AGREEMENT AND PLAN OF MERGER
Among
OAO TECHNOLOGY SOLUTIONS, INC.
ETG ACQUISITION CORPORATION
ENTERPRISE TECHNOLOGY GROUP, INC.
and
EACH OF THE SHAREHOLDERS
OF
ENTERPRISE TECHNOLOGY GROUP, INC.
DATED AS OF NOVEMBER 1, 1998
61
TABLE OF CONTENTS
ARTICLE I THE MERGER.............................................................................5
Section 1.1 The Merger...............................................................5
Section 1.2 Closing..................................................................5
Section 1.3 Effective Time...........................................................5
Section 1.4 Conversion of Securities.................................................6
Section 1.5 Adjustment to Exchange Ratio.............................................6
Section 1.6 Exchange of Securities...................................................7
Section 1.7 Definition of Subsidiary and Affiliate...................................7
ARTICLE II CERTAIN MATTERS RELATING TO THE SURVIVING
CORPORATION..............................................................................7
Section 2.1 Certificate of Incorporation of the
Surviving Corporation....................................................7
Section 2.2 By-Laws of the Surviving Corporation.....................................7
Section 2.3 Directors and Officers of the Surviving Corporation......................7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT
AND MERGER SUB.......................................................................8
Section 3.1 Existence, Good Standing, Corporate
Authority................................................................8
Section 3.2 Authorization, Validity and Effect of
Agreements...............................................................8
Section 3.3 Capitalization...........................................................8
Section 3.4 Parent Reports and Financial Statements..................................9
Section 3.5 No Violation.............................................................9
Section 3.6 No Brokers..............................................................10
Section 3.7 Parent Common Stock.....................................................10
Section 3.8 Interim Operations of Merger Sub........................................10
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SELLING
SHAREHOLDERS.........................................................................10
Section 4.1 Existence, Good Standing, Corporate
Authority...............................................................10
Section 4.2 Authorization, Validity and Effect of
Agreements..............................................................11
Section 4.3 Compliance with Laws....................................................11
Section 4.4 Capitalization..........................................................11
Section 4.5 Subsidiaries............................................................11
Section 4.6 Other Interests.........................................................11
Section 4.7 No Violation............................................................11
Section 4.8 Conduct of Business.....................................................12
Section 4.9 Litigation..............................................................12
Section 4.10 Absence of Certain Changes..............................................12
Section 4.11 Intellectual Property and Software Products.............................13
Section 4.12 Year 2000 Compliance....................................................14
Section 4.13 Properties..............................................................16
Section 4.14 Material Contracts......................................................16
Section 4.15 Taxes...................................................................17
Section 4.16 Employee Benefit Plans..................................................17
Section 4.17 Labor Matters...........................................................17
Section 4.18 Absence of Indemnifiable Claims, etc....................................17
Section 4.19 No Brokers..............................................................17
Section 4.20 Financial Condition.....................................................18
Section 4.21 Liabilities.............................................................18
Section 4.22 Questionable Payments...................................................18
Section 4.23 Environmental Matters...................................................18
Section 4.24 Insurance...............................................................20
Section 4.25 Full Disclosure.........................................................20
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ARTICLE V COVENANTS.............................................................................20
Section 5.1 Covenant Not to Compete.................................................20
Section 5.2 Confidentiality.........................................................21
Section 5.3 Interim Operations of ETG...............................................21
Section 5.4 Filings; Other Action...................................................22
Section 5.5 Inspection of Records...................................................23
Section 5.6 Further Action..........................................................23
Section 5.7 Expenses................................................................23
Section 5.8 Survival of Representations and Warranties
of The Selling Shareholders.............................................23
Section 5.9 Adjustments.............................................................23
ARTICLE VI CONDITIONS...........................................................................24
Section 6.1 Conditions to Obligation of ETG to
Effect the Merger.......................................................24
Section 6.2 Conditions to Obligation of Parent and
Merger Sub to Effect the Merger.........................................24
ARTICLE VII TERMINATION.........................................................................25
Section 7.1 Termination.............................................................25
Section 7.2 Effect of Termination...................................................25
ARTICLE VIII INDEMNIFICATION
Section 8.1 Obligation of ETG and the Selling Shareholders to
Indemnify...............................................................26
Section 8.2 Obligation of Parent to Indemnify.......................................26
Section 8.3 Notice and Opportunity to Defend........................................26
ARTICLE IX GENERAL PROVISIONS...................................................................27
Section 9.1 Notices.................................................................27
Section 9.2 Assignment, Binding Effect..............................................27
Section 9.3 Entire Agreement........................................................27
Section 9.4 Amendment...............................................................27
Section 9.5 Governing Law...........................................................28
Section 9.6 Counterparts............................................................28
Section 9.7 Headings................................................................28
Section 9.8 Interpretation..........................................................28
Section 9.9 Waivers.................................................................28
Section 9.10 Incorporation of Schedules and Exhibits.................................28
Section 9.11 Severability............................................................28
Section 9.12 Enforcement of Agreement................................................28
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SCHEDULES
Schedule 1 Selling Shareholders
Schedule 4.9 Litigation
Schedule 4.11 Intellectual Property and Software Products
Schedule 4.13(a) Assets and Property Owned by ETG
Schedule 4.13(b) Liens
Schedule 4.13(c) Assets and Property Leased by ETG
Schedule 4.14 Material Contracts of ETG
Schedule 4.16 Employee Benefit Plans
Schedule 4.17 Name, Title and Salary of Employees
Schedule 4.21 Assumed Liabilities
Schedule 4.24 Insurance
EXHIBITS
Exhibit A Registration Rights Agreement
Exhibit B Restricted Securities Letter
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is dated as of November 1, 1998 (the
"Agreement") among OAO Technology Solutions, Inc., a Delaware corporation
("Parent"), ETG Acquisition Corporation, a Delaware corporation and the
wholly-owned subsidiary of Parent ("Merger Sub"), Enterprise Technology Group,
Inc., a Delaware corporation ("ETG"), and each of the shareholders of ETG listed
on Schedule 1 attached hereto (the "Selling Shareholders").
WHEREAS, the parties wish to provide for the terms and conditions upon
which ETG will be acquired by Parent by means of a merger of ETG with and into
Merger Sub;
WHEREAS, it is the intention of the parties to this Agreement that for
federal income tax purposes, the merger provided for herein shall qualify as a
"reorganization" within the meaning of Sections 368(a)(1)(A) and 368(a)(2)(D) of
the Internal Revenue Code of 1986, as amended (the "Code"); and
NOW THEREFORE, in consideration of the premises and of the representations,
warranties, covenants and agreements set forth herein, the parties hereto hereby
agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions of
this Agreement, at the Effective Time (as defined in Section 1.3 of this
Agreement), ETG shall be merged with and into Merger Sub in accordance with the
laws of the State of Delaware and the terms of this Agreement (the "Merger"),
whereupon the separate corporate existence of ETG shall cease, and Merger Sub
shall continue as the surviving corporation of the Merger (Merger Sub, in such
capacity hereinafter sometimes referred to as the "Surviving Corporation"). The
name of Merger Sub as the Surviving Corporation, shall be changed, by virtue of
the Merger, to Enterprise Technology Group, Inc..
Section 1.2 Closing. Subject to the terms and conditions of this Agreement,
the closing of the Merger (the "Closing") shall take place (a) at the offices of
OAO Technology Solutions, Inc., 0000 Xxxxxxxx Xxxxxx Xxxxx, 00xx Xxxxx;
Xxxxxxxxx, XX 00000 at 10:00 a.m. on the first business day after all the
conditions set forth in Article VI of this Agreement (other than those that are
waived by the party or parties for whose benefit such conditions exist) are
satisfied; or (b) at such other place, time, and/or date upon which the parties
hereto may otherwise agree. The date upon which the Closing shall occur is
referred to herein as the "Closing Date."
Section 1.3 Effective Time. As soon as practical after all the conditions
to the Merger set forth in Article VI of this Agreement have been fulfilled or
waived and this Agreement shall not have been terminated as provided in Article
VII hereof, the parties hereto shall cause a certificate of merger to be
properly executed and filed in accordance with the laws of the State of Delaware
and the terms of this Agreement. The parties hereto shall also take such further
actions as may be required under the laws of the State of Delaware in connection
with the consummation of the Merger. The Merger shall become effective at such
time as the certificate of merger is duly filed with the Secretary of State of
the State of Delaware or at such later time as is specified in the certificates
of merger (the "Effective Time"). From and after the Effective Time, the
Surviving Corporation shall possess all the rights, privileges, powers and
franchises and be subject to all of the restrictions, disabilities, liabilities
and duties of ETG and Merger Sub, all as provided under applicable law.
Section 1.4 Conversion of Securities. At the Effective Time, by virtue of
the Merger and without any action on the part of Parent, Merger Sub, ETG or the
holder of any of the following securities:
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(a) ETG Common Stock. Subject to Section 1.6, each share of Common
Stock par value $ .10 per share of ETG (the "ETG Common Stock") issued and
outstanding immediately prior to the Effective Time shall be converted into
the right to receive 222.222 validly issued, fully paid and non-assessable
shares of Common Stock, par value $.01 per share, of Parent (the "Parent
Common Stock") (such ratio, as adjusted as contemplated pursuant to Section
1.5 being referred to herein as the "Exchange Ratio"). No fractional shares
shall be issued. All such shares of ETG Common Stock shall no longer be
outstanding and shall automatically be cancelled and shall cease to exist,
and each member shall cease to have any rights with respect thereto, except
the right to receive the shares of Parent Common Stock to be issued
pursuant to this Section 1.4 with respect thereto upon the surrender of
such interests in accordance with Section 1.6.
(b) ETG Stock Owned by ETG. All shares of ETG which immediately prior
to the Effective Time are held directly by ETG in its treasury, if any,
shall be cancelled and retired and shall cease to exist, and no capital
stock of Parent or other consideration shall be delivered with respect
thereto.
(c) Merger Sub Common Stock. Each share of capital stock of Merger Sub
issued and outstanding immediately prior to the Effective Time shall remain
outstanding and shall continue as one share of capital stock of the
Surviving Corporation and each certificate evidencing ownership of any such
shares shall continue to evidence ownership of the same number and kind of
shares of the Surviving Corporation.
Section 1.5 Adjustment of Exchange Ratio. In the event that, subsequent to
the date of this Agreement but prior to the Effective Time, the outstanding
shares of Parent Common Stock or ETG Common Stock, respectively, shall have been
changed into a different number of shares or interests or a different class as a
result of a stock split, reverse stock split, stock dividend, subdivision,
reclassification, split, combination, exchange, recapitalization or other
similar transaction, the Exchange Ratio shall be appropriately adjusted.
Section 1.6 Exchange of Securities.
(a) Promptly after the Effective Time, Parent shall upon surrender of
the stock certificates representing all of the issued and outstanding
shares of ETG Common Stock, deliver a stock certificate to each of the
Selling Shareholders listed on Schedule 1 hereto representing the number of
shares of Parent Common Stock set forth opposite such Selling Stockholder's
name on Schedule 1.
(b) All shares of Parent Common Stock issued upon conversion of the
ETG Common Stock in accordance with the terms hereof shall be deemed to
have been issued in full satisfaction of all rights pertaining to such ETG
Common Stock.
Section 1.8 Definition of Subsidiary and Affiliate. As used in this
Agreement, (i) a "Subsidiary" of any party means any corporation or other
organization, whether incorporated or unincorporated, of which such party or any
other Subsidiary of such party is a general partner or at least a majority of
the securities or other interests having by their terms ordinary voting power to
elect a majority of the Board of Directors or others performing similar
functions with respect to such corporation or other organization is directly or
indirectly owned or controlled by such party, by any one or more of its
Subsidiaries, or by such party and one or more of its Subsidiaries (ii) an
"Affiliate" of any party means any individual, corporation or other
organization, whether incorporated or unincorporated, which directly or
indirectly controls, or is controlled by, or is under common control with, such
party. The term "control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of any
corporation or other organization, whether incorporated or unincorporated,
whether through the ownership of voting securities, by contract or otherwise.
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ARTICLE II
CERTAIN MATTERS RELATING TO
THE SURVIVING CORPORATION
Section 2.1 Certificate of Incorporation of the Surviving Corporation. The
Certificate of Incorporation of Merger Sub, as in effect at the Effective Time,
shall be the Certificate of Incorporation of the Surviving Corporation until
thereafter amended as provided by law.
Section 2.2 By-laws of the Surviving Corporation. The By-laws of Merger
Sub, as in effect at the Effective Time, shall be the By-laws of the Surviving
Corporation until thereafter amended as provided by law.
Section 2.3 Directors and Officers of the Surviving Corporation. The
directors of Merger Sub immediately prior to the Effective Time shall be the
directors of the Surviving Corporation and all such directors will hold office
from the Effective Time until their respective successors are duly elected or
appointed and qualify in the manner provided in the Certificate of Incorporation
and By-laws of the Surviving Corporation, or as otherwise provided by applicable
law. The officers of Merger Sub immediately prior to the Effective Time shall be
the officers of the Surviving Corporation and all such officers will hold office
until their respective successors are duly appointed and qualify in the manner
provided in the By-laws of the Surviving Corporation, or as otherwise provided
by applicable law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to ETG as of the date hereof
and at the Effective Time as follows:
Section 3.1 Existence, Good Standing, Corporate Authority. Parent and each
of its Subsidiaries are corporations or partnerships duly organized, validly
existing and in good standing under the laws of their respective jurisdiction of
incorporation. Each of Parent and each of its Subsidiaries is duly licensed or
qualified to do business as a foreign corporation or partnership and is in good
standing under the laws of any other state of the United States in which the
character of the properties owned or leased by it or in which the transaction of
its respective business makes such qualification necessary, except where the
failure to be so qualified or to be in good standing would not have a material
adverse effect on the business, results of operations or financial condition of
Parent and its Subsidiaries taken as a whole (a "Parent Material Adverse
Effect"). Parent and each of its Subsidiaries have all requisite corporate power
and authority to own, operate and lease their respective properties.
Section 3.2 Authorization, Validity and Effect of Agreements. Each of
Parent and Merger Sub has the requisite corporate power and authority to execute
and deliver this Agreement and all agreements and documents to be executed and
delivered in connection herewith (the "Ancillary Agreements"). The execution and
delivery of this Agreement (and the agreements contemplated hereby) and the
consummation by Parent and Merger Sub of the transactions contemplated hereby
has been duly authorized by all requisite corporate action. This Agreement
constitutes, and all Ancillary Agreements to be executed and delivered in
connection herewith (when executed and delivered pursuant hereto for value
received) will constitute, the valid and legally binding obligations of Parent
and Merger Sub, enforceable against Parent and Merger Sub in accordance with
their respective terms, subject to applicable bankruptcy, insolvency, moratorium
or other similar laws relating to creditors' rights and general principles of
equity.
Section 3.3 Capitalization. The authorized capital stock of Parent consists
of 25,000,000 shares of Parent Common Stock and 5,000,000 shares of preferred
stock, par value $.01 per share (the "Parent Preferred Stock"). As of November
9, 1998, there were 16,449,649 shares of Parent Common Stock and no shares of
Parent Preferred Stock, issued and outstanding. Since such date no additional
shares of capital
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stock of parent have been issued, except pursuant to the exercise of options
outstanding under Parents' Amended and Restated 1996 Equity Compensation Plan
(the "Parent Stock Option Plan"). Parent has no outstanding bonds, debentures,
notes or other obligations the holders of which have the right to vote (or which
are convertible into or exercisable for securities having the right to vote)
with the stockholders of Parent on any matter. All issued and outstanding shares
of Parent Common Stock are duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights. There are not at the date of this
Agreement any existing options, warrants, calls subscriptions, convertible
securities, or other rights, agreements or commitments which obligate Parent or
any of its Subsidiaries to issue, transfer, redeem or sell any shares of capital
stock of Parent or any of its Subsidiaries except (i) as contemplated by this
Agreement, (ii) pursuant to the Parent Stock Option Plan and (iii) as described
in the Parent Commission Filings (as hereinafter defined).
Section 3.4 Parent Reports and Financial Statements. Parent has heretofore
made available to ETG true and complete copies of all reports, registration,
statements, and other documents (in each case together with all amendments
thereto) filed by Parent with the Securities and Exchange Commission since
October 21, 1997 (such reports, registration statements, definitive proxy
statements and other documents, together with any amendments thereto, are
sometimes collectively referred to as the "Parent Commission Filings"). As of
their respective dates, each of the Parent Commission Filings complied in all
material respects with the applicable requirements of the Securities Act of
1993, as amended, the Exchange Act of 1934, as amended and the rules and
regulations under each such Act, and none of the Parent Commission Filings and
no representation or warranty by Parent or Merger Sub in this Agreement and the
Ancillary Agreements contained as of such date any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
Section 3.5 No Violation. Neither the execution and delivery by Parent and
Merger Sub of this Agreement, nor the consummation by Parent and Merger Sub of
the transactions contemplated hereby in accordance with the terms hereof, will
(a) conflict with or result in a breach of any provisions of the Restated
Certificate of Incorporation or the Amended and Restated Bylaws of Parent or any
of its Subsidiaries; (b) result in a breach or violation of, a default under, or
the triggering of any payment or other material obligations pursuant to, or
accelerate vesting under, the Parent Stock Option Plan, or any grant or award
made under the foregoing; (c) violate, conflict with, result in a breach of any
provision of, constitute a default (or an event which, with notice or lapse of
time or both, would constitute a default) under, result in the termination, or
in a right of termination or cancellation of, accelerate the performance
required by, result in the triggering of any payment or other material
obligations pursuant to, result in the creation of any lien, security interest,
charge or encumbrance upon any of the material properties of Parent or its
Subsidiaries under, or result in being declared void, voidable, or without
further binding effect, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust or any material license, franchise,
permit, lease, contract, agreement or other instrument, commitment or obligation
to which Parent or any of its Subsidiaries is a party, or by which Parent or any
of its Subsidiaries or any of their respective properties is bound or affected,
except for any of the foregoing matters which would not have a Parent Material
Adverse Effect; (d) contravene or conflict with or constitute a violation of any
provision of any law, regulation, judgment, injunction, order or decree binding
upon or applicable to Parent or any of its Subsidiaries which would have a
Parent Material Adverse Effect; or (e) other than the filings provided for in
Section 1.3, filings under applicable federal, state and local regulatory laws,
filings required under the Exchange Act, the Securities Act, the NASD, or
applicable state securities and "Blue Sky" laws or filings in connection with
the maintenance of qualification to do business in other jurisdictions
(collectively, the "Regulatory Filings"), require any material consent, approval
or authorization of, or declaration, of or registration with, any domestic
governmental or regulatory authority, the failure to obtain or make would have a
Parent Material Adverse Effect.
Section 3.6 No Brokers. Parent has not entered into any contract,
arrangement or understanding with any person or firm which may result in the
obligation of ETG or Parent to pay any finder's fee, brokerage or agent's
commissions or other like payment in connection with the negotiations leading to
this Agreement or the consummation of the transactions contemplated hereby.
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Section 3.7 Parent Common Stock. The issuance and delivery by Parent of
shares of Parent Common Stock in connection with the Merger and this Agreement
have been duly and validly authorized by all necessary corporate action on the
part of Parent. The shares of Parent Common Stock to be issued in connection
with the Merger and this Agreement, when issued in accordance with the terms of
this Agreement, will be validly issued, fully paid and nonassessable and not
subject to preemptive rights of any sort.
Section 3.8 Interim Operations of Merger Sub. Merger Sub will be formed
solely for the purpose of engaging in the transactions contemplated hereby, and
immediately prior to the Effective Time will have engaged in no other business
activities, will have no Subsidiaries, and will have conducted its operations
only as contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS Each of the
Selling Shareholders jointly and severally hereby represent and warrant to
Parent as of the date hereof and at the Effective Time as follows:
Section 4.1 Existence, Good Standing, Corporate Authority. ETG is a
corporation duly organized, validly existing and in good standing under the laws
of Delaware. ETG is duly licensed or qualified to do business as a foreign
corporation or partnership and is in good standing under the laws of any other
state of the United States in which the character of the properties owned or
leased by it or in which the transaction of its respective business makes such
qualification necessary, except where the failure to be so qualified or to be in
good standing would not have a material adverse effect on the business, results
of operations or financial condition of ETG (a "ETG Material Adverse Effect").
ETG has all requisite corporate power and authority to own, operate and lease
its properties. The copies of ETG's Certificate of Incorporation and Bylaws
previously delivered or made available to Parent are true and correct.
Section 4.2 Authorization, Validity and Effect of Agreements. ETG has the
requisite corporate power and authority to execute and deliver this agreement
and all agreements and documents to be executed and delivered in connection
herewith. The execution and delivery of this Agreement (and the agreements
contemplated hereby) and the consummation by ETG of the transactions
contemplated hereby has been duly authorized by all requisite corporate action.
This Agreement constitutes, and all agreements and documents to be executed and
delivered in connection herewith (when executed and delivered pursuant hereto
for value received) will constitute, the valid and legally binding obligations
of ETG, enforceable against ETG in accordance with their respective terms,
subject to applicable bankruptcy, insolvency, moratorium or other similar laws
relating to creditors' rights and general principles of equity.
Section 4.3 Compliance with Laws. ETG has complied in all material respects
with each, and is not in violation of any law, ordinance or governmental rule or
regulation necessary to the ownership of its or the operation of the business or
otherwise.
Section 4.4 Capitalization. (a) The authorized capital stock of ETG
consists of 1,000,000 shares of ETG Common Stock and no shares of preferred
stock. As of November 1, 1998, there were 1,000 shares of ETG Common Stock
issued and outstanding. Schedule 1 hereto sets forth the name of each
shareholder of ETG and the shares of ETG Common Stock owned by each such
shareholder. Since November 1, 1998, no additional shares of capital stock of
ETG have been issued. ETG has no outstanding bonds, debentures, notes or other
obligations the holders of which have the right to vote (or which are
convertible into or exercisable for securities having the right to vote) with
the shareholders of ETG on any matter. All outstanding shares of ETG Common
Stock are duly authorized. There are not at the date of this Agreement any
existing options, warrants, calls, subscriptions, convertible securities, or
other rights, agreements or commitments which obligate ETG to issue, transfer,
redeem or sell any shares of capital stock of ETG.
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(b) Each Selling Shareholder is the lawful owner of record and beneficially
of the number of shares of the ETG Common Stock set forth opposite his
respective name in Schedule 1 hereto, free and clear of all pledges, liens,
claims and encumbrances of every kind, including, without limitation, any
agreements, subscriptions, options, warrants, calls, commitments or rights of
any character granting to any person, firm or corporation any interest in or
right to acquire from such Selling Shareholder at any time, or upon the
happening of any event, any shares of the ETG Common Stock. Each Selling
Shareholder has full legal power and all authorization required by law to
transfer and deliver the ETG Common Stock owned by him in accordance with this
Agreement.
Section 4.5 Subsidiaries. ETG does not have any Subsidiaries.
Section 4.6 Other Interests. ETG does not own, directly or indirectly any
interest or investment (whether equity or debt) in any corporation, partnership
joint venture, business, trust or entity.
Section 4.7 No Violation. Neither the execution and delivery by ETG of this
Agreement, nor the consummation by ETG of the transactions contemplated hereby
in accordance with the terms hereof, will (a) conflict with or result in a
breach of any provisions of the Certificate of Incorporation or Bylaws of ETG;
(b) violate, conflict with, result in a breach of any provision of, constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, result in the termination, or in a right of
termination or cancellation of, accelerate the performance required by, result
in the triggering of any payment or other obligations pursuant to, result in the
creation of any lien, security interest, charge or encumbrance upon any of the
properties of ETG under, or result in being declared void, voidable, or without
further binding effect, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust or any material license, franchise,
permit, lease, contract, agreement or other instrument, commitment or obligation
to which ETG is a party, or by which ETG or its properties is bound or affected;
(c) contravene or conflict with or constitute a violation of any provisions of
any law, regulation, judgment, injunction, order or decree binding upon or
applicable to ETG; or (d) other than the Regulatory Filings, required any
consent, approval or authorization of, or declaration, of or registration with,
any domestic governmental or regulatory authority.
Section 4.8 Conduct of Business. The business of ETG is not being conducted
in default or violation of any term, condition or provisions of (a) its
respective Articles of Certificate of Incorporation or By-Laws or similar
organizational documents; (b) any note, bond, mortgage, indenture, contract,
agreement, lease or other instrument or agreement of any kind to which ETG is
now a party or by which ETG or its properties or assets may be bound; or (c) any
federal, state, local or foreign statute, law, ordinance, rule, regulation or
approval applicable to ETG.
Section 4.9 Litigation. Except as disclosed on Schedule 4.9 hereto, there
are no actions, suits or proceedings pending against ETG or threatened against
ETG at law or in equity, or before or by any federal or state commission, board,
bureau, agency or instrumentality.
Section 4.10 Absence of Certain Changes. Since November 1, 1998, ETG has
conducted its business only in the ordinary course of such business, and there
has not been (a) any ETG Material Adverse Effect (b) any declaration, setting
aside or payment of any dividend or other distribution with respect to its
capital stock; or (c) any material change in its accounting principles,
practices or methods, except any such change after the date of this Agreement
required by generally accepted accounting principles.
Section 4.11 Intellectual Property and Software Products.
(a) ETG does not currently use nor has it previously used in the
operation of its business (including in the development, production or
marketing of its products and services) any copyrights, patents or
trademarks except for those listed in Schedule 4.11. ETG owns or has the
lawful right to use all copyrights (registered of unregistered), patents,
patent applications, trademarks, trademark applications, technology rights
and licenses, logos, trade names, Software Products (as defined below),
trade secrets, know-how and other intellectual property (collectively,
"Intellectual Property") that has been used in the
70
operation of its business in the ordinary course or otherwise. All of the
Intellectual Property listed in Schedule 4.11 is owned by ETG, free and
clear of all liens, security interests, charges or encumbrances or used
pursuant to an agreement that is described in Schedule 4.11. The Company
does not infringe upon or unlawfully or wrongfully used any Intellectual
Property rights owned or claimed by any other person. ETG is not in default
and has not received any notice of any claim of infringement or any other
claim or proceeding with respect to any such Intellectual Property. Except
for any rights under written licenses or other written Contracts, no
current or former employee of ETG and no other person owns or has any
proprietary, financial or other interest, direct or indirect, in whole or
in part, and including any right to royalties or other compensation, in any
of the Intellectual Property.
(b) Schedule 4.11 contains a complete list of all of the computer
software products sold, licensed, distributed, marketed, used or under
development by, or licensed to or under development for, ETG (the "Software
Products"). Each of the Software Products performs substantially in
accordance with the specifications, documentation and other written
material used in connection with the sale, license, distribution, marketing
or use thereof and is free of errors and defects in programming and
operation except such defects as would not materially and adversely affect
the use of the respective Software Products for their intended purposes.
(c) Except as specified in Schedule 4.11, all right, title and
interest in and to the Software Products is owned by ETG, free and clear of
all liens, security interests, charges or encumbrances and any of such
Software Products that is not owned is available for use pursuant to an
agreement that is described in Schedule 4.11. No government funding was
utilized in the development of any of the Software Products. The sale,
license, distribution, marketing or use of the Software Products by ETG
does not violate any rights of any other person, and ETG has not received
any communication alleging such a violation. Except as specified in
Schedule 4.11, ETG does not have any obligation to compensate any person
for the sale, license, distribution, marketing or use of the Software
Products. Other than as set forth in Schedule 4.11, ETG has not granted to
any other person any license, option or other right in or to any of the
Software Products, except for non-exclusive, royalty-bearing, end-user
licenses granted by ETG pursuant to license agreements, copies of any of
which have been provided to Parent (the "End-User Licenses").
(d) ETG does not have any obligation owing to any person to maintain,
modify, improve or upgrade any of the Software Products, except for any
such obligation set forth in an End-User License or under a
customer-specific services agreement and such other obligations as would
not, individually or in the aggregate, have a ETG Material Adverse Effect.
(e) All officers of ETG and all employees and consultants of ETG who
are involved in the design, review, evaluation or development of
Intellectual Property have executed a nondisclosure and assignment of
inventions agreement (a "Confidentiality Agreement") sufficient to protect
the confidentiality and value of such items and to vest in ETG exclusive
ownership thereof. To any Selling Shareholder knowledge, (i) none of the
Confidential Information has been used, divulged or appropriated for the
benefit of any person other than ETG or otherwise to detriment of ETG, (ii)
except as specified in Schedule 4.11, no employee or consultant of ETG has
used any other person's trade secrets or other information that is
confidential in the course of his or her work for ETG and (iv) no employee
or consultant of ETG is, or is currently expected to be, in Default under
any term of any employment contract, agreement or arrangement relating to
the Intellectual Property, or any Confidentiality Agreement of any other
Contract or any restrictive covenant relating to the Intellectual Property,
or the development or exploitation thereof.
Section 4.12 Year 2000 Compliance
(a) Definitions. The following terms, as used in this Section 4.12,
have the following meaning:
"Facilities" means any facilities or equipment used by ETG in any
location, including heating, ventilating and air conditioning systems,
mechanical systems, elevators, security systems, fire suppression systems,
telecommunications systems, fax machines, copy machines and
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equipment, whether or not owned by ETG.
"Internal MIS Systems" means any Software and computer systems
(including hardware, firmware, operating system software, utilities and
applications software) used in the ordinary course of the business by or on
behalf of ETG, including ETG's payroll, accounting, billing/receivables,
inventory, asset tracking, customer service, human resources and e-mail
systems.
"Products" means any products offered or furnished by ETG, or any
predecessor in interest of ETG, currently or at time in the past,
including, without limitation, the Software Products; each item of
hardware, Software or firmware; any system, equipment or products
consisting of or containing one or more thereof; and nay and all
enhancements, upgrades customizations, modifications and maintenance
thereto.
"Services" means any services offered or furnished by ETG in the
conduct of its business, or by any predecessor in interest of ETG,
currently or at any time in the past.
"Software" means any computer software of any nature whatsoever,
including all systems software, all applications software, whether for
general business usage (e.g., accounting, finance, word processing,
graphics, spreadsheet analysis, etc.) or specific, unique-to-the-business
usage (e.g., purchase or service order processing, etc.) and all computer
operating, security or programming software, that is owned by or licensed
to ETG or used, or has been developed or designed for or is in the process
of being developed or designed for use, directly or indirectly, in the
conduct of the business of ETG, and any and all documentation and object an
source codes related thereto.
"Year 2000 Compliant" means that (i) the Products, Services or other
item(s) at issue accurately process, provide and/or receive all date/time
data (including calculating, comparing, sequencing, processing and
outputting) within, from, into and between centuries (including the
twentieth and twenty-first centuries and the years 1999 and 2000),
including leap year calculations, and (ii) neither the performance nor the
functionality of ETG's Products, Services and other item(s) at issue will
be affected by any dates/time prior to, on, after or spanning January 1,
2000. The design of the Products, Services and other item(s) at issue to
ensure compliance with the representations and warranties contained in this
Section 4.12 includes proper date/time data century recognition and
recognition of 1999 and 2000, calculations that accommodate single century
and multi-century formulae and date/time values before, on, after and
spanning January 1, 2000, and date/time data interface values that reflect
the century, 1999 and 2000. In particular, but without limitation, (A) no
value for current date/time will cause any error, interruption or decreased
performance in or for such Products, Services and other item(s), (B) all
manipulations of date and time related data (including calculating,
comparing, sequencing, processing and outputting) will produce correct
results for all valid dates and times when used independently or in
combination with other Products, Services and/or items, (C) date/time
elements in interfaces and data storage will specify the century to
eliminate date ambiguity without human intervention, including leap year
calculations, (D) where any date/time element is represented without a
century, the correct century will be unambiguous for all manipulations
involving that element, (E) authorization codes, passwords and zaps (purge
functions) will function normally and in the same manner during, prior to,
on and after January 1, 2000, including the manner in which they function
with respect to expiration dates and CPU serial numbers, and (F) ETG's
provision of Products, Services and other item(s) will not be interrupted,
delayed, decreased or otherwise affected by the advent of the year 2000.
(b) Products and Services. Without limiting the generality of Section
4.12(b), all of the Company's Products and Services are Year 2000
Compliant. If ETG is obligated to repair or replace Products or Services
previously provided by ETG that are not Year 2000 Compliant in order to
meet ETG's contractual obligations, avoid personal injury or other
liability, avoid
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misrepresentation claims or satisfy any other obligations or requirements,
ETG has repaired or replaced those Products and Services to make them Year
2000 Compliant. ETG has furnished Parent with true, correct and complete
copies of any customer agreements and other materials and correspondence in
which ETG has furnished (or could be deemed to have furnished) assurances
as to the performance and/or functionality of ETG's Products and Services
on or after January 1, 2000.
(c) Internal MIS Systems and Facilities. All of ETG's Internal MIS
Systems and Facilities are Year 2000 Compliant.
(d) Suppliers. To the Selling Shareholders knowledge, all vendors of
products and services to ETG, and their respective products, services and
operations, are Year 2000 Complaint. To the Selling Shareholders knowledge,
each such vendor will continue to furnish its products or services to ETG,
without interruption or material delay, on and after January 1, 2000. ETG
has entered into appropriate agreements with each of its vendors certifying
that all hardware, software or firmware, and any other products and
services furnished by such vendor, including any and all enhancements,
upgrades, customizations, modifications, maintenance and the like, are Year
2000 Compliant. All such vendor agreements include appropriate
indemnification by the vendor in favor of ETG and ETG's successors if that
vendor or its products, services or operations fail to be Year 2000
Compliant or it the products, services or operations fail to conform to or
meet the terms of the vendor warranties, representations or other
contractual terms.
(e) Year 2000 Compliance Investigations and Reports. ETG has furnished
Parent with a true, correct and complete copy of any internal
investigations, memoranda, budget plans, forecasts or reports concerning
the Year 2000 Compliance of the products, services, operations, systems,
supplies and facilities of ETG and ETG's vendors.
Section 4.13 Properties. Schedule 4.13(a) hereto sets forth a complete and
accurate description and list of all assets and property owned by ETG, including
real property. ETG has good and valid title (good and marketable title in the
case of owned real property) to all of its assets and properties, free and clear
of any lien, claim or other encumbrance except as disclosed on Schedule 4.13(b)
hereto. ETG has not received notice that any of its assets or properties is in
violation in any material respect of any existing law or any building, zoning,
health, safety or other ordinance, code or regulation. The plant, facilities and
equipment of ETG necessary to the operation of its business are in operating
condition and repair sufficient for the operation of the business as presently
conducted. Schedule 4.13(c) sets forth a complete list of all leases of real or
personal property to which ETG is a party. Such leases are valid and subsisting
leases, upon consummation of the transaction contemplated hereby, shall continue
to entitle the Surviving Corporation to the use and possession of the real or
personal property purported to be covered thereby for the terms specified in
such leases and for the purposes for which such real or personal property is now
used.
Section 4.14 Material Contracts. Except as set forth on Schedule 4.14,
neither ETG nor its properties is a party to, bound by, or subject to (a) any
loan agreements, guaranties or other evidence of indebtedness; (b) any agreement
relating to the ownership or control of any interest in a partnership,
corporation, limited liability company, joint venture or other entity or similar
arrangement; (c) any employment contracts or consulting arrangements entered
into by ETG or agreements or arrangements with respect to severance or similar
matters; (d) any agreement or arrangement restricting in any manner (i) ETG's
right to compete with any other person or entity; (ii) the right of any other
party to compete with ETG; or (iii) the ability of such person or entity to
employ any of ETG's employees; (e) any secrecy or confidentiality agreement; (f)
any contract, agreement or arrangement containing change of control provisions;
(g) any agreement or arrangement between ETG and any of its officers, directors
or other Affiliates; or (i) any contract, agreement or arrangement requiring a
payment in excess of $25,000 in any twelve month period; or (j) any other
contract, agreement or arrangement, including equipment leases (collectively,
the "ETG Contracts"). Schedule 4.14 sets forth a description of each of the ETG
Contracts. All the ETG Contracts are valid, subsisting, in full force and
effect, and binding upon ETG in accordance
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with their terms, and binding upon the other parties thereto in accordance with
their terms. ETG is not (with or without notice or lapse of time or both) in
default under any ETG Contract nor is any other party to any such contract or
other agreement (with or without notice or lapse of time or both) in default
thereunder.
Section 4.15 Taxes. ETG (a) has timely filed all federal, state and foreign
tax returns required to be filed by it for tax years ended prior to the date of
this Agreement or requests for extensions have been timely filed and any such
request shall have been granted and not expired, and all such returns are
complete and accurate in all material respects; (b) has paid or accrued all
taxes shown to be due and payable on such returns and has paid or accrued all
payroll, sales, and admissions taxes and such other taxes as have been due and
payable; and (c) has properly accrued all such taxes for such periods subsequent
to the periods covered by such returns.
Section 4.16 Employee Benefit Plans. All employee benefit plans and other
benefit arrangements covering employees of ETG (the "ETG Benefit Plans") and all
employee agreements providing compensation, severance or other benefits to any
employee or former employee of ETG are set forth on Schedule 4.16 hereto. True
and complete copies of all ETG Benefit Plans, including any related trust or
funding vehicles, policies or contracts, have been made available to Parent.
None of the ETG Benefit Plans is intended to be qualified under Section 401(a)
of the Code nor does ETG have any "pension plans" as such term is defined in
Section 3(2) of ERISA, with respect to which payments must be made to the
Pension Guaranty Corporation.
Section 4.17 Labor Matters. ETG is not a party to, or bound by, any
collective bargaining agreement, contract or other agreement or understanding
with a labor union or labor organization. There is no unfair labor practice or
labor arbitration proceeding pending or threatened against ETG relating to its
business. There are no organization efforts with respect to the formation of a
collective bargaining unit presently being made or threatened involving
employees of ETG. There is no labor strike, dispute, slowdown or work stoppage
pending or threatened against ETG nor has it experienced any of the same during
the last three years. All employees of ETG are employed at will. A list of ETG's
employees, together with such employee's current job title and salary history
during the last three years, is described on Schedule 4.17.
Section 4.18 Absence of Indemnifiable Claims, etc. There are no losses,
claims, damages, costs, expenses, liabilities or judgments which would entitle
any director, officer or employee of ETG to indemnification by ETG under
applicable law, the Certificate of Incorporation or By-laws of ETG or any
insurance policy maintained by ETG.
Section 4.19 No Brokers. ETG has not entered into any contract, arrangement
or understanding with any person or firm which may result in the obligation of
ETG or Parent to pay any payments in connection with the negotiations leading to
this Agreement or the consummation of the transactions contemplated hereby. ETG
is not aware of any claim for payment of any finder's fees, brokerage or agent's
commission or other like payments in connection with the negotiations leading to
this Agreement or the consummation of the transaction contemplated hereby.
Section 4.20 Financial Condition. ETG has delivered to Parent true and
correct copies of the following, initialed by the chief executive officer of
ETG: financial statements consisting of balance sheets and income statements of
ETG as of July 31, 1998. Each such balance sheet presents fairly the financial
condition, assets, liabilities, and shareholders equity of ETG as of its date;
each such statement of income presents fairly the results of operations of ETG
for the period indicated. The financial statements referred to in this Section
4.20 are in accordance with generally accepted accounting principles. Since
October 7, 1997,
(i) There has at no time been a material adverse change in the
financial condition, results of operations, businesses, properties, assets,
liabilities, or future prospects of ETG.
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(ii) ETG has not authorized, declared, paid, or effected any dividend
or liquidating or other distribution in respect of its membership interests
or any direct or indirect redemption, purchase, or other acquisition of any
interests of ETG.
(iii) The operations and businesses of ETG have been conducted in all
respects only in the ordinary course.
(iv) ETG has not suffered an extraordinary loss (whether or not
covered by insurance) or waived any right of substantial value.
There is no fact known to ETG which materially adversely affects or in the
future (as far as ETG can foresee) may materially adversely affect the financial
condition, results of operations, businesses, properties, assets, liabilities,
or future prospects of ETG or the Surviving Corporation.
Section 4.21 Liabilities. Other than the liabilities and obligations of ETG
listed on Schedule 4.21 hereto which the Surviving Corporation is assuming and
which do not, in the aggregate, exceed $125,000, ETG does not have and has not
incurred any other liabilities or obligations.
Section 4.22 Questionable Payments. Neither ETG, nor any director, officer,
agent, employee, or other person associated with or acting on behalf of ETG, nor
any stockholder of ETG has, directly or indirectly: used any corporate funds for
unlawful contributions, gifts, entertainment, or other unlawful expenses
relating to political activity; made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or
campaigns from corporate funds; violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended; or made any bribe, rebate, payoff, influence
payment, kickback, or other unlawful payment.
Section 4.23 Environmental Matters.(a) No notice, notification, demand,
request for information, citation, summons or order has been issued, no
complaint has been filed, no penalty has been assessed and no investigation or
review is pending or threatened by any Governmental Entity (a) with respect to
any alleged violation by ETG of any law, ordinance or regulation of any
Governmental Entity, with respect to any generation, treatment, storage,
recycling, transportation or disposal or release, as defined in 42 USMC ss.
9601(22) ("Release") of any toxic, caustic or otherwise hazardous substance,
including petroleum, its derivatives, by-products and other hydrocarbons,
whether or not regulated under federal, state or local environmental statutes,
ordinances, rules, regulations or orders ("Hazardous Substance") generated by
the Company.
(b) (i) ETG has not handled any Hazardous Substance on property now or
previously owned or leased by ETG; (ii) no polychlorinated biphenyls or urea
formaldehyde is or has been present at any property now or previously owned or
leased by ETG; (iii) no asbestos is or has been present at any property now or
previously owned or leased by ETG; (iv) there are no underground storage tanks
for Hazardous Substances, active or abandoned, at any property now or previously
owned or leased by ETG; (v) no Hazardous Substance has been Released at, on or
under any property now or previously owned or leased by ETG; and (vi) no
Hazardous Substance has been released or is present, in a reportable or
threshold planning quantity, where such a quantity has been established by
statute, ordinance, rule, regulation or order, at, on or under any property now
or previously owned by ETG.
(c) ETG has not transported or arranged for the transportation, directly or
indirectly, of any Hazardous Substance to any location which is listed or
proposed for listing under the Comprehensive Environmental Responses,
Compensation and Liability Act of 1980, as amended ("CERCLA"), or on any similar
state list or which is the subject of federal, state or local enforcement
actions or other investigations which may lead to claims against ETG for cleanup
costs, remedial work, damages to natural resources or for personal injury
claims, including, but not limited to, claims under CERCLA.
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(d) No oral or written notification of a Release of a Hazardous Substance
has been filed by or on behalf of ETG and no property now or previously owned or
leased by ETG is listed or, to the Selling Shareholders knowledge, proposed for
listing, on the National Priorities List promulgated pursuant to CERCLA, or any
similar state list of sites requiring investigation or clean-up.
(e) There are no environmental liens on any of the real property or other
properties owned or leased by ETG, and no governmental actions have been taken
or are in process which could subject any of such properties to such liens and
ETG would not be required to place any notice or restriction relating to the
presence of Hazardous Substances at any property owned by any of them in any
deed to such property.
(f) There have been no environmental investigations, studies, audits,
tests, reviews or other analyses conducted by or which are in the possession of
ETG in relation to any property or facility now or previously owned or leased by
ETG which have not been delivered to Parent prior to the date hereof.
4.24 Insurance. Schedule 4.24 sets forth all policies or binders of fire,
liability, workmen's compensation, vehicular or other insurance held by or on
behalf of ETG (specifying the insurer, the policy number or covering note number
with respect to binders, and describing each pending claim thereunder of more
than $10,000, setting forth the aggregate amounts paid out under each such
policy through the date of this Agreement and the aggregate limit of any of the
insurer's liability thereunder). Such policies and binders are in full force and
effect and insure against risks and liabilities customary for the business in
which ETG is engaged. ETG is not in default with respect to any provision
contained in any such policy or binder and has not failed to give any notice or
present any claim under any such policy or binder in due and timely fashion.
Except for claims set forth on Schedule 4.24 there are no outstanding unpaid
claims under any such policy or binder. ETG has not received a notice of
cancellation or non-renewal of any such policy or binder. ETG has no knowledge
of any inaccuracy in any application for such policies or binders, any failure
to pay premiums when due or any similar state of facts which might form the
basis for termination of any such insurance.
4.25 Full Disclosure. All documents and other papers delivered by or on
behalf of ETG in connection with this Agreement and the transactions
contemplated hereby are true, complete and authentic. The information furnished
by or on behalf of ETG to Parent and its representatives in connection with this
Agreement and the transactions contemplated hereby does not contain any untrue
statement of a material fact and does not omit to state a material fact required
to be stated therein or necessary to make the statements made, in the context in
which made, not false or misleading. There is no fact which ETG has not
disclosed to Parent in writing which materially adversely affects, or so far as
ETG can now foresee will materially adversely affect, the assets, properties,
business or condition (financial or otherwise) or prospects of ETG or the
ability of ETG to perform this Agreement.
ARTICLE V
COVENANTS
Section 5.1 Confidential Information. For an indefinite period after the
Closing, no Restricted Party shall divulge, communicate or use in any way, any
confidential information or trade secrets of the Parent or its Subsidiaries.
Section 5.2 Interim Operations of ETG. Prior to the Effective Time, unless
Parent has consented in writing thereto, ETG:
(i) Shall conduct its operations according to its usual, regular and
ordinary course in substantially the same manner as heretofore conducted;
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(ii) Shall use its reasonable efforts to preserve intact its business
organizations and goodwill, keep available the services of officers and
employees and maintain satisfactory relationships with those persons having
business relationships with it;
(iii) Shall not amend its Certificate of Incorporation or Bylaws or
comparable governing instruments;
(iv) Shall promptly notify Parent of any material emergency or other
material change in its condition (financial or otherwise), business,
properties, assets, liabilities, prospects or the normal course of its
business or of its properties, any material litigation or material
governmental complaints, investigations or hearings (or communications
indicating that the same may be contemplated), or the breach of any
representation or warranty contained herein;
(v) Shall not (A), issue any shares of it capital stock, effect any
stock split or otherwise change its capitalization as it existed on the
date hereof or otherwise change (B) grant, confer or award any option,
warrant, conversion right or other right not existing on the date hereof to
acquire any shares of its capital stock; (C) increase any compensation or
enter into or amend any employment agreement with any of its present or
future officers, directors or employees; (D) grant any severance or
termination package to any employee or consultant; or (E) adopt any new
employee benefit plan (including any stock option, benefit or purchase
plan) or amend any existing employee benefit plan in any respect;
(vi) Shall not declare, set aside or pay any dividend or make any
other distribution or payment with respect to any shares of its capital
stock;
(vii) Shall not enter into any material transaction, or agree to enter
into any material transaction, outside the ordinary course of business,
including, without limitation, any transaction involving a merger,
consolidation, joint venture, partial or complete liquidation or
dissolution, reorganization, recapitalization, restructuring or a purchase,
sale, lease or other disposition of a substantial portion of assets or
capital stock;
(viii) Shall not incur any indebtedness for borrowed money or
guarantee any such indebtedness or issue or sell any debt securities or
warrants or rights to acquire any debt securities of others;
(ix) Shall not make any loans, advances or capital contributions to,
or investments in, any other person;
(x) Shall not make or commit to make any capital expenditures;
(xi) Shall not apply any of its assets to the direct or indirect
payment, discharge, satisfaction or reduction of any amount payable
directly or indirectly to or for the benefit of any Affiliate or enter into
any transaction with any Affiliate.
(xii) Shall not alter the manner of keeping its books, accounts or
records, or change in any manner the accounting practices therein
reflected;
(xiii) Shall not grant or make any mortgage or pledge or subject
itself or any of its properties or assets to any lien, charge or
encumbrance of any kind; and
(xiv) Shall maintain insurance on its tangible assets and its
businesses in such amounts and against such risks and losses as are
currently in effect.
Section 5.4 Filings; Other Action.
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(a) Subject to the terms and conditions herein provided, ETG and
Parent shall use all reasonable efforts to take, or cause to be taken, all
action and do, or cause to be done, all things necessary, proper or
appropriate to consummate and make effective the transactions contemplated
by this Agreement. If, at any time after the Effective Time, any further
reasonable action is necessary or desirable to carry out the purpose of
this Agreement, the proper officers and directors of Parent and ETG shall
take all such necessary action.
(b) (i) ETG and Parent shall give any notices to third parties, and
use all reasonable efforts to obtain any third party consents, necessary,
proper or advisable to consummate the transactions contemplated in this
Agreement.
(ii) In the event that either party shall fail to obtain any third
party consent described in subsection (b) (i) above, such party shall use
all reasonable efforts, and shall take any such actions reasonably
requested by the other party hereto, to minimize any adverse effect upon
ETG and Parent, its Subsidiaries, and their respective businesses
resulting, or which could reasonably be expected to result after the
Effective Time, from the failure to obtain such consent.
(c) From and after the date of this Agreement until the Effective
Time, each party hereto shall promptly notify the other of (i) the
occurrence, or non-occurrence, of any event the occurrence, or
non-occurrence, of which would be likely to cause any condition to the
obligations of any party to effect the Merger and the other transactions
contemplated by this Agreement not to be satisfied, or (ii) the failure of
ETG or Parent, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it pursuant to
this Agreement which would be likely to result in any condition to the
obligations of any party to effect the Merger and the other transactions
contemplated by this Agreement not to be satisfied; provided, however, that
the delivery of any notice pursuant hereto shall not cure any breach of any
representation or warranty requiring disclosure of such matter prior to the
date of this Agreement or otherwise limit or affect the remedies available
hereunder to the party receiving such notice.
Section 5.5 Inspection of Records. From the date hereof to the Effective
Time, ETG shall (a) allow all designated officers, attorneys, accountants and
other representatives of Parent reasonable access at all reasonable times to the
offices, records and files, correspondence, audits and properties, as well as to
all information relating to commitments, contracts, titles and financial
position, or otherwise pertaining to the business and affairs, of ETG; (b)
furnish to Parent and its representatives such financial and operating data and
other information as such persons may reasonably request; and (c) instruct the
employees, counsel and financial advisors of ETG to cooperate with the Parent
and its representatives in its investigation of ETG business.
Section 5.6 Further Action. Each party hereto shall, subject to the
fulfillment at or before the Effective Time of each of the conditions of
performance set forth herein or the waiver thereof, perform such further acts
and execute such documents as may be reasonably required to effect the Merger.
Section 5.7 Expenses. Whether or not the Merger is consummated, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall, except as otherwise provided herein, be paid by the
Selling Shareholders if incurred by the Selling Shareholders or ETG, and by
Parent if incurred by Parent or Merger Sub.
Section 5.8 Survival of Representations and Warranties of ETG and the
Selling Shareholders. Notwithstanding any right of Parent to investigate the
affairs of ETG and notwithstanding any knowledge of facts determined or
determinable by Parent pursuant to such investigation or right of investigation,
Parent has the right to rely fully upon the representations, warranties,
covenants and agreement of the Selling Shareholders contained in this Agreement.
All such representations, warranties, covenants and agreements shall survive the
execution and delivery hereof and the Closing hereunder. All representations,
warranties, covenants and agreements made herein by Parent and Merger Sub shall
survive the execution and delivery hereof and the Closing hereunder.
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Section 5.9 Adjustments.
(a) The parties hereto agree that (i) all real property taxes,
personal property taxes, and similar ad valorem obligations that are levied
against ETG or its property, (ii) all expenses relating to ETG's business,
including, but not limited to, utilities, bank debt and trade and accounts
payable, and (ii) all revenue relating to ETG's business, including
accounts receivable, shall be apportioned between the Selling Shareholders
and Parent as of the Closing Date based on the portion of each such expense
or revenue attributable to the period falling on or before the Closing Date
on the one hand, which the Selling Shareholders shall bear the
responsibility and benefit of, and the portion of each such expense or
revenue attributable to the period falling after the Closing Date, on the
other hand, which Parent shall bear the responsibility and benefit of (the
"Closing Adjustment").
(b) To the extent that any of the prorations made pursuant to this
Section 5.9 are based upon estimates of payments to be made and/or expenses
to be incurred subsequent to the Closing Date, or either party discovers
any errors or omissions in respect of such prorations, the parties agree to
adjust such prorations promptly upon receipt of such payments or of bills
or other documentation setting forth the actual amount of such expenses.
ARTICLE VI
CONDITIONS
Section 6.1 Conditions to Obligation of ETG to Effect the Merger. The
obligation of ETG to effect the Merger shall be subject to the fulfillment at or
prior to the Closing Date of the following conditions:
(a) Parent shall have performed, in all material respects, all of its
agreements contained herein that are required to be performed by Parent on
or prior to the Closing Date, and ETG shall have received a certificate of
the President or Senior Vice President of Parent dated the Closing Date,
certifying to such effect.
(b) The representations and warranties of Parent and Merger Sub
contained in this Agreement and in any document delivered in connection
herewith shall be true and correct as of the Closing, and ETG shall have
received a certificate of the President or Senior Vice President of Parent,
dated the Closing Date, certifying to such effect.
(c) Parent shall have executed and delivered to the Selling
Shareholders the Registration Rights Agreement, substantially in the form
of Exhibit A hereto;
Section 6.2 Conditions to Obligation of Parent and Merger Sub to Effect the
Merger. The obligations of Parent and Merger Sub to effect the Merger shall be
subject to the fulfillment at or prior to the Closing Date of the following
conditions:
(a) ETG shall have performed, in all material respects, all of its
agreements contained herein that are required to be performed by ETG on or
prior to the Closing Date, and Parent shall have received a certificate of
the President or a Vice President of ETG, dated the Closing Date,
certifying to such effect.
(b) The representations and warranties of the Selling Shareholders
contained in this Agreement and in any document delivered in connection
herewith shall be true and correct as of the Closing, and Parent shall have
received a certificate from each of the Selling Shareholders, dated the
Closing Date, certifying to such effect.
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(c) The Selling Shareholders shall have executed and delivered the
Restricted Securities Letter addressed to Parent, substantially with the
form of Exhibit B hereto.
ARTICLE VII
TERMINATION
Section 7.1 Termination. This Agreement may be terminated and the Merger
contemplated hereby may be abandoned, by written notice promptly given to the
other parties hereto, at any time prior to the Effective Time, whether prior to
or after approval by their respective stockholders or members:
Section 7.1.1 By mutual written consent of Parent and ETG;
Section 7.1.2 By either Parent or ETG, if a court of competent jurisdiction
or a Governmental Entity shall have issued an order, decree or ruling or taken
any other action, in each case permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement and such order,
decree, ruling or other action shall have become final and nonappealable;
Section 7.1.3 By Parent, if ETG fails to perform in all material respects
its obligations under this Agreement;
Section 7.1.4 By Parent, if there shall have occurred a ETG Material
Adverse Change since the date of this Agreement; or
Section 7.1.5 By ETG, if Parent fails to perform in all material respects
its obligations under this Agreement.
Section 7.2 Effect of Termination. In the event of the termination of this
Agreement and abandonment of the Merger as provided in Section 7.1 hereof, this
Agreement shall forthwith become void and there shall be no liability on the
part of Parent or ETG, except as set forth in this Section hereof and Article
VIII and except to the extent that such termination results from the willful
breach of a party hereto of any of its representations, warranties, covenants or
agreements set forth in this Agreement.
ARTICLE VIII
INDEMNIFICATION
Section 8.1 Obligation of the Selling Shareholders to Indemnify. Each of
the Selling Shareholders shall indemnify, defend and hold harmless Parent and
its assigns from and against any losses, liabilities, damages or deficiencies
(including interest, penalties and reasonable attorneys' fees and disbursements)
("Losses") based upon, arising out of or otherwise in respect of:
(i) the breach of any representation, warranty, covenant or agreement
of ETG or the Selling Shareholders contained in this Agreement or in any
document or other writing delivered pursuant to this Agreement (determined
for this purpose as if all references to knowledge and materiality
contained in Article IV are deleted); and
(ii) any liabilities or obligations of ETG arising prior to the
Closing Date other than those specifically assumed hereunder.
8.2 Obligation of Parent to Indemnify. Parent shall indemnify, defend and
hold harmless each of the Selling Shareholders from and against any losses,
liabilities, damages or deficiencies
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(including interest, penalties and reasonable attorneys' fees and disbursements)
("Losses") arising out of or due to a breach of any representation, warranty,
covenant or agreement of Parent contained in this Agreement or in any document
or other papers delivered by Parent pursuant to this Agreement (determined for
this purpose as if all references to knowledge and materiality contained in
Article IV are deleted).
8.3 Notice and Opportunity to Defend. If any party (the "Indemnitee")
receives notice of any claim or the commencement of any action or proceeding
with respect to which any other party (or parties ) is obligated to provide
indemnification (the "Indemnifying Party") pursuant to Section 8.1 or 8.2, the
Indemnitee shall promptly give the Indemnifying Party notice thereof; provided,
however, that failure to give such notification shall not affect the
indemnification provided hereunder except to the extent the Indemnifying Party
shall have been actually prejudiced as a result of such failure. The Indemnified
Party shall have the right to retain counsel of its own choice to represent it,
and the Indemnifying Party shall pay the fees, expenses and disbursements of
such counsel; and such counsel shall, to the extent consistent with its
professional responsibilities, cooperate with the Indemnifying Party and any
counsel designated by the Indemnifying Party. The Indemnifying Party shall be
liable for any settlement of any claim against the Indemnified Party made with
the Indemnifying Party's written consent, which consent shall not be
unreasonably withheld. The Indemnifying Party shall not, without the prior
written consent of the Indemnified Party, settle or compromise any claim, or
permit a default or consent to the entry of any judgment in respect thereof,
unless such settlement, compromise or consent includes, as a unconditional term
thereof, the giving by the claimant to the Indemnified Party of an unconditional
release from all liability in respect of such claim.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Notices. Any notice required to be given hereunder shall be
sufficient if in writing, and sent by facsimile transmission or by courier
service (with proof of service), hand delivery or certified or registered mail
(return receipt requested and first-class postage prepaid), addressed as
follows:
If to Parent or Merger Sub: If to ETG:
OAO Technology Solutions, Inc. Xxxxxx X. Xxxxxxx
0000 Xxxxxxxx Xxxxxx Xxxxx Xxx Xxxx Xxxxxx, Xxxxx 000
00xx Xxxxx Xxxxxxxxxxxx, XX 00000
Xxxxxxxxx, XX 00000
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
Section 9.2 Assignment, Binding Effect. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective permitted successors and assigns.
Section 9.3 Entire Agreement.This Agreement and any documents delivered by
the parties in connection herewith constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings among the parties with respect thereto. No
addition to or modification of any provision of this Agreement shall be binding
upon any party hereto unless made in writing and signed by all parties hereto.
Section 9.4 Amendment. This Agreement may not be amended except by an
instrument
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in writing signed on behalf of each of the parties hereto.
Section 9.5 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without regard to
its rules of conflict of laws.
Section 9.6 Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument.
Section 9.7 Headings. Headings of the Articles and Sections of this
Agreement are for the convenience of the parties only and shall be given no
substantive or interpretive effect whatsoever.
Section 9.8 Interpretation. In this Agreement, unless the context otherwise
requires, words describing the singular number shall include the plural and vice
versa, and words denoting any gender shall include all genders and words
denoting natural persons shall include corporations and partnerships and vice
versa.
Section 9.9 Waivers. Except as provided in this Agreement, no action taken
pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representations, warranties, covenants
or agreements contained in this Agreement. The waiver by any party hereto of a
breach of any provision hereunder shall not operate or be construed as a waiver
of any prior or subsequent breach of the same or any other provision hereunder.
Section 9.10 Incorporation of Schedules and Exhibits. The Schedules and
Exhibits attached hereto and referred to herein are hereby incorporated herein
and made a part hereof for all purposes as if fully set forth herein.
Section 9.11 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
Section 9.12 Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to seek an injunction or injunctions to prevent breaches of this Agreement and
to enforce specifically the terms and provisions hereof, this being in addition
to any other remedy to which they are entitled at law or in equity.
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IN WITNESS WHEREOF, the parties have executed this Agreement and caused the
same to be duly delivered on their behalf on the day and year first written
above.
OAO TECHNOLOGY SOLUTIONS, INC.
By:___________________________
Name: Xxxxxxx X. Xxxxx
Title: President
ETG ACQUISITION CORPORATION
By:____________________________
Name: Xxxxxxx X. Xxxxx
Title: President
ENTERPRISE TECHNOLOGY GROUP, INC.
By:____________________________
Name: Xxxxxxx X. Xxxxx
Title: President
SELLING SHAREHOLDERS:
______________________________
Xxxxxxx Xxxxx
_____________________________
Xxxx Xxxxxxx
_____________________________
Xxxxxxx Xxxxxxx
00
