AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (the "Agreement")
is entered into as of the 28th day of December, 1999 by and among BOL
Acquisition Co. X, Inc., a New York corporation ("BOL") and wholly owned
subsidiary of BiznessOnline.com, Inc., a Delaware corporation (the "Parent");
the Parent; Prime Communications Systems Incorporated, a New York corporation,
(the "Company"); and Kirk Miller, Debra Horvath and Robert Prince, the owners of
all the issued and outstanding stock of the Company (collectively the
"Stockholders").
INTRODUCTION
BOL and the Company intend to effect a merger of the Company with and
into BOL in accordance with this Agreement and the New York Business Corporation
Law (the "Merger"). Upon consummation of the Merger, the Company will cease to
exist, and BOL will continue to exist as the surviving corporation of the
Merger. It is intended that the Merger qualify as a tax-free reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code") and that this Agreement constitute a plan of reorganization
for such purposes.
This Agreement has been adopted and approved by the respective boards of
directors of BOL and the Company, and the shareholder of BOL and the
Stockholders have each unanimously approved this Agreement by written consent.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual and dependent promises
and the representations and warranties hereinafter contained, the parties hereto
agree as follows:
SECTION 1. DESCRIPTION OF THE MERGER TRANSACTION.
1.1 MERGER OF THE COMPANY INTO BOL. Upon the terms and subject to the
conditions set forth in this Agreement, at the Effective Time (as defined in
SECTION 1.2), the Company shall be merged with and into BOL, and the separate
existence of the Company shall cease.
1.2 EFFECTIVE TIME. The effective time of the Merger (the "Effective
Time") shall occur at the time a properly executed Certificate of Merger for the
merger of the Company into BOL, conforming to the requirements of the New York
Business Corporation Law (the "Merger Certificate") has been delivered and
accepted for filing by the Secretary of State New York. At the Effective Time,
the Company shall be merged with and into BOL in accordance with the Merger
Certificate and the separate existence of the Company shall cease and BOL shall
continue as the surviving corporation (the "Surviving Corporation").
1.3 ARTICLES OF INCORPORATION, BY-LAWS AND BOARD OF DIRECTORS OF THE
SURVIVING CORPORATION. At the Effective Time:
(a) The Articles of Incorporation of BOL shall become the
Articles of Incorporation of the Surviving Corporation; and, subsequent to the
Effective Time, such Articles of Incorporation shall be the Articles of
Incorporation of the Surviving Corporation until changed as provided by law.
(b) The bylaws of BOL shall become the bylaws of the Surviving
Corporation; and, subsequent to the Effective Time, such bylaws shall be the
bylaws of the Surviving Corporation until they shall thereafter be duly amended.
(c) The Board of Directors of the Surviving Corporation shall
be set forth on EXHIBIT 1.3 hereto and shall hold office subject to the
provisions of the laws of the Surviving Corporation's state of incorporation and
of the Articles of Incorporation and bylaws of the Surviving Corporation.
(d) The officers of the Surviving Corporation shall be set
forth on EXHIBIT 1.3 hereto, each of such officers to serve, subject to the
provisions of the Articles of Incorporation and bylaws of the Surviving
Corporation, until his or her successor is elected and qualified.
1.4 EFFECT OF MERGER. At the Effective Time, the effect of the Merger
shall be as provided in the applicable provisions of the New York Business
Corporation Law. Except as herein specifically set forth and as otherwise
required by law, the identity, existence, purposes, powers, objects, franchises,
privileges, rights and immunities of BOL shall continue unaffected and
unimpaired by the Merger and the corporate franchises, existence and rights of
the Company shall be merged with and into BOL, and BOL, as the Surviving
Corporation, shall be fully vested therewith. At the Effective Time, the
separate existence of the Company shall cease and, in accordance with the terms
of this Agreement, the Surviving Corporation shall possess all the rights,
privileges, immunities and franchises, of a public as well as of a private
nature, and all property, real, personal and mixed, and all debts due on
whatever account, including subscriptions to shares, and all taxes, including
those due and owing and those accrued, and all other choses in action, and all
and every other interest of or belonging to or due to the Company and BOL shall
be taken and deemed to be transferred to, and vested in, the Surviving
Corporation without further act or deed; and all property, rights and
privileges, powers and franchises and all and every other interest shall be
thereafter as effectually the property of the Surviving Corporation as they were
of the Company and BOL; and the title to any real estate, or interest therein,
whether by deed or otherwise, vested in the Company and BOL, shall not revert or
be in any way impaired by reason of the Merger. Except as otherwise provided
herein, the Surviving Corporation shall thenceforth be responsible and liable
for all the liabilities and obligations of the Company and BOL and any claim
existing, or action or proceeding pending, by or against the Company or BOL may
be prosecuted as if the Merger had not taken place, or the Surviving Corporation
may be substituted in its place. Neither the rights of creditors nor any liens
upon the property of the Company or BOL shall be impaired by the Merger, and all
debts, liabilities and duties of the Company and BOL shall attach to the
Surviving Corporation, and may be enforced against the Surviving Corporation to
the same extent as if said debts, liabilities and duties had been incurred or
contracted by the Surviving Corporation.
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1.5 MERGER CONSIDERATION; CONVERSION OF SHARES.
(a) As of the Effective Time, all of the shares of capital stock of
the Company ("Company Stock"), issued and outstanding immediately prior to the
Effective Time, by virtue of the Merger and without any action on the part of
the holders thereof, shall be automatically converted to, in the aggregate,
shares of common stock of the Parent, par value $.01 per share ("Parent Stock")
and cash, as follows (collectively, the "Merger Consideration"):
(i) $1,240,000 in U.S. currency delivered by check, wire
transfer or other immediately available funds, and
(ii) $5,760,000 in unregistered shares of the Parent Stock
valued at $8.00 per share. The shares of Parent Stock delivered hereunder shall
constitute "restricted securities" under the Securities Act of 1933, as amended
and be subject to the restrictions on transfer set forth in this Agreement.
(b) The "average NASDAQ National Market price" shall mean the
average of the closing sales prices or, in case no such reported sale takes
place on any given day, the average of the reported closing bid and asked prices
for such day. In either case, the prices would be as reported by The Nasdaq
Stock Market, Inc.
1.6 DELIVERY OF MERGER CONSIDERATION; ESCROW OF SHARES; SET-OFF.
(a) At the Closing, the Stockholders shall deliver certificates
representing all outstanding shares of Company Stock to counsel for BOL to hold
in escrow until the Effective Time. At the Effective Time, the Stockholders
shall receive the aggregate Merger Consideration set forth in SECTION 1.5 above
provided, however, that a number of shares of Parent Stock included in the
aggregate Merger Consideration with a value of $1,500,000 (the "Escrow Shares")
shall be delivered into escrow with the Parent's counsel (the "Escrow Agent")
pursuant to the escrow agreement (the "Escrow Agreement") attached hereto as
EXHIBIT 1.6. In addition to all other rights and remedies of BOL and the
Surviving Corporation for breach by the Company or the Stockholders of the
representations, warranties, covenants and agreements of the Company and the
Stockholders herein, both at law and in equity, the Surviving Corporation shall
have the right to set-off against the Escrow Shares for any claims of the
Surviving Corporation arising under the post-Closing adjustment provisions of
SECTION 2 below and/or the indemnity provisions of Section 12 below.
(b) The Stockholders shall deliver to counsel for BOL at the
Closing the certificates representing Company Stock, duly endorsed in blank by
the Stockholders or accompanied by duly executed stock powers, to hold in escrow
until the Effective Time. The Stockholders shall cure any deficiencies with
respect to the endorsement of the certificates or
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other documents of conveyance with respect to Company Stock or with respect to
the stock powers accompanying any Company Stock.
(c) At the Effective Time, counsel for BOL shall release the
certificates representing shares of Company Stock to BOL and such certificates
shall be canceled. As of the Effective Time, the stock transfer books of the
Company shall be closed and there shall be no further registration of transfers
of shares of the Company thereafter.
1.7 CLOSING. The closing of the Merger (the "Closing") shall occur on
the third business day after satisfaction or waiver of all of the conditions set
forth in Section 6 hereof at the offices of Duffy & Sweeney, LLP, 300 Turks Head
Building, Providence, Rhode Island 02903 at 10:00 a.m. on December 28, 1999, or
at such other place and time or date as may be mutually agreed upon by the
parties hereto. The actual date of the Closing is referred to herein as the
"Closing Date". At the Closing, BOL and the Company shall take all actions
necessary to effect the Merger (including filing the Merger Certificate which
shall become effective at the Effective Time) and to effect the conversion and
delivery of shares referred to in SECTION 1.6 hereof.
SECTION 2. POST CLOSING ADJUSTMENTS
2.1 POST-CLOSING ADJUSTMENT BASED ON CASH ON HAND AND ACCOUNTS
PAYABLE. The Company shall maintain a minimum of twenty thousand dollars
($20,000.00) of cash on hand at the Closing Date in excess of the Company's
outstanding payables and liabilities (the "Minimum Cash Requirement") at the
Closing. For purposes hereof, outstanding payables and liabilities shall (a)
include accrued but unpaid employee vacation and sick time, current accrued
accounts payable , accrued lease payments, etc. and (b) exclude deferred revenue
liability. Within thirty (30) days of the Closing Date, or as soon as
practicable thereafter, BOL and/or its accountants shall review the records and
accounts of the Company and to the extent that there was a deficiency in the
Minimum Cash Requirement as of the Closing Date, the Stockholders shall pay the
amount of such shortfall, in cash or other readily available funds to the
Surviving Corporation within three (3) business days of the date of
determination of the Minimum Cash Requirements.
2.2 POST-CLOSING ADJUSTMENT FOR FIRST SIX MONTHS OF 2000 REVENUES AND
EBITDA. Any adjustment described in this SECTION 2.2 shall be based on an income
statement prepared by BOL's accountants (the "Income Statement") on or about
August 30, 2000, showing the Company and the Surviving Corporation's audited
revenues and earnings before interest and taxes less depreciation and
amortization ("EBITDA") on an accrual basis in accordance with
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generally accepted accounting principals ("GAAP") for the first six (6) months
of calendar year 2000.
(a) REVENUES. To the extent that the Company's and the Surviving
Corporation's aggregate audited revenues for the first six (6) months of
calendar year 2000 are (i) less than one million four hundred thousand dollars
($1,400,000) on an accrual basis in accordance with GAAP, the Merger
Consideration shall be reduced by an amount equal to five dollars ($5.00) for
each one dollar ($1.00) in revenue less than one million four hundred thousand
($1,400,000), and (ii) greater than one million four hundred thousand dollars
($1,400,000) on an accrual basis in accordance with GAAP, the Merger
Consideration shall be increased by an amount equal to five dollars ($5.00) for
each one dollar ($1.00) in revenue greater than one million four hundred
thousand dollars ($1,400,000). For example, in the event the revenues for such
period, are one million three hundred thousand dollars ($1,300,000), the Merger
Consideration would be decreased by five hundred thousand dollars ($500,000)
(i.e. the $100,000 shortfall multiplied by 5.00). For purposes of this
paragraph, the revenue calculations shall be made in the same manner in which
BOL's accountants audit the Company's revenues for calendar year 1999 (i.e. on
an accrual basis in accordance with GAAP). In no event shall the adjustments
under this Section reduce the Merger Consideration below $1,500,000.
(b) To the extent that the Company's and the Surviving Corporation's
EBITDA for the first six (6) months of calendar year 2000 is less than
thirty-five percent (35%) of the audited revenues for such period, the Merger
Consideration shall be reduced by fourteen dollars and twenty-eight cents
($14.28) for each one dollar of revenue less than such minimum EBITDA amount.
For example, in the event that the Company's audited revenues as determined in
SECTION 2.2(a) above were $1,400,000 and the Company's EBITDA is actually
$470,000, then the Merger Consideration would be reduced by $285,600 (i.e. the
$20,000 EBITDA shortfall (35% of $1,400,000 less $470,000) times 14.28). For
purposes of calculations made pursuant to this SECTION 2.2(b), the Company's and
the Surviving Corporation's expenses shall include the Parent's allocation of
overhead charges for: (i) insurance, payroll services and other regular
operating expenses attributable to the Surviving Corporation's business and (ii)
the Surviving Corporation's pro rata share for use of the Parent's Albany data
center (if any). There shall be no allocation of overhead charge for the
Parent's Wall, New Jersey office or Executive Officers' salaries.
(c) To the extent any decrease in the Merger Consideration is required
under this SECTION 2.2, the Stockholder shall make such payment within five (5)
business days of the delivery of the Income Statement To the extent any increase
or decrease in the Merger Consideration is required under this SECTION 2.2, the
Surviving Corporation or Stockholders, as the case may be, shall pay such amount
in Parent Stock and such shares of stock would be valued at the "average Nasdaq
National Market price" for the twenty (20) business day period immediately
preceding the date of delivery of the Income Statement or the date of resolution
of any dispute regarding any Merger Consideration adjustment.
2.3 DISPUTE RESOLUTION PROCEDURE FOR ADJUSTMENTS BASED ON MERGER
CONSIDERATION ADJUSTMENTS. Notwithstanding anything in this Section 2 to the
contrary, if the Stockholders dispute the determination of the Minimum Cash
Requirement or any item contained on the
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Income Statement, the Stockholders shall notify the Surviving Corporation in
writing of each disputed item (collectively, the "Disputed Amounts"), and
specify the amount thereof in dispute within thirty (30) business days after
determination of the Minimum Cash Requirement or the delivery of the Income
Statement, as the case may be. If the Surviving Corporation and the Stockholders
cannot resolve any such dispute, then such dispute shall be resolved by an
independent nationally recognized accounting firm which is reasonably acceptable
to the Surviving Corporation and the Stockholders (the "Independent Accounting
Firm"). The determination of the Independent Accounting Firm shall be made as
promptly as practical and shall be final and binding on the parties, absent
manifest error which error may only be corrected by such Independent Accounting
Firm. Any expenses relating to the engagement of the Independent Accounting Firm
shall be allocated between the Surviving Corporation and the Stockholders so
that the Stockholders' aggregate share of such costs shall bear the same
proportion to the total costs that the Disputed Amounts unsuccessfully contested
by the Stockholders (as finally determined by the Independent Accounting Firm)
bear to the total of the Disputed Amounts so submitted to the Independent
Accounting Firm.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE STOCKHOLDERS.
3.1 MAKING OF REPRESENTATIONS AND WARRANTIES. As a material inducement
to BOL to enter into this Agreement and consummate the transactions contemplated
hereby, the Company and the Stockholders hereby jointly and severally make to
BOL the representations and warranties contained in this Section 3.
3.2 ORGANIZATION AND QUALIFICATION OF THE COMPANY. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of New York with full corporate power and authority to own or lease
the Company's properties and to conduct the Company's business in the manner and
in the places where such properties are owned or leased and where such business
is currently conducted or proposed to be conducted. The copies of the
Certificate of Incorporation of the Company as amended to date, certified by the
Secretary of State for the State of New York and the bylaws certified by the
Secretary of the Company and heretofore delivered to BOL's counsel, are complete
and correct, and no amendments thereto are pending. The stock records and minute
books of the Company which have heretofore been delivered to BOL's counsel are
correct and complete. The Company is duly qualified to do business as a foreign
corporation in each other jurisdiction in which it owns, operates or leases real
property and in each other jurisdiction in which the failure to be so qualified
or registered would have a material adverse effect on the properties, assets,
business, financial condition and prospects of the Company.
3.3 SUBSIDIARIES; INVESTMENTS. Except as set forth in SCHEDULE 3.3, the
Company has no direct or indirect subsidiaries and owns no securities issued by
any other business organization or governmental authority, except U.S.
Government securities, bank certificates of deposit and money market accounts
acquired as short-term investments in the ordinary course of its business.
Except as set forth in SCHEDULE 3.3, neither the Company nor the Stockholders
own nor have any direct or indirect interest in or control over any corporation,
partnership, joint venture or entity of any kind (other than as an owner of less
than 2% of the outstanding common stock of a publicly held company which stock
trades on a national exchange.).
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3.4 CAPITAL STOCK. The total authorized capital stock of the Company
consists solely of the shares listed on SCHEDULE 3.4. All of the issued and
outstanding shares of the Company Common Stock are duly authorized and validly
issued, are fully paid and nonassessable, are owned of record and beneficially
by the Stockholders as set forth in SCHEDULE 3.4 free and clear of any liens,
claims, encumbrances, restrictions, security interests, mortgages, pledges or
other demands, and all such shares were offered, issued, sold and delivered by
the Company in compliance with all applicable state and federal laws concerning
the issuance of securities. Further, none of such shares were issued in
violation of the preemptive rights of any past or present stockholders. No
shares of the Company Stock are held in the treasury of the Company. SCHEDULE
3.4 contains a complete and correct listing of the stockholders of the Company
at the date hereof, together with the number and class of the capital stock of
the Company owned by each such stockholders. There are no outstanding
subscriptions, options, warrants, commitments, preemptive rights, agreements,
arrangements or commitments of any kind for or relating to the issuance, sale,
registration or voting of, or outstanding securities convertible into or
exchangeable for, any shares of capital stock of any class or other equity
interests of the Company. The Company has never acquired any treasury stock.
3.5 AUTHORITY OF THE COMPANY AND THE STOCKHOLDERS
(a) The Company has full right, power and authority to enter into
this Agreement and each agreement, document and instrument to be executed and
delivered by it pursuant to or as contemplated by this Agreement and to carry
out the transactions contemplated hereby and thereby. The execution, delivery
and performance by the Company of this Agreement and each such other agreement,
document and instrument have been duly authorized by the Company's Board of
Directors, and have been approved by the Stockholders by a unanimous written
consent vote. This Agreement and each agreement, document and instrument to be
executed and delivered by the Company pursuant to or as contemplated by this
Agreement (to the extent it contains obligations to be performed by the Company)
constitutes, or when executed, delivered and approved by the Stockholders will
constitute, valid and binding obligations of the Company, enforceable in
accordance with their respective terms. The execution, delivery and performance
by the Company of this Agreement and each such other agreement, document and
instrument:
(i) does not and will not violate any provision of the Articles
of Incorporation or bylaws of the Company;
(ii) does not and will not violate any laws of the United
States, or any state or other jurisdiction applicable to the Company or
require the Company to obtain any court, regulatory body, administrative
agency or other approval, consent or waiver, or make any filing with,
any federal, state, local or foreign governmental body, agency or
official ("Governmental Entity") that has not been obtained or made,
other than the filing of the Certificate of Merger in accordance with
the laws of the State of New York and except for any other approvals,
consents, waivers and filings that, if not obtained or made,
individually or in the aggregate, would not have a material adverse
effect on the properties, assets, business, financial condition or
prospects of the Company; and
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(iii) except as otherwise indicated on Schedule 3.5 hereto, do
not and will not result in a breach of, constitute a default under,
accelerate any obligation under, or give rise to a right of termination
of any indenture or loan or credit agreement or any other agreement,
contract, instrument, mortgage, lien, lease, permit, authorization,
order, writ, judgment, injunction, decree, determination or arbitration
award, whether written or oral, to which the Company is a party or by
which the property of the Company is bound or affected, or result in the
creation or imposition of any mortgage, pledge, lien, security interest
or other charge or encumbrance on any of the assets of the Company,
except where such breach, default, acceleration or right of termination
would not have a material adverse effect on the properties, assets,
business, financial condition or prospects of the Company, and would not
result in the creation or imposition of any mortgage, pledge, lien,
security interest or other charge or encumbrance on any of the assets of
the Company.
(b) The Stockholders have full right, authority and power to enter
into this Agreement and each agreement, document and instrument to be executed
and delivered by or on behalf of it pursuant to or as contemplated by this
Agreement and to carry out the transactions contemplated hereby and thereby.
This Agreement and each agreement, document and instrument to be executed and
delivered by the Stockholders pursuant to or as contemplated by this Agreement
(to the extent it contains obligations to be performed by such Stockholders)
constitutes, or when executed and delivered will constitute, valid and binding
obligations of the Stockholders enforceable in accordance with their respective
terms, subject to the terms hereof. The execution, delivery and performance by
the Stockholders of this Agreement and each such agreement, document and
instrument:
(i) do not and will not violate any provision of the Articles
of Incorporation or bylaws of the Company;
(ii) do not and will not violate any laws of the United States,
or any state or other jurisdiction applicable to the Stockholders or require the
Stockholders to obtain any approval, consent or waiver of, or make any filing
with, any Governmental Entity that has not been obtained or made; and
(iii) do not and will not result in a breach of, constitute a
default under, accelerate any obligation under or give rise to a right of
termination of any indenture or loan or credit agreement or any other agreement,
contract, instrument, mortgage, lien, lease, permit, authorization, order, writ,
judgment, injunction, decree, determination or arbitration award to which the
Stockholders are a party or by which the property of such Stockholders is bound
or to which the property of the Stockholders is subject or result in the
creation or imposition of any mortgage, pledge, lien, security interest or other
charge or encumbrance on any of the assets or properties of the Company. Except
as disclosed on SCHEDULE 3.5, there are no stockholder agreements with respect
to the ownership or operation of the Company, and any such agreements shall be
terminated prior to the Closing.
3.6 STATUS OF PROPERTY OWNED OR LEASED.
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(a) REAL PROPERTY. The real property identified as being owned or
leased by the Company on Schedule 3.6(a) is collectively referred to herein as
the "Real Property". The Real Property constitutes all the real property owned
and leased by the Company.
(i) TITLE. Except as set forth on Schedule 3.6(a), there are no
unrecorded mortgages, deeds of trust, ground leases, security interests or
similar encumbrances, liens, assessments, licenses, claims, rights of first
offer or refusal, options, or options to purchase, or any covenants, conditions,
restrictions, rights of way, easements, judgments or other encumbrances or
matters affecting title to the Real Property. There are no leases, tenancies or
occupancy rights of any kind affecting any of the Real Property.
(ii) SECURITY INTERESTS. There is not now, nor, as a result of
the consummation of the transactions contemplated hereby, will there be, any
mortgages, deeds of trust, ground leases, security interests or similar
encumbrances on the Real Property, except as set forth on SCHEDULE 3.6(a)
(collectively, the "Encumbrances"). There is no outstanding principal balance or
accrued unpaid interest or other amount due as of the date hereof under any
instrument secured by any of the Encumbrances and all payments required under
each Encumbrance to the date hereof have been made in full. No condition or fact
does or will exist, as a result of the consummation of the transactions
contemplated hereby, which, with the lapse of time or the giving of notice or
both, would constitute a material default thereunder or result in any
acceleration of the indebtedness secured thereby or any increase in the amount
of interest, premiums or penalties payable on such indebtedness.
(iii) COMMISSIONS. There are no brokerage or leasing fees or
commissions or other compensation due or payable on an absolute or contingent
basis to any person, firm, corporation, or other entity with respect to or on
account of any of the Encumbrances or the Real Property, and no such fees,
commissions or other compensation shall, by reason on any existing agreement,
become due after the date hereof.
(iv) PHYSICAL CONDITION. Except as set forth on SCHEDULE
3.6(a), there is no material defect in the physical condition of any of the Real
Property. Except as set forth on SCHEDULE 3.6(a), there is no material defect in
any material improvements located on or constituting a part of any of the Real
Property, including, without limitation, the structural elements thereof, the
mechanical systems (including without limitation all heating, ventilating, air
conditioning, plumbing, electrical, elevator, security, telecommunication,
utility, and sprinkler systems) therein, the roofs or the parking and loading
areas (collectively, the "Improvements"). All of the Improvements located on or
constituting a part of any of the Real Property, including, without limitation,
the structural elements thereof, the mechanical systems therein, the roofs and
the parking and loading areas are in generally good operating condition and
repair.
(v) Utilities. The Company has not received any written notice
of any termination or impairment of the furnishing of, or any material increase
in rates for, services to any of the Real Property of water, sewer, gas,
electric, telecommunication, drainage or other utility services, except ordinary
and usual rate increases applicable to all customers (or all customers of a
certain class) of a utility provider. The Company has not entered into any
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agreement requiring it to pay to any utility provider rates which are less
favorable than rates generally applicable to customers of the same class as the
Company.
(vi) COMPLIANCE. Except as set forth on SCHEDULE 3.6(a), the
Company has not received any written notice from any municipal, state, federal
or other governmental authority with respect to any violation of any zoning,
building, fire, water, use, health, environmental or other statute, ordinance,
code or regulation issued in respect of any of the Real Property that has not
been heretofore corrected, and except in either case as set forth in SCHEDULE
3.6(a) hereto.
(vii) GOVERNMENT APPROVALS. The Company has not received any
notice of any plan, study or effort by any Governmental Entity which would
adversely affect the present use, zoning or value to the Company of any of the
Real Property or which would modify or realign any adjacent street or highway in
a manner materially adverse to the Company.
(viii) ZONING. The Company has not received any notice of any
zoning violations. All buildings and improvements situated on the Real Property
were built pursuant to validly issued building permits. Certificates of
occupancy were issued for all such structures as built, and all such structures
have been maintained as built since such certificates were issued.
(ix) REAL PROPERTY TAXES. Except as set forth in said SCHEDULE
3.6(a), no special assessments of any kind (special, bond or otherwise) are or
have been levied against any Real Property, or any portion thereof, which are
outstanding or unpaid. Each property constituting part of the Real Property is
assessed as a separate and distinct tax lot.
(x) SERVICE CONTRACTS. A complete list of all material existing
service, management, supply or maintenance or equipment lease contracts and
other contractual agreements affecting the Real Property or any portion thereof
(the "Service Contracts") is set forth on SCHEDULE 3.6(a). All such Service
Contracts are terminable upon no more than thirty (30) days written notice, at
no cost, except as specified in SCHEDULE 3.6(a).
(b) PERSONAL PROPERTY. A list of each item of the machinery,
equipment and other fixed assets owned or leased by the Company having a fair
market value of $5,000 or more (the "Equipment"), is contained in SCHEDULE
3.6(b) hereto. All of the Equipment and other machinery, equipment and personal
property of the Company is located on the Real Property or used in the operation
of the Company. Except as specifically disclosed in Schedule 3.6(b) or in the
Company Financial Statements (as hereinafter defined), the Company has good and
marketable title to all of the personal property owned by it. None of such
personal property or assets is subject to any mortgage, pledge, lien,
conditional sale agreement, security title, encumbrance or other charge except
as specifically disclosed in any Schedule hereto or in the Financial Statements.
The Financial Statements reflect all personal property of the Company, subject
to dispositions and additions in the ordinary course of business consistent with
this Agreement. Except as otherwise specified in SCHEDULE 3.6(b) hereto, all
leasehold improvements, furnishings, machinery and equipment of the Company are
in generally good repair, normal wear and tear excepted, have been well
maintained, and conform in all material respects with all applicable ordinances,
regulations and other laws.
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3.7. FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES.
(a) The Company has delivered to the Parent the following financial
statements, copies of which are attached hereto as SCHEDULE 3.7:
(i) Compiled, reviewed or management-prepared balance sheets of
the Company dated December 31, 1997 and December 31, 1998 and compiled, reviewed
or management-prepared statements of income, stockholders' equity and cash flows
for each of the two (2) years ended December 31, 1997 and December 31, 1998,
certified by the Chief Financial Officer of the Company (the "Year-End Company
Financial Statements");
(ii) Management prepared balance sheets of the Company as of
December 16, 1999 (herein the "Company Balance Sheet Date") and statements of
income, stockholders' equity and cash flows for the period then ended, certified
by the Chief Financial Officer of the Company (the "Interim Company Financial
Statements", together with the Year-End Company Financial Statements, the
"Company Financial Statements");
The Company Financial Statements have been prepared in accordance with GAAP
applied consistently during the periods covered thereby (except that the Interim
Company Financial Statements are subject to normal year-end audit adjustments
and do not include footnotes), and present fairly in all respects the financial
condition of the Company at the dates of said statements and the results of
their operations for the periods covered thereby.
(b) As of the Company Balance Sheet Date, the Company had no
liabilities of any nature, whether accrued, absolute, contingent or otherwise,
(including without limitation liabilities as guarantor or otherwise with respect
to obligations of others or contingent liabilities arising prior to the Company
Balance Sheet Date) except liabilities stated or adequately reserved for on the
Company Financial Statements or reflected in Schedules furnished to Parent
hereunder as of the date hereof.
(c) As of the date hereof, the Company has no liabilities of any
nature, whether accrued, absolute, contingent or otherwise, (including without
limitation liabilities as guarantor or otherwise with respect to obligations of
others, or liabilities for taxes due or then accrued or to become due or
contingent liabilities arising prior to the date hereof or the Closing, as the
case may be) except liabilities (i) stated or adequately reserved against on the
appropriate Company Financial Statement or the notes thereto, (ii) reflected in
Schedules furnished to Parent hereunder on the date hereof or (iii) incurred in
the ordinary course of business of the Company consistent with prior practices.
3.8 TAXES.
(a) The Company has paid or caused to be paid all federal, state,
local, foreign and other taxes, including without limitation income taxes,
estimated taxes, alternative minimum taxes, excise taxes, sales taxes, use
taxes, value-added taxes, gross receipts taxes, franchise taxes, capital stock
taxes, employment and payroll-related taxes, withholding taxes, stamp taxes,
11
transfer taxes and property taxes, whether or not measured in whole or in part
by net income, and all deficiencies, or other additions to tax, interest, fines
and penalties owed by it (collectively, "Taxes"), in the amounts indicated on
tax returns filed by the Company through the date hereof or in correspondence
received from any federal, state, local or foreign government taxing authority,
whether disputed or not (other than current taxes the liability for which is
adequately reserved for on the financial statements provided to the Parent
pursuant to SECTION 3.7 hereof).
(b) The Company has in accordance with applicable law filed all
federal, state, local and foreign tax returns required to be filed by it through
the date hereof and all such returns correctly and accurately set forth the
amount of any Taxes relating to the applicable period. For every taxable period
of the Company, the Company has delivered or made available to Parent complete
and correct copies of all federal, state, local and foreign income tax returns,
examination reports and statements of deficiencies assessed against or agreed to
by the Company. Schedule 3.8 attached hereto sets forth all federal tax
elections under the Internal Revenue Code of 1986, as amended (the "Code"), that
are in effect with respect to the Company or for which an application by the
Company is pending.
(c) Neither the Internal Revenue Service ("IRS") nor any other
governmental authority is now asserting in writing or threatening to assert
against the Company any deficiency or claim for additional Taxes or a claim that
the Company is or may be subject to taxation by that jurisdiction. There are no
security interests on any of the assets of the Company that arose in connection
with any failure (or alleged failure) to pay any Tax. The Company has not
entered into a closing agreement pursuant to SECTION 7121 of the Code.
(d) Except as set forth in SCHEDULE 3.8 attached hereto, there has
not been any audit of any tax return filed by the Company, no audit of any tax
return of the Company is in progress, and the Company has not been notified by
any tax authority that any such audit is contemplated or pending. Except as set
forth in SCHEDULE 3.8, no extension of time with respect to any date on which a
tax return was or is to be filed by the Company is in force, and no waiver or
agreement by the Company is in force for the extension of time for the
assessment or payment of any Taxes.
(e) (i) The Company has not consented to have the provisions
of Section 341(f)(2) of the Code applied to it, (ii) the Company has not agreed
to, and has not been requested by any governmental authority to, make any
adjustments under Section 481(a) of the Code by reason of a change in accounting
method or otherwise and (iii) the Company has never made any payments, is
obligated to make any payments, or is a party to any agreement that under
certain circumstances would obligate it to make any payments, that will not be
deductible under SECTION 280G of the Code. The Company has disclosed on its
federal income tax returns all positions taken therein that could give rise to a
penalty for underpayment of federal Tax under SECTION 6662 of the Code. The
Company has never had any liability for unpaid Taxes because it is a member of
an "affiliated group" (as defined in SECTION 1504(a) of the Code). The Company
has never filed, nor has it ever been required to file, a consolidated, combined
or unitary tax return with any entity. The Company is not a party to any tax
sharing agreement.
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(f) The Company computes its federal taxable income under the
accrual basis method of accounting.
(g) For purposes of this SECTION 3.8, all references to Sections of
the Code shall include any predecessor provisions to such Sections and any
similar provisions of federal, state, local or foreign law.
3.9 ACCOUNTS RECEIVABLE. All accounts receivable of the Company as of
the respective balance sheet dates in the Company Financial Statements and all
accounts receivable arising thereafter or hereafter to the Closing Date, arose
or will arise from valid sales in the ordinary course of business. Except as set
forth in SCHEDULE 3.9, the Company has no accounts or loans receivable from any
person, firm or corporation which is affiliated with the Company. For purposes
hereof, "affiliate" means any Stockholder, or any business entity which
controls, or is controlled by, or is under common control with the Company.
3.10 INVENTORIES. The Company maintains less than $10,000 of inventory,
all saleable in the ordinary course and stated in accordance with GAAP.
3.11 ABSENCE OF CERTAIN CHANGES.
Since December 31, 1998, the Company has conducted its business only in
the ordinary course and consistent with past practices and except as disclosed
in SCHEDULE 3.11 there has not been:
(a) Any change in the properties, assets, liabilities, business,
operations, financial condition or prospects of the Company which change by
itself or in conjunction with all other such changes, whether or not arising in
the ordinary course of business, has been materially adverse with respect to the
Company;
(b) Except for the endorsement of checks in the ordinary course of
business any material contingent liability incurred by the Company as guarantor
or otherwise with respect to the obligations of others or any cancellation of
any material debt or claim owing to, or waiver of any material right of, the
Company;
(c) Any mortgage, encumbrance or lien placed on any of the
properties of the Company which remains in existence on the date hereof or will
remain on the Closing Date except for liens permitted by any current agreement
of the Company with respect to borrowed money;
(d) Any purchase, sale or other disposition, or any agreement or
other arrangement for the purchase, sale or other disposition, of any capital
assets of the Company costing more than $10,000;
(e) Any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting any of the properties, assets or
business of the Company;
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(f) Any declaration, setting aside or payment of any dividend by
the Company, or the making of any other distribution in respect of the capital
stock of the Company, any direct or indirect redemption, purchase or other
acquisition by the Company of its own capital stock, any issuance or sale of any
securities convertible into or exchangeable for debt or equity securities of the
Company or any grant, issuance or exercise of options, warrants, subscriptions,
preemptive rights, agreements, arrangements or commitments of any kind for or
relating to the issuance, sale, registration or voting of any shares of capital
stock of any class or other equity interests of the Company;
(g) Any claim of unfair labor practices asserted against the
Company; any change in the compensation (in the form of salaries, wages,
incentive arrangements or otherwise) payable or to become payable by the Company
to any of its officers, employees, agents or independent contractors other than
customary merit or cost of living increases in accordance with its usual
practices, or any bonus payment or arrangement made to or with any of such
officers, employees, agents or independent contractors; any entering into any
employment, deferred compensation or other similar agreement (or any amendment
to any such existing agreement) with any officer, director or employee of the
Company except for employment arrangements providing for salary or wages of less
than $20,000 per annum and any oral agreement terminable at will by the Company;
(h) Any change with respect to the officers or senior management
of the Company, any grant of any severance or termination pay to any officer or
employee of the Company;
(i) Any payment or discharge of a material lien or liability of
the Company which was not shown on the Company Financial Statements or incurred
in the ordinary course of business thereafter;
(j) Any obligation or liability incurred by the Company to any of
its officers, directors or stockholders, or any loans or advances made by the
Company to any of its officers, directors, stockholders, except normal
compensation and expense allowances payable to officers or employees;
(k) Any change in accounting methods or practices other than to
comply with new accounting pronouncements, credit practices or collection
policies used by the Company;
(l) Any other transaction entered into by the Company other than
transactions in the ordinary course of business; or
(m) Any agreement or understanding whether in writing or
otherwise, that would result in any of the transactions or events or require the
Company to take any of the actions specified in paragraphs (i) through (xii)
above.
3.12 BANKING RELATIONS. All of the arrangements which the Company has
with any banking institution are described in SCHEDULE 3.12 attached hereto,
indicating with respect to each of such arrangements the type of arrangement
maintained (such as checking account,
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borrowing arrangements, safe deposit box, etc.), the names in which the accounts
are held, the account number, and the name of each person, corporation, firm or
other entity authorized in respect thereof.
3.13 PATENTS, TRADE NAMES, TRADEMARKS, COPYRIGHTS AND PROPRIETARY
RIGHTS. All patents, patent applications, trademark registrations, trademark
registration applications, copyright registrations, copyright registration
applications and all material trade names, trademarks, copyrights and other
material proprietary rights owned by or licensed to the Company or used in its
respective business as presently conducted (the "Proprietary Rights") are listed
in SCHEDULE 3.13 attached hereto. All of the material patents, registered
trademarks and copyrights of the Company and all of the material patent
applications, trademark registration applications and copyright registration
applications of the Company have been duly registered in, filed in or issued by
the United States Patent and Trademark Office, the United States Register of
Copyrights or the corresponding offices of other countries identified on said
schedule. Except as set forth in SCHEDULE 3.13: (a) use of said patents, trade
names, trademarks, copyrights or other proprietary rights in the ordinary course
of business as presently conducted does not require the consent of any other
person and (b) the Company has sufficient title or adequate rights or licenses
to use all material patents, trade names, trademarks, copyrights, or other
proprietary rights used by it in its business as presently conducted free and
clear of any attachments, liens, encumbrances or adverse claims. The Company has
not received written notice that its present or contemplated activities or
products infringe any such patents, trade names, trademarks or other proprietary
rights of others. Except as set forth in SCHEDULE 3.13: (i) no other person has
an interest in or right or license to use, or the right to license others to
use, any of said patents, patent applications, trade names, trademarks,
copyrights or other proprietary rights; (ii) there are no written claims or
demands of any other person pertaining thereto and no proceedings have been
instituted, or are pending or threatened, which challenge the rights of the
Company in respect thereof; (iii) none of the patents, trade names, trademarks,
copyrights or other proprietary rights listed in said schedule is subject to any
outstanding order, decree, judgment or stipulation, or is being infringed by
others; and (iv) no proceeding charging the Company with infringement of any
adversely held patent, trade name, trademark or copyright has been filed or is
threatened to be filed.
3.14 TRADE SECRETS AND CUSTOMER LISTS. The Company has the right to use
in the ordinary course of its business as presently conducted, free and clear of
any claims or rights of others, all trade secrets, inventions, customer lists
and secret processes required for or incident to the manufacture or marketing of
all products presently sold, manufactured, licensed, under development or
produced by it, including products licensed from others. Any payments required
to be made by the Company for the use of such trade secrets, inventions,
customer lists and secret processes are described in SCHEDULE 3.14. The Company
is not using or in any way making use of any confidential information or trade
secrets of any third party, including without limitation, a former employer of
any present or past employee of the Company or any of the predecessors of the
Company.
3.15 CONTRACTS.
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(a) Except for contracts, commitments, plans, agreements and
licenses described in SCHEDULE 3.15 (complete and accurate copies of which have
been delivered to the Parent), the Company is neither a party to nor subject to:
(i) any plan or contract providing for bonuses, pensions,
options, stock purchases, deferred compensation, retirement payments, profit
sharing, severance or termination pay, collective bargaining or the like, or any
contract or agreement with any labor union;
(ii) any employment contract or contract for services which
requires the payment of $20,000 or more annually or which is not terminable
within thirty (30) days by the Company without liability for any penalty or
severance payment other than pursuant to the Company's severance policies
existing on the date hereof;
(iii) any contract or agreement for the purchase of any
commodity, material or equipment except purchase orders in the ordinary course
for less than $10,000 each;
(iv) any other contracts or agreements creating any obligation
of the Company of $10,000 or more with respect to any such contract;
(v) any contract or agreement providing for the purchase of
all or substantially all of its requirements of a particular product from a
supplier;
(vi) any contract or agreement which by its terms does not
terminate or is not terminable by the Company or any successor or assign within
six months after the date hereof without payment of a penalty;
(vii) any contract or agreement for the sale or lease of its
products or services not made in the ordinary course of business;
(viii) any contract with any sales agent or distributor of
products of the Company or any subsidiary;
(ix) any contract containing covenants limiting the freedom of
the Company to compete in any line of business or with any person or entity;
(x) any contract or agreement for the purchase of any fixed
asset for a price in excess of $10,000 whether or not such purchase is in the
ordinary course of business;
(xi) any license agreement (as licensor or licensee);
16
(xii) any indenture, mortgage, promissory note, loan
agreement, guaranty or other agreement or commitment for the borrowing of money
and any related security agreement;
(xiii) any contract or agreement with any officer, employee,
director or stockholder of the Company or with any persons or organizations
controlled by or affiliated with any of them;
(xiv) any partnership, joint venture, or other similar
contract, arrangement or agreement; or
(xv) any registration rights agreements, warrants, warrant
agreements or other rights to subscribe for securities, any voting agreements,
voting trusts, shareholder agreements or other similar arrangements or any stock
purchase or repurchase agreements or stock restriction agreements.
(b) All material contracts, agreements, leases and instruments to
which the Company is a party or by which the Company is obligated are valid and
are in full force and effect and constitute legal, valid and binding obligations
of the Company and the other parties thereto, enforceable in accordance with
their respective terms. Neither the Company nor any other party to any contract,
agreement, lease or instrument of the Company is in default in complying with
any provisions thereof, and no condition or event or facts exists which, with
notice, lapse of time or both would constitute a default thereof on the part of
either of the Company or on the part of any other party thereto in any such case
that could have a material adverse effect on the properties, assets, financial
condition or prospects of either of the Company. SCHEDULE 3.15 indicates whether
any of the agreements, contracts, commitments or other instruments and documents
described therein requires consent or approval to be transferred to the
Surviving Corporation as a result of the transactions contemplated herein.
3.16 LITIGATION. SCHEDULE 3.16 hereto lists all currently pending and
threatened litigation and governmental or administrative proceedings or
investigations to which the Company is a party. Except for matters described in
SCHEDULE 3.16, there is no litigation or governmental or administrative
proceeding or investigation pending or threatened against the Company which may
have an adverse effect on the properties, assets, business, financial condition
or prospects of the Company or which would prevent or hinder the consummation of
the transactions contemplated by this Agreement.
3.17 COMPLIANCE WITH LAWS. The Company has not received notice of a
violation or alleged violation of applicable statutes, ordinances, orders, rules
and regulations promulgated by any federal, state, municipal or other
governmental authority, which violation or alleged violation would have a
material adverse effect on the business of the Company, and except as set forth
in SCHEDULE 3.17 hereto, the Company is currently in compliance in all material
respects with all such statutes, ordinances, orders, rules or regulations, and
there is no valid basis for any claim that the Company is not in compliance with
any such statute, ordinance, order, rule or regulation.
17
3.18 INSURANCE. The Company has delivered to counsel to BOL true and
correct copies of each insurance policy (including policies providing property,
casualty, Liability, and workers' compensation coverage and bond and surety
arrangements) to which the Company has been a party, a named insured, or
otherwise the beneficiary of coverage at any time within the past five (5)
years. With respect to each such insurance policy: (i) the policy is legal,
valid, binding, enforceable, and in full force and effect; (ii) the policy will
continue to be legal, valid, binding, enforceable, and in full force and effect
on identical terms following the consummation of the transactions contemplated
hereby, (iii) neither the Seller nor any other party to the policy is in breach
or default (including with respect to the payment of premiums or the giving of
notices), and no event has occurred which, with notice or the lapse of time,
would constitute such a breach or default, or permit termination, modification,
or acceleration, under the policy; and (iv) no party to the policy has
repudiated any provision thereof. The Seller has been covered during the past
five (5) years by insurance in scope and amount customary and reasonable for the
businesses in which it has engaged during the aforementioned period. SCHEDULE
3.18 describes any self-insurance arrangements affecting the Seller.
3.19 WARRANTY AND RELATED MATTERS. There are no existing or threatened
in writing, product liability, warranty or other similar claims against the
Company alleging that any of its products or services are defective or fail to
meet any product or service warranties except as disclosed in SCHEDULE 3.19
hereto. The Company has not received notice of any statements, citations,
correspondence or decisions by any Governmental Entity stating that any product
manufactured, marketed or distributed at any time by the Company (the "Company
Products") is defective or unsafe or fails to meet any product warranty or any
standards promulgated by any such Governmental Entity. There have been no
recalls ordered by any such Governmental Entity with respect to any Company
Product. There is no (i) fact relating to any Company Product that may impose
upon the Company a duty to recall any Company Product or a duty to warn
customers of a defect in any Company Product, (ii) latent or overt design,
manufacturing or other defect in any Company Product, or (iii) liability for
warranty or other claim or return with respect to any Company Product except in
the ordinary course of business consistent with the past experience of the
Company for such kind of claims and liabilities.
3.20 FINDER'S FEES. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf of
the Company or the Stockholders.
3.21 PERMITS; BURDENSOME AGREEMENTS. SCHEDULE 3.21 lists all material
permits, registrations, licenses, franchises, certifications and other approvals
(collectively, the "Approvals") required from Governmental Entities in order for
the Company to conduct its business. The Company has obtained all the Approvals,
which are valid and in full force and effect. Except as disclosed on SCHEDULE
3.21, none of the Approvals is subject to termination by their express terms as
a result of the execution of this Agreement by the Company or the consummation
of the Merger, and no further Approvals will be required in order to continue to
conduct the business currently conducted by the Company subsequent to the
Closing. Except as disclosed in SCHEDULE 3.21 or in any other schedule hereto,
the Company is neither subject to nor bound by any agreement, judgment, decree
or order which may materially and adversely affect its properties, assets,
business, financial condition or prospects.
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3.22 TRANSACTIONS WITH INTERESTED PERSONS. Except as set forth in
SCHEDULE 3.22 hereto, no Stockholder, officer, employee or director of the
Company and none of their respective parents, grandparents, spouses, children,
siblings or grandchildren owns directly or indirectly on an individual or joint
basis any material interest in, or serves as an officer or director or in
another similar capacity of, any competitor, supplier or customer of the Company
or any organization, person or entity with whom the Company is doing business.
3.23 EMPLOYEE BENEFIT PROGRAMS.
(a) SCHEDULE 3.23 sets forth a list of every Employee Program (as
defined below) that has been maintained (as such term is further defined below)
by the Company at any time during the three-year period ending on the date
hereof.
(b) Each Employee Program which has been maintained by a Company
and which has at any time been intended to qualify under SECTION 401(a) or
501(c)(9) of the Code, has received a favorable determination or approval letter
from the IRS regarding its qualification under such section and has, in fact,
been qualified under the applicable section of the Code from the effective date
of such Employee Program through and including the Closing (or, if earlier, the
date that all of such Employee Program's assets were distributed). No event or
omission has occurred which would cause any such Employee Program to lose such
qualification under the applicable Code section.
(c) Except as otherwise disclosed on SCHEDULE 3.23, there has not
been any failure of any party to comply with any laws applicable to or the terms
of any Employee Programs that have been maintained by the Company, except for
any failures to comply that, individually or in the aggregate, would not have a
material adverse effect on the properties, assets, business, financial condition
or prospects of the Company. With respect to any Employee Program now or
heretofore maintained by the Company, there has occurred no "prohibited
transaction," as defined in SECTION 406 of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or SECTION 4975 of the Code, or
breach of any duty under ERISA or other applicable law (including, without
limitation, any health care continuation requirements or any other tax law
requirements, or conditions to favorable tax treatment, applicable to such
plan), which could result, directly or indirectly (including without limitation
through any obligation of indemnification or contribution) in any taxes,
penalties or other liability to the Company or any Affiliate (as defined below).
No litigation, arbitration, or governmental administrative proceeding or
investigation or other proceeding (other than those relating to routine claims
for benefits) is pending or threatened with respect to any such Employee
Program.
(d) Neither the Company nor any Affiliate has ever maintained any
Employee Program subject to Title IV of ERISA.
(e) Except as otherwise disclosed on SCHEDULE 3.23, with respect
to each Employee Program maintained by the Company within the three years
preceding the date hereof, complete and correct copies of the following
documents (if applicable to such Employee Program) have previously been
delivered to the Parent: (i) all documents embodying or
19
governing such Employee Program, and any funding medium for the Employee Program
(including, without limitation, trust agreements) as they may have been amended
to the date hereof; (ii) the most recent IRS determination or approval letter
with respect to such Employee Program under Code SECTION 401 or 501(c)(9), and
any applications for determination or approval subsequently filed with the IRS;
(iii) the three most recently filed IRS forms 5500, with all applicable
schedules and accountants' opinions attached thereto; (iv) the summary plan
description for such Employee Program (or other descriptions of such Employee
Program provided to employees) and all modifications thereto; (v) any insurance
policy (including any fiduciary liability insurance policy) related to such
Employee Program; and (vi) any documents evidencing any loan to an Employee
Program that is a leveraged employee stock ownership plan.
(f) Each Employee Program maintained by the Company as of the date
hereof is subject to amendment or termination by the Board of Directors of the
Company without any further liability or obligation on the part of the Company
to make further contributions to any trust maintained under any such Employee
Program following such termination and the Company has not made any written or
oral representations to the contrary to its employees.
(g) For purposes of this SECTION 3.23:
(i) "Employee Program" means (a) all employee benefit plans
within the meaning of ERISA Section 3(3), including, but not limited to,
multiple employer welfare arrangements (within the meaning of ERISA Section
3(40)), plans to which more than one unaffiliated employer contributes and
employee benefit plans (such as foreign or excess benefit plans) which are not
subject to ERISA; and (b) all stock option plans, bonus or incentive award
plans, severance pay policies or agreements, deferred compensation agreements,
supplemental income arrangements, vacation plans, and all other employee benefit
plans, agreements, and arrangements not described in subsection (a) above. In
the case of an Employee Program funded through an organization described in Code
Section 501(c)(9), each reference to s
