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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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): September 19, 1996
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SYNERGISTIC HOLDINGS CORP.
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(Exact name of registrant as specified in its charter)
DELAWARE 33-75162 42-1358036
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
50 Laser Court, Hauppauge, New York 11788
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 436-5000
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405 Sixth Avenue, Suite 200, Des Moines, Iowa 50309
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Former name or former address, if changed since last report
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I. Items 1, 2 and 5
On September 19, 1996 (the "Closing"), Registrant's
wholly-owned subsidiary, Salex Industries, Inc., a Delaware corporation
("Subsidiary"), consummated the merger contemplated by the Merger Agreement,
dated June 27, 1996, as amended and restated on September 18, 1996 (the "Merger
Agreement), by and among Registrant, Subsidiary, Salex Holding Corporation, a
Delaware corporation ("Salex"), Salex Fleet Specialist Corp., a New York
corporation, Salex Fleet Management Corp., a New York corporation, Salex
National Account Corp., a New York corporation, Salex Salvage Disposal Corp., a
New York corporation, Salex Financial Services Corp., a New York corporation
(collectively, the "Salex Subsidiaries"), Salvatore Crimi ("Crimi"), the
Salvatore Crimi Family Limited Partnership, Pershing Sun, Michael Sun, Jennifer
Sun, Susan Tauss-Giovinco, Francis Fitzpatrick and Harrison Fitzpatrick
(collectively, the "Salex Stockholders") and T. Marshall Swartwood and Thomas M.
Swartwood.
Pursuant to the Merger Agreement, Subsidiary was merged with
and into Salex and (i) all of the shares of common stock of Salex (the "Salex
Common Stock") held by Registrant were cancelled and extinguished and (ii) all
of the 4,503,000 issued and outstanding shares of Salex Common Stock owned by
the Salex Stockholders were converted into (a) 4,003,165 shares of common stock,
par value $.01 per share, of the Registrant ("Synergistic Common Stock") and
(ii)
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1,000 shares of Series B Convertible Preferred Stock ("Synergistic Preferred
Stock"). Upon the filing by the Registrant of a Certificate of Amendment to its
Certificate of Incorporation increasing the authorized capital stock of the
Registrant, each share of Synergistic Preferred Stock shall be converted into
2,059.106 shares of Synergistic Common Stock. The shares of Synergistic Common
Stock delivered at the closing, together with the shares of Synergistic Common
Stock into which the shares of Synergistic Preferred Stock are convertible,
represent, in the aggregate, 51% of the fully-diluted, issued and outstanding
shares of the Synergistic Common Stock.
The amount of consideration paid by Registrant for the shares of Salex
Common Stock was determined by negotiations among the representatives of the
Registrant and Salex.
Salex, through the Salex Subsidiaries, provides automobile
asset management services and manages, on a nationwide basis, the maintenance
and repair of fleets of automobiles and small trucks which are owned, leased and
operated by corporate customers (the "Business"). Following the Merger, the
Registrant changed its principal place of business from 405 Sixth Avenue, Des
Moines, Iowa to 50 Laser Court, Hauppauge, New York.
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II. Action Taken Immediately Prior to the Closing.
Crimi sold to the Registrant 1,453,600 shares of Salex Common
Stock owned by him for the purchase price of $2,000,000 which was paid by the
issuance of the Registrant of two promissory notes - one for $1,055,562.19 and
one for $944,437.81. Both Promissory Notes were amended by a Letter Agreement
dated September 18, 1996.
III. Action Immediately After the Closing.
The Registrant and Dickinson Holding Corporation
("Dickinson"), a Delaware corporation, entered into (i) a Stock and Asset
Purchase Agreement pursuant to which the Registrant sold (the "Divestiture") (x)
all of the outstanding shares of its subsidiary, Dickinson & Co., Inc., a
registered broker/dealer and (y) its investment in Electronic Designs, Inc.
("EDIX"); (ii) an Indemnification Agreement whereby Dickinson is obligated to
indemnify and hold the Registrant harmless from and against any and all
liabilities (including any alleged or threatened claims) relating to or arising
out of, or in any matter related to (a) the ownership, operation or conduct of
Dickinson & Co., Inc. and/or the EDIX Assets (as defined in the Indemnification
Agreement) and any liability under the EDIX Notes (as defined in the
Indemnification Agreement), (b) the profit participation agreements between the
Registrant and the holders of the EDIX Notes, and (c) any other obligation or
liability arising in connection with the solicitation and issuance of the EDIX
Notes,
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in each case, whether occurring prior to or after the Divestiture (the
"Divestiture Liabilities") and for all losses or damages incurred by the
Registrant with respect to the Divestiture Liabilities and (iii) a Tax Indemnity
Agreement pursuant to which Dickinson has agreed to reimburse the Registrant for
50% of any Additional Income Taxes (as defined in the Tax Indemnity Agreement)
paid as a result of the Divestiture. As consideration for the stock and assets
that were transferred pursuant to the Divestiture, Dickinson transferred to the
registrant 750,000 shares of its Synergistic Common Stock and a $500,000
promissory note (the "Divestiture Promissory Note") secured by 250,000 shares of
its Synergistic Common Stock pursuant to a Pledge Agreement between Dickinson
and the Registrant. Dickinson is owned by T. Marshall Swartwood and Thomas M.
Swartwood who were both directors and officers of Synergistic.
III. Actions Taken Simultaneously with the Closing.
1. All of the officers of the Registrant resigned, effective
as of the Closing. The following persons were appointed to the positions set
forth opposite their names:
Salvatore Crimi - Chief Executive Officer and
Chairman of the Board
Jeffrey Dickson - Chief Operating Officer and
President
Pershing Sun - Senior Vice President and
Chief Information Officer
Chris Cucuzza - Chief Accounting Officer
Angelo Crimi - Secretary
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2. Registrant increased the authorized number of directors
constituting the Board of Directors to seven (7) members and the following were
elected as directors: Richard Belz, Crimi, Jeffrey Dickson, Angelo Crimi,
Pershing Sun, Thomas Swartwood and Francis Fitzpatrick. Crimi was nominated and
appointed Chairman of the Board.
3. Each issued and outstanding share of 8.5% Series A
Preferred Convertible Stock of Salex, liquidation value $100 per share ("Salex
Preferred"), and each warrant of Salex, exercisable for one share of Salex
Common Stock ("Salex Warrants") was converted into an identical share of
preferred stock of the Registrant, in the case of the Salex Preferred, and into
a warrant of the Registrant bearing identical terms and conditions as the Salex
Warrants.
4. The Registrant granted Crimi an option to purchase 500,000
shares of Synergistic Common Stock at an exercise price of $1.50 per share, with
a three-year term and exercisable in the event that the net income of the
Registrant (before taxes) equals or exceeds $2.7 million for the year ended
April 30, 1997. Crimi's option (and the underlying common stock) has piggy-back
registration rights.
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5. The Registrant granted options to the Salex Stockholders to
purchase 179,333 shares of Synergistic Common Stock at an exercise price of
$2.125 per share. The options are exercisable 20% per year over the next five
years. The options granted thereunder (and the underlying common stock) have
piggy-back registration rights.
6. The Salex Stockholders entered into a Registration Rights
Agreement with the Registrant, granting them registration rights with respect to
the shares of Synergistic Common Stock they received pursuant to the Merger.
7. The Registrant assumed the mortgage of Salex and released
Crimi from any obligation he may have with respect to such mortgage.
8. The Registrant also assumed from Salex (i) its employment
agreement with Crimi and (ii) its employment agreement with Pershing Sun.
The descriptions of the Merger Agreement and the other
agreements described herein are qualified in their entirety by reference to the
copy of the Merger Agreement and the other agreements which are filed exhibits
to this Report and which are incorporated herein by reference.
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Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits
A. Financial Statements of Salex.
It is impractical to provide the required financial
information at this time. The required financial information for the business
acquired will be filed under cover of Form 8-K within 60 days of the date this
Form 8-K was required to be filed.
B. Pro-Forma Financial Information and Exhibits.
It is impractical to provide the required pro forma financial
information at this time. The required pro forma financial information for the
business acquired will be filed under cover of Form 8-K within 60 days of the
date this Form 8-K was required to be filed.
C. Exhibit 10.1 - Amended and Restated Merger Agreement,
dated as of September 18, 1996, by and among
Registrant, the Subsidiary, Salex, the Salex
Subsidiaries, the Salex Stockholders, Thomas M.
Swartwood and T. Marshall Swartwood.
D. Exhibit 10.2 - List of Omitted Schedules/Exhibits to
Merger Agreement.
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E. Exhibit 10.3 - Promissory Note issued by Registrant to Crimi
for $1,055,562.19 dated September 18, 1996.
F. Exhibit 10.4 - Promissory Note issued by Registrant to Crimi
for $944,437.81 dated September 18, 1996.
G. Exhibit 10.5 - Amendment to the Promissory Notes dated
September 18, 1996.
H. Exhibit 10.6 - Stock and Asset Purchase Agreement
between the Registrant and Dickinson dated September
18, 1996.
I. Exhibit 10.7. - Indemnification Agreement between the
Registrant and Dickinson dated September 18, 1996.
J. Exhibit 10.8 - Tax Indemnity Agreement among the
Registrant, Dickinson and Dickinson & Co., Inc. dated
September 18, 1996.
K. Exhibit 10.9 - The Divestiture Promissory Note issued
by Dickinson to the Registrant dated September 18,
1996.
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L. Exhibit 10.10 - Stock Pledge and Security Agreement
between the Registrant and Dickinson dated September
18, 1996.
M. Exhibit 10.11 - Stock Option Agreement between Crimi
and the Registrant dated September 18, 1996.
N. Exhibit 10.12 - Stock Option Agreement among the Salex
Stockholders and the Registrant dated September 18,
1996.
O. Exhibit 10.13. - Form of Registration Rights Agreement
among each of the Salex Stockholders and the Registrant
dated September 18, 1996.
P. Exhibit 10.14 - Assumption by Registrant of Salex's
Mortgage dated September 18, 1996.
Q. Exhibit 10.15 - Assumption by Registrant of Salex's
Employment Agreement with Crimi.
R. Exhibit 10.16 - Assumption by Registrant of Salex's
Employment Agreement with Pershing Sun.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SYNERGISTIC HOLDINGS CORP
By:/s/ Salvatore Crimi
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Salvatore Crimi, Chief
Executive Officer
Date: October 4, 1996
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INDEX TO EXHIBITS
Exhibit 10.1 - Amended and Restated Merger Agreement, dated
as of September 18, 1996, by and among
Registrant, the Subsidiary, Salex, the Salex
Subsidiaries, the Salex Stockholders, Thomas
M. Swartwood and T. Marshall Swartwood.
Exhibit 10.2 - List of Omitted Schedules/Exhibits to Merger
Agreement.
Exhibit 10.3 - Promissory Note issued by Registrant to
Crimi for $1,055,562.19 dated September 18,
1996.
Exhibit 10.4 - Promissory Note issued by Registrant to
Crimi for $944,437.81 dated September 18,
1996.
Exhibit 10.5 - Amendment to the Promissory Notes dated
September 18, 1996.
Exhibit 10.6 - Stock and Asset Purchase Agreement between
the Registrant and Dickinson dated September
18, 1996.
Exhibit 10.7. - Indemnification Agreement between the
Registrant and Dickinson dated September 18,
1996.
Exhibit 10.8 - Tax Indemnity Agreement among the
Registrant, Dickinson and Dickinson & Co.,
Inc. dated September 18, 1996.
Exhibit 10.9 - The Divestiture Promissory Note issued by
Dickinson to the Registrant dated September
18, 1996.
Exhibit 10.10 - Stock Pledge and Security Agreement between
the Registrant and Dickinson dated September
18, 1996.
Exhibit 10.11 - Stock Option Agreement between Crimi and the
Registrant dated September 18, 1996.
Exhibit 10.12 - Stock Option Agreement among the Salex
Stockholders and the Registrant dated
September 18, 1996.
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Exhibit 10.13. - Form of Registration Rights Agreement among
each of the Salex Stockholders and the
Registrant dated September 18, 1996.
Exhibit 10.14 - Assumption by Registrant of Salex's Mortgage
dated September 18, 1996.
Exhibit 10.15 - Assumption by Registrant of Salex's
Employment Agreement with Crimi.
Exhibit 10.16 - Assumption by Registrant of Salex's
Employment Agreement with Pershing Sun.
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AMENDED AND RESTATED
STOCK PURCHASE AGREEMENT
AND
AGREEMENT AND PLAN OF MERGER
SALEX HOLDING CORPORATION
AND
SALEX INDUSTRIES, INC.
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AMENDED AND RESTATED
STOCK PURCHASE AGREEMENT
AND
AGREEMENT AND PLAN OF MERGER
AMENDED AND RESTATED STOCK PURCHASE AGREEMENT AND AGREEMENT
AND PLAN OF MERGER dated as of September ___, 1996 (the "Agreement"), among
Salex Holding Corporation, a Delaware corporation ("Salex"); Salex Industries,
Inc., a Delaware corporation and a wholly-owned subsidiary of Synergistic
Holdings Corp., a Delaware corporation ("Subsidiary"); Synergistic Holdings
Corp., a Delaware corporation ("Synergistic"); Salex Fleet Specialist Corp., a
New York corporation, Salex Fleet Management Corp., a New York corporation,
Salex National Account Corp., a New York corporation, Salex Salvage Disposal
Corp., a New York corporation, and Salex Financial Services Corp., a New York
corporation (collectively, the "Salex Subsidiaries"), Salvatore Crimi ("Crimi"),
the Salvatore Crimi Family Limited Partnership ("Crimi Partnership"), Pershing
Sun ("Pershing"), Jennifer Sun ("Jennifer"), Michael Sun ("Michael"), Harrison
A. Fitzpatrick ("Harrison"), Francis X. Fitzpatrick ("Francis") and Susan Tauss
Giovinco ("Susan") (collectively the "Salex Stockholders"), and T. Marshall
Swartwood and Thomas M. Swartwood (collectively, the "Swartwood Stockholders").
W I T N E S S E T H :
WHEREAS, Salex and the Salex Subsidiaries manage the
maintenance and repair of fleets of automobiles and small trucks
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which are owned, leased, and operated by corporate customers on a nationwide
basis (the "Business"); and
WHEREAS, Synergistic currently owns 1,943,400 shares of Common
Stock of Salex constituting 24.6% of the issued and outstanding shares of Common
Stock of Salex, par value $0.01 per share ("Salex Common Stock"), and now
desires to acquire the entire Business by means of the purchase of 1,453,600
shares of Salex Common Stock from Crimi and the immediate merger of Subsidiary
with and into Salex; and
WHEREAS, the Board of Directors of Synergistic, the Board of
Directors of Subsidiary, Synergistic, as the sole stockholder of Subsidiary, and
the Board of Directors of Salex and the Salex Stockholders have (a) determined
that it is in the best interests of their respective companies for Subsidiary to
be merged with and into Salex upon the terms and subject to the conditions set
forth herein; (b) approved the merger of Subsidiary with and into Salex (the
"Merger") in accordance with the General Corporation Law of the State of
Delaware ("Delaware Law"), and upon the terms and subject to the conditions set
forth herein; (c) executed a Stock Purchase Agreement and Agreement and Plan of
Merger dated as of June 27, 1996 (the "Merger Agreement"); and (d) have
determined that it is in the best interests of their respective companies to
amend and restate the Merger Agreement in its entirety upon the terms and
subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and
the mutual covenants and agreements herein contained, and
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intending to be legally bound hereby, the parties hereto do hereby agree as
follows:
1. The Transaction.
1.1. The Stock Purchase.
1.1.1. (a) Agreement of Purchase and Sale of
Certain of Crimi's Salex Common Stock. Subject to the terms and conditions set
forth in this Agreement and in reliance upon the representations, warranties,
covenants and conditions herein contained, immediately prior to the Effective
Time provided below in Subsection 1.2.2, and subject in all respects to the
consummation of the Merger and the occurrence of the conditions set forth in
Section 6.2 hereof, which the parties acknowledge shall be an express condition
subsequent to the transfer of the Crimi Shares (as hereafter defined), Crimi
shall sell, convey, assign, transfer and deliver to Synergistic, and Synergistic
shall purchase from Crimi, good and marketable title to 1,453,600 shares of
Salex Common Stock owned by him (the "Crimi Shares"), which shares, immediately
after the consummation of such sale, shall represent 18.4% of the issued and
outstanding Salex Common Stock, on a fully-diluted basis, free and clear of any
and all liens, claims, charges or encumbrances of any nature whatsoever, subject
to the Crimi Obligation to AG, described in paragraph (b) below.
(b) The foregoing representations
are subject to the obligations of Crimi to Alex Gianoplus ("AG") pursuant to
that certain Memorandum of Sale dated October 12,
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1989, and related promissory notes, pursuant to which Crimi purchased a portion
of Crimi's Salex Common Stock from AG (the "Crimi Obligation to AG").
1.1.2. Crimi Shares Purchase Price. The purchase
price for the Crimi Shares shall be $2,000,000 (the "Crimi Share Purchase
Price"), represented by two promissory notes of Synergistic in the form of
Exhibits 1.1.2A and 1.1.2B hereto (the "Notes").
1.1.3. Closing. The closing of the sale and
purchase of the Crimi Shares provided for herein shall take place on or before
10 A.M. at the offices of Tenzer Greenblatt LLP immediately prior to the
Effective Time.
Subject to the terms and conditions herein contained, at the
Closing, Synergistic shall deliver to Crimi (in addition to any other documents
and instruments to be delivered by it pursuant to this Agreement), the Crimi
Share Purchase Price represented by the Notes.
Subject to the terms and conditions herein
contained, Crimi shall deliver to Synergistic (in addition to the documents and
instruments to be otherwise delivered pursuant to this Agreement) stock
certificates and stock powers endorsed in blank representing the Crimi Shares
free and clear of all liens, claims, charges and encumbrances of any nature
whatsoever (other than the Crimi Obligation to AG) and all third party
governmental, administrative and other third party consents and approvals, as
shall be, in the reasonable opinion of Synergistic, necessary or appropriate in
order to convey, transfer and assign
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to and vest in Synergistic good and marketable right, title and interest in and
to the Crimi Shares, free and clear of all liens, security interests, claims,
charges and encumbrances of any nature whatsoever, but in the case of Crimi
personally, subject to the Crimi Obligation to AG.
1.2. The Merger of Salex and the Subsidiary.
1.2.1. Merger. At the Effective Time (as
defined in Subsection 1.2.2), and subject to and upon the terms and conditions
of this Agreement and the Delaware Law, Subsidiary shall be merged with and into
Salex, the separate corporate existence of Subsidiary shall cease, and Salex
shall continue as the surviving corporation. Salex, as the surviving corporation
after the Merger, is hereinafter sometimes referred to as the "Surviving
Corporation."
1.2.2. Effective Time. As promptly as
practicable after the satisfaction or waiver of the conditions set forth in
Section 6, Subsidiary and Salex shall cause the Merger to be consummated by
filing a Certificate of Merger (the "Agreement of Merger") with the Secretary of
State of the State of Delaware in the form of Exhibit 1.2.2 hereto and making
such other filings as may be required by Delaware Law, in such form as required
by and executed in accordance with such laws (the time of the last of such
filings to be made being the "Effective Time").
1.2.3. Effect of the Merger. At the
Effective Time, the effect of the Merger shall be as provided in the applicable
provisions of Delaware Law.
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1.2.4. Certificate of Incorporation; By-
Laws.
(a) The Certificate of
Incorporation of Salex, as in effect immediately prior to the Effective Time
(annexed hereto as Exhibit 1.2.4(a), shall be the Certificate of Incorporation
of the Surviving Corporation until thereafter amended as provided by law or such
Certificate of Incorporation.
(b) The By-Laws of Salex, as in
effect immediately prior to the Effective Time (annexed hereto as Exhibit
1.2.4(b)), shall be the By-Laws of the Surviving Corporation until thereafter
amended as provided by law or the Certificate of Incorporation of the Surviving
Corporation or the By-Laws of the Surviving Corporation.
1.2.5. Directors and Officers of Salex and
Synergistic.
(a) The Board of Directors of
Salex shall become the initial directors of the Surviving Corporation and
Richard Belz, Crimi and four persons designated by Crimi shall be additional
directors of Synergistic, each to hold office in accordance with applicable law,
the Certificate of Incorporation and By-Laws of the Surviving Corporation and of
Synergistic, respectively, until resignation, removal or replacement.
Immediately prior to the Merger, and as a condition thereto, Synergistic and the
Swartwood Stockholders shall cause the Board of Directors of Synergistic to be
expanded to seven (7) Directors and cause Richard Belz, Crimi and four persons
designated by Crimi to be elected as Directors of Synergistic and
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shall undertake all filings as shall be required in connection with the election
and maintenance of ______________________ in such positions.
1.2.6. Conversion of Securities. At the
Effective Time, by virtue of the Merger:
(a) Any share of Salex Common Stock held in the treasury
of Salex shall be cancelled and extinguished without any conversion thereof and
no payment shall be made with respect thereto.
(b) Any share of Salex Common Stock owned by Synergistic
(including the Crimi Shares) shall be cancelled and extinguished without any
conversion thereof and no payment shall be made with respect thereto (except in
connection with the purchase thereof in accordance with the provision of
Subsection 1.1 hereof).
(c) All of the 4,503,000 issued and outstanding shares
(the "Shares") of the Salex Common Stock owned by the Salex Stockholders shall
be converted into the right to receive in the aggregate (i) 4,003,165 shares of
Common Stock, par value $.01 per share, of Synergistic ("Synergistic Common
Stock") and (ii) 1,000 shares of Series B Convertible Preferred Stock (the
"Synergistic Preferred Stock"). Upon the filing by Synergistic of a Certificate
of Amendment increasing the authorized capital stock of the Company, each share
of Synergistic Preferred Stock shall be convertible into 2,059.106 shares of
Synergistic Common Stock. The shares of Synergistic Common Stock delivered at
the Effective Time, together with the
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shares of Synergistic Common Stock into which the Synergistic Preferred Stock is
convertible, represent, in the aggregate, 51% of the fully diluted issued and
outstanding shares of common stock of Synergistic (the "Share Consideration").
Such 51% shall be calculated before the further dilution effect of the
conversion rights of holders of shares of convertible preferred stock and
warrants to purchase shares of Salex Common Stock, which securities shall be
converted into shares of securities of Synergistic in accordance with the terms
of Subsection 1.2.6(d) below.
(d) Each issued and outstanding share of 8.5% Series A
Preferred Convertible Stock, liquidation value $100 per share ("Salex
Preferred"), and each Warrant, each exercisable for one share of Common Stock of
Salex ("Salex Warrants") shall be converted into an identical share of preferred
stock of Synergistic, in the case of the Salex Preferred, and into a warrant of
Synergistic bearing identical terms and conditions as the Salex Warrants.
(e) Shares of the common stock, par value $.01 per share,
of the Subsidiary issued and outstanding at the Effective Time shall remain
outstanding and unchanged and shall constitute all of the issued and outstanding
shares of the capital stock of the Surviving Corporation.
(f) At the Effective Time, the stock transfer books of
Salex shall be closed and there shall be no further registration of transfers of
any shares of Salex Common Stock thereafter on the records of Salex.
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(g) From and after the Effective Time, the holders of
certificates evidencing ownership of shares of Salex Common Stock shall cease to
have any rights with respect to Salex Common Stock, except as otherwise provided
herein or by law.
(h) Notwithstanding anything to the contrary in this
Subsection 1.2.6, no party hereto shall be liable to a holder of a certificate
or certificates formerly representing Shares for any amount properly paid to a
public official pursuant to any applicable property, escheat or similar law.
2. Representations and Warranties as to Salex. Salex and each
of the Salex Subsidiaries, jointly and severally, and each of the Salex
Stockholders (other than Harrison, Francis and Susan), severally only represent
and warrant to Synergistic and Subsidiary as follows:
2.1. Organization, Standing and Power. Salex and
each Salex Subsidiary are corporations duly organized, validly existing and in
good standing under the laws of the state of their incorporation, with full
corporate power and corporate authority to (a) own, lease and operate their
properties, (b) carry on their business as currently conducted by them and (c)
execute and deliver, and perform under this Agreement and each other agreement
and instrument to be executed and delivered by them pursuant hereto. There are
no states or jurisdictions in which the character and location of any of the
properties owned or leased by Salex or any Salex Subsidiary, or the conduct of
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their respective businesses makes it necessary for Salex or any Salex Subsidiary
to qualify to do business as a foreign corporation, where the failure to so
qualify would have a material adverse effect on the business, operations or
financial condition of Salex. True and complete copies of the Certificate of
Incorporation of Salex and of each Salex Subsidiary and all amendments thereto,
and of the By-Laws of Salex and of each Salex Subsidiary, as amended to date,
have heretofore been furnished to Synergistic and Subsidiary. Minute books of
Salex and of each Salex Subsidiary heretofore exhibited to Synergistic contain
complete and accurate records of all meetings and other corporate actions of
each corporation's stockholders and Board of Directors (including committees of
its Boards of Directors).
2.2. Capitalization.
(a) The authorized capital stock of Salex consists of
15,000,000 shares of Salex Common Stock, of which 7,900,000 shares are issued
and outstanding, and 5,000,000 shares of preferred stock, of which no shares are
issued and outstanding. All issued shares of the Salex Common Stock have been
duly and validly issued and are fully paid and nonassessable and are free and
clear of any liens, claims, charges or encumbrances of any nature whatsoever,
except in the case of Crimi personally, the Crimi Obligation to AG. Except as
set forth in Schedule 2.3, there are no outstanding options, warrants, rights,
puts, calls, commitments, conversion rights, plans or other agreements of any
character to which Salex is a party or otherwise bound which provide for the
acquisition,
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disposition or issuance of any issued but not outstanding, outstanding, or
authorized and unissued shares of Salex Common Stock. There are no preemptive or
similar rights attached to the Salex Common Stock.
(b) The authorized capital stock of the Salex
Subsidiaries and the shares thereof which are issued and outstanding are set
forth on Schedule 2.2 hereof. All issued shares of the Salex Subsidiaries
capital stock have been duly authorized, validly issued and outstanding and are
fully paid and nonassessable and owned of record and beneficially by Salex.
Other than with respect to the Series A Preferred Stock and related warrants
contemplated by the Redstone Private Placement, there are no outstanding
options, warrants, rights, puts, calls, commitments, exchange, conversion
rights, plans or other agreements of any character to which the Salex
Subsidiaries or the Salex Stockholders are a party or otherwise bound which
provide for the acquisition, disposition or issuance of any issued but not
outstanding, or authorized and unissued shares, of the Salex Subsidiaries
capital stock. There is no personal liability, and there are no preemptive or
similar rights, attached to the Salex Subsidiaries capital stock.
2.3. Ownership of Salex Common Stock. The Salex
Stockholders have good and marketable title to all shares of the issued and
outstanding shares of Salex Common Stock, free and clear of any and all liens,
adverse claims, security interests, pledges, mortgages, charges and encumbrances
of any nature whatsoever (except for federal and state securities law
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restrictions of general applicability and the Crimi Obligation to AG), and on
the Closing Date will own all of such Salex Common Stock, free and clear of any
and all liens, adverse claims, security interests, pledges, mortgages, charges
and encumbrances of any nature whatsoever (except for federal and state
securities law restrictions of general applicability and the Crimi Obligation to
AG), including, but not limited to, any claims by any present or former
stockholders of Salex. Set forth on Schedule 2.3, is a complete and correct list
of the names, addresses and record and beneficial stock ownership of the Salex
Stockholders, all of which shares are owned by the person listed thereon free
and clear of all claims, liens and encumbrances of any nature whatsoever (except
with respect to the Crimi Obligation to AG). Other than with respect to the
holders of Series A Preferred Stock and related warrants contemplated by the
Redstone Private Placement, no holders of any of the securities of Salex have
any rights, "demand," "piggy-back" or otherwise, to have such securities
registered under the Securities Act of 1933, as amended, except as otherwise set
forth on Schedule 2.3.
2.4. Interests in Other Entities.
(a) Salex does not (i) own, directly or indirectly, of
record or beneficially, any shares of voting stock or other equity securities of
any other corporation except the Salex Subsidiaries, as set forth on Schedule
2.2(b), (ii) have any ownership interest, direct or indirect, of record or
beneficially, in any unincorporated entity, and (iii) have any obligation,
direct or indirect, present or contingent, (A) to
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purchase or subscribe for any interest in, advance or loan monies to, or in any
way make investments in, any other person or entity, or (B) to share any profits
or capital investments or both.
(b) None of the Salex Stockholders
(i) owns, directly or indirectly, of record or beneficially, any shares of
voting stock or other equity securities of any other corporation engaged in the
same or similar business to that business engaged in by Salex or the Salex
Subsidiaries at the Effective Time (other than not more than one percent (1%) of
the publicly-traded capital stock of corporations engaged in such business,
which stock is held solely for investment purposes); (ii) has any ownership
interest, direct or indirect, of record or beneficially, in any unincorporated
entity engaged in the same or similar business to that business engaged in by
Salex and the Salex Subsidiaries at the Effective Time; and (iii) has any
obligation, direct or indirect, present or contingent, (A) to purchase or
subscribe for any interest in, advance or loan monies to, or in any way make
investments in, any other person or entity engaged in the same or similar
business to that business engaged in by Salex or the Salex Subsidiaries at the
Effective Time, or (B) to share any profits or capital investments or both from
a entity engaged in the same or similar business to that business engaged in by
Salex or the Salex Subsidiaries at the Effective Time.
2.5. Authority. The execution and delivery by
Salex of this Agreement and of all of the agreements to be
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executed and delivered by Salex and the Salex Subsidiaries pursuant hereto
(collectively, the "Salex Documents"), the performance by Salex and the Salex
Subsidiaries of their obligations hereunder and thereunder, and the consummation
of the transactions contemplated hereby and thereby, have been duly and validly
authorized by all necessary corporate action on the part of Salex and the Salex
Subsidiaries. The Salex Stockholders are individuals or entities having all
necessary capacity, power and authority to execute and deliver this Agreement
and such other agreements to be executed and delivered pursuant hereto and to
consummate the transaction consummated hereby and thereby. This Agreement is,
and when executed and delivered by Salex, the Salex Subsidiaries and the Salex
Stockholders, together with each of the other agreements to be delivered by
either or both of them pursuant hereto, will be, the valid and binding
obligations of Salex, the Salex Subsidiaries and the Salex Stockholders, to the
extent they are parties thereto, in accordance with their respective terms,
except as the same may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws affecting the rights of creditors generally and subject
to the rules of law governing (and all limitations on) specific performance,
injunctive relief, and other equitable remedies.
2.6. Noncontravention. Except as set forth on
Schedule 2.6, neither the execution and delivery by Salex, the Salex
Subsidiaries or the Salex Stockholders of this Agreement or of any other Salex
Documents to be executed and delivered by them, nor the consummation of any of
the transactions
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contemplated hereby or thereby, nor the performance by either or both of them of
any of their respective obligations hereunder or thereunder, will (nor with the
giving of notice or the lapse of time or both would) (a) conflict with or result
in a breach of any provision of the Certificate of Incorporation, By-Laws or
other constituent documents of Salex or the Salex Subsidiaries, each as amended
to date, or (b) give rise to a default, or any right of termination,
cancellation or acceleration, or otherwise be in conflict with or result in a
loss of contractual benefits to any of them, under any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, license, agreement or
other instrument or obligation to which any or each of them is a party or by
which any or each of them or any of their respective assets may be bound, or
require any consent, approval or notice under the terms of any such document or
instrument, or (c) violate any order, writ, injunction, decree, law, statute,
rule or regulation of any court or governmental authority which is applicable to
any or each of them, or (d) result in the creation or imposition of any lien,
adverse claim, restriction, charge or encumbrance upon any of the assets of
Salex or the Salex Subsidiaries (the "Assets"), or (e) interfere with or
otherwise adversely affect the ability of Salex to carry on the Business after
the Effective Time on substantially the same basis as is now conducted by Salex
and the Salex Subsidiaries.
2.7. Financial Statements.
(a) Attached as Exhibit 2.7 are (i)
true, correct and complete copies of the Financial Statements of
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Salex and the Salex Subsidiaries and their affiliates as at and for the fiscal
years ended April 30, 1993, 1994 and 1995, and the related statements of
operations, retained earnings and cash flows for the fiscal years then ended, as
reported on by BDO Seidman, LLP (the "Audited Financial Statements") and (ii)
true, correct and complete copies of the unaudited balance sheets of Salex and
the Salex Subsidiaries and the related statement of operations, and statement of
retained earnings and cash flows for the eleven (11) month period ended March
31, 1996 (the "Unaudited Interim Financial Statements") which have heretofore
been delivered by Salex to Synergistic. The Audited Financial Statements were
prepared in accordance with generally accepted accounting principles ("GAAP")
consistently applied, and the Audited Financial Statements and Unaudited
Financial Statements fairly present the consolidated financial position of Salex
and the Salex Subsidiaries as at the dates thereof and its results of operations
for the periods indicated, subject to normal recurring adjustments and, in the
case of the Unaudited Interim Financial Statements, the inclusion of notes which
might be required as a result of year-end audit.
(b) Salex will deliver to
Synergistic and the Subsidiary (a) copies of the unaudited consolidated balance
sheet of Salex and the Salex Subsidiaries at and for the year ended April 30,
1996, together with the related statements of income, stockholders' equity and
cash flows as at and for the year ended on such date. The books and records of
Salex are complete and correct, have been maintained in accordance with
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past practices, and accurately reflect the basis for the financial condition,
results of operations and cash flow of Salex and the Salex Subsidiaries as set
forth in the Unaudited Interim Financial Statements.
2.8. Absence of Undisclosed Liabilities. Since
January 1, 1996, Salex and the Salex Subsidiaries have no liabilities or
obligations of any nature whatsoever, whether accrued, matured, unmatured,
absolute, contingent, direct or indirect or otherwise, which have not been (a)
in the case of liabilities and obligations of a type customarily reflected on a
corporate balance sheet, set forth on the balance sheet of the Unaudited Interim
Financial Statements, or (b) incurred in the ordinary course of business since
the dates of the Unaudited Interim Financial Statements, or (c) in the case of
other types of liabilities and obligations, described in any of the Schedules
delivered pursuant hereto or omitted from said Schedules in accordance with the
terms of this Agreement, or arising under contracts or leases listed in such
Schedules or other contracts or leases which are omitted from such Schedules in
accordance with the terms of this Agreement, or (d) incurred, consistent with
past practice, in the ordinary course of business of Salex.
2.9. Properties. Except as set forth on Schedule
2.9, Salex and the Salex Subsidiaries have marketable title to all of the
properties and assets reflected on the Unaudited Interim Financial Statements
and which, taken as a whole, are material to the conduct of their business,
except properties or assets sold or otherwise disposed of in the ordinary course
of
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business, free and clear of any and all mortgages, liens (including liens for
current Taxes, as defined in Subsection 2.15(c) hereof), pledges, claims,
charges and encumbrances of any nature whatsoever (hereinafter collectively,
"Liens"), other than Liens not yet due and payable or being contested in good
faith by appropriate proceedings, and other than such Liens or imperfections of
title, if any, which are not substantial in character, amount or extent and do
not materially interfere with the present or continued use of such property or
otherwise materially adversely affect the value or transferability thereof or
otherwise materially impair the Business or operations of Salex as conducted on
the date hereof. Listed separately on Schedule 2.9 hereof are all material
plants, structures, and equipment which are in the case of plants and structures
owned by Salex or the Salex Subsidiaries and, in the case of equipment, leased
by Salex or the Salex Subsidiaries. Schedule 2.9 sets forth all (a) real
property which is leased (whether as lessor or lessee) or subject to lease
(whether as lessor or lessee) by Salex or the Salex Subsidiaries, or which is
subject to a title retention or conditional sales agreement or other security
device, and (b) material tangible personal property which is owned, leased
(whether as lessor or lessee) or subject to contract or commitment of purchase
or sale or lease (whether as lessor or lessee) by Salex or the Salex
Subsidiaries.
2.10. Accounts Receivable; Inventories. The accounts
and notes receivable which are reflected on the Unaudited Interim Financial
Statements have arisen in the
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ordinary course of business at the aggregate recorded amounts thereof, less the
respective amount of the allowances for doubtful accounts and notes receivable,
if any, reflected thereon (which allowance was established on a basis by Salex
or the Salex Subsidiaries consistent with prior practices), and are not subject
to offsets other than in the ordinary course of business. The accounts and notes
receivable of Salex and the Salex Subsidiaries which were added after the date
of the Unaudited Interim Balance Sheet, have arisen in the ordinary course of
business and are not subject to offsets other than in the ordinary course of
business. The inventories reflected on the Unaudited Interim Balance Sheet and
thereafter added consist of items of a quality and quantity usable or saleable
in the ordinary course of business, except for obsolete materials, slow-moving
items, materials of below standard quality and not readily marketable items, all
of which have been written down to net realizable value or reserved against on
the books and records of Salex and the Salex Subsidiaries consistent with past
practices.
2.11. Absence of Changes. Except as otherwise
indicated on Schedule 2.11, since the date of the Unaudited Interim Financial
Statements, there have not been (a) any material adverse changes in the
condition (financial or otherwise), assets, liabilities, business, results of
operations or cash flows of Salex and the Salex Subsidiaries (including, without
limitation, any such adverse changes resulting from damage, destruction or other
casualty loss, whether or not covered by insurance), (b) any waivers by Salex
and the Salex
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Subsidiaries of any right, or cancellation of any debt or claim, material to the
Business, (c) any declarations, set asides or payments of any dividend or other
distributions or payments in respect of the Salex Common Stock, or (d) any
changes in the accounting principles or methods which are utilized by Salex.
2.12. Litigation. Except as set forth in Schedule
2.12, there are no suits or actions, or administrative, arbitration or other
proceedings or governmental investigations, pending or, to the best knowledge of
the Salex Stockholders, threatened, against or relating to Salex, the Salex
Subsidiaries, the Salex Stockholders, the transactions contemplated hereby, the
Business, or any of the Assets, which if adversely determined would result in a
liability in excess of $25,000; nor, is there, to the best knowledge of Salex,
the Salex Subsidiaries or the Salex Stockholders, any basis for such claim,
suit, action, arbitration, investigation, inquiry or other proceeding. There are
no judgments, orders, stipulations, injunctions, decrees or awards in effect
which relate to Salex or the Salex Subsidiaries, this Agreement, the
transactions contemplated, the Business or any of the Assets, the effect of
which is (a) to limit, restrict, regulate, enjoin or prohibit in any material
manner any business practice of Salex or the Salex Subsidiaries in any area, or
the acquisition by Salex or the Salex Subsidiaries of any properties, assets or
businesses, or (b) otherwise materially adverse to the Business or any of the
Assets.
2.13. No Violation of Law. Neither Salex nor any of
the Salex Subsidiaries is engaging in any activity or omitting
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to take any action as a result of which both (a) it is in material violation of
any law, rule, regulation, zoning or other ordinance, statute, order, injunction
or decree, or any other requirement of any court or governmental or
administrative body or agency, applicable to them, the Business or any of the
Assets, including, but not limited to, those relating to: occupational safety
and health matters; issues of environmental and ecological protection (e.g., the
use, storage, handling, transport or disposal of pollutants, contaminants or
hazardous or toxic materials or wastes, and the exposure of persons thereto);
business practices and operations; labor practices; employee benefits; and
zoning and other land use, and (b) Salex, the Salex Subsidiaries, the Business
and/or any of the Assets have been, or may be, materially and adversely affected
thereby.
2.14. Intellectual Property. Schedule 2.14 is a
complete and correct list of all (A) United States and foreign patents,
trademark and trade name registrations, trademarks and trade names, servicemarks
and servicemark registrations, assumed names and copyrights and copyright
registrations, owned in whole or in part or used by Salex or any of the Salex
Subsidiaries and is material to the Business, and all applications therefor, (B)
inventions, discoveries, improvements, processes, formulae, proprietary rights
and related trade secrets (including, without limitation, all customer/
subscriber lists and information relating to such customers/subscribers)
material to the Business, (C) licenses, agreements and other rights (including
agreements and arrangements with the Business' network of affiliated service
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stations) to which Salex and the Salex Subsidiaries is a party or otherwise
bound which relate to any of the foregoing (collectively, the "Intellectual
Property Licenses") and (D) all technology, know-how and related trade secrets
material to the Business, including all computer programs and software, together
with the operating codes, source codes, updates, upgrades, modifications,
enhancements and any user and technical documentation or utilities with respect
thereto (the items referred to in (A), (B), (C) and (D) are collectively
referred to as the "Intellectual Property").
Except as set forth on Schedule 2.14, Salex and the Salex
Subsidiaries are not and, to the best of Salex's and the Salex Subsidiaries'
knowledge, no third party is, in default under any of the Intellectual Property
Licenses, and, to the best of Salex's and the Salex Subsidiaries' knowledge,
there exists no event, occurrence, condition or act (including the transactions
contemplated in this Agreement) which, with the giving of notice, the lapse of
time or the happening of any other event or condition, would become a default
thereunder. Except as set forth in Schedule 2.14 (a) all of the Intellectual
Property is free and clear of all liens, security interests, options, rights of
first refusal, mortgages, charges, restrictive agreements, security agreements,
security agreements or other restrictions on the use of or irregularities in the
title thereto; (b) no claim, demand, cause of action, suit or proceeding by any
third party contesting the validity, enforceability, use or ownership of any
Intellectual Property has been made or, to the knowledge of Salex
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and the Salex Subsidiaries, has been threatened, filed, pending, settled,
adjudged, whether at law or in equity, or before any governmental department,
commission, board, agency or instrumentally, or in any arbitration forum, which
involves a demand for any judgement or liability; (c) neither Salex nor any of
the Salex Subsidiaries has received any notice of any infringement or
misappropriation of, or other conflict with any third party with respect to, any
Intellectual Property, nor has Salex or any of the Salex Subsidiaries received
any claims of infringement or misappropriation of, or conflict with, any
Intellectual Property of any third party in connection with its business; (d)
all Intellectual Property will be owned by or available for use by Subsidiary
and the Salex Subsidiaries on identical terms and conditions immediately
subsequent to the Effective Time; and (e) none of the Intellectual Property or
use by Salex and the Salex Subsidiaries in the Business as and where presently
conducted thereof violates in any material manner any laws statutes, ordinances
or regulations or is subject to any outstanding order, decree, stipulation or
change.
2.15. Tax Matters.
(a) Salex and the Salex Subsidiaries
have filed with the appropriate governmental agencies all tax returns and
reports required to be filed by them (after giving effect to applicable
extensions), and have paid in full or contested in good faith or made adequate
provision for the payment of, Taxes (as defined herein) shown to be due or
claimed to be due on such tax returns and reports. The provisions for
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Taxes which are set forth on the Unaudited Interim Financial Statements are
adequate for all accrued and unpaid taxes of Salex for the eleven (11) month
period ended March 31, 1996, whether (i) incurred in respect of or measured by
income of Salex and the Salex Subsidiaries for any periods prior to the close of
business on that date, or (ii) arising out of transactions entered into, or any
state of facts existing, on or prior to such date. Salex and the Salex
Subsidiaries have duly withheld all payroll taxes, FICA and other federal, state
and local taxes and other items requiring to be withheld by it from employer
wages, and have duly deposited the same in trust for or paid over to the proper
taxing authorities. Neither Salex nor any of the Salex Subsidiaries has executed
or filed with any taxing authority any agreement extending the periods for the
assessment or collection of any Taxes, and is not a party to any pending or, to
their knowledge, threatened action or proceeding by any governmental authority
for the assessment or collection of Taxes. Within the past three years, the
United States federal income tax returns of Salex have not been examined by the
Internal Revenue Service ("the IRS"), nor has any state or local taxing
authority thereof examined any merchandise, personal property, sales or use tax
returns of Salex.
(b) Salex (i) has not agreed to or
been required to make any adjustment pursuant to Section 481(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), (ii) has no knowledge that the
IRS or any other taxing authority has proposed any such adjustment or change in
accounting method, and
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(iii) has no application pending with any governmental authority requesting
permission for any change in accounting method.
(c) As used herein, the term "Taxes"
means all federal, state, county, local and other taxes and governmental
assessments, including but not limited to income taxes, estimated taxes,
withholding taxes, excise taxes, ad valorem taxes, payroll related taxes
(including but not limited to premiums for worker's compensation insurance and
statutory disability insurance), employment taxes, franchise taxes and import
duties, together with any related liabilities, penalties, fines, additions to
tax or interest.
2.16. Insurance. Schedule 2.16 is a complete and
correct list and summary description of all contracts and policies of insurance
relating to any of the Assets, the Business, in which Salex and/or the Salex
Subsidiaries is an insured party, beneficiary or loss payable payee. Such
policies are in full force and effect, all premiums due and payable with respect
thereto have been paid, and no notice of cancellation or termination has been
received by Salex with respect to any such policy.
2.17. Banks; Powers of Attorney. Schedule 2.17
is a complete and correct list showing (a) the names of each bank in which Salex
has an account or safe deposit box and the names of all persons authorized to
draw thereon or who have access thereto, and (b) the names of all persons, if
any, holding powers of attorney from Salex.
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2.18. Employee Arrangements. Schedule 2.18 is a
complete and correct list and summary description of all (a) material union,
collective bargaining, employment, management, termination and consulting
agreements to which any of Salex or the Salex Subsidiaries (or any affiliate
thereof within the meaning of ERISA) is a party or otherwise bound, and (b)
compensation plans and arrangements; bonus and incentive plans and arrangements;
deferred compensation plans and arrangements; pension and retirement plans and
arrangements; profit-sharing and thrift plans and arrangements; stock purchase
and stock option plans and arrangements; hospitalization and other life, health
or disability insurance or reimbursement programs; holiday, sick leave,
severance, vacation, tuition reimbursement, personal loan and product purchase
discount policies and arrangements; and other plans or arrangements providing
for benefits for employees of Salex or the Salex Subsidiaries (or any affiliate
thereof within the meaning of ERISA). Said Schedule also lists the names and
compensation of the five most highly compensated executives of Salex in 1995 and
their projected compensation for 1996.
2.19. ERISA.
2.19.1. Plans. Schedule 2.19 lists each
Salex and Salex Subsidiaries "employee pension benefit plan" ("Salex Pension
Plan"), as such term is defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and each Salex and the Salex
Subsidiaries "welfare benefit plan" (collectively called "Salex Welfare Plans")
as such term is defined in Section 3(1) of ERISA, which
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is maintained by Salex or the Salex Subsidiaries or to which they contribute or
are obligated or required to contribute. The Salex Pension Plans and Salex
Welfare Plans are hereinafter sometimes collectively referred to as the "Plans"
and severally referred to as a "Plan". Neither Salex nor the Salex Subsidiaries
maintains any defined benefit plan subject to Title IV of ERISA.
2.19.2. Qualification. Each Salex Pension
Plan and the trust (if any) forming a part thereof has submitted to the IRS an
application for determination to be qualified under Section 401(a) of the Code
and to the best knowledge of Salex and the Salex Subsidiaries, each such Plan
meets the requirements for qualification.
2.19.3. Plan Documents. Salex or the Salex
Subsidiaries has heretofore delivered to Synergistic true, complete and correct
copies of (i) the Plans, and all related trust agreements, (ii) all written
interpretations and summary plan descriptions relating thereto, (iii) the two
most recent annual reports (Form 5500 Series) and accompanying schedules which
were prepared in connection with each Plan, (iii) all IRS determination letters
relating to the Plans, and (iv) the two most recent actuarial evaluation reports
which were prepared in connection with any of the Plans.
2.19.4. No Prohibited Transactions.
Neither Salex, nor any Salex Subsidiary, nor any of the Plans, nor any trust
created thereunder, nor any trustee or administrator thereof, has engaged in a
transaction which would subject Salex or any Salex Subsidiary or any of the
Plans to the
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tax on prohibited transactions imposed by Section [4975] of the Code or to a
civil penalty assessed pursuant to Section 502(i) of ERISA.
2.19.5. Termination, etc. Neither Salex
nor any of the Salex Subsidiaries has incurred, and are not expected to incur,
directly or indirectly, any liability to the Pension Benefit Guaranty
Corporation (the "PBGC") with respect to any Salex Pension Plan. The PBGC has
not instituted proceedings to terminate the Salex Pension Plan, nor has it
notified Salex, or any Salex Subsidiary, either formally or informally, of its
intention to institute any such proceedings.
2.19.6. Multiemployer Plans. Neither Salex
nor any of the Salex Subsidiaries has ever maintained or contributed to, or been
obligated or required to contribute to, a "multiemployer plan," as such term is
defined in Section 3(37) of ERISA.
2.19.7. Claims. There is not pending, and
to the best of the knowledge of Salex, the Salex Subsidiaries or the Salex
Stockholders there is not threatened, any claims against any of the Plans or any
fiduciary thereof (other than claims for benefits made in the ordinary course).
2.20. Certain Business Matters. Except as is set
forth in Schedule 2.20, (a) neither Salex nor the Salex Subsidiaries is a party
to or bound by any distributorship, dealership, sales agency, franchise or
similar agreement which relates to the sale or distribution of any of the
products and services of the Business, (b) neither Salex nor the Salex
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Subsidiaries has any sole-source supplier of goods or services (other than
utilities) that are material to the conduct of the Business, (c) there are no
pending or to its knowledge, threatened labor negotiations, work stoppages or
work slowdowns involving or affecting the Business, and to its knowledge, no
union representation questions exist, and to its knowledge there are no
organizing activities, in respect of any of the employees of Salex or Salex
Subsidiaries, (d) complete and correct copies or descriptions of the product and
service warranties given by Salex or Salex Subsidiaries or by which they are
bound have heretofore been delivered by Salex and Salex Subsidiaries to
Synergistic, (e) neither Salex nor the Salex Subsidiaries is a party to or bound
by any agreement which limits its freedom to compete in any line of business or
with any person, or which is otherwise materially burdensome to Salex or the
Salex Subsidiaries, and (f) neither Salex nor the Salex Subsidiaries is a party
to or bound by any agreement in which any officer, director or stockholder of
Salex or Salex Subsidiaries (or any affiliate of any such person) has, or had
when made, a direct or indirect material interest.
2.21. Certain Contracts. Schedule 2.21 is a
complete and correct list of all material contracts, commitments, obligations
and understandings which are not set forth in any other Schedule delivered
hereunder and to which Salex or Salex Subsidiaries is a party or otherwise
bound, except for (a) purchase orders from vendors or customers and (b) each of
those which (i) were made in the ordinary course of business and (ii)
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either (A) are terminable by Salex or Salex Subsidiaries (and will be terminable
by Subsidiary) without liability, expense or other obligation on 30 days' notice
or less, or (B) may be anticipated to involve aggregate payments to or by Salex
or Salex Subsidiaries of $100,000 (or the equivalent) or less calculated over
the full term thereof, and (C) are not otherwise material to the Business or
Salex. Except as expressly stated on any of such Schedules, (1) each of the four
contracts identified under "Agreements" in Schedule 2.20 is in full force and
effect, no person or entity which is a party thereto or otherwise bound thereby
is in material default thereunder, and no event, occurrence, condition or act
exists which does (and to the knowledge of Salex and the Salex Subsidiaries
which with the giving of notice or the lapse of time or both would) give rise to
a material default or right of cancellation, acceleration or loss of contractual
benefits thereunder; and (2) there has been no threatened cancellations thereof,
and there are no outstanding disputes thereunder.
2.22. Customers and Suppliers. Salex has
previously provided to Synergistic a complete and correct list setting forth, as
of April 30, 1996, (a) the 10 largest customers of the Business and the amount
for which each such customer was invoiced, and (b) the 3 largest suppliers of
the Business and the amount of goods and services purchased from each such
supplier. To the knowledge of Salex, and except with respect to the Firestone
account referenced on Schedule 2.20, there are no (i) threatened cancellations
by the aforesaid customers or suppliers
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with respect to the Business, (ii) outstanding material disputes by such
customers or suppliers with Salex or Salex Subsidiaries and the Business, or
(iii) material adverse changes in the business relationship between the Business
and any such customer or supplier.
2.23. Business Practices and Commitments. Set
forth on Schedule 2.23 is a summary description of (a) the material rebate and
volume discount practice and obligations of Salex and the Salex Subsidiaries,
(b) Salex's allowance and customer return practice, (c) Salex's material
promotional literature, and (d) Salex's warranty practices and obligations, as
each of the foregoing relate to Salex's customers and suppliers.
2.24. Approvals/Consents. Except as set forth on
Schedule 2.24, Salex and the Salex Subsidiaries currently hold all governmental
and administrative consents, permits, appointments, approvals, licenses,
certificates and franchises which are necessary for the operation of the
Business, all of which are in full force and effect. Schedule 2.24 is a complete
and correct list of all such governmental and administrative consents, permits,
appointments, approvals, licenses, certificates and franchises. No material
violations of the terms thereof have heretofore occurred or are known to exist
as of the date of this Agreement.
2.25. Information as to Salex and the Salex
Subsidiaries. None of the representations or warranties made by
Salex, the Salex Subsidiaries or the Salex Stockholders in this
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Agreement is, or as contained in any of the Salex Documents to be executed and
delivered hereto will be, false or misleading with respect to any material fact,
or omits to state any material fact necessary in order to make the statements
therein contained not misleading.
2.26. Political Contributions. Neither Salex nor
the Salex Subsidiaries has directly or indirectly, at any time (i) made any
contributions to any candidate for political office, or failed to disclose fully
any such contribution in violation of law or (ii) made any payment to any state,
federal or foreign governmental officer or official, or other person charged
with similar public or quasi-public duties, other than payments or contributions
required or allowed by applicable law.
3. Representations and Warranties as to Synergistic and
Subsidiary. Synergistic and Subsidiary, jointly and severally, represent and
warrant to Salex, the Salex Subsidiaries and Salex Stockholders as follows:
3.1. Organization, Standing and Power.
Synergistic and Subsidiary are each a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, with full
corporate power and authority to own, lease and operate its properties and to
carry on its businesses as presently conducted by it. Except as set forth on
Schedule 3.1, there are no states or jurisdictions in which the character and
location of any of the properties owned or leased by Synergistic or the
Subsidiary, or the conduct of its businesses makes it necessary for it to
qualify to do business as a foreign
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corporation, when the failure to so qualify would have a material
adverse effect.
3.2. Interests in Other Entities. Schedule 3.2 sets
forth a true and complete list of all direct or indirect subsidiaries of
Synergistic (including the Subsidiary) that are material to the financial
condition of Synergistic and its subsidiaries, including those which will be
divested as at the Effective Time, together with the jurisdiction of
incorporation of each such subsidiary and the percentage of each such
subsidiary's outstanding capital stock owned by Synergistic or another of
Synergistic's subsidiaries. Each of such subsidiaries are duly organized
corporations, validly existing and in good standing under the laws of the
jurisdiction of its respective incorporation (as well as all applicable foreign
jurisdictions necessary to its business operations) and have the requisite
corporate power and authority and governmental authority to own, operate or
lease the properties that each purports to own, operate or lease and to carry on
its business as it is now being conducted.
3.3. Incorporation Documents and By-Laws. Each of
Synergistic and Subsidiary have heretofore furnished, or will furnish to Salex,
a complete and correct copy of its Certificate of Incorporation, and the
By-Laws, each as amended to date. Such organizational documents are in full
force and effect. Neither Synergistic nor Subsidiary is in violation of any of
the provisions of any of the aforesaid organizational documents.
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3.4. Capitalization. (a) The authorized capital stock
of Synergistic consists of 10,000,000 shares of Synergistic Common Stock and
1,000,000 shares of Preferred Stock, par value $.01 per share (none of which are
outstanding or held in the treasury of Synergistic). As of the date hereof, (i)
5,949,535 shares of Synergistic Common Stock were issued and outstanding, all of
which were duly authorized, validly issued, fully paid and nonassessable, (ii)
172,300 shares of Synergistic Common Stock are issuable or available for
issuance upon exercise of options granted and available for grant under
Synergistic's stock option plan, as amended, and (iii) 625,000 shares of
Synergistic Common Stock are reserved for future issuance upon exercise of
outstanding Common Stock Purchase Warrants of Synergistic. Schedule 3.4 sets
forth a true and complete list of all outstanding options and warrants as of the
date hereof. At the Effective Time, Schedule 3.4, as then amended, shall set
forth all then outstanding shares of Synergistic Common Stock and all then
outstanding options and warrants as of the Closing Date. Except as contemplated
by the Merger and except as set forth on Schedule 3.4, there are no options,
warrants or other rights, agreements, arrangements or commitments of any
character relating to the issued or unissued capital stock of Synergistic or any
of its subsidiaries (including the Subsidiary) or obligating Synergistic or any
of its subsidiaries (including the Subsidiary) to issue or sell any shares of
capital stock of or other equity interests in Synergistic or any of its
subsidiaries (including the Subsidiary). All shares of Synergistic Common Stock
issuable
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upon exercise of outstanding options and warrants, or pursuant to the Merger,
will upon payment to Synergistic of the exercise purchase price thereof, or upon
consummation of the Merger, on the terms and conditions specified in the
instruments pursuant to which they are issuable, be duly authorized, validly
issued, fully paid and nonassessable. Except as set forth in Schedule 3.4,
neither Synergistic nor any of its subsidiaries (including the Subsidiary) is a
party to any agreement granting registration rights with respect to any equity
or debt securities of Synergistic or its subsidiaries (including the
Subsidiary). There are no preemptive rights with regard to the capital stock of
Synergistic or its subsidiaries (including the Subsidiary), and no
right-of-first refusal or similar catch-up rights with regard to such capital
stock. Except as set forth in Schedule 3.4 and except for the transactions
contemplated by this Agreement, there are no outstanding contractual obligations
or other commitments or arrangements of Synergistic or any of its subsidiaries
(including the Subsidiary) to (A) repurchase, redeem or otherwise acquire any
shares of Synergistic Common Stock (or any interest therein) or (B) to provide
funds to or make any investment (in the form of a loan, capital contribution or
otherwise) in any such subsidiary or other entity, or (C) issue or distribute to
any person any capital stock of Synergistic or its subsidiaries (including the
Subsidiary), or (D) issue or distribute to holders of any of the capital stock
of Synergistic or its subsidiaries (including the Subsidiary) any evidences of
indebtedness or assets of Synergistic or its subsidiaries. All
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of the outstanding securities of Synergistic and Subsidiary have been, and all
shares of Synergistic Common Stock issuable in connection with the Merger, and
the exercise of the outstanding options and warrants will be, offered, issued
and sold by Synergistic in full compliance with applicable federal and state
securities laws.
(b) The outstanding shares of capital stock
of the Subsidiary are duly authorized, validly issued, fully paid and
nonassessable, and such shares are owned by Synergistic, directly or indirectly,
free and clear of all security interests, liens, adverse claims, pledges,
agreements, limitations on Synergistic's voting rights, charges and other
encumbrances of any nature whatsoever.
3.5. Authority. The execution and delivery by
Synergistic and Subsidiary of this Agreement and of each agreement to be
executed and delivered by either of them pursuant hereto (collectively, the
"Synergistic Documents"), the compliance by each of them with the provisions
hereof and thereof, including the divestiture of Synergistic's interest in
Dickinson & Co. and EDIX (as set forth in Section 6.2.11 hereof) and the
consummation of the transactions contemplated hereby and thereby, have been (and
at the Closing will be) duly and validly authorized by all necessary corporate
action on the part of Synergistic and Subsidiary, and Synergistic and Subsidiary
have (and at the Closing will have) all necessary corporate power and corporate
authority with respect thereto. This Agreement is, and when executed and
delivered by Synergistic and Subsidiary each
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other Synergistic Document will be, the valid and binding obligation of
Synergistic or Subsidiary, as the case may be to the extent it is a party
thereto, in accordance with the respective terms, thereof, except as the same
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
laws affecting the rights of creditors generally and subject to the rules of law
governing (and all limitations on) specific performance, injunctive relief, and
other equitable remedies.
3.6. Noncontravention. Except as set forth on
Schedule 3.6, neither the execution and delivery by Synergistic and/or
Subsidiary of any Synergistic Document, nor the consummation of any of the
transactions contemplated hereby or thereby, nor the performance by either of
them of any of its respective obligations hereunder or thereunder, will (nor
with the giving of notice or the lapse of time or both would) (a) conflict with
or result in a breach of any provision of the Articles or Certificates of
Incorporation or By-Laws of either Synergistic or Subsidiary, or (b) give rise
to a default, or any right of termination, cancellation or acceleration, or
otherwise be in conflict with, or result in a loss of contractual benefits to,
either of them, under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, agreement or other instrument or obligation
to which either of them is a party or by which either of them or their
respective assets may be bound, or require any consent, approval or notice under
the terms of any such document or instrument, or (c) violate any order, writ,
injunction, decree, law, statute, rule
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or regulation of any court or governmental authority which is applicable to
either of them, or (d) result in the creation or imposition of any lien, adverse
claim, restriction, charge or encumbrance upon any of their assets, or (e)
interfere with or otherwise adversely affect the ability of Synergistic or
Subsidiary to carry on its business after the Closing Date on substantially the
same basis as is now conducted by it.
3.7. Absence of Litigation. Except as set forth in
Schedule 3.7, there are no claims, actions, suits, proceedings or investigations
pending or, to the best knowledge of the executive officers of Synergistic and
Subsidiary, threatened against or relating to Synergistic, Subsidiary, this
Agreement, the transactions contemplated hereby, or any properties, assets or
rights of Synergistic or Subsidiary, including but not limited to any such
matters before any court, arbitrator, or administrative, governmental or
regulatory authority or body, domestic or foreign. Neither Synergistic nor any
of its subsidiaries (including Subsidiary), nor any of their respective
properties is subject to any order, writ, judgment, injunction, decree,
determination or award which, if enforced, would have a material adverse effect
on the business, the results of the operations, cash flows or financial
condition of Synergistic separately or of Synergistic and its subsidiaries taken
as a whole.
3.8. Employee Benefit Plans. (a) Schedule 3.8 lists
all material employee benefit plans (as defined in Section 3(3) of the Employee
Retirement Income Securities Act of 1974, as
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amended ("ERISA")), and all material bonus, stock option, stock purchase,
incentive, deferred compensation, supplemental retirement, severance and other
material fringe or employee benefit plans programs or arrangements, and any
material employment or compensation agreements, written or otherwise, for the
benefit of, or relating to, any employee of Synergistic or Subsidiary or any
affiliate thereof within the meaning of ERISA, including any plan, program or
arrangement which is required to be maintained pursuant to local laws or
practices (the "Employee Plans"). Except as otherwise disclosed in Schedule 3.8,
none of the Employee Plans is a multiemployer plan, as defined in Section
4001(a)(3) of ERISA (a "Multiemployer Plan").
(b) There has been no "prohibited
transaction," as such term is defined in Section 406 of ERISA and Section 4975
of the Code, with respect to any Employee Plan, which could result in any
material liability of Synergistic and its subsidiaries, taken as a whole. All
Employee Plans are in compliance in all material respects with the requirements
prescribed by any and all applicable statutes, orders, or governmental rules or
regulations currently in effect with respect thereto, and Synergistic,
Subsidiary and each ERISA affiliate have performed all material obligations
required to be performed by them under, are not in any material respect in
default under or in violation of, and have no knowledge of any material default
or violation by any other party to, any of the Employee Plans. Each Employee
Plan intended to qualify under Section 401(a) of the Code has heretofore been
determined by the
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Internal Revenue Service (the "IRS") to so qualify, and each trust created
thereunder has heretofore been determined by the IRS to be exempt from tax under
the provisions of section 501(a) of the Code, and nothing as since occurred
which may reasonably be expected to cause the loss of such qualification or
exemption. Each Employee Plan with a group health plan has complied in all
material respects with the health care continuation coverage provisions of
ss.4980B of the Code.
(c) No Employee Plan subject to Part 3 of Subtitle I of ERISA
or Section 412 of the Code has incurred any "accumulated funding deficiency" (as
defined in ERISA or the Code), whether or not waived. Except as disclosed in
Schedule 3.8, with respect to each Employee Plans subject to Title IV of ERISA,
no "reportable event" within the meaning of Section 4043 of ERISA nor any event
described in Section 4062, 4063 or 4041 of ERISA has occurred which could result
in a material liability. Neither Synergistic, Subsidiary or any ERISA affiliate
has incurred or reasonably expect to incur any material liability under Title IV
of ERISA with respect to any Employee Plan (other than a liability for premiums
pursuant to Section 4007 of ERISA), including any liability arising under
ss.4062 and ss.4063 of ERISA, and there is no basis to expect that any Employee
Plan subject to Title IV of ERISA will be terminated involuntarily pursuant to
ss.4042 of ERISA.
(d) All contributions required to be made to any Employee Plan
have been made on or before their due dates. With respect to any Employee Plan
which is not a Multiemployee
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Plan, but which is covered by Title IV of ERISA, the total present value of
accrued benefits under such plans determined on a plan termination basis, using
the interest rate and other assumptions of the Pension Benefit Guaranty
Corporation, does not exceed the market value of assets of such plans as of the
date hereof by more than $35 million. The aggregate amount of payments by
Synergistic for 1995 in respect of retiree health care or death benefits in the
United States did not exceed $3 million.
Other than routine claims for benefits, there are no
outstanding claims or lawsuits against any Employee Plan or any fiduciary of an
Employee Plan, and no basis to anticipate that any such claims or lawsuits will
be filed.
3.9. Securities and Exchange Commission Filings;
Financial Statements.
(a) Synergistic has filed all forms,
reports, statements and documents required to be filed with the Securities and
Exchange Commission ("SEC") since November 1994 (collectively, the "SEC
Reports"), each of which has complied in all material respects with the
applicable requirements of the Securities Act of 1933, as amended (the
"Securities Act") or the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as applicable, each as in effect on the date so filed.
Synergistic has delivered to Salex, in the form filed with the SEC (including
any amendments thereto), its Annual Report on Form 10-K for its fiscal year
ended December 31, 1995 and its Quarterly Report on Form 10-Q for the quarter
ended March 31,
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1996 (the March 1996 10-Q"). None of such reports (including but not limited to
any financial statements or schedules included or incorporated by reference
therein) nor any registration statement of Synergistic or any form, filed by
Synergistic, when filed (except to the extent revised or superseded by a
subsequent filing with the SEC) contained any untrue statement of a material
fact or omitted to state a material fact required to be stated or incorporated
by reference therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(b) Each of the consolidated financial
statements contained in the SEC Reports has been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may otherwise be indicated in the
notes thereto) and each presents fairly, in all material respects, the
consolidated financial position of Synergistic and its subsidiaries as at the
respective dates thereof and the consolidated results of its operations and cash
flow position for the periods indicated.
(c) Except as and to the extent set forth on
the consolidated balance sheet of Synergistic and its subsidiaries as at
December 31, 1995, including the notes thereto, Synergistic and its subsidiaries
taken as a whole, do not have any liabilities or obligations, whether or not
accrued, contingent or otherwise, that would be required to be included on a
balance sheet prepared in accordance with GAAP, except for liabilities or
obligations incurred in the ordinary course of
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business since December 31, 1995, none of which would, individually or in the
aggregate, have a material adverse effect on the financial condition, or results
of the operations or cash flows of Synergistic and its subsidiaries, on a
consolidated basis.
3.10. Synergistic Common Stock and Synergistic
Preferred Stock Issuable in Merger. The Share Consideration, when issued, will
be duly authorized and validly issued, fully paid and non-assessable, will be
delivered hereunder free and clear of any liens, adverse claims, security
interests, pledges, mortgages, charges and encumbrances of any nature
whatsoever, except that the shares of Synergistic Common Stock, the shares of
Synergistic Preferred Stock and the shares of Synergistic Common Stock into
which the shares of Synergistic Preferred Stock are convertible which constitute
the Share Consideration will be "restricted securities" as such term is defined
in the rules and regulations of the SEC promulgated under the Securities Act and
will be subject to restrictions on transfers pursuant to such rules and
regulations and the laws of applicable states.
3.11. Properties. Except as set forth on
Schedule 3.11, Synergistic and Subsidiary have marketable title to all of the
properties and assets, reflected on its balance sheets or thereafter acquired,
except properties or assets sold or otherwise disposed of in the ordinary course
of business, free and clear of any and all Liens, other than Liens not yet due
and payable or being contested in good faith by appropriate proceedings, and
other than such Liens or imperfections of title,
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if any, which are not substantial in character, amount or extent and do not
materially interfere with the present or continued use of such property or
otherwise materially adversely affect the value or transferability thereof or
otherwise materially impair the business operations of Synergistic or Subsidiary
as conducted on the date hereof. All plants, structures and equipment which are
utilized in the business operations of Synergistic or Subsidiary, or are
material to the condition (financial or otherwise) of Synergistic or Subsidiary,
are owned or leased by Synergistic or Subsidiary, are in good operating
condition and repair (ordinary wear and tear excepted) and are adequate and
suitable for the purposes for which they are used. Schedule 3.11 sets forth all
(a) real property which is leased (whether as lessor or lessee) or subject to
lease (whether as lessor or lessee) by Synergistic or Subsidiary, or which is
subject to a title retention or conditional sales agreement or other security
device, and (b) personal property which is owned, leased (whether as lessor or
lessee) or subject to contract or commitment of purchase or sale or lease
(whether as lessor or lessee) by Synergistic or Subsidiary.
3.12. Absence of Changes. Except for any actions
taken or to be taken by Synergistic pursuant to the Divestiture (as set forth in
Section 6.2.1 below), there have not been, since December 31, 1995, (a) any
material adverse change (other than as is normal in the ordinary course of
business, e.g., inventory level changes) in the condition (financial or
otherwise), assets, liabilities, business, prospects, results of operations or
cash
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flows of Synergistic or the Subsidiary (including, without limitation, any such
adverse change resulting from damage, destruction or other casualty loss,
whether or not covered by insurance), (b) any waivers by Synergistic of any
right, or cancellation of any debt or claim, of substantial value, (c) any
declarations, set asides or payments of any dividend or other distributions or
payments in respect of the Synergistic Common Stock, or (d) any changes in the
accounting principles or methods which are utilized by Synergistic or the
Subsidiary.
3.13. No Violation of Law. Neither Synergistic
nor Subsidiary has or is engaging in any activity or omitting to take any action
as a result of which both (a) it is in violation of any law, rule, regulation,
zoning or other ordinance, statute, order, injunction or decree, or any other
requirement of any court or governmental or administrative body or agency,
applicable to either Synergistic or Subsidiary, their respective business
operations or any of their respective assets, including, but not limited to,
those relating to: occupational safety and health matters; issues of
environmental and ecological protection (e.g., the use, storage, handling,
transport or disposal of pollutants, contaminants or hazardous or toxic
materials or wastes, and the exposure of persons thereto); business practices
and operations; labor practices; employee benefits; and zoning and other land
use, and (b) Synergistic or Subsidiary, their business operations and/or any of
their assets have been, or may be, materially and adversely affected thereby.
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3.14. Intangibles/Inventions. Synergistic does
not own any intellectual property other than its tradename. Synergistic has not
granted any license to third parties with regard to any of Synergistic's
intellectual property and (a) no proceedings have been instituted, are pending,
or are threatened which challenge the rights of Synergistic with respect to its
intellectual property, if any, or its use thereof in connection with its
business affairs and/or its assets or the validity thereof and, to the best
knowledge of Synergistic, there is no valid basis for any such proceedings; (b)
neither Synergistic's ownership of any intellectual property nor its use thereof
in connection with its business operations and/or its assets violates any laws,
statutes, ordinances or regulations, or has at any time infringed upon or
violated any rights of others, or is being infringed by others; and (c) neither
the intellectual property of Synergistic nor its use thereof in connection with
its business operations and/or its assets, is subject to any outstanding order,
decree, judgment, stipulation or, except as set forth on Schedule 3.14, any
lien, security interest or other encumbrance.
3.15. Tax Matters.
3.15.1. Synergistic and its subsidiaries
have filed with the appropriate governmental agencies all tax returns and
reports required to be filed by it, and has paid in full or contested in good
faith or made adequate provision for the payment of, Taxes (as defined in
Section 2.15(c) hereof) shown to be due or claimed to be due on such tax returns
and
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reports. The provisions for Taxes which are set forth on its balance sheets are
adequate for all accrued and unpaid taxes of Synergistic and Subsidiary as of
December 31, 1995, whether (i) incurred in respect of or measured by income of
Synergistic and Subsidiary for any periods prior to the close of business on
that date, or (ii) arising out of transactions entered into, or any state of
facts existing, on or prior to such date. Synergistic and Subsidiary have duly
withheld all payroll taxes, FICA and other federal, state and local taxes and
other items requiring to be withheld by it from employer wages, and has duly
deposited the same in trust for or paid over to the proper taxing authorities.
Neither Synergistic nor Subsidiary has not executed or filed with any taxing
authority any agreement extending the periods for the assessment or collection
of any Taxes, and is not a party to any pending or, to the best knowledge of
Synergistic or Subsidiary, threatened, action or proceeding by any governmental
authority for the assessment or collection of Taxes. Within the past three
years, the United States federal income tax returns of neither Synergistic nor
Subsidiary has been examined by the IRS, nor has any taxing authority in any
state examined any merchandize, personal property, sales or use tax returns of
Synergistic or any of its subsidiaries.
3.15.2. Neither Synergistic nor Subsidiary
(i) has agreed to or been required to make any adjustment pursuant to Section
481(a) of the Code, (ii) has any knowledge that the IRS or any other taxing
authority has proposed any such adjustment or change in accounting method, and
(iii) has any
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application pending with any governmental authority requesting permission for
any change in accounting method.
3.16. Insurance. Schedule 3.16 is a complete and
correct list and summary description of all contracts and policies of insurance
relating to any of the assets of either Synergistic or Subsidiary or their
respective business operations in which Synergistic or Subsidiary is an insured
party, beneficiary or loss payable payee. Such policies are in full force and
effect, all premiums due and payable with respect thereto have been paid, and no
notice of cancellation or termination has been received by either Synergistic or
Subsidiary with respect to any such policy.
3.17. Banks; Powers of Attorney. Schedule 3.17
is a complete and correct list showing (a) the names of each bank in which
Synergistic or Subsidiary has an account or safe deposit box and the names of
all persons authorized to draw thereon or who have access thereto, and (b) the
names of all persons, if any, holding powers of attorney from either Synergistic
or Subsidiary.
3.18. Employee Arrangements. Schedule 3.18 is a
complete and correct list and summary description of all (a) union, collective
bargaining, employment, management, termination and consulting agreements to
which Synergistic or the Subsidiary is a party or otherwise bound, and (b)
compensation plans and arrangements; bonus and incentive plans and arrangements;
deferred compensation plans and arrangements; pension and retirement plans and
arrangements; profit-sharing and thrift
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plans and arrangements; stock purchase and stock option plans and arrangements;
hospitalization and other life, health or disability insurance or reimbursement
programs; holiday, sick leave, severance, vacation, tuition reimbursement,
personal loan and product purchase discount policies and arrangements; and other
plans or arrangements providing for benefits for employees of Synergistic or
Subsidiary, other than employee plans listed in Schedule 3.8. Said Schedule also
lists the names and compensation of all employees of Synergistic or Subsidiary
(other than employees of the distributed businesses) whose earnings during the
last fiscal year were $50,000 or more (including bonuses and other incentive
compensation), and all employees who are expected to receive at least said
amount in respect of the current fiscal year.
3.19. Certain Business Matters. Except as is set
forth in Schedule 3.19, and giving pro forma effect to the Divestiture, (a)
neither Synergistic nor the Subsidiary is a party to or bound by any
distributorship, dealership, sales agency, franchise or similar agreement which
relates to the sale or distribution of any of the products and services of the
business operations of Synergistic or Salex, (b) neither Synergistic nor the
Subsidiary has any sole-source supplier of significant goods or services (other
than utilities) with respect to which practical alternative sources are not
available on comparable terms and conditions, (c) there are no pending or, to
the best knowledge of Synergistic or the Subsidiary, threatened labor
negotiations, work stoppages or work slowdowns involving or
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affecting the business operations of Synergistic, and no union representation
questions exist, and there are no organizing activities, in respect of any of
the employees of Synergistic or the Subsidiary, (d) the product and service
warranties given by Synergistic or the Subsidiary or by which it is bound
(complete and correct copies or descriptions of which have heretofore been
delivered by Synergistic to Salex) entail no greater obligations than are
customary in the business operations of Synergistic or the Subsidiary, (e)
neither Synergistic nor the Subsidiary is a party to or bound by any agreement
which limits its freedom to compete in any line of business or with any person,
or which is otherwise materially burdensome to Synergistic or the Subsidiary,
and (f) neither Synergistic nor the Subsidiary is a party to or bound by any
agreement in which any officer, director or stockholder of Synergistic or the
Subsidiary (or any affiliate of any such person) has, or had when made, a direct
or indirect material interest.
3.20. Certain Contracts. Schedule 3.20 is a
complete and correct list of all material contracts, commitments, obligations
and understandings which are not set forth in any other Schedule delivered
hereunder and to which Synergistic or the Subsidiary is a party or otherwise
bound, after giving pro forma effect to the Divestiture, except for each of
those which (i) were made in the ordinary course of business and (ii) are
terminable by Synergistic or the Subsidiary without liability, expense or other
obligation on 30 days' notice or less. Complete and correct copies of all
contracts, commitments, obligations and
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undertakings set forth on any of the Schedules delivered pursuant to this
Agreement have been furnished by Synergistic to Salex. Except as expressly
stated on any of such Schedules, (1) each of them is in full force and effect,
no person or entity which is a party thereto or otherwise bound thereby is in
material default thereunder, and no event, occurrence, condition or act exists
which does (or which with the giving of notice or the lapse of time or both
would) give rise to a material default or right of cancellation, acceleration or
loss of contractual benefits thereunder; (2) there has been no threatened
cancellations thereof, and there are no outstanding disputes thereunder; and (3)
none of them is materially burdensome to Synergistic.
3.21. Approvals/Consents. Except as set forth on
Schedule 3.21, to the best knowledge of Synergistic and the Subsidiary,
Synergistic currently holds all governmental and administrative consents,
permits, appointments, approvals, licenses, certificates and franchises which
are necessary for the operation of its business (collectively "Consents") after
giving pro forma effect to the Divestiture, all of which are in full force and
effect. Schedule 3.21 is a complete and correct list of all such governmental
and administrative consents, permits, appointments, approvals, licenses,
certificates and franchises. No material violations of the terms thereof have
heretofore occurred or are known by Synergistic to exist as of the date of this
Agreement. Except as set forth in Schedule 3.21, no Consents are necessary for
execution, delivery and performance of this Agreement and transactions
contemplated herein.
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3.22. Information as to Synergistic and
Subsidiary. (a) None of the representations or warranties made by Synergistic or
Subsidiary in this Agreement, or contained in any of the Synergistic Documents
to be executed and delivered, if any, or in any Registration Statement or
amendment thereto, is or will be, false or misleading with respect to any
material fact, or omits to state any material fact necessary in order to make
the statements therein contained not misleading.
3.23. Tax Matters. As of the Effective Time
and thereafter to the extent indicated below:
3.23.1. Subsidiary is a corporation newly
formed under the Laws of the State of Delaware for the purpose of the Merger and
has conducted no business and owns no assets, real or personal, except such
assets of which are required to carry out the obligations of the Surviving
Corporation hereunder.
3.23.2. Subsidiary has conducted no business
and owns no assets except assets required to carry out the obligations of
Surviving Corporation hereunder.
3.23.3. As of the date of the Merger,
Synergistic will be in control of Subsidiary within the meaning of section
368(c)(1) of the Code.
3.23.4. Following the Merger, Subsidiary
will not issue additional shares of its stock that would result in Synergistic
losing control of Subsidiary within the meaning of section 368(c)(1) of the
Code.
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3.23.5. Synergistic has no plan or intention
to reacquire any Synergistic Common Stock issued pursuant to this Agreement.
3.23.6. Synergistic has no plan or intention
to liquidate Subsidiary; to merge Subsidiary with and into another corporation;
to sell or otherwise dispose of the stock of Subsidiary; or to cause, permit or
suffer Subsidiary to sell or otherwise dispose of any of the assets of Salex
acquired in the Merger, except for any dispositions (x) made in the ordinary
course of business or transfers described in section 368(a)(2)(C) of the Code or
(y) which do not result in Synergistic losing control of Subsidiary within the
meaning of Section 386(c) of the Code and in any event Synergistic shall not
cause, permit or suffer to occur any of the foregoing at any time during the two
years following the Effective Time, without the prior consent of the Board of
Directors of Synergistic.
3.23.7. Following the Merger, Salex will
continue the Business and, in the course thereof, use substantially all of
Salex's business assets in such Business.
3.23.8. Synergistic and Subsidiary are not
investment companies as defined in section 368(a)(2)(F)(iii) and (iv) of the
Code.
3.23.9. There is no agreement or
understanding on the part of Synergistic or Subsidiary to take any action which
is prohibited by the foregoing provisions of this Section 3.23.
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3.24. Certain Corporate Matters. Since November
1994, the Board of Directors of Synergistic (the "Board") has not undertaken any
action regarding the business and affairs of Synergistic ("Board Action") that
(a) has not otherwise been disclosed accurately in all reports, financial
statements and other filings required to be filed by Synergistic with the SEC or
any other federal, state or regulatory authority, copies of which have been
provided to Salex and the Salex Stockholders ("Disclosed Board Action") (other
than any Board Action that would not be deemed material to a reasonable investor
regarding the business and affairs of Synergistic), or (b) would in any manner
render any Disclosed Board Action misleading or inaccurate in any respect, or
(c) violated Delaware Law or the laws or regulations of any applicable federal,
state or regulatory authority, and (d) has conferred any remuneration or
financial benefit of any sort on any Directors of Synergistic other than as
reflected in Disclosed Board Action.
4. Indemnification.
4.1. Indemnification by Salex and the Salex
Stockholders.
(a) Salex and each of the Salex
Subsidiaries, jointly and severally, and each of the Salex Stockholders (other
than Harrison, Francis and Susan), severally only, hereby indemnify and agree to
hold harmless, each of Synergistic and Subsidiary, from and against any and all
losses, obligations, deficiencies, liabilities, claims, damages, costs and
expenses (including, without limitation, the amount of any
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settlement entered into pursuant hereto, and all reasonable legal and other
expenses incurred in connection with the investigation, prosecution or defense
of any matter indemnified pursuant hereto) which either of them may sustain,
suffer or incur and which arise out of, are caused by, relate to, or result or
occur from or in connection any misrepresentation of a material fact contained
in any representation of Salex, Salex Subsidiaries or the Salex Stockholders
contained in, or breached by Salex, Salex Subsidiaries or Salex Stockholders of
any warranty or covenant made by any of them in any Salex Document. The
foregoing indemnification shall also apply to direct claims by Synergistic
and/or Subsidiary against Salex, Salex Subsidiaries or Salex Stockholders.
4.2. Indemnification by Synergistic and
Subsidiary. Each of Synergistic and Subsidiary, jointly and severally, agrees to
indemnify and hold Salex and the Salex Stockholders harmless from and against
any and all losses, obligations, deficiencies, liabilities, claims, damages,
costs and expenses (including, without limitation, the amount of any settlement
entered into pursuant hereto, and all reasonable legal and other expenses
incurred in connection with the investigation, prosecution defense of any matter
indemnified pursuant hereto), which they may sustain, suffer or incur and which
arise out of, be caused by, relate to, or result or occur from or in connection
with any misrepresentation of a material fact contained in any representation of
Synergistic and/or Subsidiary or any contained in, breach by Synergistic or
Subsidiary of any warranty or
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covenant made by them in, any Synergistic Document. The foregoing
indemnification shall also apply to direct claims by Salex or the Salex
Stockholders against Synergistic and/or Subsidiary.
4.3. Third Party Claims. If a claim by a third
party is made against any party or parties hereto and the party or parties
against whom said claim is made intends to seek indemnification with respect
thereto under Subsections 4.1 or 4.2, the party or parties seeking such
indemnification shall promptly notify the indemnifying party or parties, in
writing, of such claim; provided, however, that the failure to give such notice
shall not affect the rights of the indemnified party or parties hereunder unless
such failure materially and adversely affects the indemnifying party or parties.
The indemnifying party or parties shall have 10 days after said notice is given
to elect, by written notice given to the indemnified party or parties, to
undertake, conduct and control, through counsel of their own choosing (subject
to the consent of the indemnified party or parties, such consent not to be
unreasonably withheld) and at their sole risk and expense, the good faith
settlement or defense of such claim, and the indemnified party or parties shall
cooperate with the indemnifying parties in connection therewith; provided: the
indemnified party or parties shall be entitled to participate in such settlement
or defense through counsel chosen by the indemnified party or parties, provided
that the fees and expenses of such counsel shall be borne by the indemnified
party or parties. So long as the indemnifying party or parties are
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contesting any such claim in good faith, the indemnified party or parties shall
not pay or settle any such claim; provided, however, that notwithstanding the
foregoing, the indemnified party or parties shall have the right to pay or
settle any such claim at any time, provided that in such event they shall waive
any right of indemnification therefor by the indemnifying party or parties. If
the indemnifying parties do not make a timely election to undertake the good
faith defense or settlement of the claim as aforesaid, or if the indemnifying
parties fail to proceed with the good faith defense or settlement of the matter
after making such election, then, in either such event, the indemnified party or
parties shall have the right to contest, settle or compromise the claim at their
exclusive discretion, at the risk and expense of the indemnifying parties.
4.4. Assistance. Regardless of which party is
controlling the defense of any claim, each party shall act in good faith and
shall provide reasonable documents and cooperation to the party handling the
defense, subject to the possible assertion by any party of any legal privilege.
4.5. Limitations.
4.5.1. No party hereto shall be entitled to
any claim for indemnification under this Section 4 until the aggregate amount of
losses, for which indemnity is claimed exceeds $50,000, and once such threshold
amount is met, then the indemnity shall apply to amounts over such threshold.
4.5.2. Anything in this Agreement to the
contrary notwithstanding: (a) the liability of each Salex
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Stockholder under this Section 4 shall in no event exceed the greater of: (i)
the value of the Merger consideration received by such Salex Stockholder at the
Effective Date, or (ii) the Merger consideration received by such Salex
Stockholder valued at the "Breach Determination Date" (as hereinafter defined)
and in the case of Crimi the value of any payments actually made under the
Notes, provided that the exclusive remedy against any Salex Stockholder shall in
the first instance be limited to recourse solely against the Synergistic Common
Stock received by such Salex Stockholder pursuant to the Merger (the "Initial
Shares"), and only if such Salex Stockholder has sold all or any portion of such
Initial Shares shall Synergistic have recourse to pursue any remedies hereunder,
and (b) the liability of Synergistic and the Subsidiary shall in the aggregate
in no event exceed the difference between the face or nominal value of the total
Merger consideration paid to Crimi in the case of the Crimi Shares (including
the face value of the Notes) and to the Salex Stockholders, in the case of the
Merger consideration (in each case valued at the greater of value as of the
Effective Date or Breach Determination Date (as the case may be)), and the
lesser value of such consideration which a court or arbitrator may determine to
be the actual value by reason of the breach of any representation or warranty of
Synergistic or Subsidiary set forth in this Agreement (the "Breach Determination
Date").
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5. Covenants of the Parties.
5.1. Investigation.
(a) Between the date hereof and the
earlier of the Closing Date or the termination date of this Agreement specified
in Section 8 hereof, Synergistic and/or Subsidiary, on the one hand, and Salex,
the Salex Subsidiaries and the Salex Stockholders, on the other hand, may,
directly or through their representatives, make such investigation of the other
corporate parties and their respective businesses and assets as each deems
necessary or advisable (the entity and/or its representatives making such
investigation being the "Investigating Party"), but such investigation shall not
affect any of the representations and warranties contained herein or in any
instrument or document delivered pursuant hereto. In furtherance of the
foregoing, the Investigating Party shall have reasonable access, during normal
business hours, to all properties, books, contracts, commitments and records of
each other, and shall furnish to the other and their representatives such
financial and operating data and other information as may from time to time be
reasonably requested relating to the transactions contemplated by this
Agreement. Each of Synergistic and Subsidiary, on the one hand, and Salex, the
Salex Subsidiaries and the Salex Stockholders, on the other, and the respective
management, employees, accountants and attorneys of the corporate parties shall
cooperate fully with the Investigating Party in connection with such
investigation.
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(b) The parties hereto hereby agree
that all confidential information of a party to which an Investigating Party
obtains access shall be governed by and subject to all of the terms and
conditions of paragraph 11 of the letter agreement dated May 1, 1996
("Confidentiality Agreement") among the parties hereto.
5.2. Consummation of Transaction. Each of the
parties hereto hereby agrees to use all reasonable efforts to cause all
conditions precedent to his or its obligations (and to the obligations of the
other parties hereto to consummate the transactions contemplated hereby) to be
satisfied, including, but not limited to, using all reasonable efforts to obtain
all required (if so required by this Agreement) consents, waivers, amendments,
modifications, approvals, authorizations, novations and licenses; provided,
however, that nothing herein contained shall be deemed to modify any of the
absolute obligations imposed upon any of the parties hereto under this Agreement
or any agreement executed and delivered pursuant hereto.
5.3. Registration of Synergistic Public Warrants.
Synergistic agrees to use its best efforts to effectuate the registration of its
existing public warrants and the underlying shares of common stock and the
reduction of the exercise price to $2.50 per share.
5.4. Cooperation/Further Assurances.
(a) Each of the parties hereto hereby agrees
to cooperate fully with the other parties hereto in preparing and
filing any notices, applications, reports and other instruments and
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documents which are required by, or which are desirable in the reasonable
opinion of any of the parties hereto, or their respective legal counsel, in
respect of, any statute, rule, regulation or order of any governmental or
administrative body in connection with the transactions contemplated by this
Agreement.
(b) Each of the parties hereto hereby
further agrees to execute, acknowledge, deliver, file and/or record, or cause
such other parties to the extent permitted by law to execute, acknowledge,
deliver, file and/or record such other documents as may be required by this
Agreement and as Synergistic and/or Subsidiary, on the one hand, and/or Salex,
the Salex Subsidiaries, or the Salex Stockholders, on the other, or their
respective legal counsel may reasonably require in order to document and carry
out the transactions contemplated by this Agreement.
5.5. Accuracy of Representations. Each party hereto
agrees that prior to the Closing Date he or it will enter into no transaction
and take no action, and will use his or its best efforts to prevent the
occurrence of any event (but excluding events which occur in the ordinary course
of business and events over which such party has no control), which would result
in any of his or its representations, warranties or covenants contained in this
Agreement or in any agreement, document or instrument executed and delivered by
him or it pursuant hereto not to be true and correct, or not to be performed as
contemplated, at and as of the time immediately after the occurrence of such
transaction or event.
5.6. Notification of Certain Matters. Salex, the
Salex Subsidiaries and the Salex Stockholders shall give prompt
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notice to Synergistic and Subsidiary, and Synergistic or Subsidiary shall give
prompt notice to Salex, the Salex Subsidiaries and the Salex Stockholders, as
the case may be, of (a) the occurrence, or nonoccurrence, or any event the
occurrence, or nonoccurrence, of which would be likely to cause any
representation contained in this Agreement to be untrue or inaccurate in any
material respect at or prior to the Effective Time and (b) any material failure
of Salex, the Salex Subsidiaries and the Salex Stockholders, on the one hand,
and of Synergistic and/or Subsidiary, on the other, to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by him or
it hereunder; provided, however, that the delivery of any notice pursuant to
this Subsection 5.6 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
5.7. Proxy Statement. Promptly after the Effective
Time, Synergistic shall file with the SEC a proxy statement (the "Proxy
Statement"), or in the case stockholder action is taken without a meeting, an
information statement (the "Information Statement") relating to the approval of
an Amendment to the Certificate of Incorporation increasing the number of
authorized shares of Synergistic Common Stock to allow for the exercise of all
outstanding warrants and the conversion of all outstanding shares of preferred
stock. Salex and the Salex Stockholders shall, within five (5) business days of
receipt of such statement, have the right to conduct a reasonable review, to
request reasonable changes and to approve portions of the Proxy Statement or
Information Statement with respect to the accuracy of information relating to
Salex or
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the Salex Stockholders. Promptly after the Proxy Statement or Information
Statement has cleared the SEC, Synergistic shall thereafter mail the Proxy
Statement to the Synergistic stockholders. The term "Proxy Statement" or
Information Statement shall mean such proxy or information statement at the time
it initially is mailed to the Synergistic stockholders and all amendments and
supplements thereto, if any, similarly filed and mailed.
5.8. Broker. Each of Synergistic, Subsidiary and
Salex, the Salex Subsidiaries and the Salex Stockholders represents and warrants
to the other parties that no broker or finder has been engaged or dealt with in
connection with any of the transactions contemplated by this Agreement, and each
of the parties shall indemnify and hold the other harmless from and against any
and all claims or liabilities asserted by or on behalf of any alleged broker or
finder for broker's fees, finder's fees, commissions or like payments.
5.9. Legal, Accounting or Other Costs. Each party
hereto shall be solely responsible for his or its legal, accounting and other
costs related thereto. The Salex Stockholders shall bear their personal legal,
accounting and similar costs relating to the transactions contemplated by this
Agreement, to the extent such costs were incurred in connection with counsel
other than Seyfarth, Shaw, Fairweather & Geraldson.
5.10. No Solicitation of Transactions.
(a) Prior to the earlier of the Effective
Time or the termination of this Agreement in accordance with its
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terms, none of Salex, the Salex Subsidiaries, or the Salex Stockholders will,
directly or indirectly, through any director, officer, employee, agent or
otherwise, solicit, initiate or encourage the submission of proposals or offers
from any person relating to any acquisition or purchase of all or (other than in
the ordinary course of business) any portion of the Assets or Business of, or
any equity interest in, Salex, or any business combination with Salex or, except
to the extent required by fiduciary obligations under applicable law, as advised
by counsel in writing, and other than with Synergistic and/or Subsidiary,
participate in any negotiations regarding, or furnish to any other person any
information with respect to, or otherwise cooperate in any way with, or assist
or participate in, facilitate or encourage, any effort or attempt by any other
person to do or seek any of the foregoing. Except to the extent required by
fiduciary obligations under applicable law, as advised by counsel in writing,
Salex, the Salex Subsidiaries and the Salex Stockholders shall immediately cease
and cause to be terminated any existing discussions or negotiations with any
parties conducted heretofore with respect to any of the foregoing (other than in
respect of the transaction contemplated hereby). Salex, the Salex Subsidiaries
and the Salex Stockholders shall promptly notify Synergistic if any such
proposal or offer, or any inquiry or contact with any person with respect
thereto, is made and shall, in any such notice to Synergistic, indicate in
reasonable detail the identity of the offeror and the terms and conditions of
any proposal or offer.
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(b) Prior to the earlier of the Effective
Time or the termination of this Agreement, Synergistic and the Swartwood
Stockholders shall not, directly or indirectly (i) sell a controlling equity
interest in Synergistic or Subsidiary, (ii) sell all or substantially all of the
assets of Synergistic or Subsidiary except as specified in Section 6.2.11
hereof, (iii) merge Synergistic or Subsidiary with or into another entity, other
than pursuant to the Merger, (iv) purchase the assets or equity interest of
another entity, (v) enter into any negotiations or agreements related to any of
the foregoing, or (vi) take any action that would result in a change in
beneficial ownership of the Swartwood Stockholders.
5.11. Management and Administrative Matters
5.11.1. Synergistic shall, effective at the
Closing, take any and all steps or actions reasonably necessary to effect the
following:
(a) amendment of the By-Laws of Synergistic
to provide for an increase in the number of directors on the Board of Directors
of Synergistic to seven (7) and the appointment of Richard Belz, Crimi and four
persons designated by Crimi as the additional members of the Board of Directors.
Such directors shall serve until their successors are duly elected and
qualified, with each to hold office in accordance with the Certificate of
Incorporation and By-Laws of Synergistic;
(b) nomination and appointment of Crimi as
Chairman of the Board of Directors of Synergistic;
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(c) provide for the issuance to the Salex
Stockholders, at an exercise price acceptable to the Salex Stockholders, of an
amount of options (the "Equivalent Options") sufficient to balance the effect of
the number of employee stock options granted by Synergistic as of the Effective
Date so as to maintain the 51%/49% split of ownership of Synergistic in favor of
the Salex Stockholders;
(d) provide for the issuance to Crimi of an
option to purchase 500,000 shares of Synergistic Common Stock at an exercise
price per share of $1.50 per share, such options to have a three-year term and
exercisable in the event that the net income of Synergistic (before taxes)
equals or exceeds $2.7 million for the year ended April 30, 1997 (the "Crimi
Option"); provided that such option (and the underlying common stock) shall have
unlimited piggy-back registration rights; and
5.11.2. Salex shall, effective at the Closing,
take any or all steps reasonably necessary to terminate the Stockholder
Agreement among the Salex and the Salex Stockholders dated August 4, 1995 at or
prior to the Closing.
5.12. Prohibited Conduct.
5.12.1. Each of Salex, the Salex Subsidiaries
and the Salex Stockholders, jointly and severally, covenants and agrees that,
during the period from the date hereof to the earlier to occur of September 30,
1996 or the Effective Time, except pursuant to the terms hereof or unless
Synergistic shall otherwise agree in writing, the Business shall be conducted
only, and Salex shall not take any action except, in the ordinary course of
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business and in a manner consistent with past practice and in compliance with
applicable laws.
5.12.2. Neither Salex, the Salex Subsidiaries,
nor the Salex Stockholders, nor the Synergistic or the Swartwood Stockholders,
between the date of this Agreement and the earlier to occur of September 30,
1996 or the Effective Time, directly or indirectly do, or propose or commit to
do, any of the following except as specifically provided by this Agreement or,
if not as provided, then not without the prior written consent of Synergistic or
Salex, as the case may be:
(a) (i) declare, set aside or pay any
dividends on, or make any other distributions in respect of, any of the Salex or
Synergistic Common Stock, or (ii) split, combine or reclassify any of the Salex
or Synergistic Common Stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of the Salex
Common Stock, or otherwise;
(b) authorize for issuance, issue, deliver,
sell or agree to commit to issue, sell or deliver (whether through the issuance
or granting of options, warrants, commitments, subscriptions, rights to purchase
or otherwise), pledge or otherwise encumber, any shares of Salex Common Stock or
Synergistic Common Stock or shares of common stock of the Salex Subsidiaries,
any other voting securities or any securities convertible into, or any rights,
warrants or options to acquire, any such shares, voting securities convertible
securities or any other securities or equity
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equivalents (other than the private placement with Redstone Securities, Inc.
under consideration as of the date hereof);
(c) (i) increase the compensation payable or
to become payable to any officer, director, employees or consultant of Salex or
the Salex Subsidiaries or Synergistic, except pursuant to the terms of
contracts, policies or benefit arrangements in effect on the date hereof, or
(ii) grant any severance or termination pay to, or enter into any employment or
severance agreement with, any director, officer, other employee or consultant of
Salex or the Salex Subsidiaries or Synergistic, except pursuant to the terms of
contracts, policies and benefit arrangements in effect on the date hereof, or
(iii) establish, adopt, enter into or amend any collective bargaining (other
than in accordance with past practice), bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan, agreement,
trust, fund, policy or arrangement for the benefit of any directors, officers,
employees or consultants of Salex or the Salex Subsidiaries or Synergistic;
(d) amend the Certificate or Articles of
Incorporation, By-Laws or other comparable charter or organizational documents
of Salex or the Salex Subsidiaries or Synergistic or alter through merger,
liquidation, reorganization, restructuring, or in any other fashion, the
corporate structure or ownership of Salex or the Salex Subsidiaries or
Synergistic;
(e) acquire, or agree to acquire, (i) by
merging or consolidating with, or by purchasing a substantial
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portion of the stock or assets of, or by any other manner, any business or
corporation, partnership, joint venture, association or other business
organization or division thereof, or (ii) any assets that are material,
individually or in the aggregate, to Salex and/or the Salex Subsidiaries or
Synergistic, except purchases consistent with past practice;
(f) sell, lease, license, mortgage or
otherwise encumber or subject to any lien, security interest, pledge or
encumbrance or otherwise dispose of any of the Assets or assets of Synergistic,
except sales in the ordinary course of business consistent with past practice;
(g) (i) permit Salex or the Salex
Subsidiaries or Synergistic to incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person, issue or sell any debt
securities or warrants or other rights to acquire any debt securities of Salex
or the Salex Subsidiaries or Synergistic, guarantee any debt securities of
another person, or enter into any arrangement having the economic effect of any
of the foregoing, except for short-term borrowings incurred in the ordinary
course of business consistent with past practice, or (ii) permit Salex or
Synergistic to issue any guaranties of any indebtedness of the Salex
Subsidiaries or any affiliate of Synergistic;
(h) except in the ordinary course of
business, enter into any agreement, contract, commitment, involving a commitment
on the part of Salex or the Salex Subsidiaries or
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Synergistic to purchase, sell, lease or otherwise dispose of assets or require
payment by Salex or Synergistic in excess of $50,000;
(i) adopt a plan of complete or partial
liquidation of Salex or the Salex Subsidiaries or Synergistic or resolutions
providing for or authorizing such a liquidation or the dissolution, merger,
consolidation, restructuring, recapitalization or reorganization of Salex or the
Salex Subsidiaries or Synergistic;
(j) cause Salex or the Salex Subsidiaries or
Synergistic to recognize any labor union (unless legally required to do so) or
enter into or amend any collective bargaining agreement;
(k) change any accounting principles used by
Salex or the Salex Subsidiaries or Synergistic, unless required by the SEC or
the Financial Accounting Standards Board;
(l) make any tax election of, or settle,
compromise any income tax liability of, or prescribed by law, in the case of any
of the foregoing, material to the business, financial condition or results of
the operations of Salex and/or the Salex Subsidiaries or Synergistic, taken as a
whole;
(m) settle or compromise any litigation in
which any of Salex or the Salex Subsidiaries or Synergistic and/or any officer,
director or agent thereof is a defendant (whether or not commenced prior to the
date of this Agreement) or settle, pay or compromise any claims not required to
be paid, which payments are individually in an amount in excess of $5,000 and in
the aggregate in an amount in excess of $50,000; and
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(n) authorize any of, or commit or agree to
take any of, the foregoing actions.
5.13. Payment of Taxes Upon Transfer of the Shares.
Salex or the Salex Stockholders, on the one hand, and Synergistic and
Subsidiary, on the other, as the case may be, shall be responsible for, and
shall pay, their own sales, use, purchase, transfer and similar taxes, and any
and all filing, recording, registration arising out of the transactions
contemplated by this Agreement and imposed by Federal or New York state or local
law, including any income taxes.
5.14. Continued Registration Under the Exchange
Act/Continued Quotation by NASDAQ.
On and after the Effective Date, Synergistic shall
(i) continue to maintain the registration of the Synergistic Common Stock under
the Exchange Act of 1934, (ii) continue to maintain the inclusion of the
Synergistic Common Stock in the NASDAQ National Market System, including,
without limitation, maintenance of required registered market makers for such
shares.
5.15. Post-Closing SEC/NASD Filings.
On and after the Effective Date, Synergistic will
undertake all necessary filings with the SEC, NASD or any other regulatory or
administrative body otherwise required as a result of the transactions provided
for hereunder.
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6. Conditions of Merger.
6.1. Conditions to Obligations of Synergistic and
Subsidiary to Effect the Merger. The respective obligations of Synergistic and
Subsidiary to effect the Merger shall be subject to the fulfillment at or prior
to the Effective Time of the following conditions, which if not fulfilled by
Salex, the Salex Subsidiaries or the Salex Stockholders or waived by Synergistic
and Subsidiary shall give Synergistic and Subsidiary the right to terminate this
Agreement:
6.1.1. Accuracy of Representations and
Warranties. The representations and warranties of each of Salex, the Salex
Subsidiaries and/or the Salex Stockholders contained in this Agreement or in any
Salex Document delivered by any of them shall have been true when made, and, in
addition, shall be true in all material respects on and as of the Closing Date
with the same force and effect as though made on and as of the Closing Date.
6.1.2. Performance of Agreements. Each of
Salex, the Salex Subsidiaries and the Salex Stockholders, as the case may be,
shall have performed, observed and complied in all material respects with all of
their obligations, covenants and agreements, and shall have satisfied or
fulfilled in all material respects conditions contained in any Salex Document
and required to be performed, observed or complied with, or to be satisfied or
fulfilled, by Salex, the Salex Subsidiaries and/or the Salex Stockholders at or
prior to the Closing Date.
6.1.3. Opinion of Counsel for Salex.
Synergistic and Subsidiary shall have received an opinion of
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counsel for Salex, the Salex Subsidiaries and the Salex Stockholders, dated the
Closing Date, as reasonably agreed by the parties.
6.1.4. Fairness Opinion. Synergistic shall
have received a fairness opinion from Paragon Securities, satisfactory in all
respects, that the Divestiture is fair to the stockholders of Synergistic.
6.1.5. Litigation. No order of any court or
administrative agency shall be in effect which restrains or prohibits the
transactions contemplated hereby, and no claim, suit, action, inquiry,
investigation or proceeding in which it will be, or it is, sought to restrain,
prohibit or change the terms of or obtain damages or other relief in connection
with this Agreement or any of the transactions contemplated hereby, shall have
been instituted or threatened by any person or entity (other than with respect
to the Crimi Obligation to AG), and which, in the reasonable judgment of
Synergistic (based on the likelihood of success and material consequences of
such claim, suit, action, inquiry or proceeding), makes it inadvisable to
proceed with the consummation of such transactions.
6.1.6. Consents and Approvals. All consents,
waivers, approvals, licenses and authorizations by third parties and
governmental and administrative authorities (and all amendments or modifications
to existing agreements with third parties) required as a precondition to the
performance by Salex, the Salex Subsidiaries and the Salex Stockholders, of
their respective obligations hereunder and under any agreement delivered
pursuant
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hereto, or which in Synergistic's reasonable judgment are necessary to continue
unimpaired, subsequent to the Effective Time, any rights in and to the Assets
and/or the Business which could be impaired by the Merger, shall have been duly
obtained and shall be in full force and effect.
6.1.7. Date of Consummation. The Merger
shall have been consummated on or prior to September 30, 1996, or such later
date as the parties shall agree by a written instrument signed by all of them.
6.1.8. Validity of Transactions. The
validity of all transactions contemplated hereby, as well as the form and
substance of all agreements, instruments, opinions, certificates and other
documents delivered by Salex, the Salex Subsidiaries and the Salex Stockholders
pursuant hereto, shall be satisfactory in all material respects to Synergistic
and its counsel.
6.1.9. No Material Adverse Change. There
shall not have occurred after the date hereof, in the reasonable judgment of
Synergistic, a material adverse change in the financial or business condition of
Salex or the Salex Subsidiaries, either individually or taken as a whole.
6.1.10. Closing Certificate. Salex, the
Salex Subsidiaries and the Salex Stockholders shall have furnished Synergistic
and Subsidiary with certificates, executed by them, dated the Closing Date, to
the effect that all the respective representations and warranties are true and
complete in all material respects and all covenants to be performed at or as of
the
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Closing have been performed in all material respects and conditions to be
satisfied at or as of the Closing have been waived or satisfied in all material
respects.
6.2. Conditions to Obligations of Salex, the Salex
Subsidiaries and the Salex Stockholders to Effect the Merger. The obligations of
Salex, the Salex Subsidiaries and the Salex Stockholders to effect the Merger
shall be subject to the fulfillment at or prior to the Effective Time of the
following conditions, which, if not fulfilled by Synergistic or Subsidiary or
waived by Salex, shall give Salex the right to terminate this Agreement:
6.2.1. Accuracy of Representations and
Warranties. The representations and warranties of Synergistic and Subsidiary
contained in any Synergistic Documents delivered by either Synergistic or
Subsidiary or both of them shall have been true when made, and, in addition,
shall be true in all material respects, on and as of the Closing Date with the
same force and effect as though made on and as of the Closing Date.
6.2.2. Performance of Agreements. Each of
Synergistic and Subsidiary shall have performed, observed and complied, in all
material respects, with all obligations, covenants and agreements, and shall
have satisfied or fulfilled in all material respects all conditions contained in
any Synergistic Document and required to be performed, observed or complied
with, or satisfied or fulfilled, by either or both of them at or prior to the
Closing Date.
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6.2.3. Opinion of Counsel for Synergistic
and Subsidiary. Salex, the Salex Subsidiaries and the Salex Stockholders shall
have received an opinion of Tenzer Greenblatt LLP, counsel for Synergistic and
Subsidiary, dated the Closing Date, as reasonably agreed by the parties.
6.2.4. Litigation. No order of any court or
administrative agency shall be in effect which restrains or prohibits the
transactions contemplated hereby, and no claim, suit, action, inquiry,
investigation or proceeding in which it will be, or it is, sought to restrain,
prohibit or change the terms of or obtain damages or other relief in connection
with this Agreement or any of the transactions contemplated hereby shall have
been instituted or threatened by any person or entity, and which in the
reasonable judgment of the Board of Directors of Salex (based on the likelihood
of success and material consequences of such claim, suit, action, inquiry or
proceeding), makes it inadvisable to proceed with the consummation of such
transactions.
6.2.5. Consents and Approvals. All consents,
waivers, approvals, licenses and authorizations by third parties and
governmental and administrative authorities (including the NASD) (and all
amendments and modifications to existing agreements with third parties) required
as a precondition to the performance by Synergistic and Subsidiary of their
respective obligations hereunder and under any agreement delivered pursuant
hereto, shall have been duly obtained and shall be in full force and effect.
6.2.6. Date of Consummation. The Merger
shall have been consummated on or prior to September 30, 1996, or such
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later date as the parties shall agree by a written instrument signed by all of
them.
6.2.7. Validity of Transactions. The
validity of all transactions contemplated hereby, as well as the form and
substance of all agreements, instruments, opinions, certificates and other
documents delivered by Synergistic and Subsidiary pursuant hereto, shall be
satisfactory in all material respects to the Board of Directors of Salex and its
counsel.
6.2.8. No Material Adverse Change. There
shall not have occurred after the date hereof, in the reasonable judgment of the
Board of Directors of Salex, a material adverse change in the financial or
business condition of Synergistic or Subsidiary, taken as a whole; provided,
however, that the Divestiture shall not be deemed a material adverse change.
6.2.9. Synergistic Management. Synergistic
shall have effected each of the matters set forth in Subsection 5.11, to be
effective on or immediately after the Effective Time.
6.2.10. Stock Options. At the Effective
Time, there shall be issued the Equivalent Options and the Crimi Option.
6.2.11. Divestiture. By the Effective Time,
Synergistic shall (i) have divested (the "Divestiture") itself of (a) its
subsidiary Dickinson & Co., a registered broker/dealer and (b) its investment in
Electronic Designs, Inc. ("EDIX") pursuant to the terms and conditions of the
Divestiture Agreement of even date herewith between Synergistic and Dickinson
Holding Corp and (ii) the Transferee shall have entered into a tax indemnity
agreement,
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in form and substance satisfactory to counsel to Salex, providing for the
Transferee to indemnify Synergistic for 50% of any tax liability incurred by
Synergistic pursuant to the Divestiture.
6.2.12. Closing Certificate. Each of
Synergistic and Subsidiary shall have furnished Salex, the Salex Subsidiaries
and the Salex Stockholders with certificates, each executed by their respective
presidents, dated the Closing Date, to the effect that all the representations
and warranties of Synergistic or Subsidiary, as the case may be, are true and
complete in all material respects and all covenants to be performed by each of
Synergistic or Subsidiary, as the case may be, at or as of the Closing have been
performed in all material respects and conditions to be satisfied at or as of
the Closing have been waived or satisfied in all material respects.
6.2.13. Consummation of Redstone Private
Placement. Prior to the Closing, Crimi shall have (i) received satisfactory
evidence that Redstone Securities, Inc. has successfully placed 8.5% Series A
Convertible Preferred Stock and warrants of Salex for an aggregate offering
price of not less than $630,000, in accordance with Salex's Confidential Private
Offering Memorandum dated June July 9, 1996 (the "Redstone Placement") and that
the proceeds from such placement have been escrowed in a manner satisfactory to
Crimi for use by Salex or have been released to Salex.
6.2.14. Registration Rights. Synergistic and
the Salex Stockholders shall have entered into a registration rights agreement,
in form satisfactory to the Salex Stockholders,
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providing for one demand registration right and unlimited piggy-back
registration rights (the "Registration Rights Agreement").
6.2.15. Qualification for NASDAQ Quotation.
Synergistic shall continue to qualify for quotation on the NASDAQ National
Market System or shall make such application to NASDAQ for continued listing as
may be necessary and appropriate.
6.2.16. Synergistic Fairness Opinion.
Paragon Securities shall have delivered the fairness opinion set forth in
Section 6.2.11 hereof.
6.2.17. Salex Employment Agreement. The
employment agreements for Crimi and Pershing shall have been assumed by
Synergistic.
6.2.18. Assumption of Mortgage. Synergistic
shall have assumed the existing mortgage on Salex's principal executive
headquarters and secured the release in full of Crimi.
6.2.19. Issuance of Notes. The Notes shall
have been issued and delivered by Synergistic to Crimi.
6.2.20. Release of Falstaff Loan/All
Indebtedness. Synergistic shall have delivered satisfactory evidence of the
release and satisfaction of all indebtedness and liabilities of Synergistic,
including, without limitation, conversion of the Falstaff debt.
6.2.21. Litigation Matters. Synergistic
shall have delivered satisfactory evidence regarding all litigations involving
the operations of Dickinson & Co. and, to the extent
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requested by Salex, satisfactory indemnification for Synergistic
with respect to any such litigations.
6.2.22. Cancellation of Synergistic Options.
Synergistic shall have delivered satisfactory evidence of the cancellation of
Synergistic options to the extent necessary to reflect the current outstanding
options of 172,300.
7. The Closing. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have been abandoned
pursuant to Section 8, the closing of the Merger (the "Closing") will take place
at the offices of Tenzer Greenblatt LLP as promptly as practicable and in any
event within five business days after satisfaction or waiver of the conditions
set forth in Section 6 but in no event later than September 30, 1996 (the
"Closing Date"); or such later date as shall have been fixed by a written
instrument signed by the parties.
7.1. Deliveries by Synergistic and
Subsidiary at the Closing of the Merger. At the Closing, Synergistic and
Subsidiary shall deliver the following:
(a) stock certificate(s), representing the
Share Consideration registered in the names of the Salex Stockholders;
(b) the Notes, the Equivalent Options and
the Crimi Option;
(c) copies of (i) (A) resolutions adopted by
the Boards of Directors of Synergistic authorizing Synergistic to execute and
deliver the Synergistic Documents to which it is a party and to perform its
obligations thereunder, upon the terms and
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subject to the conditions set forth therein, (B) resolutions adopted by the
Board of Directors of Synergistic increasing the number of directors
constituting the entire Board to seven (7) members and designating Crimi and
four persons designated by Crimi as Directors, duly certified by the Secretary
or Assistant Secretary of Synergistic, and (ii) resolutions of the Board of
Directors of Subsidiary authorizing Subsidiary to execute and deliver the
Synergistic Documents to which it is a party, to perform its obligations
thereunder, and to effect the Merger upon the terms and subject to the
conditions set forth therein, duly certified by the Secretary or Assistant
Secretary of Subsidiary.
(d) confirmation, in the form satisfactory
to the parties hereto, from the State of Delaware or a filing service (jointly
chosen by the parties hereto) that the Certificate of Merger of Subsidiary with
and into Salex has been filed with the Secretary of State of Delaware; together
with a copy of the executed form of such agreement.
(e) certificates of the Secretary or
Assistant Secretary of each of Synergistic and Subsidiary certifying as to the
incumbency and specimen signatures of the officers of Synergistic and Subsidiary
executing the Synergistic Documents on behalf of such corporation.
(f) the Registration Rights Agreement.
7.2. Deliveries by Salex at the Closing. At the
Closing, Salex, the Salex Subsidiaries and the Salex Stockholders, as
applicable, shall deliver to Synergistic and/or Subsidiary, as the case may be,
the following:
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(a) stock certificate(s) representing the
Salex Shares, duly endorsed for transfer or with duly executed stock powers
attached; and the Crimi Shares also duly endorsed for transfer.
(b) a copy of the resolutions of the Boards
of Directors of Salex and the Salex Subsidiaries, authorizing Salex and the
Salex Subsidiaries, respectively, to execute and deliver the Salex Documents, to
perform their obligations thereunder and to effect the Merger, duly certified by
the Secretary or assistant Secretary of Salex or the Salex Subsidiaries, as the
case may be.
(c) certificates of the Secretary or
Assistant Secretary of Salex certifying as to the incumbency and specimen
signatures of the officers of Salex executing the Salex Documents on behalf of
such corporation.
7.3. Other Deliveries. In addition, the parties shall
execute and deliver such other documents as may be required by this Agreement
and as either of them or their respective counsel may reasonably require in
order to document and carry out the transactions contemplated by this Agreement.
8. Termination, Amendment and Waiver.
8.1. Termination. Subject to the cure period provided
for in Subsection 8.1(d), this Agreement may be terminated at any time prior to
the Effective Time:
(a) By mutual consent of the Boards of
Directors of Synergistic, Subsidiary and Salex; or
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(b) By Synergistic and Subsidiary, on the
one hand, or Salex, on the other hand, if (i) the Merger shall not have been
consummated by September 30, 1996, or such later date as the parties shall have
fixed by written instrument signed by the parties hereto or, at the election of
a party because a condition to the Merger set forth in this Agreement has not
been fulfilled; provided, however, that the right to terminate this Agreement
under this Subsection shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause of, or resulted
in, the failure of the Effective Time to occur on or before such date or (ii) a
court of competent jurisdiction or governmental, regulatory or administrative
agency or commission shall have issued an order, decree or ruling or taken any
other action (which order, decree, ruling or other action the parties hereto
shall use their reasonable efforts to vacate), in each case permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated by
this Agreement.
(c) By Synergistic and Subsidiary, on the
one hand, or by Salex, on the other hand, if, in the reasonable judgment of
Synergistic and Subsidiary or Salex, as the case may be, (and provided such
parties are not then in material breach of their respective obligations
hereunder), it shall have been determined that the transaction contemplated by
this Agreement has become inadvisable or impracticable by reason of the
institution or threat by state, local or federal governmental authorities or by
any other person of material litigation or proceedings against
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Synergistic or Salex (other than with respect to the Crimi Obligation to AG).
(d) In the event Synergistic or Subsidiary,
on the one hand, or Salex and the Salex Subsidiaries, on the other hand,
breaches or otherwise fails to perform any material part of this Agreement, then
the other party (or parties) hereto not in breach shall notify in (writing) the
party in material breach and demand that such material breach or such material
failure to perform be corrected within a stipulated period, which period shall
not be less than ten (10) days following notification. If the party (or parties)
in material breach fails to correct the material breach with the period stated
in the written notice of demand for correction, the other party (or parties)
may, in its (or their) sole discretion, immediately terminate this Agreement by
giving the party (or parties) in material breach written notice of termination.
8.2. Effect of Termination. In the event of the
termination of this Agreement as provided in this Section 8, this Agreement
shall, except with respect to Subsection 8.2, forthwith become null and void and
there shall be no liability on the part of any party hereto except and to the
extent such termination results from the willful breach by a party of any of its
representations, warranties or agreements hereunder, in which case, the
non-breaching party shall be entitled to damages. Any termination shall not,
however, affect the obligations of the parties under the Confidentiality
Agreement.
8.3. Fees and Expenses.
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(a) Each of the parties shall be responsible
for, and shall pay, its or his respective fees and expenses incurred by such
party in connection with the Merger and the transactions contemplated by this
Agreement.
8.4. Amendment. This Agreement may not be amended
except by an instrument in writing signed by each of the parties
hereto.
8.5. Waiver. At any time prior to the Effective
Time, any party hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions contained herein. Any such extension or waiver shall be
valid if set forth in an instrument in writing signed by the party or parties to
be bound thereby.
9. Survival of Representations and Warranties.
Each of the parties hereto hereby agrees that all
representations and warranties made by or on behalf of him or it in this
Agreement or in any document or instrument delivered pursuant hereto shall
survive the Closing Date for a period of two (2) years after the Effective Time;
provided, however, the representations and warranties relating to matters which
are subject to statutes of limitations with respect to action by governmental
bodies, such as taxing authorities, shall survive for the duration of the
periods provided by such statute.
10. General Provisions.
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10.1. Notices. All notices and other
communications given or made pursuant hereto shall be in writing and shall be
deemed to have been duly given or made as of the earlier of the date delivered
if delivered personally, by overnight courier or mailed by express mail, or
within 3 business days if sent by registered or certified mail (postage prepaid,
return receipt requested) or on the date sent by facsimile transmittal,
confirmed by express, certified or registered mail, to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice, except that notices of changes of address shall be effective
upon receipt):
If to Synergistic or
Subsidiary: Synergistic Holdings Corp.
405 Sixth Avenue, Suite 200
Des Moines, Iowa 50309
with a copy to: Tenzer Greenblatt LLP
405 Lexington Avenue
New York, New York 10174
Attn: Barry S. Rutcofsky
Fax: (212) 885-50001
If to Salex or Salex Salex Holding Corporation
Subsidiaries: 50 Laser Court
Hauppauge, New York 11788
with a copy to: Seyfarth, Shaw, Fairweather &
Geraldson
900 Third Avenue
New York, New York 10022
Attention: Michael J. Album, Esq.
Telecopy: (212) 752-3116
If to the Salex
Stockholders, to: The name and address set forth
on Schedule 2.3.
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10.2. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the greatest
extent possible.
10.3. Entire Agreement. This Agreement and the
Confidentiality Agreement and the agreements referred to herein constitute the
entire agreement, and supersede all prior agreements and undertakings, both
written and oral, among the parties, or any of them, with respect to the subject
matter hereof.
10.4. No Assignment. This Agreement shall not be
assigned by operation of law or otherwise, and any assignment shall be null and
void.
10.5. Headings. Headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
10.6. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the law of the State of New York without
regard to its choice of law principles. Each
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of Synergistic, Subsidiary, and Salex hereby irrevocably and unconditionally
consents to submit to the exclusive jurisdiction of the courts of the States of
New York and of the United States located in the County of New York, State of
New York for any litigation arising out of or relating to this Agreement and the
transactions contemplated hereby (and agrees not to commence any litigation
relating thereto except in such courts), waives any objection to the laying of
venue of any such litigation in such courts and agrees not to plead or claim
that such litigation brought in New York, New York has been brought in an
inconvenient forum.
10.7. Attorneys' Fees. In the event of any dispute
arising out of the subject matter of this Agreement, the prevailing party shall
recover, in addition to any other damages assessed, its reasonable attorneys'
fees and costs incurred in litigating, arbitrating, or otherwise settling or
resolving such dispute.
10.8. Counterparts. This Agreement may be executed in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original,
but all of which taken together shall constitute one and the same agreement.
10.9. Effect of Abandonment. In the event that this
Agreement is terminated and the transactions contemplated hereby are abandoned
pursuant to the terms hereof, this Agreement shall forthwith become wholly void
and of no force and effect, except as to 10.1 hereof; provided, however, that
nothing in this Agreement contained shall be deemed to relieve any party hereto
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from liability for any breach of this Agreement prior to termination.
10.10. Amendment. This Agreement may only be amended
by a written instrument executed by each of the parties hereto.
10.11. Binding Effect; Benefits. This Agreement shall
inure to the benefit of, and shall be binding upon, the parties hereto and their
respective heirs, legal representatives, successors and permitted assigns.
Nothing herein contained, express or implied, is intended to confer upon any
person other than the parties hereto and their respective heirs, legal
representatives, successors and permitted assigns, any rights or remedies under
or by reason of this Agreement.
10.12. Waiver, etc. The failure of any of the parties
hereto to at any time enforce any of the provisions of this Agreement shall not
be deemed or construed to be a waiver of any such provision, nor to in any way
affect the validity of this Agreement or any provision hereof or the right of
any of the parties hereto to thereafter enforce each and every provision of this
Agreement. No waiver of any breach of any of the provisions of this Agreement
shall be effective unless set forth in a written instrument executed by the
party or parties against whom or which enforcement of such waiver is sought; and
no waiver of any such breach shall be construed or deemed to be a waiver of any
other or subsequent breach.
10.13. Announcements. No party hereto shall issue
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any press release or otherwise divulge the existence of this Agreement or the
transactions contemplated hereby without the prior approval of the other parties
hereto, except as may be required by applicable law or the applicable rules or
regulations of any stock exchange.
10.14. Schedules. The Schedules delivered pursuant
to this Agreement are an integral part hereof. Each such Schedule shall be in
writing, shall indicate the subparagraph pursuant to which it is being
delivered, and shall be initialled by the delivering party.
IN WITNESS WHEREOF, each of the Parties have caused this
Agreement to be executed as of the date first written above.
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SIGNATURE PAGES FOR MERGER AGREEMENT by and among
SALEX HOLDING CORPORATION, SALEX INDUSTRIES, INC.
SYNERGISTIC HOLDINGS CORP, SALVATORE CRIMI, THE SALVATORE
CRIMI FAMILY LIMITED PARTNERSHIP, PERSHING SUN, JENNIFER SUN,
MICHAEL SUN, HARRISON A. FITZPATRICK, FRANCIS X.
FITZPATRICK and SUSAN TAUSS GIOVINCO
SALEX HOLDING CORPORATION
By: /s/ Sal Crimi
--------------------------------------
SALEX INDUSTRIES, INC.
By: /s/ Thomas Swartwood
--------------------------------------
SYNERGISTIC HOLDINGS CORP.
By: /s/ Thomas Swartwood
--------------------------------------
SALEX FLEET SPECIALIST CORP.
By: /s/ Sal Crimi
--------------------------------------
SALEX FLEET MANAGEMENT CORP.
By: /s/ Sal Crimi
--------------------------------------
SALEX NATIONAL ACCOUNT CORP.
By: /s/ Sal Crimi
--------------------------------------
SALEX SALVAGE DISPOSAL CORP.
By: /s/ Sal Crimi
--------------------------------------
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SALEX FINANCIAL SERVICES CORP.
By: /s/ Sal Crimi
--------------------------------------
/s/ Sal Crimi
-----------------------------------------
SALVATORE CRIMI
THE SALVATORE CRIMI FAMILY LIMITED
PARTNERSHIP
By: /s/ Rose Crimi
--------------------------------------
Rose Crimi, General Partner
/s/ Pershing Sun
-----------------------------------------
PERSHING SUN
/s/ Jennifer Sun
-----------------------------------------
JENNIFER SUN
/s/ Michael Sun
-----------------------------------------
MICHAEL SUN
/s/ Harrison A. Fitzpatrick
-----------------------------------------
HARRISON A. FITZPATRICK
/s/ Francis X. Fitzpatrick
-----------------------------------------
FRANCIS X. FITZPATRICK
/s/ Susan Tauss Giovinco
-----------------------------------------
SUSAN TAUSS GIOVINCO
/s/ T. Marshall Swartwood
-----------------------------------------
T. MARSHALL SWARTWOOD
/s/ Thomas M. Swartwood
-----------------------------------------
THOMAS M. SWARTWOOD
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Exhibit 10.2
List of Omitted Schedules/Exhibits to Merger Agreement
------------------------------------------------------
2.3 Ownership of Salex Common Stock
2.2(b) Capitalization of Salex Subsidiaries
2.6 Non-Contravention
2.9 Properties Owned, Leased
2.11 Absence of Changes
2.12 Litigation
2.14 Intellectual Property
2.16 Insurance
2.17 Bank Account(s), Power(s) of Attorney
2.18 Employment Arrangements
2.19 ERISA
2.20 Certain Business Matters
2.21 Certain Contract
2.23 Business Practices
2.24 Approvals/Consents
3.1 Organization, Standing and Power
3.2 Interests in Other Entities
3.4 Pro Forma Capitalization
3.6 Non-Contravention
3.7 Absence of Litigation
3.8 Employee Benefit Plans
3.11 Properties
3.14 Intangibles/Inventions
3.16 Insurance
3.17 Banks and Powers of Attorney
3.18 Employment Arrangements
3.19 Certain Business Matters
3.20 Certain Contracts
3.21 Approvals/Consents
<PAGE>
SUBORDINATED PROMISSORY NOTE
New York, New York
September , 1996
FOR VALUE RECEIVED, the undersigned, SYNERGISTIC HOLDINGS
CORP., a Delaware corporation (the "Payor"), hereby promises to pay to the order
of SALVATORE CRIMI (the "Payee"), at such place in the State of New York as the
holder of this note (as amended, supplemented, or otherwise modified from time
to time), together with any and all notes issued in substitution of, or exchange
for, this note (this "Note") shall specify, in such coin or currency of the
United States of America as at the time shall be legal tender for the payment of
public and private debts, the principal amount of One Million Fifty-Five
Thousand Five Hundred Sixty Two and 19/100 Dollars ($1,055,562.19)*, together
with accrued interest as hereinafter provided.
1. Payment and Interest
a. The principal amount of $600,000, together with
interest thereon, shall be due and payable on the sixth anniversary of the date
hereof (the "First Payment").
b. The remaining principal amount of $455,562.10,
together with interest thereon, shall be due on the sixth anniversary date
hereof and shall be payable to Salex Holding Corporation ("Salex") to off-set
any indebtedness due and owing by Salvatore Crimi to Salex (the "Salex
Payment").
c. The unpaid principal amount hereof shall bear
simple interest from the date hereof at the rate of 7% per annum. All payments
made hereunder shall be subject to the subordination provisions of Section 3
hereof.
d. If payment of the principal amount hereof and
interest accrued thereon is not made when due, then interest shall accrue on
such unpaid principal amount from the date of non-payment to the date of payment
at the lower of (i) the rate of 12% per annum or (ii) the maximum rate permitted
by applicable law.
* Subject to adjustment based upon the effective date of the merger of
Synergistic Holdings Corp. with and into Salex Holding Corporation.
<PAGE>
2. Acceleration. To the extent that the Payor receives
proceeds from the exercise of its public warrants, that amount of the Payor's
payment obligation to the Payee hereunder constituting all or any portion of the
First Payment shall be accelerated and shall be due and payable to Payee within
30 days of receipt of such proceeds by Payor. To the extent the proceeds
received by the Payor from the exercise of its public warrants are insufficient
to accelerate the entire amount payable under Section 1(a) hereunder, the
remaining amount due shall be due and payable in accordance with the terms of
Section 1(a) hereunder, subject to earlier payment as determined by the Board of
Directors, in their sole discretion.
3. Events of Default. Subject to the provisions of paragraphs
4 and 5 hereof, and to the limited grace period provided below in this paragraph
3, immediately upon the occurrence of any of the following events (an "Event of
Default") this Note shall become immediately due and payable without any action
by the Payee:
a. If Payor shall be in default of the payment
provisions of this Note;
b. If the Payor or Salex makes a general assignment
for the benefit of creditors or commences (as the debtor) a case in bankruptcy,
or commences (as the debtor) any proceeding under any other insolvency law; or
c. If a case in bankruptcy or any proceeding under
any other insolvency law is commenced by or against the Payor or Salex (as the
debtor) and a court having jurisdiction enters a decree or order for relief
against the Payor or Salex, as the case may be, as the debtor in such case or
proceeding, or such case or proceeding is consented to by the Payor or Salex, as
the case may be, or remains undismissed for 60 days, or the Payor or Salex
consents or admits the material allegations against it in any such case or
proceeding; or
d. If a trustee, receiver or agent (however named) is
appointed or authorized to take charge of substantially all of the property of
the Payor or Salex for the purpose of general administration of such property
for the benefit of creditors and the order making such appointment or granting
such authorization is not vacated within 60 days, during which period such
trustee, receiver or agent shall not have taken any action with respect to the
property of the Payor or Salex, as the case may be, which might prejudice the
interest of the Payor hereunder.
Subject to the provisions of Sections 4 and 5
hereof, if an Event of Default occurs and is continuing, Payor may pursue any
available remedy to collect the payment of all amounts due under this Note or to
enforce the performance of any
-2-
<PAGE>
provision of this Note. No waiver of any default hereunder shall be construed as
a waiver of any subsequent default, and the failure to exercise any right or
remedy hereunder shall not waive the right to exercise such right or remedy
thereafter.
4. Subordination.
a. The Payee's right to payment pursuant to the terms
of this Note shall be and hereby is made expressly subordinate and junior in
right of payment in full in cash of the Redemption Deposit (as hereinafter
defined) to the extent and in the manner provided for in this Note. As used
herein, "Redemption Deposit" means the deposit of 10% gross annual revenues from
the Payor's retail operations into a sinking fund maintained at Chemical Bank
for the purpose of ensuring adequate funds in the event of redemption of the
Payor of its 7% Series A Convertible Preferred Stock (the "Preferred Stock"). No
payment or prepayment directly or indirectly, on account of the principal of or
interest on this Note shall be made (in cash or property or securities or by
setoff or otherwise), and no holder of this Note shall be entitled to demand or
receive any such payment or prepayment if, at the time of such payment or
prepayment, the entire Redemption Deposit has not been paid in full. Each holder
of this Note, whether upon original issue or upon transfer or assignment
thereof, by its acceptance hereof, shall be bound by the provisions contained in
this Section 3.
b. The foregoing provisions as to subordination are
solely for the purpose of defining the relative rights of the holders of the
Preferred Stock, on the one hand, and the holder of this Note, on the other
hand. Nothing contained herein is intended to or shall impair as between Payor,
its creditors and the holders of this Note the principal and interest on this
Note as and when the same shall become due and payable in accordance with the
terms hereof or affect the relative rights of the holder of this Note and the
creditors of Borrower, nor shall anything herein prevent the holder hereof from
exercising all remedies otherwise permitted by applicable law upon default
hereunder subject to the rights of holders of Preferred Stock, in respect of
cash, properties or securities of Borrower received upon the exercise of any
such remedy. The holder of this Note by acceptance hereof acknowledges and
agrees that the subordination provisions of this Section 4 are, and/or are
intended to be, an inducement and a consideration to each holder of any
Preferred Stock, whether such Preferred Stock was acquired before or after the
issuance of this Note, and each holder of Preferred Stock shall be deemed
conclusively to have relied on such subordination provisions in acquiring and
continuing to hold, or in continuing to hold, such Preferred Stock.
-3-
<PAGE>
5. Limitations on Actions.
If the Payee or any other holder of this Note, in
violation of the provisions herein set forth, shall commence, prosecute or
participate in any suit, action, case or Proceeding against the Payor, the Payor
or any holder of Preferred Stock may interpose the subordination provisions set
forth herein as a defense or plea, and shall, in any event, be entitled to
restrain the enforcement of the payment provisions of this Note in the same
suit, action, case or proceeding or in any independent suit, action, case or
proceeding.
6. Successors and Assigns. The terms of this Note shall be
binding upon and inure to the benefit of and be enforceable by the respective
successors and assigns of the Payor and the Payee, whether so expressed or not,
and, in particular, shall inure to the benefit of and be enforceable by any
holder or holders of this Note; provided that the rights, obligations, covenants
and agreements of the Payor under this Note may not be assigned or delegated, as
applicable, without the prior written consent of the Payee and Salex, if the
Salex Payment has not been paid in full.
7. Notices. All notices and other communications with
respect to this Note shall be in writing and shall be sent by hand delivery,
receipt acknowledged, or by facsimile transmission, as follows:
(a) If to the Payee, to
Salvatore Crimi
37 Kristian Lane
Hauppauge, New York 11785
with a copy to
Salex Industries, Inc.
50 Laser Court
Hauppauge, New York
-and-
______________ Bank
___________________
___________________
(b) If to the Payor, to
Synergistic Holdings Corp.
__________________________
__________________________
__________________________
<PAGE>
with a copy to
Tenzer Greenblatt LLP
The Chrysler Building
405 Lexington Avenue
New York, New York 10174
Attention: Gary A. Schonwald, Esq.
8. Modification and Amendments. No modification, rescission,
waiver, forbearance, release or amendment of any provision of this Note shall be
made, except by a written agreement duly executed by the Payor, the Payee and
Salex, if the Salex Payment has not been paid in full.
9. Governing Law. This note shall be governed by, and
construed and interpreted in accordance with, the laws of the State of New York,
without regard to principles of conflicts of laws as to all matters, including
but not limited to, matters of validity, construction, effect, performance and
remedies.
10. Severability. In case one or more provisions of this Note
shall be invalid, illegal or unenforceable in any respect under any applicable
law, the validity, legality and enforceability of the remaining provisions
contained herein or therein shall not be affect or impaired thereby.
11. WAIVER OF JURY TRIAL. EACH OF THE PAYOR AND THE PAYEE
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS NOTE.
12. Further Assurances. The Payor and the Payee, by their
acceptance of this Note, each agree that they will, at their expense and at any
time and from time to time, promptly execute and deliver all further instruments
and documents, and take all further action, that may be necessary or desirable,
in order to protect any right or interest granted or purported to be granted
hereby or to enable the holder of Preferred Stock or to exercise and enforce
their rights and remedies hereunder.
SYNERGISTIC HOLDINGS CORP.
By: /s/ Thomas M. Swartwood
-------------------------------
Name: Thomas M. Swartwood
Title: President
ACCEPTED AND AGREED
/s/ Salvatore Crimi
- -------------------------
Salvatore Crimi
-5-
<PAGE>
September 18, 1996
The undersigned, for value received, promises to pay to
SALVATORE CRIMI the principal sum of Nine Hundred Forty-Four Thousand Four
Hundred Thirty-Seven and 81/100 ($944,437.81) Dollars in quarterly payments of
Fifty Five Thousand Eighty Six (55,086)* Dollars, plus interest which shall
accrue at 10.5% per annum, with the final payment due in the amount that is the
difference between the amount remaining due under this Note and all amounts
previously paid by the undersigned.
Any payment or distribution of any kind or character, whether
in cash, securities or other property which would otherwise (but for the
subordination provisions set forth in the following paragraph) be payable to the
holder hereof on account of this Note, shall be set aside in a special
segregated account maintained by the undersigned (the "Special Account"), which
funds shall only be used for the purposes set forth herein. All payments or
prepayments made under this Note to the Special Account shall be redistributed
and payable to Alex Gianoplus as payment of the amounts due under the Promissory
Note from Payee to Alex Gianoplus pursuant to the Memorandum of Sale dated
October 12, 1989 between Payee and Alex Gianoplus (the "Gianoplus Note") until
such obligations under the Gianoplus Note have been paid in full in cash and
thereafter remaining payments shall be distributed to the holder of this Note.
Notwithstanding anything contained herein the contrary, the
holder's right to payment under this Note shall be and hereby is made expressly
subordinate and junior in right of payment in full of the Redemption Deposit (as
hereinafter defined) to the extent and in the manner provided for in this Note.
As used herein, "Redemption Deposit" means the deposit of 10% gross annual
revenues from the Payor's retail operations into a sinking fund maintained at
Chemical Bank for the purpose of ensuring adequate funds in the event of
redemption of the Payor of its 7% Series A Convertible Preferred Stock. No
payment or prepayment directly or indirectly, on account of the principal of or
interest on this Note shall be made (in cash or property or
* Subject to adjustment based upon the effective date of the merger of
Synergistic Holdings Corp. with and into Salex Holding Corporation.
<PAGE>
securities or by setoff or otherwise), and no holder of this Note shall be
entitled to demand or receive any such payment or prepayment if, at the time of
such payment or prepayment, the entire Redemption Deposit has not been paid in
full. Each holder of this Note, whether upon original issue or upon transfer or
assignment thereof, by its acceptance hereof, shall be bound by the provisions
contained in this paragraph
In the event of the non-payment of any principal amount, then,
upon fifteen (15) days written notice, by certified mail, return receipt
requested, at the option of the holder, all or part of the remaining unpaid
principal shall forthwith become due and payable. The failure to assert this
right shall not be deemed a waiver thereof.
Upon a default in payment, the holder of this note shall be
entitled to the remaining principal due with interest through the date of
payment and all costs incurred in the collection of same including, but not
limited to, reasonable attorneys fees.
The terms of this Note shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns of the
Payor and the Payee, whether so expressed or not, and, in particular, shall
inure to the benefit of and be enforceable by any holder or holders of this
Note; provided that the rights, obligations, covenants and agreements of the
Payor under this Note may not be assigned or delegated, as applicable, without
the prior written consent of the Payee.
No modification, rescission, waiver, forbearance, release or
amendment of any provision of this Note shall be made, except by a written
agreement duly executed by the Payor, the Payee and Salex, if the Salex Payment
has not been paid in full.
This Note shall be governed by, and construed and interpreted
in accordance with, the laws of the State of New York, without regard to
principles of conflicts of laws as to all matters, including but not limited to,
matters of validity, construction, effect, performance and remedies.
SYNERGISTIC HOLDINGS CORP.
By: /s/ Thomas M. Swartwood
--------------------------------
Name: Thomas M. Swartwood
Title: President
ACCEPTED AND AGREED
/s/ Salvatore Crimi
- ------------------------
Salvatore Crimi
<PAGE>
Exhibit 10.5
SYNERGISTIC HOLDINGS CORP.
405 Sixth Avenue
Des Moines, Iowa 50306
September ___, 1996
Salvatore Crimi
c/o Salex Holding Corporation
50 Laser Court
Hauppauge, New York 11788
Re: The First Note, the Second Note and
the Crimi Promissory Note (as defined the
Confidential Private Offering Memorandum of
Salex Holding Corporation dated July 9, 1996)
---------------------------------------------
Dear Mr. Salvatore Crimi:
The purpose of this letter is to confirm our understanding
with respect to the actions to be taken in the event that a payment, when due
and payable, is not made under the First Note, the Second Note or the Crimi
Promissory Note.
In the event Synergistic Holdings Corp. ("Synergistic")
defaults in any payment due under either the First Note or the Second Note, and
such default continues for more than 15 days, amounts payable under the Crimi
Promissory Note shall be reduced by the amount of such defaulted payment.
In the event you default in any payment due under the Crimi
Promissory Note ("Defaulted Crimi Payments"), and such default continues for
more than 15 days, then, first, all amounts then due and payable to Crimi under
the Second Note shall be reduced by the amount of the Defaulted Crimi Payments
and then, to the extent that any Defaulted Crimi Payments remain, then the
amount due under the First Note shall be reduced by the amount of the remaining
Defaulted Crimi Payments, accordingly.
Please confirm your agreement to the foregoing by executing
the enclosed copy of this letter where indicated.
Very truly yours,
SYNERGISTIC HOLDINGS CORP.
By: /s/ Thomas M. Swartwood
---------------------------------
Name: Thomas M. Swartwood
Title: President
AGREED AND ACCEPTED
/s/ Salvatore Crimi
- -----------------------
Salvatore Crimi
<PAGE>
Exhibit 10.6
STOCK AND ASSET PURCHASE AGREEMENT
STOCK AND ASSET PURCHASE AGREEMENT (the "Agreement") entered
into the 18th day of September, 1996, by and between SYNERGISTIC HOLDINGS CORP.,
a Delaware corporation ("Seller") and DICKINSON HOLDING CORP., a Delaware
corporation ("Buyer").
W I T N E S S E T H :
WHEREAS, Seller owns (i) 100% of the stock of Dickinson & Co.,
Inc. ("Dickinson"), a registered broker-dealer (the "B-D Shares") and (ii)
305,000 shares of common stock of Electronics Designs, Inc. ("EDIX") (the "EDIX
Shares"), warrants to purchase 10,000 EDIX Shares at an exercise price of $3.25
per share and a bank account (Account #W30-4158157, maintained at CitiBank, New
York) for the proceeds of sales of the EDIX Shares (collectively, the "EDIX
Assets"); and
WHEREAS, Seller desires to sell, and Buyer desires to
purchase, all of Seller's right, title and interest in and to the B-D Shares and
the EDIX Assets (the "Divestiture");
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, the parties hereto agree as follows:
1. Purchase and Sale.
1.1 The closing of the transactions contemplated
hereby shall take place at the offices of Tenzer Greenblatt LLP
<PAGE>
at 10:00 a.m. New York City time on September 16, 1996 (the
"Closing Date").
1.2 On the Closing Date, Seller shall sell, assign
and transfer to Buyer, and Buyer shall purchase from Seller, in reliance upon
and subject to all of the representations, warranties and other terms and
conditions of this Agreement, the B-D Shares and the EDIX Assets, free and clear
of all liens, charges, encumbrances, agreements, rights, options and/or
restrictions of any kind, nature or description, other than the Divestiture
Liabilities.
1.3 The purchase price for the B-D Shares and the
EDIX Assets is (i) 750,000 shares of common stock, $.01 par value per share of
Seller (the "Synergistic Shares") and (ii) a $500,000 promissory note (the
"Note") in the form attached hereto as Exhibit A (the "Purchase Price").
2. Assumed Liabilities.
As additional consideration, Buyer is assuming (i) the
Divestiture Liabilities (as defined in the Indemnification Agreement between
Buyer and Seller of even date herewith) including, without limitation, all
liabilities under those certain promissory notes listed on Schedule A attached
hereto and made a part hereof (the "EDIX Notes") and (ii) one-half of all income
tax liabilities that Seller suffers as a result of the Divestiture contemplated
hereunder, as provided for more fully in the Tax Indemnity Agreement between
Buyer and Seller of even date herewith.
-2-
<PAGE>
3. Payment of Purchase Price; Delivery of Certificates and
Documentation.
Subject to the representations and warranties of Seller being
true and correct in all material respects and the satisfaction of conditions set
forth herein on the Closing Date, Buyer shall deliver (i) the Synergistic Shares
and the executed Note to Seller against delivery of the EDIX Assets and the
certificates evidencing the B-D Shares (the "Certificates") and (ii) executed
copies of the Indemnification Agreement, Tax Indemnity Agreement and Stock
Pledge and Security Agreement between the parties hereto of even date herewith.
The Certificates shall be (i) endorsed in blank or accompanied by stock powers
endorsed in blank and (ii) accompanied by the requisite stock transfer stamps.
4. Representations and Warranties of Seller.
Seller hereby represents and warrants to Buyer that:
4.1 Seller is a corporation duly organized under the
laws of the state of Delaware.
4.2 Seller has full right, power, legal capacity and
authority to enter into this Agreement and to perform its obligations hereunder.
4.3 Seller owns of record and beneficially the B-D
Shares and the EDIX Assets free and clear of all liens or pledges, except with
respect to certain rights afforded the holders of the EDIX Notes, pursuant to
the terms of such notes and the related profit participation agreements, and the
Divestiture Liabilities.
-3-
<PAGE>
5. Representations and Warranties of Buyer.
Buyer represents and warrants that:
5.1 Buyer is a corporation duly organized under the
laws of the State of Delaware.
5.2 Buyer has the full right and power and all
authority to enter into this Agreement, the Indemnification Agreement, the Stock
Pledge Agreement and the Tax Indemnity Agreement and to perform all of its
obligations thereunder, including, but not limited to, the issuance of the Note
and the pledge of the shares of Synergistic Common Stock pursuant to the Pledge
Agreement between Buyer and Seller of even date herewith.
5.3 Buyer owns of record and beneficially the
Synergistic Shares free and clear of all liens, pledges, encumbrances, claims,
charges, agreements, rights options, warrants or restrictions of any kind,
nature or description.
6. Further Assurances.
6.1 Cooperation. Each of the parties hereto shall
fully cooperate with the other party hereto in preparing and filing any notices,
applications, reports and other instruments and documents which are required by,
or which are desirable in the opinion of any of the parties hereto in respect
of, any statute, rule, regulation or order of any governmental or administrative
body in connection with the transactions contemplated hereby.
6.2 Accuracy of Representations. Prior to the Closing
Date, each party hereto shall enter into no transaction and take no action, and
shall use their best efforts to prevent
-4-
<PAGE>
the occurrence of any event, which would result in any of their representations,
warranties or covenants contained in this Agreement or in any agreement,
document or instrument delivered pursuant hereto not to be true and correct, or
not to be performed as contemplated, at and as of the time immediately after the
occurrence of such transaction or event.
6.3 Conduct of Business. During the period commencing
on the date hereof and ending on the Closing Date, Seller shall conduct the
business of Dickinson in a consistent manner in accordance with existing
policies and practices and Seller shall use its best efforts to (i) preserve
Dickinson's business organization intact and (ii) retain Dickinson's good will,
and (iii) preserve Dickinson's relationships with customers, suppliers and
others.
7. Indemnification.
7.1 Buyer shall indemnify Seller pursuant to the
terms and conditions of the Indemnification Agreement and the Tax Indemnity
Agreement of even date herewith between Transferee and Synergistic.
7.2 Buyer agrees to take Seller's right, title and
interest in the B-D Shares and the Edix Assets "as is" and "where is" and shall
not have any claim whatsoever against Seller relating to the B-D Shares or the
EDIX Assets other than claims arising out of the representations set forth in
Section 4 above.
8. Nondisclosure of Confidential Information.
8.1 As used in this Section 8, the term "Confidential
Information" shall mean any and all information
-5-
<PAGE>
relating to the business of Dickinson or Electronic Designs, Inc., other than
such information which can be shown by Seller to be in the public domain other
than as the result of a breach of the provisions of Subsection 8.2 below.
8.2 Seller shall not, at any time, directly or
indirectly, use, communicate, disclose or disseminate any Confidential
Information in any manner whatsoever, unless otherwise required by law.
8.3 Upon the Closing Date, or at any other time upon
request, Seller shall promptly deliver to Buyer all copies of written
Confidential Information, including, without limitation, all notes, memoranda,
records, files and other documents which relate to the business of Dickinson,
Electronic Designs, Inc. and/or their affiliates, which are in Seller's
possession.
9. Further Documentation.
Seller and Buyer, shall, from time to time, execute and
deliver such other documents or instruments as the other reasonably may request
for the consummation, confirmation and particularization of the transaction
contemplated by this Agreement.
10. Notices.
All notices hereunder shall be in writing and be deemed given
(a) if personally delivered, when so delivered, (b) if sent by United States
mail, on the fifth business day after being mailed, postage prepaid, by
registered or certified mail, return receipt requested, (c) if sent by overnight
courier, on the
-6-
<PAGE>
second business day or (d) if sent by facsimile to the facsimile numbers listed
below when the facsimile transmission is received. All notices shall be
addressed to the appropriate party at its address below (or at such other
address for such party as shall be specified by notice in fact delivered):
(a) If to Seller:
Synergistic Holding Corp.
405 Sixth Avenue, Suite 200
Des Moines, Iowa 50309
Facsimile:
(b) If to Buyer:
Dickinson Holding Corp.
405 Sixth Avenue, Suite 200
Des Moines, Iowa 50309
Facsimile:
11. Complete Agreement.
This Agreement together with the agreements to be executed in
connection herewith constitute the entire agreement between the parties hereto
with respect to the subject matter hereof. The representations, warranties and
covenants and agreements set forth in this Agreement constitute all of the
representations, warranties, covenants and agreements among the parties hereto
and upon which the parties have relied. No change, modification, addition or
termination of this Agreement or any part thereof shall be valid unless in
writing and signed by or on behalf of the party to be charged therewith.
12. Assignment.
This Agreement is not assignable without the prior written
consent of the other party and shall be binding upon, and
-7-
<PAGE>
shall inure to the benefit of, the parties hereto and their respective heirs,
successors and assigns. Nothing in this Agreement is intended to confer upon any
person, other than the parties and their heirs, successors and assigns, any
rights or remedies under or by reason of this Agreement.
13. No Waiver.
No waiver of any of the provisions hereof shall be effective
unless in writing and signed by the party to be charged with such waiver. No
waiver shall be deemed a continuing waiver or waiver in respect of any
subsequent breach or default, whether of similar or different nature, unless
expressly so stated in writing.
14. Captions.
The headings or captions under the sections of this Agreement
are for convenience and reference only, and do not form a part hereof, and do
not in any way modify, interpret or construe the intent of the parties or affect
any of the provisions of this Agreement.
15. Governing Law.
This Agreement is intended to be governed by, interpreted and
enforced in accordance with, the laws of the State of New York, without giving
effect to conflicts of law principles.
16. Counterparts.
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which shall constitute one
and the same agreement.
-8-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have hereunto set their
hands, as of the day and year first above written.
SYNERGISTIC HOLDINGS CORP.
By: /s/ Thomas M. Swartwood
---------------------------
Name: Thomas M. Swartwood
Title: President
DICKINSON HOLDING CORP.
By:___________________________
Name:
Title:
-9-
<PAGE>
SCHEDULE A
Note Holder Principal Date Interest
- -------------------------------------------------------------------------------
Afouxenidou $25,000 12/12/95 $2,211
Afouxenidou $25,000 12/12/95 $2,211
Argyropoulos $200,000 12/12/95 $17,688
Barkagan $50,000 12/12/95 $4,422
Cooper $50,000 12/12/95 $4,422
Duquesnoy $25,000 12/12/95 $2,211
Ferrari $25,000 12/12/95 $2,211
Novick $25,000 12/12/95 $2,211
Novick $10,000 12/12/95 $884
Novick $15,000 12/12/95 $1,327
Pearlhagen $25,000 12/12/95 $2,211
Rabinowitz $25,000 PAID $0
Rubin $125,000 12/12/95 $11,055
Suchman $25,000 12/12/95 $2,211
Wills $50,000 12/12/95 $4,422
Benitz Partners $100,000 11/2/96 $10,159
Slovin $200,000 12/12/95 $17,688
----------- -------
$1,000,000 $87,542
========== =======
-10-
<PAGE>
EXHIBIT A
FORM OF PROMISSORY NOTE
$500,000.00 September ___, 1996
FOR VALUE RECEIVED, the undersigned, DICKINSON HOLDING CORP., a Delaware
corporation ("Maker"), promises to pay to the order of Synergistic Holdings
Corp., a Delaware corporation ("Payee"), ON DEMAND, the principal sum of
$500,000.00, together with interest on the principal amount of this Note
outstanding from time to time, until such principal amount is fully paid, at the
rate of 6%. This Note shall be payable in lawful money of the United States of
America at the office of Payee, or at such other place as the holder of this
Note may designate by writing to Maker from time to time.
To secure the payment of this Note in accordance with its terms, Maker
hereby grants to Payee a continuing security interest in all of Maker's right,
title and interest in, and pledges to Payee, 250,000 shares of common stock of
Synergistic Holdings Corp. In the event Maker shall default in the payment of
this Note in accordance with its terms, the holder of this Note shall have, in
respect of such collateral, the rights of secured party after default under the
Uniform Commercial Code as in effect in New York from time to time, and any
other rights or remedies otherwise available under New York law.
DICKINSON HOLDING CORP.
By: /s/ Thomas M. Swartwood
-----------------------------------
Name: Thomas M. Swartwood
Title: President
Address for Notices:
405 Sixth Avenue
Des Moines, Iowa 50309
-11-
<PAGE>
INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT, dated this ___ day of September, 1996 among
Dickinson Holding Corp., a Delaware corporation (the "Transferee"), Dickinson &
Co. Inc, a Delaware corporation ("Dickinson") and Synergistic Holdings Corp., a
Delaware corporation ("Synergistic"). All capitalized terms used herein and not
otherwise defined herein shall have the respective meanings ascribed to them in
the Stock and Asset Purchase Agreement between Transferee and Synergistic of
even date herewith (the "Divestiture Agreement");
WHEREAS, Synergistic has transferred to Transferee (i) the B-D
Shares and (ii) the EDIX Assets pursuant to the Divestiture Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained and intending to be legally
bound hereby, the parties hereto do hereby agree as follows:
1. Indemnification.
a. The Transferee and Dickinson shall indemnify .nd
hold Synergistic harmless from and against any and all liabilities (including
any alleged or threatened claims) relating to or arising out of, or in any
matter related to the ownership, operation or conduct of Dickinson and the EDIX
Assets and any liability under the EDIX Notes, the profit participation
agreements between Synergistic and the holders of the EDIX Notes,
<PAGE>
and any other obligation or liability arising in connection with the
solicitation and issuance of the EDIX Notes, in each case, whether occurring
prior to or after the Divestiture, including, but not limited to the Peters
litigation and the S.A. Holdings litigation (the "Divestiture Liabilities") and
for all losses or damages incurred by Synergistic with respect to the
Divestiture Liabilities. Transferee and Dickinson shall reimburse Synergistic
for the amount of any loss, claim, damage, expense or liability for which
Synergistic may be entitled from time to time (including, without limitation,
any attorneys' fees or litigation costs), promptly upon written notice that such
loss, claim, damage, expense or liability has been incurred.
b. The indemnification obligations specified hereunder will
run to the Salex Stockholders (as defined in the Merger Agreement) but only to
the extent that any such stockholders become liable for any of the Divestiture
Liabilities as a result of a claim by a third party and does not apply to any
claim directly by the Salex Stockholders against the Transferee or Dickinson.
c. The foregoing indemnity is in addition to, and not in lieu
of, any indemnification rights available to the Salex Stockholders and/or Salex
under the Merger Agreement; provided, however, neither Salex nor any Salex
Stockholder may recover twice for any claim that gives rise to indemnification
to Salex or the Salex Stockholders under the Merger Agreement.
2. Third Party Claims. If a claim by a third party is
made against Synergistic and Synergistic intends to seek
-2-
<PAGE>
indemnification with respect thereto under this Indemnification Agreement,
Synergistic shall promptly notify the Transferee, in writing, of such claim;
provided, however, that the failure to give such notice shall not affect the
rights of Synergistic hereunder unless such failure materially and adversely
affects the Transferee. The Transferee shall have 10 days after said notice is
given to elect, by written notice given to Synergistic, to undertake, conduct
and control, through counsel of their own choosing (subject to the consent of
Synergistic, such consent not to be unreasonably withheld) and at their sole
risk and expense, the good faith settlement or defense of such claim, and
Synergistic shall cooperate with the Transferee in connection therewith. So long
as the Transferee is contesting any such claim in good faith, Synergistic shall
not pay or settle any such claim; provided, however, that notwithstanding the
foregoing, Synergistic shall have the right to pay or settle any such claim at
any time, provided that in such event they shall waive any right of
indemnification therefor by the Transferee. If the Transferee does not make a
timely election to undertake the good faith defense or settlement of the claim
as aforesaid, or if the Transferee fails to proceed with the good faith defense
or settlement of the matter after making such election, then, in either such
event, Synergistic shall have the right to contest, settle or compromise the
claim at their exclusive discretion, at the risk and expense of the Transferee.
3. Restrictions on Transfer. Transferee shall not sell all or
substantially all of its assets or shares or
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<PAGE>
otherwise undergo a change of control (a "Change in Control") unless Synergistic
and the Salex Stockholder receive 10 days prior written notice of such Change in
Control and the transferee or the party undertaking such a Change in Control (as
the case may be) agrees in writing to assume the obligations of Transferee under
this Indemnification Agreement.
4. Security Interest.
a. As security for the Divestiture Liabilities and
the obligations of the Transferee arising hereunder relating to the EDIX Notes,
Synergistic is hereby granted a first priority security interest in all profits
available to the Transferee upon any disposition of the EDIX Shares to the
extent available to Synergistic, pursuant to the private placement of EDIX 12%
Subordinated Promissory Notes, dated November 13, 1995, and Transferee agrees to
take all steps necessary to perfect such security interest. The security
interest granted hereunder shall terminate upon the payment in full of the EDIX
Notes.
b. The Transferee hereby agrees that all proceeds
received by Transferee from any sale of the EDIX Shares shall be used solely to
satisfy the obligations under the EDIX Notes, until such time as the Notes are
paid in full.
c. Notwithstanding any provision of this Agreement to
the contrary, the Transferee shall (i) receive the written consent of the
holders of the EDIX Notes to the merger of Salex and Salex Industries, Inc. and
the transfer of the EDIX Shares on or before October 30, 1996 and (ii) sell all
of the EDIX Shares then remaining in its possession immediately upon the
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<PAGE>
maturation of the EDIX Notes and apply all proceeds to the payment of such
Notes.
5. Salex Stockholders. The parties intend that each of the
Salex Stockholders shall be direct beneficiaries of the terms and provisions of
this Agreement, and shall have the full right to enforce this Agreement on their
behalf as if they had been signatory parties hereto.
6. Attorney's Fees. In the event that any dispute arises
between or among the parties to this Agreement with respect to either the
interpretation or enforcement of any of the provisions in this Agreement, the
prevailing party in such dispute shall be entitled to be reimbursed by the other
party or parties for all costs and expenses, including court costs and
reasonable legal fees, paid or incurred by the prevailing party in seeking to
enforce and enforcing or defending against the attempted enforcement of any of
the provisions which are the subject matter of this dispute.
7. Binding Effect; Successors and Assigns. This Agreement
shall be binding upon the Transferee and its respective successors and assigns
and any subsequent transferee of the business or assets of Dickinson & Co. or
the EDIX Shares and shall inure to the benefit of the heirs and legal
representatives of Synergistic and the Salex Stockholders.
8. Waiver. The failure of Synergistic or the Salex
Stockholders to at anytime enforce any of the provisions of this Agreement shall
not be deemed or construed to be a waiver of any such provision, nor in any way
affect the validity of this
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<PAGE>
Agreement or any provision hereof or the right of Synergistic or the Salex
Stockholders, as the case may be, to thereafter enforce each and every provision
of this Agreement. No waiver of any breach of any of the provisions of this
Agreement shall be effective unless set forth in a written instrument executed
by Synergistic or the Sale Stockholders, as the case may be, and no waiver of
any such breach shall be construed or deemed to be a waiver of any other or
subsequent breach.
9. Amendment. This Agreement may be modified only in writing
signed by the Transferee and Synergistic.
10. Headings. The headings contained herein are for the sole
purpose of convenience of reference, and shall not in any way limit or affect
the meaning or interpretation of any of the terms or provisions of this
Agreement.
11. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York (applicable to contracts to be
enforced wholly within such state).
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<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first above written.
DICKINSON HOLDING CORP.
By: /s/ T. Marshall Swartwood
-------------------------------
Name: T. Marshall Swartwood
Title:
SYNERGISTIC HOLDINGS CORP.
By: /s/ Thomas M. Swartwood
-------------------------------
Name: Thomas M. Swartwood
Title: President
DICKINSON & CO. INC.
By:
-------------------------------
Name:
Title:
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<PAGE>
TAX INDEMNITY AGREEMENT
1. Payment of Additional Income Taxes. Pursuant to Paragraph
6.2.11 of that certain Merger Agreement, dated June 27, 1996, as amended and
restated as of September 18, 1996, between Synergistic Holdings Corp.
("Synergistic") and Salex Corporation (the "Merger Agreement"), and the Stock
and Asset Purchase Agreement, dated September 18, 1996 ("Divestiture
Agreement"), between Synergistic and Dickinson Holding Corp. ("Holding"), the
undersigned, Holding and Dickinson & Co. Inc. ("Dickinson"), hereby jointly and
severally indemnify Synergistic and its affiliated Corporations and respective
successors and assigns and hold Synergistic and its affiliated Corporations and
respective successors and assigns harmless from, and agree to reimburse
Synergistic for 50% of any Additional Income Taxes (as hereinafter defined),
paid as a result of the Divestiture (as that term is defined in the Merger
Agreement and the Divestiture Agreement).
In addition to the Additional Income Taxes, if any, which
Holding and Dickinson have agreed to pay by reimbursement pursuant to the above
paragraph, Dickinson and Holding agree to pay to Synergistic an amount equal to
the amount of additional total federal, state and local income taxes paid by
Synergistic on the amount of the Additional Income Taxes received pursuant to
the above paragraph by Synergistic (which shall hereinafter be
<PAGE>
referred to as "Surplus Tax"). Neither Holding nor Dickinson shall be obligated
to reimburse Synergistic for any income tax on Synergistic's receipt of the
Surplus Tax.
The term Additional Income Taxes shall be defined to mean the
excess of (i) the total federal, state and local income taxes paid by
Synergistic and members of its affiliated group as defined under Section 1504 of
the Internal Revenue Code of 1986, as amended, and the applicable regulations
thereunder, if they file a consolidated return (or only Synergistic if they do
not file a consolidated return), for the taxable year of Synergistic in which
the Divestiture is consummated (after giving effect to the deductibility of any
state and local income taxes attributable to the Divestiture), over (ii) the
total federal, state and local income taxes which would have been payable by
Synergistic and members of its affiliated group, if they file a consolidated
return (or only Synergistic if they do not file a consolidated return), for such
taxable year had the total gain, if any, attributable to the Divestiture been
excluded from the taxable income of Synergistic. The same formula shall be used
for the purpose of determining the amount of Surplus Tax payable hereunder, with
the calculation under clause (ii) of the immediately preceding sentence made by
excluding the amount of Additional Income Taxes reimbursed to Synergistic from
taxable income for the taxable year in which the reimbursement is required to be
included in Synergistic's taxable income.
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<PAGE>
2. Tax Claims. If any claim shall be made by the Internal
Revenue Service ("IRS") or the applicable state or local tax agency relative to
the amount of gain includible in the taxable income of Synergistic for the
taxable year in which the Divestiture occurs, such claim, including all notices,
copies of all reports, correspondence or other materials relating to the claim
or contention, shall be delivered to Holding and Dickinson.
The contesting of any claims and the handling of any
controversies arising before the IRS or the applicable state or local tax
agencies, including, but not limited to, any appearance before the IRS, any
state or local tax agency or any court, shall be by counsel selected and paid
for by Dickinson or Holding, subject to approval by Synergistic which approval
shall not be unreasonably delayed or withheld. Adjustments, settlements or other
final determinations of such claims or controversies shall be made only with the
approval of Synergistic if in accord with the recommendations of counsel and
shall be binding upon Dickinson, Holding and Synergistic.
In the event that Holding and Dickinson fail to employ counsel
hereunder for the purpose of contesting any claim or handling any controversy
(including, but not limited to filing any petition, claim for refund, or other
applicable document with the IRS, a state or local tax agency or any applicable
court), Synergistic shall be entitled to employ counsel, if it so chooses, to
contest, handle and represent Synergistic with
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<PAGE>
respect to the claim or controversy or proceeding and all expenses and fees and
expenses of such counsel shall be payable by Holding and Dickinson; provided,
however, Synergistic shall not be required to employ counsel so to contest,
handle or represent it in such claim, controversy or proceeding if it does not
elect to do so, and the amount of additional taxes determined by the IRS or any
applicable state or local tax agency attributable to the Divestiture may be paid
by Synergistic to the proper taxing authority, and the amount so paid shall be
included in determining the amount of Additional Income Taxes and Surplus Tax
payable hereunder.
3. Payment of Additional Income Tax and Other Amounts. If
Synergistic makes any payments of Additional Income Taxes or Surplus Tax,
Holding and Dickinson agree to reimburse Synergistic in the amount required
hereunder, within thirty days after Dickinson and Holding receive written notice
from Synergistic (after the filing of Synergistic's income tax returns for its
applicable taxable year) with a detailed calculation of the amount required to
be paid, and a letter from Synergistic's firm of certified public accountants
which prepared the applicable returns stating that the calculation is in
accordance with the provisions of this Agreement, provided that if it is later
determined that Synergistic overpaid Additional Income Taxes, Synergistic shall
within thirty days following the determination reimburse Dickinson or Holding
for the amount of
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<PAGE>
the overpayment plus the amount of Surplus Tax attributable thereto plus
interest on such sums from the date of payment by Dickinson or Holding to the
date of repayment to Dickinson or Holding at the same rate which Synergistic is
entitled to receive interest from the applicable taxing authority as a result of
such overpayment.
4. Fees and Expenses. In the event that Dickinson or Holding
fail to perform any of the obligations provided for hereunder, Synergistic shall
be entitled to recover from Holding and/or Dickinson, in addition to the amounts
of Additional Income Taxes, Surplus Taxes and fees and expenses of counsel
employed by Synergistic payable hereunder, all costs and expenses, including
reasonable legal fees, paid or incurred by Synergistic in seeking to enforce and
enforcing the obligations of Dickinson or Holding provided for herein. In the
event that Synergistic fails to perform any of the obligations provided for
hereunder, Holdings and Dickinson shall be entitled to recover from Synergistic,
in addition to the amounts of the overpayments of Additional Income Taxes and
Surplus Taxes, all costs and expenses, including reasonable legal fees, paid or
incurred by Holding and Dickinson in seeking to enforce and enforcing the
obligations of Synergistic provided for herein.
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<PAGE>
5. Governing Law. This Agreement shall be governed by the laws
of the State of New York (applicable to contracts to be performed wholly within
such state).
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement on the day and the year first above written.
SYNERGISTIC HOLDINGS CORP.
By:_____________________________
DICKINSON HOLDING CORP.
By:_____________________________
DICKINSON & CO. INC.
By:_____________________________
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<PAGE>
Exhibit 10.9
$500,000.00 September ___, 1996
FOR VALUE RECEIVED, the undersigned, DICKINSON HOLDING CORP.,
a Delaware corporation ("Maker"), promises to pay to the order of Synergistic
Holdings Corp., a Delaware corporation ("Payee"), ON DEMAND, the principal sum
of $500,000.00, together with interest on the principal amount of this Note
outstanding from time to time, until such principal amount is fully paid, at the
rate of 6%. This Note shall be payable in lawful money of the United States of
America at the office of Payee, or at such other place as the holder of this
Note may designate by writing to Maker from time to time.
To secure the payment of this Note in accordance with its
terms, Maker hereby grants to Payee a continuing security interest in all of
Maker's right, title and interest in, and pledges to Payee, 250,000 shares of
common stock of Synergistic Holdings Corp. In the event Maker shall default in
the payment of this Note in accordance with its terms, the holder of this Note
shall have, in respect of such collateral, the rights of secured party after
default under the Uniform Commercial Code as in effect in New York from time to
time, and any other rights or remedies otherwise available under New York law.
DICKINSON HOLDING CORP.
By: ____________________________
Name:
Title:
Address for Notices:
405 Sixth Avenue
Des Moines, Iowa 50309
<PAGE>
STOCK PLEDGE AND SECURITY AGREEMENT
STOCK PLEDGE AGREEMENT dated as of September ___, 1996,
between DICKINSON HOLDING CORP., a Delaware corporation (the "Pledgor") and
SYNERGISTIC HOLDINGS CORP., a Delaware corporation (the "Pledgee").
The parties hereto, intending to be legally bound, hereby
agree as follows:
1. Pledge of Securities and Grant of Security Interest. In
order to secure its obligations of the Pledgor (the "Obligations") under that
certain promissory note of even date herewith made by Pledgor to the Pledgee in
the initial principal amount of up to $500,000 (the "Note"), the Pledgor hereby
pledges to the Pledgee, and grants to the Pledgee a continuing security interest
in, 250,000 shares of common stock of Synergistic Holdings Corp. (the "Pledged
Securities"). The Pledgor is herewith delivering the Pledged Securities to the
Pledgee to be held in accordance with the terms of this Agreement, or in the
absence of such physical delivery, has made the appropriate book entry
nominations in DTC to exhibit and perfect the pledge of securities provided for
herein. The Pledgor is also delivering to the Pledgee fully executed blank stock
powers, which blank stock powers may be utilized by the Pledgee in the exercise
of the Pledgee's rights as herein granted.
2. Representations, Warranties and Covenants of Pledgor. The
Pledgor represents and warrants that it is, and covenants and agrees that at all
times during the term of this
<PAGE>
Stock Pledge Agreement it will be, the legal and beneficial owner of the Pledged
Securities, free and clear of any lien, security interest, charge or other
encumbrance except for the security interest created hereby.
3. Events of Default. Upon an Event of Default (as hereinafter
defined) under the Note, the Pledgee shall provide written notice of such
default to the Pledgor and the Pledgee shall be entitled to exercise all rights
available to it as a secured party with respect to the Pledged Securities as
provided more fully in Section 4 hereof.
4. Default Defined; Remedies.
(a) An Event of Default shall be deemed to have
occurred on the fifth calendar day after the failure of the Pledgor to make any
payments due under the Note when and if demanded.
(b) Unless and until there exists an Event of
Default, the Pledgor shall be entitled to exercise all voting and other
consensual rights pertaining to the Pledged Securities; provided that the
Pledgee shall be entitled to receive and retain any cash dividends thereon and
any cash distributions made in respect thereof.
(c) Upon an Event of default, the Pledgee shall have
all of the rights of a secured party upon the occurrence of a default under the
Uniform Commercial Code then in effect in the State of New York; and without
limiting the generality of the foregoing, upon the occurrence of a Default, the
Pledgee shall have the right at any time or times to sell, resell, assign and
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<PAGE>
deliver, all in a commercially reasonable manner, the Pledged Securities or any
part thereof, in one or more parcels, at such price of prices as shall be
commercially reasonable, at public or private sale, at any exchange or broker's
board or elsewhere.
(d) The proceeds of any such sale or sales, and any
proceeds the Pledgee receives in respect of any realization upon the Pledged
Securities, shall be received and applied: first, to the payment of the
Obligations and, second, any surplus thereafter remaining shall be paid to the
Pledgor or to whosoever may be lawfully entitled to receive the same.
5. Right to Substitute. Pledgor shall have the right from time
to time during the term of this Agreement to replace the Pledged Securities with
different collateral; provided that such substitute collateral consists of
freely tradeable securities with a value equal to or greater than the
outstanding balance of the Note. For purposes of the foregoing, the value of the
substitute collateral shall (a) if such securities are traded on a national
securities exchange or on the NASDAQ National Market System, be based on the
then current trading price of such securities, or (b) if such securities are
listed on any other exchange, the Pledgor and the Pledgee shall mutually agree
on the value.
6. Legend. The certificates representing the Pledged
Securities shall bear the following legend:
THE STOCK REPRESENTED BY THIS STOCK CERTIFICATE IS
HELD SUBJECT TO THE TERMS OF A STOCK PLEDGE
AGREEMENT, DATED AS OF SEPTEMBER ___, 1996,
BETWEEN DICKINSON HOLDING CORP. AND SYNERGISTIC
HOLDINGS CORP. MAY NOT BE OFFERED FOR SALE, SOLD,
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<PAGE>
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF EXCEPT AS PROVIDED IN SAID AGREEMENT.
ANY PURPORTED TRANSFER IN VIOLATION OF SAID
AGREEMENT SHALL BE VOID.
7. Miscellaneous. This Stock Pledge Agreement (a) may only be
modified by a written instrument which is executed by both of the parties
hereto; (b) shall be governed by the laws of the State of New York applicable to
contracts made and to be wholly performed therein; (c) sets forth the entire
agreement of the parties with respect to the subject matter hereof; (d) may not
be assigned by either party hereto without the prior written consent of the
other party, and (e) shall inure to the benefit of, and be binding upon, each of
the parties hereto and their respective successors and assigns. All notices
and/or other communications relating to this Stock Pledge Agreement shall be in
writing and deemed delivered as of the date delivered, if delivered personally,
or three (3) days after having been mailed, if mailed by registered or certified
mail, postage prepaid, return receipt requested, as follows:
if to Pledgor, to:
Dickinson Holding Corp.
405 Sixth Avenue
Des Moines, Iowa 50309
Attention: T. Marshall Swartwood
if to Pledgee, to:
Synergistic Holdings Corp.
405 Sixth Avenue
Des Moines, Iowa 50309
or to such other address as either of such parties shall have designated by like
notice to the other party.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Stock
Pledge Agreement to be executed and delivered on the date first-above written.
DICKINSON HOLDING CORP.
By: /s/ T. Marshall Swartwood
-----------------------------------------
Name: T. Marshall Swartwood
Title:
SYNERGISTIC HOLDINGS CORP.
By: /s/ Thomas M. Swartwood
-----------------------------------------
Name: Thomas M. Swartwood
Title: President
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<PAGE>
STOCK OPTION AGREEMENT
SYNERGISTIC HOLDINGS CORP.
AGREEMENT made as of this ____ day of September, 1996 (the
"Grant Date") between SYNERGISTIC HOLDINGS CORP. (the "Company"), a Delaware
corporation, having a principal place of business at 405 Sixth Avenue, Des
Moines, Iowa 50306 and SALVATORE CRIMI, an individual with an address at 50
Laser Court, Hauppauge, New York 11788 (the "Grantee").
WHEREAS, the Company desires to grant to the Grantee a Stock
Option to purchase shares of its common stock, par value $.01 per share (the
"Shares"), pursuant to the terms thereof;
NOW, THEREFORE, in consideration of the mutual covenants
hereinafter set forth and for other good and valuable consideration, the parties
hereto agree as follows:
1. Grant of Option. The Company hereby grants to the Grantee
the right and option to purchase all or any part of an aggregate of Five Hundred
Thousand (500,000) Shares on the terms and conditions and subject to all the
limitations set forth herein, provided, however, that in the event the Company
does not have sufficient authorized but unissued Shares, the Grantee shall have
the right and option to purchase such number of Series B Convertible Preferred
Stock of the Company, par value $.01 per share, equal to the number of shares
determined by dividing the number of Shares to be purchased hereunder by
2,059.106.
<PAGE>
2. Purchase Price. The purchase price of the Shares covered by
the Option shall be $1.50 per share (the "Option Price").
3. Exercise of Option. The Option granted hereby shall be
exercisable May 30, 1997, if, and only if, the net income of the Company (before
taxes) equals or exceeds $2.7 million for the year ended April 30, 1997.
4. Term of Option. The Option shall terminate three (3) years
from the date of this Agreement, but shall be subject to earlier termination as
provided herein.
5. Non-Assignability. The Option shall not be transferable by
the Grantee otherwise than by will or by the laws of descent and distribution
and shall be exercisable, during the Grantee's lifetime, only by the Grantee.
The Option shall not be assigned, pledged or hypothecated in any way (whether by
operation of law or otherwise) and shall not be subject to execution, attachment
or similar process. Any attempted transfer, assignment, pledge, hypothecation or
other disposition of the Option or of any rights granted hereunder contrary to
the provisions of this Section 5, or the levy of any attachment or similar
process upon the Option or such right, shall be null and void.
6. Exercise of Option and Issue of Shares. The Option may be
exercised in whole or in part (to the extent that it is exercisable in
accordance with its terms) by giving written notice to the Company, together
with the tender of the Option Price. Such written notice shall be signed by the
person exercising the Option, shall state the number of Shares with respect
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<PAGE>
to which the Option is being exercised, shall contain any warranty required by
Section 7 below and shall otherwise comply with the terms and conditions of this
Agreement. The Company shall pay all original issue taxes with respect to the
issue of the Shares pursuant hereto and all other fees and expenses necessarily
incurred by the Company in connection herewith. Except as specifically set forth
herein, the holder acknowledges that any income or other taxes due from him or
her with respect to this Option or the Shares issuable pursuant to this Option
shall be the responsibility of the holder. The holder of this Option shall have
rights as a shareholder only with respect to any Shares covered by the Option
after due exercise of the Option and tender of the full Option Price for the
Shares being purchased pursuant to such exercise.
7. Purchase for Investment. Unless the offering and sale of
the Shares to be issued upon the particular exercise of the Option shall have
been effectively registered under the Securities Act of 1933, as now in force or
hereafter amended, or any successor legislation (the "Act"), the Company shall
be under no obligation to issue the Shares covered by such exercise unless and
until the following conditions have been fulfilled:
(a) The person(s) who exercise the Option shall
warrant to the Company, at the time of such exercise, that such person(s) are
acquiring such Shares for his or her own account, for investment and not with a
view to, or for sale in connection with, the distribution of any such Shares, in
which event the person(s) acquiring such Shares shall be bound by the provisions
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<PAGE>
of the following legend which shall be endorsed upon the certificate(s)
evidencing their option Shares issued pursuant to such exercise:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Act"). Such shares may not be sold, transferred or otherwise
disposed of unless they have first been registered under the
Act or, unless, in the opinion of counsel satisfactory to the
Company's counsel, such registration is not required."
(b) The Company shall have received an opinion of its
counsel that the Shares may be issued upon such particular exercise in
compliance with the Act without registration thereunder. Without limiting the
generality of the foregoing, the Company may delay issuance of the Shares until
completion of any action or obtaining of any consent, which the Company deems
necessary under any applicable law (including without limitation state
securities or "blue sky" laws).
8. Piggy-Back Registration Rights.
(a) If the Company shall determine at any time to
register any of its Common Stock or securities which are convertible into or
exercisable for Common Stock (other than a registration relating solely to
employee benefit plans, or a registration relating solely to an SEC Rule 145
transaction, or a registration on any registration form which does not permit
secondary sales) the Company will: (i) promptly give to the Grantee written
notice thereof (which shall include a list of the jurisdictions in which the
Company intends to attempt to qualify such securities under the applicable blue
sky or other state securities laws), and (ii) cause to be included in such
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<PAGE>
registration and in any underwriting involved therein all of the unregistered
securities ("Registerable Securities") specified in a written request or
requests made by the Grantee within 20 days after receipt of such written notice
from the Company ("Designated Piggy-Back Securities") provided, however, that
the number of Registrable Securities so registered may be limited by the
underwriter's cut-back provision set forth in the following Section 8(c), and to
the extent that Designated Piggy-Back Securities are not registered pursuant to
the underwriter's cutback provision set forth in the following Section 8(c)
("Cut-Back Securities"), the Grantee may exercise Piggy-Back rights with respect
to Cut-Back Securities, pro rata with any other option holder or holder of
Common Stock who has also been unable to register securities as a result of the
underwriter's cut-back provision set forth in the following Section 8(c).
(b) If the registration of which the Company gives notice is
for a registered public offering involving an underwriting, the Company shall so
advise the Grantee as part of the written notice given pursuant to Section 8(a).
In such event, the right of the Grantee to registration pursuant to Section 8
shall be conditioned upon such Grantee's participation in such underwriting and
the inclusion of such Grantee's Registrable Securities in the underwriting to
the extent provided herein.
(c) If the Grantee proposes to distribute his securities
through such underwriting he shall (together with the Company) enter into an
underwriting agreement in customary form
-5-
<PAGE>
with the representative of the underwriter(s) selected for underwriting by the
Company. Notwithstanding any other provision of this Section 8, the Company
shall not be required to include in the registration the securities of the
Grantee unless the Grantee accepts and agrees to the terms proposed by the
underwriters selected by the Company, and then only in such quantity that will
not, in the opinion of the underwriters and based on marketing factors
identified by such underwriters, jeopardize the success of the offering by the
Company. If the total number of Registrable Securities which the Grantee
requests to be included in any offering exceeds the number of shares which the
underwriters reasonably believe is compatible with the success of the offering,
the Company shall only be required to include in the offering so many of the
shares as the underwriters believe will not jeopardize the success of the
offering. In such instance, the Registrable Securities of the option holders and
holders of Common Stock to be included in the registration shall be allocated
among all the option holders and holders of Common Stock in proportion, as
nearly as practicable, to the respective amounts of Registrable Securities held
by such option holders and holders of Common Stock at the time of filing the
registration statement. The number of shares proposed to be registered by the
Company and the price therefor as proposed by the Company shall have priority in
the above process and shall not be reduced until after all Registrable
Securities of the Holders have been excluded from the proposed registration.
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<PAGE>
9. Notices. Any notices required or permitted by the
terms of this Agreement shall be given by registered or certified mail, return
receipt requested, addressed as follows:
To the Company: Synergistic Holdings Corp.
405 6th Avenue
Des Moines, Iowa 50306
Attention: Thomas M. Swartwood
To the Grantee: Salvatore Crimi
c/o Salex Holding Corporation
50 Laser Court
Hauppauge, New York 11788
or to such other address or addresses of which notice in the same manner has
previously been given. Any such notice shall be deemed to have been given when
mailed in accordance with the foregoing provisions. Either party hereto may
change the address of which notices shall be given by providing the other party
hereto with written notice of such change.
10. Governing Law. This Agreement shall be construed and
enforced in accordance with the law of the State of New York (applicable to
contracts to be performed wholly within such state).
11. Benefit of Agreement. This Agreement shall be for the
benefit of and shall be binding upon the heirs, executors, administrators and
successors of the parties hereto.
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed by Thomas M. Swartwood, its duly authorized officer, and the Grantee
has hereunto set his hand, all as of the day and year first above written.
SYNERGISTIC HOLDINGS CORP.
/s/ Thomas M. Swartwood
--------------------------------
Thomas M. Swartwood, President
/s/ Salvatore Crimi
--------------------------------
Salvatore Crimi, Grantee
-8-
<PAGE>
STOCK OPTION AGREEMENT
SYNERGISTIC HOLDINGS CORP.
AGREEMENT made as of this _____ day of September, 1996 (the
"Grant Date") among Synergistic Holdings Corp. (the "Company"), a Delaware
corporation, having a principal place of business at 405 Sixth Avenue, Des
Moines, Iowa 50309 and the Salvatore Crimi Family Limited Partnership, Salvatore
Crimi, Pershing Sun, Michael Sun, Jennifer Sun, Susan Tauss-Giovinco, Harrison
Fitzpatrick and Francis Fitzpatrick (hereinafter collectively, the "Crimi Group"
or the "Grantee").
WHEREAS, the Company desires to grant to the Grantee an Stock
Option to purchase shares of its common stock, par value $.01 per share (the
"Shares"), pursuant to the terms thereof;
NOW, THEREFORE, in consideration of the mutual covenants
hereinafter set forth and for other good and valuable consideration, the parties
hereto agree as follows:
1. Grant of Option. The Company hereby grants to the Grantee
the right and option to purchase 179,333 Shares (the "Option") on the terms and
conditions and subject to all the limitations set forth herein, provided,
however, that in the event the Company does not have sufficient authorized but
unissued Shares, the Grantee shall have the right and option to purchase such
number of Series B Convertible Preferred Stock of the Company, par value $.01
per share, equal to the number of shares determined by dividing the number of
Shares to be purchased hereunder by 2,059.106. The Option provided for
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hereunder may be allocated among the Crimi Group in such proportion as they may
direct in writing.
2. Exercise Price. The exercise price of the Shares covered by
the Option shall be $2.125 per share (the "Option Price").
3. Exercise of Option. The Option granted hereby shall be
exercisable (i) as to 20% of the Shares covered hereby, on a cumulative basis,
on November 21, 1996 (the vesting date for the 172,300 employee stock options)
and on the first, second, third and fourth anniversary of such date, or (ii)
pursuant to any other vesting schedule that governs or may govern the exercise
of the 172,300 employee stock options.
4. Term of Option. The Option shall terminate on November 21,
2002, but shall be subject to earlier termination as provided herein.
If the Grantee is an employee of the Company and ceases to be
employed by the Company for any reason other than death, termination for cause
or voluntary termination without the consent of the Company, the Option may be
exercised within thirty (30) days after the date the Grantee ceases to be an
employee, but may not be exercised thereafter. In such event, the Option shall
be exercisable only to the extent that the right to purchase Shares has accrued
and is in effect at the date of such cessation of employment.
If the Grantee is an employee of the Company and becomes
disabled (as determined by the Board of Directors of the Company and as to the
fact and date of which the Grantee is
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notified by the Board in writing), the Option shall be exercisable within ninety
(90) days after the date of such disability or, if earlier, the term originally
prescribed by this Agreement. In such event, the Option shall be exercisable
only to the extent that the right to purchase the Shares hereunder has accrued
on the date the Grantee becomes disabled and is in effect as of such
determination date.
If the Grantee is an employee of the Company and such
employment is terminated for cause or is voluntarily terminated without the
consent of the Company, the Option shall terminate immediately.
If the Grantee is an employee of the Company, then, in the
event of the death of the Grantee while an employee of the Company or within
thirty (30) days after the termination of employment (other than termination for
cause or without consent of the Company), the Option shall be exercisable to the
extent exercisable but not exercised as of the date of death and in such event,
the Option must be exercised, if at all, within one hundred and eighty (180)
days after the date of death of the Grantee or, if earlier, within the
originally prescribed term of the Option.
5. Non-Assignability. The Option shall not be trans- ferable
by the Grantee otherwise than by will or by the laws of descent and distribution
and shall be exercisable, during the Grantee's lifetime, only by the Grantee;
provided, that the Option may be allocated (and replacement options granted) to
individuals and/or entities comprising the Crimi Group, upon
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written request, in such proportional amounts as are set forth in Annex A
attached hereto, and any such replacement options may be exercised by the
grantee pursuant to the terms hereof. Except as provided for herein, the Option
shall not be assigned, pledged or hypothecated in any way (whether by operation
of law or otherwise) and shall not be subject to execution, attachment or
similar process. Any attempted transfer, assignment, pledge, hypothecation or
other disposition of the Option or of any rights granted hereunder contrary to
the provisions of this Section 5, or the levy of any attachment or similar
process upon the Option or such right, shall be null and void.
6. Exercise of Option and Issue of Shares. The Option may be
exercised in whole or in part (to the extent that it is exercisable in
accordance with its terms) by giving written notice to the Company, together
with the tender of the Option Price. Such written notice shall be signed by the
person exercising the Option, shall state the number of Shares with respect to
which the Option is being exercised, shall contain any warranty required by
Section 7 below and shall otherwise comply with the terms and conditions of this
Agreement. The Company shall pay all original issue taxes with respect to the
issue of the Shares pursuant hereto and all other fees and expenses necessarily
incurred by the Company in connection herewith. Except as specifically set forth
herein, the holder acknowledges that any income or other taxes due from him or
her with respect to this Option or the Shares issuable pursuant to this Option
shall be the responsibility of the holder. The holder of this
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Option shall have rights as a shareholder only with respect to any Shares
covered by the Option after due exercise of the Option and tender of the full
Option Price for the Shares being purchased pursuant to such exercise.
7. Purchase for Investment. Unless the offering and sale of
the Shares to be issued upon the particular exercise of the Option shall have
been effectively registered under the Securities Act of 1933, as now in force or
hereafter amended, or any successor legislation (the "Act"), the Company shall
be under no obligation to issue the Shares covered by such exercise unless and
until the following conditions have been fulfilled:
(a) The person(s) who exercise the Option shall
warrant to the Company, at the time of such exercise, that such person(s) are
acquiring such Shares for his or her own account, for investment and not with a
view to, or for sale in connection with, the distribution of any such Shares, in
which event the person(s) acquiring such Shares shall be bound by the provisions
of the following legend which shall be endorsed upon the certificate(s)
evidencing their option Shares issued pursuant to such exercise:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Act"). Such shares may not be sold, transferred or otherwise
disposed of unless they have first been registered under the
Act or, unless, in the opinion of counsel satisfactory to the
Company's counsel, such registration is not required."
(b) The Company shall have received an opinion of its
counsel that the Shares may be issued upon such particular exercise in
compliance with the Act without registration there-
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<PAGE>
under. Without limiting the generality of the foregoing, the Company may delay
issuance of the Shares until completion of any action or obtaining of any
consent, which the Company deems necessary under any applicable law (including
without limitation state securities or "blue sky" laws).
8. Notices. Any notices required or permitted by the
terms of this Agreement shall be given by registered or certified mail, return
receipt requested, addressed as follows:
To the Company: Synergistic Holdings Corp.
405 6th Avenue
Des Moines, Iowa 50306
Attention: Thomas M. Swartwood
To the Grantee: The Crimi Group
50 Laser Court
Hauppauge, New York 11788
or to such other address or addresses of which notice in the same manner has
previously been given. Any such notice shall be deemed to have been given when
mailed in accordance with the foregoing provisions. Either party hereto may
change the address of which notices shall be given by providing the other party
hereto with written notice of such change.
9. Governing Law. This Agreement shall be construed
and enforced in accordance with the law of the State of New York (applicable to
contracts to be performed wholly within such state).
10. Benefit of Agreement. This Agreement shall be for
the benefit of and shall be binding upon the heirs, executors, administrators
and successors of the parties hereto.
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IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed by a duly authorized officer of the Company, and the Grantee has
hereunto set his or her hand, all as of the day and year first above written.
SYNERGISTIC HOLDING CORP.
/s/ Thomas M. Swartwood
--------------------------------
Thomas M. Swartwood, President
/s/ Salvatore Crimi
--------------------------------
Salvatore Crimi
/s/ Pershing Sun
--------------------------------
Pershing Sun
/s/ Michael Sun
--------------------------------
Michael Sun
/s/ Jennifer Sun
--------------------------------
Jennifer Sun
/s/ Susan Tauss-Giovinco
--------------------------------
Susan Tauss-Giovinco
/s/ Francis Fitzpatrick
--------------------------------
Francis Fitzpatrick
/s/ Harrison Fitzpatrick
--------------------------------
Harrison Fitzpatrick
THE SALVATORE CRIMI FAMILY
LIMITED PARTNERSHIP
By: /s/ Rose Crimi
--------------------------------
Name: Rose Crimi
Title: General Partner
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REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is
entered into by and between Salex Holding Corporation, a Delaware corporation
(the "Company"), with its principal office at 50 Laser Court, Hauppauge, New
York 11788, and an individual residing at _____________________ (hereinafter
"Holder").
1. Definitions. Capitalized terms used herein and not
otherwise defined hereunder shall have the meanings as set forth in the
Company's Confidential Private Offering Memorandum dated July 3, 1996. As used
in this Agreement, the following terms shall have the following meanings:
"Holder" shall mean any purchaser or any assignee
under this Agreement who holds any Registrable Securities (as
defined below).
The terms "register", "registered" and "registration"
refer to a registration effected by preparing and filing a registration
statement in compliance with the Act, including the declaration or ordering of
the effectiveness of such registration statement.
"Registrable Securities" means Shares (as defined
below) which have not been registered pursuant to this Agreement.
"Registration Expenses" shall mean all expenses
incurred by the Company in connection with a registration hereunder, including,
without limitation, all registration and filing fees, printing expenses, blue
sky fees and expenses, the expense of any special audits incident to or required
by any such
<PAGE>
registration, the fees and disbursements of counsel for the Company, including
expenses related to any legal opinions issued by the Company in connection with
the sale or transfer of the Shares by the Holder, but excluding the compensation
of regular employees of the Company (which shall be paid in any event by the
Company).
"Selling Expenses" shall mean all underwriting discounts and
selling commissions applicable to the sale of the Shares and all fees and
disbursements of counsel for any Holder in connection with the sale of the
Shares (other than expenses of Company counsel referred to above under
Registration Expenses).
"Shares" means shares of the Company's Common Stock that are
(i) purchased from the Company, (ii) issued or issuable upon exercise of a
warrant or option issued by the Company, or (iii) issued or issuable upon
conversion of securities of the Company which are, by their terms, convertible
into Common Stock, including Common Stock issued in respect of such shares of
Common Stock as a result of any stock split, stock dividend, recapitalization,
or similar event.
2. "Piggy-Back" Registration.
(a) If the Company shall determine at any time to register any
of its Common Stock or securities which are convertible into or exercisable for
Common Stock (other than a registration relating solely to employee benefit
plans, or a registration relating solely to an SEC Rule 145 transaction, or a
registration on any registration form which does not permit secondary sales) the
Company will: (i) promptly give to the
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<PAGE>
Holder written notice thereof (which shall include a list of the jurisdictions
in which the Company intends to attempt to qualify such securities under the
applicable blue sky or other state securities laws), and (ii) cause to be
included in such registration and in any underwriting involved therein all the
Registrable Securities specified in a written request or requests made by the
Holder within 20 days after receipt of such written notice from the Company
("Designated Piggy-Back Securities") provided, however, that the number of
Registrable Securities so registered may be limited by the underwriter's
cut-back provision set forth in the following Section 2(c), and to the extent
that Designated Piggy-Back Securities are not registered pursuant to the
underwriter's cut-back provision set forth in the following Section 2(c)
("Cut-Back Securities"), the Holder may exercise Piggy-Back rights with respect
to Cut-Back Securities, pro rata with any other Holder who has also been unable
to register securities as a result of the underwriter's cut-back provision set
forth in the following Section 2(c).
(b) If the registration of which the Company gives notice is
for a registered public offering involving an underwriting, the Company shall so
advise the Holder as part of the written notice given pursuant to Section 2(a).
In such event, the right of the Holder to registration pursuant to Section 2
shall be conditioned upon such Holder's participation in such underwriting and
the inclusion of such Holder's Registrable Securities in the underwriting to the
extent provided herein.
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(c) Any Holder proposing to distribute his or its securities
through such underwriting shall (together with the Company) enter into an
underwriting agreement in customary form with the representative of the
underwriter(s) selected for underwriting by the Company. Notwithstanding any
other provision of this Section 2, the Company shall not be required to include
in the registration the securities of any Holder unless the Holder accepts and
agrees to the terms proposed by the underwriters selected by the Company, and
then only in such quantity that will not, in the opinion of the underwriters and
based on marketing factors identified by such underwriters, jeopardize the
success of the offering by the Company. If the total number of Registrable
Securities which the Holder(s) request to be included in any offering exceeds
the number of shares which the underwriters reasonably believe is compatible
with the success of the offering, the Company shall only be required to include
in the offering so many of the shares as the underwriters believe will not
jeopardize the success of the offering. In such instance, the Registrable
Securities of the Holders to be included in the registration shall be allocated
among all the Holders thereof in proportion, as nearly as practicable, to the
respective amounts of Registrable Securities held by such Holders at the time of
filing the registration statement. The number of shares proposed to be
registered by the Company and the price therefor as proposed by the Company
shall have priority in the above process and shall not be reduced until
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<PAGE>
after all Registrable Securities of the Holders have been excluded from the
proposed registration.
3. Information by Holder. The Holder(s) of Registrable Securities
included in any registration shall cooperate with the Company and any
underwriters to effect such registration(s), including providing to the Company
any consents and furnishing to the Company such information regarding such
Holder(s) and the distribution proposed by such Holder(s) as the Company may
reasonably request in writing and as shall be required in connection with any
registration, qualification, or compliance referred to in this Agreement.
4. Expenses of Registration. All Registration Expenses incurred in
connection with any registration, qualification, or compliance pursuant to
Section 2 of this Agreement shall be borne by the Company, and all Selling
Expenses shall be borne by each Holder of the securities so registered solely to
the extent that, in the case of fees and disbursements of counsel, such expenses
were directly authorized by such Holder, and in the case of underwriting
discounts and selling commissions, pro rata on the basis of the number of their
shares so registered.
5. Indemnification. In the event that the Registrable Securities of a
Holder are included in a registration statement filed under this Agreement:
(a) To the extent permitted by law, the Company will indemnify
each such Holder, each of its officers, directors and partners, and each person
controlling such Holder, with respect to which registration, qualification, or
compliance of
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<PAGE>
Registrable Securities of such Holder has been effected pursuant to this
Agreement, and each underwriter, if any, and each person who controls any
underwriter against all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any registration statement,
prospectus, offering circular or other document incident to any such
registration, qualification, or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation by the
Company of the Securities Act or of any rule or regulation promulgated under the
Securities Act applicable to the Company and relating to action or inaction
required of the Company in connection with any such registration, qualification,
or compliance, and will reimburse each such Holder, each of its officers,
directors and partners, and each person controlling such Holder, each such
underwriter, and each person who controls any such underwriter for any legal and
any other expenses reasonably incurred in connection with investigating and
defending any such claim, loss, damage, liability, or action, provided that the
Company will not be liable in any such case for amounts paid in settlement of
any such claim, loss, damage, liability, or action if such settlement is
effected without the reasonable consent of the Company (which consent shall not
be unreasonably withheld), nor shall the Company be liable to the extent that
any such claim, loss, damage, liability, or expense arises out of or is based on
any
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<PAGE>
untrue statement or omission based upon written information furnished to the
Company by such Holder and stated to be specifically used therein.
(b) To the extent permitted by law, each such Holder will, if
Registrable Securities held by such Holder are included in the securities as to
which such registration, qualification or compliance is being effected,
individually (and not on a joint and several basis) indemnify the Company, each
of its directors and officers, each underwriter, if any, of the Company's
securities covered by such a registration statement, each person who controls
the Company or such underwriter within the meaning of the Securities Act, and
each other Holder, each of such other Holder's officers, directors, and
partners, and each person controlling such other Holder, against all claims,
losses, damages, and liabilities (or actions in respect thereof) arising out of
or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any such registration statement, prospectus, offering
circular, or other document, or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the Company, such other
Holders, such directors, officers, partners, person, underwriters, or control
persons for any legal or any other expenses reasonably incurred in connection
with investigating or defending any such claim, loss, damage, liability, or
action, in each case to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement)
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<PAGE>
or omission (or alleged omission) is made in such registration statement,
prospectus, offering circular, or other document in reliance upon and in
conformity with written information furnished to the Company by such Holder and
stated to be specifically used therein, provided that the Holder will not be
liable in any case for amounts paid in settlement of any such claim, loss,
damage, liability, or action if such settlement is effected without the
reasonable consent of the Holder (which consent shall not be unreasonably
withheld), and provided further, that the liability of any Holder hereunder
shall be limited to the net proceeds to such Holder from the Shares of such
Holder that were sold in such offering.
(c) Each party entitled to indemnification under this Section
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve such
Indemnifying Party of its obligations under this Agreement. No Indemnifying
Party, in the
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defense of any such claim or litigation, shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release from all liability
in respect to such claim or litigation.
6. Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the SEC which may permit the sale of any
outstanding Shares to the public without registration, the Company agrees after
any registration to use its best efforts to:
(a) make and keep public information available, as those terms
are understood and defined in Rule 144 under the Act, at all times;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act
of 1934 ("Exchange Act"), as long as it is subject to such reporting
requirements; and
(c) so long as a Holder holds any Shares, furnish to the
Holder forthwith upon request a written statement by the Company as to its
compliance with the reporting requirements of said Rule 144 and of the Act and
the Exchange Act, a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents so filed by the Company as Holder
may reasonably request in availing itself of any rule or regulation of the SEC
allowing a Holder to sell any such securities without registration.
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<PAGE>
7. Limitations on Future Registration Rights. Without the prior written
consent of the Holders of not less than a majority of the Registrable Securities
(which consent shall not be unreasonably withheld), the Company shall not grant
registration rights with respect to the securities of the Company to any third
party unless (i) such agreement includes a "market stand-off" agreement pursuant
to which such third party holder agrees not to sell or otherwise dispose of any
securities of the Company held by such third party holder during the 90-day
period following the effective date of a registration statement of the Company
filed under the Securities Act, (ii) such agreement includes an underwriter's
cut-back provision equivalent to the ones contained in Section 2(c) above, (iii)
such registration rights are "piggy-back" registration rights, (iv) such
registration rights do not apply to an initial public offering of the Company's
stock, (v) the shares of the holders of such registration shall be pooled with
the Shares of the Holders under this Agreement in any registration, and all such
shareholders shall participate in such registration on a pro rata basis, and
(vi) such registration rights shall be similar or identical in all other
respects to the registration rights granted hereunder.
8. Modifications and Waivers. This Agreement may not be amended or
modified, nor may the rights of any party hereunder be waived, except by a
written document that is executed by the Holders and the Company. No waiver of
any provision of this Agreement shall be deemed or shall constitute a waiver of
any
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other provision hereof, nor shall any waiver constitute a continuing waiver.
9. Successors. This Agreement is and shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns;
provided, however, neither the Company nor any of the Holders shall assign this
Agreement to any third party.
10. Rights and Obligations of Third Parties. Nothing in this Agreement,
whether express or implied, is intended to confer any rights or remedies under
or by reason of this Agreement on any persons other than the parties to it and
their respective successors and permitted assigns, nor is anything in this
Agreement intended to relieve or discharge the obligation or liability of any
third parties to any party to this Agreement, nor shall any provision give any
third party any right of subrogation or action against any party to this
Agreement.
11. Notices. Any notice, request, consent, or other communication
hereunder shall be in writing and shall be sent by one of the following means:
(i) mailed by registered or certified first class air mail, postage prepaid;
(ii) by facsimile transmission; (iii) by reputable overnight courier; or (iv) by
personal delivery, and shall be properly addressed to the Company or the Holder
as the case may be, at the address set forth above, or to such other address or
addresses as the Company or each Holder shall hereafter designate to the other
parties in writing. Notices sent by facsimile, courier, or personal delivery
shall be
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effective when received; notices sent by mail shall be effective 3 days after
receipt.
12. Entire Agreement. This Agreement and the exhibits hereto constitute
the entire agreement between the parties hereto in relation to the subject
matter hereof. Any prior written or oral negotiations, correspondence, or
understandings relating to the subject matter hereof shall be superseded by this
Agreement and shall have no force or effect.
13. Severability. If any provision which is not essential to the
effectuation of the basic purpose of this Agreement is determined by a court of
competent jurisdiction to be invalid and contrary to any existing or future law,
such invalidity shall not impair the operation of the remaining provisions of
this Agreement.
14. Headings. The headings of the Sections of this Agreement are
inserted for convenience of reference only and shall not affect the construction
or interpretation of any provisions hereof.
15. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be an original,
but all of which together shall constitute one and the same instrument.
16. Governing Law. This Agreement shall be constructed in accordance
with and governed by the laws of the State of New York (applicable to contracts
to be performed wholly within the State).
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IN WITNESS WHEREOF, the Company and Holder have caused this Agreement
to be executed by his or its duly authorized representative.
SALEX HOLDING CORPORATION HOLDER
By: ______________________ By: ______________________________
Date: ____________________ Date: ____________________________
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Exhibit 10.14
ASSUMPTION OF MORTGAGE
For good and valuable consideration, the receipt of which is
hereby acknowledged, Synergistic Holdings Corp., a Delaware corporation, hereby
(i) assumes and agrees to perform all of the obligations of Salex Holding
Corporation under the mortgage and note secured thereby with Fleet Bank for the
property located at 50 Laser Court, Hauppauge, New York (the "Mortgage") and
(ii) releases, waives and discharges Crimi from any and all of his obligations
in connection with such Mortgage.
Dated: September __, 1996
SYNERGISTIC HOLDINGS CORP.
By:/s/ Thomas M. Swartwood
-----------------------------------
Name: Thomas M. Swartwood
Title: President
<PAGE>
ASSUMPTION OF CRIMI EMPLOYMENT AGREEMENT
For good and valuable consideration, the receipt of which is
hereby acknowledged, Synergistic Holdings Corp., a Delaware corporation, hereby
assumes and agrees to perform all of the obligations of Salex Holding
Corporation under the Salvatore Crimi Employment Agreement, dated August 4,
1995, between Salvatore Crimi and Salex Holding Corporation.
Dated: September___, 1996
SYNERGISTIC HOLDINGS CORP.
By:/s/ Thomas M. Swartwood
----------------------------
Name: Thomas M. Swartwood
Title: President
<PAGE>
ASSUMPTION OF SUN EMPLOYMENT AGREEMENT
For good and valuable consideration, the receipt of which is
hereby acknowledged, Synergistic Holdings Corp., a Delaware corporation, hereby
assumes and agrees to perform all of the obligations of Salex Holding
Corporation under the Pershing Sun Employment Agreement, dated August 4, 1995,
between Pershing Sun and Salex Holding Corporation. Dated: September __, 1996
SYNERGISTIC HOLDINGS CORP.
By:/s/ Thomas M. Swartwood
-------------------------------
Name: Thomas M. Swartwood
Title: President
