EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
by and among
PROVAL CORPORATION
(ProVal)
MANATRON, INC.,
(Manatron)
and
PROVAL ACQUISITION CORPORATION
(MergerSub)
and joined in by
J. XXXXX XXXXX
(Xxxxx)
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "PLAN OF MERGER") is made this
28th day of May 1999, between ProVal Corporation, an Ohio corporation
("PROVAL"), Manatron, Inc., a Michigan corporation ("MANATRON"), ProVal
Acquisition Corporation, an Ohio corporation ("MERGERSUB"), and J. Xxxxx
Xxxxx, an individual ("XXXXX"). Xxxxx owns all of the outstanding shares
of ProVal's capital stock and joins in this Agreement to make certain
representations and covenants and to guaranty the prompt performance of
ProVal's obligations under this Agreement.
ProVal licenses and supports real estate appraisal software to local
governments in North America (the "BUSINESS"). Manatron desires to become
affiliated with ProVal through the merger of ProVal with and into MergerSub
in accordance with the Ohio General Corporation Act, as amended (the "OHIO
ACT"). The transactions contemplated by and described in this Plan of
Merger are referred to as the "MERGER."
It is intended that, for federal tax purposes, the Merger qualify as a
reorganization under the provisions of Section 368 of the Internal Revenue
Code of 1986, as amended (the "INTERNAL REVENUE CODE").
In consideration of the representations, warranties, and covenants
contained in this Plan of Merger, the parties agree:
ARTICLE 1 THE MERGER
1.1 THE MERGER. At the Effective Time (as defined below), ProVal
shall be merged with and into MergerSub and MergerSub shall be the
surviving corporation (the "SURVIVING CORPORATION"). At the Effective
Time, the separate existence of ProVal shall cease. The name of the
Surviving Corporation shall be "Manatron ProVal Corporation." The Merger
shall have the effect on ProVal and MergerSub as "constituent corporations"
of the Merger as provided under the Ohio Act.
1.2 EFFECTIVE TIME. The Merger shall become effective at the time
(the "EFFECTIVE TIME") of filing of, or at such later time specified in the
articles of merger (as determined by Manatron, but in no event more than
five business days after the Closing) (the "ARTICLES OF MERGER"), in the
form required by and executed in accordance with the Ohio Act, filed with
the Ohio Secretary of State (the "SECRETARY OF STATE").
1.3 ARTICLES OF INCORPORATION AND BYLAWS OF SURVIVING CORPORATION.
The Articles of Incorporation and Bylaws of MergerSub shall be the Articles
of Incorporation and Bylaws of the Surviving Corporation until thereafter
amended as provided by the Act.
1.4 OFFICERS AND DIRECTORS OF SURVIVING CORPORATION. Subject to
applicable law, the executive officers of MergerSub immediately prior to
the Effective Time shall be the initial executive officers of the Surviving
Corporation, and the directors of MergerSub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation.
1.5 FURTHER ASSURANCES. If, at any time after the Effective Time,
the Surviving Corporation shall consider that any other actions or things
are necessary to fully effectuate this Agreement, the Surviving Corporation
shall be authorized to execute and deliver, in the name and on behalf of
each of the constituent corporations or otherwise, all such documents and
to take all such actions and things as may be necessary or desirable to do
so.
ARTICLE 2 VOTING AND CONVERSION OF SHARES
2.1 EFFECT ON SHARES AND MERGERSUB'S CAPITAL STOCK. At the Effective
Time, without any further act by or on behalf of any party to this
Agreement:
2.1.1 CONVERSION OF PROVAL CAPITAL STOCK. Except as provided
below, all of the shares of ProVal Class A and Class B Common Stock
(collectively) outstanding immediately prior to the Effective Time
shall be converted into (a) three hundred thousand (300,000) shares of
validly issued, fully paid, and nonassessable shares of Manatron
common stock, no par value per share ("MANATRON COMMON STOCK"), and
(b) One Million Five Hundred Thousand Dollars ($1,500,000) in cash.
2.1.2 MANATRON RIGHTS. Each share of Manatron Common Stock
to be issued in the Merger will have attached to it the number of
"Manatron Rights" issuable pursuant to the "Manatron Rights Agreement"
(as those terms are defined in Section 4.4) then represented by each
share of Manatron Common Stock at the Effective Time, provided that
the Manatron Rights are not then separately transferable.
2.1.3 MERGERSUB'S COMMON STOCK. As of the Effective Time,
each share of Common Stock of MergerSub, $1.00 par value per share
("MERGERSUB COMMON STOCK"), outstanding immediately prior to the
Effective Time shall remain as one full share of Common Stock of the
Surviving Corporation.
2.2 SHAREHOLDER MEETING.
2.2.1 PROVAL'S ACTIONS. Xxxxx shall cause ProVal, in
accordance with applicable law, to duly call, give notice of, convene,
and hold a special meeting of its shareholder, or act by unanimous
written consent, as soon as practicable following the execution of
-2-
this Agreement for the purpose of considering and adopting this
Agreement. Xxxxx shall either execute a written consent or vote at
the meeting all of the ProVal Capital Stock then owned by him in favor
of the approval and adoption of this Agreement.
2.2.2 MANATRON'S ACTIONS. Manatron agrees that it will vote
all of its shares of MergerSub Common Stock in favor of the approval
and adoption of this Agreement.
2.3 PLACE AND DATE OF CLOSING. The closing of the transactions
contemplated by this Agreement (the "CLOSING") shall take place at the
offices of Lagos & Lagos on the later of (a) May 28, 1999; or (b) the
satisfaction or written waiver of the conditions set forth in Articles 6
and 7. Subject to the provisions of Article 8, failure to consummate the
purchase and sale provided for in this Agreement on the date and time and
at the place determined pursuant to this Section will not result in the
termination of this Agreement and will not relieve any party of any
obligation hereunder.
2.4 CONSUMMATION OF THE MERGER. As soon as practicable after the
satisfaction or waiver of the conditions set forth in Articles 6 and 7, the
parties shall execute and file the Articles of Merger with the Secretary of
State and take such other actions as may be required by law to make the
Merger effective on May 31, 1999.
2.5 CLOSING OBLIGATIONS.
2.5.1 MANATRON'S OBLIGATIONS. At the Closing, Manatron
and/or MergerSub shall deliver to Xxxxx:
(a) STOCK. Certificates representing such number of shares
of Manatron Common Stock issued in the name of Xxxxx, as
determined above.
(b) CASH. One Million Five Hundred Thousand Dollars
($1,500,000) in immediately available funds.
(c) REGISTRATION RIGHTS AGREEMENT. A registration rights
agreement in substantially the form of APPENDIX A, as executed by
Manatron (the "REGISTRATION RIGHTS AGREEMENT").
(d) EMPLOYMENT AGREEMENT. An employment agreement for
Xxxxx in substantially the form as APPENDIX B, as executed by
ProVal and Manatron (the "EMPLOYMENT AGREEMENT").
-3-
(e) LEGAL OPINION, ETC. The legal opinion described in
Section 7.3 and those supplemental documents set forth in Section
7.4.
(f) ARTICLES OF MERGER. Articles of Merger, as required by
the Ohio Act and reasonably acceptable to counsel for Xxxxx,
executed by MergerSub and Manatron.
2.5.2 XXXXX'X OBLIGATIONS. At or prior to the Closing, Xxxxx
shall deliver to Manatron:
(a) OLD CERTIFICATES. Certificates representing each share
of ProVal Capital Stock, duly endorsed (or accompanied by duly
executed stock powers), for transfer to MergerSub.
(b) REGISTRATION RIGHTS AGREEMENT. The Registration Rights
Agreement, as executed by Xxxxx.
(c) EMPLOYMENT AGREEMENT. The Employment Agreement, as
executed by Xxxxx.
(d) LEGAL OPINION, ETC. The legal opinion described in
Section 6.4 and those supplemental documents set forth in Section
6.5.
(e) ARTICLES OF MERGER. Articles of Merger, as required by
the Ohio Act and reasonably acceptable to counsel for Manatron,
executed by ProVal.
2.6 POST-CLOSING SOFTWARE LICENSE AND SUPPORT FEES ADJUSTMENTS TO
MERGER CONSIDERATION.
(a) ADJUSTMENT.
(1) FISCAL YEAR ENDING APRIL 30, 2000. Subject to the
terms of this Agreement, if the Product Revenues of
MergerSub for the year ending April 30, 2000 exceed One
Million One Hundred Thousand Dollars ($1,100,000), then
Xxxxx shall be issued one (1) share of Manatron Common
Stock for each Fifteen Dollars ($15) of the amount by
which such Product Revenues for the year ended April
30, 2000 exceed One Million One Hundred Thousand
Dollars ($1,100,000).
(2) FISCAL YEARS ENDING APRIL 30, 2001, 2002 AND 2003.
If the Product Revenues of MergerSub for any of the years
ending April 30, 2001, 2002 or 2003 exceed One Million
Two Hundred Thousand Dollars ($1,200,000), then Xxxxx
-4-
shall be issued one (1) share of Manatron Common Stock
for each Fifteen Dollars ($15) of the amount by which
such Product Revenues for such fiscal year exceed One
Million Two Hundred Thousand Dollars ($1,200,000);
PROVIDED, HOWEVER, that if the Product Revenues earned
by MergerSub with respect to any of the years ending
April 30, 2000, 2001, or 2002 are less than the amounts
set forth above, such shortfalls shall be carried
forward and set off against Product Revenues with
respect to future fiscal years in determining whether
Xxxxx is entitled to any additional shares of Manatron
Common Stock under this Section 2.6.
(3) OVERALL LIMITATIONS. Notwithstanding anything
herein to the contrary, in no event shall Manatron be
obligated to issue more than three hundred thousand
(300,000) shares of Manatron Common Stock to Xxxxx
pursuant to this Section 2.6. In the event that Xxxxx
breaches the provisions of Section 5.7 below, all
remaining obligations of Manatron under this Section
2.6 shall immediately cease.
(b) ADJUSTMENT PROCEDURE.
(1) Following the Merger, the Surviving Corporation's
fiscal year shall end on April 30th. As soon as
reasonably practicable and in any event within ninety
(90) days after the end of a Surviving Corporation
fiscal year, Manatron shall caused to be prepared and
delivered to Xxxxx its calculation of the Product
Revenues for such fiscal year. Xxxxx or his
representatives shall have the right to review all work
papers and procedures used by Manatron to calculate
such amounts.
(2) Within thirty (30) days after Manatron's delivery
of its calculation of the Product Revenues for a fiscal
year, Xxxxx shall notify Manatron in writing of his
acceptance of such calculation or his claim that the
calculation is not accurate, setting forth in
reasonable detail the basis for such claim. If notice
of disagreement is not given within such 30-day period,
then the amounts as calculated and delivered by
Manatron to Xxxxx shall be used for determining any
adjustments under this Section 2.6.
(3) If Xxxxx makes a claim of disagreement within such
30-day period, Manatron and Xxxxx shall use their best
-5-
efforts to resolve their dispute and agree upon a
revised figure. If agreement cannot be reached within
fifteen (15) days of Xxxxx making his claim, Xxxxx and
Manatron shall jointly retain a mutually acceptable
public accounting firm to resolve the dispute. Such
accounting firm shall resolve the dispute within thirty
(30) days of its appointment and its decision shall be
final and binding on all parties. Fees and charges of
such accounting firm shall be paid one-half by Xxxxx
and one-half by Manatron.
2.7 POST-CLOSING EBT ADJUSTMENTS TO MERGER CONSIDERATION.
(a) DEFINITIONS. For purposes of this Section 2.7, the
term "EBT" shall mean the net income before taxes for MergerSub
for fiscal years ending April 30 resulting from Product Revenues,
as well as well as service revenues from training, conversion and
other services, excluding any Manatron corporate overhead
allocation, with MergerSub conducting business under the
operational control of Xxxxx in accordance with the ProVal
Acquisition Corporation Operating Plan dated May 21, 1999 (the
"OPERATING PLAN"). EBT shall be determined in accordance with
generally accepted accounting principles, consistently applied.
Notwithstanding the foregoing, the EBT for the fiscal year ended
April 30, 2000 shall be annualized based on the eleven (11)
months ended April 30, 2000 and it shall be assumed that the EBT
for the additional month of such fiscal year would be identical
to the average of the EBT for the eleven (11) other months of
such fiscal year. The term "PRODUCT REVENUES" means earned
license revenue from property valuation and tax system products
for Windows with the present ProVal trade names of "ProVal" and
"Equitax" and derivatives thereof and earned contract software
maintenance and support revenue from the ProVal product (and
derivatives thereof) only.
(b) ADJUSTMENT AMOUNT. If EBT for any of the fiscal years
ending April 30, 2000, 2001, 2002 or 2003 is less than Five
Hundred Thousand Dollars ($500,000) and MergerSub has conducted
its business under the operational control of Xxxxx in accordance
with the Operating Plan, the number of shares of Manatron Common
Stock, if any, issuable under Section 2.6 above shall be reduced
by a number equal to (i) the difference between the EBT for such
year and $500,000 divided by (ii) Seven Dollars and Fifty Cents
($7.50). Any reductions pursuant to this Section 2.7(b) in the
amount of shares of Manatron Common Stock issuable pursuant to
Section 2.6 that are not fully used in a given fiscal year may be
carried forward and used to reduce the amount of Manatron Common
Stock issuable pursuant to Section 2.6 in future fiscal years.
-6-
No increase under this Section 2.7 shall be made in the number of
shares of Manatron Common Stock issuable if EBT for any or all
fiscal years ending April 30, 2000, 2001, 2002 or 2003 exceeds
$500,000.
(c) ADJUSTMENT PROCEDURE.
(1) Within ninety (90) days after the end of each of
Manatron's fiscal years ending April 30, 2000, 2001,
2002 and 2003, Manatron (at its own expense) shall
cause to be prepared and delivered to Xxxxx its
calculation of the EBT for such fiscal year. Each
party shall cooperate fully with the other and provide
the other with access to all records of MergerSub for
purpose of computing the EBT of the years 2000, 2001,
2002 and 2003. Xxxxx or his representatives shall have
the right to review all work papers and procedures used
by Manatron to calculate the EBT of each of such fiscal
years.
(2) Within thirty (30) days after Manatron's delivery
of its calculation of the EBT for a fiscal year, Xxxxx
shall notify Manatron in writing of his acceptance of
such calculation or his claim that the calculation is
not accurate, setting forth in reasonable detail the
basis for such claim. If notice of disagreement is not
given within such 30-day period, then the EBT as
calculated and delivered by Manatron to Xxxxx shall be
used for determining any adjustments under this Section
2.7.
(3) If Xxxxx makes a claim of disagreement within such
30-day period, Manatron and Xxxxx shall use their best
efforts to resolve their dispute and agree upon a
revised EBT figure. If agreement cannot be reached
within fifteen (15) days of Xxxxx making his claim,
Xxxxx and Manatron shall jointly retain a mutually
acceptable public accounting firm to resolve the
dispute. Such accounting firm shall resolve the
dispute within thirty (30) days of its appointment and
its decision as to the correct EBT shall be final and
binding on all parties. Fees and charges of such
accounting firm shall be paid one-half by Xxxxx and
one-half by Manatron.
-7-
2.8 GENERAL PROVISIONS CONCERNING SECTIONS 2.6 AND 2.7.
(a) PAYMENT TERMS UNDER SECTION 2.6 AND SECTION 2.7. Within
thirty (30) days after the amounts required to be calculated under Sections
2.6 and 2.7 above have been finalized, Manatron shall issue to Xxxxx
certificates representing the shares, if any, of Manatron Common Stock to
which he is entitled pursuant to such sections. Each such share of
Manatron Common Stock, if any, shall be a "restricted security," as that
term is defined in Securities and Exchange Commission ("SEC") Rule 144,
promulgated under the Securities Act of 1933, as amended (the "SECURITIES
ACT").
(b) EMPLOYMENT AGREEMENT. The parties acknowledge that, for
purposes of calculating the amounts, if any, to which Xxxxx may be entitled
under Section 2.6 and 2.7 above, it is contemplated that Xxxxx will retain
operational control of MergerSub, in accordance with his Operating Plan.
2.9 POST-CLOSING STOCK PRICE ADJUSTMENT.
(a) TRADING PERIOD. If the publicly reported closing price of
Manatron Common Stock is not Seven Dollars ($7.00) (the "TARGET PRICE") or
higher for at least thirty-five (35) trading days during the two (2) year
period beginning thirty (30) days following the Closing (the "TRADING
PERIOD"), then Xxxxx shall be entitled to an amount equal to the difference
between the Target Price and the Floor Price multiplied by three hundred
thousand (300,000).
(b) FLOOR PRICE. As used in this Section 2.9, the term "FLOOR
PRICE" means Five Dollars ($5.00) per share of Manatron Common Stock;
PROVIDED, HOWEVER, that if the last reported sales price of a share of
Manatron Common Stock on the day that the registration statement that
Manatron is required to file pursuant to the Registration Rights Agreement
becomes effective with the Securities and Exchange Commission is less than
Five Dollars ($5.00), then such last reported sales price shall be the
Floor Price.
(c) METHOD OF PAYMENT. Payment, if any, under this Section 2.9,
shall be made in equal parts cash and Manatron Common Stock, within thirty
(30) days after the end of the Trading Period. For purposes of determining
the number of shares of Manatron Common Stock issuable under this Section
2.9, the price of a share of Manatron Common Stock shall be deemed to be
the Floor Price.
(d) RESTRICTED STOCK. Each share of Manatron Common Stock
issued under this Section 2.9, if any, shall be a "restricted security," as
that term is defined in SEC Rule 144, promulgated under the Securities Act.
2.10 STOCK SPLITS, STOCK DIVIDENDS, ETC. If the number of shares of
Manatron Common Stock outstanding changes by reason of a stock dividend,
-8-
stock split, recapitalization, merger, consolidation, combination, exchange
of shares or any other change in the corporate structure or shares of
Manatron, the aggregate number and class of shares issuable under Sections
2.6, 2.7 and 2.9 and the respective stock prices and values referenced in
such sections shall be appropriately adjusted; PROVIDED, HOWEVER, that no
such adjustment shall be made with respect to any stock dividends payable
or issuable with respect to Manatron Common Stock that do not in any
calendar year exceed five percent (5%) of the number of shares of Manatron
Common Stock outstanding at the beginning of such calendar year; PROVIDED
FURTHER, that if shares are payable to Xxxxx under Sections 2.6, 2.7 and 2.9
at the end of a fiscal year, the shares will be issued before Manatron pays a
5% or less stock dividend in a subsequent year. No fractional shares shall
be issued hereunder, and any fractional shares otherwise payable under
Sections 2.6, 2.7 and 2.9 shall be eliminated, with an appropriate cash
adjustment for the value of any fractional share eliminated.
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF XXXXX
Except as provided in the Disclosure Schedule (as defined below),
Xxxxx and ProVal represent and warrant to Manatron as follows:
3.1 DISCLOSURE SCHEDULE. Xxxxx and ProVal have delivered to Manatron
and its counsel one identical copy (each) of individually numbered
schedules (collectively, the "DISCLOSURE SCHEDULE") corresponding to the
sections of this Article. Each individual schedule in the Disclosure
Schedule contains all applicable exceptions to the specifically identified
section contained in this Article and sets forth each exception in
reasonable detail; provided, however, that any specifically described
exception in one section of the Disclosure Schedule shall be considered
disclosure for all reasonably related sections of the Disclosure Schedule
and it shall not be necessary for such exception in one section to be
repeated. In such cases, Xxxxx and ProVal have used their best efforts to
provide conspicuous cross-references. Xxxxx and ProVal have provided or
otherwise made available to Manatron true and complete copies of all
documents referenced in the Disclosure Schedule.
3.2 ORGANIZATION AND GOOD STANDING. ProVal is a corporation duly
organized, validly existing, and in good standing under the laws of State
of Ohio. ProVal has all requisite corporate power and authority to carry
on it business as presently conducted. ProVal does not own, and has no
obligation to acquire, any interest in any other person or entity.
3.3 CAPITALIZATION OF PROVAL. The authorized equity securities of
ProVal consists of: (a) 1,000 shares of Class A common stock, of which
forty (40) shares are issued and outstanding (as of the date of this
Agreement and immediately prior to the Effective Time), and (b) 1,000
shares of Class B common stock, of which 1,000 shares are issued and
outstanding (as of the date of this Agreement and immediately prior to the
-9-
Effective Time). Collectively, ProVal's Class A and Class B common stock
shall be referred to as "PROVAL CAPITAL STOCK." Xxxxx is, and will be at
the Closing and immediately prior to the Effective Time, the record and
beneficial owner and holder of all of the outstanding shares of ProVal
Capital Stock, free and clear of all encumbrances and adverse claims.
There are no other issued or outstanding equity securities or other
securities of ProVal; no legend or other reference to any purported
encumbrance appears upon any ProVal share certificate; all of the shares of
ProVal Capital Stock have been duly authorized and validly issued and are
fully paid and nonassessable; and there are no agreements relating to the
issuance, sale, or transfer of any equity securities or other securities of
ProVal.
3.4 ENFORCEABILITY. ProVal and Xxxxx each have full capacity, power,
and authority to execute and perform this Agreement, the Employment
Agreement, and the Registration Rights Agreements (collectively, the
"CLOSING AGREEMENTS") and to carry out the transactions contemplated by
them. This Agreement is, and the Closing Agreements shall be upon
execution and delivery, binding upon ProVal and Xxxxx (as applicable) and
enforceable against ProVal and Xxxxx (as applicable) in accordance with
their respective terms.
3.5 NO CONFLICT WITH OTHER INSTRUMENTS OR PROCEEDINGS. The execution
and performance of this Agreement by ProVal and/or Xxxxx will not:
(a) result in a breach of or constitute a default under ProVal's articles
of incorporation or bylaws, or any agreement or other obligation to which
ProVal or Xxxxx is now a party or by which they or any of their assets may
be bound or affected; (b) violate any law, rule, regulation, license, or
permit of any governmental body or any order or decree of any court;
(c) result in the imposition of any tax or encumbrance on ProVal or any of
its assets; or (d) affect in any way the terms of any of ProVal's
indebtedness. All consents, approvals, or authorizations of, or
declarations, filings, or registrations with, any third parties or
governmental bodies required of ProVal in connection with the execution,
delivery, and performance of this Agreement have been made or obtained, as
applicable.
3.6 COMPLIANCE WITH LAWS AND OTHER REGULATIONS. ProVal is (and has
been since January 1, 1993) in compliance with all laws, rules, regulations
and other requirements applicable to the conduct of ProVal's business or
its assets or properties, or any premises occupied by ProVal.
3.7 FINANCIAL STATEMENTS. The audited financial statements of ProVal
as of and for the fiscal years ended July 31, 1998 and 1997, as reported on
by ProVal's independent accountants, Barnett, Grieser, Xxxxxxx & Xxxxxxx
Co., of Springfield, Ohio ("PROVAL'S ACCOUNTANTS"), including all schedules
and notes relating to such statements, are correct and complete in all
material respects. In addition, the unaudited balance sheet of ProVal as
of April 30, 1999 (the "INTERIM BALANCE SHEET"), and the unaudited income
-10-
statement for the nine months then ended, including all schedules and notes
relating to such statements, are correct and complete in all material
respects. These statements fairly present ProVal's financial condition and
results of operations on the dates and for the periods indicated, and have
been prepared in conformity with generally accepted accounting principles
("GAAP") applied consistently throughout the periods indicated, except as
otherwise noted in such financial statements or the notes thereto, and
except that the unaudited interim financial statements have been prepared
without footnote disclosures (that, if presented, would not differ
materially from those included in the Balance Sheet) and normal recurring
year-end audit adjustments, the effect of which will not, individually or
in the aggregate, be materially adverse to ProVal. The financial
statements referred to in this Section reflect the consistent application
of such accounting principles throughout the periods involved, except as
disclosed in the notes to such financial statements. In this Agreement,
ProVal's balance sheet as of July 31, 1998, is referred to as the "BALANCE
SHEET" and July 31, 1998, is referred to as the "BALANCE SHEET DATE."
Subject to customary terms and conditions, ProVal's Accountants have agreed
to cooperate in the preparation of financial statements relating to ProVal
or the Merger in any document required by law to include such financial
statements and filed by Manatron with the SEC.
3.8 ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed on the
Balance Sheet, ProVal has no liabilities or obligations of any nature
(whether known or unknown and whether absolute, accrued, contingent, or
otherwise) except for liabilities or obligations reflected or reserved
against in the Balance Sheet or the Interim Balance Sheet and current
liabilities incurred in the ordinary course of business since the
respective dates thereof.
3.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the Balance Sheet
Date, ProVal has conducted the Business in the ordinary course of business
and has maintained ProVal's records and books of account relating to the
Business in a manner that fairly and accurately reflects ProVal's
transactions, assets, and liabilities in accordance with standard
accounting practices consistently applied, and, since the Balance Sheet
Date, there has been no adverse change in the condition of the Business,
financial or otherwise, or in ProVal's business or properties. In
particular, and without limiting the foregoing, since the Balance Sheet
Date, ProVal has not with respect to the Business: (a) paid or otherwise
satisfied any obligation except for claims, liabilities, and obligations
disclosed or reserved against on the Balance Sheet or incurred since the
Balance Sheet Date in the ordinary course of business or consistent with
past practice; (b) written down or written off any item of inventory or any
note or account receivable as uncollectible; (c) canceled or waived any
debt, claim, or right (absolute or contingent) having a value or potential
value in excess of $25,000; (d) subjected any assets to any type of
encumbrance or other restriction, other than encumbrances of record as of
-11-
the Balance Sheet Date; (e) sold or otherwise disposed of any assets except
in the ordinary course of business; (f) disposed of or permitted a lapse of
any license, permit, patent, trademark, trade name, or copyright;
(g) disposed of or disclosed to any person any trade secret, formula,
process, or know-how; (h) increased the compensation of, or declared or
agreed to pay a bonus to, any officer or employee, except regularly
scheduled increases in compensation to non-officer employees in the
ordinary course of business; (i) suffered a material loss of or a reduction
in working capital available for current or prospective operations (for
purposes of this Agreement, the term "WORKING CAPITAL" shall mean the
difference between current assets and current liabilities classified and
determined in accordance with GAAP); (j) entered into any agreement or
arrangement with, any director, officer, employee, or shareholder; (k) made
any capital expenditure, purchase order, or commitment in excess of $25,000
for additions to property, plant, equipment, or otherwise; (l) purchased or
placed a purchase order for inventory, supplies, or any other items, or
entered into any other agreement or transaction other than in the ordinary
course of business; (m) suffered any loss of or damage to physical property
or other assets not covered by insurance; (n) paid or incurred any
obligation to pay any dividends or other distributions with respect to
ProVal's capital stock; (o) issued or authorized capital stock of ProVal;
or (p) violated any federal, state, local, or foreign law, statute,
ordinance, regulation, or order.
3.10 CUSTOMERS AND SUPPLIERS. Since the Balance Sheet Date, there has
not been any adverse change in ProVal's relationship with any of their
respective ten largest customers or suppliers, nor has ProVal or Xxxxx
received information from such customers, dealers, or suppliers that an
adverse change should be reasonably anticipated as a result of the Merger.
There are no known claims against ProVal to return merchandise in excess of
an aggregate of Five Thousand Dollars ($5,000) by any one purchaser, or
Twenty Five Thousand Dollars ($25,000) for all purchasers considered
collectively.
3.11 TAXES.
3.11.1 FILINGS. ProVal filed or caused to be filed on a
timely basis all "Tax Returns"(as defined below) that are or were
required to be filed by or with respect to it pursuant to applicable
law. ProVal has paid, or made provision for the payment of, all
"Taxes" (as defined below) that have or may have become due pursuant
to those Tax Returns or otherwise, or pursuant to any assessment
received by ProVal.
3.11.2 AUDITS AND EXTENSIONS. The Disclosure Schedule
contains a complete and accurate list of all audits, if any, of all of
ProVal's federal and state Tax Returns, including a reasonably
detailed description of the nature and outcome of each audit. All
-12-
deficiencies proposed as a result of such audits, if any, have been
paid, reserved against, settled, or, as described in the Disclosure
Schedule, are being contested in good faith by appropriate
proceedings. ProVal has not given or been requested to give waivers
or extensions (or is or would be subject to a waiver or extension
given by any other Person) of any statute of limitations relating to
the payment of Taxes of ProVal or for which ProVal may be liable.
3.11.3 RESERVES. The charges, accruals, and reserves
with respect to Taxes on the respective books of ProVal are
adequate (determined in accordance with GAAP) and are at least
equal to ProVal's liability for Taxes. There exists no proposed
tax assessment against any ProVal. No consent to the
application of Section 341(f)(2) of the Internal Revenue Code has
been filed with respect to any property or assets held, acquired,
or to be acquired by ProVal. All Taxes that ProVal is or was
required by law to withhold or collect have been duly withheld or
collected and, to the extent required, have been paid to the
proper governmental authority.
3.11.4 ACCURATE. All Tax Returns filed by (or that
include on a consolidated basis) ProVal are true, correct, and
complete. There is no tax sharing agreement that will require
any payment by ProVal after the date of this Agreement. ProVal is
not, and within the five-year period preceding the Closing Date,
has not been, an "S" corporation.
3.11.5 DEFINITIONS. "TAX" means any tax (including any
income tax, capital gains tax, value-added tax, use tax, sales
tax, property tax, gift tax, or estate tax), levy, assessment,
tariff, duty (including any customs duty), deficiency, or other
fee, and any related charge or amount (including any fine,
penalty, interest, or addition to tax), imposed, assessed, or
collected by or under the authority of any governmental body or
payable pursuant to any tax-sharing agreement or any other
contract relating to the sharing or payment of any such tax,
levy, assessment, tariff, duty, deficiency, or fee. "TAX RETURN"
means any return (including any information return), report,
statement, schedule, notice, form, or other document or
information filed with or submitted to, or required to be filed
with or submitted to, any governmental body in connection with
the determination, assessment, collection, or payment of any Tax
or in connection with the administration, implementation, or
enforcement of or compliance with any law relating to any Tax.
3.12 ACCOUNTS RECEIVABLE. All accounts receivable of ProVal that
are reflected on the Balance Sheet or the Interim Balance Sheet or on
the accounting records of ProVal as of the Closing Date (collectively,
-13-
the "ACCOUNTS RECEIVABLE") represent or will represent valid
obligations arising from sales actually made or services actually
performed in the ordinary course of business. Unless paid prior to the
Closing Date, the Accounts Receivable are or will be as of the Closing
Date current and collectible net of the respective reserves shown on
the Balance Sheet or the Interim Balance Sheet (which reserves are
adequate and calculated consistent with past practice and, in the case
of the reserve as of the Closing Date, will not represent a greater
percentage of the Accounts Receivable as of the Closing Date than the
reserve reflected in the Interim Balance Sheet represented of the
Accounts Receivable reflected therein and will not represent a
material adverse change in the composition of such Accounts Receivable
in terms of aging). Subject to such reserves, each of the Accounts
Receivable either has been or will be collected in full, without any
set-off, within 180 days after the day on which it first becomes due
and payable. There is no contest, claim, or right of set-off, other
than returns in the ordinary course of business, under any contract
with any obligor of an Accounts Receivable relating to the amount or
validity of such Accounts Receivable. The Disclosure Schedule
contains a complete and accurate list of all Accounts Receivable as of
the date of the Interim Balance Sheet, which list sets forth the aging
of such Accounts Receivable.
3.13 REAL PROPERTY. No building or improvement that ProVal uses
encroaches on any easement or property owned by another and no
building or improvement owned by another encroaches on any property
that ProVal uses or on any easement the benefit of which runs to
ProVal. ProVal is not in violation of any law, order, regulation, or
other requirement relating to any real property that ProVal uses.
There are no ground subsidences or slides on any real property that
ProVal uses. All buildings and improvements that ProVal uses are in
good condition (normal wear and tear excepted), are structurally sound
and not in need of repairs and are adequately serviced by all
necessary utilities.
3.14 PERSONAL PROPERTY. ProVal has good title to all personal
property owned by it, except as since sold or otherwise disposed of in
the ordinary course of business, subject to no lien, encumbrance, or
other restriction. All personal property will be in the possession of
ProVal at the Effective Time. The personal property (whether owned or
leased) of ProVal are in good condition and repair, normal wear and
tear excepted.
3.15 YEAR 2000 COMPLIANCE. All buildings, plants, structures,
machinery, equipment, software, hardware, computer systems and other
property owned, leased, licensed or used by ProVal in the Business (a
"YEAR 2000 ASSET") will at all times before, during and after January
1, 2000 be Year 2000 Compliant. As used herein, "YEAR 2000 COMPLIANT"
-14-
means that a Year 2000 Asset or item will at all times before, during
and after January 1, 2000 accurately process and handle date and time
data, including but not limited to performing all leap year
calculations and calculating, comparing and sequencing during and
between the years 1999 and 2000 and all other years, and will not
malfunction, cease to function or provide invalid or incorrect results
or data as a result of date or time data, including when a Year 2000
Asset is used in combination with or is interfacing with any other
Year 2000 Asset or with any other asset or information technology. No
proceeding is pending or threatened by or against ProVal based on any
claim that ProVal or any Year 2000 Asset was not, is not or will not
be Year 2000 Compliant and, to ProVal's knowledge, there is no basis
for such a Proceeding.
3.16 INTELLECTUAL PROPERTY. The term "INTELLECTUAL PROPERTY
ASSETS" includes: (i) the ProVal name, all fictional business names,
trading names, registered and unregistered trademarks, service marks,
and applications (collectively, "MARKS"); (ii) all patents, patent
applications, and inventions and discoveries that may be patentable
(collectively, "PATENTS"); (iii) all copyrights in both published
works and unpublished works (collectively, "COPYRIGHTS"); and (iv) all
know-how, trade secrets, confidential information, customer lists,
software, technical information, data, process technology, plans,
drawings, and blue prints (collectively, "TRADE SECRETS"); owned,
used, or licensed by ProVal as licensee or licensor.
3.16.1 AGREEMENTS. The Disclosure Schedule contains a
complete and accurate list and summary description, including any
royalties paid or received by ProVal, of all contracts relating
to the Intellectual Property Assets to which ProVal is a party or
by which ProVal is bound, except for any license implied by the
sale of a product and perpetual, paid-up licenses for commonly
available software programs with a value of less than Five
Thousand Dollars ($5,000) under which ProVal is the licensee.
There are no outstanding and, to ProVal's knowledge, no
threatened disputes or disagreements with respect to any such
agreement.
3.16.2 KNOW-HOW NECESSARY FOR THE BUSINESS. The
Intellectual Property Assets are all those necessary for the
operation of the Business as it is currently conducted. ProVal
is the owner of all right, title, and interest in and to each of
the Intellectual Property Assets, free and clear of all liens,
security interests, charges, encumbrances, equities, and other
adverse claims, and has the right to use without payment to a
third party all of the Intellectual Property Assets.
-15-
3.16.3 EMPLOYEES. No ProVal employee has entered into
any contract that restricts or limits in any way the scope or
type of work in which the employee may be engaged or requires the
employee to transfer, assign, or disclose information concerning
his or her work to anyone other than ProVal.
3.16.4 PATENTS. The Disclosure Schedule contains a
complete and accurate list and summary description of all
Patents, if any. ProVal is the owner of all right, title, and
interest in and to each of the Patents, free and clear of all
liens, security interests, charges, encumbrances, entities, and
other adverse claims. All of the issued Patents are currently in
compliance with formal legal requirements (including payment of
filing, examination, and maintenance fees and proofs of working
or use), are valid and enforceable, and are not subject to any
maintenance fees or taxes or actions falling due within 90 days
after the Closing Date. No Patent has been or is now involved in
any interference, reissue, reexamination, or opposition
proceeding. To ProVal's knowledge, there is no potentially
interfering patent or patent application of any third party. No
Patent is infringed or, to ProVal's knowledge, has been
challenged or threatened in any way. None of the products
manufactured and sold, nor any process or know-how used, by
ProVal infringes or is alleged to infringe any patent or other
proprietary right of any other person or entity. All products
made, used, or sold under the Patents have been marked with the
proper patent notice.
3.16.5 TRADEMARKS. The Disclosure Schedule contains a
complete and accurate list and summary description of all Marks.
ProVal is the owner of all right, title, and interest in and to
each of the Marks, free and clear of all liens, security
interests, charges, encumbrances, equities, and other adverse
claims. All Marks that have been registered with the United
States Patent and Trademark Office are currently in compliance
with all formal legal requirements (including the timely post-
registration filing of affidavits of use and incontestability and
renewal applications), are valid and enforceable, and are not
subject to any maintenance fees or taxes or actions falling due
within 90 days after the Closing Date. No Xxxx has been or is
now involved in any opposition, invalidation, or cancellation
and, to ProVal's knowledge, no such action is threatened with the
respect to any of the Marks. To ProVal's knowledge, there is no
potentially interfering trademark or trademark application of any
third party. No Xxxx is infringed or, to ProVal's knowledge, has
been challenged or threatened in any way. None of the Marks used
by ProVal infringes or is alleged to infringe any trade name,
trademark, or service xxxx of any third party. All products and
-16-
materials containing a Xxxx xxxx the proper federal registration
notice where permitted by law.
3.16.6 COPYRIGHTS. The Disclosure Schedule contains a
complete and accurate list and summary description of all
Copyrights. ProVal is the owner of all right, title, and
interest in and to each of the Copyrights, free and clear of all
liens, security interests, charges, encumbrances, equities, and
other adverse claims. All the Copyrights are valid and
enforceable. No Copyright is infringed or, to ProVal's
knowledge, has been challenged or threatened in any way. None of
the subject matter of any of the Copyrights infringes or is
alleged to infringe any copyright of any third party or is a
derivative work based on the work of a third party. (iv) All
works encompassed by the Copyrights have been marked with the
proper copyright notice.
3.16.7 TRADE SECRETS. ProVal has taken all reasonable
precautions to protect the secrecy, confidentiality, and value of
its Trade Secrets. ProVal has good title and an absolute (but
not necessarily exclusive) right to use the Trade Secrets. The
Trade Secrets are not part of the public knowledge or literature,
and, to ProVal's knowledge, have not been used, divulged, or
appropriated either for the benefit of any person or entity
(other than ProVal) or to the detriment of ProVal. No Trade
Secret is subject to any adverse claim or has been challenged or
threatened in any way.
3.17 CONTRACTS. All agreements and other arrangements of ProVal
with a third party are valid and enforceable in accordance with their
terms. Neither ProVal nor any other party is in default or in arrears
under the terms of any of those agreements. Except as set forth in
the Disclosure Schedule, ProVal is not a party to: (a) any other
agreement with respect to any real property; (b) any joint venture,
distributor, dealer, advertising, agency, manufacturer's
representative, sales representative, sales agent, franchise, license,
or similar agreement; (c) any loan agreement, security agreement,
mortgage, indenture, or promissory note; (d) any consulting or
employment agreement; (e) any contract out of the ordinary course of
business; (f) any contract of guaranty or indemnification; or (g) any
contract purporting to limit the freedom of ProVal to compete in any
line of business in any geographical area. Except for customers in
the ordinary course of business, no person or entity has any agreement
or understanding for the purchase from ProVal of any of its assets.
3.18 EMPLOYEE RELATIONS. ProVal has not had, within the last
three years, any union organizational effort, claim of unfair labor
practice, wrongful discharge, employment discrimination, or sexual
-17-
harassment dispute. ProVal has complied with all applicable laws,
rules, and regulations respecting employment practices, occupational
safety, wages, and hours. ProVal has not been within the last five
years a party to any contract or agreement with any of ProVal's
present or former employees with respect to length, duration, or
conditions of employment, compensation, or any other form of
remuneration. A copy of each employee handbook governing ProVal's
employees, and a copy of the employment application forms currently
used by ProVal are attached to the Disclosure Schedule. No key
employee of ProVal has notified ProVal of an intention to terminate
employment.
3.19 EMPLOYEE BENEFIT PLANS. With respect to any "employee
welfare benefit plan," any "employee pension benefit plan," or any
"employee benefit plan" within the respective meanings of
Sections 3(1), 3(2), and 3(3) of the Employee Retirement Income
Security Act of 1974, as amended "ERISA") (each referred to as an
"EMPLOYEE BENEFIT PLAN"), maintained by or for the benefit of ProVal
or to which ProVal has made payments or contributions on behalf of its
employees:
3.19.1 ERISA COMPLIANCE. ProVal, each Employee Benefit
Plan, and all trusts created thereunder are in substantial
compliance with ERISA, and all other applicable laws and
regulations insofar as such laws and regulations apply to such
plans and trusts. No Employee Benefit Plan and no trust created
thereunder has been involved, subsequent to June 30, 1974, in any
nonexempt "prohibited transaction" as defined in Section 4975 of
the Internal Revenue Code and in Sections 406, 407, and 408 of
ERISA.
3.19.2 INTERNAL REVENUE CODE COMPLIANCE. ProVal and
ProVal Bank, each Employee Benefit Plan that is intended to be a
qualified plan under Section 401(a) of the Internal Revenue Code,
and all trusts created thereunder are in substantial compliance
with the applicable provisions of the Internal Revenue Code.
3.19.3 PLAN TERMINATION. No Employee Benefit Plan that
is a qualified plan under Section 401(a) of the Internal Revenue
Code and no trust created thereunder has been terminated,
partially terminated, curtailed, discontinued, or merged into
another plan or trust after January 1, 1985, except in compliance
with notice and disclosure to the Internal Revenue Service and
the Pension Benefit Guaranty Corporation (the "PBGC"), where
applicable, as required by the Internal Revenue Code and ERISA.
With respect to each such termination, all termination procedures
have been completed and there are no pending or potential
liabilities to the PBGC, to the plans, or to participants under
-18-
such terminated plans. Each such termination, partial
termination, curtailment, discontinuance, or consolidation has
been accompanied by the issuance of a current favorable
determination letter by the IRS and, where applicable, has been
accompanied by plan termination proceedings with and through the
PBGC.
3.19.4 MULTIEMPLOYER PLAN, ETC. No Employee Benefit Plan
is a "multiemployer plan" within the meaning of Section 3(37)(A)
of ERISA. No Employee Benefit Plan in effect as of December 31,
1997, is a "defined benefit plan" within the meaning of Section
3(35) of ERISA.
3.19.5 PAYMENTS. ProVal has made when due all
contributions required under each Employee Benefit Plan and under
applicable laws and regulations. There are no payments that have
become due from any Employee Benefit Plan, the trusts created
thereunder, or from ProVal that have not been paid through normal
administrative procedures to the plan participants or
beneficiaries entitled thereto, except for claims for benefits
for which administrative claims procedures under such plan have
not been exhausted.
3.19.6 ACCUMULATED FUNDING DEFICIENCY. No Employee
Benefit Plan that is intended to be a qualified plan under
Section 401(a) of the Internal Revenue Code and no trust created
thereunder has incurred, subsequent to June 30, 1974, an
"accumulated funding deficiency" as defined in Section 412(a) of
the Internal Revenue Code and Section 302 of ERISA (whether or
not waived).
3.19.7 FILING OF REPORTS. ProVal has filed or caused to
be filed, and will continue to file or cause to be filed, in a
timely manner all filings pertaining to each Employee Benefit
Plan with the IRS, the United States Department of Labor, and the
PBGC as prescribed by the Internal Revenue Code or ERISA, or
regulations issued thereunder. All such filings, as amended,
were complete and accurate in all material respects as of the
dates of such filings, and there were no material misstatements
or omissions in any such filing.
3.20 ENVIRONMENTAL MATTERS. Without limiting the generality of
the other representations and warranties set forth in this Article 3,
except as described in the Disclosure Schedule: (i) ProVal has
conducted its business in material compliance with all applicable
Environmental Laws; (ii) none of the real property owned, leased or
otherwise used by ProVal contains any substance that is regulated by
Environmental Laws in amounts exceeding the levels permitted by
-19-
applicable Environmental Laws; (iii) ProVal has not received any
notice, demand letter or request for information from any governmental
entity or other person indicating that ProVal may be in violation of,
or liable under, any Environmental Law; (iv) no reports have been
filed, or are required to be filed, by ProVal concerning the release
of any regulated substance or the threatened or actual violation of
any Environmental Law; and (v) there is no friable asbestos or friable
asbestos containing material present in any of the real property
owned, leased or otherwise used by ProVal and no asbestos has been
removed by or on behalf of ProVal from any such property. The
Business as currently conducted does not constitute a nuisance and no
claim or allegation of nuisance has been made with respect to the
Business by any adjoining land owner or other person or entity. For
purposes of this Section, "ENVIRONMENTAL LAW" means any federal,
state, local, or foreign statute, ordinance, rule, regulation, or
standard relating to air quality, water quality, solid waste
management, hazardous materials, toxic substances, or the protection
of public health or protection or remediation of the environment.
3.21 LITIGATION. There is no pending or, to the knowledge of
ProVal, threatened, suit, proceeding or inquiry affecting ProVal or
Xxxxx (in his capacity as a shareholder or director), or any of the
capital stock, properties, assets, or business prospects of ProVal, or
the transactions contemplated by this Agreement; there is no factual
basis upon which any suit, proceeding, or inquiry could be asserted or
based; and there is no outstanding order or decree of any court,
governmental body, or arbitration tribunal against or affecting ProVal
or any of its capital stock, properties, assets, or business
prospects.
3.22 PRODUCT WARRANTIES. The Disclosure Schedule sets forth (a) a
specimen copy of the form of written warranties covering each product
sold in the Business; and (b) a summary of any exception of such
warranty given to any customer of the Business that is still in
effect. Xxxxx and ProVal have provided Manatron a true and complete
summary of ProVal's warranty experience over the past five years.
There have been no personal injury product liability claims asserted
against ProVal during the last five years.
3.23 INSURANCE. All of ProVal's insurance policies are
outstanding and in full force and, to the extent that they are due,
all premiums are currently paid, and all duties of the insured have
been fully discharged. The Disclosure Schedule contains a list and
complete description of all insurance policies and all other forms of
insurance that ProVal owns or holds. ProVal's present insurance
coverage shall, by its terms, survive the Effective Time without
further action by ProVal.
-20-
3.24 PERMITS AND LICENSES. All permits, licenses, orders, and
approvals necessary to carry on the Business as presently conducted
are identified in the Disclosure Schedule and are in full force and
effect and have been complied with. All fees and charges incident to
those permits, licenses, orders, and approvals have been fully paid
and are current, and no suspension or cancellation of any such permit,
license, order, or approval has been to the best of ProVal's
knowledge, threatened or could result by reason of this Agreement.
3.25 ACKNOWLEDGMENTS REGARDING MANATRON'S RESTRICTED COMMON
STOCK.
3.25.1 RESTRICTED. Xxxxx has been advised that the
Manatron Common Stock to be received in connection with this
Agreement has not been registered under the Securities Act of
1933, as amended (the "SECURITIES ACT"), or registered or
qualified under any state securities law (a "BLUE SKY LAW").
Xxxxx understands that Manatron is relying on the representations
of Xxxxx and ProVal for purposes of claiming exemptions from
registration under the Securities Act and applicable Blue Sky
Laws and that the basis for such exemptions may not be present if
Xxxxx intends to acquire the Manatron Common Stock for resale on
the occurrence or non-occurrence of some predetermined event.
Xxxxx has no such intention.
3.25.2 RULE 144. Xxxxx understands that the shares of
Manatron Common Stock received in connection with this Agreement
will be "restricted securities" as that term is defined in SEC
Rule 144 under the Securities Act. Except as expressly provided
in the Registration Rights Agreement, Xxxxx understands that
Manatron is under no obligation so to register or qualify the
restricted shares under the Securities Act or any Blue Sky Law.
Xxxxx understands and agrees that any certificates representing
or relating to the restricted Manatron Common Stock may bear such
legends as Manatron may consider necessary or advisable to
facilitate compliance with the Securities Act, Blue Sky Laws, and
any other securities law.
3.25.3 QUALIFIED INVESTOR. Xxxxx is an "accredited
investor," as that term is defined in Regulation D under the
Securities Act.
3.26 BOOKS AND RECORDS. The books of account, minute books, stock
record books, and other records of ProVal, all of which have been made
available to Manatron, are complete and correct and have been
maintained in accordance with sound business practices, including the
maintenance of an adequate system of internal controls. The minute
books of ProVal contain accurate and complete records of all meetings
-21-
held of, and corporate action taken by, the shareholders, the Boards
of Directors, and committees of the Boards of Directors of ProVal, and
no meeting of any such shareholders, Board of Directors, or committee
has been held for which minutes have not been prepared and are not
contained in such minute books.
3.27 RELATIONSHIPS WITH RELATED PERSONS. Except as described in
the Balance Sheet (and the notes thereto), neither ProVal nor any
Related Person (defined below) of ProVal is, or since January 1, 1997,
has had an interest in, any entity that has (a) had business dealings
or a material interest in any transaction with ProVal, or (b) engaged
in competition with ProVal. Except for employment-related agreements,
neither ProVal nor any Related Person of ProVal is a party to any
agreement with, or has any claim or right against, ProVal. For the
purposes of this Agreement, a "RELATED PERSON" with respect to a
particular person, shall mean (a) any person that directly or
indirectly controls, is directly or indirectly controlled by, or is
directly or indirectly under common control with such person; (b) any
person that holds a material interest in such person; (c) each person
that serves as a director or officer of such person; (d) any entity in
which such person holds a material interest; and (e) any person
related to any individual described in clause (b) or (c).
3.28 ACCOUNTING AND TAX TREATMENT. Neither Xxxxx, ProVal, nor,
to the best of their knowledge, any of their affiliates, has taken or
agreed to take any action or knows of any reason that, would prevent
the Merger from qualifying as a reorganization under Section 368(a) of
the Internal Revenue Code.
3.29 BROKERS. Neither ProVal nor Xxxxx have retained or employed
any broker, finder, investment banker, or other person, or taken any
action that would give any person any valid claim against Manatron,
Xxxxx, or ProVal for a commission, brokerage fee, or other
compensation.
3.30 ACCURACY OF STATEMENTS. No representation or warranty made
by ProVal or Xxxxx in this Agreement, or any information, statement,
certificate, or schedule furnished, or to be furnished, to Manatron in
connection with this Agreement, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material
fact necessary to make the statements not misleading. The
representations and warranties of ProVal and Xxxxx shall be deemed to
be made as of the date of this Agreement and again as of the Closing.
-22-
ARTICLE 4 MANATRON'S REPRESENTATIONS AND WARRANTIES
Manatron represents and warrants to Xxxxx and ProVal as
follows:
4.1 MANATRON'S ORGANIZATION AND GOOD STANDING. Manatron is a
corporation duly organized, validly existing, and in good standing
under the laws of the State of Michigan.
4.2 ENFORCEABILITY. Manatron has full capacity, power, and
authority to enter into this Agreement and the Closing Agreements and
to carry out the transactions contemplated by them. This Agreement
is, and Closing Agreements shall be, binding upon Manatron and is
enforceable against Manatron in accordance with their respective
terms.
4.3 FINANCIAL STATEMENTS. The audited, consolidated financial
statements of Manatron and Manatron's subsidiaries as of and for the
fiscal years ended April 30, 1998 and 1997, as reported on by
Manatron's independent accountants, Xxxxxx Xxxxxxxx LLP, including all
schedules and notes relating to such statements, are correct and
complete in all material respects. These statements fairly present
Manatron's and Manatron's subsidiaries' financial condition and
results of operations on a consolidated basis on the dates and for the
periods indicated, and have been prepared in conformity with GAAP
applied consistently throughout the periods indicated, except as
otherwise noted in such financial statements or the notes thereto.
The financial statements referred to in this Section reflect the
consistent application of GAAP throughout the periods involved, except
as disclosed in the notes to such financial statements.
4.4 MANATRON'S CAPITAL STOCK.
4.4.1 CLASSES AND SHARES. The authorized capital stock
of Manatron consists of (a) 7,500,000 shares of Manatron Common
Stock, of which, as of January 31, 1999, a total of 2,939,136
shares were legally issued and outstanding; and (b) 2,000,000
shares of preferred stock, without par value, none of which are
issued and outstanding as of the date of this Agreement.
4.4.2 NO OTHER CAPITAL STOCK. As of the execution of
this Agreement: (a) other than Manatron Common Stock, there is no
security issued and outstanding that represents or is convertible
into capital stock of Manatron; and (b) there are no outstanding
subscriptions, options, warrants, or rights to acquire any
capital stock of Manatron, or agreements to which Manatron is a
party or by which it is bound to issue capital stock, except as
set forth in, or as contemplated by, this Agreement, except (i)
-23-
stock options awarded pursuant to stock option plans; (ii)
provisions for the grant or sale of shares to, or for the account
of, employees and directors pursuant to benefit plans; (iii)
"MANATRON RIGHTS" issued pursuant to a Rights Agreement, dated as
of June 2, 1997, between Manatron and American Stock Transfer &
Trust Company, presently associated with each share of Manatron
Common Stock; and (iv) shares issuable to former shareholders of
corporations previously acquired by Manatron pursuant to the
agreements governing such acquisitions.
4.5 CAPITALIZATION OF MERGERSUB. Manatron is and will be
immediately prior to the Effective Time, the record and beneficial
owner and holder of the issued and outstanding shares of MergerSub
Common Stock, free and clear of all encumbrances and adverse claims.
There are no other issued or outstanding equity securities or other
securities of MergerSub. MergerSub has engaged in no business
operations. MergerSub is a corporation in good standing under the
laws of the State of Ohio.
4.6 SEC FILINGS. In the last two years, Manatron has filed in a
timely manner all required filings with the SEC. All such filings, as
amended, were complete and accurate in all material respects as of the
dates of such filings, and contain no untrue statement of material
fact, or omit to state a material fact necessary to make the
statements contained therein, in the light of the circumstances in
which they are made, not misleading.
4.7 ISSUANCE OF MANATRON COMMON STOCK. The shares of Manatron
Common Stock to be issued in connection with this Agreement have been
duly authorized and, when issued as contemplated by this Agreement,
will be legally issued, fully paid, and nonassessable shares.
4.8 ACCOUNTING AND TAX TREATMENT. Neither Manatron nor, to the
best of its knowledge, any of its affiliates, has taken or agreed to
take any action or knows of any reason that, with respect to Manatron
and its affiliates, would prevent the Merger from qualifying as a
reorganization under Section 368(a) of the Internal Revenue Code.
4.9 BROKERS. Manatron has not retained or employed any broker,
finder, investment banker, or other person, or taken any action, or
entered into any agreement or understanding that would give any
broker, finder, investment banker, or other person any valid claim
against Manatron, Xxxxx, or ProVal for a commission, brokerage fee, or
other compensation.
4.10 YEAR 2000 COMPLIANCE. All Year 2000 Assets owned, leased,
licensed or used by Manatron in its business will at all times before,
during and after January 1, 2000 be Year 2000 Compliant. No
proceeding is pending or threatened by or against Manatron based on
-24-
any claim that Manatron or any Year 2000 Asset was not, is not or will
not be Year 2000 Compliant and, to Manatron's knowledge, there is no
basis for such a Proceeding.
ARTICLE 5 COVENANTS
5.1 ACCESS AND INVESTIGATION. Between the date of this
Agreement and the Effective Time or such time as this Agreement is
terminated pursuant to Article 8 (the "TERM OF THIS AGREEMENT"),
ProVal shall (a) afford Manatron and its representatives full and free
access to its personnel, properties, contracts, books and records, and
other documents and data, provided Manatron shall conduct its review
to minimize disruption to ProVal's business and operations, (b)
furnish Manatron with copies of all such documents and data as
Manatron may reasonably request, and (c) furnish Manatron with such
additional information as Manatron may reasonably request.
5.2 OPERATION OF THE BUSINESS. During the Term of this
Agreement, ProVal shall: (a) conduct its business only in the ordinary
course of business; (b) use its best efforts to preserve intact its
current business organization, keep available the services of the
current officers, employees, and agents, and maintain the relations
and goodwill with suppliers, customers, landlords, creditors,
employees, agents, and others having business relationships with it;
and (c) confer with Manatron concerning operational matters of a
material nature and otherwise report periodically to Manatron
concerning the status of its business, operations, and finances.
5.3 NEGATIVE COVENANT. Except as otherwise expressly permitted
by this Agreement, during the Term of this Agreement, neither ProVal
nor Xxxxx will take any affirmative action, or fail to take any
reasonable action within their or its control, as a result of which
any of the changes or events listed in Section 3.9 would be likely to
occur.
5.4 REQUIRED APPROVALS. As promptly as practicable after the
date of this Agreement, Manatron, Xxxxx, and ProVal shall make all
legal filings required to be made by them in order to consummate the
transactions contemplated by this Agreement. During the Term of this
Agreement, (a) Xxxxx and ProVal shall (i) cooperate with Manatron with
respect to all filings that Manatron elects to make or is required to
make in connection with the transactions contemplated by this
Agreement, and (ii) cooperate with Manatron in obtaining all consents
required to consummate the Merger; and (b) Manatron shall
(i) cooperate with Xxxxx and ProVal with respect to all filings that
they elect to make or are required to make in connection with the
-25-
transactions contemplated by this Agreement, and (ii) cooperate with
ProVal and Xxxxx in obtaining all consents required to consummate the
Merger
5.5 NOTIFICATION. During the Term of this Agreement, each party
promptly will notify the other in writing of any fact or condition
that causes or constitutes a breach of any of their respective
representations and warranties as of the date of this Agreement, or if
they become aware of the occurrence of any fact or condition that
would cause or constitute a breach of any such representation or
warranty had such representation or warranty been made as of the time
of occurrence or discovery of such fact or condition. If any such
fact or condition requires any change in the Disclosure Schedule if
the Disclosure Schedule were dated the date of the occurrence or
discovery of any such fact or condition, Xxxxx will promptly
supplement the Disclosure Schedule. During the same period, each
party will promptly notify the other of the occurrence of any breach
of any covenant in this Article 5 by them or of the occurrence of any
event that may make their satisfaction of the respective conditions in
Articles 6 or 7 impossible or unlikely.
5.6 NO NEGOTIATION. During the Term of this Agreement, neither
ProVal nor Xxxxx shall solicit, initiate, or encourage any inquiries
or proposals from, discuss or negotiate with, provide any information
to, or consider the merits of any unsolicited inquiries or proposals
from, any person or entity (other than Manatron) relating to any
transaction involving the sale of the business or assets (other than
in the ordinary course of business) of ProVal or any of the capital
stock of ProVal or any merger or business combination involving
ProVal.
5.7 NO COMPETITION. As an inducement for Manatron to enter into
this Agreement, Xxxxx agrees that:
5.7.1 NO COMPETITION. For a period of five (5) years
after the Effective Time, he shall not, directly or indirectly,
engage or invest in, own, manage, operate, finance, control, or
participate in the ownership, management, operation, financing,
or control of, be employed by or in any way associated with or
render services or advice to, any business whose products or
activities compete in whole or in part with the products or
activities of ProVal or its successors, anywhere within the
United States; provided, that he may purchase or otherwise
acquire up to (but not more than) 1% of any class of securities
of any such enterprise (but without otherwise participating in
the activities of such enterprise), if such securities are listed
on any national or regional securities exchange or have been
registered under Section 12 of the Securities Exchange Act of
-26-
1934, as amended. Furthermore, Xxxxx may own securities in
Manatron, any of Manatron's successors, any company that it spun
off from Manatron, or any company that Manatron is merged into or
that acquires Manatron. Xxxxx agrees that this covenant is
reasonable with respect to its duration, geographical area, and
scope.
5.7.2 NO SOLICITATION. For a period of five (5) years
after the Effective Time, Xxxxx shall not, directly or
indirectly, either for himself or any other person or entity, (a)
induce or attempt to induce any employee of ProVal (or its
successors) to leave their employment, (b) employ, or otherwise
engage as an employee, independent contractor, or otherwise, any
employee of ProVal (or its successors), or (c) induce or attempt
to induce any customer, supplier, licensee, or business relation
of ProVal (or its successor) to cease doing business with ProVal
(or its successor), or in any way interfere with the relationship
between any customer, supplier, licensee, or business relation of
ProVal (or its successors).
In the event of a breach of any covenant set forth in this Section,
the term of such covenant will be extended by the period of the
duration of such breach.
5.8 RELEASE OF CLAIMS. Effective as of the Effective Time,
Xxxxx releases and forever discharges ProVal and its affiliates
(collectively, the "RELEASED PERSONS") from any and all claims,
demands, proceedings, causes of action, orders, obligations,
contracts, agreements, debts, and liabilities whatsoever, that Xxxxx
now has, has ever had, or may hereafter have against the Released
Persons arising at or prior to the Effective Time or on account of or
arising out of any matter, cause, or event occurring at or prior to
the Effective Time, including, but not limited to, any rights to
indemnification or reimbursement from ProVal, and whether or not
relating to claims pending on, or asserted after, the Effective Time;
provided, however, that nothing contained in this Section shall
operate to release any obligations of Manatron or MergerSub arising
under this Agreement. Further, Xxxxx, as of the Effective Time,
irrevocably covenants to refrain from, directly or indirectly,
asserting any claim or demand, or commencing, instituting, or causing
to be commenced, any proceeding of any kind against any Released
Person, based upon any matter purported to be released hereby.
5.9 PROVAL DIVIDENDS. ProVal shall not declare, set aside, pay
or make any dividend or other distribution or payment (whether in
cash, stock, or property) with respect to, or purchase or redeem, any
shares of its capital stock.
-27-
5.10 PROVAL AFFILIATES. ProVal shall take reasonable steps to
ensure that none of its affiliates who receive Manatron Common Stock
in connection with the Merger offer, sell, or otherwise dispose of, or
enter into a contract to offer, sell, or otherwise dispose of, any
shares of Manatron Common Stock from 30 days prior to the Effective
Time of the Merger until financial results of the post-Merger combined
operations of Manatron have been published covering a period of at
least 30 days.
5.11 MANATRON'S POST-CLOSING FILINGS. Manatron shall file the
reports required to be filed by it under the Exchange Act, and the
rules and regulations adopted by the SEC thereunder, all to the extent
required from time to time to enable Xxxxx to sell the Manatron Common
Stock issued in connection with this Agreement pursuant to and in
compliance with SEC Rule 144, for a period of two years after delivery
of the Manatron Common Stock under this Agreement.
5.12 PUBLICATION OF RESULTS. Manatron shall use its best efforts
to publish as promptly as reasonably practical but in no event later
than 45 days after the end of the first month after the Effective Time
in which there are at least 30 days of post-Merger combined operations
(which month may be the month in which the Effective Time occurs),
combined sales and net income figures as contemplated by and in
accordance with the terms of SEC Accounting Series Release No. 135.
5.13 ACCOUNTING AND TAX TREATMENT. During the Term of this Plan
of Merger, Manatron and ProVal each agree not to take any action that
would adversely affect the ability of Manatron to treat the Merger as
a "reorganization" within the meaning of Section 368(a) of the
Internal Revenue Code.
5.14 STOCK OPTION PLAN. Following the Closing, Manatron shall
grant to MergerSub's employees options to purchase an aggregate total
of sixty thousand (60,000) shares of Manatron Common Stock, the
exercise prices for which shall be the current market price for
Manatron Common Stock on the date of grant of such options.
5.15 BEST EFFORTS. During the Term of this Agreement, Manatron,
ProVal, and Xxxxx shall use their best efforts to cause the conditions
in Articles 6 and 7 to be satisfied.
ARTICLE 6 CONDITIONS PRECEDENT TO MANATRON'S
OBLIGATION TO CLOSE
Manatron's and MergerSub's obligation to consummate the
Merger and to take the other actions required of it at the Closing is
subject to the satisfaction, at or prior to the Closing, of each of
-28-
the following conditions (any of which may be waived by Manatron, in
whole or in part):
6.1 ACCURACY OF REPRESENTATIONS. All of Xxxxx'x and ProVal's
representations and warranties in this Agreement (considered
collectively), and each of these representations and warranties
(considered individually), must have been accurate in all material
respects as of the date of this Agreement, and must be accurate in all
material respects as of the Closing as if then made, without giving
effect to any supplement to the Disclosure Schedule, except that each
of Xxxxx'x and ProVal's representations and warranties in Sections
3.3, 3.7, and 3.30 must have been accurate in all respects as of the
date of this Agreement and must be accurate in all respects as of the
Closing Date as if made on the Closing Date; without giving effect to
any supplement to the Disclosure Schedule.
6.2 PROVAL'S PERFORMANCE. All of the covenants and obligations
that ProVal is required to perform or to comply with at or prior to
the Closing (considered collectively), and each of these covenants and
obligations (considered individually), must have been duly performed
and complied with in all material respects.
6.3 CONSENTS. Each of the consents identified in Section 3.5
and/or Schedule 3.5 of the Disclosure Schedule must have been obtained
and must be in full force and effect.
6.4 LEGAL OPINION. ProVal must have delivered an opinion of its
counsel in substantially the form as set forth in EXHIBIT 6.4.
6.5 ADDITIONAL DOCUMENTS. Each of the following documents must
have been delivered to Manatron: such documents as Manatron may
reasonably request for the purpose of (a) enabling its counsel to
provide the opinion referred to in Section 7.3, (b) evidencing the
accuracy of any of Xxxxx'x or ProVal's representations and warranties,
or the performance by ProVal of, or the compliance by ProVal with, any
covenant or obligation required hereunder, (c) evidencing the
satisfaction of any condition referred to in this Article 6, or
(d) otherwise facilitating the consummation or performance of any of
the transactions contemplated by this Agreement.
6.6 NO PROCEEDINGS. Since the date of this Agreement, there
must not have been commenced or threatened against Manatron or any of
its affiliates, any proceeding (a) involving any challenge to or
relating in any way to this Agreement, or (b) that may prevent, delay,
make illegal, or otherwise interfere with any of the transactions
contemplated by this Agreement.
-29-
6.7 NO CLAIM REGARDING SALE PROCEEDS. There must not have been
made or threatened by any person or entity any claim asserting that
such person or entity is entitled to all or any portion of the
consideration paid to Xxxxx in connection with the Merger.
6.8 NO INJUNCTION. There must not be in effect any legal
requirement or any injunction or other order that prohibits the Merger
and has been adopted or issued, or has otherwise become effective,
since the date of this Agreement.
6.9 NO PROHIBITION. The consummation of any of the transactions
contemplated by this Agreement will not materially contravene,
conflict with, or result in a material violation of, or cause Manatron
or any of its affiliates to suffer any material adverse consequence
under, any applicable law.
ARTICLE 7 CONDITIONS PRECEDENT TO PROVAL'S
OBLIGATION TO CLOSE
ProVal's obligation to consummate the Merger and to take the
other actions required to be taken by it at the Closing is subject to
the satisfaction, at or prior to the Closing, of each of the following
conditions (any of which may be waived by ProVal, in whole or in
part):
7.1 ACCURACY OF REPRESENTATIONS. All of Manatron's
representations and warranties in this Agreement (considered
collectively), and each of these representations and warranties
(considered individually), must have been accurate in all material
respects as of the date of this Agreement and must be accurate in all
material respects as of the Closing as if then made, except that each
of Manatron's representations and warranties in Section 4.3 must have
been accurate in all respects as of the date of this Agreement and
must be accurate in all respects as of the Closing Date as if made on
the Closing Date; without giving effect to any supplement to the
Disclosure Schedule.
7.2 MANATRON'S PERFORMANCE. All of the covenants and
obligations that Manatron is required to perform or to comply with
pursuant to this Agreement at or prior to the Closing (considered
collectively), and each of these covenants and obligations (considered
individually), must have been performed and complied with in all
material respects.
7.3 LEGAL OPINION. Manatron must have delivered an opinion of
its counsel in substantially the form as set forth in EXHIBIT 7.3.
-30-
7.4 ADDITIONAL DOCUMENTS. Manatron must have caused to be
delivered to ProVal such documents as ProVal may reasonably request
for the purpose of (a) enabling its counsel to provide the opinion
referred to in Section 6.4 evidencing the accuracy of any
representation or warranty of Manatron, (b) evidencing the performance
by Manatron of, or the compliance by Manatron with, any covenant or
obligation required to be performed or complied with by Manatron,
(c) evidencing the satisfaction of any condition referred to in this
Article 7, or (d) otherwise facilitating the consummation of any of
the transactions contemplated hereby.
7.5 NO INJUNCTION. There must not be in effect any legal
requirement or any injunction or other order that prohibits the Merger
and has been adopted or issued, or has otherwise become effective,
since the date of this Agreement.
ARTICLE 8 TERMINATION
8.1 TERMINATION EVENTS. This Agreement may, by notice given
prior to or at the Closing, be terminated:
8.1.1 BREACH. By either Manatron or Xxxxx if a material
breach of this Agreement has been committed by the other and such
breach has not been waived;
8.1.2 CONDITIONS. (a) By Manatron if any of the
conditions in Article 6 has not been satisfied as of the Closing
or if satisfaction of such a condition is or becomes impossible
(other than through Manatron's fault) and Manatron has not waived
such condition on or before the Closing; or (b) by Xxxxx, if any
of the conditions in Article 7 has not been satisfied as of the
Closing or if satisfaction of such a condition is or becomes
impossible (other than through ProVal's or Xxxxx'x fault) and
Xxxxx have not waived such condition on or before the Closing;
8.1.3 CONSENT. By mutual consent of Manatron and Xxxxx;
8.1.4 UPSET DATE. By either Manatron or Xxxxx if the
Closing has not occurred (other than through the fault of the
party seeking to terminate this Agreement) on or before July 31,
1999, or such later date as the parties may agree upon; or
8.2 EFFECT OF TERMINATION. The exercise of a party's right of
termination under Section 8.1 will not be an election of remedies. If
this Agreement is terminated pursuant to Section 8.1, all further
obligations of the parties under this Agreement will terminate, except
that the obligations in Sections 10.3 and 10.5 will survive; provided,
-31-
however, that if this Agreement is terminated by a party because of
the breach of the Agreement by the other party or because one or more
of the conditions to the terminating party's obligations under this
Agreement is not satisfied as a result of the other party's failure to
comply with its obligations under this Agreement, the terminating
party's right to pursue all legal remedies will survive unimpaired.
ARTICLE 9 INDEMNIFICATION
9.1 INDEMNIFICATION AND REIMBURSEMENT BY XXXXX. Xxxxx will
indemnify and hold harmless Manatron and ProVal, and their respective
representatives, shareholders, controlling persons, and affiliates
(collectively, the "INDEMNIFIED PERSONS"), and will reimburse the
Indemnified Persons, for any loss, liability, claim, damage, expense
(including costs of investigation and defense and reasonable
attorneys' fees) or diminution of value, whether or not involving a
third-party claim (collectively, "DAMAGES"), arising from or in
connection with: (a) any breach of any representation or warranty made
by Xxxxx in this Agreement or any other certificate or document
delivered by ProVal or Xxxxx pursuant to this Agreement; or (b) any
breach by either ProVal or Xxxxx of any covenant or obligation of
ProVal or Xxxxx in this Agreement.
9.2 LIMITATIONS ON INDEMNIFICATION. Notwithstanding any other
provisions in this Article, Manatron's (and Manatron's affiliates')
right to indemnification under Section 9.1(a) shall be limited as
follows:
9.2.1 BASKET. Xxxxx shall not be obligated to indemnify
Manatron and Manatron's affiliates unless and until, and only to
the extent that, the aggregate amount of Indemnified Losses
exceeds One Hundred Thousand Dollars ($100,000) (the "BASKET"),
in which case Xxxxx shall be liable for all claims to the extent
they exceed the Basket amount, up to a maximum aggregate amount
of One Million Five Hundred Thousand Dollars ($1,500,000) (the
"CEILING"); provided, however, that the Basket and Ceiling shall
not apply to, and Xxxxx shall fully indemnify Manatron and
Manatron's affiliates for: (a) any claim arising out of a breach
of a representation or warranty relating to authorization to
enter into and enforceability of this Agreement, Taxes, or the
capitalization of ProVal; (b) any fraudulent or intentional
breach of this Agreement; and (c) any breach of the
representations and warranties set forth in Section 3.12
concerning Accounts Receivable, or the failure of ProVal to
collect such Accounts Receivable following the Effective Time
(net of the respective reserves shown on the Balance Sheet or the
Interim Balance Sheet).
-32-
9.2.2 INDEMNIFICATION PERIOD. Manatron's right to seek
indemnification shall survive for a period of 12 months from the
Effective Time. The making of a claim for indemnification under
this Agreement shall toll the running of the limitation period
with respect to that claim. For purposes of the preceding
sentence, a claim shall be deemed made upon the commencement of
an independent judicial proceeding with respect to the matter
underlying the claim or receipt by Xxxxx of a written notice of
claim setting forth the amount of the claim (if known by
Manatron) and a general description of the facts underlying the
claim.
9.2.3 INSURANCE. Manatron shall have no right to seek
indemnification for breaches of the representations and
warranties set forth in Section 3.8 above to the extent that the
damages resulting from such breach are paid for by insurance or
would have been covered by insurance had Manatron maintained, or
caused the Surviving Corporation to maintain, insurance coverage
similar to that which was in effect before Closing.
9.3 THIRD-PARTY CLAIMS.
9.3.1 NOTICE OF THIRD-PARTY CLAIMS. If any action,
suit, or proceeding (including claims by federal, state, local,
or foreign tax authorities) shall be threatened or commenced
against Manatron in respect of which Manatron may demand
indemnification under this Agreement, Manatron shall notify Xxxxx
to that effect with reasonable promptness after receiving written
notice of the action, suit, or proceeding, and Xxxxx shall have
the opportunity (provided Xxxxx shall have acknowledged in
writing that Xxxxx is obligated under the terms of this Agreement
to indemnify Manatron and Manatron shall not have determined, in
Manatron's sole judgment, to retain control over the action,
suit, or proceeding in accordance with Section 9.3.2) to defend
against the action, suit, or proceeding, at Xxxxx'x sole expense,
subject to the limitations set forth below.
9.3.2 DEFENSE OF CLAIMS. If Xxxxx elect to defend
against an action, suit, or proceeding and Manatron does not
decide to retain control of the matter as provided in this
Section, Xxxxx shall notify Manatron to that effect with
reasonable promptness. Manatron shall have the right to employ
Manatron's own counsel and participate in the defense of the
case, but the fees and expenses of Manatron's counsel shall be at
the expense of Manatron, unless (a) the employment of Manatron's
counsel at the expense of ProVal shall have been authorized in
writing by Xxxxx in connection with the defense of the action,
suit, or proceeding; (b) Xxxxx shall have decided not to defend
-33-
against the action, suit, or proceeding; or (c) Manatron shall
have reasonably concluded that the action, suit, or proceeding
involves to a significant extent matters beyond the scope of the
indemnity agreement contained in this Article. In any case
described in clause (c) of the preceding sentence, Xxxxx shall
not have the right to direct the defense of the action, suit, or
proceeding on behalf of Manatron, provided that only that portion
of the fees and expenses reasonably related to matters covered
by the indemnity agreement contained in this Article shall be
borne by Xxxxx.
9.3.3 CONDUCT OF DEFENSE. Any party granted the right
to direct the defense of a claim pursuant to this Article shall:
(a) keep the other parties to this Agreement fully informed
of the action, suit, or proceeding at all stages of the matter,
whether or not represented; (b) promptly submit to the other
parties copies of all pleadings, responsive pleadings, motions,
and other similar legal documents and papers received in
connection with the action, suit, or proceeding; (c) permit the
other parties to this Agreement and their counsel, to the extent
practicable, to confer on the conduct of the defense of the
action, suit, or proceeding; and (d) to the extent practicable,
permit the other parties to this Agreement and their counsel an
opportunity to review all legal papers to be submitted before the
submission. Subject to an appropriate confidentiality agreement,
the parties shall make available to each other and each other's
counsel and accountants all of the books and records relating to
the action, suit, or proceeding, and each party shall render to
the other any assistance as may be reasonably required in order
to insure the proper and adequate defense of the action, suit, or
proceeding.
9.4 CLAIMS BY MANATRON. Manatron shall notify Xxxxx in writing
with reasonable promptness after the discovery of any claim upon which
Manatron will demand indemnification from Xxxxx under this Agreement.
To the extent possible, the notice shall describe in reasonable detail
the basis for the claim, include an itemized accounting of the claim,
and provide a good faith estimate of the amount of the Indemnified
Loss. Within 14 days after receipt of the notice, Xxxxx shall either
reimburse Manatron for the amount of the claim (or acknowledge
Manatron's right of offset) or notify Manatron of Xxxxx'x intent to
dispute the claim.
9.5 REMEDIES CUMULATIVE. The remedies provided in this Article
are cumulative and shall not prevent the assertion by Manatron of any
other rights or the seeking of any other remedies against Xxxxx.
-34-
ARTICLE 10 GENERAL
10.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS, AND
INDEMNITIES. All representations, warranties, covenants, and
indemnities made by any party to this Agreement and all other
documents related hereto shall survive the Closing and Effective Time
and any investigation made by or on behalf of any party.
10.2 ASSIGNMENT AND BENEFITS. No party to this Agreement may
assign or transfer this Agreement, either directly or indirectly,
without the prior written consent of all parties to this Agreement,
except that Manatron may assign all or part of Manatron's interest in
this Agreement to one or more of its affiliates. Any assignment of
this Agreement shall not release the assignor from the duty to perform
the assignor's obligations under this Agreement. This Agreement shall
be binding upon, inure to the benefit of, and may be enforced by and
against the respective successors and permitted assigns of each of the
parties to this Agreement.
10.3 NO PUBLIC ANNOUNCEMENT. Any public announcement or similar
publicity with respect to this Agreement or the Merger will be issued,
if at all, at such time and in such manner as the parties mutually
agree. Unless consented to by the other in advance or required by
law, prior to the Effective Time, ProVal (and Xxxxx) and Manatron
shall keep this Agreement strictly confidential and may not make any
disclosure of this Agreement to any person or entity, except to their
respective employees, consultants and advisors. Each party will
consult with each other concerning the means by which ProVal's
employees, customers, and suppliers and others having dealings with
the Business will be informed of the Merger and Manatron will have the
right to be present for any such communication.
10.4 NOTICES. All notices and other communications under this
Agreement shall be in writing and shall be deemed to have been duly
given when delivered, sent by fax, or sent by express delivery service
with charges prepaid and receipt requested, or, if those services are
not reasonably available, mailed (postage prepaid) by certified mail
with return receipt requested:
TO MANATRON: WITH A COPY TO:
Manatron, Inc. Xxxxxx Xxxxxxxx & Xxxx LLP
0000 Xxxxx Xxxxx Xxxxxx 000 Xxx Xxxx Xxxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000 000 Xxxx Xxxxxx, XX
Xxxxx Xxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxx X. Xxxxxxxxx Attn.: Xxxxxxx X. Xxxxxxxxx
Fax: (000) 000-0000, ext. 222 Fax: (000) 000-0000
-35-
TO PROVAL OR XXXXX: WITH A COPY TO:
ProVal Corporation Lagos & Lagos
00 Xxxx Xxxx Xxxxxx Xxx Xxxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxx 00000 Suite 1000
Attn: Xxxxx X. Xxxxx Xxxxxxxxxxx, Xxxx 00000
J. Xxxxx Xxxxx Attn: Xxx Xxxxx
Fax: (000) 000-0000 Fax: (000) 000-0000
Any party may change that party's address by prior written notice to
the other parties.
10.5 EXPENSES. Each party to this Agreement shall pay that
party's respective expenses, costs, and fees (including professional
fees) incurred in connection with the negotiation, preparation,
execution, and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement.
10.6 ENTIRE AGREEMENT; COUNTERPARTS. This Agreement, and the
exhibits and schedules (including the Disclosure Schedule) to this
Agreement (which are incorporated in this Agreement by reference), the
Confidentiality Agreement, executed in September 1998, between
Manatron and ProVal, and the agreements referred to in this Agreement,
contains the entire agreement and understanding of the parties and
supersede all prior agreements, negotiations, arrangements, and
understandings relating to the subject matter of this Agreement. This
Agreement may be signed in counterparts, each of which shall be deemed
to be an original, and the counterparts shall together constitute one
document.
10.7 AMENDMENTS AND WAIVERS. This Agreement may be amended,
superseded, or canceled, and any of the terms or conditions of this
Agreement may be waived, only by a written instrument signed by each
party to this Agreement or, in the case of a waiver, by or on behalf
of the party waiving compliance. The failure of any party at any time
to require performance of any provision in this Agreement shall not
affect the right of that party at a later time to enforce that or any
other provision. No waiver by any party of any condition, or of any
breach of any term, covenant, representation, or warranty contained in
this Agreement, in any one or more instances, shall be deemed to be a
further or continuing waiver of any condition or of any breach of any
other term, covenant, representation, or warranty.
10.8 NO THIRD-PARTY BENEFICIARIES. The provisions of this
Agreement are solely between and for the benefit of the respective
parties to this Agreement, and do not inure to the benefit of, or
confer rights upon, any third party, including any employee of
Manatron or ProVal, except Xxxxx and his spouse.
-36-
10.9 SEVERABILITY. Whenever possible each provision and term of
this Agreement will be interpreted in a manner to be effective and
valid but if any provision or term of this Agreement is held to be
prohibited by or invalid, then such provision or term will be
ineffective only to the extent of such prohibition or invalidity,
without invalidating or affecting in any manner whatsoever the
remainder of such provision or term or the remaining provisions or
terms of this Agreement. If any of the covenants set forth in Section
5.7 are held to be unreasonable, arbitrary, or against public policy,
such covenants will be considered divisible with respect to scope,
time, and geographic area, and in such lesser scope, time and
geographic area, will be effective, binding and enforceable against
Xxxxx.
10.10 GOVERNING LAW. This Agreement shall be governed by,
and interpreted and enforced in accordance with, the laws of the State
of Ohio, without regard to conflicts of law principles.
10.11 JURISDICTION; SERVICE OF PROCESS. Any action or
proceeding seeking to enforce any provision of, or based on any right
arising out of, this Agreement may be brought against any of the
parties in the courts of the State of Michigan, County of Kent, or, if
it has or can acquire jurisdiction, in the United States District
Court for the Western District of Michigan, and each of the parties
consents to the jurisdiction of such courts (and of the appropriate
appellate courts) in any such action or proceeding and waives any
objection to venue laid therein. Process in any action or proceeding
referred to in the preceding sentence may be served by registered mail
on any party anywhere in the United States.
* * *
-37-
This Agreement and Plan of Merger is signed on May 28, 1999.
MANATRON, INC.
By ______________________________________________
Xxxxxxx X. Xxxx, Chairman of the Board
MANATRON ACQUISITION CORPORATION
By ______________________________________________
Xxxx X. Xxxxxxxxx, President
PROVAL CORPORATION
By ______________________________________________
J. Xxxxx Xxxxx, President
_________________________________________________
J. XXXXX XXXXX
-38-
TABLE OF CONTENTS
Page
ARTICLE 1 THE MERGER. . . . . . . . . . . . . . . . . . . . . . . . .1
1.1 The Merger. . . . . . . . . . . . . . . . . . . . . . .1
1.2 Effective Time. . . . . . . . . . . . . . . . . . . . .1
1.3 Articles of Incorporation and Bylaws of Surviving
Corporation . . . . . . . . . . . . . . . . . . . . . .1
1.4 Officers and Directors of Surviving Corporation . . . .1
1.5 Further Assurances. . . . . . . . . . . . . . . . . . .2
ARTICLE 2 VOTING AND CONVERSION OF SHARES . . . . . . . . . . . . . .2
2.1 Effect on Shares and MergerSub's Capital Stock. . . . .2
2.2 Shareholder Meeting . . . . . . . . . . . . . . . . . .3
2.3 Place and Date of Closing . . . . . . . . . . . . . . .3
2.4 Consummation of the Merger. . . . . . . . . . . . . . .3
2.5 Closing Obligations . . . . . . . . . . . . . . . . . .3
2.6 Post-Closing EBT Adjustments to Merger Consideration. .4
2.7 Post-Closing Software License and Support Fees
Adjustments to Merger Consideration . . . . . . . . . .5
2.8 General Provisions Concerning Sections 2.6 and 2.7. . .7
2.9 Post-Closing Stock Price Adjustment . . . . . . . . . .7
2.10 Stock Splits, Stock Dividends, etc. . . . . . . . . . .8
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF XXXXX . . . . . . . . . .7
3.1 Disclosure Schedule . . . . . . . . . . . . . . . . . .8
3.2 Organization and Good Standing. . . . . . . . . . . . .8
3.3 Capitalization of ProVal. . . . . . . . . . . . . . . .9
3.4 Enforceability. . . . . . . . . . . . . . . . . . . . .9
3.5 No Conflict with Other Instruments or Proceedings . . .9
3.6 Compliance with Laws and Other Regulations. . . . . . .9
3.7 Financial Statements. . . . . . . . . . . . . . . . . .9
3.8 Absence of Undisclosed Liabilities. . . . . . . . . . .9
3.9 Absence of Certain Changes or Events. . . . . . . . . 10
3.10 Customers and Suppliers . . . . . . . . . . . . . . . 10
3.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . . 11
3.12 Accounts Receivable . . . . . . . . . . . . . . . . . 12
3.13 Real Property . . . . . . . . . . . . . . . . . . . . 12
3.14 Personal Property . . . . . . . . . . . . . . . . . . 13
3.15 Year 2000 Compliance. . . . . . . . . . . . . . . . . 13
3.16 Intellectual Property . . . . . . . . . . . . . . . . 13
3.17 Contracts . . . . . . . . . . . . . . . . . . . . . . 15
3.18 Employee Relations. . . . . . . . . . . . . . . . . . 15
3.19 Employee Benefit Plans. . . . . . . . . . . . . . . . 15
3.20 Environmental Matters . . . . . . . . . . . . . . . . 17
3.21 Litigation. . . . . . . . . . . . . . . . . . . . . . 17
-i-
3.22 Product Warranties. . . . . . . . . . . . . . . . . . 17
3.23 Insurance . . . . . . . . . . . . . . . . . . . . . . 17
3.24 Permits and Licenses. . . . . . . . . . . . . . . . . 18
3.25 Acknowledgments Regarding Manatron's
Restricted Common Stock . . . . . . . . . . . . . . . 18
3.26 Books and Records . . . . . . . . . . . . . . . . . . 18
3.27 Relationships with Related Persons. . . . . . . . . . 18
3.28 Accounting and Tax Treatment. . . . . . . . . . . . . 19
3.29 Brokers . . . . . . . . . . . . . . . . . . . . . . . 19
3.30 Accuracy of Statements. . . . . . . . . . . . . . . . 19
ARTICLE 4 MANATRON'S REPRESENTATIONS AND WARRANTIES . . . . . . . . 19
4.1 Manatron's Organization and Good Standing . . . . . . 19
4.2 Enforceability. . . . . . . . . . . . . . . . . . . . 19
4.3 Financial Statements. . . . . . . . . . . . . . . . . 19
4.4 Manatron's Capital Stock. . . . . . . . . . . . . . . 20
4.5 Capitalization of MergerSub . . . . . . . . . . . . . 20
4.6 SEC Filings . . . . . . . . . . . . . . . . . . . . . 20
4.7 Issuance of Manatron Common Stock . . . . . . . . . . 20
4.8 Accounting and Tax Treatment. . . . . . . . . . . . . 21
4.9 Brokers . . . . . . . . . . . . . . . . . . . . . . . 21
4.10 Year 2000 Compliance. . . . . . . . . . . . . . . . . 21
ARTICLE 5 COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . 21
5.1 Access and Investigation. . . . . . . . . . . . . . . 21
5.2 Operation of the Business . . . . . . . . . . . . . . 21
5.3 Negative Covenant . . . . . . . . . . . . . . . . . . 21
5.4 Required Approvals. . . . . . . . . . . . . . . . . . 21
5.5 Notification. . . . . . . . . . . . . . . . . . . . . 22
5.6 No Negotiation. . . . . . . . . . . . . . . . . . . . 22
5.7 No Competition. . . . . . . . . . . . . . . . . . . . 22
5.8 Release of Claims . . . . . . . . . . . . . . . . . . 23
5.9 ProVal Dividends. . . . . . . . . . . . . . . . . . . 23
5.10 ProVal Affiliates . . . . . . . . . . . . . . . . . . 23
5.11 Manatron's Post-Closing Filings . . . . . . . . . . . 23
5.12 Publication of Results. . . . . . . . . . . . . . . . 24
5.13 Accounting and Tax Treatment. . . . . . . . . . . . . 24
5.14 Stock Option Plan . . . . . . . . . . . . . . . . . . 24
5.15 Best Efforts. . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 6 CONDITIONS PRECEDENT TO MANATRON'S
OBLIGATION TO CLOSE . . . . . . . . . . . . . . . . . . . . . . 24
6.1 Accuracy of Representations . . . . . . . . . . . . . 24
6.2 ProVal's and Xxxxx'x Performance. . . . . . . . . . . 24
6.3 Consents. . . . . . . . . . . . . . . . . . . . . . . 24
6.4 Legal Opinion . . . . . . . . . . . . . . . . . . . . 25
6.5 Additional Documents. . . . . . . . . . . . . . . . . 25
6.6 No Proceedings. . . . . . . . . . . . . . . . . . . . 25
-ii-
6.7 No Claim Regarding Sale Proceeds. . . . . . . . . . . 25
6.8 No Injunction . . . . . . . . . . . . . . . . . . . . 25
6.9 No Prohibition. . . . . . . . . . . . . . . . . . . . 25
ARTICLE 7 CONDITIONS PRECEDENT TO XXXXX'X
OBLIGATION TO CLOSE . . . . . . . . . . . . . . . . . . . . . . 25
7.1 Accuracy of Representations . . . . . . . . . . . . . 25
7.2 Manatron's Performance. . . . . . . . . . . . . . . . 26
7.3 Legal Opinion . . . . . . . . . . . . . . . . . . . . 26
7.4 Additional Documents. . . . . . . . . . . . . . . . . 26
7.5 No Injunction . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 8 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . 26
8.1 Termination Events. . . . . . . . . . . . . . . . . . 26
8.2 Effect of Termination . . . . . . . . . . . . . . . . 27
ARTICLE 9 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . 27
9.1 Indemnification and Reimbursement by Xxxxx. . . . . . 27
9.2 Limitations on Indemnification. . . . . . . . . . . . 27
9.3 Third-Party Claims. . . . . . . . . . . . . . . . . . 28
9.4 Claims by Manatron. . . . . . . . . . . . . . . . . . 29
9.5 Remedies Cumulative . . . . . . . . . . . . . . . . . 29
ARTICLE 10 GENERAL. . . . . . . . . . . . . . . . . . . . . . . . . 29
10.1 Survival of Representations, Warranties,
Covenants, and Indemnities. . . . . . . . . . . . . . 29
10.2 Assignment and Benefits . . . . . . . . . . . . . . . 29
10.3 No Public Announcement. . . . . . . . . . . . . . . . 29
10.4 Notices . . . . . . . . . . . . . . . . . . . . . . . 30
10.5 Expenses. . . . . . . . . . . . . . . . . . . . . . . 30
10.6 Entire Agreement; Counterparts. . . . . . . . . . . . 30
10.7 Amendments and Waivers. . . . . . . . . . . . . . . . 30
10.8 No Third-Party Beneficiaries. . . . . . . . . . . . . 31
10.9 Severability. . . . . . . . . . . . . . . . . . . . . 31
10.10 Governing Law . . . . . . . . . . . . . . . . . . . . 31
10.11 Jurisdiction; Service of Process . . . . . . . . . . 31
-iii-
