Exhibit 10.1
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AGREEMENT AND PLAN OF MERGER
AMONG
PROXIMITY, INC.,
ACT TELECONFERENCING, INC.,
ACT PROXIMITY, INC.,
XXXXXX X. XXXXXX,
XXXXXXX XXXXXXX,
AND
NORTH ATLANTIC VENTURE FUND II, L.P.
Dated as of December 21, 2001
1
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
Page
ARTICLE I THE MERGER..................................................................................... 2
Section 1.1 The Merger.............................................................................. 2
Section 1.2 Effective Time.......................................................................... 3
Section 1.3 Effects of the Merger................................................................... 3
Section 1.4 Articles and Bylaws; Directors and Officers............................................. 3
Section 1.5 Conversion of Securities/Merger Consideration........................................... 3
Section 1.6 Adjustment of Merger Consideration...................................................... 5
Section 1.7 Closing of Company Transfer Books....................................................... 5
Section 1.8 Further Assurances...................................................................... 6
ARTICLE II REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB.............................................. 8
Section 2.1 Organization, Standing and Power........................................................ 8
Section 2.2 Authority............................................................................... 9
Section 2.3 Consents and Approvals; No Violation.................................................... 9
Section 2.4 SEC Documents and Other Reports......................................................... 10
Section 2.5 Required Vote of Parent Stockholders.................................................... 10
Section 2.6 Brokers................................................................................. 11
Section 2.7 Litigation.............................................................................. 11
Section 2.8 Operations of Sub....................................................................... 11
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................................ 11
Section 3.1 Organization, Standing and Power........................................................ 11
Section 3.2 Capital Structure....................................................................... 12
Section 3.3 Authority............................................................................... 13
Section 3.4 Consents and Approvals; No Violation.................................................... 14
Section 3.5 Financial Statements.................................................................... 14
Section 3.6 No Dividends; Absence of Certain Changes or Events...................................... 15
Section 3.7 Governmental Permits.................................................................... 17
Section 3.8 Tax Matters............................................................................. 18
Section 3.9 Actions and Proceedings................................................................. 19
Section 3.10 Certain Agreements..................................................................... 20
Section 3.11 Employee Benefits...................................................................... 20
Section 3.12 Worker Safety and Environmental Laws................................................... 22
Section 3.13 Labor Matters.......................................................................... 22
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Section 3.14 Intellectual Property; Software...................................................... 22
Section 3.15 Availability of Assets and Legality of Use........................................... 26
Section 3.16 Real Property........................................................................ 27
Section 3.17 Real Property Leases................................................................. 27
Section 3.18 Personal Property Leases............................................................. 27
Section 3.19 Title to Assets...................................................................... 27
Section 3.20 Contracts............................................................................ 27
Section 3.21 Status of Contracts.................................................................. 28
Section 3.22 Insurance............................................................................ 29
Section 3.23 Takeover Statutes and Charter Provisions............................................. 29
Section 3.24 Required Vote of Company Shareholders................................................ 29
Section 3.25 Brokers.............................................................................. 29
Section 3.26 Xxxx-Xxxxx-Xxxxxx.................................................................... 30
Section 3.27 Accredited Investors................................................................. 30
ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS................................................... 30
Section 4.1 Conduct of Business Pending the Merger................................................ 30
Section 4.2 Filing of Statements with the IRS..................................................... 32
ARTICLE V ADDITIONAL AGREEMENTS........................................................................ 33
Section 5.1 Shareholder Meeting................................................................... 33
Section 5.2 Access to Information................................................................. 33
Section 5.3 Fees and Expenses..................................................................... 33
Section 5.4 Commercially Reasonable Efforts....................................................... 33
Section 5.5 Public Announcements.................................................................. 34
Section 5.6 State Takeover Laws................................................................... 34
Section 5.7 Notification of Certain Matters....................................................... 35
Section 5.8 Termination of Agreements............................................................. 35
ARTICLE VI CONDITIONS PRECEDENT TO THE MERGER.......................................................... 35
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger............................ 35
Section 6.2 Conditions to Obligation of the Company and the Company Shareholdersto Effect the
Merger......................................................................................... 36
Section 6.3 Conditions to Obligations of Parent and Sub to Effect the Merger...................... 36
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER.......................................................... 37
Section 7.1 Termination........................................................................... 37
Section 7.2 Effect of Termination................................................................. 39
Section 7.3 Amendment............................................................................. 39
Section 7.4 Waiver................................................................................ 39
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ARTICLE VIII INDEMNIFICATION..................................................................... 39
Section 8.1 Indemnification by Active Shareholders.......................................... 39
Section 8.2 Indemnification by Company...................................................... 40
Section 8.3 Indemnification Procedure....................................................... 40
Section 8.4 Limitations on Indemnification.................................................. 41
Section 8.5 Payment of Indemnification Claims............................................... 42
ARTICLE IX GENERAL PROVISIONS.................................................................... 42
Section 9.1 Survival of Representations and Warranties...................................... 42
Section 9.2 Notices......................................................................... 43
Section 9.3 Interpretation.................................................................. 44
Section 9.4 Counterparts.................................................................... 44
Section 9.5 Entire Agreement; No Third-Party Beneficiaries.................................. 44
Section 9.6 Governing Law................................................................... 44
Section 9.7 Assignment...................................................................... 45
Section 9.8 Severability.................................................................... 45
Section 9.9 Enforcement of this Agreement................................................... 45
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EXHIBITS
Exhibit A Form of Parent Note
Exhibit B Form of Earnout Agreement (with respect to Earnout Shares)
Exhibit C Form of Escrow Agreement (with respect to Escrow Consideration)
Exhibit D Form of Opinion of Faegre & Xxxxxx
Exhibit E Form of Registration Rights Agreement
Exhibit F Form of Employment Agreements
Exhibit G Form of Opinion of Downs Xxxxxxx Xxxxxx PLLC
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement"), is dated as of
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December 21, 2001, by and among ACT Teleconferencing, Inc., a Colorado
corporation ("Parent"), ACT Proximity, Inc., a Colorado corporation and a direct
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wholly owned subsidiary of Parent ("Sub"), Proximity, Inc., a Vermont
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corporation (the "Company") (Sub and the Company being hereinafter collectively
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referred to as the "Constituent Companies"), Xxxxxx X. Xxxxxx ("Kaphan"),
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Xxxxxxx Xxxxxxx ("Xxxxxxx" and together with Kaphan, the "Active Shareholders"),
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and North Atlantic Venture Fund II, L.P., a Delaware limited partnership
("NAVF," and together with the Active Shareholders, the "Company Shareholders").
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W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Sub and Company
have approved and declared advisable the merger of Sub and the Company (the
"Merger"), upon the terms and subject to the conditions set forth herein,
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whereby each issued and outstanding share of Capital Stock of the Company will
be converted into the right to receive a portion of the Merger Consideration;
WHEREAS, the Company Shareholders own all of the issued and
outstanding Company Capital Stock and desire to enter into this Agreement to
effect the Merger and receive their proportionate share of the Merger
Consideration;
NOW, THEREFORE, in consideration of the premises, representations,
warranties and agreements herein contained, the parties agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the
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conditions set forth in this Agreement, and in consideration for the Shareholder
Consideration and the Escrow Consideration (collectively, the "Merger
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Consideration"), in accordance with the Colorado Business Corporations Act (the
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"CBCA") the Company shall be merged with and into Sub at the Effective Time.
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Following the Merger, the separate existence of the Company shall cease and Sub
shall continue as the surviving corporation (the "Surviving Corporation") and
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shall succeed to and assume all the rights and obligations of the Company in
accordance with the CBCA. Notwithstanding anything to the contrary herein, at
the election of Parent, any Subsidiary of Parent may be substituted for Sub as a
Constituent Company in the Merger. In such event, the parties agree to execute
an appropriate amendment to this Agreement, in form and substance reasonably
satisfactory to Parent and the Company, in order to reflect such substitution.
The parties intend that the Merger will qualify as a reorganization as described
in Sections 368(a)(2)(D) and 368(a)(1)(A) of the Internal Revenue Code of 1986,
as amended (the "Code").
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Section 1.2 Effective Time. The Merger shall become effective at the
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time provided in the Statement of Merger (the "Statement of Merger") to be
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executed in accordance with the relevant provisions of the CBCA and filed with
the Secretary of State of the State of Colorado. The Statement of Merger shall
provide that the effective time of the Merger (the "Effective Time") shall be
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the date of the Closing. The filing of the Statement of Merger shall be made on
the date of the Closing.
Section 1.3 Effects of the Merger. The Merger shall have the effects
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set forth in Section 0-000-000 of the CBCA and Chapter 11 of the Vermont
Business Corporations Act.
Section 1.4 Articles and Bylaws; Directors and Officers.
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(a) At the Effective Time, the Articles of Incorporation of Sub, as in
effect immediately prior to the Effective Time, shall be the Articles of
Incorporation of the Surviving Corporation until thereafter changed or amended
as provided therein or by applicable law. At the Effective Time, the Bylaws of
Sub, as in effect immediately prior to the Effective Time, shall be the Bylaws
of the Surviving Corporation until thereafter changed or amended as provided
therein or in the Articles of Incorporation of the Surviving Corporation.
(b) The directors and officers of Sub at the Effective Time shall be
the directors and officers of the Surviving Corporation, until the earlier of
their resignation or removal or until their respective successors are duly
elected and qualified, as the case may be.
Section 1.5 Conversion of Securities/Merger Consideration. As of the
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Effective Time, by virtue of the Merger and without any action on the part of
Sub, the Company, or the holders of any securities of the Constituent Companies:
(a) All capital stock of the Company ("Company Capital Stock"),
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including, without limitation, the common stock, $0.001 par value (the "Company
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Common Stock"), the Series A Preferred Stock of the Company, $0.001 par value,
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and the Series B Preferred Stock of the Company, $0.001 par value (collectively
the Series A Preferred Stock and the Series B Preferred Stock are referred to
herein as the "Company Preferred Stock") shall be exchanged for the Merger
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Consideration and, other than the right of each holder thereof to receive a
portion of the Merger Consideration, no other consideration or capital stock of
the Parent or Sub shall be delivered in exchange therefor.
(b) The Parent shall pay the following consideration (collectively,
the "Shareholder Consideration") to the Company Shareholders or the Earnout
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Escrow Agent in such proportions as set forth on Schedule 1.5:
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(i) $450,000 (the "Cash Consideration") in immediately
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available funds, payable by wire transfer or in accordance with other
instructions from the Company Shareholders;
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(ii) 290,000 shares of Parent's common stock ("Parent Common
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Stock"), $.01 par value (the "Stock Consideration");
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(iii) Notes in the aggregate original principal amount of
$675,000, payable by Parent to Active Shareholders in the form of Exhibit A
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(the "Parent Notes").
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(iv) 135,000 shares of Parent Common Stock (the "Earnout
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Stock") which shall be delivered to Downs Xxxxxxx Xxxxxx PLLC, as escrow
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agent (the "Escrow Agent") and held pursuant to the Earnout Agreement in
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the form of Exhibit B (the "Earnout Agreement") and the Escrow Agreement in
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the form of Exhibit C (the "Escrow Agreement").
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(v) 25,000 shares of Parent Common Stock, which shall be
delivered to NAVF.
(c) In addition to the Shareholder Consideration, and pursuant to the
Escrow Agreement, Parent shall deliver the following consideration (the "Escrow
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Consideration,") to Escrow Agent, such Escrow Consideration to secure the
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representations, warranties and covenants of Active Shareholders and to be held
in escrow for the Active Shareholders in such proportions as set forth on
Schedule 1.5:
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(i) $ 50,000 in immediately available funds, payable by wire
transfer or in accordance with other instructions from Escrow Agent;
(ii) 35,000 shares of Parent Common Stock;
(iii) Notes in the aggregate principal amount of $75,000 in
substantially the form of the Parent Notes, but with additional provisions
providing for the reduction of principal amounts pursuant to this Agreement
and the Escrow Agreement; and
(iv) 15,000 shares of Parent Common Stock, which upon release
from escrow under the terms of the Escrow Agreement, shall be deemed to be
additional shares of Earnout Stock subject to the terms of the Earnout
Escrow Agreement.
(d) In calculating the consideration payable under this Section 1.5,
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Parent and Sub shall be entitled to rely on Schedule 1.5 provided by the Company
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Shareholders, the representations and warranties contained in Section 3.2 and
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the certificate delivered pursuant to Section 6.3(e). If such schedule,
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representations, warranties and certificate are not correct, Parent shall have
the right, but not the obligation, to adjust the Merger Consideration
accordingly.
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(e) Company Shareholders agree that, for a period of five (5) years
after the Closing, they shall not, without the prior written consent of Parent,
sell in any three month period shares of capital stock of Parent in excess of
the maximum amount permitted under Rule 144(e) promulgated under the Securities
Act of 1933.
(f) Upon the request of Company Shareholders, certain shares that
make up the Stock Consideration will be issued to Downs Xxxxxxx Xxxxxx PLLC, as
nominee. Parent agrees that it will issue new certificates representing such
shares in accordance with written instructions from Downs Xxxxxxx Xxxxxx PLLC
within three (3) business days of receipt of such instructions and the return of
the appropriate certificates representing such shares.
Section 1.6 Adjustment of Merger Consideration. As soon as
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reasonably practicable following the Closing, Parent shall cause an audit (the
"Audit") of the Surviving Corporation to be performed for the year ending
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December 31, 2001. The Audit shall be conducted according to GAAP, consistent
with the past practice of the Company, and shall be conducted without taking
into account transaction costs of the Company associated with the Merger or any
effect of the Merger (it being expressly understood that Company Shareholders
shall be responsible for all of their expenses as provided in Section 5.3). If
the variance between (i) $96,105, and (ii) the current assets of the Company as
of December 31, 2001 less the liabilities of the Company as of December 31, 2001
(the "December Difference"), each as determined by the Audit, is equal to or
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greater than $50,000, then the Active Shareholders and Parent, as applicable,
shall pay the amount of such variance in excess of $50,000 to the other party in
accordance with the procedures below, with Parent making payment if the December
Difference exceeds $96,105, and Active Shareholders making payment if $96,105
exceeds the December Difference. Any amounts credited or payable pursuant to
this section shall be outside of and not included in any limitations or caps on
indemnification pursuant to this Agreement or the Escrow Agreement. Any amounts
credited or payable pursuant to this section shall be on a dollar-for-dollar
basis, with the first such adjustment to be made against the Parent Notes until,
in the case of any credit or adjustment in favor of Parent, the amount due
thereunder is reduced to zero, the second such adjustment to be made against the
Stock Consideration (with the price of each share of Parent Common Stock to be
considered equal to $10) until, in the case of any credit or adjustment in favor
of Parent, all of the Stock Consideration has been exhausted, and any excess
amount to be made against the Cash Consideration.
Section 1.7 Closing of Company Transfer Books. At the date of the
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execution of this Agreement, the transfer books of the Company shall be closed,
and no transfer of Company Capital Stock Interests shall thereafter be made on
the records of the Company.
Section 1.8 Further Assurances. If at any time after the Effective
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Time the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments or assurances or any other acts or things are
necessary, desirable or proper (a) to vest, perfect
9
or confirm, of record or otherwise, in the Surviving Corporation its right,
title or interest in, to or under any of the rights, privileges, powers,
franchises, properties or assets of either of the Constituent Companies, or (b)
otherwise to carry out the purposes of this Agreement, the Surviving Corporation
and its proper officers and directors or their designees shall be authorized to
execute and deliver, in the name and on behalf of either of the Constituent
Companies, all such deeds, bills of sale, assignments and assurances and to do,
in the name and on behalf of either Constituent Company, all such other acts and
things as may be necessary, desirable or proper to vest, perfect or confirm the
Surviving Corporation's right, title or interest in, to or under any of the
rights, privileges, powers, franchises, properties or assets of such Constituent
Company and otherwise to carry out the purposes of this Agreement.
Section 1.9 Closing; Closing Deliveries.
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(a) The closing of the transactions contemplated by this Agreement
(the "Closing") and all actions specified in this Agreement to occur at the
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Closing shall take place at 10:00 a.m., Eastern Standard Time, on January 2,
2002, or at such other time as Parent and the Company shall agree (the date and
time on which the Closing actually occurs is referred to herein as the "Closing
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Date"). The Closing shall be conducted by videoconference. This Agreement and
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all documents and instruments to be delivered at Closing may be delivered
electronically or by facsimile copy and each party undertakes to transmit
original executed documents promptly following the Closing.
(b) Subject to fulfillment or waiver of the conditions set forth in
Article VI, at the Closing, Parent and Sub, as applicable, shall deliver to the
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Company Shareholders and Escrow Agent, as applicable, all of the following:
(i) copies of the Articles of Incorporation for Parent and
Sub, certified as of a recent date by the Secretary of State of the State
of Colorado;
(ii) certificates of good standing of Parent and Sub, issued as
of a recent date by the Secretary of State of the State of Colorado;
(iii) a certificate of the Secretary or an Assistant Secretary
of Parent, dated the Closing Date, in form and substance reasonably
satisfactory to the Company and the Company Shareholders, as to (a) no
amendments to the Articles of Incorporation of the Parent and Sub since
November 30, 2001, (b) the current Bylaws of Parent and Sub, (c) the
resolutions of the Boards of Directors of Parent and Sub authorizing the
execution and performance of this Agreement and the transactions
contemplated herein and (d) the incumbency and signatures of the officers
of Parent and Sub executing this Agreement;
(iv) the Merger Consideration;
(v) the opinion of Faegre & Xxxxxx in the form of Exhibit D;
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(vi) a Registration Rights Agreement (the "Registration
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Agreement") in the form of Exhibit E, executed by Parent;
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(vii) employment agreements for each of Kaphan and Xxxxxxx (the
"Employment Agreements") in the form of Exhibit F, executed by Parent;
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(viii) all consents, waivers or approvals obtained by Parent with
respect to the consummation of the transactions contemplated by this
Agreement;
(ix) the certificate contemplated by Section 6.2(a); and
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(x) the Earnout Agreement, executed by the Parent.
(c) Subject to fulfillment or waiver of the conditions set forth in
Article VI, at the Closing the Company shall deliver to Parent all of the
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following:
(i) a copy of the Articles of Incorporation of the Company,
certified as of a recent date by the Secretary of State of the State of
Vermont;
(ii) a certificate of good standing of the Company, issued as
of a recent date by the Secretary of State of the State of Vermont;
(iii) certificate of the Secretary or an Assistant Secretary of
the Company, dated the Closing Date, in form and substance reasonably
satisfactory to Parent, as to (a) no amendments to the Articles of
Incorporation of the Company since November 30, 2001, (b) the bylaws of the
Company, (c) the resolutions of the Board of Directors of the Company
authorizing the execution and performance of this Agreement and the
transactions contemplated herein, (d) the approval of the Shareholders of
the Company approving and adopting this Agreement in accordance with
applicable law, and (e) the incumbency and signatures of the officers of
the Company executing this Agreement and any Company Ancillary Agreement;
(iv) unaudited financial statements of the Company prepared in
accordance with GAAP through November 30, 2001;
(v) schedules of all liens and encumbrances, accounts payable,
and accounts receivable of the Company as of the most practicable date
prior to Closing;
(vi) a schedule of the Company's customers as of November 30,
2001;
(vii) a schedule of employees who have indicated they intend to
continue in the Company's employment following the Merger with Sub;
(viii) the opinion of Downs Xxxxxxx Xxxxxx PLLC in the form of
Exhibit G.
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(ix) all consents, waivers or approvals obtained by the Company
with respect to the consummation of the transactions contemplated by this
Agreement; and
(x) the certificates contemplated by Sections 6.3(a), 6.3(b),
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and 6.3(e).
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(d) Subject to the fulfillment or waiver of the conditions set forth
in Article VI, at the Closing the Company Shareholders shall deliver to Parent
the following:
(i) the certificates contemplated by Sections 6.3(a), 6.3(b)
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and 6.3(e), executed by each of the Active Shareholders;
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(ii) the Escrow Agreement executed by each of the Active
Shareholders;
(iii) the Employment Agreements, executed by each of the Active
Shareholders;
(iv) the Earnout Agreement executed by each of the Company
Shareholders;
(v) certificates representing all shares of Company Capital
Stock; and
(vi) such executed certificates as reasonably requested by
Parent in order to determine that the Merger qualifies as a reorganization
under Section 368(a)(2)(D) of the Code.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant to the Company and Company
Shareholders as follows:
Section 2.1 Organization, Standing and Power. Each of Parent and Sub
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is a corporation duly organized, validly existing and in good standing under the
laws of the State of Colorado, respectively, and has the requisite corporate
power and authority to carry on its business as now being conducted. Parent and
Sub are duly qualified to do business and are in good standing in each
jurisdiction where the character of their properties owned or held under lease
or the nature of their activities make such good standing necessary, except
where the failure to be so qualified or licensed and in good standing would not
have a Material Adverse Effect.
Section 2.2 Authority. The Boards of Directors of Parent and Sub
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have declared the Merger advisable and fair to and in the best interest of
Parent and Sub,
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respectively, and Parent, as sole stockholder of Sub, has approved this
transaction and has adopted this Agreement in accordance with the CBCA. The
Board of Directors of Parent has approved the issuance of Parent Common Stock in
connection with the Merger (the "Share Issuance") and payment of the other
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Merger Consideration and has approved the other agreements to be entered into by
it as contemplated hereby (such other agreements, the "Parent Ancillary
----------------
Agreements"). Parent has the requisite corporate power and authority to enter
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into this Agreement and the Parent Ancillary Agreements, to consummate the
transactions contemplated hereby and thereby and to effect the Share Issuance.
Sub has all corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Parent and Sub and the Parent Ancillary Agreements by Parent,
and the consummation by Parent and Sub of the transactions contemplated hereby
and thereby, have been duly authorized by all necessary corporate action on the
part of Parent and Sub. Assuming the valid authorization, execution and delivery
by the other parties thereto and the validity and binding effect hereof and
thereof on the other parties thereto, this Agreement constitutes the valid and
binding obligation of Parent and Sub enforceable against each of them in
accordance with its terms, and each of the Parent Ancillary Agreements, upon
execution and delivery thereof by Parent, will constitute the valid and binding
obligation of Parent enforceable against it in accordance with its terms, except
to the extent its enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by the effect of general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law).
Section 2.3 Consents and Approvals; No Violation. Assuming that all
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consents, approvals, authorizations and other actions described in this Section
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2.3 have been obtained and all filings and obligations described in this Section
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2.3 have been made, the execution and delivery of this Agreement by Parent and
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Sub, and the Parent Ancillary Agreements by Parent, do not, and the consummation
of the transactions contemplated hereby and thereby and compliance with the
provisions hereof and thereof will not, result in any violation of, or default
(with or without notice or lapse of time, or both) under, or give to others a
right of termination, cancellation or acceleration of any obligation or the loss
of a material benefit under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets of the
Parent or Sub, any provision of (i) the Parent or Sub's Articles of
Incorporation or the Parent or Sub's Bylaws, (ii) any loan or credit agreement,
note, bond, mortgage, indenture, guaranty, lease or other agreement, instrument,
permit, concession, franchise or license applicable to the Parent or Sub or any
of their respective properties or assets, (iii) any judgment, order, decree,
injunction, statute, law, ordinance, rule or regulation applicable to the Parent
or Sub or any of their respective properties or assets. No filing or
registration with, or authorization, consent or approval of, any Governmental
Entity is required by or with respect to the Parent or Sub in connection with
the execution and delivery of this Agreement or the Parent Ancillary Agreements
by the Parent or Sub or is necessary for the consummation of the Merger and the
other transactions contemplated by this Agreement or the Parent Ancillary
Agreements, except for the filing of the Statement of Merger with the Secretary
of State of the State of Colorado, appropriate
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documents with the relevant authorities of other states in which the Company or
any of its Subsidiaries is qualified to do business, and appropriate filings
with the SEC.
Section 2.4 SEC Documents and Other Reports. Parent has filed all
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required documents with the Securities Exchange Commission ("SEC") between
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January 1, 2001 and the date hereof (the "Parent SEC Documents"). Except for
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the late filing of the Company's Form 10-Q for the three months ended June 30,
2001, as of their respective dates or, if amended, as of the date of the last
amendment, the Parent SEC Documents comply in all material respects with the
requirements of the Securities Act of 1933 (the "Securities Act") or the
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Securities Exchange Act of 1934 (the "Exchange Act"), as the case may be, and,
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at the respective times they were filed, none of the Parent SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. The
consolidated financial statements (including, in each case, any notes thereto)
of Parent included in the Parent SEC Documents complied as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, were prepared in
accordance with generally accepted accounting principles ("GAAP") (except, in
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the case of the unaudited statements, as permitted by Form 10-Q of the SEC)
applied on a consistent basis during the periods involved (except as may be
indicated therein or in the notes thereto) and fairly presented in all material
respects the consolidated financial position of Parent and its consolidated
subsidiaries at the respective dates thereof and the consolidated results of
their operations and their consolidated cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments and to any other adjustments described therein). Except as
disclosed in the Parent SEC Documents or as required by GAAP, Parent has not,
since January 1, 2001, made any material change in the accounting practices or
policies applied in the preparation of financial statements included in the
Parent SEC Documents.
Section 2.5 Required Vote of Parent Stockholders. No vote of the
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security holders of Parent is required by law, the Articles of Incorporation or
Bylaws of Parent or otherwise in order for Parent to consummate the Merger and
the transactions contemplated hereby.
Section 2.6 Brokers. Other than Xxxxxx, Xxxxxxxx & Company, Inc., no
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broker, investment banker or other Person is entitled to any broker's, finder's
or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Parent.
Section 2.7 Litigation. There is no action, claim, suit arbitration,
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mediation, proceeding, claim or investigation pending or, to Parent's Knowledge,
threatened, against Parent or Sub before any court, administrative agency or
arbitrator that would, if determined adversely to Parent, have a Material
Adverse Effect on Parent or a material adverse effect on Parent's ability to
consummate the transactions contemplated by this Agreement.
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Section 2.8 Operations of Sub. Sub is a wholly-owned Subsidiary of
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Parent and was formed solely for the purpose of engaging in the transaction
contemplated hereby, has engaged in no other business activities and has
conducted its operation only as contemplated hereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company and each of the Company Shareholders represent and warrant
to Parent and Sub, as of the date of execution of this Agreement, as follows (it
being understood that NAVF represents and warrants solely for the purposes of
Section 3.27 below):
Section 3.1 Organization, Standing and Power. The Company is a
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corporation duly organized, validly existing and in good standing under the laws
of the State of Vermont and has the requisite power and authority to carry on
its business as now being conducted. Except as set forth on Schedule 3.1, the
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Company has no Subsidiaries. Each Subsidiary of the Company is duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is organized and has the requisite corporate (in the case of a
Subsidiary that is a corporation) or other power and authority to carry on its
business as now being conducted. The Company and each of its Subsidiaries are
duly qualified to do business, and are in good standing, in each jurisdiction
where the character of their properties owned or held under lease or the nature
of their activities makes such qualification or good standing necessary, except
where the failure to be so qualified or licensed and in good standing would not
have a Material Adverse Effect on the Company.
For purposes of this Agreement, "Material Adverse Change" or "Material
----------------------- --------
Adverse Effect" means, when used with respect to Parent, Sub, Surviving
--------------
Corporation or the Company, as the case may be, any event, change or effect that
individually or when taken together with all other such events, changes or
effects is or could reasonably be expected to be materially adverse to the
business, prospects, assets, liabilities, financial condition or results of
operations of Parent and its Subsidiaries, taken as a whole, or the Company and
its Subsidiaries, taken as a whole, as the case may be.
Section 3.2 Capital Structure.
-----------------
(a) The authorized equity interests in the Company consist of Five
Million (5,000,000) shares of Common Stock, Nine Hundred Fifty Thousand
(950,000) shares of Series A Preferred Stock, and Two Hundred (200) shares of
Series B Preferred Stock. As of the date hereof, there are Four Million
(4,000,000) shares of Company Common Stock issued and outstanding, Nine Hundred
Fifty Thousand (950,000) shares of Series A Preferred Stock issued and
outstanding, and Two Hundred (200) shares of Series B Preferred Stock issued and
outstanding, all of which were validly issued, fully paid and nonassessable and
free of preemptive rights. Except as set forth at Schedule 3.2, neither the
------------
Company nor any of its Subsidiaries has any benefit plans under which any equity
interests in the Company or any of
15
its Subsidiaries are issuable. The Company has not promised or agreed to issue
equity interests under such benefit plans. Except as set forth above, no Company
Capital Stock or other voting securities of the Company are issued, reserved for
issuance or outstanding and the Company Shareholders own all issued and
outstanding shares of Company Capital Stock. There are no options, warrants,
calls, rights, puts or agreements to which the Company or any of its
Subsidiaries is a party or by which any of them is bound obligating the Company
or any of its Subsidiaries to issue, deliver, sell or redeem, or cause to be
issued, delivered, sold or redeemed, any additional shares of Company Capital
Stock (or other voting securities or equity equivalents) of the Company or any
of its Subsidiaries or obligating the Company or any of its Subsidiaries to
grant, extend or enter into any such option, warrant, call, right, put or
agreement. Except as set forth in Schedule 3.2(a), neither of the Company
---------------
Shareholders or the Company are a party to, and do not otherwise have any
knowledge of the current existence of, any shareholder agreement, voting trust
agreement or any other similar contract, agreement, arrangement, commitment,
plan or understanding relating to the voting, dividend, ownership or transfer
rights of any Company Capital Stock. True and complete copies of the Company's
Articles of Incorporation (the "Company Articles"), and Bylaws of the Company
----------------
(the "Company Bylaws") have been delivered to Parent.
--------------
(b) Each outstanding share of Company Capital Stock is duly
authorized, validly issued, fully paid and nonassessable, and each such share
(or other voting security or equity equivalent, as the case may be) is owned by
the Company Shareholders, free and clear of all security interests, liens,
claims, pledges, options, rights of first refusal, agreements, limitations on
voting rights, charges and other encumbrances of any nature whatsoever. The
Company does not have any outstanding bonds, debentures, notes or other
obligations the holders of which have the right to vote (or convertible into or
exercisable for securities having the right to vote) with the Company
Shareholders on any matter. On the Closing Date, each outstanding share of
capital stock (or other voting security or equity equivalent, as the case may
be) of each Subsidiary of the Company will be duly authorized, validly issued,
fully paid and nonassessable, and each such share (or other voting security or
equity equivalent, as the case may be) will be owned by the Company or another
Subsidiary of the Company, free and clear of all security interests, liens,
claims, pledges, options, rights of first refusal, agreements, limitations on
voting rights, charges and other encumbrances of any nature whatsoever.
(c) Schedule 3.2(c) sets forth the name and address of each holder of
---------------
record of Company Capital Stock outstanding on the date hereof, together, in
each case, with the number and type of such Company Capital Stock held by such
Shareholder.
(d) Schedule 3.2(d) sets forth a list of all Subsidiaries and Joint
---------------
Ventures of the Company and the jurisdiction in which such Subsidiary or Joint
Venture is organized. Schedule 3.2(d) also sets forth the nature and extent of
---------------
the ownership and voting interests held by the Company in each such Subsidiary
and Joint Venture. The Company has no obligation to make any capital
contributions, or otherwise provide assets or cash, to any Joint Venture. For
purposes of this Agreement, "Joint Venture" means any corporation, limited
-------------
16
liability company, partnership, joint venture, trust, association or other
entity which is not a Subsidiary of the Company, as the case may be, and in
which (a) the Company, directly or indirectly, owns or controls any shares of
any class of the outstanding voting securities or other equity interests or (b)
the Company or one of its Subsidiaries is a general partner.
(e) All issued and outstanding shares of Company Capital Stock have
been issued in compliance with all appropriate securities laws and are subject
to all appropriate restrictions on transfer in connection with such laws.
Section 3.3 Authority. The Board of Directors of the Company has
---------
declared the Merger advisable and fair to and in the best interest of the
Company and its Shareholders, approved and adopted this Agreement in accordance
with the law of the State of Vermont, approved the other agreements to be
entered into by it as contemplated hereby (such other agreements, the "Company
-------
Ancillary Agreements"), resolved to recommend the approval and adoption of this
--------------------
Agreement by the Company Shareholders and directed that this Agreement be
submitted to the Company Shareholders for approval and adoption. The Company
has the requisite power and authority to enter into this Agreement and the
Company Ancillary Agreements, to consummate the transactions contemplated by the
Company Ancillary Agreements and, to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this Agreement and the
Company Ancillary Agreements by the Company and the consummation by the Company
of the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action on the part of the Company. Assuming the valid
authorization, execution and delivery by the other parties thereto and the
validity and binding effect hereof and thereof on the other parties thereto,
this Agreement constitutes the valid and binding obligation of the Company and
the Company Shareholders enforceable against each in accordance with its terms,
and each of the Company Ancillary Agreements upon execution and delivery thereof
by the Company and the Company Shareholders party thereto will constitute the
valid and binding obligation of the Company and the Company Shareholders party
thereto enforceable against each in accordance with its terms, except to the
extent as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by the effect of general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law).
Section 3.4 Consents and Approvals; No Violation. Assuming that all
------------------------------------
consents, approvals, authorizations and other actions described in this Section
-------
3.4 have been obtained and all filings and obligations described in this Section
--- -------
3.4 have been made, except as set forth in Schedule 3.4, the execution and
--- ------------
delivery of this Agreement and the Company Ancillary Agreements by the Company
do not, and the consummation of the transactions contemplated hereby and thereby
and compliance with the provisions hereof and thereof will not, result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give to others a right of termination, cancellation or acceleration of
any obligation or the loss of a material benefit under, or result in the
creation of any lien, security interest, charge or encumbrance upon any of the
properties or assets of the Company or any of its
17
Subsidiaries under, any provision of (i) the Company Articles or the Company
Bylaws, (ii) the comparable charter or organizational documents of any of the
Company's Subsidiaries, (iii) any loan or credit agreement, note, bond,
mortgage, indenture, guaranty, lease or other agreement, instrument, permit,
concession, franchise or license applicable to the Company or any of its
Subsidiaries or any of their respective properties or assets, (iv) any judgment,
order, decree, injunction, statute, law, ordinance, rule or regulation
applicable to the Company or any of its Subsidiaries or any of their respective
properties or assets. No filing or registration with, or authorization, consent
or approval of, any Governmental Entity is required by or with respect to the
Company or any of its Subsidiaries in connection with the execution and delivery
of this Agreement or the Company Ancillary Agreements by the Company or is
necessary for the consummation of the Merger and the other transactions
contemplated by this Agreement or the Company Ancillary Agreements, except for
the filing of the Statement of Merger with the Secretary of State of the State
of Colorado and appropriate documents with the relevant authorities of other
states in which the Company or any of its Subsidiaries is qualified to do
business.
Section 3.5 Financial Statements. Schedule 3.5 contains (i) the
-------------------- ------------
audited balance sheet (the "Balance Sheet") of the Company and its Subsidiaries
-------------
as of December 31, 2000 (the "Balance Sheet Date") and the related statements of
------------------
income, stockholders' equity and cash flows for the year then ended, together
with the appropriate notes to such financial statements (the "Annual Financial
----------------
Statements") and (ii) the unaudited balance sheet of the Company and its
----------
Subsidiaries as of November 30, 2001 (the "Interim Balance Sheet Date") and the
--------------------------
related unaudited statements of income, stockholders' equity and cash flows for
the eleven months then ended, together with the appropriate notes to such
financial statements (the "Interim Financial Statements" and together with the
----------------------------
Annual Financial Statements, the "Financial Statements"). Except as disclosed
--------------------
in the notes thereto, the Financial Statements have been prepared in conformity
with GAAP consistently applied and fairly present in all material respects the
financial position of the Company and its subsidiaries at the dates of such
balance sheets and the results of its operations and cash flows for the
respective periods indicated (subject, in the case of the Interim Financial
Statements, to year-end adjustments that will not be material).
Section 3.6 No Dividends; Absence of Certain Changes or Events.
--------------------------------------------------
(a) Since the Interim Balance Sheet Date, neither the Company nor
any of its Subsidiaries has ever declared or made, or agreed to declare or make,
any payment of dividends or distributions to its members or other equity
holders, as applicable (and no record date with respect to any of the foregoing
has occurred), or purchased or redeemed, or agreed to purchase or redeem, any of
its equity interests.
(b) Except as set forth in Schedule 3.6(b), since the Interim
---------------
Balance Sheet Date there has been:
18
(i) no Material Adverse Change with respect to the Company;
and
(ii) no damage, destruction, loss or claim, whether or not
covered by insurance, or condemnation or other taking adversely affecting
any material assets or business of the Company or any of its Subsidiaries.
(c) Except as set forth in Schedule 3.6(c), since the Interim Balance
---------------
Sheet Date, the Company and its Subsidiaries have conducted their respective
businesses in all material respects only in the ordinary course and in
conformity with past practice. Without limiting the generality of the
foregoing, since the Interim Balance Sheet Date, except as set forth in Schedule
--------
3.6(c), neither the Company nor any of its Subsidiaries has:
------
(i) issued, delivered or agreed (conditionally or
unconditionally) to issue or deliver, or granted any option, warrant or
other right to purchase, any of its capital stock or other equity interest
or any security convertible into an equity interest;
(ii) issued, delivered or agreed (conditionally or
unconditionally) to issue or deliver any of its bonds, notes or other debt
securities;
(iii) paid any material obligation or liability (absolute or
contingent) other than current liabilities reflected on the Interim
Financial Statements and current liabilities incurred since the Interim
Balance Sheet Date in the ordinary course of business consistent with past
practice;
(iv) except in the ordinary course of business consistent with
past practice, made or permitted any material amendment or termination of
any agreement to which the Company is a party;
(v) undertaken or committed to undertake capital expenditures
exceeding $5,000 for any single project or related series of projects or
$25,000 in the aggregate;
(vi) made charitable donations in excess of $2,500 in the
aggregate;
(vii) sold, leased (as lessor), transferred or otherwise
disposed of (including any transfers from the Company or any of its
Subsidiaries to any of the Company Shareholders or any of their respective
Affiliates), or mortgaged or pledged, or imposed or suffered to be imposed
any lien, claim, charge, security interest, mortgage, pledge, easement,
conditional sale or other title retention agreement, defect in title,
covenant or other restriction of any kind (an "Encumbrance"), on, any of
-----------
the assets reflected on the Interim Financial Statements or any assets
acquired by the Company or any of its Subsidiaries after the Interim
Balance Sheet Date, except for inventory and minor amounts of personal
property sold or otherwise disposed of for fair value in the ordinary
course of its business consistent with past practice and except for (A)
liens for taxes and other governmental charges and assessments which
19
are not yet due and payable, (B) liens of landlords and liens of carriers,
warehousemen, mechanics and materialmen and other like liens arising in the
ordinary course of business for sums not yet due and payable and (C) other
liens or imperfections on property which are not material in amount, do not
interfere with, and are not violated by the consummation of the
transactions contemplated by, this Agreement, and do not materially detract
from the value or marketability of, or materially impair the existing use
of, the property affected by such lien or imperfection (each, a "Permitted
---------
Encumbrance");
-----------
(viii) canceled any debts owed to or claims held by the Company
or any of its Subsidiaries (including the settlement of any claims or
litigation) other than in the ordinary course of its business consistent
with past practice;
(ix) created, incurred or assumed, or agreed to create, incur
or assume, any indebtedness for borrowed money or entered into, as lessee,
any capitalized lease obligations (as defined in Statement of Financial
Accounting Standards No. 13);
(x) accelerated or delayed collection of notes or accounts
receivable in advance of or beyond their regular due dates or the dates
when the same would have been collected in the ordinary course of its
business consistent with past practice;
(xi) delayed or accelerated payment of any account payable or
other liability beyond or in advance of its due date or the date when such
liability would have been paid in the ordinary course of its business
consistent with past practice;
(xii) instituted any increase in any compensation payable to
any employee, director or consultant of the Company or any of its
Subsidiaries or in any profit-sharing, bonus, incentive, deferred
compensation, insurance, pension, retirement, medical, hospital,
disability, welfare or other benefits made available to employees of the
Company or any of its Subsidiaries except, in case of employees other than
directors or officers, salary increases in connection with annual or
periodic compensation reviews in the ordinary course of business consistent
with the Company's past practice;
(xiii) made any tax election or settled or compromised any
material federal, state, local or foreign income tax liability;
(xiv) prepared or filed any Tax Return inconsistent with past
practice or, on any such Tax Return, took any position, made any election
or adopted any method that is inconsistent with positions taken, elections
made or methods used in preparing or filing similar Tax Returns in prior
periods;
(xv) made any change in the accounting principles and
practices used by the Company from those applied in the preparation of the
Financial Statements; or
20
(xvi) entered into or become committed to enter into any other
material transaction except in the ordinary course of business consistent
with past practice.
(d) Except as set forth in Schedule 3.6(d), neither the Company nor
---------------
any of its Subsidiaries is subject to any liability (including unasserted
claims, whether known or unknown), whether absolute, contingent, accrued or
otherwise, which is not shown or which is in excess of amounts shown or reserved
for in the Interim Financial Statements, other than liabilities of the same
nature as those set forth in the Interim Financial Statements and the notes
thereto and reasonably incurred in the ordinary course of its business
consistent with past practice after the Interim Balance Sheet Date.
Section 3.7 Governmental Permits. Each of the Company and its
--------------------
Subsidiaries owns, holds or possesses all licenses, franchises, permits,
privileges, immunities, approvals and other authorizations from Governmental
Entities which are necessary to entitle it to own or lease, operate and use its
assets and to carry on and conduct its business substantially as currently
conducted (herein collectively called "Company Permits"). Complete and correct
---------------
copies of all of the Company Permits have been delivered by the Company to
Parent.
Each of the Company and its Subsidiaries has fulfilled and performed
its obligations under each of the material Company Permits, and each of the
Company Permits is valid, subsisting and in full force and effect and will
continue in full force and effect after the Effective Time, in each case without
(x) the occurrence of any breach, default or forfeiture of rights thereunder or
(y) the consent, approval or act of, or the making of any filing with, any
Governmental Entity.
Section 3.8 Tax Matters.
-----------
(a) Except as set forth in Schedule 3.8(a), (i) each of the Company
---------------
and each Subsidiary of the Company and each Company Group has timely filed all
Tax Returns required to have been filed; (ii) all such Tax Returns are complete
and accurate and disclose all Taxes required to be paid by the Company, each
Subsidiary of the Company and each Company Group for the periods covered thereby
and all Taxes shown to be due on such Tax Returns have been timely paid; (iii)
all Taxes (whether or not shown on any Tax Return) owed by the Company, any
Subsidiary of the Company or any Company Group have been timely paid; (iv) none
of the Company, any Subsidiary of the Company, any Company Shareholder has
waived or been requested to waive any statute of limitations in respect of
Taxes, which waiver or request is currently in effect; (v) there is no action,
suit, investigation, audit, claim or assessment pending or proposed or
threatened with respect to Taxes of the Company, any Subsidiary of the Company
or any Company Group and, to the knowledge of Company and the Active
Shareholders, no basis exists therefor; (vi) all deficiencies asserted or
assessments made as a result of any examination of the Tax Returns referred to
in clause (i) have been paid in full; (vii) all Tax Sharing Arrangements and Tax
indemnity
21
arrangements (in each case to which the Company or any Subsidiary of the Company
is or becomes a party) will terminate prior to the Effective Time and neither
the Company nor any Subsidiary of the Company will have any liability thereunder
on or after the Effective Time; (viii) there are no liens for Taxes upon the
assets of the Company or any Subsidiary of the Company except liens relating to
current Taxes not yet due; (ix) all Taxes which the Company, any Subsidiary of
the Company or any Company Group is required by law to withhold or to collect
for payment have been duly withheld and collected and have been paid to the
respective taxing authority or accrued, reserved against and entered on the
books of the Company; and (x) the charges, accruals and reserves in respect of
Taxes on the Balance Sheet are adequate to provide for all unpaid Taxes as of
the Balance Sheet Date.
(b) No transaction contemplated by this Agreement is subject to
withholding under Section 1445 of the Internal Revenue Code of 1986 (the
"Code"), and no stock transfer Taxes, sales Taxes, use Taxes, real estate
----
transfer Taxes or other similar Taxes will be imposed on the transactions
contemplated by this Agreement.
(c) As a result of the transactions contemplated by this Agreement,
none of the Company, any Subsidiary of the Company or Parent has made, or will
be obligated to make, a payment to an individual that would be an "excess
parachute payment" to a "disqualified individual" as those terms are defined in
Section 280G of the Code, without regard to whether such payment is reasonable
compensation for personal services performed or to be performed in the future.
(d) None of the Company, any predecessor of the Company or any
Subsidiary of the Company is (and none thereof has ever been) a member of (i)
any "affiliated group" (as defined in Section 1504(a) of the Code without regard
to the limitations contained in Section 1504(b) of the Code) or (ii) any other
group of corporations or entities which files or has filed Tax Returns on a
combined, consolidated or unitary basis.
(e) For purposes of this Agreement: (i) "Company Group" means any
-------------
"affiliated group" (as defined in Section 1504(a) of the Code without regard to
the limitations contained in Section 1504(b) of the Code) that, at any time on
or before the Effective Time, includes or has included the Company or any
Subsidiary of the Company, or any predecessor of the Company or any Subsidiary
of the Company (or another such predecessor), or any other group of corporations
which, at any time on or before the Effective Time, files or has filed Tax
Returns on a combined, consolidated or unitary basis with the Company or any
Subsidiary of the Company, or any predecessor of the Company or any Subsidiary
of the Company (or another such predecessor), (ii) "Taxes" means any federal,
-----
state, local, foreign or provincial income, gross receipts, windfall profit,
severance, property, sales, use, license, excise, franchise, employment,
payroll, withholding, alternative or added minimum, ad valorem, value-added,
transfer, stamp or environmental (including Taxes under Section 59A of the Code)
or excise tax or other tax, custom, duty, governmental fee or other like
assessment or charge of any kind whatsoever, together with any interest or
penalty imposed by any Governmental Entity, (iii) "Tax Return" means any return,
----------
report or similar statement
22
(including the attached schedules) required to be filed with respect to any Tax,
including any information return, claim for refund, amended return or
declaration of estimated Tax, and (iv) "Tax Sharing Arrangement" means any
-----------------------
written or unwritten agreement or arrangement for the allocation or payment of
Tax liabilities or payment for Tax benefits with respect to a consolidated,
combined or unitary Tax Return which Tax Return includes the Company or any
Subsidiary of the Company.
Section 3.9 Actions and Proceedings.
-----------------------
(a) Except as set forth in Schedule 3.9(a), there are no outstanding
---------------
orders, judgments, injunctions, awards or decrees of any Governmental Entity
against or involving the Company or any of its Subsidiaries or against or
involving any of the present or former directors, officers, employees or, to the
knowledge of the Company and the Active Shareholders, consultants, agents,
stockholders or shareholders of the Company or any of its Subsidiaries, as such,
or any of its or their properties, assets or business or any Company Plan.
Except as set forth in Schedule 3.9(a), there are no actions, suits or claims or
---------------
legal, administrative or arbitration proceedings or investigations pending or,
to the knowledge of the Company and the Active Shareholders, threatened against
or involving the Company or any of its Subsidiaries or any of its or their
present or former directors, officers, employees or, to the knowledge of the
Company and the Active Shareholders, consultants, agents, shareholders, as such,
or any of its or their properties, assets or business or any Company Plan, and
the Company is not aware of any reasonable basis therefore, including any
actions, suits or claims or legal, administrative or arbitration proceedings or
investigations relating to (i) prior employment of any of the Company's
employees, (ii) the use in connection with the Company's business of any
information or techniques allegedly proprietary to any of their former employers
or their obligations under any agreements with prior employers or (iii) the
transactions contemplated by this Agreement and the Company Ancillary
Agreements. The Company and each of its Subsidiaries has complied in all
material respects with all Requirements of Laws which are applicable to the
Company's assets or business.
(b) For purposes of this Agreement, "Requirements of Laws" means any
--------------------
foreign, federal, state and local laws, statutes, regulations, rules, codes or
ordinances enacted, adopted, issued or promulgated by any Governmental Entity
(including those pertaining to electrical, building, zoning, environmental and
occupational safety and health requirements) or common law.
Section 3.10 Certain Agreements. Except as set forth in Schedule
------------------ --------
3.10, neither the Company nor any of its Subsidiaries is a party to any oral or
----
written agreement or plan, including any employment agreement, severance
agreement, stock option plan, stock appreciation rights plan, restricted stock
plan or stock purchase plan, any of the benefits of which will be increased, or
the vesting of the benefits of which will be accelerated, by the occurrence of
any of the transactions contemplated by this Agreement or the value of any of
the benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement. No holder of any option or other right to
purchase Company Capital
23
Stock granted in connection with the performance of services for the Company or
its Subsidiaries, is or will be entitled to receive cash from the Company or any
Subsidiary in lieu of or in exchange for such option, other right or interest.
Section 3.11 Employee Benefits.
-----------------
(a) Each Company Plan is listed in Schedule 3.11(a). With respect to
----------------
each Company Plan, the Company has delivered to Parent a true and correct copy
of (i) the three (3) most recent annual reports (Form 5500 or such other report
that may be required with respect to such Company Plan) filed with the Internal
Revenue Service ("IRS"), (ii) each such Company Plan that has been reduced to
---
writing and all amendments thereto, (iii) each trust agreement, insurance
contract or administration agreement relating to each such Company Plan, (iv) a
written summary of each unwritten Company Plan, (v) the most recent summary plan
description or other written explanation of each Company Plan provided to
participants, (vi) the most recent determination letter and request therefor, if
any, issued by the IRS with respect to any Company Plan intended to be qualified
under Section 401(a) of the Code, (vii) any request for a determination
currently pending before the IRS and (viii) all correspondence with the IRS, the
Department of Labor, the SEC or Pension Benefit Guaranty Corporation relating to
any outstanding controversy or audit. Each Company Plan complies in all
respects with the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), the Code and all other applicable statutes and governmental rules and
-----
regulations. Neither the Company nor any ERISA Affiliate currently maintains,
contributes to or has any liability under or, at any time during the past six
(6) years has maintained or contributed to, any pension plan which is subject to
Section 412 of the Code or Section 302 of ERISA or Title IV of ERISA. Neither
the Company nor any ERISA Affiliate currently maintains, contributes to or has
any liability under or, at any time during the past six (6) years has
maintained, contributed to, or had any liability under, any multiemployer plan
(as defined in Section 4001(a)(3) of ERISA).
(b) Except as listed in Schedule 3.11(b), with respect to the Company
----------------
Plans, no event or set of circumstances has occurred and there exists no
condition or set of circumstances in connection with which the Company or ERISA
Affiliates or any Company Plan fiduciary could be subject to any liability under
the terms of such Company Plans, ERISA, the Code or any other applicable law.
All Company Plans that are intended by their terms to be, or are otherwise
treated by the Company as, qualified under Section 401(a) of the Code have been
determined by the IRS to be so qualified, or a timely application for such
determination is now pending and the Company and the Company Shareholders are
not aware of any reason why any such Company Plan is not so qualified in
operation. Except as set forth in Section 3.12(b) of the Company Letter,
neither the Company nor any ERISA Affiliate has any liability or obligation
under any welfare plan or agreement to provide benefits after termination of
employment to any employee or dependent other than as required by Section 4980B
of the Code.
24
(c) As used herein, (i) "Company Plan" means a "pension plan" (as
------------
defined in Section 3(2) of ERISA, a "welfare plan" (as defined in Section 3(1)
of ERISA), or any other written or oral bonus, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase, stock
option, phantom stock, restricted stock, stock appreciation right, holiday pay,
vacation, retention, severance, medical, dental, vision, disability, death
benefit, sick leave, fringe benefit, personnel policy, insurance or other plan,
arrangement or understanding, in each case established or maintained by the
Company or any of its ERISA Affiliates or as to which the Company or any of its
ERISA Affiliates has contributed or otherwise may have any liability, and (ii)
"ERISA Affiliate" means any trade or business (whether or not incorporated)
---------------
which would be considered a single employer with the Company pursuant to Section
414(b), (c), (m) or (o) of the Code and the regulations promulgated under those
sections or pursuant to Section 4001(b) of ERISA and the regulations promulgated
thereunder.
(d) Schedule 3.11(d) contains a list of all (i) employment,
----------------
compensation and other agreements with current employees, consultants and
independent contractors providing services to the Company or any ERISA
Affiliate, (ii) severance programs and policies of the Company and each ERISA
Affiliate with or relating to its current and former employees, consultants and
independent contractors, and (iii) plans, programs, agreements and other
arrangements of the Company and each ERISA Affiliate with or relating to its
current and former employees, consultants and independent contractors containing
change of control or similar provisions (collectively, "Company Employment
------------------
Agreements"). The Company has delivered to Parent a true and correct copy of
----------
each Company Employment Agreement and any amendments thereto.
(e) The Company is not a party to any agreement, contract or
arrangement that could result, separately or in the aggregate, in the payment of
any "excess parachute payments" within the meaning of Section 280G of the Code.
Section 3.12 Worker Safety and Environmental Laws. The properties,
------------------------------------
assets and past and present operations of the Company and its Subsidiaries have
been and are in all material respects in compliance with all applicable federal,
state, local and foreign laws, rules and regulations, orders, decrees,
judgments, permits and licenses relating to public and worker health and safety
and the protection and clean-up of the environment and activities or conditions
related thereto, including, without limitation, those relating to the
generation, handling, disposal, transportation or release of hazardous
materials.
Section 3.13 Labor Matters. Schedule 3.13 contains a true and
------------- -------------
complete listing of all employees of the Company, their annual salaries and
their dates of hire. The Company and each of its Subsidiaries has complied in
all material respects with all applicable laws, rules and regulations which
relate to prices, wages, hours, discrimination in employment and collective
bargaining and to the operation of its business and is not liable for any
arrears of wages or any withholding taxes or penalties for failure to comply
with any of the foregoing. Neither the Company nor any of its Subsidiaries is a
party to any collective
25
bargaining agreement or labor contract. Neither the Company nor any of its
Subsidiaries has engaged in any unfair labor practice with respect to any
Persons employed by or otherwise performing services primarily for the Company
or any of its Subsidiaries (the "Company Business Personnel"), and there is no
--------------------------
unfair labor practice complaint or grievance pending or threatened in writing
against the Company or any of its Subsidiaries by the National Labor Relations
Board or any comparable state agency with respect to the Company Business
Personnel. There is no labor strike, dispute, slowdown or stoppage pending or,
to the Knowledge of the Company, threatened against or affecting the Company or
any of its Subsidiaries which may interfere with the respective business
activities of the Company or any of its Subsidiaries.
Section 3.14 Intellectual Property; Software.
-------------------------------
(a) For purposes of this Agreement, the term "Intellectual Property"
---------------------
means the intellectual property owned by, licensed to, or used by the Company or
any Subsidiary of the Company that relates to either the Company's or such
Subsidiary's business, including:
(i) all United States and foreign patents, patent
applications, continuations, continuations-in-part, divisions, reissues,
patent disclosures, inventions (whether or not patentable) and improvements
thereto ("Patent Rights");
-------------
(ii) all United States, state and foreign trademarks, service
marks, logos, trade dress and trade names (including all assumed or
fictitious names under which the Company or any Subsidiary of the Company
is conducting its business or has within the previous five years conducted
its business), and any other source-identifying designations or devices,
including any combinations and variations thereof, and associated goodwill,
whether registered or unregistered, and pending applications to register
the foregoing ("Trademarks");
----------
(iii) all United States and foreign copyrights, whether
registered or unregistered, and pending applications to register the same
("Copyrights");
----------
(iv) all Internet domain names and registrations thereof
("Domain Names"); and
------------
(v) all confidential ideas, trade secrets, computer software,
including source code, know-how, works-in-progress, concepts, methods,
processes, inventions, invention disclosures, formulae, reports, data,
customer lists, mailing lists, business plans or other proprietary
information ("Trade Secrets").
-------------
Schedule 3.14 (a) sets forth all Patent Rights, Trademarks, Copyrights
-----------------
and Domain Names owned by, licensed to or used by the Company or any Subsidiary
of the Company.
26
(b) For purposes of this Agreement, the term "Software" means computer
--------
software programs and software systems, including all databases, compilations,
tool sets, compilers, higher level or proprietary languages, related
documentation and materials, whether in source code, object code or human
readable form, owned by, licensed to or used by the Company or any Subsidiary of
the Company (other than commercially available over-the-counter "shrinkwrap"
software. Schedule 3.14(b) of the Company Letter sets forth such Software.
----------------
(c) Schedule 3.14(c) contains a list and description of all
----------------
agreements, commitments, contracts, understandings, licenses, sublicenses,
assignments and indemnities, which relate or pertain to any Intellectual
Property or Software and are material to the conduct of the Company or any of
its Subsidiaries' business as currently conducted, to which the Company or any
Subsidiary of the Company is a party, showing in each case the parties thereto
and the material terms thereof. Correct and complete copies of all written
items identified in Schedule 3.14(c) have been delivered by the Company to
----------------
Parent.
(d) Except as disclosed in Schedule 3.14(d), each of the Company and
----------------
its Subsidiaries either (i) owns the entire right, title and interest in and to
the Intellectual Property and Software, free and clear of any Encumbrance or
(ii) has the perpetual, unrestricted and royalty-free rights to use the
Intellectual Property and the Software.
(e) Except as disclosed in Schedule 3.14(e), (i) neither the Company
----------------
nor any Subsidiary of the Company is in breach of or is aware of any allegation
(communicated orally or in writing) that the Company or any Subsidiary of the
Company is in breach of any material provision of any agreement, commitment,
contract, understanding, license, sublicense, assignment or indemnity which
relates to any of the Intellectual Property, the Software or any other
intellectual property right of a third party, (ii) neither the Company nor any
Subsidiary of the Company has, through any action or omission, impaired or
otherwise adversely affected the rights of the Company or any Subsidiary of the
Company in any of the Intellectual Property or Software, (iii) nothing with
respect to the Intellectual Property and items identified in Schedule 3.14(c),
----------------
nor any agreement, commitment, contract, understanding, license, sublicense,
assignment or indemnity which relates to any other intellectual property of any
third party, shall restrict the Company's right, power and authority to execute
and deliver this Agreement and the Company Ancillary Agreements, to consummate
the transactions contemplated hereby and thereby and to comply with or fulfill
the terms, conditions or provisions hereof or thereof and (iv) the transactions
contemplated by this Agreement and the Company Ancillary Agreements shall have
no material adverse effect on the validity and enforceability of any of the
Intellectual Property or materials identified in Schedule 3.14(a) and (b) and,
------------------------
except as disclosed in Schedule 3.14(e), the right, title and interest thereto
----------------
of the Company or any Subsidiary of the Company immediately after the Effective
Time shall be identical to that of the Company or such Subsidiary immediately
prior to the Effective Time.
27
(f) The Company and each Subsidiary of the Company have taken all
actions reasonably necessary to protect, and where necessary register, the
Copyrights, Trademarks, Software, Domain Names, Patent Rights or Trade Secrets
that are material to the Company and its Subsidiaries, and Schedule 3.14(a)
----------------
includes a complete list of all registered Intellectual Property and
applications to register Intellectual Property, which are owned in whole or in
part by the Company or any Subsidiary of the Company (collectively, the
"Registered Intellectual Property"). Except as disclosed in Schedule 3.14(a):
-------------------------------- ----------------
(i) the Registered Intellectual Property has not been sold, assigned or
transferred to a third Person, or abandoned or permitted to lapse, and is not
the subject of any pending opposition proceedings, office actions, pending
cancellation proceedings, pending interference proceedings, pending lawsuit
naming the Company or any of its Subsidiaries as a party or other pending
challenges or proceedings of which the Company, any of its Subsidiaries or any
of the Active Shareholders has knowledge; (ii) all registrations for
Intellectual Property identified as being owned by the Company or any of its
Subsidiaries are valid and in force, and all applications to register any
unregistered Intellectual Property are pending and in good standing, all without
challenge of any kind; (iii) the Intellectual Property owned by the Company and
each of its Subsidiaries is valid and enforceable; and (iv) each of the Company
and its Subsidiaries has the sole and exclusive right to bring actions for
infringement or unauthorized use of the Intellectual Property and Software owned
by the Company and such Subsidiaries, and to the knowledge of the Company and
the Active Shareholders, there is no basis for any such action.
(g) Except as disclosed in Schedule 3.14(g), each of the employees,
----------------
agents, consultants, contractors or others who have contributed to or
participated in the discovery, creation or development of any Intellectual
Property on behalf of the Company or its Subsidiaries: (i) has assigned to the
Company or the relevant Subsidiary, or is under a valid obligation to assign to
the Company or such Subsidiary, all right, title and interest in such
Intellectual Property; (ii) is a party to a valid "work-for-hire" agreement
under which the Company or any of its Subsidiaries is deemed to be the original
owner/author of all property rights therein; or (iii) otherwise has by operation
of law vested in the Company or any of its Subsidiaries all right, title and
interest in such Intellectual Property by virtue of his employment relationship
with the Company or any of its Subsidiaries. None of the Company's or any
Subsidiary's officers or employees has entered into any agreement relating to
the prohibition or restriction of competition or solicitation of customers, or
any other similar restrictive agreement or covenant, whether written or oral,
with any Person other than the Company or its Subsidiaries.
(h) Except as disclosed in Schedule 3.14(h): (i) the Company and its
----------------
Subsidiaries (including any predecessors-in-interest thereof) have not infringed
any copyright, mask work right, trademark, service xxxx, trade name, patent,
patent right or trade secret or other property right of any third Person, (ii)
no claim of any such infringement has been made or asserted against the Company
or any of its Subsidiaries, (iii) neither the Company nor any of its
Subsidiaries has had notice (whether written or oral) of any such claim and (iv)
to the knowledge of the Company and the Active Shareholders, no basis for
28
such a claim exists in connection with the operations, products (including
software, equipment, machinery or other devices), processes, methods or
activities of the Company or any of its Subsidiaries.
(i) Except as disclosed in Schedule 3.14(i), neither the Company nor
----------------
any Subsidiary of the Company, nor their respective employees or agents, have
taken any of the following actions such that a Material Adverse Effect on its
rights in the Intellectual Property or Software would result: disclosing or
providing access to source code for the Software except to employees of the
Company or its Subsidiaries bound by confidentiality obligations to the Company
or its Subsidiaries or to third Person consultants bound by confidentiality
agreements; disclosing any Trade Secrets without an appropriate non-disclosure
agreement; providing access to the Software without restrictions on use
(including against copying, sale, transfer, recompilation, disassembly or
reverse-engineering); or embedding, incorporating or modifying third-party
software or other material without adequate permission.
(j) Except as disclosed in Schedule 3.14(j): (i) the Software is not
----------------
subject to any transfer, assignment, site, equipment or other operational
limitations; (ii) the Company has maintained and protected the Software it owns
(the "Owned Software") (including all source code and system specifications)
--------------
with appropriate proprietary notices (including the notice of copyright in
accordance with the requirements of 17 U.S.C. (S) 401), confidentiality and non-
disclosure agreements and such other measures as are necessary to protect the
proprietary, trade secret or confidential information contained therein; (iii)
the Owned Software has been registered or is eligible for protection and
registration under applicable copyright law and has not been forfeited to the
public domain; (iv) the Company has copies of all releases or separate versions
of the Owned Software so that the same may be subject to registration in the
United States Copyright Office; (v) the Company has complete and exclusive
right, title and interest in and to the Owned Software; (vi) the Company has
developed the Owned Software through its own efforts and for its own account
without the aid or use of any consultants, agents, independent contractors or
Persons (other than Persons that are employees of the Company); (vii) the Owned
Software does not infringe any copyright, trademark, service xxxx, trade name,
patent, patent right, trade secret or other property right of any other Person;
(viii) any Owned Software includes the source code, system documentation,
statements of principles of operation and schematics, as well as any pertinent
commentary, explanation, program (including compilers), workbenches, tools and
higher level or proprietary language used for the development, maintenance,
implementation and use thereof, so that a trained computer programmer could
develop, maintain, support, compile and use all releases or separate versions of
the same that are currently subject to maintenance obligations by the Company;
(ix) there are no agreements or arrangements in effect with respect to the
marketing, distribution, licensing or promotion of the Owned Software by any
other Person; (x) the Owned Software complies with all applicable Requirements
of Laws relating to the export or reexport of the same and (x) the Owned
Software licensed to third parties in the ordinary course of the Company's
business may be exported or reexported to all countries without the necessity of
any license, other than to
29
those countries specified as prohibited destinations pursuant to applicable
regulations of the U.S. Department of Commerce and/or the United States State
Department
Section 3.15 Availability of Assets and Legality of Use. All of the
------------------------------------------
Company's assets that are valued at over $500 are listed on Schedule 3.15.
-------------
Except as indicated in Schedule 3.15, the assets owned or leased by the Company
-------------
and its Subsidiaries constitute all the assets used in its business (including
all books, records, computers and computer programs and data processing systems)
and are in good condition (subject to normal wear and tear and immaterial
impairments of value and damage) and serviceable condition and are generally
suitable for the uses for which intended. There are no material services
provided by any Company Shareholders or any of their Affiliates to the Company
or any Subsidiary of the Company utilizing either (i) assets not owned by the
Company or its Subsidiaries as of the Effective Time or (ii) Persons not
employed by the Company or its Subsidiaries. For purposes of this Agreement,
"Affiliate" means, with respect to any Person, any other Person which directly
---------
or indirectly controls, is controlled by or is under common control with such
Person. For purposes of this Agreement, "Person" means any individual,
------
corporation, partnership, limited liability company, joint venture, association,
joint-stock company, trust or unincorporated organization.
Section 3.16 Real Property. Except as set forth in Schedule 3.16,
------------- -------------
neither the Company nor any of its Subsidiaries owns any real property or holds
any option to acquire any real property.
Section 3.17 Real Property Leases. Schedule 3.17 sets forth a list
-------------------- -------------
and brief description of each lease or similar agreement under which the Company
or any Subsidiary of the Company is lessee of, or holds or operates, any real
property owned by any third Person (the "Leased Real Property"). Except as set
--------------------
forth in Schedule 3.17, each of the Company and its Subsidiaries has the right
-------------
to quiet enjoyment of all the real property described in such Section of which
it is the lessee for the full term of each such lease or similar agreement (and
any related renewal option) relating thereto, and the leasehold or other
interest of the Company or any Subsidiary in such real property is not subject
or subordinate to any Encumbrance except for Permitted Encumbrances. Complete
and correct copies of each such lease or similar agreement has been delivered by
the Company to Parent.
Section 3.18 Personal Property Leases. Schedule 3.18 contains a
------------------------ -------------
brief description of each lease or other agreement or right, whether written or
oral, under which the Company or any Subsidiary of the Company is lessee of, or
holds or operates, any machinery, equipment, vehicle or other tangible personal
property owned by a third Person.
Section 3.19 Title to Assets. Each of the Company and its
---------------
Subsidiaries has good title to all of its assets reflected on the Balance Sheet
as being owned by it and all of the assets thereafter acquired by it (except to
the extent that such assets have been disposed of after the Balance Sheet Date
in the ordinary course of business consistent with past practice),
30
free and clear of all Encumbrances, except for Permitted Encumbrances and except
as set forth in Schedule 3.19.
-------------
Section 3.20 Contracts. Except as set forth in Schedule 3.20,
--------- -------------
neither the Company nor any Subsidiary of the Company is a party to or bound by:
(i) any contract for the purchase, sale or lease of real
property involving total payments of more than $5,000;
(ii) any contract for the purchase of goods or raw materials
involving total payments of more than $5,000;
(iii) any contract for the sale of goods or services;
(iv) any contracts relating to the marketing, distribution or
manufacturing of products, services, processes or technology;
(v) any contract for the purchase, licensing or development
of software to be used by the Company or any Subsidiary of the Company
other than contracts for the purchase or licensing of shrink-wrap, off-the-
shelf software not involving the payment of more than $10,000 in the
aggregate;
(vi) any guarantee of the obligations or liabilities of
customers, suppliers, officers, directors, employees, Affiliates of the
Company or its Subsidiaries or any other Persons;
(vii) any agreement which provides for, or relates to, the
incurrence by the Company or any Subsidiary of the Company of debt for
borrowed money or the extension of credit by the Company or any Subsidiary
of the Company to any other Person;
(viii) any agreement or understanding with a third Person that
restricts the Company or any Subsidiary from carrying on its business
anywhere in the world;
(ix) any contract which provides for, or relates to, any
confidentiality arrangement or any non-competition arrangement with any
Person, including, without limitation, any current or former officer or
employee of the Company or any Subsidiary;
(x) any contract or group of related contracts for capital
expenditures in excess of $10,000 for any single project or related series
of projects;
(xi) any partnership, joint venture or other similar
arrangement or agreement involving a sharing of profits or losses;
31
(xii) any contract which involves payments or receipts by the
Company or any Subsidiary of the Company of more than $10,000;
(xiii) any contract for any purpose (whether or not made in the
ordinary course of the business or otherwise not required to be listed or
described in Schedule 3.20) which is material to the Company, any
-------------
Subsidiary of the Company or their respective businesses; or
(xiv) any contract not made in the ordinary course of business.
Section 3.21 Status of Contracts. Except as set forth in Schedule
------------------- --------
3.21, each of the leases, contracts and other agreements listed in Schedules
---- ---------
3.11, 3.14, 3.17, 3.18 and 3.20 (collectively, the "Company Agreements")
------------------------------- ------------------
constitutes a valid and binding obligation of the Company and, to the knowledge
of the Company and the Active Shareholders, the other parties thereto and is in
full force and effect and (except for those Company Agreements which by their
terms will expire prior to the Effective Time or are otherwise terminated prior
to the Effective Time in accordance with the provisions hereof) will continue in
full force and effect after the Effective Time, in each case without breaching
the terms thereof or resulting in the forfeiture or impairment of any rights
thereunder and without the consent, approval or act of, or the making of any
filing with, any other party. Each of the Company and its Subsidiaries has
fulfilled and performed in all material respects its obligations under each of
the Company Agreements, and neither the Company nor any Subsidiary of the
Company is in, or is alleged to be in, breach or default under, nor, to the
knowledge of the Company and the Active Shareholders, is there or, to the
knowledge of the Company and the Active Shareholders, is there alleged to be any
basis for termination of any of the Company Agreements and, to the knowledge of
the Company and the Active Shareholders, no other party to any of the Company
Agreements has breached or defaulted thereunder, and no event has occurred and
no condition or state of facts exists which, with the passage of time or the
giving of notice or both, would constitute such a default or breach by the
Company or any Subsidiary of the Company, to the knowledge of the Company and
the Active Shareholders, by any such other party. Complete and correct copies
of each of the Company Agreements have heretofore been delivered by the Company
to Parent.
Section 3.22 Insurance. Each of the Company and its Subsidiaries
---------
maintains policies of fire and casualty, liability (general, products and other
liability), workers' compensation and other forms of insurance and bonds in such
amounts and against such risks and losses as are insured against by companies
engaged in the same or a similar business. Schedule 3.22 sets forth a list of
--------
insurance maintained, owned or held by the Company or any Subsidiary. The
Company and its Subsidiaries shall keep or cause such insurance or comparable
insurance in full force and effect through the Effective Time. Each of the
Company and its Subsidiaries has complied with each such insurance policy and
has not failed to give any notice or to present any claim thereunder in a due
and timely manner.
32
Section 3.23 Takeover Statutes and Charter Provisions. To the
----------------------------------------
knowledge of the Company and the Active Shareholders, no state takeover statutes
or Company Articles or Company Bylaws provisions are applicable to the Merger,
this Agreement, the Parent Ancillary Agreements and the Company Ancillary
Agreements, and the transactions contemplated hereby and thereby.
Section 3.24 Required Vote of Company Shareholders. The affirmative
-------------------------------------
vote of NAVF and the holders of a majority of the outstanding shares of Company
Capital Stock is required to adopt this Agreement. No other vote of the Company
Shareholders is required by law, the Company Articles, the Company Bylaws or
otherwise in order for the Company to consummate the Merger and the transactions
contemplated hereby and by the Parent Ancillary Agreements and the Company
Ancillary Agreements.
Section 3.25 Brokers. No broker, investment banker or other Person,
-------
other than Xxxxxxx & Company, the fees and expenses of which will be paid by the
Company Shareholders (as reflected in an agreement between Xxxxxxx & Company and
the Company, a copy of which has been furnished to Parent), is entitled to any
broker's, finder's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company.
Section 3.26 Xxxx-Xxxxx-Xxxxxx. The Company is its own sole
-----------------
"ultimate parent entity" (as defined in 16 C.F.R. (S) 801.1(a)(3) (2001)). The
"person" (as defined in 16 C.F.R. (S) 801.1(a)(1) (2001)) of which the Company
is the "ultimate parent entity" (as defined in 16 C.F.R. (S) 801.1(a)(3)
(2001))--i.e., the "person" consisting of the Company and all entities that the
Company controls directly or indirectly -- does not have "total assets" (as
defined in 16 C.F.R. (S) 801.11 (2001)) or "annual net sales" (as defined in 16
C.F.R. (S) 801.11 (2001)) of $10 million or more.
Section 3.27 Accredited Investors. Each of the Company Shareholders
--------------------
is an "accredited investor" as such term is defined in Rule 501 promulgated
under the Securities Act of 1933.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1 Conduct of Business Pending the Merger. Except as
--------------------------------------
expressly permitted by clauses (i) through (xviii) of this Section 4.1, during
-----------
the period from the date of this Agreement through the Effective Time, the
Company and each of its Subsidiaries shall, and the Active Shareholders shall
cause the Company and each of its Subsidiaries to, in all material respects
carry on its business in the ordinary course of its business as currently
conducted and, to the extent consistent therewith, use commercially reasonable
efforts to preserve intact its current business organizations, keep available
the services of its current officers and employees and preserve its
relationships with customers, suppliers and others having business dealings with
it to the end that its goodwill and ongoing business shall be unimpaired at the
Effective Time. Without limiting the generality of the foregoing, and
33
except as otherwise expressly contemplated by this Agreement, the Company shall
not, and shall not permit any of its Subsidiaries to, without the prior written
consent of Parent:
(i) (A) declare, set aside or pay any dividends on, or make any
other actual, constructive or deemed distributions in respect of, any of
its capital stock, as the case may be, or otherwise make any payments to
its stockholders, in their capacity as such, (B) split, combine or
reclassify any of its capital stock, or issue or authorize the issuance of
any other securities in respect of, in lieu of or in substitution for its
capital stock, or (C) purchase, redeem or otherwise acquire any securities
thereof or any rights, warrants or options to acquire, any such securities;
(ii) issue, deliver, sell, pledge, dispose of or otherwise
encumber any of its equity interests, any other voting securities or equity
equivalents or any securities convertible into, or any rights, warrants or
options to acquire, any such equity interests, voting securities, equity
equivalents or convertible securities;
(iii) amend its articles of incorporation or bylaws or other
comparable charter or organizational documents;
(iv) acquire or agree to acquire by merging or consolidating
with, by purchasing a substantial portion of the assets of or equity in or
by any other manner, any business or any corporation, limited liability
company, partnership, association or other business organization or
division thereof or otherwise acquire or agree to acquire any assets, other
than assets acquired in the ordinary course of business consistent with
past practice and not material to the Company and its Subsidiaries taken as
a whole;
(v) sell, transfer, lease, license, mortgage, pledge, encumber
or otherwise dispose of any of its properties or assets, other than sales,
leases or licenses of products or services in the ordinary course of
business consistent with past practice;
(vi) incur any indebtedness for borrowed money, guarantee any
such indebtedness or make any loans, advances or capital contributions to,
or other investments in, any other Person, other than (A) indebtedness,
loans, advances, capital contributions and investments between the Company
and any of its wholly owned Subsidiaries or between any of such wholly
owned Subsidiaries, (B) cash management activities carried on in the
ordinary course of business consistent with past practice and not material
to the Company and its Subsidiaries taken as a whole, and (C) advances to
employees for travel and related business expenses consistent with Company
policies and past practices;
(vii) alter (through merger, liquidation, reorganization,
restructuring or in any other fashion) the corporate structure or ownership
of the Company or any Subsidiary;
34
(viii) enter into, adopt or amend any severance plan, agreement
or arrangement, Company Plan or Company Employment Agreement;
(ix) increase the compensation payable or to become payable to
its directors, officers or employees or grant any severance or termination
pay to, or enter into or amend any employment or severance agreement with,
any current or former director or officer of the Company or any of its
Subsidiaries, except, in case of employees other than directors or
officers, as may be in the ordinary course of business consistent with the
Company's past practice in connection with annual compensation reviews, or
establish, adopt, enter into or, except as may be required to comply with
applicable law, amend or take action to enhance or accelerate any rights or
benefits under, any labor, bonus, profit sharing, thrift, compensation,
stock option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund,
policy or arrangement for the benefit of any current or former director,
officer or employee;
(x) knowingly violate or knowingly fail to perform any
obligation or duty imposed upon it or any Subsidiary by any applicable
material federal, state or local law, rule, regulation, guideline or
ordinance;
(xi) make any tax election or settle or compromise any material
federal, state, local or foreign income tax liability;
(xii) prepare or file any Tax Return inconsistent with past
practice or, on any such Tax Return, take any position, make any election
or adopt any method that is inconsistent with positions taken, elections
made or methods used in preparing or filing similar Tax Returns in prior
periods;
(xiii) make any change to accounting policies or procedures
(other than actions required to be taken by GAAP);
(xiv) enter into, amend or terminate (a) any agreement or
contract material to the Company and its Subsidiaries, taken as a whole,
(b) any noncompetition agreement, (c) any agreement pursuant to which any
third Person is granted marketing, distribution, manufacturing or any other
rights with respect to any Company product, services, processes or
technology, or (d) or make or agree to make any new capital expenditure or
expenditures which, individually, is in excess of $5,000 or, in the
aggregate, are in excess of $25,000;
(xv) waive or release any material right or claim or pay,
discharge or satisfy any material claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction, in the ordinary course of
business consistent with past practice or in accordance with their terms,
of liabilities reflected or reserved against in the Balance Sheet or
incurred in the ordinary course of business consistent with past practice;
35
(xvi) initiate, settle or compromise any litigation or
arbitration proceeding;
(xvii) engage in any activity other than the Current Activities;
or
(xviii) authorize, recommend, propose or announce an intention
to do any of the foregoing or enter into any contract, agreement,
commitment or arrangement to do any of the foregoing.
Section 4.2 Filing of Statements with the IRS. The parties will make
---------------------------------
such filings as required pursuant to Treasury Regulation 1.368-3 in connection
with the qualifications of the Merger as a reorganization under section
368(a)(2)(D) of the Code.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 Shareholder Meeting. The Company will, prior to the
-------------------
Closing, obtain the written consent of the Company Shareholders approving the
Merger. The Company will, through its Board of Directors recommend to its
shareholders approval of this Agreement and shall use all reasonable efforts to
solicit such approval by its members and such Board of Directors shall not
withdraw or modify, or propose to withdraw or modify in a manner adverse to
Parent, such recommendation.
Section 5.2 Access to Information. The Company shall, and shall
---------------------
cause each of its Subsidiaries to, afford to the accountants, counsel, financial
advisors and other representatives of Parent reasonable access to, and permit
them to make such inspections as they may reasonably require of all of its
employees, customers, properties, books, contracts, commitments and records
(including the work papers of independent accountants, if available and subject
to the consent of such independent accountants) during normal business hours
during the period from the date of this Agreement through the Effective Time
and, during such period, the Company shall, and shall cause each of its
Subsidiaries to, furnish promptly to Parent all information concerning its
business, properties and personnel as the other may reasonably request. Parent
shall afford to the accountants, counsel, financial advisors and other
representatives of the Company reasonable access to the executive officers of
Parent during normal business hours during the period from the date of this
Agreement through the Effective Time. No investigation pursuant to this Section
-------
5.3 shall affect any representation or warranty in this Agreement of any party
---
hereto or any condition to the obligations of the parties hereto. All
information obtained pursuant to this Section 5.3 shall be kept confidential by
-----------
the party acquiring such information.
Section 5.3 Fees and Expenses. All costs and expenses incurred in
-----------------
connection with this Agreement and the transactions contemplated hereby,
including the fees and disbursements of counsel, financial advisors and
accountants, shall be paid by the party incurring such costs and expenses.
Without limiting the generality of the foregoing, Company Shareholders shall be
responsible for all fees and expenses of Downs Xxxxxxx Xxxxxx PLLC, Xxxxxxx &
Company, and Xxxxxxxx, Xxxxxxx & Xxxxxxx.
36
Section 5.4 Commercially Reasonable Efforts.
-------------------------------
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use commercially reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the Merger and the other transactions contemplated by this
Agreement, including: (i) obtaining all necessary actions or non-actions,
waivers, consents and approvals from all Governmental Entities and making of all
necessary registrations and filings (including filings with Governmental
Entities) and taking of all reasonable steps as may be necessary to obtain an
approval or waiver from, or to avoid an action or proceeding by, any
Governmental Entity, (ii) obtaining all necessary consents, approvals or waivers
from third parties, and (iii) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by this
Agreement. No party to this Agreement shall consent to any voluntary delay of
the consummation of the Merger at the behest of any Governmental Entity without
the consent of the other parties to this Agreement, which consent shall not be
unreasonably withheld.
(b) Each party shall use all commercially reasonable efforts to not
take any action, or enter into any transaction, which would cause any of its
representations or warranties contained in this Agreement to be untrue or result
in a breach of any covenant made by it in this Agreement.
(c) Notwithstanding anything to the contrary contained in this
Agreement, in connection with any filing or submission required or action to be
taken by either Parent or the Company relating to this Agreement or the
transactions contemplated hereby, (i) neither Parent nor any of its Affiliates
shall be required to divest or hold separate or otherwise take or commit to take
any action that limits its freedom of action with respect to, or its ability to
retain, the Company or any of the businesses, product lines or assets of Parent,
the Company or any of their respective Subsidiaries or Affiliates, or that
otherwise would have an adverse effect on Parent or the Company, and (ii) the
Company shall not, without Parent's prior written consent, take or agree to take
any such action.
(d) Nothing contained in this Agreement, including this Section 5.4,
-----------
shall limit or restrict Parent or any of its Subsidiaries from entering into or
effecting any agreement relating to any other business combination, acquisition
or merger, and no such business combination, acquisition or merger shall be
deemed to violate this Section 5.4.
-----------
Section 5.5 Public Announcements. Company will not issue any press
--------------------
release with respect to the transactions contemplated by this Agreement or
otherwise issue any written public statements with respect to such transactions
without prior consultation with the Parent.
37
Section 5.6 State Takeover Laws. If any "fair price," "business
-------------------
combination" or "control share acquisition" statute or other similar statute or
regulation shall become applicable to the transactions contemplated hereby or in
the Company Ancillary Agreements, Parent and the Company and their respective
Boards of Directors shall use their commercially reasonable efforts to grant
such approvals and take such actions as are necessary so that the transactions
contemplated hereby and thereby may be consummated as promptly as practicable on
the terms contemplated hereby and thereby and otherwise act to minimize the
effects of any such statute or regulation on the transactions contemplated
hereby and thereby.
Section 5.7 Notification of Certain Matters. Parent shall use its
-------------------------------
commercially reasonable efforts to give prompt notice to the Company, and the
Company shall use its commercially reasonable efforts to give prompt notice to
Parent, of: (i) the occurrence or non-occurrence of any event, the occurrence
or non-occurrence of which it is aware and which would be reasonably likely to
cause (x) any representation or warranty of the notifying party contained in
this Agreement to be untrue or inaccurate in any material respect or (y) any
covenant, condition or agreement contained in this Agreement not to be complied
with or satisfied in all material respects, (ii) any failure of Parent or the
Company, as the case may be, to comply in a timely manner with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder. The Company shall use its commercially reasonable efforts to give
prompt notice to Parent of any change or event which would be reasonably likely
to have a Material Adverse Effect on the Company. The delivery of any notice
pursuant to this Section 5.7 shall not limit or otherwise affect the remedies
-----------
available hereunder to the party receiving such notice.
Section 5.8 Termination of Agreements. Company and Company
-------------------------
Shareholders agree that as of the Effective Time all of the agreements listed at
Schedule 3.2(a) and any other agreements (other than this Agreement or any
---------------
related agreement) concerning the Company Capital Stock shall be immediately and
automatically terminated and of no further force and effect. Company and
Company Shareholders agree to execute such documents as reasonably necessary to
evidence the termination of all such agreements.
ARTICLE VI
CONDITIONS PRECEDENT TO THE MERGER
Section 6.1 Conditions to Each Party's Obligation to Effect the
---------------------------------------------------
Merger. The respective obligations of each party to effect the Merger shall be
------
subject to the fulfillment or waiver by Parent and the Company at or prior to
the Effective Time of the following conditions:
(a) Shareholder Approval. This Agreement shall have been duly
--------------------
approved by NAVF and the requisite vote of the Company Shareholders in
accordance with applicable law.
38
(b) Certain Approvals. All approvals to be obtained by Parent, Sub
-----------------
or the Company shall have been received
(c) No Order. No court or other Governmental Entity having
--------
jurisdiction over the Company or Parent, or any of their respective
Subsidiaries, shall have enacted, issued, promulgated, enforced or entered any
law, rule, regulation, executive order, decree, injunction or other order
(whether temporary, preliminary or permanent) which is then in effect and has
the effect of making the Merger or any of the transactions contemplated hereby
illegal.
Section 6.2 Conditions to Obligation of the Company and the Company
-------------------------------------------------------
Shareholders to Effect the Merger. The obligation of the Company and the
---------------------------------
Company Shareholders to effect the Merger shall be subject to the fulfillment
(or waiver by the Parent or Sub, as applicable) at or prior to the Effective
Time of the following additional condition:
(a) Performance of Obligations; Representations and Warranties. Each
----------------------------------------------------------
of Parent and Sub shall have performed in all material respects each of its
agreements contained in this Agreement required to be performed on or prior to
the Effective Time, each of the representations and warranties of Parent and Sub
contained in this Agreement that is qualified by materiality shall be true and
correct on and as of the Effective Time as if made on and as of such date (other
than representations and warranties which address matters only as of a certain
date which shall be true and correct as of such certain date) and each of the
representations and warranties that is not so qualified shall be true and
correct in all material respects on and as of the Effective Time as if made on
and as of such date (other than representations and warranties which address
matters only as of a certain date which shall be true and correct in all
material respects as of such certain date), in each case except as contemplated
or permitted by this Agreement, and the Company shall have received a
certificate signed on behalf of Parent by its Chief Executive Officer and its
Chief Financial Officer to such effect.
(b) Guaranties. Parent shall have executed a side letter agreement
----------
relating to Active Shareholders' guarantees in favor of Key Bank, N.A and
NorthStar Leasing Corp..
Section 6.3 Conditions to Obligations of Parent and Sub to Effect the
---------------------------------------------------------
Merger. The obligations of Parent and Sub to effect the Merger shall be subject
------
to the fulfillment (or waiver by Parent) at or prior to the Effective Time of
the following additional conditions:
(a) Performance of Obligations; Representations and Warranties. The
----------------------------------------------------------
Company shall have performed in all material respects each of its agreements
contained in this Agreement required to be performed on or prior to the
Effective Time, each of the representations and warranties of the Company and
the Company Shareholders contained in this Agreement that is qualified by
materiality shall be true and correct on and as of the Effective Time as if made
on and as of such date (other than representations and warranties
39
which address matters only as of a certain date which shall be true and correct
as of such certain date) and each of the representations and warranties that is
not so qualified shall be true and correct in all material respects on and as of
the Effective Time as if made on and as of such date (other than representations
and warranties which address matters only as of a certain date which shall be
true and correct in all material respects as of such certain date), in each case
except as contemplated or permitted by this Agreement, and Parent shall have
received a certificate signed on behalf of the Company by its Chief Executive
Officer or its Chief Financial Officer to such effect.
(b) Material Adverse Effect. Since the Interim Balance Sheet Date
-----------------------
through the Effective Time, there shall not have been any Material Adverse
Effect on the Company. Parent shall have received a certificate signed on
behalf of the Company by its Chief Executive Officer and the Active Shareholders
to such effect.
(c) Consents. All authorizations, consents, orders, declarations or
--------
approvals of, or filings with, or terminations or expirations of waiting periods
imposed by, any Governmental Entity, which the failure to obtain, make or occur
would have the effect of making the Merger or any of the transactions
contemplated hereby illegal or would have, individually or in the aggregate, an
adverse effect on Parent (assuming the Merger had taken place) shall have been
obtained, shall have been made or shall have occurred. Further, the Company
shall have obtained the consent or approval of each Person that is not a
Governmental Entity whose consent or approval shall be required in connection
with the transactions contemplated hereby under any material loan or credit
agreement, note, mortgage, indenture, lease or other agreement or instrument by
which the Company or any of its Subsidiaries is bound.
(d) No Litigation or Injunction. There shall not be instituted or
---------------------------
pending any suit, action or proceeding by any Governmental Entity relating to
this Agreement, any of the Company Ancillary Agreements or Parent Ancillary
Agreements or any of the transactions contemplated herein or therein. No action
or proceeding shall have been commenced seeking any temporary restraining order,
preliminary or permanent injunction or other order from any court of competent
jurisdiction or seeking any other legal restraint or prohibition preventing the
consummation of the Merger other than any of the foregoing which shall have been
dismissed with prejudice.
(e) Capital Structure Certificate. The Company shall have delivered
-----------------------------
a certificate of its Chief Executive Officer and each of the Company
Shareholders setting forth all of the information that would have been required
to have been included in Schedule 3.2(c) if this Agreement were dated as of the
--------
Effective Time.
40
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 Termination. This Agreement may be terminated at any
-----------
time prior to the Effective Time, whether before or after any approval of the
matters presented in connection with the Merger by the Shareholders of the
Company:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company if the other party shall have
failed to comply in any material respect with any of its covenants or agreements
contained in this Agreement required to be complied with prior to the date of
such termination, which failure to comply has not been cured within ten business
days following receipt by such other party of written notice from the non-
breaching party of such failure to comply;
(c) by either Parent or the Company if there has been (i) a material
breach by the other party (in the case of Parent, including any material breach
by Sub) of any representation or warranty that is not qualified as to
materiality which has the effect of making such representation or warranty not
true and correct in all material respects, or (ii) a breach by the other party
(in the case of Parent, including any breach by Sub) of any representation or
warranty that is qualified as to materiality, in each case which breach has not
been cured within thirty business days following receipt by the breaching party
from the non-breaching party of written notice of the breach;
(d) by either Parent or the Company if: (i) the Merger has not been
effected on or prior to the close of business on January 1, 2002; provided,
--------
however, that the right to terminate this Agreement pursuant to this Section
------- -------
7.1(d)(i) shall not be available to any party whose failure to fulfill any of
---------
its obligations contained in this Agreement has been the cause of, or resulted
in, the failure of the Merger to have occurred on or prior to the aforesaid
date, or (ii) any court or other Governmental Entity having jurisdiction over a
party hereto shall have issued an order, decree or ruling or taken any other
action permanently enjoining, restraining or otherwise prohibiting the
transactions contemplated by this Agreement and such order, decree, ruling or
other action shall have become final and nonappealable;
(e) by Parent if the Company Shareholders do not approve this
Agreement at the Shareholder Meeting or at any adjournment or postponement
thereof;
(f) by Parent if (i) the Board of Directors of the Company shall not
have recommended, or shall have resolved not to recommend, or shall have
qualified, modified or withdrawn its recommendation of the Merger or declaration
that the Merger is advisable and fair to and in the best interest of the Company
and its shareholders, or shall have resolved to do so, (ii) any Person (other
than Parent or its Affiliates) acquires or becomes the beneficial owner of 20%
or more of the outstanding Company Capital Stock, or (iii) the Board of
Directors of the Company shall have recommended to the shareholders of the
Company any Takeover Proposal or shall have resolved to do so;
41
(g) by Parent if any Governmental Entity (i) seeks to restrain or
prohibit or restrains or prohibits the consummation of the Merger or any of the
other transactions contemplated by this Agreement, (ii) seeks to prohibit or
prohibits the ownership, operation or control by the Company, Parent or any of
their respective Subsidiaries of any portion of the business or assets
(including any agreement) of the Company, Parent or any of their respective
Subsidiaries, (iii) seeks to limit or impose any conditions on or limits or
imposes any conditions on the ownership, operation or control by the Company,
Parent or any of their respective Subsidiaries of any portion of the business or
assets (including any agreement) of the Company, Parent or any of their
respective Subsidiaries or that otherwise, in the good faith opinion of Parent,
individually or in the aggregate, would have a Material Adverse Effect on
Parent, the Company or any of their respective Subsidiaries or would detract
from the value of the Merger to Parent in any material manner, or (iv) seeks to
compel or compels the Company, Parent or any of their respective Subsidiaries to
dispose of, grant rights in respect of or hold separate any portion of the
business or assets (including any agreement) of the Company, Parent or any of
their respective Subsidiaries.
The right of any party hereto to terminate this Agreement pursuant to
this Section 7.1 shall remain operative and in full force and effect regardless
-----------
of any investigation made by or on behalf of any party hereto, any Person
controlling any such party or any of their respective officers or directors,
whether prior to or after the execution of this Agreement.
Section 7.2 Effect of Termination. In the event of termination of
---------------------
this Agreement by either Parent or the Company, as provided in Section 7.1, this
-----------
Agreement shall forthwith become void, and there shall be no liability hereunder
on the part of the Company, Parent, Sub or their respective officers or
directors (except for the last sentence of Section 5.2 and the entirety of
-----------
Section 5.3, which shall survive the termination); provided, however, that
----------- -------- -------
nothing contained in this Section 7.2 shall relieve any party hereto from any
-----------
liability for any willful breach of a representation or warranty contained in
this Agreement or the breach of any covenant contained in this Agreement. In
addition the parties agree that upon such termination, all consideration paid
hereunder shall be returned to such payor and such party is authorized to cancel
any notes or certificates issued as consideration hereunder.
Section 7.3 Amendment. This Agreement may be amended by the parties
---------
hereto, by or pursuant to action taken by their respective Boards of Directors,
at any time before or after approval of the matters presented in connection with
the Merger by the Shareholders of the Company, but, after any such approval, no
amendment shall be made which by law requires further approval by such members
without such further approval. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
Section 7.4 Waiver. At any time prior to the Effective Time, the
------
parties hereto may (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties
42
contained herein or in any document delivered pursuant hereto and/or (iii) waive
compliance with any of the covenants, agreements or conditions contained herein
which may legally be waived. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
ARTICLE VIII
INDEMNIFICATION
Section 8.1 Indemnification by Active Shareholders. Active
--------------------------------------
Shareholders shall jointly and severally indemnify and hold harmless Sub,
Surviving Corporation and Parent at all times after the Effective Time, against
and in respect of:
(a) Litigation Liabilities of Company. Any damage, loss, cost,
---------------------------------
expense or liability (including reasonable attorney's fees) (collectively,
"Loss") related to litigation or other causes of action against the Company or
----
Surviving Corporation that arises from or relates to the periods prior to the
Effective Time.
(b) Misrepresentations. Any Loss from any false or inaccurate
------------------
representation, breach of warranty or non-fulfillment of any agreement on the
part of Company or any of Company Shareholders under this Agreement or from any
misrepresentation in any closing certificate or other instrument required to be
furnished by Company or any of Company Shareholders to Sub or Parent hereunder;
and
(c) Actions and Suits. All claims, actions, suits, proceedings,
-----------------
demands, assessments, judgments, costs and expenses, including, without
limitation, reasonable legal fees and expenses, incident to any of the
foregoing.
Section 8.2 Indemnification by Parent and Surviving Corporation. The
---------------------------------------------------
Parent and Surviving Corporation shall jointly and severally indemnify, defend
and hold harmless Company Shareholders, at all times after the Effective Time,
against and in respect of:
(a) Misrepresentations. Any Loss resulting to Company Shareholders
------------------
from any false or inaccurate representation, breach of warranty or non-
fulfillment of any agreement on the part of Parent or Sub under this Agreement
or from any misrepresentation in or any omission from any certificate or other
instrument required to be furnished by the Parent or Sub to Company or
Corporation Shareholders hereunder;
(b) Action or Inaction of Parent or Surviving Corporation. Any Loss
-----------------------------------------------------
arising directly and solely from any action or inaction by Parent or Surviving
Corporation after the Effective Time and arising from or in connection with the
operation of the Surviving Corporation after the Effective Time; and
(c) Actions and Suits. All claims, actions, suits, proceedings,
-----------------
demands, assessments, judgments, costs and expenses, including, without
limitation, reasonable legal fees and expenses, incident to any of the
foregoing.
43
Section 8.3 Indemnification Procedure.
-------------------------
(a) A party that may be entitled to indemnification pursuant to
Section 8.1 or Section 8.2 (the "Indemnitee") shall promptly give written notice
----------
(a "Notice of Claim") to the party liable for such indemnification (the
---------------
"Indemnitor"). A Notice of Claim shall set forth (a) a description, in
----------
reasonable detail, of the facts and circumstances with respect to the subject
matter of such claim or potential claim for indemnification, and (b) the
anticipated total amount of the indemnification claim (including any costs or
expenses which have been or may be reasonably incurred in connection therewith).
Upon receipt of a Notice of Claim, the Indemnitor may elect to cure the
circumstances giving rise to the indemnification claim (the "Event of Loss")
-------------
within fourteen (14) days after the date of receipt of the Notice of Claim. If
such cure cannot be effected within such 14-day period, payment of the amount of
actual damage, loss, cost, expense or liability (including reasonable attorneys'
fees) (collectively, "Damages") due to the Indemnitee as set forth in the Notice
-------
of Claim shall be made by Indemnitor no later than the fourteenth (14th) day
after the date of the Notice of Claim (or such later date as the Indemnitor
receives written notice that the Indemnitee has suffered Damages). The
Indemnitee's failure to give prompt notice or to provide copies of documents or
to furnish relevant data shall not constitute a defense (in whole or in part) to
any claim by the Indemnitee against the Indemnitor for indemnification, except
and only to the extent that such failure shall have caused or increased such
liability or adversely affected the ability of the Indemnitor to defend against
or reduce its liability.
(b) If any Notice of Claim relates to any claim made against an
Indemnitee by a third person, the Notice of Claim shall state the nature, basis
and amount of such claim. The Indemnitor shall have the right, at its election,
by written notice to the Indemnitee, to assume the defense of the claim as to
which such notice has been given. Except as provided in the next sentence, if
the Indemnitor so elects to assume such defense, it shall diligently and in good
faith defend such claim and shall keep the Indemnitee reasonably informed of the
status of such defense, and the Indemnitee shall cooperate fully with the
Indemnitor in the defense of such claim, provided that in the case of any
--------
settlement providing for remedies other than monetary damages for which
indemnification is provided, the Indemnitee shall have the right to approve the
settlement, which approval shall not be unreasonably withheld or delayed. If
the Indemnitor does not so elect to defend any claim as aforesaid or shall fail
to defend any claim diligently and in good faith (after having so elected), the
Indemnitee may assume the defense of such claim by written notice to the
Indemnitor and take such other action as it may elect to defend or settle such
claim as it may determine in its reasonable discretion, provided that the
--------
Indemnitor shall have the right to approve any settlement, which approval will
not be unreasonably withheld or delayed.
Section 8.4 Limitations on Indemnification.
------------------------------
(a) Basket Amount. The indemnification provided for in Section 8.1
-------------
shall not apply to (i) Damages relating to an individual indemnification claim
if such amounts do not exceed $5,000 in the aggregate, whereupon claim may be
made for the entire amount of
44
Damages, provided that the limits of clause (ii) have been met, and (ii) until
Parent's and Surviving Corporation's collective claims for indemnification
exceed $20,000 in the aggregate, whereupon claim may be made for all amounts in
excess of $20,000, subject to the limits of clause (i) herein (it being
understood that Damages relating to claims below $5,000 may be included for
purposes of determining whether the limits of this clause (ii) have been
satisfied).
(b) Insurance Proceeds and Other Set-Offs. The amount of any Damages
-------------------------------------
for which indemnification is provided under Section 8.1 or Section 8.2 shall be
net of any amounts recovered or recoverable by the Indemnitee under insurance
policies with respect to such Damages. Upon making any payment to an Indemnitee
for any indemnification claim, the Indemnitor shall be subrogated, to the extent
of such payment, to any rights which the Indemnitee may have against the third
party with respect to the subject matter underlying such indemnification claim.
Section 8.5 Payment of Indemnification Claims. Except as otherwise
---------------------------------
provided below, in the event that any party is required to indemnify pursuant to
Sections 8.1 or 8.2, such party shall make payment of such indemnification claim
in cash. In the event that Parent or Surviving Corporation is entitled to
indemnification pursuant to Section 8.1(b), Active Shareholders may pay such
amount in cash or, at the option of Active Shareholders, effect the payment of
such indemnification by, and in accordance with, the terms of the Escrow
Agreement, (i) first, directing the Escrow Agent to return to Parent the
Escrowed Notes in escrow, in which case Parent shall tender to the Escrow Agent
in substitution therefor Notes reduced in principal amount by the amount of
Seller's indemnification obligation to the Indemnitee (which Notes shall
thereupon become the "Notes"), or (ii) second, if the Notes are insufficient to
-----
satisfy the indemnification obligation, by directing the Escrow Agent to return
to Parent an integral number of shares of Parent Common Stock equal in value to
the indemnification obligation (in which case the value of each such share shall
be considered equal to $10), and (iii) third, if the Notes and the shares are
insufficient to satisfy the indemnification obligation, by directing the Escrow
Agent to pay the Parent escrowed cash in amounts equal to the indemnification
obligation under Section 8.1(b). Except as otherwise provided in this
Agreement, resort to the shares, notes and cash in escrow (other than the
Earnout Stock) shall constitute the sole remedy of Parent for indemnification
claims under Section 8.1(b) under this Agreement, except with respect to fraud
or willful misconduct perpetrated by Seller. In order to receive
indemnification pursuant to Section 8.1(a), Parent or Surviving Corporation must
file a Notice of Claim on or prior to the second anniversary of the Effective
Time. The collective indemnification obligations of Active Shareholders
pursuant to Section 8.1(a) shall not exceed $1,500,000.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Survival of Representations and Warranties. The
------------------------------------------
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall terminate on the first anniversary of the
Effective Time. Except as
45
otherwise provided herein, no claim shall be made for the breach of any
representation or warranty made in this Agreement or in any instrument delivered
pursuant to this Agreement after the date on which such representations and
warranties terminate as set forth in this Section.
Section 9.2 Notices. All notices and other communications hereunder
-------
shall be in writing and shall be deemed given when delivered personally, one day
after being delivered to an overnight courier or on the business day received
(or the next business day if received after 5 p.m. local time or on a weekend or
day on which banks are closed) when sent via facsimile (with a confirmatory copy
sent by overnight courier) to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
(a) if to Parent or Sub, to
ACT Teleconferencing, Inc.
0000 Xxxx Xxxx., Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Faegre & Xxxxxx LLP
000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxxx
Facsimile No.: (000) 000-0000
if to the Company, to
Proximity, Inc.
00 Xxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Downs Xxxxxxx Xxxxxx PLLC
000 Xxxx Xxxxxx, 0/xx/ Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxx X. Ode, Jr.
Facsimile No.: (000)000-0000
46
Xxxxxx X. Xxxxxx
00 Xxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Xxxxxxx Xxxxxxx
00 Xxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
North Atlantic Venture Fund II, L.P.
0 Xxxx Xxxxxx, 0/xx/ Xxxxx
Xxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxxxxx
Facsimile No.: (000) 000-0000
Section 9.3 Interpretation. When a reference is made in this
--------------
Agreement to a Section, Article, Exhibit or Schedule, such reference shall be to
a Section or Article of, or an Exhibit or Schedule attached to, this Agreement
unless otherwise indicated. The Schedules and Exhibits referred to herein shall
be construed with and as an integral part of this Agreement to the same extent
as if they were set forth verbatim herein. The table of contents, table of
defined terms and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. For purposes of this Agreement, (i) the words "include,"
"includes" or "including" shall be deemed to be followed by the words "without
limitation," and (ii) the words "herein," "hereof," "hereby," "hereto" and
"hereunder" refer to this Agreement as a whole. The term "knowledge" means, as
to a natural person, the awareness of a fact or a reasonable probability of such
fact, and, as to an entity, the awareness of a fact or a reasonable probability
of such fact by a natural person in executive management or on the board of
directors.
Section 9.4 Counterparts. This Agreement may be executed in
------------
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
Section 9.5 Entire Agreement; No Third-Party Beneficiaries. This
----------------------------------------------
Agreement constitutes the entire agreement and supersedes all prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter hereof. This Agreement is not intended to confer upon any Person
other than the parties hereto any rights or remedies hereunder.
47
Section 9.6 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the internal laws (as opposed to conflicts of law
provisions) of the State of Colorado applicable to contracts made and performed
wholly therein.
Section 9.7 Assignment. Subject to Section 1.1, neither this
---------- -----------
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other parties.
Section 9.8 Severability. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other terms, conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic and
legal substance of the transactions contemplated hereby are not affected in any
manner materially adverse to any party. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions contemplated by this Agreement
may be consummated as originally contemplated to the fullest extent possible.
Section 9.9 Enforcement of this Agreement. The parties hereto agree
-----------------------------
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific wording or
were otherwise breached. It is accordingly agreed that the parties hereto shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, such remedy being
in addition to any other remedy to which any party is entitled at law or in
equity.
48
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized
all as of the date first written above.
ACT TELECONFERENCING, INC.
By: _________________________________
Name: Xxxxx Xxxxxxx
Title: Chief Financial Officer
ACT PROXIMITY, INC.
By: _________________________________
Name: Xxxxx Xxxxxxx
Title: President
PROXIMITY, INC.
By: _________________________________
Name:
Title:
XXXXXX X. XXXXXX
_________________________________
Xxxxxx X. Xxxxxx
XXXXXXX XXXXXXX
_________________________________
Xxxxxxx Xxxxxxx
49
NORTH ATLANTIC VENTURE FUND II, L.P.
By: North Atlantic Investors, L.P.
its General Partner
By:___________________________________
Name: Xxxx X. Xxxxxxxxxxx
Title: General Partner
[Signature Page to Merger Agreement]
50
EXHIBIT A
Form of Parent Note
51
EXHIBIT B
Form of Earnout Agreement (with respect to Earnout Shares)
EARNOUT AGREEMENT
This Earnout Agreement (this "Agreement") dated as of January 2, 2001 is by
---------
and among ACT Teleconferencing, Inc., a Colorado corporation, ("ACT"), ACT
---
Proximity, Inc., a Colorado corporation and wholly owned subsidiary of ACT
("Sub"), North Atlantic Venture Fund II, L.P., a Delaware limited partnership
---
("NAVF"), Xxxxxx X. Xxxxxx ("Kaphan"), and Xxxxxxx Xxxxxxx ("Xxxxxxx", and
---- ------ -------
together with NAVF and Kaphan, the "Sellers").
-------
RECITALS
A. The parties hereto have entered into that certain Agreement and Plan of
Merger dated as of December 21, 2001 (the "Merger Agreement") pursuant to which
----------------
Sellers will surrender all of their shares of capital stock of Proximity, Inc.,
a Vermont corporation ("Proximity"), and Proximity will merge with and into Sub
---------
with Sub being the surviving entity.
B. Pursuant to Sections 1.5(b)(iv) and 1.5(c)(iv) of the Merger Agreement, ACT
has agreed to issue a total of 150,000 shares of ACT's common stock, $.01 par
value, (the "Earnout Shares") to be held in escrow pursuant to the terms of the
--------------
Escrow Agreement and this Agreement.
C. The parties hereto desire to make certain covenants and agreements in
connection with the Earnout Shares upon the terms and conditions set forth
herein.
AGREEMENT
Now, therefore, in consideration of the mutual benefits and consideration
contained herein, the parties agree as follows:
1. DEFINITIONS. ALL CAPITALIZED TERMS USED HEREIN AND NOT OTHERWISE DEFINED
-----------
SHALL HAVE THE MEANINGS GIVEN TO SUCH TERMS IN THE MERGER AGREEMENT.
2. DISTRIBUTION OF EARNOUT SHARES.
------------------------------
(a) Subject to the terms and conditions contained in the Merger
Agreement and the Escrow Agreement, ACT shall instruct Escrow Agent to
distribute the Earnout Shares to the Sellers as a group as follows:
(i) Provided that the gross margin of the Sub (as determined by Sub's
audited financials and consistent with previous practice) for the fiscal year
ending December 31, 2002 is at least 35%, then the Sellers collectively shall
have a right to receive a number of Earnout
52
Shares equal to (A) the number of dollars of total revenues (as determined by
Sub's audited financials and consistent with previous practice) of the Sub for
the fiscal year ending December 31, 2002 less 6,000,000, (B) divided by 20.
(ii) Provided that the gross margin of the Sub (as determined by
Sub's audited financials and consistent with previous practice) for the fiscal
year ending December 31, 2003 is at least 35%, the Sellers collectively shall
have a right to receive a number of Earnout Shares equal to (A) the number of
dollars of total revenues (as determined by Sub's audited financials and
consistent with previous practice) of the Sub for the fiscal year ending
December 31, 2003, less 7,500,000, (B) divided by 20.
(b) The following example is intended to illustrate the calculation to be
made under section 2(a): assuming a gross margin of at least 35%, if the total
revenues of Sub for the fiscal year ending December 31, 2002 are $8,000,000,
then the number of Earnout Shares the Sellers have the right to receive would be
100,000 ((8,000,000 - 6,000,000) / 20 = 100,000).
(c) Regardless of the total revenues of the Sub for the fiscal years
ending December 31, 2002 and 2003, the maximum the Sellers may receive pursuant
to the formula described above shall be all of the Earnout Shares, and ACT shall
have no obligation to issue additional shares of common stock or provide further
consideration to the Sellers. Any Earnout Shares not released from escrow
pursuant to the above formula shall be returned to ACT and Sellers shall have no
further right or claim to such Earnout Shares.
(d) When required pursuant to this Agreement, the Escrow Agent shall
distribute the Earnout Shares to each individual Seller in the following
percentages: Kaphan - 37.5%; Xxxxxxx - 37.5% and NAVF - 25%.
(e) Notwithstanding Section 2(d) above, NAVF acknowledges and agrees that
it shall have no right or interest in and to the 15,000 Earnout Shares held by
the Escrow Agent pursuant to Section 1.5(c)(iv) of the Merger Agreement in order
to satisfy Kaphan's and Xxxxxxx'x potential indemnification obligations under
the Merger Agreement.
3. Conduct of Sub After Effective Time. Except as set forth below, ACT shall
-----------------------------------
have the complete and absolute right to make all business decisions affecting
the Sub and its business, properties, operations, and products after the
Effective Time in a manner consistent with the Sub's best business interests;
provided, however, that for as long as there are Earnout Shares in escrow
subject to this Agreement, Parent agrees and covenants (a) to maintain the Sub
as a separate subsidiary of ACT and to operate the Sub in a manner consistent
with the past practices of Proximity, (b) to keep the assets, liabilities and
revenue stream of Sub separate from ACT and any other subsidiaries and
affiliates of ACT, (c) that all transactions between Sub and any ACT affiliate
shall be on arms-length terms, (d) that if Sub acquires any business, such
business shall be segregated for financial reporting purposes and shall not be
taken into account for purposes of calculating the number of Earnout Shares to
be released from escrow, (e) that ACT shall not
53
divert U.S. business away from Sub or compete against Sub in the U.S. market for
Sub's services, (f) that ACT shall observe its obligations under the Employment
Agreements with each of Kaphan and Xxxxxxx of even date herewith, and (g) that
each of Kaphan and Xxxxxxx shall serve as a member of Sub's Board of
Directors.4. Acceleration of Distribution of Earnout Shares. Notwithstanding the
----------------------------------------------
provisions of Section 2 above, upon the occurrence of a Liquidation Event (as
such term is defined in the Escrow Agreement) at any time from the Effective
Time through January 1, 2004, the Escrow Agent shall, in accordance with the
procedures in the Escrow Agreement, distribute the Earnout Shares to the
Sellers.
5. NOTICES. ALL NOTICES AND OTHER COMMUNICATIONS SHALL BE GIVEN IN THE MANNER
-------
PROVIDED IN THE MERGER AGREEMENT.
6. COUNTERPARTS. THIS AGREEMENT MAY BE EXECUTED IN COUNTERPARTS, ALL OF WHICH
------------
SHALL BE CONSIDERED ONE AND THE SAME AGREEMENT, AND SHALL BECOME EFFECTIVE WHEN
ONE OR MORE COUNTERPARTS HAVE BEEN SIGNED BY EACH OF THE PARTIES AND DELIVERED
TO THE OTHER PARTIES.
7. ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. THIS AGREEMENT CONSTITUTES
----------------------------------------------
THE ENTIRE AGREEMENT AND SUPERSEDES ALL PRIOR AGREEMENTS AND UNDERSTANDINGS,
BOTH WRITTEN AND ORAL, AMONG THE PARTIES WITH RESPECT TO THE SUBJECT MATTER
HEREOF. THIS AGREEMENT IS NOT INTENDED TO CONFER UPON ANY PERSON OTHER THAN THE
PARTIES HERETO ANY RIGHTS OR REMEDIES HEREUNDER.
8. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
-------------
ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAW PROVISIONS) OF
THE STATE OF COLORADO APPLICABLE TO CONTRACTS MADE AND PERFORMED WHOLLY THEREIN.
9. ASSIGNMENT. NEITHER THIS AGREEMENT NOR ANY OF THE RIGHTS, INTERESTS OR
----------
OBLIGATIONS HEREUNDER SHALL BE ASSIGNED BY ANY OF THE PARTIES HERETO (WHETHER BY
OPERATION OF LAW OR OTHERWISE) WITHOUT THE PRIOR WRITTEN CONSENT OF THE OTHER
PARTIES.
10. SEVERABILITY. IF ANY TERM OR OTHER PROVISION OF THIS AGREEMENT IS INVALID,
------------
ILLEGAL OR INCAPABLE OF BEING ENFORCED BY ANY RULE OF LAW OR PUBLIC POLICY, ALL
OTHER TERMS, CONDITIONS AND PROVISIONS OF THIS AGREEMENT SHALL NEVERTHELESS
REMAIN IN FULL FORCE AND EFFECT SO LONG AS THE ECONOMIC AND LEGAL SUBSTANCE OF
THE TRANSACTIONS CONTEMPLATED HEREBY ARE NOT AFFECTED IN ANY MANNER MATERIALLY
ADVERSE TO ANY PARTY. UPON SUCH DETERMINATION THAT ANY TERM OR OTHER PROVISION
IS INVALID, ILLEGAL OR INCAPABLE OF BEING ENFORCED, THE PARTIES SHALL NEGOTIATE
IN GOOD FAITH TO MODIFY THIS AGREEMENT SO AS TO EFFECT THE ORIGINAL INTENT OF
THE PARTIES AS CLOSELY AS
54
POSSIBLE IN A MUTUALLY ACCEPTABLE MANNER IN ORDER THAT THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT MAY BE CONSUMMATED AS ORIGINALLY CONTEMPLATED TO
THE FULLEST EXTENT POSSIBLE.
11. ENFORCEMENT OF THIS AGREEMENT. THE PARTIES HERETO AGREE THAT IRREPARABLE
-----------------------------
DAMAGE WOULD OCCUR IN THE EVENT THAT ANY OF THE PROVISIONS OF THIS AGREEMENT
WERE NOT PERFORMED IN ACCORDANCE WITH THEIR SPECIFIC WORDING OR WERE OTHERWISE
BREACHED. IT IS ACCORDINGLY AGREED THAT THE PARTIES HERETO SHALL BE ENTITLED TO
AN INJUNCTION OR INJUNCTIONS TO PREVENT BREACHES OF THIS AGREEMENT AND TO
ENFORCE SPECIFICALLY THE TERMS AND PROVISIONS HEREOF IN ANY COURT OF THE UNITED
STATES OR ANY STATE HAVING JURISDICTION, SUCH REMEDY BEING IN ADDITION TO ANY
OTHER REMEDY TO WHICH ANY PARTY IS ENTITLED AT LAW OR IN EQUITY.
IN WITNESS WHEREOF, Parent, Sub, Kaphan and Xxxxxxx have caused this
Agreement to be signed by their respective officers thereunto duly authorized
all as of the date first written above.
ACT TELECONFERENCING, INC.
By: __________________________
Name:
Title:
ACT PROXIMITY, INC.
By: ___________________________
Name:
Title:
XXXXXX X. XXXXXX
___________________________
Xxxxxx X. Xxxxxx
XXXXXXX XXXXXXX
55
___________________________
Xxxxxxx Xxxxxxx
NORTH ATLANTIC VENTURE FUND II, L.P.
By: North Atlantic Investors, L.P.
its General Partner
By:________________________________
Name: Xxxx X. Xxxxxxxxxxx
Title: General Partner
56
EXHIBIT C
Form of Escrow Agreement (with respect to Escrow Consideration)
57
EXHIBIT D
Form of Opinion of Faegre & Xxxxxx
58
EXHIBIT E
Form of Registration Rights Agreement
59
EXHIBIT F
Form of Employment Agreement
60
EXHIBIT G
Form of Opinion of Downs Xxxxxxx Xxxxxx PLLC
61
