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Agreement and Plan of Merger |
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2000 |
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AGREEMENT AND PLAN OF MERGER
DATED AS OF
MARCH 16, 1998
AMONG
MCE COMPANIES, INC.,
MCE ACQUISITION NO. 1, INC.
AND
METELICS CORPORATION
<PAGE> 2
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is entered into as
of March 16, 1998 by and among MCE COMPANIES, INC., a Michigan corporation
("MCE"), MCE ACQUISITION NO. 1, INC., a Michigan corporation and a wholly-owned
subsidiary of MCE ("Newco"), and METELICS CORPORATION, a California corporation
("Metelics"). MCE and Newco are sometimes referred to herein individually as an
"MCE Company" and collectively as the "MCE Companies".
RECITALS
A. MCE, Newco and Metelics have determined that it is in the best
interests of their respective shareholders for MCE to acquire all of the issued
and outstanding equity interests in Metelics, all as provided herein.
B. In order to effectuate the acquisition of the business of Metelics,
MCE has organized Newco as a wholly-owned subsidiary, and the parties have
agreed, subject to the terms and conditions set forth in this Agreement, to
merge Newco with and into Metelics, so that Metelics shall continue as the
surviving corporation of the mergers and as a wholly-owned subsidiary of MCE,
and the shareholders of Metelics (each a "Shareholder" and collectively the
"Shareholders") will receive merger consideration in the form of cash and shares
of MCE Common Stock (as defined in Section 1.3(a)) as provided herein, in
exchange for the Shareholders' respective issued and outstanding equity
interests in Newco.
C. Capitalized terms not otherwise defined at the time of usage shall
have the meanings designated in Article IX of this Agreement or elsewhere in
this Agreement.
TERMS OF AGREEMENT
In consideration of the mutual representations, warranties, covenants
and agreements contained herein, the parties hereto agree as follows:
ARTICLE I
MERGER; MERGER CONSIDERATION; CLOSING
1.1 THE CLOSING. Subject to the terms and conditions of this Agreement,
the consummation of the Merger (as defined below) and the other transactions
contemplated hereby (the "Closing") shall take place on Friday, March 6, 1998,
or as promptly as practicable thereafter (and in any event within five (5)
business days after the satisfaction or waiver of the conditions set forth in
Articles VI and VII hereof), at the offices of Metelics, or at such other place
and time as the parties may otherwise agree, and the date of the Closing is
referred to herein as the "Closing Date".
1
<PAGE> 3
1.2 THE MERGER. The merger described in this Section 1.2 is referred to
herein as the "Merger". The surviving corporation of the Merger is sometimes
referred to herein as the "Surviving Corporation". Subject to the terms and
conditions of this Agreement, and in accordance with the provisions of the
California General Corporation Law (the "California Law") and the Michigan
Business Corporation Act (the "Michigan Law"), as the case may be, at the
Effective Time (as defined below), Newco will be merged with and into Metelics,
with Metelics being the Surviving Corporation in the Merger and becoming a
wholly-owned subsidiary of MCE, and the separate corporate existence of Newco
shall cease.
1.3 MERGER CONSIDERATION; CONVERSION OF SECURITIES.
(a) Merger Consideration; Conversion of Metelics Stock. At the
Effective Time, by virtue of the Merger and without any action on the part of
Metelics, MCE, Newco or the Shareholders, all of the outstanding shares of
capital stock of Metelics (collectively, the "Metelics Stock") shall be
converted into the right to receive aggregate merger consideration (the "Merger
Consideration") equal to the following:
(i) An aggregate of $20,900,000 in cash, in
immediately available funds (the "Cash Consideration"), subject to the
Cash Adjustments (as defined below); and
(ii) An aggregate of 16,364 shares of the Common
Stock, without par value, of MCE (the "MCE Common Stock"), valued at
$6,102,000 (the "MCE Common Stock Consideration"), with such MCE Common
Stock Consideration subject to the MCE Common Stock Adjustments (as
defined below), the Indemnification Escrow (as defined below) and, for
the Named Shareholders (as defined below), the Employment Escrow (as
defined below).
At the Closing, MCE shall, in exchange for all of the Metelics Stock, (x) pay to
the Shareholders, based on their respective Pro Rata Percentages (as defined in
Section 9.1), the Cash Consideration, and (y) issue to the Shareholders, based
upon their respective Pro Rata Percentages, the MCE Common Stock Consideration
(including fractional shares, as necessary). All of the shares of Metelics
Stock, as well as the certificates representing any such shares, shall, by
virtue of the Merger and without any action on the part of the parties hereto or
the Shareholders, be deemed to be no longer outstanding, not to be transferable
on the books of the Surviving Corporation, and shall represent solely the right
to receive the Merger Consideration. Notwithstanding anything herein to the
contrary, any shares of Metelics Stock held by Shareholders who have not voted
in favor of the Merger and who have complied with all of the
2
<PAGE> 4
relevant provisions of Section 1301 of the California Law (the "Dissenting
Shares") shall not be converted into the right to receive the Merger
Consideration, unless and until such holder shall have failed to perfect, or
shall have effectively withdrawn or lost, their rights to appraisal thereunder.
If, after the Effective Time, any holder of Dissenting Shares fails to protect
or withdraws or otherwise loses such right, each of such holders of shares of
Metelics Stock shall thereupon be deemed to have been converted into the right
to receive, as of the Effective Time, the Merger Consideration with out any
interest thereon.
(b) Treasury Stock of Metelics. All shares of Metelics Stock
that are held by Metelics as treasury stock, if any, shall be canceled and
retired and no shares of MCE Common Stock or other consideration shall be
delivered or paid in exchange therefor.
(c) Conversion of Newco Stock. Each share of common stock of
Newco issued and outstanding immediately prior to the Effective Time shall, by
virtue of the Merger and without any action on the part of MCE, Newco, Metelics
or the Shareholder, shall automatically be converted into one fully paid and
non-assessable share of common stock of the Surviving Corporation, which shall
constitute all of the issued and outstanding shares of common stock of the
Surviving Corporation immediately after the Effective Time of the Merger.
1.4 ADJUSTMENTS. The Merger Consideration shall be subject to the
following adjustments (collectively, the "Adjustments"):
(a) Cash Adjustment. The Cash Consideration shall be adjusted
in accordance with the following, with the sum of the following adjustments
collectively referred to as the "Cash Adjustment":
(i) Changes in Net Working Capital. As of September
30, 1997, the Net Working Capital of Metelics (exclusive of cash) is
represented by Metelics to be as follows (the "9/30/97 Net Working
Capital"):
<TABLE>
<S> <C>
Accounts Receivable (net of reserves) $1,455,000
Inventory
(net of reserves) 875,000
Prepaids 110,000
Accounts Payable (161,000)
Accruals (594,000)
----------
Net Working Capital $1,685,000
==========
</TABLE>
If the Net Working Capital of Metelics as of the month end immediately
preceding the Closing or, if the Closing occurs on or effective as of a
month end, as of such month end (in either case, the "Closing Net
Working Capital"), is more than $1,685,000, the Cash Consideration
shall be adjusted upward, on a dollar-for-dollar basis, in an amount
equal to such difference and if the Closing Net Working Capital of
Metelics is less than
3
<PAGE> 5
$1,685,000, the Cash Consideration shall be adjusted downward, on a
dollar-for-dollar basis, in an amount equal to such difference (the
"Closing Net Working Capital Adjustment").
(ii) Distribution of Less than All of Pre-Closing
Cash Amount. In the event that Metelics distributes less than all of
the Pre-Closing Cash Amount (as defined in Section 9.1) to the
Shareholders prior to or as of the Effective Time, the Cash
Consideration shall be adjusted upward on a dollar-for-dollar basis in
an amount equal to the difference between the Pre-Closing Cash Amount
and the amount so distributed (the "Pre-Closing Cash Amount
Distribution Adjustment").
(b) MCE Common Stock Adjustment.
(i) Subject to the provisions of subsection (ii)
below, the number of shares of MCE Common Stock comprising the MCE
Common Stock Consideration shall be adjusted upward by an amount, if
any, by which 16,364 is less than the quotient of:
(A) the value of Metelics, determined by
using the product of the Closing EBITDA of Metelics as of and
for the period ended December 31, 1997, multiplied by 9.09, as
finally determined in accordance with Article IV hereof, and
less 20,900,000; divided by
(B) the value of MCE, determined by using
the Valuation Formula as of and for the period ended December
31, 1997, as finally determined in accordance with Article IV
hereof, divided by the Closing Outstanding MCE Shares (as
defined in Section 9.1).
(ii) If the adjustment described above in subsection
(i) results in an upward adjustment, then MCE shall deliver (in
accordance with Article IV) to the Shareholders, based upon their
respective Pro Rata Percentages, up to an additional 3,600 shares of
MCE Common Stock in the aggregate, with fifty percent (50%) of such
shares issued directly to the Shareholders and fifty percent (50%) of
such shares issued to and held by the Indemnification Escrow (all of
which shares issued to the Named Shareholders also would be issued to
and held by the Employment Escrow).
The foregoing adjustment to increase the number of shares issued pursuant to the
MCE Common Stock Consideration is referred to herein as the "MCE Common Stock
Adjustment". The net result of the MCE Common Stock Adjustment would be that the
Shareholders could receive, in the aggregate, as many as 19,964 shares of MCE
Common Stock.
1.5 FILING OF MERGER DOCUMENTS; EFFECTIVE TIME. At the Closing, the
parties shall cause the Merger to be consummated by executing and filing a duly
executed Certificate of Merger with respect to the Merger with the Secretary of
State of the State of California and a
4
<PAGE> 6
duly executed Certificate of Merger with respect to the Merger with the
Department of Consumer and Industry Services of the State of Michigan, with each
of the foregoing in such form as counsel for MCE and Metelics determines is
required by and in accordance with the relevant provisions of the California Law
and the Michigan Law, as the case may be (the latest date and time of such
filings is referred to herein as the "Effective Date" or "Effective Time").
1.6 EFFECT OF THE MERGER. At the Effective Time, the effect of the
Mergers shall be as provided under the California Law and the Michigan Law, as
the case may be. Without limiting the generality of the foregoing, at the
Effective Time:
(a) All property, rights, privileges, policies and franchises
of Metelics and Newco shall vest in the Surviving Corporation and all debts,
liabilities and duties of Metelics and Newco shall become the debts, liabilities
and duties of the Surviving Corporation;
(b) The Articles of Incorporation and the Bylaws of Metelics
as in effect immediately prior to the Effective Time or as amended by the
Certificate of Merger, shall be the Articles of Incorporation and the Bylaws of
the Surviving Corporation after the Effective Time, unless and until amended in
accordance with their terms and as provided by law; and
(c) The directors and officers of the Surviving Corporation
after the Effective Time shall be those individuals listed on Schedule 1.5, with
each individual to hold his position as a director or as an officer in
accordance with the Articles of Incorporation and the Bylaws of the Surviving
Corporation, until his successor is duly elected and qualified or until his
resignation or removal.
1.7 TAX AND ACCOUNTING TREATMENT. The parties hereto acknowledge and
agree that the Merger contemplated hereby shall be accounted for under the
purchase method of accounting, and the Mergers are not intended to be treated
for tax purposes as tax-free reorganizations under Section 368 of the Code (as
defined in Section 9.1). In addition, none of the parties shall make an election
under, or take any action to have the Merger result in tax treatment equivalent
to an election under, Section 338(h)(10) of the Code.
1.8 PROCEDURE AT THE CLOSING. At the Closing, the parties agree that
the following shall occur:
(a) Conditions to Obligations of MCE. Metelics shall have
satisfied (or MCE shall have waived) each of the conditions set forth in Article
VI and shall deliver to MCE the documents, certificates, opinions, consents and
letters required by Article VI.
(b) Conditions to Obligations of Metelics. MCE shall have
satisfied (or Metelics shall have waived) each of the conditions set forth in
Article VII and shall deliver the documents, certificates, consents and letters
required by Article VII.
(c) Payment of Merger Consideration at the Closing. MCE shall
pay to the Shareholders, based on their Pro Rata Percentages, the Cash
Consideration and the MCE
5
<PAGE> 7
Common Stock Consideration, in accordance with Schedule 1.8. Notwithstanding
anything herein to the contrary, no Shareholder shall be entitled to receive any
Merger Consideration unless and until such Shareholder has delivered to MCE the
stock certificate(s) representing all of the Metelics Stock owned by such
Shareholder, duly endorsed in blank, or accompanied by stock powers duly
endorsed in blank, with signatures guaranteed by a national or state chartered
bank or other financial institution and with all necessary transfer tax and
other revenue stamps (if any), acquired at such Shareholder's expense, affixed
thereto and canceled. In the event that a Shareholder does not receive all of
the Merger Consideration at the Closing due to the failure to comply with the
preceding sentence, none of the MCE Companies or Metelics shall be obligated to
pay any interest or other consideration to such Shareholder, it being understood
and agreed that the sole obligation of such Persons shall be to pay the Merger
Consideration upon compliance with the provisions hereof.
1.9 APPOINTMENT OF SHAREHOLDERS' COMMITTEE. Upon approval of the Merger
by the Shareholders, the Shareholders shall be deemed to have appointed the
Named Shareholders as the initial members of a five-person committee (the
"Shareholders' Committee"), to have irrevocably designated the Shareholders
Committee as the agent of each of the Shareholders to act for and on behalf of
the Shareholders as specifically set forth in, and to take all actions required
or permitted under, this Agreement, the Indemnification Agreement or the Escrow
Agreement, and to have approved the following terms and conditions pertaining to
the Shareholders' Committee:
(a) Actions of the Shareholders' Committee shall require
approval by a majority of the members then serving. Decisions of the
Shareholders' Committee, when evidenced by a writing executed by a majority of
the members of the Shareholders' Committee or by the Shareholders' Committee
Representative, shall be final, binding and conclusive upon each Shareholder.
Third parties, including but not limited to MCE and the Escrow Agent under the
Escrow Agreement, may rely upon any such decision, act or instruction as being
the decision, act or instruction of each Shareholder and any notice given to the
Shareholders' Committee under this Agreement, the Indemnification Agreement or
the Escrow Agreement shall constitute effective notice to all the Shareholders.
The authority and responsibilities of the Shareholders' Committee shall include,
but not necessarily be limited to, (i) fulfilling the post-Closing obligations
of the Shareholders under Article IV of this Agreement, (ii) contesting and
settling claims under the Indemnification Agreement, (iii) coordinating and
acting on behalf of the Shareholders under the Escrow Agreement and (iv)
engaging accountants, lawyers and other Persons which, in the discretion of the
Shareholders' Committee, shall be necessary or advisable in connection with
carrying out its responsibilities under this Agreement, the Indemnification
Agreement and the Escrow Agreement. In the event of the disability, death, or
resignation of any member of the Shareholders' Committee, the remaining member
or members, or if there is none, a majority in interest of the Shareholders
based on their Pro Rata Percent-ages, shall designate the successor member or
members to fill such vacancy or vacancies.
(b) The Shareholders' Committee shall select one of its
members as representative (the "Shareholders' Committee Representative") who
shall act for and on behalf of
6
<PAGE> 8
the Shareholders' Committee as specifically set forth in this Agreement, the
Indemnification Agreement or the Escrow Agreement. The Shareholders' Committee
Representative may be removed by the Shareholders' Committee acting by the
affirmative vote of a majority of such members. In the event of the disability,
death, resignation or removal of the Shareholders' Committee Representative, the
Shareholders' Committee shall promptly designate another member of the
Shareholders' Committee to serve as the Shareholders' Committee Representative
acting by the affirmative vote of a majority of such members. The Shareholders'
Committee Representative shall send notice of changes in members of the
Shareholders' Committee and in the position of Shareholders' Committee
Representative to each Shareholder at his or her last address of record.
(c) In taking any action under this Agreement, the
Indemnification Agreement or the Escrow Agreement, the members of the
Shareholders' Committee and the Shareholders' Committee Representative shall be
protected in relying upon any notice or other document reasonably believed to be
genuine, or upon any evidence reasonably deemed by him or them to be sufficient.
(d) The members of the Shareholders' Committee (including the
member acting as the Shareholders' Committee Representative) shall not be liable
to the Shareholders for any loss, damage, cost, expense whatsoever arising under
this Agreement, the Indemnification Agreement or the Escrow Agreement, excepting
only to the extent such damage, cost or expense was caused solely by the gross
negligence or willful misconduct of the individual member of the Shareholders'
Committee against whom a claim is made.
(e) Each member of the Shareholders' Committee, and their
respective successors, shall be indemnified and held harmless by the
Shareholders to the fullest extent per missible under California law (including
attorneys' fees, judgments, fines, and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such person in connection with their role as
members of the Shareholders' Committee or as the Shareholders' Committee
Representative; provided that the indemnification obligation of the Shareholders
hereunder shall be several only in proportion to their respective Pro Rata
Percentages in Metelics prior to the Closing. The foregoing right to
indemnification shall include advances to cover expenses incurred in defending
any proceeding in advance of its final disposition, provided that such advances
shall be made only upon an undertaking, by or on behalf of the indemnitee, that
such advances will be repaid if it shall ultimately be determined that such
person is not entitled to be indemnified. The foregoing right to indemnification
shall continue as to a person who has ceased to be a member of the Shareholders'
Committee and shall inure to the benefit of his heirs, executors and
administrators.
(f) The members of the Shareholders' Committee and the
Shareholders' Committee Representative shall serve without compensation but
shall be reimbursed by the Shareholders for attorney fees and other
out-of-pocket expenses reasonably incurred or suffered by such person in
connection with their role as members of the Shareholders' Committee or as the
Shareholders' Committee Representative, or in connection with any dispute
arising under this Agreement, the Indemnification Agreement or the Escrow
Agreement.
7
<PAGE> 9
(g) Out of the Cash Consideration otherwise due the
Shareholders at the Closing, the Shareholders shall authorize MCE to deposit his
or her respective Pro Rata Percentage of $100,000 to an interest bearing account
at Comerica Bank-California, Santa Clara County, California established by and
in the name of the Shareholders' Committee (the "Shareholders' Committee
Account"). The funds in the Shareholders' Committee Account shall be used
exclusively by the Shareholders' Committee and the Shareholders' Committee
Representative in carrying out its and his responsibilities under this
Agreement, the Indemnification Agreement and the Escrow Agreement and to
reimburse and/or indemnify them or him as specifically authorized in this
Section 1.9. The Shareholders' Committee Representative shall provide prompt
written notice to the Shareholders of all disbursements from the Shareholders'
Committee Account. All funds in the Shareholders' Committee Account shall be
disbursed to the Shareholders, in accordance with their respective interest, at
the third anniversary of the Closing, provided, however, that if a claim under
the Indemnification Agreement is then pending then the balance of such funds
shall be disbursed promptly after settlement or final disposition of such claim.
(h) The authority conferred under this Section 1.9 shall be an
agency coupled with an interest, and all authority conferred hereby is
irrevocable and not subject to termination by the Shareholders or any one of
them or by operation of law.
ARTICLE II
REPRESENTATIONS AND WARRANTEES OF THE MCE COMPANIES
As a material inducement to Metelics to enter into this Agreement and
to consummate the transactions contemplated hereby, the MCE Companies make the
following representations and warranties to Metelics:
2.1 CORPORATE STATUS. MCE is a corporation duly organized, validly
existing and in good standing under the laws of the State of Michigan and has
the requisite power and authority to own or lease its properties and to carry on
its business as presently conducted. Newco is a corporation duly organized,
validly existing and in good standing under the laws of the State of Michigan
and has the requisite power and authority to own or lease its properties and to
carry on its business as presently conducted. There is no pending or, to the
knowledge of MCE, threatened proceeding for the dissolution, liquidation,
insolvency or rehabilitation of any of the MCE Companies.
2.2 CORPORATE POWER AND AUTHORITY. Each of the MCE Companies has the
corporate power and authority to execute and deliver this Agreement and the
several other documents, certificates, instruments and agreements which shall be
executed and delivered by MCE and/or Newco pursuant to this Agreement or the
transactions contemplated hereby (collectively with this Agreement, the "MCE
Delivered Documents"), to perform its obligations
8
<PAGE> 10
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. Each of the MCE Companies has taken all corporate action necessary
to authorize its execution and delivery of this Agreement and the other MCE
Delivered Documents, the performance of its obligations hereunder and thereunder
and the consummation of the transactions contemplated hereby and thereby, except
for the approval of the Board of Directors of MCE.
2.3 ENFORCEABILITY. This Agreement has been duly executed and delivered
by the MCE Companies and constitutes the legal, valid and binding obligation of
the MCE Companies, and the other MCE Delivered Documents will be duly executed
and delivered by the MCE Companies and will constitute the legal, valid and
binding obligation of the MCE Companies, with all of the foregoing enforceable
against the MCE Companies in accordance with their terms, except as the same may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and
general equitable principles regardless of whether such enforceability is
considered in a proceeding at law or in equity.
2.4 MCE COMMON STOCK CONSIDERATION. Upon consummation of the
transactions contemplated hereby and the issuance and delivery of certificates
representing the shares of MCE Common Stock comprising the MCE Common Stock
Consideration, as provided in this Agreement, such shares will be validly
issued, fully paid, non-assessable shares.
2.5 CAPITALIZATION; SHAREHOLDERS. As of the date hereof, the authorized
capital stock of MCE consists of 340,000 shares of MCE Common Stock and 20,000
shares of preferred stock. As of the date hereof, 193,065 shares of MCE Common
Stock were validly issued and outstanding, and no shares of preferred stock were
issued or outstanding, except for 4,000 shares of Series A Preferred Stock,
$1,000 liquidation value per share. Except as described on Schedule 2.5, there
are no outstanding or authorized rights, options, warrants, convertible
securities, subscription rights, conversion rights, exchange rights or other
agreements or commitments of any kind that could require MCE to issue or sell
any shares of its capital stock (or securities convertible into or exchangeable
for shares of its capital stock). Schedule 2.5 sets forth the name of MCE's
shareholders, and the number of outstanding shares of each class of its capital
stock owned by its shareholders, as of the date hereof. As of the date hereof,
the number of issued and outstanding shares of MCE Common Stock determined on a
Fully Diluted Basis is set forth on Schedule 2.5.
2.6 NO VIOLATION. The execution and delivery of this Agreement and the
other MCE Delivered Documents by the MCE Companies, the performance by the MCE
Companies of their respective obligations hereunder and thereunder and the
consummation by the MCE Companies of the transactions contemplated hereby and
thereby will not:
(a) Contravene any provision of the Articles of Incorporation
or Bylaws of the MCE Companies;
(b) Violate or conflict with any law, statute, ordinance,
rule, regulation,
9
<PAGE> 11
decree, writ, injunction, judgment, ruling or order of any Governmental
Authority (as defined in Section 9.1) or of any arbitration award which is
either applicable to, binding upon, or enforceable against the MCE Companies;
(c) Assuming that the consents, approvals, authorizations,
permits, filings or notifications referenced in (f) below are obtained or made,
conflict with, result in any breach of, or constitute a default (or an event
which would, with the passage of time or the giving of notice or both,
constitute a default) under, or give rise to a right to terminate, amend,
modify, abandon or accelerate, any material Contract (as defined in Section 9.1)
which is applicable to, binding upon or enforceable against the MCE Companies;
(d) Assuming that the consents, approvals, authorizations,
permits, filings or notifications referenced in (f) below are obtained or made,
result in or require the creation or imposition of any Lien upon or with respect
to any of the property or assets of the MCE Companies, provided that all of the
assets of the Surviving Corporation will serve as collateral for a guaranty of
the obligations of MCE under the Credit Agreement, dated December 31, 1997,
between Comerica Bank and MCE (the "Comerica Credit Agreement") to be provided
by the Surviving Corporation to Comerica Bank for purposes of receiving certain
financing for the transactions contemplated hereby;
(e) Assuming that the consents, approvals, authorizations,
permits, filings or notifications referenced in (f) below are obtained or made,
give to any Person a right or claim against the MCE Companies, which would have
a Material Adverse Effect on MCE; or
(f) Require the consent, approval, authorization or permit of,
or filing with or notification to, any Governmental Authority, any court or
tribunal or any other Person, except (i) filings required under the securities
or blue sky laws of the various states, (ii) filings required under the HSR Act
(as defined in Section 9.1), (iii) any filings or consents required to be made
or obtained by the Board of Directors of MCE or by Metelics or the Shareholders,
(iv) any governmental permits or licenses required to operate the business of
Metelics, or (v) the requisite consents or approvals from Comerica Bank pursuant
to the Comerica Credit Agreement and from National City Capital Corporation
("NCCC") and Hanifen Imhoff Mezzanine Fund, LP ("Hanifen") pursuant to the Note,
Warrant and Preferred Stock Purchase Agreement, dated July 23, 1996, as amended,
among MCE, NCCC and Hanifen (the "NCCC/Hanifen Purchase Agreement").
2.7 RECORDS OF MCE COMPANIES. The copies of the Articles of
Incorporation and Bylaws of the MCE Companies which were provided to Metelics
are true, accurate, and complete and reflect all amendments made through the
date of this Agreement. The minute books, stock ledgers and other corporate
records for the MCE Companies made available to Metelics for review were correct
and complete as of the date of such review, and no further entries have been
made through the date of this Agreement (except those which have been provided
to Metelics prior to or as of the date hereof).
10
<PAGE> 12
2.8 SUBSIDIARIES. Except as described on Schedule 2.8, MCE does not,
directly or indirectly, own any outstanding voting securities of or other
interests in, or control, any other corporation, membership, joint venture or
other entity.
2.9 MCE FINANCIAL STATEMENTS. MCE has delivered to Metelics the
following (collectively, the "MCE Financial Statements") copies of which are
attached hereto as part of Schedule 2.9:
(a) The financial statements of MCE as of and for the years
ended December 31, 1995 and December 31, 1996, as audited by Ernst & Young LLP.
(b) The unaudited financial statements of MCE as of and for
the year ended December 31, 1997.
(c) The unaudited financial statements of MCE as of and for
the interim period ended January 31, 1998.
The balance sheet of MCE dated as of December 31, 1997, included in the MCE
Financial Statements, is referred to herein as the "MCE Current Balance Sheet".
The MCE Financial Statements fairly present the financial position of MCE at
each of the balance sheet dates and the results of operations for the periods
covered thereby, and have been prepared in accordance with GAAP (as defined in
Section 9.1) consistently applied throughout the periods indicated, except, in
the case of unaudited statements, to normal audit and year-end adjustments which
were not and are not expected to be material in amount and to the addition of
required footnotes thereto and except as otherwise expressly described in
Schedule 2.9. The MCE Audited Financial Statements and the MCE Closing Financial
Statements will upon delivery fairly present the combined financial position of
Metelics at the balance sheet dates, and the results of operations for the
period covered thereby, and the MCE Audited Financial Statements will be
prepared in accordance with GAAP consistently applied throughout the period
indicated, except, in the case of unaudited statements, to normal audit and
year-end adjustments which were not and are not expected to be material in
amount and to the addition of required footnotes thereto and except as otherwise
expressly described in Schedule 2.9. There are no material special or
non-recurring items of income or expense during the periods covered by the MCE
Financial Statements, and, except as otherwise expressly described in Schedule
2.9, the balance sheets included in the Financial Statements do not reflect any
write-up or revaluation increasing the book value of any assets. The MCE
Financial Statements reflect all adjustments necessary for a fair presentation
of the financial information contained therein. There will be no material
special or non-recurring items of income or expense during the period covered by
the MCE Audited Financial Statements, and the balance sheet included in the MCE
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