities of Parent, which, are present at or have migrated from the
facilities, whether contained in ambient air, surface water, groundwater, land
surface or subsurface strata. The facilities have been maintained by Parent in
material compliance with all environmental protection, occupational, health and
safety or similar laws, ordinances, restrictions, licenses, and regulations.
Parent has not disposed of or arranged (by contract, agreement or otherwise) for
the disposal of any material or substance that was generated or used by Parent
at any off-site location that has been or is listed or proposed for inclusion on
any list promulgated by any Governmental Authority for the purpose of
identifying sites which pose a danger to health and safety. To the best of the
knowledge of Parent, there have been no environmental studies, reports and
analyses made or prepared in the last five years relating to the facilities of
Parent. Parent has not installed any underground storage tanks in any of its
facilities and, to the best of Parent's knowledge, none of such facilities
contain any underground storage tanks.
Section 5.22 ILLEGAL PAYMENTS. Parent has not, directly or
indirectly, paid or delivered any fee, commission or
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other sum of money or item of property, however characterized, to any finder,
agent, government official or other party, in the United States or any other
country, which is in any manner related to the business or operations of Parent,
which Parent knows or has reason to believe to have been illegal under any
federal, state or local laws or the laws of any other country having
jurisdiction. Parent has not participated, directly or indirectly, in any
boycotts affecting any of its actual or potential customers.
Section 5.23 COMPLIANCE WITH LAW. Parent has complied in all
material respects with all laws, rules, regulations, arbitral determinations,
orders, writs, decrees and injunctions which are applicable to or binding upon
Parent or its properties, except where such failure would not cause a Material
Adverse Effect.
Section 5.24 BUSINESS RELATIONSHIPS. Although there can be no
assurance that such relationships or arrangements will continue, Parent has no
material business relationship or arrangements of any nature whatsoever which it
knows or has reason to believe will not be available to Parent, following the
consummation of the transactions contemplated hereby, on substantially the same
terms or conditions as they are currently available to Parent.
Section 5.25 SUPPLIERS AND CUSTOMERS. Except as set forth in
SCHEDULE 5.25, no material supplier or customer of Parent has during the past
twelve months cancelled or otherwise terminated its services or supplies to
Parent or its use or purchase of Parent's products or services, as the case may
be, or has communicated any threat to Parent's management to do so. Parent has
no knowledge that any material supplier or customer intends to cancel or
otherwise terminate its relationship with Parent or the usage or purchase of the
products of Parent or that the transactions contemplated by this Agreement will
result in any such termination. Notwithstanding the foregoing, Parent has
completed projects during the past 12 months which will not be renewed.
Section 5.26 FULL DISCLOSURE. All schedules and annexes to
this Agreement (collectively, "Parent Documents") delivered by or on behalf of
Parent pursuant to this Agreement are true and complete in all material respects
and are authentic. No representation or warranty of Parent contained in this
Agreement, and no Parent Document furnished by or on behalf of Parent to LPC or
the LPC Stockholders pursuant to this Agreement, contains an untrue statement of
a material fact or omits to state a material fact required to be stated therein
or necessary to make the statements made, in the context in which made, not
materially false or misleading.
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ARTICLE VI
COVENANTS OF LPC, THE LPC STOCKHOLDERS,
ACQUISITION CORP. AND THE PARENT
Section 6.1 COVENANTS OF LPC AND LEONARD PARKER REGARDING
CONDUCT OF BUSINESS OPERATIONS PENDING THE CLOSING. LPC and Leonard Parker
covenant and agree that between the date of this Agreement and the Closing Date,
LPC will carry on its business in the ordinary course and consistent with past
practice, will use its best efforts to (i) preserve its business organization
intact, (ii) retain the services of its present employees, and (iii) preserve
the good will of its suppliers and customers, will not enter into any material
commitments for services or otherwise without the prior written notification to,
and written approval of, such contemplated action by the Parent and will not,
except in the ordinary course of business, purchase, sell, lease or dispose of
any property or assets or incur any liability or enter into any other
extraordinary transaction. By way of amplification and not limitation, LPC and
Leonard Parker shall not (except as contemplated hereunder), between the date of
this Agreement and the Closing Date, directly or indirectly, do any of the
following without the prior written consent of the Parent:
(a) (i) issue, sell, pledge, dispose of, encumber, authorize,
or propose the issuance, sale, pledge, disposition, encumbrance or authorization
of any shares of capital stock of any class, or any options, warrants,
convertible securities or other rights of any kind to acquire any shares of
capital stock, or any other ownership interest, of LPC;
(b) (i) make any acquisition (by merger, consolidation, or
acquisition of stock or assets) of any corporation, partnership or other
business organization or division thereof; (ii) except in the ordinary course of
business and in a manner consistent with past practice, sell, pledge, dispose
of, or encumber or authorize or propose the sale, pledge, disposition or
encumbrance of any of its assets; PROVIDED, HOWEVER, that LPC may (1) distribute
to the LPC Stockholders the property-automobiles as set forth on SCHEDULE
6.1(B)(I) hereof, (2) distribute the $100,000 investment owned by LPC in
Watermark Investments Ltd. in such amounts and to such LPC Stockholders as set
forth on SCHEDULE 6.1(B)(I) hereof, (3) distribute all of the assets of the
Leonard Parker Trust in such amounts and to such persons as set forth on
SCHEDULE 6.1(B)(I) hereof, and (4) distribute cash to the stockholders and/or
employees of LPC in such amount as to reduce stockholders' equity of LPC to
$2,150,000 inclusive of "Advances to Parker Reorder," regardless of the
treatment or classification of such advances under GAAP, less the reasonable
expenses incurred by LPC in connection with the transactions contemplated by
this Agreement; (iii) other than under any existing credit facility, incur any
indebtedness for borrowed money, assume, guarantee, endorse or
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otherwise become responsible for the obligations of any other individual,
partnership, firm or corporation, or make any loans or advances to any
individual, partnership, firm, or corporation, or enter into any contract or
agreement to do so, except in the ordinary course of business and consistent
with past practice and except with regard to the borrowing by LPC of sufficient
cash to enable the distribution or payments referred to in clause (iv) above;
(iv) authorize any single capital expenditure or series of related capital
expenditures each of which, individually or in the aggregate, is in excess of
$10,000; or (v) release or assign any indebtedness owed to it or any claims held
by it, except in the ordinary course of business and consistent with past
practice;
(c) take any action other than in the ordinary course of
business and in a manner consistent with past practice (none of which actions
shall be unreasonable or unusual) with respect to the grant of any severance or
termination pay (otherwise than pursuant to its policies in effect on the date
hereof) or with respect to any increase of benefits payable under its severance
or termination pay policies in effect on the date hereof;
(d) make any payments (except in the ordinary course of
business and in amounts and in a manner consistent with past practice) under any
LPC Employee Plan to any employee, independent contractor or consultant, enter
into any new LPC Employee Plan or any new consulting agreement or grant or
establish any awards under such LPC Employee Plan or agreement, in any such case
providing for payments of more than $10,000, or adopt or otherwise amend any of
the foregoing; PROVIDED, HOWEVER, that LPC may (i) distribute to Douglas Parker,
Bradley Parker, Philip Parker, Mitchell Parker and Gregg Parker the life
insurance policies on the lives of each of them held by LPC and (ii) distribute
to Leonard Parker the whole life insurance policy on the life of Leonard Parker
in the amount of $160,000 as set forth on SCHEDULE 6.1(B)(I) hereof;
(e) take any action except in the ordinary course of business
and in a manner consistent with past practice (none of which actions shall be
unreasonable or unusual) with respect to accounting policies or procedures,
other than such actions deemed necessary to comply with U.S. GAAP (including
without limitation its procedures with respect to the payment of accounts
payable);
(f) except in the ordinary course of business, enter into or
terminate any material contract or agreement or make any material change in any
of its material contracts or agreements, other than agreements, if any, relating
to the transactions contemplated hereby; or
(g) take, or agree in writing or otherwise to take, any of the
foregoing actions or any action which would make any of their respective
representations or warranties contained in this
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Agreement untrue or incorrect in any material respect as of the date when made
or as of a future date.
Section 6.2 COVENANTS OF PARENT REGARDING CONDUCT OF BUSINESS
OPERATIONS PENDING THE CLOSING. Parent covenants and agrees that between the
date of this Agreement and the Closing Date, Parent will carry on its business
in the ordinary course and consistent with past practice, will use its best
efforts to (i) preserve its business organization intact, (ii) retain the
services of its present employees, and (iii) preserve the good will of its
suppliers and customers, will not enter into any material commitments for
services or otherwise without the prior written notification to, and written
approval of, such contemplated action by LPC and will not, except in the
ordinary course of business, purchase, sell, lease or dispose of any property or
assets or incur any liability or enter into any other extraordinary transaction.
By way of amplification and not limitation, Parent shall not (except as
contemplated hereunder), between the date of this Agreement and the Closing
Date, directly or indirectly, do any of the following without the prior written
consent of LPC:
(a) (i) issue, sell, pledge, dispose of, encumber, authorize,
or propose the issuance, sale, pledge, disposition, encumbrance or authorization
of any shares of capital stock of any class, or any options, warrants,
convertible securities or other rights of any kind to acquire any shares of
capital stock, or any other ownership interest, of Parent;
(b) (i) make any acquisition (by merger, consolidation, or
acquisition of stock or assets) of any corporation, partnership or other
business organization or division thereof; (ii) except in the ordinary course of
business and in a manner consistent with past practice, sell, pledge, dispose
of, or encumber or authorize or propose the sale, pledge, disposition or
encumbrance of any of its assets; (iii) other than under any existing credit
facility, incur any indebtedness for borrowed money, assume, guarantee, endorse
or otherwise become responsible for the obligations of any other individual,
partnership, firm or corporation, or make any loans or advances to any
individual, partnership, firm, or corporation, or enter into any contract or
agreement to do so, except in the ordinary course of business and consistent
with past practice; (iv) authorize any single capital expenditure or series of
related capital expenditures each of which, individually or in the aggregate, is
in excess of $10,000; or (v) release or assign any indebtedness owed to it or
any claims held by it, except in the ordinary course of business and consistent
with past practice;
(c) take any action other than in the ordinary course of
business and in a manner consistent with past practice (none of which actions
shall be unreasonable or unusual) with respect to the grant of any severance or
termination pay (otherwise than pursuant to its policies in effect on the date
hereof) or with respect to
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any increase of benefits payable under its severance or termination pay policies
in effect on the date hereof;
(d) make any payments (except in the ordinary course of
business and in amounts and in a manner consistent with past practice) under any
Parent Employee Plan to any employee, independent contractor or consultant,
enter into any new Parent Employee Plan or any new consulting agreement or grant
or establish any awards under such Parent Employee Plan or agreement, in any
such case providing for payments of more than $10,000, or adopt or otherwise
amend any of the foregoing;
(e) take any action except in the ordinary course of business
and in a manner consistent with past practice (none of which actions shall be
unreasonable or unusual) with respect to accounting policies or procedures,
other than such actions deemed necessary to comply with U.S. GAAP (including
without limitation its procedures with respect to the payment of accounts
payable);
(f) except in the ordinary course of business, enter into or
terminate any material contract or agreement or make any material change in any
of its material contracts or agreements, other than agreements, if any, relating
to the transactions contemplated hereby; or
(g) take, or agree in writing or otherwise to take, any of the
foregoing actions or any action which would make any of their respective
representations or warranties contained in this Agreement untrue or incorrect in
any material respect as of the date when made or as of a future date.
Section 6.3 NO OTHER NEGOTIATIONS. Prior to the termination of
this Agreement, LPC and the LPC Stockholders covenant and agree that between the
date of this Agreement and through February 28, 1997 (the "Exclusivity Period"),
they will not, nor will they permit any of their affiliates (including any
officers, directors, employees, financial advisors, brokers, stockholders or any
other person acting on their behalf) to, (a)(i) take any action intended to
encourage discussions or negotiations, (ii) participate in discussions or
negotiations or (iii) provide any information, access to books or records to or
with any person or entity other than Acquisition Corp. and the Parent, relating
to a merger of LPC or sale of the capital stock or assets of LPC, (b) rescind,
suspend or delay any Required Filings and Consents (as defined below) or (c)
enter into or alter any agreement or option with respect to the Shares.
Section 6.4 BOARD REPRESENTATIVE. At such time as the Parent
Preferred Stock is no longer issued and outstanding, provided that the LPC
Stockholders shall own no less than 10% of the issued and outstanding shares of
Parent Common Stock (or the right to acquire such shares within 60 days),
following the Closing
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the Parent shall use its best efforts to nominate and cause two persons
designated by Leonard Parker to be elected to its Board of Directors and to have
one of such designated persons serve on the audit and compensation committees
(to the extent such committees then exist) of its Board of Directors; provided,
however, that the person designated to serve on the audit and/or compensation
committees may not be an officer or employee of Parent or any of its
subsidiaries or any other individual having a relationship which, in the opinion
of the Board of Directors of the Parent, would interfere with the exercise of
independent judgment in carrying out the responsibilities of a member of such
committee(s).
Section 6.5 REGULATORY APPROVALS. Parent, LPC and each of the
LPC Stockholders covenant and agree to fully cooperate in obtaining any Required
Filings and Consents.
Section 6.6 DUE DILIGENCE REVIEW. (a) LPC and each of the LPC
Stockholders shall, upon reasonable notice, give access to, and cooperate fully
with, the attorneys, auditors, representatives and agents of the Parent to
conduct a due diligence review of the business activities of LPC, including all
management matters, all financial, accounting and business records and all
contracts and other legal documents (the "Due Diligence Review"), including, but
not limited to, all financial information, reasonably requested by the Parent or
its attorneys, auditors, representatives and agents, and all financial
statements required by the rules and regulations promulgated under the
Securities Act.
(b) The Parent shall, upon reasonable notice, give access to,
and cooperate fully with, the attorneys, auditors, representatives and agents of
LPC to conduct a due diligence review of the business activities of the Parent,
including all management matters, all financial, accounting and business records
and all contracts and legal documents, including, but not limited to, all
financial information, reasonably requested by LPC or its attorneys, auditors,
representatives and agents. LPC shall, upon reasonable notice, give access to,
and cooperate fully with, the attorneys, auditors, representatives and agents of
Parent to conduct a due diligence review of the business activities of the
Parent, including, but not limited to, all financial information, reasonably
requested by Parent or its attorneys, auditors, representatives and agents.
Section 6.7 ANNOUNCEMENTS. (a) Unless required by applicable
law or regulatory authority, neither any LPC Stockholder, LPC or any affiliate
of any of the foregoing shall issue any report, statement or press release to
the public, the trade, or the press or any third party relating to this
Agreement or the transactions contemplated hereby, except as agreed to in
writing by the Parent before the issuance thereof.
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(b) Unless required by applicable law or regulatory authority,
neither Acquisition Corp., Parent or any affiliate of the foregoing shall issue
any report, statement or press release to the public, the trade, or the press or
any third party relating to this Agreement or the transactions contemplated
hereby, except as agreed to in writing by the LPC Stockholders before the
issuance thereof.
Section 6.8 ADDITIONAL COVENANTS OF LPC, THE LPC STOCKHOLDERS
AND THE PARENT. Each of LPC, the LPC Stockholders, Acquisition Corp. and the
Parent covenant and agree:
(a) BEST EFFORTS. To proceed diligently and use its best
efforts to take or cause to be taken all actions and to do or cause to be done
all things necessary, proper and advisable to consummate the transactions
contemplated by this Agreement, including the execution and delivery of the
Registration Rights Agreement and the Employment Agreements.
(b) COMPLIANCE. To comply in all material respects with all
applicable rules and regulations of any Governmental Authority in connection
with the execution, delivery and performance of this Agreement and the
transactions contemplated hereby; to use all reasonable efforts to obtain in a
timely manner all necessary waivers, consents and approvals and to take, or
cause to be taken, all other actions and to do, or cause to be done, all other
things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement.
(c) NOTICE. To give prompt notice to the other party or
parties of (i) the occurrence, or failure to occur, of any event whose
occurrence or failure to occur, would be likely to cause any representation or
warranty contained in this Agreement to be untrue or incorrect in any material
respect at any time from the date hereof to the Closing Date and (ii) any
material failure on its part, or on the part of any of its officers, directors,
employees or agents, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder; PROVIDED, HOWEVER,
that the delivery of any such notice shall not limit or otherwise affect the
remedies available hereunder to the party receiving such notice.
(d) CONFIDENTIALITY. To hold in strict confidence all data and
information obtained from the other party hereto or any subsidiary, division,
associate, representative, agent or affiliate of any such party (unless such
information is or becomes publicly available without the fault of any
representative of such party, or public disclosure of such information is
required by law in the opinion of counsel to such party) and shall insure that
such representatives do not disclose information to others without the prior
written consent of the other party hereto, and in the event
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of the termination of this Agreement, to cause its representatives to return
promptly every document furnished by the other party hereto or any subsidiary,
division, associate, representative, agent or affiliate of any such party in
connection with the transactions contemplated hereby and any copies thereof
which may have been made, other than documents which are publicly available.
(e) Following the Closing, at the request of LPC, the LPC
Stockholders will cause all of the shares of the capital stock of the Sister
Companies, or the benefits thereof, owned by them to be transferred to LPC or
its designee.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF
LPC AND THE LPC STOCKHOLDERS
The obligations of the LPC Stockholders and LPC under this
Agreement are subject to the satisfaction, on or prior to the Closing Date,
unless waived in writing, of each of the following conditions:
Section 7.1 REPRESENTATIONS AND WARRANTIES TRUE. The
representations and warranties of Acquisition Corp. and the Parent contained in
this Agreement shall be true and correct in all material respects as of the date
when made and at and as of the Closing Date, with the same force and effect as
if made on and as of the Closing Date, and the LPC Stockholders shall have
received a certificate to that effect and as to the matters set forth in Section
7.2 hereof, dated the Closing Date, from the Chief Executive Officer of the
Parent.
Section 7.2 PERFORMANCE OF COVENANTS. Acquisition Corp. and
the Parent shall have performed or complied in all material respects with all
agreements, conditions and covenants required by this Agreement to be performed
or complied with by it on or before the Closing Date.
Section 7.3 NO PROCEEDINGS. No preliminary or permanent
injunction or other order (including a temporary restraining order) of any
state, federal or local court or other governmental agency or of any foreign
jurisdiction which prohibits the consummation of the transactions which are the
subject of this Agreement or prohibits Acquisition Corp's or the Parent's
ownership of the Shares shall have been issued or entered and remain in effect.
Section 7.4 CONSENTS AND APPROVALS. All filings and
registrations with, and notifications to, all federal, state, local and foreign
authorities required for consummation of the transactions contemplated by this
Agreement shall have been made, and all consents, approvals and authorizations
of all federal, state, local and foreign authorities and parties to material
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contracts, licenses, agreements or instruments required for consummation of the
transactions contemplated by this Agreement (the "Required Filings and
Consents") shall have been received and shall be in full force and effect.
Section 7.5 EMPLOYMENT AGREEMENTS. The Employment Agreements
shall have been executed by the parties thereto.
Section 7.6 REGISTRATION RIGHTS AGREEMENT. The Registration
Rights Agreement shall have been executed by the parties thereto.
Section 7.7 OPINION OF ACQUISITION CORP'S AND THE PARENT'S
COUNSEL. LPC and the LPC Stockholders shall have received the opinion of Olshan
Grundman Frome & Rosenzweig LLP, counsel to Acquisition Corp. and the Parent,
dated as of the Closing Date, in a form reasonably satisfactory to LPC,
substantially to the effect that: (i) Acquisition Corp. and the Parent are
corporations duly organized, validly existing and in good standing under the
laws of their respective states of incorporation; (ii) Acquisition Corp. has the
corporate power to enter into this Agreements, and to consummate the
transactions contemplated hereby and the Parent has the corporate power to enter
into the Parent's Agreements, and to consummate the transactions contemplated
hereby and thereby; (iii) the execution and delivery of this Agreement and the
Parent's Agreements, and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by all requisite corporate action
on the part of Acquisition Corp. and the Parent, respectively; (iv) this
Agreement has been duly executed and delivered by Acquisition Corp. and the
Parent's Agreements have been duly executed and delivered by the Parent and
(assuming that it is a valid and binding obligation of the other parties
thereto) are valid and binding obligations of Acquisition Corp. and the Parent
and enforceable against Acquisition Corp. and the Parent in accordance with
their respective terms, except as enforceability may be limited by any
bankruptcy, insolvency and other laws affecting the enforcement of creditors'
rights generally, and as such enforceability is subject to general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law), (v) the issuance and delivery of the shares to be issued
to the LPC Stockholders as the Merger Consideration have been duly authorized,
and when issued and delivered to the LPC Stockholders will be validly issued,
fully-paid and nonassessable; (vi) the execution, delivery or performance of
this Agreement by Acquisition Corp. and the consummation by Acquisition Corp. of
the transactions herein, to the best of such counsel's knowledge, do not
conflict with or result in a breach of, or default under, Acquisition Corp.'s
articles of incorporation or bylaws or any material indenture, mortgage, deed of
trust, voting trust agreement, stockholders agreement, note agreement or other
material agreement or other material instrument to which the Acquisition Corp.
is a party or by which Acquisition Corp. is bound
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or to which any of the property of the Parent is subject, and (vii) the
execution, delivery or performance of the Parent's Agreements by the Parent and
the consummation by the Parent of the transactions herein and therein, to the
best of such counsel's knowledge, do not conflict with or result in a breach of,
or default under, the Parent's certificate of incorporation or bylaws or any
material indenture, mortgage, deed of trust, voting trust agreement,
stockholders agreement, note agreement or other material agreement or other
material instrument to which the Parent is a party or by which the Parent is
bound or to which any of the property of the Parent is subject. Such opinion
shall be limited to the laws of the State of New York and United States federal
law. In so far as the opinion expressed above relates to matters that are
governed by the State of Florida, such counsel may assume that the laws of the
State of Florida are identical to the laws of the State of New York.
Section 7.8 MATERIAL CHANGES. Since the date hereof, there
shall not have been any material change in the business, operations, financial
condition, assets, liabilities, prospects or regulatory status of Parent.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF
ACQUISITION CORP. AND THE PARENT
The obligations of Acquisition Corp. and the Parent under this
Agreement are subject to the satisfaction, on or prior to the Closing Date,
unless waived in writing, of each of the following conditions:
Section 8.1 REPRESENTATION AND WARRANTIES TRUE. The
representations and warranties of LPC, Leonard Parker and the LPC Stockholders
contained in this Agreement shall be true and correct in all material respects
as of the date when made and at and as of the Closing Date, with the same force
and effect as if made on and as of the Closing Date, and the Parent shall have
received a certificate to that effect and as to the matters set forth in Section
8.2 hereof, dated the Closing Date, from the [President] or [Chief Executive
Officer] of LPC and from each LPC Stockholder.
Section 8.2 PERFORMANCE OF COVENANTS. LPC, Leonard Parker and
the LPC Stockholders shall have performed or complied in all material respects
with all agreements, conditions and covenants required by this Agreement to be
performed or complied with by them on or before the Closing Date.
Section 8.3 NO PROCEEDINGS. No preliminary or permanent
injunction or other order, whether pending or threatened, (including a temporary
restraining order) of any state, federal or local court or other governmental
agency or of any foreign
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jurisdiction which prohibits the consummation of the transactions which are the
subject of this Agreement or prohibits the Parent's ownership of the Shares or
operation of LPC's business shall have been issued or entered and remain in
effect.
Section 8.4 CONSENTS AND APPROVALS. All Required Filings and
Consents shall have been received and shall be in full force and effect.
Section 8.5 EMPLOYMENT AGREEMENT. The Employment Agreements
shall have been executed by the parties thereto.
Section 8.6 REGISTRATION RIGHTS AGREEMENT. The Registration
Rights Agreement shall have been executed by the parties thereto.
Section 8.7 OPINION OF LPC'S AND THE LPC STOCKHOLDERS'
COUNSEL. The Parent shall have received the opinion of Greenberg, Traurig,
Hoffman, Lipoff, Rosen & Quentel, P.A., counsel to LPC and the LPC Stockholders,
dated the Closing Date, in form reasonably satisfactory to the Parent,
substantially to the effect that: (i) LPC and each Subsidiary is a corporation
duly organized, validly existing and in good standing under the laws of its
respective state of incorporation; (ii) LPC has the corporate power, and each
LPC Stockholder has full legal right, power and authority, to enter into the LPC
Agreements and to consummate the transactions, contemplated hereby and thereby;
(iii) the execution and delivery of the LPC Agreements, and the consummation of
the transactions contemplated hereby and thereby have been duly authorized by
requisite corporate action taken on the part of LPC; (iv) each of the LPC
Agreements and the LPC Stockholders' Agreements have been executed and delivered
by LPC and the LPC Stockholders and (assuming that each is a valid and binding
obligation of the other parties thereto) is a valid and binding obligation of
LPC or the LPC Stockholders enforceable against LPC the LPC Stockholders in
accordance with its terms, as the case may be, except as enforceability may be
limited by any bankruptcy, insolvency and other laws affecting the enforcement
of creditors' rights generally, and as such enforceability is subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law) and except as to any provision relating to
covenants against competition; (v) the Shares are duly authorized, validly
issued, fully paid and nonassessable, (vi) none of the execution, delivery or
performance of the LPC Agreements by LPC or the LPC Stockholders' Agreements by
the LPC Stockholders and the consummation by LPC and the LPC Stockholders of the
transactions herein and therein contemplated, to the best of such counsel's
knowledge, conflict with or result in a breach of, or default under, LPC's
Articles of Incorporation or Bylaws or any contract or commitment of LPC set
forth on SCHEDULE 3.15 hereto or any material indenture, mortgage, deed of
trust, voting trust agreement, stockholders agreement, note agreement or
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other material agreement or other material instrument to which the LPC
Stockholders are parties or by which the LPC Stockholders are bound or to which
any of the property of the LPC Stockholders is subject; and (vii) upon filing of
the Articles of Merger, the Merger will be effective, the separate corporate
existence of Acquisition Corp. will cease and LPC will continue as the surviving
corporation.
Section 8.8 CAPITALIZATION OF LPC. The stockholders' equity of
LPC computed in accordance with generally accepted accounting principles and
certified by the Parent's independent public accountants shall be equal to
$2,150,000 less the reasonable expenses incurred by LPC in connection with the
transactions contemplated by this Agreement. Should any of the "Advances to
Parker Reorder" be required to be expensed under GAAP, the $2,150,000 referred
to above shall be reduced by the amount of such expensed advances.
Section 8.9 MATERIAL CHANGES. Since the date hereof, there
shall not have been any material adverse change in the business, operations,
financial condition, assets, liabilities, prospects or regulatory status of LPC.
Section 8.10 RESIGNATIONS. Philip Parker, Mitchell Parker and
Gregg Parker shall have resigned as directors of LPC and Leonard Parker, Bradley
Parker and Gregg Parker shall have resigned as directors of Parker Reorder.
ARTICLE IX
INDEMNIFICATION
Section 9.1 INDEMNIFICATION BY LPC AND THE LPC STOCKHOLDERS.
Subject to the limits set forth in this Article IX, LPC and each of the LPC
Stockholders agrees to indemnify, defend and hold Acquisition Corp., the Parent
and each of their respective directors, officers and advisors harmless from and
against any and all loss, liability, damage, costs and expenses (including
interest, penalties and reasonable attorneys' fees) (collectively, "Losses")
that Acquisition Corp., the Parent or any of their respective affiliates may
incur or become subject to arising out of or due to any inaccuracy of any
representation or the breach of any warranty or covenant of LPC, contained in
this Agreement. LPC and/or the LPC Stockholders will reimburse Acquisition Corp,
the Parent and each controlling person for any legal or any other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, liability, action or proceeding.
Section 9.2 INDEMNIFICATION BY THE LPC STOCKHOLDERS. Subject
to the limits set forth in this Article IX, each of the LPC Stockholders, solely
as to their individual representations and
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warranties and covenants, agrees to indemnify, defend and hold Acquisition Corp,
the Parent and each of their respective directors and officers harmless from and
against any and all Losses, that Acquisition Corp., the Parent or any of their
affiliates may incur or become subject to arising out of or due to any
inaccuracy of any representation or the breach of any warranty or covenant of
such LPC Stockholder contained in this Agreement. Each such LPC Stockholder will
reimburse Acquisition Corp, the Parent and each controlling person for any legal
or any other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, liability, action or
proceeding.
Section 9.3 INDEMNIFICATION BY THE PARENT. Subject to the
limits set forth in this Article IX, Acquisition Corp. and the Parent agrees to
indemnify, defend and hold the LPC Stockholders harmless from and against any
and all Losses that LPC and the LPC Stockholders or their affiliates may incur
or become subject to arising out of or due to any inaccuracy of any
representation or the breach of any warranty or covenant of Acquisition Corp. or
the Parent contained in this Agreement. Acquisition Corp. and the Parent will
reimburse LPC and the LPC Stockholders for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, liability, action or proceeding.
Section 9.4 SURVIVAL. The representations and warranties of
LPC, the LPC Stockholders, Acquisition Corp. and the Parent set forth in
Articles III, IV and V of this Agreement shall survive the Closing until the
date that is 15 months after the Closing Date, except for those representations
contained in Sections 3.2, 3.3, 3.9, 4.1, 5.3 and 5.6, which shall not
terminate. The covenants and agreements of the LPC Stockholders, Acquisition
Corp., the Parent and LPC shall not survive the Closing, except for the
covenants and agreements set forth in Sections 6.2 and 6.4 and under Article IX
hereof.
Section 9.5 LIMITATIONS. Neither LPC, the LPC Stockholders,
Acquisition Corp. nor the Parent shall assert any claim against the other party
or parties for indemnification hereunder with respect to any inaccuracy or
breach of such warranties, representations, covenants or agreements unless and
until the amount of all such claims shall exceed $100,000, in which event each
indemnified person shall be entitled to be indemnified for the full amount of
all claims arising hereunder in excess of $100,000. In no event shall the
aggregate liability of LPC and the LPC Stockholders on the one hand and Parent
and Acquisition Corp. on the other hand exceed $10,000,000. Any indemnification
payable by the LPC Stockholders may be satisfied, at their option, (i) in cash,
(ii) by surrender of Preferred Stock, valued at its Stated Value, or (iii) by
surrender of Parent Common Stock, valued at its current market value, or any
combination thereof.
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Section 9.6 THIRD PARTY CLAIMS. In order for a party (the
"indemnified party") to be entitled to any indemnification provided for under
this Agreement in respect of, arising out of, or involving a claim or demand or
written notice made by any third party against the indemnified party (a "Third
Party Claim") after the Closing Date, such indemnified party must notify the
indemnifying party (the "indemnifying party") in writing of the Third Party
Claim within 30 business days after receipt by such indemnified party of written
notice of the Third Party Claim; provided that the failure of any indemnified
party to give timely notice shall not affect his right of indemnification
hereunder except to the extent the indemnifying party has actually been
prejudiced or damaged thereby. If a Third Party Claim is made against an
indemnified party, the indemnifying party shall be entitled, if it so chooses,
to assume the defense thereof with counsel selected by the indemnifying party
(which counsel shall be reasonably satisfactory to the indemnified party),
unless the indemnified party reasonably concludes that the assumption of control
by the indemnifying party creates a risk of a significant adverse effect on the
indemnified party's business operations, in which case the indemnifying party
shall not be entitled to assume the defense thereof and shall be freed of any
responsibility for indemnification thereunder. If the indemnifying party assumes
the defense of a Third Party Claim, the indemnified party will cooperate in all
reasonable respects with the indemnifying party in connection with such defense,
and shall have the right to participate in such defense with counsel selected by
it. The fees and disbursements of such counsel, however, shall be at the expense
of the indemnified party; PROVIDED, HOWEVER, that in the case of any Third Party
Claim of which the indemnifying party has not employed counsel to assume the
defense, the fees and disbursements of such counsel shall be at the expense of
the indemnifying party.
Section 9.7 REDUCTION FOR INSURANCE. The gross amount which an
indemnifying party is liable to, for, or on behalf of the indemnified party
pursuant to this Article IX (the "Indemnifiable Loss") shall be reduced
(including, without limitation, retroactively) by any insurance proceeds
actually recovered by or on behalf of such indemnified party related to the
Indemnifiable Loss and by any associated tax benefit. If an indemnified party
shall have received or shall have had paid on its behalf an indemnity payment in
respect of an Indemnifiable Loss and shall subsequently receive directly or
indirectly insurance proceeds in respect of such Indemnifiable Loss, then such
indemnified party shall pay to such indemnifying party the net amount of such
insurance proceeds or, if less, the amount of such indemnity payment.
ARTICLE X
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TERMINATION, AMENDMENT AND WAIVER
Section 10.1 TERMINATION. This Agreement may be terminated and
the transactions contemplated by this Agreement abandoned at any time prior to
the Closing (unless otherwise specified) as follows:
(a) by mutual written consent duly authorized by the Boards of
Directors of LPC and the Parent;
(b) by Acquisition Corp. or the Parent (i) if any
representation or warranty of LPC or any of the LPC Stockholders set forth in
this Agreement shall be untrue when made or shall have become untrue such that
any condition set forth in Article VIII would not be satisfied as of the Closing
Date, or (ii) upon a breach of any covenant or agreement on the part of LPC or
any of the LPC Stockholders set forth in this Agreement such that any condition
set forth in Article VIII would not be satisfied as of the Closing Date;
(c) by LPC (i) if any representation or warranty of
Acquisition Corp. or the Parent set forth in this Agreement shall be untrue when
made or shall have become untrue such that any condition set forth in Article
VII would not be satisfied as of the Closing Date, or (ii) upon a breach of any
covenant or agreement on the part of the Parent set forth in this Agreement such
that any condition set forth in Article VII would not be satisfied as of the
Closing Date;
(d) by either LPC or the Parent if the Closing does not occur
on or before February 28, 1997.
Section 10.2 EFFECT OF TERMINATION. In the event of any
termination of this Agreement in accordance with Section 10.1(a) or (d) hereof,
this Agreement shall forthwith become void, except as provided in Section 10.3,
and there shall be no liability under this Agreement on the part of any party
hereto or their respective affiliates, officers, directors, employees or agents
by virtue of such termination.
Section 10.3 SURVIVAL AFTER TERMINATION. If this Agreement is
terminated in accordance with Section 10.1 and the transactions contemplated
hereby are not consummated, this Agreement shall become void and of no further
force and effect, except for (i) the provisions of Section 6.7(d) relating to
the obligations of Acquisition Corp., the Parent, LPC and the LPC Stockholders
to keep confidential and not to use certain information and data obtained by
them from any other party and to return all such documents to such parties and
(ii) the provisions of Section 10.3.
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Section 10.4 AMENDMENT. This Agreement may be amended only by
the written agreement of Acquisition Corp., the Parent and all of the LPC
Stockholders.
ARTICLE XI
MISCELLANEOUS
Section 11.1 EXPENSES. Each of the parties hereto shall bear
their own expenses in connection with this Agreement and the transactions
contemplated hereby regardless of the failure to consummate transactions
contemplated hereby.
Section 11.2 NOTICES. All notices, requests, demands and other
communications which are required or may be given under this Agreement shall be
in writing and shall be deemed to have been duly given when delivered personally
or by facsimile transmission, in either case with receipt acknowledged, or three
days after being sent by registered or certified mail, return receipt requested,
postage prepaid:
(a) If to Acquisition Corp. or the Parent to:
Hospitality Worldwide Services, Inc.
969 Third Avenue
New York, NY 10022
Attention: Chief Executive Officer
with a copy to:
Olshan Grundman Frome & Rosenzweig LLP
505 Park Avenue
New York, New York 10022
Attention: Robert H. Friedman, Esq.
(b) If to the LPC Stockholders, to the address listed
on the signature pages hereto, if to LPC to:
The Leonard Parker Company
550 Biltmore Way
Coral Gables, FL 33134
Attention:
with a copy to:
Greenberg, Traurig, Hoffman, Lipoff,
Rosen & Quentel, P.A.
1221 Brickell Avenue
Miami, FL 33131
Attention: Gary Epstein, Esq.
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or to such other address as any party shall have specified by notice in writing
to the other in compliance with this Section 11.2.
Section 11.3 ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement among the parties hereto with respect to the subject matter
hereof and thereof and supersedes all prior agreements, representations and
understandings among the parties hereto including the letter of intent, as
amended, dated November 13, 1996 among the Parent, LPC and Leonard Parker.
Section 11.4 BINDING EFFECT, BENEFITS, ASSIGNMENTS. This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and assigns; nothing in this Agreement,
expressed or implied, is intended to confer on any other person, other than the
parties hereto or their respective successors and assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement. This Agreement
may not be assigned without the prior written consent of the other parties
hereto.
Section 11.5 APPLICABLE LAW. This Agreement and the legal
relations between the parties hereto shall be governed by and construed in
accordance with the laws of the State of New York, without regard to principles
of conflicts of law.
Section 11.6 JURISDICTION. (a) Any action or proceeding
arising out of or relating to this Agreement, if commenced by LPC or the LPC
Stockholders, must be determined in any New York state or Federal court sitting
in the City of New York, New York. In such event, each of the parties hereto
hereby irrevocably submits to the exclusive jurisdiction of any New York state
or Federal court sitting in the City of New York, New York over any action or
proceeding arising out of or relating to this Agreement, and each of the parties
hereto hereby irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such New York state or Federal court.
Each of the parties hereto hereby irrevocably waives, to the fullest extent
legally possible, the defense of an inconvenient forum to the maintenance of
such action or proceeding.
(b) Any action or proceeding arising out of or relating to
this Agreement, if commenced by Acquisition Corp. or Parent, must be determined
in any Florida state or Federal court sitting in the City of Miami, Florida. In
such event, each of the parties hereto hereby irrevocably submits to the
exclusive jurisdiction of any Florida state or Federal court sitting in the City
of Miami, Florida over any action or proceeding arising out of or relating to
this Agreement, and each of the parties hereto hereby irrevocably agrees that
all claims in respect of such action or proceeding may be heard and determined
in such Florida state or Federal court. Each of the parties hereto hereby
irrevocably waives, to the
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fullest extent legally possible, the defense of an inconvenient forum to the
maintenance of such action or proceeding.
Section 11.7 HEADINGS. The headings and captions in this
Agreement are included for purposes of convenience only and shall not affect the
construction or interpretation of any of its provisions.
Section 11.8 COUNTERPARTS. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year hereinabove first set forth.
HOSPITALITY WORLDWIDE SERVICES, INC.
By: /S/ HOWARD G. ANDERS
-------------------------------------
Name: Howard G. Anders
Title: Executive Vice President
LPC ACQUISITION CORP.
By: /S/ HOWARD G. ANDERS
-------------------------------------
Name: Howard G. Anders
Title: Executive Vice President
THE LEONARD PARKER COMPANY
By: /S/ DOUGLAS PARKER
-------------------------------------
Name: Douglas Parker
Title: President
/S/ LEONARD PARKER
- -------------------------------------
LEONARD PARKER
Address: 5575 SW 93rd Street
Miami, FL 33156
/S/ DOUGLAS PARKER
- -------------------------------------
DOUGLAS PARKER
Address: 4140 Pinta Court
Coral Gables, FL 33146
/S/ BRADLEY PARKER
- -------------------------------------
BRADLEY PARKER
Address: 1251 North Greenway Drive
Coral Gables, FL 33134
/S/ PHILIP PARKER
- -------------------------------------
PHILIP PARKER
Address: 8465 SW 147th Street
Miami, FL 33158
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/S/ MITCHELL PARKER
- -------------------------------------
MITCHELL PARKER
Address: 6225 SW 123rd Terrace
Miami, FL 33156
/S/ GREGG PARKER
- -------------------------------------
GREGG PARKER
Address: 120 6th Pl.
Manhattan Beach, CA 90266
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ARTICLE I
THE MERGER
1.1 The Merger..............................................1
1.2 Effective Time..........................................2
1.3 Effect of the Merger....................................2
1.4 Subsequent Actions......................................2
1.5 Articles of Incorporation; By-Laws; Directors
and Officers............................................2
1.6 Conversion of Securities................................3
1.7 Delivery Of Merger Consideration........................3
1.8 Fractional Shares.......................................4
ARTICLE II
CLOSING
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF LPC AND THE LPC STOCKHOLDERS
3.1 Corporate Organization; Requisite Authority to
Conduct Business; Articles of Incorporation and
By-Laws.................................................4
3.2 Capitalization and Shareholdings........................5
3.3 Stockholder Approval of Merger..........................5
3.4 Subsidiaries, etc.......................................5
3.5 Authority Relative to and Validity of this
Agreement...............................................6
3.6 Required Filings and Consents; No Conflict..............6
3.7 Financial Statements....................................7
3.8 Absence of Certain Changes and Events...................8
3.9 Taxes and Tax Returns...................................8
3.10 Employee Benefit Plans.................................10
3.11 Title to Property......................................14
3.12 Trademarks, Patents and Copyrights.....................14
3.13 Legal Proceedings, Claims, Investigations,
etc....................................................15
3.14 Insurance..............................................15
3.15 Material Contracts.....................................15
3.16 Certain Transactions...................................16
3.17 Inventory..............................................16
3.18 Receivables............................................17
3.19 Broker.................................................17
3.20 Environmental Matters..................................17
3.21 Illegal Payments.......................................18
3.22 Compliance with Law....................................18
3.23 Business Relationships.................................18
3.24 Suppliers and Customers................................18
3.25 Full Disclosure........................................19
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE LPC STOCKHOLDERS
4.1 Capitalization.........................................19
4.2 Authority Relative to and Validity of this
Agreement..............................................19
4.3 Brokers' or Finders' Fees..............................20
4.4 LPC Stockholders' Addresses, Access to
Information, Experience, Etc...........................20
4.5 Purchase Entirely for Own Account......................20
4.6 Restricted Securities..................................20
4.7 Legends................................................21
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF
ACQUISITION CORP. AND THE PARENT
5.1 Corporate Organization; Requisite Authority to
Conduct Business; Articles of Incorporation and
By-Laws................................................21
5.2 Execution and Delivery.................................22
5.3 Stockholder Approval of Merger.........................23
5.4 No Conflicts; Absence of Defaults......................23
5.5 Investment.............................................23
5.6 Capitalization.........................................23
5.7 SEC Reports and Financial Statements...................24
5.8 No Undisclosed Liabilities.............................24
5.9 Broker.................................................24
5.10 Authority Relative to and Validity of this
Agreement..............................................25
5.11 Required Filings and Consents; No Conflict.............25
5.12 Absence of Certain Changes and Events..................26
5.13 Taxes and Tax Returns..................................26
5.14 Employee Benefit Plans.................................27
5.15 Title to Property......................................28
5.16 Trademarks, Patents and Copyrights.....................28
5.17 Legal Proceedings, Claims, Investigations,
etc....................................................29
5.18 Insurance..............................................29
5.19 Material Contracts.....................................29
5.20 Certain Transactions...................................30
5.21 Environmental Matters..................................30
5.22 Illegal Payments.......................................31
5.23 Compliance with Law....................................31
5.24 Business Relationships.................................31
5.25 Suppliers and Customers................................32
5.26 Full Disclosure........................................32
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ARTICLE VI
COVENANTS OF LPC, THE LPC STOCKHOLDERS,
ACQUISITION CORP. AND THE PARENT
6.1 Covenants of LPC and Leonard Parker Regarding
Conduct of Business Operations Pending the
Closing................................................32
6.2 Covenants of Parent Regarding Conduct of
Business Operations Pending the Closing................34
6.3 No Other Negotiations..................................36
6.4 Board Representative...................................36
6.5 Regulatory Approvals...................................36
6.6 Due Diligence Review...................................36
6.7 Announcements..........................................37
6.8 Additional Covenants of LPC, the LPC
Stockholders and the Parent............................37
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF
LPC AND THE LPC STOCKHOLDERS
7.1 Representations and Warranties True....................38
7.2 Performance of Covenants...............................39
7.3 No Proceedings.........................................39
7.4 Consents and Approvals.................................39
7.5 Employment Agreements..................................39
7.6 Registration Rights Agreement..........................39
7.7 Opinion of Acquisition Corp's and the Parent's
Counsel................................................39
7.8 Material Changes.......................................40
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF
ACQUISITION CORP. AND THE PARENT
8.1 Representation and Warranties True.....................41
8.2 Performance of Covenants...............................41
8.3 No Proceedings.........................................41
8.4 Consents and Approvals.................................41
8.5 Employment Agreement...................................41
8.6 Registration Rights Agreement..........................41
8.7 Opinion of LPC's and the LPC Stockholders'
Counsel................................................41
8.8 Capitalization of LPC..................................42
8.9 Material Changes.......................................42
8.10 Resignations...........................................42
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ARTICLE IX
INDEMNIFICATION
9.1 Indemnification by LPC and the LPC
Stockholders...........................................42
9.2 Indemnification by the LPC Stockholders................43
9.3 Indemnification by the Parent..........................43
9.4 Survival...............................................43
9.5 Limitations............................................44
9.6 Third Party Claims.....................................44
9.7 Reduction for Insurance................................45
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
10.1 Termination............................................45
10.2 Effect of Termination..................................45
10.3 Survival After Termination.............................46
10.4 Amendment..............................................46
ARTICLE XI
MISCELLANEOUS
11.1 Expenses...............................................46
11.2 Notices................................................46
11.3 Entire Agreement.......................................47
11.4 Binding Effect, Benefits, Assignments..................47
11.5 Applicable Law.........................................47
11.6 Jurisdiction...........................................47
11.7 Headings...............................................48
11.8 Counterparts...........................................48
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ANNEXES
Annex A Employment Agreement of Leonard Parker
Annex B Employment Agreement of Douglas Parker
Annex C Employment Agreement of Brad Parker
Annex D Employment Agreement of Philip Parker
Annex E Employment Agreement of Mitchell Parker
Annex F Registration Rights Agreement
Annex G Certificate of Designation
SCHEDULES
1.7 Delivery of Merger Consideration; Capitalization
3.4 Subsidiaries
3.7 Financial Statements
3.8 Absence of Certain Changes and Events
3.10 Employee Benefits
3.11 Property
3.12 Legal Proceedings
3.13 Trademarks, Patents and Copyrights
3.14 Insurance
3.15 Contracts
3.16 Certain Transactions
3.20 Environmental Matters
3.24 Suppliers and Customers
5.5 Capitalization
5.11 Absence of Certain Changes and Events
5.13 Employee Benefit Plans
5.14 Title to Property
5.15 Trademarks, Patents and Copyrights
5.16 Legal Proceedings, Claims, Investigations
5.17 Insurance
5.18 Material Contracts
5.19 Certain Transactions
5.20 Environmental Matters
5.24 Suppliers and Customers
6.1(a)(i) Distributions
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SCHEDULE 1.7
Parent Parent
Common Stock Preferred
LPC to be Stock to be
Name of Stockholder Shares Held Received Received
- -------------------- ----------- -------- --------
Leonard Parker 10 300,000 --
5575 SW 93rd Street
Miami, FL 33156
Douglas Parker 18 190,000 40,000
4140 Pinta Court
Coral Gables, FL 33146
Bradley Parker 18 190,000 40,000
1251 North Greenway Drive
Coral Gables, FL 33134
Philip Parker 18 190,000 40,000
8465 SW 147th Street
Miami, FL 33158
Mitchell Parker 18 190,000 40,000
6225 SW 123rd Terrace
Miami, FL 33156
Gregg Parker 18 190,000 40,000
120 6th Pl
Manhattan Beach, CA 90266 --- --------- -------
100 1,250,000 200,000
EXHIBIT 3
CERTIFICATE OF INCORPORATION
OF
HOSPITALITY WORLDWIDE SERVICES, INC.
Under Section 402 of the Business Corporation Law
1. The name of the corporation is HOSPITALITY WORLDWIDE
SERVICES, INC. (hereinafter referred to as the "Corporation").
2. The purpose or purposes for which the Corporation is formed
are as follows; to wit,
To engage in any lawful act or activity for which corporations
may be formed under the Business Corporation Law. The Corporation is not formed
to engage in any act or activity requiring the consent or approval of any state
official, department, board, agency or other body without such consent or
approval first being obtained.
To own, operate, manage, acquire and deal in property, real
and personal, which may be necessary to the conduct of the business.
The Corporation shall have all of the powers enumerated in
Section 202 of the Business Corporation Law, subject to any limitations provided
in the Business Corporation Law or any other statute in the State of New York.
3. The personal liability of the directors of the Corporation
is hereby eliminated to the fullest extent permitted by the provisions of
paragraph (b) of Section 402 of the Business Corporation Law of the State of New
York, as the same may be amended and supplemented. Any repeal or modification of
this Article by the shareholders of the Corporation shall not adversely affect
any right or protection of a director of the Corporation existing hereunder with
respect to any act or omission occurring prior to such repeal or modification.
4. The county in which the office of the corporation is to be
located in the State of New York is: Nassau
5. The aggregate number of shares of stock that the
Corporation shall have authority to issue is (i) twenty million (20,000,000)
shares of Common Stock, $0.01 par value per share ("Common Stock"), and (ii)
three million (3,000,000) shares of Preferred Stock, $0.01 par value per share
("Preferred Stock"). The Board of Directors is hereby authorized to fix or alter
the rights, preferences, privileges and restrictions granted to or imposed upon
any series of Preferred Stock, and the number of shares constituting any such
series and the designation thereof, or of any of them.
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* * * * *
1. DESIGNATIONS AND AMOUNT. 200,000 shares of the
Preferred Stock of the Corporation, stated value of $25 (the
"Stated Value") per share, shall constitute a class of
Preferred Stock designated as "Redeemable Convertible
Preferred Stock" (the "Preferred Stock").
2. RANK. The Preferred Stock shall rank senior to all
classes and series of common stock of the Corporation now or
hereafter authorized, issued or outstanding, including,
without limitation, the Common Stock, par value $.01 per share
("Common Stock") of the Corporation, and any other classes and
series of capital stock of the Corporation now or hereafter
authorized, issued or outstanding and specifically designated
as being junior to the Preferred Stock (collectively, the
"Junior Securities"). Unless authorized by a vote of the
holders of a majority of the Preferred Stock then outstanding,
no other capital stock of the Corporation shall rank senior to
the Preferred Stock.
3. DIVIDENDS.
(a) The holders of shares of Preferred Stock shall be
entitled to receive, out of assets of the Corporation legally
available for payment, cash dividends at the rate of six
percent (6%) (or $1.50) per annum per share of Preferred Stock
(the "Preferred Dividend"), payable annually and in arrears on
the ninetieth day following the end of the fiscal year of The
Leonard Parker Company, a Florida corporation ("LPC") in each
year, commencing March 31, 1998 (each a "dividend payment
date"); PROVIDED, HOWEVER, that if on any such day banks in
the City of New York are authorized or required to close, a
Preferred Dividend otherwise payable on such day will be
payable on the next day that banks in the City of New York are
not authorized or required to close. Such Preferred Dividend
shall accrue from the date of issuance and be cumulative from
the later of the date of initial issuance of such shares of
Preferred Stock or the most recent dividend payment date on
which dividends have been paid on the Preferred Stock by the
Corporation. The party that holds the Preferred Stock on an
applicable record date, as shall be fixed by the Board, for
any Preferred Dividend will be entitled to receive such
Preferred Dividend, without regard to whether the Preferred
Stock is outstanding subsequent to the applicable record date
but prior to the applicable dividend payment date. If the
Corporation is legally capable of paying the Preferred
Dividend and elects to accrue such amount, such accrued
dividends shall bear interest at the rate of 13 1/2% per annum
until paid.
(b) So long as any Preferred Stock shall remain
outstanding, the holders of the Preferred Stock shall be
entitled to receive, and Parker Reorder Corporation, a Florida
corporation ("Parker Reorder"), shall pay, out of the
cumulative net profits (the
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"Cumulative Net Profits") of Parker Reorder, a cash payment
(the "Participating Dividend") equal to twenty percent (20%)
of (i) the Cumulative Net Profits of Parker Reorder, less (ii)
all Participating Dividends previously made to the holders of
the Preferred Stock hereunder, such Participating Dividend to
be payable annually to the holders of the Preferred Stock
ninety (90) days following the end of each fiscal year of
Parker Reorder. Such Participating Dividend shall be paid in
only such amounts as shall be authenticated by a certificate
executed by two officers of the Corporation. "Cumulative Net
Profits" shall mean net profits of Parker Reorder computed in
accordance with generally accepted accounting principles based
on the audited financial statements of Parker Reorder,
assuming that taxes and other charges are assessed as if it
were a standalone company, cumulative from January 1, 1997.
For purposes of calculating Cumulative Net Profits, expenses
allocated to Parker Reorder for goods or services provided by
any affiliate of the Company shall not exceed the sum Parker
Reorder would have paid for such goods or services to an
unaffiliated third party. In the event that the Preferred
Stock ceases to be outstanding at a time prior to the end of a
fiscal year of Parker Reorder, Cumulative Net Profits and,
consequently, the Participating Dividend, shall be computed as
of the end of the most recently completed fiscal quarter of
Parker Reorder and shall be paid within ninety (90) days after
the Preferred Stock ceases to be outstanding.
(c) So long as any Preferred Stock shall remain
outstanding, neither the Corporation nor any subsidiary
thereof shall pay or declare any dividend or make any
distribution upon, nor shall any distribution be made in
respect of, any Junior Securities, unless all accrued and
unpaid Preferred Dividends on the Preferred Stock for all
prior and applicable dividend periods have been or
contemporaneously are declared and paid and the Preferred
Dividends on the Preferred Stock for the current and
applicable dividend period, if accrued, have been or
contemporaneously are declared and set apart for payment.
4. RIGHTS ON LIQUIDATION, DISSOLUTION OR WINDING UP,
ETC.
(a) In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, the
assets of the Corporation available for distribution to the
stockholders of the Corporation, whether from capital, surplus
or earnings, shall be distributed in the following order of
priority:
(i) The holders of shares of Preferred Stock
shall be entitled to receive, in cash, prior and in preference
to any distribution to the holders of any Junior Securities an
amount equal to the Stated Value for each share of the
Preferred Stock then outstanding, plus an amount equal to all
accrued and unpaid Preferred Dividends and interest thereon,
if any, on such shares
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of Preferred Stock as of the date such payment is made to the
holders of shares of Preferred Stock; and
(ii) If there is a distribution pursuant to
Section 4(a)(i) hereof, the remaining assets of the
Corporation available for distribution, if any, to the
stockholders of the Corporation shall be distributed pro rata
to the holders of issued and outstanding shares of Common
Stock.
(b) If upon any liquidation, dissolution or winding
up of the Corporation, the assets distributable among the
holders of shares of Preferred Stock are insufficient to
permit the payment in full to the holders of all such shares
of all preferential amounts payable to all such holders, then
the entire assets of the Corporation thus distributable shall
be distributed ratably among the holders of the shares of
Preferred Stock in proportion to the respective amounts that
would be payable per share if such assets were sufficient to
permit payment in full.
(c) For purposes of this Section 4, a distribution of
assets in any liquidation, dissolution or winding up shall not
include (i) any consolidation or merger of the Corporation
with or into any other corporation, (ii) any liquidation,
dissolution, winding up or reorganization of the Corporation
immediately followed by reincorporation of another corporation
or (iii) a sale or other disposition of all or substantially
all of the Corporation's assets to another corporation;
PROVIDED, HOWEVER, that, in each case, effective provision is
made in the certificate of incorporation of the resulting and
surviving corporation or otherwise for the protection of the
rights of the holders of shares of Preferred Stock and that
the holders of a majority of the Preferred Stock then
outstanding, voting as a class, shall have given their
approval.
(d) After the payment of the full preferential
amounts provided for herein to the holders of shares of
Preferred Stock, such holders shall be entitled to no other or
further participation in the distribution of the assets of the
Corporation.
5. REDEMPTION OF PREFERRED STOCK.
(a) OPTIONAL REDEMPTION. At any time and from time to
time after the third anniversary of the closing of the
purchase by the Corporation of all of the common stock of LPC
(the "Closing"), the Corporation shall have the option, on a
pro rata basis, to (unless otherwise prevented by law) redeem
all, or any portion of, the Preferred Stock in accordance with
Section 5(c) and upon 30 days prior written notice of the
Corporation's intention to exercise the redemption option to
the holders of shares of Preferred Stock, at a redemption
price equal to the Stated Value for each such share of the
Preferred Stock then outstanding, plus an amount equal to all
accrued and unpaid Preferred Dividends and interest
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thereon, if any, on such shares of Preferred Stock as of the
date such redemption is exercised.
(b) MANDATORY REDEMPTION. At any time after the fifth
anniversary of the Closing, at the request of the holders of
all of the Preferred Stock, the Corporation must redeem,
within 90 days after such notice is received, all of the
Preferred Stock in accordance with Section 5(d), at a
redemption price equal to the Stated Value for each such share
of the Preferred Stock then outstanding, plus an amount equal
to all accrued and unpaid Preferred Dividends and interest
thereon, if any, on such shares of Preferred Stock as of the
date such redemption is exercised. If the Corporation does not
redeem all of the Preferred Stock as provided in this Section
5(b) within 90 days of notice duly served upon the Corporation
in accordance with Section 5(d) by holders of a majority in
interest of the Preferred Stock, then the holders of the
Preferred Stock, voting together as a class, shall be entitled
to elect such number of directors of the Corporation as shall
equal the minimum number required to equal a majority of such
Board of Directors. In order to effect such election, the
Corporation will, to the extent necessary, expand its Board of
Directors to allow for such additional members and will take
all such additional actions as may be reasonably necessary.
Upon payment of the redemption price of the Preferred Stock,
the class vote as described herein shall expire and the
holders of the Preferred Stock shall cause the directors so
elected to resign. The obligation of the Corporation to redeem
the Preferred Stock pursuant to this Section 5(b) shall be
secured by a pledge of all of the capital stock of LPC, as
evidenced by that certain Pledge Agreement, dated January 9,
1997.
(c) OPTIONAL REDEMPTION PROCEDURE. Notice of any
Preferred Stock redemption date pursuant to Section 5(a)
hereof shall be sent by the Corporation by first-class
certified mail, return receipt requested, postage prepaid, to
the holders of record of shares of Preferred Stock at their
respective addresses as the same shall appear on the books of
the Corporation at its principal corporate office. At any time
on or after any Preferred Stock redemption date, the holders
of record of shares of Preferred Stock to be redeemed on such
Preferred Stock redemption date in accordance with this
Section 5 shall be entitled to receive the applicable
redemption price upon actual delivery to the Corporation or
its agents of the certificates representing the shares to be
redeemed or delivery of an affidavit, in form reasonably
acceptable to the Corporation, that such certificates have
been lost or destroyed.
(d) MANDATORY REDEMPTION PROCEDURE. If the
Corporation receives an election from the holders of the
Preferred Stock pursuant to Section 5(b) hereof, notice of the
Preferred Stock redemption date (which shall be on or before
the date 90 days after notice to the Corporation) shall be
sent by the Corporation
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by first-class certified mail, return receipt requested,
postage prepaid, to the holders of record of shares of
Preferred Stock at their respective addresses as the same
shall appear on the books of the Corporation. At any time on
or after any Preferred Stock redemption date, the holders of
record of shares of Preferred Stock to be redeemed on such
Preferred Stock redemption date in accordance with this
Section 5 shall be entitled to receive the applicable
redemption price upon actual delivery to the Corporation or
its agents of the certificates representing the shares to be
redeemed.
6. VOTING RIGHTS. (a) Except as hereinafter set
forth, the holders of Preferred Stock shall be entitled to
vote together with the holders of the Common Stock on all
matters submitted to the holders of the Common Stock. Each
share of Preferred Stock shall be entitled to 4.17 votes.
(b) The holders of record of the Preferred Stock,
voting as a class, shall be entitled to elect two (2)
directors of the Corporation's Board of Directors at any time
that any of the Preferred Stock is outstanding.
(c) The holders of the Preferred Stock shall be
entitled to vote as a class with respect to any action of the
Corporation adversely affecting the Preferred Stock, its
rights and preferences.
7. CONVERSION OF PREFERRED STOCK.
(a) Any holder of the Preferred Stock shall have the
right at such holders' option, at any one time during the
period beginning immediately after the first anniversary of
the Closing and ending on the third anniversary of the
Closing, to convert all of such holder's shares of Preferred
Stock into (i) such whole number of shares of Common Stock
equal to the product of the Stated Value and the number of
such holder's shares of Preferred Stock, divided by the
average closing sale price (determined as provided in Section
7(e)) for the Common Stock for the 20 trading days immediately
prior to the date written notice of the holder's intention to
exercise the conversion option is given (the "Conversion
Rate"); PROVIDED, HOWEVER, that in no case shall the number of
shares of Common Stock into which each share of Preferred
Stock may be converted be less than five or greater than 25 or
(ii) such whole number of shares of common stock, par value
$1.00 per share, of Parker Reorder (the "Parker Common Stock")
equal to 9.80% of the outstanding shares of Parker Common
Stock as calculated immediately after such conversion.
(b) Before any holder of shares of Preferred Stock
shall be entitled to convert the same into shares of Common
Stock, such holder shall give (a) 10 days written notice in
the case of exercising the conversion rights set forth in
Section 7(a)(i)
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(which notice shall not be given later than 10 days prior to
the end of the third anniversary of the Closing) or (b) 30
days written notice in the case of exercising the conversion
rights set forth in Section 7(a)(ii) to the Corporation at its
principal corporate office of the election to convert the same
and shall state therein the name or names in which the
certificates for shares of Common Stock are to be issued.
After the expiration of the applicable notice period, the
holder of shares of Preferred Stock shall surrender the
certificates therefor, duly endorsed, at the office of the
Corporation or of any transfer agent for the Preferred Stock.
The Corporation shall, as soon as practicable thereafter,
issue and deliver at such office to such holder of Preferred
Stock, or to the nominee or nominees of such holder,
certificates for the number of shares of Common Stock or
Parker Common Stock to which such holders shall be entitled as
aforesaid. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date of such
surrender of the shares of Preferred Stock to be converted,
and the person or persons entitled to receive the shares of
Common Stock or Parker Common Stock issuable upon such
conversion shall be treated for all purposes as the record
holder or holders of such shares of Common Stock or Parker
Common Stock as of such date.
(c) The Corporation shall not be required to issue
fractions of shares of Common Stock upon conversion of the
Preferred Stock. If any fractions of a share would, but for
this Section, be issuable upon any conversion of Preferred
Stock, in lieu of such fractional share, the Company shall pay
to the holder, in cash, an amount equal to the same fraction
of the price per share of Common Stock as determined in
Section 7(a)(i). Notwithstanding the foregoing, Parker Reorder
may issue fractions of shares of Parker Common Stock upon
conversion of the Preferred Stock.
(d) The Corporation and Parker Reorder shall reserve
and shall at all times have reserved out of each of their
respective authorized but unissued shares of Common Stock
sufficient shares of Common Stock to permit the conversion of
the then outstanding shares of the Preferred Stock pursuant to
this Section 7. All shares of Common Stock or shares of Parker
Common Stock which may be issued upon conversion of shares of
the Preferred Stock pursuant to this Section 7 shall be
validly issued, fully paid and nonassessable.
(e) The closing price for each day shall be the last
reported sale price or, in case no such reported sale takes
place on such date, the average of the reported closing bid
prices for ten consecutive trading days ending the last
trading day before the day in question, on the principal
national securities exchange on which the Common Stock is
listed or admitted to trading or, if not listed or admitted to
trading on any national securities exchange, the closing sale
price of Common Stock, or in case no reported sale takes
place, the average of the daily closing bid and asked
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prices, for ten consecutive trading days ending the last
trading day before the day in question, on the Nasdaq SmallCap
Market ("NASDAQ"), or if Common Stock is not quoted on NASDAQ,
the OTC Electronic Bulletin Board or any comparable system,
the closing sale price or, in case no reported sale takes
place, the average of the closing bid and asked prices, as
furnished by any two members of the National Association of
Securities Dealers, Inc. selected from time to time by the
Corporation for that purpose. If Common Stock is not quoted on
NASDAQ, the OTC Electronic Bulletin Board or any comparable
system, the Board of Directors shall in good faith determine
the current market price on such reasonable basis as it
reasonably considers appropriate.
(f) If any of the following shall occur: (i) any
reclassification, stock split or change of outstanding shares
of Common Stock issuable upon conversion of shares of
Preferred Stock (other than a change in par value, or from par
value to no par value, or from no par value to par value, or
as a result of a subdivision or combination), or (ii) any
consolidation or merger to which the Corporation is a party
other than a merger in which the Corporation is the continuing
corporation and which does not result in any reclassification
or stock split of, or change (other than a change in name, or
par value, or from par value to no par value, or from no par
value to par value, or as a result of a subdivision or
combination) in, outstanding shares of Common Stock, then in
addition to all of the rights granted to the holders of
Preferred Stock as designated herein, the Corporation, or such
successor or purchasing corporation, as the case may be,
shall, as a condition precedent to such reclassification,
stock split, change, consolidation or merger, provide in its
certificate of incorporation or other charter document that
each share of Preferred Stock shall have rights which shall be
as nearly equivalent as may be practicable to the rights
provided for in this Section 7. If, in the case of any such
reclassification, stock split, change, consolidation or
merger, the stock or other securities and property (including
cash) receivable thereupon by a holder of Common Stock
includes shares of capital stock or other securities and
property of a corporation other than the successor purchasing
corporation, as the case may be, in such reclassification,
stock split, change, consolidation or merger, then the
certificate of incorporation or other charter document of such
other corporation shall contain such additional provisions to
protect the interests of the holders of shares of the
Preferred Stock as the Board of Directors shall reasonably
consider necessary by reason of the foregoing. The provision
of this Section 7(f) shall similarly apply to successive
consolidations, mergers, sales or conveyances.
(g) The Corporation will not, by amendment of its
Certificate of Incorporation, as amended, or through any
reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other
voluntary action, avoid the
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observance or performance of any of the terms to be observed
or performed hereunder by the Corporation, but will at all
times in good faith assist in the carrying out of all the
provisions of this Section 7 and in the taking of all such
action as may be necessary or appropriate in order to protect
the conversion rights of the holders of the Preferred Stock
against impairment.
8. NOTICES OF RECORD DATE. In the event of any taking
by the Corporation of a record of the holders of any class of
securities for the purpose of determining the holders thereof
who are entitled to receive any dividend or other
distribution, any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any
other securities or property, or to receive any other right,
the Corporation shall mail to each holder of Preferred Stock,
at least twenty (20) days prior to the date specified therein,
a notice specifying the date on which any such record is to be
taken for the purpose of such dividend, distribution or right,
and the amount and character of such dividend, distribution or
right.
9. RESTRICTION OF TRANSFERABILITY. The shares of
Preferred Stock may not be sold, assigned or transferred
except in accordance with the provisions of Sections 5 and 7.
10. OTHER. The Corporation and its affiliates may not
purchase shares of Preferred Stock except ratably from all
holders thereof.
* * * * *
6. The Secretary of State is designated as agent of the
corporation upon whom process against it may be served. The post office address
to which the Secretary of State shall mail a copy of any process against the
corporation served upon him is:
The Corporation
218 Rockaway Turnpike, Suite 707
Cedarhurst, New York 11516
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