AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of June 5, 2000 (the "AGREEMENT"),
by and between XXXXXXX INVESTMENTS, INC., a Minnesota corporation (the
"COMPANY"), XXXXXXXXX.XXX GROUP, INC., a Minnesota corporation ("ACQUIROR") and
SW ACQUISITION, INC., a Minnesota corporation ("MERGERCO").
WHEREAS, the Board of Directors of the Company (the "COMPANY BOARD") and
the Board of Directors of each of Acquiror and MergerCo have determined that the
merger of the Company with and into MergerCo (the "MERGER"), in accordance with
the Minnesota Business Corporation Act (the "MBCA") and upon the terms and
subject to the conditions set forth in this Agreement, would be fair to and in
the best interests of their respective shareholders, and such Boards of
Directors have approved such Merger, pursuant to which each share of common
stock, par value $.01 per share of the Company (the "COMPANY COMMON STOCK")
issued and outstanding immediately prior to the Effective Time will be converted
into the right to receive one-half share of common stock, par value $.04 per
share of Acquiror, subject to adjustment as hereafter provided (the "ACQUIROR
COMMON STOCK"), and cash in an amount equal to $6.00.
WHEREAS, it is the intention of the parties to this Agreement that the
Merger be treated as a "reorganization" under Section 368(a) of the Code.
WHEREAS, Acquiror, MergerCo and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
ARTICLE 1
CERTAIN DEFINITIONS; INTERPRETATION
SECTION 1.1 CERTAIN DEFINITIONS. The following terms are used in this
Agreement with the meanings set forth below:
"ACQUIROR" has the meaning assigned in the preamble to this Agreement.
"ACQUIROR BENEFIT PLANS" has the meaning assigned in Section 4.4(n).
"ACQUIROR BROKER-DEALER SUBSIDIARIES" has the meaning assigned in Section
4.4(g).
"ACQUIROR COMMON STOCK" has the meaning assigned in the first recital of
this Agreement.
"ACQUIROR ERISA AFFILIATE" has the meaning assigned in Section 4.4(n).
"ACQUIROR ERISA CLIENT" has the meaning assigned in Section 4.4(l).
"ACQUIROR FINANCIAL STATEMENTS" has the meaning assigned in Section
4.4(g).
"ACQUIROR FOCUS REPORTS" has the meaning assigned in Section 4.4(g).
"ACQUIROR FORM ADV" has the meaning assigned in Section 4.4(l).
"ACQUIROR FORM BD" has the meaning assigned in Section 4.4(l).
"ACQUIROR FORMS" has the meaning assigned in Section 4.4(l).
"ACQUIROR INSURANCE POLICIES" has the meaning assigned in Section 4.4(s).
"ACQUIROR SEC DOCUMENTS" has the meaning assigned in Section 4.4(g).
"ACQUIROR STOCK" has the meaning assigned in Section 4.4(e).
"ACQUIROR STOCK OPTIONS" has the meaning assigned in Section 4.4(e).
"ACQUIROR UNDESIGNATED STOCK" has the meaning assigned in Section 4.4(e).
"ACQUIROR WARRANTS" has the meaning assigned in Section 4.4(e).
"ACQUISITION PROPOSAL" has the meaning assigned in Section 5.3.
"AFFILIATE," means, with respect to any specified person, any other
person, directly or indirectly controlling, controlled by or under common
control with such specified person. For purposes of this definition, "control"
when used in connection with any specified person means the power to direct the
management or policies of such person, directly or indirectly, whether through
the ownership of voting securities, by Contract or otherwise; and the terms
"controlling" and "controlled" have correlative meanings to the foregoing.
"AGREEMENT" means this Agreement, as amended or modified from time to
time in accordance with Section 8.2.
"ARTICLES OF MERGER" has the meaning assigned in Section 2.2.
"AVERAGE DAILY PRICE" means the average of the closing sale prices of one
share of Acquiror Common Stock as reported on the NASDAQ/NMS for the 20
consecutive full trading days (in which such shares are traded on the
NASDAQ/NMS) ending on the close of trading on the NASDAQ/NMS trading day
immediately preceding the Condition Date.
"CASH CONSIDERATION" has the meaning assigned in Section 3.1(c).
"CERTIFICATES" has the meaning assigned in Section 3.4(b).
"CLIENT" means any person to whom the Company or any of its Subsidiaries
provides products or services under a Contract.
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"CLOSING" has the meaning assigned in Section 2.2.
"CLOSING DATE" has the meaning assigned in Section 2.2.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY" has the meaning assigned in the preamble to this Agreement.
"COMPANY AFFILIATE" has the meaning assigned in Section 5.14(a).
"COMPANY ARTICLES" means the Articles of Incorporation of the Company, as
amended.
"COMPANY BENEFIT PLANS" has the meaning assigned in Section 4.3(q).
"COMPANY BOARD" has the meaning assigned in the first recital of this
Agreement.
"COMPANY BROKER-DEALER SUBSIDIARIES" has the meaning assigned in Section
4.3(g).
"COMPANY BYLAWS" means the Bylaws of the Company, as amended.
"COMPANY COMMON STOCK" has the meaning assigned in the first recital of
this Agreement.
"COMPANY ERISA AFFILIATE" has the meaning assigned in Section 4.3(q).
"COMPANY ERISA CLIENT" has the meaning assigned in Section 4.3(k).
"COMPANY FINANCIAL STATEMENTS" has the meaning assigned in Section
4.3(g).
"COMPANY FOCUS REPORTS" has the meaning assigned in Section 4.3(g).
"COMPANY FORM ADV" has the meaning assigned in Section 4.3(k).
"COMPANY FORM BD" has the meaning assigned in Section 4.3(k).
"COMPANY FORMS" has the meaning assigned in Section 4.3(k).
"COMPANY INSURANCE POLICIES" has the meaning assigned in Section 4.3(v).
"COMPANY PREFERRED STOCK" has the meaning assigned in Section 4.3(e).
"COMPANY REPORTS" has the meaning assigned in Section 4.3(l).
"COMPANY SEC DOCUMENTS" has the meaning assigned in Section 4.3(g).
"COMPANY STOCK" means, collectively, the Company Common Stock, the
Company Preferred Stock and the Company Undesignated Stock.
"COMPANY STOCK OPTION" has the meaning assigned in Section 3.3(a).
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"COMPANY STOCK PLANS" means stock-based compensation plans and incentive
plans of the Company Previously Disclosed.
"COMPANY UNDESIGNATED STOCK" has the meaning assigned in Section 4.3(e).
"COMPANY WARRANTS" has the meaning assigned in Section 3.3(a).
"CONDITION DATE" has the meaning assigned in Section 2.2.
"CONFIDENTIALITY AGREEMENT" has the meaning assigned in Section 5.8(b).
"CONTINUING EMPLOYEES" means employees of the Company or any Subsidiary
at immediately before the Effective Time who continue as employees of Acquiror,
the Surviving Corporation or any other Affiliate of Acquiror.
"CONTRACT" means, with respect to any person, any agreement, indenture,
undertaking, debt instrument, contract, contractual obligation, lease or other
commitment to which such person or any of its Subsidiaries is a party or by
which any of them is bound or to which any of their properties is subject.
"CONVERTIBLE NOTES" has the meaning assigned in Section 4.4(e).
"CSE" means the Chicago Stock Exchange.
"DISCLOSURE SCHEDULE" has the meaning assigned in Section 4.1.
"DISSENTING SHARES" has the meaning assigned in Section 3.1(d).
"EFFECTIVE DATE" means the date on which the Effective Time occurs.
"EFFECTIVE TIME" has the meaning assigned in Section 2.2.
"ENVIRONMENTAL LAWS" means any federal, state or local law, regulation,
order, decree, permit, authorization, common law or agency requirement with
force of law relating to: (1) the protection or restoration of the environment,
health or safety (in each case as relating to the environment) or natural
resources, or (2) the handling, use, presence, disposal, release or threatened
release of any Hazardous Substance.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ESPP" has the meaning assigned in Section 3.3(c).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder.
"EXCHANGE AGENT" has the meaning assigned in Section 3.4(a).
"EXCHANGE FUND" has the meaning assigned in Section 3.4(h).
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"EXCHANGE RATIO" has the meaning assigned in Section 3.1(c).
"EXCHANGED SHARES" has the meaning assigned in Section 3.4(b).
"FEDERAL RESERVE SYSTEM" means the Board of Governors of the Federal
Reserve System and the Federal Reserve Banks.
"GOVERNMENTAL AUTHORITY" means any court, administrative agency or
commission or other foreign, federal, state or local governmental authority or
instrumentality.
"HAZARDOUS SUBSTANCE" means any hazardous or toxic substance, material or
waste, including those substances, materials and wastes listed in the United
States Department of Transportation Hazardous Materials Table (49 C.F.R. (S)
172.101), or by the United States Environmental Protection Agency as hazardous
substances (40 C.F.R. Part 302) and amendments thereto, or become regulated
under any applicable local, state or federal law, including petroleum compounds,
lead, asbestos and polychlorinated biphenyls.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended.
"INDEMNIFIED PARTY" has the meaning assigned in Section 5.12(a).
"INSURANCE AMOUNT" has the meaning assigned in Section 5.12(c).
"INVESTMENT ADVISORS ACT" means the Investment Advisers Act of 1940, as
amended, and the rules and regulations thereunder.
"INVESTMENT COMPANY ACT" means the Investment Company Act of 1940, as
amended, and the rules and regulations thereunder.
"IRS" means the Internal Revenue Service.
"LIENS" means any charge, mortgage, pledge, security interest,
restriction, claim, lien, or encumbrance.
"LITIGATION" has the meaning assigned in Section 4.3(o).
"LITIGATION LIST" has the meaning assigned in Section 4.3(o).
"MATERIAL" means, with respect to any fact, circumstance, event or thing,
that such fact, circumstance, event or thing is or would reasonably be expected
to be material to (1) the financial position, results of operations, assets,
properties or business of the Acquiror and its Subsidiaries, taken as a whole,
the Company and its Subsidiaries, taken as a whole, or the Surviving Corporation
and its Subsidiaries, taken as a whole, as the case may be (other than to the
extent such fact, circumstance, event or thing is due to (x) general changes in
conditions in the securities industry, or in the global or United States economy
or capital markets, or (y) changes in applicable generally accepted accounting
principles or in laws, regulations or regulatory policies of general
applicability), or (2) the ability of either the Acquiror or the Company, as the
case may be, timely to perform its obligations under this Agreement or otherwise
to consummate the transactions contemplated by this Agreement.
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"MATERIAL ADVERSE EFFECT" means with respect to the Acquiror, the
Company, or the Surviving Corporation, respectively, an effect that,
individually or in the aggregate, is both Material and adverse with respect to
the Acquiror and its Subsidiaries, the Company and its Subsidiaries or the
Surviving Corporation and its Subsidiaries, in each case taken as a whole;
provided that "MATERIAL ADVERSE EFFECT" shall not be deemed to include the
effects of (x) general changes in conditions in the securities industry, or in
the global or United States economy or capital markets, or (y) changes in
applicable generally accepted accounting principles or in laws, regulations or
regulatory policies of general applicability, or (z) actions or omissions of the
Company taken with the prior written consent of the Acquiror.
"MBCA" has the meaning assigned in the first recital of this Agreement.
"MERGER" has the meaning assigned in the first recital of this Agreement.
"MERGERCO" has the meaning assigned in the preamble to this Agreement.
"MERGER CONSIDERATION" has the meaning assigned in Section 3.1(c).
"MSRB" means the Municipal Securities Rulemaking Board.
"NASD" means the National Association of Securities Dealers, Inc.
"NYSE" means the New York Stock Exchange, Inc.
"OPTION CONSIDERATION" HAS THE MEANING ASSIGNED IN SECTION 3.3.
"PERSON" shall mean and include an individual, bank, partnership, joint
venture, limited liability company, corporation, trust, unincorporated
organization and government or any department or agency thereof.
"PREVIOUSLY DISCLOSED" has the meaning assigned in Section 4.1.
"Prospectus/Proxy Statement" has the meaning assigned in Section 5.5(a).
"REGISTRATION STATEMENT" has the meaning assigned in Section 5.5(a).
"Representatives" has the meaning assigned in Section 5.3.
"RIGHTS" means, with respect to any person, securities or obligations
convertible into or exercisable or exchangeable for, or giving any person any
right to subscribe for, redeem or acquire, or any options, calls or commitments
relating to, or any stock appreciation right or other instrument the value of
which is determined in whole or in part by reference to the market price or
value of, shares of capital stock of such person.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
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"SECURITIES LAWS" means, collectively, the Securities Act, the Exchange
Act, the Investment Advisors Act, the Investment Company Act and any state
securities and "blue sky" laws.
"SELF-REGULATORY ORGANIZATION" means the National Association of
Securities Dealers, Inc., the NYSE, the AMEX, the MSRB or other commission,
board, agency or body that is not a Governmental Authority but is charged with
the supervision or regulation of brokers, dealers, securities underwriting or
trading, stock exchanges, commodities exchanges, insurance companies or agents,
investment companies or investment advisers, or to the jurisdiction of which the
Company or one of its Subsidiaries is otherwise subject.
"SHARE" has the meaning assigned in Section 3.1(c).
"SHAREHOLDERS MEETING" has the meaning assigned in Section 5.4.
"STOCK CONSIDERATION" has the meaning assigned in Section 3.1(c).
"SUBSIDIARY" AND "SIGNIFICANT SUBSIDIARY" have the meanings ascribed to
them in Rule 1-02 of SEC Regulation S-X.
"SUPERIOR PROPOSAL" has the meaning assigned in Section 5.3.
"SURVIVING CORPORATION" has the meaning assigned in Section 2.1.
"TAKEOVER LAWS" has the meaning assigned in Section 4.3(c).
"TAX OPINION" has the meaning assigned in Section 6.1(f).
"TAXES" means all federal, state, local and foreign taxes, levies or
other assessments imposed by any taxing authority, however denominated,
including, without limitation, all net income, gross income, gross receipts
sales, use, ad valorem, goods and services, capital, transfer, franchise,
profits, license, withholding, payroll, employment, employer health, excise,
estimated, severance, stamp, occupation, property or other taxes, and custom
duties, together with any interest and any penalties, additions to tax or
additional amounts imposed by any taxing authority.
"TAX RETURNS" means, collectively, all returns, declarations, reports,
estimates, information returns and statement required to be filed under federal,
state, local or any foreign tax laws.
"TERMINATION FEE" has the meaning assigned in Section 7.2.
SECTION 1.2 INTERPRETATION. When a reference is made in this Agreement
to Recitals, Sections, Annexes or Schedules, such reference shall be to a
Recital or Section of, or Annex or Schedule to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and are not part of this Agreement. Whenever the
words "include," "includes" or "including" are used in this Agreement, they
shall be deemed followed by the words "without limitation." No rule against the
draftsperson shall be applied in connection with the interpretation or
enforcement of this Agreement. Whenever this Agreement shall require a party to
take an action, such requirement shall be deemed to constitute an
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undertaking by such party to cause its Subsidiaries, and to use its reasonable
best efforts, to cause its Affiliates, to take appropriate action in connection
therewith.
ARTICLE 2
THE MERGER
SECTION 2.1 THE MERGER. Upon the terms and subject to the conditions
hereof, at the Effective Time and in accordance with the provisions of the MBCA,
the Company shall be merged with and into MergerCo, whereupon the separate
corporate existence of the Company shall cease, and MergerCo shall continue as
the surviving corporation (the "SURVIVING CORPORATION"). From and after the
Effective Time, the Surviving Corporation shall possess all the rights,
privileges, immunities, powers and franchises, of a public as well as a private
nature, of the Company and MergerCo and be subject to all the liabilities,
obligations and duties of the Company and MergerCo, all as more fully described
in the MBCA.
SECTION 2.2 CLOSING; EFFECTIVE TIME. Subject to the provisions of
Article 6, the closing of the Merger (the "CLOSING") shall take place in the
offices of Xxxxxx, Xxxxxxxx and Xxxxxx, P.A., 5500 Norwest Center, 00 Xxxxx
Xxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000, as soon as practicable but in no
event later than 10:00 a.m. Minneapolis time on the fourth business day after
the date on which each of the conditions set forth in Article 6 has been
satisfied or waived by the party or parties entitled to the benefit of such
conditions (the "Condition Date"), or at such other place, at such other time or
on such other date as MergerCo and the Company may mutually agree. The date on
which the Closing actually occurs is hereinafter referred to as the "CLOSING
DATE." At the Closing, MergerCo and the Company shall cause articles of merger
for the Merger (the "ARTICLES OF MERGER") to be executed and filed with the
Secretary of State of the State of Minnesota in the form required by and
executed in accordance with the applicable provisions of the MBCA. The Merger
shall become effective as of the date and time of such filings or such other
time after such filings as the parties hereto shall agree to in the Articles of
Merger (the "EFFECTIVE TIME").
SECTION 2.3 ARTICLES OF INCORPORATION. At the Effective Time, and
without any further action on the part of the Company or MergerCo, the articles
of incorporation of MergerCo shall be the articles of incorporation of the
Surviving Corporation and thereafter may be amended or repealed as provided by
law.
SECTION 2.4 BYLAWS. The bylaws of MergerCo, as in effect immediately
prior to the Effective Time, shall become, from and after the Effective Time,
the bylaws of the Surviving Corporation, until thereafter altered, amended or
repealed as provided therein or in the articles of incorporation of the
Surviving Corporation and in accordance with applicable law.
SECTION 2.5 DIRECTORS AND OFFICERS. The directors of MergerCo and
officers of the Company, respectively, immediately prior to the Effective Time
shall become, from and after the Effective Time, the directors and officers of
the Surviving Corporation, until their respective successors are duly elected or
appointed or their earlier resignation or removal.
SECTION 2.6 FURTHER ASSURANCES. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or MergerCo, any
deeds, bills of sale, assignments or assurances and to take
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and do, in the name and on behalf of the Company or MergerCo, any other actions
and things to vest, perfect or confirm of record or otherwise in the Surviving
Corporation any and all right, title and interest in, to and under any of the
rights, properties or assets acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger.
ARTICLE 3
CONVERSION OF SHARES; SHAREHOLDER APPROVAL
SECTION 3.1 EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue
of the Merger and without any action on the part of the holder of any shares of
Company Common Stock or any shares of capital stock of MergerCo:
(a) CAPITAL STOCK OF MERGERCO. Each share of common stock of MergerCo
issued and outstanding immediately prior to the Effective Time shall be
converted into and become one share of common stock of the Surviving
Corporation.
(b) TREASURY STOCK AND MERGERCO-OWNED STOCK. Each share of Company
Common Stock that is owned by the Company or any subsidiary of the Company and
each share of Company Common Stock that is owned by Acquiror, MergerCo or any
affiliate of Acquiror or MergerCo shall automatically be canceled and retired
and shall cease to exist, and no consideration shall be delivered in exchange
therefor.
(c) CONVERSION OF COMPANY COMMON STOCK. Except as otherwise provided
in Section 3.1(b) or 3.1(d), each issued and outstanding share of Company Common
Stock (each, a "SHARE") shall be canceled, extinguished and converted into and
become a right to receive (i) cash, without interest, in an amount equal to
$6.00 (the "CASH CONSIDERATION") and (ii) a number of shares of validly issued,
fully paid and nonassessable shares of Acquiror Common Stock (the "STOCK
CONSIDERATION" and together with the Cash Consideration, the "MERGER
CONSIDERATION") equal to (i) if the Average Daily Price is less than $9.00, a
quotient, the numerator of which is $4.50 and the denominator of which is the
Average Daily Price (such quotient to be rounded to the nearest ten thousandth);
(ii) if the Average Daily Price is equal to or less than $15.00 and equal to or
greater than $9.00, 0.5; or (iii) if the Average Daily Price is greater than
$15.00, a quotient, the numerator of which is $7.50 and the denominator of which
is the Average Daily Price (such quotient to be rounded to the nearest ten
thousandth) (in each case, subject to adjustment pursuant to Section 3.2, the
"EXCHANGE RATIO").
(d) DISSENTING SHARES. Notwithstanding anything in this Agreement to
the contrary, each share of Company Common Stock that is issued and outstanding
immediately prior to the Effective Time and that is held by a shareholder who
has properly demanded and perfected such shareholder's rights to dissent from
the Merger and to be paid the fair value of such shares in accordance with
Sections 302A.471 and 302A.473 of the MBCA (the "DISSENTING SHARES"), shall not
be converted into or exchangeable for the right to receive the Merger
Consideration, but the holder thereof shall be entitled to such rights as are
granted by the MBCA and the Surviving Corporation shall make all payments to the
holders of the shares of Company Common Stock with respect to such demands in
accordance with the MBCA; PROVIDED, HOWEVER, that if such holder shall have
failed to perfect or shall have lost the right to dissent and payment under the
MBCA, each share of Company Common Stock held by such holder shall thereupon be
deemed to have been converted into and to have
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become exchangeable for, as of the Effective Time, solely the right to receive
Merger Consideration. The Company shall give reasonably prompt notice to
MergerCo of any demands received by the Company for payment under Sections
302A.471 and 302A.473 of the MBCA, and MergerCo shall have the right to
participate in all negotiations and proceedings with respect to such demands.
The Company shall not, except with the prior written consent of MergerCo, make
any payment with respect to, or settle or offer to settle, such demands.
(e) CANCELLATION AND RETIREMENT OF COMMON STOCK. Each Share converted
into the right to receive the Merger Consideration pursuant to Section 3.1(c)
shall no longer be outstanding and shall automatically be canceled and retired
and shall cease to exist, and each holder of a certificate representing any such
Shares shall, to the extent such certificate represents such Shares, cease to
have any rights with respect thereto, except the right to receive the cash
applicable thereto, upon surrender of such certificate in accordance with
Section 3.4.
SECTION 3.2 ADJUSTMENT OF EXCHANGE RATIO. If, after the date of this
Agreement, but prior to the Effective Time, the shares of Acquiror Common Stock
issued and outstanding shall, through a reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split or other
similar change (regardless of the method of effectuation of any of the
foregoing, including by way of a merger or otherwise) in the capitalization of
the Acquiror, increase or decrease in number or be changed into or exchanged for
a different kind or number of securities, then an appropriate and proportionate
adjustment shall be made to the Exchange Ratio.
SECTION 3.3 TREATMENT OF OPTIONS, WARRANTS AND EMPLOYEE STOCK PURCHASE
PLAN. (a) Each option to purchase shares of Company Common Stock (each, a
"COMPANY STOCK OPTION") (and any rights thereunder) and each warrant to purchase
shares of Company Common Stock (and any rights thereunder) (each, a "COMPANY
WARRANT"), whether vested or unvested, outstanding immediately prior to the
Effective Time shall be cancelled immediately prior to the Effective Time in
exchange for the right to receive an amount in cash, without interest, equal to
the product of (i) the number of shares of Company Common Stock subject to such
Company Stock Option or Company Warrant immediately prior to the Effective Time
and (ii) the difference, if any, of (A) the sum of $6.00 plus the product of the
Daily Average Price and the Exchange Ratio (the "Option Consideration") minus
(B) the per share exercise price of such Company Stock Option or Company
Warrant, to be delivered by the Surviving Corporation immediately following the
Effective Time. All applicable withholding taxes attributable to the payments
made hereunder shall be deducted from the amounts payable under this Section
3.3.
(b) Prior to the Effective Time, the Company shall have taken all
actions necessary or appropriate in the judgment of MergerCo to ensure that all
stock options, stock appreciation right or other equity-based plans maintained
with respect to the Shares shall terminate as of the Effective Time and the
provisions in any other compensation or benefit plan providing for the issuance,
transfer or grant of any capital stock of the Company or any interest in respect
of any capital stock of the Company shall be terminated as of the Effective
Time, and the Company shall use its reasonable best efforts to ensure that
following the Effective Time neither the Company nor any of its subsidiaries is
or will be bound by any Company Stock Options which would entitle any person,
other than MergerCo or its affiliates, to beneficially own, or receive any
payments (other than as otherwise contemplated by Section 3.1 and this Section
3.3) in respect of, any capital stock of the Company or the Surviving
Corporation.
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(c) Prior to the Effective Time, the Company shall take all action
necessary to terminate the Company's 1992 Employee Stock Purchase Plan (as
amended and restated, the "ESPP"). As soon as practicable after the Effective
Time, the Surviving Corporation shall refund to participants in the ESPP amounts
credited to such participants' bookkeeping accounts thereunder.
SECTION 3.4 PAYMENT FOR COMMON STOCK (a) EXCHANGE AGENT. At or before
the Effective Time, Acquiror shall designate a bank or trust company reasonably
acceptable to the Company to act as Exchange Agent in connection with the Merger
(the "EXCHANGE AGENT") for the purpose of exchanging certificates representing
Shares for the Merger Consideration. On the Closing Date, Acquiror will make
available to the Exchange Agent the Merger Consideration to be paid and
delivered in respect of the Shares.
(b) EXCHANGE. Promptly after the Effective Time, the Surviving
Corporation shall cause the Exchange Agent to mail to each record holder, except
the holders of Dissenting Shares, as of the Effective Time, of any outstanding
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (the "CERTIFICATES"), a
form letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon proper
delivery of the Certificates to the Exchange Agent) and instructions for use in
effecting the surrender of the Certificates for payment therefor. In effecting
the payment and delivery of the Merger Consideration in respect of Shares
represented by Certificates entitled to the Merger Consideration pursuant to
Section 3.1 (the "EXCHANGED SHARES"), upon the surrender of each such
Certificate, the Exchange Agent shall pay the holder of such Certificate the
Cash Consideration multiplied by the number of Exchanged Shares and deliver
certificates for the number of whole shares of Acquiror Common Stock determined
by multiplying the Exchange Ratio by the number of Exchanged Shares, in
consideration therefor. Upon such payment and delivery, such Certificate so
surrendered shall forthwith be canceled. No interest will be paid or accrued on
the cash payable upon the surrender of the Certificates. If cash or Acquiror
Common Stock is to be remitted to a person other than that in which the
Certificate for Shares surrendered for exchange is registered, it shall be a
condition of such payment or delivery (a) that the Certificate so surrendered
shall be properly endorsed, with signature guaranteed or otherwise in proper
form for transfer and (b) the person requesting such exchange shall pay any
transfer or other taxes required by reason of the payment of cash to a person,
other than that of the registered holder of the Certificate surrendered, or
establish to the satisfaction of the Surviving Corporation that such tax has
been paid or is not applicable. Until surrendered in accordance with the
provisions of this Section 3.4, each Certificate (other than Certificates
representing Shares owned by the Company, any subsidiary of the Company or by
Acquiror or MergerCo or any affiliate of Acquiror or MergerCo and Certificates
representing Dissenting Shares), shall represent for all purposes only the right
to receive the Merger Consideration applicable thereto, without any interest
thereon, subject to any required withholding taxes. The stock transfer books of
the Company shall be closed immediately upon the Effective Time and there shall
be no further registration of transfers of shares of Company Common Stock
thereafter on the records of the Company. On or after the Effective Time, any
Certificates presented to the Exchange Agent or the Surviving Corporation for
any reasn shall be converted into the Merger Consideration with respect to the
shares of Company Common Stock formerly represented thereby.
(c) NO ISSUANCE OF FRACTIONAL SHARES. No certificates or scrip for
fractional shares of Acquiror Common Stock shall be issued, but in lieu thereof
each holder of Shares who would otherwise be entitled to receive certificates or
scrip for a fraction of a share of Acquiror Common Stock shall receive from
Acquiror, at such time as such holder shall receive a certificate representing
11
shares of Acquiror Common Stock, an amount of cash equal to the per share market
value of Acquiror Common Stock determined by multiplying (i) the closing price
of one share of Acquiror Common Stock as reported on the NASDAQ/NMS on the last
full trading day prior to the Closing Date by (ii) the fraction of a share of
Acquiror Common Stock to which such holder would otherwise be entitled.
(d) INVESTMENT OF EXCHANGE FUND. The Exchange Agent shall invest any
cash included in the Exchange Fund as directed by the Surviving Corporation on a
daily basis; provided, that no such investment or loss thereon shall affect the
amounts payable to Company shareholders pursuant to Article 3. Any interest and
other income resulting from such investments shall promptly be paid to the
Surviving Corporation.
(e) LOST CERTIFICATES. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such person of a bond in such
reasonable amount as the Surviving Corporation may direct as indemnity against
any claim that may be made against it with respect to such Certificate, the
Exchange Agent will deliver in exchange for such lost, stolen or destroyed
Certificate the applicable Merger Consideration with respect to the Shares
formerly represented thereby, pursuant to this Agreement.
(f) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends or
other distributions with respect to unexchanged Shares with a record date after
the Effective Time shall be paid to the holder of any unsurrendered Certificate
for Shares with respect to the unexchanged Shares represented thereby until the
surrender of such Certificate in accordance with Article 3.
(g) NO FURTHER OWNERSHIP RIGHTS IN SHARES EXCHANGED FOR CASH. The
Merger Consideration paid or delivered upon the surrender for exchange of
Certificates representing Shares in accordance with the terms of Article 3 shall
be deemed to have been paid in full satisfaction of all rights pertaining to the
Shares exchanged for the Merger Consideration theretofore represented by such
Certificates.
(h) TERMINATION OF EXCHANGE FUND. Any portion of the Merger
Consideration deposited with the Exchange Agent pursuant to this Section 3.4
(the "EXCHANGE FUND") which remains undistributed to the holders of the
Certificates representing Shares for six months after the Effective Time shall
be delivered to the Surviving Corporation, upon demand, and any holders of
Shares prior to the Merger who have not theretofore complied with Article 3
shall thereafter look only to the Surviving Corporation for payment and delivery
of the Merger Consideration, for unexchanged Shares to which such holders may be
entitled. Any portion of the Exchange Fund remaining unclaimed by holders of
Shares five years after the Effective Time (or such earlier date immediately
prior to the time as such amounts would escheat to or become property of any
Governmental Authority shall, to the extent permitted by law, become the
property of the Surviving Corporation, free and clear of any claims or interest
of any person previously entitled thereto.
(i) NO LIABILITY. None of Acquiror, MergerCo, the Surviving
Corporation or the Exchange Agent shall be liable to any person in respect of
any cash from the Exchange Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
12
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY, ACQUIROR AND MERGERCO
SECTION 4.1 DISCLOSURE SCHEDULES. On or prior to the date hereof, the
Company has delivered to the Acquiror, and the Acquiror has delivered to the
Company, a schedule (respectively, its "DISCLOSURE SCHEDULE") setting forth,
among other things, items the disclosure of which is necessary or appropriate
either (i) in response to an express informational requirement contained in or
requested by a provision hereof, or (ii) as an exception to one or more
representations or warranties contained in Section 4.3 or 4.4, respectively, or
to one or more of its covenants contained in Article 5; provided, that (a) no
such item is required to be set forth on the Disclosure Schedule as an exception
to a representation or warranty if its absence is not reasonably likely to
result in the related representation or warranty being deemed incorrect or
untrue under the standard established in Section 4.2 and (b) the mere inclusion
of an item in a Disclosure Schedule as an exception to a representation or
warranty or covenant shall not be deemed an admission by a party that such item
(or any undisclosed item or information of comparable or greater significance)
represents a Material exception or fact, event or circumstance with respect to
the Company, Acquiror or MergerCo, respectively. "PREVIOUSLY DISCLOSED" means
information set forth in a Disclosure Schedule, whether in response to an
express informational requirement or as an exception to one or more
representations or warranties or covenants, in each case, that is contained in a
correspondingly enumerated portion of such Disclosure Schedule. To the extent
information is Previously Disclosed pursuant to the foregoing, the corresponding
representation, warranty or covenant shall be deemed to be modified by such
Previously Disclosed information and references herein (including in Section
4.2) to such corresponding representation, warranty or covenant shall be deemed
to be references to such representation, warranty or covenant as so modified.
SECTION 4.2 STANDARD. No representation or warranty of the Company, on
the one hand, or the Acquiror and MergerCo, on the other, contained in Section
4.3 or 4.4 shall be deemed untrue or incorrect, and no party hereto shall be
deemed to have breached a representation or warranty, as a consequence of the
existence of any fact, event, or circumstance that is inconsistent with one or
more representations or warranties (with such representations and warranties
being read, for purposes of this Section 4.2, without regard to individual
references to "MATERIALITY" or "MATERIAL ADVERSE EFFECT" set forth therein),
unless such fact, event or circumstance (individually or taken together with all
other facts, events or circumstances that are inconsistent with any
representation or warranty contained in Section 4.3 or 4.4) would be Material
with respect to the Company or the Acquiror, as the case may be.
SECTION 4.3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as
Previously Disclosed in a paragraph of its Disclosure Schedule corresponding to
the relevant paragraph below, the Company hereby represents and warrants to the
Acquiror and MergerCo as follows:
(a) ORGANIZATION, STANDING AND AUTHORITY. The Company is a
corporation, duly organized, validly existing and in good standing under the
laws of the State of Minnesota, and is duly qualified to do business and is in
good standing in all jurisdictions where its ownership or leasing of property or
assets or the conduct of its business requires it to be so qualified.
13
(b) CORPORATE POWER. The Company and each of its Subsidiaries has the
corporate power and authority to carry on its business as it is now being
conducted and to own or lease all its properties and assets.
(c) CORPORATE AUTHORITY AND ACTION.
(1) The Company has the requisite corporate power and
authority, and has taken all corporate action necessary, in order to
authorize the execution and delivery of, and performance of its
obligations under, this Agreement and, subject only to receipt of the
requisite approval and adoption of this Agreement and the Merger by the
holders of a majority of the outstanding shares of Company Common Stock,
to consummate the transactions contemplated by this Agreement. This
Agreement is a valid and legally binding obligation of the Company,
enforceable in accordance with its terms.
(2) The Company has taken all action required to be taken by it
in order to exempt this Agreement from, the requirements of any
applicable "moratorium," "control share," "fair price" or other
antitakeover laws and regulations of the State of Minnesota
(collectively, "TAKEOVER LAWS").
(d) REGULATORY FILINGS; NO DEFAULTS.
(1) No consents or approvals of, or filings or registrations
with, any Governmental Authority, Self-Regulatory Organization or with
any third party are required to be made or obtained by the Company in
connection with the execution, delivery or performance by the Company of
this Agreement, or to consummate the Merger, except for (A) those
required under the HSR Act; (B) filings of applications or notices with
the CSE, the NASD and other Previously Disclosed securities licensing or
supervisory authorities, (C) the filing with the SEC of the
Prospectus/Proxy Statement and compliance with the Exchange Act; (D)
approval of the Company's shareholders as contemplated by Section 4.3(c);
(E) approval of the CSE and consents of national securities exchanges to
the transfer of ownership of seats or memberships; and (F) the filing of
Articles of Merger with the Secretary of State of the State of Minnesota
pursuant to the MBCA. As of the date hereof, the Company is not aware of
any reason why the approvals of all Governmental Authorities or
Self-Regulatory Organizations necessary to permit consummation of the
transactions contemplated by this Agreement will not be received.
(2) Subject only to the approval by the holders of a majority
of the outstanding shares of Company Common Stock, the receipt of the
regulatory approvals referred to in Section 4.3(d)(1), the expiration of
applicable waiting periods and the making of required filings under
federal and state securities laws, the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby do not and will not (A) constitute a breach or
violation of, or a default under, or give rise to any Lien, any
acceleration of remedies or any right of termination (with or without the
giving of notice, passage of time or both) under, any law, rule or
regulation or any judgment, decree, order, governmental or
nongovernmental permit or license, or Contract of the Company or of any
of its Subsidiaries or to which the Company or any of its Subsidiaries or
its or their properties is subject or bound, (B) constitute a breach or
violation of, or a default under, the Company Articles or the Company
Bylaws or similar governing documents of any of its Subsidiaries,
14
or (C) require any consent or approval under any such law, rule,
regulation, judgment, decree, order, governmental or nongovernmental
permit or license or Contract.
(e) COMPANY STOCK. The authorized capital stock of the Company
consists of (i) 7,500,000 shares of Company Common Stock, (ii) 1,000,000 shares
of preferred stock (the "COMPANY PREFERRED STOCK"), and (iii) 16,500,000 shares
of undesignated stock (the "COMPANY UNDESIGNATED STOCK"). As of May 30, 2000,
(a) 4,891,191 shares of Company Common Stock were issued and outstanding, (b) no
shares of Company Preferred Stock were issued and outstanding, (c) no shares of
Company Undesignated Stock were issued and outstanding, (d) 670,762 shares of
Company Common Stock were reserved for issuance under the Company's ESPP, (e)
625,357 shares of Company Common Stock were reserved for issuance under the
Company's 1990 and 1997 Stock Option Plans and (f) 325,000 shares of Company
Common Stock were reserved for issuance under Company Warrants. The outstanding
shares of Company Common Stock have been duly authorized and are validly issued
and outstanding, fully paid and nonassessable, and subject to no preemptive
rights (and were not issued in violation of any subscriptive or preemptive
rights). As of the date hereof, other than the Company Stock Options and the
Company Warrants, there are no shares of Company Common Stock authorized and
reserved for issuance, the Company does not have any Rights issued or
outstanding with respect to Company Stock, and the Company does not have any
commitment to authorize, issue or sell any Company Stock or Rights, except
pursuant to this Agreement. Section 4.3(e) of the Company Disclosure Schedule
sets forth a list of the holders of outstanding Company Stock Options and
Company Warrants, the date that each such Company Stock Option or Company
Warrant was granted, the number of shares of Company Common Stock subject to
each such Company Stock Option or Company Warrant, the expiration date of each
such Company Stock Option or Company Warrant and the price at which each such
Company Stock Option or Company Warrant may be exercised.
(f) SUBSIDIARIES. The Company has Previously Disclosed a list of all
its Subsidiaries, including the states in which such Subsidiaries are organized,
a brief description of such Subsidiaries' principal activities, and if any of
such Subsidiaries is not wholly owned by the Company or one of its Subsidiaries,
the percentage owned by the Company or any such Subsidiary and the names,
addresses and percentage ownership by any other person. No equity securities of
any of the Company's Subsidiaries are or may become required to be issued,
transferred or otherwise disposed of (other than to the Company or a wholly
owned Subsidiary of the Company) by reason of any Rights with respect thereto.
There are no Contracts by which any of the Company's Subsidiaries is or may be
bound to sell or otherwise issue any shares of its capital stock, and there are
no Contracts relating to the rights or obligations of the Company to vote or to
dispose of such shares. All of the shares of capital stock of each of the
Company's Subsidiaries are fully paid and nonassessable and subject to no
subscriptive or preemptive rights or Rights and, except as Previously Disclosed,
are owned by the Company or a Company Subsidiary free and clear of any Liens.
Each of the Company's Subsidiaries is duly organized, validly existing and in
good standing under the laws of the jurisdiction in which it is organized and is
duly qualified to do business and in good standing in each jurisdiction where
its ownership or leasing of property or the conduct of its business requires it
to be so qualified.
(g) SEC DOCUMENTS, FINANCIAL STATEMENTS.
(1) The Company has provided or made available to the Acquiror
copies of each registration statement, offering circular, report,
definitive proxy statement or information statement filed by the Company
with the SEC or circulated by the Company from December
15
31, 1996 through the date of this Agreement and will promptly provide
each such registration statement, offering circular, report, definitive
proxy statement or information statement filed or circulated after the
date hereof (collectively, the "COMPANY SEC DOCUMENTS"), each in the form
(including exhibits and any amendments thereto) filed with the SEC (or,
if not so filed, in the form used or circulated). As of their respective
dates (and without giving effect to any amendments or modifications filed
after the date of this Agreement), each of the SEC Documents, including
the financial statements, exhibits and schedules thereto, filed or
circulated prior to the date hereof complied (and each of the SEC
Documents filed after the date of this Agreement will comply) as to form
with applicable Securities Laws and did not (or in the case of reports,
statements, or circulars filed after the date of this Agreement, will
not) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements made therein, in the light of the circumstances under which
they were made, not misleading.
(2) Each of the Company's consolidated statements of financial
condition or balance sheets included in or incorporated by reference into
the SEC Documents, including the related notes and schedules, fairly
presented (or, in the case of SEC Documents filed after the date of this
Agreement, will fairly present) the consolidated financial condition of
the Company and its Subsidiaries as of the date of such statement of
financial condition or balance sheet and each of the consolidated
statements of income, cash flows and changes in shareholders' equity
included in or incorporated by reference into the SEC Documents,
including any related notes and schedules (collectively, the foregoing
financial statements and related notes and schedules are referred to as
the "COMPANY FINANCIAL STATEMENTS"), fairly presented (or, in the case of
SEC Documents filed after the date of this Agreement, will fairly
present) the consolidated results of operations, cash flows and
shareholders' equity, as the case may be, of the Company and its
Subsidiaries for the periods set forth therein (subject, in the case of
unaudited statements, to normal year-end audit adjustments), in each case
in accordance with generally accepted accounting principles consistently
applied during the periods involved (except as may be noted therein and
except that such unaudited statements include no notes).
(3) Except as disclosed in the Financial Statements or the
Company SEC Documents filed prior to the date of this Agreement, none of
the Company or any of its Subsidiaries has any liability or obligation
(contingent or otherwise) that, individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect on the Company.
(4) The Company has delivered or made available to the Acquiror
true and complete copies of the FOCUS Reports filed on Form X-17A-5 (the
"COMPANY FOCUS REPORTS") for the quarters ended March 31, 1999, June 30,
1999, September 30, 1999, December 31, 1999 and March 31, 2000 by each
Subsidiary of the Company that is a "broker" or "dealer", as such terms
are defined in Sections 2(a)(4) and 2(a)(5) of the Exchange Act
(collectively, the "COMPANY BROKER-DEALER SUBSIDIARIES"). Each Company
FOCUS Report complied (and with respect to Company FOCUS Reports filed
after the date hereof, will comply) at the date thereof with the rules
and regulations of the SEC relating thereto and fairly presented (or will
present, as the case may be) the information required to be presented
therein pursuant to Rule 17a-5 under the Exchange Act.
16
(h) ABSENCE OF CERTAIN CHANGES. Since December 31, 1999, the business
of the Company and its Subsidiaries has been conducted in the ordinary and usual
course, consistent with past practice, and there has not been:
(1) any event, occurrence, development or state of
circumstances or facts which has had or is reasonably likely to have a
Material Adverse Effect on the Company;
(2) any amendment of any term of any outstanding security of
the Company or any of its Subsidiaries or to the Company or any of its
Subsidiaries' articles of incorporation or bylaws (or similar governing
documents);
(3) any (A) incurrence, assumption or guarantee by the Company
or any of its Subsidiaries of any indebtedness for borrowed money, or (B)
assumption, guarantee, endorsement or otherwise by the Company of any
obligations of any other person, in each case, other than in the ordinary
and usual course of business, consistent with past practice, and in
amounts and on terms consistent with past practices;
(4) any creation or assumption by the Company or any of its
Subsidiaries of any Lien on any material asset other than in the ordinary
and usual course of business consistent with past practices;
(5) prior to or on the date hereof, any making of any loan in
excess of $100,000, or aggregate loans in excess of $250,000, advance or
capital contributions to or investment in any person, in each case, other
than in the ordinary and usual course of business consistent with past
practice;
(6) any change in any accounting policies or practices by the
Company or any of its Subsidiaries; or
(7) any (A) employment, deferred compensation, severance,
retirement or other similar agreement entered into with any director,
officer, consultant, partner or employee of the Company or any of its
Subsidiaries (or any amendment to any such existing agreement), (B) grant
of any severance or termination pay to any director, officer, consultant,
partner or employee of the Company or any of its Subsidiaries, or (C)
change in compensation or other benefits payable to any director,
officer, consultant, partner or employee of the Company or any of its
Subsidiaries, except, in each case, in the ordinary course of business or
as required by Contract or applicable law with respect to employees of
the Company or any of its Subsidiaries.
(i) CONTRACTS.
(1) The Company has Previously Disclosed each of the following
executory Contracts to which either the Company or any of its
Subsidiaries is a party, or by which any of them is bound or to which any
of their properties is subject:
(A) any lease of real property;
(B) any partnership, joint venture or other similar
agreement or arrangement, or any options or rights to acquire from
any person any capital stock,
17
voting securities or securities convertible into or exchangeable
for capital stock or voting securities or such person, in each
case, entered into other than in the ordinary course of business;
(C) any agreement relating to the acquisition or
disposition of any business (whether by merger, sale of stock,
sale of assets or otherwise);
(D) any indenture, mortgage, promissory note, loan
agreement, guarantee or other agreement or commitment, outstanding
as of the date hereof, for the borrowing of money by the Company
or one of its Subsidiaries or the deferred purchase price of
property in excess of $100,000 (in either case, whether incurred,
assumed, guaranteed or secured by any asset);
(E) any agreement in force as of the date hereof that
creates future payment obligations in excess of $100,000 in the
aggregate and which by its terms does not terminate or is not
terminable without penalty upon notice of 90 days or less;
(F) any license, franchise or similar agreement material
to the Company or any of its Subsidiaries or any agreement
relating to any trade name or intellectual property right that is
material to the Company or any of its Subsidiaries;
(G) any exclusive dealing agreement or any agreement
that limits the freedom of the Company or any of its Subsidiaries
to compete in any line of business or with any person or in any
area or that would so limit their freedom after the Effective
Date;
(H) any compensation, employment, severance,
supplemental retirement or other similar agreement or arrangement
with any employee or former employee of, or independent contractor
with respect to, the Company or any of its Subsidiaries, or any
other agreement with any current or former Affiliate of the
Company; and
(I) any other Contract that is a "material contract" as
defined in Item 601(b)(10) of SEC Regulation S-K and that has not
been filed prior to the date hereof as an exhibit to the Company's
SEC Documents.
(2) Each Contract that has been, or is required to be,
Previously Disclosed pursuant to this Section is a valid and binding
agreement of the Company or one or more of its Subsidiaries, as the case
may be, and is in full force and effect, and the Company or its
Subsidiaries parties thereto are not in default or breach in any material
respect under the terms of any such Contract.
(j) CONTRACTS WITH CLIENTS. Each of the Company and its Subsidiaries
is in compliance with the terms of each Contract with any Client, and
each such Contract is in full force and effect with respect to the
applicable Client. There are no disputes pending or threatened with any
Client under the terms of any such Contract or with any former Client.
18
(k) REGISTRATION MATTERS.
(1) Each of the Company's Subsidiaries required to be
registered as a broker-dealer or investment advisor with the SEC, the
securities commission or similar authority of any state or any
Self-Regulatory Organization are duly registered and such registrations
are in full force and effect. Each Company Broker-Dealer Subsidiary is,
and at the Effective Time will be, a member in good standing with all
required Self-Regulatory Organizations and in compliance with all
applicable rules and regulations of the Self-Regulatory Organizations.
(2) The Company has delivered or made available to the
Acquiror, true, correct and complete copies of (A) each Company
Broker-Dealer Subsidiary's Uniform Application for Broker-Dealer
Registration on Form BD (each, "COMPANY FORM BD") and (B) each Uniform
Application for Investment Adviser Registration filed by the Company or
any Subsidiary (each, a "COMPANY FORM ADV", and together with Company
Form BD, "COMPANY FORMS"), all of the Company Forms reflecting all
amendments thereto filed with the NASD or the SEC, as the case may be, on
or prior to the date hereof. The Company Forms are in compliance with
the applicable requirements of the Exchange Act or the Investment
Advisers Act, as the case may be and do not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company
has provided or made available true and complete copies of all audit
reports since December 31, 1996 by the SEC or the NASD regarding the
Company or its Subsidiaries. Each director, officer, agent and employee
of each Company Broker-Dealer Subsidiary who is required to be registered
as a representative, principal or agent with the securities commission of
any state or with any Self Regulating Organization is duly registered as
such and such registration is in full force and effect. Each registered
representative and principal of each Company Broker-Dealer Subsidiary has
at least the minimum series license for the activities which such
registered representative or principal performs for such Company
Broker-Dealer Subsidiary.
(3) The net capital, as such term is defined in Rule 15c3-1
under the Exchange Act, of each Company Broker-Dealer Subsidiary
satisfies the minimum net capital requirements of the Exchange Act and of
the laws of any jurisdiction in which the Company Broker-Dealer
Subsidiary conducts business, and has been sufficient to permit each
Company Broker-Dealer Subsidiary to operate without restriction on its
ability to expand its business under NASD Conduct Rule 3130.
(4) None of the Company Broker-Dealer Subsidiaries nor any
"associated person" thereof (a) is subject to a "statutory
disqualification" as such terms are defined in the Exchange Act, (b) is
ineligible to serve as a broker-dealer or as an associated person to a
registered broker-dealer or (c) is subject to a disqualification that
would be a basis for censure, limitations on the activities, functions or
operations of, or suspension or revocation of the registration of any
Company Broker-Dealer Subsidiary as broker-dealer, municipal securities
dealer, government securities broker or government securities dealer
under Section 15, Section 15B or Section 15C of the Exchange Act and
there is no reasonable basis for, or proceeding or investigation, whether
formal or informal, or whether preliminary or otherwise, that is
reasonably likely to result in, any such censure, limitations, suspension
or revocation.
19
(5) Except for Xxxx X. Xxxxxxx and Company, Incorporated and as
Previously Disclosed, neither the Company nor its Subsidiaries is or is
required to be registered as an investment company, investment adviser,
commodity trading advisor, commodity pool operator, futures commission
merchant, introducing broker, insurance agent, or transfer agent under
any United States federal, state, local or foreign statutes, laws, rules
or regulations. No Company Broker-Dealer Subsidiary acts as the
"sponsor" of a "broker-dealer trading program", as such terms are defined
in Rule 17a-23 under the Exchange Act.
(6) Neither the Company, its Subsidiaries nor any "associated
person" (as defined in the Investment Advisers Act) thereof, as
applicable, is ineligible pursuant to Section 203 of the Investment
Advisers Act to serve as an investment adviser or as an associated person
to a registered investment adviser. Neither the Company nor its
Subsidiaries provides investment advisory, subadvisory or management
services to or through (i) any issuer or other Person that is an
investment company (within the meaning of the Investment Company Act),
(ii) any issuer or other Person that would be an investment company
(within the meaning of the Investment Company Act) but for the exemptions
contained in Section 3(c)(1), Section 3(c)(7), the final clause of
Section 3(c)(3) or the third or fourth clauses of Section 3(c)(11) of the
Investment Company Act, or (iii) any issuer or other Person that is or is
required to be registered under the laws of the appropriate securities
regulatory authority in the jurisdiction in which the issuer is domiciled
(other than the United States or the states thereof), which is or holds
itself out as engaged primarily in the business of investing, reinvesting
or trading in securities.
(7) Each account to which the Company provides investment
management, advisory or subadvisory services that is (i) an employee
benefit plan, as defined in Section 3(3) of ERISA, that is subject to
Title I of ERISA; (ii) a Person acting on behalf of such a plan; or (iii)
any entity whose underlying assets are deemed, under 29 C.F.R. Section
2510.3-101, to include the assets of such a plan by reason of such plan's
investment in such entity (each, a "COMPANY ERISA CLIENT") has been
managed or provided brokerage services by the Company or a Subsidiary
thereof, as applicable, such that the Company or such Subsidiary in the
exercise of such management or in the provision of such services is in
compliance in all material respects with the applicable requirements of
ERISA.
(l) COMPLIANCE WITH LAWS. Each of the Company and its Subsidiaries,
and, to the best of the Company's knowledge, each of their respective officers
and employees:
(1) is in compliance with all applicable federal, state, local
and foreign statutes, laws, regulations, ordinances, rules, judgments,
orders or decrees applicable to the conduct of its businesses or to the
employees conducting such businesses, and the rules of all
Self-Regulatory Organizations applicable thereto;
(2) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations
with, all Governmental Authorities and Self-Regulatory Organizations that
are required in order to permit them to own or lease their properties and
to conduct their businesses as presently conducted; all such permits,
licenses, certificates of authority, orders and approvals are in full
force and effect and are current and, to the best of the Company's
knowledge, no suspension or cancellation of any of them is threatened or
is reasonably likely and all such filings, applications and registrations
are current;
20
(3) has received, since January 1, 1998, no written
notification or communication (or, to the best knowledge of the Company,
any other communication) from any Governmental Authority or
Self-Regulatory Organization (A) asserting non-compliance with any of the
statutes, regulations, rules or ordinances that such Governmental
Authority or Self-Regulatory Organization enforces, (B) threatening any
material penalty or to revoke any license, franchise, seat on any
exchange, permit, or governmental authorization, (C) requiring any of
them (including any of the Company's or its Subsidiary's directors or
controlling persons) to enter into a cease and desist order, agreement,
or memorandum of understanding (or requiring the board of directors
thereof to adopt any resolution or policy), or (D) restricting or
disqualifying their activities (except for restrictions imposed by rule,
regulation or administrative policy on brokers or dealers generally);
(4) is not aware of any pending or threatened investigation,
review or disciplinary proceedings by any Governmental Authority or
Self-Regulatory Organization against the Company, any of its Subsidiaries
or any officer, director or employee thereof;
(5) in the conduct of its business with respect to employee
benefit plans subject to Title I of ERISA, has not (A) breached any
applicable fiduciary duty under Part 4 of Title I of ERISA which would
subject it to liability under Sections 405 or 409 of ERISA and (B)
engaged in a "prohibited transaction" within the meaning of Section 406
of ERISA or Section 4975(c) of the Code which would subject it to
liability or Taxes under Sections 409 or 502(i) of ERISA or Section
4975(a) of the Code;
(6) The Company has made available to the Acquiror true and
correct copies of (A) each Form G-37/G-38 filed with the MSRB since
January 1, 1998 and (B) all records required to be kept by the Company
under Rule G-8(a)(xvi) of the MSRB. Since January 1, 1998, other than as
disclosed in such Forms G-37/G-38 made available to the Acquiror, there
have been no contributions or payments, and there is no other
information, that would be required to be disclosed by the Company or any
of the Company's Subsidiaries;
(7) is not subject to any cease-and-desist or other order
issued by, or a party to any written agreement, consent agreement or
memorandum of understanding with, or a party to any commitment letter or
similar undertaking to, or subject to any order or directive by, a
recipient of any supervisory letter from or has adopted any board
resolutions at the request of, any Governmental Authority or
Self-Regulatory Organization, or been advised since January 1, 1998, by
any Governmental Authority or Self-Regulatory Organization that it is
considering issuing or requesting any such agreement or other action or
has knowledge of any pending or threatened regulatory investigation; and
(8) since January 1, 1998, has timely filed all reports,
registrations and statements, together with any amendments required to be
made with respect thereto, that were required to be filed under any
applicable law, regulation or rule, with (A) any applicable Governmental
Authority and (B) any Self-Regulatory Organization (collectively, the
"COMPANY REPORTS"). As of their respective dates, the Company Reports
complied with the applicable statutes, rules, regulations and orders
enforced or promulgated by the regulatory authority with which they were
filed.
21
(m) PROPERTIES; SECURITIES.
(1) Except as may be reflected in the Company's Financial
Statements dated before the date hereof, the Company and its Subsidiaries
have good and marketable title, free and clear of all Liens (other than
Liens for current taxes not yet delinquent) to all of the Material
properties and assets, tangible or intangible, reflected in such
financial statements as being owned by the Company and its Subsidiaries
as of the dates thereof. To the best of the Company's knowledge, all
buildings and all the Material fixtures, equipment, and other property
and assets held under leases or subleases by any of the Company and its
Subsidiaries are held under valid leases or subleases, enforceable in
accordance with their respective terms (except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other laws affecting creditors' rights generally and to general equity
principles). The Company has Previously Disclosed a list of any and all
real estate owned or leased by it or a Company Subsidiary as of the date
hereof. Each of the Company and its Subsidiaries has good and marketable
title to all securities held by it (except securities sold under
repurchase agreements or held in any fiduciary or agency capacity), free
and clear of any Lien, except to the extent such securities are pledged
in the ordinary course of business consistent with prudent business
practices to secure obligations of each of the Company or any of its
Subsidiaries. Such securities are valued on the books of the Company or
its Subsidiaries in accordance with generally accepted accounting
principles.
(2) Except as Previously Disclosed, neither the Company nor any
Subsidiary thereof holds any equity securities for its own account
involving, in the aggregate, ownership or control of 5% or more of any
class of an issuer's voting securities or 25% or more of the issuer's
equity (treating subordinated debt as equity). Except as Previously
Disclosed, there are no partnerships, limited liability companies, joint
ventures or similar entities, in which the Company or any of its
Subsidiaries is a general partner, manager, managing member or holds some
other similar position or owns or controls any interest, directly or
indirectly, of 5% or more and the nature and amount of each such
interest.
(n) TAXES.
(1) The Company and its Subsidiaries have filed, completely and
correctly in all material respects, all Tax Returns that are required by
applicable law to be filed by the Company or its Subsidiaries;
(2) All Taxes shown to be due on such Tax Returns have been
paid in full;
(3) All Taxes due with respect to completed examinations have
been paid in full;
(4) No currently effective waivers of statutes of limitations
(excluding such statues that relate to years currently under examination
by the IRS) have been given by or requested with respect to any Taxes of
the Company or any of its Subsidiaries;
(5) Each of the Company and its Subsidiaries has duly paid or
made provision for the payment of all Taxes that have been incurred or
are due or claimed to be due from it by federal, state, foreign or local
taxing authorities other than Taxes that are not yet delinquent or are
being contested in good faith and have not been finally determined;
22
(6) The federal and state income Tax Returns of the Company and
its Subsidiaries have been examined by the IRS or the relevant state
taxing authorities, as the case may be, through December 31, 1996. The
federal income tax returns of the Company and its Subsidiaries for the
fiscal year ended December 31, 1995 and for all fiscal years prior
thereto are, for purposes of routine audit by the IRS, closed because of
the statute of limitations, and no claims for additional taxes for such
fiscal years are pending. Except as Previously Disclosed, there are no
audits by, or disputes pending between the Company or any of its
Subsidiaries and, any taxing authority of which the Company or any of its
Subsidiaries has received written notice, or claims asserted in writing
by any taxing authority for, Taxes or assessments upon the Company or any
of its Subsidiaries. In addition, (A) proper and accurate amounts have
been withheld by the Company and its Subsidiaries from their employees
for all prior periods in compliance with the Tax withholding provisions
of applicable federal, state and local laws, (B) federal, state and local
Tax Returns that are complete and accurate have been filed by the Company
and its Subsidiaries for all periods for which Tax Returns were due with
respect to income Tax withholding, Social Security and unemployment
Taxes, (C) the amounts shown on such federal, state or local Tax Returns
to be due and payable have been paid in full and (D) there are no Tax
liens upon any property or assets of the Company or its Subsidiaries
except liens for current Taxes not yet due;
(7) Neither the Company nor any of its Subsidiaries has been
required to include in income any adjustment pursuant to Section 481 of
the Code by reason of a voluntary change in accounting method initiated
by the Company or any of its Subsidiaries, and the IRS has not initiated
or proposed any such adjustment or change in accounting method; and
(8) Neither the Company nor any of its Subsidiaries is a party
to or is bound by any Tax sharing, allocation or indemnification
agreement or arrangement. Neither the Company nor any of its
Subsidiaries has any liability for the Taxes of any person (other than
the Company and its Subsidiaries) under Treasury Regulation Section
1.1502-6 (or any similar provision of state, local or foreign law), as
successor or transferee, by contract or otherwise.
(o) LITIGATION. Company has furnished Acquiror copies of (i) all
attorney responses to the request of the independent auditors for Company with
respect to loss contingencies as of the end of its fiscal year most recently
completed as of the date hereof in connection with the Company's financial
statements included in the Company's most recent annual report on Form 10-K as
filed with the SEC, and (ii) a written list of all Material legal litigation,
proceedings, investigations or controversy ("LITIGATION") before any court,
arbitrator, mediator, Governmental Authority or Self-Regulatory Organization to
which the Company or any Company Subsidiary has been a party since the end of
such fiscal year ("LITIGATION LIST"). Except as disclosed in the Litigation
List, no Litigation before any court, arbitrator, mediator, Governmental
Authority or Self-Regulatory Organization that has been or would reasonably be
expected to be Material to the Company and its Subsidiaries taken as a whole is
pending against the Company or any of its Subsidiaries, and, to the best of the
Company's knowledge, no such Litigation has been threatened.
(p) EMPLOYEES; LABOR MATTERS.
(1) Each of the Company and its Subsidiaries is in compliance
with all currently applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours,
including the Immigration Reform and Control Act, the
23
Worker Adjustment and Retraining Notification Act, any such laws
respecting employment discrimination, harassment, disability rights or
benefits, equal opportunity, plant closure issues, affirmative action,
workers' compensation, employee benefits, severance payments, labor
relations, employee leave issues, wage and hour standards, occupational
safety and health requirements and unemployment insurance and related
matters. None of the Company or any of its Subsidiaries are engaged in
any unfair labor practice and there is no unfair labor practice complaint
pending or threatened against the Company or any of its Subsidiaries
before the National Labor Relations Board. There are no charges or
complaints against the Company or any of its Subsidiaries pending of
threatened in writing alleging sexual or other harassment, or other
discrimination, by the Company, any of its Subsidiaries or by any of
their employees, agents or representatives.
(2) Neither the Company nor any of its Subsidiaries is a party
to, or is bound by, any collective bargaining agreement, Contract or
other agreement or understanding with any labor union or organization,
nor has it agreed to recognize any union or other collective bargaining
unit, nor has any union or other collective bargaining unit been
certified, or is seeking certification, as representing any of the
employees of any of the Companies or their Subsidiaries.
(q) EMPLOYEE BENEFIT PLANS.
(1) The Company has Previously Disclosed a complete list of
each employee or director benefit plan, arrangement or agreement, whether
or not written, including without limitation any employee welfare benefit
plan within the meaning of Section 3(1) of ERISA, any employee pension
benefit plan within the meaning of Section 3(2) of ERISA (whether or not
such plan is subject to ERISA) and any bonus, incentive, deferred
compensation, vacation, stock purchase, stock option, severance,
employment, change of control or fringe benefit plan, program or
agreement that is sponsored, maintained or contributed to by the Company
or any of its Subsidiaries for the benefit of current or former employees
or directors or their beneficiaries (the "COMPANY BENEFIT PLANS").
(2) The Company has heretofore made available to Acquiror (A)
true and complete copies of each of the Company Benefit Plans (or written
explanations of any unwritten Company Benefit Plans) as in effect on the
date hereof; (B) the three most recent Annual Reports (Form 5500 Series)
and accompanying schedules, if any; and (C) the most recent determination
letter from the IRS (if applicable) for such Company Benefit Plan.
(3) With respect to each Company Benefit Plan, the Company and
its Subsidiaries have complied, and are now in compliance, in all
material respects with all provisions of ERISA, the Code and all laws and
regulations applicable to such Company Benefit Plans and each Company
Benefit Plan has been administered in all material respects in accordance
with its terms. The Internal Revenue Service has issued a favorable
determination letter with respect to each Company Benefit Plan that is
intended to be a "qualified plan" within the meaning of Section 401(a) of
the Code and the related trust that has not been revoked, and, to the
knowledge of the Company, no circumstances exist and no events have
occurred that could reasonably be expected to adversely affect the
qualified status of any such plan or the related trust (except for
changes in applicable law for which the remedial amendment period has not
yet expired). No Company Benefit Plan is intended to meet the
requirements of Code Section 501(c)(9).
24
(4) All contributions required to be made to any Company
Benefit Plan by applicable law or regulation or by any plan document or
other contractual undertaking, and all premiums due or payable with
respect to insurance policies funding any Plan, for any period through
the date hereof have been timely made or paid in full or, to the extent
not required to be made or paid on or before the date hereof, have been
fully reflected on the Company Financial Statements. Each Company
Benefit Plan, if any, that is an employee welfare benefit plan under
Section 3(1) of ERISA is either (A) funded through an insurance company
contract and is not a "welfare benefit fund" with the meaning of Section
419 of the Code or (B) unfunded.
(5) There is no pending or, to the knowledge of the Company,
threatened litigation relating to the Company Benefit Plans. Neither the
Company nor any of its Subsidiaries has engaged in a transaction with
respect to any Company Benefit Plan that would subject the Company or any
of its Subsidiaries to a Material tax or penalty imposed by either
Section 4975 of the Code or Section 502(i) of ERISA.
(6) No Company Benefit Plan is subject to Title IV or Section
302 of ERISA or Section 412 or 4971 of the Code, and neither the Company
nor any of its Subsidiaries has contributed or been obligated to
contribute to a "multiemployer plan" (as defined in Section 3(37) of
ERISA) or a plan that has two or more contributing, but unrelated,
sponsors and that is subject to Title IV of ERISA at any time on or after
December 31, 1994. No liability under Subtitle C or D of Title IV of
ERISA has been or is reasonably expected to be incurred by the Company or
any of its Subsidiaries with respect to any ongoing, frozen or terminated
"single-employer plan," within the meaning of Section 4001 of ERISA,
currently or formerly maintained by any of them, or the single-employer
plan of any entity which is considered one employer with the Company
under Section 4001 of ERISA or Section 414 of the Code (a "COMPANY ERISA
AFFILIATE"). No notice of a "reportable event," within the meaning of
Section 4043 of ERISA, for which the 30-day reporting requirement has not
been waived has been required to be filed for any Company Benefit Plan
or, to the knowledge of the Company, by any Company ERISA Affiliate.
Neither the Company nor any of its Subsidiaries or Company ERISA
Affiliates has provided, or is required to provide, security to any
Company Benefit Plan or any single-employer plan of a Company ERISA
Affiliate.
(7) Neither the Company nor any of its Subsidiaries has any
obligation for retiree health, life or other welfare benefits, except for
benefits and coverage required by applicable law, including, without
limitation, Section 4980B of the Code and Part 6 of Title I of ERISA.
There are no restrictions on the rights of the Company or any of its
Subsidiaries to amend or terminate any such plan (other than reasonable
and customary advance notice requirements) without incurring any Material
liability thereunder.
(8) Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby (either standing
alone or in conjunction with any other event) will (A) result in any
payment (including severance, unemployment compensation, "excess
parachute" (within the meaning of 280G of the Code), forgiveness of
indebtedness or otherwise) becoming due to any director or any employee
of the Company or any of its Subsidiaries under any Company Benefit Plan,
(B) increase any benefits otherwise payable under any Company Benefit
Plan, (C) result in any acceleration of the time of
25
payment or vesting of any such benefit or (D) affect in any way the
ability to amend, terminate, merge or administer any Company Benefit
Plan.
(r) ENVIRONMENTAL MATTERS. The Company and its Subsidiaries have
complied at all times with applicable Environmental Laws; no property (including
buildings and any other structures) currently or formerly owned or operated (or
which the Company or any of its Subsidiaries would be deemed to have owned or
operated under any Environmental Law) by the Company or any of its Subsidiaries
or in which the Company or any of its Subsidiaries (whether as fiduciary or
otherwise) has a Lien, has been contaminated with, or has had any release of,
any Hazardous Substance in such form or substance so as to create any liability
for the Company or its Subsidiaries; the Company is not subject to liability for
any Hazardous Substance disposal or contamination on any other third-party
property; within the last six years, the Company and its Subsidiaries have not
received any notice, demand letter, claim or request for information alleging
any violation of, or liability of the Company under, any Environmental Law; the
Company and its Subsidiaries are not subject to any order, decree, injunction or
other agreement with any Governmental Authority or any third party relating to
any Environmental Law; the Company and its Subsidiaries are not aware of any
reasonably likely liability relating to environmental circumstances or
conditions (including the presence of asbestos, underground storage tanks, lead
products or polychlorinated biphenyls) involving the Company or one of its
Subsidiaries, any currently or formerly owned or operated property (whether as
fiduciary or otherwise), or any reasonably likely liability related to any Lien
held by the Company or one of its Subsidiaries; and the Company has made
available to the Acquiror copies of all environmental reports, studies, sampling
data, correspondence, filings and other environmental information in its
possession or reasonably available to it relating to the Company or one of its
Subsidiaries or any currently or formerly owned or operated property or any
property in which the Company or one of its Subsidiaries (whether as fiduciary
or otherwise) has held a Lien.
(s) INTERNAL CONTROLS. The Company and its Subsidiaries have devised
and maintained a system of internal accounting controls sufficient to provide
reasonable assurances that (1) transactions are executed in accordance with
management's general or specific authorizations, (2) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principals and to maintain accountability for
assets, (3) access to assets is permitted only in accordance with management's
general or specific authorization, and (4) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(t) DERIVATIVES; ETC. All exchange-traded, over-the-counter or other
swaps, caps, floors, collars, option agreements, futures and forward contracts
and other similar arrangements or Contracts, whether entered into for the
Company's own account, or for the account of one or more of the Company's
Subsidiaries or their customers, were entered into (1) in accordance with
prudent business practices and all applicable laws, rules, regulations and
regulatory policies and (2) with counter parties reasonably believed to be
financially responsible at the time; and each of them constitutes the valid and
legally binding obligation of the Company or one of its Subsidiaries,
enforceable in accordance with its terms (except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar laws of general applicability relating to or
affecting creditors' rights or by general equity principles), and are in full
force and effect. Neither the Company nor its Subsidiaries, nor, to the best of
the Company's knowledge, any other party thereto, is in breach of any of its
obligations under any such agreement or arrangement. The Company's SEC
Documents disclose the value of such agreements and
26
arrangements on a xxxx-to-market basis in accordance with generally accepted
accounting principles and, since December 31, 1999, there has not been a
material change in such value.
(u) NAMES AND TRADEMARKS. The Company and its Subsidiaries have the
right to use the names, service-marks, trademarks and other intellectual
property currently used by them in the conduct of their businesses; each of such
names, service-marks, trademarks and other intellectual property has been
Previously Disclosed; and, in the case of such names, service-marks and
trademarks, in each state of the United States, such right of use is free and
clear of any Liens, and no other person has the right to use such names,
service-marks or trade marks in any such state.
(v) INSURANCE. The Company has Previously Disclosed all of the
insurance policies, binders, or bonds maintained by the Company or its
Subsidiaries ("COMPANY INSURANCE POLICIES"). The Company and its Subsidiaries
are insured with reputable insurers against such risks and in such amounts as
the management of the Company reasonably has determined to be prudent in
accordance with industry practices. All of the Company Insurance Policies are
in full force and effect; the Company and its Subsidiaries are not in material
default thereunder; and all claims thereunder have been filed in due and timely
fashion.
(w) NO BROKERS. No action has been taken by the Company that would
give rise to any valid claim against any party hereto for a brokerage
commission, finder's fee or other like payment with respect to the transactions
contemplated by this Agreement, excluding the fees to be paid by the Company to
U.S. Bancorp Xxxxx Xxxxxxx in amounts and on terms Previously Disclosed.
(x) TAX TREATMENT. As of the date hereof, the Company has no reason
to believe that the Merger will not qualify as a "reorganization" within the
meaning of Section 368(a) of the Code.
SECTION 4.4 REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR AND
MERGERCO. Except as Previously Disclosed in a paragraph of its Disclosure
Schedule corresponding to the relevant paragraph below, each of the Acquiror and
MergerCo, as the case maybe, hereby represents and warrants to the Company as
follows:
(a) ORGANIZATION, STANDING AND AUTHORITY. Each of the Acquiror and
MergerCo is a corporation duly organized, validly existing and in good standing
under the laws of the State of Minnesota (in the case of the Acquiror) or the
State of Minnesota (in the case of MergerCo), and is duly qualified to do
business and is in good standing in all jurisdictions where its ownership or
leasing of property or assets or the conduct of its business requires it to be
so qualified.
(b) CORPORATE POWER. The Acquiror and each of its Subsidiaries has
the corporate power and authority to carry on its business as it is now being
conducted and to own all its properties and assets.
(c) CORPORATE AUTHORITY. Each of the Acquiror and MergerCo has the
requisite corporate power and authority, and has taken all corporate action
necessary, in order to authorize the execution, delivery of and performance of
its obligations under, this Agreement and to consummate the transactions
contemplated by this Agreement. This Agreement is a valid and legally binding
agreement of each of the Acquiror and MergerCo, enforceable in accordance with
its terms.
27
(d) REGULATORY APPROVALS; NO DEFAULTS.
(1) No consents or approvals of, or filings or registrations
with, any Governmental Authority, Self-Regulatory Organization or with
any third party are required to be made or obtained by the Acquiror or
any of its Subsidiaries in connection with the execution, delivery or
performance by the Acquiror and MergerCo of this Agreement, or to
consummate the Merger, except for (A) those required under the HSR Act;
(B) filings of applications or notices with the CSE, the NASD and other
Previously Disclosed securities licensing or supervising authorities; (C)
approval of the CSE and consents of national securities exchanges for the
transfer of ownership of seats or membership; (D) the filing and
declaration of effectiveness of the Registration Statement; (E) approval
of the listing on the NASDAQ/NMS of the shares of Acquiror Common Stock
to be issued as Merger Consideration; and (F) the filing of Articles of
Merger with the Secretary of State of the State of Minnesota pursuant to
the MBCA. As of the date hereof, the Acquiror is not aware of any reason
why the approvals of all Governmental Authorities or Self-Regulatory
Organizations necessary to permit consummation of the transactions
contemplated hereby will not be received.
(2) Subject only to receipt of the regulatory approvals
referred to in Section 4.4(d)(1), the expiration of applicable waiting
periods and the making of all required filings under federal and state
securities laws, the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby do
not and will not (A) constitute a breach or violation of, or a default
under, or give rise to any Lien, any acceleration of remedies or any
right of termination (with or without the giving of notice, passage of
time or both) under, any law, rule or regulation or any judgment, decree,
order, governmental or nongovernmental permit or license, or Contract of
the Acquiror or of any of its Subsidiaries or to which the Acquiror or
any of its Subsidiaries or its or their properties is subject or bound,
(B) constitute a breach or violation of, or a default under, the articles
of incorporation or bylaws (or similar governing documents) of the
Acquiror or any of its Subsidiaries, or (C) require any consent or
approval under any such law, rule, regulation, judgment, decree, order,
governmental permit or license or Contract.
(e) ACQUIROR STOCK. The authorized capital stock of the Acquiror
consists of 100,000,000 shares of capital stock, par value $.04 per share, of
which 50,000,000 shares are designated as Acquiror Common Stock, and 50,000,000
shares are undesignated (the "ACQUIROR UNDESIGNATED STOCK" AND TOGETHER WITH THE
ACQUIROR COMMON STOCK, THE "ACQUIROR STOCK"). As of March 31, 2000, (a)
21,575,273 shares of Acquiror Common Stock were issued and outstanding, and (b)
no shares of Acquiror Undesignated Stock were issued and outstanding, (c)
1,525,000 shares of Acquiror Common Stock were reserved for issuance upon the
exercise of options issued or issuable under the Acquiror's 1995 Stock Option
Plan and 1996 Non-Employee Director Stock Option Plan (the "ACQUIROR STOCK
OPTIONS") and (d) 314,258 shares of Acquiror Common Stock were reserved for
issuance under outstanding warrants to purchase Acquiror Common Stock (the
"ACQUIROR WARRANTS"). The outstanding shares of Acquiror Common Stock have been
duly authorized and are validly issued and outstanding, fully paid and
nonassessable, and subject to no preemptive rights (and were not issued in
violation of any subscriptive or preemptive rights). As of the date hereof,
other than the Acquiror Stock Options and the Acquiror Warrants and the
convertible notes ("CONVERTIBLE NOTES") which are proposed to be issued, offered
and sold pursuant to SEC registration 333-35544 filed April 25, 2000, there are
no shares of Acquiror Common Stock authorized and reserved for issuance, the
Acquiror does not have any Rights issued or outstanding with respect to Acquiror
28
Stock, and the Acquiror does not have any commitment to authorize, issue or sell
any Acquiror Stock or Rights, except pursuant to this Agreement. The
Convertible Notes, when issued, will have a conversion price of not less than
the fair market value of a share of Acquiror Common Stock.
(f) SUBSIDIARIES. Each of the Acquiror's Subsidiaries has been duly
organized, is validly existing and in good standing under the laws of the
jurisdiction of its organization, and is duly qualified to do business and in
good standing in the jurisdictions where its ownership or leasing of property or
the conduct of its business requires it to be so qualified. The Acquiror has
continuously owned all of the outstanding capital stock of MergerCo since the
initial issuance by MergerCo of its capital stock.
(g) SEC DOCUMENTS; FINANCIAL STATEMENTS.
(1) Since December 31, 1998, Acquiror and each Acquiror
Subsidiary has filed all reports, registrations, and statements it was
required to file with the SEC under the Securities Act, or under Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act, including, but not limited
to Acquiror's Annual Reports on Form 10-K for the fiscal year ended
December 31, 1998, Forms 10-Q, registration statements, definitive proxy
statements, and information statements and Acquiror has Previously
Disclosed to the Company a draft of its Annual Report on Form 10-K for
the fiscal year ended March 31, 2000 (collectively, the "ACQUIROR SEC
DOCUMENTS"). As of their respective dates (and without giving effect to
any amendments or modification filed after the date of this Agreement)
each of the Acquiror SEC Documents, including the financial statements,
exhibits, and schedules thereto, filed, circulated or Previously
Disclosed prior to the date hereof complied (and each of the Acquiror SEC
Documents filed after the date of this Agreement will comply) as to form
with applicable Securities Laws and did not (or, in the case of reports,
statements, or circular filed after the date of this Agreement, will not)
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.
(2) Each of the balance sheets included in or incorporated by
reference into the Acquiror SEC Documents and the audited balance sheet
of MJK Holdings, Inc for the period ended March 31, 1999 Previously
Disclosed to the Company, including the related notes and schedules,
fairly presented (or, in the case of Acquiror SEC Documents filed after
the date of this Agreement, will fairly present) the consolidated
financial condition of the Acquiror and its Subsidiaries as of the date
of such balance sheet and each of the statements of income, cash flows
and changes in shareholders' equity and comprehensive income included in
or incorporated by reference into the Acquiror SEC Documents or in the
audited financial statements of MJK Holdings, Inc. for the period ended
March 31, 1999 Previously Disclosed to the Company, including any
related notes and schedules (collectively the foregoing financial
statements and related notes and schedules are referred to as the
"ACQUIROR FINANCIAL STATEMENTS"), fairly presented (or, in the case of
Acquiror SEC Documents filed after the date of this Agreement, will
fairly present) the consolidated results of operations, cash flows and
shareholders' equity, as the case may be, of the Acquiror and its
Subsidiaries for the periods set forth therein (subject, in the case of
unaudited statements, to normal year-end audit adjustments), in each case
in accordance with generally accepted accounting principles consistently
applied during the periods involved (except as may be noted therein and
except that such unaudited statements include no notes).
29
(3) Except as disclosed in the Acquiror Financial Statements or
the Acquiror SEC Documents filed prior to the date of this Agreement,
none of the Acquiror or any of its Subsidiaries has any liability or
obligation (contingent or otherwise) that, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect on
Acquiror.
(4) Acquiror has delivered or made available to the Company
true and complete copies of the FOCUS Reports filed on Form X-17A-5 (the
"ACQUIROR FOCUS REPORTS") for the quarters ended March 31, 1999, June 30,
1999, September 30, 1999, December 31, 1999 and March 31, 2000 by each
Subsidiary of Acquiror that is a "broker" or "dealer", as such terms are
defined in Sections 2(a)(4) and 2(a)(5) of the Exchange Act
(collectively, the "ACQUIROR BROKER-DEALER SUBSIDIARIES"). Each Acquiror
FOCUS Report complied (and with respect to Acquiror FOCUS Reports filed
after the date hereof, will comply) at the date thereof with the rules
and regulations of the SEC relating thereto and fairly presented (or will
present, as the case may be) the information required to be presented
therein pursuant to Rule 17a-5 under the Exchange Act.
(h) ABSENCE OF CERTAIN CHANGES. Since March 31, 2000, the business of
the Acquiror and its Subsidiaries has been conducted in the ordinary and usual
course, consistent with past practice, and there has not been:
(1) any event, occurrence, development or state of
circumstances or facts which has had or is reasonably likely to have a
Material Adverse Effect on the Acquiror;
(2) any amendment of any term of any outstanding security of
the Acquiror or any of its Subsidiaries or to the Acquiror or any of its
Subsidiaries' articles of incorporation or bylaws (or similar governing
documents);
(3) any (A) incurrence, assumption or guarantee by the Acquiror
or any of its Subsidiaries of any indebtedness for borrowed money, or (B)
assumption, guarantee, endorsement or otherwise by the Acquiror of any
obligations of any other person, in each case, other than in the ordinary
and usual course of business, consistent with past practice, and in
amounts and on terms consistent with past practices;
(4) any creation or assumption by the Acquiror or any of its
Subsidiaries of any Lien on any material asset other than in the ordinary
and usual course of business consistent with past practices;
(5) prior to or on the date hereof, any making of any loan in
excess of $100,000, or aggregate loans in excess of $250,000, advance or
capital contributions to or investment in any person, in each case, other
than in the ordinary and usual course of business consistent with past
practice;
(6) any change in any accounting policies or practices by the
Acquiror or any of its Subsidiaries; or
(7) any (A) employment, deferred compensation, severance,
retirement or other similar agreement entered into with any director,
officer, consultant, partner or employee of the Acquiror or any of its
Subsidiaries (or any amendment to any such existing agreement), (B) grant
of any severance or termination pay to any director, officer, consultant,
partner or
30
employee of the Acquiror or any of its Subsidiaries, or (C) change in
compensation or other benefits payable to any director, officer,
consultant, partner or employee of the Acquiror or any of its
Subsidiaries, except, in each case, in the ordinary course of business or
as required by Contract or applicable law with respect to employees of
the Acquiror or any of its Subsidiaries.
(i) CONTRACTS.
(1) The Acquiror has Previously Disclosed each of the following
executory Contracts to which either the Acquiror or any of its
Subsidiaries is a party, or by which any of them is bound or to which any
of their properties is subject:
(A) any lease of real property;
(B) any partnership, joint venture or other similar
agreement or arrangement, or any options or rights to acquire from
any person any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting
securities or such person, in each case, entered into other than
in the ordinary course of business;
(C) any agreement relating to the acquisition or
disposition of any business (whether by merger, sale of stock,
sale of assets or otherwise);
(D) any indenture, mortgage, promissory note, loan
agreement, guarantee or other agreement or commitment, outstanding
as of the date hereof, for the borrowing of money by the Acquiror
or one of its Subsidiaries or the deferred purchase price of
property in excess of $100,000 (in either case, whether incurred,
assumed, guaranteed or secured by any asset);
(E) any agreement in force as of the date hereof that
creates future payment obligations in excess of $100,000 in the
aggregate and which by its terms does not terminate or is not
terminable without penalty upon notice of 90 days or less;
(F) any license, franchise or similar agreement material
to the Acquiror or any of its Subsidiaries or any agreement
relating to any trade name or intellectual property right that is
material to the Acquiror or any of its Subsidiaries;
(G) any exclusive dealing agreement or any agreement
that limits the freedom of the Acquiror or any of its Subsidiaries
to compete in any line of business or with any person or in any
area or that would so limit their freedom after the Effective
Date;
(H) any compensation, employment, severance,
supplemental retirement or other similar agreement or arrangement
with any employee or former employee of, or independent contractor
with respect to, the Acquiror or any of its Subsidiaries, or any
other agreement with any current or former Affiliate of the
Acquiror; and
31
(I) any other Contract that is a "material contract" as
defined in Item 601(b)(10) of SEC Regulation S-K and that has not
been filed prior to the date hereof as an exhibit to the
Acquiror's SEC Documents.
(2) Each Contract that has been, or is required to be,
Previously Disclosed pursuant to this Section is a valid and binding
agreement of the Acquiror or one or more of its Subsidiaries, as the case
may be, and is in full force and effect, and the Acquiror or its
Subsidiaries parties thereto are not in default or breach in any material
respect under the terms of any such Contract.
(j) LITIGATION. Except as disclosed in the Acquiror's SEC Documents
filed before the date of this Agreement, no Litigation before any court,
arbitrator, mediator, Governmental Authority or Self-Regulatory Organization
that has been or would reasonably be expected to be Material to the Acquiror and
its Subsidiaries taken as a whole is pending against the Acquiror or any of its
Subsidiaries, and, to the best of the Acquiror's knowledge, no such Litigation
has been threatened.
(k) COMPLIANCE WITH LAWS. The Acquiror and each of its Significant
Subsidiaries: is in compliance with all applicable federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders or
decrees applicable to the conduct of its businesses or to the employees
conducting such businesses in all material respects, and the rules of all
Self-Regulatory Organizations applicable thereto and has all permits, licenses,
authorizations, orders and approvals of, and has made all filings, applications
and registrations with, all Governmental Authorities and Self-Regulatory
Organizations that are required in order to permit them to own or lease their
properties and to conduct their businesses as presently conducted (all such
permits, licenses, certificates of authority, orders and approvals are in full
force and effect and are current and, to the best of the Acquiror's knowledge,
no suspension or cancellation of any of them is threatened or is reasonably
likely and all such filings, applications and registrations are current).
(l) REGISTRATION MATTERS.
(1) Each of the Acquiror's Subsidiaries required to be
registered as a broker-dealer or investment advisor with the SEC, the
securities commission or similar authority of any state or any
Self-Regulatory Organization are duly registered and such registrations
are in full force and effect. Each Broker-Dealer Subsidiary is, and at
the Effective Time will be, a member in good standing with all required
Self-Regulatory Organizations and in compliance with all applicable rules
and regulations of the Self-Regulatory Organizations.
(2) The Acquiror has delivered or made available to the
Company, true, correct and complete copies of (A) each Acquiror
Broker-Dealer Subsidiary's Uniform Application for Broker-Dealer
Registration on Form BD (each, "ACQUIROR FORM BD") and (B) each Uniform
Application for Investment Adviser Registration filed by the Acquiror or
any Subsidiary (each, an "ACQUIROR FORM ADV", and together with Acquiror
Form BD, "ACQUIROR FORMS"), all of the Acquiror Forms reflecting all
amendments thereto filed with the NASD or the SEC, as the case may be, on
or prior to the date hereof. The Acquiror Forms are in compliance with
the applicable requirements of the Exchange Act or the Investment
Advisers Act, as the case may be and do not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Acquiror
has provided or made available true and complete copies of all
32
audit reports since December 31, 1996 by the SEC or the NASD regarding
the Acquiror or its Subsidiaries. Each director, officer, agent and
employee of each Acquiror Broker-Dealer Subsidiary who is required to be
registered as a representative, principal or agent with the securities
commission of any state or with any Self Regulating Organization is duly
registered as such and such registration is in full force and effect.
Each registered representative and principal of each Acquiror
Broker-Dealer Subsidiary has at least the minimum series license for the
activities which such registered representative or principal performs for
such Acquiror Broker-Dealer Subsidiary.
(3) The net capital, as such term is defined in Rule 15c3-1
under the Exchange Act, of each Acquiror Broker-Dealer Subsidiary
satisfies the minimum net capital requirements of the Exchange Act and of
the laws of any jurisdiction in which the Acquiror Broker-Dealer
Subsidiary conducts business, and has been sufficient to permit each
Acquiror Broker-Dealer Subsidiary to operate without restriction on its
ability to expand its business under NASD Conduct Rule 3130.
(4) None of the Acquiror Broker-Dealer Subsidiaries nor any
"associated person" thereof (a) is subject to a "statutory
disqualification" as such terms are defined in the Exchange Act, (b) is
ineligible to serve as a broker-dealer or as an associated person to a
registered broker-dealer or (c) is subject to a disqualification that
would be a basis for censure, limitations on the activities, functions or
operations of, or suspension or revocation of the registration of any
Acquiror Broker-Dealer Subsidiary as broker-dealer, municipal securities
dealer, government securities broker or government securities dealer
under Section 15, Section 15B or Section 15C of the Exchange Act and
there is no reasonable basis for, or proceeding or investigation, whether
formal or informal, or whether preliminary or otherwise, that is
reasonably likely to result in, any such censure, limitations, suspension
or revocation.
(5) Except as Previously Disclosed, neither the Acquiror nor
its Subsidiaries is or is required to be registered as an investment
company, investment adviser, commodity trading advisor, commodity pool
operator, futures commission merchant, introducing broker, insurance
agent, or transfer agent under any United States federal, state, local or
foreign statutes, laws, rules or regulations. No Acquiror Broker-Dealer
Subsidiary acts as the "sponsor" of a "broker-dealer trading program", as
such terms are defined in Rule 17a-23 under the Exchange Act.
(6) Neither the Acquiror, its Subsidiaries nor any "associated
person" (as defined in the Investment Advisers Act) thereof, as
applicable, is ineligible pursuant to Section 203 of the Investment
Advisers Act to serve as an investment adviser or as an associated person
to a registered investment adviser. Neither the Acquiror nor its
Subsidiaries provides investment advisory, subadvisory or management
services to or through (i) any issuer or other Person that is an
investment company (within the meaning of the Investment Company Act),
(ii) any issuer or other Person that would be an investment company
(within the meaning of the Investment Company Act) but for the exemptions
contained in Section 3(c)(1), Section 3(c)(7), the final clause of
Section 3(c)(3) or the third or fourth clauses of Section 3(c)(11) of the
Investment Company Act, or (iii) any issuer or other Person that is or is
required to be registered under the laws of the appropriate securities
regulatory authority in the jurisdiction in which the issuer is domiciled
(other than the United States or the states thereof), which is or holds
itself out as engaged primarily in the business of investing, reinvesting
or trading in securities.
33
(7) Each account to which the Acquiror provides investment
management, advisory or subadvisory services that (i) is an employee
benefit plan, as defined in Section 3(3) of ERISA, that is subject to
Title I of ERISA; (ii) a Person acting on behalf of such a plan; or (iii)
any entity whose underlying assets are deemed, under 29 C.F.R. Section
2510.3-101, to include the assets of such a plan by reason of such a
plan's investment in such entity (each, an "ACQUIROR ERISA CLIENT") has
been managed or provided brokerage services by the Acquiror or a
Subsidiary thereof, as applicable, such that the Acquiror or such
Subsidiary in the exercise of such management or in the provision of such
services is in compliance in all material respects with the applicable
requirements of ERISA.
(m) EMPLOYEES; LABOR MATTERS.
(1) Each of the Acquiror and its Subsidiaries is in compliance
with all currently applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours,
including the Immigration Reform and Control Act, the Worker Adjustment
and Retraining Notification Act, any such laws respecting employment
discrimination, harassment, disability rights or benefits, equal
opportunity, plant closure issues, affirmative action, workers'
compensation, employee benefits, severance payments, labor relations,
employee leave issues, wage and hour standards, occupational safety and
health requirements and unemployment insurance and related matters. None
of the Acquiror or any of its Subsidiaries are engaged in any unfair
labor practice and there is no unfair labor practice complaint pending or
threatened against the Acquiror or any of its Subsidiaries before the
National Labor Relations Board. There are no charges or complaints
against the Acquiror or any of its Subsidiaries pending of threatened in
writing alleging sexual or other harassment, or other discrimination, by
the Company, any of its Subsidiaries or by any of their employees, agents
or representatives.
(2) Neither the Acquiror nor any of its Subsidiaries is a party
to, or is bound by, any collective bargaining agreement, Contract or
other agreement or understanding with any labor union or organization,
nor has it agreed to recognize any union or other collective bargaining
unit, nor has any union or other collective bargaining unit been
certified, or is seeking certification, as representing any of the
employees of the Acquiror or its Subsidiaries.
(n) EMPLOYEE BENEFIT PLANS.
(1) The Acquiror has Previously Disclosed a complete list of
each employee or director benefit plan, arrangement or agreement, whether
or not written, including without limitation any employee welfare benefit
plan within the meaning of Section 3(1) of ERISA, any employee pension
benefit plan within the meaning of Section 3(2) of ERISA (whether or not
such plan is subject to ERISA) and any bonus, incentive, deferred
compensation, vacation, stock purchase, stock option, severance,
employment, change of control or fringe benefit plan, program or
agreement that is sponsored, maintained or contributed to by the Acquiror
or any of its Subsidiaries for the benefit of current or former employees
or directors or their beneficiaries (the "ACQUIROR BENEFIT PLANS").
(2) The Acquiror has heretofore made available to the Company
(A) true and complete copies of each of the Acquiror Benefit Plans (or
written explanations of any unwritten Benefit Plans) as in effect on the
date hereof; (B) the three most recent Annual
34
Reports (Form 5500 Series) and accompanying schedules, if any; and (C)
the most recent determination letter from the IRS (if applicable) for
such Acquiror Benefit Plan.
(3) With respect to each Acquiror Benefit Plan, the Acquiror
and its Subsidiaries have complied, and are now in compliance, in all
material respects with all provisions of ERISA, the Code and all laws and
regulations applicable to such Acquiror Benefit Plans and each Acquiror
Benefit Plan has been administered in all material respects in accordance
with its terms. The Internal Revenue Service has issued a favorable
determination letter with respect to each Acquiror Benefit Plan that is
intended to be a "qualified plan" within the meaning of Section 401(a) of
the Code and the related trust that has not been revoked, and, to the
knowledge of the Acquiror, no circumstances exist and no events have
occurred that could reasonably be expected to adversely affect the
qualified status of any such plan or the related trust (except for
changes in applicable law for which the remedial amendment period has not
yet expired). No Acquiror Benefit Plan is intended to meet the
requirements of Code Section 501(c)(9).
(4) All contributions required to be made to any Acquiror
Benefit Plan by applicable law or regulation or by any plan document or
other contractual undertaking, and all premiums due or payable with
respect to insurance policies funding any Plan, for any period through
the date hereof have been timely made or paid in full or, to the extent
not required to be made or paid on or before the date hereof, have been
fully reflected on the Acquiror Financial Statements. Each Acquiror
Benefit Plan, if any, that is an employee welfare benefit plan under
Section 3(1) of ERISA is either (A) funded through an insurance company
contract and is not a "welfare benefit fund" with the meaning of Section
419 of the Code or (B) unfunded.
(5) There is no pending or, to the knowledge of the Acquiror,
threatened litigation relating to the Acquiror Benefit Plans. Neither
the Acquiror nor any of its Subsidiaries has engaged in a transaction
with respect to any Acquiror Benefit Plan that would subject the Acquiror
or any of its Subsidiaries to a Material tax or penalty imposed by either
Section 4975 of the Code or Section 502(i) of ERISA.
(6) No Acquiror Benefit Plan is subject to Title IV or Section
302 of ERISA or Section 412 or 4971 of the Code, and neither the Acquiror
nor any of its Subsidiaries has contributed or been obligated to
contribute to a "multiemployer plan" (as defined in Section 3(37) of
ERISA) or a plan that has two or more contributing, but unrelated,
sponsors and that is subject to Title IV of ERISA at any time on or after
December 31, 1994. No liability under Subtitle C or D of Title IV of
ERISA has been or is reasonably expected to be incurred by the Acquiror
or any of its Subsidiaries with respect to any ongoing, frozen or
terminated "single-employer plan," within the meaning of Section 4001 of
ERISA, currently or formerly maintained by any of them, or the
single-employer plan of any entity which is considered one employer with
the Acquiror under Section 4001 of ERISA or Section 414 of the Code (an
"ACQUIROR ERISA AFFILIATE"). No notice of a "reportable event," within
the meaning of Section 4043 of ERISA, for which the 30-day reporting
requirement has not been waived has been required to be filed for any
Acquiror Benefit Plan or, to the knowledge of the Acquiror, by any
Acquiror ERISA Affiliate. Neither the Acquiror nor any of its
Subsidiaries or Acquiror ERISA Affiliates has provided, or is required to
provide, security to any Benefit Plan or any single-employer plan of an
Acquiror ERISA Affiliate.
35
(o) ENVIRONMENTAL MATTERS. The Acquiror and its Subsidiaries have
complied at all times with applicable Environmental Laws; no property (including
buildings and any other structures) currently or formerly owned or operated (or
which the Acquiror or any of its Subsidiaries would be deemed to have owned or
operated under any Environmental Law) by the Acquiror or any of its Subsidiaries
or in which the Acquiror or any of its Subsidiaries (whether as fiduciary or
otherwise) has a Lien, has been contaminated with, or has had any release of,
any Hazardous Substance in such form or substance so as to create any liability
for the Acquiror or its Subsidiaries; the Acquiror is not subject to liability
for any Hazardous Substance disposal or contamination on any other third-party
property; within the last six years, the Acquiror and its Subsidiaries have not
received any notice, demand letter, claim or request for information alleging
any violation of, or liability of the Acquiror under, any Environmental Law; the
Acquiror and its Subsidiaries are not subject to any order, decree, injunction
or other agreement with any Governmental Authority or any third party relating
to any Environmental Law; the Acquiror and its Subsidiaries are not aware of any
reasonably likely liability relating to environmental circumstances or
conditions (including the presence of asbestos, underground storage tanks, lead
products or polychlorinated biphenyls) involving the Acquiror or one of its
Subsidiaries, any currently or formerly owned or operated property (whether as
fiduciary or otherwise), or any reasonably likely liability related to any Lien
held by the Acquiror or one of its Subsidiaries; and the Acquiror has made
available to the Acquiror copies of all environmental reports, studies, sampling
data, correspondence, filings and other environmental information in its
possession or reasonably available to it relating to the Acquiror or one of its
Subsidiaries or any currently or formerly owned or operated property or any
property in which the Acquiror or one of its Subsidiaries (whether as fiduciary
or otherwise) has held a Lien.
(p) INTERNAL CONTROLS. The Acquiror and its Subsidiaries have devised
and maintained a system of internal accounting controls sufficient to provide
reasonable assurances that (1) transactions are executed in accordance with
management's general or specific authorizations, (2) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principals and to maintain accountability for
assets, (3) access to assets is permitted only in accordance with management's
general or specific authorization, and (4) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(q) DERIVATIVES; ETC. All exchange-traded, over-the-counter or other
swaps, caps, floors, collars, option agreements, futures and forward contracts
and other similar arrangements or Contracts, whether entered into for the
Acquiror's own account, or for the account of one or more of the Acquiror's
Subsidiaries or their customers, were entered into (1) in accordance with
prudent business practices and all applicable laws, rules, regulations and
regulatory policies and (2) with counter parties reasonably believed to be
financially responsible at the time; and each of them constitutes the valid and
legally binding obligation of the Acquiror or one of its Subsidiaries,
enforceable in accordance with its terms (except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar laws of general applicability relating to or
affecting creditors' rights or by general equity principles), and are in full
force and effect. Neither the Acquiror nor its Subsidiaries, nor, to the best
of the Acquiror's knowledge, any other party thereto, is in breach of any of its
obligations under any such agreement or arrangement. The Acquiror's SEC
Documents disclose the value of such agreements and arrangements on a
xxxx-to-market basis in accordance with generally accepted accounting principles
and, since December 31, 1999, there has not been a material change in such
value.
36
(r) NAMES AND TRADEMARKS. The Acquiror and its Subsidiaries have the
right to use the names, service-marks, trademarks and other intellectual
property currently used by them in the conduct of their businesses; each of such
names, service-marks, trademarks and other intellectual property has been
Previously Disclosed; and, in the case of such names, service-marks and
trademarks, in each state of the United States, such right of use is free and
clear of any Liens, and no other person has the right to use such names,
service-marks or trade marks in any such state.
(s) INSURANCE. The Acquiror has Previously Disclosed all of the
insurance policies, binders, or bonds maintained by Acquiror or its Subsidiaries
("ACQUIROR INSURANCE POLICIES"). The Company and its Subsidiaries are insured
with reputable insurers against such risks and in such amounts as the management
of Acquiror reasonably has determined to be prudent in accordance with industry
practices. All of the Acquiror Insurance Policies are in full force and effect;
the Acquiror and its Subsidiaries are not in material default thereunder; and
all claims thereunder have been filed in due and timely fashion.
(t) BROKERS. No action has been taken by the Acquiror that would give
rise to any valid claim against any party hereto for a brokerage commission,
finder's fee or other like payment with respect to the transactions contemplated
by this Agreement, excluding the fees to be paid by Acquiror to X.X. Xxxxxxxx &
Company in amounts and on terms Previously Disclosed.
(u) ABSENCE OF CERTAIN CHANGES. Since March 31, 2000, there has not
been any event, occurrence, development or state of circumstances or facts which
has had or is reasonably likely to have a Material Adverse Effect on Acquiror.
(v) ACTIVITIES OF MERGER SUB. MergerCo does not have any Subsidiaries
or material investments of any kind in any entity. MergerCo has been
incorporated on behalf of the Acquiror solely for purposes of accomplishing the
Merger, has not engaged in any other business activity and has conducted its
operations only as contemplated hereby.
(w) FUNDS. Acquiror has available and will make available to MergerCo
at the Effective Time, sufficient funds to consummate the Merger and pay the
Cash Consideration in accordance with the terms of this Agreement.
(x) VALIDITY OF ACQUIROR COMMON STOCK. The shares of Acquiror Common
Stock to be issued to the holders of Company Common Stock as part of the Merger
Consideration will be, when issued, duly authorized, validly issued, fully paid
and nonassessable and not in violation of any preemptive rights.
(y) TAXES.
(1) The Acquiror and its Subsidiaries have filed, completely
and correctly in all material respects, all Tax Returns that are required
by applicable law to be filed by the Acquiror or its Subsidiaries;
(2) All Taxes shown to be due on such Tax Returns have been
paid in full;
(3) All Taxes due with respect to completed examinations have
been paid in full;
37
(4) No currently effective waivers of statutes of limitations
(excluding such statutes that relate to years currently under examination
by the IRS) have been given by or requested with respect to any Taxes of
the Acquiror or any of its Subsidiaries;
(5) Each of the Acquiror and its Subsidiaries has duly paid or
made provision for the payment of all Taxes that have been incurred or
are due or claimed to be due from it by federal, state, foreign or local
taxing authorities other than Taxes that are not yet delinquent or are
being contested in good faith and have not been finally determined.
(z) TAX TREATMENT. As of the date hereof, Acquiror has no reason to
believe that the Merger will not qualify as a "reorganization" within the
meaning of Section 368(a) of the Code.
ARTICLE 5
COVENANTS
SECTION 5.1 FOREBEARANCES OF THE COMPANY. From the date hereof until
the Effective Time, except as expressly contemplated by this Agreement, without
the prior written consent of the Acquiror, the Company will not, and will cause
each of its Subsidiaries not to:
(a) ORDINARY COURSE. Conduct the business of the Company or any of
its Subsidiaries other than in the ordinary and usual course, or, to the extent
consistent therewith, fail to use reasonable best efforts to preserve intact any
of their business organizations and assets and maintain their rights, franchises
and existing relations with clients, customers, correspondents, independent
contractors, suppliers, employees and business associates; or engage in any new
lines of business.
(b) CAPITAL STOCK. Other than pursuant to the exercise of Previously
Disclosed Rights outstanding on the date hereof, (1) issue, sell or otherwise
permit to become outstanding, or authorize the creation of, any additional
shares of Company Stock or any Rights, (2) enter into any Contract with respect
to the foregoing or (3) permit any additional shares of Company Stock to become
subject to new grants of employee or director stock options, other Rights or
similar stock-based employee rights.
(c) DIVIDENDS, ETC. (1) Make, declare, pay or set aside for payment
any dividend on or in respect of, or declare or make any distribution on, any
shares of its capital stock, other than dividends from wholly owned Subsidiaries
to the Company (in each case having record and payment dates consistent with
past practice) or (2) directly or indirectly adjust, split, combine, redeem,
reclassify, purchase or otherwise acquire, any shares of its capital stock,
other than as required by the Company Stock Plans upon exercise of Previously
Disclosed Rights outstanding on the date hereof.
(d) COMPENSATION; EMPLOYMENT AGREEMENTS; ETC. Enter into, amend,
modify or renew any Contract regarding employment, consulting, severance or
similar arrangements with any directors, officers, employees of, or independent
contractors with respect to, the Company or its Subsidiaries, or grant any
salary, wage or other increase in compensation or increase in any employee
benefit (including incentive or bonus payments), except (1) for changes that are
required by applicable law, (2) to satisfy Previously Disclosed Contracts
existing on the date hereof, or (3) for employment arrangements for, or grants
of awards to, newly hired non-officer employees in the ordinary course of
business consistent with past practice or (4) for normal individual increases in
38
compensation to non-officer employees in the ordinary and usual course of
business consistent with past practice.
(e) BENEFIT PLANS. Enter into, establish, adopt, amend or modify any
pension, retirement, stock option, stock purchase, savings, profit sharing,
deferred compensation, consulting, bonus, group insurance or other employee
benefit, incentive or welfare Contract, plan, program or arrangement, or any
trust agreement (or similar arrangement) related thereto, in respect of any
directors, officers, employees of, or independent contractors with respect to,
the Company or its Subsidiaries, including taking any action that accelerates
the vesting or exercisability of stock options, restricted stock or other
compensation or benefits payable thereunder, except, in each such case, as may
be required by applicable law or expressly required by the terms of Contracts
Previously Disclosed as such Contracts are in effect as of the date hereof.
(f) DISPOSITIONS. Except for sales of securities or other investments
or assets in the ordinary course of business consistent with past practice,
sell, transfer, mortgage, lease, encumber or otherwise dispose of or discontinue
any material portion of its assets, business or properties.
(g) ACQUISITIONS. Except for the purchase of securities or other
investments or assets in the ordinary course of business consistent with past
practice, acquire a material portion of the assets of any other person.
(h) GOVERNING DOCUMENTS. Amend the Company Articles, the Company
Bylaws or the articles of incorporation or bylaws (or similar governing
documents) of any of the Company's Subsidiaries.
(i) ACCOUNTING METHODS. Implement or adopt any change in accounting
principles, practices or methods, other than as may be required by generally
accepted accounting principles.
(j) CONTRACTS. Except in the ordinary course of business consistent
with past practice, enter into, renew or terminate any material Contract or
amend or modify in any material respect, or waive any material right under, any
of its existing material Contracts.
(k) CLAIMS. Settle any claim, action or proceeding, except for any
claim, action or proceeding involving solely money damages in an amount,
individually and in the aggregate for all such settlements, not more than
$250,000 and which could not reasonably be expected to establish an adverse
precedent or basis for subsequent settlements.
(l) CAPITAL EXPENDITURES. Authorize or make any capital expenditures,
other than (1) annual budgeted amounts Previously Disclosed, or (2) in the
ordinary and usual course of business consistent with past practice in amounts
not exceeding $250,000 in the aggregate.
(m) RISK MANAGEMENT. Except as required by applicable law or
regulation, (1) implement or adopt any change in the risk management policies,
procedures or practices of the Company, which, individually or in the aggregate
with all such other changes, would be Material, or (2) materially restructure or
change its investment securities portfolio, if any, or the manner in which such
portfolio is classified or reported.
(n) TAX MATTERS. Make or change any tax election, change any annual
tax accounting period, adopt or change any method of tax accounting, file any
amended Tax Return, enter into any
39
closing agreement, settle any Tax claim or assessment, surrender or compromise
any right to claim a Tax refund or consent to any extension or waiver of the
limitations period applicable to any Tax claim or assessment, other than any of
the foregoing actions that are (i) not, alone or in the aggregate, Material and
(ii) taken in the ordinary and usual course of business, consistent with past
practice.
(o) INDEBTEDNESS. (i) Other than in the ordinary course of business
consistent with past practice, (A) incur any indebtedness for borrowed money
(other than short-term indebtedness incurred to refinance existing short-term
indebtedness, and indebtedness of the Company or any of its Subsidiaries to the
Company or any of its Subsidiaries, and indebtedness under existing lines of
credit), (B) assume, guarantee, endorse or otherwise as an accommodation become
responsible for the obligations of any other Person, (C) make any loan or
advance other than forgivable loans to employees in connection with the hiring
of such employees consistent with past practice, or (ii) other than with respect
to customary concessions regarding margin indebtedness of brokerage clients in
the ordinary course of business consistent with past practice, and with respect
to the regularly scheduled forgiveness of loans made to employees prior to the
date hereof in connection with the hiring of such employees when and as required
by the express provisions of Previously Disclosed Contracts in full force and
effect between such employees and the Company or any of its Subsidiaries,
forgive or extinguish any indebtedness to the Company or any of its Subsidiaries
for borrowed money or otherwise waive any rights under any instrument or
arrangement pursuant to which such indebtedness was incurred.
(p) COMMITMENTS. Agree or commit to do, or adopt any resolutions of
its board of directors in support of, anything that would be precluded by
clauses (a) through (o).
SECTION 5.2 FORBEARANCES OF THE ACQUIROR AND MERGERCO. From the date
hereof until the Effective Time, except as expressly contemplated by this
Agreement, without the prior written consent of the Company, each of the
Acquiror and MergerCo will not take any action that is intended or is reasonably
likely to result in (A) any of its representations and warranties set forth in
this Agreement being or becoming untrue in any material respect at any time at
or prior to the Effective Time, (B) any of the conditions to the Merger set
forth in Article 6 not being satisfied, or (C) a material breach of any
provision of this Agreement.
SECTION 5.3 NO SOLICITATION. (a) From the date of this Agreement
until the Effective Time or the termination of this Agreement pursuant to its
terms, the Company agrees that it will not and will not permit any of its
subsidiaries, or any of its or their officers, directors, employees,
representatives, agents, or affiliates, including, without limitation, any
investment banker, attorney or accountant retained by the Company or any of its
subsidiaries (collectively, "REPRESENTATIVES") to, directly or indirectly, (i)
initiate, solicit, encourage or otherwise facilitate (including by way of
furnishing information), any inquiries or the making of any proposal or offer
that constitutes, or may reasonably be expected to lead to an Acquisition
Proposal (as defined below), or (ii) enter into or maintain or continue
discussions or negotiate with any person in furtherance of such inquiries or to
obtain an Acquisition Proposal, or (iii) agree to, approve, recommend, or
endorse any Acquisition Proposal, or authorize or permit any of its or their
subsidiaries or Representatives to take any such action and, except to the
extent prohibited by contracts existing at the date of this Agreement, the
Company shall promptly notify Acquiror of any such inquiries and proposals
received by the Company or any of its subsidiaries or Representatives, relating
to any of such matters; PROVIDED, HOWEVER, that nothing contained in this
Agreement shall prohibit the Board from (A) furnishing nonpublic information to,
or engaging in discussions or negotiations with, any person in response to an
unsolicited bona fide written Acquisition Proposal; or (B) recommending such an
unsolicited bona
40
fide written Acquisition Proposal to the shareholders of the Company, if and
only to the extent that (a) the Board concludes in good faith (after
consultation with its financial advisors) that such Acquisition Proposal would
constitute a Superior Proposal (as hereinafter defined), and (b) prior to
furnishing such information to, or entering into discussions or negotiations
with, such person the Company provides prompt written notice to Acquiror to the
effect that it is furnishing information to, or entering into discussions or
negotiations with, such person (which notice shall identify the nature and
material terms of the proposal), and (c) prior to providing any information or
data to any person in connection with an Acquisition Proposal by any such
person, the Board receives from such person an executed confidentiality
agreement no less restrictive than the confidentiality agreement previously
entered into between the Company and Acquiror in connection with their
consideration of the Merger.
(b) For purposes of this Agreement, "ACQUISITION PROPOSAL" means an
inquiry, offer or proposal regarding any of the following (other than the
transactions contemplated by this Agreement) including the Company or its
subsidiaries: (i) any merger, reorganization, consolidation, share exchange,
recapitalization, business combination, liquidation, dissolution, or other
similar transaction involving, or, any sale, lease, exchange, mortgage, pledge,
transfer or other disposition of, all or any significant portion of the assets
or 20% or more of the equity securities of, the Company or any of its
subsidiaries, in a single transactions or series of related transactions which
would reasonably be expected to interfere with the completion of the Merger; or
(ii) any tender offer or exchange offer for 20% or more of the outstanding
shares of capital stock of the Company or the filing of a registration statement
under the Securities Act in connection therewith.
(c) For purposes of this Agreement, "SUPERIOR PROPOSAL" means a bona
fide Acquisition Proposal made by a third person that the Board determines in
its good faith judgment to be more favorable to the Company's shareholders than
the Merger and for which financing, to the extent required, is then committed or
which, in the good faith judgment of the Board (based on the written advice of
the Company's independent financial advisor) is reasonably capable of being
obtained by such third person.
(d) Nothing contained in this Section 5.3 shall prohibit the Company
from taking and disclosing to its shareholders a position contemplated by Rule
14e-2 promulgated under the Exchange Act or from making any disclosure to the
Company's shareholders which, in the good faith judgment of the Board based on
the advice of outside counsel, is required under applicable law.
SECTION 5.4 SHAREHOLDERS' MEETING. The Company, acting through the
Board, will as promptly as practicable following the date of this Agreement and
in consultation with Acquiror and MergerCo:
(i) duly call, give notice of, convene and hold a meeting of
its shareholders for the purpose of approving and adopting this Agreement
and the transactions contemplated hereby (the "SHAREHOLDERS MEETING"),
and
(ii) (A) include in the Prospectus/Proxy Statement (as defined
in Section 5.5) the recommendation of the Board that the shareholders of
the Company vote in favor of the approval and adoption of this Agreement
and the transactions contemplated hereby, as well as the written opinion
of U. S. Bancorp Xxxxx Xxxxxxx, the Board's financial advisor, that, as
of the date of such opinion, the consideration to be received by the
shareholders of the Company pursuant to the Merger is fair to such
shareholders from a financial point of view
41
and (B) use its reasonable best efforts to obtain the necessary approval
and adoption of this Agreement and the transactions contemplated hereby
by its shareholders, PROVIDED HOWEVER, that the Board may fail to make or
may withdraw or modify such recommendation or fail to seek such approval
if the Board has determined in good faith after consultation with outside
counsel that failure to so act would result in a breach by the Board of
its fiduciary duties to the Company's shareholders under applicable law.
SECTION 5.5 REGISTRATION STATEMENT. (a) For the purpose of (i) of
holding the Shareholders' Meeting to approve the Merger and this Agreement, and
(ii) of registering with the SEC and with applicable state securities
authorities the Acquiror Common Stock to be issued as contemplated by this
Agreement, the parties hereto shall cooperate in the preparation of an
appropriate registration statement (such registration statement, together with
all and any amendments and supplements thereto, being herein referred to as the
"REGISTRATION STATEMENT"), which shall include a prospectus/proxy statement
satisfying all applicable requirements of the Securities Act, the Exchange Act,
applicable state securities laws and the rules and regulations thereunder (such
prospectus/proxy statement, together with any and all amendments or supplements
thereto, being herein referred to as the "PROSPECTUS/PROXY STATEMENT").
(b) Acquiror shall furnish such information concerning Acquiror and
its Subsidiaries as is necessary in order to cause the Prospectus/Proxy
Statement, insofar as it relates to Acquiror, the Acquiror Subsidiaries and
Acquiror securities, to be prepared in accordance with Section 5.4(b). Acquiror
agrees promptly to advise the Company if at any time prior to the Shareholders'
Meeting any information provided by Acquiror in the Prospectus/Proxy Statement
becomes incorrect or incomplete in any material respect, and to share with the
Company the information needed to correct such inaccuracy or omission.
(c) The Company shall furnish Acquiror with such information
concerning the Company and its Subsidiaries as is necessary in order to cause
the Prospectus/Proxy Statement, insofar as it relates to the Company, the
Company Subsidiaries and the Company securities, to be prepared in accordance
with Section 5.4(b). The Company agrees promptly to advise Acquiror if at any
time during which the Prospectus/Proxy Statement is required to be delivered any
information provided by the Company in the Prospectus/Proxy Statement becomes
incorrect or incomplete in any material respect and to provide Acquiror with the
information needed to correct such inaccuracy or omission.
(d) Acquiror shall use reasonable efforts to cause the Registration
Statement to become effective under the Securities Act and applicable state
securities laws at the earliest practicable date. Acquiror agrees to provide
the Company with reasonable opportunity to review and comment on the
Registration Statement and any amendment thereto before filing with the SEC or
any other governmental entity and agrees not to make such filing if the Company
reasonably objects to the completeness or accuracy of any information contained
therein. Acquiror shall advise the Company promptly when the Registration
Statement has become effective and of any supplements or amendments thereto, and
Acquiror shall furnish the Company with copies of all such documents. Prior to
the Effective Date or the termination of this Agreement, each party shall
consult with the other with respect to any material (other than the
Prospectus/Proxy Statement) that might constitute a "prospectus" relating to the
Merger within the meaning of the Securities Act.
(e) The Company shall use its reasonable best efforts to cause to be
delivered to Acquiror a letter and consent relating to the financial statements
of the Company included in the Registration Statement from KPMG LLP, the
Company's independent auditors, dated a date within two business
42
days before the date on which the Registration Statement shall become effective
and addressed to Acquiror, in form and substance reasonably satisfactory to
Acquiror and customary in scope and substance for letters and consents delivered
by independent public accountants in connection with registration statements
similar to the Registration Statement.
(f) Acquiror shall use its reasonable best efforts to cause to be
delivered to the Company a letter and consent relating to the financial
statements of Acquiror included in the Registration Statement from Ernst & Young
LLP, Acquiror's independent auditors, dated a date within two business days
before the date on which the Registration Statement shall become effective and
addressed to the Company, in form and substance reasonably satisfactory to the
Company and customary in scope and substance for letters and consents delivered
by independent public accountants in connection with registration statements
similar to the Registration Statement.
(g) Acquiror agrees to use its reasonable best efforts to obtain all
necessary state securities law or "Blue Sky" permits and approvals required to
carry out the transactions contemplated by this Agreement.
SECTION 5.6 STOCK LISTING. Acquiror shall use its reasonable best
efforts to list on the NASDAQ/NMS the shares of Acquiror Common Stock to be
issued in connection with the Merger on the Effective Date.
SECTION 5.7 CLEARING AGREEMENT. The Company and Acquiror will
cooperate with each other to transfer all clearing functions of the Company to
an Acquiror Broker-Dealer Subsidiary as soon as reasonably practicable after the
Effective Time, including by giving appropriate prospective notice of such
transfer conditional on the consummation of the Merger to NationsBanc Xxxxxxxxxx
Securities, LLC at least 90 days prior to the anticipated Closing Date and to
the Company's Clients at least 15 days prior to the anticipated Closing Date.
SECTION 5.8 ACCESS; INFORMATION. (a) The Company and its Subsidiaries,
on one hand, and Acquiror and its Subsidiaries on the other, shall upon
reasonable notice and subject to applicable laws relating to the exchange of
information, afford the other party and its officers, employees, counsel,
accountants and other authorized representatives, such access during normal
business hours throughout the period prior to the Effective Time to the books,
records (including, without limitation, tax returns and work papers of
independent auditors), properties, personnel and to such other information as
the other party may reasonably request and, during such period, it shall furnish
promptly to such other party (1) a copy of each material report, schedule and
other document filed by it pursuant to the requirements of federal or state
securities laws, and (2) all other information concerning the business,
properties and personnel of it as the other may reasonably request.
(b) The Acquiror and the Company agree that any information obtained
pursuant to this Section 5.8 will be subject to the terms of the letter
agreements, dated January 14, 2000 and May 12, 2000 between the Acquiror and the
Company (collectively the "CONFIDENTIALITY AGREEMENT"). No investigation by any
party of the business and affairs of another party shall affect or be deemed to
modify or waive any representation, warranty, covenant or agreement in this
Agreement or the conditions to consummation contained in Article 6.
SECTION 5.9 REASONABLE BEST EFFORTS. (a) Subject to the terms and
conditions of this Agreement, each of the Company and the Acquiror agrees to use
its reasonable best efforts in good faith to take, or cause to be taken
(including causing any of its Subsidiaries to take), all actions, and
43
to do, or cause to be done, all things necessary, proper or desirable, or
advisable under applicable laws, so as to permit consummation of the Merger as
promptly as reasonably practicable and otherwise to enable consummation of the
transactions contemplated hereby, and shall cooperate fully with the other party
hereto to that end.
(b) Without limiting the generality of Section 5.9(a), the Company
agrees to use its reasonable best efforts to obtain the consent or approval of
all persons party to a Contract with the Company, to the extent the failure to
obtain such consent is reasonably likely to have a Material Adverse Effect on
the Company giving effect to the Merger, or is required in order to consummate
the Merger.
SECTION 5.10 REGULATORY APPLICATIONS. (a) The Acquiror and the Company
and their respective Subsidiaries shall cooperate and use their respective
reasonable best efforts to prepare all documentation, to effect all filings and
to obtain all permits, consents, approvals and authorizations of all third
parties and Governmental Authorities necessary to consummate the transactions
contemplated by this Agreement as promptly as reasonably practicable. Each of
the Acquiror and the Company shall have the right to review in advance, and to
the extent practicable each will consult with the other (subject in each case to
applicable laws relating to the exchange of information) with respect to, all
material written information submitted to any third party or Governmental
Authority in connection with the transactions contemplated by this Agreement.
In exercising the foregoing right, each of the Acquiror and the Company agrees
to act reasonably and as promptly as practicable. Each of the Acquiror and the
Company agrees that it will consult with the other party hereto with respect to
the obtaining of all material permits, consents, approvals and authorizations of
all third parties and Governmental Authorities necessary or advisable to
consummate the transactions contemplated by this Agreement and each party will
keep the other party apprised of the status of material matters relating to
completion of the transactions contemplated hereby.
(b) Each of the Acquiror and the Company agrees, upon request, to
furnish the other party with all information concerning itself, its
Subsidiaries, directors, officers and shareholders and such other matters as may
be reasonably necessary or advisable in connection with any filing, notice or
application made by or on behalf of such other party or any of its Subsidiaries
to any third party or Governmental Authority.
SECTION 5.11 CERTAIN EMPLOYEE BENEFITS. In the event that Acquiror
discontinues any Company Benefit Plans for the benefit of Continuing Employees
and replaces them with new benefit plans, programs or arrangements or Acquiror
Benefit Plans, Acquiror shall, or shall cause its Subsidiaries to, cause each
such plan, program or arrangement to treat such Continuing Employee in the same
manner as similarly situated employees of the Acquiror and treat the prior
service with the Company of each Covered Employee (to the same extent such
service is recognized under any analogous plans, programs or arrangements of the
Company immediately prior to the Effective Time to the extent such a plan,
program or arrangement is in effect immediately prior to the Effective Time) as
service rendered to the Acquiror or its Subsidiaries, as the case may be, solely
for purposes of eligibility to participate and for vesting thereunder (but not
for purposes of benefit accruals). The Acquiror and its Subsidiaries will cause
any and all pre-existing condition limitations (to the extent such limitations
did not apply to a pre-existing condition under the new plan or Acquiror Benefit
Plans) and eligibility waiting periods, under any health plans maintained or
adopted by the Acquiror or its Subsidiaries in which Covered Employees are
eligible to participate after the Effective Time, to be waived with respect to
(a) Covered Employees who, immediately prior to the Effective Time,
44
participated in a Company-sponsored health plan and (b) their eligible
dependents. The Acquiror and its Subsidiaries will recognize, for purposes of
any annual deductible and out-of-pocket limits under its existing or any new
health plans, deductible and out-of-pocket expenses paid by Covered Employees
and their dependents during the calendar year in which the Effective Time occurs
under the health plans of the Company and its Subsidiaries. The Acquiror and
its Subsidiaries shall honor, pursuant to the terms of the Previously Disclosed
Company Benefit Plans, and to the extent consistent with applicable law, all
accrued employee benefit obligations to current and former employees of the
Company under such plans. Nothing in this Section 5.11 shall prevent Acquiror
from amending or terminating any Company Benefit Plans or benefit plans of the
Acquiror (or its Subsidiaries) or any other contracts, arrangements, commitments
or understandings, in accordance with their terms and applicable law; providing,
however, that the arrangements identified in Section 5.11 of the Company
Disclosure Schedule shall be administered as described therein. The Acquiror
acknowledges that the consummation of the Merger (or, if otherwise provided
under the applicable Company Benefit Plan, the approval of the Merger by the
Company's shareholders) shall constitute a "Change of Control" or "Change in
Control" or "Change of Control not initiated by the Company" for purposes of
each Company Benefit Plan for which the concept is relevant.
SECTION 5.12 INDEMNIFICATION. With respect to the indemnification of
directors and officers, Acquiror agrees as follows:
(a) Acquiror shall ensure that all rights to indemnification and all
limitations of liability existing in favor of any person who is now, or has been
at any time prior to the date hereof, or who becomes prior to the Effective Time
of the Merger, a director or officer of Company or any Company Subsidiary (an
"INDEMNIFIED PARTY" and, collectively, the "INDEMNIFIED PARTIES"), under
applicable law, in the Company Articles or Bylaws or similar governing documents
of any Company Subsidiary, as applicable in the particular case and as in effect
on the Effective Date, shall, with respect to claims arising from (A) facts or
events that occurred before the Effective Time of the Merger or (B) this
Agreement or any of the transactions contemplated by this Agreement, whether in
any case asserted or arising before or after the Effective Time of the Merger,
survive the Merger and shall continue in full force and effect. Nothing
contained in this Section 5.12(a) shall be deemed to preclude the liquidation,
consolidation, or merger of Company or any Company Subsidiary, in which case all
of such rights to indemnification and limitations on liability shall be deemed
to survive and continue as contractual rights notwithstanding any such
liquidation or consolidation or merger; provided, however, that in the event of
liquidation or sale of substantially all of the assets of Company or a Company
Subsidiary, the Acquiror shall guarantee, the indemnification obligations of
Company or such Company Subsidiary to the extent of indemnification obligations
of Company and the Company Subsidiaries described above.
(b) Any Indemnified Party wishing to claim indemnification under this
Section, upon learning of such claim, action, suit, proceeding, or
investigation, shall promptly notify the Acquiror thereof, but the failure to so
notify shall not relieve the Acquiror of any liability it may have to such
Indemnified Party unless such failure has actually prejudiced the Acquiror. In
the event of any such claim, action, suit, proceeding, or investigation (whether
arising before or after the Effective Time) (i) if the Acquiror agrees that the
claim, action, suit, proceeding or investigation is fully indemnifiable and that
the Acquiror will pay any liability resulting from such claim, action, suit,
proceeding or investigation, the Acquiror shall have the right to assume the
defense thereof and shall not be liable to any Indemnified Party for any legal
expenses of other counsel or any other expenses subsequently incurred by such
Indemnified Party in connection with the defense thereof, except that if the
Acquiror elects not to assume such defense or counsel for the Indemnified Party
advises that
45
there are issues which raise conflicts of interest between Acquiror and the
Indemnified Party, the Indemnified Party may retain counsel satisfactory to
them, and the Acquiror shall pay the reasonable fees and expenses of such
counsel for the Indemnified Party promptly as statements therefor are received;
provided, however, that Acquiror shall be obligated pursuant to this
subparagraph (b) to pay for only one firm of counsel for all Indemnified Parties
in any jurisdiction unless the use of one counsel for such Indemnified Parties
would present such counsel with a conflict of interest, and (ii) such
Indemnified Party shall cooperate fully in the defense of any such matter.
(c) For a period of six years from the Effective Time, the Acquiror
shall use its reasonable best efforts to provide that portion of director's and
officer's liability insurance that serves to reimburse the present and former
officers and directors of the Company or any of its Subsidiaries with respect to
claims against such directors and officers arising from fact or events which
occurred before the Effective Time, which insurance shall contain at least the
same coverage and amounts, and contain terms and conditions no less
advantageous, as that coverage currently provided by the Company; provided,
however, that in no event shall the Acquiror be required to expend per annum
more than 200 percent of the current amount expended by the Company (such limit
on the premiums required to be expended by the Acquiror, the "INSURANCE AMOUNT")
to maintain or procure such directors and officers insurance coverage for a
comparable six-year period; provided, further, that if the Acquiror is unable to
maintain or obtain the insurance called for by this Section 5.12(c), the
Acquiror shall use its reasonable best efforts to obtain as much comparable
insurance as is available for the Insurance Amount; provided, further, that
officers and directors of the Company or any subsidiary may be required to make
application and provide customary representations and warranties to the
Acquiror's insurance carrier for the purpose of obtaining such insurance.
(d) If the Acquiror or any of its successors shall consolidate with,
or merge into, any other entity and shall not be the continuing or surviving
entity of such consolidation or merger, or shall transfer all of its assets to
any other entity, then, and in each case, proper provision shall be made so that
the successor and assigns of the Acquiror shall assume the obligations set forth
in this Section 5.12.
(e) The provisions of this Section 5.12 are intended to be for the
benefit of, and enforceable in accordance with their terms by, Indemnified
Parties.
SECTION 5.13 NOTIFICATION OF CERTAIN MATTERS. (a) Each of the
Company and the Acquiror shall give prompt notice to the other of any fact,
event or circumstance known to it that is reasonably likely, individually or
taken together with all other facts, events and circumstances known to it, to
result in a material breach of any of its representations, warranties, covenants
or agreements contained herein.
(b) The Company and each of its Subsidiaries shall promptly notify the
Acquiror, and the Acquiror shall promptly notify the Company, of any written
notice (or any other communication of which the Company and each of its
Subsidiaries, on the one hand, or the Acquiror, on the other hand, becomes
aware) from any person alleging that the consent of such person is or may be
required as a condition to the Merger or any notice or other communication from
any Governmental Authority or Self-Regulatory Organization in connection with
the transactions contemplated by this Agreement.
SECTION 5.14 AFFILIATE AGREEMENTS. (a) Not later than the 15th day
prior to the mailing of the Prospectus/Proxy Statement, the Company shall
deliver to the Acquiror a schedule of each person that, to the best of its
knowledge, is or is reasonably likely to be, as of the date of the
46
Shareholder's Meeting, deemed to be an "affiliate" of the Company (each, a
"COMPANY AFFILIATE") as that term is used in Rule 145 under the Securities Act.
(b) The Company shall use its reasonable best efforts to cause each
person who may be deemed to be a Company Affiliate to execute and deliver to the
Acquiror, on or before the date of mailing of the Prospectus/Proxy Statement, an
agreement in substantially the form attached hereto as Annex A.
SECTION 5.15 RETENTION PROGRAM. At the Effective Time, the Company, in
cooperation with the Acquiror, will have established a retention program on
terms described in Schedule 5.15 to be used to retain certain employees of the
Company, and Acquiror, the Company and the Surviving Corporation, as applicable,
shall take all actions necessary to implement the provisions of such Schedule
5.15.
SECTION 5.16 PRESS RELEASES. Each of the Company and the Acquiror
agrees that it will not, without the prior approval of the other party, issue
any press release or written statement for general circulation relating to the
transactions contemplated hereby, except as otherwise required by applicable law
or regulation or the rules of any applicable Self-Regulatory Organization.
SECTION 5.17 SECTION 16 MATTERS. Prior to the Effective Time, the
Acquiror and the Company shall take all such steps as may be required to cause
any dispositions of Company Common Stock (including derivative securities with
respect to Company Common Stock) or acquisitions of Acquiror Common Stock
resulting from the transactions contemplated by Article 3 of this Agreement by
each individual who is subject to the reporting requirements of Section 16(a) of
the Exchange Act with respect to the Company, to be exempt under Rule 16b-3
promulgated under the Exchange Act, such steps to be taken in accordance with
the No-Action Letter dated January 12, 1999, issued by the SEC to Skadden, Arps,
Slate, Xxxxxxx & Xxxx LLP.
ARTICLE 6
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 6.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective
obligations of each of the parties hereto to consummate the Merger shall be
subject to the fulfillment or written waiver by the Acquiror and the Company
prior to the Effective Time of the following conditions:
(a) NO RESTRAINTS. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued since the date of this Agreement by any U. S. federal or
state court of competent jurisdiction and shall remain in effect; and no U. S.
federal or state law, statute, rule, regulation or decree that makes
consummation of the Merger illegal shall have been enacted or adopted since the
date of this Agreement and shall remain in effect.
(b) REGISTRATION STATEMENT. The Registration Statement shall have
been declared effective in accordance with the provisions of the Securities Act;
and no stop order suspending the effectiveness of the Registration Statement
shall have been issued by the SEC, and no proceeding shall have been initiated
or threatened in writing by the SEC for the purpose of seeking or obtaining such
a stop order.
47
(c) LISTING. The Acquiror Common Stock to be issued to holders of
Company Common Stock as a result of the Merger shall have been approved for
listing on the NASDAQ/NMS.
(d) GOVERNMENTAL AND REGULATORY CONSENTS. All approvals and
authorizations of, filings and registrations with, and notifications to, all
Governmental Authorities and Self-Regulatory Organizations required for the
consummation of the Merger shall have been obtained or made and shall be in full
force and effect and all waiting periods required by law shall have expired.
(e) SHAREHOLDER APPROVAL. This Agreement and the Merger shall have
been duly approved by the requisite vote of the holders of outstanding shares of
Company Common Stock entitled to vote thereon in accordance with the MBCA, other
applicable law and the Company Articles and Company Bylaws.
(f) TAX OPINION. The Company and the Acquiror shall have received an
opinion (the "TAX OPINION") of KPMG LLP, the Company's independent auditors,
dated the Effective Date, substantially to the effect that, based upon the facts
and assumptions stated therein for United States federal income tax purposes,
the merger should qualify as a "reorganization" within the meaning of Section
368(a) of the Code.
(g) NO GOVERNMENTAL LITIGATION. There shall not be pending before any
U. S. federal or state court of competent jurisdiction any suit, action or
proceeding commenced by any U. S. federal or state Governmental Authority
against Acquiror or the Company (and no U. S. federal or state Governmental
Authority shall have overtly threatened to commence any action, suit or
proceeding against Acquiror or the Company before any U. S. federal or state
court of competent jurisdiction): (i) challenging or seeking to restrain or
prohibit the consummation of the Merger; (ii) relating to the Merger and seeking
to obtain from Acquiror or the Company or any of their Subsidiaries any damages
that would be material to Acquiror or the Company; (iii) seeking to prohibit or
limit in any material respect Acquiror's ability to vote, receive dividends with
respect to or otherwise exercise ownership rights with respect to the stock of
the Surviving Corporation; or (iv) which would materially and adversely affect
the right of the Surviving Corporation to own the assets or operate the business
of the Company.
(h) NO OTHER LITIGATION. There shall not be pending before any U. S.
federal or state court of competent jurisdiction any suit, action or proceeding
commenced by any person against Acquiror in which there is a reasonable
likelihood of a judgment against Acquiror or the Company providing for an award
of damages or other relief that would have a Material Adverse Effect on Acquiror
or the Company; (i) challenging or seeking to prohibit or limit in any material
respect Acquiror's ability to vote, receive dividends with respect to or
otherwise exercise ownership rights with respect to the stock of the Surviving
Corporation; or (iii) which would affect adversely the right of the Surviving
Corporation to own the assets or operate the business of the Company.
SECTION 6.2 CONDITIONS TO OBLIGATION OF THE COMPANY. The obligation of
the Company to consummate the Merger is also subject to the fulfillment or
written waiver by the Company prior to the Effective Time of each of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES. Subject to the standard set forth
in Section 4.2, the representations and warranties of the Acquiror and Merger
Sub set forth in this Agreement shall be true and correct as of the Effective
Date as though made on and as of the Effective Date (except that representations
and warranties that by their terms speak as of the date of this Agreement or
some
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other date shall be true and correct only as of such date), and the Company
shall have received a certificate, dated the Effective Date, signed on behalf of
the Acquiror by a senior executive officer to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF THE ACQUIROR. The Acquiror shall
have performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Effective Time, and the Company
shall have received a certificate, dated the Effective Date, signed on behalf of
the Acquiror by a senior executive officer to such effect.
SECTION 6.3 CONDITIONS TO OBLIGATION OF THE ACQUIROR AND MERGER SUB.
The obligation of the Acquiror and Merger Sub to consummate the Merger is also
subject to the fulfillment or written waiver by the Acquiror prior to the
Effective Time of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. Subject to the standard set forth
in Section 4.2 (except with respect to Section 4.3(e), which shall be true and
correct in all material respects), the representations and warranties of the
Company set forth in this Agreement shall be true and correct as of the
Effective Date as though made on and as of the Effective Date (except that
representations and warranties that by their terms speak as of the date of this
Agreement or some other date shall be true and correct only as of such date) and
the Acquiror shall have received a certificate, dated the Effective Date, signed
on behalf of the Company by a senior executive officer to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Effective Time, and the Acquiror
shall have received, prior to the Effective Time, a certificate, dated the
Effective Date, signed on behalf of the Company by a senior executive officer to
such effect.
(c) THIRD PARTY CONSENTS. All consents or approvals of all persons,
other than Governmental Authorities, required for or in connection with the
execution, delivery and performance of this Agreement and the consummation of
the Merger shall have been obtained and shall be in full force and effect,
unless the failure to obtain any such consent or approval is not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
the Company or the Surviving Corporation.
ARTICLE 7
TERMINATION
SECTION 7.1 TERMINATION. This Agreement may be terminated, and the
Merger may be abandoned at any time prior to the Effective Time, whether before
or after approval thereof by shareholders of the Company:
(a) MUTUAL CONSENT. At any time prior to the Effective Time, by the
mutual consent of the Acquiror and the Company.
(b) BREACH. At any time prior to the Effective Time, by the Acquiror
or the Company in the event of either: (1) a breach by the other party of any
representation or warranty contained herein (subject to the standard set forth
in Section 4.2), which breach cannot be or has not been cured within
49
30 days after the giving of written notice to the breaching party of such
breach, or (2) a breach by the other party of any of the covenants or agreements
contained herein, which breach cannot be or has not been cured within 30 days
after the giving of written notice to the breaching party of such breach and
which breach is reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect on the breaching party or the Surviving Corporation.
(c) DELAY. At any time prior to the Effective Time, by the Acquiror
or the Company in the event that the Merger is not consummated by December 31,
2000, except to the extent that the failure of the Merger then to be
consummated arises out of or results from the knowing action or inaction of the
party seeking to terminate pursuant to this Section 7.1(c).
(d) NO APPROVAL. By the Company or the Acquiror in the event (1) the
approval of any Governmental Authority required for consummation of the Merger
and the other transactions contemplated by this Agreement shall have been denied
by final nonappealable action of such Governmental Authority, or such
Governmental Authority shall have requested the permanent withdrawal of any
application therefor, or (2) the shareholder approval required by Section 6.1(h)
herein is not obtained at the Shareholder Meeting or at any adjournment or
postponement thereof.
(e) FAILURE TO RECOMMEND, ETC. By Acquiror if the Board shall have
withdrawn, or modified or amended in a manner adverse to Acquiror, its approval
or recommendation of this Agreement and the Merger or its recommendation that
shareholders of the Company adopt and approve this Agreement and the Merger or
approved, recommended or endorsed any proposal for a transaction other than the
Merger (including a tender or exchange offer for Shares).
(f) ALTERNATIVE TRANSACTION. By the Company, if (i) the Board
authorizes the Company, subject to complying with the terms of this Agreement,
to enter into a binding written agreement to enter into a transaction that
constitutes a Superior Proposal and the Company notifies Acquiror in writing
that it intends to enter into such an agreement, attaching a description of the
material terms and conditions thereof, (ii) Acquiror does not make, within five
business days of receipt of the Company's written notification of its intention
to enter into a binding agreement for a Superior Proposal, an offer that the
Board determines in good faith by a majority vote after consultations with its
financial advisors, is at least as favorable to the shareholders of the Company
as the Superior Proposal, it being understood that the Company shall not enter
into any such binding agreement during such five day period and (iii) the
Company prior to such termination pursuant to this clause (f) pays to Acquiror
in immediately available funds the fees required to be paid pursuant to Section
7.2. The Company agrees to notify Acquiror promptly if its intention to enter
into a written agreement referred to in its notification shall change at any
time after giving such notification; and
SECTION 7.2 FEES AND EXPENSES. If (i) this Agreement is terminated by
the Company pursuant to Section 7.1(f) to accept a Superior Proposal; or (ii)
(A) this Agreement is terminated by Acquiror pursuant to Section 7.1(e), and (B)
within 12 months of any such termination of this Agreement, the Company shall
enter into a letter of intent or definitive agreement with respect to such
Acquisition Proposal or such Acquisition Proposal shall have been consummated;
or (iii) (A) this Agreement is terminated by the Company or Acquiror pursuant to
Section 7.1(d)(2), (B) at any time after the date of this Agreement and at or
before the Shareholder Meeting an Acquisition Proposal shall have been publicly
announced or communicated to the Board, and (C) within 12 months of any such
termination of this Agreement, the Company shall enter into a letter of intent
or definitive agreement with respect to such Acquisition Proposal or such
Acquisition Proposal shall have been consummated; then the Company shall pay
Acquiror a fee in the amount of $1,000,000
50
(the "TERMINATION FEE"). The Termination Fee payable pursuant to clause (i)
above shall be paid by the Company prior to the termination of this Agreement by
the Company. The Termination Fee payable pursuant to clauses (ii)-(iii) above
shall be paid at or before the consummation of such Acquisition Proposal or
within one business day following the effective date of such letter of intent or
definitive agreement, whichever is earlier.
SECTION 7.3 ACQUIROR DEPOSIT. (a) Upon execution of this Agreement,
Acquiror deposited in escrow $1,000,000 to be delivered at Closing to the
Exchange Agent as part of the Cash Consideration (the "Escrow Deposit"). In
the event that this Agreement is terminated, the Escrow Deposit will be
disbursed as follows:
(i) The Escrow Deposit (plus all interest accrued thereon)
shall be distributed to Acquiror upon written notice by Acquiror to the
Exchange Agent if this Agreement is terminated (A) pursuant to Section
7.1(a) and such mutual termination provides for a return to Acquiror of
the Escrow Deposit, (B) pursuant to Section 7.1(d), (e) or (f), or (C) by
Acquiror pursuant to Section 7.1(b) or (c).
(ii) The Escrow Deposit (plus all interest accrued thereon)
shall be distributed to the Company upon written notice by the Company to
the Exchange Agent if this Agreement is terminated (A) pursuant to
Section 7.1(a) and such mutual termination provides for a disposition to
the Company of the Escrow Deposit, (B) by the Company pursuant to Section
7.1(b), or (C) by the Company pursuant to Section 7.1(c) and the failure
to consummate the Merger results from the knowing action or inaction of
Acquiror or MergerSub.
(b) Such payment shall not limit any remedy available to the Company for
breach of the Agreement by Acquiror. Acquiror shall pay the cost of the escrow
and shall be entitled to any income thereon. The escrow shall be governed by an
escrow agreement substantially in the form of Annex B hereto.
SECTION 7.4 EFFECT OF TERMINATION AND ABANDONMENT. In the event of
termination of this Agreement and the abandonment of the Merger pursuant to this
Article 7, no party to this Agreement shall have any liability or further
obligation to any other party hereunder except (1) as set forth in Sections 7.3,
8.1 and 8.5 and (2) that termination will not relieve a breaching party from
liability for any willful breach of this Agreement.
ARTICLE 8
MISCELLANEOUS
SECTION 8.1 SURVIVAL. No representations, warranties, agreements and
covenants contained in this Agreement shall survive the Effective Time or
termination of this Agreement if this Agreement is terminated prior to the
Effective Time; provided, however, that (a) to the extent the agreements of the
parties contained herein by their terms apply after the Effective Time, such
agreements shall survive the Effective Time, and (b) if this Agreement is
terminated prior to the Effective Time, the agreements of the parties contained
in Sections 5.8(b), 7.2, 7.3 and in this Article 8 shall survive such
termination.
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SECTION 8.2 WAIVER; AMENDMENT. Prior to the Effective Time, any
provision of this Agreement may be (1) waived by the party benefited by the
provision, or (2) amended or modified at any time, by an agreement in writing
between the parties hereto approved or authorized by their respective Boards of
Directors and executed in the same manner as this Agreement, except that, after
approval of the Merger by the shareholders of the Company, no amendment may be
made which under applicable law requires further approval of such shareholders
without obtaining such required further approval.
SECTION 8.3 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to constitute an original.
SECTION 8.4 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Minnesota, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 8.5 EXPENSES. Each party hereto will bear all expenses
incurred by it in connection with this Agreement and the transactions
contemplated hereby, except the printing and mailing expenses, the SEC
registration fees and the cost of the Tax Opinion shall be shared equally
between the Company and Acquiror.
SECTION 8.6 NOTICES. All notices, requests and other communications
hereunder to a party shall be in writing and shall be deemed given (1) on the
date of delivery, if personally delivered or telecopied (with confirmation), (2)
on the first business day following the date of dispatch, if delivered by a
recognized next-day courier service, or (3) on the third business day following
the date of mailing, if mailed by registered or certified mail (return receipt
requested), in each case to such party at its address or telecopy number set
forth below or such other address or numbers as such party may specify by notice
to the parties hereto.
If to the Acquiror or MergerCo, to:
Xxxxxxxxx.xxx Group, Inc.
0000 Xxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Attention: President
With a copy to:
Maun & Simon, PLC
0000 Xxxxxxx Xxxxx Xxxxxxxx Xxxx
000 Xxxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx
52
If to the Company, to:
Xxxxxxx Investments, Inc.
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Attention: President
With a copy to:
Xxxxxx, Xxxxxxxx & Xxxxxx, P.A.
0000 Xxxxxxx Xxxxxx
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx
SECTION 8.7 ENTIRE UNDERSTANDING, NO THIRD PARTY BENEFICIARIES. This
Agreement (together with the Disclosure Schedules) and the Confidentiality
Agreement represent the entire understanding of the parties hereto with
reference to the transactions contemplated hereby and thereby and supersede any
and all other oral or written agreements heretofore made. Except for Section
5.11, insofar as such Section expressly provides certain rights to the persons
named therein, nothing in this Agreement, expressed or implied, is intended to
confer upon any person, other than the parties hereto or their respective
successors and permitted assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
SECTION 8.8 ASSIGNMENT. Neither this Agreement nor any of the rights
or obligations hereunder may be assigned by any party without the prior written
consent of the other parties hereto. Subject to the foregoing, this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed as of the day and year first above written.
XXXXXXX INVESTMENTS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxxx
---------------------------------------
Its: Chairman and Chief Executive Officer
---------------------------------------
XXXXXXXXX.XXX GROUP, INC.
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxx X. Xxxxxx
---------------------------------------
Its: Chairman and Chief Executive Officer
---------------------------------------
SW ACQUISITION, INC.
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxx X. Xxxxxx
---------------------------------------
Its: Chairman and Chief Executive Officer
---------------------------------------
(Signature Page to Agreement and Plan of Merger)
54
