Exhibit 99.1
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION ("Reorganization Agreement" or
"Agreement") dated as of April 25, 2001, by and among DynCorp Management
Resources Inc. (the "Company"), a Virginia corporation having its principal
executive office at 00000 Xxxxx Xxxxxxx Xxxxx, Xxxxxx, Xxxxxxxx 00000, and
Newport Acquisition Corp. ("Newco"), a Delaware corporation having its principal
executive office at 00000 Xxx Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxxxx
00000, and joined in by DynCorp ("Company Parent"), a Delaware corporation
having its principal executive office at 00000 Xxxxx Xxxxxxx Xxxxx, Xxxxxx,
Xxxxxxxx 00000, and Xxxxxxxxxx.xxx, Inc. ("Newco Parent"), a Delaware
corporation having its principal executive office at 00000 Xxx Xxxxxx Xxxxxx,
Xxxxx 000, Xxxxxx, Xxxxxxxxxx 00000.
WITNESSETH
WHEREAS, the parties hereto desire that the Company shall be acquired
by Newco Parent through the merger ("Merger") of the Company with and into
Newco, with Newco as the surviving corporation pursuant to an Agreement and Plan
of Merger substantially in the form attached hereto as Annex A ("Plan of
Merger"); and
WHEREAS, the parties hereto desire to provide for certain undertakings,
conditions, representations, warranties and covenants in connection with the
transactions contemplated hereby;
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and covenants herein contained and intending to be
legally bound hereby, the parties hereto do hereby agree as follows:
Article I.
DEFINITIONS
1.1 "Agreement" is defined in the preamble hereto.
1.2 "Affiliate" shall mean, as to any specified Person, any other Person, which,
directly, or indirectly controls, is controlled by or is under common control
with, such specified Person. For purposes of this definition, "control" means
the possession of the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of voting securities,
by contract or otherwise and "Person" shall mean an individual, corporation,
partnership, association, trust, estate, governmental authority or other entity.
1.3 "Closing" is defined in Section 4.8 hereof.
1.4 "Closing Date" shall mean the date specified pursuant to Section 4.8 hereof
as the date on which the parties hereto shall close the transactions
contemplated herein.
1.5 "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.6 "Commission" or "SEC" shall mean the Securities and Exchange
Commission.
1.7 "Company" is defined in the preamble hereto.
1.8 "Company Claims" is defined in Section 4.12 hereof.
1.9 "Company Common Stock" is defined in Section 2.1 hereof.
1.10 "Company Financial Statements" shall mean the unaudited balance sheet of
the Company and its predecessor(s) as of December 28, 2000 and as of March 29,
2001, and statements of income for the respective twelve-month and three-month
periods ending on December 28, 2000 and March 29, 2001.
1.11 "Company Liabilities" is defined in Section 4.12 hereof.
1.12 "Company Parent" is defined in the recitals hereto.
1.13 "Company Parent's Insurance Policies" is defined in Section 4.12
hereof.
1.14 "Company Parent Plans" is defined in Section 4.9 hereof.
1.15 "Company Parent Welfare Plans" is defined in Section 4.9 hereof.
1.16 "Confidentiality Agreement" is defined in Section 4.5 hereof.
1.17 "Continuing Employees" is defined in Section 4.9 hereof.
1.18 "Effective Date" is defined in Section 4.8 hereof.
1.19 "Environmental Action" is defined in Section 2.14 hereof.
1.20 "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
1.21 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
1.22 "Financing" is defined in Section 4.17 hereof.
1.23 "IRS" shall mean the Internal Revenue Service.
1.24 "Intellectual Property" means domestic and foreign letters patent, patents,
patent applications, patent licenses, software licensed or owned, know-how
licenses, trade names, common law and other trademarks, service marks, licenses
of trademarks, trade names and/or service marks, trademark registrations and
applications, service xxxx registrations and applications and copyright
registrations and applications.
1.25 "Material Adverse Effect" shall mean, with respect to the Company or Newco
Parent, as the case may be, a material adverse effect on the business, results
of operations or financial condition of such party and any Subsidiary of the
party taken as a whole or a material adverse effect on such party's ability to
consummate the transactions contemplated hereby; provided, however, that in
determining whether a Material Adverse Effect has occurred there shall be
excluded any effect on the referenced party the cause of which is any action or
omission of the Company, Company Parent or Newco Parent or any Subsidiary of any
of them taken with the prior written consent of Newco Parent or Company Parent,
as applicable, in contemplation of the Merger.
1.26 "Merger" is defined in the recitals hereto.
1.27 "Merger Consideration" is defined in the Plan of Merger.
1.28 "Nasdaq" shall mean the Nasdaq Small Cap Market.
1.29 "Newco" is defined in the preamble hereto.
1.30 "Newco Parent" is defined in the preamble hereto.
1.31 "Newco Parent Class B Common Stock" shall mean shares of Class B common
stock, par value $0.001 per share, of Newco Parent to be issued to Company
Parent pursuant to the Plan of Merger.
1.32 "Newco Parent Common Stock" is defined in Section 3.1 hereof.
1.33 "Newco Parent ERISA Affiliate" is defined in Section 3.12 hereof.
1.34 "Newco Parent Financial Statements" shall mean (i) the audited consolidated
balance sheets of Newco Parent as of June 30, 2000 and 1999 and the related
consolidated statements of income, cash flows and changes in shareholders'
equity (including related notes, if any) for each of the three years ended June
30, 2000, 1999 and 1998, respectively, as filed by Newco Parent in SEC
Documents, (ii) the unaudited consolidated balance sheets of Newco Parent and
related consolidated statements of income, cash flows and changes in
shareholders' equity (including related notes, if any) as filed by Newco Parent
in SEC Documents as of December 31, 2000, for the six months ended December 31,
2000, and with respect to periods ended subsequent to December 31, 2000 and
(iii) the unaudited consolidated balance sheets of Newco Parent and related
consolidated statements of income, cash flows and changes in shareholders'
equity (including related notes, if any) as of, or with respect to the 8-month
period ended, February 28, 2001.
1.35 "Newco Parent Plan" is defined in Section 3.12 hereof.
1.36 "Newco Parent Preferred Stock" is defined in Section 3.1 hereof.
1.37 "Newco Parent Subsidiary" shall mean each Subsidiary of Newco Parent as
disclosed in its annual report of Form 10-K for the year ended June 30, 2000, as
well as Newco.
1.38 "Non-Continuing Employees" is defined in Section 4.9 hereof.
1.39 "Option Agreement" shall mean the stock option agreement, dated as of the
date hereof, in the form attached hereto as Annex B with respect to the option
granted by Newco Parent to Company Parent to acquire certain shares of Newco
Parent Common Stock in the circumstances set forth therein.
1.40 "Plan" is defined in Section 2.9 hereof.
1.41 "Plan of Merger" is defined in the recitals hereto.
1.42 "Previously Disclosed" shall mean disclosed prior to the execution hereof
in a letter dated of even date herewith from the party making such disclosure
and delivered to the other party prior to the execution hereof. Any information
disclosed by one party to the other for any purpose hereunder shall be deemed to
be disclosed for all purposes hereunder. The inclusion of any matter in
information Previously Disclosed shall not be deemed an admission or otherwise
to imply that any such matter is material for purposes of this Agreement.
1.43 "Proxy Statement" shall mean the proxy statement (or similar document)
together with any supplements thereto sent to the stockholders of Newco Parent
to solicit their votes in connection with this Agreement and the Plan of Merger.
1.44 "Registration Rights Agreement " shall mean the registration rights
agreement in the form attached hereto as Annex C with respect to the Newco
Parent Class B Common Stock to be issued in connection with the Merger.
1.45 "Rights" shall mean warrants, options, rights, convertible securities and
other arrangements or commitments which obligate an entity to issue or dispose
of any of its capital stock, and stock appreciation rights, performance units
and other similar stock-based rights whether they obligate the issuer thereof to
issue stock or other securities or to pay cash.
1.46 "Reorganization Agreement" is defined in the preamble hereto.
1.47 "SEC" shall mean the Securities and Exchange Commission.
1.48 "SEC Documents" shall mean all reports and registration statements filed,
or required to be filed, by a party hereto pursuant to the Securities Laws.
1.49 "Securities Act" shall mean the Securities Act of 1933, as amended.
1.50 "Securities Laws" shall mean the Securities Act; the Exchange Act; the
Investment Company Act of 1940, as amended; the Investment Advisers Act of 1940,
as amended; the Trust Indenture Act of 1939, as amended; and the rules and
regulations of the Commission promulgated thereunder.
1.51 "Subsidiary" or "Subsidiaries" shall mean with respect to any party, any
corporation, partnership or other organization, whether incorporated or
unincorporated, which is consolidated with such party for financial reporting
purposes.
1.52 "Takeover Laws" is defined in Section 3.21 hereof.
1.53 "Takeover Proposal" is defined in Section 4.7(c)(12) hereof.
1.54 "Tax" or "Taxes" shall mean all taxes, however denominated, including any
interest, penalties, or additions to tax or other additional amounts that may
become payable in respect thereof, imposed by any federal, state, local or
foreign government or any agency or political subdivision of any such
government, which taxes shall include, without limiting the generality of the
foregoing, all income taxes, payroll and employment taxes, withholding taxes,
unemployment insurance taxes, social security (or similar) taxes, sales and use
taxes, excise taxes, franchise taxes, gross receipts taxes, occupation taxes,
real and personal property taxes, stamp taxes, value added taxes, transfer
taxes, profits or windfall profits taxes, licenses in the nature of taxes,
estimated taxes, severance taxes, duties, workers' compensation taxes, premium
taxes, environmental taxes, disability taxes, registration taxes, alternative or
add-on minimum taxes, estimated taxes, and other fees, assessments, charges or
obligations of the same or of a similar nature.
1.55 "Tax Return" or "Tax Returns" shall mean all returns, reports, estimates,
information statements or other written submissions, and any schedules or
attachments thereto, required or permitted to be filed pursuant to the statutes,
rules and regulations of any federal, state, local or foreign government Tax
authority, including but not limited to, original returns and filings, amended
returns, claims for refunds, and information returns.
Article II.
REPRESENTATIONS AND WARRANTIES OF COMPANY AND COMPANY PARENT
Except as Previously Disclosed, the Company and Company Parent hereby
jointly and severally represent and warrant to Newco Parent and Newco as
follows:
2.1 Capital Structure of Company
The authorized capital stock of the Company consists of (i) 100 shares
of common stock, par value $1.00 per share ("Company Common Stock"), of which,
as of the date hereof, 100 shares are issued and outstanding and held by Company
Parent and no shares are held in treasury. As of the Closing Date, all
outstanding Company Common Stock will be held by Company Parent free and clear
of all liens, encumbrances, charges, defaults or equitable interests. As of the
date hereof, no shares of Company Common Stock are reserved for issuance. All
outstanding shares of Company Common Stock have been duly authorized and validly
issued and are fully paid and nonassessable. The Company does not have and is
not bound by any Rights which are authorized, issued or outstanding with respect
to the capital stock of the Company except as set forth above. None of the
shares of the Company's capital stock has been issued in violation of the
preemptive rights of any person. The Company has no Subsidiary.
2.2 Organization, Standing and Authority of the Company
The Company is a duly organized corporation, validly existing and in
good standing under the laws of the Commonwealth of Virginia with full corporate
power and authority to carry on its business as now conducted and is duly
licensed or qualified to do business in the states of the United States and
foreign jurisdictions where its ownership or leasing of property or the conduct
of its business requires such qualification, except where the failure to be so
licensed or qualified would not have a Material Adverse Effect on the Company.
The Company is qualified to do business under the laws of those jurisdictions as
Previously Disclosed.
2.3 Authorized and Effective Agreement
(a) Each of the Company and Company Parent has all requisite corporate power and
authority to enter into and perform all of its obligations under this
Reorganization Agreement and the Plan of Merger. The execution and delivery of
this Reorganization Agreement and the Plan of Merger and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action in respect thereof on the part of
the Company and Company Parent.
(b) Assuming the accuracy of the representation contained in Section 3.5(b)
hereof, this Reorganization Agreement and the Plan of Merger constitute legal,
valid and binding obligations of the Company and Company Parent, in each case
enforceable against it in accordance with their respective terms, subject as to
enforceability, to bankruptcy, insolvency and other laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.
(c) Neither the execution and delivery of this Reorganization Agreement or the
Plan of Merger, nor consummation of the transactions contemplated hereby or
thereby, nor compliance by the Company or Company Parent with any of the
provisions hereof or thereof shall (i) conflict with or result in a breach of
any provision of the certificate of incorporation or bylaws of the Company or
Company Parent, (ii) assuming the consents and approvals contemplated by Section
4.3 hereof and the consents and approvals which are Previously Disclosed are
duly obtained, constitute or result in a breach of any term, condition or
provision of, or constitute a default under, or give rise to any right of
termination, cancellation or acceleration with respect to, or result in the
creation of any lien, charge or encumbrance upon any property or asset of the
Company pursuant to, any note, bond, mortgage, indenture, license, agreement or
other instrument or obligation, or (iii) assuming the consents and approvals
contemplated by Section 4.3 hereof and the consents and approvals which are
Previously Disclosed are duly obtained, violate any order, writ, injunction,
decree, statute, rule or regulation applicable to the Company or Company Parent,
except (in the case of clauses (ii) and (iii) above) for such violations,
rights, conflicts, breaches, creations or defaults which, either individually or
in the aggregate, would not have a Material Adverse Effect on the Company.
(d) Other than as contemplated by Section 4.3 hereof and except as expressly
referred to in this Reorganization Agreement, no consent, approval or
authorization of, or declaration, notice, filing or registration with, any
governmental or regulatory authority, or any other person, is required to be
made or obtained by the Company or Company Parent on or prior to the Closing
Date in connection with the execution, delivery and performance of this
Agreement and the Plan of Merger or the consummation of the transactions
contemplated hereby or thereby.
2.4 Financial Statements; Books and Records; Minute Books
The Company Financial Statements have been prepared in accordance with
Company Parent's customary accounting procedures, designed to present fairly the
financial position of the Company and the results of its operations as of the
dates and for the periods indicated. The books and records of the Company fairly
reflect in all material respects the transactions to which it is a party or by
which its properties are subject or bound. Such books and records have been
properly kept and maintained and are in compliance in all material respects with
all applicable legal and accounting requirements. The minute books of the
Company contain records which are accurate in all material respects of all
corporate actions of its shareholders and Board of Directors (including
committees of its Board of Directors).
2.5 Material Adverse Change
The Company has not suffered any change in its financial condition,
results of operations or business since December 31, 2000 which individually or
in the aggregate with any other such changes would constitute a Material Adverse
Effect with respect to the Company and no event or circumstance has occurred
since December 31, 2000 that individually or in the aggregate is reasonably
likely to have a Material Adverse Effect on the financial condition, results of
operations or business of the Company.
2.6 Absence of Undisclosed Liabilities
The Company does not have any liability (contingent or otherwise),
excluding contractually assumed contingencies, that is material to the Company,
or that, when combined with all similar liabilities, would be material to the
Company, except as disclosed in the Company Financial Statements except for
liabilities incurred in the ordinary course of business subsequent to December
28, 2000.
2.7 Properties
The Company has good and marketable title free and clear of all liens,
encumbrances, charges, defaults or equitable interests to all of the properties
and assets, real and personal, which, individually or in the aggregate, are
material to the business of the Company taken as a whole, and which are
reflected on the Company Financial Statements as of December 28, 2000 or
acquired after such date, except (i) liens for taxes not yet due and payable,
(ii) such imperfections of title, easements and encumbrances, if any, as are not
material in character, amount or extent and (iii) dispositions and encumbrances
for adequate consideration in arm's length transactions at fair market value in
the ordinary course of business. All leases pursuant to which the Company, as
lessee, leases real and personal property which, individually or in the
aggregate, are material to the business of the Company taken as a whole are
valid and enforceable in accordance with their respective terms except where the
failure of such lease or leases to be valid and enforceable would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
All tangible property used in the business of the Company is in good condition,
reasonable wear and tear excepted, and is usable in the ordinary course of
business consistent with the Company's past practices.
2.8 Tax Matters
(a) All Tax Returns required to be filed by or with respect to the Company have
been timely filed, except where the failure to file timely such Tax Returns
would not, in the aggregate, have a Material Adverse Effect on the Company. All
such filed Tax Returns are true and correct in all material respects. All Taxes
due and owing by or with respect to the Company (including, without limitation,
any Taxes arising under Treasury Regulation Section 1.1502-6 or any
corresponding provision of foreign, state or local law) have been paid or
adequate reserves have been established by Company Parent or on the Company
Financial Statements for the payment of such Taxes, except where any such
failure to pay or establish adequate reserves would not, in the aggregate, have
a Material Adverse Effect on the Company. The Company will not have any
liability for any such Taxes in excess of the amounts so paid or reserves or
accruals so established except where such liability would not have a Material
Adverse Effect on the Company.
(b) Neither the Company nor Company Parent has requested, nor has there been
granted, any extension of time within which to file any Tax Returns by or with
respect to the Company which have not since been filed. Neither the Company nor
Company Parent has received any notice of assessment or proposed assessment in
connection with any Tax Returns filed by or with respect to the Company except
as accrued by the Company Parent or on the Company Financial Statements, and
there are no pending material Tax examinations of, or Tax claims asserted with
respect to, the Company. There are currently no agreements in effect with
respect to the Company, or Tax Returns with respect to the Company, to extend
the period of limitations for the assessment or collection of any Tax.
(c) The Company is not a party to any agreement (other than an agreement
exclusively among Company Parent and its subsidiaries) providing for the
allocation or sharing of, or indemnification for, Taxes.
(d) The Company (i) has not been a member of any affiliated group filing a
consolidated federal income Tax Return other than a group the common parent of
which was the Company and (ii) has no liability for the Taxes of any Person
(other than any of the Company, Company Parent or its Subsidiaries) under
Treasury Regulations Section 1.1502-6 (or any corresponding provision of
foreign, state or local law).
2.9 Employee Benefit Plans
The Company does not sponsor, maintain or contribute to any
material Plan, other than any such Plan that is sponsored or maintained by
Company Parent and that will not cover the Continuing Employees with respect to
their employment after the Closing Date. For purposes of this Section 2.9,
"Plan" means any bonus, deferred compensation, incentive compensation, stock
purchase, stock option, severance pay, medical, life or other insurance,
profit-sharing, or pension plan, program, agreement or arrangement, and each
other employee benefit plan, program, agreement or arrangement.
2.10 Certain Contracts
(a) The Company is not a party to, nor is bound by, (i) any material contract as
defined in Item 601(b)(10) of Regulation S-K of the SEC or any other material
contract or similar arrangement whether or not made in the ordinary course of
business or any agreement restricting the nature or geographic scope of its
business activities in any material respect, (ii) any agreement, indenture or
other instrument relating to the borrowing of money by the Company or the
guarantee by the Company of any such obligation, other than instruments relating
to transactions entered into in the ordinary course of business or with Company
Parent or a Subsidiary of Company Parent, (iii) any agreement, arrangement or
commitment relating to the employment of a consultant who was formerly a
director or executive officer or the employment, election, retention in office
or severance of any present or former director or officer, (iv) any contract,
agreement or understanding with a labor union, in each case whether written or
oral or (v) any material agreement between Company Parent or any of its
Affiliates, on the one hand, and the Company, on the other.
(b) The Company is not in default under any material agreement, commitment,
arrangement, lease, insurance policy or other instrument whether entered into in
the ordinary course of business or otherwise and whether written or oral, and
there has not occurred any event that, with the lapse of time or giving of
notice or both, would constitute such a default, except for such defaults which
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company.
2.11 Legal Proceedings
There are no actions, suits or proceedings instituted, pending or, to
the knowledge of the Company and Company Parent, threatened (or unasserted but
considered probable of assertion and which if asserted would have at least a
reasonable probability of an unfavorable outcome) against the Company or against
any asset, interest or right of the Company as to which there is a reasonable
probability of an unfavorable outcome and which, if such an unfavorable outcome
was rendered, would, individually or in the aggregate, have a Material Adverse
Effect on the Company. To the knowledge of the Company and Company Parent, there
are no actual or threatened actions, suits or proceedings which present a claim
to restrain or prohibit the transactions contemplated herein or to impose any
material liability in connection therewith as to which there is a reasonable
probability of an unfavorable outcome and which, if such an unfavorable outcome
was rendered, would, individually or in the aggregate, have a Material Adverse
Effect on the Company. There are no actions, suits or proceedings instituted,
pending or, to the knowledge of the Company and Company Parent, threatened (or
unasserted but considered probable of assertion and which if asserted would be
reasonably expected to have an unfavorable outcome) against any present or, to
the knowledge of the Company and Company Parent, former director or officer of
the Company, that would reasonably be expected to give rise to a claim for
indemnification and that (i) has a reasonable probability of an unfavorable
outcome and (ii) in the event of an unfavorable outcome, would, individually or
in the aggregate, have a Material Adverse Effect on the Company.
2.12 Compliance with Laws
The Company is in compliance in all material respects with all statutes
and regulations applicable to the conduct of its business, and neither the
Company nor Company Parent has received notification with respect to the Company
from any agency or department of federal, state or local government (i)
asserting a material violation of any such statute or regulation, (ii)
threatening to revoke any license, franchise, permit or government authorization
or (iii) restricting or in any way limiting its operations, except for such
noncompliance, violations, revocations and restrictions which would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
2.13 Labor Matters
With respect to the employees of the Company, neither the Company nor
Company Parent is a party to any labor agreement with any labor organization,
group or association and has not engaged in any unfair labor practice. Since
January 1, 2001 and prior to the date hereof, neither the Company nor Company
Parent has experienced, with respect to the Company, any attempt by organized
labor or its representatives to make the Company conform to demands of organized
labor relating to employees or to enter into a binding agreement with organized
labor that would cover the employees of the Company. To the knowledge of the
Company and Company Parent, there is no unfair labor practice charge or other
complaint by any employee or former employee of the Company against the Company
or Company Parent with respect to the Company pending before any court,
arbitrator or governmental agency arising out of the Company's activities, which
charge or complaint (i) has a reasonable probability of an unfavorable outcome
and (ii) in the event of an unfavorable outcome would, individually or in the
aggregate, have a Material Adverse Effect on the Company; there is no labor
strike or labor disturbance pending or, to the knowledge of the Company and
Company Parent, threatened against the Company; and the Company has not
experienced a work stoppage or other material labor difficulty since January 1,
2001.
2.14 Environmental Liability
Neither the Company nor Company Parent has received with respect to the
Company any written notice of any legal, administrative, arbitral or other
proceeding, claim or action and, to the knowledge of the Company and Company
Parent, there is no governmental investigation of any nature ongoing with
respect to the Company, in each case that would reasonably be expected to result
in the imposition, on the Company of any liability arising under any local,
state or federal environmental statute, regulation or ordinance including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended (each, an "Environmental Action"), which
liability would have a Material Adverse Effect on the Company. There are no
facts or circumstances which would reasonably be expected to form the basis for
any proceeding, claim, action or governmental investigation that would impose
any liability in an Environmental Action; and the Company is not subject to any
agreement, order, judgment, decree or memorandum by or with any court,
governmental authority, regulatory agency or third party imposing any liability
in an Environmental Action.
2.15 Intellectual Property
The Company owns the entire right, title and interest in and to, or has
valid licenses with respect to, all of the Intellectual Property necessary to
conduct the business and operations of the Company as presently conducted,
except where the failure to do so would not, individually or in the aggregate,
have a Material Adverse Effect on the Company and all such Intellectual Property
has been Previously Disclosed. The ownership, licensing or use of such
Intellectual Property by the Company does not conflict with, infringe,
misappropriate or otherwise violate the Intellectual Property rights of any
other person or entity. None of the Intellectual Property used by the Company is
subject to any outstanding order, decree, judgment, stipulation, settlement,
lien, charge, encumbrance or attachment, which order, decree, judgment,
stipulation, settlement, lien, charge, encumbrance or attachment would have a
Material Adverse Effect on the Company.
2.16 Tax Treatment
Neither the Company nor Company Parent has taken or agreed to take any
action or is aware of any facts or circumstances that might prevent or impede
the Merger from qualifying as a reorganization within the meaning of Section
368(a) of the Code.
2.17 Brokers and Finders
Neither Company Parent, the Company nor any Affiliate of the Company,
nor any of their respective officers, directors or employees, has employed any
broker, finder or financial advisor or incurred any liability for any fees or
commissions in connection with the transactions contemplated herein or the Plan
of Merger, in each case which such fees or commissions would be payable by the
Company, Newco or Newco Parent.
2.18 Insurance
Company Parent and/or the Company currently maintain insurance in
amounts considered by Company Parent and/or the Company, as applicable to be
reasonably necessary for the operations of the Company. Neither Company Parent
nor the Company has received any notice of a material premium increase or
cancellation with respect to any of its insurance policies or bonds held with
respect to the business of Company, and within the last three years, neither
Company Parent nor the Company has been refused any insurance coverage sought or
applied for with respect to the business of the Company, and neither Company
Parent nor the Company has any reason to believe that existing insurance
coverage with respect to the Company's business could not be renewed as and when
the same shall expire, upon terms and conditions as favorable as those presently
in effect, other than possible increases in premiums or unavailability in
coverage that have not resulted from any extraordinary loss experience of the
Company. A list of all outstanding material claims as of the date hereof under
any such insurance policy with respect to the Company have been Previously
Disclosed.
2.19 Investment Representation
Company Parent is acquiring the Newco Parent Class B Common Stock for
its own account and/or for the account of one or more of its Subsidiaries and
not for distribution and acknowledges that it must bear the economic risk of the
investment in the Newco Parent Class B Common Stock for an indefinite period of
time under applicable Securities Laws. Company Parent has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of acquiring the Newco Parent Class B Common Stock pursuant
to the Plan of Merger; and Company Parent has the financial ability to bear the
economic risks of acquiring and holding the Newco Parent Class B Common Stock to
be acquired by it pursuant to the Plan of Merger for investment. Company Parent
has had the opportunity to ask questions and receive answers to Company Parent's
satisfaction concerning the terms and conditions of the transfer of Newco Parent
Class B Common Stock pursuant to the Plan of Merger. Company Parent understands
that the Newco Parent Class B Common Stock has not been registered under the
Securities Act and agrees that it may only dispose of the Newco Parent Class B
Common Stock pursuant to an effective registration statement under the
Securities Act of 1933, as amended, or pursuant to an exemption from
registration thereunder. Certificates evidencing the shares of Newco Parent
Class B Common Stock to Company Parent under the Plan of Merger may be endorsed
with legends regarding the foregoing transfer restrictions; provided, that Newco
Parent shall provide Company Parent, upon request, with certificates not bearing
such legends at such time as such transfer restrictions no longer apply.
Article III.
REPRESENTATIONS AND WARRANTIES OF
NEWCO PARENT AND NEWCO
Except as Previously Disclosed, Newco Parent and Newco hereby jointly
and severally represent and warrant to the Company and Company Parent as
follows:
3.1 Capital Structure of Newco Parent
The authorized capital stock of Newco Parent consists at April 24, 2001
of (i) 10,000,000 shares of preferred stock, par value $0.0001 per share ("Newco
Parent Preferred Stock"), of which 2,189,800 shares were issued and outstanding
as Series A Preferred Stock and 191,880 shares have been reserved for issuance
pursuant to option agreements exercisable for Newco Parent Series A Preferred
Stock, and (ii) 100,000,000 shares of common stock, par value $0.0001 per share
("Newco Parent Common Stock"), of which: 18,863,000 shares were issued and
outstanding or in the process of being issued based upon contractual obligations
for their issuance; no shares were held in treasury; 3,753,807 shares have been
reserved for issuance pursuant to the Option Agreement; 7,492,542 shares have
been reserved for issuance of Newco Parent Common Stock pursuant to redemption
of a subsidiary's preferred stock, warrant and option agreements; and 5,954,200
shares have been reserved for issuance upon conversion of Newco Parent Series A
Preferred Stock. All outstanding shares of Newco Parent capital stock have been
duly authorized and validly issued and are fully paid and nonassessable. None of
the shares of Newco Parent's capital stock has been issued in violation of the
preemptive rights of any person. The shares of Newco Parent Class B Common Stock
to be issued in connection with the Merger will, as of the Closing Date, be duly
authorized and, when issued in accordance with the terms of this Reorganization
Agreement and the Plan of Merger, will be validly issued, fully paid,
nonassessable and free and clear of any preemptive rights.
3.2 Organization, Standing and Authority of Newco Parent
Newco Parent is a duly organized corporation, validly existing and in
good standing under the laws of Delaware, with full corporate power and
authority to carry on its business as now conducted and is duly licensed or
qualified to do business in the states of the United States and foreign
jurisdictions where its ownership or leasing of property or the conduct of its
business requires such qualification, except where the failure to be so licensed
or qualified would not have a Material Adverse Effect on Newco Parent. Newco
Parent is qualified to do business under the laws of those jurisdictions as
Previously Disclosed.
3.3 Ownership of Newco Parent Subsidiaries; Capital Structure of Newco
Parent Subsidiaries
Newco Parent has no Subsidiary other than those disclosed in its annual
report on Form 10-K for the year ended June 30, 2000, Newco or any Subsidiary
that is not a significant subsidiary under Regulation S-X of the SEC. Other than
the Newco Parent Subsidiaries, no Subsidiary of Newco has any material assets or
material liabilities or carries on any business or has any operations. The
outstanding shares of capital stock of the Newco Parent Subsidiaries have been
duly authorized and validly issued and are fully paid and nonassessable and all
such shares are directly or indirectly owned by Newco Parent free and clear of
all liens, claims and encumbrances. No Newco Parent Subsidiary has or is bound
by any Rights which are authorized, issued or outstanding with respect to the
capital stock of any Newco Parent Subsidiary and there are no agreements,
understandings or commitments relating to the right of Newco Parent to vote or
to dispose of said shares. None of the shares of capital stock of any Newco
Parent Subsidiary has been issued in violation of the preemptive rights of any
person.
3.4 Organization, Standing and Authority of Newco Parent Subsidiaries
Each Newco Parent Subsidiary is a duly organized corporation, validly
existing and in good standing under applicable laws. Each Newco Parent
Subsidiary (i) has full power and authority to carry on its business as now
conducted, and (ii) is duly licensed or qualified to do business in the states
of the United States and foreign jurisdictions where its ownership or leasing of
property or the conduct of its business requires such licensing or qualification
and where failure to be licensed or qualified would have a Material Adverse
Effect on Newco Parent. Each Newco Parent Subsidiary has all federal, state,
local and foreign governmental authorizations necessary for it to own or lease
its properties and assets and to carry on its business as it is now being
conducted, except where the failure to be so authorized would not have a
Material Adverse Effect on Newco Parent. Each Newco Parent Subsidiary is
qualified to do business under the laws of those jurisdictions as Previously
Disclosed.
3.5 Authorized and Effective Agreement
(a) Each of Newco Parent and Newco has all requisite corporate power and
authority to enter into and perform all of its obligations under this
Reorganization Agreement, the Plan of Merger, the Option Agreement and the
Registration Rights Agreement and all other documents or agreements contemplated
hereby or thereby. The execution and delivery of this Reorganization Agreement,
the Plan of Merger, the Option Agreement and the Registration Rights Agreement
and the consummation of the transactions contemplated hereby and thereby have
been duly and validly authorized by all necessary corporate action in respect
thereof on the part of Newco Parent and Newco. The Board of Directors of Newco
Parent has directed that the transactions contemplated by this Reorganization
Agreement and the Plan of Merger be submitted to Newco Parent's stockholders for
approval at a special meeting to be held as soon as practicable.
(b) Assuming the accuracy of the representation contained in Section 2.3(b)
hereof, this Reorganization Agreement, the Plan of Merger and the Option
Agreement constitute, and upon execution the Registration Rights Agreement will
constitute, legal, valid and binding obligations of each of Newco Parent and
Newco, as the case may be, in each case enforceable against it in accordance
with their respective terms subject, as to enforceability, to bankruptcy,
insolvency and other laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
(c) Neither the execution and delivery of this Reorganization Agreement, the
Plan of Merger, the Option Agreement, or the Registration Rights Agreement, nor
consummation of the transactions contemplated hereby or thereby, nor compliance
by Newco Parent or Newco with any of the provisions hereof or thereof shall (i)
conflict with or result in a breach of any provision of the articles or
certificate of incorporation or bylaws of Newco Parent or any Newco Parent
Subsidiary, (ii) assuming the consents and approvals contemplated by Section 4.3
hereof and the consents and approvals which are Previously Disclosed are duly
obtained, constitute or result in a breach of any term, condition or provision
of, or constitute a default under, or give rise to any right of termination,
cancellation or acceleration with respect to, or result in the creation of any
lien, charge or encumbrance upon any property or asset of Newco Parent or any
Newco Parent Subsidiary pursuant to, any note, bond, mortgage, indenture,
license, agreement or other instrument or obligation, or (iii) assuming the
consents and approvals contemplated by Section 4.3 hereof and the consents and
approvals which are Previously Disclosed are duly obtained, violate any order,
writ, injunction, decree, statute, rule or regulation applicable to Newco Parent
or any Newco Parent Subsidiary, except (in the case of clauses (ii) and (iii)
above) for such violations, rights, conflicts, breaches, creations or defaults
which, either individually or in the aggregate, would not have a Material
Adverse Effect on Newco Parent.
(d) Except for approvals specified in Section 4.3 hereof and except as expressly
referred to in this Reorganization Agreement, no consent, approval or
authorization of, or declaration, notice, filing or registration with, any
governmental or regulatory authority, or any other person, is required to be
made or obtained by Newco Parent or Newco on or prior to the Closing Date in
connection with the execution, delivery and performance of this Agreement and
the Plan of Merger or the consummation of the transactions contemplated hereby
or thereby.
3.6 SEC Documents
Newco Parent has filed all SEC Documents required by the Securities
Laws and such SEC Documents complied, as of their respective dates, in all
material respects with the Securities Laws.
3.7 Financial Statements; Books and Records; Minute Books
The Newco Parent Financial Statements prior to the date of this
Agreement fairly present, and the Newco Parent Financial Statements filed by
Newco Parent in SEC Documents after the date of the Agreement will fairly
present, the consolidated financial position of Newco Parent and its
consolidated Subsidiaries as of the dates indicated and the consolidated results
of operations, changes in shareholders' equity and cash flows of Newco Parent
and its consolidated Subsidiaries for the periods then ended and each such
financial statement has been or will be, as the case may be, prepared in
conformity with generally accepted accounting principles applied on a consistent
basis except as disclosed therein and except in the case of unaudited
statements, as permitted by Form 10-Q. The books and records of Newco Parent and
each Newco Parent Subsidiary fairly reflect in all material respects the
transactions to which it is a party or by which its properties are subject or
bound. Such books and records have been properly kept and maintained and are in
compliance in all material respects with all applicable legal and accounting
requirements. The minute books of Newco Parent and the Newco Parent Subsidiaries
contain records which are accurate in all material respects of all corporate
actions of its stockholders and Board of Directors (including committees of its
Board of Directors).
3.8 Material Adverse Change
Newco Parent has not, on a consolidated basis, suffered any change in
its financial condition, results of operations or business since December 31,
2000 which individually or in the aggregate with any other such changes would
constitute a Material Adverse Effect with respect to Newco Parent and no event
or circumstance has occurred since December 31, 2000 that individually or in the
aggregate is reasonably likely to have a Material Adverse Effect on the
financial condition, results of operations or business of Newco Parent on a
consolidated basis.
3.9 Absence of Undisclosed Liabilities
Neither Newco Parent nor any Newco Parent Subsidiary has any liability
(contingent or otherwise), excluding contractually assumed contingencies, that
is material to Newco Parent on a consolidated basis, or that, when combined with
all similar liabilities, would be material to Newco Parent on a consolidated
basis as disclosed in the Newco Parent Financial Statements filed with the SEC
prior to the date hereof and except for liabilities incurred in the ordinary
course of business subsequent to June 30, 2000.
3.10 Properties
Newco Parent has good and marketable title free and clear of all liens,
encumbrances, charges, defaults or equitable interests to all of the properties
and assets, real and personal, which, individually or in the aggregate, are
material to the business of Newco Parent taken as a whole, and which are
reflected on the Newco Parent Financial Statements as of December 31, 2000 or
acquired after such date, except (i) liens for taxes not yet due and payable,
(ii) such imperfections of title, easements and encumbrances, if any, as are not
material in character, amount or extent and (iii) dispositions and encumbrances
for adequate consideration in arm's length transactions at fair market value in
the ordinary course of business. All leases pursuant to which Newco Parent, as
lessee, leases real and personal property which, individually or in the
aggregate, are material to the business of Newco Parent taken as a whole are
valid and enforceable in accordance with their respective terms except where the
failure of such lease or leases to be valid and enforceable would not,
individually or in the aggregate, have a Material Adverse Effect on Newco
Parent. All tangible property used in the business of Newco Parent is in good
condition, reasonable wear and tear excepted, and is usable in the ordinary
course of business consistent with Newco Parent's past practices.
3.11 Tax Matters
(a) All Tax Returns required to be filed by or with respect to Newco Parent and
each Newco Parent Subsidiary have been timely filed, except where the failure to
file Tax Returns would not, in the aggregate, have a Material Adverse Effect on
Newco Parent. All such filed Tax Returns are true and correct in all material
respects. All Taxes due and owing by or with respect to Newco Parent or any
Newco Parent Subsidiary have been paid or adequate reserves have been
established on the Newco Parent Financial Statements for the payment of such
Taxes, except where any such failure to pay or establish adequate reserves would
not, in the aggregate, have a Material Adverse Effect on Newco Parent. Newco
Parent and each Newco Parent Subsidiary will not have any liability for any such
Taxes in excess of the amounts so paid or reserves or accruals so established
except where such liability would not have a Material Adverse Effect on Newco
Parent.
(b) None of Newco Parent or any Newco Parent Subsidiary has requested, nor has
there been granted, any extension of time within which to file any Tax Returns
with respect to Newco Parent or any Newco Parent Subsidiary which have not since
been filed. None of Newco Parent or any Newco Parent Subsidiary has received any
notice of assessment or proposed assessment in connection with any Tax Returns
filed by or with respect to Newco Parent or any Newco Parent Subsidiary except
as accrued on the Newco Parent Financial Statements, and there are no pending
material tax examinations of, or Tax claims asserted with respect to, Newco
Parent or any Newco Parent Subsidiary. There are currently no agreements in
effect with respect to Newco Parent or any Newco Parent Subsidiary to extend the
period of limitations for the assessment or collection of any Tax.
(c) None of Newco Parent or any Newco Parent Subsidiary is a party to any
agreement (other than an agreement exclusively among Newco Parent and a Newco
Parent Subsidiary) providing for the allocation or sharing of, or
indemnification for, Taxes.
(d) For purposes of this Section 3.11, (i) references to Newco Parent and any
Newco Parent Subsidiary shall include predecessors thereof and (ii) "Newco
Parent Subsidiary" shall include each Subsidiary (as defined in Article 1
hereof) of Newco Parent, and each corporation, partnership, limited liability
company, joint venture or other entity which Newco Parent controls directly or
indirectly (through one or more intermediaries). For purposes of the previous
sentence, "control" means the possession, direct or indirect, of the power
either (1) to vote fifty percent (50%) or more of the voting interests of a
corporation, partnership, limited liability company, joint venture or other
entity, or (2) to direct or cause the direction of the management and policies
of a corporation, partnership, limited liability company, joint venture or other
entity, whether by contract or otherwise.
3.12 Newco Parent Employee Benefit Plans
(a) Each material Newco Parent Plan has been Previously Disclosed. For purposes
of this Agreement, "Newco Parent Plan" means each bonus, deferred compensation,
incentive compensation, stock purchase, stock option, severance pay, medical,
life or other insurance, profit-sharing, or pension plan, program, agreement or
arrangement, and each other employee benefit plan, program, agreement or
arrangement, sponsored, maintained or contributed to or required to be
contributed to by Newco Parent or by any trade or business, whether or not
incorporated, that together with Newco Parent would be deemed a "single
employer" under Section 414 of the Code (a "Newco Parent ERISA Affiliate").
(b) With respect to each of the Newco Parent Plans, Newco Parent has heretofore
delivered or made available to Company Parent true and complete copies of each
of the following documents: (i) the Newco Parent Plan and related documents
(including all amendments thereto); (ii) the two most recent annual reports and
financial statements, if any; (iii) the most recent summary plan description,
together with each summary of material modifications, required under ERISA with
respect to such Newco Parent Plan, and (iv) the most recent determination letter
received from the IRS with respect to each Newco Parent Plan that is intended to
be qualified under the Code and all material communications to or from the IRS
or any other governmental or regulatory authority relating to each Newco Parent
Plan.
(c) No liability under Title IV of ERISA has been incurred by Newco Parent or
any Newco Parent ERISA Affiliate that has not been satisfied in full, and no
condition exists that presents a material risk to Newco Parent or any Newco
Parent ERISA Affiliate of incurring any liability under such Title.
(d) Neither Newco Parent nor any Newco Parent ERISA Affiliate, nor any of the
Newco Parent Plans, nor any trust created thereunder, nor any trustee or
administrator thereof has engaged in a transaction in connection with which
Newco Parent, any Newco Parent ERISA Affiliate, or any of the Newco Parent
Plans, could, directly or indirectly, be subject to a civil penalty assessed
pursuant to Section 409 or 502(i) of ERISA, a tax imposed pursuant to Section
4975, 4976, 4980B, or 4980D of the Code, or any similar civil penalty or tax. No
retirement benefit plan sponsored, maintained, contributed to or required to be
contributed to by Newco Parent or a current or past ERISA Affiliate of Newco
Parent has incurred an "accumulated funding deficiency" as defined under Code
Section 412.
(e) Full payment has been made, or will be made in accordance with Section
404(a) (6) of the Code, of all amounts that Newco Parent or any Newco Parent
ERISA Affiliate is required to pay under the terms of the Newco Parent Plans or
applicable law.
(f) No Newco Parent Plan is (i) subject to Section 412 of the Code or Title IV
of ERISA, (ii) a "multiemployer plan," as such term is defined in Section 3(37)
of ERISA, (iii) a "multiple employer welfare arrangement," as such term is
defined in Section 3(40) of ERISA, or (iv) single employer plan that has two or
more contributing sponsors, at least two of whom are not under common control,
within the meaning of Section 4063(a) of ERISA.
(g) A favorable determination letter has been issued by the IRS with respect to
each of the Newco Parent Plans that is intended to be "qualified" within the
meaning of Section 401(a) of the Code, and no condition exists that presents a
material risk of any such letter being revoked. Each of the Newco Parent Plans
that is intended to satisfy the requirements of Section 125 or 501 (c) (9) of
the Code satisfies such requirements in all material respects. Each of the Newco
Parent Plans has been operated and administered in all material respects in
accordance with its terms and applicable laws, including but not limited to
ERISA and the Code.
(h) There are no claims pending, or, to the knowledge of Newco Parent,
threatened or anticipated (other than routine claims for benefits) against any
Newco Parent Plan, the assets of any Newco Parent Plan, or against Newco Parent
or any Newco Parent ERISA Affiliate with respect to any Newco Parent Plan. There
are no pending or threatened audits or investigations by any governmental body,
commission or agency involving any Newco Parent Plan.
(i) Neither the execution of this Agreement nor the consummation of the
transactions contemplated hereby will result in, or is a precondition to, (a)
any employee of Newco Parent or any of its Affiliates becoming entitled to
severance pay or any similar payment, (b) the acceleration of the time of
payment or vesting, or an increase in the amount of, any compensation due to any
employee of Newco Parent or any of its Affiliates, or (c) the renewal or
extension of the term of any agreement regarding the compensation of any
employee of Newco Parent or any of its Affiliates.
3.13 Certain Contracts
(a) Neither Newco Parent nor any Newco Parent Subsidiary is a party to, nor is
bound by, (i) any material contract as defined in Item 601(b)(10) of Regulation
S-K of the SEC or any other material contract or similar arrangement whether or
not made in the ordinary course of business (other than loans or loan
commitments and funding transactions in the ordinary course of business of any
Newco Parent Subsidiary) or any agreement restricting the nature or geographic
scope of its business activities in any material respect, (ii) any agreement,
indenture or other instrument relating to the borrowing of money by Newco Parent
or any Newco Parent Subsidiary or the guarantee by Newco Parent or any Newco
Parent Subsidiary of any such obligation, other than instruments relating to
transactions entered into in the ordinary course of business, (iii) any
agreement, arrangement or commitment relating to the employment of a consultant
who was formerly a director or executive officer or the employment, election,
retention in office or severance of any present or former director or officer,
or (iv) any contract, agreement or understanding with a labor union, in each
case whether written or oral.
(b) Neither Newco Parent nor any Newco Parent Subsidiary is in default under any
material agreement, commitment, arrangement, lease, insurance policy or other
instrument whether entered into in the ordinary course of business or otherwise
and whether written or oral, and there has not occurred any event that, with the
lapse of time or giving of notice or both, would constitute such a default,
except for such defaults which would not, individually or in the aggregate, have
a Material Adverse Effect on Newco Parent.
3.14 Legal Proceedings
There are no actions, suits or proceedings instituted, pending
or, to the knowledge of Newco Parent and Newco, threatened (or unasserted but
considered probable of assertion and which if asserted would have at least a
reasonable probability of an unfavorable outcome) against Newco Parent, Newco or
any Newco Parent Subsidiary or against any asset, interest or right of Newco
Parent or any Newco Parent Subsidiary as to which there is a reasonable
probability of an unfavorable outcome and which, if such an unfavorable outcome
was rendered, would, individually or in the aggregate, have a Material Adverse
Effect on Newco Parent. To the knowledge of Newco Parent, there are no actual or
threatened actions, suits or proceedings which present a claim to restrain or
prohibit the transactions contemplated herein or to impose any material
liability in connection therewith as to which there is a reasonable probability
of an unfavorable outcome and which, if such an unfavorable outcome was
rendered, would, individually or in the aggregate, have a Material Adverse
Effect on Newco Parent. There are no actions, suits or proceedings instituted,
pending or, to the knowledge of Newco Parent, threatened (or unasserted but
considered probable of assertion and which if asserted would be reasonably
expected to have an unfavorable outcome) against any present or, to Newco
Parent's knowledge, former director or officer of Newco Parent, that would
reasonably be expected to give rise to a claim for indemnification and that (i)
has a reasonable probability of an unfavorable outcome and (ii) in the event of
an unfavorable outcome, would, individually or in the aggregate, have a Material
Adverse Effect on Newco Parent.
3.15 Compliance with Laws
Each of Newco Parent and the Newco Parent Subsidiaries is in compliance
in all material respects with all statutes and regulations applicable to the
conduct of its business, and none of them has received notification from any
agency or department of federal, state or local government (i) asserting a
material violation of any such statute or regulation, (ii) threatening to revoke
any license, franchise, permit or government authorization or (iii) restricting
or in any way limiting its operations, except for such noncompliance,
violations, revocations and restrictions which would not, individually or in the
aggregate, have a Material Adverse Effect on Newco Parent. None of Newco Parent
or any Newco Parent Subsidiary is subject to any regulatory or supervisory cease
and desist order, agreement, directive, memorandum of understanding or
commitment which could be reasonably anticipated to have a Material Adverse
Effect on Newco Parent, and none of them has received any communication
requesting that they enter into any of the foregoing.
3.16 Labor Matters
With respect to their employees, neither Newco Parent nor any Newco
Parent Subsidiary is a party to any labor agreement with any labor organization,
group or association and has not engaged in any unfair labor practice. Since
January 1, 2001 and prior to the date hereof, Newco Parent and the Newco Parent
Subsidiaries have not experienced any attempt by organized labor or its
representatives to make Newco Parent or any Newco Parent Subsidiary conform to
demands of organized labor relating to their employees or to enter into a
binding agreement with organized labor that would cover the employees of Newco
Parent or any Newco Parent Subsidiary. To the knowledge of Newco Parent and the
Newco Parent Subsidiaries, there is no unfair labor practice charge or other
complaint by any employee or former employee of Newco Parent or any Newco Parent
Subsidiary against any of them pending before any court, arbitrator or
governmental agency arising out of Newco Parent's or such Newco Parent
Subsidiary's activities, which charge or complaint (i) has a reasonable
probability of an unfavorable outcome and (ii) in the event of an unfavorable
outcome would, individually or in the aggregate, have a Material Adverse Effect
on Newco Parent; there is no labor strike or labor disturbance pending or, to
the knowledge of Newco Parent and the Newco Parent Subsidiaries, threatened
against any of them; and neither Newco Parent nor any Newco Parent Subsidiary
has experienced a work stoppage or other material labor difficulty since January
1, 2001.
3.17 Brokers and Finders
Neither Newco Parent nor any Newco Parent Subsidiary, nor any of their
respective officers, directors or employees, has employed any broker, finder or
financial advisor or incurred any liability for any fees or commissions in
connection with the transactions contemplated herein or the Plan of Merger.
Prior to the execution and delivery of this Agreement, Valuation Counselors has
delivered to the Board of Directors of Newco Parent an opinion that the Merger
is fair from a financial point of view to the stockholders of Newco Parent.
3.18 Insurance
Newco Parent and the Newco Parent Subsidiaries each currently maintains
insurance in amounts considered by Newco Parent and any Newco Parent Subsidiary
as applicable, to be reasonably necessary for their operations. Neither Newco
Parent nor any Newco Parent Subsidiary has received any notice of a material
premium increase or cancellation with respect to any of its insurance policies
or bonds, and within the last three years, neither Newco Parent nor any Newco
Parent Subsidiary has been refused any insurance coverage sought or applied for,
and Newco Parent has no reason to believe that existing insurance coverage
cannot be renewed as and when the same shall expire, upon terms and conditions
as favorable as those presently in effect, other than possible increases in
premiums or unavailability in coverage that have not resulted from any
extraordinary loss experience of Newco Parent or any Newco Parent Subsidiary.
Newco Parent and the Newco Parent Subsidiaries have Previously Disclosed a list
of all outstanding claims as of the date hereof by Newco Parent and the Newco
Parent Subsidiaries under any insurance policy.
3.19 Environmental Liability
Neither Newco Parent nor any Newco Parent Subsidiary has received any
written notice of any legal, administrative, arbitral or other proceeding, claim
or action and, to the knowledge of Newco Parent and the Newco Parent
Subsidiaries, there is no governmental investigation of any nature ongoing, in
each case that could reasonably be expected to result in the imposition, on
Newco Parent or any Newco Parent Subsidiary of any liability arising under an
Environmental Action, which liability would have a Material Adverse Effect on
Newco Parent; there are no facts or circumstances which could reasonably be
expected to form the basis for any proceeding, claim, action or governmental
investigation that would impose any liability in an Environmental Action; and
neither Newco Parent nor any Newco Parent Subsidiary is subject to any
agreement, order, judgment, decree or memorandum by or with any court,
governmental authority, regulatory agency or third party imposing any liability
in an Environmental Action.
3.20 Intellectual Property
Newco Parent or a Newco Parent Subsidiary owns the entire right, title
and interest in and to, or has valid licenses with respect to, all of the
Intellectual Property necessary to conduct the business and operations of Newco
Parent and the Newco Parent Subsidiaries as presently conducted, except where
the failure to do so would not, individually or in the aggregate, have a
Material Adverse Effect on Newco Parent and all such Intellectual Property has
been Previously Disclosed. The ownership, licensing or use of Intellectual
Property by Newco Parent or its Subsidiaries does not conflict with, infringe,
misappropriate or otherwise violate the Intellectual Property rights of any
other person or entity. None of such Intellectual Property is subject to any
outstanding order, decree, judgment, stipulation, settlement, lien, charge,
encumbrance or attachment, which order, decree, judgment, stipulation,
settlement, lien, charge, encumbrance or attachment would have a Material
Adverse Effect on Newco Parent.
3.21 Takeover Laws
Newco Parent and Newco have taken all action required to by taken by
each of them in order to exempt this Reorganization Agreement and the Plan of
Merger and the transactions contemplated hereby and thereby from, and this
Reorganization Agreement and the Plan of Merger and the transactions
contemplated hereby and thereby are exempt from, the requirements of any
"moratorium," "control share," "fair price," "affiliate transaction," "business
combination," or other antitakeover laws and regulations of any state
(collectively, "Takeover Laws"), including, without limitation, the State of
Delaware.
3.22 Tax Treatment
Neither Newco Parent nor any Newco Parent Subsidiary has taken or
agreed to take any action or is aware of any facts or circumstances that might
prevent or impede the Merger from qualifying as a reorganization within the
meaning of Section 368(a) of the Code.
3.23 Merger Consideration
Newco Parent will have, at the Effective Date (as defined in Article 4
hereof), unissued shares of Newco Parent Class B Common Stock sufficient to
provide the Merger Consideration that are not reserved for any other purpose.
Article IV.
COVENANTS
4.1 Stockholders' Meeting
Newco Parent shall submit this Reorganization Agreement and the Plan of
Merger and the issuance of Newco Parent Class B Common Stock thereunder and the
amendment to its certificate of incorporation and bylaws as set forth in Annex D
to its stockholders for approval at a special meeting to be held as soon as
reasonably practicable. Subject to the fiduciary duties of the board of
directors of Newco Parent as determined after consultation with counsel, the
board of directors of Newco Parent shall recommend that the stockholders of
Newco Parent vote to approve such matters submitted.
4.2 Proxy Statement
As promptly as reasonably practicable after the date hereof, Newco
Parent shall prepare the Proxy Statement to be mailed to the stockholders of
Newco Parent in connection with this Agreement and the transactions contemplated
hereby.
4.3 Applications
As promptly as reasonably practicable after the date hereof, each of
the parties hereto shall, and they shall cause their respective subsidiaries to,
submit any applications, notices or other filings to any other state or federal
government agency, department or body the approval of which is required for
consummation of the Merger. The Company and Newco Parent each represents and
warrants to the other that all information concerning it and its directors,
officers, stockholders and subsidiaries included (or submitted for inclusion) in
any such application and furnished by it shall be true, correct and complete in
all material respects.
4.4 Best Efforts
(a) Subject to the terms and conditions of this Agreement, Newco Parent, Newco,
Company Parent and the Company shall each use its reasonable efforts in good
faith, and each of them shall cause its Subsidiaries to use their reasonable
efforts in good faith, to (i) furnish such information as may be required in
connection with the preparation of the documents referred to in Sections 4.2 and
4.3 above, subject to the provisions of Section 4.23 and (ii) take or cause to
be taken all action necessary or desirable on its part so as to permit
consummation of the Merger at the earliest possible date, including, without
limitation, (1) obtaining the consent or approval of each individual,
partnership, corporation, association or other business or professional entity
whose consent or approval is required for consummation of the transactions
contemplated hereby, and (2) requesting the delivery of appropriate opinions,
consents and letters from its counsel and independent auditors. Subject to the
terms and conditions of this Agreement, no party hereto shall take or fail to
take, or cause or permit its Subsidiaries to take or fail to take, or to the
best of its ability permit to be taken or omitted to be taken by any third
persons, any action that would substantially impair the prospects of completing
the Merger pursuant to this Reorganization Agreement and the Plan of Merger,
that would materially delay such completion, or that would adversely affect the
qualification of the Merger as a reorganization within the meaning of Section
368(a) of the Code. In the event that either party has taken any action, whether
before, on or after the date hereof, that would adversely affect such
qualification, each party shall take such action as the other party may
reasonably request to cure such effect to the extent curable without a Material
Adverse Effect on either of the parties.
(b) The Company shall give prompt notice to Newco Parent, and Newco Parent shall
give prompt notice to the Company, of (i) the occurrence, or failure to occur,
of any event which occurrence or failure would be reasonably likely to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate at any time from the date hereof to the Closing Date such that the
condition set forth in Section 5.2(a) or 5.3(a), as applicable, would not be met
if such failure to be true or accurate were to occur or be continuing on the
Closing Date, and (ii) any material failure of the Company or Newco Parent, as
the case may be, to comply with or satisfy any covenant, condition or agreement
to be complied with or satisfied by it hereunder, and each party shall use all
reasonable best efforts to remedy such failure.
(c) Each party shall provide and shall request its auditors to provide the other
party with such historical financial information regarding it (and related audit
reports and consents) as the other party may reasonably request for disclosure
purposes under the Securities Laws.
4.5 Investigation and Confidentiality
The Company and Newco Parent each will keep the other advised of all
material developments relevant to its business and to consummation of the
transactions contemplated herein and in the Plan of Merger. Newco Parent and the
Company each may make or cause to be made such investigation of the financial
and legal condition of the other as such party reasonably deems necessary or
advisable in connection with the transactions contemplated herein and in the
Plan of Merger, provided, however, that such investigation shall be reasonably
related to such transactions and shall not interfere unnecessarily with normal
operations. Newco Parent and the Company agree to furnish the other and the
other's advisors with such financial data and other information with respect to
its business and properties as such other party shall from time to time
reasonably request. No investigation pursuant to this Section 4.5 shall affect
or be deemed to modify any representation or warranty made by, or the conditions
to the obligations to consummate the Merger of, any party hereto. Each party
hereto shall hold all information furnished by the other party or any of such
party's Subsidiaries or representatives pursuant to this Agreement in confidence
to the extent required by, and in accordance with, the provisions of the
confidentiality agreement, dated January 11, 2001, between Company Parent and
Newco Parent (the "Confidentiality Agreement").
4.6 Press Releases
The Company and Newco Parent shall agree with each other as to the form
and substance of any press release related to this Reorganization Agreement and
the Plan of Merger or the transactions contemplated hereby or thereby, and shall
consult each other as to the form and substance of other public disclosures
related thereto, provided, however, that nothing contained herein shall prohibit
any party, following notification to the other parties, from making any
disclosure which is required by applicable law or Nasdaq rules.
4.7 Actions Pending the Merger
(a) Prior to the Closing Date, and except as otherwise provided for by this
Reorganization Agreement and the Plan of Merger, or consented to or approved by
the other parties hereto, each of Newco Parent and the Company shall, and shall
cause each of its Subsidiaries to, use its reasonable best efforts to preserve
its properties, business and relationships with customers, employees and other
persons.
(b) The Company shall not, and to the extent applicable as regards its
relationship with the Company, Company Parent shall itself not and shall cause
its Affiliates to not, except with the prior written consent of Newco Parent
which will not be unreasonably withheld and except as Previously Disclosed or
expressly contemplated or permitted by this Agreement or the Plan of Merger:
(1) carry on its business other than in the usual, regular and ordinary
course in substantially the same manner as heretofore conducted;
(2) declare, set aside, make or pay any dividend or other distribution in
respect of its capital stock other than distributions to Company Parent in the
ordinary course consistent with past practices;
(3) issue any shares of its capital stock or permit any treasury shares to
become outstanding other than pursuant to Rights outstanding and Previously
Disclosed at the date hereof;
(4) incur any additional debt obligation or other obligation for borrowed money
other than in the ordinary course of business consistent with past practice;
(5) issue, grant or authorize any Rights or effect any recapitalization,
reclassification, stock dividend, stock split or like change in capitalization,
or redeem, repurchase or otherwise acquire any shares of its capital stock;
(6) amend its certificate of incorporation or bylaws;
(7) merge with any other corporation or permit any other corporation to merge
into it or consolidate with any other corporation; acquire control over any
other corporation or organization or create any Subsidiary;
(8) waive or release any material right or cancel or compromise any
material debt or claim;
(9) liquidate or sell or dispose of any material assets or acquire any material
assets; except as Previously Disclosed, make any capital expenditure in excess
of $500,000 in any instance or $2,000,000 in the aggregate;
(10) increase the rate of compensation of, pay or agree to pay any bonus to, or
provide any other employee benefit or incentive to, any of its directors,
officers or employees except in a manner consistent with past practice or as
required by law or contractual obligation in effect as of the date hereof;
(11) change its methods of accounting in effect at December 28, 2000, except as
required by changes in generally accepted accounting principles concurred in by
its independent certified public accountants; or
(12) agree to do any of the foregoing.
(c) Newco Parent shall not, and shall not permit any of the Newco Parent
Subsidiaries to, except with the prior written consent of the Company Parent or
as expressly contemplated or permitted by this Agreement or the Plan of Merger:
(1) carry on its business other than in the usual, regular and ordinary
course in substantially the same manner as heretofore conducted;
(2) declare, set aside, make or pay any dividend or other distribution
in respect of its capital stock except as Previously Disclosed;
(3) issue any shares of its capital stock or permit any treasury shares to
become outstanding other than pursuant to Rights outstanding at the date hereof;
(4) incur any additional debt obligation or other obligation for borrowed money
other than in the ordinary course of business consistent with past practice;
(5) issue, grant or authorize any Rights or effect any recapitalization,
reclassification, stock dividend, stock split or like change in capitalization,
or redeem, repurchase or otherwise acquire any shares of its capital stock;
(6) amend its certificate of incorporation or bylaws;
(7) merge with any other corporation or permit any other corporation to merge
into it or consolidate with any other corporation; acquire control over any
other corporation or organization or create any Subsidiary;
(8) waive or release any material right or cancel or compromise any
material debt or claim;
(9) liquidate or sell or dispose of any material assets or acquire any material
assets; except as Previously Disclosed, make any capital expenditure in excess
of $500,000 in any instance or $2,000,000 in the aggregate;
(10) increase the rate of compensation of, pay or agree to pay any bonus to, or
provide any other employee benefit or incentive to, any of its directors,
officers or employees except in a manner consistent with past practice or as
required by law or contractual obligation in effect as of the date hereof;
(11) change its methods of accounting in effect at December 31, 2000, except as
required by changes in generally accepted accounting principles concurred in by
its independent certified public accountants;
(12) authorize or permit any of its officers, directors, employees or agents to
directly or indirectly solicit or initiate any inquiries relating to, or the
making of any proposal which constitutes, a "Takeover Proposal" (as defined
below), or, except to the extent legally required in the judgment of Newco
Parent's Board of Directors after consultation with outside counsel for the
discharge of the fiduciary duties of its Board of Directors, recommend or
endorse any Takeover Proposal, or participate in any discussions or
negotiations, or provide third parties with any material nonpublic information,
relating to any such inquiry or proposal or otherwise knowingly facilitate any
effort or attempt to make or implement a Takeover Proposal; provided, however,
that the Newco Parent may communicate information about any such Takeover
Proposal to its stockholders if, in the judgment of the Newco Parent's Board of
Directors, after consultation with outside counsel, such communication is
necessary in order to comply with its fiduciary duties to the Newco Parent's
stockholders required under applicable law. Newco Parent will take all actions
necessary or advisable to inform the appropriate individuals or entities
referred to in the first sentence of this subsection 12 of the obligations
undertaken herein. Newco Parent will notify Company Parent promptly if any such
inquiries or Takeover Proposals are received by, any such information is
requested from, or any such negotiations or discussions are sought to be
initiated or continued with, Newco Parent, and Newco Parent will promptly inform
Company Parent in writing of all of the relevant details with respect to the
foregoing. As used in this Agreement, "Takeover Proposal" shall mean any tender
or exchange offer, proposal for a merger, consolidation or other business
combination involving Newco Parent or any proposal or offer to acquire in any
manner a substantial equity interest in, or a substantial portion of the assets
of, Newco Parent other than the transactions contemplated or permitted by this
Agreement, and the Plan of Merger; or
(13) agree to do any of the foregoing.
4.8 Closing; Certificate of Merger and Articles of Merger
The transactions contemplated by this Reorganization Agreement and the
Plan of Merger shall be consummated at a closing ("Closing") to be held at the
offices of Xxxxx Xxxxxxx LLP, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000 on the
third business day following satisfaction of the conditions to consummation of
the Merger set forth in Article 5 hereof (other than such conditions relating to
the actions to be taken at the Closing) or such later date as may be mutually
specified by Newco Parent and Company Parent. In connection with such Closing,
Newco shall execute (a) a certificate of merger and shall cause such certificate
to be delivered to the Delaware Secretary of State in accordance with Section
251(c) of the Delaware General Corporation Law and (b) articles of merger and
shall cause such articles to be delivered to the State Corporation Commission of
Virginia. The Merger shall be effective at the time and on the date such
certificate of merger has been accepted for filing by the Delaware Secretary of
State and such articles of merger have been accepted for filing by the State
Corporation Commission of Virginia, or on the date specified therein as mutually
agreed by the parties hereto (the "Effective Date").
4.9 Employee Matters
(a) At least ten (10) days prior to the Closing Date, the Company and Company
Parent shall provide to Newco and Newco Parent a list of employees of the
Company who are not to be employed by Newco following the Closing Date (the
"Non-Continuing Employees"). All costs associated with any severance of the
Non-Continuing Employees shall be accrued on the books of the Company and paid
by Newco following the Merger. Other than the Non-Continuing Employees, Newco
Parent and Newco agree that each person who is an employee of the Company as of
the Closing Date (individually, a "Continuing Employee" and collectively, the
"Continuing Employees") shall be an employee of Newco immediately following the
Closing Date except for such employees as Previously Disclosed. After the
Closing Date, each Continuing Employee, while employed by Newco or any of its
Affiliates shall be employed (i) at a base salary or base hourly wage that is
not less than that which such Continuing Employee was receiving immediately
prior to the Closing Date, and (ii) on terms and conditions that are no less
favorable to the Continuing Employee than those applicable to other similarly
situated employees of Newco Parent and its Affiliates.
(b) Commencing immediately following the Closing Date, Newco Parent shall cause
the Continuing Employees, while employed by Newco, Newco Parent or any of Newco
Parent's Affiliates, to be eligible to participate in Newco Parent Plans that
provide employee benefits (including but not limited to pension, welfare,
incentive compensation, severance, and vacation pay benefits) that are not less
favorable to the Continuing Employees than those afforded to other similarly
situated employees of Newco Parent and its Affiliates. Newco Parent shall cause
the Newco Parent Plans that cover the Continuing Employees or any of their
dependents or beneficiaries to treat the employment and service of the
Continuing Employees with the Company, its Affiliates and any predecessor
employers through the Closing Date as employment and service with Newco Parent
and its Affiliates for all purposes under Newco Parent Plans. The Continuing
Employees and their dependents and beneficiaries shall not be required for
calendar year 2001 to satisfy any deductible, co-payment, out-of pocket maximum
or similar requirements under Newco Parent Plans that provide medical, dental
and other welfare benefits to the extent of amounts previously credited for such
purposes under the medical, dental and other welfare benefit plans of Company
Parent and its Affiliates that covered the Continuing Employees prior to the
Closing Date (the "Company Parent Welfare Plans"), and any waiting periods,
pre-existing condition exclusions and requirements to show evidence of good
health contained in such Newco Parent Plans shall not apply with respect to the
Continuing Employees and their dependents and beneficiaries, (i) except to the
extent that any waiting period, pre-existing condition exclusion, or requirement
to show evidence of good health applied prior to the Closing to limit or deny
coverage to a Continuing Employee or any dependent or beneficiary thereof under
a Company Parent Welfare Plan and (ii) except to the extent that Newco Parent
has Previously Disclosed that Newco Parent Plans are offered through an
insurance company that would not allow the waiver of any waiting periods,
pre-existing condition exclusion or requirement to show evidence of good health.
The Continuing Employees shall receive full credit under Newco Parent's vacation
plan or policy for all unused vacation credited to the Continuing Employees as
of the Closing Date.
(c) Following the Closing Date, Newco Parent and its Affiliates shall have sole
liability and obligation for (i) all wages, commissions, employee withholdings,
or taxes relating to the employment of the Continuing Employees and all other
current or former employees of the Company, (ii) any workers' compensation or
similar workers' protection claims with respect to the Continuing Employees that
relate to an incident that occurs on or after the Closing Date, and (iii) all
short-term disability benefits, sick pay or salary continuation rights relating
to events occurring prior to, on or after the Closing Date with respect to the
Continuing Employees and all other current or former employees of the Company.
Except as set forth in the previous sentence, Company Parent shall be solely
responsible for all liabilities and/or benefits payable to current or former
Company employees under the employee benefit plans maintained by Company Parent
that covered the Company's employees prior to the Closing Date (the "Company
Parent Plans") and shall retain all liabilities and responsibilities relating to
Company Parent Plans.
(d) If a Continuing Employee's employment is terminated by Newco Parent or any
of its Affiliates within one (1) year after the Closing Date, such Continuing
Employee shall be entitled to severance benefits from Newco Parent and its
Affiliates that are not less than those provided to other similarly situated
employees of Newco Parent and its Affiliates whose employment is terminated by
such companies after similar longevity of employment (determined taking into
account employment service with the Company and its Affiliates prior to the
Closing Date in accordance with Section 4.9(b) hereof).
(e) Prior to the Closing Date, the Board of Directors of Newco Parent will take
such action as may be required to set the number of directors of Newco Parent at
seven and to elect as directors of Newco Parent, effective as of the Closing
Date, three individuals designated by Company Parent to serve as directors of
Newco Parent as required under Article FOURTH, Section D(2) of the Amended and
Restated Certificate of Incorporation of Xxxxxxxxxx.xxx, Inc.
4.10 Tax-Free Reorganization
Each party to this Agreement shall use its best efforts to
cause the Merger to qualify, and shall not take any action which could prevent
the Merger from qualifying, as a reorganization within the meaning of Section
368(a) of the Code.
4.11 Post-Closing Tax Matters
(a) After the Closing Date, each of Newco Parent and the Company Parent shall
(and shall cause their respective Subsidiaries to) cooperate fully, as and to
the extent reasonably requested by the other party, in connection with filing of
Tax Returns with respect to the Company and in any audit, litigation or other
proceeding with respect to Taxes of the Company. Such assistance and cooperation
shall include, but is not limited to, the following:
(i) assist the other party in preparing any Tax Returns which
such other party is responsible for preparing and filing;
(ii) cooperate fully in preparing for any audits of, or disputes with
taxing authorities regarding, any Tax Returns with respect to the Company;
(iii) make available to the other and to any taxing authority as
reasonably requested all information, records, and documents relating to Taxes
with respect to the Company; and
(iv) provide timely notice to the other in writing of any pending or
threatened Tax audits or assessments with respect to the Company for taxable
periods for which the other party may have liability, and furnish the other
party with copies of all correspondence received from any taxing authority in
connection with any Tax audit or information request with respect to any taxable
period.
(b) Commencing on the Closing Date, Newco Parent shall (and shall cause its
Subsidiaries to) retain until 90 days after the expiration of any applicable
statutes of limitations, and the Company Parent shall have access to, and the
right to copy, at its expense, during usual business hours upon reasonable prior
notice to Newco Parent, copies of all Tax Returns, work schedules and other
books, records or information which Newco Parent or any of its Subsidiaries
possesses relating to the Company and which may be reasonably required by the
Company Parent in connection with its Tax matters (including as may be necessary
to enable the Company Parent to prepare for or to respond to any Tax audit).
4.12 Insurance Matters.
(a) Effective as of the Closing Date: (i) Company Parent will terminate or cause
its Affiliates to terminate all coverage relating to the Company and its
businesses, assets and current or former employees under the general corporate
policies of insurance, cancelable surety bonds and hold harmless agreements of
Company Parent for the benefit of the Company, the identities of and the terms
of which shall be Previously Disclosed (provided that no such termination of
occurrence liability policies shall be effected so as to prevent Newco (as
successor to the Company) from recovering under such policies for losses from
events occurring prior to the Closing Date); and (ii) Newco Parent shall become
solely responsible for all insurance coverage and related risk of loss based on
events occurring on and after the Closing Date with respect to the Company as
merged into Newco and its businesses, assets and current or former employees.
Commencing as of the Closing Date, Newco Parent shall also be solely responsible
for, and shall indemnify, defend and save Company Parent and its Affiliates
harmless from, all losses, liabilities, claims, damages and expenses relating to
the Company and its businesses, assets and current or former employees, except
in instances in which such losses, liabilities, claims, damages and expenses
relate to matters resulting from a material breach of covenants and agreements
that was not known by Newco or Newco Parent as of the Closing Date, or the
non-disclosure of which was a material breach of representations and warranties
that was not known by Newco or Newco Parent as of the Closing Date, by the
Company or Company Parent under this Reorganization Agreement, the Plan of
Merger, the Confidentiality Agreement or any ancillary agreement contained in
Annexes to this Reorganization Agreement.
(b) Notwithstanding clause (a), to the extent that (i) any insurance policies
controlled by Company Parent and its Affiliates ("Company Parent's Insurance
Policies"), cover any loss, liability, claim, damage or expense relating to the
Company or its businesses, assets and current or former employees ("Company
Liabilities") and relating to or arising out of occurrences prior to the Closing
Date and (ii) Company Parent's Insurance Policies continue after the Closing to
permit claims to be made thereunder with respect to Company Liabilities relating
to or arising out of occurrences prior to the Closing Date ("Company Claims"),
Company Parent shall cooperate and cause its Affiliates to cooperate with Newco
Parent and Newco in submitting Company Claims (or pursuing Company Claims
previously made) on behalf of Newco Parent or Newco under Company Parent's
Insurance Policies; provided that Company Parent shall be under no obligation to
commence or maintain litigation to enforce any Company Claim and that Newco
Parent shall reimburse, indemnify and hold Company Parent and its Affiliates
harmless from all liabilities, costs and expenses (including all present or
future premiums, deductibles, legal and administrative costs, attorney's fees,
overhead and costs of compliance under Company Parent's Insurance Policies) of
any nature actually incurred by Company Parent or its Affiliates as a result of
Company Claims made under Company Parent's Insurance Policies. Upon the
incurrence of any such liability, cost or expense relating to Company Claims
made under Company Parent's Insurance Policies and upon receipt from Company
Parent of a statement of the amount of such liabilities, costs and expenses in
reasonable detail, from time to time, Newco Parent shall make payment promptly
to Company Parent or its Affiliates of the amount indicated in such statement.
(c) To the extent that, after the Closing Date, Newco Parent or Company Parent
requires any information regarding claim data, payroll or other information in
order to make filings with insurance carriers or self insurance regulators,
Company Parent shall promptly supply such information to Newco Parent and Newco
Parent shall promptly supply such information to Company Parent.
4.13 Assumption of Proceedings.
Except for any matters relating to Taxes (which matters shall
be governed by the provisions of Section 4.11) and actions, suits or proceedings
instituted or pending against the Company or against any asset, interest or
right of the Company that have not been Previously Disclosed (or arise after the
date hereof and are disclosed to Newco Parent prior to the Closing Date) as to
which there is a reasonable probability of an unfavorable outcome and which, if
such an unfavorable outcome was rendered, would have a Material Adverse Effect
on the Company, from and after the Closing Date, Newco Parent agrees to and
shall, or shall cause Newco to, assume the defense of and indemnify and hold
Company Parent and its affiliates harmless from and against any and all actions,
suits, claims and administrative or other proceedings of every kind and nature
instituted or pending against Company Parent or any of its affiliates at any
time before or after the Closing Date that relate to or arise out of (but only
to the extent that such proceedings relate to or arise out of) the assets,
business, operations, conduct, products and/or employees (including former
employees) of the Company (and any predecessors), whether relating to or arising
out of occurrences prior to or after the Closing Date. At the request of Company
Parent, Newco Parent shall assume and conduct the defense of any matters assumed
by it pursuant to this Section and Company Parent and its Affiliates shall
cooperate in such defense to the extent reasonably requested by Newco Parent.
4.14 Intercompany Indebtedness and Intercompany Tax Settlement.
(a) Except as set forth in Section 4.14(b), on or immediately prior to the
Closing Date, the Company and Company Parent shall cause all intercompany
indebtedness between the Company and Company Parent to be capitalized.
(b) On or immediately prior to the Closing Date, the Company and Company Parent
shall cause all intercompany Tax accounts to be settled and paid.
4.15 Name and Xxxx.
(a) From and after the Closing Date, Newco and Newco Parent shall not own or
license any rights to, the name "DynCorp", any derivative of the name "DynCorp"
(including, without limitation, the use of any product name containing a
derivative of the name "DynCorp") or any other name, designation or symbol which
consists of or includes any trade name, trademark or service xxxx owned or used
by Company Parent or any of its Subsidiaries (including the Company) prior to
the Closing Date, and shall not own or license any rights to use any other
designation indicating affiliation after the Closing Date with Company Parent or
any of its Subsidiaries. From and after the Closing Date, Newco and Newco
Parent, at their own expense, shall cause the Company/Newco to change all names
on all signage and all stationery, contracts, and other business forms and
documents to names which (i) do not use the name "DynCorp", any derivative of
the name "DynCorp" or any other name, designation or symbol which consists of or
includes any trade name, trademark or service xxxx owned or used by Company
Parent or any of its Subsidiaries (including the Company) prior to the Closing
Date and (ii) are not in any way similar to the name of Company Parent or any of
its Subsidiaries; provided, however, that Newco shall have the right to use
existing stationary, forms, labels, product literature, invoices, purchase
orders and other similar documents containing the name of the Company until the
earlier of 60 days after the Closing or such time as such supplies are
exhausted. Upon Company Parent's request therefor, Newco Parent will provide
Company Parent with a certificate signed on behalf of Newco Parent by an
appropriate officer thereof to the effect that the provisions of paragraph (a)
of this Section 4.15 have been complied with.
(b) Newco and Newco Parent acknowledge that a breach of their obligations under
this Section 4.15 would cause Company Parent irreparable injury and that damages
would be inadequate, and that therefore Company Parent shall have the right to
an injunction or other equitable relief in any court of competent jurisdiction
enjoining such breach. The existence and exercise of this right shall not
preclude any other rights and remedies Company Parent may have at law or in
equity or otherwise.
4.16 Post-Closing Cooperation; Surety Bonds.
(a) Company Parent, Newco and Newco Parent agree that so long as any books,
records and files relating to the business, properties, assets or operations of
the Company, to the extent that they pertain to the operations of the Company
prior to the Closing Date, remain in existence and available (which shall be for
a period of not less than six years after the Closing Date, or such longer
period as may be required by applicable law), each party (at its expense) shall
have the right to inspect and to make copies of the same at any time during
normal business hours for any proper purpose.
(b) Company Parent agrees that it shall preserve, through and for a period not
to exceed 365 days after the Closing Date, all surety or other bonds that are
currently in place with respect to any outstanding contracts and agreements to
which the Company is a party; provided, that Newco and Newco Parent use their
good faith best efforts to replace Company Parent's role in support of such
surety or other bonds as soon as reasonably practicable following the Closing
Date and provided further that Newco Parent shall indemnify and hold Company
Parent and its affiliates harmless from and against any and all losses and
damages relating to, or claims under, any of such surety or other bonds that
have been so preserved.
4.17 Working Capital Facility.
Newco Parent shall use its best efforts to secure a firm irrevocable
financing commitment and/or credit facility on prevailing market terms and
conditions under which, collectively, no less that $20 million of financing will
be available to Newco to support and finance its operations for a period of at
least 2 years subsequent to the Closing (the "Financing"), contingent only upon
the Closing. Company Parent shall cooperate in supporting Newco Parent's efforts
in this regard.
4.18 Management Matters.
On or before the Closing Date, Company Parent and Newco Parent shall
agree as to the officers of Newco following the Merger and thereafter Company
Parent shall use its best efforts to cause any officers of the Company who are
not to continue as officers of Newco following the Merger to resign such
offices; provided, however, that all costs associated with any such severance
shall be accrued on the books of the Company and paid by Newco following the
Merger.
4.19 Guarantee Covenant.
(a) Company Parent shall use good faith reasonable efforts to obtain the release
of the Company for each and every guarantee by the Company of obligations of
Company Parent or an Affiliate of Company Parent. If Company Parent is unable to
effect such a release with respect to such guarantees after using good faith
reasonable efforts to do so, Company Parent hereby agrees to indemnify Newco
Parent and Newco from any losses or damages arising from such guarantees.
(b) Newco Parent shall use good faith reasonable efforts to obtain the release
of Company Parent and its Affiliates for each and every guarantee by Company
Parent or an Affiliate of Company Parent of obligations of the Company. If Newco
Parent is unable to effect such a release with respect to such guarantees after
using good faith reasonable efforts to do so, Newco Parent hereby agrees to
indemnify Company Parent and all Affiliates of Company Parent and Newco from any
losses or damages arising from such guarantees. Without limiting the foregoing,
after the Closing Date, Newco Parent and Newco will not, and will not permit any
of their Affiliates to, renew, extend, amend or supplement any loan, contract,
lease or other obligation that is covered by any such guarantee without
providing Company Parent with evidence reasonably satisfactory to Company Parent
that the guarantees by Company Parent and its Affiliates have been released. Any
cash or other collateral posted by Company Parent or an Affiliate of Company
Parent (other than the Company) in respect of any such guarantee shall be
delivered to Company Parent.
4.20 TechServ Agreement.
Neither Company Parent nor the Company shall take any action to
terminate or cancel the Agreement, to be dated as of October 1, 2000 between the
Company and TechServ LLC, other than in the event of a breach of such agreement
by TechServ LLC. 4.21 Non-Competition.
Company Parent agrees that neither it nor any of its Subsidiaries
shall, for a period of three (3) years after the Closing Date, compete directly
or indirectly with Newco or Newco Parent and its Subsidiaries (including,
without limitation, by seeking business opportunities, responding to requests
for bids or other proposals, and by performing contracts) for revenue producing
service contracts with state and local government agencies in the state and
local government markets (which shall refer to vertical lines of business and
not geographic areas) in which the Company and Newco Parent's Subsidiaries are
actively engaged in business as of the Closing Date; provided, however, that
such restriction shall not apply, and Company Parent and its Subsidiaries shall
be free at all times to pursue and perform any and all of the following
contracts secured before, during and after the aforementioned restriction
period:
(a) Contracts and business in the health-related, transportation, law
enforcement and public safety markets pursued by Company Parent's Subsidiaries,
AdvanceMed Corporation, DynRide LLC, DynCorp Information and Enterprise
Technology, Inc. and DynCorp Information Systems, respectively;
(b) Any and all business that is conducted by Company Parent or any of its
Subsidiaries under or in connection with, or as an outgrowth of, any federal
government contract regardless of when awarded to Company Parent or a
Subsidiary;
(c) Any and all business that is conducted by Company Parent or any of its
Subsidiaries under any non-federal government contract that is in effect as of
the Closing Date (other than contracts that are currently being performed, or
are presently contemplated to be performed, by the Company);
(d) Any and all business that is conducted at any time by any business or entity
that may be acquired by Company Parent or any of its Subsidiaries, so long as
the aggregate revenue of such business or entity from contracts with state and
local governments does not exceed, in the year of acquisition, more than the
lesser of 15% of total annual revenue of such acquired business or entity or
$7,500,000;
(e) Any and all business that is conducted by an Affiliate of Company Parent
that is not a Subsidiary consolidated with Company Parent (or its parent) for
financial reporting purposes;
(f) Any and all business that is conducted by (i) any Subsidiary of Company
Parent subsequent to Company Parent's complete divestiture of such Subsidiary or
(ii) any non-affiliated third party that purchases any portion of Company
Parent's or any of its Subsidiaries' business;
(g) Any and all business under contracts or proposals of any Subsidiary of
Company Parent (other than the Company) outstanding as of the Closing Date with
other than state and local government agencies, but for services ultimately
beneficial, directly or indirectly, to a state or local government;
(h) Contracts to provide information technology desk top or "seat" management
hardware and services to a state or local government agency if, after reasonable
notice of the opportunity by Company Parent or a Subsidiary to Newco or Newco
Parent, Newco or Newco Parent has failed to actively seek or pursue such
opportunity; and
(i) Investments in any business that may be involved in providing services to
state and local government agencies so long as the securities of such businesses
are publicly traded and the aggregate investment by Company Parent does not
exceed 1% of the total outstanding securities in which the investment is made.
4.22 Outstanding Common Stock Equivalents.
Newco Parent shall take all action necessary to ensure that effective
as of the Closing Date, the terms of all options, warrants, rights or other
securities of Newco Parent or any Subsidiary of Newco Parent that are
convertible into shares of Newco Parent Common Stock have been amended or
modified in such a manner that such options, warrants, rights or other
securities are convertible into shares of Class A Common Stock, par value
$0.0001 per share, of Newco Parent.
4.23 Company Financial Statements.
Within thirty (30) days following the Closing Date, Company Parent and
the Company shall deliver to Newco Parent audited and unaudited financial
statements of the Company necessary to meet applicable Securities Laws
requirements for inclusion in the Proxy Statement, which audited financial
statements shall include, but not be limited to, balance sheets for each of the
Company's last two fiscal years and related statements of income, cash flow and
equity for each of the last three fiscal years, necessary footnote disclosure
and an unqualified opinion from an independent certified public accountant
reasonably acceptable to Newco Parent.
Article V.
CONDITIONS PRECEDENT
5.1 Conditions Precedent to Obligations of Newco Parent, Newco, Company
Parent and the Company
The respective obligations of the parties to effect the Merger shall be
subject to satisfaction or waiver of the following conditions at or prior to the
Closing Date:
(a) All corporate action necessary to authorize the execution, delivery and
performance of this Reorganization Agreement and the Plan of Merger and
consummation of the transactions contemplated hereby and thereby shall have been
duly and validly taken;
(b) The parties hereto shall have received all regulatory approvals required or
mutually deemed necessary in connection with the transactions contemplated by
this Reorganization Agreement and the Plan of Merger, all notice periods and
waiting periods required after the granting of any such approvals shall have
passed and all conditions contained in any such approval required to have been
satisfied prior to consummation of such transactions shall have been satisfied,
provided, however, that no such approval shall have imposed any condition or
requirement that, in the reasonable good faith opinion of the Board of Directors
of Newco Parent or the Company so materially and adversely affects the
anticipated economic benefits to Newco Parent or the Company, respectively, of
the transactions contemplated by this Agreement as to render consummation of
such transactions inadvisable;
(c) To the extent that any lease, license, loan, financing agreement or other
contract or agreement to which the Company, Company Parent, Newco Parent or
Newco is a party requires the consent of or waiver from the other party thereto
as a result of the transactions contemplated by this Agreement, such consent or
waiver shall have been obtained, unless the failure to obtain such consents or
waivers, individually or in the aggregate, would not have a Material Adverse
Effect on Newco Parent;
(d) None of the parties hereto shall be subject to any order, decree or
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits the consummation of the transactions contemplated by this
Reorganization Agreement and the Plan of Merger;
(e) Company Parent shall have received an opinion of Xxxxxx & Xxxxxx, and Newco
Parent shall have received an opinion of Xxxxx Peabody LLP, in each case in form
and substance reasonably satisfactory to the Company Parent and Newco Parent, as
the case may be, dated as of the Closing Date, substantially to the effect that,
on the basis of facts, representations and assumptions set forth or referred to
in such opinion, the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code. The issuance of
such opinions shall be conditioned on the receipt of tax representation letters
from each of the Company, Newco Parent, Newco, and the Company Parent, which
letters shall be in such form and substance as may reasonably be required by
Xxxxxx & Xxxxxx and Xxxxx Xxxxxxx LLP. Each such tax representation letter shall
be dated on or before the date of such opinion and shall not have been withdrawn
or modified in any material respect as of the date of such opinion. Xxxxxx &
Xxxxxx and Xxxxx Xxxxxxx LLP shall, in rendering their opinions, be entitled to
rely on the facts, representations and assumptions contained in such letters.
5.2 Conditions Precedent to Obligations of the Company and Company Parent
The obligations of the Company and Company Parent to effect the Merger
shall be subject to satisfaction of the following additional conditions at or
prior to the Closing Date unless waived by the Company and Company Parent
pursuant to Section 6.4 hereof:
(a) The representations and warranties of Newco Parent and Newco contained in
this Agreement shall be true and correct in all material respects as of the date
of this Reorganization Agreement (except that representations and warranties
qualified by materiality or Material Adverse Effect shall be true and correct in
all respects), and the representations and warranties of Newco Parent and Newco
contained in this Reorganization Agreement shall be true and correct in all
material respects as of the Closing Date as though made on and as of the Closing
Date (except that representations and warranties qualified by materiality or
Material Adverse Effect shall be true and correct in all respects) except for
changes specifically contemplated by this Reorganization Agreement and except
for those representations and warranties that address matters only as of a
particular date, which shall remain true and correct in all material respects
(except that representations and warranties qualified by materiality or Material
Adverse Effect shall be true and correct in all respects) as of such particular
date, with the same force and effect as if made on and as of the Closing Date;
(b) Since the date of this Agreement, there shall have been no material adverse
change in the financial condition, business, assets or operations of Newco
Parent and its Subsidiaries, taken as a whole;
(c) The Financing shall have been secured in form and substance reasonably
acceptable to Company Parent;
(d) Newco Parent shall have executed and delivered the Registration Rights
Agreement;
(e) The certificate of incorporation and bylaws of Newco Parent shall have
been amended substantially as set forth in Annex D;
(f) Newco Parent and Newco shall have entered into a transition services
agreement with Company Parent, in a form reasonably satisfactory to Company
Parent, Newco and Newco Parent;
(g) Newco Parent shall have entered into an employment agreement
(including an intellectual property assignment), effective on or before the
Closing Date, with Xxxxx Xxxx as Chief Executive Officer of Newco Parent
having a term of no less than three years, in form and substance reasonably
satisfactory to Company Parent and Xx. Xxxx;
(h) Newco Parent and Newco shall have in all material respects performed all
obligations and complied with all covenants required by this Reorganization
Agreement and the Plan of Merger to be performed or complied with at or prior to
the Closing Date; and
(i) Each of Newco Parent and Newco shall have delivered to the Company a
certificate, dated the Closing Date and signed by its respective Chairman, CEO,
Executive Vice President or Senior Vice President to the effect that the
conditions set forth in paragraphs (a) through (g) of this section have been
satisfied.
5.3 Conditions Precedent to Obligations of Newco Parent and Newco
The respective obligations of Newco Parent and Newco to effect the
Merger shall be subject to satisfaction of the following additional conditions
at or prior to the Closing Date unless waived by Newco Parent pursuant to
Section 6.4 hereof:
(a) The representations and warranties of Company Parent and the Company
contained in this Agreement shall be true and correct in all material respects
as of the date of this Reorganization Agreement (except that representations and
warranties qualified by materiality or Material Adverse Effect shall be true and
correct in all respects), and the representations and warranties of Company
Parent and the Company contained in this Reorganization Agreement shall be true
and correct in all material respects as of the Closing Date as though made on
and as of the Closing Date (except that representations and warranties qualified
by materiality or Material Adverse Effect shall be true and correct in all
respects) except for changes specifically contemplated by this Reorganization
Agreement and except for those representations and warranties that address
matters only as of a particular date, which shall remain true and correct in all
material respects (except that representations and warranties qualified by
materiality or Material Adverse Effect shall be true and correct in all
respects) as of such particular date, with the same force and effect as if made
on and as of the Closing Date;
(b) The Company and Company Parent shall have in all material respects performed
all obligations and complied with all covenants required by this Reorganization
Agreement and the Plan of Merger to be performed or complied with at or prior to
the Closing Date;
(c) Since the date of this Agreement, there shall have been no material adverse
change in the financial condition, business, assets or operations of the
Company;
(d) The Company shall have entered into a strategic alliance agreement with
DynRide LLC, in a form reasonably satisfactory to Company Parent and Newco
Parent;
(e) Company Parent shall have entered into a transition services agreement with
Newco and Newco Parent, in a form reasonably satisfactory to Company Parent,
Newco and Newco Parent;
(f) The Financing shall have been secured in form and substance reasonably
acceptable to Newco Parent; and
(g) The Company shall have delivered to Newco Parent and Newco a certificate,
dated the Closing Date and signed by its President or any Vice President to the
effect that the conditions set forth in paragraphs (a) through (f) of this
section have been satisfied.
Article VI.
TERMINATION, WAIVER AND AMENDMENT
6.1 Termination
This Reorganization Agreement and the Plan of Merger may be terminated,
either before or after approval by the stockholders of the Company or Newco
Parent:
(a) At any time on or prior to the Effective Date, by the mutual consent
in writing of the parties hereto;
(b) At any time on or prior to the Closing Date, by Newco Parent in writing, if
the Company or Company Parent has, or by the Company in writing, if Newco Parent
or Newco has, in any material respect, breached (i) any covenant or agreement
contained herein or in the Plan of Merger or (ii) any representation or warranty
contained herein, and in either case if (x) such breach has not been cured by
the earlier of 30 days after the date on which written notice of such breach is
given to the party committing such breach or the Closing Date and (y) such
breach would entitle the non-breaching party not to consummate the transactions
contemplated hereby under Article V hereof;
(c) At any time, by any party hereto in writing, if the applications for prior
approval referred to in Section 4.3 hereof have been finally denied, and the
time period for appeals and requests for reconsideration has run, or if any
governmental entity of competent jurisdiction shall have issued a final
nonappealable order enjoining or otherwise prohibiting the Merger;
(d) At any time, by any party hereto in writing, if the stockholders of Newco
Parent do not approve the transactions contemplated herein and the amendment of
its certificate of incorporation and bylaws as contemplated herein at the
special meeting duly called for that purpose; or
(e) By any party hereto in writing, if the Closing Date has not occurred by the
close of business on October 31, 2001 unless the failure of the Closing to occur
by such date shall be due to the failure of the party seeking to terminate this
Agreement to perform or observe the covenants and agreements set forth herein.
6.2 Effect of Termination
(a) In the event this Reorganization Agreement and the Plan of Merger is
terminated pursuant to Section 6.1 hereof, this Agreement and the Plan of Merger
shall become void and have no effect, except that (i) the provisions relating to
confidentiality and expenses set forth in Sections 4.5 and 7.1 hereof,
respectively, shall survive any such termination and (ii) a termination pursuant
to Section 6.1(b)(i) or (b)(ii) shall not relieve the breaching party from
liability for an uncured willful breach of such covenant or agreement or
representation or warranty giving rise to such termination.
(b) If this Agreement is terminated pursuant to Section 6.1(b)(i) or (b)(ii),
the breaching party shall reimburse the non-breaching party for all reasonable
out-of pocket expenses incurred by the non-breaching party and its Affiliates
(including, without limitation, legal and accounting fees and fees payable to
banks and other financial institutions and advisers) or on its behalf in
connection with the negotiation, preparation, execution and performance of this
Agreement and the transactions contemplated hereby up to an aggregate of
$300,000. For purposes of this Section 6.2(b), Newco and Newco Party shall be
considered to be one party and the Company and Company Parent shall be
considered to be the other party.
(c) If this Agreement is terminated pursuant to Section 6.1(d), Newco Parent
shall reimburse the Company and Company Parent for all reasonable out-of pocket
expenses incurred by the Company and Company Parent and their Affiliates
(including, without limitation, legal and accounting fees and fees payable to
banks and other financial institutions and advisers) or on their behalf in
connection with the negotiation, preparation, execution and performance of this
Agreement and the transactions contemplated hereby up to an aggregate of
$300,000.
6.3 Survival of Representations, Warranties and Covenants
All representations, warranties and covenants in this Reorganization
Agreement and the Plan of Merger or in any instrument delivered pursuant hereto
or thereto shall expire on, and be terminated and extinguished at, the Effective
Date other than covenants that by their terms are to survive or be performed
after the Effective Date.
6.4 Waiver
Except where not permitted by law, Newco Parent and Company Parent,
respectively, by written instrument signed by an executive officer of such
party, may at any time (whether before or after approval of this Reorganization
Agreement and the Plan of Merger by the stockholders of Newco Parent and the
Company) extend the time for the performance of any of the obligations or other
acts of the Company or Company Parent, on the one hand, or Newco Parent or
Newco, on the other hand, and may waive (i) any inaccuracies of such parties in
the representations or warranties contained in this Agreement, the Plan of
Merger or any document delivered pursuant hereto or thereto, (ii) compliance
with any of the covenants, undertakings or agreements of such parties, or
satisfaction of any of the conditions precedent to its obligations, contained
herein or in the Plan of Merger or (iii) the performance by such parties of any
of its obligations set out herein or therein.
6.5 Amendment or Supplement
This Reorganization Agreement and the Plan of Merger may be amended or
supplemented at any time only by mutual agreement of the parties hereto or
thereto. Any such amendment or supplement must be in writing and approved by
their respective boards of directors and/or officers authorized thereby and
shall be subject to the proviso in Section 6.4 hereto.
Article VII.
MISCELLANEOUS
7.1 Expenses
Each party hereto shall bear and pay all costs and expenses incurred by
it in connection with the transactions contemplated in this Reorganization
Agreement, including fees and expenses of its own financial consultants,
accountants and counsel.
7.2 Entire Agreement
This Reorganization Agreement and the Plan of Merger contain the entire
agreement between the parties with respect to the transactions contemplated
hereunder and thereunder and supersede all prior arrangements or understandings
with respect thereto, written or oral, other than documents referred to herein
or therein and the Confidentiality Agreements. The terms and conditions of this
Reorganization Agreement and the Plan of Merger shall inure to the benefit of
and be binding upon the parties hereto and thereto and their respective
successors. Except as specifically set forth herein, or in the Plan of Merger,
nothing in this Reorganization Agreement or the Plan of Merger, expressed or
implied, is intended to confer upon any party, other than the parties hereto and
thereto, and their respective successors, any rights, remedies, obligations or
liabilities. This Reorganization Agreement and the Plan of Merger, taken
together, shall constitute a plan of reorganization within the meaning of
Section 368 of the Code. EXCEPT AS TO THOSE MATTERS EXPRESSLY COVERED BY THE
REPRESENTATIONS AND WARRANTIES IN THIS AGREEMENT, EACH PARTY HERETO DISCLAIMS
ALL OTHER WARRANTIES, REPRESENTATIONS AND GUARANTIES WHETHER EXPRESS OR IMPLIED.
NO PARTY MAKES ANY REPRESENTATION OR WARRANTY AS TO MERCHANTABILITY OR FITNESS
FOR ANY PARTICULAR PURPOSE AND NO IMPLIED WARRANTIES WHATSOEVER. The
representations and warranties are included in this Agreement as a matter of
risk allocation only and the inaccuracy or breach of any representation and
warranty in no event shall be used as evidence of or be deemed to constitute bad
faith, misconduct, misrepresentation or fraud even if it is shown that the party
making such representation or warranty knew or should have known that it was
incorrect when made. Each party acknowledges that no other party nor any of its
representatives or any other person has made any representation or warranty,
express or implied, as to the accuracy or completeness of any memoranda, charts
or summaries heretofore made available by one party or its representatives to
any other party or any other information which is not included in this Agreement
or the documents referred to herein, and no party nor any of its representatives
or any other person will have or be subject to any liability to another party or
any other person resulting from the distribution of any such information to, or
use of any such information. No party makes any representations or warranties
with respect to any estimates, projections, forecasts or forward-looking
information provided to another party. There is no assurance that any estimated,
projected or forecasted results will be achieved. It is understood that any cost
estimates, forecasts, projections or other predictions contained or referred to
in any materials that have been or shall hereafter be provided to a party are
not and shall not be deemed to be representations or warranties by the party
providing such information. Each party acknowledges that (i) there are
uncertainties inherent in attempting to make such estimates, projections and
other predictions, (ii) it is familiar with such uncertainties, (iii) it is
taking full responsibility for making its own evaluation of the adequacy and
accuracy of all estimates, projections and other predictions so furnished to it,
and (iv) it shall have no claim against any other party or any of its officers,
directors, or agents with respect thereto.
7.3 No Assignment
No party hereto may assign any of its rights or obligations under this
Reorganization Agreement to any other person.
7.4 Notices
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered personally or sent by
facsimile transmission or overnight express or by registered or certified mail,
postage prepaid, addressed as follows:
If to the Company or Company Parent:
DynCorp
00000 Xxxxx Xxxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxxx
Facsimile No.: (000) 000-0000
With a required copy to:
Xxxxxx & Xxxxxx
000 Xxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxx, Esquire
Facsimile No.: (000) 000-0000
If to Newco Parent or Newco:
Xxxxxxxxxx.xxx, Inc.
00000 Xxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Xxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
With a required copy to:
Xxxxx Xxxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx, Esquire
Facsimile No.: (000) 000-0000
7.5 Captions
The captions contained in this Reorganization Agreement are for
reference purposes only and are not part of this Reorganization Agreement.
7.6 Counterparts
This Reorganization Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
7.7 Governing Law
This Reorganization Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware applicable to agreements made
and entirely to be performed within such jurisdiction, except to the extent
federal law may be applicable.
7.8 Severability
If any provision of this Agreement or the application of any such
provision is held invalid, illegal or unenforceable in any jurisdiction, such
invalidity, illegality or unenforceability shall not affect any such provision
of this Agreement or invalidate or render unenforceable such provision in any
other jurisdiction. In the event that any provision of this Agreement shall be
finally determined by a court of competent jurisdiction to be unenforceable,
such court shall have jurisdiction to reform this Agreement so that it is
enforceable to the maximum extent permitted by law and the parties shall abide
by such court's determination.
[Remainder of this page left intentionally blank.]
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Reorganization Agreement to be executed in counterparts
by their duly authorized officers, all as of the day and year first above
written.
DYNCORP MANAGEMENT RESOURCES INC.
By ---------------------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Senior Vice President
NEWPORT ACQUISITION CORP.
By ---------------------------------------------------
Name: Xxxxxx X. Xxxx
Title: CEO
XXXXXXXXXX.XXX, INC.
By ---------------------------------------------------
Name: Xxxxxx X. Xxxx
Title: CEO
DYNCORP
By ---------------------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Senior Vice President
