EXHIBIT 2.7
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MERGER AGREEMENT
BY AND AMONG
CENTERPOINT ADVISORS, INC.,
XXX MERGERSUB INC.
SELF FUNDED BENEFITS, INC., D/B/A/
INSURANCE DESIGN ADMINISTRATORS
AND
XXXXXX X. XXXXX AND XXXXXXX X. XXXXXXX,
ALL OF THE STOCKHOLDERS OF
SELF FUNDED BENEFITS, INC., D/B/A/
INSURANCE DESIGN ADMINISTRATORS
MARCH 31, 1999
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TABLE OF CONTENTS
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ARTICLE I
PURCHASE AND SALE OF STOCK........................................................ 2
1.1 Merger.................................................................... 2
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1.2 Effects of the Merger..................................................... 2
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1.3 Directors and Officers of the Surviving Corporation....................... 2
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ARTICLE II
CONSIDERATION AND MANNER OF PAYMENT............................................... 3
2.1 Merger Consideration...................................................... 3
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2.1.1 Basic Purchase Consideration....................................... 3
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2.1.2 Cancellation of Company Stock...................................... 3
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2.1.3 Dissenting Shares.................................................. 3
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2.1.4 Conversion of Mergersub Stock...................................... 3
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2.1.5 Exchange of Certificates for Consideration......................... 4
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2.2 Post-Closing Adjustments to Basic Purchase Consideration.................. 4
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2.2.1 Adjustments for Net Working Capital Shortfall/Excess............... 4
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2.2.2 Preliminary Balance Sheet and Adjustment........................... 4
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2.2.3 Final Adjustment................................................... 4
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2.2.4 Disputes........................................................... 4
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2.2.5 Payment of Adjustments............................................. 5
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2.3 Contingent Payment Procedures............................................. 5
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2.3.1 Contingent Payment................................................. 5
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2.3.2 Financial Statements and Contingent Payment Report................. 5
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2.3.3 Dispute Notice..................................................... 6
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2.3.4 Dispute Resolution................................................. 6
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2.3.5 Definitions........................................................ 6
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2.4 Post-Closing Management of AR............................................. 7
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2.5 Assignment of Uncollected AR.............................................. 7
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2.6 Definitions............................................................... 7
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ARTICLE III
THE CLOSING....................................................................... 8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................................... 8
(i)
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4.1 Organization and Qualification............................................ 8
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4.2 Company Subsidiaries...................................................... 9
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4.3 Authority; Non-Contravention; Approvals................................... 9
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4.4 Capitalization............................................................ 11
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4.5 Year 2000................................................................. 12
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4.6 Financial Statements...................................................... 12
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4.7 Absence of Undisclosed Liabilities........................................ 13
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4.8 Accounts and Notes Receivable............................................. 13
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4.9 Absence of Certain Changes or Events...................................... 13
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4.10 Litigation................................................................ 16
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4.11 Compliance with Applicable Laws........................................... 17
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4.12 Licenses.................................................................. 17
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4.13 Material Contracts........................................................ 17
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4.14 Properties................................................................ 20
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4.15 Intellectual Property..................................................... 22
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4.16 Taxes..................................................................... 22
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4.17 Employee Benefit Plans; ERISA............................................. 23
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4.18 Labor Matters............................................................. 25
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4.19 Environmental Matters..................................................... 26
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4.20 Insurance................................................................. 26
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4.21 Interest in Customers and Suppliers; Affiliate Transactions............... 27
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4.22 Business Relationships.................................................... 27
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4.23 Compensation.............................................................. 27
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4.24 Bank Accounts............................................................. 28
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4.25 Disclosure; No Misrepresentation.......................................... 28
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDERS............................................................... 28
5.1 Several Representations and Warranties.................................... 28
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5.1.1 Capitalization................................................ 28
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5.1.2 Authority..................................................... 29
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5.1.3 Non-Contravention............................................. 29
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5.1.4 Approvals..................................................... 29
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5.1.5 Litigation.................................................... 29
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5.1.6 No Transfer................................................... 30
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5.1.7 Disclosure.................................................... 30
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5.1.8 Representations and Warranties of the Company................. 30
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5.2 Joint and Several Representations and Warranties.......................... 30
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(ii)
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF CENTERPOINT..................................... 30
6.1 Organization And Qualification............................................ 31
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6.2 Capitalization............................................................ 31
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6.3 No Subsidiaries........................................................... 32
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6.4 Authority; Non-Contravention; Approvals................................... 32
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6.5 Absence of Undisclosed Liabilities........................................ 33
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6.6 Litigation................................................................ 33
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6.7 Compliance with Applicable Laws........................................... 33
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6.8 No Misrepresentation...................................................... 34
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ARTICLE VII
CERTAIN COVENANTS AND OTHER TERMS................................................. 34
7.1 Conduct of Business by the Company Prior to the Effective Time............ 34
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7.2 No-Shop................................................................... 36
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7.3 Schedules................................................................. 37
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7.4 Company Stockholder Meeting............................................... 38
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ARTICLE VIII
ADDITIONAL AGREEMENTS............................................................. 38
8.1 Access to Information..................................................... 38
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8.2 Registration Statements................................................... 39
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8.3 Expenses and Fees......................................................... 40
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8.4 Agreement to Cooperate.................................................... 40
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8.5 Public Statements......................................................... 41
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8.6 Registration Rights....................................................... 41
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8.7 CenterPoint Covenants..................................................... 43
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8.8 Release of Guarantees..................................................... 43
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8.9 Lock-Up Agreement......................................................... 43
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8.10 Preparation and Filing of Tax Returns..................................... 44
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8.11 Maintenance of Insurance.................................................. 44
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8.12 Administration............................................................ 44
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ARTICLE IX
INDEMNIFICATION................................................................... 44
9.1 Indemnification by the Stockholders....................................... 44
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9.2 Indemnification by CenterPoint............................................ 46
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(iii)
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9.3 Indemnification Procedure for Third Party Claims.......................... 47
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9.4 Direct Claims............................................................. 49
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9.5 Failure to Give Timely Notice............................................. 49
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9.6 Reduction of Loss......................................................... 49
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9.7 Limitation on Indemnities................................................. 50
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9.7.1 Threshold for the Stockholders..................................... 50
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9.7.2 Threshold for CenterPoint.......................................... 50
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9.7.3 Limitations on Claims Against the Stockholders..................... 50
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9.7.4 Limitation on Claims Against CenterPoint........................... 51
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9.8 Survival of Representations, Warranties and Covenants of
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the Stockholders and the Company; Time Limits on
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Indemnification Obligations............................................... 51
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9.9 Survival of Representations, Warranties and Covenants of
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CenterPoint; Time Limits on Indemnification Obligations................... 51
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9.10 Defense of Claims; Control of Proceedings................................. 51
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9.11 Fraud; Exclusive Remedy................................................... 52
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9.12 Manner of Satisfying Indemnification Obligations.......................... 52
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9.13 Stockholder Representative................................................ 52
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ARTICLE X
CLOSING CONDITIONS................................................................ 52
10.1 Conditions to Each Party's Obligation to Effect the Merger................ 52
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10.2 Conditions to Obligation of the Stockholders and the Company
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to Effect the Merger...................................................... 53
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10.3 Conditions to Obligation of CenterPoint to Effect the Merger.............. 55
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ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER................................................. 57
11.1 Termination............................................................... 57
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11.2 Effect of Termination..................................................... 58
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11.3 Amendment................................................................. 58
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11.4 Waiver.................................................................... 58
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ARTICLE XII
TRANSFER RESTRICTIONS............................................................. 58
12.1 Transfer Restrictions Generally........................................... 58
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12.2 Release of Restrictions................................................... 59
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12.3 Legend.................................................................... 59
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(iv)
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ARTICLE XIII
NONCOMPETITION.................................................................... 60
13.1 Prohibited Activities..................................................... 60
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13.2 Damages................................................................... 61
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13.3 Reasonable Restraint...................................................... 61
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13.4 Severability; Reformation................................................. 61
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13.5 Independent Covenant...................................................... 61
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13.6 Materiality............................................................... 62
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ARTICLE XIV
NONDISCLOSURE OF CONFIDENTIAL INFORMATION......................................... 62
14.1 Stockholders' Covenant.................................................... 62
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14.2 Damages................................................................... 63
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14.3 Survival.................................................................. 63
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ARTICLE XV
GENERAL PROVISIONS................................................................ 63
15.1 Brokers................................................................... 63
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15.2 Notices................................................................... 63
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15.3 Interpretation............................................................ 64
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15.4 Certain Definitions....................................................... 65
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15.5 Entire Agreement; Assignment.............................................. 65
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15.6 Applicable Law............................................................ 65
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15.7 Counterparts.............................................................. 65
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15.8 Parties in Interest....................................................... 65
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(v)
LIST OF SCHEDULES
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Schedule 2.1 Consideration
Schedule 2.1(a) Apportionment
Schedule 2.5 Net Working Capital Adjustment Items
Schedule 4.2 Company Subsidiaries
Schedule 4.3.2 Required Consents
Schedule 4.4 Capitalization
Schedule 4.7 Liabilities
Schedule 4.9 Certain Changes and Events
Schedule 4.10 Litigation
Schedule 4.11 Noncompliance with Applicable Laws
Schedule 4.12 Licenses and Permits
Schedule 4.13 Material Contracts
Schedule 4.14.1-1 Real Property
Schedule 4.14.1-2(a) Exceptions Regarding Owned Property
Schedule 4.14.1-2(b) Exceptions Regarding Leased Property
Schedule 4.14.2 Tangible Personal Property; Liens
Schedule 4.15 Intellectual Property
Schedule 4.16.1-1 Taxes
Schedule 4.16.1-2 Tax Audits
Schedule 4.17.1 Employee Plans
Schedule 4.17.2 Unwritten Employee Plans
(vi)
Schedule 4.18 Labor Matters
Schedule 4.19 Environmental Matters
Schedule 4.20 Insurance
Schedule 4.21 Affiliate Transactions
Schedule 4.22 Business Relationships
Schedule 4.23 Compensation
Schedule 4.24 Bank Accounts
Schedule 6.2 CenterPoint's Capitalization
Schedule 6.5 Liabilities
Schedule 7.1.3(i) Terminated Agreements
Schedule 7.1.3(ii) Excluded Assets
Schedule 8.8 Stockholders' Guarantees
Schedule 15.1 Brokers
Schedule 15.2.3 Stockholders and Their Counsel
(vii)
LIST OF EXHIBITS
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Exhibit A List of Stockholders of the Company
Exhibit 10.2(c) Form of Opinion of CenterPoint's Counsel
Exhibit 10.2(d) Form of Employment Agreement
Exhibit 10.2(f) Form of Stockholders Agreement
Exhibit 10.3(c) Form of Opinion of Counsel to Company and Stockholders
Exhibit 10.3(i) Form of Stockholders' Release
Exhibit 10.3(l) Form of Voting Agreement
CenterPoint agrees to furnish supplementally to the Securities Exchange
Commission, upon request, a copy of any omitted exhibit or schedule to this
Agreement.
(viii)
DEFINED TERMS
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Actions...................................................... Section 4.10.1
Acquisition Transaction...................................... Section 13.1
Affiliate.................................................... Section 15.4
Affiliate Transactions....................................... Section 4.21
Agreement.................................................... Introduction
Aggregate Basic Cash Consideration........................... Section 2.1
Aggregate Basic Purchase Consideration....................... Section 2.1
AR........................................................... Section 2.5(a)
Arbitrator................................................... Section 2.2.5
Arbitrator Report............................................ Section 2.3.4
Business..................................................... Introduction
CenterPoint.................................................. Introduction
CenterPoint Common Stock..................................... Section 2.1
CenterPoint Indemnified Party(ies)........................... Section 9.1
CenterPoint Material Adverse Effect.......................... Section 6.4.3
CenterPoint Representatives.................................. Section 8.1.1
CenterPoint Required Statutory Approvals..................... Section 6.4.3
CenterPoint Accountants...................................... Section 2.2.2
Closing...................................................... Article III
Closing Balance Sheet........................................ Section 2.2.2
Closing Date................................................. Article III
(ix)
Code......................................................... Introduction
Company...................................................... Introduction
Company Material Adverse Effect.............................. Section 4.3.3
Company Representatives...................................... Section 8.1.1
Company Stock................................................ Section 2.1
Company Subsidiaries......................................... Section 4.2
Consummation Date............................................ Article III
Contingent Payment........................................... Section 2.3.1
Contingent Payment Report.................................... Section 2.3.2
Contracts.................................................... Section 4.13
Consummation Date............................................ Article III
Copyrights................................................... Section 4.15
Defense Notice............................................... Section 9.3.1
DGCL......................................................... Section 1.1
Direct Claim................................................. Section 9.4
Dispute Notice............................................... Section 2.3.3
Disputed Item................................................ Section 2.2.5
Dissenting Shares............................................ Section 2.1.3
Effective Time............................................... Section 1.1
Employee Plan................................................ Section 4.17.5(a)
Environmental and Safety Requirements........................ Section 4.19
ERISA........................................................ Section 4.17.5(b)
(x)
Excluded Assets.............................................. Section 7.1.4
Excluded Liabilities......................................... Section 7.1.4
Final Adjustment............................................. Section 2.2.4
Financial Statements......................................... Section 4.6
First Person................................................. Section 4.17.5(c)
Form S-1..................................................... Section 4.3.3
Form S-4..................................................... Section 4.3.3
Founding Companies........................................... Introduction
GAAP......................................................... Section 4.6.1
general increase............................................. Section 4.23
Governmental Authority....................................... Section 4.3.2
Hazardous Materials.......................................... Section 4.19
HSR Act...................................................... Section 4.3.3
Indemnified Party............................................ Section 9.3.1
Indemnifying Party........................................... Section 9.3.1
Intellectual Property........................................ Section 4.15
Intellectual Property Licenses............................... Section 4.15
Interim Adjustment........................................... Section 2.2.3
IPO.......................................................... Introduction
Knowledge.................................................... Section 15.4
Latest Balance Sheet......................................... Section 4.6
Laws......................................................... Section 4.11
(xi)
Leased Property.............................................. Section 4.14.1
Licenses..................................................... Section 4.12
Liens........................................................ Section 4.3.2
Liquidated Damages Amount.................................... Section 7.3
Losses....................................................... Section 9.1
Market Price................................................. Section 9.12
Marks........................................................ Section 4.15
Material Contracts........................................... Section 4.13
Merger....................................................... Introduction
Merger Documents............................................. Section 1.1
Mergersub.................................................... Introduction
Mergersub Stock.............................................. Section 6.2.1
Net Working Capital.......................................... Section 2.5(b)
1933 Act..................................................... Section 4.3.3
1934 Act..................................................... Section 8.7
Organizational Documents..................................... Section 4.1
Other Agreements............................................. Introduction
Other Mergers................................................ Introduction
Other Founding Companies..................................... Section 9.1
Owned Property............................................... Section 4.14.1
Patents...................................................... Section 4.15
Person....................................................... Section 15.4
(xii)
Plan Affiliate............................................... Section 4.17.5(c)
Preliminary Report........................................... Section 2.2.2
Real Property................................................ Section 4.14.1
Registration Statements...................................... Section 4.3.3
Restricted Shares............................................ Section 12.3
Resolution Period............................................ Section 2.2.5
Returns...................................................... Section 4.16.1
Review Period................................................ Section 2.3.3
Schedules.................................................... Section 7.3
SEC.......................................................... Section 4.3.3
Securities Act............................................... Section 4.3.3
Stockholder Indemnified Party................................ Section 9.2
Stockholder Representative................................... Section 9.13
Stockholders................................................. Introduction
Stockholders Agreement....................................... Section 10.2(f)
Stockholder's Percentage Interest............................ Section 2.2
Surviving Corporation........................................ Section 1.2
Target....................................................... Section 2.6(d)
Tax Accrual.................................................. Section 2.6(e)
Taxes........................................................ Section 4.16.2
Territory.................................................... Section 13.1(a)
Third Party Claim............................................ Section 9.3.1
(xiii)
Trade Secrets................................................ Section 4.15
Underwriters................................................. Section 8.1.1
Voting Agreement............................................. Introduction
(xiv)
MERGER AGREEMENT
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THIS MERGER AGREEMENT (this "AGREEMENT") is made as of March 31, 1999, by
and among CenterPoint Advisors, Inc., a Delaware corporation ("CENTERPOINT"),
XXX Mergersub, Inc., a Delaware corporation and wholly-owned subsidiary of
CenterPoint ("MERGERSUB"), Self Funded Benefits, Inc., d/b/a/ Insurance Design
Administrators, a New Jersey corporation (the "COMPANY"), and the stockholders
of the Company identified on Exhibit A to this Agreement (each a "STOCKHOLDER"
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and, collectively, the "STOCKHOLDERS").
WITNESSETH:
WHEREAS, the Company engages directly, and indirectly through the Company
Subsidiaries, if any, in the business of providing third party administration
and management of health care benefit services to companies and governments
(such business provided by the Company is referred to as the "BUSINESS");
WHEREAS, the Boards of Directors of the Company, CenterPoint and Mergersub
deem it advisable and in the best interests of their respective shareholders to
approve and consummate the business combination transaction provided for herein
in which Mergersub would merge with the Company, with the Company being the
surviving corporation in the merger (the "MERGER");
WHEREAS, certain Stockholders have entered into a Voting Agreement dated
the date hereof (the "VOTING AGREEMENT") pursuant to which among other things
such Stockholders have agreed to vote the shares of capital stock of the Company
that such Stockholders own or control, directly or indirectly, to approve the
Merger and the transactions contemplated by this Agreement.
WHEREAS, CenterPoint is entering into other agreements (the "OTHER
AGREEMENTS") substantially similar to this Agreement with each of Xxxxxxx Xxxxxx
& Xxxxxxxxx, P.C., Xxxxxx X. Driver Company, Inc., Xxxx Frankfort Xxxxx & Xxxx,
P.C., The Xxxxxxx Company, Inc., Xxxxxxx Administrators, LLC, Verasource Excess
Risk Ltd., Berry, Dunn, XxXxxx & Xxxxxx, Chartered, Xxxxxx Xxxx & Xxxxxx PC,
Xxxxx & Company, P.C., Simione, Scillia, Xxxxxx & Xxxxxxx LLC, Xxxxxxx Rudzewicz
& Co., P.C., and Xxxxxxxxx, Xxxxxx & Van Trigt (which companies together with
the Company are collectively referred to herein as the "FOUNDING COMPANIES"),
which agreements provide for the merger of a wholly-owned subsidiary of
CenterPoint with each such Founding Company (the "OTHER MERGERS") simultaneously
with the Merger, which Other Agreements together with all schedules and exhibits
shall be made available to the Company prior to the execution of this Agreement;
WHEREAS, simultaneously with the consummation of the Merger, CenterPoint
will close an initial public offering (the "IPO") of CenterPoint Common Stock
(as defined in Section 2.1(a)); and
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WHEREAS, the parties intend the acquisition of CenterPoint Common Stock
pursuant to the terms hereof be tax-free under the provisions of Section 351 of
the Internal Revenue Code of 1986, as amended (the "CODE").
NOW, THEREFORE, for and in consideration of the premises and of the mutual
representations, warranties, covenants and agreements contained in this
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
PURCHASE AND SALE OF STOCK
1.1 Merger. Upon the terms and subject to the conditions set forth in
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this Agreement and in reliance upon the representations and warranties set forth
herein, Mergersub shall be merged with and into the Company, the result of which
will cause the separate corporate existence of Mergersub to cease and the
Company to continue under the laws of the State of New Jersey. As promptly as
possible on the Closing Date, the parties shall cause the Merger to be completed
by filing articles of merger and a certificate of merger, as applicable (the
"MERGER DOCUMENTS"), with the Secretary of State of the State of New Jersey as
required by the corporate law of New Jersey, and with the Secretary of State of
the State of Delaware, as provided in the General Corporation Law of the State
of Delaware, as amended (the "DGCL"). The Merger shall become effective (the
"EFFECTIVE TIME") upon the filing of the Merger Documents with the Secretary
of State of the State of New Jersey and the Secretary of State of Delaware or at
such later time, contemporaneously with the closing of the IPO as agreed by
CenterPoint and the Company and specified in the Merger Documents.
1.2 Effects of the Merger. At the Effective Time (i) the separate
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existence of Mergersub shall cease and Mergersub shall be merged with and into
the Company, with the Company being the surviving corporation in the Merger (the
Company is sometimes referred to herein as the "SURVIVING CORPORATION"), (ii)
the Certificates of Incorporation and By-Laws of the Surviving Corporation shall
be amended in form and substance acceptable to CenterPoint and as specified in
the Merger Documents, (iii) the Merger shall have all the effects provided by
applicable law, and (iv) the Company shall be a wholly-owned subsidiary of
CenterPoint.
1.3 Directors and Officers of the Surviving Corporation. From and after
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the Effective Time, the directors and officers of the Company shall be the
directors and officers of the Surviving Corporation until their successors are
duly elected and qualified.
2
ARTICLE II
CONSIDERATION AND MANNER OF PAYMENT
2.1 Merger Consideration.
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2.1.1 Basic Purchase Consideration. At the Closing, by virtue of the
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Merger and without any action on the part of the holders thereof, the
outstanding shares of capital stock, consisting of 149 shares, no par
value, Class A Voting common stock and 14,660 shares, no par value, Class B
Non-Voting common stock of the Company (collectively, the "COMPANY STOCK")
shall be converted into the right to receive (a) that number of shares of
common stock, par value $.01 per share, of CenterPoint ("CENTERPOINT COMMON
STOCK") determined in accordance with the formula set forth in Schedule
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2.1 and (b) the amount of cash set forth Schedule 2.1 (the aggregate amount
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of such cash to be paid in respect of all of the Company Stock is herein
referred to as the "AGGREGATE BASIC CASH CONSIDERATION"). The sum of (a)
the Aggregate Basic Cash Consideration and (b) the value (determined as set
forth on Schedule 2.1 of all shares of CenterPoint Common Stock to be
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issued to the Stockholders is herein referred to as "AGGREGATE BASIC
PURCHASE CONSIDERATION." The Aggregate Purchase Price shall be apportioned
among the Stockholders as set forth on Schedule 2.1(a).
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2.1.2 Cancellation of Company Stock. Each share of capital stock of
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the Company held in treasury of the Company shall be canceled and retired
and no payment shall be made in respect thereof.
2.1.3 Dissenting Shares. Each outstanding shares of capital stock of
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the Company the holder of which has perfected his right to dissent under
applicable law and has not effectively withdrawn or lost such right as of
the Effective Time (the "DISSENTING SHARES") shall not be converted into
the right to receive Basic Purchase Consideration, and the holder thereof
shall be entitled only to such rights as are granted by applicable law.
The Company shall give CenterPoint prompt notice upon receipt by the
Company of any such written demands for payment of fair value of shares of
capital stock of the Company and any other instruments provided pursuant to
applicable law. Any payments made in respect of Dissenting Shares shall be
made by the Surviving Corporation.
2.1.4 Conversion of Mergersub Stock. At the Effective Time, each
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share of Mergersub Stock issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into and become one validly
issued, fully paid and non-assessable share of the Surviving Corporation.
Such newly issued shares shall thereafter constitute all of the issued and
outstanding capital stock of the Surviving Corporation.
3
2.1.5 Exchange of Certificates for Consideration. At the Closing,
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the Stockholders shall deliver to CenterPoint the original certificates
representing the Company Stock, duly endorsed in blank by the Stockholders
or accompanied by blank stock powers, in exchange for (a) issuance and
delivery by CenterPoint to the Stockholders of certificates representing
the number of shares of CenterPoint Common Stock determined in accordance
with Section 2.1, which shares shall be registered pursuant to a
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registration statement on Form S-4 (as defined in Section 4.3.3), and (b)
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payment by CenterPoint of the Aggregate Basic Cash Consideration by
certified check, cashier's check or wire transfer of immediately available
funds to a bank account or bank accounts in the amounts and manner
specified by the Stockholder Representative in a writing delivered to
CenterPoint at least three (3) business days prior to the Closing Date.
The shares represented by the Company stock certificates so delivered shall
be canceled.
2.2 Post-Closing Adjustments to Basic Purchase Consideration.
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2.2.1 Adjustments for Net Working Capital Shortfall/Excess. The
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Aggregate Basic Purchase Consideration shall be (a) reduced dollar-for-
dollar to the extent Net Working Capital on the Closing Date is less than
the Target or (b) increased dollar-for-dollar to the extent Net Working
Capital on the Closing Date is greater than the Target.
2.2.2 Preliminary Balance Sheet and Adjustment. At or about the
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Closing, the Company will prepare, and the firm of PricewaterhouseCoopers
LLP (the "CENTERPOINT ACCOUNTANTS") will prepare a balance sheet of the
Company, as of the Closing Date, in accordance with GAAP and consistent
with the accounting policies and practices used in connection with the
preparation of the Financial Statements (the "CLOSING BALANCE SHEET")
along with a preliminary calculation of any excess or shortfall of Net
Working Capital as compared to the Target (the "PRELIMINARY REPORT").
2.2.3 Final Adjustment. As soon as practicable, but in no event
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later than 180 days after the Closing, the Company will prepare and deliver
to CenterPoint a final calculation of Net Working Capital revised to
reflect all collections of AR up to the date 150 days from the Closing
Date. Within ten (10) days of receipt of such calculation, CenterPoint will
deliver to the Stockholder Representative a written report indicating the
amount and nature of any adjustment to the Basic Purchase Consideration
determined in accordance with Section 2.2.1 (the "FINAL ADJUSTMENT").
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2.2.4 Disputes. If the Stockholder Representative does not object
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(or otherwise respond) in writing to the Final Adjustment report within
thirty (30) days after its delivery, the Final Adjustment shall
automatically become final, binding and conclusive on all parties hereto.
The Stockholder Representative shall be provided with full access to the
Company's workpapers and reasonable access to the Company's accounting
personnel in connection with such review. Any objection to the Final
Adjustment report shall be in writing and shall specify the item or items
in dispute (each a "DISPUTED ITEM").
4
If the Stockholder Representative and CenterPoint are unable to
resolve any Disputed Item within thirty (30) days after notice from the
Stockholder Representative that a dispute exists (the "RESOLUTION PERIOD"),
then a representative from the office of a nationally recognized accounting
firm selected by CenterPoint and the Stockholder Representative (the
"ARBITRATOR") will arbitrate the dispute. The Stockholder Representative
and CenterPoint shall, within twenty (20) days after expiration of the
Resolution Period, present their respective positions with respect to any
Disputed Item to the Arbitrator together with such materials as the
Arbitrator reasonably deems appropriate. To the extent any Disputed Item is
similar to a disputed item under the Other Agreements, the Arbitrator shall
arbitrate the Disputed Item based on the submitted materials and without
regard to the disputed item under the Other Agreements. The Arbitrator
shall, after the submission of the materials, submit a written decision on
each Disputed Item to the Stockholder Representative and CenterPoint and
such determination shall be final and binding on the parties hereto. The
arbitration shall be conducted in Chicago, Illinois. The parties hereto
agree that the cost of the Arbitrator shall be borne by the non-prevailing
party or as determined by the Arbitrator.
2.2.5 Payment of Adjustments. In the event Net Working Capital is
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less than the Target, the Stockholders shall pay the amount of the
shortfall to CenterPoint. In the event Net Working Capital is greater than
the Target, CenterPoint shall pay the amount of the excess to the
Stockholders. Any payment required to be made pursuant to this paragraph
shall be made, within ten (10) days of delivery of the report including,
without limitation, the Preliminary Report, indicating any adjustment, by
wire transfer of immediately available funds to an account designated in
writing by the party that is to receive payment of such adjustment;
provided, however, if the Stockholder Representative objects to the
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Preliminary Report, no payments with respect to such objections shall be
made until the Final Adjustment has been provided and agreed upon as
provided herein. Payments with respect to the agreed upon portion of the
Preliminary Report shall be made within such 10 day period. In respect of
the Final Adjustment, the party making a payment required by such
adjustment shall make such payment within ten days after the Final
Adjustment becomes final.
2.3 Contingent Payment Procedures.
-----------------------------
2.3.1 Contingent Payment. CenterPoint agrees to pay to the
------------------
Stockholders in the aggregate (each, a "CONTINGENT PAYMENT") as additional
cash consideration for the exchange of the Company Stock an amount equal to
the lesser of (i) 6.75 times Adjusted EBITDA or (ii) $3,415,500. If
Adjusted EBITDA is a negative number, then CenterPoint shall not be
required to make any Contingent Payment and the Stockholders shall have no
obligation to refund to CenterPoint the amount of such negative calculation
expressed as a positive number. The Contingent Payment, if any, shall be
paid to each Stockholder in proportion to their interests as set forth on
SCHEDULE 2.1(A) no later than five business days after the earliest to
occur of: (1) the determination of the final Contingent Payment Report;
5
or (2) the delivery of the Arbitrator Report. Such payment may be made by
check or wire transfer of immediately available funds to accounts
designated in writing by the party that is to receive such payment.
2.3.2 Financial Statements and Contingent Payment Report. As
--------------------------------------------------
promptly as practicable, but no later than March 31, 2001, the Company
shall prepare and deliver to the Stockholder Representative (as defined in
Section 9.13), as representative for the former holders of the Company
------------
Stock, and CenterPoint (i) a copy of the Company's income statement for the
twelve month period ending December 31, 2000, and (ii) a report calculating
Adjusted EBITDA and the amount of any Contingent Payment (the "CONTINGENT
PAYMENT REPORT").
2.3.3 Dispute Notice. The Stockholder Representative shall have 30
--------------
days from the date on which the Contingent Payment Report is delivered to
it to review such documents (the "REVIEW PERIOD"). The Stockholder
Representative shall be provided with full access to the Company's work
papers and reasonable access to the Company's accounting personnel in
connection with such review. If the Stockholder Representative shall have
any objections to the Contingent Payment Report, on or prior to the last
day of the Review Period, it will deliver a written notice to CenterPoint
describing in reasonable detail its objections and the basis for such
objections (the "DISPUTE NOTICE"). The Stockholders' Representative may
deliver to CenterPoint at any time a written notice accepting the
Contingent Payment Report without objection.
2.3.4 Dispute Resolution. The Stockholder Representative and
------------------
CenterPoint shall attempt to resolve any objections contained in the
Dispute Notice and upon such resolution will cause the Contingent Payment
Report to be revised to reflect such resolution. Such revised Contingent
Payment Report (or the Contingent Payment Report prepared by CenterPoint,
if the Stockholders' Representative does not object thereto) shall
constitute the final Contingent Payment Report and shall be final and
binding upon CenterPoint, the Company and the Stockholders. If the
Stockholders' Representative and CenterPoint are unable to resolve any
objection raised in the Dispute Notice within 30 days after CenterPoint has
received the Dispute Notice, then a representative from the office of a
nationally recognized accounting firm selected jointly by the Stockholders'
Representative and CenterPoint will arbitrate the dispute in Chicago,
Illinois. The Stockholder Representative and CenterPoint will present their
respective positions with respect to any unresolved objection identified in
the Dispute Notice to the Arbitrator together with such materials as the
Arbitrator deems appropriate. The Arbitrator shall, after the submission of
the materials, submit a written decision on each unresolved objection to
the Stockholder Representative and CenterPoint and such determination shall
be final and binding on the parties hereto (the "ARBITRATOR REPORT"). The
parties agree that the cost of the Arbitrator shall be borne by the non-
prevailing party or as determined by the Arbitrator.
6
2.3.5 Definitions. For purposes of this Section, the following
-----------
terms shall have the following meanings:
(a) "ADJUSTED EBITDA" means EBITDA less any EBITDA
----
attributable to any entity or portion of such entity acquired by or
merged with or into the Company after the Closing less $3,290,000.
----
(b) "DEBT" means (a) all indebtedness for borrowed money,
whether or not evidenced by an instrument, (b) notes payable and
drafts accepted representing extensions of credit whether or not
representing obligations for borrowed money, (c) any obligation owed
for all or part of the deferred purchase price of property or services
(excluding accounts payable arising in the ordinary course of
business) and (d) any guaranty of a Person with respect to liabilities
of a type described in immediately preceding clauses (a) through (c).
(c) "EBITDA" means for the twelve month period ending December
31, 2000 the sum of: (a) the net income (or loss) of the Company
excluding extraordinary items, (b) provisions for taxes based on
income, (c) total interest expense of the Company with respect to
Debt, (d) to the extent net income for the Company has been reduced
thereby, depreciation expense, and (e) to the extent net income for
the Company has been reduced thereby, amortization expense less non-
----
cash items increasing net income, all as determined in accordance with
GAAP.
(d) "GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the American Institute of
Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board (or any successor authority),
consistently applied.
2.4 Post-Closing Management of AR. Following the Closing, the billing,
-----------------------------
servicing, administering and collection of the AR shall be conducted by the
Company. The Company shall take all such actions as may be necessary or
advisable to collect the AR in accordance with applicable laws, rules and
regulations, with reasonable care and diligence, and in accordance with the
Company's credit and collection policy in effect at Closing. The Company may
modify, adjust or write off AR from time to time in accordance with the
Company's credit and collection policy in effect at Closing.
Unless otherwise required by contract or law, payments by an obligor in
respect of services rendered or expenses advanced by the Company shall be
applied as follows: in the event any such payment specifically references the
invoice being paid or clearly relates to an outstanding invoice, the payment
will be applied to the corresponding invoice, and, in any other case, the
payment will be applied to satisfy AR relating to such obligor in the order that
such AR arose. Any adjustment, modification or write-off affecting AR and fees
and expenses receivable and
7
unbilled fees and expenses of the Company incurred after Closing with respect to
the same client shall be allocated ratably to the pre-Closing and post-Closing
periods.
2.5 Assignment of Uncollected AR. If any AR remain uncollected by the
----------------------------
Company as of one hundred fifty (150) days after the Closing Date, the Company
will assign the uncollected AR to the Stockholders. Notwithstanding the
preceding sentence, the Company and not the Stockholders will retain the sole
right to service, administer and collect the uncollected AR. Any such
collection of assigned AR shall be remitted to the Stockholders.
2.6 Definitions. For purposes of this Agreement, the following terms
-----------
shall have the following meanings:
(a) "AR" means any administration fees and commissions receivable
excluding prebilled unearned administration fees and prebilled unearned
commissions, of the Company on the Closing Date.
(b) "NET WORKING CAPITAL" means an amount determined as of the
Closing Date, whenever calculated, equal to difference between: (i) the sum
of any AR, prepaid expenses and other current assets less (ii) the sum of
----
accounts payable, accrued current liabilities, the Tax Accrual and the
portion of employer-paid FICA attributable to Medicare, payable in
connection with deferred compensation and the Special Bonus Plan. For
purposes of this Section 2.6(b), the Special Bonus Plan accrual shall not
--------------
constitute a current liability.
(c) "SPECIAL BONUS PLAN" means the Company's Special Bonus Plan
dated March 1, 1999.
(d) "TARGET" means an amount equal to $75,000.
(e) "TAX ACCRUAL" means an amount equal to the product of (i) Net
Working Capital (calculated before deduction of the Tax Accrual and only to
the extent it will result in taxable income to CenterPoint) less an amount
equal to any tax deductions realized by CenterPoint as a result of any
payments pursuant to the Special Bonus Plan and (ii) the sum of 34% plus
the effective state tax rate on the Company (net of federal tax benefit).
A negative Tax Accrual shall be treated as a current asset for purposes of
Section 2.6(b)(i).
-----------------
ARTICLE III
THE CLOSING
The consummation of the Merger and the other transactions contemplated by
this Agreement (the "CLOSING"") shall take place at the offices of Xxxxxx Xxxxxx
& Xxxxx, Chicago,
8
Illinois, contemporaneously with the closing of the IPO, or at such other time
and date as the parties hereto may mutually agree (the "CLOSING DATE").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to CenterPoint, as of the date
hereof and, subject to Section 7.3, as of the date on which CenterPoint and the
-----------
lead Underwriter (as defined in Section 8.1.1) execute and deliver the
-------------
Underwriting Agreement related to the IPO and as of the Closing Date, as
follows:
4.1 Organization and Qualification. The Company is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of the State of
New Jersey. Each Company Subsidiary (as defined in Section 4.2) is duly
-----------
organized, validly existing and in good standing under the laws of the state of
its organization set forth on Schedule 4.2. Each of the Company and the Company
------------
Subsidiaries has the requisite power and authority to own, lease and operate its
assets and properties and to carry on its business as it is now being conducted,
and is qualified to do business and is in good standing in each jurisdiction in
which the properties owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary. True, accurate and
complete copies of the Company's and each Company Subsidiary's Organizational
Documents, in each case as in effect on the date hereof, have heretofore been
delivered to CenterPoint. "ORGANIZATIONAL DOCUMENTS" means (a) the articles
or certificate of incorporation and the bylaws of a corporation (professional or
otherwise), (b) the partnership agreement and any statement of partnership of a
general partnership, (c) the limited partnership agreement and the certificate
of limited partnership of any limited partnership, (d) the operating or limited
liability company agreement and certificate of formation of any limited
liability company, (e) any charter or similar document adopted and filed in
connection with the creation, formation, organization or governance (as
applicable) of any Person and (f) any amendment to any of the foregoing.
4.2 Company Subsidiaries. Schedule 4.2 sets forth the name (including any
-------------------- ------------
assumed names), jurisdiction of organization and ownership of the issued and
outstanding equity interests of each Person in which the Company owns, directly
or indirectly, securities or other interests having the power to elect a
majority of such Person's board of directors or similar governing body, or
otherwise having the power to direct the business and policies of such Person
(each a "COMPANY SUBSIDIARY"). Except as set forth on Schedule 4.2, the
------------
Company does not, directly or indirectly, own, of record or beneficially, or
control any capital stock, securities convertible into capital stock or any
other equity interest in any Person.
9
4.3 Authority; Non-Contravention; Approvals.
---------------------------------------
4.3.1 The Company has full right, power and authority to enter into
this Agreement, subject to the approval of the Merger and the transactions
contemplated hereby by the Company's stockholders, to consummate the
transactions contemplated hereby. The execution, delivery and performance
of this Agreement by the Company has been duly authorized by all necessary
corporate action on the part of the Company. This Agreement has been duly
executed and delivered by the Company, and, assuming the due authorization,
execution and delivery hereof by CenterPoint, constitutes a valid and
legally binding agreement of the Company enforceable against the Company in
accordance with its terms, except that such enforcement may be subject to
(i) bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting or relating to enforcement of creditors' rights generally
and (ii) general equitable principles.
4.3.2 The execution and delivery of this Agreement by the Company
does not violate, conflict with or result in a breach of any provision of,
or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination of,
or accelerate the performance required by, or result in a right of
termination or acceleration under, or result in the creation of any claim,
lien, privilege, mortgage, charge, hypothecation, assessment, security
interest, pledge or other encumbrance, conditional sales contract, equity
charge, restriction, or adverse claim of interest of any kind or nature
whatsoever (each a "LIEN" and collectively, the "LIENS") upon any of the
properties or assets of the Company or any Company Subsidiary under, any of
the terms, conditions or provisions of (i) the Organizational Documents of
the Company or any Company Subsidiary, (ii) any statute, law, ordinance,
rule, regulation, judgment, decree, order, injunction, writ, permit or
license of any court or federal, state, provincial, local or foreign
government, or any subdivision, agency or authority of any thereof
("GOVERNMENTAL AUTHORITY") applicable to any Stockholder, the Company, any
Company Subsidiary, or the Business, properties or assets of the Company or
any Company Subsidiary, or (iii) any note, bond, mortgage, indenture, deed
of trust, license, franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind to which the Company, or
any Company Subsidiary is a party or by which the Company, any Company
Subsidiary or any of the properties or assets of the Company or any Company
Subsidiary may be bound or affected. The consummation by the Company of
the transactions contemplated hereby will not result in a violation,
conflict, breach, right of termination, creation or acceleration of Liens
under the of the terms, conditions or provisions of the items described in
clauses (i) through (iii) of the immediately preceding sentence, subject,
in the case of the terms, conditions or provisions of the items described
in clause (iii) above, to obtaining (prior to the Closing Date) such
consents required from third parties set forth on Schedule 4.3.2.
--------------
4.3.3 Except for (i) the filing in connection with the IPO of a
registration statement on Form S-1 (the "FORM S-1") and the filing of a
registration statement on Form
10
S-4 (the "FORM S-4") (Form S-1 and Form S-4 are collectively the
"REGISTRATION STATEMENTS") with the Securities and Exchange Commission (the
"SEC") pursuant to the Securities Act of 1933, as amended (the "SECURITIES
ACT" or the "1933 ACT"), the declaration of the effectiveness thereof by
the SEC and filings, if required, with various state securities or "blue
sky" authorities, (ii) any filing which may be required under the Xxxx-
Xxxxx-Xxxxxx Antitrust Improvement Act of 1976, as amended (the "HSR ACT"),
and (iii) the necessary filings with the New Jersey Department of Banking
and Insurance, no declaration, filing or registration with, or notice to,
or authorization, consent or approval of, any Governmental Authority is
necessary for the execution and delivery of this Agreement by the Company
or the consummation by the Company of the transactions contemplated hereby,
other than such declarations, filings, registrations, notices,
authorizations, consents or approvals which, if not made or obtained, as
the case may be, would not, individually or in the aggregate, have a
"COMPANY MATERIAL ADVERSE EFFECT," which, for purposes of this Agreement
means a material adverse effect on the operations, assets, condition
(financial or other), operating results, employee or client relations, or
prospects of the Company or any Company Subsidiary.
4.4 Capitalization.
--------------
4.4.1 The authorized capital stock of the Company consists of Fifteen
Thousand (15,000) shares of Company Stock, of which One Hundred Forty Nine
(149) shares of Class A Voting Common Stock and Fourteen Thousand Six
Hundred Sixty (14,660) shares of Class B Non-Voting Common Stock are issued
and outstanding. The authorized capital stock of each of the Company
Subsidiaries, if any, and the number of such shares issued and outstanding
is completely and accurately set forth in Schedule 4.4. All of such issued
------------
and outstanding shares are validly issued and are fully paid, nonassessable
and free of preemptive rights. The Stockholders are all of the
stockholders of the Company and own beneficially and of record all of the
issued and outstanding shares of the Company Stock as set forth in Schedule
--------
4.4, which shares constitute all of the outstanding shares of capital stock
---
of the Company. The Company owns all shares of the Company's Subsidiaries
as indicated on Schedule 4.4, in each case free and clear of all Liens, and
------------
the Company has good and marketable title to such shares of the Company
Subsidiaries. All of such issued and outstanding shares are validly issued
and are fully paid, nonassessable and free of preemptive rights.
4.4.2 Except as set forth on Schedule 4.4, there are no outstanding
------------
subscriptions, options, calls, contracts, commitments, undertakings,
restrictions, arrangements, rights or warrants, including any right of
conversion or exchange under any outstanding security, instrument or other
agreement to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of the capital stock of the Company or any Company
Subsidiary or obligating the Company or any Company Subsidiary to grant,
extend or enter into any such agreement or commitment or obligating the
Company or any Company Subsidiary to convey or transfer any Company Stock
or Company Subsidiary stock, as the case may
11
be. As of the Closing Date, there will be no voting trusts, proxies or
other agreements or understandings to which the Company or any Company
Subsidiary is a party or is bound with respect to the voting of any shares
of capital stock or other equity interests of the Company or any Company
Subsidiary.
4.5 Year 2000. To the Knowledge of the Company, all of the computer
---------
software, computer firmware, computer hardware (whether general or special
purpose), and other similar or related items of automated, computerized, and/or
software system(s) that are used or relied on by the Company or any Company
Subsidiary in the conduct of the Business will not malfunction, will not cease
to function, will not generate incorrect data, and will not produce incorrect
results when processing, providing, and/or receiving (i) date-related data into
and between the twentieth (20/th/) and twenty-first (21/st/) centuries and (ii)
date-related data in connection with any valid date in the twentieth (20/th/)
and twenty-first (21/st/) centuries, except for any malfunctions or generations
of incorrect data or results that would not individually or in the aggregate
have a Company Material Adverse Effect. Nothing in this Section 4.5 is intended
-----------
or shall be construed as a representation or warranty with respect to embedded
systems.
4.6 Financial Statements. The Company has previously furnished to
--------------------
CenterPoint copies of the audited consolidated balance sheet of the Company as
of December 31 in each of the years 1997 and 1998 (the "LATEST BALANCE SHEET"),
and the related unaudited consolidated statements of income, stockholders'
equity and cash flow for the one (1) year period ended December 31, 1996 and the
related audited consolidated statements of income, stockholders' equity and cash
flow for each of the years in the two (2) year period ended December 31, 1998,
including all notes thereto, including all notes thereto (collectively, the "1
FINANCIAL STATEMENTS"). Each of the Financial Statements is accurate and
complete in all material respects, is consistent with the books and records of
the Company and the Company Subsidiaries (which, in turn, are accurate and
complete in all material respects), and fairly presents in all material respects
the financial condition, assets and liabilities of the Company and the Company
Subsidiaries as of its date and the results of operations and cash flows for the
periods related thereto, in each case in accordance with generally accepted
accounting principles applied on a consistent basis ("GAAP").
4.7 Absence of Undisclosed Liabilities. Except as disclosed in Schedule
---------------------------------- --------
4.7, neither the Company nor any Company Subsidiary had, as of the date of the
---
Latest Balance Sheet, nor has it incurred since that date, any liabilities or
obligations of any nature (whether known or unknown, absolute, contingent,
accrued, direct, indirect, perfected, inchoate, unliquidated or otherwise),
except (i) to the extent clearly and accurately reflected or accrued or fully
reserved against in the Financial Statements or (ii) liabilities and obligations
which have arisen after the date of the Latest Balance Sheet in the ordinary
course of business and consistent with past custom and practices (none of which
is a liability resulting from a breach of contract, breach of warranty, tort,
infringement claim, legal violation or lawsuit). Such liabilities include, but
are not limited to, any claim or potential claim against the Company or any
Company Subsidiary by any employee benefit plan, client or government agency
(including, but not limited to, the IRS or Department of Labor) related to the
Company or any Company Subsidiary's alleged failure to
12
properly administer or advise any employee benefit plan or related to the sale
or brokerage of any products or services relating to any employee benefit plans
of current or former clients of the Company or any Company Subsidiary.
4.8 Accounts and Notes Receivable. All of the accounts receivable of the
-----------------------------
Company and each Company Subsidiary reflected in the Latest Balance Sheet or
arising from the date thereof until the Closing Date have arisen or will arise
in the ordinary course of business, are not and will not be subject to any
defense, counterclaim or setoff and have been collected or are and will be
collectible in the ordinary course of business using normal collection practices
and policies employed by the Company and each Company Subsidiary as of the date
of this Agreement, in each case subject to any allowance for doubtful accounts
determined in accordance with the Company's past custom and practices.
4.9 Absence of Certain Changes or Events. Except as set forth on Schedule
------------------------------------ --------
4.9, since the date of the Latest Balance Sheet, each of the Company and the
---
Company Subsidiaries has conducted its business only in the ordinary course
consistent with past custom and practices. Except as set forth on Schedule 4.9,
------------
since the date of the Latest Balance Sheet, there has not been any:
(a) material adverse change in the operations, condition (financial or
otherwise), operating results, assets, liabilities, employee, or client
relations or prospects of the Company or any Company Subsidiary;
(b) damage, destruction or loss of any property owned by the Company
or any Company Subsidiary, or used in the operation of the Business,
whether or not covered by insurance, having a replacement cost or fair
market value in excess of five percent (5%) of the amount of net property,
plant and equipment shown on the Latest Balance Sheet, in the aggregate;
(c) voluntary or involuntary sale, transfer, surrender, cancellation,
abandonment, waiver, release or other disposition of any kind by the
Company or any Company Subsidiary of any right, power, claim, debt, except
the collection of accounts in the ordinary course of business consistent
with past custom and practices;
(d) strike, picketing, boycott, work stoppage, union organizational
activity, allegation, charge or complaint of employment discrimination or
other labor dispute or similar occurrence that is reasonably expected to
adversely affect the Company, a Company Subsidiary or the Business;
(e) loan or advance by the Company or any Company Subsidiary to any
Person, other than as a result of services performed for, or expenses
properly and reasonably advanced for the benefit of, customers in the
ordinary course of business consistent with past custom and practices;
13
(f) notice received (formal or otherwise) of any liability, potential
liability or claimed liability relating to environmental matters;
(g) except for cash distributions which do not reduce the Company's
Net Working Capital below the Target, declaration, setting aside, or
payment of any dividend or other distribution in respect of the Company's
capital stock or other equity interests or any direct or indirect
redemption, purchase, or other acquisition of the Company's or any Company
Subsidiary's capital stock or other equity interests, or the payment of
principal or interest on any note, bond, debt instrument or debt to any
Affiliate (as defined in Section 15.4) of the Company or any Company
------------
Subsidiary, except bonuses and year-end distributions to employees and
Stockholders disclosed to CenterPoint in writing that are consistent with
the Company's past custom and practices or as otherwise contemplated by
this Agreement;
(h) incurrence by the Company or any Company Subsidiary of debts,
liabilities or obligations except current liabilities incurred in
connection with or for services rendered or goods supplied in the ordinary
course of business consistent with past custom and practices, liabilities
on account of taxes and governmental charges (but not penalties, interest
or fines in respect thereof), and obligations or liabilities incurred by
virtue of the execution of this Agreement;
(i) issuance by the Company or any Company Subsidiary of any notes,
bonds, or other debt securities or any equity securities or securities
convertible into or exchangeable for any equity securities;
(j) entry by the Company or any Company Subsidiary into, or amendment
or termination of, any material commitment, contract, agreement, or
transaction, other than in the ordinary course of business and other than
expiration of contracts in accordance with their terms;
(k) loss or, to the best of knowledge, threatened loss of, or any
material reduction or threatened material reduction in revenues from, any
client of the Company or any Company Subsidiary that accounted for revenues
during the last twelve months in excess of one percent (1%) of the
consolidated net revenues of the Company and the Company Subsidiaries, or
change in the relationship of the Company or any Company Subsidiary with
any client or Governmental Authority that is reasonably expected to
adversely affect the Company, any Company Subsidiary or the Business;
(l) change in accounting principles, methods or practices (including,
without limitation, any change in depreciation or amortization policies or
rates) utilized by the Company or any Company Subsidiary;
14
(m) discharge or satisfaction by the Company or any Company Subsidiary
of any material liability or encumbrance or payment by the Company or any
Company Subsidiary of any material obligation or liability, other than
current liabilities paid in the ordinary course of its business consistent
with past custom and practices;
(n) sale, lease or other disposition by the Company or any Company
Subsidiary of any tangible assets (having an aggregate replacement cost or
fair market value in excess of five percent (5%) of the amount of net
property, plant and equipment shown on the Latest Balance Sheet) other than
in the ordinary course of business, or the sale, assignment or transfer by
the Company or any Company Subsidiary of any trademarks, service marks,
trade names, corporate names, copyright registrations, trade secrets or
other intangible assets or disclosure of any proprietary confidential
information of the Company or any Company Subsidiary to any Person other
than an employee, agent, attorney, accountant or other representative of
the Company that has agreed in writing to maintain the confidentiality of
any such proprietary confidential information;
(o) capital expenditures or commitments therefor by the Company or any
Company Subsidiary in excess of $50,000 individually or $100,000 in the
aggregate;
(p) mortgage, pledge or other encumbrance of any asset of the Company
or any Company Subsidiary or creation of any easements, Liens or other
interests against or on any of the Real Property (as defined in Section
-------
4.14.1);
------
(q) adoption, amendment or termination of any Employee Plan (as
defined in Section 4.17.5(a)) or increase in the benefits provided under
------------------
any Employee Plan, or promise or commitment to undertake any of the
foregoing in the future; or
(r) an occurrence or event not included in clauses (a) through (q)
that has resulted or, based on information of which the Company has
Knowledge, is reasonably expected to result in a Company Material Adverse
Effect.
4.10 Litigation. Except as set forth on Schedule 4.10 (which shall
---------- -------------
disclose the parties to, nature of and relief sought for each matter to be
disclosed on Schedule 4.10):
--------------
4.10.1 There is no suit, action, proceeding, investigation, claim or
order pending or, to the Knowledge of the Company, threatened against the
Company or any Company Subsidiary, or with respect to the Merger, or with
respect to any Employee Plan, or any fiduciary of any such plan (or pending
or, to the Knowledge of the Company, threatened against any of the
officers, directors, members, partners or employees of the Company or any
Company Subsidiary with respect to its business or proposed business
activities), or to which the Company or any Company Subsidiary is otherwise
a party, or that is reasonably expected to have a Company Material Adverse
Effect, before any court, or
15
before any Governmental Authority (each an "ACTION" and collectively, the
"ACTIONS"); nor, to the Knowledge of the Company, is there any basis for
any such Action.
4.10.2 Neither the Company nor any Company Subsidiary is subject to
any unsatisfied or continuing judgment, order or decree of any court or
Governmental Authority. Neither the Company nor any Company Subsidiary, to
the Knowledge of the Company, is otherwise exposed, from a legal
standpoint, to any liability or disadvantage that is reasonably expected to
result in a Company Material Adverse Effect, and neither the Company nor
any Company Subsidiary is a party to any legal action to recover monies due
it or for damages sustained by it, other than collection of past due
charges for services rendered or expenses incurred by the Company.
4.10.3 Schedule 4.10 lists the insurer for each Action covered by
-------------
insurance or designates such Action, or a portion of such Action, as
uninsured and lists the individual and aggregate policy limits for the
insurance covering each insured Action and the applicable policy
deductibles for each insured Action.
4.10.4 Schedule 4.10 sets forth all material closed litigation
-------------
matters to which the Company or any Company Subsidiary was a party during
the five (5) year period preceding the Closing Date, the date such
litigation was commenced and concluded, and the nature of the resolution
thereof (including amounts paid in settlement or judgment).
4.11 Compliance with Applicable Laws. Except as set forth on Schedules
------------------------------- ---------
4.11 and 4.19, each of the Company and the Company Subsidiaries has complied in
---- ----
all material respects with all laws, rules, regulations, writs, injunctions,
decrees, and orders (collectively, "LAWS") applicable to it or to the
operation of the Business, and has not received any notice of any alleged claim
or threatened claim, violation of or liability or potential responsibility under
any such Law which has not heretofore been cured and for which there is no
remaining liability and, to the Knowledge of the Company, no event has occurred
or circumstances exist that (with or without notice or lapse of time) is
reasonably expected to constitute or result in a violation by the Company or any
Company Subsidiary of any Law or that gives rise to any liability on the part of
the Company or any Company Subsidiary under any Law. Without limiting the
foregoing, all financial arrangements whereby service provider discounts are not
passed on to plan participants have been fully disclosed both to those plan
participants and the employers.
4.12 Licenses. Schedule 4.12 lists all Licenses used by the Company and
-------- -------------
the Company Subsidiaries that are material to the conduct of Business.
"LICENSES" means all notifications, licenses, permits, franchises, certificates,
approvals, exemptions, classifications, registrations and other similar
documents and authorizations, and applications therefor held by the Company or
any Company Subsidiary and issued by, or submitted by the Company or any Company
Subsidiary to, any Governmental Authority or other Person. All such Licenses
are valid, binding and in full force and effect. Except as described on Schedule
--------
4.12, the execution, delivery and performance of this Agreement and the
----
consummation of the transactions contemplated hereby will not
16
adversely affect any such Licenses. To the Knowledge of the Company, the Company
and the Company Subsidiaries have taken all necessary action to maintain such
Licenses. No loss or expiration of any such License is pending or, to the
Company's Knowledge, threatened or reasonably foreseeable.
4.13 Material Contracts. Except as listed or described on Schedule 4.13
------------------ -------------
(such contracts, or those which should have been listed on Schedule 4.13, are
-------------
herein referred to as the "MATERIAL CONTRACTS"), as of or on the date hereof,
neither the Company nor any Company Subsidiary is a party to or bound by, any
written or oral leases, agreements or other contracts or legally binding
contractual rights or contractual obligations or contractual commitments (each a
"CONTRACT" and collectively, the "CONTRACTS") relating to or in any way
affecting the operation or ownership of the Business that are of a type
described below and no such agreements are currently in negotiation or proposed:
(a) any consulting agreement pursuant to which the Company or a
Company Subsidiary is to receive consulting services, employment agreement,
change-in-control agreement, or collective bargaining arrangement with any
labor union;
(b) any Contract for capital expenditures or the acquisition or
construction of fixed assets in excess of $50,000;
(c) any Contract for the purchase, maintenance or acquisition, or the
sale or furnishing, of materials, supplies, merchandise, machinery,
equipment, parts or other property or services (except if such Contract is
made in the ordinary course of business and requires aggregate future
payments of less than $25,000;
(d) any Contract, other than trade payables in the ordinary course of
business, relating to the borrowing of money, or the guaranty of another
Person's borrowing of money, including, without limitation, any notes,
mortgages, indentures and other obligations, guarantees of performance,
agreements and instruments for or relating to any lending or borrowing,
including assumed indebtedness;
(e) any Contract granting any Person a Lien on all or any part of the
assets of the Company or any Company Subsidiary;
(f) any Contract for the cleanup, abatement or other actions in
connection with Hazardous Materials (as defined in Section 4.19), the
------------
remediation of any existing environmental liabilities or relating to the
performance of any environmental audit or study;
(g) any Contract granting to any Person an option or a first refusal,
first-offer or similar preferential right to purchase or acquire any
material assets of the Company or any Company Subsidiary;
17
(h) any Contract with any agent, distributor or representative which
is not terminable by the Company or a Company Subsidiary upon ninety (90)
calendar days or less notice without penalty;
(i) any Contract under which the Company or any Company Subsidiary is
(A) a lessee or sublessee of any machinery, equipment, vehicle or other
tangible personal property, or (B) a lessor of any tangible personal
property owned by the Company or any Company Subsidiary, in either case
having an original purchase price or requiring aggregate lease payments in
excess of $50,000;
(j) any Contract under which the Company or any Company Subsidiary has
granted or received a license or sublicense or under which it is obligated
to pay or has the right to receive a royalty, license fee or similar
payment, in either case which provides for payments over the life of such
Contract in excess of $25,000;
(k) any Contract concerning an Affiliate Transaction (as defined in
Section 4.21);
------------
(l) any Contract providing for the indemnification or holding harmless
of any officer, director, employee or other Person;
(m) any Contract (A) for purchase or sale by the Company or any
Company Subsidiary of any real property on which the Company or any Company
Subsidiary conducts any aspect of the Business, (B) granting any options to
lease or purchase all or any portion of the Real Property, or (C) providing
for labor, services or materials to the Real Property (including, without
limitation, brokerage or management services) involving aggregate future
payments of more than $25,000;
(n) any Contract limiting, restricting or prohibiting the Company or
any Company Subsidiary from conducting business anywhere in the United
States or elsewhere in the world;
(o) any joint venture or partnership Contract;
(p) any lease, sublease or associated agreements relating to the
Leased Property (as defined in Section 4.14.1);
--------------
(q) any Contract requiring prior notice, consent or other approval
upon a change of control in the equity ownership of the Company or any
Company Subsidiary, which, if amended, modified or terminated as a result
of, relating to or in connection with a failure to provide prior notice, or
gain such consent or approval, would result in a Company Material Adverse
Effect;
18
(r) any Contract under which the Company or any Company Subsidiary
would be considered an employee benefit plan "administrator" as such term
is defined in Section 3(16) of ERISA or a "fiduciary" as such term is
defined in Section 3(21) of ERISA; or
(s) any other Contract, whether or not made in the ordinary course of
business, which involves future payments by the Company or any Company
Subsidiary in excess of $25,000.
The Company has provided CenterPoint with a true and complete copy of each
written Material Contract and a true and complete summary of each oral Material
Contract, in each case including all amendments or other modifications thereto.
Except as set forth on Schedule 4.13, each Material Contract is a valid and
-------------
binding obligation of, and enforceable in accordance with its terms against, the
Company or a Company Subsidiary, as applicable, and, to the Knowledge of the
Company, the other parties thereto, and is in full force and effect, subject
only to bankruptcy, reorganization, receivership and other laws affecting
creditors' rights generally and equitable principles. Except as set forth on
Schedule 4.13, the Company or one of the Company Subsidiaries, as applicable,
-------------
has performed in all material respects all obligations required to be performed
by it as of the date hereof and will have performed in all material respects all
obligations required to be performed by it as of the Closing Date under each
Material Contract and neither the Company or Company Subsidiary, as applicable,
nor, to the Knowledge of the Company, any other party to any Material Contract
is in breach or default thereunder, and, to the Knowledge of the Company, there
exists no condition which would, with or without the lapse of time or the giving
of notice, or both, constitute a breach or default thereunder. The Company has
not been notified that any party to any Material Contract intends to cancel,
terminate, not renew, or exercise an option under any Material Contract, whether
in connection with the transactions contemplated hereby or otherwise.
4.14 Properties.
----------
4.14.1 Schedule 4.14.1-1 is a correct and complete list, and a brief
-----------------
description of, all real estate in which the Company or any of the Company
Subsidiaries has an ownership interest (the "OWNED PROPERTY") and all real
property leased by the Company (the "LEASED PROPERTY"). Except as lessee of
Leased Property, neither the Company nor any Company Subsidiary is a lessee
under or otherwise a party to any lease, sublease, license, concession or
other agreement, whether written or oral, pursuant to which another Person
has granted to the Company or any Company Subsidiary the right to use or
occupy all or any portion of any real property.
The Company or one of the Company Subsidiaries has good and marketable
fee simple title to the Owned Property and, assuming good title in the
Landlord, a valid leasehold interest in the Leased Property (the Owned
Property and the Leased Property being sometimes referred to herein as
"REAL PROPERTY"), in each case free and clear of all Liens, assessments or
restrictions (including, without limitation, inchoate liens arising out
19
of the provision of labor, services or materials to any such real estate)
other than (a) mortgages shown on the Financial Statements as securing
specified liabilities or obligations, with respect to which no default (or
event that, with notice or lapse of time or both, would constitute a
default) exists, (b) Liens for current taxes not yet due, (c) (i) minor
imperfections of title, including utility and access easements depicted on
subdivision plats for platted lots that do not impair the intended use of
the property, if any, none of which materially impairs the current
operations of the Company or the Business, and (ii) zoning laws and other
land use restrictions or restrictive covenants that do not materially
impair the present use of the property subject thereto, and (d) Liens,
assessments, and restrictions pursuant to and by virtue of the terms of the
lease of the Leased Property. The Real Property constitutes all real
properties reflected on the Financial Statements or used or occupied by the
Company or any Company Subsidiary in connection with the Business or
otherwise.
With respect to the Owned Property, if any, except as reflected on
Schedule 4.14.1-2(a):
--------------------
(a) the Company or one of the Company Subsidiaries is in exclusive
possession thereof and no easements, licenses or rights are necessary to
conduct the Business thereon in addition to those which exist as of the
date hereof;
(b) no portion thereof is subject to any pending condemnation
proceeding or proceeding by any public or quasi-public authority materially
adverse to the Owned Property and, to the Knowledge of the Company, there
is no threatened condemnation or proceeding with respect thereto;
(c) there is no violation of any covenant, condition, restriction,
easement or agreement of any Governmental Authority that affects the Owned
Property or the ownership, operation, use or occupancy thereof;
(d) no portion of any parcel of the Owned Property is subject to any
roll-back tax, dual or exempt valuation tax and no portion of any Owned
Property is omitted from the appropriate tax rolls; and
(e) all assessments and taxes currently due and payable on such Owned
Property have been paid.
With respect to the Leased Property, except as reflected on Schedule
--------
4.14.1-2(b):
-----------
(i) the Company and/or one of the Company Subsidiaries is in
exclusive, peaceful and undisturbed possession thereof and, to the
Knowledge of the Company, no easements, licenses or rights are necessary to
conduct the Business thereon in addition to those which exist as of the
date hereof; and
20
(ii) to the Knowledge of the Company, no portion thereof is
subject to any pending condemnation proceeding or proceeding by any public
or quasi-public authority materially adverse to the Leased Property and
there is no threatened condemnation or proceeding with respect thereto.
4.14.2 The Latest Balance Sheet and/or Schedule 4.14.2 reflect all
---------------
material tangible personal property owned by the Company or any Company
Subsidiary, except as sold or otherwise disposed of or acquired in the ordinary
course of business. Except as set forth on Schedule 4.14.2, the Company or one
---------------
of the Company Subsidiaries has good and marketable title to, or a valid
leasehold interest in, or valid license of, such personal property (including,
without limitation, machinery, equipment and computers), in each case free and
clear of any 1 Liens (other than Liens that are part of such leasehold or
license), and each such asset is in working order and has been maintained in a
commercially reasonable manner and does not contain, to the Knowledge of the
Company, any material defect. Except as set forth in Schedule 4.14.2, no
---------------
personal property (including, without limitation, software and databases
maintained on off-premises computers) used by the Company or any Company
Subsidiary in connection with the Business is held under any lease, security
agreement, conditional sales contract or other title retention or security
arrangement or is located other than on the Real Property.
4.15 Intellectual Property. The (i) patents, patent applications,
---------------------
inventions and discoveries that may be patentable (collectively, the "PATENTS"),
(ii) registered and unregistered trademarks, trade names, company names, assumed
business names and service marks (collectively, the "MARKS"), (iii) copyrights
(the "COPYRIGHTS"), and (iv) know how, trade secrets, confidential information,
client lists, software, technical information, data, process technology, plans
and drawings (collectively, the "TRADE SECRETS") owned, used or licensed by the
Company or any Company Subsidiary (collectively, the "INTELLECTUAL PROPERTY")
are all those necessary to enable the Company and the Company Subsidiaries to
conduct and to continue to conduct the Business substantially as it is currently
conducted. Schedule 4.15 contains a complete and accurate list of all material
-------------
Patents, Marks and Copyrights and a brief description of all material Trade
Secrets owned, used by or directly licensed to the Company or any Company
Subsidiary, and a list of all material license agreements and arrangements with
respect to any of the Intellectual Property to which the Company or any Company
Subsidiary is a party, whether as licensee, licensor or otherwise (collectively,
the "INTELLECTUAL PROPERTY LICENSES"). Except as set forth on Schedule 4.15,
-------------
(i) all of the Intellectual Property is owned, or to the Knowledge of the
Company used under a valid Intellectual Property License, by the Company or one
of the Company Subsidiaries, and is free and clear of all Liens and other
adverse claims; (ii) neither the Company nor any Company Subsidiary has received
any written notice that it is or has infringed on, misappropriated or otherwise
conflicted with, or otherwise has Knowledge that it is infringing on,
misappropriating, or otherwise conflicting with the intellectual property rights
of any third parties; (iii) there is no claim pending or, to the Knowledge of
the Company, threatened against the Company or any Company Subsidiary with
respect to the alleged infringement or misappropriation by the Company or
Company Subsidiary, or a conflict with, any intellectual property rights of
others; (iv) the operation of any aspect of the Business in the manner in which
21
it has heretofore been operated or is presently operated does not give rise to
any such infringement or misappropriation; and (v) there is no infringement or
misappropriation of the Intellectual Property by a third party or claim, pending
or, to the Knowledge of the Company, threatened, against any third party with
respect to the alleged infringement or misappropriation of the Intellectual
Property.
4.16 Taxes.
-----
4.16.1 Except as set forth on Schedule 4.16.1-1, each of the Company
-----------------
and the Company Subsidiaries has timely and accurately prepared and filed
or will timely and accurately prepare and file all federal, state, local
and foreign returns, declarations and reports, information returns and
statements (collectively, the "RETURNS") for Taxes (as defined in Section
-------
4.16.2) required to be filed by or with respect to the Company or the
------
Company Subsidiaries before the Closing Date, and has paid or caused to be
paid, or has made adequate provision or set up an adequate accrual or
reserve for the payment of, all Taxes required to be paid in respect of the
periods for which Returns are due on or prior to the Closing Date, and will
establish an adequate accrual or reserve for the payment of all Taxes
payable in respect of the period, including portions thereof, subsequent to
the last of said periods required to be so accrued or reserved, in each
case in accordance with GAAP up to and including the Closing Date. All such
Returns are or will be true and correct in all material respects. The
Company has delivered to CenterPoint true and complete copies of all
Returns referred to in the first sentence of this Section 4.16.1 (including
--------------
any amendments thereof) for the five (5) most recent taxable years.
Neither the Company nor any Company Subsidiary is delinquent in the payment
of any Tax, and no material deficiencies for any Tax, assessment or
governmental charge have been threatened, claimed, proposed or assessed.
No waiver or extension of time to assess any Taxes has been given or
requested. No written claim, or any other claim, by any taxing authority
in any jurisdiction where the Company or any Company Subsidiary does not
file Tax returns is pending pursuant to which the Company or Company
Subsidiary, as applicable, is or may be subject to taxation by that
jurisdiction. The Company's and the Company Subsidiaries' Returns were
last audited by the Internal Revenue Service or comparable state, local or
foreign agencies on the dates set forth on Schedule 4.16.1-2.
-----------------
4.16.2 For purposes of this Agreement, the term "TAXES" shall mean
all taxes, charges, withholdings, fees, levies, penalties, additions,
interest or other assessments, including, without limitation, income, gross
receipts, excise, property, sales, employment, withholding, social
security, occupation, use, service, service use, license, payroll,
franchise, transfer and recording taxes, fees and charges, windfall
profits, severance, customs, import, export, employment or similar taxes,
charges, fees, levies or other assessments, imposed by the United States,
or any state, local, foreign or provincial government or subdivision or any
agency thereof, whether computed on a separate, consolidated, unitary,
combined or any other basis.
22
4.17 Employee Benefit Plans; ERISA.
-----------------------------
4.17.1 Except as described in Schedule 4.17.1, neither the Company
---------------
nor any Company Subsidiary has or is reasonably expected to have any
liability (including contingent liability) whether direct or indirect (and
regardless of whether it would be derived from a current or former Plan
Affiliate as defined in Section 4.17.5(c)) with respect to any of the
-----------------
following (whether written, unwritten or terminated): (i) any employee
welfare benefit plan, as defined in Section 3(1) of "ERISA," including, but
not limited to, any medical plan, life insurance plan, short-term or long-
term disability plan or dental plan; (ii) any "employee pension benefit
plan," as defined in Section 3(2) of ERISA (as defined in Section
-------
4.17.5(b)), including, but not limited to, any excess benefit plan, top hat
---------
plan or deferred compensation plan or arrangement, nonqualified retirement
plan or arrangement, qualified defined contribution or defined benefit
arrangement; or (iii) any other benefit plan, policy, program, arrangement
or agreement, including, but not limited to, any material fringe benefit
plan or program, personnel policy, bonus or incentive plan, stock option,
restricted stock, stock bonus, holiday pay, vacation pay, sick pay, bonus
program, service award, moving expense, reimbursement program, tool
allowance, safety equipment allowance, deferred bonus plan, salary
reduction agreement, change-of-control agreement, employment agreement or
consulting agreement.
4.17.2 A complete copy of each written Employee Plan (as defined in
Section 4.17.5(a)) as amended to the Closing, together with audited
-----------------
financial statements, if any, for the two (2) most recent plan years and
unaudited financial statements for the plan year 1996; a copy of each trust
agreement or other funding vehicle with respect to each such plan; a copy
of any and all determination letters, rulings or notices issued by a
Governmental Authority with respect to such plan; a copy of the Form 5500
Annual Report for the three (3) most recent plan years; and a copy of each
and any general explanation or communication which was required to be
distributed or otherwise provided to participants in such plan and which
describes all or any relevant aspect of each plan, including summary plan
descriptions and/or summary of material modifications, have been delivered
to CenterPoint. A description of each unwritten Employee Plan, including a
description of eligibility, participation, benefits, funding arrangements
and assets or other relevant aspects of the obligation, is set forth in
Schedule 4.17.2.
---------------
4.17.3 Except as is not reasonably expected to give rise to any
liability (including contingent liability), whether direct or indirect, to
the Company or any Company Subsidiary, each Employee Plan (i) has been and
is operated and administered in compliance with its terms; (ii) has been
and is operated, administered, maintained and funded in compliance with the
applicable requirements of the Code in such a manner as to qualify, where
appropriate and intended, for both Federal and state purposes, for income
tax exclusions, tax-exempt status, and the allowance of deductions and
credits with respect to contributions thereto; (iii) where appropriate, has
received a favorable determination letter from the Internal Revenue Service
upon which the sponsor of the plan
23
may currently rely; (iv) has been and currently complies in form and in
operation in all respects with all applicable requirements of ERISA and the
Code and any applicable reporting and disclosure requirements of Federal
and state laws, including but not limited to the requirement of Part 6 of
subtitle B of Title I of ERISA and Section 4980B of the Code. With respect
to each Employee Plan, no Person has: (i) entered into any nonexempt "
prohibited transaction," as such terms are defined in ERISA or the Code;
(ii) breached a fiduciary obligation or (iii) any liability for any failure
to act or comply in connection with the administration or investment of the
assets of such plan; and no Employee Plan has any liability and there is no
liability in connection with any Employee Plan, other than a liability (i)
which is expressly and adequately reflected in the Latest Balance Sheets,
(ii) which is discretionary or terminable at will by the Company or one of
the Company Subsidiaries without incurring any such liability, or (iii)
which is adequately funded under a funding arrangement separate from the
assets of the Company, any Company Subsidiary or a Plan Affiliate (and only
to the extent of such funding). Any contribution made or accrued with
respect to any Employee Plan is fully deductible by the Company, a Company
Subsidiary or a Plan Affiliate.
4.17.4 Neither the Company nor any Company Subsidiary or Plan
Affiliate has ever sponsored, maintained, contributed to or been required
to contribute to, or has any liability, whether direct or indirect, with
respect to any Employee Plan which is or has ever been (i) a "multiemployer
plan" as defined in Section 4001 of ERISA, (ii) a "multiemployer plan"
within the meaning of Section 3(37) of ERISA, (iii) a "multiple employer
plan" within the meaning of Code Section 413(c), (iv) a "multiple employer
welfare arrangement" within the meaning of Section 3(40) of ERISA, (v)
subject to the funding requirements of Section 412 of the Code or to Title
IV of ERISA, or (vi) provides for post-retirement medical, life insurance
or other welfare-type benefits.
4.17.5 As used in this Agreement, the following terms shall have the
following respective meanings:
(a) the term "EMPLOYEE PLAN" shall mean any plan, policy,
program, arrangement or agreement described in Section 4.17.1, whether
-------------
or not scheduled;
(b) the term "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended; and
(c) with respect to any Person ("FIRST PERSON"), the term
"PLAN AFFILIATE" shall mean any other Person with whom the First
Person constitutes or has constituted all or part of a controlled
group, or which would be treated or have been treated with the First
Person as under common control or whose employees would be or have
been treated as employed by the First Person, under Section 414 of the
Code or Section 4001(b) of ERISA and any regulations, administrative
rulings and case law interpreting the foregoing.
24
4.18 Labor Matters. Except as set forth in Schedule 4.18, there is no, and
------------- -------------
within the last three (3) years neither the Company nor any Company Subsidiary
has experienced any, strike, picketing, boycott, work stoppage or slowdown or
other similar labor dispute, union organizational activity, allegation, charge
or complaint of unfair labor practice, employment discrimination or other
matters relating to the employment of labor pending or, to the Knowledge of the
Company, threatened against the Company or any Company Subsidiary, or which
might affect the Company or any Company Subsidiary; nor, to the Knowledge of the
Company, is there any basis for any such allegation, charge, or complaint.
There is no request for representation pending and, to the Knowledge of the
Company, no question concerning representation has been raised. There is no
grievance pending that is reasonably expected to result in a Company Material
Adverse Effect nor any arbitration proceeding arising out of a union agreement.
To the Knowledge of the Company, no key employee and no group of employees has
announced or otherwise indicated any plans to terminate employment with the
Company or any Company Subsidiary. Each of the Company and any Company
Subsidiary has complied with all applicable laws relating to the employment of
labor, including provisions thereof relating to wages, hours, equal opportunity,
collective bargaining and the payment of social security and other taxes.
Neither the Company nor any Company Subsidiary is liable for any arrears of
wages or any taxes or penalties for failure to comply with any such laws,
ordinances or regulations.
4.19 Environmental Matters. Other than as disclosed on Schedule 4.19, (i)
--------------------- -------------
each of the Company and the Company Subsidiaries is operating and has operated
its business in compliance with all applicable Environmental and Safety
Requirements (as defined later in this Section); (ii) to the actual knowledge of
the officers of the Company, without any duty to inquire (notwithstanding the
definition of "Knowledge" in Section 15.4), there are no Hazardous Materials (as
------------
defined later in this Section) present at, on or under any real property
currently or formerly owned, leased or used by the Company or Company Subsidiary
(other than those present in office supplies and cleaning/maintenance materials)
for which the Company or a Company Subsidiary is reasonably expected to be
responsible or otherwise have any liability, for response costs under any
Environmental and Safety Requirements; (iii) each of the Company and the Company
Subsidiaries has disposed of all waste materials generated by the Company or
such Company Subsidiary at any real property currently or formerly owned, leased
or used by the Company or Company Subsidiary in compliance with applicable
Environmental and Safety Requirements; and (iv) there are and have been no
facts, events, occurrences or conditions at or related to any real property
currently or formerly owned, leased or used by the Company or Company Subsidiary
that is reasonably expected to cause or give rise to liabilities or response
obligations of the Company or any Company Subsidiary under any Environmental and
Safety Requirements. The term "ENVIRONMENTAL AND SAFETY REQUIREMENTS" means any
federal, state and local laws, statutes, regulations or other requirements
relating to the protection, preservation or conservation of the environment or
worker health and safety, all as amended or reauthorized. The term "HAZARDOUS
MATERIALS" means "hazardous substances," as defined by the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. (S) 9601 et
seq., "hazardous wastes," as defined by the Resource Conservation Recovery Act,
42 U.S.C. (S) 6901 et seq., asbestos in any form or condition, polychlorinated
biphenyls and any other material, substance or waste to which
25
liability or standards of conduct may be imposed under any Environmental and
Safety Requirement.
4.20 Insurance. Each of the Company and the Company Subsidiaries has in
---------
full force and effect commercially reasonable amounts of insurance to protect
the Company's and Company Subsidiaries' ownership or interest in, and operation
of, its assets against the types of liabilities, including professional
malpractice, customarily insured against in connection with operations similar
to the Business, and all premiums due on such policies have been paid. To the
Company's Knowledge, each of the Company and the Company Subsidiaries has
complied with the provisions of all such policies and is not in default under
any of such policies. Schedule 4.20 contains a complete and correct list of all
-------------
such insurance policies. Neither the Company nor any Company Subsidiary has
received any notice of cancellation or intent to cancel or increase premiums
with respect to such insurance policies. Schedule 4.20 also contains a list of
-------------
all claims or asserted claims reported to insurers under such policies relating
to the ownership or interest in the Company's and the Company Subsidiaries'
assets, or operation of the Business, including all professional malpractice
claims and similar types of claims, actions or proceedings asserted against the
Company or any Company Subsidiary arising out of the Business at any time within
the past three (3) years.
4.21 Interest in Customers and Suppliers; Affiliate Transactions. Except
-----------------------------------------------------------
as described on Schedule 4.21 and except for ownership as an investment of not
-------------
more than one percent (1%) of any class of capital stock of any publicly-traded
company, no Stockholder, any Affiliate of a Stockholder or Affiliate of the
Company or any Company Subsidiary (i) possesses, directly or indirectly, any
financial interest in, or is a director, officer, employee or affiliate of any
Person that is a client, supplier, customer, lessor, lessee or competitor of the
Company or any Company Subsidiary, (ii) owns, directly or indirectly, in whole
or in part, or has any interest in any tangible or intangible property used in
the conduct of the Business, or (iii) is a party to an agreement or
relationship, that involves the receipt by such Person of compensation or
property from the Company or any Company Subsidiary other than through a
customary employment relationship or through distributions made with respect to
the Company Stock or equity interests in any Company Subsidiary (provided such
distributions have been made consistent with the Company's or any Company
Subsidiary's, as the case may be, past custom and practices). Schedule 4.21
-------------
sets forth the parties to and the date, nature and amount of each transaction
during the last five (5) years involving the transfer of any cash, property or
rights to or from the Company or any Company Subsidiary from, to or for the
benefit of any Affiliates (other than customary employment relationships or
distributions made with respect to the Company Stock) ("AFFILIATE
TRANSACTIONS"), and any existing commitments of the Company or any Company
Subsidiary to engage in the future in any Affiliate Transactions. Except as
disclosed, each Affiliate Transaction and each transaction with former
Affiliates of the Company or any Company Subsidiary was effected on terms
equivalent to those that would have been established in an arm's-length
transaction.
26
4.22 Business Relationships. Schedule 4.22 lists all clients of the
---------------------- -------------
Company and each Company Subsidiary representing one percent (1%) or more of the
Company's revenues for the twelve (12) months ended December 31, 1998. Except
as set forth on Schedule 4.22, since December 31, 1998, none of such clients has
-------------
canceled or substantially reduced its business with the Company or Company
Subsidiary, as applicable, nor to the best of Knowledge, are any of such clients
threatening to do so. To the Knowledge of the Company, no client that accounts
for one percent (1%) or more of the Company's consolidated net revenue or
supplier of the Company or any Company Subsidiary, will cease to do business
with, or substantially reduce its business with, the Company or Company
Subsidiary, as applicable, after the consummation of the transactions
contemplated hereby.
4.23 Compensation. Schedule 4.23 is a complete list setting forth the
------------ -------------
names and current total compensation, including, without limitation, salary and
bonuses paid to employees and draws or other distributions paid to partners,
members or owners of each Person who earned from the Company or a Company
Subsidiary in 1998 total compensation in excess of $100,000. Except as set
forth in Schedule 4.23, no Person listed thereon has received any bonus or
-------------
increase in compensation and there has been no "general increase" in the
compensation or rate of compensation payable to any employees, partners, members
or owners of the Company or any Company Subsidiary since the date of the Latest
Balance Sheet, other than in the Company's and Company Subsidiaries' ordinary
course of business, consistent with past custom and practices, nor since that
date has there been any oral or written promise to employees, partners, members
or owners of any bonus or increase in compensation, other than in the Company's
ordinary course of business, consistent with past custom and practices. The term
"GENERAL INCREASE" as used herein means any increase generally applicable to a
class or group, but does not include increases granted to individuals for merit,
length of service or change in position or responsibility made on the basis of
the custom and past practices of the Company or any Company Subsidiary.
Schedule 4.23 includes the date and amount of the last bonus or similar
-------------
distribution or increase in compensation for each listed individual.
4.24 Bank Accounts. Schedule 4.24 is a true and complete list of each bank
------------- -------------
in which the Company or any Company Subsidiary has an account or safe deposit
box, the number of each such account or box, and the names of all Persons
authorized to draw thereon or to have access thereto.
4.25 Disclosure; No Misrepresentation. No representation or warranty of
--------------------------------
the Company contained in this Agreement or in any of the certification,
schedules, lists, documents, exhibits, or other instruments delivered or to be
delivered to CenterPoint as contemplated by any provision hereof contains any
untrue statement regarding a material fact or omits to state a material fact
necessary in order to make the statements made herein or therein not misleading.
To the Knowledge of the Company, there is no fact or circumstance that has not
been disclosed to CenterPoint herein that has or is reasonably expected to have
a Company Material Adverse Effect.
27
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDERS
5.1 Several Representations and Warranties. Each Stockholder, severally
--------------------------------------
and not jointly, hereby represents and warrants to CenterPoint as of the date
hereof and, subject to Section 7.3, as of the date on which CenterPoint and the
-----------
lead Underwriter execute and deliver the Underwriting Agreement related to the
IPO and as of the Closing Date as follows:
5.1.1 Capitalization. Such Stockholder owns beneficially and of
--------------
record all of the issued and outstanding shares of the Company Stock as set
forth opposite the name of such Stockholder in Schedule 4.4. Such Company
------------
Stock is free and clear of all Liens, and such Stockholder has good and
marketable title to such Company Stock. At the Closing as provided in this
Agreement, CenterPoint will acquire good and valid title to such Company
Stock, free and clear of any Lien other than any Lien created by
CenterPoint.
5.1.2 Authority. Such Stockholder has full right, capacity, power and
---------
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
such Stockholder, and, assuming the due authorization, execution and
delivery hereof by CenterPoint, constitutes a valid and legally binding
agreement of such Stockholder, enforceable against such Stockholder in
accordance with its terms, except that such enforcement may be subject to
(i) bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting or relating to enforcement of creditors' rights generally
and (ii) general equitable principles.
5.1.3 Non-Contravention. The execution and delivery of this Agreement
-----------------
by such Stockholder does not violate, conflict with or result in a breach
of any provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or
result in the termination of, or accelerate the performance required by, or
result in a right of termination or acceleration under, or result in the
creation of any Lien upon any of the properties or assets of the Company or
any Company Subsidiary under, any of the terms, conditions or provisions of
(i) any statute, law, ordinance, rule, regulation, judgment, decree, order,
injunction, writ, permit or license of any Governmental Authority
applicable to such Stockholder or (ii) other than those licenses,
franchises, permits, concessions or instruments of any Governmental
Authority, any note, bond, mortgage, indenture, deed of trust, license,
franchise, permit, concession, contract, lease or other instrument,
obligation or agreement of any kind to which such Stockholder is a party or
by which such Stockholder may be bound or affected. The consummation by
such Stockholder of the transactions contemplated hereby will not result in
a violation, conflict, breach, right of termination, creation or
acceleration of Liens under the of the terms, conditions or provisions of
the items described in clauses (i) and
28
(ii) of the immediately preceding sentence subject to obtaining (prior to
the Closing Date) the consents set forth on Schedule 4.3.2.
--------------
5.1.4 Approvals. To the Knowledge of such Stockholder, and except
---------
with respect to (i) the filing of the Registration Statements with the SEC
pursuant to the 1933 Act, the declaration of the effectiveness of the
Registration Statements by the SEC and filings, if required, with various
state securities or "blue sky" authorities and (ii) any filing which may be
required under the HSR Act, no declaration, filing, or registration with,
or notice to, or authorization, consent or approval of, any Governmental
Authority is necessary for the execution and delivery of this Agreement by
such Stockholder or the consummation by such Stockholder of the
transactions contemplated hereby.
5.1.5 Litigation. There is no action, claim, suit, proceeding
----------
(disciplinary or otherwise), arbitration or investigation pending, or to
the Knowledge of such Stockholder, threatened against such Stockholder
relating to (i) the transactions contemplated by this Agreement, or (ii)
any action taken by such Stockholder or contemplated by such Stockholder in
connection with the consummation by such Stockholder of the transactions
contemplated hereby.
5.1.6 No Transfer. There are no outstanding subscriptions, options,
-----------
calls, contracts, commitments, undertakings, restrictions, arrangements,
rights or warrants, including any right of conversion or exchange under any
outstanding security, instrument or other agreement to deliver or sell, or
cause to be delivered or sold, shares of Company Stock owned by such
Stockholder or obligating such Stockholder to grant, extend or enter into
any such agreement or commitment or obligating such Stockholder to convey
or transfer any Company Stock. As of the Closing Date, there will be no
voting trusts, proxies or other agreements or understandings to which such
Stockholder is a party or is bound with respect to the voting of any shares
of capital stock or other equity interests of the Company other than the
Voting Agreement.
5.1.7 Disclosure. No representation or warranty by or on behalf of
----------
such Stockholder contained in this Agreement or any of the written
statements or certificates furnished at or prior to the Closing by or on
behalf of such Stockholder to CenterPoint or its representatives in
connection herewith or pursuant hereto, contains any untrue statement of a
material fact, or omits or will omit to state any material fact required to
make the statements contained herein or therein not misleading.
5.1.8 Representations and Warranties of the Company. To such
---------------------------------------------
Stockholder's actual knowledge, the representations and warranties of the
Company set forth in Article IV of this Agreement are true and correct.
5.2 Joint and Several Representations and Warranties. The Stockholders
------------------------------------------------
jointly and severally represent and warrant to CenterPoint that the authorized
capital stock of the Company
29
consists of Fifteen Thousand (15,000) shares of Company Stock, of which Fourteen
Thousand Eight Hundred Nine (14,809) shares are issued and outstanding all of
which are validly issued and are fully paid, nonassessable and free of
preemptive rights.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF CENTERPOINT
CenterPoint represents and warrants to the Company and the Stockholders as
of the date hereof and, subject to Section 7.3, as of the date on which
-----------
CenterPoint and the lead Underwriter execute and deliver the Underwriting
Agreement related to the IPO and as of the Closing Date as follows:
6.1 Organization And Qualification. Each of CenterPoint and Mergersub is
------------------------------
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the requisite power and authority to own,
lease and operate its assets and properties and to carry on its business as it
is now being conducted. True, accurate and complete copies of each of
CenterPoint's and Mergersub's Certificate of Incorporation and By-laws, as in
effect on the date hereof, including all amendments thereto, have heretofore
been delivered to the Company.
6.2 Capitalization.
--------------
6.2.1 The authorized capital stock of CenterPoint consists of 20,000
shares of CenterPoint Common Stock, of which 17,500 shares are outstanding
as of the date hereof. All of the issued and outstanding shares of
CenterPoint Common Stock are validly issued and are fully paid,
nonassessable and free of preemptive rights. Immediately prior to the
Closing Date, the authorized capital stock of CenterPoint will consist of
50,000 shares of CenterPoint Common Stock, of which the number of shares
set forth in the Form S-1 will be issued and outstanding, and 10,000 shares
of Preferred Stock, par value $0.01 per share, none of which will be issued
and outstanding. Other than (i) shares of CenterPoint Common Stock issued
pursuant to a split of the shares outstanding as of the date of this
Agreement, (ii) shares of CenterPoint Common Stock issued in accordance
with the Merger and the Other Mergers, and (iii) shares of CenterPoint
Common Stock that may be issued to new members of management in lieu of
shares previously issued to current members of management, but which will
not increase the number of shares of outstanding CenterPoint Common Stock,
no shares of CenterPoint Common Stock will be issued prior to the
consummation of the IPO. Mergersub's authorized capital stock consists
solely of 100 shares of common stock, par value $.01 per share (the
"MERGERSUB STOCK"), all of which are issued and outstanding, are owned free
and clear of any Liens by CenterPoint, and are fully paid, nonassessable
and free of pre-emptive rights.
30
6.2 Except as set forth on Schedule 6.2, as of the date hereof, there
------------
are no outstanding subscriptions, options, calls, contracts, commitments,
understandings, restrictions, arrangements, rights or warrants, including
any right of conversion or exchange under any outstanding security,
instrument or other agreement obligating CenterPoint to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of the
capital stock of CenterPoint or obligating CenterPoint to grant, extend or
enter into any such agreement or commitment. There are no voting trusts,
proxies or other agreements or understandings to which CenterPoint is a
party or is bound with respect to the voting of any shares of capital stock
of CenterPoint. The shares of CenterPoint Common Stock issued to
stockholders of the Company in the Merger will at the Closing Date be duly
authorized, validly issued, fully paid and nonassessable and free of
preemptive rights and issued pursuant to a registration statement as
required by the 1933 Act or an exemption thereof.
6.3 No Subsidiaries. Except for CenterPoint's ownership of 100% of the
---------------
capital stock of Professional Service Group, Inc., a Delaware corporation and
Mergersub (and similar entities created for similar purposes with respect to
Other Agreements), CenterPoint has no subsidiaries and it does not own any
capital stock of any corporation or any equity or other interest of any nature
whatsoever in any Person.
6.4 Authority; Non-Contravention; Approvals.
---------------------------------------
6.4.1 Each of CenterPoint and Mergersub has all requisite right,
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been approved by the
Board of Directors of CenterPoint, and no other corporate proceedings on
the part of CenterPoint or Mergersub are necessary to authorize the
execution and delivery of this Agreement or the consummation by CenterPoint
and Mergersub of the transactions contemplated hereby. This Agreement has
been duly executed and delivered by CenterPoint and Mergersub and, assuming
the due authorization, execution and delivery hereof by the Company and the
Stockholders, constitutes a valid and legally binding agreement of
CenterPoint and Mergersub, enforceable against each of them in accordance
with its terms, except that such enforcement may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to enforcement of creditors' rights generally and
(ii) general equitable principles.
6.4.2 The execution and delivery of this Agreement by CenterPoint
does not violate, conflict with or result in a breach of any provision of,
or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination of,
or accelerate the performance required by, or result in a right of
termination or acceleration under, or result in the creation of any Lien
upon any of the properties or assets of CenterPoint or Mergersub under any
of the terms, conditions or provisions of (i) the Certificate of
Incorporation or By-laws of CenterPoint or Mergersub,
31
(ii) any statute, law, ordinance, rule, regulation, judgment, decree,
order, injunction, writ, permit or license of any court or Governmental
Authority applicable to CenterPoint or Mergersub or any of their respective
properties or assets, or (iii) any note, bond, mortgage, indenture, deed of
trust, license, franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind to which CenterPoint or
Mergersub is now a party or by which CenterPoint, Mergersub or any of their
respective properties or assets, may be bound or affected. The consummation
by CenterPoint and Mergersub of the transactions contemplated hereby will
not result in any violation, conflict, breach, right of termination or
acceleration or creation of Liens under any of the terms, conditions or
provisions of the items described in clauses (i) through (iii) of the
immediately preceding sentence, subject, in the case of the terms,
conditions or provisions of the items described in clause (ii) above, to
obtaining (prior to the Closing Date) CenterPoint Required Statutory
Approvals (as defined in Section 6.4.3) and, in the case of the terms,
-------------
conditions or provisions of the items described in clause (iii) above, to
obtaining (prior to the Closing Date) consents required from commercial
lenders, lessors or other third parties.
6.4.3 Except with respect to (i) the filing of the Registration
Statements with the SEC pursuant to the 1933 Act, the declaration of the
effectiveness of the Registration Statements by the SEC and filings, if
required, with various state securities or "blue sky" authorities, and (ii)
any filing which may be required under the HSR Act (the filings and
approvals referred to in clauses (i) through (ii) are collectively referred
to as the "CENTERPOINT REQUIRED STATUTORY APPROVALS") no declaration,
filing or registration with, or notice to, or authorization, consent or
approval of, any governmental or regulatory body or authority is necessary
for the execution and delivery of this Agreement by CenterPoint or
Mergersub or the consummation by CenterPoint or Mergersub of the
transactions contemplated hereby, other than such declarations, filings,
registrations, notices, authorizations, consents or approvals which, if not
made or obtained, as the case may be, are not reasonably expected to, in
the aggregate, have a material adverse effect on the business operations,
properties, assets, condition (financial or other), results of operations
or prospects of CenterPoint and its subsidiaries, taken as a whole (a
"CENTERPOINT MATERIAL ADVERSE EFFECT").
6.5 Absence of Undisclosed Liabilities. Except as set forth in Schedule
---------------------------------- --------
6.5, neither CenterPoint nor Mergersub has incurred any liabilities or
---
obligations (whether known or unknown, absolute, contingent, direct, indirect,
perfected, inchoate, unliquidated or otherwise) of any nature. Except as set
forth on Schedule 6.5, neither CenterPoint nor Mergersub has engaged in any
------------
business activities of any type or kind whatsoever, nor entered into any
agreements nor is it bound by any obligation or undertaking.
6.6 Litigation. There are no claims, suits, actions or proceedings
----------
pending or, to the Knowledge of CenterPoint, threatened against, relating to or
affecting CenterPoint or Mergersub, before any court, Governmental Authority or
any arbitrator that seek to restrain or enjoin the
32
consummation of the Merger or the IPO or which could reasonably be expected,
either alone or in the aggregate with all such claims, actions or proceedings,
to have a CenterPoint Material Adverse Effect. CenterPoint is not subject to any
unsatisfied or continuing judgment, order or decree of any court or Governmental
Authority. CenterPoint is not a party to any legal action to recover monies due
it or for damages sustained by it.
6.7 Compliance with Applicable Laws. Each of CenterPoint and Mergersub
-------------------------------
has complied in all material respects with all Laws applicable to it, and has
not received any notice of any alleged claim or threatened claim, violation of
or liability or potential responsibility under any such Law which has not
heretofore been cured and for which there is no remaining liability and, to the
Knowledge of CenterPoint, no event has occurred or circumstances exist that
(with or without notice or lapse of time) may constitute or result in a
violation by CenterPoint or Mergersub of any Law or may give rise to any
liability on the part of the CenterPoint or Mergersub under any Law.
6.8 No Misrepresentation. None of the representations and warranties of
--------------------
CenterPoint or Mergersub set forth in this Agreement or in any of the
certificates, schedules, lists, documents, exhibits, or other instruments
delivered or to be delivered to the Stockholders or the Company as contemplated
by any provision hereof contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements contained herein
or therein not misleading. To the Knowledge of CenterPoint, there is no fact or
circumstance that has not been disclosed to the Company herein that has or is
reasonably expected to have a Company Material Adverse Effect.
ARTICLE VII
CERTAIN COVENANTS AND OTHER TERMS
7.1 Conduct of Business by the Company Prior to the Effective Time.
--------------------------------------------------------------
7.1.1 Except as otherwise contemplated by this Agreement, after the
date hereof and prior to the Closing Date or earlier termination of this
Agreement, unless CenterPoint shall otherwise agree in writing, the Company
shall, and shall cause each Company Subsidiary to:
(a) in all material respects, conduct the Business in the
ordinary and usual course and consistent with past customs and
practices;
(b) not (i) amend its Organizational Documents, (ii) split,
combine or reclassify its outstanding capital stock or (iii) declare,
set aside or pay any dividend or distribution payable in cash, stock,
property or otherwise except dividends or distributions which (A) are
consistent with past customs and practices, (B) do not
33
result in a Company Material Adverse Effect, and (C) as set forth on
Schedule 7.1.3(ii);
------------------
(c) not issue, sell, pledge or dispose of, or agree to issue,
sell, pledge or dispose of (i) any additional shares of, or any
options, warrants or rights of any kind to acquire any shares of, its
capital stock or equity interests of any class, (ii) any debt with
voting rights or (iii) any debt or equity securities convertible into
or exchangeable for, or any rights, warrants, calls, subscriptions, or
options to acquire, any such capital stock, debt with voting rights or
convertible securities;
(d) not (i) incur or become contingently liable with respect to
any indebtedness for borrowed money other than (A) borrowings in the
ordinary course of business in a manner consistent with past customs
and practices or (B) borrowings to refinance existing indebtedness on
commercially reasonable terms, (ii) redeem, purchase, acquire or offer
to purchase or acquire any shares of its capital stock or equity
interests or any options, warrants or rights to acquire any of its
capital stock or equity interests or any security convertible into or
exchangeable for its capital stock or equity interests, (iii) sell,
pledge, dispose of or encumber any assets or businesses other than
dispositions in the ordinary course of business in a manner consistent
with past customs and practices or (iv) enter into any contract,
agreement, commitment or arrangement with respect to any of the
foregoing;
(e) use commercially reasonable efforts to (i) preserve intact
its business organizations and goodwill, (ii) keep available the
services of its present officers and key employees, and (iii) preserve
the goodwill and business relationships with clients and others having
business relationships with it and not engage in any action, directly
or indirectly, with the intent to adversely impact the transactions
contemplated by this Agreement;
(f) confer on a regular and frequent basis with one or more
representatives of CenterPoint to report operational matters of
materiality and the general status of ongoing operations;
(g) not (i) increase in any manner the base compensation of, or
enter into any new bonus or incentive agreement or arrangement with,
any of its employees, partners, members or owners, except in the
ordinary course of business in a manner consistent with past customs
and practices of the Company or any Company Subsidiary, as applicable,
(ii) pay or agree to pay any additional pension, retirement allowance
or other employee benefit under any Employee Plan to any such Person,
whether past or present, (iii) enter into any new employment,
severance, consulting, or other compensation agreement with any of its
existing employees, partners, members or owners (iv) amend or enter
into a new Employee
34
Plan (except as required by Law) or amend or enter into a new
collective bargaining agreement, or (v) engage in any new Affiliate
Transaction;
(h) comply in all material respects with all applicable Laws;
(i) not make any material investment in, directly or indirectly,
acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial equity interest in or substantial portion of
the assets of, or by any other manner, any businesses or any Person or
division thereof or otherwise acquire or agree to acquire any assets
in each case which are material to it other than in the ordinary
course of business in a manner consistent with past customs and
practices;
(j) other than as set forth on Schedule 7.1.4(ii), not sell,
------------------
lease, license, encumber or otherwise dispose of, or agree to sell,
lease, license, encumber or otherwise dispose of, any of its assets
other than in the ordinary course of business consistent with past
customs and practices;
(k) maintain with financially responsible insurance companies
insurance on its tangible assets and its businesses in such amounts
and against such risks and losses in a manner consistent with past
customs practices in all material respects; and
(l) collect and xxxx receivables in the ordinary and usual course
and consistent with past custom and practices.
7.1.2 Notwithstanding the fact that such action might otherwise be
permitted pursuant to this Article, none of the Stockholders or the Company
shall take, or permit any Company Subsidiary to take, any action that would
or is reasonably likely to result in any of the representations or
warranties of the Stockholders and the Company set forth in this Agreement
being untrue or in any of the conditions to the consummation of the
transactions contemplated hereunder set forth in Article X (other than
---------
Section 10.1(i)) not being satisfied.
--------------- ---
7.1.3 Prior to the Closing, (i) the Company and/or the Stockholders,
as applicable, shall terminate, without any liability to the Company or the
Company Subsidiaries, all agreements relating to the voting of the
Company's capital stock, and all agreements and obligations of the Company
and the Company Subsidiaries relating to borrowed money and/or involving
payments to or for the benefit of a Stockholder or former stockholder of
the Company, or an Affiliate or family member of a Stockholder or former
stockholder of the Company, including without limitation those set forth on
Schedule 7.1.3(i), but excluding (A) agreements as set forth on Schedule
----------------- --------
7.1.3(i)(A) and (B) items approved by CenterPoint in writing; and (ii)
-----------
notwithstanding anything contained in this Section 7.1 to the contrary, the
-----------
Company may, at its sole option, transfer and
35
distribute the assets listed on Schedule 7.1.3(ii) including, without
------------------
limitation, any cash or AR not necessary to meet the Target or otherwise
satisfy the obligations of the Company or the Stockholders hereunder (the
"EXCLUDED ASSETS") to the Persons listed on Schedule 7.1.3(ii), subject to
------------------
all liabilities and obligations of any nature (whether known or unknown,
accrued, absolute, contingent, direct, indirect, perfected, inchoate,
unliquidated or otherwise) relating to the Excluded Assets (collectively,
the "EXCLUDED LIABILITIES"); provided, however, that prior to the Closing,
-------- -------
the Company and the Stockholders shall obtain novations or other releases
or agreements discharging the Company from all Excluded Liabilities (so
that the respective Excluded Liabilities will become direct liabilities and
obligations of the assignee), and provide copies thereof to CenterPoint.
7.2 No-Shop.
-------
(a) After the date hereof and prior to the Closing Date or earlier
termination of this Agreement, the Company and the Stockholders shall (i)
not, and the Company shall use its diligent efforts to cause the Company
Subsidiaries and any officer, director or employee of, or any attorney,
accountant, investment banker, financial advisor or other agent retained by
the Company or any Company Subsidiary not to, initiate, solicit, negotiate,
encourage, or provide non-public or confidential information to facilitate,
any proposal or offer to acquire all or any substantial part of the
business and properties of the Company or any Company Subsidiary, or any
capital stock of the Company or any Company Subsidiary, whether by merger,
purchase of assets or otherwise, whether for cash, securities or any other
consideration or combination thereof, or enter into any joint venture or
partnership or similar arrangement, and (ii) promptly advise CenterPoint of
the terms of any communications the Company or the Stockholders may receive
or become aware of relating to any bid for part or all of the Company or
any Company Subsidiary.
(b) The Company and the Stockholders (i) acknowledge that a breach of
any of their covenants contained in this Section 7.2 will result in
-----------
irreparable harm to CenterPoint which will not be compensable in money
damages; and (ii) agree that such covenant shall be specifically
enforceable and that specific performance and injunctive relief shall be a
remedy properly available to the other party for a breach of such covenant.
7.3 Schedules. Each party hereto agrees that with respect to the
---------
representations and warranties of such party contained in this Agreement, such
party shall have the continuing obligation until the Closing promptly to
supplement or amend and deliver to the other parties all the schedules to this
Agreement (the "SCHEDULES") to correct any matter which would constitute a
breach of any such party's representations and warranties herein; provided,
--------
however, that no amendment or supplement to a Schedule that constitutes or
reflects a Company Material Adverse Effect or affects Schedule 4.2, Schedule 4.4
------------ ------------
or Schedule 8.8 may be made unless CenterPoint and a majority of the Founding
------------
Companies consent to such amendment or supplement. No amendment or supplement to
a Schedule shall be made later than three (3) business days prior to the
anticipated effectiveness of the Form S-1. For all purposes of this Agreement,
including, without
36
limitation, for purposes of determining whether the conditions set forth in
Sections 10.2 and 10.3 have been fulfilled, the
------------- ----
Schedules hereto shall be deemed to be the Schedules as amended or supplemented
pursuant to this Section 7.3. In the event that (i) one of the other Founding
-----------
Companies seeks to amend or supplement a Schedule pursuant to Section 7.3 of one
-----------
of the Other Agreements, (ii) such amendment or supplement constitutes or
reflects a Company Material Adverse Effect (as defined in such Other Agreement)
or affects Schedule 4.2, Schedule 4.4 or Schedule 8.8 of such Other Agreement,
------------ ------------ ------------
and (iii) CenterPoint and a majority of the Founding Companies consent to such
amendment or supplement, but the Company and the Stockholders do not, the
Company and the Stockholders may terminate this Agreement at any time prior to
the Closing Date. In the event that (i) the Company seeks to amend or
supplement a Schedule pursuant to this Section 7.3, (ii) such amendment or
-----------
supplement constitutes or reflects a Company Material Adverse Effect or affects
Schedule 4.2, Schedule 4.4 or Schedule 8.8, and (iii) CenterPoint and a majority
------------ ------------ ----
of the Founding Companies do not consent to such amendment or supplement, this
Agreement shall be deemed terminated.
No party to this Agreement shall be liable to any other party if this
Agreement shall be terminated pursuant to the provisions of this Section 7.3,
-----------
unless this Agreement is so terminated in connection with an amendment of or
supplement to a Schedule relating to a breach of a representation or warranty as
of the date of this Agreement in which case the Company shall pay to
CenterPoint's exclusive remedy (notwithstanding anything to the contrary) and as
liquidated damages, and not as a penalty, an amount equal to $2,000,000 (the
"LIQUIDATED DAMAGES AMOUNT"). The Company agrees that in the case of such
termination, CenterPoint and the Founding Companies (excluding the Company) will
sustain immediate and irreparable economic harm and loss of goodwill and that
actual losses suffered by such parties will be difficult, if not impossible, to
ascertain, but the Liquidated Damages Amount set forth herein is reasonable and
has been arrived at after a good faith effort to estimate such losses. Payment
of the Liquidated Damages Amount shall be made in cash to CenterPoint within
thirty (30) days of a termination pursuant to this Section 7.3 in connection
-----------
with an amendment of or supplement to a Schedule relating to a breach of a
representation or warranty as of the date of this Agreement.
7.4 Company Stockholder Meeting. The Company shall take all action in
---------------------------
accordance with applicable Laws and its Organizational Documents necessary to
duly call, give notice of, convene and hold a meeting of the Stockholders to be
held on the earliest practicable date determined in consultation with
CenterPoint to consider and vote upon approval of the Merger, this Agreement and
the transactions contemplated hereby by the Stockholders, and the Company's
Board of Directors shall recommend approval of the Merger, this Agreement and
the transactions contemplated hereby by the Stockholders.
37
ARTICLE VII
ADDITIONAL AGREEMENTS
8.1 Access to Information.
---------------------
8.1.1 The Company shall and shall cause the Company Subsidiaries to
afford to CenterPoint and its accountants, counsel, financial advisors and
other representatives, including without limitation the underwriters
engaged in connection with the IPO (each an "UNDERWRITER" and collectively,
the "UNDERWRITERS") and their counsel (collectively, the "CENTERPOINT
REPRESENTATIVES"), and to the other Founding Companies and their
accountants, counsel, financial advisors and other representatives, and
CenterPoint shall afford to the Stockholders and the Company and their
accountants, counsel, financial advisors and other representatives (the
"COMPANY REPRESENTATIVES"), upon reasonable notice, full access during
normal business hours throughout the period prior to the Closing Date to
all of its respective properties, books, contracts, commitments and records
(including, but not limited to, financial statements and Tax Returns) and,
during such period, shall furnish promptly to one another all due diligence
information requested by the other party. CenterPoint shall hold and shall
use its best efforts to cause the CenterPoint Representatives to hold, and
the Stockholders and the Company shall hold and shall use their best
efforts to cause the Company Representatives to hold, in strict confidence
all non-public information furnished to it in connection with the
transactions contemplated by this Agreement, except that each of
CenterPoint, the Stockholders and the Company may disclose any information
that it is required by law or judicial or administrative order to disclose.
In addition, CenterPoint will cause each of the other Founding Companies
and their members and stockholders to enter into a provision similar to
this Section 8.1 requiring each such Founding Company to keep confidential
-----------
any information obtained by such Founding Company in connection with the
transactions contemplated by this Agreement.
8.1.2 In the event that this Agreement is terminated in accordance
with its terms, each party shall promptly return to the disclosing party
all non-public written material provided pursuant to this Section 8.1 or
-----------
pursuant to the Other Agreements and shall not retain any copies, extracts
or other reproductions of such written material. In the event of such
termination, all documents, memoranda, notes and other writings prepared by
CenterPoint or the Company based on the information in such material shall
be destroyed (and CenterPoint and the Company shall use their respective
reasonable best efforts to cause their advisors and representatives to
similarly destroy such documents, memoranda and notes), and such
destruction (and reasonable best efforts) shall be certified in writing by
an authorized officer supervising such destruction.
38
8.2 Registration Statements.
-----------------------
8.2.1 Subject to the reasonable discretion of CenterPoint as advised
by the lead Underwriter, CenterPoint shall file with the SEC as soon as is
reasonably practicable after the date hereof the Registration Statements
and shall use all reasonable efforts to have the Registration Statements
declared effective by the SEC as promptly as practicable. CenterPoint shall
also take any action required to be taken under applicable state "blue sky"
or securities laws in connection with the issuance of CenterPoint Common
Stock. CenterPoint, the Company and the Stockholders shall promptly furnish
to each other all information, and take such other actions, as may
reasonably be requested in connection with making such filings. All
information provided and to be provided by CenterPoint and the Company,
respectively, for use in the Registration Statements shall be true and
correct in all material respects without omission of any material fact
which is required to make such information not false or misleading as of
the date thereof and in light of the circumstances under which given or
made. The Company and the Stockholders agree promptly to advise CenterPoint
if at any time during the period in which a prospectus relating to the
offering of the Merger is required to be delivered under the Securities
Act, any information contained in the prospectus concerning the Company,
the Company Subsidiaries or the Stockholders becomes incorrect or
incomplete in any material respect, and to provide the information needed
to correct such inaccuracy or remedy such incompletion."
8.2.2 CenterPoint agrees that it will provide to the Company and its
counsel copies of drafts of the Registration Statements (and any amendments
thereto) containing material changes to the information therein as they are
prepared and will not (i) file with the SEC, (ii) request the acceleration
of the effectiveness of or (iii) circulate any prospectus forming a part
of, the Registration Statements (or any amendment thereto) unless the
Company and its counsel (x) have had at least two days to review the
revised information contained therein (which changes shall be highlighted
by computer generated marks indicating the additions and deletions made
from the prior draft reviewed by the Company's counsel) and (y) have not
objected to the substance of the information contained therein. Any
objections posed by the Company or its counsel shall be in writing and
state with specificity the material in question, the reason for the
objection, and the Company's proposed alternative. If the objection is
founded upon a rule promulgated under the Securities Act, the objection
shall cite the rule. Notwithstanding the foregoing, during the five (5)
business days immediately preceding the date scheduled for the filing of
the Registration Statements and any amendment thereto, the Company and its
counsel shall be obligated to respond to proposed changes electronically
transmitted to them within two (2) hours from the time the proposed changes
(in the case of the initial filing of the Registration Statements, from the
last circulated draft of the Registration Statements; and, in the case of
any subsequent filing of the Registration Statements or any amendment
thereof, from the most recently filed Registration Statements or amendment
thereof) are transmitted to the Company's counsel; provided, that,
CenterPoint has provided to the
39
Company or its counsel reasonable advance notice of such proposed changes;
provided, further, that such changes are highlighted by computer generated
marks indicating the additions and deletions made from the prior draft
reviewed by the Company's counsel. CenterPoint will advise each Stockholder
Representative of the effectiveness of the Registration Statements, advise
each Stockholder Representative of the entry of any stop order suspending
the effectiveness of the Registration Statements or the initiation of any
proceeding for that purpose, and, if such stop order shall be entered, use
its best efforts promptly to obtain the lifting or removal thereof. Upon
the written request of any Stockholder, CenterPoint will furnish to such
Stockholder a reasonable number of copies of the final prospectus
associated with the IPO.
8.3 Expenses and Fees. CenterPoint shall pay the fees and expenses of the
-----------------
independent public accountants and legal counsel to CenterPoint and all filing,
printing and other reasonable, documented fees and expenses associated with the
IPO and Form S-4. Neither the Company nor the Stockholders will be liable for
any portion of the above expenses in the event the IPO is not completed.
CenterPoint shall also pay the underwriting discounts and commissions payable in
connection with the sale of CenterPoint Common Stock in the IPO. All other
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses.
8.4 Agreement to Cooperate. Subject to the terms and conditions herein
----------------------
provided, each of the parties hereto shall use all reasonable efforts to take,
or cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement.
8.5 Public Statements. Except as may be required by law, no party hereto
-----------------
nor any Affiliate of any party hereto shall issue any press release or any
written public statement with respect to this Agreement or the transactions
contemplated by this Agreement or the Other Agreements without the prior written
consent of CenterPoint and the Company.
8.6 Registration Rights.
-------------------
8.6.1 At any time after the second anniversary but prior to the
fourth anniversary of the Closing Date, whenever CenterPoint proposes to
register any CenterPoint Common Stock for its own account or the account of
others under the Securities Act for a public offering for cash other than a
registration relating to employee benefit plans or acquisitions,
CenterPoint will give each of the Stockholders prompt written notice of its
intent to do so. Upon the written request of any of the Stockholders given
within thirty (30) days after receipt of such notice, CenterPoint will use
its best efforts to cause to be included in such registration all of the
CenterPoint Common Stock which any such Stockholder requests, provided that
CenterPoint shall have the right to reduce the number of shares included in
such registration, if CenterPoint is advised in writing in good faith by
any managing underwriter of the securities being offered pursuant to any
registration
40
statement under this Section 8.6 that the number of shares to be sold by
-----------
Persons other than CenterPoint is greater than the number of such shares
which can be offered without adversely affecting the offering; in such
case, CenterPoint may reduce the number of shares offered for the accounts
of such Persons to a number deemed satisfactory by such managing
underwriter. Any such reduction shall occur first by eliminating from such
registration any shares held by Persons other than Persons holding
CenterPoint Common Stock directly or indirectly immediately following the
Closing and then reducing pro rata (based upon the number of shares
requested to be registered) the number of shares offered for the account of
such Person. CenterPoint shall not be obligated to register any shares of
CenterPoint Common Stock held by any Stockholder at any time when such
shares are not then transferable in accordance with Section 12.2 hereof.
------------
Registration rights under this Section 8.6 may be transferred in whole or
-----------
in part in connection with the transfer of any shares of CenterPoint Common
Stock received pursuant to this Agreement other than the transfer of the
kind described in clause (x) of Section 12.2 hereof.
------------
8.6.2 Except for underwriting commissions and discounts, all expenses
incurred in connection with the registrations under this Section 8.6
-----------
(including all registration, filing, qualification, legal, printer and
accounting fees) shall be paid by CenterPoint. In connection with
registrations under this Section 8.6, CenterPoint shall
-----------
(a) use its best efforts to prepare and file with the SEC as soon
as reasonably practicable, a registration statement with respect to the
CenterPoint Common Stock (and such amendments and supplements to such
registration statement and the prospectus used in connection therewith as
may be required by applicable law) and use its best efforts to cause such
registration to promptly become and remain effective for a period of at
least one hundred twenty (120) days (or such shorter period during which
holders shall have sold all CenterPoint Common Stock which they requested
to be registered);
(b) upon the written request of a Stockholder whose CenterPoint
Common Stock is to be covered by any such registrations, furnish to such
Stockholder a reasonable number of copies of the prospectus covering the
offering and sale by the Stockholder of the shares to be covered thereby;
(c) use its best efforts to register and qualify the CenterPoint
Common Stock covered by such registration statement under applicable state
securities laws as the holders shall reasonably request for the
distribution for the CenterPoint Common Stock;
(d) take such other actions as are reasonable and necessary to
comply with the requirements of the 1933 Act and the regulations
thereunder;
41
(e) advise each Stockholder whose CenterPoint Common Stock is to
be covered by such registration of the effectiveness of such
registration statement, advise each such Stockholder of the entry of
any stop order suspending the effectiveness of such registration
statement or of the initiation of any proceeding for that purpose,
and, if such stop order shall be entered, use its best efforts
promptly to obtain the lifting or removal thereof; and
(f) at any time when a prospectus relating to any CenterPoint
Common Stock is required to be delivered under the 1933 Act, notify
each Stockholder whose CenterPoint Common Stock is to be covered by
such registration of the happening of any event as a result of which
the registration statement, the prospectus or any document
incorporated therein by reference includes an untrue statement of a
material fact or omits to state a material fact required to be stated
therein or necessary to make the statements made therein not
misleading and, at the request of such Stockholder, prepare and
furnish to such Stockholder a post-effective amendment or supplement
to the registration statement or the related prospectus or any
document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of such
shares, such prospectus shall not include any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements made therein not
misleading.
8.6 In connection with each registration pursuant to this Section 8.6
-----------
covering an underwritten registration public offering, CenterPoint and each
participating holder agree to enter into a written agreement with the
managing underwriters in such form and containing such provisions as are
customary in the securities business for such an arrangement between such
managing underwriters and companies of CenterPoint's size and investment
stature, including indemnification.
8.6 In consideration of the granting to the Stockholders of the
registration rights under this Section 8.6, the Stockholders agree, and
-----------
agree to enter into an agreement with the underwriters in connection with
an underwritten registration to the effect, that it/they will not sell,
transfer or otherwise dispose of, including, without limitation, through
put or short sale arrangements, shares of CenterPoint Common Stock in the
ten (10) days prior to the effectiveness of any registration of CenterPoint
Common Stock for sale to the public and for up to ninety (90) days
following the effectiveness of such registration, provided that all
directors, executive officers and holders of more than five percent (5%) of
the outstanding CenterPoint Common Stock agree to the same restrictions;
and further provided that, with respect to the first public offering of
shares of the CenterPoint Common Stock within three (3) years following the
IPO, the Stockholders shall have been afforded a meaningful opportunity to
include shares in such registration after any reduction by reason of
underwriters' written advice.
42
8.7 CenterPoint Covenants. After the date hereof and prior to the Closing
---------------------
Date or earlier termination of this Agreement, in accordance with its terms,
CenterPoint shall comply in all material requests with all applicable laws.
CenterPoint shall not take any action that would or is reasonably likely to
result in any of the representations or warranties of CenterPoint set forth in
this Agreement being untrue or in any of the conditions to the consummation of
the transactions contemplated hereunder set forth in Article X not being
---------
satisfied.
8.8 Release of Guarantees. CenterPoint shall use all commercially
---------------------
reasonable efforts and good faith to have the Stockholders released from any and
all guarantees on any indebtedness and leases that they personally guaranteed
for the benefit of the Company as set forth on Schedule 8.8, with all such
------------
guarantees on indebtedness and leases being assumed by CenterPoint, if necessary
to achieve such releases. If any guaranteed indebtedness is repaid in full with
proceeds from the IPO and the Stockholders' guarantees thereafter shall have no
further force and effect, then CenterPoint shall not be obligated to use any
efforts to obtain release of such guarantee. In the event that CenterPoint
cannot obtain such releases from the lenders of any such guaranteed indebtedness
or lessors of any guaranteed leases, CenterPoint agrees to indemnify, defend and
hold harmless the Stockholders against any and all claims made by lenders or
landlords under such guarantees.
8.9 Lock-Up Agreement. Each Stockholder agrees, and agrees to enter into
-----------------
an agreement with the Underwriter on or prior to the date on which preliminary
Prospectuses are delivered to the effect that, the Stockholder will not offer,
sell, contract to sell or otherwise dispose of any shares of CenterPoint Common
Stock, or any securities convertible into or exercisable or exchangeable for
CenterPoint Common Stock, for a period of 180 days after the date of the final
Prospectus for the IPO without the prior written consent of the Underwriter
except for shares of CenterPoint Common Stock disposed of as bona fide gifts,
subject to any remaining portion of the 180-day period applying to any shares so
disposed of.
8.10 Preparation and Filing of Tax Returns.
-------------------------------------
8.10.1 The Company shall be responsible for causing the timely filing
of the final pre-Closing Returns for the Company and the Company
Subsidiaries; provided, however, that CenterPoint and its advisors shall
have the right to review and approve such returns prior to filing, which
approval shall not be unreasonably withheld. CenterPoint shall, and shall
cause its Affiliates to, provide to the Company such cooperation and
information reasonably requested in filing any return, amended return or
claim for refund, determining a liability for Taxes or a right to refund of
Taxes or in conducting any audit or other proceeding in respect of Taxes.
The Company shall bear costs of filing such returns.
8.10.2 Each of the Company, CenterPoint and the Stockholders shall
comply with the tax reporting requirements of Section 1.351-3 of the
Treasury Regulations promulgated under the Code, and shall treat the
transaction as subject to the provisions of Section 351 of the Code.
43
8.11 Maintenance of Insurance. The Company covenants and agrees that all
------------------------
insurance policies listed, or required to be listed, on Schedule 4.20 will be
-------------
maintained in full force and effect through the Closing Date.
8.12 Administration. After the Closing, at the request of the
--------------
Stockholders, CenterPoint shall, directly or through one or more of its
subsidiaries, administer and manage the collection of amounts referred to on
Schedule 7.1.3(ii) using reasonable care and in accordance with the Company's
------------------
policies in effect at Closing.
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification by the Stockholders. Subject to Sections 9.7 and 9.8,
----------------------------------- ------------ ---
the Stockholders jointly and severally agree to indemnify, defend and save the
CenterPoint Indemnified Parties (hereinafter defined), forever harmless from and
against, and to promptly pay to a CenterPoint Indemnified Party or reimburse a
CenterPoint Indemnified Party for, any and all Losses (hereinafter defined)
sustained or incurred by any CenterPoint Indemnified Party resulting from,
arising out of, in connection with or otherwise by virtue of:
(a) any misrepresentation or breach of a representation or warranty
made in Article V herein or in any certificate, schedule, document, exhibit
---------
or other instrument delivered hereunder by any Stockholder or any action,
demand or claim by any third party against or affecting any CenterPoint
Indemnified Party which, if successful, would give rise to a breach of any
such representation or warranty, except that the obligation of the
Stockholders to indemnify, defend and save harmless for any
misrepresentation or breach of representation or warranty made in Section
-------
5.1 hereof or in any certificate, schedule, document, exhibit or other
---
instrument delivered in respect thereof shall not be joint and several, but
such obligation shall be several only and limited to the several
Stockholder(s) making such misrepresentation or breach;
(b) any failure by the Company or any Stockholder to observe or
perform any of their covenants and agreements set forth herein related to
the period prior to the Closing except that the obligation of the
Stockholders to indemnify, defend and save harmless for any failure to
observe or perform any covenant or agreement shall not be joint and
several, but such obligation shall be several only and limited to the
several Stockholder(s) failing to observe or perform such covenant or
agreement;
(c) any liability under the 1933 Act, the 1934 Act or other federal or
state law or regulation, at common law or otherwise, arising out of or
based upon any untrue statement or alleged untrue statement of a material
fact relating to the Company, contained in any preliminary prospectus
relating to the IPO, the Registration Statements or any proxy
44
statement or prospectus forming a part thereof, or any amendment thereof or
supplement thereto, or arising out of or based upon any omission to state
therein a material fact relating to the Company required to be stated
therein or necessary to make the statements therein not misleading, and not
provided to CenterPoint or its counsel by the Company; provided, however,
that such indemnity shall not inure to the benefit of any CenterPoint
Indemnified Party to the extent that such untrue statement (or alleged
untrue statement) was made in, or omission (or alleged omission) occurred
in, any preliminary prospectus and (i) the Company provided, in writing,
corrected information to CenterPoint or its counsel for inclusion in the
final prospectus prior to distributing such prospectus, and such
information was not so included, or (ii) CenterPoint did not provide the
Company and its counsel with the information required to be provided
pursuant to Section 8.2.2, and such information is the basis for the untrue
-------------
statement or omission (or alleged untrue statement or omission) giving rise
to the liability under this Section 9.1(c); or
--------------
(d) notwithstanding anything contained in this Agreement to the
contrary, (i) any arrangements made by or on behalf of the Stockholder or
the Company in connection with the Merger or the transactions contemplated
by this Agreement with respect to brokerage, finders and other fees or
commissions, (ii) any Loss relating to, resulting from, arising out of or
otherwise by virtue of any matter which is or should be listed on Schedule
--------
4.10 or Schedule 7.1.3 hereto and (iii) any payment with respect to
---- --------------
Dissenting Shares.
As used herein, the "CENTERPOINT INDEMNIFIED PARTIES" shall mean
CenterPoint, its Subsidiaries and Affiliates, the Founding Companies other than
the Company (the "OTHER FOUNDING COMPANIES"), and their respective officers,
directors, employees, agents, employee plans and plan fiduciaries, plan
administrators or other Person dealing with any such plans; provided, however,
that the Other Founding Companies, and each of their respective officers,
directors, employees, agents, employee plans and plan fiduciaries, plan
administrators or other Persons dealing with any such plans, shall cease to be a
"CENTERPOINT INDEMNIFIED PARTY" for all purposes hereunder as of the Closing,
and thereafter such Persons shall have no further rights and remedies under this
Article IX (except to the extent a Person is an officer, director, employee or
----------
agent of CenterPoint as a result of the consummation of the transactions
contemplated under the Other Agreements); provided further, that the
Subsidiaries of CenterPoint shall include the Company, the Company Subsidiaries
and the other Founding Companies from and after the Closing. Accordingly, for
purposes of this Article IX and subject to the limitations set forth in this
----------
Article IX, the Other Founding Companies, and each of their respective officers,
----------
directors, employees, agents, employee plans and plan fiduciaries, plan
administrators or other Persons dealing with any such plans, shall be deemed to
be third party beneficiaries of this Agreement.
As used in this Agreement, "LOSSES" shall mean the following: (i) in the
event the Agreement is terminated pursuant to Section 11.1 and the Closing does
------------
not occur, any and all out-of-pocket costs and expenses (including reasonable
fees and expenses of the attorneys, accountants and other experts), or (ii)
subsequent to the Closing, any and all liabilities (whether contingent,
45
fixed or unfixed, liquidated or unliquidated, or otherwise), obligations,
deficiencies, demands, claims, suits, actions, or causes of action, assessments,
losses, costs, expenses, interests, fines, penalties, actual or punitive damages
or costs or expenses of any and all investigations, proceedings, judgments,
orders, environmental analyses, remediations, settlements and compromises
(including reasonable fees and expenses of the attorneys, accountants and other
experts).
9.2 Indemnification by CenterPoint. CenterPoint agrees to indemnify,
------------------------------
defend and save each of the Stockholders and their respective Affiliates, and
their Affiliates' respective officers, directors, employees and agents (each, a
"STOCKHOLDER INDEMNIFIED PARTY") forever harmless from and against, and to
promptly pay to a Stockholder Indemnified Party or reimburse a Stockholder
Indemnified Party for, any and all Losses sustained or incurred by any
Stockholder Indemnified Party relating to, resulting from, arising out of or
otherwise by virtue of any of the following:
(a) any misrepresentation or breach of a representation or warranty
made herein or in any document or other instrument delivered hereunder by
CenterPoint or any action, demand or claim by any third party against or
affecting any Stockholder Indemnified Party which, if successful, would
give rise to a breach of any such representation or warranty;
(b) any failure by CenterPoint to observe or perform any of its
covenants and agreements set forth herein or in any document or other
instrument delivered hereunder;
(c) any liability under the 1933 Act, the 1934 Act or other Federal or
state law or regulation, at common law or otherwise, arising out of or
based upon any untrue statement or alleged untrue statement of a material
fact relating to CenterPoint or any of the Other Founding Companies
contained in any preliminary prospectus relating to the IPO, the
Registration Statements or any proxy statement or prospectus forming a part
thereof, or any amendment thereof or supplement thereto, or arising out of
or based upon any omission or alleged omission to state therein a material
fact relating to CenterPoint or any of the Other Founding Companies
required to be stated therein or necessary to make the statements therein
not misleading; and
(d) any liability under the 1933 Act, the 1934 Act, or other federal
or state law or regulation, at common law or otherwise, arising out of or
based upon any untrue statement or alleged untrue statement of a material
fact relating to the Company or the Stockholders, contained in any
preliminary prospectus relating to the IPO, the Registration Statements or
any proxy statement or prospectus forming a part thereof, or any amendment
thereof or supplement thereto, or arising out of or based upon any omission
to state therein a material fact relating to the Company or the
Stockholders required to be stated therein or necessary to make the
statements therein not misleading, to the extent such untrue statement (or
alleged untrue statement) was made in, or omission (or alleged omission)
occurred in, any preliminary prospectus and (i) the Company or the
Stockholders
46
provided, in writing, corrected information to CenterPoint or its counsel
for inclusion in the final prospectus prior to distributing such
prospectus, and such information was not so included, or (ii) CenterPoint
did not provide the Company and its counsel with the information required
to be provided pursuant to Section 8.2.2, and such information is the basis
-------------
for the untrue statement or omission (or alleged untrue statement or
omission) giving rise to the liability under this Section 9.2(d).
--------------
9.3 Indemnification Procedure for Third Party Claims.
------------------------------------------------
9.3.1 In the event that subsequent to the Closing any Person
entitled to indemnification under this Agreement (an "INDEMNIFIED PARTY")
receives notice of the assertion of any claim, issuance of any order or the
commencement of any action or proceeding by any Person who is not a party
to this Agreement or an Affiliate of a party, including, without
limitation, any domestic or foreign court or Governmental Authority (a "
THIRD PARTY CLAIM"), against such Indemnified Party, against which a party
to this Agreement is required to provide indemnification under this
Agreement (an "INDEMNIFYING PARTY"), the Indemnified Party shall give
written notice thereof together with a statement of any available
information regarding such claim to the Indemnifying Party within thirty
(30) days after learning of such claim (or within such shorter time as may
be necessary, in the Indemnified Party's reasonable judgment, to give the
Indemnifying Party a reasonable opportunity to respond to and defend such
claim). The Indemnifying Party shall have the right, upon written notice to
the Indemnified Party (the "DEFENSE NOTICE") within ten days (10) after
receipt from the Indemnified Party of notice of such claim, to conduct at
its expense the defense against such claim in its own name, or if necessary
in the name of the Indemnified Party; provided, however, that the
Indemnified Party shall have the right to approve the defense counsel
selected by the Indemnifying Party, which approval shall not be
unreasonably withheld, and in the event the Indemnifying Party and the
Indemnified Party cannot agree upon such counsel within ten (10) days after
the Defense Notice is provided, then the Indemnifying Party shall propose
an alternate defense counsel, who shall be subject again to the Indemnified
Party's approval.
9.3.2 In the event that the Indemnifying Party shall fail to timely
give the Defense Notice, it shall be deemed to have elected not to conduct
the defense of the subject claim, and in such event the Indemnified Party
shall have the right to conduct such defense in good faith at the cost and
expense of the Indemnifying Party and the Indemnifying Party shall
reimburse the Indemnified Party for all costs, expenses and settlement
amounts actually paid in connection therewith; provided, however, that
-------- -------
under no circumstances shall the Indemnified Party compromise or settle any
Third Party Claim without the prior written consent of the Indemnifying
Party (which, in the case of the Stockholders, may be granted by the
Stockholder Representative (as defined in Section 9.13)), which consent
------------
shall not be unreasonably withheld or delayed.
47
9.3.3 In the event that the Indemnifying Party does elect to conduct
the defense of the subject claim, the Indemnified Party will cooperate with
and make available to the Indemnifying Party such assistance and materials
as may be reasonably requested by it, all at the expense of the
Indemnifying Party, and the Indemnified Party shall have the right at its
expense to participate in the defense assisted by counsel of its own
choosing, provided that the Indemnified Party shall have the right to
compromise and settle the claim only with the prior written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld or
delayed. Without the prior written consent of the Indemnified Party, the
Indemnifying Party will not enter into any settlement of any Third Party
Claim or cease to defend against such claim, if pursuant to or as a result
of such settlement or cessation, (i) injunctive or other equitable relief
would be imposed against the Indemnified Party, or (ii) such settlement or
cessation would lead to liability or create any financial or other
obligation on the part of the Indemnified Party for which the Indemnified
Party is not entitled to indemnification hereunder, or (iii) such
settlement includes a written admission of guilt. The Indemnifying Party
shall not be entitled to control, and the Indemnified Party shall be
entitled to have sole control over, the defense or settlement of any claim
(A) to the extent that claim seeks an order, injunction or other equitable
relief against the Indemnified Party which, if successful, could materially
interfere with the business, operations, assets, condition (financial or
otherwise) or prospects of the Indemnified Party or (B) in a proceeding to
which the Indemnifying Party is also a party and the Indemnified Party
determines in good faith that joint representation would be inappropriate
(and in each case the cost of such defense shall constitute an amount for
which the Indemnified Party is entitled to indemnification hereunder). If
an offer is made to settle a Third Party Claim which all parties to such
Third Party Claim (including the Indemnifying Party) are prepared to settle
and which offer the Indemnifying Party is permitted to settle under this
Section 9.3.3 only upon the prior written consent of the Indemnified Party,
-------------
the Indemnifying Party will give prompt written notice to the Indemnified
Party to that effect. If the Indemnified Party fails to consent to such
firm offer within (30) calendar days after its receipt of such notice, the
Indemnified Party may continue to contest or defend such Third Party Claim
and, in such event, the maximum liability of the Indemnifying Party as to
such Third Party Claim will not exceed the amount of such settlement offer,
plus costs and expenses paid or incurred by the Indemnified Party through
the end of such (30) day period.
9.3.4 Any judgment entered, order issued or settlement agreed upon
in the manner provided herein shall be binding upon the Indemnifying Party,
and shall conclusively be deemed to be an obligation with respect to which
the Indemnified Party is entitled to prompt indemnification hereunder.
9.4 Direct Claims. It is the intent of the parties hereto that all direct
-------------
claims by an Indemnified Party against a party hereto not arising out of Third
Party Claims shall be subject to and benefit from the terms of this Article IX.
----------
Any claim under this Article IX by an Indemnified Party for indemnification
----------
other than indemnification against a Third Party Claim, (a "DIRECT
48
CLAIM") will be asserted by giving the Indemnifying Party reasonably prompt
written notice thereof, together with a statement of any available information
regarding such claim, and the Indemnifying Party will have a period of thirty
(30) calendar days within which to satisfy such Direct Claim. If the
Indemnifying Party does not so respond within such thirty (30) calendar day
period, the Indemnifying Party will be deemed to have rejected such claim, in
which event the Indemnified Party will be free to pursue such remedies as may be
available to the Indemnified Party under this Article IX.
9.5 Failure to Give Timely Notice. A failure by an Indemnified Party to
-----------------------------
give timely, complete or accurate notice as provided in Section 9.3 or 9.4 will
----------- ---
not affect the rights or obligations of any party hereunder except and only to
the extent that, as a result of such failure, any party entitled to receive such
notice was deprived of its right to recover any payment under any applicable
insurance coverage, or deprived of its right to assert any claim because of
expiration of the applicable statute of limitations, or was otherwise directly
and materially damaged as a result of such failure to give timely notice.
9.6 Reduction of Loss. To the extent any Loss of an Indemnified Party is
-----------------
reduced by receipt of payment (i) under insurance policies (net of any
retroactive adjustment or other reimbursement to the insurer in respect of such
payment), (ii) from third parties not affiliated with the Indemnified Party, or
(iii) the amount of any tax benefit to the CenterPoint Indemnified Parties, such
payments and/or tax benefits (net of the expenses of the recovery thereof) shall
be credited against such Loss. The pendency of such payments shall not delay or
reduce the obligation of the Indemnifying Party to make payment to the
Indemnified Party in respect of such Loss, and the Indemnified Party shall not
have any obligation, hereunder or otherwise, to pursue payment under or from any
insurer or third party in respect of such Loss. The Indemnified Party shall
cooperate, at no expense to the Indemnified Party, in any reasonable efforts of
the Indemnifying Party in pursuing such payments, including expressly
acknowledging the Indemnifying Party's right and standing to pursue such
payments, and the Indemnified Party will use its customary efforts short of
litigating with an insurer or third party to collect amounts due from such
insurer or third party. If any insurance or third party reimbursement is
obtained subsequent to payment by an Indemnifying Party in respect of a Loss,
such reimbursement (to the extent of amounts theretofore paid by the
Indemnifying Party on account of such Loss) shall be promptly paid over to the
Indemnifying Party.
9.7 Limitation on Indemnities.
-------------------------
9.7.1 Threshold for the Stockholders. With respect to representations
------------------------------
and warranties, the Stockholders shall not have any liability pursuant to
Section 9.1(a) hereof unless and until and only to the extent that the
--------------
aggregate amount of Losses accrued pursuant to Section 9.1(a) exceeds 1% of
--------------
Aggregate Basic Purchase Consideration; provided, however, that this
threshold shall not apply to Losses arising out of breaches of
representations or warranties contained in Sections 5.1.1, 5.1.2, 5.2, and
--------------------------
5.1.8 as it relates to the representation and warranty of the Company set
-----
forth in Section 4.16, and
------------
49
the Stockholders shall indemnify the CenterPoint Indemnified Parties for
any Losses accruing thereunder in accordance with this Article IX without
----------
regard to such threshold.
9.7.2 Threshold for CenterPoint. With respect to representations and
-------------------------
warranties, CenterPoint shall not have any liability pursuant to Section
-------
9.2(a) hereof unless and until and only to the extent that the aggregate
------
amount of the Losses accrued pursuant to Section 9.2(a) exceeds 1% of
--------------
Aggregate Basic Purchase Consideration; provided, however, that this
-------- --------
threshold shall not apply to Losses arising out of the breach of
representations or warranties contained in Section 6.2 and CenterPoint
-----------
shall indemnify the Stockholder Indemnified Parties from any Losses
occurring thereunder in accordance with this Article IX without regard to
----------
such threshold.
9.7.3 Limitations on Claims Against the Stockholders. The liability
----------------------------------------------
of all Stockholders for misrepresentations and breaches of representations
and warranties under Section 9.1(a) shall be limited to 100% of the sum of
--------------
the Aggregate Basic Purchase Consideration in the aggregate; provided,
--------
however, that such liability for a Stockholder shall be limited to 1.5
-------
times the sum of (i) the Aggregate Basic Purchase Consideration and (ii)
the Contingent Payment received, if any, by such Stockholder; provided
--------
further, however, that such limitation shall not apply to Losses arising
------- -------
out of breaches of representations or warranties contained in Sections
--------
5.1.1, 5.1.2, 5.2, and 5.1.8 as it relates to the representation and
----------------- -----
warranty of the Company set forth in Section 4.16, and any Losses accruing
------------
thereunder shall not count towards such limitations.
9.7.4 Limitation on Claims Against CenterPoint. The liability of
----------------------------------------
CenterPoint under Section 9.2(a) shall be limited to 100% of Aggregate
--------------
Basic Purchase Consideration in the aggregate; provided, however that this
limitation shall not apply to Losses arising out of breaches of
representations or warranties in Section 6.2 and any Losses accruing
-----------
thereunder shall not count towards such limitation.
9.8 Survival of Representations, Warranties and Covenants of the
------------------------------------------------------------
Stockholders and the Company; Time Limits on Indemnification Obligations.
------------------------------------------------------------------------
Notwithstanding any right of CenterPoint to fully investigate the affairs of the
Stockholders, the Company, the Company Subsidiaries and the Business, and
notwithstanding any Knowledge of facts determined or determinable by CenterPoint
pursuant to such investigation or right of investigation, CenterPoint has the
right to rely fully upon the representations, warranties, covenants and
agreements of the Stockholders and the Company contained in this Agreement or in
any certificate delivered pursuant to any of the foregoing. All such
representations, warranties, covenants and agreements of the Stockholders and
the Company shall survive the execution and delivery of this Agreement and the
Closing hereunder; provided, however, (i) that the Stockholders' obligations
pursuant to Section 9.1, other than those relating to covenants and agreements
-----------
to be performed by the Stockholders after the Closing, shall expire one (1) year
after the Closing, except with respect to obligations arising under or relating
to Section 4.16 hereof as it relates to federal, state, local and foreign income
------------
taxation, which shall survive until the earlier of (A) the expiration of the
applicable periods
50
(including any extensions) of the respective statutes of limitation applicable
to the payment of the Taxes or (B) the completion of the final audit and
determinations by the applicable taxing authority and final disposition of any
deficiency resulting therefrom; and (ii) solely to the extent that CenterPoint
actually incurs liability under the 1933 Act or the 1934 Act, the obligations
under Sections 9.1(c) or (d) above shall survive until the expiration of any
--------------- ---
applicable statute of limitations with respect to such claims.
9.9 Survival of Representations, Warranties and Covenants of CenterPoint;
---------------------------------------------------------------------
Time Limits on Indemnification Obligations. All representations, warranties,
------------------------------------------
covenants and agreements of CenterPoint shall survive the execution and delivery
of this Agreement and the Closing hereunder; provided, however, that
-------- -------
CenterPoint' obligations under Section 9.2, other than those relating to
-----------
covenants and agreements to be performed by CenterPoint after the Closing, shall
expire one year after Closing, except that, solely to the extent that the
Stockholders actually incur liability under the 1933 Act or the 1934 Act, the
obligations under Sections 9.2(c) or (d) above shall survive until the
--------------- ---
expiration of any applicable statute of limitations with respect to such claims.
9.10 Defense of Claims; Control of Proceedings. Notwithstanding anything
-----------------------------------------
in this Agreement to the contrary, to the extent any Loss subject to
indemnification hereunder would exceed the Indemnifying Party's indemnity
obligations under this Agreement, the Indemnified Party shall be entitled to
control the defense of such claim or management of such proceeding with respect
to such excess Loss.
9.11 Fraud; Exclusive Remedy. The limitations set forth in this Article IX
----------------------- ----------
shall not apply to fraud by any party. In the absence of fraud and
notwithstanding any law to the contrary and any rights that would otherwise be
available thereunder, the indemnification provisions of this Article IX set
forth the sole and exclusive remedy of the CenterPoint Indemnified Parties
following the Closing against the Stockholders and of the Stockholder
Indemnified Parties following the Closing against CenterPoint and its affiliates
with respect to any claim for relief resulting from, arising out of or otherwise
by virtue of this Agreement and the transactions contemplated hereby.
9.12 Manner of Satisfying Indemnification Obligations. Subsequent to the
------------------------------------------------
Closing, the Stockholders may satisfy their respective obligations, if any,
under this Article IX (i) with cash, (ii) by tendering to the CenterPoint
--------------
Indemnified Parties cash or shares of CenterPoint Common Stock that are
transferable in accordance with Section 12.2, such shares to be valued at the
Market Price. "MARKET PRICE" shall mean the average closing (last) price for a
share of CenterPoint Common Stock (as reported on the exchange or market on
which such shares are then listed or traded) for the most recent twenty (20)
days that such shares have traded ending on the date two (2) days prior to the
date tendered pursuant to clause (i) of the preceding sentence, or, if such
shares are not then listed or traded on an exchange or other market, the fair
market value of such shares as determined by an appraiser reasonably agreed to
by the parties.
51
9.13 Stockholder Representative. Each Stockholder appoints Xxxxxx Xxxxx
--------------------------
and Xxxxxxx Xxxxxxx (collectively, the "STOCKHOLDER REPRESENTATIVE") as its
agent and representative with full power and authority to agree, contest or
settle any claim or dispute affecting any Stockholder made under Articles II or
-----------
IX and to otherwise act on behalf of the Stockholders in accordance with the
--
terms of this Agreement, including, without limitation, to direct the amount and
manner of the payment of Aggregate Basic Purchase Consideration; provided, that
-------- ----
the Stockholder Representative may be removed and a successor to the Person
originally serving as the Stockholder Representative may be designated in a
writing signed by a majority in interest of the Stockholders and delivered to
CenterPoint in accordance with Section 15.2
------------
ARTICLE X
CLOSING CONDITIONS
10.1 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 at or prior to the Closing of the following conditions:
(a) the Underwriting Agreement related to the IPO shall have been
executed and the closing of the sale of CenterPoint Common Stock to the
Underwriters pursuant thereto shall have occurred simultaneously with the
Closing hereunder;
(b) the closings of the transactions contemplated under each of the
Other Agreements shall have occurred simultaneously with the Closing
hereunder, unless terminated in accordance with Section 7.3 of the
-----------
applicable Other Agreement;
(c) the Registration Statements shall have become effective in
accordance with the provisions of the Securities Act, and no stop order
suspending such effectiveness shall have been issued and remain in effect
and no proceeding for that purpose shall have been instituted by the SEC or
any state regulatory authorities;
(d) no preliminary or permanent injunction or other order or decree
shall be pending or issued by any federal or state court which seeks to
prevent or prevents the consummation of the IPO, the Merger or any of the
Other Mergers shall have been issued and remain in effect;
(e) the minimum price condition set forth on Schedule 2.1 shall have
------------
been satisfied.
(f) no action shall have been taken, and no statute, rule or
regulation shall have been enacted, by any state or federal government or
governmental agency in the United
52
States which would prevent the consummation of the Merger or any of the
Other Mergers or make the consummation of the Merger or any of the Other
Mergers illegal;
(g) all material governmental and third party waivers, consents and
approvals required for the consummation of the Merger or any of the Other
Mergers and the transactions contemplated hereby and by the Other
Agreements (including, without limitation, any consents listed on Schedules
---------
4.3.2 or 4.12) shall have been obtained and be in effect;
----- ----
(h) No action, suit or proceeding with respect to the Merger has been
filed or threatened by a third party and remains threatened or remains
pending before any court, Governmental Authority or regulatory Person;
(i) This Agreement, the Merger and the transactions contemplated
hereby shall have been approved and adopted by the Stockholders in the
manner required by any applicable Law and the Company's Organizational
Documents; and
(j) CenterPoint shall have entered into one or more credit facilities
providing for aggregate commitments of not less than $75 million.
10.2 Conditions to Obligation of the Stockholders and the Company to
---------------------------------------------------------------
Effect the Merger. Unless waived by the Company, the obligation of the
-----------------
Stockholders and the Company to effect the Merger shall be subject to the
fulfillment at or prior to the Closing of the following additional conditions:
(a) CenterPoint, Mergersub and each of the Other Founding Companies
shall have performed in all material respects their agreements contained in
this Agreement and each Other Agreement required to be performed on or
prior to the Closing Date and the representations and warranties of
CenterPoint contained in this Agreement and each Other Agreement shall be
true and correct in all material respects on and as of the date made and on
and as of the Closing Date as if made at and as of such date, and the
Company shall have received a certificate of the Chief Executive Officer or
President of CenterPoint to that effect;
(b) no Governmental Authority shall have promulgated or formally
proposed any statute, rule or regulation which, when taken together with
all such promulgations, would materially impair the value to the
Stockholders of the Merger;
(c) the Company shall have received an opinion from Xxxxxx Xxxxxx &
Zavis, dated as of the Closing Date, containing the substantive opinions
set forth in Exhibit 10.2(c), the final form of such opinion to be in form
---------------
and substance reasonably acceptable to the Company and Stockholders;
53
(d) Each of the Stockholders shall have been afforded the opportunity
to enter into an employment agreement (the "EMPLOYMENT AGREEMENT") with
the Company substantially in the form attached hereto as Exhibit 10.2(d);
---------------
(e) CenterPoint shall have delivered to the Company and the
Stockholders a certificate, dated as of a date no later than ten days prior
to the Closing Date, duly issued by the Delaware Secretary of State,
showing that CenterPoint is in good standing;
(f) each of the Stockholders, the partners, the members and
stockholders of the other Founding Companies who are to receive shares of
CenterPoint Common Stock pursuant to the Other Agreements, and the other
stockholders of CenterPoint other than those acquiring stock in the IPO
shall have entered into an agreement (the "STOCKHOLDERS AGREEMENT")
substantially in the form attached hereto as Exhibit 10.2(f);
---------------
(g) all conditions to the Other Mergers of the other Founding
Companies, on substantially the same terms as provided herein, shall have
been satisfied or waived by the applicable party and the Company;
(h) the Company shall have received an opinion of Xxxxxx Xxxxxx &
Zavis, dated as of the Closing Date and based upon certain factual
representations and assumptions that for federal income tax purposes there
will be no gain or loss recognized with respect to the CenterPoint Common
Stock received for their Company Stock in the Merger pursuant to Section
351 of the Code, the final form of such opinion to be in form and substance
reasonably acceptable to the Company and the Stockholders; and
(i) a written bonus plan satisfactory to the Stockholders shall have
been agreed to in writing by CenterPoint and the Stockholders.
10.3 Conditions to Obligation of CenterPoint to Effect the Merger. Unless
------------------------------------------------------------
waived by CenterPoint, the obligation of CenterPoint and Mergersub to effect the
Merger shall be subject to the fulfillment at or prior to the Closing of the
additional following conditions:
(a) the Company shall have performed in all material respects its
agreements contained in this Agreement required to be performed on or prior
to the Closing Date and the representations and warranties of the Company
contained in this Agreement shall be true and correct in all material
respects on and as of the date made and on and as of the Closing Date as if
made at and as of such date, and CenterPoint and the Underwriters shall
have received a Certificate of the Chief Executive Officer or President of
the Company to that effect;
(b) the Stockholders shall have performed in all material respects
their agreements contained in this Agreement required to be performed on or
prior to the Closing Date and the representations and warranties of the
Stockholders contained in this
54
Agreement shall be true and correct in all material respects on and as of
the date made and on and as of the Closing Date as if made at and as of
such date, and CenterPoint and the Underwriters shall have received a
Certificate of each Stockholder to that effect;
(c) CenterPoint and the Underwriters shall have received an opinion
from Cole, Schotz, Meisel, Xxxxxx & Xxxxxxx, P.A., counsel to the Company,
dated the Closing Date, in the form attached hereto as Exhibit 10.3(c), the
---------------
final form of such opinion to be in form and substance reasonably
acceptable to the Underwriters and CenterPoint;
(d) each of the Stockholders shall have executed and delivered the
Employment Agreement referred to in Section 10.2(d);
---------------
(e) CenterPoint and the Underwriters shall have received "Comfort"
letters in customary form from the Company's independent public
accountants, dated the effective date of the Form S-1 and the Closing Date
(or such other date reasonably acceptable to CenterPoint), with respect to
certain financial statements and other financial information included in
the Form S-1 and any subsequent changes in specified balance sheet and
income statement items, including total assets, working capital, total
stockholders' equity, total revenues and the total and per share amounts of
net income;
(f) the Company shall have delivered to CenterPoint and the
Underwriters a certificate, dated as of a date no later than ten days prior
to the Closing Date, duly issued by the appropriate Governmental Authority
in the state of organization of the Company and each Company Subsidiary
and, unless waived by CenterPoint, in each state in which the Company or
any Company Subsidiary is authorized to do business, showing the Company or
Company Subsidiary (as applicable) is in good standing;
(g) no Governmental Authority shall have promulgated or formally
proposed any statute, rule or regulation which, when taken together with
all such promulgations, would materially impair the value to CenterPoint of
the Merger;
(h) the Stockholders shall have executed the Stockholders Agreement;
(i) the Stockholders shall have delivered to CenterPoint an instrument
in the form attached hereto as Exhibit 10.3(i), dated the Closing Date,
---------------
releasing the Company and the Company Subsidiaries from any and all claims
of the Stockholders against the Company and the Company Subsidiaries and
obligations of the Company and the Company Subsidiaries to the
Stockholders;
(j) Reserved;
(k) the Company and the Stockholders, as applicable, shall have
terminated or have caused the termination of any voting trusts, proxies or
other agreements or
55
understandings to which the Company or any Stockholder is a party or is
bound with respect to any shares of capital stock or other equity interests
of the Company and the Company Subsidiaries shall have provided CenterPoint
evidence of such termination that is acceptable to CenterPoint's counsel;
(l) the Company shall have presented evidence satisfactory to
CenterPoint of its compliance with the provisions of Section 7.1.3 hereof;
-------------
(m) the Stockholders and/or the Company shall have delivered to
CenterPoint a payoff letter including a statement of per diem interest
amounts and other applicable release documents from all such lenders or
creditors regarding the payment in full of such indebtedness at Closing, in
each case in form and substance satisfactory to CenterPoint (including,
without limitation, applicable UCC-3 termination statements); and
(n) the secretary of the Company shall have delivered certified
copies of the resolutions of the board of directors and shareholders of the
Company approving execution and delivery of this Agreement, the Merger and
the other actions, agreements and documents necessary or desirable to
complete the transactions contemplated herein.
ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER
11.1 Termination. This Agreement may be terminated at any time prior to
-----------
the Closing Date:
(a) pursuant to Section 7.3;
-----------
(b) by the Company,
(i) if the Merger is not completed by August 31, 1999 other
than on account of delay or default on the part of the Company or the
Stockholders or any of their affiliates or associates;
(ii) if the Merger is enjoined by a final, unappealable court
order not entered at the request or with the support of the Company
or any of the Stockholders or any of their affiliates or associates;
(iii) if CenterPoint (A) fails to perform in any material
respect any of its material covenants in this Agreement and (B) does
not cure such default in all material respects within thirty (30)
days after written notice of such default is given to CenterPoint; or
56
(c) by CenterPoint,
(i) if the Merger is not completed by August 31, 1999 other
than on account of delay or default on the part of CenterPoint or any
of its stockholders or any of their affiliates or associates;
(ii) if the Merger is enjoined by a final, unappealable court
order not entered at the request or with the support of CenterPoint
or any of its stockholders or any of their affiliates or associates;
(iii) if the Company (A) fails to perform in any material
respect any of its material covenants in this Agreement and (B) does
not cure such default in all material respects within thirty (30)
days after written notice of such default is given to the Company by
CenterPoint;
(iv) if the Stockholders (A) fail to perform in any material
respect any of their material covenants in this Agreement and (B) do
not cure such default in all material respects within thirty (30)
days after written notice of such default is given to the Stockholder
Representative by CenterPoint; or
(d) by mutual consent of the Boards of Directors of the Company and
CenterPoint.
11.2 Effect of Termination. In the event of termination of this Agreement
---------------------
by either CenterPoint or the Company, as provided in Section 11.1, this
------------
Agreement shall forthwith become void and there shall be no further obligation
on the part of the Company, the Stockholders, CenterPoint, Mergersub or their
respective officers or directors (except the obligations set forth in this
Section 11.2 and in Sections 8.1, 8.3, 8.5 and Article IX, all of which shall
------------ ---------------------- ----------
survive the termination). Nothing in this Section 11.2 shall relieve any party
------------
from liability for any breach of this Agreement.
11.3 Amendment. This Agreement may not be amended except by action taken
---------
by the parties' respective Boards of Directors of CenterPoint and the Company or
duly authorized committees thereof and then only by an instrument in writing
signed on behalf of each of the parties hereto and in compliance with applicable
law. CenterPoint covenants and agrees that it shall not amend, modify or
supplement the material terms of any Other Agreement following the Closing
without the prior written consent of at least two thirds (2/3rds) of the members
of CenterPoint's Board of Directors; provided that no waiver of any restriction
set forth in Article XII shall be of any effect unless consented to by a
-----------
majority of the members of CenterPoint's Board of Directors who do not at the
time of such proposed waiver hold Restricted Shares within the meaning of this
Agreement, any Other Agreement or the Stockholders Agreement.
57
11.4 Waiver. At any time prior to the Closing Date, the parties hereto may
------
(a) extend the time for the performance of any of the obligations or other acts
of the other parties hereto, (b) waive any inaccuracies in the representations
and warranties contained herein or in any document delivered pursuant thereto
and (c) waive compliance with any of the agreements or conditions contained
herein. 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 XII
TRANSFER RESTRICTIONS
12.1 Transfer Restrictions Generally. Except as provided in Section 12.2,
------------------------------- ------------
for a period of forty-two (42) months from the Closing, the Stockholders shall
not (a) sell, assign, exchange, transfer, distribute or otherwise dispose of, in
whole or in part (i) any shares of CenterPoint Common Stock received by the
Stockholders in the Merger (the "1 RESTRICTED SHARES"), or (ii) any interest
(including, without limitation, an option to buy or sell) in any Restricted
Shares; or (b) engage in any transaction, whether or not with respect to any
Restricted Shares or any interest therein, the intent or effect of which is to
reduce the risk of owning the Restricted Shares (including, without limitation,
engaging in put, call, short-sale, derivative, straddle or similar market
transactions).
12.2 Release of Restrictions. Effective eighteen (18) months following the
-----------------------
Closing and every six (6) months thereafter, until all of such Stockholder's
Restricted Shares shall have been released from such restrictions, 20% of the
original number of Restricted Shares of each Stockholder shall no longer be
subject to the restrictions set forth in Section 12.1 and shall no longer be
------------
deemed Restricted Shares for any purposes of this Agreement provided, that, if a
-------- ----
Stockholder's employment with CenterPoint or its subsidiaries is terminated
within thirty (30) months of the Closing other than through death, disability,
retirement, without Cause (as defined in such Stockholder's employment agreement
with the Company of even date) or due to circumstances approved by the Company's
management or reasonably approved by CenterPoint's Chief Executive Officer, the
Restricted Shares held by such Stockholder shall remain subject to the
restrictions set forth in Section 12.1 until the fifth anniversary of the
------------
Closing Date. Notwithstanding the foregoing and Section 12.1, a Stockholder may
------------
(x) at any time pledge or encumber all or part of such Stockholder's Restricted
Shares, provided that the pledgee or secured party agrees in writing to be bound
by the provisions contained in Article XII, (y) at any time transfer all or part
-----------
of such Stockholder's Restricted Shares to another Stockholder or to an
immediate family member (or trust or other estate planning Person), provided,
--------
that, any such Stockholder, family member or other Person agrees in writing to
----
be bound by the provisions contained in Article XII, and (z) transfer or cause
-----------
to be transferred such Stockholder's Restricted Shares upon such Stockholder's
disability or death. As used in this Section 12.2, the terms "disability" and
------------
"retirement" shall have the meaning ascribed to them in CenterPoint's Employee
Incentive Compensation Plan. No attempted transfer of any nature whatsoever that
is in violation of this Section shall be treated as effective for any purpose.
58
12.3 Legend. The certificates evidencing the CenterPoint Common Stock
------
delivered to the Stockholders pursuant to Article II of this Agreement shall
----------
bear a legend substantially in the form set forth below and containing such
other information as CenterPoint may deem necessary or appropriate:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE
AND THE DISPOSITION THEREOF ARE SUBJECT TO THE
TERMS OF A MERGER AGREEMENT DATED MARCH 31, 1999.
A COPY OF SUCH AGREEMENT IS ON FILE AT THE
PRINCIPAL OFFICE OF THE CORPORATION AND MAY BE
INSPECTED BY THE REGISTERED OWNER OF THIS
CERTIFICATE OR A DULY AUTHORIZED REPRESENTATIVE
OF SUCH OWNER UPON REQUEST DURING NORMAL BUSINESS
HOURS.
Upon request from any Stockholder (or a permitted transferee) following the
expiration of either all or a part of the restrictions on the transfer of
CenterPoint Common Stock set forth in this Article XII, CenterPoint shall
-----------
immediately notify its transfer agent that the applicable shares of CenterPoint
Common Stock are no longer restricted shares and shall direct the transfer agent
to reissue certificates of CenterPoint Common Stock which do not contain a
restrictive legend in place of the applicable restricted shares. In the event a
Stockholder's request to remove the restrictive legend coincides with his
request to sell the CenterPoint Common Stock, CenterPoint shall take such
actions as are required by its transfer agent to allow the transfer agent to
transfer the unrestricted CenterPoint Common Stock free of any restrictive
legend.
ARTICLE XIII
NONCOMPETITION
13.1 Prohibited Activities. Each Stockholder agrees severally, and not
---------------------
jointly, that such Stockholder will not, for a period of three (3) years
following the Closing Date, for any reason whatsoever, directly or indirectly,
for themselves or on behalf of or in conjunction with any other Person:
(a) engage, as an officer, director, shareholder, owner, partner,
joint venturer, or in a managerial capacity, whether as an employee,
independent contractor, consultant or advisor, or as a sales
representative, in any business selling or providing any products or
services of a type or nature similar to those sold or provided by the
Company of a type or nature similar to those provided by the Company at or
within one year time prior to the date that such Stockholder commences
competition within a fifty (50) mile radius of any office location of the
Company or any Company Subsidiary (the "TERRITORY");
59
(b) sell or provide any competitive products or services to, or
solicit for the purpose of selling or providing any competitive products or
services to, any Person or Person that was a customer of the Company or any
Company Subsidiary at any time during the preceding one-year period or that
was known by Stockholder to have been actively being solicited by the
Company or any Company Subsidiary to become a customer at any time during
such period;
(c) call upon any Person who is, at that time, within the Territory,
an employee of CenterPoint (including the subsidiaries and affiliates
thereof) for the purpose or with the intent of enticing such employee away
from or out of the employ of CenterPoint (including the subsidiaries and
affiliates thereof), or hire such Person; or
(d) enter into, or call upon or request non-public information for
the purpose of entering into, an Acquisition Transaction (as hereinafter
defined) with any Person with respect to which CenterPoint or any
subsidiary or affiliate thereof has made an offer or proposal for, or
entered into discussions or negotiations for, or evaluated with the intent
of making a proposal for, an Acquisition Transaction, within the preceding
one-year period.
For purposes of this Agreement, an "ACQUISITION TRANSACTION" means a
merger, consolidation, purchase of material assets, purchase of a material
equity interest, tender offer, recapitalization, accumulation of shares, proxy
solicitation or other business combination. Notwithstanding the above, the
foregoing covenant shall not be deemed to prohibit any Stockholder from
acquiring as an investment not more than one percent (1%) of the capital stock
of a competing business whose stock is traded on a national securities exchange
or over-the-counter so long as the Stockholder does not consult with or is not
employed by such competitor.
13.2 Damages. Because of the difficulty of measuring economic losses to
-------
CenterPoint as a result of a breach of the foregoing covenant, and because of
the immediate and irreparable damage that could be caused to CenterPoint for
which it would have no other adequate remedy, each Stockholder agrees that the
foregoing covenant may be enforced by CenterPoint in the event of breach by such
Stockholder, by injunctions and restraining orders.
13.3 Reasonable Restraint. It is agreed by the parties hereto that the
--------------------
foregoing covenants in this Article XIII impose a reasonable restraint on the
------------
Stockholders in light of the activities and business of CenterPoint (including
the subsidiaries thereof) on the date of the execution of this Agreement and the
current plans of CenterPoint; but it is also the intent of CenterPoint and the
Stockholders that such covenants be construed and enforced in accordance with
the changing activities and business of CenterPoint (including the subsidiaries
thereof) throughout the term of this covenant.
It is further agreed by the parties hereto that, in the event that any
Stockholder who has entered into an employment agreement, incentive compensation
agreement or other similar
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agreement or other similar agreement with CenterPoint and/or any subsidiary
thereof as set forth herein shall thereafter cease to be employed thereunder,
and such Stockholder shall enter into a business or pursue other activities not
in competition with CenterPoint and/or any subsidiary thereof, or similar
activities or business in locations the operations of which, under such
circumstances, does not violate this Article XIII and in any event such new
------------
business, activities or location are not in violation of this Article XIII or of
------------
such Stockholder's obligations under this Article XIII, such Stockholder shall
------------
not be chargeable with a violation of this Article XIII if CenterPoint and/or
------------
any subsidiary thereof shall thereafter enter the same, similar or a competitive
(i) business, (ii) course of activities or (iii) location, as applicable.
13.4 Severability; Reformation. The covenants in this Article XIII are
------------------------- ------------
severable and separate, and the unenforceability of any specific covenant shall
not affect the provisions of any other covenant. Moreover, in the event any
court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the intention of
the parties that such restrictions be enforced to the fullest extent which the
court deems reasonable, and the Agreement shall thereby be reformed.
13.5 Independent Covenant. All of the covenants in this Article XIII
-------------------- ------------
shall be construed as an agreement independent of any other provision in this
Agreement, and the existence of any claim or cause of action of any Stockholder
against CenterPoint (including the subsidiaries thereof), whether predicated on
this Agreement or otherwise, shall not constitute a defense to the enforcement
by CenterPoint of such covenants. It is specifically agreed that the period of
three (3) years stated at the beginning of this Article XIII, during which the
------------
agreements and covenants of each Stockholder made in this Article XIII shall be
------------
effective, shall be computed by excluding from such computation any time during
which such Stockholder is in violation of any provision of this Article XIII;
------------
provided, however, in all events CenterPoint shall initiate proceedings to
-------- -------
enforce this Article XIII within four (4) years of the Closing Date. The
covenants contained in Article XIII shall not be affected by any breach of any
------------
other provision hereof by any party hereto and shall have no effect if the
transactions contemplated by this Agreement are not consummated.
13.6 Materiality. The Company and the Stockholders hereby agree that
-----------
this covenant is a material and substantial part of this transaction.
ARTICLE XIV
NONDISCLOSURE OF CONFIDENTIAL INFORMATION
14.1 Stockholders' Covenant. The Stockholders recognize and acknowledge
----------------------
that they had in the past, currently have, and in the future may possibly have,
access to certain confidential information of the Company, the other Founding
Companies, the Company Subsidiaries and/or CenterPoint, such as strategic plans,
systems, operational policies, marketing plans, and pricing and cost policies
that are valuable, special and unique assets of the Company's, the other
61
Founding Companies', the Company Subsidiaries' and/or CenterPoint's respective
businesses. The Stockholders agree that they will not disclose such
confidential information to any Person, firm, corporation, association or other
entity for any purpose or reason whatsoever, except
(a) to authorized representatives of CenterPoint,
(b) following the Closing, such information may be disclosed by the
Stockholders as is required in the course of performing their duties to
CenterPoint, and
(c) to counsel and other advisers, provided that such advisers (other
than counsel) agree to the confidentiality provisions of this Section 14.1,
------------
unless
(i) such information becomes known to the public generally
through no fault of the Stockholders,
(ii) disclosure is required by law or the order of any
governmental authority under color of law, provided that prior to
disclosing any information pursuant to this clause (ii), the
Stockholder shall, if possible, give prior written notice thereof to
CenterPoint and provide CenterPoint with the opportunity to contest
such disclosure, or
(iii) the disclosing party reasonably believes that such
disclosure is required in connection with the defense of a lawsuit
against the disclosing party.
In the event of a breach or threatened breach by any of the Stockholders of the
provisions of this Section 14.1, CenterPoint shall be entitled to an injunction
------------
restraining such Stockholders from disclosing, in whole or in part, such
confidential information. Nothing herein shall be construed as prohibiting
CenterPoint from pursuing any other available remedy for such breach or
threatened breach, including the recovery of damages.
14.2 Damages. Because of the difficulty of measuring economic losses as a
-------
result of the breach of the foregoing covenants in Section 14.1, and because of
------------
the immediate and irreparable damage that would be caused for which they would
have no other adequate remedy, the parties hereto agree that, in the event of a
breach by any of them of the foregoing covenants, the covenant may be enforced
against the other parties by injunction and restraining orders.
14.3 Survival. The obligations of the parties under this Article XIV shall
-------- -----------
survive the termination of this Agreement.
ARTICLE XV
GENERAL PROVISIONS
15.1 Brokers. Each of the Company and the Stockholders represents and
-------
warrants that no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee (except for the fee described in Schedule 15.1)
-------------
or commission in connection with the Merger or the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of the Company.
CenterPoint represents and warrants that no broker, finder or investment banker
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is entitled to any brokerage, finder's or other fee or commission in connection
with the Merger or the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of CenterPoint or its stockholders (other than
underwriting discounts and commission to be paid in connection with the IPO).
15.2 Notices. All notices and other communications hereunder shall be in
-------
writing and shall be deemed given if delivered personally, sent by nationally
recognized overnight delivery service, mailed by registered or certified mail
(return receipt requested) or sent via facsimile to the parties at the following
addresses (or at such other address for a party as shall be specified by notice
given in accordance with this Section):
15.2.1 If to CenterPoint or Mergersub, to:
CenterPoint Advisors, Inc.
000 Xxxx Xxxxxxxxxx Xxxxxx
00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx Xxxxxx
with a copy to:
Xxxxxx Xxxxxx & Zavis
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
15.2.2 If to the Company, to:
Insurance Design Administrators
000 Xxxxxx Xxxx
X.X. Xxx 000
Xxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxxx X. Xxxxx
Facsimile No.: (000) 000-0000
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with a copy to:
Cole, Schotz, Meisel, Xxxxxx & Xxxxxxx, P.A.
00 Xxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
15.2.3 If to the Stockholder Representative or the Stockholders, as
applicable, addressed to the addresses set forth on Schedule 15.2.3, with
---------------
copies to such counsel as is set forth with respect to each Stockholder on
such Schedule 15.2.3, as applicable.
---------------
15.3 Interpretation. The table of contents and headings contained in this
--------------
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement. In this Agreement, unless a
contrary intention appears, (i) the words "1 herein," "hereof" and "hereunder"
and other words of similar import refer to this Agreement as a whole and not to
any particular Article, Section or other subdivision and (ii) reference to any
Article or Section means such Article or Section hereof. No provision of this
Agreement shall be interpreted or construed against any party hereto solely
because such party or its legal representative drafted such provision.
15.4 Certain Definitions. As used in this Agreement, (i) the term
-------------------
"PERSON" shall mean any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated association, corporation, entity, firm,
association, organization or other business in any form whatsoever or government
(whether Federal, state, county, city or otherwise, including, without
limitation, any instrumentality, division, agency or department thereof) and
(ii) the term "AFFILIATE" shall have the meaning given for that term in Rule 405
under the Securities Act, and shall include each past and present Affiliate of a
Person and the members of such Affiliate's immediate family or their spouses or
children and any trust the beneficiaries of which are such individuals or
relatives, and (iii) an individual will be deemed to have "KNOWLEDGE" of a
particular fact or other matter if: (a) such individual is actually aware of
such fact or matter, or (b) a prudent individual could be expected to discover
or otherwise become aware of such fact or other matter in the course of
conducting a reasonably comprehensive investigation concerning the existence of
such fact or other matter and a prudent individual would conduct such
investigation; a Person, other than an individual, will be deemed to have
"KNOWLEDGE of a particular fact or other matter if any individual who is a
shareholder of such Person or who is otherwise serving, or who has served, as a
director, officer, partner, member or trustee (or any capacity) of such Person
has, or at any time had, knowledge of such fact or other matter.
15.5 Entire Agreement; Assignment. This Agreement (including the documents
----------------------------
and instruments referred to herein) (a) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both written and oral,
among the parties, or any of them, with
64
respect to the subject matter hereof and (b) shall not be assigned by operation
of law or otherwise, except that CenterPoint may assign this Agreement to any
wholly-owned subsidiary of CenterPoint.
15.6 Applicable Law. This Agreement shall be governed in all respects,
--------------
including validity, interpretation and effect, by the laws of the State of
Illinois applicable to contracts executed and to be performed wholly within such
state, without giving effect to its choice of law rules.
15.7 Counterparts. This Agreement may be executed via facsimile or
------------
otherwise in two or more counterparts, each of which shall be deemed to be an
original, but all of which shall constitute one and the same agreement.
15.8 Parties in Interest. This Agreement shall be binding upon and inure
-------------------
solely to the benefit of each party hereto, and their respective successors,
permitted assigns, heirs, legal representatives and executors and except as
expressly set forth in herein, nothing in this Agreement, express or implied, is
intended to confer upon any other Person any rights or remedies of any nature
whatsoever under or by reason of this Agreement.
* * *
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IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as
of the date first written above.
CENTERPOINT ADVISORS, INC.
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxxx
--------------------------------------
Its: President and Chief Executive Officer
---------------------------------------
XXX MERGERSUB INC.
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxxx
--------------------------------------
Its: President
---------------------------------------
SELF FUNDED BENEFITS, INC., D/B/A/ INSURANCE DESIGN
ADMINISTRATORS
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxx
--------------------------------------
Its: President
---------------------------------------
STOCKHOLDERS
/s/ Xxxxxx X. Xxxxx
-------------------------------------------
Xxxxxx X. Xxxxx
/s/ Xxxxxxx X. Xxxxxxx
-------------------------------------------
Xxxxxxx X. Xxxxxxx
66