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EXHIBIT A
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement"), dated as of September
12, 1999, is by and among XXX.Xxx, Incorporated, a Texas corporation (the
"Company"), Xxxxxxx X. Xxxxx, Xx. ("Xxxxx") and X.X. Xxxxxx Family Partnership
("Xxxxxx"), principal shareholders of the Company, Internet America, Inc., a
Texas corporation ("Parent") and GEEK Houston II, Inc., a Texas corporation and
wholly owned subsidiary of Parent (the "Merger Sub"). Ladin and Xxxxxx are
referred to collectively as the "Principal Shareholders."
WITNESSETH:
WHEREAS, the Company is in the business of providing Internet access to
customers, both individuals and businesses, in the Texas market;
WHEREAS, the respective Boards of Directors of the Company, Merger Sub and
Parent have adopted resolutions approving and adopting the proposed merger (the
"Merger") of Merger Sub with and into the Company upon the terms and conditions
hereinafter set forth in this Agreement; and
WHEREAS, Parent, Merger Sub, the Company and the Principal Shareholders
intend that the Merger of Merger Sub with and into the Company qualify as a
tax-free reorganization under the provisions of Section 368 of the Internal
Revenue Code of 1986, as amended (the "Code") and the Treasury Regulations
promulgated thereunder; and
WHEREAS, the Principal Shareholders, who together own approximately 59% of
the outstanding common stock of the Company, desire to enter into this Agreement
for the purpose of evidencing their consent to the consummation of the Merger
and for the purpose of making certain representations, warranties, covenants and
agreements. Certain terms used in this Agreement are defined in Exhibit A
attached hereto; and
WHEREAS, as a condition and inducement of the Company and Parent entering
into this Agreement and incurring the obligations set forth herein, certain
shareholders of the Company and Parent have entered into a Voting Agreement, in
substantially the form attached hereto as Exhibit B (the "Voting Agreement").
NOW, THEREFORE, in consideration of the mutual representations, warranties
and covenants herein contained, and on the terms and subject to the conditions
herein set forth, the parties hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01. The Merger. Subject to the terms and conditions of this
Agreement, Merger Sub will be merged with and into the Company and the separate
corporate existence of Merger Sub shall thereupon cease. The Company (sometimes
referred to herein as the "Surviving Corporation") shall be the surviving
corporation in the Merger. The Merger shall have the effects set forth in
Article 5.06 of the Texas Business Corporation Act (the "TBCA").
SECTION 1.02. Effective Time of the Merger. The parties hereto shall cause
Articles of Merger (the "Articles of Merger") that meet the requirements of the
applicable provisions of the TBCA to be properly executed and filed with the
Secretary of State of Texas on the Closing Date. The Merger shall be effective
at the time of acceptance of the filing of the Articles of Merger with the
Secretary of State of the State of Texas in accordance with the TBCA or at such
later time which the parties hereto shall have agreed upon and designated in
such filing as the effective time of the Merger (the "Effective Time").
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SECTION 1.03. The Surviving Corporation.
(a) Articles of Incorporation. The Articles of Incorporation of the
Company shall be the Articles of Incorporation of the Surviving
Corporation.
(b) Bylaws. The Bylaws of the Company as in effect immediately prior
to the Effective Time shall be the Bylaws of the Surviving Corporation.
(c) Directors and Officers. The directors and officers of the Company
shall be as set forth on Schedule 1.03 from the Effective Time until their
respective successors are duly elected or appointed and qualify in the
manner provided in the Articles of Incorporation and Bylaws of the
Surviving Corporation, or as otherwise provided by law.
SECTION 1.04. Conversion of Shares. At the Effective Time, by virtue of the
Merger and without any action on the part of Company, Parent, Merger Sub or any
holder of capital stock of any of them, subject to the limitations contained
herein:
(a) Subject to Section 1.06, each share of common stock of the Company
(the "Company Common Stock") issued and outstanding immediately prior to
the Effective Time shall be automatically converted into the right to
receive shares of fully paid and nonassessable common stock of Parent (the
"Parent Common Stock") in the amount equal to the Exchange Ratio; provided,
however, that of the shares of Parent Common Stock to be issued hereunder,
240,000 of such shares (the "Escrowed Shares") shall be held in an escrow
account pursuant to an escrow agreement, the form of which is attached
hereto as Exhibit E (the "Escrow Agreement"), for indemnification purposes.
The Escrowed Shares shall be apportioned among the holders of Company
Common Stock in accordance with their pro rata portion of the aggregate
shares of Company Common Stock. By approving this Agreement at a vote of
shareholders of the Company or by written consent, such shareholders agree
(i) to the terms of the Escrow Agreement, (ii) to the appointment of Ladin
as their representative for purposes of the Escrow Agreement, (iii) that
the Escrow Agreement cannot be terminated or amended without the prior
written consent of Parent, except as provided in the Escrow Agreement and
(iv) to the indemnification provisions contained in Section 11.01 herein.
The shares of Parent Common Stock shall be issued to the Company's
shareholders as set forth on Schedule 1.04(a).
(b) Each Company Incentive Stock Option outstanding immediately prior
to the Effective Time shall be exchanged for an option to purchase Parent
Common Stock in the amount of the Exchange Ratio (the "Parent Incentive
Stock Options") under a substantially similar Incentive Stock Option Plan
to be adopted by Parent prior to Closing, and each Company Incentive Stock
Option shall be deemed to be canceled as of the Closing Date. The Parent
Incentive Stock Options shall be issued as set forth on Schedule 1.04(b).
(c) Each Company Non-Qualified Stock Option outstanding immediately
prior to the Effective Time shall be exchanged for an option to purchase
Parent Common Stock in the amount of the Exchange Ratio (the "Parent
Nonqualified Stock Options", and together with the Parent Incentive Stock
Options, the "Parent Options") under a substantially similar Non-Qualified
Stock Option Plan to be adopted by Parent prior to Closing, and each
Company Non-Qualified Stock Option shall be deemed canceled as of the
Closing Date. The Parent Non-Qualified Stock Options shall be issued as set
forth on Schedule 1.04(c).
(d) Each share of common stock of Merger Sub issued and outstanding
immediately prior to the Effective Time shall automatically be converted
into and become one share of Common Stock of the Surviving Corporation and
shall constitute the only outstanding shares of capital stock of the
Surviving Corporation.
SECTION 1.05. Stock Certificates. At or following the Effective Time, each
holder of an outstanding certificate or certificates representing Company Common
Stock shall surrender the same to the Parent and the Parent shall, in exchange
therefor, issue to the holder of such certificate(s) shares of Parent Common
Stock in
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accordance with Section 1.04, and the surrendered certificate(s) shall be
canceled. From and after the Effective Time, all shares of the Company Common
Stock converted in accordance with Section 1.04 shall no longer be outstanding
and shall automatically be canceled and retired and shall cease to exist. Until
surrendered and exchanged, each certificate of Company Common Stock shall
represent solely the right to receive Parent Common Stock in accordance with
Section 1.04, without interest and less any tax withholding. From and after the
Effective Time, all certificates representing the common stock of Merger Sub
shall be deemed for all purposes to represent the number of shares of common
stock of the Surviving Corporation into which they are converted in accordance
with Section 1.04.
SECTION 1.06. Dissenting Shares. Each share of Company Common Stock issued
and outstanding immediately prior to the Effective Time not voted in favor of
the Merger, the holder of which has given written notice of the exercise of
dissenter's rights and has perfected such rights as required by the TBCA, is
herein called a "Dissenting Share." Dissenting Shares shall not be converted
into or represent the right to receive Parent Common Stock pursuant to Section
1.04 and shall be entitled only to such rights as are available to such holder
pursuant to the TBCA, unless the holder thereof shall have withdrawn or
forfeited his dissenter's rights. Each holder of Dissenting Shares shall be
entitled to receive the value of such Dissenting Shares held by him in
accordance with the applicable provisions of the TBCA. The Company will pay to
any holder of Dissenting Shares such amount as such holder shall be entitled to
receive in accordance with the applicable provisions of the TBCA. If any holder
of Dissenting Shares shall effectively withdraw or forfeit his dissenter's
rights under the TBCA, such Dissenting Shares shall be converted into the right
to receive Parent Common Stock in accordance with Section 1.04.
SECTION 1.07. Tax-Free Reorganization. The parties hereto intend that the
Merger shall constitute a reorganization within the meaning of Section 368 of
the Code. The parties hereto adopt this Agreement as a "plan of reorganization"
within the meaning of Section 1.368-2(g) and 1.368-3(a) of the Treasury
Regulations promulgated thereunder.
SECTION 1.08. Further Documents. Each party hereto will, either prior to or
after the Effective Time, execute such further documents, instruments, deeds,
bills of sale, assignments and assurances and take such further actions as may
reasonably be requested by one or more of the other parties to consummate the
Merger, to vest the Surviving Corporation with full title to all assets,
properties, privileges, rights, approvals, immunities and franchises of Merger
Sub or the Company, or to effect the other purposes of this Agreement.
SECTION 1.09. Adjustment of Exchange Ratio. The Exchange Ratio shall be
adjusted in the event of any consolidation, reorganization, recapitalization,
stock split, stock dividend or other like event which occurs, between the date
of this Agreement and the Closing Date, with respect to the Parent Common Stock.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PRINCIPAL SHAREHOLDERS
Each of the Principal Shareholders, severally and not jointly, represents
and warrants that the following are true and correct as of the date hereof and
will be true and correct through the Closing Date as if made on that date:
SECTION 2.01. Ownership of the Stock. Such Principal Shareholder owns,
beneficially and of record, good and marketable title to the shares of Company
Common Stock set forth opposite such Principal Shareholder's name on Schedule
3.01, free and clear of all security interests, liens, adverse claims,
encumbrances, equities, proxies, options and shareholders' agreements, except as
set forth in Schedule 3.01. At the Closing, such Principal Shareholder will
convey to Parent or tender in exchange for the Parent Common Stock good and
marketable title to all of the shares of Company Common Stock set forth opposite
such Principal Shareholder's name on Schedule 3.01, free and clear of any
security interests, liens, adverse claims, encumbrances, equities, proxies,
options or shareholders' agreements, except as set forth in Schedule 3.01.
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SECTION 2.02. No Other Commitments. Except as set forth in Schedule 2.02,
such Principal Shareholder is not party to or bound by, nor does such Principal
Shareholder have any knowledge of, any agreement, instrument, arrangement,
contract, obligation, commitment or understanding of any character, whether
written or oral, express or implied, relating to the sale, assignment,
encumbrance, conveyance, transfer or delivery of any capital stock of the
Company owned by such Principal Shareholder or any securities of any Subsidiary.
SECTION 2.03. Authority and Validity. Such Principal Shareholder has full
power and authority to execute, deliver and perform this Agreement and the
agreements set forth in Schedule 2.03 (the "Related Agreements") to which such
Principal Shareholder is or shall be a party, and to consummate the transactions
contemplated hereby and thereby. This Agreement and the Related Agreements have
been or will be as of the Closing Date duly executed and delivered by such
Principal Shareholder, and constitute or will constitute at Closing the legal,
valid and binding obligations of such Principal Shareholder, enforceable against
such Principal Shareholder in accordance with their respective terms, except as
may be limited by applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally or the availability of equitable remedies.
SECTION 2.04. No Violation. Except as set forth in Schedule 2.02, neither
the execution, delivery or performance of this Agreement or the Related
Agreements, nor the consummation of the transactions contemplated hereby or
thereby, will (a) conflict with, or result in a violation or breach of the
terms, conditions or provisions of, or constitute a default under, any
organizational document of such Principal Shareholder or any agreement,
indenture or other instrument under which such Principal Shareholder is bound or
to which the shares of Company Common Stock owned by such Principal Shareholder
are subject, or result in the creation or imposition of any security interest,
lien, charge or encumbrance upon the shares of Company Common Stock owned by
such Principal Shareholder, or (b) violate or conflict with any judgment,
decree, order, statute, rule or regulation of any court or public, governmental
or regulatory agency or body having jurisdiction over such Principal Shareholder
or the shares of Company Common Stock owned by such Principal Shareholder.
SECTION 2.05. Compliance with Laws. There are no existing violations by
such Principal Shareholder of any federal, state or local law or regulation that
could affect the property or business of the Company. Such Principal Shareholder
is not subject to, or in default with respect to, any continuing court or
administrative order, writ, injunction or decree applicable specifically to the
Company or to its business, assets, operations or employees.
SECTION 2.06. Investments in Competitors. Such Principal Shareholder does
not own directly or indirectly any interests or any investment in any
corporation, business or other person that is a Competitor of the Company or any
Subsidiary, other than a passive investment consisting of an aggregate interest
of up to 5% in any such Competitor which is a reporting company under the
Securities Exchange Act of 1934, as amended.
SECTION 2.07. Consents. Except as set forth in Schedule 2.02, no consent,
authorization, approval, permit or license of, or filing with, any governmental
or public body or authority, any lender or lessor or any other person or entity
is required to authorize, or is required in connection with, the execution,
delivery and performance of this Agreement or the Related Agreements by such
Principal Shareholder.
SECTION 2.08. Status of Principal Shareholders. Such Principal Shareholder
is a sophisticated investor with such knowledge and experience in financial and
business matters that such Principal Shareholder is capable of evaluating the
merits and risks of an investment in Parent, and is able to bear the economic
risk of loss of such Principal Shareholder's investment in Parent. Such
Principal Shareholder is an "accredited investor," as that term is defined in
Rule 501(a) of Regulation D under the Securities Act. Such Principal Shareholder
is acting on its own behalf in connection with the investigation and examination
of Parent and its decision to execute these documents and consummate the
transactions contemplated herein. Such Principal Shareholder is acquiring its
portion of the Parent Common Stock for its own account and not with a view to
distribution. Such Principal Shareholder acknowledges that the Parent Common
Stock is not and will not be registered except as provided in Article X and may
not be sold or transferred in the absence of registration
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under the Securities Act and applicable state securities laws, unless an
exemption exists therefor (including, without limitation, Rule 144 under the
Securities Act).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND LADIN
The Company and Ladin represent and warrant that the following are true and
correct as of the date hereof and will be true and correct through the Closing
Date as if made on that date (it being acknowledged and agreed that
indemnification for any breaches of the representations and warranties set forth
in this Article III shall be as provided in Article XI below):
SECTION 3.01. Ownership of the Stock. The shareholders listed on Schedule
3.01 own, beneficially and of record, good and marketable title to the shares of
Company Common Stock set forth opposite such shareholders' names on Schedule
3.01, which constitutes all of the issued and outstanding capital stock of the
Company, and to the knowledge of the Company and Ladin, free and clear of all
security interests, liens, adverse claims, encumbrances, equities, proxies,
options or shareholders' agreements, except as set forth in Schedule 3.01. At
the Closing, the shareholders of the Company will convey to Parent good and
marketable title to all of the issued and outstanding capital stock of the
Company, free and clear of any security interests, liens, adverse claims,
encumbrances, equities, proxies, options, shareholders' agreements or
restrictions, except as set forth in Schedule 3.01.
SECTION 3.02. Organization and Good Standing; Qualification. The Company is
a corporation duly organized, validly existing and in good standing under the
laws of its state of incorporation, with all requisite corporate power and
authority to carry on the business in which it is engaged, to own the properties
it owns, to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The Company is duly qualified and licensed to
do business and is in good standing in all jurisdictions where the nature of its
business makes such qualification necessary, which jurisdictions are listed on
Schedule 3.02. The Company does not have any assets, employees or offices in any
state other than the states listed on Schedule 3.02.
SECTION 3.03. Capitalization. The authorized capital stock of the Company
consists of (a) 16,000,000 shares of common stock, par value $0.01 per share, of
which 6,517,923 shares are issued and outstanding, and (b) 1,000,000 shares of
preferred stock, par value $10.00 per share, of which no shares are issued and
outstanding, and no shares of such capital stock are held in the treasury of the
Company. All of the issued and outstanding shares of capital stock of the
Company are duly authorized, validly issued, fully paid and nonassessable.
Except as set forth on Schedule 3.03, there exist no options, warrants,
subscriptions or other rights to purchase, or securities convertible into or
exchangeable for, the capital stock of the Company. Except as set forth in
Schedule 3.01, neither the Company nor, to the Company's or Ladin's knowledge,
the shareholders of the Company are parties to or bound by, nor do they have any
knowledge of, any agreement, instrument, arrangement, contract, obligation,
commitment or understanding of any character, whether written or oral, express
or implied, relating to the sale, assignment, encumbrance, conveyance, transfer
or delivery of any capital stock of the Company. No shares of capital stock of
the Company have been issued or disposed of in violation of the preemptive
rights of any of the Company's shareholders. Any accrued dividends on the
capital stock of the Company, whether or not declared, have been paid in full.
SECTION 3.04. Corporate Records. The copies of the Company's Articles of
Incorporation and Bylaws, and all amendments thereto, that have been delivered
to Parent are true, correct and complete copies thereof, as in effect on the
date hereof. The minute books of the Company, copies of which have been
delivered to Parent, contain accurate minutes of all meetings of, and accurate
consents to all actions taken without meetings by, the Board of Directors (and
any committees thereof) and the shareholders of the Company since the formation
of the Company.
SECTION 3.05. Authorization and Validity. The execution, delivery and
performance by the Company of this Agreement and the other agreements
contemplated hereby, and the consummation of the transactions contemplated
hereby and thereby, have been or will be upon approval by the necessary vote of
shareholders of the Company duly authorized by all director and shareholder
action required by the Company. This
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Agreement and the Related Agreements have been or will be as of the Closing Date
duly executed and delivered by the Company and constitute or will constitute
legal, valid and binding obligations of the Company, enforceable against the
Company in accordance with their respective terms, except as may be limited by
applicable bankruptcy, insolvency or similar laws affecting creditors' rights
generally or the availability of equitable remedies, subject to approval by the
shareholders of the Company. The merger of Merger Sub with and into the Company
as set forth herein will not impair the ability or authority of the Company to
carry on its business as now conducted in any respect.
SECTION 3.06. Subsidiaries. Except as set forth on Schedule 3.06, the
Company does not own, directly or indirectly, any of the capital stock of any
other corporation or any equity, profit sharing, participation or other interest
in any corporation, partnership, joint venture or other entity. Each Subsidiary
is duly organized and validly existing in good standing under the laws of the
state in which it is incorporated, and is duly qualified to do business and in
good standing in each jurisdiction wherein failure to qualify to do business
could adversely affect the Subsidiary. The Company has delivered to Parent true,
complete and correct copies of the Articles of Incorporation and Bylaws of each
Subsidiary, as in effect on the date hereof. The authorized capital stock of
each Subsidiary is set forth in Schedule 3.06. All issued and outstanding shares
of capital stock of each Subsidiary are duly authorized and validly issued and
outstanding, fully paid and nonassessable and are owned by the Company free and
clear of all security interests, liens, adverse claims, encumbrances, equities,
proxies, options or shareholders' agreements. There are in existence no options,
warrants or similar rights granted by any Subsidiary, or any agreements to which
any Subsidiary is a party, for the issuance or sale by it of any securities
except to the Company. Each Subsidiary has obtained or duly applied for all such
material licenses, permits and certificates from government agencies and
authorities as are necessary to the conduct of its business, and the
consummation of the transactions contemplated hereby will not result in the loss
or impairment of, or any default under, any such license, permit or certificate.
SECTION 3.07. No Violation. Neither the execution, delivery or performance
of this Agreement or the Related Agreements nor the consummation of the
transactions contemplated hereby or thereby will (a) conflict with, or result in
a violation or breach of the terms, conditions or provisions of, or constitute a
default under, the Articles of Incorporation or Bylaws of the Company or any
agreement, indenture or other instrument under which the Company is bound or to
which the Company Common Stock or any of the assets of the Company or any
Subsidiary are subject, or result in the creation or imposition of any security
interest, lien, charge or encumbrance upon the Company Common Stock or any of
the assets of the Company or any Subsidiary, or (b) violate or conflict with any
judgment, decree, order, statute, rule or regulation of any court or any public,
governmental or regulatory agency or body having jurisdiction over the Company,
the Company Common Stock or the assets of the Company or any Subsidiary.
SECTION 3.08. Consents. Except as set forth in Schedule 3.08, no consent,
authorization, approval, permit or license of, or filing with, any governmental
or public body or authority, any lender or lessor or any other person or entity
is required to authorize, or is required in connection with, the execution,
delivery and performance of this Agreement or the Related Agreements on the part
of the Company.
SECTION 3.09. Financial Statements. The Company has furnished to Parent the
audited consolidated balance sheet and related audited consolidated statements
of income, retained earnings and cash flows for the twelve-month periods ended
December 31, 1998 and December 31, 1997, including the notes thereto (the
"Audited Financial Statements"), as well as unaudited consolidated balance
sheets and related unaudited consolidated statements of income, retained
earnings and cash flows for each month ended thereafter through July 31, 1999
(the "Unaudited Financial Statements," and together with the Audited Financial
Statements, the "Financial Statements"). The Audited Financial Statements are
true, correct and complete, are in accordance with the books and records of the
Company and the Subsidiaries, fairly present the consolidated financial
condition and results of operations of the Company and the Subsidiaries as of
the dates and for the periods indicated and have been prepared in conformity
with generally accepted accounting principles applied on a consistent basis with
prior periods. The Unaudited Financial Statements are in accordance with the
books and records of the Company and the Subsidiaries, and fairly present the
consolidated financial condition and results of operations of the Company and
the Subsidiaries as of the dates and for the periods indicated, except for the
absence of notes thereto and subject to normal year-end audit adjustments which
are not material. The
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books of account of the Company and the Subsidiaries have been kept accurately
in the ordinary course of business, the transactions entered therein represent
bona fide transactions and the revenues, expenses, assets and liabilities of the
Company and the Subsidiaries have been properly recorded in such books.
SECTION 3.10. Liabilities and Obligations. The Financial Statements reflect
all liabilities of the Company and the Subsidiaries, accrued, contingent or
otherwise (known or unknown and asserted or unasserted), arising out of
transactions effected or events occurring on or prior to the date hereof. All
reserves shown in the Financial Statements are appropriate, reasonable and
sufficient to provide for losses thereby contemplated. Except as set forth in
the Financial Statements, neither the Company nor any Subsidiary is liable upon
or with respect to, or obligated in any other way to provide funds in respect of
or to guarantee or assume in any manner, any debt, obligation or dividend of any
person, corporation, association, partnership, joint venture, trust or other
entity, and neither the Company, any Subsidiary nor Ladin know of any basis for
the assertion of any other claims or liabilities of any nature or in any amount.
SECTION 3.11. Employee Matters.
(a) Cash Compensation. Schedule 3.11(a) contains a complete and
accurate list of the names, titles and cash compensation, including without
limitation wages, salaries, bonuses (discretionary and formula) and other
cash compensation (the "Cash Compensation") of all employees of the Company
and the Subsidiaries. Except as set forth on Schedule 3.11(a), there have
been no promised increases in Cash Compensation of employees of the Company
and the Subsidiaries that have not yet been effected.
(b) Compensation Plans. Schedule 3.11(b) contains a complete and
accurate list of all compensation plans, arrangements or practices (the
"Compensation Plans") sponsored by the Company and/or the Subsidiaries or
to which the Company or any Subsidiary contributes on behalf of its
employees, other than Employee Benefit Plans listed in Schedule 3.12(a).
The Compensation Plans include without limitation plans, arrangements or
practices that provide for severance pay, deferred compensation, incentive,
bonus or performance awards, and stock ownership or stock options. The
Company has provided Parent a copy of each written Compensation Plan and a
written description of each unwritten Compensation Plan. Each of the
Compensation Plans can be terminated or amended at will by the Company.
(c) Employment Agreements. Schedule 3.11(c) contains a complete and
accurate list of all employment agreements (the "Employment Agreements") to
which the Company and/or any Subsidiary is a party with respect to its
employees. The Employment Agreements include without limitation employee
leasing agreements, employee services agreements and noncompetition
agreements. The Company has provided Parent a copy of each written
Employment Agreement and a written description of each unwritten Employment
Agreement.
(d) Employee Policies and Procedures. Schedule 3.11(d) contains a
complete and accurate list of all employee manuals, policies, procedures
and work-related rules (the "Employee Policies and Procedures") that apply
to employees of the Company and/or any Subsidiary. The Company has provided
or made available to Parent a copy of all written Employee Policies and
Procedures and a written description of all unwritten Employee Policies and
Procedures. Each of the Employee Policies and Procedures can be amended or
terminated at will by the Company or the appropriate Subsidiary, as the
case may be.
(e) Unwritten Amendments. No unwritten amendments have been made,
whether by oral communication, pattern of conduct or otherwise, with
respect to any Compensation Plans, Employment Agreements or Employee
Policies and Procedures.
(f) Labor Compliance. The Company and each Subsidiary (i) has been and
is in compliance with all laws, rules, regulations and ordinances
respecting employment and employment practices, terms and conditions of
employment and wages and hours, and (ii) is not liable for any arrears of
wages or penalties for failure to comply with any of the foregoing. Neither
the Company nor any Subsidiary has engaged in any unfair labor practice or
discriminated on the basis of race, color, religion, sex, national origin,
age or handicap in its employment conditions or practices. There are no (i)
unfair labor practice charges or
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complaints or racial, color, religious, sex, national origin, age or
handicap discrimination charges or complaints pending or, to the knowledge
of Company and Ladin, threatened, against the Company or any Subsidiary
before any federal, state or local court, board, department, commission or
agency nor, to the knowledge of the Company and Ladin, does any basis
therefor exist or (ii) existing or, to the knowledge of Company and Ladin,
threatened, labor strikes, disputes, grievances, controversies or other
labor troubles affecting the Company or any Subsidiary, nor, to the
knowledge of the Company and Ladin, does any basis therefor exist.
(g) Unions. Neither the Company nor any Subsidiary has ever been a
party to any agreement with any union, labor organization or collective
bargaining unit. No employees of the Company or any Subsidiary are
represented by any union, labor organization or collective bargaining unit.
To the knowledge of the Company and Ladin, the employees of the Company and
the Subsidiaries have no intention to and have not threatened to organize
or join a union, labor organization or collective bargaining unit.
(h) Aliens. All employees of the Company and the Subsidiaries are
citizens of, or are authorized to be employed in, the United States.
SECTION 3.12. Employee Benefit Plans.
(a) Identification. Schedule 3.12(a) contains a complete and accurate
list of all employee benefit plans (the "Employee Benefit Plans") (within
the meaning of Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")) sponsored by the Company or any Subsidiary
or to which the Company or any Subsidiary contributes on behalf of its
employees and all Employee Benefit Plans previously sponsored or
contributed to on behalf of its employees within the three years preceding
the date hereof. The Company has provided Parent with or made available to
Parent, copies of all plan documents, determination letters, pending
determination letter applications, trust instruments, insurance contracts,
administrative services contracts, annual reports, actuarial valuations,
summary plan descriptions, summaries of material modifications,
administrative forms and other documents that constitute a part of or are
incident to the administration of the Employee Benefit Plans. In addition,
the Company has provided Parent a written description of all existing
practices engaged in by the Company or any Subsidiary that constitute
Employee Benefit Plans. Each of the Employee Benefit Plans can be
terminated or amended at will by the Company or the appropriate Subsidiary,
as the case may be. No unwritten amendment exists with respect to any
Employee Benefit Plan.
(b) Administration. Each Employee Benefit Plan has been administered
and maintained in compliance with all laws, rules and regulations. No
Employee Benefit Plan is currently the subject of an audit, investigation,
enforcement action or other similar proceeding conducted by any state or
federal agency. No prohibited transactions (within the meaning of Section
4975 of the Code) have occurred with respect to any Employee Benefit Plan.
No threatened or pending claims, suits or other proceedings exist with
respect to any Employee Benefit Plan other than normal benefit claims filed
by participants or beneficiaries.
(c) Qualification. The Company has received a favorable determination
letter or ruling from the Internal Revenue Service for each Employee
Benefit Plan intended to be qualified within the meaning of Section 401(a)
of the Code and/or tax-exempt within the meaning of Section 501(a) of the
Code. No proceedings exist or have been threatened that could result in the
revocation of any such favorable determination letter or ruling.
(d) Funding Status. No accumulated funding deficiency (within the
meaning of Section 412 of the Code), whether waived or unwaived, exists
with respect to any Employee Benefit Plan or any plan sponsored by any
member of a controlled group (within the meaning of Section 412(n)(6)(B) of
the Code) in which the Company or any Subsidiary is a member (a "Controlled
Group"). With respect to each Employee Benefit Plan subject to Title IV of
ERISA, the assets of each such plan are at least equal in value to the
present value of accrued benefits determined on an ongoing basis as of the
date hereof. With respect to each Employee Benefit Plan described in
Section 501(c)(9) of the Code, the assets of
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each such plan are at least equal in value to the present value of accrued
benefits as of the date hereof. Schedule 3.12(d) contains a complete and
accurate statement of all actuarial assumptions applied to determine the
present value of accrued benefits under all Employee Benefit Plans subject
to actuarial assumptions. Neither the Company nor any Subsidiary or any
member of a Controlled Group has any liability to pay excise taxes with
respect to any Employee Benefit Plan under applicable provisions of the
Code or ERISA.
(e) Multiemployer Plans. Neither the Company nor any Subsidiary nor
any member of a Controlled Group is or ever has been obligated to
contribute to a multiemployer plan within the meaning of Section 3(37) of
ERISA.
(f) PBGC. No facts or circumstances exist that would result in the
imposition of liability against Parent by the Pension Benefit Guaranty
Company as a result of any act or omission by the Company, any Subsidiary
or any member of a Controlled Group. No reportable event (within the
meaning of Section 4043 of ERISA) for which the notice requirement has not
been waived has occurred with respect to any Employee Benefit Plan subject
to the requirements of Title IV of ERISA.
(g) Medical and Dental Care Claims. To the Company's and Ladin's
knowledge, Schedule 3.12(g) contains a complete and accurate list of all
claims made (without identifying specific individuals) under any medical or
dental care plan or commitment offered by the Company or any Subsidiary to
its employees involving hospitalization, medical or dental care claims that
have exceeded $80,000 per year for an individual during the Company's
current fiscal year or the last fiscal year preceding the date hereof.
Neither the Company nor any Subsidiary has any obligation or commitment to
provide medical, dental or life insurance benefits to or on behalf of any
of its employees who may retire or any of its former employees who have
retired from employment with the Company or any Subsidiary, except as
otherwise required by part 6 of Subtitle B of Title I of ERISA.
SECTION 3.13. Absence of Certain Changes. Except as set forth in Schedule
3.13, since July 31, 1999, neither the Company nor any Subsidiary has
(a) suffered any material adverse change in its condition (financial
or otherwise), operations, assets, liabilities, business or prospects;
(b) contracted for the purchase of any capital assets having a cost in
excess of $60,000 or paid any capital expenditures in excess of $60,000;
(c) incurred any indebtedness for borrowed money or issued or sold any
debt securities;
(d) incurred or discharged any liabilities or obligations except in
the ordinary course of business;
(e) paid any amount on any indebtedness prior to the due date,
forgiven or canceled any debts or claims or released or waived any rights
or claims;
(f) mortgaged, pledged or subjected to any security interest, lien,
lease or other charge or encumbrance any of its properties or assets;
(g) suffered any damage or destruction to or loss of any assets
(whether or not covered by insurance) that has materially and adversely
affected, or that the Company or Ladin reasonably expect to materially and
adversely affect, its business;
(h) acquired or disposed of any assets except in the ordinary course
of business;
(i) written up or written down the carrying value of any of its
assets;
(j) changed the costing system or depreciation methods of accounting
for its assets;
(k) waived any material rights or forgiven any material claims;
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(l) lost or terminated any employee, customer or supplier, the loss or
termination of which has materially and adversely affected, or that the
Company or Ladin reasonably expect to materially and adversely affect, its
business or assets;
(m) increased the compensation of any director or officer;
(n) increased the compensation of any employee except in the ordinary
course of business;
(o) made any payments to or loaned any money to any person or entity
referred to in Section 3.29;
(p) formed or acquired or disposed of any interest in any corporation,
partnership, joint venture or other entity;
(q) redeemed, purchased or otherwise acquired, or sold, granted or
otherwise disposed of, directly or indirectly, any of its capital stock or
securities or any rights to acquire such capital stock or securities, or
agreed to change the terms and conditions of any such rights;
(r) entered into, adopted or amended any Employee Benefit Plan; or
(s) entered into any other commitment or transaction or experienced
any other event that is material to this Agreement or to any of the Related
Agreements or to the transactions contemplated hereby or thereby, or that
has materially and adversely affected, or could materially and adversely
affect, the condition (financial or otherwise), operations, assets,
liabilities, business or prospects of the Company or its Subsidiaries.
SECTION 3.14. Title; Leased Assets.
(a) Real Property. The Company and the Subsidiaries own no real
property. The leased real property referred to in Section 3.14(c)
constitutes the only real property used in the conduct of the business of
the Company and the Subsidiaries.
(b) Personal Property. Except as set forth in Schedule 3.14(b), the
Company and the Subsidiaries have good, valid and marketable title to all
tangible and intangible personal property owned by them (collectively, the
"Personal Property"). The Personal Property and the leased personal
property referred to in Section 3.14(c) constitute the only personal
property used in the conduct of the business of the Company and the
Subsidiaries.
(c) Leases. A list and brief description of all leases of real and
personal property to which the Company or any Subsidiary is a party, either
as lessor or lessee, are set forth in Schedule 3.14(c). All such leases are
valid and enforceable in accordance with their respective terms except as
may be limited by applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally or the availability of equitable
remedies.
(d) Right to Use Assets. Except for those assets acquired since July
31, 1999, which are listed in Schedule 3.14(d), all tangible and intangible
assets used in the conduct of the business of the Company and the
Subsidiaries are reflected in the Financial Statements in a manner that is
in conformity with generally accepted accounting principles applied on a
consistent basis with prior periods. Either the Company or a Subsidiary
owns, leases or otherwise possesses a right to use all assets used in the
conduct of the business of the Company or such Subsidiary, which will not
be impaired by the consummation of the transactions contemplated hereby.
SECTION 3.15. Commitments.
(a) Commitments; Defaults. Except as set forth in Schedule 3.15,
neither the Company nor any Subsidiary has entered into, nor are the
Company Common Stock, the assets or the business of the Company or any
Subsidiary bound by, whether or not in writing, any
(i) partnership or joint venture agreement;
(ii) deed of trust or other security agreement;
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(iii) guaranty or suretyship, indemnification or contribution
agreement or performance bond;
(iv) employment, consulting or compensation agreement or
arrangement, including the election or retention in office of any
director or officer;
(v) labor or collective bargaining agreement;
(vi) debt instrument, loan agreement or other obligation relating
to indebtedness for borrowed money or money lent or to be lent to
another;
(vii) deed or other document evidencing an interest in or contract
to purchase or sell real property;
(viii) agreement with dealers or sales or commission agents, public
relations or advertising agencies, accountants or attorneys;
(ix) lease of real or personal property, whether as lessor, lessee,
sublessor or sublessee;
(x) agreement between the Company and any affiliate of the Company;
(xi) agreement relating to any material matter or transaction in
which an interest is held by a person or entity that is an affiliate of
the Company;
(xii) any agreement for the acquisition of services, supplies,
equipment or other personal property and involving more than $60,000 in
the aggregate;
(xiii) powers of attorney;
(xiv) contracts containing noncompetition covenants;
(xv) any other contract or arrangement that involves either an
unperformed commitment in excess of $60,000 or that terminates more than
30 days after the date hereof;
(xvi) agreement relating to any material matter or transaction in
which an interest is held by any person or entity referred to in Section
3.29;
(xvii) agreement providing for the purchase from a supplier of all
or substantially all of the requirements of the Company or any
Subsidiary of a particular product or service; or
(xviii) any other agreement or commitment not made in the ordinary
course of business or that is material to the business or financial
condition of the Company or any Subsidiary.
All of the foregoing are hereinafter collectively referred to as the
"Commitments." True, correct and complete copies of the written Commitments, and
true, correct and complete written descriptions of the oral Commitments, have
heretofore been delivered or made available to Parent. There are no existing
defaults, events of default or events, occurrences, acts or omissions that, with
the giving of notice or lapse of time or both, would constitute defaults by the
Company or any Subsidiary, and no penalties have been incurred nor are
amendments pending, with respect to the Commitments. The Commitments are in full
force and effect and are valid and enforceable obligations of the parties
thereto in accordance with their respective terms, except as the enforcement
thereof may be limited by applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally or the availability of equitable remedies,
and no defenses, off-sets or counterclaims have been asserted or, to the
knowledge of the Company and Ladin, may be made by any party thereto, nor has
the Company or any Subsidiary waived any rights thereunder. Neither the Company
nor any Subsidiary has received notice of any default with respect to any
Commitment.
(b) No Cancellation or Termination of Commitment. Except as
contemplated hereby, neither the Company nor any Subsidiary nor Ladin has
received notice of any plan or intention of any other party to any
Commitment to exercise any right to cancel or terminate any Commitment or
agreement, and neither the Company nor any Subsidiary nor Ladin knows of
any fact that would justify the exercise of such a right. Neither the
Company nor any Subsidiary nor Ladin currently contemplates, or has reason
to believe any other person or entity currently contemplates, any amendment
or change to any
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Commitment. Except as listed in Schedule 3.15, none of the customers or
suppliers of the Company or any Subsidiary has refused, or communicated
that it will or may refuse, to purchase or supply goods or services, as the
case may be, or has communicated that it will or may substantially reduce
the amounts of goods or services that it is willing to purchase from, or
sell to, the Company or any Subsidiary.
SECTION 3.16. Adverse Agreements. Neither the Company nor any Subsidiary is
a party to any agreement or instrument or subject to any charter or other
corporate restriction or any judgment, order, writ, injunction, decree, rule or
regulation that materially and adversely affects, or may in the future
materially and adversely affect, the condition (financial or otherwise),
operations, assets, liabilities, business or prospects of the Company or any
Subsidiary.
SECTION 3.17. Insurance. The Company and the Subsidiaries carry property,
liability, workers' compensation and such other types of insurance as is
customary in the industry of the insured. A list and brief description of all
insurance policies of the Company and the Subsidiaries are set forth in Schedule
3.17. All of such policies are valid and enforceable policies, issued by
insurers of recognized responsibility in amounts and against such risks and
losses as is customary in the industry of the insured. Such insurance shall be
outstanding and duly in force without interruption up to and including the
Closing Date.
SECTION 3.18. Patents, Trade-marks, Service Marks and Copyrights.
(a) Ownership. The Company and each Subsidiary own all patents,
trade-marks, service marks and copyrights, if any, necessary to conduct its
business, or possesses adequate licenses or other rights, if any, therefor.
Set forth in Schedule 3.18 is a true and correct description of the
following (the "Proprietary Rights"):
(i) all trade-marks, trade-names, service marks and other trade
designations, including common law rights, registrations and
applications therefor, and all patents, copyrights and applications
currently owned, in whole or in part, by the Company or any Subsidiary
with respect to the business of the Company and the Subsidiaries, and
all licenses, royalties, assignments and other similar agreements
relating to the foregoing to which the Company or any Subsidiary is a
party (including expiration date if applicable); and
(ii) all agreements relating to technology, know-how or processes
that the Company or any Subsidiary is licensed or authorized to use by
others, or which it licenses or authorizes others to use.
(b) Conflicting Rights of Third Parties. The Company has the sole and
exclusive right, excluding all Proprietary Rights which the Company has the
right to use under a "shrink-wrap" or similar mass marketing license, to
use the Proprietary Rights without infringing or violating the rights of
any third parties. Use of the Proprietary Rights does not require the
consent of any other person and the Proprietary Rights are freely
transferable. No claim has been asserted by any person to the ownership of
or right to use any Proprietary Right or challenging or questioning the
validity or effectiveness of any license or agreement constituting a part
of any Proprietary Right, and neither the Company nor Ladin knows of any
valid basis for any such claim. Each of the Proprietary Rights is valid and
subsisting, has not been canceled, abandoned or otherwise terminated and,
if applicable, has been duly issued or filed.
(c) Claims of Other Persons. The Company and Ladin have no knowledge
of any claim that, or inquiry as to whether, any product, activity or
operation of the Company or any Subsidiary infringes upon or involves, or
has resulted in the infringement of, any proprietary right of any other
person, corporation or other entity; and no proceedings have been
instituted, are pending or, to the knowledge of the Company and Ladin, are
threatened, that challenge the rights of the Company or any Subsidiary with
respect thereto. The Company has not given and is not bound by any
agreement of indemnification for any Proprietary Right as to any property
or service manufactured, used or sold by it.
SECTION 3.19. Trade Secrets and Customer Lists. Either the Company or the
appropriate Subsidiary has the right to use, free and clear of any claims or
rights of others all trade secrets, customer lists and proprietary information
required for the marketing of all merchandise and services formerly or presently
sold
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or marketed by the Company or its Subsidiaries. Neither the Company nor any
Subsidiary is using or in any way making use of any confidential information or
trade secrets of any third party, including without limitation any past or
present employee of the Company or any Subsidiary.
SECTION 3.20. Taxes.
(a) All Returns required to have been filed by the Company or a
Subsidiary have been timely filed (taking into account duly granted
extensions) and are true, correct and complete in all respects. Neither the
Company nor a Subsidiary is currently the beneficiary of any extension of
time within which to file any Return, and no claim has ever been made by
any governmental authority in a jurisdiction where the Company or a
Subsidiary do not file Returns that the Company or a Subsidiary is or may
be subject to taxation by that jurisdiction, which claim has not been
resolved as of the date hereof.
(b) All Taxes of the Company and Subsidiaries which have become due
(without regard to any extension of the time for payment and whether or not
shown on any Return) have been paid. The Company and the Subsidiaries have
withheld and paid over all Taxes required to have been withheld and paid
over by them and have complied with all information reporting and back-up
withholding requirements relating to Taxes. There are no liens with respect
to Taxes on any of the assets of the Company or a Subsidiary, other than
liens for Taxes not yet due and payable, and for which adequate reserves
have been established in the Financial Statements.
(c) No deficiencies exist or have been asserted (verbally or in
writing) with respect to Taxes of the Company or a Subsidiary and neither
the Company nor the Subsidiaries have received notice (verbally or in
writing) that they have not filed a Return or paid any Taxes required to be
filed or paid by them. Other than a Texas sales tax audit, no audit,
examination, investigation, action, suit, claim or proceeding relating to
the determination, assessment or collection of any Tax of the Company or a
Subsidiary is currently in process, pending or, to the knowledge of Ladin
or the Company, threatened (verbally or in writing). No waiver or extension
of any statute of limitations relating to the assessment or collection of
any Tax of the Company or a Subsidiary is in effect. There are no
outstanding requests for rulings with any Tax authority relating to Taxes
of the Company or a Subsidiary.
(d) Neither the Company nor any Subsidiary is or has ever been (i) a
party to any tax sharing agreement or arrangement (formal or informal,
verbal or in writing), or (ii) a member of an affiliated group of
corporations (within the meaning of Internal Revenue Code Section 1504)
filing a consolidated federal income Return, or any similar group under
analogous provisions of other law.
(e) Neither the Company nor any Subsidiary is liable for the unpaid
Taxes of any person other than such Company or Subsidiary under Treasury
Regulation Section 1.1502-6 or any similar provision of state, local or
foreign law, or by contract or otherwise. The Company has delivered to
Parent true and complete copies of all federal, state, local and foreign
income Returns filed by the Company and Subsidiaries for their two (2) most
recently ended taxable years, together with all related examination
reports, statements of deficiencies and closing and other agreements.
(f) Neither the Company nor any Subsidiary (i) has filed a consent
under Internal Revenue Code Section 341(f) concerning collapsible
corporations; (ii) has made any payments, obligated itself to make any
payments or become a party to any agreement that under any circumstance
could obligate it or any successor or assignee of it to make any payments
that are not or will not be deductible under Code Section 280G, or that
would be subject to excise Tax under Internal Revenue Code Section 4999;
(iii) is a "foreign person" as defined in Internal Revenue Code Section
1445(f)(3); (iv) is or has been a United States real property holding
corporation within the meaning of Internal Revenue Code Section 897(c)(2)
during the applicable period specified in Internal Revenue Code Section
897(c)(1)(A)(ii); (v) owns or has owned any interest in any "controlled
foreign corporation" as defined in Internal Revenue Code Section 957 or
"passive foreign investment company" as defined in Internal Revenue Code
Section 1296; (vi) is or has been a party to any agreement or arrangement
for which partnership Returns are required to be filed; (vii) owns any
asset that is subject to a "safe harbor lease" within the meaning of
Internal Revenue Code Section 168(f)(8), as in effect prior to amendment
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by the Tax Equity and Fiscal Responsibility Act of 1982; (viii) to the
knowledge of the Company and Ladin, owns any "tax-exempt use property"
within the meaning of Internal Revenue Code Section 168(h) or "tax exempt
bond financed property" within the meaning of Internal Revenue Code Section
168(g)(5); and (ix) has agreed to and is required to make any adjustment
under Internal Revenue Code Section 481(a) by reason of a change in
accounting method or otherwise.
(g) Prior to January 1, 1999, the Company was a validly electing S
Corporation within the meaning of Internal Revenue Code Sections 1361 and
1362.
SECTION 3.21. Compliance with Laws. The Company and each of the
Subsidiaries have complied with all laws, regulations and licensing requirements
and have filed with the proper authorities all necessary statements and reports.
There are no existing violations by the Company, any Subsidiaries or Ladin of
any federal, state or local law or regulation that could affect the property or
business of the Company or the Subsidiaries. The Company and each of the
Subsidiaries possess all necessary licenses, franchises, permits and
governmental authorizations to conduct its business as now conducted.
SECTION 3.22. Finder's Fee. Except as set forth on Schedule 3.22, neither
the Company nor any Subsidiary nor Ladin has incurred any obligation for any
finder's, broker's or agent's fee in connection with the transactions
contemplated hereby.
SECTION 3.23. Litigation. Except as described in Schedule 3.23, there are
no legal actions or administrative proceedings or investigations instituted or,
to the knowledge of the Company and Ladin, threatened, against or affecting, or
that could affect, the Company, any Subsidiary, any of the Company Common Stock,
or the business of the Company or any Subsidiary. Neither the Company nor any
Subsidiary nor Ladin is (a) subject to any continuing court or administrative
order, writ, injunction or decree applicable specifically to the Company or any
Subsidiary or to their respective business, assets, operations or employees or
(b) in default with respect to any such order, writ, injunction or decree.
Neither the Company, any Subsidiary nor Ladin knows of any basis for any such
action, proceeding or investigation.
SECTION 3.24. Accuracy of Information Furnished. All information furnished
to Parent by the Company, any Subsidiary or Ladin hereby or in connection with
the transactions contemplated hereby is true, correct and complete in all
material respects. Such information states all material facts required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which such statements are made, not misleading.
SECTION 3.25. Condition of Fixed Assets. All of the equipment owned by the
Company and the Subsidiaries is in good condition and repair for its intended
use, normal wear and tear and normal obsolescence excepted, in the ordinary
course of business and conforms in all material respects with all applicable
ordinances, regulations and other laws and there are no known defects therein.
SECTION 3.26. Accounts Receivable. Schedule 3.26 sets forth the accounts
receivable of the Company and the Subsidiaries as of July 31, 1999. All such
accounts receivable have arisen from bona fide transactions in the ordinary
course of business and are valid and enforceable claims subject to no right of
set-off or counterclaim, except for reasonable reserves for bad debts.
SECTION 3.27 Subscribers. A complete and accurate list of the Company's and
each Subsidiary's standard prices and subscribers, showing with respect to each,
the name, billing address, pricing, sales records and any applicable discounts
related to such subscriber has been previously provided to Parent. A copy of the
form of the Company's service agreement with each such subscriber has been
previously provided to Parent.
SECTION 3.28. Banking Relations. Set forth in Schedule 3.28 is a complete
and accurate list of all arrangements that the Company and the Subsidiaries have
with any bank or other financial institution, indicating with respect to each
relationship the type of arrangement maintained (such as checking account,
borrowing arrangements, safe deposit box, etc.), account number and the person
or persons authorized in respect thereof.
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SECTION 3.29. Ownership Interests of Interested Persons. Except as set
forth on Schedule 3.29, no officer, supervisory employee, director or
shareholder of the Company or any Subsidiary, or their respective spouses or
children, owns directly or indirectly, on an individual or joint basis, any
material interest in, or serves as an officer or director of, any customer or
supplier of the Company or any Subsidiary, or any organization that has a
material contract or arrangement with the Company or any Subsidiary.
SECTION 3.30. Environmental Matters.
(a) Environmental Laws. Neither the Company nor any Subsidiary nor any
of their respective assets is currently in violation of, or subject to any
existing, pending or threatened investigation or inquiry by any
governmental authority or to any remedial obligations under, any laws or
regulations pertaining to health or the environment (hereinafter sometimes
collectively called "Environmental Laws"), including without limitation (i)
the Comprehensive Environmental Response, Compensation and Liability Act of
1980 (42 U.S.C. sec. 9601 et seq.), as amended from time to time ("CERCLA")
(including without limitation as amended pursuant to the Superfund
Amendments and Reauthorization Act of 1986), and regulations promulgated
under CERCLA, (ii) the Resource Conservation and Recovery Act of 1976 (42
U.S.C. sec. 6901 et seq.), as amended from time to time ("RCRA"), and
regulations promulgated thereunder, (iii) statutes, rules or regulations,
whether federal, state or local, relating to asbestos or polychlorinated
biphenyls, and (iv) the provisions of applicable Texas law, and this
representation and warranty would continue to be true and correct following
disclosure to the applicable governmental authorities of all relevant
facts, conditions and circumstances, if any, pertaining to the assets and
operations of the Company and the Subsidiaries.
(b) Use of Assets. To the knowledge of the Company and Ladin, the
assets of the Company and the Subsidiaries have never been used in a manner
that would be in violation of any of the Environmental Laws, including
without limitation CERCLA, RCRA, and applicable Texas laws.
(c) Permits. Neither the Company nor any Subsidiary has obtained or is
required to obtain, and neither the Company nor any Subsidiary has any
knowledge of any reason Parent will be required to obtain, any permits,
licenses or similar authorizations to construct, occupy, operate or use any
buildings, improvements, fixtures and equipment owned or leased by the
Company or any Subsidiary by reason of any Environmental Laws.
(d) Superfund List. To the knowledge of the Company and Ladin, none of
the assets owned or leased by the Company or any Subsidiary are on any
federal or state "Superfund" list or subject to any environmentally related
liens.
SECTION 3.31. Certain Payments. Neither the Company nor Ladin nor any
director, officer or, to the knowledge of the Company and Ladin, employee, of
the Company or any Subsidiary has paid or caused to be paid, directly or
indirectly, in connection with the business of the Company or any Subsidiary (a)
to any government or agency thereof or any agent of any supplier or customer any
bribe, kick-back or other similar payment; or (b) any contribution to any
political party or candidate (other than from personal funds of directors,
officers or employees not reimbursed by their respective employers or as
otherwise permitted by applicable law).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub jointly and severally represent and warrant that the
following are true and correct as of the date hereof and will be true and
correct through the Closing Date as if made on that date:
SECTION 4.01. Organization and Good Standing. Each of Parent and Merger Sub
is a corporation duly organized, validly existing and in good standing under the
laws of the state of its incorporation, with all requisite corporate power and
authority to carry on the business in which it is engaged, to own the properties
it owns, to execute and deliver this Agreement and to consummate the
transactions contemplated hereby.
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SECTION 4.02. Authorization and Validity. The execution, delivery and
performance by Parent and Merger Sub of this Agreement and the other agreements
contemplated hereby, and the consummation of the transactions contemplated
hereby and thereby, have been duly authorized by Parent and Merger Sub. This
Agreement and each other agreement contemplated hereby have been or will be as
of the Closing Date duly executed and delivered by Parent and Merger Sub and
constitute or will constitute legal, valid and binding obligations of Parent and
Merger Sub, enforceable against Parent and Merger Sub in accordance with their
respective terms, except as may be limited by applicable bankruptcy, insolvency
or similar laws affecting creditors' rights generally or the availability of
equitable remedies.
SECTION 4.03. No Violation. Neither the execution, delivery or performance
of this Agreement or the other agreements contemplated hereby nor the
consummation of the transactions contemplated hereby or thereby will (a)
conflict with, or result in a violation or breach of the terms, conditions and
provisions of, or constitute a default under, the Articles of Incorporation or
Bylaws of Parent or Merger Sub or any agreement, indenture or other instrument
under which Parent or Merger Sub is bound or (b) violate or conflict with any
judgment, decree, order, statute, rule or regulation of any court or any public,
governmental or regulatory agency or body having jurisdiction over Parent,
Merger Sub or the properties or assets of Parent or Merger Sub.
SECTION 4.04. Finder's Fee. Except as set forth on Schedule 4.04, neither
Parent nor Merger Sub has incurred any obligation for any finder's, broker's or
agent's fee in connection with the transactions contemplated hereby.
SECTION 4.05. Authorization for Parent Common Stock. The authorized and
issued capital stock of the Parent as of September 1, 1999 are set forth on
Schedule 4.05. Except as set forth on Schedule 4.05, as of September 1, 1999,
there exist no options, warrants, subscriptions or other rights to purchase, or
securities convertible into or changeable for, the capital stock of the Parent.
No shares of capital stock of the Parent have been issued or disposed of in
violation of the preemptive rights of any of the Parent's shareholders. Subject
to the consents set forth in Schedule 4.08, Parent has taken all action
necessary to permit it to issue the Parent Common Stock. The Parent Common Stock
issued pursuant to this Agreement will, when issued, be duly authorized, validly
issued, fully paid and nonassessable, free and clear of any liens, claims,
charges or security interests (except as created herein) and no shareholder of
Parent will have any preemptive right of subscription or purchase in respect
thereof.
SECTION 4.06. SEC Reports and Nasdaq. Since the date of its initial public
offering, Parent has filed all forms, documents and reports with the SEC
required to be filed by it pursuant to federal securities laws and the SEC rules
and regulations thereunder (the "SEC Reports"), all of which complied in all
material respects with all applicable requirements of the Securities Act and the
Exchange Act. The SEC Reports do not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein to make
statements contained therein not misleading. Since the date of the last SEC
Report, Parent has not suffered a material adverse change in its condition
(financial or otherwise), operations or business. Parent has not received any
notification from The Nasdaq Stock Market that it fails to meet the minimum
listing requirements required for continued listing, nor does Parent have
knowledge of any basis for such notification.
SECTION 4.07. Accuracy of Information Furnished. With respect to all
information furnished to the Company by Parent hereby or in connection with the
transactions contemplated hereby, Parent has not made any untrue statement of a
material fact or omitted to state a material fact necessary in order to make the
statements made, in the light of the circumstances under which they were made,
not misleading.
SECTION 4.08. Consents. Except as set forth in Schedule 4.08, no consent,
authorization, approval, permit or license of, or filing with, any governmental
or public body or authority, any lender or lessor or any other person or entity
is required to authorize, or is required in connection with, the execution,
delivery and performance of this Agreement or the Related Agreements on the part
of Parent.
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ARTICLE V
THE COMPANY'S AND PRINCIPAL SHAREHOLDERS' COVENANTS
The Company and Principal Shareholders jointly and severally agree that
between the date hereof and the Closing:
SECTION 5.01. Consummation of Agreement. The Company and Principal
Shareholders shall use their best efforts to cause the consummation of the
transactions contemplated hereby in accordance with their terms and conditions.
SECTION 5.02. Business Operations. The Company and the Subsidiaries shall
operate their businesses in the ordinary course consistent with past practice.
Without the prior written consent of Parent, the Company and Subsidiaries shall
not pursue, negotiate or enter into any acquisitions of other businesses and
shall discontinue any such pursuits or negotiations pending as of the date of
this Agreement. The Company and Principal Shareholders shall use their
reasonable best efforts to preserve the business of the Company and the
Subsidiaries intact, to retain the present customers, suppliers, creditors,
officers and employees so that they will be available to Parent after the
Closing. The Company and Principal Shareholders shall not take any action that
could adversely affect the condition (financial or otherwise), operations,
assets, liabilities, business or prospects of the Company or any Subsidiary
without the prior written consent of Parent or take or fail to take any action
that would cause or permit the representations made in Article III to be
inaccurate at the time of Closing or preclude the Company and Principal
Shareholders from making such representations and warranties at the Closing.
SECTION 5.03. Access. Subject to reasonable notice from Parent, the Company
and Principal Shareholders shall permit during business hours, Parent and its
authorized representatives full access to, and make available for inspection,
all of the assets and business of the Company and the Subsidiaries, including
their respective employees, customers and suppliers, and permit Parent and its
authorized representatives to inspect and make copies of all documents, records
and information with respect to the affairs of the Company and the Subsidiaries
as Parent and its representatives may request, all for the sole purpose of
permitting Parent to become familiar with the business and assets and
liabilities of the Company and the Subsidiaries.
SECTION 5.04. Material Change. The Company and Principal Shareholders shall
promptly inform Parent in writing of any material adverse change in the
condition (financial or otherwise), operations, assets, liabilities, business or
prospects of the Company or any Subsidiary. Notwithstanding the disclosure to
Parent of any such material adverse change, the Company and Principal
Shareholders shall not be relieved of any liability for, nor shall the providing
of such information by the Company to Parent be deemed a waiver by Parent of,
the breach of any representation or warranty of the Company and Principal
Shareholders contained in this Agreement.
SECTION 5.05. Approvals of Third Parties. The Company and Principal
Shareholders shall use their reasonable best efforts to secure, as soon as
practicable after the date hereof, all necessary approvals and consents of third
parties and the Company's shareholders to the consummation of the transactions
contemplated hereby. In connection therewith, the Company shall duly call, give
notice of, convene and hold a shareholders meeting for the purpose of voting on
the approval and adoption of this Agreement and the Merger as soon as
practicable after the date hereof; provided that, a validly executed consent in
lieu of a shareholders meeting shall constitute compliance with this provision.
Unless the Company's board of directors determines that an alternative action is
necessary in accordance with its fiduciary duties to the Company's shareholders
under applicable law (which determination shall not affect the previous approval
by the Company's board of directors of the transactions contemplated herein or
the obligations of the Company's shareholders under the Voting Agreement), the
board of directors of the Company shall recommend approval and adoption of this
Agreement and the Merger by the holders of Company Common Stock and shall use
all commercially reasonable efforts to obtain such approval and adoption. The
Principal Shareholders agree to vote all of their stock in favor of the
Agreement and Merger.
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SECTION 5.06. Employee Matters. Neither the Company nor any Subsidiary
shall, without the prior written approval of Parent, except as required by law:
(a) increase the Cash Compensation of the employees set forth on
Schedule 5.06(a), except in the ordinary course of business;
(b) adopt, amend or terminate any Compensation Plan;
(c) adopt, amend or terminate any Employment Agreement;
(d) adopt, amend or terminate any Employee Policies and Procedures;
(i) institute, settle or dismiss any employment litigation;
(j) enter into, modify, amend or terminate any agreement with any
union, labor organization or collective bargaining unit; or
(k) take or fail to take any action with respect to any past or
present employee of the Company or any Subsidiary that could adversely
affect the business of the Company or any Subsidiary.
SECTION 5.07. Employee Benefit Plans. Neither the Company nor any
Subsidiary shall, without the prior written approval of Parent, except as
required by law:
(a) adopt, amend or terminate any Employee Benefit Plan;
(b) take any action that would deplete the assets of any Employee
Benefit Plan, other than payment of benefits in the ordinary course to
participants and beneficiaries;
(c) fail to pay any premium or contribution due or with respect to any
Employee Benefit Plan;
(d) fail to file any return or report with respect to any Employee
Benefit Plan; or
(e) take or fail to take any action that could adversely affect any
Employee Benefit Plan.
SECTION 5.08. Contracts. Except with Parent's prior written consent,
neither the Company nor any Subsidiary shall waive any right or cancel any
contract, debt or claim nor assume, enter into, amend or modify any contract,
lease, license, obligation, indebtedness, commitment, purchase or sale except in
the ordinary course of business consistent with past practices.
SECTION 5.09. Capital Assets; Payments of Liabilities;
Indebtedness. Neither the Company nor any Subsidiary shall, without the prior
written approval of Parent (a) acquire or dispose of any capital asset having an
initial cost of $60,000 or more; (b) incur any indebtedness for borrowed money
or guarantee any such indebtedness other than in the ordinary course of its
business consistent with past practice; (c) voluntarily purchase, cancel, prepay
or otherwise provide for a complete or partial discharge in advance of a
scheduled repayment date with respect to, or waive any right under, any
indebtedness for borrowed money; or (d) discharge or satisfy any lien or
encumbrance or pay or perform any obligation or liability other than (i)
liabilities and obligations reflected in the Financial Statements or (ii)
current liabilities and obligations incurred in the ordinary course of business
since July 31, 1999 and, in either case (i) or (ii) above, only as required by
the express terms of the agreement or other instrument pursuant to which the
liability or obligation was incurred.
SECTION 5.10. Mortgages, Leases, Liens and Guaranties. Neither the Company
nor any Subsidiary shall, without the prior written approval of Parent, enter
into or assume any mortgage, pledge, conditional sale or other title retention
agreement, permit any security interest, lien, encumbrance or claim of any kind
to attach to any of its assets, whether now owned or hereafter acquired, or
guarantee or otherwise become contingently liable for any obligation of another,
except obligations arising by reason of endorsement for collection and other
similar transactions in the ordinary course of business consistent with past
practice, or make any capital contribution or investment in any corporation,
business or other person. The Company and Subsidiaries shall not (a) enter into
(or commit to enter into) any new lease or renew any existing lease of real
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property (except pursuant to commitments for such lease or lease renewal entered
into prior to the date hereof); or (b) purchase or acquire or enter into any
agreement to purchase or acquire any real estate.
SECTION 5.11. No Negotiation with Others. Neither the Company nor any
Principal Shareholder shall solicit or participate in negotiations with (and the
Company and the Principal Shareholders shall use their best efforts to prevent
any affiliate, shareholder, director, officer, employee or other representative
or agent of the Company from negotiating with, soliciting or participating in
negotiations with) any third party with respect to the sale of the business of
the Company or any Subsidiary or any transaction inconsistent with those
contemplated hereby, except to the extent necessary to comply with the Company's
and the Principal Shareholders' fiduciary duties to the Company's Shareholders
under the TBCA.
SECTION 5.12. HSR Act. The Company and Principal Shareholders shall use
their best efforts to file as soon as possible, and to effect early termination
of all applicable waiting periods, under the HSR Act, including without
limitation complying promptly with all requests thereunder for additional
information, if necessary.
SECTION 5.13. Corporate Actions. No distribution, payment or dividend of
any kind will be declared or paid by the Company or any Subsidiary, nor will any
repurchase or redemption of any capital stock of the Company be approved or
effected. The Company and Subsidiaries shall make no offerings, issuances or
grants of securities of the Company or Subsidiaries, including but not limited
to options, warrants and other securities convertible into Company Common Stock.
The Company and Subsidiaries shall not (a) adopt or propose any change in their
respective articles of incorporation or bylaws; (b) adopt a plan or agreement of
complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization; or (c) split, combine,
reclassify or take similar action with respect to its capital stock.
SECTION 5.14. Tax Issues. Neither the Company nor any Subsidiary will
change any tax election, change any annual tax accounting period, change any
method of tax accounting, file any amended Tax Return, enter into any closing
agreement relating to any Tax, settle any Tax claim or assessment, surrender any
right to claim a Tax refund or consent to any extension or waiver (other than a
reasonable extension or waiver) of the limitations period applicable to any Tax
claim or assessment, if any such action would have the effect of increasing the
aggregate Tax liability or reducing the aggregate tax assets of the Company and
its Subsidiaries, taken as a whole.
SECTION 5.15. General. The Company and Subsidiaries will not agree or
commit to do any actions prohibited by this Agreement.
SECTION 5.16. Tax-Free Reorganization. Neither the Company nor the
Principal Shareholders shall take any action prior to or after the Effective
Time that could reasonably be expected to cause the Merger to fail to qualify as
a "reorganization" under Section 368(a) of the Code.
ARTICLE VI
PARENT'S COVENANTS
Parent agrees that between the date hereof and the Closing:
SECTION 6.01. Consummation of Agreement. Parent shall use its best efforts
to cause the consummation of the transactions contemplated hereby in accordance
with their terms and conditions.
SECTION 6.02. HSR Act. Parent shall use its best efforts to file as soon as
possible, and to effect early termination of all applicable waiting periods,
under the HSR Act, including without limitation complying promptly with all
requests thereunder for additional information, if necessary.
SECTION 6.03. Approvals of Third Parties. Parent shall use its reasonable
best efforts to secure, as soon as practicable after the date hereof, all
necessary approvals and consents of third parties and Parent's shareholders to
the consummation of the transactions contemplated hereby. In connection
therewith, Parent shall duly call, give notice of, convene and hold a
shareholders meeting for the purpose of voting on the approval and adoption of
this Agreement and the Merger as soon as practicable after the date hereof.
Parent
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shall use all commercially reasonable efforts to file a preliminary proxy
statement within fourteen (14) days after the date of this Agreement. The board
of directors of Parent shall recommend approval and adoption of this Agreement
and the Merger by its shareholders and shall use all commercially reasonable
efforts to obtain such approval and adoption.
SECTION 6.04. Listing Application. Parent shall prepare and submit to the
Nasdaq National Market a listing application covering the Parent Common Stock
being issued hereunder and shall use its best effort to obtain approval for the
listing of such shares upon official notice of issuance.
SECTION 6.05. Tax Free Reorganization. Neither Parent nor the Merger Sub
shall take any action prior to or after the Effective Time that could reasonably
be expected to cause the Merger to fail to qualify as a "reorganization" under
Section 368(a) of the Code.
SECTION 6.06. General. Parent will not agree or commit to do any actions
prohibited by this Agreement.
ARTICLE VII
PARENT'S CONDITIONS PRECEDENT
Except as may be waived in writing by Parent, the obligations of Parent
hereunder are subject to the fulfillment at or prior to the Closing Date of each
of the following conditions:
SECTION 7.01. Representations and Warranties. The representations and
warranties of the Company and Principal Shareholders contained herein shall have
been true and correct in all respects when initially made and shall be true and
correct in all material respects as of the Closing Date; and Parent shall have
received a certificate of the Company's President, and of Principal
Shareholders, dated as of the Closing Date, to the foregoing effect.
SECTION 7.02. Covenants and Conditions. The Company and Principal
Shareholders shall have performed and complied in all material respects with all
covenants and conditions required by this Agreement to be performed and complied
with by the Company and Principal Shareholders prior to the Closing Date; and
Parent shall have received a certificate of the Company's President, and of
Principal Shareholders, dated as of the Closing Date, to the foregoing effect.
SECTION 7.03. Proceedings. No action, proceeding or order by any court or
governmental body or agency shall have been threatened, orally or in writing,
asserted, instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
SECTION 7.04. No Material Adverse Change. No material adverse change in the
condition (financial or otherwise), operations, assets, liabilities, business or
prospects of the Company shall have occurred since the date of the most recent
balance sheet included in the Financial Statements.
SECTION 7.05. HSR Act. All applicable waiting periods under the HSR Act
shall have expired or been terminated.
SECTION 7.06. Resignations of Directors and Officers. Parent shall have
received the resignations of the directors and officers of the Company and all
Subsidiaries as requested by Parent in Schedule 7.06.
SECTION 7.07. Tax Affidavit. Parent shall have received a nonforeign
affidavit, as such affidavit is referred to in Section 1445(b)(2) of the Code,
of each of the Company's shareholders signed under penalty of perjury and dated
as of the Closing Date, to the effect that such shareholder is not a foreign
person and providing such shareholder's United States taxpayer identification
number.
SECTION 7.08. Dissenting Shareholders. Parent shall have received a
certificate signed by the President of the Company stating that none of the
Company's shareholders have filed with the Company a demand for dissenters
rights under the TBCA.
SECTION 7.09. Merger Effective. The Merger shall have become effective
under the TBCA.
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SECTION 7.10. Approval by the Shareholders. This Agreement and the
transactions contemplated hereby shall have been approved by the shareholders of
Parent and the Company.
SECTION 7.11. Closing Deliveries. Parent shall have received all documents,
duly executed in form satisfactory to Parent and its counsel, referred to in
Section 9.01.
ARTICLE VIII
THE COMPANY'S AND PRINCIPAL SHAREHOLDERS' CONDITIONS PRECEDENT
Except as may be waived in writing by the Company and Principal
Shareholders, the obligations of the Company and Principal Shareholders
hereunder are subject to fulfillment at or prior to the Closing Date of each of
the following conditions:
SECTION 8.01. Representations and Warranties. The representations and
warranties of Parent contained herein shall have been true and correct in all
respects when initially made and shall be true and correct in all material
respects as of the Closing Date; and Parent shall have delivered to the Company
and Principal Shareholders a certificate of Parent's President, dated as of the
Closing Date, to the foregoing effect.
SECTION 8.02. Covenants and Conditions. Parent shall have performed and
complied in all material respects with all covenants and conditions required by
this Agreement to be performed and complied with by it prior to the Closing
Date; and Parent shall have delivered to the Company and Principal Shareholders
a certificate of Parent's President, dated as of the Closing Date, to the
foregoing effect.
SECTION 8.03. Proceedings. No action, proceeding or order by any court or
governmental body or agency shall have been threatened in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
SECTION 8.04. HSR Act. All applicable waiting periods under the HSR Act
shall have expired or been terminated.
SECTION 8.05. No Material Adverse Change. No material adverse change in the
condition (financial or otherwise), operations, assets, liabilities, business or
prospects of Parent shall have occurred since the date of the most recent
balance sheet of Parent provided to the Company.
SECTION 8.06. Approval by the Shareholders. This Agreement and the
transactions contemplated hereby shall have been approved by the shareholders of
Parent and the Company.
SECTION 8.07. Nasdaq Listing. The shares of Parent Common Stock being
issued hereunder shall have been approved for listing on the Nasdaq National
Market, subject to official notice of issuance.
SECTION 8.08. Closing Deliveries. The Company or Principal Shareholders, as
the case may be, shall have received all documents referred to in Section 9.02.
SECTION 8.09. Tax Opinion. The Company shall have received a written
opinion from its tax counsel, Xxxxxxx & Xxxxx LLP, in form and substance
reasonably satisfactory to the Company, to the effect that, based on the facts,
representations and assumptions set forth in such opinion, the Merger shall
constitute a reorganization within the meaning of Section 368(a) of the Code and
such opinion shall have not been withdrawn. The parties to this Agreement agree
to make such reasonable representations as requested by such counsel for the
purpose of rendering such opinion.
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ARTICLE IX
CLOSING DELIVERIES
SECTION 9.01. Deliveries of the Company and Principal Shareholders. At the
Closing, the Company and Principal Shareholders shall deliver to Parent the
following, all of which shall be in form and content satisfactory to Parent and
its counsel:
(a) certificates representing all of the Company Common Stock, duly
endorsed and in proper form for transfer to Parent by delivery under
applicable law, or accompanied by duly executed instruments of transfer in
blank;
(b) a copy of resolutions of the Board of Directors and shareholders
of the Company authorizing the execution, delivery and performance of this
Agreement and all related documents and agreements, each certified by the
Secretary of the Company as being true and correct copies of the originals
thereof subject to no modifications or amendments;
(c) a certificate of the President of the Company, and of Principal
Shareholders, dated the Closing Date, as to the truth and correctness of
the representations and warranties of the Company and Principal
Shareholders contained herein on and as of the Closing Date;
(d) a certificate of the President of the Company, and of Principal
Shareholders, dated the Closing Date, (i) as to the performance of and
compliance by the Company and Principal Shareholders with all covenants
contained herein on and as of the Closing Date and (ii) certifying that all
conditions precedent of the Company and Principal Shareholders to the
Closing have been satisfied;
(e) a certificate of the Secretary of the Company certifying as to the
incumbency of the directors and officers of the Company and as to the
signatures of such directors and officers who have executed documents
delivered at the Closing on behalf of the Company;
(f) a certificate, dated within five business days of the Closing
Date, of the Secretary of State of the states of incorporation of the
Company and each Subsidiary establishing that the Company and each
Subsidiary is in existence, has paid all franchise taxes and otherwise is
in good standing to transact business in its state of incorporation;
(g) certificates, dated within five business days of the Closing Date,
of the Secretaries of State of the states in which the Company and each
Subsidiary is qualified to do business, to the effect that the Company and
each Subsidiary is qualified to do business and is in good standing as a
foreign corporation in each of such states;
(h) an opinion of Xxxxxxx & Xxxxx, L.L.P., counsel to the Company and
Principal Shareholders, dated as of the Closing Date, in substantially the
form attached as Exhibit C;
(i) all authorizations, consents, approvals, permits and licenses
referenced in Schedule 3.08;
(j) an executed General Release in substantially the form attached as
Exhibit D;
(k) executed Articles of Merger to effectuate the Merger;
(l) executed Escrow Agreement in substantially the form attached as
Exhibit E;
(m) executed tax certificate in substantially the form attached as
Exhibit F; and
(n) such other instrument or instruments of transfer as shall be
necessary or appropriate, as Parent or its counsel shall reasonably
request, to vest in Parent good and marketable title to the Company Common
Stock.
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SECTION 9.02. Deliveries of Parent. At the Closing, Parent shall deliver
the following to the Company or the appropriate party:
(a) the Parent Common Stock and Parent Options as set forth in Section
1.04;
(b) a copy of the resolutions of the Board of Directors of Parent
authorizing the execution, delivery and performance of this Agreement and
all related documents and agreements and approving the issuance of the
Parent Common Stock to be issued hereunder, each certified by Parent's
Secretary as being true and correct copies of the originals thereof subject
to no modifications or amendments;
(c) a certificate of the President of Parent, dated the Closing Date,
as to the truth and correctness of the representations and warranties of
Parent contained herein on and as of the Closing Date;
(d) a certificate of the President of Parent, dated the Closing Date,
(i) as to the performance of and compliance by Parent with all covenants
contained herein on and as of the Closing Date and (ii) certifying that all
conditions precedent of Parent to the Closing have been satisfied;
(e) a certificate of the Secretary of Parent certifying as to the
incumbency of the directors and officers of Parent and as to the signatures
of such directors and officers who have executed documents delivered at the
Closing on behalf of Parent;
(f) a certificate, dated within five business days of the Closing
Date, of the Secretary of State of Parent's state of incorporation,
establishing that Parent is in existence, has paid all state taxes and
otherwise is in good standing to transact business in such state;
(g) certificates, dated within five business days of the Closing Date,
of the Secretaries of State of the states in which Parent and Merger Sub
are qualified to do business, to the effect that Parent and Merger Sub are
qualified to do business and are in good standing as a foreign corporation
in each of such states;
(h) an opinion of Xxxxxxx Xxxxxx L.L.P. counsel to Parent and Merger
Sub, dated as of the Closing Date, in substantially the form attached as
Exhibit G;
(i) executed Escrow Agreement in substantially the form attached as
Exhibit E; and
(j) executed tax certificate in substantially the form attached as
Exhibit F.
ARTICLE X
POST CLOSING MATTERS
SECTION 10.01. Further Instruments of Transfer. Following the Closing, at
the request of Parent, Principal Shareholders shall deliver any further
instruments of transfer and take all reasonable action as may be necessary or
appropriate to (a) vest in Parent good and marketable title to the Company
Common Stock and (b) carry out more effectively the provisions of this Agreement
and to establish and protect the rights created in favor of the parties
hereunder or thereunder.
SECTION 10.02. Registration Rights. The Company and Parent covenant and
agree as follows:
(a) Definitions. For purposes of this Section 10.02:
(i) The term "Holder" means any person owning or having the right
to acquire Registrable Securities or any assignee thereof in accordance
with Section 10.02(l) hereof.
(ii) The term "1934 Act" shall mean the Securities Exchange Act of
1934, as amended.
(iii) The term "register," "registered," and "registration" refer
to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Securities Act of
1933, as amended (the "Act"), and the declaration or ordering of
effectiveness of such registration statement or document.
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(iv) The term "Registrable Securities" means (A) the shares of
Parent Common Stock issued pursuant to Section 1.04 of this Agreement
(including the shares of Parent Common Stock underlying the Parent
Options that are not registered on Form S-8 under Section 10.06 below),
and (B) any Parent Common Stock issued as (or issuable upon the
conversion or exercise of any warrant, right or other security which is
issued as) a dividend or other distribution with respect to, or in
exchange for or in replacement of the shares referenced in (A) above,
excluding in all cases, however, any Registrable Securities (I) sold by
a Holder in a transaction in which such Holder's rights under this
Section 10.02 are not assigned, or (II) registered under the Act, the
registration statement in connection therewith has been declared
effective; provided, however, that in either case of (A) or (B) above,
any such securities shall cease to be Registrable Securities if the
registration rights granted hereunder are not transferred in accordance
with the provisions of Section 10.02(l) below. For purposes of Sections
10.02 (c) and (d) below, the term "Registrable Securities" does not
include Shelf Shares.
(v) The term "SEC" shall mean the Securities and Exchange
Commission.
(vi) The term "Shelf Shares" shall mean 350,000 shares of Parent
Common Stock issued pursuant to Section 1.04 of this Agreement, which
Shelf Shares are identified on Schedule 10.02(a).
(b) Shelf Registration.
(i) On or before 60 days after the Closing Date, Parent agrees to
cause the filing of a registration statement on an appropriate form with
the SEC to register the resale from time to time in the open market of
the Shelf Shares (as adjusted to or resulting from additional securities
being issued in connection with the reclassification, split,
combination, or dividends of securities paid thereon). Parent shall use
commercially reasonable efforts to cause such registration statement to
be declared effective by the SEC and to remain effective from the date
it is declared effective by the SEC until the earlier of: (A) six months
after the first anniversary of the Closing Date; or (B) the date upon
which all the Shelf Shares which are included in such registration
statement have been sold.
(ii) The registration statement filed pursuant to this Section
10.02(b) may include other securities of Parent.
(c) Demand Registration.
(i) From and after six months after the Closing Date, the Holders
of at least 55% of the Registrable Securities then outstanding
(excluding any Shelf Shares) may notify Parent in writing that such
Holders desire for Parent to cause up to all of such notifying Holders'
Registrable Securities to be registered for sale to the public under the
Act. Upon receipt of such written request, Parent will promptly notify
in writing all other Holders of Registrable Securities of such request,
which Holders shall within twenty days following such notice from Parent
notify Parent in writing whether such persons desire to have up to all
of the Registrable Securities held by each of them included in such
offering. Parent will, promptly following the expiration of such twenty
day period, prepare and file subject to the provisions of this Section
10.02, and use its best efforts to prosecute to effectiveness, an
appropriate filing with the SEC of a registration statement covering
such Registrable Securities and the proposed sale or distribution
thereof under the Act.
(ii) Notwithstanding anything in this Section 10.02(c) to the
contrary, Parent shall not be obligated to prepare or file any
registration statement pursuant to this Section 10.02(c) or to prepare
or file any amendment or supplement thereto, at any time when Parent
delivers a certificate signed by Parent's Chief Executive Officer or
Chairman of the Board stating that in the good faith judgment of the
Board of Directors of Parent that the filing thereof at the time
requested, or the offering of securities pursuant thereto (A) would
materially adversely affect a pending or proposed public offering of
Parent's securities, or an acquisition, merger, recapitalization,
consolidation, reorganization or similar transaction, negotiations,
discussions or pending proposals with respect
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thereto or (B) would materially adversely affect the business or
prospects of Parent in view of the disclosures that may be required
thereby of information about the business, assets, liabilities or
operations of Parent theretofore disclosed; provided, however, that the
filing of a registration statement, or any supplement or amendment
thereto, by Parent may be deferred pursuant to this Section 10.02(c) for
no longer than 180 days (but only once in every twelve month period)
after the delivery of such demand notice.
(iii) Notwithstanding anything in this Section 10.02(c) to the
contrary: (A) Parent shall not be required to effect the registration of
the Registrable Securities pursuant to this Section 10.02(c) more than
one time; and (B) Parent shall not be required to effect any such
registration unless at least $1 million of Registrable Securities are to
be sold in such registration (with such amount being determined based on
the market price of the Parent Common Stock on the date of the
initiating Holder(s) request). If any registration pursuant to this
Section 10.02(c) is in the form of an underwritten offering, Parent will
select and obtain the investment banker or investment bankers and
manager or managers that will administer the offering, which investment
bankers must offer terms which are reasonably competitive in the
marketplace for similar size companies and similar offerings. Parent
shall (together with all Holders proposing to distribute Registrable
Securities through such underwriting) enter into an underwriting
agreement, containing usual and customary terms, with the managing
underwriter selected for such underwriting. If any holder of Registrable
Securities disapproves of the terms of the underwriting, such person may
elect to withdraw therefrom by written notice to Parent and the managing
underwriter. The Registrable Securities so withdrawn shall also be
withdrawn from registration.
(iv) If any registration statement under this Section 10.02(c) is
not declared effective (except as a result of Holders withdrawing
Registrable Securities), then the holders of Registrable Securities may
request an additional registration under this Section 10.02(c).
(v) No registrations effected under this Section 10.02(c) shall
relieve Parent of its obligations to effect any registrations under, and
pursuant to the terms of, Section 10.02(d).
(d) Piggyback Registration. If (but without any obligation to do so)
Parent proposes to register (including for this purpose a registration
effected by Parent for shareholders other than the Holders) any Parent
Common Stock or other securities under the Act in connection with the
public offering of such securities solely for cash (other than registration
relating solely to the sale of securities to participants in a Parent stock
option, stock purchase or similar employee benefit plan, a registration on
any form which does not include substantially the same information as would
be required to be included in a registration statement covering the sale of
the Registrable Securities (including Form S-4 or any form substitution
thereof) or a registration in which the only Parent Common Stock being
registered is Parent Common Stock issuable upon conversion of debt
securities which are also being registered or a SEC Rule 145 transaction),
Parent shall, at such time, promptly give each Holder written notice of
such registration. Upon the written request of each Holder given within
twenty days after mailing of such notice by Parent, Parent shall, subject
to the provisions of Section 10.02(h), use all reasonable efforts to cause
to be registered under the Act and any applicable state securities laws up
to all of such requesting Holder's Registrable Securities.
(e) Obligations of Parent. Whenever under this Section 10.02 Parent is
to effect the registration of any Registrable Securities, Parent shall, as
expeditiously as reasonably possible:
(i) Prepare and file with the SEC on any appropriate form a
registration statement with respect to the Registrable Securities
proposed to be registered and use its best efforts to cause such
registration statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities registered
thereunder, keep such registration statement effective for a period of
up to twelve months (except as provided in Section 10.02(b)(i)) or, if
earlier, until the distribution contemplated in the Registration
Statement has been completed;
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(ii) Unless such registration is a firm commitment underwriting,
prepare and file with the SEC such amendments (including post-effective
amendments) and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep such
registration statement effective and to comply with the provisions of
the Act with respect to the disposition of all Registrable Securities
and other securities covered by such registration statement for a period
of twelve months (except as provided in Section 10.02(b)(i)).
(iii) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably
request in order to facilitate the disposition of Registrable Securities
owned by them.
(iv) Use its best efforts to register or qualify all Registrable
Securities and other securities covered by such registration statement
under such other securities or "blue sky" laws of such jurisdictions as
the underwriter or such sellers shall reasonably request and do any and
all other acts and things as may be reasonably necessary to consummate
the disposition in such jurisdictions of the Registrable Securities
covered by such registration statement, except that Parent shall not for
any such purpose be required to qualify generally to do business as a
foreign corporation in any jurisdiction wherein it is not so qualified,
or to subject itself to taxation in respect of doing business in any
such jurisdiction, or to consent to general service of process in any
such jurisdiction.
(v) Immediately notify each seller of Registrable Securities
covered by such registration statement, at any time when a prospectus
relating thereto is required to be delivered under the Act, of the
happening of any event as a result of which the prospectus included in
such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing
or if it is necessary, in the opinion of counsel to Parent, to amend or
supplement such prospectus to comply with law, and at the request of any
such seller prepare and to send such seller a reasonable number of
copies of a supplement to or any amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus shall not include any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing and shall
otherwise comply in all material respects with law and so that such
prospectus, as amended or supplemented, will comply with law.
(vi) Otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC.
(vii) In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual
and customary form, with the managing underwriter of such offering. Each
Holder participating in such underwriting shall also enter into and
perform its obligations under such an agreement.
(viii) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereunder and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date
of such registration.
(f) Furnish Information. It shall be a condition precedent to the
obligations of Parent to take any action pursuant to this Section 10.02
with respect to the Registrable Securities of any selling Holder that such
Holder shall furnish to Parent such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition
of such securities as shall be required to effect the registration of such
Holder's Registrable Securities.
(g) Expenses of Registration. All expenses incurred in connection with
registrations, filings or qualifications pursuant to this Section 10.02 in
connection with one demand registration, any shelf registration and all
piggyback registrations including, without limitation, all registration,
filing and
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qualification fees, printers' and accounting fees, fees and disbursements
of counsel for Parent and the reasonable fees and expenses of one counsel
for the selling Holders (as a group) (but excluding underwriter's
commissions and fees and any fees of others employed by a selling Holder)
shall be borne by Parent.
(h) Underwriting Requirements; Cut-backs.
(i) In connection with any offering involving an underwriting of
shares of Parent's capital stock, Parent shall not be required to
include any Holders' Registrable Securities in such underwriting unless
they accept the terms of the underwriting as agreed upon between Parent
and the underwriters selected by it (or by other persons entitled to
select the underwriters), and then only in such quantity as the
underwriters determine in their sole discretion will not materially
jeopardize or in any way reduce the success of the offering by Parent
(with the securities being eliminated as provided in (ii) below).
(ii) Parent has previously granted registration rights to certain
of its securityholders (the "Other Holders"). Notwithstanding anything
in this Section 10.02 to the contrary, in the event of any request for
registration hereunder, Parent shall provide each Other Holder the
notice required with respect to their registration rights and will allow
such Other Holders to participate in any such registration to the extent
of such registration rights; it being acknowledged and agreed that if
the total amount of securities, including Registrable Securities,
requested by Holders and Other Holders to be included in such offering
exceeds the amount of securities that the underwriters determine in
their sole discretion is compatible with the success of the offering
(excluding any securities to be offered by Parent), then Parent shall be
required to include in the offering only that number of such securities,
including Registrable Securities, which the underwriters determine in
their sole discretion will not jeopardize the success of the offering
(the securities so included to be apportioned pro rata among the selling
Holders and Other Holders according to the total amount of securities
entitled to be included therein owned by each selling Holder and Other
Holder or in such other proportions as shall mutually be agreed to by
such selling Holders and Other Holders).
(i) Delay of Registration. No Holder shall have any right to obtain or
seek an injunction restraining or otherwise delaying any registration by
Parent of any securities as a result of any controversy that might arise
with respect to the interpretation or implementation of this Section 10.02.
(j) Indemnification. In the event any Registrable Securities are
included in a registration statement under this Section 10.02:
(i) To the extent permitted by law, Parent will indemnify and hold
harmless each Holder, any underwriter (as defined in the Act) for such
Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Act or the 1934 Act against any losses,
claims, damages, or liabilities (joint or several) to which they may
become subject under the Act, the 1934 Act or other federal or state
law, insofar as such losses, claims, damages, or liabilities (or actions
in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively a "Violation"): (A)
any untrue statement or alleged untrue statement of a material fact
contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, (B) the omission or alleged omission to state
therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (C) any violation or
alleged violation by Parent of the Act, the 1934 Act, any state
securities law or any rule or regulation promulgated under, the 1934 Act
or any state securities law; and, subject to Section 10.02(j)(iii)
below, Parent will pay to each such Holder, underwriter or controlling
person, as incurred, any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim,
damage, liability, or action; provided, however, that the indemnity
agreement contained in this Section 10.02(j)(i) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability,
or action if such settlement is effected without the consent of Parent
(which consent shall
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not be reasonably delayed or withheld), nor shall Parent be liable in
any such case for any such loss, claim, damage, liability, or action to
the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information
furnished expressly for use in connection with such registration by any
such Holder, underwriter or controlling person.
(ii) To the extent permitted by law, each selling Holder will
indemnify and hold harmless Parent, each of its directors, each of its
officers who has signed the registration statement, each person, if any,
who controls Parent within the meaning of the Act, any underwriter, any
other Holder selling securities in such registration statement and any
controlling person of any such underwriter or other Holder, and any
agent of Parent, against any losses, claims, damages, or liabilities
joint or several) to which any of the foregoing persons may become
subject, under the Act, the 1934 Act or other federal or state law,
insofar as such losses, claims, damages, or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in each
case to the extent (and only to the extent) that such Violation occurs
in reliance upon and in conformity with written information furnished by
such Holder expressly for use in connection with such registration; and
each such Holder will pay, as incurred, any legal or other expenses
reasonably incurred by any person intended to be indemnified pursuant to
this Section 10.02(j)(ii), in connection with investigating or defending
any such loss, claim, damage, liability, or action; provided, however,
that the indemnity agreement contained in this Section 10.02(j)(ii)
shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the
consent of the Holder, which consent shall not be reasonably withheld;
provided, that, in no event shall any indemnity under this Section
10.02(j)(ii) exceed the net proceeds from the offering received by such
Holder.
(iii) Promptly after receipt by an indemnified party under this
Section 10.02(j) of notice of the commencement of any action (including
any governmental action), such indemnified party will, if a claim in
respect thereof is to be made against any indemnifying party under this
Section 10.02(j), deliver to the indemnifying party a written notice of
the commencement thereof and the indemnifying party shall have the right
to participate in, and, to the extent the indemnifying party so desires,
jointly with any other indemnifying party receiving similar notice, to
assume the defense thereof with counsel reasonably satisfactory to the
parties; provided, however, that an indemnified party (together with all
other indemnified parties which may be represented without conflict by
one counsel) shall have the right to retain one separate counsel, with
the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such proceeding; otherwise, the
indemnified party shall be responsible for the fees and expenses of its
counsel. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action, if
prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this
Section 10.02(j) with respect to such action, but not with respect to
any other action.
(iv) Except as provided in the last sentence of Section
10.02(j)(iii) above, if the indemnification provided for in this Section
10.02(j) is held by a court of competent jurisdiction to be unavailable
to an indemnified party with respect to any loss, liability, claim,
damage, or expense referred to herein, then the indemnifying party, in
lieu of indemnifying such indemnified party hereunder, shall contribute
to the amount paid or payable by such indemnified party as a result of
such loss, liability, claim, damage, or expense in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on
the one hand and of the indemnified party on the other in connection
with the statements or omissions that resulted in such loss, liability,
claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material
fact or the omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified party and the
parties
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relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
(v) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in any
underwriting agreement entered into in connection with an underwritten
public offering are in conflict with the foregoing provisions, the
provisions in the underwriting agreement shall control.
(vi) The obligations of Parent and Holders under this Section
10.02(j) shall survive the completion of any offering of Registrable
Securities pursuant to a registration statement under this Section
10.02.
(k) Reports Under the 1934 Act. With a view to making available to the
Holders the benefits of Rule 144 promulgated under the Act ("Rule 144") and
any other rule or regulation of the SEC that may at any time permit a
Holder to sell securities of Parent to the public without registration or
pursuant to a registration on Form S-3, Parent agrees to:
(i) make and keep public information available, as those terms are
understood and defined in Rule 144, at all times after the Closing Date;
(ii) file with the SEC in a timely manner all reports and other
documents required of Parent under the Act and the 1934 Act; and
(iii) furnish to any Holder, so long as the Holder owns any
Registrable Securities, promptly upon request (A) a written statement by
Parent that it has complied with the reporting requirements of Rule 144
(at any time after ninety (90) days after the effective date of the
first registration statement filed by Parent), the Act and the 1934 Act
(at any time after it has become subject to such reporting
requirements), or that it qualifies as a registrant whose securities may
be resold pursuant to Form S-3 (at any time after it so qualifies), (B)
a copy of the most recent annual or quarterly report of Parent and such
other reports and documents so filed by Parent, and (C) such other
information as may be reasonably requested in availing any Holder of any
rule or regulation of the SEC that permits the selling of any such
securities without registration or pursuant to such form.
(l) Assignment of Registration Rights. The registration rights of the
Holders under this Section 10.02 may be assigned (but only with all related
obligations) by a Holder to a transferee or assignee of such securities who
purchases from such Holder at least 10,000 shares of Registrable Securities
(subject to appropriate adjustment for stock splits, stock dividends,
combinations and other recapitalizations), provided: (A) Parent is within a
reasonable time after such transfer, furnished with written notice of the
name and address of such transferee or assignee and the securities with
respect to which such registration rights are being assigned; (B) such
transferee or assignee agrees in writing to be bound by and subject to the
terms and conditions of this Agreement, including without limitation the
provisions of Section 10.02(m) below; and (C) such assignment shall be
effective only if immediately following such transfer the further
disposition of such securities by the transferee or assignee is restricted
under the Act.
(m) Lock-up Agreement. Each Holder hereby agrees that if requested by
Parent or the underwriters in any underwritten offering, such Holder shall
not, for the period of not more than 180 days (as specified by the managing
underwriter) after the effective date of an underwritten public offering of
shares of Parent Common Stock, if requested by the managing underwriter,
without the prior written approval of Parent or such underwriters (as the
case may be), directly or indirectly, sell, offer to sell, contract to sell
(including without limitation, any short sale), grant any option to
purchase or otherwise transfer or dispose of any shares of Parent Common
Stock legally or beneficially owned by such Holder. In order to enforce the
foregoing covenant, Parent may impose stop-transfer instructions with
respect to the Registrable Securities of each Holder (and the shares or
securities of every other person subject to the foregoing restriction)
until the end of such period. Notwithstanding the foregoing, the provisions
of this Section 10.02(m) shall only be applicable to the Holders if all
officers and directors of Parent enter into similar agreements.
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(x) Xxxxxxxxxxx of Registration Rights. Notwithstanding anything in
this Section 10.02 to the contrary, no Holder shall be entitled to exercise
any right provided for in this Section 10.02: (i) at any time more than two
(2) years following the Closing Date or (ii) at such time as such Holder is
able to sell all of such Holder's Registrable Securities in a single
three-month period in compliance with Rule 144.
(o) Limitations on Subsequent Registration Rights. From and after the
date of this Agreement and until Holder's registration rights terminate
pursuant to Section 10.02(n) above, Parent shall not, without the prior
written consent of the Holders of a majority of the Registrable Securities,
enter into any agreement with any holder or prospective holder of any
securities of Parent that would grant to such holder or prospective holder
registration rights which are superior to those granted to the Holders
hereunder (although pari passu rights will be permissible).
SECTION 10.03. Appointment of Directors. Parent shall cause Ladin to become
a member of the board of directors of Parent immediately following the Effective
Time and shall increase the size of the board to five members, consisting of the
aforesaid person and the four current board members. In addition, following the
Closing, the parties acknowledge and agree that the board of directors and
management of Parent will use reasonable efforts to cause Xxxx X. Xxxxxx to
become a member of the board of directors of Parent and in that event, will
increase the size of the board to six members. Should Xxxx X. Xxxxxx decline to
become a member of the board of directors of Parent, then Ladin may nominate
someone else to become a director subject to the approval of the board of
directors other than Ladin. In addition, following the Closing, the parties
acknowledge and agree that Xxxxxxx X. Xxxx and Xxxx X. Xxxxxx (should he become
a director) will jointly attempt to identify up to two (2) outside persons to
add as members of the board of directors of Parent and that in such event, the
board of directors of Parent shall be increased to eight persons. If Xxxx X.
Xxxxxx does not become a member of the board of directors of Parent, then
Xxxxxxx X. Xxxx and Xxxxx will jointly attempt to identify up to two (2) outside
persons to add as members of the board of directors of Parent. So long as Xxxx
X. Xxxxxx and Ladin, collectively, own 5% or more of the Parent's outstanding
common stock, Parent will use its reasonable best efforts to elect Ladin to the
Board of Directors.
SECTION 10.04. Tax Matters. Each party hereto shall provide to each of the
other parties hereto such cooperation and information as any of them reasonably
may request in filing any Return, amended Return or claim for refund,
determining a liability for Taxes or a right to refund of such Taxes or in
conducting any audit or other proceeding in respect of such Taxes. Such
cooperation and information shall include providing copies of all relevant
portions of Returns, together with relevant accompanying schedules, work papers,
documents relating to rulings or other determinations by taxing authorities and
records concerning the ownership and tax basis of property, which such party may
possess.
SECTION 10.05. Indemnification of Directors and Officers.
(a) From and after the Effective Time and for a period of six (6)
years thereafter, the Surviving Corporation shall fulfill and honor in all
material respects the indemnification obligations of the Company contained
in the Articles of Incorporation or by-laws or any equivalent
organizational document of the Company as in effect immediately prior to
the Effective Time.
(b) The provisions of this Section 10.05 are intended to be for the
benefit of, and shall be enforceable by, each Person entitled to
indemnification as set forth in Section 10.05(a) and the heirs and
representatives of such Person. Parent shall not permit the Surviving
Corporation to dividend or distribute all or substantially all of its
assets, or merge or consolidate with, or sell all or substantially all of
its assets to, any other Person unless: (i) the Surviving Corporation
ensures that the surviving or resulting entity will assume the obligations
imposed by this Section 10.05; or (ii) Parent agrees to assume the
obligations of the Surviving Corporation imposed by this Section 10.05.
SECTION 10.06. Registration of Shares Underlying Parent Options. As soon as
practicable after the Closing Date, but in no event later than fifteen business
days following the Closing Date, Parent shall register
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all of the shares of Parent Common Stock underlying Parent Options that Parent
is permitted to register on a Form S-8 under the rules and regulations of the
SEC.
ARTICLE XI
REMEDIES
SECTION 11.01. Indemnification by Shareholders. Subject to the terms and
conditions of this Article, the shareholders of the Company entitled to shares
of Parent Common Stock under Section 1.04 (the "Indemnifying Shareholders") each
agree to indemnify, defend and hold Parent and its directors, officers, agents,
attorneys and affiliates (the "Parent Indemnitees") harmless from and against
any and all losses, claims, obligations, demands, assessments, penalties,
liabilities, costs, damages and expenses (including reasonable attorneys' and
other fees and expenses for investigation and defense with respect to the
foregoing) (collectively, "Damages") asserted against or incurred by such
indemnitees by reason of or resulting from: (a) a breach of any representation,
warranty or covenant of the Company or Principal Shareholders contained herein,
in any exhibit, schedule, certificate or financial statement delivered
hereunder, any certificate delivered at Closing, or in any agreement executed in
connection with the transactions contemplated hereby; and (b) any claims,
liabilities, costs, expenses or losses resulting from and arising out of the
matters described in Schedule 11.01 attached hereto; provided that the
Indemnifying Shareholders shall not be required to indemnify the Parent
Indemnitees in respect to any Damages until the aggregate amount of all such
Damages exceeds $100,000 (the "Basket"), whereupon the Indemnifying Shareholders
shall be required to indemnify the Parent Indemnitees in respect of such Damages
to the extent (but only to the extent) that such Damages exceed the Basket. Any
provision in this Agreement to the contrary notwithstanding, (x) the
Indemnifying Shareholders' liability to the Parent Indemnitees for Damages under
this Article shall be limited to the Escrowed Shares and shall be payable only
by return of the Escrowed Shares in accordance with the Escrow Agreement, except
as provided in the next sentence of this Section 11.01; (y) Damages arising out
of a breach of the representations in Section 3.01, 3.03 or 3.05 with respect to
an Indemnifying Shareholder shall be the obligation of only the Indemnifying
Shareholder breaching such representations; and (z) the obligations of the
Principal Shareholders to indemnify the Parent Indemnitees for Damages arising
out of any breach of any representation or warranty contained in Article II of
this Agreement shall be several, and not joint, and shall be the obligation only
of the Principal Shareholder breaching such representation or warranty.
Notwithstanding anything hereinabove to the contrary, in the event of any
Damages arising from a breach of the representations set forth in Section 3.01,
3.03, or 3.05 in excess of the Escrowed Shares remaining in escrow, the
Indemnifying Shareholders shall be severally liable on a pro rata basis based
upon the amount of shares of Parent Common Stock issued to each Indemnifying
Shareholder hereunder, but not in excess of such amount of Parent Common Stock
issued to such Indemnifying Shareholder. Any claim for Damages against an
Indemnifying Shareholder to be satisfied by Escrowed Shares shall be pursuant to
and in accordance with the Escrow Agreement.
SECTION 11.02. Indemnification by Parent. Subject to the terms and
conditions of this Article, Parent hereby agrees to indemnify, defend and hold
the Company and Indemnifying Shareholders and its or their respective directors,
officers, agents, attorneys and affiliates (the "Company Indemnities") harmless
from and against all Damages asserted against or incurred by any of such
indemnitees by reason of or resulting from a breach of any representation,
warranty or covenant of Parent contained herein or in any exhibit, schedule or
certificate delivered hereunder, any certificate delivered at Closing, or in any
agreement executed in connection with the transactions contemplated hereby;
provided however, that Parent shall not be required to indemnify the Company
Indemnitees in respect to any Damages until the aggregate amount of all such
Damages exceeds the Basket.
SECTION 11.03. Conditions of Indemnification. The respective obligations
and liabilities of the Company and Principal Shareholders and Parent (the
"indemnifying party") to the other (the "party to be
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indemnified") under Sections 11.01 and 11.02 with respect to claims resulting
from the assertion of liability by third parties shall be subject to the
following terms and conditions:
(a) Within 20 days (or such earlier time as might be required to avoid
prejudicing the indemnifying party's position) after receipt of notice of
commencement of any action evidenced by service of process or other legal
pleading, the party to be indemnified shall give the indemnifying party
written notice thereof together with a copy of such claim, process or other
legal pleading, and the indemnifying party shall have the right to
undertake the defense thereof by representatives of its own choosing and at
its own expense; provided that the party to be indemnified may participate
in the defense with counsel of its own choice, the fees and expenses of
which counsel shall be paid by the party to be indemnified unless (i) the
indemnifying party has agreed to pay such fees and expenses, (ii) the
indemnifying party has failed to assume the defense of such action or (iii)
the named parties to any such action (including any impleaded parties)
include both the indemnifying party and the party to be indemnified and the
party to be indemnified has been advised by counsel that there may be one
or more legal defenses available to it that are different from or
additional to those available to the indemnifying party (in which case, if
the party to be indemnified informs the indemnifying party in writing that
it elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the
defense of such action on behalf of the party to be indemnified, it being
understood, however, that the indemnifying party shall not, in connection
with any one such action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys at any time for the
party to be indemnified, which firm shall be designated in writing by the
party to be indemnified).
(b) In the event that the indemnifying party, by the 30th day after
receipt of notice of any such claim (or, if earlier, by the 10th day
preceding the day on which an answer or other pleading must be served in
order to prevent judgment by default in favor of the person asserting such
claim), does not elect to defend against such claim, the party to be
indemnified will (upon further notice to the indemnifying party) have the
right to undertake the defense, compromise or settlement of such claim on
behalf of and for the account and risk of the indemnifying party and at the
indemnifying party's expense, subject to the right of the indemnifying
party to assume the defense of such claims at any time prior to settlement,
compromise or final determination thereof.
(c) Notwithstanding the foregoing, the indemnifying party shall not
settle any claim without the consent of the party to be indemnified unless
such settlement involves only the payment of money and the claimant
provides to the party to be indemnified a release from all liability in
respect of such claim. If the settlement of the claim involves more than
the payment of money, the indemnifying party shall not settle the claim
without the prior consent of the party to be indemnified.
(d) The party to be indemnified and the indemnifying party will each
cooperate with all reasonable requests of the other.
SECTION 11.04. Survival of Representations, Warranties and Covenants. The
representations, warranties and covenants contained herein shall survive the
Closing and all statements contained in any certificate, exhibit or other
instrument delivered by or on behalf of the Company, Principal Shareholders or
Parent pursuant to this Agreement shall be deemed to have been representations
and warranties by the Company and Principal Shareholders or Parent, as the case
may be, and, notwithstanding any provision in this Agreement to the contrary,
shall survive for a period of twelve months after the Closing Date. Any claims
for Damages must be made prior to the expiration of the applicable period set
forth in this section, and as to any such claim that is presented to the
indemnifying party within the applicable period set forth in this section, such
obligation to indemnify shall continue to survive until such claim is finally
resolved or disposed of.
SECTION 11.05. Waiver. No waiver by any party of any default or breach by
another party of any representation, warranty, covenant or condition contained
in this Agreement, any exhibit or any document, instrument or certificate
contemplated hereby shall be deemed to be a waiver of any subsequent default or
breach by such party of the same or any other representation, warranty, covenant
or condition. No act, delay,
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omission or course of dealing on the part of any party in exercising any right,
power or remedy under this Agreement or at law or in equity shall operate as a
waiver thereof or otherwise prejudice any of such party's rights, powers and
remedies. All remedies, whether at law or in equity, shall be cumulative and the
election of any one or more shall not constitute a waiver of the right to pursue
other available remedies.
SECTION 11.06. Remedies Exclusive. The remedies provided in this Article
shall be exclusive of any other rights or remedies available to one party
against the other, either at law or in equity, except in the case of fraud.
SECTION 11.07. Offset. Any and all amounts owing or to be paid by Parent to
Principal Shareholders, hereunder or otherwise, shall be subject to offset and
reduction pro tanto by any amounts that may be owing at any time by Principal
Shareholders to Parent in respect of any failure or breach of any
representation, warranty or covenant of the Company or Principal Shareholders
under or in connection with this Agreement or any other agreement with Parent or
any transaction contemplated hereby or thereby, as reasonably determined by
Parent. If Parent determines that such offset is appropriate, notice shall be
given to Principal Shareholders of such determination at least 10 days prior to
the due date of the payment to be reduced. If the conditions upon which the
reduction is based are cured by Principal Shareholders prior to such due date,
as determined by Parent, the amount of such payment shall not be so reduced.
SECTION 11.08. Costs, Expenses and Legal Fees. Whether or not the
transactions contemplated hereby are consummated, each party hereto shall bear
its own costs and expenses (including attorneys' fees and expenses), except that
each party hereto that is shown to have breached this Agreement or any other
agreement contemplated hereby agrees to pay the costs and expenses (including
reasonable attorneys' fees and expenses) incurred by any other party in
successfully (a) enforcing any of the terms of this Agreement against such
breaching party or (b) proving that another party breached any of the terms of
this Agreement.
ARTICLE XII
TERMINATION
SECTION 12.01. Termination. This Agreement may be terminated:
(a) At any time prior to the Closing Date by mutual written agreement
of all parties.
(b) At any time prior to the Closing Date by Parent if any
representation or warranty of the Company or Principal Shareholders
contained in this Agreement or in any certificate or other document
executed and delivered by the Company pursuant to this Agreement is or
becomes untrue or breached in any material respect or if the Company or
Principal Shareholders fail to comply in any material respect with any
covenant contained herein, and any such misrepresentation, noncompliance or
breach is not cured, waived or eliminated within seven days.
(c) At any time prior to the Closing Date by the Company if any
representation or warranty of Parent contained in this Agreement or in any
certificate or other document executed and delivered by Parent pursuant to
this Agreement is or becomes untrue or breached in any material respect or
if Parent fails to comply in any material respect with any covenant
contained herein, and any such misrepresentation, noncompliance or breach
is not cured, waived or eliminated within seven days.
(d) By Parent if the conditions stated in Article VII have not been
satisfied by the Closing Date.
(e) By the Company if the conditions stated in Article VIII have not
been satisfied by the Closing Date.
In the event this Agreement is terminated pursuant to subparagraph (b), (c), (d)
or (e) above, Parent, the Company and Principal Shareholders shall each be
entitled to pursue, exercise and enforce any and all remedies, rights, powers
and privileges available at law or in equity. In the event of a termination of
this Agreement under the provisions of this Article, a party not then in
material breach of this Agreement shall stand fully released and discharged of
any and all obligations under this Agreement.
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SECTION 12.02. Stock Price Protection.
(a) This Agreement may be terminated by the Company on the Closing
Date, if both of the following conditions are satisfied:
(i) the market value of the Parent Common Stock as of the close of
business on the Determination Date (the "Parent Market Value") shall be
less than $9.875; and
(ii) the quotient obtained by dividing the Parent Market Value by
the Starting Date Price (such number being referred to herein as the
"Parent Ratio") shall be less than the quotient obtained by dividing the
Index Price on the Determination Date by the Index Price on the Starting
Date and subtracting 0.15 from such quotient subject, however, to the
following: If the Company shall elect to terminate this Agreement
pursuant to this Section 12.02, it shall give written notice thereof to
Parent on the Closing Date; but provided further, that Parent shall have
the option to elect to increase the Exchange Ratio by multiplying the
Exchange Ratio by the quotient obtained by dividing the Starting Date
Price by the Parent Market Value, whereupon no termination shall have
occurred pursuant to this Section 12.02 and this Agreement shall remain
in effect in accordance with its terms (except as the Exchange Ratio
shall have been so modified), and any references in this Agreement to
"Exchange Ratio" shall thereafter be deemed to refer to the Exchange
Ratio as adjusted pursuant to this Section 12.02.
(b) For purposes of this Section 12.02, the following terms shall have
the meanings indicated:
"Starting Date Price" shall mean the closing price per share of the
Parent Common Stock on the Nasdaq National Market on the last trading
day prior to the date of this Agreement.
"Determination Date" shall mean the date immediately preceding the
Closing Date.
"Index Group" shall mean the six internet service provider
companies listed below, the common stocks of all of which shall be
publicly traded and as to which there shall not have been, since the
Starting Date and before the Determination Date, any public announcement
of a proposal of such company to be acquired or for such company to
acquire another company or companies in transactions with a value
exceeding 25% of the acquiror's market capitalization. In the event that
any such company or companies are removed from the Index Group, the
weights which have been determined based upon the number of shares of
outstanding common stock shall be redistributed proportionately for
purposes of determining the Index Price. The six internet service
provider companies and the weights attributed to them are as follows:
INTERNET SERVICE PROVIDER % WEIGHTING
------------------------- -----------
MindSpring............................................... 16 2/3%
Earthlink................................................ 16 2/3%
Prodigy Communications................................... 16 2/3%
XxxXxxx.xxx.............................................. 16 2/3%
Voyager Net.............................................. 16 2/3%
Flash net................................................ 16 2/3%
------
Total.......................................... 100.00%
"Index Price" on a given date shall mean the weighted average
(weighted in accordance with the factors listed above) of the closing
sales prices on such date of the companies composing the Index Group.
"Starting Date" shall mean the date of this Agreement or the last
business day prior to the date of this Agreement if this Agreement is
not dated as of a business day.
If Parent or any company belonging to the Index Group declares or
effects a stock dividend, reclassification, recapitalization, split-up,
combination, exchange of shares, or similar transaction
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between the Starting Date and the Determination Date, the prices for the
common stock of such company or Parent shall be appropriately adjusted
for the purposes of applying this Section 12.02.
SECTION 12.03. This Agreement shall terminate if the Closing has not
occurred by December 15, 1999.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.01. Amendment. This Agreement may be amended, modified or
supplemented only by an instrument in writing executed by all the parties
hereto.
SECTION 13.02. Assignment. Neither this Agreement nor any right created
hereby or in any agreement entered into in connection with the transactions
contemplated hereby shall be assignable by any party hereto, except by Parent to
an affiliate of Parent.
SECTION 13.03. Parties In Interest; No Third Party Beneficiaries. Except as
otherwise provided herein, the terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective heirs, legal
representatives, successors and assigns of the parties hereto. Neither this
Agreement nor any other agreement contemplated hereby shall be deemed to confer
upon any person not a party hereto or thereto any rights or remedies hereunder
or thereunder.
SECTION 13.04. Entire Agreement. This Agreement and the agreements
contemplated hereby constitute the entire agreement of the parties regarding the
subject matter hereof, and supersede all prior agreements and understandings,
both written and oral, among the parties, or any of them, with respect to the
subject matter hereof.
SECTION 13.05. Severability. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under present or future laws effective
during the term hereof, such provision shall be fully severable and this
Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision never comprised a part hereof; and the remaining
provisions hereof shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its severance
herefrom. Furthermore, in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as part of this Agreement a
provision as similar in its terms to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid and enforceable.
SECTION 13.06. Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE SUBSTANTIVE LAWS (BUT NOT THE RULES GOVERNING CONFLICTS OF
LAWS) OF THE STATE OF TEXAS.
SECTION 13.07. Captions. The captions in this Agreement are for convenience
of reference only and shall not limit or otherwise affect any of the terms or
provisions hereof.
SECTION 13.08. Gender and Number. When the context requires, the gender of
all words used herein shall include the masculine, feminine and neuter and the
number of all words shall include the singular and plural.
SECTION 13.09. Reference to Agreement. Use of the words "herein", "hereof",
"hereto" and the like in this Agreement shall be construed as references to this
Agreement as a whole and not to any particular Article, Section or provision of
this Agreement, unless otherwise noted.
SECTION 13.10. Confidentiality; Publicity and Disclosures. Each party shall
keep this Agreement and its terms confidential, and shall make no press release
or public disclosure, either written or oral, regarding the transactions
contemplated by this Agreement without the prior knowledge and consent of the
other parties hereto; provided that the foregoing shall not prohibit any
disclosure (a) by press release, filing or otherwise that is required by federal
securities laws or the rules of the Nasdaq National Market, (b) to attorneys,
accountants, investment bankers or other agents of the parties assisting the
parties in connection with the
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transactions contemplated by this Agreement and (c) by Parent in connection with
conducting an examination of the operations and assets of the Company and the
Subsidiaries.
SECTION 13.11. Notice. Any notice or communication hereunder or in any
agreement entered into in connection with the transactions contemplated hereby
must be in writing and given by depositing the same in the United States mail,
addressed to the party to be notified, postage prepaid and registered or
certified with return receipt requested, or by delivering the same in person or
by facsimile transmission. Such notice shall be deemed received on the date on
which it is hand-delivered or received by facsimile transmission or on the third
business day following the date on which it is so mailed. For purposes of
notice, the addresses of the parties shall be:
If to Parent: Internet America, Inc.
000 X. Xx. Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: President
with a copy to: Xxxxxxx Xxxxxxx
Xxxxxxx Xxxxxx L.L.P.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
If to the Company: PDQ. Net, Incorporated
00 X. Xxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: President
If to Principal Shareholders: Xxxxxxx X. Xxxxx, Xx.
00 X. Xxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
X. X. Xxxxxx Family Partnership
0000 Xxxxxxxx
Xxxxxxx, Xxxxxxxxxxx 00000
with a copy to: Xxxxxxx X. Xxxxxx
Xxxxxxx & Xxxxx, L.L.P.
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxxxxxx, Xxxxx 00000
Any party may change its address for notice by written notice given to the other
parties in accordance with this Section.
SECTION 13.14. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
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EXECUTED as of the date first above written.
PARENT:
INTERNET AMERICA, INC.
By: /s/ XXXXXXX X. XXXXXX
----------------------------------
Xxxxxxx X. Xxxxxx
President and Chief Executive
Officer
MERGER SUB:
GEEK HOUSTON II, INC.
By: /s/ XXXXXXX X. XXXXXX
----------------------------------
Xxxxxxx X. Xxxxxx
President
THE COMPANY:
XXX.XXX, INCORPORATED
By: /s/ XXXXXXX X. XXXXX, XX.
----------------------------------
Xxxxxxx X. Xxxxx, Xx.
PRINCIPAL SHAREHOLDERS:
/s/ XXXXXXX X. XXXXX, XX.
------------------------------------
Xxxxxxx X. Xxxxx, Xx.
/s/ XXXX X. XXXXXX
------------------------------------
X. X. Xxxxxx Family Partnership
By: Xxxx X. Xxxxxx, General Partner
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EXHIBIT A
DEFINITIONS
In addition to terms otherwise defined in this Agreement, as used in this
Agreement, the following terms shall have the meanings set forth below:
"Articles of Merger" shall have the meaning set forth in Section 1.02.
"knowledge", "have no knowledge of ", or "do not know of " and similar
phrases shall mean (i) in the case of a natural person, the particular fact was
known, or not known, as the context requires, to such person after diligent
investigation and inquiry by such person, and (ii) in the case of an entity, the
particular fact was known, or not known, as the context requires, to any
executive officer of such entity after diligent investigation and inquiry by the
principal executive officer of such entity.
"Cash Compensation" shall have the meaning set forth in Section 3.11(a).
"Closing" shall mean the closing of the transactions contemplated by this
Agreement, which shall occur at 10:00 a.m., local time, on the Closing Date in
the offices of Xxxxxxx Xxxxxx L.L.P., Suite 6000, 000 Xxxx Xxxxxx, Xxxxxx, Xxxxx
00000, or at such other time and place as shall be mutually agreed in writing by
the parties hereto.
"Closing Date" shall mean the date of Closing, which date shall be as soon
as practicable after the date of this Agreement; provided that the date may not
be later than December 15, 1999.
"Code" shall mean the Internal Revenue Code of 1986.
"Commitments" shall have the meaning set forth in Section 3.15(a).
"Company Common Stock" shall have the meaning set forth in Section 1.04.
"Company Shareholders" shall have the meaning set forth in Section 10.02.
"Compensation Plans" shall have the meaning set forth in Section 3.11(b).
"Competitor" means an Internet service provider that operates in a
geographic market in which Parent operates.
"Controlled Group" shall have the meaning set forth in Section 3.1(d).
"Damages" shall have the meaning set forth in Section 10.02.
"Dissenting Share" shall have the meaning set forth in Section 1.06.
"Effective Time" shall have the meaning set forth in Section 1.02.
"Employee Benefit Plan" shall have the meaning set forth in Section
3.12(a).
"Employee Policies and Procedures" shall have the meaning set forth in
Section 3.11(d).
"Employment Agreements" shall have the meaning set forth in Section
3.11(c).
"Environmental Laws" shall have the meaning set forth in Section 3.33(a).
"Exchange Ratio" means the ratio obtained by dividing 2,425,000 by the
number of issued and outstanding shares of Company Common Stock as set forth on
Schedule 3.01.
"Financial Statements" shall have the meaning set forth in Section 3.09.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"ordinary course of business" means the usual and customary way in which
the Company or any Subsidiary, as the case may be, has conducted its business in
the past.
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"Merger" shall have the meaning set forth in the preamble of this
Agreement.
"Related Agreements" shall have the meaning set forth in Section 2.03.
"Parent Common Stock" shall have the meaning set forth in Section 1.04.
"Parent Notice" shall have the meaning set forth in Section 10.02.
"Personal Property" shall have the meaning set forth in Section 3.14(b).
"Proprietary Rights" shall have the meaning set forth in Section 3.18(a).
"Return" or "Returns" means any returns, reports or statements (including
any information returns) required to be filed for purposes of a particular Tax.
"Tax" or "Taxes" means all federal, state, local or foreign net or gross income,
gross receipts, net proceeds, sales, use, ad valorem, value added, franchise,
bank shares, withholding, payroll, employment, excise, property, deed, stamp,
alternative or add on minimum, environmental or other taxes, assessments,
duties, fees, levies or other governmental charges of any nature whatever,
whether disputed or not, together with any interest, penalties, additions to tax
or additional amounts with respect thereto.
"Shares" shall have the meaning set forth in Section 10.02.
"Subsidiary" shall mean any corporation, partnership, joint venture or
other legal entity of which the Company owns, directly or indirectly, stock or
other equity interests which entitle the holder to vote for the election of the
board of directors or other governing body of such corporation or other legal
entity; and shall include within the meaning of the term each Subsidiary, as
defined above, of any Subsidiary of the Company.
"Surviving Corporation" shall have the meaning set forth in Section 1.01.
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