Fill and Sign the Merger Agreement Sample Form

MERGER AGREEMENT This Merger Agreement ("Agreement") dated as of _____ day of ________, 20___ is made by and among __________________, a ________________ corporation (hereinafter referred to as "__________________"), __________________ (hereinafter "Guarantors"), __________________ a ________________ corporation (hereinafter referred to as "__________________"), __________________, a ________________ limited liability company (hereinafter referred to as "__________________ "), and __________________ and __________________ (hereinafter sometimes collectively referred to as the "__________________"). RECITALS: (a) __________________ is a corporation duly organized and validly existing under the laws of the State of ________________ operating a pallet manufacturing and distribution business in the States of ________________ and _______________. (b) __________________ is a corporation duly organized and validly existing under the laws of the State of ________________, all issued and outstanding shares of which are owned by the __________________. (c) __________________ is a limited liability company duly organized and validly existing under the laws of the State of ________________, having as its members the __________________. (d) __________________ operates a sawmill facility and a manufacturing facility located at __________________, __________________, ________________ (the "Facilities"). __________________ owns the Facilities and the real properties on which the Facilities are located, as described in Exhibit "A" attached hereto and incorporated herein by reference (the "Premises"). - 1 - (e) The __________________ desire to offer and sell to __________________ all of the shares of __________________ owned by the __________________ (the "National Stock") in consideration of stock and obligations of __________________ so that __________________ shall be merged into __________________ as hereinafter set forth. (f) __________________ desires to lease to __________________ the Facilities and Premises as hereinafter set forth. (g) The respective boards of directors of __________________, __________________ and __________________ deem it advisable to enter into this Agreement and have, by resolutions duly adopted, approved this Agreement. NOW, THEREFORE, in consideration of the premises and the representations, covenants and agreements herein contained, the parties hereto hereby agree as follows: ARTICLE I PLAN OF MERGER OF __________________ INTO __________________ SECTION 1.1. Merger . __________________ shall be merged into __________________ pursuant to the terms hereinafter set forth (the "Merger"). SECTION 1.2. Terms of Merger . The terms of the Merger are: (a) __________________ shall be merged into __________________ in accordance with the statutory procedure set forth in ________ Code Ann. §__________, et seq. (b) __________________ shall be the surviving corporation and the corporate identity, existence, purposes, powers, franchises, rights and immunities of __________________ shall continue unaffected and unimpaired by the Merger. The single corporation which shall so survive the Merger is hereinafter sometimes called the "Surviving Corporation." The Articles of Incorporation and the By-Laws, each as heretofore amended, of __________________ shall remain in effect, unaltered by the Articles of Incorporation and the By-Laws of the Surviving - 2 - Corporation. A copy of the Articles of Incorporation and By-Laws of the Surviving Corporation are attached hereto as Exhibit 1.2(b). (c) The directors and officers of the Surviving Corporation shall be the duly qualified and acting directors and officers of __________________ immediately prior to the Effective Date of the Merger. (d) The corporate identity, existence, purposes, powers, franchises, rights and immunities of __________________ shall be merged into __________________, and __________________ shall be fully vested therewith. (e) The separate existence of __________________, except insofar as specifically otherwise provided by law, shall cease at the Effective Date, whereupon __________________ and __________________ shall become a single corporation. (f) The name of the Surviving Corporation shall be __________________. (g) At the Effective Date, all of the outstanding common shares of __________________ shall be converted into shares and obligations of __________________ as hereinafter set forth. SECTION 1.3. Basis of Exchange . The manner and basis of converting the shares of __________________ into shares and obligations of __________________ shall be as follows: (a) The outstanding shares of __________________ shall not be changed or converted as a result of the Merger, and following the Effective Date, all shares of __________________ heretofore authorized shall be authorized shares of the Surviving Corporation, and all shares of __________________ then outstanding shall remain outstanding, shall be fully paid and non-assessable by __________________, and shall be subject to all the provisions of this Plan of Merger. - 3 - (b) At the Effective Date, the shares of __________________ of which the __________________ are the holders of record, upon surrender to __________________ of one or more certificates of such shares for cancellation, shall thereupon be exchanged and/or converted as follows: i. The 150 common shares of __________________ owned by __________________ shall be entitled to receive ________ shares of Common Stock of __________________ and an interest in the Initial Note; ii. The 50 common shares of __________________ owned by __________________ shall be entitled to receive ________ shares of Common Stock of __________________ and an interest in the Initial Note; iii. The 55 common shares of __________________ owned by __________________ shall be entitled to receive _______ shares of Common Stock of __________________ and an interest in the Initial Note; iv. The 45 common shares of __________________ owned by __________________ shall be entitled to receive an interest in the Initial Note, an interest in the Cash Payment and an interest in the Promissory Note; v. The 150 common shares of __________________ owned by __________________ shall be entitled to receive an interest in the Initial Note, an interest in the Cash Payment and an interest in the Promissory Note; and, vi. The 50 common shares of __________________ owned by __________________ shall be entitled to receive an interest in the Initial Note, an interest in the Cash Payment and an interest in the Promissory Note. When used in this Agreement, "Common Stock" shall mean common shares of __________________. SECTION 1.4. Shareholders Approval . Upon approving this Agreement, the Board of Directors of __________________ and of __________________, respectively, shall, by resolution, direct that this Plan of Merger and Articles of Merger be submitted, pursuant to statute to a vote at special meetings of shareholders of __________________ and __________________, respectively, to be held on or before _________, 20____. The form of the Articles of Merger is attached hereto as Exhibit 1.4. - 4 - SECTION 1.5. Stock of Surviving Corporation . On the Effective Date of the Merger, the total amount of Common Stock of the Surviving Corporation to be authorized, and the number and manner by which the issued and outstanding shares of Common Stock is to be held, will be as follows: SHAREHOLDER NUMBER OF SHARES (%) __________________ _________ (10.00%) __________________ _________ (10.00%) SECTION 1.6. Assumption of Equipment Leases . Under the terms and subject to the conditions herein, __________________ agrees to assume liability for the outstanding leases relating to two (2) Viking Turbo Max nailing machines used by __________________ in its business (the "Equipment Leases"). On the Effective Date, __________________ shall pay One Hundred Thousand Dollars ($100,000.00) (the "Equipment Lease Payment") to the holder of the Equipment Leases in order to obtain the release of the __________________ as personal guarantors of the Equipment Leases. The Equipment Lease Payment shall be used to reduce the balance of payments owed with respect to the Equipment Leases. The parties agree that, for the purposes of this Agreement, the Equipment Leases liability being assumed by __________________ after payment of the Equipment Lease Payment will be Three Hundred Five Thousand Dollars ($305,000.00)(the "Equipment Leases Assumption"). SECTION 1.7. Inventory Valuation and Note . The parties agree and acknowledge that __________________ is now and on the Effective Date will be possessed of certain inventories of raw materials, supplies, work-in-progress and finished products (the "Inventory"). The parties agree that for purposes of this Agreement, the value of the inventory as of the Effective Date is and will be Two Hundred Thousand Dollars ($200,000.00)(the "Inventory Value"). The Inventory Value shall be paid as follows: - 5 - (a) __________________ shall execute a Promissory Note to __________________, or to such persons or entities as it may designate, in the principal amount of the Inventory Value, bearing interest at the rate of eight percent (8%) per annum from and after the Effective Date, with principal and interest payable in three consecutive equal monthly installments with the first installment being due forty-five (45) days after the Effective Date (the "Inventory Note"). The Inventory Note shall be in the form of Exhibit "1.7(a)" attached hereto. SECTION 1.8. Note to all __________________. __________________ shall execute and deliver a promissory note payable to all of the __________________, or to such entity owned by them as they may designate, in the principal amount of One Hundred Thousand Dollars ($100,000.00), bearing interest at the rate of eight percent (8%) per annum, and payable in ten (10) consecutive equal monthly installments of $________________ each, with the first installment being due thirty (30 days after the Effective Date (the "Initial Note"). The Initial Note shall be in the form of Exhibit "1.8" attached hereto. SECTION 1.9. Cash Payment and Promissory Notes to George __________________, __________________. (a) As used herein, the term "Transaction Event" means (i) a merger or consolidation of __________________ with or into any individual, partnership, joint venture, corporation, trust, unincorporated organization or a government or any agency thereof, if either (a) __________________ is not the surviving entity of such merger or consulation or (b) the ownership percentage of __________________ would be reduced or extinguished as a result of such merger or consolidation; (ii) a sale or disposition of all or substantially all of the assets of __________________ in a single transaction or a series of transactions, including any liquidation or dissolution of __________________; (ii) a sale or other disposition of all or - 6 - substantially of the capital stock of __________________ in a single transaction or a series of transactions; or (iv) a public offering and sale pursuant of one or more effective registration statements under the Securities Act of 1933, as amended, of at least 50% of the number of then outstanding shares of common stock of __________________; (v) any stock split, reverse stock split, recapitalization, redemption, reorganization or other action which reduces or extinguishes the percentage of stock ownership of __________________ in __________________. (b) __________________ shall pay__________________, and __________________the sum of Two Hundred Sixty-Four Thousand Dollars ($264,000.00) (the "Cash Payment"), which sum shall be paid by __________________ as follows: i. __________________ shall pay the sum of Thirty-nine Thousand Three Hundred Fifty-eight and no/100 Dollars ($39,358.00) to GEORGE DAN MARTIN, on the Effective Date; and, ii. __________________ shall pay the sum of Forty Thousand One Hundred Sixty and 50/100 Dollars ($40,160.50) to MARIANNA MARTIN, on the Effective Date; and, iii. __________________ shall pay the sum of One Hundred Twenty Thousand Four Hundred Eighty-one and 50/100 Dollars ($120,481.50) to MARCUS MARTIN, on the Effective Date; and, iv. __________________ shall pay the sum of Twelve Thousand Five Hundred Ninety-four and 47/100 Dollars ($12,594.47) to GEORGE DAN MARTIN, within thirty (30) days after the Effective Date; and, v. __________________ shall pay the sum of Twelve Thousand Eight Hundred Fifty-one and 50/100 Dollars ($12,851.50) to MARIANNA MARTIN, within thirty (30) days after the Effective Date; and. vi. __________________ shall pay the sum of Thirty-eight Thousand Five hundred Fifty-four and 03/100 Dollars ($38,554.03) to MARCUS MARTIN, within thirty (30) days after the Effective Date. The parties agree that if the amounts provided for in Section 1.9(c)(iv) through (vi) shall not be paid when due, said amounts shall bear interest at the Default Rate, as defined herein, from the Effective Date until paid in full. (c) __________________ shall execute and deliver a promissory note to __________________ in the principal sum of Two Hundred Eighteen Thousand Forty-seven and - 7 - 53/100 Dollars ($218,047.53), bearing interest at the initial rate of eight percent (8%) per annum but providing for interest at the Default Rate should any default occur, and payable in sixty (60) equal monthly installments, with the first installment due thirty (30) days after the Effective Date (the "Dan Note"). The __________________n Note shall be substantially in the form of Exhibit "1.8(d)" attached hereto. (d) __________________ shall execute and deliver a promissory note to __________________ in the principal sum of Two Hundred Forty-six Thousand Nine Hundred Eighty-eight and no/100 Dollars ($246,988.53), bearing interest at the initial rate of eight percent (8%) per annum but providing for interest at the Default Rate should any default occur, and payable in sixty (60) equal monthly installments, with the first installment due thirty (30) days after the Effective Date (the "__________________ Note"). The Marianna Note shall be substantially in the form of collective Exhibit "1.8(e)" attached hereto. (e) __________________ shall execute and deliver a promissory note to __________________ in the principal sum of Seven Hundred Forty Thousand Nine Hundred Sixty-four and 47/100 Dollars ($740,964.47), bearing interest at the initial rate of eight percent (8%) per annum but providing for interest at the Default Rate should any default occur, and payable in sixty (60) equal monthly installments, with the first installment due thirty (30) days after the Effective Date (the "__________________ Note"). The __________________ Note shall be substantially in the form of collective Exhibit "1.8(f)" attached hereto. (f) If a Transaction Event shall occur prior to the date that the final payments are due under the __________________ Note, __________________ Note and __________________ Note, or any of them, all principal and interest payable pursuant to each of said promissory notes shall be immediately due and payable. - 8 - (g) __________________' obligations under the __________________ Note, __________________ Note and __________________ Note shall be secured by a blanket security interest, in favor of the holders of said promissory notes, in and all goods, inventory, receivables, equipment, machinery, furniture, fixtures, vehicles, chattel, chattel paper, after acquired property and intangibles owned by __________________, wherever located, including any proceeds, products, substitutions, or accessions in connection therewith, which security interest shall be subordinated to the security interest in favor of __________________. __________________ shall execute all documents necessary to grant the holders such security interest, including a security agreement, in a form satisfactory to __________________. That Security Agreement shall include a provision allowing __________________ to substitute collateral of equal or greater value for collateral that becomes outdated, in need of repair, or otherwise not useful to __________________. SECTION 1.10 Default Rate. SECTION 1.11. Earnest Money Deposit . The parties acknowledge that __________________ has delivered unto the __________________ the sum of Ten Thousand Dollars ($10,000.00) as earnest money deposit (the "Deposit"). In the event the transactions in the Agreement close, the Deposit shall be applied and credited to the first installment due under the Initial Note. However, if the transactions contemplated by this Agreement fail to close in the time and manner provided herein due to no fault of __________________, then the Deposit shall be immediately returned to __________________. SECTION 1.12. Excluded Assets . The parties acknowledge and agree that the following assets of __________________, which have been reelected on the financial statements - 9 - provided to __________________ by __________________ will be transferred to __________________ prior to or on the Effective Date (the "Excluded Assets"): (a) Cash on hand on the Effective Date; (b) Accounts receivable existing prior to Effective date; (c) Refundable taxes, utility deposits and prorated prepaid insurance premiums; (d) Any future rebates arising out of favorable loss experience, prior to the Effective Date, which may accrue to __________________ from insurance policies, including, without limitation, __________________'s participation in a self-insured worker's compensation fund. (e) All real property owned by __________________, including, without limitation, the Premises and the Facilities; (f) All life insurance owned by __________________. SECTION 1.13. Effective Date . The Merger shall become effective upon filing of the Articles of Merger with the Secretary of State of ________________ (the "Effective Date"). __________________ shall cause such articles to be so filed and recorded within 48 hours after this Plan of Merger shall have been approved by the shareholders of both __________________ and __________________, as provided by statute. If at any time before the Articles of Merger have been so filed and recorded, either __________________ or __________________ shall notify the other, pursuant to the provisions of Section 1.11 hereof, of its election to cancel the Merger, this Plan of Merger shall be null and void and the Merger shall not be effective, and __________________ shall not thereafter file or record the such Articles of Merger. SECTION 1.14. Cancellation of Plan . __________________ or __________________ may, in their sole discretion, cancel this Plan of Merger and abandon the Merger at anytime prior to the Effective Date (?Time), by delivering written notice thereof to the other party if it shall appear at such time that any of the statements or representations made by - 10 - the other party is untrue or inaccurate in any material respect, or that any of the conditions or undertakings set forth in this Agreement are not met or fulfilled. SECTION 1.15. Reason for Merger . The directors of __________________ and __________________ believe that the combination of __________________'s business with __________________' business will result with better integrated as well as more diversified operations. __________________'s business will provide an important supplement to __________________' activities in __________________ manufacturing and sales. __________________'s sawmill operation will also be beneficial to __________________' manufacturing operations. Another important reason for the Merger is the common interest of __________________ and __________________ in pallet manufacturing and sales. SECTION 1.16. Further Instruments . From time to time, as and when reasonably requested by the Surviving Corporation, __________________ and the __________________ shall execute deliver, or cause to be executed and delivered, all such other instruments, and will take or cause to be taken such further or other action as the Surviving Corporation may deem necessary or desirable in order to vest in and confirm to the Surviving Corporation title to and possession of all property, rights, privileges, powers and franchises and otherwise to carry out the intent and purposes of this Agreement. ARTICLE II OTHER TRANSACTIONS SECTION 2.1. Employment Agreements . At Effective Date, _________________ and __________________ shall execute agreements for employment of said individuals by __________________ in the forms attached hereto as collective Exhibit "2.1" (hereinafter collectively the "Employment Agreements"). - 11 - SECTION 2.2. Lease Agreement . At Effective Date, __________________ and __________________ shall execute an agreement for lease of the Facilities and Premises by __________________ in the form attached hereto as Exhibit "2.2". SECTION 2.3. Lease Agreement . At Effective Date, all shareholders of __________________ shall execute a Shareholders' Agreement in the form attached hereto as Exhibit "2.3". ARTICLE III REPRESENTATIONS AND WARRANTIES OF __________________ AND THE __________________ __________________ and the __________________, jointly and severally, hereby represent and warrant to __________________ that as of the date of this Agreement and at the Effective Date: SECTION 3.1. Organization and Good Standing . __________________ is a corporation duly organized, validly existing and in good standing under the laws of the State of ________________, and has full corporate power and authority to own and hold the properties and assets owned and leased by it, to conduct its business as presently conducted, and to carry out the transactions described in this Agreement. SECTION 3.2. Capitalization . All shares of __________________ are owned by the __________________ free and clear of all liens, claims and encumbrances, and there are no outstanding subscriptions, calls, commitments, warrants or options for the purchase of any capital stock or other securities of __________________ or any securities convertible into or exchangeable for shares of capital stock or other securities of __________________. The aggregate number of shares that __________________ is authorized to issue is 500, - 12 - consisting of 500 common shares with a par value $10.00 per share, of which 500 shares are issued and outstanding as follows: SHAREHOLDER NUMBER HELD SECTION 3.3. Authority . __________________ has the requisite corporate power and authority to enter into this Agreement and to carry out its obligations hereunder. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by __________________'s Board of Directors, and no other corporate proceedings on the part of __________________ are necessary to authorize this Agreement and the transactions contemplated hereby, except as set forth herein. This Agreement has been duly executed and delivered by and constitutes a valid and binding agreement of __________________. SECTION 3.4. Non-Contravention . __________________ is not subject to or obligated under any charter, by-law or contract provision, or any license, franchise or permit, or any order or decree, which would be breached or violated or in respect of which a right of acceleration would be created by its executing and carrying out this Agreement. SECTION 3.5. Absence of Undisclosed Liabilities . Except as and to the extent reflected in Exhibit "3.5" attached hereto, __________________ has no known liabilities, claims, suits or obligations and __________________ is not subject to any pending action, order, injunction, judgment, litigation, proceeding, arbitration action, governmental audit or investigation, nor is __________________, or any of its directors or officers, or the __________________, or any of them, aware of any threatened action, litigation, proceeding, arbitration action, governmental audit or investigation. The __________________, jointly and severally, hereby agree to indemnify and hold harmless __________________ and its affiliates, directors, officers and shareholders from and against any and all costs, losses, liabilities, - 13 - damages, claims or expenses (including reasonable attorney fees) incurred by __________________ arising out of or resulting from any liability, claim or obligation not specifically reflected in Exhibit "3.5" attached hereto or otherwise expressly assumed by __________________ herein. SECTION 3.6. Freedom from Encumbrance . Consummation of the transactions herein contemplated and the fulfillment of the terms of this Agreement will not conflict with, or result in a breach of, any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the assets of __________________ pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which __________________ or the __________________ is a party or by which either of them may be bound or to which any of the assets is subject. SECTION 3.7. Merchantable Title . __________________ has good, merchantable and insurable title to all the assets it owns or uses in its business or purports to own, including, without limitation, those reflected in its books and records and in the financial statements and balance sheets provided by __________________ to __________________. Except as and to the extent reflected in Exhibit "3.7" attached hereto, none of such properties and assets of __________________ are subject to any known mortgage, pledge, lien, charge, security interest, encumbrance, restriction, lease, license, easement, liability or adverse claim. SECTION 3.8. Business Activity of __________________. The sole business location of __________________ is at __________________, __________________, ________________ and the sole business conducted by __________________ is a sawmill operation and a and facility. The __________________ do not have an interest and are not involved in any other wooden pallet manufacturing and distribution business. - 14 - SECTION 3.9. Compliance with Law . To the best knowledge of __________________ and the __________________, __________________ has not violated and is in compliance with all laws, statutes, ordinances, regulations, rules and orders of any federal, state or local government and any other governmental department or agency, and any judgment, decision, decree or order of any court of governmental agency, department, or authority, including without limitation, environmental laws, relating to the assets of __________________, except where the violation or failure to comply, individually or in the aggregate, would not have a material adverse effect on __________________. Neither __________________ nor the __________________ has received any notice to the effect that, or otherwise been advised that, __________________ is not in compliance with any such statutes, regulations, rules, judgments, decrees, orders, ordinances or other laws, and neither __________________ nor the __________________ has reason to anticipate that any existing circumstances are likely to result in violations of any of the foregoing which failure or violation could, in any one case or in the aggregate, have a material adverse effect on __________________. SECTION 3.10. No Agreements to Sell the Assets . Neither __________________ nor the __________________ has any commitment or legal obligation, absolute or contingent, to any other person or firm to, directly or indirectly, sell, assign, transfer or effect a sale of the property and assets of __________________ or to enter into any agreement or cause the entering into of an agreement with respect to any of the foregoing. SECTION 3.11. Books and Records . None of the books, records and work papers of __________________ which have been presented to __________________ for review contain information which __________________ or the __________________ know to be untrue or materially incorrect or misleading. - 15 - SECTION 3.12. Tax Matters . (a) To the best knowledge of __________________ and the __________________, (i) __________________ has duly and timely filed with the appropriate federal, state, local and other government agencies, all tax records and reports required to be filed; (ii) such returns and reports are accurate and complete, except for certain reports due on _____________, 19__________________, which will be filed by __________________ on or before ________________, 20___; and (iii) __________________ has duly and timely paid in full or recorded adequate reserves for the payment of all taxes due with respect to its assets, income and operations for the fiscal periods covered by such returns. For the purposes of this Agreement, the term "Tax" includes, without limitation, excise, income, franchise, real and personal property, sales, use, and employment taxes, assessments, deficiencies, liabilities, offsets by adjustments or credits, and all interest and penalties thereon, payable to federal, state, local or foreign tax authorities. To the best knowledge of __________________ and the __________________, __________________ has made all withholdings of tax required to be made under all applicable federal, state and local tax regulations and such withholdings have either been paid to the respective government agencies or set aside in accounts for such purpose or accrued, reserved against and entered upon its books, as the case may be. (b) __________________ has determined and, according to its calculations, fully paid or accrued its federal income tax liabilities for all fiscal years prior to and including the fiscal year ending __________ ___________, 20__. __________________ has not executed or filed with any taxing authority any writing having the effect of extending the period of assessment or collection of any taxes. With respect to the fiscal year ended __________ ___________, 20___, __________________ and the __________________ are not aware of any - 16 - tax liability other than that set forth in the records and books of __________________, or previously disclosed in writing to __________________. SECTION 3.13. Employment Matters . There are no material controversies pending or threatened between __________________ and any of its employees. Without limiting the generality of any other representation, to the best knowledge of __________________ and the __________________, __________________ has, and on the Effective Date will have, complied with all laws relating to the employment of labor, including any provisions thereof relating to wages, hours, collective bargaining and the payment of social security and similar taxes and benefits for employees and former employees, and __________________ is not liable to any person or entity (including any governmental entity) for any arrears of wages, payments, taxes or penalties for failure to comply with any of the foregoing, or for any liability loss, claim or damage in connection with any employment benefit, pension, annuity, profit-sharing, retirement, deferred compensation, welfare, vacation or bonus plan, contract or arrangement. To the best knowledge of __________________ and the __________________, none of the employees of __________________ is a member of a labor union, and there is no organization effort currently being made or threatened involving any employee of __________________. On the Effective Date, __________________ will not be a party to any employment contract which is not terminable at will. SECTION 3.14. Disclosure of Tangible Assets . To the extent reasonably feasible, __________________ has heretofore delivered to __________________ descriptions of all assets of __________________ as of the date hereof. In the case of any asset leased by __________________, the disclosure also includes the current name and address of the Lessor and a copy of the lease agreement. - 17 - SECTION 3.15. Unaudited Financial Statements . To the best knowledge of __________________ and the __________________, the unaudited financial statements of __________________ for the periods beginning _____________, 20___ and ending __________ ___________, 20____, present fairly the financial position and results of operations and changes in financial position of __________________ at the date and for the period to which they apply. Said statements and related notes have been prepared in accordance with generally accepted accounting principles applied on a basis which is consistent during the period involved. To the extent such statements have not been prepared in accordance with GAAP, such variances have been fully explained and or documented to the satisfaction of the chief executive officer of __________________. SECTION 3.16. Change in Condition . Except as disclosed herein, subsequent to __________ ___________, 20____, the latest period for which the financial statements have been prepared, _________________ has not incurred any material liabilities or material obligations, direct or contingent, not in the ordinary course of business, or entered into any transaction not in the ordinary course of business, or any adverse change or any development involving, so far as __________________ or the __________________ can now reasonable foresee, a perspective adverse change in the condition (financial or other), net worth, results of operations, business, key personnel, customers, suppliers of equipments, inventories or services or properties which would - 18 - be material to its business or financial condition other than as disclosed to the chief executive officer of __________________. SECTION 3.17. Environmental Matters . Except as and to the extent reflected in Exhibit 3.17 attached hereto: (a) To the best knowledge of __________________ and the __________________, all Federal, State and local permits, licenses and authorization required for the use and operation of __________________'s business have been obtained and are presently in effect. (b) To the best knowledge of __________________ and the __________________, none of __________________'s assets or the Facilities or the Premises have been used by __________________ to handle, treat, store or dispose of any hazardous or toxic waste or substance other than in the ordinary course of business, nor are any of __________________'s assets or the Facilities or the Premises, including all soils, ground waters and surface waters located on, in or under the Facilities or the Premises, contaminated with pollutants, or other substances which contamination may give rise to a clean-up obligation under any Federal, State or local law, rule, regulation or ordinance, including, but not limited to, the Federal Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. 9601 et seq., and the common law. (c) To the best knowledge of __________________ and __________________, all underground storage tanks located in, on or - 19 - under the Premises are in a state of good condition and repair and have not leaked. (d) To the best knowledge of __________________ and __________________, there are no outstanding violations or any consent decrees entered against __________________ or __________________ regarding environment and use matters, including, but not limited to, matters effecting the emission of air pollutants, the discharge of water pollutants, the management of hazardous or toxic substances or waste, or noise. (e) To the best knowledge of __________________ and __________________, there are no claimed, threatened or alleged violations with respect to any Federal, State or local environmental law, rule, regulation, ordinance, permit, license or authorization, and there are no present discussions with any Federal, State or local governmental agency concerning any alleged violation of environmental laws, rules, regulations, ordinances, permits, licenses or authorizations. (f) To the best knowledge of __________________ and __________________, all operations conducted by __________________ and __________________ on the Facilities and the Premises have been and are in compliance with all Federal, State and local statutes, rules, regulations, ordinances, permits, licenses and authorizations pertaining to environmental control and compliance. - 20 - ARTICLE IV REPRESENTATIONS AND WARRANTIES OF __________________ __________________ and the __________________ jointly and severally represent and warrant to __________________ that as of the date of this Agreement and at the Effective Date: SECTION 4.1. Organization and Good Standing . __________________ is a limited liability company duly organized, validly existing and in good standing under the laws of the State of ________________, and has full power and authority to own and hold the Premises and assets owned and leased by it, and to conduct its business as presently conducted. SECTION 4.2. Authority . __________________ has the requisite power and authority to enter into this Agreement and to carry out its obligations hereunder. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized. This Agreement has been duly executed and delivered by and constitutes a valid and binding agreement of __________________. SECTION 4.3. Non-Contravention . __________________ is not subject to or obligated under any contract provision, or any license, franchise or permit, or any order or decree, which would be breached or violated or in respect of which a right of - 21 - acceleration would be created by its executing and carrying out this Agreement. SECTION 4.4. Title to Premises . __________________ has, and on the Effective Date shall have, good, absolute and clear title to the Facilities and the Premises so that __________________ shall be able to lease the Facilities and Premises to __________________ under the terms and conditions set forth in the Lease Agreement attached hereto as Exhibit "2.1". ARTICLE V REPRESENTATIONS AND WARRANTIES OF __________________ __________________ represents and warrants to __________________ and the __________________ that as of the date of this Agreement and at the Effective Date: SECTION 5.1. Organization and Good Standing . __________________ is a corporation duly organized, validly existing and in good standing under the laws of the State of ________________, and has full corporate power and authority to own and hold the properties and assets owned and leased by it, and to conduct its business as presently conducted. __________________ is a duly qualified, validly existing and in good standing under the laws of each state in which where it does business, including without limitation, the State of __________. SECTION 5.2. Capitalization . All shares of __________________ are owned by __________________ and - 22 - __________________ free and clear of all liens, claims and encumbrances, and there are no outstanding subscriptions, calls, commitments, warrants or options for the purchase of any capital stock or other securities of __________________ or any securities convertible into or exchangeable for shares of capital stock or other securities of __________________, except that __________________ each have options to acquire ten percent (10%) each of the shares of __________________. As of the date of this Agreement, the aggregate number of shares that __________________ is authorized to issue is _________, consisting of _________ common shares, par value $1.00 per share, of which __________ shares are issued and outstanding as follows: SHAREHOLDER NUMBER HELD SECTION 5.3. Authority . __________________ has the requisite corporate power and authority to enter into this Agreement and to carry out its obligations hereunder. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by __________________ Board of Directors, and no other corporate proceedings on the part of __________________ are necessary to authorize this Agreement and the transactions contemplated hereby. This Agreement has been duly executed and delivered by and constitutes a valid and binding agreement of __________________. SECTION 5.4. Non-Contravention . __________________ is not subject to or obligated under any charter, by- law or contract provision, or any license, franchise or permit, or any order or decree, which would be breached or violated or in respect of which a - 23 - right of acceleration would be created by its executing and carrying out this Agreement. SECTION 5.5. Books and Records . None of the books, records and work papers of __________________ which have been presented to __________________ for review contain information which __________________ knows to be untrue or materially incorrect or misleading. SECTION 5.6. Unaudited Financial Statements . The unaudited financial statements for the periods beginning __________, 20_____and ending __________ ___________, 20_____, present fairly the financial position and results of operations and changes in financial position of __________________ at the date and for the period to which they apply. Said statements and related notes have been prepared in accordance with generally accepted accounting principles applied on a basis which is consistent during the period involved. To the extent such statements have not been prepared in accordance with GAAP, such variances have been disclosed on Exhibit 5.6 and fully explained and documented to the satisfaction of the President of __________________. SECTION 5.7. Change in Condition . Subsequent to ___________ _______, 20___, the latest period for which the financial statements have been prepared, __________________ has not incurred any material liabilities or material obligations, direct or contingent, not in the ordinary course of business, or entered into any transaction not in the ordinary course of business, or any adverse change or any development - 24 - involving, so far as __________________ and GUARANTORS can now reasonable foresee, a perspective adverse change in the condition (financial or other), net worth, results of operations, business, key personnel, customers, suppliers of equipments, inventories or services or properties which would be material to its business or financial condition other than as disclosed on Exhibit 5.7. SECTION 5.8. Absence of Undisclosed Liabilities . Except as and to the extent reflected in Exhibit 5.8 attached hereto, __________________ has no known liabilities, claims, suits or obligations and __________________ is not subject to any pending action, order, injunction, judgment, litigation, proceeding, arbitration action, governmental audit or investigation, nor is __________________, or any of its directors or officers, or GUARANTORS, or any of them, aware of any threatened action, litigation, proceeding, arbitration action, governmental audit or investigation. __________________ and GUARANTORS, jointly and severally, hereby agree to indemnify and hold harmless the __________________ and __________________, including its affiliates, partners and managers from and against any and all costs, losses, liabilities, damages, claims or expenses (including reasonable attorney fees) incurred by the __________________ or __________________ arising out of or resulting from any liability, claim or obligation assumed by __________________ herein. SECTION 5.9. Freedom from Encumbrance . Consummation of the transactions herein contemplated and the fulfillment - 25 - of the terms of this Agreement will not conflict with, or result in a breach of, any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the assets of __________________ pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which __________________ or GUARANTORS are a party or by which either of them may be bound. SECTION 5.10. Merchantable Title . __________________ has good, merchantable and insurable title to all the assets it owns or uses in its business or purports to own, including, without limitation, those reflected in its books and records and in the financial statements and balance sheets provided by __________________ to __________________. Except as and to the extent reflected in Exhibit 5.10 attached hereto, none of such properties and assets of __________________ are subject to any known mortgage, pledge, lien, charge, security interest, encumbrance, restriction, lease, license, easement, liability or adverse claim. SECTION 5.11. Business Activity of __________________. The sole business locations of __________________ are at ________________, ________________, ________________ and _________________, ___________________, _____________. SECTION 5.12. Compliance with Law . To the best knowledge of __________________ and GUARANTORS, __________________ has not violated and is in compliance with all laws, - 26 - statutes, ordinances, regulations, rules and orders of any federal, state or local government and any other governmental department or agency, and any judgment, decision, decree or order of any court of governmental agency, department, or authority, including without limitation, environmental laws, relating to the business operations and assets of __________________, except where the violation or failure to comply, individually or in the aggregate, would not have a material adverse effect on __________________. Neither __________________ nor GUARANTORS has received any notice to the effect that, or otherwise been advised that, __________________ is not in compliance with any such statutes, regulations, rules, judgments, decrees, orders, ordinances or other laws, and neither __________________ nor GUARANTORS has reason to anticipate that any existing circumstances are likely to result in violations of any of the foregoing which failure or violation could, in any one case or in the aggregate, have a material adverse effect on __________________. SECTION 5.13. No Agreements to Sell the Assets . Other than in the ordinary course of business, __________________ does not have any commitment or legal obligation, absolute or contingent, to any other person or firm to, directly or indirectly, sell, assign, transfer or effect a sale of the property and assets of __________________ or to enter into any agreement or cause the entering into of an agreement with respect to any of the foregoing. - 27 - SECTION 5.14. Books and Records . None of the books, records and work papers of __________________ which have been presented to __________________ for review contain information which __________________ or the __________________ know to be untrue or materially incorrect or misleading. SECTION 5.15. Tax Matters . (a) To the best knowledge of __________________ and GUARANTORS, (i) __________________ has duly and timely filed with the appropriate federal, state, local and other government agencies, all tax records and reports required to be filed; (ii) such returns and reports are accurate and complete, except for certain reports due on _____________, 20_______, which will be filed by __________________ on or before ________________, 20________; and (iii) __________________ has duly and timely paid in full or recorded adequate reserves for the payment of all taxes due with respect to its assets, income and operations for the fiscal periods covered by such returns. For the purposes of this Agreement, the term "Tax" includes, without limitation, excise, income, franchise, real and personal property, sales, use, and employment taxes, assessments, deficiencies, liabilities, offsets by adjustments or credits, and all interest and penalties thereon, payable to federal, state, local or foreign tax authorities. To the best knowledge of __________________ and GUARANTORS, __________________ has made all withholdings of tax required to be made under all applicable federal, state and local tax regulations and such withholdings have either been paid to the respective - 28 - government agencies or set aside in accounts for such purpose or accrued, reserved against and entered upon its books, as the case may be. (b) __________________ has determined and, according to its calculations, fully paid or accrued its federal income tax liabilities for all fiscal years prior to and including the fiscal year ending ____________ _____, 20______. __________________ has not executed or filed with any taxing authority any writing having the effect of extending the period of assessment or collection of any taxes. With respect to the fiscal year ended __________ ___________, 20_____, __________________ and GUARANTORS are not aware of any tax liability other than that set forth in the records and books of __________________, or previously disclosed in writing to __________________ and the __________________. SECTION 5.16. Employment Matters . There are no material controversies pending or threatened between __________________ and any of its employees. Without limiting the generality of any other representation, to the best knowledge of __________________ and GUARANTORS, __________________ has, and on the Effective Date will have, complied with all laws relating to the employment of labor, including any provisions thereof relating to wages, hours, collective bargaining and the payment of social security and similar taxes and benefits for employees and former employees, and __________________ is not liable to any person or entity (including any governmental entity) for any arrears of wages, payments, taxes or penalties for failure to comply with any of the foregoing, or for any liability loss, claim or damage in - 29 - connection with any employment benefit, pension, annuity, profit-sharing, retirement, deferred compensation, welfare, vacation or bonus plan, contract or arrangement. To the best knowledge of __________________ and GUARANTORS, none of the employees of __________________ is a member of a labor union, and there is no organization effort currently being made or threatened involving any employee of __________________. SECTION 5.17. Disclosure of Tangible Assets . To the extent reasonably feasible, __________________ has heretofore delivered to __________________ descriptions of all assets of __________________ as of the date hereof. In the case of any asset leased by __________________, the disclosure also includes the current name and address of the Lessor and a copy of the lease agreement. SECTION 5.18. Unaudited Financial Statements . To the best knowledge of __________________ and GUARANTORS, the unaudited financial statements of __________________ for the periods beginning _________, 20_____ and ending __________ ___________, 20_____, present fairly the financial position and results of operations and changes in financial position of __________________ at the date and for the period to which they apply. Said statements and related notes have been prepared in accordance with generally accepted accounting principles applied on a basis which is consistent during the period involved. To the extent such statements have not been prepared in accordance with GAAP, such - 30 - variances have been fully explained and or documented to the satisfaction of the President of __________________. SECTION 5.19. Change in Condition . Except as disclosed herein, subsequent to __________ ___________, 20___, the latest period for which the financial statements have been prepared, __________________ has not incurred any material liabilities or material obligations, direct or contingent, not in the ordinary course of business, or entered into any transaction not in the ordinary course of business, or any adverse change or any development involving, so far as __________________ or GUARANTORS can now reasonable foresee, a perspective adverse change in the condition (financial or other), net worth, results of operations, business, key personnel, customers, suppliers of equipments, inventories or services or properties which would be material to its business or financial condition other than as disclosed to the President of __________________. SECTION 5.20. Environmental Matters . Except as and to the extent reflected in Exhibit 5.20 attached hereto: (a) To the best knowledge of __________________ and GUARANTORS, all Federal, State and local permits, licenses and authorization required for the use and operation of __________________' business have been obtained and are presently in effect. (b) To the best knowledge of __________________ and GUARANTORS, none of __________________' assets have been used by __________________ to handle, treat, store or dispose of any hazardous - 31 - or toxic waste or substance other than in the ordinary course of business, nor are any of __________________ assets, including all soils, ground waters and surface waters located on, in or under any real property on which any of __________________' assets are located or on which __________________ conducts any of its business operations, contaminated with pollutants, or other substances which contamination may give rise to a clean-up obligation under any Federal, State or local law, rule, regulation or ordinance, including, but not limited to, the Federal Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. 9601 et seq., and the common law. (c) To the best knowledge of __________________ and GUARANTORS, all underground storage tanks located in, on or under any real property on which any of __________________' assets are located or on which __________________ conducts any of its business operations are in a state of good condition and repair and have not leaked. (d) To the best knowledge of __________________ and GUARANTORS, there are no outstanding violations or any consent decrees entered against __________________ or GUARANTORS regarding environment and use matters, including, but not limited to, matters effecting the emission of air pollutants, the discharge of water pollutants, the management of hazardous or toxic substances or waste, or noise. (e) To the best knowledge of __________________ and GUARANTORS, there are no claimed, threatened or alleged violations - 32 - with respect to any Federal, State or local environmental law, rule, regulation, ordinance, permit, license or authorization, and there are no present discussions with any Federal, State or local governmental agency concerning any alleged violation of environmental laws, rules, regulations, ordinances, permits, licenses or authorizations. (f) To the best knowledge of __________________ and GUARANTORS, all operations conducted by __________________ on any real property which it owns or on which any of __________________' assets are located have been and are in compliance with all Federal, State and local statutes, rules, regulations, ordinances, permits, licenses and authorizations pertaining to environmental control and compliance. SECTION 15.21. "As is" Condition . Except as otherwise provided herein to the contrary, __________________ accepts all assets of __________________ and __________________ acquired through the transactions provided for in this Agreement, including, without limitation, equipment, whether reflected in __________________'s financial statements or otherwise, on an "as is, where is" basis and no warranties, either express or implied, are made by __________________, __________________ or the __________________. ARTICLE VI TERMINATION, AMENDMENT AND WAIVER SECTION 6.1. Termination . This Agreement may be terminated at any time prior to the Effective Date: - 33 - (a) By mutual consent of the __________________, the Board of Directors of __________________ and the Board of Directors of __________________; or (b) By __________________, if at the time of or prior to Effective Date __________________ determines, in its sole discretion, that any representation or warranty of __________________ or the __________________ contained herein is untrue or incorrect in any material respect. (c) By __________________ or the __________________, if at the time of or prior to Effective Date either __________________ or the __________________ determine, in their sole discretion, that any representation or warranty of __________________ or GUARANTORS contained herein is untrue or incorrect in any material respect. SECTION 6.2. Effect of Termination . In the event of termination of this Agreement as provided in this Agreement, this Agreement shall forthwith become void and there shall be no liability on the part of any party hereto, except for the provisions of Sections 8.1, 8.2, 10.3 and 12.8 which shall survive such termination. SECTION 6.3. Amendment . This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto. ARTICLE VII COVENANTS - 34 - SECTION 7.1. __________________ Covenants . __________________ hereby covenants and agrees as follows: (a) That __________________ will at or prior to the Effective Date enter into Employments Agreements with __________________ with terms substantially similar to those shown in Exhibit "2.1" attached hereto. (b) __________________ shall use its best efforts to secure before the Effective Date all necessary consents and approvals needed to satisfy all the conditions precedent to the obligations of __________________ and the __________________ hereunder. (c) __________________ will take all necessary corporate and other actions and use its best effort to obtain all consents, approvals and amendments of agreements required of it to carry out the transactions contemplated by this Agreement and to satisfy the conditions specified herein. (d) __________________ will promptly provide __________________ and the __________________ upon reasonable request any information or documents reasonably necessary for __________________ and the __________________ to make an informed judgment as to the advisability of consummating the transactions contemplated hereby or to verify the representations and warranties of __________________ herein. Until the Effective Date, __________________ shall notify __________________ and the __________________ of any matter which may be materially adverse to - 35 - __________________ and shall keep __________________ and the __________________ fully informed of such events. (e) That __________________ will, at or prior to the Effective Date, enter into the Shareholder Agreement on the terms set forth in Exhibit 7.1 attached hereto. (f) That __________________ will, at or prior to the Effective Date, enter into the Lease Agreements on the terms set forth in Exhibit 7.1(f) attached hereto. (g) That __________________ will, at or prior to the Effective Date, provide the __________________ will a full and absolute release from ________________, releasing the __________________ from all liability, costs and expense related to the Equipment Leases. SECTION 7.2. GUARANTORS Covenants . GUARANTORS hereby covenant and agree: (a) That they will, at or prior to the Effective Date, enter into the Shareholder Agreement on the terms set forth in Exhibit 7.1 attached hereto. (B) That they will, at or prior to the Effective Date, execute the Guaranty Agreement on the terms set forth in Exhibit 7.2 attached hereto. SECTION 7.3. __________________ and the __________________ . __________________ and the __________________, jointly and severally, covenant and agree as follows: - 36 - (a) __________________ and the __________________ shall use their best efforts (i) to ensure an orderly transition with respect to __________________'s business, customers, suppliers and employees and (ii) to preserve for __________________ the goodwill of the suppliers and customers having business relations with __________________ relating to the assets of __________________ or the business conducted at the Facility. (b) __________________ and the __________________ shall use their best efforts to secure before the Effective Date all necessary consents and approvals needed to satisfy all the conditions precedent to the obligations of __________________ and GUARANTORS hereunder. (c) __________________ and the __________________ will take all necessary corporate and other actions and use its best effort to obtain all consents, approvals and amendments of agreements required of it to carry out the transactions contemplated by this Agreement and to satisfy the conditions specified herein. (d) __________________ and the __________________ will provide __________________ upon reasonable request any information or documents reasonably necessary for __________________ to make an informed judgment as to the advisability of consummating the transactions contemplated hereby or to verify the representations and warranties of __________________ and the __________________ herein. Until the Effective Date, __________________ and the __________________ shall notify __________________ of any matter which may be materially - 37 - adverse to __________________ and the __________________ and shall keep __________________ fully informed of such events. SECTION 7.3. __________________ . __________________ covenants and agrees that at or prior to the Effective Date, __________________ will enter into Lease Agreements with __________________ on the terms set forth in Exhibit 2.2 attached hereto. ARTICLE VIII ACCESS AND EXCLUSIVE NEGOTIATING RIGHTS SECTION 8.1. Access of __________________ . During the period from the date of the execution of this Agreement until the Effective Date, __________________ and its representative shall have access to all facilities, equipment, building, personnel, computers, books and records of __________________ relating to __________________'s business and the Premises, and __________________ shall furnish __________________ financial and other data and information requested for the completion of __________________' investigation of __________________'s business. In the event the transactions herein contemplated do not take place, __________________ agrees to keep confidential and not to use for any purpose any proprietary confidential information provided to __________________ by __________________, excluding any information which is otherwise known by or becomes known to __________________ outside of its due diligence investigation - 38 - of __________________ or of __________________'s business or such as is made public. SECTION 8.2. Access of __________________ and the __________________ . During the period from the date of the execution of this Agreement until the Effective Date, __________________ and the __________________, and their representatives shall have access to all facilities, equipment, building, personnel, computers, books and records of __________________ relating to __________________' business, and __________________ shall furnish __________________ financial and other data and information requested for the completion of __________________ and the __________________' investigation of __________________' business. In the event the transactions herein contemplated do not take place, __________________ and the __________________ agree to keep confidential and not to use for any purpose any proprietary confidential information provided to __________________ and the __________________ by __________________, excluding any information which is otherwise known by or becomes known to __________________ or the __________________ outside of its due diligence investigation of __________________ or of __________________' business or such as is made public. SECTION 8.3. Exclusive Negotiating Rights . In consideration of the expenditures of time, effort and expense by __________________ in connection with its review of - 39 - __________________'s operations, __________________ and the __________________ agree that between the date of the execution of this Agreement and the Effective Date they will not enter into nor conduct any discussions with any other prospective purchaser of ___________