Exhibit 2.3
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization, dated as of March 1, 2000
(the "Agreement"), is by and among UNIPAC Service Corporation, a Nebraska
corporation ("Parent"), NelNet, Inc., a Nevada corporation and a wholly-owned
subsidiary of Parent ("Subsidiary") and National Education Loan Network, Inc., a
Nevada corporation ("Company").
WHEREAS, the Boards of Directors of Parent, Subsidiary and Company have
approved the merger of Company with and into Subsidiary pursuant to this
Agreement (the "Merger") and the transactions contemplated hereby upon the terms
and subject to the conditions set forth herein; and
WHEREAS, it is intended that the Merger will be treated as a
reorganization under Sections 368(a)(1)(A) and (a)(2)(D) of the Internal Revenue
Code of 1986, as amended (the "Code"), and the regulations thereunder.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained herein, the parties hereto,
intending to be legally bound hereby, agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 THE MERGER. Upon the terms and subject to the conditions
of this Agreement, at the Effective Time (as defined in Section 1.2), Company
shall be merged with and into Subsidiary and the separate existence of Company
shall thereupon cease. Subsidiary shall be the surviving corporation in the
Merger (hereinafter sometimes referred to as the "Surviving Corporation").
SECTION 1.2 EFFECTIVE TIME OF THE MERGER. The Merger shall become
effective at such time (the "Effective Time") as Articles of Merger, in the form
set forth as Exhibit 1.2 hereto, are filed with the Secretary of State of the
State of Nevada (the "Merger Filing"); such filing shall be made simultaneously
with or as soon as practicable after the Closing (as defined in Section 3.3).
ARTICLE II
THE SURVIVING AND PARENT CORPORATIONS
SECTION 2.1 EFFECTS OF THE MERGER. At the Effective Time, the
Surviving Corporation will continue to be governed by the laws of the State of
Nevada, and the separate corporate existence of Surviving Corporation and all of
its rights, privileges, immunities and franchises, and all its duties and
liabilities as a corporation organized under the Nevada General Corporation Law,
shall continue unaffected by the Merger. At the Effective Time, (i) the Articles
of Incorporation of Subsidiary, as in effect immediately prior to the Effective
Time, shall be the
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Articles of Incorporation of Subsidiary as the surviving corporation in the
Merger until thereafter amended as provided by law and such Articles of
Incorporation, and (ii) the By-laws of Subsidiary, as in effect immediately
prior to the Effective Time, shall be the By-laws of Subsidiary as the surviving
corporation in the Merger, until thereafter amended as provided by law, the
Articles of Incorporation of the Surviving Corporation and such By-laws. Subject
to the foregoing, the additional effects of the Merger shall be as provided in
the applicable provisions of Chapter 92A of the Nevada General Corporation Law.
SECTION 2.2 DIRECTORS. Effective as of Effective Time, all members
of the Board of Directors of Subsidiary shall remain as members of the Board of
Directors of the Surviving Corporation until resignation or appointment of
successors, in accordance with Subsidiary's By-laws.
SECTION 2.3 OFFICERS. Immediately after the Board of Directors
referred to in Section 2.2 is constituted, Parent shall cause all such corporate
action to be taken as may be necessary to cause Xxxxxxx X. Xxxxxx, Chairman of
the company, Xxx Xxxx, President of the Company, and Xxxxxxx X. Xxxxxxxxxxx,
Vice President of the Company, to each become officers of the Surviving
Corporation.
ARTICLE III
CONVERSION OF SHARES
SECTION 3.1 EFFECT OF THE MERGER ON CAPITAL STOCK. At the Effective
Time:
(a) Each then outstanding share of Class B common stock, par value
$0.10 per share of the Company and preferred stock, par value $0.50 per
share of Company ("Common Stock") (other than those shares of Class B
common stock of the Company held by Xxxxxxx X. Xxxxxxxxxxx and/or Xxxxxxx
X. Xxxxxx, other than those shares of Common Stock held in the treasury of
Company, and other than shares of nonvoting Common Stock the holders of
which have perfected any dissenter's rights that they may have under the
Nevada General Corporation Law and which have not withdrawn or lost such
rights ("Dissenting Shares")) will be converted into a right to receive
one (1) share of Class B common stock, par value $0.10 per share, of
Parent ("Parent Class B Common Stock"). Each then outstanding share of
Class B Common stock held by Xxxxxxx X. Xxxxxxxxxxx will be converted into
a right to receive 0.9809 of a share of Parent Class B Common Stock. Each
then outstanding share of Class B Common Stock held by Xxxxxxx X. Xxxxxx
will be converted into a right to receive 0.9875 of a share of Parent
Class B Common Stock.
(b) Each then outstanding share of Class A common stock, par value
$0.10 per share, of Company ("Class A Common Stock") (other than those
shares of Class A Stock held in the treasury of Company, and other than
Dissenting Shares) will be converted into a right to receive 1.86 shares
of Class A common stock, par value $0.10 per share, of Parent ("Parent
Class A Common Stock").
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(c) Each then outstanding share of Common Stock of Company will be
canceled and retired, and each share of Common Stock issued and held in
Company's treasury will be canceled and retired, without further action.
(d) At the Effective Time, by virtue of the Merger and without any
action on the part of any holder of any capital stock of Parent, each
issued and outstanding share of common stock of Parent shall continue
unchanged.
SECTION 3.2 EXCHANGE OF CERTIFICATES.
(a) As of the Effective Time, each holder of an outstanding
certificate which immediately prior to the Effective Time represented
shares of stock and which was surrendered to Parent in accordance with
Section 3.2(b) hereof shall be entitled to receive in exchange therefor, a
certificate or certificates theretofore representing the number of whole
shares of Parent Common Stock, to which such holder is entitled pursuant
to Section 3.1.
(b) Within ten (10) days after approval of this Agreement and the
Merger by the requisite number of shareholders of Company in accordance
with Section 92A.120 of the Nevada General Corporation Law ("Company
Shareholders' Approval"), Parent shall mail to each holder of record of a
certificate or certificates that as of the date of such approval,
represented outstanding shares of Common Stock (the "Company
Certificates"): (i) a form letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to Company
Certificates shall pass, only upon actual delivery of Company Certificates
to Parent); and (ii) instructions for use in effecting the surrender of
Company Certificates in exchange for certificates representing shares of
Parent Common Stock. Such instructions shall instruct such holder to
deliver to Parent their respective Company Certificates within twenty (20)
days from the date such holder receives the form letter of transmittal,
together with a duly executed and completed letter of transmittal and such
other documents as the Parent shall reasonably require. Thereafter, at and
after the Effective Time, each holder of shares of Common Stock, upon
delivery of their respective Company Certificates, together with a duly
executed letter of transmittal, shall be entitled to receive in exchange
therefor the consideration to which such holder is entitled pursuant to
Section 3.1, and Company Certificates so surrendered shall forthwith be
canceled. Notwithstanding the foregoing, no party hereto shall be liable
to a holder of shares of Common Stock for any shares of Parent Common
Stock or dividends or distributions thereon delivered to a public official
pursuant to applicable abandoned property, escheat or similar laws.
(c) Notwithstanding any provision of this Agreement to the contrary,
Dissenting Shares shall not be converted into or represent a right to
receive the consideration to which other shares of Common Stock other than
Dissenting
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Shares are entitled pursuant to this Article III, but the holder of
Dissenting Shares shall only be entitled to such rights as are granted by
Chapter 92A of the Nevada General Corporation Law. If a holder of shares
of Common Stock who pursues dissenters' rights with respect to those
shares under Chapter 92A of the Nevada General Corporation Law shall
effectively withdraw or lose (through failure to perfect or otherwise) the
right to dissent, then, as of the Effective Time or the occurrence of such
event, whichever last occurs, those shares of Common Stock shall be
converted into and represent only the right to receive the consideration
as provided in Article III, without interest, upon the surrender of the
Company Certificate or Company Certificates representing those shares of
Common Stock. Company shall give Parent prompt notice of any written
demands made pursuant to dissenting shareholders rights under Chapter 92A
of the Nevada General Corporation Law with respect to any shares of Common
Stock, attempted withdrawals of such demands and any other instruments
served pursuant to Chapter 92A of the Nevada General Corporation Law
received by Company relating to a shareholder's right to dissent. Company
shall not, except with the prior written consent of Parent, voluntarily
make any payment with respect to any demands made pursuant to such
dissenters' rights with respect to any shares of Common Stock, offer to
settle or settle any such demands or approve any withdrawal of any such
demands. Parent shall contribute to Company or the Surviving Corporation,
as the case may be, sufficient funds to enable Company or the Surviving
Corporation to make, or shall itself directly make, any payments required
to be made to holders of Dissenting Shares.
(d) Anything to the contrary notwithstanding in this Section 3.2, if
this Agreement is terminated pursuant to Article IX, any Company
Certificate or Company Certificates which have been surrendered to Parent
shall be promptly returned to the persons submitting the same.
(e) Until surrendered and exchanged in accordance with this Section
3.2, each Company Certificate shall, after the Effective Time, represent
solely the right to receive the Parent Common Stock, to which the holder
of such Company Certificate is entitled to hereunder, and shall have no
other rights. At the Effective Time, the stock transfer books of Company
will be closed and no transfer of shares of Common Stock will thereafter
be made.
SECTION 3.3 CLOSING. The closing (the "Closing") of the transactions
contemplated by this Agreement shall take place at a place mutually agreed upon
within five (5) business days immediately following the date on which the last
of the conditions set forth in Article VIII is fulfilled or waived, or at such
other time and place as Parent and Company shall agree (the date on which the
Closing occurs being the "Closing Date").
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUBSIDIARY
Parent and Subsidiary each represent and warrant to Company as
follows:
SECTION 4.1 ORGANIZATION AND QUALIFICATION. Each of Parent and
Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation 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. Each of Parent and
Subsidiary 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,
except where the failure to be so qualified and in good standing will not, when
taken together with all other such failures, have a material adverse effect on
the business, financial condition or results of operations of Parent and its
subsidiaries, taken as a whole (a "Parent Material Adverse Effect"). True,
accurate and complete copies of Parent's Articles of Incorporation and By-laws,
in each case as in effect on the date hereof, including all amendments thereto,
have heretofore been delivered to Company. True, accurate and complete copies of
Subsidiary's Articles of Incorporation and By-laws, as in effect on the date
hereof, including all amendments thereto, have heretofore been delivered to the
Company.
SECTION 4.2 CAPITALIZATION.
(a) The authorized capital stock of Parent consists of 10,000 shares
of Class A Parent Common Stock, par value $0.10 per share and 1,000,000
shares of Class B Parent Common Stock, par value $0.10 per share. As of
the date of this Agreement, the number of issued and outstanding shares of
Class A Parent Common Stock was 1,000. All of the issued and outstanding
shares of Parent Common Stock are validly issued and are fully paid,
nonassessable and free of preemptive rights. No subsidiary of Parent holds
any shares of capital stock of Parent. As of the time immediately prior to
the Merger, the number of issued and outstanding shares of Class B Parent
Common Stock shall be 63,244.
(b) The authorized capital stock of Subsidiary consists of 1,000
shares of Subsidiary common stock, par value $1.00 per share, of which 100
shares are issued and outstanding, all of which are owned beneficially and
of record by Parent.
(c) 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 Parent or any subsidiary of Parent to issue, deliver or sell,
or cause to be issued, delivered or sold, additional shares of the capital
stock of Parent or obligating Parent or any subsidiary of Parent to grant,
extend or enter into any such agreement or commitment, except for (i) this
Agreement, and (ii) the commitment to issue an
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additional 63,244 shares of Class B Parent Stock to existing shareholders
of Class A Parent Stock. There are no voting trusts, proxies or other
agreements or understandings to which Parent or any subsidiary of Parent
is a party or is bound with respect to the voting of any shares of capital
stock of Parent. The shares of Parent Common Stock to be issued to
shareholders of Company in the Merger will be at the Effective Time duly
authorized, validly issued, fully paid and nonassessable and free of
preemptive rights.
SECTION 4.3 SUBSIDIARIES. Each corporate subsidiary of Parent is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation 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. Each subsidiary of Parent 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, except where the failure to be so qualified
and in good standing will not, when taken together with all other such failures,
have a Parent Material Adverse Effect. All of the outstanding shares of capital
stock of each corporate subsidiary of Parent are validly issued, fully paid,
nonassessable and free of preemptive rights, and those owned directly or
indirectly by Parent are owned free and clear of any liens, claims,
encumbrances, security interests, equities, charges and options of any nature
whatsoever. Parent owns directly or indirectly all of the issued and outstanding
shares of the capital stock of Subsidiary. Immediately prior to the Effective
Time, Parent will be in control of Subsidiary within the meaning of Section
368(c)(1) of the Code. There are no subscriptions, options, warrants, rights,
calls, contracts, voting trusts, proxies or other commitments, understandings,
restrictions or arrangements relating to the issuance, sale, voting, transfer,
ownership or other rights with respect to any shares of capital stock of any
corporate subsidiary of Parent, including any right of conversion or exchange
under any outstanding security, instrument or agreement. As used in this
Agreement, the term "subsidiary" shall mean any corporation, partnership, joint
venture or other entity of which the specified entity, directly or indirectly,
controls or which the specified entity (either acting alone or together with its
other subsidiaries) owns, directly or indirectly, 50% or more of the stock or
other voting interests, the holders of which are, ordinarily or generally, in
the absence of contingencies (which contingencies have not occurred) or
understandings (which understandings have not yet been required to be performed)
entitled to vote for the election of a majority of the board of director or any
similar governing body.
SECTION 4.4 AUTHORITY; NON-CONTRAVENTION; APPROVALS.
(a) Parent and subsidiary each have full corporate power and
authority to enter into this Agreement and, subject to the Parent Required
Statutory Approvals (as defined in Section 4.4(c)), to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement, and the consummation by Parent and Subsidiary of the
transactions contemplated hereby, have been duly authorized by Parent's
and Subsidiary's Board of Directors, respectively, and by Parent as sole
shareholder of subsidiary, and no other corporate proceedings on the part
of Parent or subsidiary are necessary to
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authorize the execution and delivery of this Agreement and the
consummation by Parent and subsidiary of the transactions contemplated
hereby, except for the obtaining of the Parent Required Statutory
Approvals. This Agreement has been duly and validly executed and delivered
by each of Parent and Subsidiary, and, assuming the due authorization,
execution and delivery hereof by Company, constitutes a valid and binding
agreement of each Parent and Subsidiary 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.
(b) The execution and delivery of this Agreement by each of Parent
and Subsidiary do not, and the consummation by Parent and Subsidiary of
the transactions contemplated hereby will 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, security
interest, charge or encumbrance upon any of the properties or assets of
Parent or any of its subsidiaries under any of the terms, conditions or
provisions of (i) the respective charters or by-laws of Parent or any of
its subsidiaries; (ii) subject to obtaining the Parent Required Statutory
Approvals, any statute, law, ordinance, rule, regulation, judgment,
decree, order, injunction, writ, permit, or license of any court or
governmental authority applicable to Parent or any of its subsidiaries 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 Parent or any of its subsidiaries is now a party or
by which Parent or any of its subsidiaries or any of their respective
properties or assets may be bound or affected, excluding from the
foregoing clauses (ii) and (iii) such violations, conflicts, breaches,
defaults, terminations, accelerations or creations of liens, security
interests, charges or encumbrances that would not, in the aggregate, have
a Parent Material Adverse Effect.
(c) Except for (i) the filings by Parent and Company required by
Title II of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR Act"); and (ii) the making of the Merger Filing with the
Secretary of State of the State of Nevada in connection with the Merger,
(the filings and approvals referred to in clauses (i) and (ii) are
collectively referred to as the "Parent 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 Parent or
Subsidiary or the consummation by Parent or Subsidiary of the transactions
contemplated hereby, other than such declarations, filings, registrations,
notices, authorizations, consents or approvals which, if not made or
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obtained, as the case may be, would not, in the aggregate, have a Parent
Material Adverse Effect.
SECTION 4.5 REPORTS AND FINANCIAL STATEMENTS. The audited
consolidated financial statements and unaudited interim consolidated financial
statements of Parent (including all notes and schedules contained therein and
annexed thereto) (the "Parent Financial Statements") have been, and will be,
prepared in accordance with generally accepted accounting principles (except, in
the case of unaudited statements, for the absence of footnote disclosure)
applied on a consistent basis (except as may be indicated therein or in the
notes thereto) and fairly, and will fairly, present the financial position of
Parent and its subsidiaries as of the dates thereof and the results of their
operations and changes in financial position for the periods then ended,
subject, in the case of the unaudited interim financial statements, to normal
year-end and audit adjustments and any other adjustments described therein.
SECTION 4.6 ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed
in the Parent Financial Statements, or as expressly disclosed and described in
any of the schedules hereto, neither Parent nor any of its subsidiaries has any
liabilities or obligations (whether absolute, accrued, contingent or otherwise)
of any nature (a) except liabilities, obligations or contingencies (i) which are
accrued or reserved against in the Parent Financial Statements or reflected in
the notes thereto; or (ii) which were incurred in the ordinary course of
business and consistent with past practices; and (b) except for any liabilities,
obligations or contingencies which would not, in the aggregate, have a Parent
Material Adverse Effect.
SECTION 4.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set
forth in the Parent Financial Statements, since December 31, 1999, there has not
been any material adverse change in the business, operations, properties,
assets, liabilities, condition (financial or other), results of operations or
prospects of Parent and its subsidiaries, taken as a whole.
SECTION 4.8 LITIGATION. There are no claims, suits, actions or
proceedings pending or, to the knowledge of Parent, threatened against, relating
to or affecting Parent or any of its subsidiaries, before any court,
governmental department, commission, agency, instrumentality or authority, or
any arbitrator which could reasonably be expected, either alone or in the
aggregate with all such claims, actions or proceedings, to have a Parent
Material Adverse Effect. Except as set forth in the Parent Financial Statements,
neither Parent nor any of its subsidiaries is subject to any judgment, decree,
injunction, rule or order of any court, governmental department, commission,
agency, instrumentality or authority or any arbitrator which prohibits or
restricts the consummation of the transactions contemplated hereby or would have
any Parent Material Adverse Effect.
SECTION 4.9 NO VIOLATION OF LAW. Neither parent nor any of its
subsidiaries is in violation of, or has been given notice or been charged with
any violation of, any law, statute, order, rule, regulation, ordinance or
judgment (including, without limitation, any applicable environmental law,
ordinance or regulation) of any governmental or regulatory body or authority,
except for violations which, in the aggregate, do not have a Parent Material
Adverse Effect. As of the date of this Agreement, no investigation or review by
any governmental or regulatory body or
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authority is pending or, to the knowledge of Parent, is threatened, nor has any
governmental or regulatory body or authority indicated an intention to conduct
the same, other than, in each case, those the outcome of which, as far as
reasonably can be foreseen, will not have a Parent Material Adverse Effect.
Parent and its subsidiaries have all permits, licenses, franchises, variances,
exemptions, orders and other governmental authorizations, consents and approvals
necessary to conduct their businesses as presently conducted (the "Parent
Permits"), except for permits, licenses, franchises, variances, exemptions,
orders, authorizations, consents and approvals the absence of which, alone or in
the aggregate, would not have a Parent Material Adverse Effect. Parent and its
subsidiaries (a) have duly and currently filed all reports and other information
required to be filed with the Department of Education or any other governmental
or regulatory authority in connection with the Parent Permits; and (b) are not
in violation of the terms of any Parent Permit, except for delays in filing
reports or violations which, alone or in the aggregate, would not have a Parent
Material Adverse Effect.
SECTION 4.10 COMPLIANCE WITH AGREEMENTS. Parent and each of its
subsidiaries are not in breach or violation of or in default in the performance
or observance of any term or provision of, and no event has occurred which, with
lapse of time or action by a third party, could result in a default under (a)
the respective charters, by-laws or other similar organizational instruments of
Parent or any of its subsidiaries; or (b) any contract, commitment, agreement,
indenture, mortgage, loan agreement, note, lease, bond, license, approval or
other instrument to which Parent or any of its subsidiaries is a party or by
which any of them is bound or to which any of their property is subject, which
breaches, violations and defaults, in the case of clause (b) of this Section
4.10, would have, in the aggregate, a Parent Material Adverse Effect.
SECTION 4.11 TAXES.
(a) Parent and its subsidiaries have (i) duly filed with the
appropriate governmental authorities all Tax Returns (as defined in
Section 4.11(c)) required to be filed by them for all periods ending on or
prior to the Effective Time, other than those Tax Returns the failure of
which to file would not have a Parent Material Adverse Effect, and such
Tax Returns are true, correct and complete in all material respects; and
(ii) duly paid in full or made adequate provision for the payment of all
Taxes for all periods ending at or prior to the Effective Time. The
liabilities and reserves for Taxes reflected in the Parent balance sheet
as of December 31, 1999, (the "1999 Parent Balance Sheet") is, and will
be, adequate to cover all Taxes for all periods ending on or prior to
December 31, 1999, and there are no material liens for Taxes not yet due.
There are no unresolved issues of law or fact arising out of a notice of
deficiency, proposed deficiency or assessment from the Internal Revenue
Service (the "IRS") or any other governmental taxing authority with
respect to Taxes of the Parent or any of its subsidiaries which, if
decided adversely, singly or in the aggregate, would have a Parent
Material Adverse Effect. Neither Parent nor any of its subsidiaries is a
party to any agreement providing for the allocation or sharing of Taxes
with any entity that is not, directly or indirectly, a wholly owned
corporate subsidiary of Parent other than agreements the consequences of
which are fully and adequately reserved for
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on the 1999 Parent Balance Sheet. Neither Parent nor any of its corporate
subsidiaries has, with regard to any assets or property held, acquired or
to be acquired by any of them, filed a consent to the application of
Section 341(f) of the Code.
(b) For purposes of this Agreement, the term "Taxes" shall mean all
taxes, charges, fees, levies or other assessments, including, without
limitation, income, gross receipts, excise, property, sales, withholding,
social security, occupation, use, service, service use, license, payroll,
franchise, transfer and record taxes, fees and charges, imposed by the
United States, or any state, local or foreign government or subdivision or
agency thereof whether computed on a separate, consolidated, unitary,
combined or any other basis; and such term shall include any interest,
fines, penalties or additional amounts attributable or imposed or with
respect to any such taxes, charges, fees, levies or other assessments.
(c) For purposes of this Agreement, the term "Tax Return" shall mean
any return, report or other document or information required to be
supplied to a taxing authority in connection with Taxes.
SECTION 4.12 EMPLOYEE BENEFIT PLANS; ERISA.
(a) Except as disclosed to the Company, at the date hereof, Parent
and its subsidiaries do not maintain or contribute to any material
employee benefit plans, programs, arrangements or practices (such plans,
programs, arrangements or practices of Parent and its subsidiaries being
referred to as the "Parent Plans"), including employee benefit plans
within the meaning set forth in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or other similar
material arrangements for the provision of benefits. Neither Parent nor
its subsidiaries has any obligation to create any additional such plan or
to amend any such plan so as to increase benefits thereunder, except as
required under the terms of the Parent Plans, under existing collective
bargaining agreements or to comply with applicable law.
(b) Except as disclosed by Parent; (i) there have been no prohibited
transactions within the meaning of Section 406 or 407 of ERISA or Section
4975 of the Code with respect to any of the Parent Plans that could result
in penalties, taxes or liabilities which, singly or in the aggregate,
could have a Parent Material Adverse Effect; (ii) except for premiums due,
there is no outstanding liability in excess of $100,000.00, whether
measured alone or in the aggregate, under Title IV of ERISA with respect
to any of the Parent Plans; (iii) neither the Pension Benefit Guaranty
Corporation nor any plan administrator has instituted proceedings to
terminate any of the Parent Plans subject to Title IV of ERISA other than
in a "standard termination" described in Section 4041(b) of ERISA; (vi)
none of the Parent Plans has incurred any "accumulated funding deficiency"
(as defined in Section 302 of ERISA and Section 412 of the Code), whether
or not waived, as of
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the last day of the most recent fiscal year of each of the Parent Plans
ended prior to the date of this Agreement; (v) the current present value
of all projected benefit obligations under each of the Parent Plans which
is subject to Title IV of ERISA did not, as of its latest valuation date,
exceed the then current value of the assets of such plan allocable to such
benefit liabilities by more than the amount, if any, disclosed in the
Parent Financial Statements, based upon reasonable actuarial assumptions
currently utilized for such Parent Plan; (vi) each of the Parent Plans has
been operated and administered in all material respects in accordance with
applicable laws during the period of time covered by the applicable
statute of limitations; (vii) each of the Parent Plans which is intended
to be "qualified" within the meaning of Section 401(a) of the Code has
been determined by the Internal Revenue Service to be so qualified and
such determination has not been modified, revoked or limited by failure to
satisfy any condition thereof or by a subsequent amendment thereto or a
failure to amend, except that it may be necessary to make additional
amendments retroactively to maintain the "qualified" status of such Parent
Plans, and the period for making any such necessary retroactive amendments
has not expired; (viii) to the best knowledge of Parent and its
subsidiaries, there are no material pending, threatened or anticipated
claims involving any of the Parent Plans other than claims for benefits in
the ordinary course; and (ix) Parent and its subsidiaries have no current
liability in excess of $100,000.00, whether measured alone or in the
aggregate, for plan termination or withdrawal (complete or partial) under
Title IV of ERISA based on any plan to which any entity that would be
deemed one employer with Parent and its subsidiaries under Section 4001 of
ERISA or Section 414 of the Code contributed during the period of time
covered by the applicable statute of limitations (a "Parent Controlled
Group Plan"), and Parent and its subsidiaries do not reasonably anticipate
that any such liability will be asserted against Parent or any of its
subsidiaries, none of the Parent Controlled Group Plans has an
"accumulated funding deficiency" (as defined in Section 302 of ERISA and
Section 412 of the Code), and no Parent Controlled Group Plan has an
outstanding funding waiver which could result in the imposition of liens,
excise taxes or liability in excess of $100,000.00 against Parent and its
subsidiaries.
SECTION 4.13 INVESTMENT COMPANY ACT. Parent and each of its
subsidiaries either (a) is not an "investment company," or a company
"controlled" by, or an "affiliated company" with respect to, an "investment
company," within the meaning of the Investment Company Act of 1940 (the
"Investment Company Act"); or (b) satisfies all conditions for an exemption from
the Investment Company Act, and, accordingly, neither Parent nor any of its
subsidiaries is required to be registered under the Investment Company Act.
SECTION 4.14 LABOR CONTROVERSIES. Except as disclosed by Parent (a)
there are no significant controversies pending or, to the knowledge of Parent,
threatened between Parent or its subsidiaries and any representatives of any of
their employees; (b) to the knowledge of Parent, there are no material
organizational efforts presently being made involving any of the presently
unorganized employees of Parent and its subsidiaries; (c) Parent and its
subsidiaries have, to the
11
knowledge of Parent, complied in all material respects with all laws relating to
the employment of labor, including, without limitation, any provisions thereof
relating to wages, hours, collective bargaining, and the payment of social
security and similar taxes; and (d) no person has, to the knowledge of Parent,
asserted that Parent or any of its subsidiaries is liable in any material amount
for any arrears of wages, or any taxes or penalties for failure to comply with
any of the foregoing, except for such controversies, organizational efforts,
non-compliance and liabilities which, singly or in the aggregate, could not
reasonably be expected to have a Parent Material Adverse Effect.
SECTION 4.15 ENVIRONMENTAL MATTERS. To the knowledge of Parent,
neither Parent nor any of its subsidiaries has disposed of or arranged for the
disposal of any hazardous substance at any facility, location or site so as to
be or become a potentially liable party for remedial action or response costs in
connection with such facility, location or site under the Federal Comprehensive
Environmental Response, Compensation and Liability Act, as amended, the Federal
Resource Conservation and Recovery Act, as amended, or similar state statutes
which liability could reasonably be expected to have a material adverse effect
on the business, operations, properties, assets, condition (financial or other),
results of operations or prospects of Parent and its subsidiaries taken as a
whole.
SECTION 4.16 BROKERS. No broker, finder or investment banker 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 Parent or Subsidiary.
SECTION 4.17 SUBSEQUENT LIQUIDATION OR SALE: REACQUISITION OF PARENT
COMMON STOCK. Parent has no plan or intention (i) to liquidate Subsidiary, (ii)
to merge Subsidiary with and into another corporation, (iii) to sell or
otherwise dispose of the stock of Subsidiary, or (iv) to cause Subsidiary to
sell or otherwise dispose of any of the assets of the Company acquired in the
Merger, except for dispositions made in the ordinary course of business or
transfers described in Section 368(a)(2)(C) of the Code. Parent has no plan or
intention to reacquire, directly or indirectly, any of the Parent Common Stock
issued in the Merger.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF COMPANY
Company represents and warrants to Parent and Subsidiary as follows:
SECTION 5.1 ORGANIZATION AND QUALIFICATION. Company is a corporation
duly organized, validly existing, and in good standing under the laws of the
state of Nevada and has the requisite corporate power and authority to own,
lease, and operate its assets and properties and to carry on its business as it
is now being conducted. Company 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, except where the failure to be so qualified and in good standing will
not, when taken together with all other such failures, have a material adverse
effect on the business, financial condition, or results of
12
operations of Company (a "Company Material Adverse Effect"). True, accurate, and
complete copies of Company's Articles of Incorporation and Bylaws in each case
as in effect on the date hereof, including all amendments thereto, have
heretofore been delivered to Parent.
SECTION 5.2 CAPITALIZATION.
(a) As of the date hereof, 1,000 shares of Class A Common Stock of
the Company were issued and outstanding, 17,000 shares of Preferred Stock
of the Company were issued and outstanding, and 124,593 shares of Class B
Common Stock of the Company were issued and outstanding. All of the issued
and outstanding shares of stock in the Company are validly issued and are
fully paid and nonassessable.
(b) As of the date hereof, there are no outstanding subscriptions,
options, calls, contracts, commitments, understandings, restrictions,
arrangements, rights, or warrants, including any right of conversation or
exchange under any outstanding security, instrument, or other agreement
obligating Company to issue, deliver, or sell, or cause to be issued,
delivered, or sold, additional shares of the capital stock of Company or
obligating Company to grant, extend, or enter into any such agreement or
commitment. There are no voting trusts, proxies, or other agreements or
understandings to which Company is a party or is bound with respect to the
voting of any shares of capital stock of Company, except for a
Stockholders Agreement disclosed previously by the Company.
SECTION 5.3 NO SUBSIDIARIES. Company does not own any interest in
any corporation, partnership, business organization, or other entity, other than
those previously disclosed by the Company.
SECTION 5.4 AUTHORITY: NON-CONTRAVENTION; APPROVALS.
(a) Company has full corporate power and authority to enter into
this Agreement and, subject to Company Shareholders' Approval and Company
Required Statutory Approvals (as defined in Section 5.4(c)), to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation by Company of the transactions contemplated
hereby, have been duly authorized by Company's Board of Directors, and no
other corporate proceedings on the part of Company are necessary to
authorize the execution and delivery of this Agreement and the
consummation by Company of the transactions contemplated hereby, except
for Company Shareholders' Approval and the obtaining of Company Required
Statutory Approvals. This Agreement has been duly and validly executed and
delivered by Company, and assuming the due authorization, execution, and
delivery hereof by Parent and Subsidiary, constitutes a valid and binding
agreement of Company, enforceable against Company in accordance with its
terms, except that such enforcement may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium, or other similar laws
13
affecting or relating to enforcement of creditors' rights generally; and
(ii) general equitable principles.
(b) The execution and delivery of this Agreement by Company does
not, and the consummation by Company of the transactions contemplated
hereby will 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, security interest, charge, or encumbrance upon any of the
properties or assets of Company under any of the terms, conditions, or
provisions of (i) the articles of incorporation or bylaws of Company; (ii)
subject to obtaining Company Required Statutory Approvals and the receipt
of Company Shareholders' Approval, any statute, law, ordinance, rule,
regulation, judgment, decree, order, injunction, writ, permit, or license
of any court or government authority applicable to Company or any of its
properties or assets; or (iii) subject to obtaining Company Required
Statutory Approvals, 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 Company is now a
party or by which Company or any of its properties or assets may be bound
or affected, excluding from the foregoing clauses (ii) and (iii) such
violations, conflicts, breaches, defaults, terminations, accelerations, or
creations of liens, security interests, charges, or encumbrances that
would not, in the aggregate, have a Company Material Adverse Effect.
(c) Except for (i) the filings by Parent and Company required by
Title II of the HSR Act; and (ii) the making of the Merger Filing with the
Secretary of State of the state of Nevada in connection with the Merger
approvals referred to in clauses (i) and (ii), collectively referred to as
the "Company 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 Company or the consummation by
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, in the aggregate, have a Company Material Adverse Effect.
SECTION 5.5 FINANCIAL STATEMENTS. The Company has previously
furnished complete copies of the financial statements of Company consisting of
(i) balance sheets of Company as of December 31, 1998 (including the notes
contained therein or annexed thereto); and (ii) an unaudited balance sheet of
Company as of December 31, 1999 (the "Recent Balance Sheet"). All of such
financial statements (including all notes and schedules contained therein and
annexed thereto) have been prepared in accordance with generally accepted
accounting principles (except, in the case of unaudited statements, for the
absence of footnote disclosure) applied on a consistent basis (except as may be
indicated therein or in the notes thereto) and
14
fairly present, in all material respects, the financial position, results of
operations, and cash flows of Company as of the dates and for the years and
periods indicated, subject, in the case of the unaudited interim financial
statements, to normal year-end and audit adjustments and any other adjustments
described therein.
SECTION 5.6 ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed
in the Recent Balance Sheet, Company does not have any liabilities or
obligations (whether absolute, accrued, contingent, or otherwise) of any nature
(a) except liabilities, obligations, or contingencies (i) which are accrued or
reserved against in the Recent Balance Sheet or reflected in the notes thereto;
or (ii) which were incurred after the date of the Recent Balance Sheet and were
incurred in the ordinary course of business and consistent with past practice;
and (b) except for any liabilities, obligations, or contingencies which (i)
would not, in the aggregate, have a Company Material Adverse Effect; or (ii)
have been discharged or paid in full prior to the date hereof.
SECTION 5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of
the Recent Balance Sheet, there has not been any material adverse change in the
business, operations, properties, assets, liabilities, condition (financial or
other), results of operations or prospects of Company and its subsidiaries, as a
whole.
SECTION 5.8 LITIGATION. There are no claims, suits, actions, or
proceedings pending or, to the knowledge of Company, threatened against,
relating to or affecting Company, before any court, governmental department,
commission, agency, instrumentality, or authority, or any arbitrator which could
reasonably be expected, either alone or in the aggregate with all such claims,
actions, or proceedings, to have a Company Material Adverse Effect. Company is
not subject to any judgment, decree, injunction, rule, or order of any court,
governmental department, commission, agency, instrumentality, or authority, or
any arbitrator which prohibits or restricts the consummation of the transactions
contemplated hereby or would have any Company Material Adverse Effect.
SECTION 5.9 NO VIOLATION OF LAW. Company is not in violation of and
has not been given notice or been charged with any violation of any law,
statute, order, rule, regulation, ordinance, or judgment (including, without
limitation, any applicable environmental law, ordinance, or regulation) of any
governmental or regulatory body or authority, except for violations which, in
the aggregate, do not have a Company Material Adverse Effect. As of the date of
this Agreement, no investigation or review by any governmental or regulatory
body or authority is pending or, to the knowledge of Company, threatened nor has
any governmental or regulatory body or authority indicated an intention to
conduct the same other than, in each case, those the outcome of which, as far as
reasonably can be foreseen, will not have a Company Material Adverse Effect.
Company has all permits, licenses, franchises, variances, exemptions, orders,
and other governmental authorizations, consents, and approvals necessary to
conduct its business as presently conducted (the "Company Permits"), except for
permits, licenses, franchises, variances, exemptions, orders, authorizations,
consents, and approvals, the absence of which, alone or in the aggregate, would
not have a Company Material Adverse Effect. Company (a) has duly and currently
filed all reports and other information required to be filed with the
15
Department of Education or any other governmental or regulatory authority in
connection with Company Permits; and (b) is not in violation of the terms of any
Company Permit, except for delays in filing reports or violations which, alone
or in the aggregate, would not have a Company Material Adverse Effect.
SECTION 5.10 COMPLIANCE WITH AGREEMENTS. Company is not in breach or
violation of or in default in the performance or observance of any term or
provision of, and no event has occurred which, with lapse of time or action by a
third party could result in, a default under (a) the articles of incorporation
or bylaws of Company; or (b) any contract, commitment, agreement, indenture,
mortgage, loan agreement, note, lease, bond, license, approval, or other
instrument to which Company is a party or by which it is bound or to which any
of its property is subject, which breaches, violations, and defaults, in the
case of clause (b) of this Section 5.10, would have, in the aggregate, a Company
Material Adverse Effect.
SECTION 5.11 TAXES. Company has (i) duly filed with the appropriate
governmental authorities all Tax Returns required to be filed by it for all
periods ending on or prior to the Effective Time, other than those Tax Returns,
the failure of which to file would not have a Company Material Adverse Effect,
and such Tax Returns are true, correct, and complete in all material respects;
and (ii) duly paid in full or made adequate provision for the payment of all
Taxes for all periods ending at or prior to the Effective Time. The liabilities
and reserves for Taxes reflected in the Recent Balance Sheet are adequate to
cover all Taxes for all periods ending on or prior to the date of the Recent
Balance Sheet, and there are no material liens for Taxes upon any property or
assets of Company, except for liens for Taxes not yet due. There are no
unresolved issues of law or fact arising out of a notice of deficiency, proposed
deficiency, or assessment from the IRS or any other governmental taxing
authority with respect to Taxes of Company, which, if decided adversely, singly
or in the aggregate, would have a Company Material Adverse Effect.
SECTION 5.12 EMPLOYEE BENEFIT PLANS; ERISA.
(a) Except as disclosed by Company at the date hereof, Company does
not maintain or contribute to any material employee benefit plans,
programs, arrangements, and practices (such as plans, programs,
arrangements, and practices of Company being referred to as the "Company
Plans"), including employee benefit plans within the meaning set forth in
Section 3(3) of ERISA. Company has no obligation to create any additional
such plan or to amend any such plan so as to increase benefits thereunder,
except as required under the terms of Company Plans or to comply with
applicable law.
(b) Except as disclosed by Company, (i) there have been no
non-exempt prohibited transactions within the meaning of Sections 406 or
407 of ERISA or Section 4975 of the Code with respect to any of Company
Plans that could result in penalties, taxes, or liabilities, which, singly
or in the aggregate, could have a Company Material Adverse Effect; (ii)
except for premiums due, there is no outstanding liability in excess of
$100,000, whether measured alone or
16
in the aggregate, under Title IV of ERISA with respect to any of Company
Plans; (iii) neither the Pension Benefit Guaranty Corporation nor any plan
administrator has instituted proceedings to terminate any of Company Plans
subject to Title IV of ERISA other than in a "standard termination"
described in Section 404(b) of ERISA; (iv) none of Company Plans has
incurred any "accumulated funding deficiency" (as defined in Section 302
of ERISA and Section 412 of the Code), whether or not waived, as of the
last day of the most recent fiscal year of each such Company Plan ended
prior to the date of this Agreement for which the required time for making
contributions has expired; (v) the current present value of all projected
benefit obligations under each of Company Plans which is subject to Title
IV of ERISA did not, as of its latest valuation date, exceed the then
current value of the assets of such plan allocable to such benefit
liabilities by more than the amount, if any, disclosed in the Recent
Balance Sheet (based upon reasonable actuarial assumptions currently
utilized for such Company Plan); (vi) each of Company Plans has been
operated and administered in all material respects in accordance with
applicable laws during the period of time covered by the applicable
statute of limitations; (vii) each of Company Plans which is intended to
be "qualified" within the meaning of Section 401(a) of the Code has been
determined by the Internal Revenue Service to be so qualified and such
determination has not been modified, revoked, or limited by failure to
satisfy any condition thereof or by a subsequent amendment thereto or a
failure to amend, except that it may be necessary to make additional
amendments retroactively to maintain the "qualified" status of such
Company Plans, and the period for making any such necessary retroactive
amendments has not expired; (viii) to the best knowledge of Company, there
are no material pending, threatened, or anticipated claims involving any
of Company Plans other than claims for benefits in the ordinary course;
and (ix) Company has no current liability in excess of $100,000, whether
measured alone or in the aggregate, for plan termination or withdrawal
(complete or partial) which has occurred under Title IV of ERISA based on
any plan to which any entity that would be deemed one employer with
Company under Section 4001 of ERISA or Section 414 of the Code contributed
during the period of time covered by the applicable statute of limitations
(the "Company Controlled Group Plans"), and Company has no knowledge that
any such liability will be asserted against it, none of Company Controlled
Group Plans has an "accumulated funding deficiency" (as defined in Section
302 of ERISA and Section 412 of the Code) as of the last day of the most
recent fiscal year of such plan ended prior to the date of this Agreement
for which the required time for making contributions has expired, and no
Company Controlled Group Plan has an outstanding funding waiver which
could result in the imposition of liens, excise taxes, or liability
against Company in excess of $100,000, whether measured alone or in the
aggregate.
SECTION 5.13 INVESTMENT COMPANY ACT. Company either (a) is not an
"investment company," or a company "controlled" by, or an "affiliated company"
with respect to an "investment company" within the meaning of the Investment
Company Act; or (b) satisfies all
17
conditions for an exemption from the Investment Company Act and, accordingly,
Company is not required to be registered under the Investment Company Act.
SECTION 5.14 LABOR CONTROVERSIES. Except as disclosed by the
Company, (a) there are no significant controversies pending or, to the knowledge
of Company, threatened between Company and any representatives of any of its
employees; (b) to the knowledge of Company, there are no material organization
efforts presently being made involving any of the presently unorganized
employees of Company; (c) Company has, to its knowledge, complied in all
material respects with all laws relating to the employment of labor, including,
without limitation, any provisions thereof relating to wages, hours, collective
bargaining, and the payment of social security and similar taxes; and (d) no
person has, to the knowledge of Company, asserted that Company is liable, in any
material amount, for any arrears of wages or any taxes or penalties for failure
to comply with any of the foregoing, except for such controversies,
organizational efforts, non-compliance and liabilities, which, singly or in the
aggregate, could not reasonably be expected to have a Company Material Adverse
Effect.
SECTION 5.15 ENVIRONMENTAL MATTERS. The applicable federal, state,
or local laws ("Laws") relating to pollution or protection of the environment,
including Laws relating to emissions, discharges, generation, storage, releases,
or threatened releases of pollutants, contaminants, chemicals, or industrial,
toxic, hazardous, or petroleum, or petroleum-based substances or wastes
("Waste") into the environment (including, without limitation, ambient air,
surface water, ground water, land surface, or subsurface strata), or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of Waste, including, without limitation, the
Clean Water Act, the Clean Air Act, the Resource Conservation and Recovery Act,
the Toxic Substances Control Act, and the Comprehensive Environmental Response
Compensation Liability Act ("CERCLA"), as amended, and their state and local
counterparts are herein collectively referred to as the "Environmental Laws."
Company is in full compliance with all limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules, and time tables
contained in the Environmental Laws or contained in any regulation, code, plan,
order, decree, judgment, injunction, notice, or demand letter issued, entered,
promulgated, or approved thereunder, except to the extent that noncompliance
would not have a Company Material Adverse Effect. There is no civil, criminal,
or administrative action, suit, demand, claim, hearing, notice of violation,
investigation, proceeding, notice, or demand letter pending or, to Company's
knowledge, threatened against Company relating in any way to the Environmental
Law or any regulation, code, plan, order, decree, judgment, injunction, notice,
or demand letter issued, entered, promulgated, or approved thereunder. To
Company's knowledge, there are no past or present events, conditions,
activities, practices, incidents, actions, omissions, or plans which would
interfere with or prevent compliance, or continued compliance, with the
Environmental Laws or with any regulation, code, plan, order, decree, judgment,
injunction, notice, or demand letter issued, entered, promulgated, or approved
thereunder or which would give rise to any liability thereunder, including,
without limitation, liability under CERCLA or similar state or local Laws, or
otherwise form the basis of any claim, action, demand, \suit, proceeding,
hearing, notice of violation, study, or investigation, based on or related to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling, or the emission, discharge, release, or threatened
release into the
18
environment of any Waste, except to the extent that such noncompliance,
liability, or claim would not have a Company Material Adverse Effect.
SECTION 5.16 INTELLECTUAL PROPERTY. Company is licensed or otherwise
has the right to use all patents, patent rights, trademarks, trademark rights,
trade names, trade name rights, service marks, service xxxx rights, copyrights,
and other proprietary intellectual property rights and computer programs which
are material to the business, financial condition, or results of operation of
Company. No claims are pending or, to the knowledge of Company, threatened that
Company is infringing or otherwise adversely affecting the rights of any person
with regard to any patent, license, trademark, trade name, service xxxx,
copyright, or other intellectual property right, except for any of the foregoing
as would not have a Company Material Adverse Effect.
SECTION 5.17 TITLE TO AND CONDITION OF PROPERTIES. Company has good
and marketable title to all of Company's material assets, business, and
properties, including, without limitation, all such properties (tangible and
intangible) reflected in the Recent Balance Sheet, free and clear of all
mortgages, liens (statutory or otherwise), security interests, claims, pledges,
licenses, equities, options, conditional sales contracts, assessments, levies,
easements, covenants, reservations, restrictions, rights-of-way, exceptions,
limitations, charges, or encumbrances of any nature whatsoever (collectively,
"Liens"), except those previously disclosed by Company.
SECTION 5.18 BROKERS. No broker, finder, or investment banker 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 Company.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 6.1 CONDUCT OF BUSINESS BY COMPANY PENDING THE MERGER.
Except as otherwise contemplated by this Agreement after the date hereof and
prior to the Closing Date or earlier termination of this Agreement, unless the
parties hereto shall otherwise agree in writing, each of the respective parties
hereto shall:
(a) Conduct its business in the ordinary and usual course of
business, consistent with past practice;
(b) not (i) amend or propose to amend its Articles of Incorporation
or Bylaws; or (ii) split, combine, or reclassify its outstanding capital
stock or declare, set aside, or pay any dividend or distribution payable
in cash, stock, property, or otherwise;
(c) not issue, sell, pledge, or dispose of, or agree to issue, sell,
pledge, or dispose of any additional shares of, or any options, warrants,
or rights of any
19
kind to acquire any shares of its capital stock of any class or any debt
or equity securities convertible into or exchangeable for such capital
stock;
(d) not (i) incur or become contingently liable with respect to any
indebtedness for borrowed money other than borrowings in the ordinary
course of business; (ii) redeem, purchase, acquire, or offer to purchase
or acquire any shares of its capital stock; (iii) take or fail to take any
action, which action or failure to take action would cause Company or its
shareholders (except to the extent that any shareholders receive
consideration other than Parent Common Stock) or Parent or its
shareholders (except to the extent that any shareholders receive
consideration other than Common Stock) to recognize gain or loss for
federal income tax purposes as a result of the consummation of the Merger;
(iv) make any acquisition of any material amount of assets or any
businesses other than expenditures for fixed or capital assets in the
ordinary course of business; (v) sell any material amount of assets or any
businesses, other than sales, in the ordinary course of business; or (vi)
enter into any contract, agreement, commitment, or arrangement with
respect to any of the foregoing;
(e) use all reasonable efforts to preserve intact its business
organization and goodwill, keep available the services of their respective
present officers and key employees, and preserve the goodwill and business
relationships with suppliers, distributors, customers, 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 the other parties hereto to report operational matters
of materiality and the general status of ongoing operations;
(g) not enter into or amend any employment, severance, special pay
arrangement with respect to termination of employment, or other similar
arrangements or agreements with any directors, officers, or key employees,
except in the ordinary course and consistent with past practice;
(h) not adopt, enter into, or amend any bonus, profit sharing,
compensation, stock option, pension, retirement, deferred compensation,
health care, employment, or other employee benefit plan, agreement, trust,
fund, or arrangement for the benefit or welfare of any employee or
retiree, except in the ordinary course of business and consistent with
past practice or as required under the terms of such plans; and
(i) maintain with financially responsible insurance companies
insurance on its tangible assets and its businesses, in such amounts and
against such risks and losses as are consistent with past practice.
20
SECTION 6.2 CONTROL OF COMPANY'S OPERATIONS. Nothing contained in
this Agreement shall give to Parent, directly or indirectly, rights to control
or direct Company's operations. Nothing contained in this Agreement shall give
to Company, directly or indirectly, rights to control or direct Parent's
operations. Prior to the Effective Time, Parent and Company shall exercise,
consistent with the terms and conditions of this Agreement, complete control and
supervision of their respective operations.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1 ACCESS TO INFORMATION. Company shall afford to Parent
and Subsidiary and their respective accountants, counsel, financial advisors,
and other representatives (the "Parent Representatives") and Parent and its
subsidiaries shall afford to its accountants, counsel, financial advisors and
other representatives (the "Company Representatives") full access during normal
business hours throughout the period prior to the Effective Time to all of their
respective properties, books, contracts, commitments, and records (including,
but not limited to, Tax Returns) and during such period shall furnish promptly
to one another such other information concerning their respective businesses,
properties, and personnel as Parent or Subsidiary or Company, as the case may
be, shall reasonably request; provided that no investigation pursuant to this
Section 7.1 shall affect any representations or warranties made herein or the
conditions to the obligations of the respective parties to consummate the
Merger. Parent and its subsidiaries shall hold and shall use their best efforts
to cause the Parent Representatives to hold, and Company shall hold and shall
use its best efforts to cause Company Representatives to hold in strict
confidence all non-public documents and information furnished to Parent and
Subsidiary or to Company, as the case may be, in connection with the
transactions contemplated by this Agreement, except that Parent, Subsidiary, and
Company may disclose such information as may be necessary in connection with
seeking the Parent Required Statutory Approvals, Company Required Statutory
Approvals, and Company Shareholders' Approval, and Parent, Subsidiary, and
Company may disclose any information that any of them is required by law or
judicial or administrative order to disclose; provided that the party required
to disclose such information shall provide the other parties with adequate prior
notice to such effect, and such party shall cooperate with any other party which
wishes to obtain a protective order or injunction covering such information. In
the event that this Agreement is terminated in accordance with its terms, each
party shall promptly re-deliver to the other all non-public written material
provided pursuant to this Section 7.1 and shall not retain any copies, extracts,
or other reproductions, in whole or in part, of such written material. In such
event, all documents, memoranda, notes, and other writing whatsoever prepared by
Parent or Company based on the information in such material shall be destroyed
(and Parent and Company shall use their respective best efforts to cause their
advisors and representatives to similarly destroy their documents, memoranda,
and notes), and such destruction (and best efforts) shall be certified, in
writing, by an authorized officer supervising such destruction. Company shall
promptly advise Parent, and Parent shall promptly advise Company in writing, of
any change or the occurrence of any event after the date of this Agreement
having, or which, insofar as can reasonably be foreseen, in the future may have
any material adverse effect on the business, operations,
21
properties, assets, condition (financial or other), results of operations, or
prospects of Company or Parent and its subsidiaries, taken as a whole.
SECTION 7.2 COMPANY SHAREHOLDERS' APPROVAL. The parties hereto shall
promptly submit this Agreement and the transactions contemplated hereby for
their respective shareholders' approval at a meeting of shareholders and shall
use its best efforts to obtain shareholder approval and adoption of this
Agreement and the transactions contemplated hereby. Such meeting shall be held
as soon as practicable following the date hereof. Each party hereto shall,
through its Board of Directors, recommend to its respective shareholders
approval of the transactions contemplated by this Agreement.
SECTION 7.3 EXPENSES. All cost and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such expenses.
SECTION 7.4 AGREEMENT TO COOPERATE. Parent, Subsidiary, and Company
each agree to take such actions as may be necessary to obtain any governmental
consents, orders, and approvals legally required for the consummation of the
Merger, and the transactions contemplated hereby, including the making of any
filings, publications, and requests for extensions and waivers and shall take
all necessary and appropriate steps to file under the HSR Act.
SECTION 7.5 PUBLIC STATEMENTS. Both the timing and the content of
all disclosure to third parties and public announcements concerning the
transactions provided for in this Agreement by either Company or Parent shall be
subject to the prior approval of Parent, which shall not be unreasonably
withheld. Company and Parent expressly agree that a public announcement of the
transactions contemplated by this Agreement shall be made as agreed upon by
Company and Parent.
SECTION 7.6 EMPLOYEE BENEFITS. Parent hereby acknowledges the
existence of each of the Company Plans and agrees that it shall perform, or
cause to be performed, after the Effective Time all of the obligations of
Company thereunder. Each of the Parent Plans and Company Plans in effect at the
date hereof shall be maintained in effect without any amendments or
modifications which would adversely affect the beneficiaries thereof with
respect to the employees or former employees of Parent, on the one hand, and of
Company on the other hand, respectively, who received any benefits under any
such benefit plans immediately prior to the Closing Date until the second
anniversary of the Effective Time.
SECTION 7.7 STOCKHOLDER AGREEMENT. At or immediately after the
Closing, Parent and Company shall each use best efforts in good faith to have
shareholders of Parent execute and deliver to each other a Stockholder Agreement
("Stockholder Agreement") substantially in the form of Exhibit 7.7 hereto.
SECTION 7.8 MERGER VOTE. In any vote of the shareholders of Company
regarding approval of the Merger, Parent shall vote, or cause to be voted, all
shares of Common
22
Stock then owned by Parent, Subsidiary, or any other subsidiary of Parent or
with respect to which Parent, Subsidiary, or any other subsidiary of Parent
holds the power to direct the voting in favor of approval of the Merger and this
Agreement.
SECTION 7.9 TAX TREATMENT. Following the Merger, Parent and
Subsidiary shall not take any actions that would adversely impact the treatment
of the Merger as a reorganization that qualifies under Sections 368(a)(1)(A) and
(a)(2)(D) of the Code. It is expressly understood and agreed that the present
shareholders of Company are intended beneficiaries who are entitled to enforce
the provisions of this Section 7.9 as if they were parties hereto.
ARTICLE VIII
CONDITIONS
SECTION 8.1 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 Date of the following
conditions:
(a) This Agreement and the transactions contemplated hereby shall
have been approved and adopted by the requisite vote of the shareholders
of Company, Parent and Subsidiary under applicable law;
(b) Parent Common Stock, issuable in the Merger, shall have been
authorized;
(c) The waiting period applicable to the consummation of the Merger
under the HSR Act shall have expired or been terminated;
(d) No preliminary or permanent injunction or other order or decree
by any federal or state court which prevents the consummation of the
Merger shall have been issued and remain in effect (each party agreeing to
use its reasonable efforts to have any such injunction, order, or decree
lifted);
(e) 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 States which would prevent the
consummation of the Merger; and
(f) All governmental consents, orders, and approvals legally
required for the consummation of the Merger and the transactions
contemplated hereby shall have become Final Orders.
(g) Consummation of the Merger shall satisfy all requirements under
Section 355(e) of the Code with respect to shareholders of Parent.
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SECTION 8.2 CONDITIONS TO OBLIGATION OF COMPANY TO EFFECT THE
MERGER. Unless waived by Company, the obligation of Company to effect the Merger
shall be subject to the fulfillment at or prior to the Closing Date of the
following additional conditions:
(a) Parent and Subsidiary 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 Parent and Subsidiary contained in this Agreement shall be
true and correct in all material respects on and as of (i) the date made;
and (ii) except in the case of representations and warranties expressly
made solely with reference to a particular date and to the extent the
failure of such to be true and correct in all material respects on and as
of the Closing Date is the result of actions expressly mandated by Section
7.4;
(b) All governmental consents, orders, and approvals legally
required for the consummation of the Merger and the transactions
contemplated hereby shall have been obtained and be in effect at the
Closing Date, and no such consent, order, or approval shall have any terms
which, in the reasonable judgment of Company, when taken together with the
terms of all such consents, orders, or approvals, would materially impair
the value of the Merger to the shareholders of the Company, and no
governmental authority shall have promulgated any statute, rule, or
regulation which, when taken together with all such promulgations, would
materially impair the value of the Merger to the shareholders of the
Company;
SECTION 8.3 CONDITIONS TO OBLIGATIONS OF PARENT AND SUBSIDIARY TO
EFFECT THE MERGER. Unless waived by Parent and Subsidiary, the obligations of
Parent and Subsidiary to effect the Merger shall be subject to the fulfillment
at or prior to the Effective Time of the additional following conditions:
(a) 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
Company contained in this Agreement shall be true and correct in all
material respects on and as of (i) the date made; and (ii) except in the
case of representations and warranties expressly made solely with
reference to a particular date, and to the extent the failure of such to
be true and correct in all material respects on and as of the Closing
Date, is the result of actions expressly mandated by Section 7.4 the
Closing Date;
(b) Investor Representation Forms, in the form reasonably required
by Parent and executed by each Company shareholder (other than Parent and
any holders of Dissenting Shares) as of the date on which Company
Shareholders' Approval is received, shall have been delivered to Parent;
and
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(c) All governmental consents, orders, and approvals legally
required for the consummation of the Merger and the transactions
contemplated hereby shall have been obtained and be in effect at the
Closing Date, and no such consent, order, or approval shall have any terms
which, in the reasonable judgment of Parent, when taken together with the
terms of all such consents, orders, or approvals, would materially impair
the value to Parent of the Merger, and no governmental authority shall
have promulgated any statute, rule, or regulation which, when taken
together with all such promulgations, would materially impair the value to
Parent of the Merger.
ARTICLE IX
TERMINATION, AMENDMENT, AND WAIVER
SECTION 9.1 TERMINATION. This Agreement may be terminated at any
time prior to the Closing Date, whether before or after approval by the
shareholders of the parties:
(a) by mutual consent of Parent and Company;
(b) by any party hereto, by written notice to the other party, if
approval of such notifying party's shareholders shall not have been
obtained at a duly held special meeting, including any adjournments
thereof; and
(c) by any party hereto, if any state or federal law, order, rule,
or regulation is adopted or issued which has the effect, as supported by
the written opinion of outside counsel for such party, of prohibiting the
Merger or by any party hereto, if any court of competent jurisdiction in
the United States or any state shall have issued an order, judgment, or
decree permanently restraining, enjoining, or otherwise prohibiting the
Merger, and such order, judgment, or decree shall have become final and
nonappealable.
SECTION 9.2 EFFECT OF TERMINATION. In the event of termination of
this Agreement by either Parent or Company as provided in Section 9.1, this
Agreement shall forthwith become void, and there shall be no further obligation
on the part of either Company, Parent, Subsidiary, or their respective officers
or directors (except as set forth in this Section 9.2 and in Sections 7.1 and
7.4 which shall survive the termination). Nothing in this Section 9.2 shall
relief any party from liability for any breach of this Agreement.
SECTION 9.3 AMENDMENT. This Agreement may be amended before or after
Company Shareholder Approval has been obtained but only by an instrument, in
writing, signed on behalf of each of the parties hereto and in compliance with
applicable law.
SECTION 9.4 WAIVER. At any time prior to the Effective Time, 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 of the other parties
contained herein or in any document delivered pursuant thereto, and (c) waive
compliance
25
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 if set
forth in an instrument in writing signed on behalf of such party.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties contained in Articles IV and V of this Agreement
shall survive the Merger.
SECTION 10.2 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally, 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 like notice):
(a) If to Parent or Subsidiary, to:
UNIPAC Service Corporation
Attention: K. Xxx Xxxx, President
0000 X. Xxxxxx Xxxx, Xxxxx 000
Xxxxxx, XX 00000
(b) If to Company, to:
National Education Loan Network, Inc.
Attention: Xxx Xxxx, President
000 X. 00xx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
SECTION 10.4 INTERPRETATION. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
SECTION 10.5 MISCELLANEOUS. This Agreement (including the documents
and instruments referred to herein) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof.
SECTION 10.6 COUNTERPARTS. This Agreement may be executed 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.
SECTION 10.7 PARTIES IN INTEREST. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and, except as
expressly herein provided, nothing
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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.
IN WITNESS WHEREOF, Parent, Subsidiary and Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
UNIPAC Service Corporation
("Parent")
By: /s/ K. Xxx Xxxx
--------------------------------
Title: President
--------------------------------
NelNet, Inc.
("Subsidiary")
By: /s/ Xxx Xxxx
--------------------------------
Title: President
--------------------------------
National Education Loan Network, Inc.
("Company")
By: /s/ Xxx Xxxx
--------------------------------
Title: President
--------------------------------
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