AGREEMENT AND PLAN OF MERGER
BY AND AMONG
FINANCIAL PERFORMANCE CORPORATION
FPC ACQUISITION CORP.,
xXXXXXXX.XXX, INC.,
Xxxxxxx Xxxxxx III
and
Xxxxxxxx Xx Xxxxxx
Dated as of February 23, 2000
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ARTICLE I.
THE MERGER
SECTION 1.01. The Merger....................................................2
SECTION 1.02. Effective Time................................................2
SECTION 1.03. Effect of the Merger..........................................2
SECTION 1.04. Certificate of Incorporation; By-Laws.........................2
SECTION 1.05. Directors and Officers........................................3
SECTION 1.06. Effect on Capital Stock.......................................3
SECTION 1.07. Tax Consequences..............................................3
SECTION 1.08. Taking of Necessary Action; Further Action....................3
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 2.01. Organization; Power and Authority; Qualifications..............4
SECTION 2.02. Authorization of the Documents; No Conflicts...................4
SECTION 2.03. No Consent or Approval Required................................4
SECTION 2.04. Capitalization.................................................5
SECTION 2.05. Predecessor and Subsidiaries...................................5
SECTION 2.06. No Defaults....................................................5
SECTION 2.07. Financial Information..........................................6
SECTION 2.08. Absence of Undisclosed Liabilities.............................6
SECTION 2.09. Absence of Changes.............................................6
SECTION 2.10. Title to Assets, Properties and Rights; Insurance..............7
SECTION 2.11. Intellectual Property Rights...................................7
SECTION 2.12. Employment of Officers, Employees and Consultants.............10
SECTION 2.13. Employee Benefit Plans; ERISA.................................10
SECTION 2.14. Contracts.....................................................11
SECTION 2.15. Compliance with Applicable Laws...............................11
SECTION 2.16. Labor Relations; Employees....................................12
SECTION 2.17. Litigation....................................................12
SECTION 2.18. Environmental Laws............................................12
SECTION 2.19. Tax Matters...................................................13
SECTION 2.20. Related Party Transactions....................................14
SECTION 2.21. Brokers.......................................................14
SECTION 2.22. Disclosure....................................................14
SECTION 2.23. Investment Representations....................................14
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ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
SECTION 3.01. Organization; Power and Authority; Qualifications.............15
SECTION 3.02. Authorization of the Documents; No Conflicts..................16
SECTION 3.03. Authorization of Parent Common Stock..........................16
SECTION 3.04. No Consent or Approval Required...............................16
SECTION 3.05. SEC Filings; Financial Statements.............................17
ARTICLE IV.
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 4.01. Conduct of Business Pending the Merger........................17
SECTION 4.02. No Solicitation...............................................19
ARTICLE V.
CONDITIONS TO THE MERGER
SECTION 5.01. Conditions to Obligation of Each Party to Effect the Merger...20
SECTION 5.02. Additional Conditions to Obligations of Parent and Merger Sub.20
SECTION 5.03. Additional Conditions to Obligation of the Company............21
ARTICLE VI.
TERMINATION
SECTION 6.01. Termination...................................................22
SECTION 6.02. Effect of Termination.........................................22
SECTION 6.03. Fees and Expenses.............................................22
ARTICLE VII.
GENERAL PROVISIONS
SECTION 7.01. Survival of Representations, Warranties and Agreements, Etc...23
SECTION 7.02. Indemnification...............................................23
SECTION 7.03. Remedies......................................................23
SECTION 7.04. Successors and Assigns........................................24
SECTION 7.05. Entire Agreement..............................................24
SECTION 7.06. Notices.......................................................24
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SECTION 7.07. Amendment; Waiver.............................................25
SECTION 7.08. Counterparts..................................................25
SECTION 7.09. Interpretation................................................25
SECTION 7.10. Severability..................................................25
SECTION 7.11. Governing Law.................................................25
SECTION 7.12. Waiver of Jury Trial..........................................25
SECTION 7.13. Certain Definitions...........................................26
SECTION 7.14. Obligations Joint and Several.................................27
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of February 23, 2000 (this
"Agreement"), among FINANCIAL PERFORMANCE CORPORATION, a New York corporation
("Parent"), FPC ACQUISITION CORP., a Delaware corporation and a direct, wholly
owned subsidiary of Parent ("Merger Sub"), xXXXXXXX.XXX, INC., a Delaware
corporation (the "Company"), Xxxxxxx Xxxxxx III ("Xxxxxx") and Xxxxxxxx X. Xx
Xxxxxx ("Xx Xxxxxx"); Xxxxxx and Xx Xxxxxx are sometimes hereinafter referred
to, individually, as a "Stockholder" and, collectively, as the "Stockholders".
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Parent, Merger Sub and the
Company have each determined that it is advisable and in the best interests of
their respective shareholders, and consistent with and in furtherance of their
respective business strategies and goals, for Parent to cause Merger Sub to
merge with and into the Company upon the terms and subject to the conditions set
forth herein;
WHEREAS, in furtherance of such combination, the Boards of Directors
of Parent, Merger Sub and the Company have each approved the merger (the
"Merger") of Merger Sub with and into the Company in accordance with the
applicable provisions of the Delaware General Corporation Law (the "DGCL"), and
upon the terms and subject to the conditions set forth herein;
WHEREAS, Parent, Merger Sub and the Company intend, by approving
resolutions authorizing this Agreement, to adopt this Agreement as a plan of
reorganization within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "Code"), and the regulations promulgated thereunder;
WHEREAS, pursuant to the Merger, each outstanding share (a "Share")
of the Company's Common Stock, par value $0.01 per share (the "Company Common
Stock"), shall be converted into the right to receive 1,000 shares of the
Parent's Common Stock, par value $0.01 per share (the "Parent Common Stock"),
upon the terms and subject to the conditions set forth herein; and
WHEREAS, the Stockholders are the sole stockholders of the Company;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:
ARTICLE I.
THE MERGER
SECTION 1.01. The Merger.
(a) Effective Time. At the Effective Time (as defined in Section
1.02 hereof), and subject to and upon the terms and conditions of this Agreement
and the DGCL, Merger Sub shall be merged with and into the Company, the separate
corporate existence of Merger Sub shall cease, and the Company shall continue as
the surviving corporation. The Company as the surviving corporation after the
Merger, is hereinafter sometimes referred to as the "Surviving Corporation."
(b) Closing. Unless this Agreement shall have been terminated and
the transactions herein contemplated shall have been abandoned pursuant to
Section 6.01, and subject to the satisfaction or waiver of the conditions set
forth in Article V the consummation of the Merger (the "Closing") will take
place as promptly as practicable (and in any event within two business days)
after satisfaction or waiver of the conditions set forth in Article V, at the
offices of Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP, 919 Third Avenue, New York, New
York, unless another date, time or place is agreed to in writing by the parties
hereto.
SECTION 1.02. Effective Time. As promptly as practicable after the
satisfaction or waiver of the conditions set forth in Article V, the parties
hereto shall cause the Merger to be consummated as of the day of the Closing by
filing a certificate of merger as contemplated by the DGCL (the "Certificate of
Merger"), together with any required related certificates, with the Secretary of
State of the State of Delaware, in such form as required by, and executed in
accordance with the relevant provisions of, the DGCL (the time of such filing
being the "Effective Time").
SECTION 1.03. Effect of the Merger. At the Effective Time, the
effect of the Merger shall be as provided in this Agreement, the Certificate of
Merger and the applicable provisions of the DGCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time all the
property, rights, privileges, powers and franchises of the Company and Merger
Sub shall vest in the Surviving Corporation, and all debts, liabilities and
duties of the Company and Merger Sub shall become the debts, liabilities and
duties of the Surviving Corporation.
SECTION 1.04. Certificate of Incorporation; By-Laws.
(a) Certificate of Incorporation. Unless otherwise determined by
Parent prior to the Effective Time, at the Effective Time the Certificate of
Incorporation of the Company, as in effect immediately prior to the Effective
Time, shall be the Certificate of Incorporation of the Surviving Corporation
until thereafter amended as provided by the DGCL and such Certificate of
Incorporation; provided, however, that Article FOURTH shall be amended and
restated in its entirety to provide that the capital stock of the Surviving
Corporation shall consist of 1,000 shares of common stock, par value $.10 per
share.
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(b) By-Laws. The By-Laws of the Company, as in effect immediately
prior to the Effective Time, shall be the By-Laws of the Surviving Corporation
until thereafter amended as provided by the DGCL, the Certificate of
Incorporation of the Surviving Corporation and such By-Laws.
SECTION 1.05. Directors and Officers. The directors of Merger Sub
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-Laws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified.
SECTION 1.06. Effect on Capital Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of Parent, Merger Sub,
the Company or the holders of any of the following securities:
(a) Conversion of Securities. Each Share issued and outstanding
immediately prior to the Effective Time shall be converted into the right to
receive 1,000 validly issued, fully paid and nonassessable shares of Parent
Common Stock.
(b) Capital Stock of Merger Sub. Each share of common stock, $.01
par value, of Merger Sub issued and outstanding immediately prior to the
Effective Time shall be converted into and exchanged for one validly issued,
fully paid and nonassessable share of common stock, $0.10 par value, of the
Surviving Corporation.
SECTION 1.07. Tax Consequences. It is intended by the parties hereto
that the Merger shall constitute a reorganization within the meaning of Section
368 of the Code. The parties hereto hereby adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the
United States Treasury Regulations.
SECTION 1.08. Taking of Necessary Action; Further Action. Subject to
the terms and conditions set forth herein, each of Parent, Merger Sub, the
Company and the Stockholders will take all such reasonable and lawful action as
may be necessary or appropriate in order to effectuate the Merger and the other
transactions contemplated by this Agreement in accordance with this Agreement as
promptly as possible. If, at any time after the Effective Time, any such further
action is necessary or desirable to carry out the purposes of this Agreement and
to vest the Surviving Corporation with full right, title and possession to all
assets, property, rights, privileges, powers and franchises of the Company and
Merger Sub, the officers and directors of the Company and Merger Sub immediately
prior to the Effective Time are fully authorized in the name of their respective
corporations or otherwise to take, and will take, all such lawful and necessary
action.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Stockholders hereby, jointly and severally, represent and
warrant to Parent and Merger Sub as follows:
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SECTION 2.01. Organization; Power and Authority; Qualifications. The
Company and each of its Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware (or, in
the case of Program Flow, Inc., Virginia) and has all requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as presently conducted and as presently proposed to be conducted. The
Company and each of its Subsidiaries is duly qualified or licensed to do
business, and is in good standing, in each jurisdiction listed on Schedule 2.1.
The Stockholders have provided Parent with true, correct and complete copies of
the Organizational Documents of the Company and each of its Subsidiaries.
SECTION 2.02. Authorization of the Documents; No Conflicts. Each
Stockholder and the Company has all necessary power and authority to execute and
deliver this Agreement and the Employment Agreement and the Non-Competition
Agreement referred to in Section 5.02(e) (this Agreement and the Employment
Agreements and the Non-Competition Agreements referred to in Section 5.02(e) are
sometimes referred to herein, individually, as a "Document" and, collectively,
as the "Documents") executed by such Stockholder or the Company, as the case may
be, to consummate the transactions contemplated by the Documents, and to perform
his or its obligations under the Documents. Each Document to which a Stockholder
or the Company is a party constitutes (or will constitute upon the execution and
delivery thereof by such Stockholder or the Company, as the case may be) a
valid, legal and binding obligation of such Stockholder or the Company, as the
case may be, enforceable against such Stockholder or the Company, as the case
may be, in accordance with its terms, except as enforcement may be limited by
general principles of equity and by bankruptcy, insolvency and similar laws
affecting creditors' rights and remedies generally. The execution, delivery and
performance of the Documents and the consummation of the transactions
contemplated thereby and compliance with the provisions thereof by the
Stockholders and the Company will not (a) violate any Law or any Governmental
Order applicable to any Stockholder or to the Company or any of is Subsidiaries
or any of their respective properties or assets or (b) with or without due
notice or lapse of time, or both, violate, conflict with or result in any breach
of any of the terms, conditions or provisions of, or constitute a default (or
give rise to any right of termination, amendment, cancellation or acceleration)
under, or result in the creation of any Lien upon any of the properties or
assets of any Stockholder or of the Company or any of its Subsidiaries under,
the Organizational Documents of the Company or any of its Subsidiaries, or any
Contract or obligation to which any Stockholder, the Company or any of its
Subsidiaries is a party or by which any of them or any of their properties is
bound or affected. The execution and delivery of this Agreement by the Company
and the consummation by the Company of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action (including
the approval of the Merger and this Agreement by the unanimous written consent
of the stockholders of the Company) and no other corporate proceedings on the
part of the Company are necessary to authorize this Agreement or to consummate
the transactions so contemplated. The Board of Directors of the Company has
determined that it is advisable and in the best interest of the Company's
stockholders for the Company to enter into this Agreement and to consummate the
Merger upon the terms and subject to the conditions of this Agreement.
SECTION 2.03. No Consent or Approval Required. No consent of any
Person and no consent, approval or authorization of, or declaration to or filing
with, any Governmental Entity is required for the valid authorization, execution
and delivery by any
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Stockholder or the Company of any Document or for the consummation by any
Stockholder or the Company of the transactions contemplated thereby other than
those consents, approvals, authorizations, declarations or filings (including
those filings required to be made under applicable Federal securities and/or
state securities and "blue sky" laws) which have been or will timely be obtained
or made, as the case may be, and which are identified on Schedule 2.3.
SECTION 2.04. Capitalization.
(a) The authorized capital stock of the Company immediately prior to
the Effective Time shall consist of 10,000 shares of Common Stock, par value
$0.01 per share, of which (i) 1,000 shares shall have been validly issued and be
outstanding, fully paid and non-assessable, with no personal liability attaching
to the ownership thereof and (ii) no additional shares shall have been reserved
or authorized for issuance for any purpose.
(b) Schedule 2.4 contains a true, complete and correct list of all
record and beneficial holders of capital stock of the Company and each of its
Subsidiaries, including the number of shares of capital stock held by each such
holder. There are, and immediately prior to the Effective Time there will be, no
outstanding Options or other Contracts, including preemptive or other rights, to
purchase or otherwise acquire shares of capital stock of the Company or of any
of its Subsidiaries pursuant to any provision of Law, the Organizational
Documents of the Company or of any of its Subsidiaries or any Contract to which
the Company or any of its Subsidiaries is a party; and there is, and immediately
prior to the Effective Time there will be, no Contract or Lien (such as a right
of first refusal, right of first offer, proxy, voting trust or voting agreement)
with respect to the sale or voting of any shares of capital stock of the Company
or of any of its Subsidiaries (whether outstanding or issuable upon conversion
or exercise of outstanding securities). Each Stockholder owns, and immediately
prior to the Effective Time will own, beneficially and of record, 500 shares of
Common Stock, free and clear of all Liens.
SECTION 2.05. Predecessor and Subsidiaries. On January 13, 2000,
Incontext, Inc., a District of Columbia corporation ("Predecessor"), was duly
merged into the Company in compliance with all applicable law. Except for the
Subsidiaries of the Company listed on Schedule 2.4, none of the Predecessor, the
Company or the entities that are Subsidiaries of the Company on the date hereof
(Predecessor, the Company and the entities that are Subsidiaries of the Company
on the date hereof are sometimes referred to herein, individually, as a "Member
of the Company Group" and, collectively, as the "Members of the Company Group")
has ever had, or presently has, any Subsidiaries or has owned, or presently
owns, any capital stock or other proprietary interest, directly or indirectly,
in any Person.
SECTION 2.06. No Defaults. Neither the Company nor any of its
Subsidiaries is in violation, breach or default (and no event has occurred which
with due notice or the lapse of time or both would constitute a violation,
breach or default) of or under any term, condition or provision of (i) its
Organizational Documents, (ii) any Contract or other obligation to which it is a
party or by which its properties or assets are bound, or (iii) any Governmental
Order applicable to it or its properties or assets, except, in the case of
clauses (ii) and (iii) of this Section 2.06, for such violations, breaches or
defaults, if any, which, individually or in the aggregate, are not reasonably
likely to result in a Material Adverse Change.
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SECTION 2.07. Financial Information. The Stockholders have delivered
to Parent a true, complete and correct copy of the Federal income tax returns of
the Predecessor and the entities that are Subsidiaries of the Company on the
date hereof for each of the years ended December 31, 1997, 1998 and (except for
Program Flow, Inc. ) 1999 (collectively, the "Tax Returns"). The Tax Returns (i)
are in accordance with the books and records of the Predecessor and the entities
that are Subsidiaries of the Company on the date hereof and (ii) present fairly
on an income tax basis the financial condition and results of operations of the
Predecessor and the entities that are Subsidiaries of the Company on the date
hereof as of the dates and for the periods indicated.
SECTION 2.08. Absence of Undisclosed Liabilities. As of December 31,
1999, (a) the Predecessor and the entities that are Subsidiaries of the Company
on the date hereof had no Liabilities (other than (i) to the extent set forth in
the balance sheets included in the Tax Returns for the year ended December 31,
1999 or (ii) those set forth in Schedule 2.14(f)) which, individually or in the
aggregate, exceeded $100,000.00. There are no loss contingencies (as such term
is used in Statement of Financial Accounting Standards No. 5 issued by the
Financial Accounting Standards Board in March 1975) which would be reflected in
a combined balance sheet prepared in accordance with generally accepted
accounting principles of the Predecessor and the entities that are Subsidiaries
of the Company on the date hereof as of December 31, 1999 or in the notes to
such combined balance sheet. Since December 31, 1999, none of the Predecessor,
the Company or the entities that are Subsidiaries of the Company on the date
hereof has incurred any Liabilities, except current Liabilities incurred in the
ordinary course of business consistent with past practice and Liabilities of the
Company assumed by the Company as successor by merger to the Predecessor, none
of which, individually or in the aggregate, is reasonably likely to result in a
material adverse change in or have a material adverse effect on the business,
assets, properties, revenues, operations, prospects, condition (financial or
otherwise), results of operations or liabilities of the Company and its
Subsidiaries on a consolidated basis or of the Predecessor and the entities that
are Subsidiaries of the Company on the date hereof on a combined basis (a
"Material Adverse Change").
SECTION 2.09. Absence of Changes. Since December 31, 1998, there has
not been (a) any Material Adverse Change, (b) any borrowing or Contract to
borrow any funds by any Member of the Company Group, (c) any asset or property
of any Member of the Company Group subjected to any Lien, (d) any waiver or loss
of any valuable right of any Member of the Company Group, or the cancellation of
any debt, claim or Contract held by any Member of the Company Group, (e) except
as set forth in Schedule 2.9, any declaration, setting aside or payment of a
dividend on, or other distribution with respect to, or any direct or indirect
redemption, purchase, or acquisition of, any shares of the capital stock of any
Member of the Company Group (other than the cancellation of the capital stock of
the Predecessor upon consummation of the merger of the Predecessor into the
Company and the acquisition by the Company from the Stockholders of all of the
outstanding capital stock of the two entities that are Subsidiaries of the
Company on the date hereof), (f) any issuance of any stock, bond or other
security of any Member of the Company Group (including Options or Contracts to
purchase such securities or grant such Options) except as disclosed on Schedule
2.4, (g) any mortgage, pledge, sale, assignment, license or transfer of any
tangible or intangible assets of any Member of the Company Group, except, with
respect to tangible assets other than real property, sales in the ordinary
course of business consistent with past practice and except for the transfer of
the assets
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of the Predecessor to the Company upon consummation of the merger of the
Predecessor into the Company, (h) any loan or guarantee by any Member of the
Company Group to any officer, director, employee, consultant or stockholder of
any Member of the Company Group (except for advances for travel expenses in the
ordinary course of business), (i) any damage, destruction or loss (whether or
not covered by insurance) affecting the business, assets, properties,
operations, condition (financial or otherwise) or results of operations of any
Member of the Company Group in any material respect, (j) any increase, direct or
indirect, in the compensation paid or payable to any officer, director,
employee, consultant or agent of any Member of the Company Group outside the
ordinary course of business consistent with past practice, (k) any change in the
accounting methods, practices or policies followed by any Member of the Company
Group or any change in depreciation or amortization policies or rates
theretofore adopted, or (l) any Contract by any Member of the Company Group to
do any of the foregoing.
SECTION 2.10. Title to Assets, Properties and Rights; Insurance. The
Company and its Subsidiaries have good and marketable title to all properties,
interests in properties and assets, real, personal and mixed, tangible or
intangible, used in the conduct of their business, free and clear of any Lien.
The Company and its Subsidiaries own, license or lease all personal properties
and assets necessary to the operation of their business as now conducted and as
proposed to be conducted. The Company and its Subsidiaries maintain in full
force and effect insurance with reputable insurers covering such risks and in
such amounts (including deductibles) that are reasonable, adequate and customary
for the business and operations conducted by the Company and its Subsidiaries.
SECTION 2.11. Intellectual Property Rights.
(a) As used herein, the term "Intellectual Property Assets" shall
mean all worldwide industrial and intellectual property rights, including,
without limitation, patents, patent applications, patent rights, trademarks,
trademark applications, trademark rights, service marks, service xxxx
applications, service xxxx rights, copyrights, copyright applications, rights in
data bases, trade names, unfair competition rights, franchises, licenses,
inventories, know-how, trade secrets, moral rights, rights of publicity,
customer lists, proprietary information, technologies, processes and formulae,
all source and object code, computer algorithms, computer architectures,
computer structures, display screens, layouts, inventions, development tools,
and all documentation and media constituting, describing or relating to the
above, including, without limitation, manuals, memoranda and records in any
format, whether hard copy or machine-readable only.
(b) The Company or a Subsidiary of the Company is the sole legal and
beneficial owner, free and clear of any Lien, of the entire right, title and
interest in and to the Intellectual Property Assets used in the conduct of the
business of the Company and its Subsidiaries as presently conducted and as
proposed to be conducted (it being understood, however, that where the Company
is a licensee of Intellectual Property Assets such licenses may not be exclusive
licenses) and such rights to use, sell or license are sufficient for such
conduct of the business of the Company and its Subsidiaries. The execution,
delivery and performance of this Agreement and the other Documents and the
consummation of the transactions contemplated hereby and thereby will not
constitute a breach of any Contract involving any of the Intellectual Property
Assets of the Company or any of its Subsidiaries, will not cause the forfeiture
or
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termination or give rise to a right of forfeiture or termination of any such
Intellectual Property Asset or impair the rights of the Company and its
Subsidiaries to use, sell or license any Intellectual Property Asset or portion
thereof.
(c) Set forth in Schedule 2.11(c) is a complete and correct list of
(i) all patents and patent applications owned by the Company or any of its
Subsidiaries worldwide; (ii) all trademark and service xxxx registrations and
all trademark and service xxxx applications and all trade names owned by the
Company or any of its Subsidiaries worldwide; (iii) all copyright registrations
and copyright applications owned by the Company or any of its Subsidiaries
worldwide; (iv) all rights in data bases; and (v) all licenses owned by the
Company or any of its Subsidiaries in which Company or any of its Subsidiaries
is (A) a licensor with respect to any of the patents, trademarks, service marks,
trade names or copyrights listed in Schedule 2.11(c), or (B) a licensee of any
other person's patents, trade names, trademarks, service marks or copyrights.
The Company and its Subsidiaries have used their reasonable best efforts to make
all necessary filings and recordations to protect and maintain their interest in
the patents, patent applications, trademark and service xxxx registrations,
trademark and service xxxx applications, trade names, copyright registrations
and copyright applications, rights in data bases and licenses set forth in
Schedule 2.11(c).
(d) Each patent, trademark or service xxxx registration, and
copyright registration of the Company or any of its Subsidiaries set forth in
Schedule 2.11(c) is valid and subsisting and has not been judged invalid,
unregistrable or unenforceable, in whole or in part, and is enforceable. Except
as set forth in Schedule 2.11(d), each patent application, trademark
application, service xxxx application or copyright application of the Company or
any of its Subsidiaries set forth in Schedule 2.11(c) is pending before an
appropriate governmental body, and has not been judged unregistrable, in whole
or in part. Each license of the Company or any of its Subsidiaries identified in
Schedule 2.11(c) is valid and subsisting and has not been adjudged invalid or
unenforceable, in whole or in part, and is enforceable. The Company has notified
Parent of all uses of any item of the Intellectual Property Assets of the
Company or any of its Subsidiaries which, to the Best Knowledge of the
Stockholders, has become invalid or unenforceable, including uses which were not
supported by the good will of the business connected with such Intellectual
Property Assets. Except for transfer by the Predecessor to the Company upon
consummation of the merger of the Predecessor into the Company, no Member of the
Company Group has made a previous assignment, transfer or Contract constituting
a present or future assignment, transfer or Lien of any Intellectual Property
Asset. Except as listed in Schedule 2.11(c), no Member of the Company Group has
granted any license, release, covenant not to xxx, or non-assertion assurance to
any person with respect to any part of the Intellectual Property Assets.
(e) Neither the use of the Intellectual Property Assets, nor the
manufacture, marketing, license, sale or use of any product or service currently
licensed or sold by any Member of the Company Group or currently under
development by any Member of the Company Group violates any license agreement
between any Member of the Company Group and any third party or, to the actual
knowledge of the Company, infringes any proprietary rights of any third party
and there is no pending or, to the actual knowledge of the Company, threatened
claim or litigation contesting the validity, ownership or right to use, sell,
license or dispose of any Intellectual Property Asset or product nor, to the
actual knowledge of the
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Company, is there any basis for any such claim, nor has any Member of the
Company Group received any notice asserting that any of the Intellectual
Property Assets or products of any Member of the Company Group, or the proposed
use, sale, license or disposition thereof conflicts or will conflict with the
rights of any other party, nor is there any basis for any such assertion.
(f) To the actual knowledge of the Company, there is no unauthorized
use, infringement or misappropriation of any of the Intellectual Property Assets
of the Company or any of its Subsidiaries by any third party, including any
employee or former employee of any Member of the Company Group nor is there any
basis to suspect any employee or former employee of any Member of the Company
Group of any such unauthorized use, infringement or misappropriation..
(g) Except as set forth in Schedule 2.11(g), there are no royalties,
honoraria, fees or other fixed or contingent amounts or payments payable by any
Member of the Company Group to any person with respect to any Intellectual
Property Assets.
(h) The Company and its Subsidiaries have taken reasonable and
practicable steps designed to safeguard and maintain the secrecy and
confidentiality of, and the proprietary rights of the Company and its
Subsidiaries in, the Intellectual Property Assets. To the actual knowledge of
the Company, no current or prior officer, employee or consultant of or to any
Member of the Company Group (i) claims or has a right to claim an ownership
interest in any Intellectual Property Assets as a result of having been involved
in the development or licensing of any such property while employed by or
consulting to any Member of the Company Group, or otherwise, or (ii) to the Best
Knowledge of the Stockholders, owns any Intellectual Property Assets directly or
indirectly competitive with those of any Member of the Company Group.
(i) Schedule 2.11(i) lists all material products and services of the
Members of the Company Group sold or proposed to be sold by the Company or any
Subsidiary of the Company. Schedule 2.11(i) sets forth, for each product and
service, the following: (i) a list of all Contracts (including all development
agreements, trademark or service xxxx licenses, technology licenses,
manufacturer's representative agreements, distribution or other agreements)
relating to the product or service; (ii) as to any Contract under which
compliance or performance continues to be required, the advances paid or
payable, and the royalties or other sums payable, to any third parties with
respect to such product or service and (iii) a list of third parties with
distribution rights to such product or service together with a description of:
(a) the territory in which the third party has distribution rights; and (b)
whether such distribution rights are exclusive or nonexclusive.
(j) To the actual knowledge of the Company, after conducting
commercially reasonably testing and evaluation on all software products or
services owned, provided or otherwise developed by any Member of the Company
Group, or used in the conduct of the business of any Member of the Company Group
as presently conducted and as proposed to be conducted, whether in whole or in
part, by or for any Member of the Company Group, which incorporate any
date-related information or otherwise process any date-related information, any
such software products or services provide, among other things, the following
functionality: (i) accurate processing of date-related information before,
during and after January 1, 2000,
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including accepting the date input, providing the date output, and performing
calculations on dates or portions of dates; (ii) accurate functioning without
interruption before, during and after January 1, 2000, without any change in
operation associated with the advent of the new century; (iii) ability to
respond to two-digit date input in a way that resolves any ambiguity as to
century in a disclosed, defined and predetermined manner; and (iv) the ability
to store and provide output date information in ways that are unambiguous as to
century.
(k) Schedule 2.11(k) sets forth a complete list of each employee of
or consultant to any Member of the Company Group who has or is proposed to have
access to the source code of any Member of the Company Group or any material
confidential and proprietary information of any Member of the Company Group.
SECTION 2.12. Employment of Officers, Employees and Consultants. No
Person has asserted any claim against any Member of the Company Group or any of
the present officers or employees of or consultants to any Member of the Company
Group (collectively, the "Designated Persons") with respect to (a) the continued
employment by, or association with, any Member of the Company Group, of any of
the Designated Persons or (b) the use, in connection with any business presently
conducted or proposed to be conducted by any Member of the Company Group, of any
information which any Member of the Company Group or any of the Designated
Persons would be prohibited from using under any prior agreement or arrangement
or any legal considerations applicable to unfair competition, trade secrets or
proprietary information.
SECTION 2.13. Employee Benefit Plans; ERISA.
(a) Except as set forth in Schedule 2.13, neither any Member of the
Company Group nor any ERISA Affiliate (as defined below) maintains, or has ever
maintained, any Employee Benefit Plan. "Employee Benefit Plan" means any
"employee benefit plan," as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended, and any other plan, policy, program,
practice or Contract providing benefits to any current or former director,
employee or independent contractor (or to any dependent or beneficiary thereof)
of any Member of the Company Group or any ERISA Affiliate, which are now or have
ever been maintained by any Member of the Company Group or any ERISA Affiliate
or under which any Member of the Company Group or any ERISA Affiliate has any
obligation or Liability, including all incentive, bonus, deferred compensation,
vacation, holiday, medical, disability, stock appreciation rights, stock option,
stock purchase or other similar plans, policies, programs, practices,
arrangements or Contracts. "ERISA Affiliate" means any entity (whether or not
incorporated) other than the Company that, together with any Member of the
Company Group, is or was a member of (i) a controlled group of corporations
within the meaning of Section 414(b) of the Code, (ii) a group of trades or
businesses under common control within the meaning of Section 414(c) of the
Code, or (iii) an affiliated service group within the meaning of Section 414(m)
of the Code. There exists no action, suit or claim (other than routine claims
for benefits) with respect to any of such Plans or Contracts pending, nor to the
Best Knowledge of the Stockholders, threatened, against any such Plans or
Contracts.
(b) Neither any Member of the Company Group nor any ERISA Affiliate
has proposed or agreed to the creation of any new Employee Benefit Plan.
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SECTION 2.14. Contracts. Except as set forth on Schedule 2.14, no
Member of the Company Group is a party to any Contract not made in the ordinary
course of business and, whether or not made in the ordinary course of business,
no Member of the Company Group is a party to any (a) Contract with any labor
union; (b) Contract for the future purchase of fixed assets or for the future
purchase of materials, supplies or equipment in excess of normal operating
requirements; (c) Contract for the employment of any officer, individual
employee or other person on a full-time basis or any Contract with any Person on
a consulting basis; (d) Contract or indenture relating to the borrowing of money
or to the placing of a Lien on any asset of the Company or a Subsidiary of the
Company; (e) guaranty of any obligation for borrowed money; (f) Contract under
which the Company or a Subsidiary of the Company is lessee of or holds or
operates any property, real or personal, owned by any other Person; (g) Contract
under which the Company or a Subsidiary of the Company is lessor of or permits
any Person to hold or operate any property, real or personal, owned or
controlled by the Company or a Subsidiary of the Company; (h) Contract for
capital expenditures in excess of $10,000; (i) Contract under which the Company
or a subsidiary of the Company is obligated to pay any broker's fees, finder's
fees or any such similar fees, to any Person; (j) stockholder or other Contract
relating to the holding, sale or other transfer, voting or registration under
the Securities Act of any securities of the Company or a Subsidiary of the
Company; or (k) any other Contract which is material to the business of the
Company and its Subsidiaries on a consolidated basis (collectively, the
"Material Contracts"). The Company has made available to the Parent a true,
complete and correct copy of each of the Material Contracts. With such
exceptions, if any, as would not, individually or in the aggregate, have a
reasonable possibility of resulting in a Material Adverse Change, all of the
Material Contracts are in full force and effect and constitute the valid and
binding obligations of one or more Members of the Company Group and the other
parties thereto, enforceable in accordance with their respective terms, except
as enforcement may be limited by general principles of equity and by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies generally,
and neither any Member of the Company Group nor any other party thereto is in
default thereunder and there exists no condition, event or act which
constitutes, or which after notice, lapse of time or both, would constitute, a
default by any other party thereunder.
SECTION 2.15. Compliance with Applicable Laws.
(a) The Company and its Subsidiaries have made or have obtained and
hold all material registrations, filings, submissions, certificates,
determinations, permits, licenses, variances, exemptions, orders and approvals
of all Governmental Entities (collectively, "Permits") necessary for the lawful
conduct of their business as presently or previously conducted. Schedule 2.15
sets forth a complete and correct list of each Permit that is held by any Member
of the Company Group or that otherwise relates to the business of, or to any of
the assets or properties owned or used by, any Member of the Company Group. With
respect to such Permits which are material, (i) the Permits of the Company and
its Subsidiaries are valid and in full force and effect, (ii) no Member of the
Company Group is in default under, and no condition exists that with notice or
lapse of time or both would constitute a default under, such Permits, and (iii)
none of such Permits will be terminated or impaired or become terminable, in
whole or in part, as a result of the transactions contemplated by the Documents.
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(b) The business of the Members of the Company Group has been
conducted in compliance in all material respects with all applicable Laws. To
the Best Knowledge of the Stockholders, no investigation or review by any
Governmental Entity with respect to any Member of the Company Group is pending
or threatened nor has any Governmental Entity indicated an intention to conduct
the same.
SECTION 2.16. Labor Relations; Employees. No Member of the Company
Group is bound by or subject to (and none of its assets or properties is bound
by or subject to) any Contract with any labor union, and no labor union has
requested or, to the Best Knowledge of the Stockholders, has sought to represent
any of the employees, representatives or agents of any Member of the Company
Group. There is no strike or other labor dispute involving any Member of the
Company Group pending, or to the Best Knowledge of the Stockholders, threatened,
nor is any Member of the Company Group aware of any labor organization activity
involving its employees. No Member of the Company Group is aware that any
officer or key employee, or that any group of key employees, intends to
terminate their employment with any Member of the Company, nor does any Member
of the Company Group have a present intention to terminate the employment of any
of the foregoing. No Member of the Company Group is delinquent in payments to
any of its employees for any wages, salaries, commissions, bonuses or other
direct compensation for any services performed by them in any capacity to the
date hereof or amounts required to be reimbursed to such employees. The Members
of the Company Group are in compliance in all material respects with all Laws
with respect to the wages, hours and working conditions of their employees. The
Members of the Company Group believe that their relations with their employees
are satisfactory.
SECTION 2.17. Litigation. There is no suit, claim, action,
investigation, litigation, arbitration or other proceeding ("Proceeding")
pending or, to the Best Knowledge of the Stockholders, threatened against any
Member of the Company Group. No Member of the Company Group is subject to any
outstanding Governmental Order.
SECTION 2.18. Environmental Laws.
(a) The Members of the Company Group are in compliance with any and
all applicable Laws relating to the protection of human health and safety or
emissions, discharges, releases, threatened releases, removal, remediation or
abatement of pollutants, contaminants, chemicals or industrial, hazardous or
toxic substances or wastes into or in the environment (including air, surface
water, ground water or land) or otherwise used in connection with the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, hazardous or toxic substances
or wastes, as defined under such applicable laws ("Environmental Laws"). No
Permits are required under applicable Environmental Laws to conduct the business
of the Company Group.
(b) To the Best Knowledge of the Stockholders, there is no substance
designated a "hazardous substance" by any Environmental Law, including asbestos,
petroleum, urea formaldehyde insulation and petroleum by-products ("Hazardous
Substance") present at any of the real property currently owned or leased by any
Member of the Company Group, except to the extent that such presence would not
result in a Material Adverse Change; and with respect to such real property, to
the Best Knowledge of the Stockholders, there has not occurred (i) any
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release or any threatened release of a Hazardous Substance or (ii) any discharge
or threatened discharge of any Hazardous Substance into the ground, surface or
navigable waters, which discharge or threatened discharge violates any Federal,
state, local or foreign laws, rules or regulations concerning water pollution.
(c) No Member of the Company Group has disposed of, transported or
arranged for the transportation or disposal of any Hazardous Substance where
such disposal, transportation or arrangement would give rise to liability
pursuant to any Environmental Law other than any such liabilities that could not
reasonably be expected to result in a Material Adverse Change.
SECTION 2.19. Tax Matters. (a) Each Member of the Company Group has
filed all Federal, state, local and foreign tax returns, declarations of
estimated tax, tax reports, information returns, amended returns and statements
(collectively, the "Returns") required to be filed by it prior to the Effective
Time relating to any Taxes (as defined below); (b) as of the time of filing, the
Returns were complete and correct in all material respects and the Members of
the Company Group have paid all Taxes shown on the Returns to be due; (c) no
Member of the Company Group is delinquent in the payment of any Taxes, nor has
any Member of the Company Group requested any extension of time within which to
file any Return, which Return has not since been filed; (d) to the Best
Knowledge of the Stockholders, there are no pending tax audits of any Returns of
any Member of the Company Group; (e) no Tax liens have been filed and no
deficiency or addition to Taxes, interest or penalties for any Taxes has been
proposed, asserted or assessed against any Member of the Company Group; (f) no
Member of the Company Group has granted any extension of the statute of
limitations applicable to any Return or other Tax claim which remains effective;
(g) no Member of the Company Group has, during the five-year period preceding
the date hereof, been a personal holding company within the meaning of Section
542 of the Code (or any corresponding provision of state, local or foreign Law);
(h) no Member of the Company Group has made any election under Section 341(f) of
the Code (or any corresponding provisions of state, local or foreign Law); (i)
no Member of the Company Group is liable for Taxes of any other Person to the
Best Knowledge of the Stockholders, nor is any Member of the Company Group
currently under any contractual obligation to indemnify any Person with respect
to Taxes (except for customary agreements to indemnify lenders or security
holders in respect of taxes other than income taxes), nor is any Member of the
Company Group a party to any tax sharing agreement or any other agreement
providing for payments by any Member of the Company Group with respect to Taxes;
(j) no Member of the Company Group has agreed, nor is any Member of the Company
Group required, as a result of a change in method of accounting or otherwise
with respect to any taxable year ending on or before the Effective Time, to
include any adjustment under Section 481 of the Code (or any corresponding
provision of state, local or foreign Law) in taxable income for any taxable year
ending after the Effective Time; and (k) except as set forth on Schedule 2.19,
no Member of the Company Group has ever elected S corporation status within the
meaning of Section 1361(a)(1) of the Code (or any corresponding provision of
state, local or foreign Law). As used in this Agreement, the term "Tax" shall
mean any of the Taxes and the term "Taxes" shall mean, with respect to any
Person, (i) all income taxes (including any tax on or based upon net income, or
gross income, or income as specially defined, or earnings, or profits, or
selected items of income, earnings or profits) and all gross receipts, sales,
use, ad valorem, transfer, franchise, license, withholding, payroll, employment,
excise, severance, stamp, occupation, premium, property or windfall profits
taxes,
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alternative or add-on minimum taxes, customs duties or other taxes, fees,
assessments or charges of any kind whatsoever, together with any interest and
any penalties, additions to tax or additional amounts imposed by any taxing
authority (domestic or foreign) on such Person and (ii) any liability for the
payment of any amount of the type described in the immediately preceding clause
(i) as a result of being a "transferee" (within the meaning of Section 6901 of
the Code or any other applicable Law) of another Person or a member of an
affiliated or combined group.
SECTION 2.20. Related Party Transactions. Except as set forth in
Schedule 2.21, no stockholder, director, officer or employee of any Member of
the Company Group, nor any "Affiliate" (as defined in the rules and regulations
promulgated under the Securities Act) of any such Person, is presently, or since
the inception of any Member of the Company Group has been, directly or
indirectly through his, her or its affiliation with any other Person, a party to
any transaction with any Member of the Company Group providing for the
furnishing of services by or to, or rental or license of real or personal
property from or to, or otherwise requiring cash payments to or by any such
Person.
SECTION 2.21. Brokers. Neither any Member of the Company Group nor
any of the officers, directors, employees or stockholders of any Member of the
Company Group has employed any broker or finder in connection with the
transactions contemplated by this Agreement.
SECTION 2.22. Disclosure. Neither this Agreement nor any other
Document or certificate delivered by or on behalf of the Stockholders or any
Member of the Company Group in connection with the Closing of the transactions
contemplated hereby contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained herein
and therein, viewed as a whole, in light of the circumstances under which they
were made, not misleading. To the Best Knowledge of the Stockholders, there is
no fact which materially adversely affects the business, assets, properties,
operations, prospects, condition (financial or otherwise), results of operations
or liabilities of the Members of the Company Group which has not been set forth
in this Agreement (or in Schedule 2.22) or in such other Documents or
certificates.
SECTION 2.23. Investment Representations.
(a) Each Stockholder will be acquiring the shares of Parent Common
Stock to be acquired by such Stockholder upon consummation of the Merger for his
own account and not with a view to the distribution thereof within the meaning
of the Securities Act in any transaction that would violate the securities Laws
of the United States of America, or any state, without prejudice, however, to
the right of such Stockholder at all times to sell or otherwise dispose of such
shares of Parent Common Stock under an effective registration statement or
applicable exemption from registration under the Securities Act and any
applicable state securities Law, subject to the Documents.
(b) Each Stockholder understands that (i) the shares of Parent
Common Stock to be acquired by such Stockholder upon consummation of the Merger
will not be registered under the Securities Act, by reason of their issuance by
Parent in a transaction exempt from the
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registration requirements of the Securities Act, and (ii) such shares of Parent
Common Stock must be held by such Stockholder indefinitely unless a subsequent
disposition thereof is registered under the Securities Act or is exempt from
such registration. Each Stockholder understands further that, except as may be
provided in the Registration Rights Agreement referred to in Section 5.03(g),
the Parent will be under no obligation to register any of the shares of Parent
Common Stock to be issued upon consummation of the Merger.
(c) Each Stockholder further understands that, with respect to the
shares of Parent Common Stock to be issued upon the consummation of the Merger,
the exemption from registration afforded by Rule 144 (the provisions of which
are known to the Stockholders) promulgated under the Securities Act ("Rule 144")
depends on the satisfaction of various conditions, and that, if applicable, Rule
144 may only afford the basis for sales in limited amounts.
(d) Each Stockholder agrees that Parent may place a legend on the
certificates delivered upon consummation of the Merger stating that the shares
of Parent Common Stock have not been registered under the Securities Act and,
therefore, cannot be offered, sold or transferred unless they are registered
under the Securities Act or an exemption from such registration is available,
and that the Parent may place stop transfer orders on the transfer books of
Parent.
(e) Each Stockholder is a sophisticated investor with sufficient
knowledge and experience in investing in companies similar to Parent so as to be
able to evaluate the risks and merits of its investment in Parent and that he is
financially able to hold the shares of Parent Common Stock to be acquired by him
upon consummation of the Merger indefinitely and to bear the risks thereof and
the entire loss of his investment in Parent. Each Stockholder is an "accredited
investor" as defined under Rule 501(a) of Regulation D promulgated under the
Securities Act.
SECTION 2.24. 1999 Revenues. The combined revenues of the
Predecessor and the entities that are Subsidiaries of the Company on the date
hereof for the calendar year ended December 31, 1999 from third parties (without
duplication) were as follows: billed -- not less than $1,600,000; collected --
not less than $1,350,000.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby, jointly and severally, represent and
warrant to the Company and the Stockholders as follows:
SECTION 3.01. Organization; Power and Authority; Qualifications.
Parent is a corporation duly organized, validly existing and in good standing
under the laws of the State of New York. Merger Sub is a corporation duly
organized, validly existing and in good standing under the law of the State of
Delaware. Each of Parent and Merger Sub has all requisite corporate power and
authority to own, lease and operate its properties, to carry on its business as
presently conducted and as presently proposed to be conducted and to carry out
the transactions
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contemplated by the Documents. With such exceptions, if any, as will not be
material, Parent is duly qualified or licensed to do business, and is in good
standing, in each jurisdiction where the nature of the business conducted by
Parent or the character of its properties or operations requires such
qualification or licensing. Parent has provided the Stockholders with true,
correct and complete copies of its Organizational Documents.
SECTION 3.02. Authorization of the Documents; No Conflicts. Each of
Parent and Merger Sub has all necessary corporate power and authority to execute
and deliver the Documents, to consummate the transactions contemplated by the
Documents, and to perform its obligations under the Documents. The execution,
delivery and performance by Parent and Merger Sub of the Documents to which it
is or is to be a party have been duly authorized and approved by all requisite
corporate action by Parent or Merger Sub, as the case may be, and each such
Document constitutes (or will, upon the execution and delivery thereof by Parent
or Merger Sub, as the case may be, constitute) a valid, legal and binding
obligation of Parent or Merger Sub, as the case may be, enforceable against
Parent or Merger Sub, as the case may be, in accordance with its terms, except
as enforcement may be limited by general principles of equity and by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies generally.
The execution, delivery and performance of the Documents to which Parent or
Merger Sub is or is to be a party and the consummation of the transactions
contemplated thereby and compliance with the provisions thereof by Parent and
Merger Sub and the issuance and delivery of the Parent Common Stock to be issued
by Parent upon consummation of the Merger, will not (a) violate any Law or any
Governmental Order applicable to Parent or Merger Sub or any of its properties
or assets or (b) with or without due notice or lapse of time, or both, violate,
conflict with or result in any breach of any of the terms, conditions or
provisions of, or constitute a default (or give rise to any right of
termination, amendment, cancellation or acceleration) under, or result in the
creation of any Lien upon any of the properties or assets of Parent or Merger
Sub under, the Organizational Documents of Parent or Merger Sub, or any Contract
or obligation to which Parent is a party or by which it or any of its properties
is bound or affected.
SECTION 3.03. Authorization of Parent Common Stock. The
authorization, issuance and delivery of the shares of Parent Common Stock to be
issued upon consummation of the Merger have been duly authorized by all
requisite corporate action of Parent, and, when issued and delivered as
contemplated hereby, such shares of Parent Common Stock will be validly issued
and outstanding, fully paid and nonassessable, with no personal liability
attaching to the ownership thereof, and not subject to preemptive or any other
similar rights of the stockholders of Parent or others.
SECTION 3.04. No Consent or Approval Required. No consent of any
Person and no consent, approval or authorization of, or declaration to or filing
(other than the filing of the Certificate of Merger) with, any Governmental
Entity is required for the valid authorization, execution and delivery by Parent
or Merger Sub of any Document or for the consummation by Parent or Merger Sub of
the transactions contemplated thereby or for the valid authorization, issuance
and delivery of the shares of Parent Common Stock upon consummation of the
Merger.
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SECTION 3.05. SEC Filings; Financial Statements.
(a) Parent has filed all forms, reports and documents required to be
filed with the Securities and Exchange Commission since December 31, 1997
through the date of this Agreement (collectively, the "Parent SEC Reports"). The
Parent SEC Reports (i) were prepared in all material respects in accordance with
the requirements of the Securities Act or the Exchange Act, as the case may be,
and (ii) did not at the time they were filed (or if amended or superseded by a
filing prior to the date of this Agreement, then on the date of such filing)
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(b) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in the Parent SEC Reports was
prepared in accordance with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto or in the Parent SEC
Reports), and each fairly presents in all material respects the consolidated
financial position of the Parent and its subsidiaries as at the respective dates
thereof and the consolidated results of its operations and cash flows for the
periods indicated, except that the unaudited interim financial statements were
or are subject to normal and recurring year-end adjustments which were not or
are not expected to be material in amount.
ARTICLE IV.
CONDUCT OF BUSINESS PENDING THE MERGER
The Stockholders, jointly and severally, covenant and agree as
follows:
SECTION 4.01. Conduct of Business Pending the Merger. From the date
of this Agreement to the Closing, except as consented to by Parent in writing,
the Stockholders will not cause or permit the representations and warranties of
the Stockholders set forth in this Agreement to be untrue with respect to the
period from the date of this Agreement to the Closing, except for changes
resulting from the transactions contemplated by this Agreement. Without limiting
the generality of the foregoing:
(a) The business of the Company and its Subsidiaries shall be
conducted only in the ordinary course, which, without limitation, shall not
include (i) the making of any commitment (except for purchases of merchandise,
supplies or services in amounts consistent with past practice and in the
ordinary course of business) extending beyond Xxxxx 00, 0000, (xx) the sale or
disposition of any assets, tangible or intangible, (iii) the making of any
capital expenditures or commitments therefor in excess of $50,000 in the
aggregate, (iv) the making of any loans to stockholders, directors officer or
employees of the Company or any of its Subsidiaries, or (v) the execution of any
lease of real property or commitment therefor.
(b) No change will be made in the Organizational Documents of the
Company or any of its Subsidiaries.
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(c) No change shall be made in the number of shares of capital stock
authorized, issued or outstanding of the Company or any of its Subsidiaries.
(d) No dividend or other distribution or payment shall be declared,
made or paid in respect to the capital stock of the Company, nor shall the
Company or any of its Subsidiaries, directly or indirectly, redeem, purchase or
otherwise acquire any such stock or agree to do any of the foregoing.
(e) Neither the Company nor any of its Subsidiaries will grant any
general or uniform increase in the rates of pay to its employees or in the
benefits under any profit-sharing, bonus, pension, retirement, severance or
other similar payment plan, nor increase the compensation payable or to become
payable to officers, or to any other salaried employee whose aggregate
compensation now exceeds $50,000 per annum, nor increase any bonus, insurance,
pension or other benefit plan payment or arrangement made to, for, or with any
such officer or salaried employee.
(f) No borrowings shall be made by the Company or any of its
Subsidiaries; nor shall the Company or any of its Subsidiaries pledge or subject
to any Lien any of its assets, tangible or intangible; nor shall the Company or
any of its Subsidiaries waive any right of substantial value.
(g) No change shall be made in the banking and safe deposit
arrangements of the Company or any of its Subsidiaries.
(h) The Company and its Subsidiaries will duly comply in all
material respects with all laws applicable to them in the conduct of their
business.
(i) No change shall be made in the contingent obligations of the
Company or any of its Subsidiaries by way of guaranty, endorsement, indemnity,
warranty, or otherwise, other than changes in ordinary course, not material in
amount.
(j) The Company and its Subsidiaries will maintain their property
and assets in substantially their represent order and condition, subject to
normal wear and tear.
(k) Neither the Company nor any of its Subsidiaries will issue,
sell, pledge, dispose of or encumber, or authorize the issuance, sale, pledge,
disposition or encumbrance of, any shares of capital stock of any class, or any
options, warrants, convertible securities or other rights of any kind to acquire
any shares of capital stock, or any other ownership interest in the Company or
any of its Subsidiaries.
(l) Neither the Company nor any of its Subsidiaries will take, or
agree in writing or otherwise to take, any of the actions described in Sections
4.01(a) through (k) above.
The Company and its Subsidiaries will permit representatives of Parent, its
legal counsel and Messrs. Xxxxx Xxxxxxxx LLP, independent certified public
accountants, such access to their offices and records and will give to those
representatives such information relating to the affairs of the Company and its
Subsidiaries as the representatives may reasonably request for purposes related
to this Agreement. The Company and its Subsidiaries will use their best efforts
to
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preserve their business organizations intact, to keep available to the Surviving
Corporation (without making any commitment on its behalf) the services of the
present officers and employees of the Company and its Subsidiaries and to
preserve for the Surviving Corporation the good will of their customers,
suppliers and others having business relations with them.
SECTION 4.02. No Solicitation.
(a) Neither the Company nor any Stockholder shall, directly or
indirectly, through any officer, director, employee, representative or agent of
the Company or any of its Subsidiaries or of any Stockholder, solicit or
encourage the initiation of any inquiries or proposals regarding any merger,
sale of substantial assets, sale of shares of capital stock (including without
limitation by way of a tender offer) or similar transactions involving the
Company or any Subsidiaries of the Company (any of the foregoing inquiries or
proposals being referred to herein as an "Acquisition Proposal").
(b) The Company and the Stockholders shall immediately notify Parent
after receipt of any Acquisition Proposal, or any modification of or amendment
to any Acquisition Proposal, or any request for nonpublic information relating
to the Company or any of its Subsidiaries in connection with an Acquisition
Proposal or for access to the properties, books or records of the Company or any
Subsidiary by any person or entity that informs the Company or such Subsidiary
or any Stockholder that it is considering making, or has made, an Acquisition
Proposal. Such notice to Parent shall be made orally and in writing, and shall
indicate the identity of the person making the Acquisition Proposal or intending
to make an Acquisition Proposal or requesting non-public information or access
to the books and records of Parent, and the terms of any such Acquisition
Proposal or modification or amendment to an Acquisition Proposal.
(c) Anything to the contrary in this Section or elsewhere in this
Agreement notwithstanding, (i) the Board of Directors of the Company shall not
approve or recommend, or propose to approve or recommend, any Acquisition
Proposal and (ii) none of the Company, any Subsidiary of the Company or any
Stockholder shall enter into any agreement with respect to any Acquisition
Proposal.
(d) The Company and the Stockholders shall immediately cease and
cause to be terminated any existing discussions or negotiations with any persons
(other than Parent and Merger Sub) conducted heretofore with respect to any of
the foregoing. The Company agrees not to release any third party from the
confidentiality provisions of any confidentiality agreement to which the Company
is a party.
(e) The Company shall ensure that the officers, directors and
employees of the Company and its Subsidiaries and any advisor or representative
retained by the Company are aware of the restrictions described in this Section
4.02.
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ARTICLE V.
CONDITIONS TO THE MERGER
SECTION 5.01. Conditions to Obligation of Each Party to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) Governmental Actions. There shall not have been instituted,
pending or threatened any action or proceeding (or any investigation or other
inquiry that might result in such an action or proceeding) by any governmental
authority or administrative agency before any governmental authority,
administrative agency or court of competent jurisdiction, domestic or foreign,
nor shall there be in effect any judgment, decree or order of any governmental
authority, administrative agency or court of competent jurisdiction, or any
other legal restraint (i) preventing or seeking to prevent consummation of the
Merger or (ii) prohibiting or seeking to prohibit or limiting or seeking to
limit, Parent from exercising all material rights and privileges pertaining to
its ownership of the Surviving Corporation or the ownership or operation by
Parent or any of its subsidiaries of all or a material portion of the business
or assets of the Surviving Corporation or any of its subsidiaries; and
(b) Illegality. No statute, rule, regulation or order shall be
enacted, entered, enforced or deemed applicable to the Merger which makes the
consummation of the Merger illegal.
SECTION 5.02. Additional Conditions to Obligations of Parent and
Merger Sub. The obligations of Parent and Merger Sub to effect the Merger are
also subject to the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Stockholders set forth in this Agreement or in any Schedule or
certificate delivered pursuant hereto shall be true and correct as of the date
of this Agreement and shall be deemed repeated as of the date of the Closing
(the "Closing Date") and shall then be true and correct, except that the
representations and warranties of the Stockholders set forth in this Agreement
or in any Schedule or certificate delivered pursuant hereto that are not
qualified as to materiality shall be true and correct in all material respects
as of the Closing Date, except to the extent a representation or warranty is
expressly limited by its terms to another date.
(b) Performance of Covenants. The Stockholders and the Company shall
have performed and complied with all covenants and agreements contained herein
required to be performed or complied with by them at or before the Effective
Time.
(c) No Material Adverse Change. Since December 31, 1999, no change
or event shall have occurred which has resulted in or could reasonably be
expected to result in, individually or in the aggregate, a Material Adverse
Change.
(d) Stockholders' Certificate. The Parent shall have received a
certificate of the Stockholders, dated the Closing Date, certifying as to the
matters set forth in Sections 5.02(a), (b) and (c).
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(e) Employment Agreements. At the Closing , each of the Stockholders
shall have entered into an Employment Agreement with the Surviving Corporation
and a Non-Competition Agreement with Parent, in each case, in form and substance
satisfactory to Parent.
(f) Proceedings. All proceedings to be taken and all waivers and
consents, approvals, qualifications and/or registrations required to be obtained
or effected in connection with the execution, delivery and performance by the
Stockholders and the Company of the Documents and the transactions contemplated
thereby, shall have been taken, obtained or effected (except for the filing of
any notice subsequent to the Effective Time which may be required under
applicable Federal and state securities or "blue sky" laws which, if required,
the Stockholders hereby agree to file on a timely basis as may be so required),
and all documents incident thereto, shall be reasonably satisfactory in form and
substance to Parent and its counsel. Parent and its counsel shall have received
all such originals or certified or other copies of such documents as have been
reasonably requested.
(g) Opinion of Counsel. Parent shall have received from Venable,
Baetjer, Xxxxxx & Civiletti, LLP, counsel for the Stockholders and the Company,
its favorable opinion addressed to the Parent, dated the date of the Closing, in
form and substance reasonably satisfactory to Parent.
SECTION 5.03. Additional Conditions to Obligations of the Company.
The obligation of the Company to effect the Merger is also subject to the
following conditions.
(a) Representations and Warranties. The representations and
warranties of Parent set forth in this Agreement or in any Schedule or
certificate delivered pursuant hereto shall be true and correct as of the date
of this Agreement and shall be deemed repeated as of the Closing Date and shall
then be true and correct, except that the representations and warranties of
Parent set forth in this Agreement or in any Schedule or certificate delivered
pursuant hereto that are not qualified as to materiality shall be true and
correct in all material respects as of the Closing Date, except to the extent a
representation or warranty is expressly limited by its terms to another date.
(b) Performance of Covenants. Parent and Merger Sub shall have
performed and complied with all covenants and agreements contained herein
required to be performed or complied with by them at or before the Closing Date.
(c) No Material Adverse Change. Since December 31, 1999, no change
or event shall have occurred which has had or could reasonably be expected,
individually or in the aggregate, to result in a material adverse change in or
have a material adverse effect on the business, assets, properties, operations,
prospects, condition (financial or otherwise), results of operations or
liabilities of Parent.
(d) Officer's Certificate. The Stockholders shall have received a
certificate of an executive officer of Parent, dated the Closing Date,
certifying as to the matters set forth in Sections 5.03(a),(b) and (c).
(e) Corporate Proceedings. All proceedings to be taken and all
waivers and consents, approvals, qualifications and/or registrations required to
be obtained or effected in
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connection with the execution, delivery and performance by Parent and Merger Sub
of the Documents and the transactions contemplated thereby, including the
issuance and delivery of the shares of Parent Common Stock to be issued and
delivered hereunder, shall have been taken, obtained or effected (except for the
filling of any notice subsequent to such Closing which may be required under
applicable Federal and state securities or "blue sky" laws which, if required,
Parent hereby agrees to file on a timely basis as may be so required), and all
documents incident thereto, shall be reasonably satisfactory in form and
substance to the Stockholders and their counsel. The Stockholders and their
counsel shall have received all such originals or certified or other copies of
such documents as have been reasonably requested.
(f) Opinion of Counsel. The Stockholders shall have received from
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP, counsel for Parent and Merger Sub, its
favorable opinion addressed to the Stockholders dated the date of the Closing in
form and substance reasonably satisfactory to the Stockholders.
(g) Employment and Registration Rights Agreements. At the Closing,
each of the Stockholders shall have entered into an Employment Agreement with
the Surviving Corporation and the Stockholders shall have entered into a
Registration Rights Agreement with Parent, in each case, in form and substance
satisfactory to the Stockholders.
ARTICLE VI.
TERMINATION
SECTION 6.01. Termination. This Agreement may be terminated at any
time prior to the Effective Time:
(a) by mutual written consent duly authorized by the Boards of
Directors of Parent and the Company; or
(b) by either Parent or the Company if the Merger shall not have
been consummated by March 3, 2000; or
(c) by either Parent or the Company if a court of competent
jurisdiction or governmental, regulatory or administrative agency or commission
shall have issued a nonappealable final order, decree or ruling or taken any
other action having the effect of permanently restraining, enjoining or
otherwise prohibiting the Merger.
SECTION 6.02. Effect of Termination. In the event of the termination
of this Agreement pursuant to Section 6.01, this Agreement shall forthwith
become void and there shall be no liability on the part of any party hereto or
any of its affiliates, directors, officers or shareholders except that nothing
herein shall relieve the Company, Parent, Merger Sub or any Stockholder from
liability for any willful material breach hereof.
SECTION 6.03. Fees and Expenses. Except as set forth in this Section
6.03, all fees and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses, whether or not the Merger is consummated; provided, however, that
Parent shall, subsequent to the Effective Time,
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pay the reasonable legal fees and expenses incurred by the Stockholders in
connection with the Merger.
ARTICLE VII.
GENERAL PROVISIONS
SECTION 7.01. Survival of Representations, Warranties and
Agreements, Etc. All representations and warranties herein or in any other
Document or made pursuant hereto or thereto shall survive the Merger for a
period of fifteen (15) months following the Effective Time, except that the
representations and warranties in Section 2.04 and in Schedule 2.4 shall survive
indefinitely. All statements contained in any schedule, certificate or other
instrument delivered by the Stockholders or Parent pursuant to this Agreement or
any other Document shall constitute representations and warranties by the
Stockholders or Parent, as the case may be. All agreements contained herein
shall survive indefinitely until, by their respective terms, they are no longer
operative. Each of Parent and the Stockholders shall be entitled to rely on all
such representations and warranties regardless of any investigation by or on its
behalf and regardless of whether Parent or the Stockholders , as the case may
be, knew or should have known that such representation or warranty was not true,
correct or complete.
SECTION 7.02. Indemnification.
(a) The Stockholders shall indemnify, defend and hold Parent
harmless against all claims, liability, loss or damage, together with all
reasonable costs and expenses related thereto (including legal and accounting
fees and expenses) ("Losses"), arising from the untruth, inaccuracy or breach of
any of the representations, warranties, covenants or agreements of the
Stockholders herein or in any other Document or any facts or circumstances
constituting any such untruth, inaccuracy or breach or with respect to any
liability for any brokers' or finders' fees or compensation owing or alleged to
be owing in connection with the transactions contemplated hereby. The
Stockholders shall not have any obligation to indemnify Parent and the Surviving
Corporation hereunder, and Parent shall not have any obligation to indemnify the
Stockholders hereunder, in either case, unless and until (except in the case of
an untruth, inaccuracy or breach of any of the representations or warranties in
Section 2.04 or in Schedule 2.4 or a breach of any Document other than this
Agreement) the aggregate amount of the Losses exceeds $200,000.00.
(b) Parent shall indemnify, defend and hold the Stockholders
harmless against all Losses arising from the untruth, inaccuracy or breach of
any of the representations, warranties, covenants or agreements of Parent herein
or in any other Document or any facts or circumstances constituting any such
untruth, inaccuracy or breach.
SECTION 7.03. Remedies. In case any one or more of the covenants
and/or agreements set forth in this Agreement or in any other Document shall
have been breached by either Stockholder or the Company, Parent may proceed to
protect and enforce its rights by action at law or by suit in equity, including
an action for specific performance, injunctive relief and other forms of
equitable relief (without posting any bond and without proving that damages
would be inadequate) in respect of any such covenant or agreement contained in
this Agreement
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or in any other Document. All remedies hereunder shall be cumulative and the
election of any one remedy shall not preclude any other remedy.
SECTION 7.04. Successors and Assigns. This Agreement shall bind and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.
SECTION 7.05. Entire Agreement. This Agreement, the Documents and
the other writings referred to herein or delivered pursuant hereto which form a
part hereof contain the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior and contemporaneous arrangements
or understandings with respect thereto.
SECTION 7.06. Notices. All notices, requests, consents and other
communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person or sent by telecopy,
nationally-recognized overnight courier or first class-registered or certified
mail, return receipt requested, postage prepaid, addressed to such party at the
address set forth below, or such other address, telecopy number or person's
attention, as may hereafter be designated in writing by such party to the other
parties:
(a) if to either Stockholders or the Company, to:
Xxxxx 000
0000 X Xxxxxx X.X.
Xxxxxxxxxx, X.X. 00000
Telecopier: (000) 000-0000
with a copy to:
Xxxxxx X. Xxxxxxxx
Xxxxxxx, Xxxxxxx, Xxxxxx and Xxxxxxxxx, LLP
0000 X Xxxxxx X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Telecopier: (000) 000-0000
(b) if to Parent or Merger Sub, to:
Financial Performance Corporation
000 Xxxxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Executive Officer
Telecopier: (000) 000-0000
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with a copy to:
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Telecopier: (000) 000-0000
All such notices, requests, consents and other communications shall be deemed to
have been delivered (i) in the case of personal delivery or delivery by
telecopy, on the date of such delivery, (ii) in the case of dispatch by
nationally-recognized overnight courier, on the next business day following such
dispatch and (iii) in the case of mailing, on the third business day after the
posting thereof.
SECTION 7.07. Amendment; Waiver. The terms and provisions of this
Agreement may not be modified or amended, nor may any of the provisions hereof
be waived, temporarily or permanently, except pursuant to a written instrument
executed by the Stockholders and Parent.
SECTION 7.08. Counterparts. This Agreement may be executed in any
number of counterparts, and each such counterpart hereof shall be deemed to be
an original instrument, but all such counterparts together shall constitute but
one agreement.
SECTION 7.09. Interpretation. The table of contents and headings
herein are for convenience of reference only, do not constitute part of this
Agreement and shall not be deemed to limit or otherwise affect any of the
provisions hereof. Where a reference in this Agreement is made to a Section,
Article, Schedule or Exhibit, such reference shall be to a Section or Article of
or Schedule or Exhibit to this Agreement unless otherwise indicated. Where the
reference "hereof," "hereby" or "herein" appears in this Agreement, such
reference shall be deemed to be a reference to this Agreement as a whole.
Whenever the words "include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation." Words denoting the singular include the plural, and vice versa, and
references to it or its or words denoting any gender shall include all genders..
SECTION 7.10. Severability. If any provisions of this Agreement
shall be determined to be illegal and unenforceable by any court of law, the
remaining provisions shall be severable and enforceable in accordance with their
terms.
SECTION 7.11. Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE
MADE IN AND IN ALL RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND
IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF.
SECTION 7.12. Waiver of Jury Trial. EACH OF THE PARTIES HERETO
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
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(WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 7.13. Certain Definitions. For the purposes of this
Agreement, the following terms shall have the meanings ascribed to them in this
Section 7.14:
(1) "Affiliate" means, with respect to any Person, any
Person directly or indirectly controlling, controlled by or
under common control with such Person.
(2) "Best Knowledge" means (a) actual knowledge and (b) that
knowledge which a prudent businessperson could have obtained
in the management of his or her business affairs after
making due inquiry and exercising due diligence with respect
thereto. In connection with the foregoing, the knowledge
(both actual and constructive) of any director, officer or
key employee of the Company or any of its Subsidiaries shall
be imputed to be the knowledge of the Stockholders
(3) "Contract" means any agreement, contract, obligation,
promise, commitment, arrangement or undertaking (whether
written or oral and whether express or implied), other than
those that have been terminated.
(4) "Exchange Act" means the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated
by the Securities and Exchange Commission thereunder.
(5) "Governmental Entity" means any federal or national,
state or provincial, municipal or local government,
governmental authority, regulatory or administrative agency
(including the NASD), governmental commission, department,
board, bureau, agency or instrumentality, political
subdivision, court, tribunal, official arbitrator or
arbitral body, in each case whether domestic or foreign.
(6) "Governmental Order" means any order, writ, rule,
judgment, injunction, decree, stipulation, determination,
decision, consent, agreement or award of, or entered into by
or with, any Governmental Entity.
(7) "Law" means all applicable provisions of all
constitutions, treaties, statutes, laws (including common
law), rules, regulations, ordinances codes or orders of any
Governmental Entity.
-26-
(8) "Liabilities" means any liability or obligation of any
nature, whether accrued, contingent or otherwise, and
whether due or to become due or asserted or unasserted.
(9) "Lien" means any mortgage, lien, pledge, security
interest, encumbrance, assessment, restriction, charge or
other adverse claim or interest of every nature.
(10) "Options" means any right, option, warrant or agreement
to purchase or subscribe for any securities of another
Person.
(11) "Organizational Documents" means (a) the articles or
certificate of incorporation and the by-laws or code of
regulations of a corporation; (b) the partnership agreement
and any statement of partnership of a general partnership;
(c) the limited partnership agreement and the certificate of
limited partnership of a limited partnership; (d) the
articles or certificate of formation and operating agreement
of a limited liability company; (e) any charter, trust
certificate or document or similar document adopted or filed
in connection with the creation, formation or organization
of a Person; and (e) any and all amendments to any of the
foregoing.
(12) "Person" means any individual, corporation (including
any non-profit corporation), general or limited partnership,
limited liability company, joint venture, estate, trust,
association, organization, labor union or other entity or
governmental body or Governmental Entity.
(13) "Securities Act" means the Securities Act of 1933, as
amended, or any successor law.
(14) "Subsidiary" or "Subsidiaries" of any Person means any
corporation, partnership, limited liability company or other
entity of which such Person, either directly or indirectly
through one or more other Subsidiaries, owns more than 50%
of the stock or other equity interests the holders of which
are generally entitled to vote for the election of the board
of directors or other governing body of such entity.
SECTION 7.14. Obligations Joint and Several. All obligations of the
Stockholders hereunder shall be deemed to be their joint and several
obligations.
SECTION 7.15. Certain Non-Competition Agreements. Subsequent to the
Effective Time, the Stockholders shall use their reasonable best efforts to
cause each key
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employee of the Surviving Corporation or any of its Subsidiaries to enter into
an agreement with the Surviving Corporation containing (A) reasonable
non-competition provisions, (B) non-solicitation provisions effective for up to
one year after termination of such person's employment or other relationship
with the Company and its Subsidiaries, (C) non-disclosure of confidential
information provisions and (D) assignment of inventions provisions, such
agreements to be in form and substance reasonably satisfactory to Parent.
SECTION 7.16. Certain Tax Provisions. Each party hereby agrees to
take all reasonable action to cause the Merger to qualify as a reorganization
within the meaning of Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code and
will immediately notify the other parties of any circumstance or condition of
which it is or becomes aware which might cause the Merger to fail to so qualify.
Parent represents to the Stockholders that no Affiliate of Parent has taken any
action that would cause the Merger to fail to so qualify as a reorganization
within the meaning of Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code, and it
is not aware of any circumstances which would cause the Merger to fail to so
qualify. Parent agrees that it will not take any action or cause any Affiliate
of Parent to take any action which would cause the Merger to fail to qualify as
a reorganization within the meaning of Sections 368(a)(1)(A) and 368(a)(2)(E) of
the Code. The Company and the Stockholders represent to Parent that no Affiliate
of the Company or of any Stockholder has taken any action that would cause the
Merger to fail to so qualify as a reorganization within the meaning of Sections
368(a)(1)(A) and 368(a)(2)(E) of the Code, and none of them is aware of any
circumstances which would cause the Merger to fail to so qualify. The Company
and each Stockholder covenants to Parent that he or it will not take any action
or cause any of his or its Affiliates to take any action which would cause the
Merger to fail to qualify as a reorganization within the meaning of Sections
368(a)(1)(A) and 368(a)(2)(E) of the Code.
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IN WITNESS WHEREOF, each of the Stockholders has duly executed
this Agreement and Parent, Merger Sub and the Company have caused this Agreement
to be executed as of the date first written above by their respective officers
thereunto duly authorized.
FINANCIAL PERFORMANCE
CORPORATION
By: /s/
--------------------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: Chairman and Chief Executive Officer
FPC ACQUISITION CORP.
By: /s/
-------------------------------
Name: Xxxxxx Xxxx
Title: Secretary and Treasurer
xXXXXXXX.XXX, INC.
By: /s/
-------------------------------
Name: Xxxxxxx Xxxxxx III
Title: Chairman
/s/
------------------------------------
Xxxxxxx Xxxxxx III
/s/
------------------------------------
Xxxxxxxx X. Xx Xxxxxx
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