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EXHIBIT 2.1 EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
AMERITRADE HOLDING CORPORATION.
("PURCHASER"),
TRADECAST INC.
(THE "COMPANY"),
TC MERGER SUB INC.
("MERGER SUB")
AND
THE PERSONS LISTED ON THE SCHEDULE OF STOCKHOLDERS ATTACHED HERETO
(TOGETHER, "STOCKHOLDERS")
DATED AS OF FEBRUARY 13, 2001
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TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS..............................................1
1.1 Definitions..................................................1
1.2 Interpretation..............................................11
ARTICLE II THE MERGER..............................................12
2.1 The Merger; Effective Time; Effect on Capital Stock.........12
2.2 Payment of the Merger Consideration.........................13
2.3 Closing Date Balance Sheet..................................15
2.4 Earn-Out Statement..........................................16
2.5 Treatment of TradeCast Options..............................17
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND STOCKHOLDERS........................................18
3.1 Due Incorporation; Subsidiaries.............................18
3.2 Due Authorization...........................................18
3.3 Consents and Approvals; Authority Relative
to this Agreement...........................................19
3.4 Capitalization..............................................19
3.5 Financial Statements; Undisclosed Liabilities...............20
3.6 No Adverse Effects or Changes...............................20
3.7 Title to Properties.........................................22
3.8 Condition and Sufficiency of Assets.........................22
3.9 Real Property...............................................23
3.10 Accounts Receivable.........................................23
3.11 Intellectual Property.......................................23
3.12 Contracts...................................................25
3.13 Permits.....................................................27
3.14 Insurance...................................................27
3.15 Employee Benefit Plans and Employment Agreements............27
3.16 Employment and Labor Matters................................29
3.17 Taxes.......................................................29
3.18 No Defaults or Violations...................................31
3.19 Environmental Matters.......................................32
3.20 Litigation..................................................33
3.21 Bank Accounts...............................................33
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3.22 Improper and Other Payments.. ..............................33
3.23 Privacy Policies; Security..................................33
3.24 Brokers.....................................................34
3.25 Investment Representations..................................34
3.26 Accuracy of Statements......................................35
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER.............35
4.1 Due Incorporation...........................................35
4.2 Due Authorization...........................................35
4.3 Consents and Approvals; Authority Relative to
this Agreement..............................................35
4.4 Litigation..................................................36
4.5 Public Reports..............................................36
4.6 No Adverse Effects or Changes...............................36
4.7 Brokers.....................................................36
ARTICLE V COVENANTS...............................................36
5.1 Implementing Agreement......................................36
5.2 Access to Information and Facilities........................37
5.3 Preservation of Business....................................37
5.4 Consents and Approvals......................................39
5.5 Maintenance of Insurance....................................39
5.6 Supplemental Information....................................40
5.7 Confidentiality.............................................40
5.8 Exclusivity.......................... ......................42
5.9 Interim Financial Statements................................42
5.10 Tax Matters.................................................42
5.11 Stockholders Meeting........................................43
5.12 Preservation of Books and Records; Access...................43
5.13 Indemnification of Officers, Directors, Managers, Partners,
Members and Stockholders....................................44
5.14 Termination of 401(k) Plan..................................44
ARTICLE VI CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER........44
6.1 Warranties True as of Both Present Date and Closing Date....44
6.2 Compliance with Agreements and Covenants....................45
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6.3 Certificate of Compliance...................................45
6.4 Consents and Approvals......................................45
6.5 Xxxx-Xxxxx-Xxxxxx...........................................45
6.6 NASD........................................................45
6.7 No Material Adverse Change..................................45
6.8 Actions or Proceedings......................................45
6.9 Purchase....................................................45
ARTICLE VII CONDITIONS PRECEDENT TO OBLIGATIONS OF STOCKHOLDERS.....45
7.1 Warranties True as of Both Present Date and Closing Date....45
7.2 Compliance with Agreements and Covenants....................46
7.3 Certificate of Compliance...................................46
7.4 Consents and Approvals......................................46
7.5 Xxxx-Xxxxx-Xxxxxx...........................................46
7.6 NASD........................................................46
7.7 No Material Adverse Change..................................46
7.8 Actions or Proceedings......................................46
7.9 Purchase....................................................46
ARTICLE VIII CLOSING.................................................46
8.1 Closing.....................................................46
8.2 Deliveries by Stockholders..................................47
8.3 Deliveries by Purchaser.....................................48
ARTICLE IX TERMINATION.............................................48
9.1 Termination.................................................48
9.2 Effect of Termination.......................................49
ARTICLE X INDEMNIFICATION.........................................49
10.1 Survival....................................................49
10.2 Indemnification by Stockholders.............................49
10.3 Indemnification by Purchaser................................50
10.4 Limitations on Indemnification..............................51
10.5 Claims......................................................52
10.6 Notice of Third Party Claims; Assumption of Defense.........52
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10.7 Settlement or Compromise....................................53
10.8 Failure of Indemnifying Person to Act.......................53
10.9 Recovery from Indemnity Shares and Earn-Out
Indemnity Shares............................................53
10.10 Net Indemnity Payments......................................53
10.11 Exclusive Remedy............................................53
10.12 Time Limits.................................................54
ARTICLE XI MISCELLANEOUS...........................................54
11.1 Expenses....................................................54
11.2 Amendment...................................................54
11.3 Notices.....................................................54
11.4 Waivers.....................................................55
11.5 Counterparts................................................56
11.6 Assignment..................................................56
11.7 No Third Party Beneficiaries................................56
11.8 Publicity...................................................56
11.9 Further Assurances..........................................56
11.10 Severability................................................56
11.11 Entire Understanding........................................57
11.12 Stockholders Representative.................................57
11.13 Applicable Law..............................................57
11.14 Specific Performance........................................57
11.15 Waiver of Jury Trial........................................57
11.16 Schedules...................................................57
11.17 Disclosure..................................................57
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TABLE OF CONTENTS
(continued)
SCHEDULES
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Schedule of Stockholders
Schedule 1.1A Bankstream Assets
Schedule 1.1B Financial Statements
Schedule 2.3 Exceptions from GAAP - Closing Date Balance Sheet
Schedule 2.4 Exceptions from GAAP - Earn-Out Statement
Schedule 3.1 Organization of the Company and the Subsidiaries
Schedule 3.3(a) Consents and Approvals.
Schedule 3.3(b) Authority Relative to this Agreement
Schedule 3.4(b) Capital Stock and Ownership of Subsidiaries
Schedule 3.4(c) Options and Contractual Obligations Relating to
Company Shares
Schedule 3.5 Financial Statements; Undisclosed Liabilities
Schedule 3.6 Adverse Effects or Changes
Schedule 3.7 Exceptions to Title; Permitted Liens
Schedule 3.8 Condition of Assets
Schedule 3.9 List of Leased Real Property and Real Property Leases
Schedule 3.10 Accounts Receivable
Schedule 3.11(a) Intellectual Property Owned by the Company
Schedule 3.11(b) Software
Schedule 3.11(c) TradeCast License Agreements
Schedule 3.11(d) Adverse Claims to Intellectual Property
Schedule 3.11(e) Infringement
Schedule 3.11(f) Disclosure of Trade Secrets
Schedule 3.12 Contracts
Schedule 3.13 Permits
Schedule 3.14 Insurance
Schedule 3.15 Employee Benefit Plans and Employment Agreements
Schedule 3.16 Employment and Labor Matters
Schedule 3.17 Tax Matters
Schedule 3.18 Defaults and Violations
Schedule 3.19 Environmental Matters
Schedule 3.20 Litigation
Schedule 3.21 Bank Accounts
Schedule 4.3 Consents and Approvals; Authority Relative to
this Agreement
Schedule 5.3 Preservation of Business
EXHIBITS
Exhibit A Form of Employment Agreements
Exhibit B Form of Escrow Agreement
Exhibit C Form of License Agreement
Exhibit D Purchase Agreement
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Exhibit E Form of Stockholders Agreement
Exhibit F Form of Opinion of Counsel to the Company
and Stockholders
Exhibit G Form of Opinion of Counsel to Purchaser
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT is made as of the 13th day of February, 2001, by and
among AMERITRADE HOLDING CORPORATION, a Delaware corporation ("Purchaser"),
TRADECAST INC., a Delaware corporation (the "Company"), TC MERGER SUB INC., a
Delaware corporation ("Merger Sub"), and each of the Persons listed on the
Schedule of Stockholders attached hereto (each a "Stockholder" and together
"Stockholders"). Certain capitalized terms used herein are defined in Article I.
W I T N E S S E T H:
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WHEREAS, the respective Boards of Directors of each of Purchaser, the
Company and Merger Sub have approved and declared advisable this Agreement and
the merger of Merger Sub with and into the Company (the "Merger") upon the terms
and subject to the conditions set forth in this Agreement;
WHEREAS, the parties intend, by executing and delivering this
Agreement, to adopt a plan of reorganization within the meaning of Section
368(a) of the Code and to cause the Merger to qualify as a "reorganization" as
therein defined.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements herein contained, the
parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. The following terms shall have the following
meanings for the purposes of this Agreement:
"Accounting Firm" shall mean Ernst & Young LLP or another nationally
recognized independent accounting firm mutually agreeable to Purchaser and the
Stockholders Representative.
"Accounts Receivable" shall have the meaning set forth in Section 3.10.
"Accrued Earn-Out Shares" shall mean the sum of (i) Net Revenue Shares,
(ii) Pretax Profits Shares, (iii) B2B Shares and (iv) B2C Shares.
"Affiliate" shall mean, with respect to any specified Person, (i) any
other Person which, directly or indirectly, owns or controls, is under common
ownership or control with, or is owned or controlled by, such specified Person,
(ii) any other Person which is a director, officer, partner or manager, or is,
directly or indirectly, the beneficial owner of ten percent (10%) or more of any
class of equity securities, of the specified Person or a Person described in
clause (i) of this paragraph, (iii) another Person of which the specified Person
is a director, officer, partner or manager or is, directly or indirectly, the
beneficial owner of ten percent (10%) or more of any class of equity securities,
(iv) another Person in which the specified Person has a substantial beneficial
interest or as to which the specified Person serves as trustee or in a similar
capacity or
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(v) any spouse, parent, child or sibling of the specified Person; provided, that
at any time after the Closing Date, the Company and the Subsidiaries on the one
hand and Stockholders and their respective Affiliates (other than the Company
and the Subsidiaries) on the other hand shall not be deemed to be Affiliates of
each other.
"Agreement" shall mean this Agreement and Plan of Merger, including all
exhibits and schedules hereto, as it may be amended, modified or supplemented
from time to time in accordance with its terms.
"Audited 2000 Financials" shall mean the audited consolidated financial
statements of TradeCast Investments and the other Subsidiaries (not including
TradeCast Enterprises) as of December 31, 2000, consisting of the balance sheet
as of such date and the related statement of earnings and retained earnings and
cash flows for the fiscal year then ended
"Bankstream" shall mean Bankstream Ltd, a Texas limited partnership.
"Bankstream Assets" shall mean the partnership interests of Bankstream,
the Sixth Market Note and all other assets, properties and rights set forth on
Schedule 1.1A.
"Business Day" shall mean any day of the year other than (i) any
Saturday or Sunday or (ii) any other day on which banks located in New York, New
York generally are closed for business.
"B2B Shares" shall mean (i) if B2B Trades exceed 10,122,170 and are
less than 14,777,795, the number of Shares equal to the product obtained by
multiplying (A) 187,500 by (B) the quotient obtained by dividing (1) B2B Trades
minus 10,122,170 by (2) 4,655,625 and (ii) if B2B Trades are equal to or exceed
14,777,795, the number of Shares equal to 187,500.
"B2B Trades" shall mean all trades during the twelve-month period ended
December 31, 2001 that are (i) executed on behalf of customers of broker dealers
who are not Affiliates of the Company or any Subsidiary (or their respective
successors) and who have been granted the right to use or practice any rights
under any Intellectual Property in the ordinary course of business and
consistent with past practice and (ii) for which the Company and the
Subsidiaries (or their respective successors) are paid on a per share basis (for
purposes of this definition, each 1,000 shares shall represent one trade) or per
order basis in the ordinary course of business and consistent with past
practices; provided, that if any such broker dealer becomes an Affiliate of
Purchaser, the Company or any Subsidiary after the Closing, "B2B Trades" shall
include all trades executed on behalf of customers of such broker dealers.
"B2C Shares" shall mean (i) if B2C Trades exceed 309,213 and are less
than 903,627, the number of Shares equal to the product obtained by multiplying
(A) 187,500 by (B) the quotient obtained by dividing (1) B2C Trades minus
309,213 by (2) 594,414 and (ii) if B2C Trades are equal to or exceed 903,627,
the number of Shares equal to 187,500.
"B2C Trades" shall mean all trades during the twelve-month period ended
December 31, 2001 that are (i) executed on behalf of (A) retail customers of the
Company or the Subsidiaries (or their respective successors) in the ordinary
course of business and consistent with past practice and (B) retail customers of
Purchaser or its Affiliates (other than the Company or the
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Subsidiaries or their respective successors) granted the right to use or
practice any rights under any Intellectual Property in the ordinary course of
business and consistent with past practice and (ii) for which the Company or the
Subsidiaries (or their respective successors) or Purchaser or its Affiliates are
entitled to be paid a fee or commission (including free trades that are part of
any promotion offered by Purchaser or its Affiliates) in the ordinary course of
business and consistent with past practice.
"Certificate of Merger" shall have the meaning set forth in Section
2.1(b).
"Closing" shall mean the consummation of Merger and all other
transactions contemplated herein in accordance with Article VIII.
"Closing Average Share Price" shall mean the average of the closing
prices of the Shares on all securities exchanges on which the Shares may at the
time be listed, or, if there has been no sales on any such exchange on any day,
the average of the highest bid and lowest asked prices on all such exchanges at
the end of such day, or, if on any day such security is not so listed, the
average of the representative bid and asked prices quoted in the Nasdaq National
Market as of 4:00 P.M., New York time, or, if on any day such security is not
quoted in the Nasdaq National Market, the average of the highest bid and lowest
asked prices on such day in the domestic over-the-counter market as reported by
the National Quotation Bureau, Incorporated, or any similar successor
organization, in each such case on the Closing Date.
"Closing Date" shall mean the date on which the Closing occurs or is to
occur.
"Closing Date Balance Sheet" shall have the meaning set forth in
Section 2.3(a).
"Code" shall mean the United States Internal Revenue Code of 1986, as
amended.
"Company" shall have the meaning set forth in the preamble hereof.
"Company Benefit Plan" means all Employee Benefit Plans which the
Company or any Subsidiary or any of their respective ERISA Affiliates maintains,
sponsors, is a party to, participates in, has any commitment to create or has
any liability or contingent liability.
"Company's Knowledge" shall mean the actual knowledge of each
Stockholder and each of Xxxxxxx Xxxxx, Xxxxxxx Xxxxx, Xxxxxx Xxxxxxxx and
Xxxxxxx Xxxxxxxxx or the knowledge such Stockholder could reasonably obtain
after due inquiry; provided, that with respect to each Stockholder, the phrase
"due inquiry" shall mean that such Stockholder has inquired of the officers and
employees of the Company and the Subsidiaries having primary responsibility for
the matter that is the subject of such inquiry.
"Company Share" shall mean each share of Class A common stock, $.01 par
value per share, of the Company, and each share of Class B common stock, $.01
par value per share, of the Company.
"Contract" shall mean any contract, lease, sales order, purchase order,
agreement, indenture, mortgage, note, bond, right, warrant or instrument,
whether written or verbal.
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"Deductible Amount" shall mean the product obtained by multiplying (i)
78,750 by (ii) the Closing Average Share Price.
"Delaware Law" shall mean the Delaware General Corporation Law.
"Dollars" or numbers preceded by the symbol "$" shall mean amounts in
United States Dollars.
"Earn-Out Indemnity Shares" shall mean the product obtained by
multiplying (i) the Accrued Earn-Out Shares by (ii) .05.
"Earn-Out Shares" shall mean 750,000 Shares.
"Earn-Out Statement" shall have the meaning set forth in Section
2.4(a).
"Effective Time" shall have the meaning set forth in Section 2.1(b).
"Employee Benefit Plan" means (i) any "employee welfare benefit plan"
or "employee pension benefit plan" (as those terms are defined in Sections 3(1)
and 3(2), respectively, of ERISA) and (ii) any retirement or deferred
compensation plan, incentive compensation plan, stock plan, unemployment
compensation plan, vacation pay, severance pay, bonus or benefit arrangement,
insurance or hospitalization program or any other fringe benefit arrangements
for any current or former employee, officer, director, consultant or agent,
whether pursuant to contract, arrangement, custom or informal understanding,
which does not constitute an employee benefit plan (as defined in Section 3(3)
of ERISA).
"Employment Agreements" shall mean an employment agreement between
Purchaser and each of Xxxxxx X. Xxxxxxxx, Xx., Xxxxx X. Xxxxxx and Xxxxxxx
Xxxxx, to be dated the Closing Date and in the form attached hereto as Exhibit
A.
"Environmental Law" shall mean any Law that imposes liability or
standards of conduct concerning, or otherwise relates to, discharges, emissions,
releases or threatened releases of noises, odors or any pollutants, contaminants
or hazardous or toxic wastes, substances or materials, whether as matter or
energy, into ambient air, water or land, or otherwise relating to the
manufacture, processing, generation, distribution, use, treatment, storage,
disposal, cleanup, transport or handling of pollutants, contaminants or
hazardous or toxic wastes, substances or materials.
"Environmental Permit" shall mean any Permit required by or pursuant to
any applicable Environmental Law.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" shall mean, with respect to any Person, any
corporation, trade or business which, together with such Person, is a member of
a controlled group of corporations or a group of trades or businesses under
common control within the meaning of Section 414 of the Code.
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"Escrow Agent" shall mean The Chase Manhattan Bank, or its successor
appointed pursuant to the Escrow Agreement.
"Escrow Agreement" shall mean an escrow agreement between Escrow Agent,
Purchaser, the Stockholders Representative and the Sellers Representative, to be
dated the Closing Date and in the form attached hereto as Exhibit B.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exchange Ratio" shall have the meaning set forth in Section 2.1(d).
"Excluded Company Share" shall mean any Company Share that is owned by
the Company or any Subsidiary.
"Excluded Covenants" shall mean (i) Sections 5.7 (confidentiality),
5.10 (tax matters), 5.12 (preservation of books and records; access), 5.13
(indemnification of officers, directors, managers, partners, members and
stockholders), 11.1 (expenses), 11.12 (stockholders representative), 11.14
(specific performance) and 11.15 (waiver of jury trial) of this Agreement and
the provisions of Article X (indemnification) of this Agreement that expressly
survive the one (1) year limitation contained therein and (ii) Sections 5.6
(confidentiality), 5.8 (tax matters), 5.9 (preservation of books and records;
access), 5.10 (indemnification of officers, directors, managers, partners,
members and stockholders), 11.1 (expenses), 11.12 (sellers representative),
11.14 (specific performance) and 11.15 (waiver of jury trial) of the Purchase
Agreement and the provisions of Article X (indemnification) of the Purchase
Agreement that expressly survive the one (1) year limitation contained therein.
"Financial Statements" shall mean (i) the audited consolidated
financial statements of TradeCast Investments and the other Subsidiaries (not
including TradeCast Enterprises) as of December 31, 1999 (including all notes
thereto) and (ii) the unaudited consolidated financial statements of TradeCast
Investments and the other Subsidiaries (not including TradeCast Enterprises) as
of the end of each month after December 31, 1999 through the date hereof
(including all notes thereto), which are included in Schedule 1.1B, consisting
of the balance sheets at such dates and the related statements of earnings and
retained earnings and partners' equity, as applicable, for the respective
periods then ended. In addition, after the date of this Agreement, the term
"Financial Statements" shall include all financial statements provided pursuant
to Section 5.9.
"GAAP" shall mean United States generally accepted accounting
principles at the time in effect.
"Governmental Authority" shall mean the government of the United States
or any foreign country or any state or political subdivision thereof and any
entity, body or authority, whether national, international or supra-national,
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, including any quasi-governmental
entity established to perform such functions.
"Hazardous Substance" shall mean any material or substance which (i)
constitutes a hazardous substance, toxic substance or pollutant (as such terms
are defined by or pursuant to
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any Environmental Law) or (ii) is regulated or controlled as a hazardous
substance, toxic substance, contaminant, pollutant or other regulated or
controlled material, substance or matter pursuant to any Environmental Law.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended.
"Indemnification Cap" shall mean the product obtained by multiplying
(i) the sum of (A) the Indemnity Shares and (B) the Earn-Out Indemnity Shares by
(ii) the Closing Average Share Price.
"Indemnified Person" shall mean the Person or Persons entitled to, or
claiming a right to, indemnification under Article X.
"Indemnifying Person" shall mean the Person or Persons claimed by the
Indemnified Person to be obligated to provide indemnification under Article X.
"Indemnity Shares" shall mean 375,000 Shares.
"Intellectual Property" shall mean all trademarks, service marks, trade
names, Internet domain names, designs, logos, slogans, and general intangibles
of like nature, together with all goodwill, registrations and applications
related to the foregoing; patents and industrial design registrations or
applications (including any continuations, divisionals, continuations-in-part,
renewals, reissues, and applications for any of the foregoing); copyrights
(including any registrations and applications for any of the foregoing);
Software; "mask works" (as defined under 00 Xxxxxx Xxxxxx Code Section
901(a)(2)) and any registrations and applications for "mask works"; Trade
Secrets; rights of publicity and privacy relating to the use of the names,
likenesses, voices, signatures and biographical information of real persons; in
each case owned or used by the Company or any Subsidiary.
"IRS" shall mean the United States Internal Revenue Service.
"Latest Balance Sheet" shall mean the unaudited consolidated balance
sheet of TradeCast Investments and the other Subsidiaries (not including
TradeCast Enterprises) dated as of December 31, 2000 set forth in Schedule 1.1B.
"Law" shall mean any law, statute, regulation, ordinance, rule, order,
directive, decree, judgment, consent decree, settlement agreement or
governmental requirement enacted, promulgated, entered into or imposed by any
Governmental Authority.
"Leased Real Property" shall have the meaning set forth in Section 3.9.
"License Agreement" shall mean a license agreement between Purchaser
and Bankstream, to be dated the Closing Date and in the form attached hereto as
Exhibit C.
"Lien" shall mean any lien, mortgage, charge, restriction, pledge,
security interest, option, lease, sublease or encumbrance.
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"Loss" or "Losses" shall mean any and all losses, liabilities, costs,
claims, damages, penalties, interest and expenses (including reasonable
attorneys' fees and expenses and reasonable costs of investigation and
litigation, but excluding lost profits and consequential damages). In the event
any of the foregoing are indemnifiable hereunder, the terms "Loss" and "Losses"
shall include any and all reasonable attorneys' fees and expenses and reasonable
costs of investigation and litigation incurred by the Indemnified Person in
enforcing such indemnity.
"Material Adverse Change to the Company" shall mean a change (or
circumstance involving a prospective change) in the business, operations,
assets, liabilities, results of operations, cash flows, condition (financial or
otherwise) or prospects of the Company and the Subsidiaries taken as a whole
which is materially adverse.
"Material Adverse Change to Purchaser" shall mean a change (or
circumstance involving a prospective change) in the business, operations,
assets, liabilities, results of operations, cash flows, condition (financial or
otherwise) or prospects of Purchaser and its subsidiaries taken as a whole which
is materially adverse.
"Material Adverse Effect on the Company" shall mean an effect (or
circumstance involving a prospective effect) on the business, operations,
assets, liabilities, results of operations, cash flows, condition (financial or
otherwise) or prospects of the Company and the Subsidiaries taken as a whole
which is materially adverse.
"Material Adverse Effect on Purchaser" shall mean an effect (or
circumstance involving a prospective effect) on the business, operations,
assets, liabilities, results of operations, cash flows, condition (financial or
otherwise) or prospects of Purchaser and its subsidiaries taken as a whole which
is materially adverse.
"Merger" shall have the meaning set forth in the recital of this
Agreement.
"Merger Consideration" shall have the meaning set forth in Section 2.2.
"Merger Sub" shall have the meaning set forth in the preamble hereof.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Net Revenues" shall mean the total revenues (including customer
interest income) of the Company and the Subsidiaries (and their respective
successors) for the twelve-month period ended December 31, 2001 less customer
interest expense of the Company and the Subsidiaries (and their respective
successors) for the twelve-month period ended December 31, 2001.
"Net Revenues Shares" shall mean (i) if Net Revenues exceed $15,950,000
and are less than $33,114,000, the number of Shares equal to the product
obtained by multiplying (A) 93,750 by (B) the quotient obtained by dividing (1)
Net Revenues minus $15,950,000 by (2) $17,164,000, (ii) if Net Revenues are
equal to or exceed $33,114,000 and are less than $43,060,000, the number of
Shares equal to the sum of 93,750 and the product obtained by multiplying (A)
93,750 by (B) the quotient obtained by dividing (1) Net Revenues minus
$33,114,000 by (2) $9,946,000 and (iii) if Net Revenues are equal to or exceed
$43,060,000, the number of Shares equal to 187,500.
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"Net Worth" shall mean the amount equal to (i) the total current assets
of the Company and the Subsidiaries (or their respective successors) reflected
on the Closing Date Balance Sheet less (ii) the total current liabilities of the
Company and the Subsidiaries (or their respective successors) reflected on the
Closing Date Balance Sheet.
"Option Exercise Price" shall have the meaning set forth in Section
2.5(a).
"Option Exchange Ratio" shall mean .075.
"Permit" shall mean any permit, license, bond, approval, consent or
other authorization required or granted by any Governmental Authority.
"Permitted Liens" shall mean (i) Liens for Taxes that are not yet
delinquent or that are being contested in good faith by appropriate proceedings
and which are fully reserved for in the Financial Statements and on the Closing
Date Balance Sheet, (ii) workers', mechanics', materialmen's, repairmen's,
suppliers', carriers' or similar Liens arising in the ordinary course of
business with respect to obligations that are not yet delinquent or that are
being contested in good faith by appropriate proceedings, (iii) Liens
encumbering the landlord's interest in the Leased Real Property, (iv) covenants,
zoning restrictions, easements, licenses or other restrictions on the use of the
Leased Real Property so long as the same do not materially impair the use of the
Leased Real Property and (v) those Liens set forth in Schedule 3.7 and
designated as "Permitted Liens."
"Person" shall mean any individual, corporation, proprietorship, firm,
partnership, limited partnership, limited liability company, trust, association
or other entity.
"Pretax Profits" shall mean the net income (loss) before taxes of the
Company and the Subsidiaries (and their respective successors) for the
twelve-month period ended December 31, 2001; provided, that (i) expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall not be included in such calculation, (ii) a corporate overhead
allocation shall not be included in such calculation, (iii) advertising and
marketing expenses directly relating to the Company and the Subsidiaries (and
their respective successors) shall be included in such calculation and (iv)
advertising and marketing expenses indirectly relating to the Company and the
Subsidiaries (and their respective successors) shall not be included in such
calculations.
"Pretax Profits Shares" shall mean (i) if Pretax Profits exceed
$1,600,000 and are less than $11,048,000, the number of Shares equal to the
product obtained by multiplying (A) 93,750 by (B) the quotient obtained by
dividing (1) Pretax Profits minus $1,600,000 by (2) $9,448,000, (ii) if Pretax
Profits are equal to or exceed $11,048,000 and are less than $15,690,000, the
number of Shares equal to the sum of 93,750 and the product obtained by
multiplying (A) 93,750 by (B) the quotient obtained by dividing (1) Pretax
Profits minus $11,048,000 by (2) $4,642,000 and (iii) if Pretax Profits are
equal to or exceed $15,690,000, the number of Shares equal to 187,500.
"Prototype Plan" shall mean the employee pension benefit plan
maintained by TradeCast Investments, which is a prototype cash or deferred
profit sharing plan sponsored by American United Life Insurance Company.
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"Public Reports" shall have the meaning set forth in Section 4.5.
"Purchase" shall mean the purchase of interests in TradeCast
Enterprises and TradeCast Investments in accordance with the Purchase Agreement.
"Purchase Agreement" shall mean the interest purchase agreement between
Purchaser and Sellers, dated the date hereof and in the form attached hereto as
Exhibit D.
"Purchaser" shall have the meaning set forth in the preamble hereof.
"Purchaser Indemnified Party" or "Purchaser Indemnified Parties" shall
mean Purchaser and each of its Affiliates (including, after the Closing, the
Company and the Subsidiaries), and their respective officers, directors,
managers, stockholders, partners, members, employees, agents and
representatives; provided, that in no event shall any Stockholder be deemed to
be a Purchaser Indemnified Party.
"Real Property Leases" shall have the meaning set forth in Section 3.9.
"Related Agreement" shall mean the Purchase Agreement and any other
Contract that is entered into at the Closing or otherwise pursuant to this
Agreement. The Related Agreements executed by a specified Person shall be
referred to as "such Person's Related Agreements," "its Related Agreements" or
another similar expression.
"Remaining Shares" shall mean the remainder obtained by subtracting (i)
the sum of the Indemnity Shares and the Earn-Out Shares from (ii) the Total
Shares.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Sellers" shall mean ForTradeCast L Partners, L.P., a Texas limited
partnership, and ForTradeCast S Partners, L.P., a Texas limited partnership.
"Sellers Representative" shall have the meaning ascribed to it in the
Purchase Agreement.
"Share" or "Shares" shall mean the Class A Common Stock, par value
$0.01 per share, of Purchaser.
"Sixth Market Note" shall mean (i) the Loan Agreement in the amount of
$250,000, dated December 15, 1999, between Sixth Market, L.L.C., Xxx Xxxxxxx,
Xxxx Xxxxx and TradeCast Securities Ltd., (ii) the Secured Multiple Advance
Promissory Note in the amount of $250,000, dated December 15, 1999, between
Sixth Market, L.L.C., Xxx Xxxxxxx, Xxxx Xxxxx and TradeCast Securities Ltd.,
(iii) the Security Agreement in the amount of $250,000, dated December 15, 1999,
between Sixth Market, L.L.C., Xxx Xxxxxxx and Xxxx Xxxxx, as Debtor, and
TradeCast Securities Ltd., as Secured Party, (iv) the Addendum to Security
Agreement (Accounts, Inventory, Documents, Chattel Paper, General Intangibles)
in the amount of $250,000, dated December 15, 1999, between Sixth Market,
L.L.C., Xxx Xxxxxxx and Xxxx Xxxxx, as Debtor, and TradeCast Securities Ltd., as
Secured Party, (v) the Amendment and Modification of Security Agreement, dated
March 1, 2000, (vi) the UCC-1 (Xxx Xxxxxxx, as Debtor, and TradeCast Securities
Ltd., as Secured Party), dated January 10, 2000, (vii) the
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UCC-1 (Xxxx Xxxxx, as Debtor, and TradeCast Securities Ltd., as Secured Party),
dated January 10, 2000, (viii) the UCC-3 (Sixth Market, L.L.C., as Debtor, and
TradeCast Securities Ltd., as Secured Party), dated March 29, 2000, and (ix) the
UCC-3 (Xxxx Xxxxx, as Debtor, and TradeCast Securities Ltd., as Secured Party),
dated March 29, 2000.
"Software" means any and all (i) computer programs, including any and
all software implementation of algorithms, models and methodologies, whether in
source code or object code form, (ii) databases and compilations, including any
and all data and collections of data, and (iii) all documentation, including
user manuals and training materials, relating to any of the foregoing.
"Stockholders" shall have the meaning set forth in the preamble hereof.
"Stockholders Agreement" shall mean a stockholders agreement between
Purchaser, Stockholders and Sellers, to be dated the Closing Date and in the
form attached hereto as Exhibit E.
"Stockholder Indemnified Party" or "Stockholder Indemnified Parties"
shall mean Stockholders and each of their respective Affiliates, and their
respective officers, directors, managers, stockholders, partners, members,
employees, agents and representatives; provided, that after the Closing, in no
event shall the Company or any Subsidiary be deemed to be a Stockholder
Indemnified Party.
"Stockholders Representative" shall have the meaning set forth in
Section 11.12.
"Subsidiaries" shall mean TradeCast Enterprises, TradeCast Investments,
Bankstream, Quotecast Ltd., TradeCast Ltd., TradeCast Advertising LLC, TradeCast
Management Corp., TradeCast Resources Inc., TradeCast Securities Ltd. and
TradeCast Services Inc.; provided, that as of immediately after the Closing, in
no event shall Bankstream be deemed to be a Subsidiary.
"Surviving Corporation" shall have the meaning set forth in Section
2.1(a).
"Taxes" or "Tax" shall mean all taxes, charges, fees, duties (including
customs duties), levies or other assessments, including income, gross receipts,
net proceeds, ad valorem, turnover, real and personal property (tangible and
intangible), sales, use, franchise, excise, value added, stamp, leasing, lease,
user, transfer, fuel, excess profits, occupational, interest equalization,
windfall profits, severance, license, payroll, environmental, capital stock,
disability, employees' income withholding, other withholding, unemployment and
Social Security taxes, which are imposed by any Governmental Authority, and such
term shall include any interest, penalties or additions to tax attributable
thereto.
"Tax Indemnification Period" shall mean the period (including all prior
taxable years) ending on and including the Closing Date. For any taxable year of
the Company or any Subsidiary that does not end on, and would otherwise extend
beyond, the Closing Date, there shall be a deemed short taxable year ending on
and including the Closing Date and a second deemed short taxable year beginning
on and including the day after the Closing Date. The allocation of income and
deductions between the deemed short taxable years shall be based on a closing of
the books as of the end of the Closing Date.
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"Tax Return" shall mean any report, return or other information
required to be supplied to a Governmental Authority in connection with any
Taxes.
"Total Shares" shall mean 8,250,000 Shares.
"TradeCast Class II Units" shall mean the Class II Units representing
Class II limited partner interests in TradeCast Investments issuable under the
Agreement of Limited Partnership of TradeCast Investments.
"TradeCast Enterprises" shall mean TradeCast Enterprises LLC, a Texas
limited liability company.
"TradeCast Option" shall mean an option to purchase TradeCast Class II
Units issued to employees of the Company and the Subsidiaries pursuant to the
TradeCast Option Plan.
"TradeCast License Agreements" shall have the meaning set forth in
Section 3.11(c).
"TradeCast Investments" shall mean TradeCast Investments Ltd., a Texas
limited partnership.
"TradeCast Option Plan" shall mean the TradeCast Investments Ltd. 1999
Long-Term Incentive Plan.
"Trade Secrets" shall mean all technology, trade secrets and other
confidential information, know-how, proprietary processes, formulae, algorithms,
models, and methodologies.
1.2 Interpretation. The headings preceding the text of Articles and
Sections included in this Agreement and the headings to Schedules attached to
this Agreement are for convenience only and shall not be deemed part of this
Agreement or be given any effect in interpreting this Agreement. The use of the
masculine, feminine or neuter gender or the singular or plural form of words
herein shall not limit any provision of this Agreement. The use of the terms
"including" or "include" shall in all cases herein mean "including, without
limitation" or "include, without limitation," respectively. Reference to any
Person includes such Person's successors and assigns to the extent such
successors and assigns are permitted by the terms of any applicable agreement,
and reference to a Person in a particular capacity excludes such Person in any
other capacity or individually. Reference to any agreement (including this
Agreement), document or instrument means such agreement, document or instrument
as amended or modified and in effect from time to time in accordance with the
terms thereof and, if applicable, the terms hereof. Reference to any Law means
such Law as amended, modified, codified, replaced or re-enacted, in whole or in
part, including rules, regulations, enforcement procedures and any
interpretations promulgated thereunder. Underscored references to Articles,
Sections, Subsections or Schedules shall refer to those portions of this
Agreement. The use of the terms "hereunder," "hereof," "hereto" and words of
similar import shall refer to this Agreement as a whole and not to any
particular Article, Section or clause of, or any Exhibit or Schedule to, this
Agreement.
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ARTICLE II
THE MERGER
2.1 The Merger; Effective Time; Effect on Capital Stock.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, at the Effective Time, Merger Sub shall be merged with and into the
Company and the separate corporate existence of Merger Sub shall thereupon
cease. The Company shall be the surviving corporation in the Merger (sometimes
referred to as the "Surviving Corporation") and shall continue to be governed by
the laws of the State of Delaware, and the separate corporate existence of the
Company, with all its rights, privileges, immunities, powers and franchises,
shall continue unaffected by the Merger except as set forth in this Section 2.1.
The Merger shall have the effects specified in the Delaware Law.
(b) As soon as practicable following the Closing, Purchaser and the
Company will cause a Certificate of Merger (the "Certificate of Merger") to be
executed, acknowledged and filed with the Secretary of State of the State of
Delaware as provided in Sections 103 and 251 of the Delaware Law. The Merger
shall become effective at the time when the Certificate of Merger has been duly
filed with the Secretary of State of the State of Delaware or such other time as
shall be agreed upon by the parties and set forth in the Certificate of Merger
in accordance with the Delaware Law (the "Effective Time").
(c) The certificate of incorporation of Merger Sub as in effect
immediately prior to the Effective Time shall be the certificate of
incorporation of the Surviving Corporation, until duly amended as provided
therein or by applicable law. The by-laws of Merger Sub in effect at the
Effective Time shall be the by-laws of the Surviving Corporation, until
thereafter amended as provided therein or by applicable law. The directors of
Merger Sub at the Effective Time shall, from and after the Effective Time, be
the directors of the Surviving Corporation until their successors have been duly
elected or appointed and qualified or until their earlier death, resignation or
removal in accordance with the certificate of incorporation and the by-laws of
the Surviving Corporation. The officers of Merger Sub at the Effective Time
shall, from and after the Effective Time, be the officers of the Surviving
Corporation until their successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the certificate of incorporation and the by-laws of the Surviving
Corporation.
(d) At the Effective Time, the Merger shall have the following effects
on the capital stock of the Company and Merger Sub, without any action on the
part of the holder of any capital stock of the Company or Merger Sub:
(i) each Company Share issued and outstanding immediately prior
to the Effective Time (but excluding any Excluded Company
Shares), shall be converted into and become exchangeable for
the fraction of a Share (the "Exchange Ratio") equal to the
quotient obtained by dividing (A) the number of Shares
issued to Stockholders in accordance with Section 2.2(a) by
(B) the number of Company Shares issued and outstanding
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immediately prior to the Effective Time (other than the
Excluded Company Shares);
(ii) all Company Shares shall no longer be outstanding, shall be
canceled and retired and shall cease to exist, and each
certificate formerly representing any Company Shares (other
than Excluded Company Shares) shall thereafter represent
only the right to the consideration per share set forth in
Section 2.1(d)(i) in respect of each Company Share formerly
represented by such certificate multiplied by the number of
Company Shares formerly represented by such certificate and
the right, if any, to receive pursuant to Section 2.1(f)
cash in lieu of the fractional shares into which such
Company Shares have been converted pursuant to this Section
2.1(d)(ii) without interest;
(iii) each Excluded Company Share issued and outstanding
immediately prior to the Effective Time shall no longer be
outstanding, shall be canceled and retired without payment
of any consideration therefor and shall cease to exist; and
(iv) each share of Common Stock, par value $0.01 per share, of
Merger Sub issued and outstanding immediately prior to the
Effective Time shall be converted into one share of common
stock of the Surviving Corporation, and the Surviving
Corporation shall thereby become a wholly-owned subsidiary
of Purchaser.
(e) Notwithstanding any other provision of this Agreement, no
fractional Shares will be issued and any Stockholder entitled to receive a
fractional Share but for this Section 2.2(e) shall be entitled to receive in
lieu thereof an amount in cash (without interest) determined by multiplying such
fraction (rounded to the nearest one-hundredth of a share) by the Closing
Average Share Price.
(f) Each Stockholder hereby waives any appraisal rights that may be
available to it in connection with the Merger under Section 262 of the Delaware
Law.
(g) In the event that prior to the Effective Time, there shall have
been declared or effected a reclassification, stock split (including a reverse
split), stock dividend or stock distribution with respect to the Shares, the
Exchange Ratio shall be equitably adjusted to reflect such event.
2.2 Payment of the Merger Consideration. The total consideration for
the Company Shares (collectively, the "Merger Consideration") and the total
consideration paid to Sellers pursuant to the Purchase Agreement shall be as
follows:
(a) Within five (5) Business Days after the Closing Date, Purchaser
shall issue to Stockholders and Sellers and deliver to the Escrow Agent
certificates representing the Indemnity Shares and the Earn-Out Shares to be
held in accordance with the provisions of the Escrow Agreement, and shall issue
and deliver to Stockholders and Sellers the number of Remaining Shares
determined as follows:
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(i) if the Closing Average Share Price multiplied by 8,250,000
is less than or equal to $60,000,000, then fifty percent
(50%) of the Remaining Shares shall be issued to
Stockholders and fifty percent (50%) of the Remaining Shares
shall be issued to Sellers;
(ii) if the Closing Average Share Price multiplied by 8,250,000
is greater than $60,000,000 but less than or equal to
$100,000,000, then (A) the first $60,000,000 in value of the
Remaining Shares (computed by multiplying the Closing
Average Share Price by the number of Remaining Shares) shall
be issued fifty percent (50%) to Stockholders and fifty
percent (50%) to Sellers and (B) the balance of the
Remaining Shares shall be issued seventy-five percent (75%)
to Stockholders and twenty-five percent (25%) to Sellers; or
(iii) if the Closing Average Share Price multiplied by 8,250,000
is greater than $100,000,000, then (A) the first $60,000,000
in value of the Remaining Shares (computed by multiplying
the Closing Average Share Price by the number of Remaining
Shares) shall be issued fifty percent (50%) to Stockholders
and fifty percent (50%) to Sellers, (B) the next $40,000,000
in value of the Remaining Shares (computed by multiplying
the Closing Average Share Price by the number of Remaining
Shares) shall be issued seventy-five percent (75%) to
Stockholders and twenty-five percent (25%) to Sellers and
(C) the balance of the Remaining Shares shall be issued
sixty percent (60%) Stockholders and forty percent (40%) to
Sellers.
(b) Within five (5) Business Days after the date the Closing Date
Balance Sheet becomes final and binding in accordance with Section 2.3, if Net
Worth is less than $2,000,000, Stockholders shall cause Bankstream to pay such
deficiency to Purchaser and, if such deficiency is not so timely paid to
Purchaser, Purchaser and the Stockholders Representative shall, at Purchaser's
request and option, immediately instruct the Escrow Agent to deliver to
Purchaser the number of Indemnity Shares equal to the quotient obtained by
dividing (i) the amount of such deficiency by (ii) the Closing Average Share
Price.
(c) On the first anniversary of the Closing Date, Purchaser and the
Stockholders Representative shall instruct the Escrow Agent to deliver to
Stockholders and Sellers certificates representing (i) the Indemnity Shares less
(ii) the sum of (A) the number of Indemnity Shares delivered to Purchaser
pursuant to Section 2.2(b) and (B) the number of Indemnity Shares equal to the
quotient obtained by dividing (1) any amounts necessary to satisfy any claims
theretofore asserted by any Purchaser Indemnified Party pursuant to Article X
and resolved pursuant to the provisions thereof and any amounts deemed by
Purchaser and the Stockholders Representative reasonably necessary to satisfy
any claims theretofore asserted by any Purchaser Indemnified Party pursuant to
Article X and not yet resolved pursuant to the provisions thereof by (2) the
Closing Average Share Price.
(d) Within five (5) Business Days after the Earn-Out Statement becomes
final and binding in accordance with Section 2.4, Purchaser and the Stockholders
Representative shall instruct the Escrow Agent to (i) deliver to Stockholders
and Sellers certificates representing (A)
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the Accrued Earn-Out Shares less (B) the number of Earn-Out Indemnity Shares
equal to the quotient obtained by dividing (y) any amounts deemed by Purchaser
and the Stockholders Representative reasonably necessary to satisfy any claims
theretofore asserted by any Purchaser Indemnified Party pursuant to Article X
and not yet resolved pursuant to the provisions thereof by (z) the Closing
Average Share Price and (ii) to deliver to Purchaser the remainder obtained by
subtracting (A) the Accrued Earn Out Shares from (B) the Earn-Out Shares.
(e) All certificates for Shares issued hereunder shall be in such names
and denominations as the Stockholders Representative and the Sellers
Representative shall designate to Purchaser or the Escrow Agent, as the case may
be, no later than two (2) Business Days before such issuance is required
hereunder. Purchaser shall promptly take all actions reasonably requested by the
Stockholders Representative to correct any mistake made in the names or
denominations of such certificates.
(f) Any Shares delivered to Purchaser under this Section 2.2 shall be
treated by Purchaser, Stockholders and Sellers as an adjustment to the Merger
Consideration.
2.3 Closing Date Balance Sheet.
(a) Within thirty (30) days after the Closing Date, Purchaser shall
prepare and deliver to the Stockholders Representative, at Purchaser's expense,
a consolidated balance sheet for the Company and the Subsidiaries as of the
Closing Date (the "Closing Date Balance Sheet"), including a calculation of Net
Worth, which shall be prepared by Purchaser in accordance with GAAP and the past
practices of the Company and the Subsidiaries, except as set forth on Schedule
2.3. Together with the Closing Date Balance Sheet, Purchaser shall make
available to the Stockholders Representative the work papers and back-up
materials used by Purchaser in preparing the Closing Date Balance Sheet and
shall promptly make available such other documents as the Stockholders
Representative may reasonably request in connection with his review of the
Closing Date Balance Sheet. Any information supplied to the Stockholders
Representative by Purchaser to enable the Stockholders Representative to prepare
the Closing Date Balance Sheet shall be maintained by the Stockholders
Representative and Stockholders in strict confidence and shall not be disclosed
to any Person (other than their accountants, lawyers and other representatives
who need to know such information) or used by the Stockholders Representative or
Stockholders for any purpose, except in each case in connection with the matters
specifically covered by this Section 2.3.
(b) Within thirty (30) days after receipt of the Closing Date Balance
Sheet, the Stockholders Representative shall deliver to Purchaser a written
statement describing its objections (if any) to the Closing Date Balance Sheet.
If the Stockholders Representative does not raise any objections in a written
statement within such thirty-day period, the Closing Date Balance Sheet shall
become final and binding upon all parties. If the Stockholders Representative
does raise objections in a written statement within such thirty-day period, and
the parties cannot resolve such objections within ten (10) days after the
receipt by Purchaser of the Stockholders Representative's written statement of
objections, any remaining disputes shall be resolved by the Accounting Firm. The
Accounting Firm shall be instructed to resolve such disputes within thirty (30)
days after its appointment. The resolution of disputes by the Accounting Firm
shall be set forth in writing and shall be conclusive and binding upon all
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parties and the Closing Date Balance Sheet, as modified by such resolution,
shall become final and binding upon the date of such resolution. The fees and
expenses of the Accounting Firm shall be apportioned by the Accounting Firm
based on the degree to which each party's claims were unsuccessful and shall be
paid by Purchaser and Bankstream in accordance with such determination. For
example, if pursuant to this Section 2.3(b) the Stockholders Representative
submitted an objection affecting the Net Worth in the amount of $100,000 and
prevailed as to $45,000 of the amount, then Bankstream would bear 55% of the
fees and expenses of the Accounting Firm. If Bankstream is obligated to pay any
fees and expenses of the Accounting Firm pursuant to this Section 2.3(b),
Stockholders shall cause Bankstream to pay such fees and expenses and hereby
unconditionally guarantee such obligations of Bankstream.
2.4 Earn-Out Statement.
(a) Within thirty (30) days after December 31, 2001, Purchaser shall
prepare and deliver to the Stockholders Representative, at Purchaser's expense,
a consolidated balance sheet and statement of earnings for the Company and the
Subsidiaries as of and for the twelve-month period ended December 31, 2001
(collectively, the "Earn-Out Statement"), including a calculation of (i) Net
Revenues and Pretax Profits, which shall be prepared in accordance with GAAP and
the past practices of the Company and the Subsidiaries, except as set forth on
Schedule 2.4, and (ii) B2B Trades and B2C Trades, which shall be prepared in
accordance with the past practices of the Company and the Subsidiaries. Together
with the Earn-Out Statement, Purchaser shall make available to the Stockholders
Representative the work papers and back-up materials used by Purchaser in
preparing the Earn-Out Statement and shall promptly make available such other
documents as the Stockholders Representative may reasonably request in
connection with his review of the Earn-Out Statement. Any information supplied
to the Stockholders Representative by Purchaser to enable the Stockholders
Representative to prepare the Earn-Out Statement shall be maintained by the
Stockholders Representative and Stockholders in strict confidence and shall not
be disclosed to any Person (other than their accountants, lawyers and other
representatives who need to know such information) or used by the Stockholders
Representative or Stockholders for any purpose, except in each case in
connection with the matters specifically covered by this Section 2.4.
(b) Within thirty (30) days after receipt of the Earn-Out Statement,
the Stockholders Representative shall deliver to Purchaser a written statement
describing its objections (if any) to the Earn-Out Statement. If the
Stockholders Representative does not raise any objections in a written statement
within such thirty-day period, the Earn-Out Statement shall become final and
binding upon all parties. If the Stockholders Representative does raise
objections in a written statement within such thirty-day period, and the parties
cannot resolve such objections within ten (10) days after the receipt by
Purchaser of the Stockholders Representative's written statement of objections,
any remaining disputes shall be resolved by the Accounting Firm. The Accounting
Firm shall be instructed to resolve such disputes within thirty (30) days after
its appointment. The resolution of disputes by the Accounting Firm shall be set
forth in writing and shall be conclusive and binding upon all parties and the
Earn-Out Statement, as modified by such resolution, shall become final and
binding upon the date of such resolution. The fees and expenses of the
Accounting Firm shall be apportioned by the Accounting Firm based on the degree
to which each party's claims were unsuccessful and shall be paid by Purchaser
and Bankstream in accordance with such determination. For example, if pursuant
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to this Section 2.4(b) the Stockholders Representative submitted an objection
affecting the Net Revenues in the amount of $100,000 and prevailed as to $45,000
of the amount, then Bankstream would bear 55% of the fees and expenses of the
Accounting Firm. If Bankstream is obligated to pay any fees and expenses of the
Accounting Firm pursuant to this Section 2.4(b), Stockholders shall cause
Bankstream to pay such fees and expenses and hereby unconditionally guarantee
such obligations of Bankstream.
2.5 Treatment of TradeCast Options.
(a) At the Effective Time, each TradeCast Option shall be converted
into a right to receive either:
(i) a fully vested option to acquire a number of Shares equal to
the product obtained by multiplying (A) the number of
TradeCast Class II Units the holder of such TradeCast Option
would have been entitled to receive (assuming that such
TradeCast Option has fully vested in accordance with its
terms as a result of the Merger) had such holder exercised
such TradeCast Option in full immediately prior to the
Effective Time (rounded down to the nearest whole number) by
(B) the Option Exchange Ratio, at an exercise price per
share (rounded to the nearest whole cent) equal to the
quotient obtained by dividing (y) the aggregate exercise
price for the TradeCast Class II Units held by such holder
by (z) the Option Exchange Ratio (the "Option Exercise
Price"); or
(ii) an option to acquire a number of Shares equal to the product
obtained by multiplying (A) the number of TradeCast Class II
Units the holder of such TradeCast Option would have been
entitled to receive (assuming that such TradeCast Option has
not fully vested in accordance with its terms as a result of
the Merger but instead with options vested at the Effective
Time remaining vested and options not vested at the
Effective Time vesting as to one-third on the first, second
and third anniversary of the Effective Time) had such holder
exercised such TradeCast Option in full immediately prior to
the Effective Time (rounded down to the nearest whole
number) by (B) the Option Exchange Ratio, at an exercise
price per share (rounded to the nearest whole cent) equal to
the lower of (A) the Option Exercise Price or (B) the
Closing Average Share Price.
(b) As soon as practicable after the date hereof, the Company shall
deliver to the participants in the TradeCast Option Plan appropriate notices
setting forth such participants' rights pursuant this Agreement and soliciting
their election with respect to the alternatives set forth above. Each
participant shall be instructed to select an alternative by giving written
notice to Purchaser and the Company within five (5) Business Days after the
Closing Date. Any participant who does not so timely select shall be deemed to
have selected alternative (i) above.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND STOCKHOLDERS
The Company and each Stockholder represents and warrants to Purchaser
as follows:
3.1 Due Incorporation; Subsidiaries. The Company and each of the
Subsidiaries is duly organized, validly existing and in good standing under the
laws of its respective jurisdiction of organization, with all requisite power
and authority to own, lease and operate its properties and to carry on its
business as they are now being owned, leased, operated and conducted. Except as
set forth on Schedule 3.1, the Company and each of the Subsidiaries is licensed
or qualified to do business and is in good standing as a foreign corporation,
partnership or limited liability company, as the case may be, in each
jurisdiction where the nature of the properties owned, leased or operated by it
and the nature of the business transacted by it require such licensing or
qualification. The jurisdictions in which the Company and each of the
Subsidiaries is organized and licensed or qualified to do business as a foreign
corporation, partnership or limited liability company, as the case may be, are
set forth on Schedule 3.1. Except for the Subsidiaries and as set forth on
Schedule 3.1, the Company has no direct or indirect subsidiaries, either wholly
or partially owned, and, does not hold any direct or indirect economic, voting
or management interest in any Person or any security issued by any Person. True,
correct and complete copies of the certificate of incorporation, by-laws,
partnership agreements, limited liability company agreements (or similar
organizational instruments) and minutes of all meetings (or written consents in
lieu of meetings) of the board of directors and managers (and all committees
thereof) and stockholders, partners and members of the Company and each of the
Subsidiaries have been delivered to Purchaser.
3.2 Due Authorization.
(a) The Company has full power and authority to enter into this
Agreement and its Related Agreements and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance by the
Company of this Agreement and its Related Agreements have been duly and validly
approved by the board of directors of the Company, and no other actions or
proceedings on the part of the Company are necessary to authorize this
Agreement, its Related Agreements and the transactions contemplated hereby and
thereby, except as contemplated by Section 5.11. The Company has duly and
validly executed and delivered this Agreement and has duly and validly executed
and delivered (or prior to or at the Closing will duly and validly execute and
deliver) its Related Agreements. Assuming the due authorization, execution and
delivery of this Agreement and its Related Agreements by each other party hereto
or thereto, this Agreement constitutes legal, valid and binding obligations of
the Company and its Related Agreements constitute (or upon execution and
delivery by the Company will constitute) legal, valid and binding obligations of
the Company, in each case, enforceable in accordance with their respective
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, reorganization or similar laws in effect that affect the
enforcement of creditors' rights generally and by equitable limitations on the
availability of specific remedies.
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(b) Each Stockholder has full power and authority to enter into this
Agreement and its Related Agreements and to consummate the transactions
contemplated hereby and thereby. Each Stockholder has duly and validly executed
and delivered this Agreement and has duly and validly executed and delivered (or
prior to or at the Closing will duly and validly execute and deliver) its
Related Agreements. Assuming the due authorization, execution and delivery of
this Agreement and its Related Agreements by each other party hereto or thereto,
this Agreement constitutes legal, valid and binding obligations of each
Stockholder and each Stockholder's Related Agreements constitute (or upon
execution and delivery by such Stockholder will constitute) legal, valid and
binding obligations of such Stockholder, in each case, enforceable in accordance
with their respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, moratorium, reorganization or similar laws in
effect that affect the enforcement of creditors' rights generally and by
equitable limitations on the availability of specific remedies.
3.3 Consents and Approvals; Authority Relative to this Agreement.
(a) Except under the HSR Act and the NASD Rules and as set forth on
Schedule 3.3(a), no consent, authorization or approval of, filing or
registration with, waiver of any option or right of first refusal or first offer
from, or cooperation from, any Governmental Authority or any other Person is
necessary in connection with the execution, delivery and performance by the
Company or Stockholders of this Agreement or their respective Related Agreements
or the consummation of the transactions contemplated hereby or thereby.
(b) Except as set forth on Schedule 3.3(b), the execution, delivery and
performance by the Company and Stockholders of this Agreement and their
respective Related Agreements do not and will not (i) violate any Law applicable
to or binding on the Company, any Subsidiary, any Stockholder or any of their
respective assets or properties; (ii) result in or constitute a circumstance
which, without regard to any grace period or notice requirement or both, would
violate or conflict with, result in a breach or termination of, constitute a
default or give any third party any additional right (including a termination
right) under, permit cancellation of, or result in the creation of any Lien upon
any of the assets or properties of the Company, any Subsidiary or any
Stockholder under, any Contract to which the Company, any Subsidiary or any
Stockholder is a party or by which the Company, any Subsidiary or any
Stockholder or any of their respective assets or properties are bound; (iii)
permit the acceleration of the maturity of any indebtedness of the Company, any
Subsidiary or any Stockholder or indebtedness secured by their respective assets
or properties; (iv) violate or conflict with any provision of any of the
certificate of incorporation, by-laws, partnership agreements or limited
liability company agreements (or similar organizational instruments) of the
Company or any Subsidiary; or (v) entitle any officer or employee of the Company
or any Subsidiary to receive any change of control, severance or parachute
payments.
3.4 Capitalization.
(a) The authorized capital stock of the Company consists of 1,000,000
shares of Class A common stock, $.01 par value per share, of which 840,000 are
currently issued and outstanding, and 1,000,000 shares of Class B common stock,
$.01 par value per share, of which 315,000 are currently issued and outstanding.
All of the issued and outstanding shares of capital
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stock of the Company (i) are validly issued, fully paid and non-assessable, (ii)
when issued were free of preemptive rights and (iii) are owned (legally and
beneficially) by Stockholders, free and clear of any and all Liens.
(b) The authorized, issued and outstanding capital of each Subsidiary,
and the ownership thereof, are accurately set forth on Schedule 3.4(b). Except
as set forth on Schedule 3.4(b), all of the outstanding shares of capital stock
or capital interests of each such Subsidiary (i) are validly issued, fully paid
and non-assessable, (ii) when issued were free of preemptive rights and (iii)
are owned as set forth in Schedule 3.4(b), free and clear of any and all Liens.
(c) Except as set forth in Schedule 3.4(c), there are no shares of
capital stock or capital interests or other securities (whether or not such
securities have voting rights) of the Company or any Subsidiary issued or
outstanding or any subscriptions, options, warrants, calls, rights, convertible
securities or other agreements or commitments of any character obligating the
Company, any Subsidiary or any Stockholder, to issue, transfer or sell, or cause
the issuance, transfer or sale of, any shares of capital stock or capital
interests or other securities (whether or not such securities have voting
rights) of the Company or any Subsidiary. Except as set forth in Schedule
3.4(c), there are no outstanding contractual obligations of the Company, any
Subsidiary or any Stockholder that relate to the purchase, sale, issuance,
repurchase, redemption, acquisition, transfer, disposition, holding or voting of
any shares of capital stock or capital interests or other securities of the
Company or any Subsidiary or the management or operation of the Company or any
Subsidiary.
(d) Stockholders have full power and authority to convey good and
marketable title to all of the Company Shares, and at the Effective Time,
Purchaser will receive good and marketable title to the Company Shares, free and
clear of all Liens.
3.5 Financial Statements; Undisclosed Liabilities.
(a) Except as set forth in Schedule 3.5, the Financial Statements have
been prepared in accordance with GAAP consistently applied and present fairly in
all material respects the financial position, assets and liabilities of
TradeCast Investments and the other Subsidiaries as of the dates thereof and the
results of operations, revenues, expenses and cash flows of TradeCast
Investments and the other Subsidiaries for the periods covered thereby. The
Financial Statements are in accordance with the books and records of TradeCast
Investments and the Subsidiaries and do not reflect any transactions that are
not bona fide transactions.
(b) Except as set forth in Schedule 3.5 or in the Latest Balance Sheet,
TradeCast Investments and the Subsidiaries have no material liabilities, debts
or obligations, whether accrued, absolute, contingent or otherwise, whether due
or to become due, other than trade payables, accrued expenses and obligations
under Contracts incurred since the date of the Latest Balance Sheet in the
ordinary course of business and consistent with past practice.
(c) Except as set forth in Schedule 3.5 neither the Company nor
TradeCast Enterprises have any assets or have any liabilities, debts or
obligations, whether accrued, absolute, contingent or otherwise.
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3.6 No Adverse Effects or Changes.
(a) Except as listed on Schedule 3.6, since the date of the Latest
Balance Sheet and as of the date hereof, neither the Company nor any Subsidiary
has:
(i) suffered any Material Adverse Effect on the Company,
(ii) suffered any material damage, destruction or Loss to any of
its assets or properties (whether or not covered by
insurance),
(iii) taken any material action or entered into or authorized any
material Contract or transaction other than in the ordinary
course of business and consistent with past practice,
(iv) sold, transferred, conveyed, assigned or otherwise disposed
of any of its material assets or properties,
(v) waived, released or canceled any material claims against
third parties or debts owing to it, or any rights which have
any substantial value,
(vi) made any material changes in its accounting systems,
policies, principles, practices or methods,
(vii) entered into, authorized or permitted any transaction with
any Stockholder or any Affiliate thereof, except in the
ordinary course of business and consistent with past
practice;
(viii) authorized for issuance, issued, sold, delivered or agreed
or committed to issue, sell or deliver (whether through the
issuance or granting of options, warrants, convertible or
exchangeable securities, commitments, subscriptions, rights
to purchase or otherwise) any shares of its capital stock or
capital interests or any other securities, or amended any of
the terms of any such securities;
(ix) split, combined or reclassified any shares of its capital
stock or capital interests, declared, set aside or paid any
dividend or other distribution (whether in cash, stock or
property or any combination thereof) in respect of its
capital stock or capital interests, or redeemed or otherwise
acquired any shares, interests or other securities of the
Company or any Subsidiary;
(x) made any borrowings, incurred any debt (other than trade
payables in the ordinary course of business and consistent
with past practice), or assumed, guaranteed, endorsed
(except for the negotiation or collection of negotiable
instruments in transactions in the ordinary course of
business and consistent with past practice) or otherwise
become liable (whether directly, contingently or otherwise)
for the obligations of any other Person (other than the
Subsidiaries), or made any payment or repayment in respect
of any indebtedness (other than trade payables, accrued
expenses and payments of indebtedness existing on the date
of the Latest Balance
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Sheet, in each case in the ordinary course of business and
consistent with past practice);
(xi) made any material loans or advances to, or any capital
contributions to or investments in, any other Person;
(xii) entered into, adopted, amended, modified or terminated any
Company Employee Plan, or increased in any manner the
compensation or fringe benefits of any current or former
director, officer or employee of the Company or any
Subsidiary, or paid any benefit not required by any Company
Employee Plan or entered into any Contract or informal
understanding to do any of the foregoing, except in the
ordinary course of business and consistent with past
practice;
(xiii) acquired, leased or encumbered any assets outside the
ordinary course of business or any assets which are material
to the Company or any Subsidiary;
(xiv) made any Tax election or settled or compromised any
federal, state, local or foreign Tax liability, or waived or
extended the statute of limitations or period for assessment
in respect of any such Taxes;
(xv) paid any amount, performed any obligation or agreed to pay
any amount or perform any obligation, in settlement or
compromise of any suits or claims of liability against the
Company, any Subsidiary or any of their respective
directors, officers, employees or agents; or
(xvi) terminated, modified, amended or otherwise altered or
changed any of the terms or provisions of any material
Contract, except in the ordinary course of business and
consistent with past practice.
3.7 Title to Properties. Except as disclosed on Schedule 3.7, the
Company and the Subsidiaries (a) have good and valid title to, and are the
lawful owners of, all of the tangible and intangible assets, properties and
rights used in connection with their respective businesses and reflected in the
Financial Statements (other than assets disposed of in the ordinary course of
business since the date of such Financial Statements) and (b) on the Closing
Date will have good and valid title to, and will be the lawful owners of, all of
the tangible and intangible assets, properties and rights to be reflected in the
Closing Date Balance Sheet, in any case free and clear of any Liens other than
Permitted Liens.
3.8 Condition and Sufficiency of Assets. Except as disclosed on
Schedule 3.8, all of the tangible assets and tangible properties of the Company
and the Subsidiaries, whether owned or leased, that are necessary for the
operation of their respective businesses are in commercially reasonable
operating condition and repair (with the exception of normal wear and tear) for
purposes of the Company's and the Subsidiaries' business as currently conducted,
and are free from material defects other than such minor defects as do not
interfere with the intended use thereof in the conduct of normal operations.
Except as disclosed on Schedule 3.8, immediately after the Closing Date, the
Company and each Subsidiary shall own or have a right to use all the
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assets, properties and rights that are required for or currently used in
connection with the operation of its business as it is presently conducted.
3.9 Real Property. Neither the Company nor any Subsidiary owns any real
estate. Schedule 3.9 includes an accurate list of all the real estate held by
the Company or any Subsidiary under real property leases (the "Leased Real
Property"). The Leased Real Property constitutes all of the real property and
real property interests owned or held by the Company or any Subsidiary and
currently used in connection with the operation of their respective businesses
as they are presently conducted. The Company has delivered to Purchaser true and
complete copies of all leases covering the Leased Real Property (the "Real
Property Leases"). All the Real Property Leases are in full force and effect,
valid and enforceable against the Company or the Subsidiary that is a party
thereto and, to the Company's Knowledge, against the other parties thereto, in
accordance with their respective terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, moratorium, reorganization or
similar laws in effect that affect the enforcement of creditors' rights
generally and by equitable limitations on the availability of specific remedies.
All rent and other amounts due and payable with respect to the Real Property
Leases have been paid in accordance with their respective terms through the date
of this Agreement and all rent and other amounts due and payable with respect to
the Real Property Leases on or prior to the Closing Date will have been paid
prior to the Closing Date.
3.10 Accounts Receivable. Schedule 3.10 contains an accurate schedule
as of the date of the Latest Balance Sheet of all accounts receivable of the
Company and each Subsidiary ("Accounts Receivable"). Except as disclosed on
Schedule 3.10, (a) each Account Receivable represents a sale made or a service
provided in the ordinary course of business and the Company and the Subsidiaries
have performed all of their respective obligations to produce the goods or
perform the services to which such Account Receivable relates and (b) no Account
Receivable is subject to any claim for reduction, counterclaim, set-off,
recoupment or other claim for credit, allowances or adjustments by the obligor
thereof. Except as reserved against in the Financial Statements and the Closing
Date Balance Sheet, all Accounts Receivable are collectible in full within
ninety (90) days of their origination.
3.11 Intellectual Property.
(a) Schedule 3.11(a) sets forth, for the Intellectual Property owned by
the Company or any Subsidiary, an accurate list of all United States and
foreign: (i) patents and patent applications; (ii) trademark registrations
(including Internet domain registrations), trademark applications and material
unregistered trademarks; and (iii) copyright registrations, mask work, copyright
and mask work applications, and material unregistered copyrights. The Company or
a Subsidiary is listed in the records of the appropriate United States registry
as the sole current owner of record for each application and registration listed
on Schedule 3.11(a). All of the Intellectual Property listed in Schedule 3.11(a)
as having been issued by, registered with or filed with the United States Patent
and Trademark Office or Register of Copyrights have been so duly registered,
filed with or issued by the United States Patent and Trademarks Office or
Register of Copyrights, as the case may be, and have been properly maintained
and renewed in accordance with all applicable provisions of Law.
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(b) Schedule 3.11(b) lists all Software (other than readily available
commercial software programs having an acquisition price of less than $5,000)
which are owned, licensed or leased by the Company or any of the Subsidiaries,
and identifies which Software is owned, licensed or leased, as the case may be.
Except as set forth on Schedule 3.11(b), to the Company's Knowledge, none of the
Software listed in Schedule 3.11(b) contains any (i) material error or defect
that has not been logged on the Company's error management systems and disclosed
to Purchaser, (ii) virus, time bomb, software lock, worm or other intentionally
harmful code or data incorporated into the Software that destroys, erases,
damages or otherwise disrupts the normal operation of the Software or other
software, hardware or systems, (iii) trap door, back door or other code designed
to allow unauthorized third parties to access or modify any data, software,
hardware or systems, or (iv) requirement for any password or similar information
to operate any function of the Software, except to the extent that such password
or information will be provided to Purchaser on or before the Closing.
(c) Schedule 3.11(c) sets forth an accurate list of all Contracts to
which the Company or any Subsidiary is a party or by which it is bound, or to
which any of its assets or properties is subject, (i) granting or obtaining any
right to use or practice any rights under any Intellectual Property or (ii)
restricting the Company's or any Subsidiary's rights to use any Intellectual
Property, including license agreements, development agreements, distribution
agreements, settlement agreements, consent to use agreements and covenants not
to xxx (collectively, the "TradeCast License Agreements"). Neither the Company
nor any Subsidiary has licensed or sub-licensed its rights in any Intellectual
Property other than pursuant to the TradeCast License Agreements. No royalties,
honoraria or other fees are payable by the Company or any Subsidiary to any
third parties for the use of or right to use any Intellectual Property, except
pursuant to the TradeCast License Agreements. All the TradeCast License
Agreements are in full force and effect, valid and enforceable in accordance
with their respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, moratorium, reorganization or similar laws in
effect that affect the enforcement of creditors' rights generally and by
equitable limitations on the availability of specific remedies.
(d) Except as set forth on Schedule 3.11(d):
(i) the Company or a Subsidiary owns, or has a valid right to use,
free and clear of all Liens, all of the Intellectual Property
used in or necessary for the conduct of the business currently
conducted by the Company and the Subsidiaries;
(ii) the Intellectual Property owned by the Company or any Subsidiary
and, to the Company's Knowledge, any Intellectual Property used
by the Company or any Subsidiary, is subsisting, in full force
and effect, and has not been cancelled, expired or abandoned, and
is valid and enforceable;
(iii) the Company and the Subsidiaries have at all times protected
their respective rights in any Intellectual Property owned by the
Company or any Subsidiary and any related apparatus or processes
and there have been no acts or omissions, the result of which
would be to compromise the rights of the Company or any
Subsidiary to apply for or enforce appropriate legal protection
of such Intellectual Property;
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(iv) neither the Company nor any Subsidiary or Stockholder has
received any written notice, and there is no pending or, to the
Company's Knowledge, threatened claim, suit, arbitration or other
adversarial proceeding before any court, agency, arbitral
tribunal or registration authority in any jurisdiction (A)
involving the Intellectual Property owned by the Company or any
Subsidiary, or to the Company's Knowledge, the Intellectual
Property licensed to the Company or any Subsidiary or (B)
alleging that the activities or the conduct of the Company's or
any Subsidiary's business does or will infringe upon, violate or
constitute the unauthorized use of the intellectual property
rights of any third party or challenging the ownership, use,
validity, enforceability or registrability of any Intellectual
Property owned or used by the Company or any of its Subsidiaries;
and
(v) there are no settlements, forbearances to use, consents,
judgments, or orders or similar obligations other than the
TradeCast License Agreements which (A) restrict the Company's or
any Subsidiary's rights to use any Intellectual property, (B)
restrict the Company's or any Subsidiary's business in order to
accommodate a third party's intellectual property rights or (C)
permit third parties to use any Intellectual Property.
(e) The conduct of the Company's and the Subsidiaries' business as
currently conducted or, to the Company's Knowledge, planned to be conducted,
does not infringe upon (either directly or indirectly such as through
contributory infringement or inducement to infringe) any intellectual property
rights owned or controlled by any third party. Except as set forth on Schedule
3.11(e), to the Company's Knowledge, no third party is misappropriating,
infringing or violating any Intellectual Property.
(f) The Company and the Subsidiaries take reasonable measures to
protect the confidentiality of its Trade Secrets, including requiring its
employees and other parties having access to its Trade Secrets to execute
written non-disclosure agreements. Except as set forth on Schedule 3.11(f), to
the Company's Knowledge, no Trade Secret has been disclosed or authorized to be
disclosed to any third party other than pursuant to a non-disclosure agreement.
To the Company's Knowledge, no party to any non-disclosure agreement relating to
its Trade Secrets is in breach or default thereof.
(g) No current or former director, officer, partner, manager or
employee of the Company or the Subsidiaries (or any of their respective
predecessors in interest) will, after giving effect to the transactions
contemplated herein, own or retain any rights in or to any of the Intellectual
Property, except for the Intellectual Property included in the Bankstream
Assets.
(h) The consummation of the transactions contemplated hereby will not
result in the loss or impairment of the Company's or any of its Subsidiaries'
rights to own or use any of the Intellectual Property, except for the
Intellectual Property included in the Bankstream Assets.
3.12 Contracts. Schedule 3.12 is an accurate list of all Contracts of
the following types to which the Company or any Subsidiary is a party or by
which it is bound, or to which any of its assets or properties is subject:
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(a) any Contract which either (i) requires a payment by any party in
excess of, or a series of payments which in the aggregate exceed, $25,000 or
provides for the delivery of goods or performance of services, or any
combination thereof, having a value in excess of $25,000, or (ii) has a term of,
or requires the performance of any obligations by the Company or any Subsidiary
over a period in excess of, six months;
(b) any Contract with any employee, officer, director, manager or
partner of the Company or any Subsidiary or any of the respective Affiliates of
such individuals, or any Contract or other arrangement of any kind with any
Stockholder or any Affiliate thereof (other than those set forth on Schedule
3.15);
(c) any Contract with a sales representative, manufacturer's
representative, distributor, dealer, broker, sales agency, advertising agency or
other Person engaged in sales, distributing or promotional activities, or any
Contract to act as one of the foregoing on behalf of any Person;
(d) any Contract pursuant to which the Company or any Subsidiary has
made or will make loans or advances, or has or will have incurred indebtedness
for borrowed money or become a guarantor or surety or pledged its credit on or
otherwise become responsible with respect to any undertaking of another (except
for the negotiation or collection of negotiable instruments in transactions in
the ordinary course of business);
(e) any indenture, credit agreement, loan agreement, note, mortgage,
security agreement, loan commitment, letter of credit or other Contract relating
to the borrowing of funds, an extension of credit or financing;
(f) any Contract involving a partnership, joint venture or other
cooperative undertaking;
(g) any Contract involving any restrictions with respect to the
geographical area of operations or scope or type of business of the Company or
any Subsidiary;
(h) any Contract, whether or not fully performed, relating to any
acquisition or disposition of any capital stock or capital interests or other
securities of the Company or any Subsidiary or any predecessor in interest of
the Company or any Subsidiary, or any acquisition or disposition of any
subsidiary, division, line of business, material assets or real property of the
Company or any Subsidiary or any predecessor in interest of the Company or any
Subsidiary;
(i) any Contract not made in the ordinary course of business or that
is material to the Company or any Subsidiary which is to be performed in whole
or in part at or after the date of this Agreement.
The Company has delivered or made available to Purchaser accurate copies of each
document listed on Schedule 3.12, and a written description of each oral
arrangement so listed. Stockholders have delivered or made available to
Purchaser accurate copies of each material form contract that is used in the
business of the Company and each Subsidiary.
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3.13 Permits. Schedule 3.13 is an accurate list of all Permits (other
than Environmental Permits) held by the Company and each Subsidiary. All of the
listed Permits are in full force and effect and neither the Company, any
Subsidiary nor any Stockholder has received any notice that any such Permit may
be revoked or canceled. Except as set forth on Schedule 3.13, the Company and
each Subsidiary are in possession of all material Permits (other than
Environmental Permits) required for the conduct or operation of their respective
businesses (or any part thereof) and are in compliance in all material respects
with all of the requirements and limitations included in such Permits.
3.14 Insurance.
(a) Schedule 3.14 contains an accurate list of all policies of fire,
liability, medical, workers' compensation, title and other forms of insurance
owned or held by the Company or any Subsidiary (or its assets or business), and
the Company has heretofore delivered or made available to Purchaser accurate and
complete copies of all such policies, including all occurrence-based policies,
if any, applicable to the Company or any Subsidiary (or its business) for all
periods prior to the Closing Date. To the Company's Knowledge, all such policies
are in full force and effect. All premiums with respect to such policies
covering all periods up to and including the Closing Date have been paid; and no
notice of cancellation or termination has been received with respect to any such
policy.
(b) The Company has furnished or made available to Purchaser an
accurate list of all claims involving a potential loss in excess of $25,000
which have been made by the Company or any Subsidiary since December 31, 1997
under any workers' compensation, general liability, property or other insurance
policy applicable to the Company or any Subsidiary or any of their respective
assets or properties. Except as set forth on such list, there are no pending or,
to the Company's Knowledge, threatened claims involving a potential loss in
excess of $25,000 under any insurance policy. Such claim information includes
the following information with respect to each accident, loss or other event:
(i) the identity of the claimant; (ii) the date of the occurrence; (iii) the
status as of the report date; and (iv) the amounts paid or expected to be paid
or recovered.
3.15 Employee Benefit Plans and Employment Agreements.
(a) Schedule 3.15 is a true and correct list of all Company Benefit
Plans and all Contracts regarding employment or consulting to which the Company
or any Subsidiary is a party or by which it is bound.
(b) A true and correct copy of each Company Benefit Plan, and all Contracts
relating thereto, or to the funding thereof, including all trust declarations
and agreements, insurance contracts, administration contracts, investment
management agreements, subscription and participation agreements and record
keeping agreements, each as in effect on the date hereof, has been furnished or
made available to Purchaser. In the case of any Company Benefit Plan that is not
in written form, Purchaser has been supplied with an accurate description of
such Company Benefit Plan as in effect on the date hereof. A true and correct
copy of the most recent summary plan description and opinion letter from the IRS
or other appropriate Governmental Authority with respect to each Company Benefit
Plan, to the extent applicable, and a schedule of assets
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(and the fair market value thereof assuming liquidation of any asset which is
not readily tradable) as of December 31, 2000 held with respect to any funded
Company Benefit Plan has been supplied to Purchaser, and there have been no
material changes in the financial condition in the respective Company Benefit
Plans from that stated in the annual report supplied.
(c) As to all Company Benefit Plans:
(i) all Company Benefit Plans comply and have been administered
in form and in operation in all material respects with all
requirements of Law applicable thereto, no event has
occurred which will or could cause any Company Benefit Plan
to fail to comply with such requirements and there has been
no notice issued by any Governmental Authority questioning
or challenging such compliance;
(ii) the only Company Benefit Plan that is an employee pension
benefit plan (as defined in Section 3(2) of ERISA) is the
Prototype 401(k) Plan;
(iii) none of the assets of any Company Benefit Plan is invested
in employer securities or employer real property;
(iv) there have been no "prohibited transactions" (as described
in Section 406 of ERISA or Section 4975 of the Code) with
respect to any Company Benefit Plan and none of the
Company, any Subsidiary or any of their respective ERISA
Affiliates has otherwise engaged in any prohibited
transaction;
(v) there have been no acts or omissions by the Company, any
Subsidiary or any of their respective ERISA Affiliates that
have given rise to or may give rise to fines, penalties,
taxes or related charges under Section 502 of ERISA or
Chapters 43, 47, 68 or 100 of the Code for which the
Company or any Subsidiary may be liable;
(vi) none of the payments contemplated by the Company Benefit
Plans would, in the aggregate, constitute excess parachute
payments as defined in Section 280G of the Code (without
regard to subsection (b)(4) thereof) or would exceed the
amount deductible pursuant to Section 162(m) of the Code;
(vii) there are no actions, suits or claims (other than routine
claims for benefits) pending or, to the Company's
Knowledge, threatened involving the Company Benefit Plans
or the assets thereof, and, to the Company's Knowledge, no
facts exist which could give rise to any such actions,
suits or claims (other than routine claims for benefits);
(viii) no Company Benefit Plan is subject to Title IV of ERISA;
(ix) each Company Benefit Plan which constitutes a "group health
plan" (as defined in Section 607(1) of ERISA or Section
4980B(g)(2) of the Code),
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including any plans of current and former affiliates which
must be taken into account under Section 4980B and 414(t)
of the Code or Sections 601-608 of ERISA, have been
operated in all material respects in compliance with
applicable Laws, including continuation coverage
requirements of Section 4980B of the Code and Section 601
of ERISA and the portability and nondiscrimination
requirements of Sections 9801 and 9802 of the Code to the
extent such requirements are applicable;
(x) none of the Company or the Subsidiaries has any liability
or contingent liability, under any Company Benefit Plan or
otherwise, for providing post-retirement or
post-termination medical, death or life insurance benefits
(whether insured or uninsured), other than statutory
liability for providing group health plan continuation
coverage under Part 6 of Title I of ERISA and section 4980B
(or any predecessor section thereto) of the Code or
applicable state Law; and
(xi) there has been no act or omission that would impair the
right or ability of the Company or any Subsidiary to
unilaterally amend, so long as such amendment complies with
the applicable provisions of the Code and ERISA, or
terminate any Company Benefit Plan.
(d) Neither the Company nor any Subsidiary or any of their respective ERISA
Affiliates contributes to, has contributed to or has any liability or contingent
liability with respect to any multiemployer plan.
3.16 Employment and Labor Matters. Schedule 3.16 contains an accurate and
complete list of the names, titles, annual compensation or hourly rate schedule
and all bonuses and similar payments made with respect to each such individual
for the current and preceding fiscal year for all partners, managers, directors,
officers and employees of the Company and each Subsidiary. The Company and each
Subsidiary has conducted and currently is conducting its business in all
material respects in compliance with all Laws relating to employment and
employment practices, terms and conditions of employment, wages and hours,
nondiscrimination in employment and occupational health and safety. Except as
disclosed on Schedule 3.16, to the Company's Knowledge, there is, and since
December 31, 1997 there has been, no labor strike, dispute, slow-down, work
stoppage or other labor difficulty pending or threatened against or involving
the Company or any Subsidiary. Except as disclosed on Schedule 3.16, none of the
employees of the Company or any Subsidiary is covered by any collective
bargaining agreement, no collective bargaining agreement is currently being
negotiated and, to the Company's Knowledge, no attempt is currently being made
or since December 31, 1997 has been made to organize any employees of the
Company or any Subsidiary to form or enter a labor union or similar
organization.
3.17 Taxes.
(a) Except as set forth on Schedule 3.17, all federal, state, local and
foreign income and other Tax Returns required to be filed have been or prior to
the Closing (giving effect to any properly obtained extension) will be filed for
the Company and each Subsidiary, and all other
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required material filings in respect of Taxes have been or prior to the Closing
(giving effect to any properly obtained extension) will be made for the Company
and each Subsidiary, for all periods as required by applicable Law. Each such
Tax Return and filing is or will be accurate and complete. Except as set forth
on Schedule 3.17, all Taxes and estimated Taxes payable by the Company and each
Subsidiary have been paid, to the extent due, for all periods as required by
applicable Law. Except as set forth on Schedule 3.17, the amounts provided as a
liability on the Financial Statements for all Taxes are adequate to cover all
unpaid liabilities for all Taxes, whether or not disputed, that have accrued
with respect to or are applicable to the period ended on and including the dates
of such Financial Statements or to any years and periods prior thereto and for
which the Company or any Subsidiary may be directly or contingently liable in
its own right or as a transferee of the assets of, or successor to, any Person.
Except as set forth in Schedule 3.17, none of the Tax Returns or other filings
that include the operations of the Company or any Subsidiary has ever been
audited or investigated by any Governmental Authority, and, to the Company's
Knowledge, no facts exist which would constitute grounds for the assessment of
any additional Taxes by any Governmental Authority with respect to the taxable
years covered in such Tax Returns and filings. Except as set forth in Schedule
3.17, no issues have been raised in any examination by any Governmental
Authority with respect to the businesses and operations of the Company or any
Subsidiary which, by application of similar principles, reasonably could be
expected to result in a proposed adjustment to the liability for Taxes for any
other period not so examined, and no position has been taken on any Tax Return
with respect to the business or operations of the Company or any Subsidiary for
a taxable year for which the statute of limitations for the assessment of any
Tax with respect thereto has not expired that is contrary to any publicly
announced position of a Governmental Authority or, to the Company's Knowledge,
that is substantially similar to any position which a Governmental Authority has
successfully challenged in the course of any examination of a Tax Return of the
Company, any Subsidiary or any other taxpayer. Except as set forth on Schedule
3.17, no material claim has ever been made by a Governmental Authority in any
jurisdiction where the Company or any Subsidiary does not file Tax Returns that
it is or may be subject to Taxes in such jurisdiction.
(b) Except as set forth on Schedule 3.17, all Taxes which the Company or
any Subsidiary is required by Law to withhold or collect, including sales and
use taxes, and amounts required to be withheld for Taxes of employees and other
withholding taxes, have been duly withheld or collected and, to the extent
required, have been paid over to the proper Governmental Authorities. All
information returns required to be filed by the Company or any Subsidiary have
been filed, and all statements required to be furnished to payees by the Company
or any Subsidiary have been furnished to such payees, and the information set
forth on such information returns and statements is accurate and complete.
(c) Except as set forth on Schedule 3.17, neither the Company nor any
Subsidiary has granted or been requested to grant any waiver of any statutes of
limitations or assessment periods applicable to any claim for Taxes.
(d) Neither any Stockholder, the Company nor any Subsidiary is a "foreign
person" as defined in Section 1445(f)(3) of the Code. Each Stockholder is a
permitted shareholder as defined in Section 1361(b)(1)(B) or Section 1361(c)(2)
of the Code.
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(e) Except as set forth in Schedule 3.17, neither the Company nor any
Subsidiary is a party to or otherwise subject to any arrangement having the
effect of or giving rise to the recognition of a deduction or loss in a taxable
period ending on or before the Closing Date, and a corresponding recognition of
taxable income or gain in a taxable period ending after the Closing Date, or any
other arrangement that would have the effect of or give rise to the recognition
of taxable income or gain in a taxable period ending after the Closing Date
without the receipt of or entitlement to a corresponding amount of cash.
(f) Except for the Subsidiaries or as set forth in Schedule 3.17, neither
the Company nor any Subsidiary is subject to any joint venture, partnership or
other Contract which is treated as a partnership for federal income tax
purposes. Neither the Company nor any Subsidiary is a party to any tax sharing
agreement with any Person other than the Company or any Subsidiary.
(g) None of the assets of the Company or any Subsidiary constitutes
tax-exempt bond financed property or tax-exempt use property within the meaning
of Section 168 of the Code, and none of the assets reflected on the Financial
Statements is subject to a lease, safe harbor lease or other arrangement as a
result of which the Company or any Subsidiary is not treated as the owner for
federal income tax purposes.
(h) Neither the Company nor any Subsidiary has made or become obligated to
make, and neither the Company nor any Subsidiary will as a result of any event
connected with any transaction contemplated herein become obligated to make, any
payments that could be nondeductible by reason of Section 280G (without regard
to subsection (b)(4) thereof) or 162(m) of the Code.
(i) The basis of all depreciable or amortizable assets, and the methods
used in determining allowable depreciation or amortization (including cost
recovery) deductions of the Company and each Subsidiary, are correct and in
compliance with the Code and the regulations thereunder.
(j) Neither the Company nor any Subsidiary is required to include in income
any adjustment pursuant to Section 481(a) of the Code, for any period after the
Closing Date, by reason of any voluntary or involuntary change in accounting
method (nor has any taxing authority proposed in writing any such adjustment or
change of accounting method).
(k) Neither the Company nor any Subsidiary has or could have any liability
for Taxes of any person other than the Company or any Subsidiary under U.S.
Treasury Regulation Section 1.1502-6 (or any similar provision of state, local
or foreign Law).
(l) None of the assets of the Company or any Subsidiary is subject to a
consent pursuant to Section 341(f) of the Code (or any predecessor provision).
(m) Except as set forth on Schedule 3.17, neither the Company nor any
Subsidiary has requested or received a ruling from any taxing authority or
signed a closing or other agreement with any taxing authority which would affect
any taxable period after the Closing Date.
3.18 No Defaults or Violations. Except as disclosed on Schedule 3.18:
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(a) Neither the Company nor any Subsidiary has breached any provision of,
or is in default under the terms of, any Contract to which it is a party or
under which it has any rights or by which it is bound, except where such breach
or default has been remedied or would not be reasonably expected to have
Material Adverse Effect on the Company, and, to the Company's Knowledge, no
other party to any such Contract has breached any material provision of, or is
in material default under the terms of, any such Contract. Neither of the
Company nor any Subsidiary or Stockholder has received any written notice of
any, and, to the Company's Knowledge, there exists no, dispute, claim, event of
default or event that constitutes or would constitute, without regard to any
grace period or notice requirement or both, a default by the Company or any
Subsidiary under any such Contract.
(b) The Company and each Subsidiary are in compliance in all material
respects with all Laws (other than Environmental Laws) applicable to or binding
on them or any of their respective assets or properties, and, to the Company's
Knowledge, no condition exists or event has occurred which, without regard to
any grace period or notice requirement or both, would constitute a material
violation under, any such Law.
(c) Neither the Company nor any Subsidiary has received any written notice
from any Governmental Authority since December 31, 1998 claiming any material
violation of any Law, or requiring any work, construction or substantial
expenditure.
3.19 Environmental Matters. Except as disclosed in Schedule 3.19:
(a) the Company and each Subsidiary are in compliance in all material
respects with all Environmental Laws, and no condition exists or event has
occurred which, without regard to any grace period or notice requirement or
both, would constitute a violation of or could give rise to any order or Lien
under any Environmental Law;
(b) Schedule 3.19 is an accurate list of all Environmental Permits held by
the Company and each Subsidiary; all of the listed Environmental Permits are in
full force and effect and neither the Company nor any Subsidiary or Stockholder
has received any notice that any such Environmental Permit may be revoked or
canceled; the Company and each Subsidiary are in possession of all Environmental
Permits required for the conduct or operation of their respective businesses and
are in compliance in all material respects with all of the requirements and
limitations included in such Environmental Permits;
(c) there are no, and neither the Company nor any Subsidiary has used or
stored any, Hazardous Substances in, on or at any of the Leased Real Property,
except for inventories of substances that are used or are to be used in the
ordinary course of business and which inventories have been stored and used in
accordance with all applicable Environmental Laws and Environmental Permits,
including all so-called "Right To Know Laws"; and
(d) no notice from any Governmental Authority or any other Person has been
received by the Company, any Subsidiary or any Stockholder claiming that any
aspect of
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the business, operations or facilities of the Company or any Subsidiary is in
violation of any Environmental Law or Environmental Permit, or that any of them
is responsible (or potentially responsible) for the cleanup or remediation of
any substances at any location.
3.20 Litigation.
(a) Except as disclosed in Schedule 3.20, there are no actions, suits,
arbitrations, proceedings, governmental investigations, charges, prosecutions or
other litigation pending or, to the Company's Knowledge, threatened against or
affecting the Company or any Subsidiary or any of their respective directors,
officers, partners, managers, employees, agents or stockholders in their
capacity as such, or any of the Company's or the Subsidiaries' respective
properties or businesses, and to the Company's Knowledge, there are no facts or
circumstances which may give rise to any of the foregoing. Except as disclosed
in Schedule 3.20, neither the Company nor any Subsidiary is subject to any
order, judgment, decree, injunction, stipulation or consent order of or with any
court or other Governmental Authority, other than orders having general
application to the industry in which the Company and the Subsidiaries operate.
Except as disclosed on Schedule 3.20, neither the Company nor any Subsidiary has
entered into any agreement to settle or compromise any proceeding pending or
threatened against it for which the Company or any Subsidiary has any continuing
obligation.
(b) There are no claims, actions, suits, proceedings, investigations,
charges, prosecutions or other litigation pending or, to the Company's
Knowledge, threatened by or against the Company, any Subsidiary, any Stockholder
or any Affiliate thereof with respect to this Agreement or the Related
Agreements, or in connection with the transactions contemplated hereby or
thereby, and, to the Company's Knowledge, there is no valid basis for any such
claim, action, suit, proceeding, investigation, charge, prosecution or
litigation.
3.21 Bank Accounts. Schedule 3.21 sets forth an accurate list of the names
and locations of each bank or other financial institution at which the Company
or any Subsidiary has an account (giving the account numbers) or safe deposit
box and the names of all Persons authorized to draw thereon or have access
thereto, and the names of all Persons, if any, now holding powers of attorney or
comparable delegation of authority from the Company or any Subsidiary.
3.22 Improper and Other Payments. Neither the Company nor any Subsidiary
nor any director, officer, manager, stockholder, partner, member, employee,
agent or representative of the Company or any Subsidiary, nor any Person acting
on behalf of any of them, has made, paid or received any bribes, kickbacks or
other similar payments to or from any Person, whether lawful or unlawful, or
made any improper foreign payment (as defined in the Foreign Corrupt Practices
Act). No contributions have been made by the Company or any Subsidiary, directly
or indirectly, to a domestic or foreign political party or candidate.
3.23 Privacy Policies; Security.
(a) Neither the Company nor any Subsidiary has a privacy policy for any
website operated by the Company. Neither the Company nor any Subsidiary uses
personal information of its customers in a manner that has or may be claimed to
have violated any Laws, including
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claims of trespass to property, invasion of privacy, violation of unfair trade
practices acts, consumer protection laws or public disclosure of private facts.
Neither the Company nor any Subsidiary sell, licenses or transfers the personal
information of its customers to third parties. Neither the Company nor any
Subsidiary utilizes "cookies" on its website, or any other surveillance or
tracking mechanisms without full disclosure to its customers.
(b) All personal and/or financial information relating to customers of the
Company and the Subsidiaries is treated as confidential by the Company and the
Subsidiaries and has been provided the protection afforded to all Trade Secrets
of the Company and the Subsidiaries. No Person has access to the personal
information of any customer of the Company and the Subsidiaries unless such
Person is an employee of the Company or a Subsidiary with a need to know such
information for the purpose of providing authorized services to such customer.
3.24 Brokers. Neither the Company nor any Subsidiary or Stockholder has
used any broker or finder in connection with the transactions contemplated
hereby, other than XX Xxxxxx H&Q (formerly known as Chase H&Q), and neither
Purchaser nor any Affiliate of Purchaser (including the Company and the
Subsidiaries) has or shall have any liability or otherwise suffer or incur any
Loss as a result of or in connection with any brokerage or finder's fee or other
commission of any Person retained by the Company, any Subsidiary, any
Stockholder or any Affiliate thereof in connection with any of the transactions
contemplated by this Agreement or the Related Agreements.
3.25 Investment Representations.
(a) Each Stockholder has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of an
investment in Purchaser. Each Stockholder, other than any Stockholder that is a
trust, is an "accredited investor" as such term is defined in Regulation D under
the Securities Act.
(b) Each Stockholder is acquiring the Shares for its own account with the
present intention of holding such securities for purposes of investment, and it
has no intention of selling such securities in a public distribution in
violation of the federal securities laws or any applicable state securities
laws, without prejudice to such Stockholder's right to sell or otherwise dispose
of such Shares pursuant to registration under the Securities Act or pursuant to
an exemption from registration under the Securities Act.
(c) Each Stockholder has been provided with sufficient information
regarding an investment in Purchaser to enable it to adequately evaluate its
investment and has been provided with all information regarding its investment
that it has requested. Each Stockholder has had an opportunity to discuss its
investment in Purchaser with management and to ask questions of management
regarding the investment, which questions were answered to its satisfaction.
Each Stockholder that is a trust has been furnished with the information
regarding Purchaser set forth in Rule 502(b)(2)(ii) promulgated under the
Securities Act.
(d) Each Stockholder acknowledges that the Shares are being issued without
registration under the Securities Act pursuant to an exemption from the
registration provisions of the Securities Act, the availability of which depends
upon, among other things, the accuracy of
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such Stockholder's representations and warranties contained herein. Each
Stockholder acknowledges that the Shares must be held until registered under the
Securities Act or unless an exemption from such registration is available.
3.26 Accuracy of Statements. Neither this Agreement nor any schedule or
certificate furnished or to be furnished at the Closing by or on behalf of the
Company, any Subsidiary or any Stockholder to Purchaser or any representative or
Affiliate of Purchaser in connection with this Agreement, any Related Agreement
or any of the transactions contemplated hereby or thereby contains or will
contain any untrue statement of a material fact or omits or will omit to state a
material fact necessary to make the statements contained herein or therein, in
light of the circumstances in which they are made, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to the Company and Stockholders as
follows:
4.1 Due Incorporation. Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, with all
requisite power and authority to own, lease and operate its properties and to
carry on its business as they are now being owned, leased, operated and
conducted.
4.2 Due Authorization. Purchaser has full power and authority to enter into
this Agreement and its Related Agreements and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance by
Purchaser of this Agreement and its Related Agreements have been duly and
validly approved by the board of directors of Purchaser, and no other actions or
proceedings on the part of Purchaser are necessary to authorize this Agreement,
its Related Agreements and the transactions contemplated hereby and thereby.
Purchaser has duly and validly executed and delivered this Agreement and has
duly and validly executed and delivered (or prior to or at the Closing will duly
and validly execute and deliver) its Related Agreements. Assuming the due
authorization, execution and delivery of this Agreement and its Related
Agreements by each other party hereto or thereto, this Agreement constitutes
legal, valid and binding obligations of Purchaser and Purchaser's Related
Agreements constitute (or upon execution and delivery by Purchaser will
constitute) legal, valid and binding obligations of Purchaser, in each case,
enforceable in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, moratorium,
reorganization or similar laws in effect that affect the enforcement of
creditors' rights generally and by equitable limitations on the availability of
specific remedies.
4.3 Consents and Approvals; Authority Relative to this Agreement.
(a) Except under the HSR Act and the NASD Rules and except as set forth on
Schedule 4.3, no consent, authorization or approval of, filing or registration
with, or cooperation from, any Governmental Authority or any other Person is
necessary in connection with the execution, delivery and performance by
Purchaser of this Agreement and its Related Agreements and the consummation of
the transactions contemplated hereby and thereby.
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(b) Except as set forth on Schedule 4.3, the execution, delivery and
performance by Purchaser of this Agreement and its Related Agreements do not and
will not (i) violate any Law applicable to or binding on Purchaser or any of its
assets or properties; (ii) result in or constitute a circumstance which, without
regard to any grace period or notice requirement or both, would violate or
conflict with, result in a breach or termination of, constitute a default or
give any third party any additional right (including a termination right) under,
permit cancellation of, or result in the creation of any Lien upon any of the
assets or properties of Purchaser under, any Contract to which Purchaser is a
party or by which Purchaser or any of its assets or properties are bound; (iii)
permit the acceleration of the maturity of any indebtedness of Purchaser or
indebtedness secured by its assets or properties; or (iv) violate or conflict
with any provision of the certificate of incorporation or by-laws of Purchaser.
4.4 Litigation. There are no claims, actions, suits, proceedings,
investigations, charges, prosecutions or other litigation pending or, to the
best knowledge of Purchaser, threatened by or against Purchaser or any of its
Affiliates (a) with respect to this Agreement or the Related Agreements, or in
connection with the transactions contemplated hereby or thereby, or (b) which
could reasonably be expected to have a Material Adverse Effect on Purchaser or
the value of the Shares, and Purchaser has no reason to believe that there is a
valid basis for any such claim, action, suit, proceeding, investigation, charge,
prosecution or litigation.
4.5 Public Reports. Purchaser has made or will make available to
Stockholders each registration statement, report, proxy statement or information
statement filed by Purchaser since September 25, 1998 with the Securities and
Exchange Commission (the "Public Reports"). As of their respective dates, the
Public Reports complied as to form in all material respects with all applicable
requirements under the Securities Act, the Exchange Act and the rules and
regulations thereunder and did 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 light of the circumstances in which they
were made, not misleading.
4.6 No Adverse Effects or Changes. Since December 29, 2000, there has been
no Material Adverse Change to Purchaser.
4.7 Brokers. Purchaser has used no broker or finder in connection with the
transactions contemplated hereby, other than Deutsche Banc Alex. Xxxxx, and no
Stockholder or any Affiliate thereof has or shall have any liability or
otherwise suffer or incur any Loss as a result of or in connection with any
brokerage or finder's fee or other commission of any Person retained by
Purchaser or any of its Affiliates in connection with any of the transactions
contemplated by this Agreement or the Related Agreements.
ARTICLE V
COVENANTS
5.1 Implementing Agreement. Subject to the terms and conditions hereof,
each party hereto shall use all commercially reasonable efforts to fulfill its
obligations under the terms of this Agreement and otherwise to facilitate the
consummation of the transactions contemplated hereby.
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5.2 Access to Information and Facilities. From and after the date of this
Agreement until the Closing Date, the Company and the Subsidiaries shall, and
Stockholders shall cause the Company and the Subsidiaries to, (a) give Purchaser
and its representatives reasonable access during normal business hours to all of
the facilities, properties, books, records and Contracts of the Company and the
Subsidiaries, (b) make the officers and employees of the Company and the
Subsidiaries available to Purchaser and its representatives, as Purchaser and
its representatives shall from time to time reasonably request, (c) give
Purchaser and its representatives a reasonable opportunity to communicate with
the significant customers of the Company and the Subsidiaries, as Purchaser and
its representatives shall from time to time reasonably request, and (d) furnish
Purchaser and its representatives with all information concerning the Company
and the Subsidiaries which Purchaser or its representatives reasonably request.
5.3 Preservation of Business. From the date of this Agreement until the
Closing Date, the Company and the Subsidiaries shall, and Stockholders shall
cause the Company and the Subsidiaries to, operate in the ordinary and usual
course of business and consistent with past practice, and shall utilize their
commercially reasonable efforts to (a) preserve intact the present business
organization and personnel of the Company and each Subsidiary, (b) preserve the
good will and advantageous relationships of the Company and the Subsidiaries
with customers, suppliers, employees, independent contractors of the Company and
the Subsidiaries and other Persons material to the operation of their business,
(c) not permit any action or omission which would cause any of the
representations or warranties of the Company or Stockholders contained herein to
become inaccurate or any of the covenants of the Company or Stockholders to be
breached. Without limiting the generality of the foregoing, except as set forth
in Schedule 5.3, prior to the Closing the Company or any Subsidiary shall not,
and Stockholders will not permit the Company or any Subsidiary to, without the
prior written consent of Purchaser:
(i) take any action, or enter into or authorize any Contract or
transaction, other than in the ordinary course of business
and consistent with past practice;
(ii) sell, transfer, convey, assign or otherwise dispose of any
of its assets or properties, other than (A) the Bankstream
Assets or (B) other assets or properties in the ordinary
course of business consistent with past practice; provided,
that the documents transferring the Bankstream Assets shall
be approved by Purchaser;
(iii) waive, release or cancel any material claims against third
parties or debts owing to it, or any rights which have any
substantial value;
(iv) make any changes in its accounting systems, policies,
principles, practices or methods;
(v) enter into, authorize or permit any transaction with any
Stockholder or any Affiliate thereof, except in the
ordinary course of business consistent with past practice;
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(vi) authorize for issuance, issue, sell, deliver or agree or
commit to issue, sell or deliver (whether through the
issuance or granting of options, warrants, convertible or
exchangeable securities, commitments, subscriptions, rights
to purchase or otherwise) any shares of capital stock or
capital interests or any other securities of the Company or
any Subsidiary, or amend any of the terms of any such
capital stock or capital interest or other securities;
(vii) split, combine or reclassify any shares of its capital
stock, declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any
combination thereof) in respect of its capital stock or
capital interests, or redeem or otherwise acquire any
capital stock or capital interests or other securities of
the Company or any Subsidiary, other than the Bankstream
Assets;
(viii) make any borrowings, incur any debt (other than trade
payables in the ordinary course of business and consistent
with past practice), or assume, guarantee, endorse (except
for the negotiation or collection of negotiable instruments
in the ordinary course of business and consistent with past
practice) or otherwise become liable (whether directly,
contingently or otherwise) for the obligations of any other
Person, or make any payment or repayment in respect of any
indebtedness (other than trade payables, accrued expenses
and payments of indebtedness existing on the date of the
Latest Balance Sheet, in each case in the ordinary course
of business and consistent with past practice);
(ix) make any loans, advances or capital contributions to, or
investments in, any other Person, other than loans or
advances to employees in the ordinary course of business
and consistent with past practice;
(x) except as contemplated by Section 5.14, enter into, adopt,
amend, modify or terminate any Company Employee Plan, or
increase in any manner the compensation or fringe benefits
of any current or former director, officer or employee of
the Company or any Subsidiary, except pursuant to Contracts
in force on the date hereof, or pay any benefit not
required by any Company Benefit Plan or enter into any
Contract or informal understanding to do any of the
foregoing;
(xi) acquire, lease or encumber any assets outside the ordinary
course of business or any assets that are material to the
Company or any Subsidiary;
(xii) authorize or make any capital expenditures for which the
Company or any Subsidiary will have any continuing
obligation after the Closing and which individually or in
the aggregate are in excess of $50,000;
(xiii) make any Tax election or settle or compromise any federal,
state, local or foreign income Tax liability, or waive or
extend the statute of limitations or period for assessment
in respect of any such Taxes;
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(xiv) pay any amount, perform any obligation or agree to pay any
amount or perform any obligation, in settlement or
compromise of any suits or claims of liability against the
Company or any Subsidiary or any of their respective
directors, officers, employees or agents, which
individually are in excess of $50,000 or for which the
Company or any Subsidiary will have any continuing
obligation (monetary or otherwise) after the Closing; or
(xv) terminate, modify, amend or otherwise alter or change any
of the terms or provisions of any Contract, other than in
the ordinary course of business and consistent with past
practices.
5.4 Consents and Approvals.
(a) From the date of this Agreement until the Closing Date, Purchaser, the
Company and Stockholders shall use all commercially reasonable efforts to obtain
all consents, approvals, certificates and other documents that are required in
connection with the performance of this Agreement and the Related Agreements and
the consummation of the transactions contemplated hereby and thereby; provided,
that, except in the ordinary course of business, no contact will be made by the
Company or any Stockholder (or any representative thereof) with any third party
to obtain any such consent or approval, except in accordance with a plan
previously agreed to by Purchaser, which agreement shall not be unreasonably
withheld. Stockholders shall, and shall cause the Company and each Subsidiary
to, promptly make all filings, applications, statements and reports to all
Governmental Authorities and other Persons that are required to be made prior to
the Closing Date by or on behalf of Stockholders, the Company, any Subsidiary or
any Affiliate thereof pursuant to any applicable Law in connection with this
Agreement, the Related Agreements and the transactions contemplated hereby and
thereby. Purchaser shall promptly make all filings, applications, statements and
reports to all Governmental Authorities and other Persons that are required to
be made prior to the Closing Date by or on behalf of Purchaser or any of its
Affiliates pursuant to any applicable Law in connection with this Agreement, the
Related Agreements and the transactions contemplated hereby and thereby.
(b) Without limiting the foregoing, Purchaser and the Company shall (i)
within five (5) Business Days after the date hereof file all necessary
notifications and reports with the Justice Department and the Federal Trade
Commission pursuant to the HSR Act in connection with this Agreement and the
consummation of the transactions contemplated hereby and shall request early
termination of the waiting period thereunder, (ii) respond promptly to inquiries
from the Justice Department and the Federal Trade Commission in connection with
such filings, including providing any supplemental information that may be
reasonably requested by the Justice Department or the Federal Trade Commission
and (iii) provide to the other parties copies of all filings made under the HSR
Act promptly following submission to the Justice Department and the Federal
Trade Commission.
5.5 Maintenance of Insurance. From the date of this Agreement until the
Closing Date, the Company shall, and shall cause each Subsidiary to, continue to
carry its existing insurance through the Closing Date, and shall not allow any
breach or default and shall use
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commercially reasonable efforts to prevent a termination or cancellation of such
insurance policies or agreements to occur or exist.
5.6 Supplemental Information.
(a) From time to time prior to the Closing Date, the Company and
Stockholders shall promptly disclose in writing to Purchaser any matter known to
the Company, any Subsidiary or any Stockholder and hereafter arising which, if
existing, occurring or known at the date of this Agreement would have been
required to be disclosed to Purchaser (or any of its representatives) or which
would render inaccurate any of the representations, warranties or statements set
forth in Article III. Any such disclosure shall supplement or amend the
appropriate Schedule hereto. No such supplement or amendment to any Schedule
shall be deemed to cure any breach for purposes of Section 6.1. In all other
respects, any such supplement and amendment will be effective to cure and
correct for all purposes any breach of any representation or warranty that would
have existed if the Company or Stockholder had not made such supplement or
amendment, and all references to any Schedule hereto that is supplemented or
amended as provided in this Section 5.6 shall for all purposes (except as
provided in the immediately preceding sentence) be deemed to be a reference to
such Schedule as so supplemented or amended.
(b) From time to time prior to the Closing Date, Purchaser shall promptly
disclose in writing to Stockholders any matter known to Purchaser and hereafter
arising which, if existing, occurring or known at the date of this Agreement
would have been required to be disclosed to Stockholders (or any of their
representatives) or which would render inaccurate any of the representations,
warranties or statements set forth in Article IV. Any such disclosure shall
supplement or amend the appropriate Schedule hereto. No such supplement or
amendment to any Schedule shall be deemed to cure any breach for purposes of
Section 7.1. In all other respects, any such supplement and amendment will be
effective to cure and correct for all purposes any breach of any representation
or warranty that would have existed if Purchaser had not made such supplement or
amendment, and all references to any Schedule hereto that is supplemented or
amended as provided in this Section 5.6 shall for all purposes (except as
provided in the immediately preceding sentence) be deemed to be a reference to
such Schedule as so supplemented or amended.
5.7 Confidentiality.
(a) For a period of eighteen (18) months after the Closing Date,
Stockholders shall, and shall cause each of their respective Affiliates to,
maintain all non-public or confidential information relating to the
Company, any Subsidiary or their respective operations in strict confidence
and not disclose to any Person or use any such information for any purpose;
provided, that such restrictions shall not apply to (i) any information
which becomes publicly available after the Closing Date through no
fault of Stockholders or any of their respective Affiliates, (ii) any
information which after the Closing Date is legitimately received by
Stockholders or any of their respective Affiliates from a third party
(provided such third party is not known by Stockholders or any of their
respective Affiliates to be bound by an obligation of secrecy) and (iii)
any disclosure required by Law or any Governmental Authority, so long as
notice of such disclosure is given to
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Purchaser prior to making such disclosure and Stockholders cooperate with
Purchaser as Purchaser may reasonably request to resist such disclosure.
(b) At all times prior to and for a period of eighteen (18) months
after the Closing Date, whether or not the Closing has occurred,
Stockholders shall, and shall cause their respective Affiliates to,
maintain in strict confidence all non-public or confidential information
relating to Purchaser or any of its Affiliates obtained by Stockholders or
any of their respective Affiliates in connection with this Agreement or the
Related Agreements or the transactions contemplated hereby or thereby and
not disclose to any Person (other than their employees, attorneys,
accountants and advisors who need to know such information) or use any such
information for any purpose (except in connection with the transactions
contemplated hereby and by the Related Agreements); provided, that
such restrictions shall not apply to (i) any information which becomes
publicly available after the date of disclosure by Purchaser through no
fault of any Stockholder or any of their respective Affiliates, (ii) any
information which is legitimately received by Stockholders or any of their
respective Affiliates from a third party (provided such third party is not
known by any Stockholder any of their respective Affiliates to be bound by
an obligation of secrecy) or (iii) any disclosure required by Law or any
Governmental Authority, so long as notice of such disclosure is given to
Purchaser prior to making such disclosure and Stockholders cooperate with
Purchaser as Purchaser may reasonably request to resist such disclosure.
(c) If this Agreement is terminated, upon the request of Purchaser,
Stockholders shall promptly return any written materials they or any of
their respective Affiliates have received from Purchaser or its Affiliates
or their representatives or employees in connection with this Agreement or
the Related Agreements or the transactions contemplated hereby or thereby,
together with any copies of such materials made by them, and shall deliver
to Purchaser such reports, compilations and other information prepared or
obtained by Stockholders or their Affiliates or their representatives or
employees related to Purchaser or any of its Affiliates in connection with
this Agreement or the Related Agreements or the transactions contemplated
hereby or thereby.
(d) At all times prior to and for a period of eighteen (18) months
after the Closing Date, whether or not the Closing has occurred, Purchaser
shall, and shall cause its respective Affiliates to, maintain in strict
confidence all non-public or confidential information relating to (i)
Stockholders (and, if the Closing does not occur, the Company and the
Subsidiaries) or any of their respective Affiliates and (ii) the Bankstream
Assets, in each case obtained by Purchaser or any of its Affiliates in
connection with this Agreement or the Related Agreements or the
transactions contemplated hereby or thereby and not disclose to any Person
(other than their employees, attorneys, accountants and advisors who need
to know such information) or use any such information for any purpose
(except in connection with the transactions contemplated hereby and by the
Related Agreements); provided, that such restrictions shall not apply to
(x) any information which becomes publicly available after the date of
disclosure by Stockholders or any of their respective Affiliates through no
fault of Purchaser or any of its Affiliates, (y) any information which is
legitimately received by Purchaser or any of
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its Affiliates from a third party (provided such third party is not known
by Purchaser or any of its Affiliates to be bound by an obligation of
secrecy) or (z) any disclosure required by Law or any Governmental
Authority, so long as notice of such disclosure is given to Stockholders
prior to making such disclosure and Purchaser cooperates with Stockholders
as Stockholders may reasonably request to resist such disclosure.
(e) If this Agreement is terminated, upon the request of Stockholders,
Purchaser shall promptly return any written materials it or any of its
Affiliates has received from Stockholders or their respective Affiliates or
their representatives or employees in connection with this Agreement or the
Related Agreements or the transactions contemplated hereby or thereby,
together with any copies of such materials made by them, and shall deliver
to Stockholders such reports, compilations and other information prepared
or obtained by Purchaser or its Affiliates or their representatives or
employees related to Stockholders, the Company, the Subsidiaries or any of
their Affiliates in connection with this Agreement or the Related
Agreements or the transactions contemplated hereby or thereby.
5.8 Exclusivity. Prior to the Closing Date, the Stockholders and the
Company shall not, and shall not permit any Subsidiary or any of their
respective directors, officers, managers, stockholders, partners, members,
employees, representatives, agents or Affiliates to, directly or indirectly,
solicit, initiate, encourage, respond favorably to, permit or condone inquiries
or proposals from, or provide any non-public confidential information to, or
participate in any discussions or negotiations with, any Person (other than
Purchaser, its Affiliates and their respective directors, officers, employees,
representatives and agents) concerning (a) any merger, sale of assets not in the
ordinary course of business (other than the Bankstream Assets), acquisition,
business combination, change of control or other similar transaction involving
the Company, any Subsidiary or any division of the Company or any Subsidiary,
(b) any purchase or other acquisition by any Person of any Company Shares or (c)
any sale or issuance by the Company or any Subsidiary of any shares of its
capital stock or capital interests. Stockholders and the Company will promptly
advise Purchaser of, and communicate to Purchaser the terms and conditions of
(and the identity of the Person making), any such inquiry or proposal received.
5.9 Interim Financial Statements. Prior to the Closing Date, the Company
shall provide to Purchaser:
(a) as soon as practicable, the Audited 2000 Financials; and
(b) as soon as practicable after the end of each calendar month and
consistent with past practices, unaudited consolidated financial statements of
the TradeCast Investments and the other Subsidiaries (not including TradeCast
Enterprises), consisting of a balance sheet as of the end of such month and the
related statement of earnings and retained earnings and partners' capital for
that month and for the portion of the year then ended.
5.10 Tax Matters.
(a) After the Closing, Stockholders shall make available to Purchaser, at
Purchaser's expense, such records related to the Company and the Subsidiaries as
are in possession of
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Stockholders and as Purchaser may require for the preparation of any Tax Returns
or other similar reports or forms required to be filed by Purchaser, the Company
or any Subsidiary and such records as Purchaser may require for the defense of
any audit, examination, administrative appeal or litigation of any such Tax
Return or other similar report or form. After the Closing, Purchaser shall make
available to Stockholders, at Stockholder's expense, such records relating to
the Company and the Subsidiaries as Stockholders may require for the preparation
of any Tax Returns or other similar reports or forms required to be filed by
Stockholders and such records as Stockholders may require for the defense of any
audit, examination, administrative appeal or litigation or any such Tax Return
or other similar report or form.
(b) The Stockholders Representative and the Sellers Representative shall
have the right to prepare any Tax Returns or other similar reports or forms
required to be filed by the Company or any of the Subsidiaries for tax periods
ending prior to the Closing Date, including making proper "reverse section
704(c) allocations" as defined in Treasury Regulations ss.1.704-3(a)(6)(i). The
Stockholders Representative and the Sellers Representative shall also have the
right to prepare all Tax Returns for Bankstream. The Stockholders Representative
and the Sellers Representative shall not in any Tax Return referred to in this
Section 5.10(b) provide for any allocation that would, artificially or in a
manner inconsistent with past practices, have the effect of giving rise to
taxable income or gain of the Company or any Subsidiary in a taxable period
ending after the Closing Date without the receipt or entitlement to a
corresponding amount of cash.
(c) Tax Returns for tax periods ending after Closing shall be prepared by
Purchaser. Tax Returns for the taxable year in which the Closing occurs shall be
subject to the following:
(i) allocations of income, gain, loss, and deduction shall be
made on an interim closing of the books method of
accounting effective as of the Closing Date and shall
otherwise be consistent with past practices of TradeCast
Investments and the Subsidiaries; and
(ii) "reverse section 704(c) allocations" shall be made
consistently with the partnership returns of TradeCast
Investments and the Subsidiaries for the taxable year ended
December 31, 2000.
5.11 Stockholders Meeting. The Company shall take, in accordance with
applicable Law and its certificate of incorporation and by-laws, all action
necessary to convene a stockholders meeting (or solicit a unanimous written
consent) as promptly as reasonably practicable after the date hereof to consider
and vote upon the adoption of this Agreement. The Company's board of directors
shall recommend that the stockholders of the Company approve this Agreement and
transactions contemplated by this Agreement. At such meeting (or in such
unanimous written consent), each Stockholder shall waive any required notice of
such meeting and shall vote to adopt this Agreement and approve the transactions
contemplated hereby.
5.12 Preservation of Books and Records; Access.
(a) For a period of seven years after the Closing Date, Purchaser shall (i)
preserve and retain all corporate, accounting, legal, auditing and other books
and records of the Company
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and the Subsidiaries (including any documents relating to actions, suits,
proceedings or investigations by any Governmental Authority or any other Person)
relating to the Company and the Subsidiaries and the conduct of their businesses
prior to the Closing Date or (ii) offer such books and records to Stockholders.
Notwithstanding the forgoing, if Purchaser offers such books and records to
Stockholders and Stockholders decline to take possession thereof, Purchaser may
dispose of such books and records.
(b) After the Closing Date, Purchaser shall cause the Company and the
Subsidiaries to (i) give Stockholders and their representatives reasonable
access during normal business hours to the books and records of the Company and
the Subsidiaries and (ii) make the officers and employees of the Company and the
Subsidiaries available to Stockholders and their representatives, in each case
in connection with any claim, action, suit, proceeding, investigation, charge,
prosecution or other litigation involving Stockholders and relating to the
Company and the Subsidiaries and the conduct of their business prior to the
Closing Date.
5.13 Indemnification of Officers, Directors, Managers, Partners, Members
and Stockholders. From and after the Closing, each Person who is or was an
officer, director, manager, partner, member, stockholder or other Person serving
in any capacity on behalf of the Company or any Subsidiary shall continue to be
entitled to all indemnities provided to such Person as of immediately prior to
the Closing that are provided by Law or contained in the certificate of
incorporation, by-laws, certificate of formation, limited liability company
agreement, certificate of limited partnership or limited partnership agreement
of the Company or any Subsidiary, as the case may be, in each case as such are
constituted as of immediately prior to the Closing. Purchaser shall not, and
Purchaser shall cause the Company and the Subsidiaries not to, take any action
to restrict or limit, with respect to any such Person, the scope of or Persons
covered by such indemnities from and after the Closing.
5.14 Termination of 401(k) Plan. Prior to the Closing Date, the Company
shall cause TradeCast Investments to take any and all actions necessary to
terminate, effective prior to the Closing Date, the Prototype 40(k) Plan.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS
OF PURCHASER
The obligations of Purchaser under Article II of this Agreement are subject
to the satisfaction or waiver by Purchaser of the following conditions precedent
on or before the Closing Date:
6.1 Warranties True as of Both Present Date and Closing Date. The
representations and warranties of the Company and Stockholders contained herein
and in the Related Agreements shall have been accurate, true and correct on and
as of the date hereof or of the Related Agreements, respectively, and, except to
the extent that any such representation or warranty is made solely as of the
date hereof or as of another date earlier than the Closing Date, shall also be
accurate, true and correct in all material respects on and as of the Closing
Date with
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the same force and effect as though made by the Company and Stockholders on and
as of the Closing Date.
6.2 Compliance with Agreements and Covenants. The Company and Stockholders
shall have performed and complied in all material respects with all of their
respective covenants, obligations and agreements contained in this Agreement and
in their Related Agreements to be performed and complied with by them on or
prior to the Closing Date.
6.3 Certificate of Compliance. The Company shall have delivered to
Purchaser a certificate dated as of the Closing Date, signed by the President or
a Vice President of the Company, on behalf of the Company, as to compliance with
Section 6.1 and Section 6.2. Each Stockholder shall have delivered to Purchaser
a certificate dated as of the Closing Date, signed by such Stockholder,
certifying as to compliance with Section 6.1 and Section 6.2.
6.4 Consents and Approvals. Purchaser shall have received written evidence
reasonably satisfactory to Purchaser that all consents and approvals set forth
on Schedule 3.3(a) and marked with an asterisk have been obtained.
6.5 Xxxx-Xxxxx-Xxxxxx. The applicable waiting period under the HSR Act
shall have expired or have been earlier terminated without action by the Justice
Department or the Federal Trade Commission to prevent consummation of the
transactions contemplated by this Agreement.
6.6 NASD. The Company or the appropriate Subsidiary shall have received
approval from the NASD for the consummation of the transactions contemplated
hereby under NASD Rule 1017.
6.7 No Material Adverse Change. No Material Adverse Change to the Company
shall have occurred and no event shall have occurred which, in the reasonable
judgment of Purchaser, may have a Material Adverse Effect on the Company.
6.8 Actions or Proceedings. No action or proceeding by any Governmental
Authority or other Person shall have been instituted or threatened which
enjoins, restrains, prohibits or results in substantial damages in respect of,
or could enjoin, restrain, prohibit or result in substantial damages in respect
of, any provision of this Agreement or any Related Agreement or the consummation
of the transactions contemplated hereby or thereby.
6.9 Purchase. The Purchase shall have been consummated (or simultaneously
with the Closing shall be consummated) in accordance with the terms of the
Purchase Agreement.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF STOCKHOLDERS
The obligations of the Company under Article II of this Agreement are
subject to the satisfaction or waiver by the Company of the following conditions
precedent on or before the Closing Date:
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7.1 Warranties True as of Both Present Date and Closing Date. The
representations and warranties of Purchaser contained herein and in its Related
Agreements shall have been accurate, true and correct on and as of the date
hereof and of the Related Agreements, respectively, and, except to the extent
that any such representation or warranty is made solely as of the date hereof or
as of another date earlier than the Closing Date, shall also be accurate, true
and correct in all material respects on and as of the Closing Date with the same
force and effect as though made by Purchaser on and as of the Closing Date.
7.2 Compliance with Agreements and Covenants. Purchaser shall have
performed and complied in all material respects with all of its covenants,
obligations and agreements contained in this Agreement and in its Related
Agreements to be performed and complied with by it on or prior to the Closing
Date.
7.3 Certificate of Compliance. Purchaser shall have delivered to
Stockholders a certificate dated as of the Closing Date, signed by the President
or a Vice President of Purchaser on behalf of Purchaser, certifying as to
compliance with Section 7.1 and Section 7.2.
7.4 Consents and Approvals. Stockholders, the Company and the Subsidiaries
shall have received all consents and approvals set forth on Schedule 3.3(a) and
marked with an asterisk.
7.5 Xxxx-Xxxxx-Xxxxxx. The applicable waiting period under the HSR Act
shall have expired or have been earlier terminated without action by the Justice
Department or the Federal Trade Commission to prevent consummation of the
transactions contemplated by this Agreement.
7.6 NASD. Purchaser shall have received approval from the NASD for the
consummation of the transactions contemplated hereby under NASD Rule 1017.
7.7 No Material Adverse Change. No Material Adverse Change to Purchaser
shall have occurred and no event shall have occurred which, in the reasonable
judgment of Stockholders, may have a Material Adverse Effect on Purchaser.
7.8 Actions or Proceedings. No action or proceeding by any Governmental
Authority or other Person shall have been instituted or threatened which
enjoins, restrains, prohibits or results in substantial damages in respect of,
or could enjoin, restrain, prohibit or result in substantial damages in respect
of, any provision of this Agreement or any Related Agreement or the consummation
of the transactions contemplated hereby or thereby.
7.9 Purchase. The Purchase shall have been consummated (or simultaneously
with the Closing shall be consummated) in accordance with the terms of the
Purchase Agreement.
ARTICLE VIII
CLOSING
8.1 Closing. Unless the parties otherwise agree, the Closing shall take
place at such location and time of day as Purchaser and the Stockholders
Representative shall mutually agree
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on the date three (3) Business Days after the satisfaction or waiver of the
conditions precedent set forth in Sections 6.4, 6.5, 6.6, 7.4, 7.5 and 7.6 shall
have occurred. The Closing, and all transactions to occur at the Closing, shall
be deemed to have taken place at, and shall be effective as of, the close of
business on the Closing Date.
8.2 Deliveries by Stockholders. At the Closing, in addition to any other
documents or agreements required under this Agreement, the Company and
Stockholders shall deliver to Purchaser the following:
(a) certificates, evidencing all of the Company Shares, which
certificates shall be duly endorsed in blank or accompanied by stock powers
duly executed in blank;
(b) evidence, in form reasonably satisfactory to Purchaser, that all
consents and approvals set forth on Schedule 3.3(a) with respect to the
Company and Stockholders and marked with an asterisk have been obtained;
(c) a written statement from each Person holding a Lien (other than a
Permitted Lien) upon any of the assets of the Company or any Subsidiary, or
upon any Company Shares, confirming the repayment of the indebtedness
secured thereby, the release as of the Closing Date of such Lien and the
registration of effective discharges with respect thereto in all
appropriate public records and registers;
(d) a certificate of the secretary of the Company certifying
resolutions of its board of directors and stockholders approving and
authorizing the execution, delivery and performance of this Agreement and
its Related Agreements and the consummation of the transactions
contemplated hereby and thereby (together with an incumbency and signature
certificate regarding the officer(s) signing on behalf of the Company);
(e) the certificate of incorporation of the Company and each
Subsidiary that is a corporation, certified by the Secretary of State of
the State of Incorporation, and the by-laws, partnership agreement, limited
liability agreement, regulations or similar instrument of the Company and
each Subsidiary, certified by its secretary or other duly authorized
officer;
(f) certificates of good standing for the Company and the Subsidiaries
from their jurisdiction of organization and each other State in which they
are qualified to do business;
(g) an opinion, dated the Closing Date, of Xxxxx, Xxxxxx & XxXxxxxx,
L.L.P., counsel to the Company and Stockholders, in form and substance
satisfactory to Purchaser and to the effect set forth in Exhibit F;
(h) the Employment Agreements duly executed by each of Xxxxxx X.
Xxxxxxxx, Xx., Xxxxx X. Xxxxxx, and Xxxxxxx Xxxxx;
(i) the Escrow Agreement duly executed by Stockholders and Sellers;
(j) the License Agreement duly executed by Bankstream;
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(k) the Stockholders Agreement duly executed by Stockholders and
Sellers;
(l) the Audited 2000 Financials;
(m) an affidavit from each Stockholder stating, under penalty of
perjury, such Stockholder's U.S. taxpayer identification number and that
such Stockholder is not a "foreign person" as defined by Section 1445(f)(3)
of the Code; and
(n) such other documents and instruments as may be required by any
other provision of this Agreement or any Related Agreement or as may
reasonably be required to consummate the Closing.
8.3 Deliveries by Purchaser. At the Closing, Purchaser shall deliver to
Stockholders the following:
(a) a certificate of Purchaser's secretary certifying resolutions of
its board of directors approving this Agreement and its Related Agreements
and the transactions contemplated hereby and thereby (together with an
incumbency and signature certificate regarding the officer(s) signing on
behalf of Purchaser);
(b) an opinion, dated the Closing Date, of Xxxxx, Xxxxx & Xxxxx,
counsel for Purchaser, in form and substance satisfactory to Stockholders
and to the effect set forth in Exhibit G;
(c) the Employment Agreements duly executed by Purchaser;
(d) the Escrow Agreement duly executed by Purchaser;
(e) the License Agreement duly executed by Purchaser; and
(f) the Stockholders Agreement duly executed Purchaser.
ARTICLE IX
TERMINATION
9.1 Termination. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time on or prior to the Closing
Date:
(a) with the mutual consent of the Stockholders Representative, the
Sellers Representative and Purchaser;
(b) by the Stockholders Representative or Purchaser, if the Closing
shall not have taken place on or before March 30, 2001; provided, that the
right to terminate this Agreement under this Section 9.1(b) shall not be
available to (i) the Stockholders Representative if the failure of the
Company or any Stockholder to fulfill any obligation under this Agreement
has been the cause of or resulted in the failure of the Closing to occur on
or before such date or (ii) Purchaser if the failure of Purchaser to
fulfill any
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obligation under this Agreement has been the cause of or resulted in the
failure of the Closing to occur on or before such date;
(c) by Purchaser, if there shall have been a material breach of any
covenant, representation or warranty of the Company or Stockholders
hereunder, and such breach shall not have been remedied within ten (10)
Business Days after receipt by the Stockholders Representative of a notice
in writing from Purchaser specifying the breach and requesting such be
remedied;
(d) by the Stockholders Representative, if there shall have been a
material breach of any covenant, representation or warranty of Purchaser
hereunder, and such breach shall not have been remedied within ten (10)
Business Days after receipt by Purchaser of notice in writing from the
Stockholders Representative specifying the breach and requesting such be
remedied;
(e) by Purchaser if Stockholders do not adopt this Agreement and
approve the transactions contemplated hereby within five (5) Business Days
after the date hereof; or
(f) by the Stockholders Representative or Purchaser if the Purchase
Agreement is terminated for any reason.
9.2 Effect of Termination. If this Agreement is terminated pursuant to
Section 9.1, all obligations of the parties hereunder shall terminate, except
for the obligations set forth in Sections 3.24 (brokers), 4.7 (brokers), 5.7
(confidentiality), 11.1 (expenses), 11.8 (publicity) and 11.15 (waiver of jury
trial), which shall survive the termination of this Agreement, and except that
no such termination shall relieve any party from liability for any prior
intentional breach of this Agreement.
ARTICLE X
INDEMNIFICATION
10.1 Survival. The representations and warranties of the parties hereto
contained in this Agreement and the Related Agreements shall only survive the
Closing for a period of one (1) year. The covenants and obligations of the
parties contained in this Agreement and the Related Agreements shall only
survive the Closing for a period of one (1) year, except for the covenants and
obligations of the parties contained in the Excluded Covenants, which shall
survive as provided therein, or if not so provided, indefinitely. For purposes
of this Article X, the term "Related Agreements" shall exclude the Employment
Agreements, the Escrow Agreement, the License Agreement and the Stockholders
Agreement. The parties hereto agree that the provisions of this Article X shall
not apply to the Employment Agreements, the Escrow Agreement, the License
Agreement or the Stockholders Agreement, and that any breach of any provision of
any such agreement shall be the sole responsibility of the breaching party
thereto as provided in such agreement.
10.2 Indemnification by Stockholders. Subject to the provisions of this
Article X, each Stockholder agrees to
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hold each of them harmless from, any and all Losses incurred or suffered by
them relating to or arising out of or in connection with any of the following:
(a) any breach of or any inaccuracy in any representation or warranty
made by the Company or any Stockholder in this Agreement or any Related
Agreement or any certificate delivered by the Company or any Stockholder at
the Closing;
(b) any breach of or failure by the Company to perform any covenant or
obligation of the Company required to be performed or complied with on or
prior to the Closing Date contained in this Agreement or any Related
Agreement or any certificate delivered by the Company at the Closing;
(c) any breach of or failure by any Stockholder or the Stockholders
Representative to perform any covenant or obligation of any Stockholder or
the Stockholders Representative contained in this Agreement or any Related
Agreement or any certificate delivered by the Company or any Stockholder at
the Closing;
(d) any breach of or any inaccuracy in any representation or warranty
made by any Seller in the Purchase Agreement or any Related Agreement or
any certificate delivered by any Seller at the Closing;
(e) any breach of or failure by any Seller or the Sellers
Representative to perform any covenant or obligation of any Seller or the
Sellers Representative contained in the Purchase Agreement or any Related
Agreement or any certificate delivered by any Seller at the Closing; or
(f) all Taxes that have become due and payable during, or which have
accrued with respect to the Company or any Subsidiary for, any period
included in the Tax Indemnification Period and that have not been paid
prior to the Closing Date or reserved on the Closing Date Balance Sheet (it
being understood that any Taxes attributable to the Company or any
Subsidiary payable as a result of an audit of any Tax Return shall be
deemed to have accrued in the period to which such Taxes are attributable);
provided, that no Stockholder shall have any liability under this Section 10.2
unless a notice of the Purchaser Indemnified Party's claim shall have been given
to the Stockholders Representative and the Sellers Representative not later than
the close of business on the first anniversary of the Closing Date, except with
respect to claims for breaches of Excluded Covenants.
10.3 Indemnification by Purchaser. Subject to the provisions of this
Article X, Purchaser agrees to indemnify each Stockholder Indemnified Party
against, and agrees to hold each of them harmless from, any and all Losses
incurred or suffered by them relating to or arising out of or in connection with
any of the following:
(a) any breach of or any inaccuracy in any representation or warranty
made by Purchaser in this Agreement, the Purchase Agreement or any Related
Agreement or any certificate delivered by Purchaser at the Closing;
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(b) any breach of or failure by Purchaser to perform any covenant or
obligation of Purchaser contained in this Agreement, the Purchase Agreement
or any Related Agreement or any certificate delivered by Purchaser at the
Closing; or
(c) any event, occurrence, act or omission of the Company or any
Subsidiary after the Closing Date, other than an event occurrence, act or
omission of the Company or any Subsidiary that forms the basis for a right
of any Purchaser Indemnified Party to indemnification pursuant to Section
10.2.
provided, that Purchaser shall have no liability under Section 10.3(a) or (b)
unless a notice of the Stockholder Indemnified Party's claim shall have been
given to Purchaser not later than the close of business on the first anniversary
of the Closing Date, except with respect to claims for breaches of Excluded
Covenants.
10.4 Limitations on Indemnification.
(a) Stockholders and Sellers shall have no liability pursuant to this
Article X (other than for any breach of or failure by any Stockholder or the
Stockholders Representative to perform any covenant or obligation of any
Stockholder or the Stockholders Representative set forth in Sections 2.2(b)-(e),
2.3 (but only with respect to the payment of fees and expenses by Bankstream and
the Stockholders' guaranty related thereto) or 2.4 (but only with respect to the
payment of fees and expenses by Bankstream and the Stockholders' guaranty
related thereto) or any breach of or failure by any Seller or the Sellers
Representative to perform any covenant or obligation of any Seller or the
Sellers Representative set forth in Section 2.2(b)-(e), 2.3 (but only with
respect to the payment of fees and expenses by Bankstream and the Sellers'
guaranty related thereto) or 2.4 (but only with respect to the payment of fees
and expenses by Bankstream and the Sellers' guaranty related thereto) of the
Purchase Agreement) unless and until the aggregate amount of all Losses incurred
or suffered by the Purchaser Indemnified Parties exceeds the Deductible Amount,
after which time the Purchaser Indemnified Parties shall be entitled to recover
only those Losses which exceed the Deductible Amount, and Stockholders and
Sellers shall have no liability pursuant to this Article X for any Losses
incurred or suffered by the Purchaser Indemnified Parties that in the aggregate
are in excess of the Indemnification Cap.
(b) The amount of any Losses incurred or suffered by any Indemnified Person
shall be calculated after giving effect to (i) any insurance proceeds received
by the Indemnified Person (or any of its Affiliates) with respect to such Losses
and (ii) any recoveries obtained by the Indemnified Person (or any of its
Affiliates) from any third parties with respect to such Losses. Each Indemnified
Person shall use all commercially reasonably efforts to obtain such proceeds and
recoveries. If any such proceeds or recoveries are received by an Indemnified
Person (or any of its Affiliates) with respect to any Losses after an
Indemnifying Person has made a payment to the Indemnified Person with respect
thereto, the Indemnified Person (or such Affiliate) shall pay to the
Indemnifying Person the amount of such proceeds or recoveries (up to the amount
of the Indemnifying Person's payment). Upon making any payment to an Indemnified
Person in respect of any Losses, the Indemnifying Person will, to the extent of
such payment, be subrogated to all rights of the Indemnified Person (and its
Affiliates) against any insurance company or other third party in respect of the
Losses to which such payment relates. Such Indemnified Person (and its
Affiliates) and such Indemnifying Person will execute upon
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request all instruments reasonably necessary to evidence or further perfect such
subrogation rights.
10.5 Claims. As soon as is reasonably practicable after becoming aware of a
claim for indemnification under this Article X that does not involve a claim, or
the commencement of any suit, action or proceeding, of the type described in
Section 10.6, the Indemnified Person shall promptly give notice to the
Indemnifying Person of such claim. Such notice shall specify (in reasonable
detail in light of the circumstances then existing) the facts alleged to
constitute the basis for such claim, the representations, warranties, covenants
and obligations alleged to have been breached and the amount (to the extent then
determinable) that the Indemnified Person seeks to recover hereunder from the
Indemnifying Person, together with such other information as may be reasonably
necessary for the Indemnifying Party to determine that the limitations contained
in this Article X, have been satisfied or do not apply. The Indemnifying Person
shall notify the Indemnified Person in writing within thirty (30) calendar days
of receiving notice thereof if the Indemnifying Person intends to object to such
indemnification claim; provided, that the failure to so notify the Indemnified
Person shall not prejudice the Indemnifying Person's rights hereunder.
10.6 Notice of Third Party Claims; Assumption of Defense. The Indemnified
Person shall give notice as promptly as is reasonably practicable to the
Indemnifying Person of the assertion of any claim, or the commencement of any
suit, action or proceeding, by any Person not a party hereto (and not a
Purchaser Indemnified Party or a Stockholder Indemnified Party) for which
indemnity may be sought under this Article X. Such notice shall specify (in
reasonable detail in light of the circumstances then existing) the facts alleged
to constitute the basis for such claim, the representations, warranties,
covenants and obligations alleged to have been breached and the amount (to the
extent then determinable) that the Indemnified Person seeks to recover hereunder
from the Indemnifying Person, together with such other information as may be
reasonably necessary for the Indemnifying Party to determine that the
limitations contained in this Article X, have been satisfied or do not apply.
The Indemnifying Person may, at its own expense, (a) participate in the defense
of any such claim, suit, action or proceeding and (b) assume the defense thereof
upon notice to the Indemnified Person and the Indemnifying Person's delivering
to the Indemnified Person a written agreement that (i) the Indemnified Person is
entitled to indemnification pursuant to and subject to the provisions of this
Article X for all Losses arising out of such claim, suit, action or proceeding
and (ii) the Indemnifying Person shall be liable for the entire amount of any
such Loss, subject to the provisions of this Article X. In the event the
Indemnifying Person assumes the defense of any such claim, suit, action or
proceeding, (y) the Indemnifying Person's counsel shall be reasonably
satisfactory to the Indemnified Person and (z) the Indemnifying Person shall
thereafter consult with the Indemnified Person upon the Indemnified Person's
reasonable request for such consultation from time to time with respect to such
claim, suit, action or proceeding If the Indemnifying Person assumes such
defense, the Indemnified Person shall have the right (but not the duty) to
participate in the defense thereof and to employ counsel, at its own expense,
separate from the counsel employed by the Indemnifying Person. If, however, the
Indemnified Person reasonably determines in its judgment that representation by
the Indemnifying Person's counsel of both the Indemnifying Person and the
Indemnified Person would present such counsel with a conflict of interest, then
such Indemnified Person may employ separate counsel to represent or defend it in
any such claim, action, suit or proceeding and the Indemnifying Person shall pay
the reasonable
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fees and expenses of such separate counsel. Whether or not the Indemnifying
Person chooses to defend or prosecute any such claim, suit, action or
proceeding, all of the parties hereto shall cooperate and reasonably assist in
the defense or prosecution thereof.
10.7 Settlement or Compromise. Without its prior written consent, no
obligation, restriction or Loss shall be imposed on the Indemnified Person as a
result of any settlement or compromise made or caused to be made by the
Indemnifying Person of any claim, suit, action or proceeding of the kind
referred to in Section 10.6. The Indemnified Person shall give the Indemnifying
Person at least thirty (30) days' notice of any proposed settlement or
compromise of any claim, suit, action or proceeding the Indemnified Person is
defending, during which time the Indemnifying Person may reject such proposed
settlement or compromise; provided, that from and after such rejection, the
Indemnifying Person shall be have full and complete liability and responsibility
for such claim, suit, action or proceeding and for all Losses in connection
therewith as well as any and all unindemnifiable Losses in excess of the amount
of unindemnifiable Losses which the Indemnified Person would have been obligated
to pay under the proposed settlement or compromise.
10.8 Failure of Indemnifying Person to Act. In the event that the
Indemnifying Person does not elect to assume the defense of any claim, suit,
action or proceeding, then any failure of the Indemnified Person to defend or to
participate in the defense of any such claim, suit, action or proceeding or to
cause the same to be done, shall not relieve the Indemnifying Person of its
obligations hereunder.
10.9 Recovery from Indemnity Shares and Earn-Out Indemnity Shares. In the
event a Purchaser Indemnified Party is entitled to receive any amount from any
Stockholder under this Article X, Purchaser shall recover such amount only from
the Indemnity Shares and the Earn-Out Indemnity Shares. Purchaser and the
Stockholders Representative shall instruct the Escrow Agent to deliver to
Purchaser the number of Indemnity Shares and/or Earn-Out Indemnity Shares equal
to the quotient obtained by dividing (a) the amount of such recovery by (b) the
Closing Average Share Price.
10.10 Net Indemnity Payments. Any amounts payable under Section 10.2 or
Section 10.3 shall be treated by Purchaser and Stockholders as an adjustment to
the Merger Consideration.
10.11 Exclusive Remedy. Except as set forth in Section 11.14, the
provisions of this Article X shall be the sole and exclusive remedies of the
Purchaser Indemnified Parties and the Stockholder Indemnified Parties under or
in connection with or pursuant to this Agreement, the Purchase Agreement, the
Related Agreements or the transactions contemplated hereby or thereby (including
for any breach of or inaccuracy in any representation or warranty or any breach
of or failure to perform any covenant set forth in this Agreement, the Purchase
Agreement or any Related Agreement made in connection with any of the
transactions contemplated hereby or thereby). To the extent that any Purchaser
Indemnified Party or Stockholder Indemnified Party incurs any Losses for which
they may assert any other right to indemnification, contribution or recovery,
whether under this Agreement, the Purchase Agreement, any Related Agreement or
under any Law or otherwise, Purchaser, on behalf of itself and the other
Purchaser Indemnified Parties, hereby waives, releases and agrees not to assert
such right, and agrees to cause all other
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Purchaser Indemnified Parties to waive, release and agree not to assert such
right, and each Stockholder, on behalf of itself and the other Stockholder
Indemnified Parties, hereby waives, releases and agrees not to assert such
right, and agrees to cause all other Stockholder Indemnified Parties to waive,
release and agree not to assert such right.
10.12 Time Limits. If any claim for indemnification pursuant to this
Article X is timely asserted in accordance with the provisions hereof, the
Indemnified Person shall have the right to bring an action, suit or proceeding
to enforce such claim prior to the third anniversary of the Closing Date, and no
Indemnified Person shall be entitled to bring such an action, suit or proceeding
after such date.
ARTICLE XI
MISCELLANEOUS
11.1 Expenses. Except as otherwise set forth herein, each party hereto
shall bear its own expenses with respect to the transactions contemplated
hereby. Purchaser shall pay all fees and expenses incurred in connection with
the filing of any pre-merger notification and report forms required by the HSR
Act. Stockholders shall pay all sales, use, stamp, transfer, service, recording,
real estate and like taxes or fees, if any, imposed by any Governmental
Authority in connection with the transfer and assignment of the Company Shares.
11.2 Amendment. This Agreement may be amended, modified or supplemented but
only in a writing signed by Purchaser, the Company and each Stockholder.
11.3 Notices. Any notice, request, instruction or other document to be
given hereunder by a party hereto shall be in writing and shall be deemed to
have been given, (i) when received if given in person or by courier or a courier
service, (ii) on the date of transmission if sent by facsimile or other wire
transmission (receipt confirmed) or (iii) three (3) Business Days after being
deposited in the U.S. mail, certified or registered mail, postage prepaid:
(a) If to the Company, Stockholders or the Stockholders Representative,
addressed as follows:
Xxxxx X. Xxxxxx
0000 Xxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Phone No.: 000-000-0000
Facsimile No.: 713-739-8403
Xxxxxx X. Xxxxxxxx, Xx.
0000 Xxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Phone No.: 000-000-0000
Facsimile No.: 000-000-0000
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Xxxxxxx Xxxxx
0000 Xxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Phone No.: 000-000-0000
Facsimile No.:713-739-8403
with a copy to:
XXXXX, XXXXXX & XXXXXXXX, L.L.P.
0000 Xxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxx X. Xxxxxx
Phone No.: 000-000-0000
Facsimile No.: 713-739-8403
(b) If to Purchaser, addressed as follows:
AMERITRADE HOLDING CORPORATION
000 Xxxxxxxx Xxxxxxxx Xxxxxxx
Xxxxxxxxx Xxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Phone No.: 000-000-0000
Facsimile No.: 000-000-0000
with a copy to:
XXXXX, XXXXX & XXXXX
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Phone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
or to such other individual or address as a party hereto may designate for
itself by notice given as herein provided.
11.4 Waivers. The failure of a party hereto at any time or times to require
performance of any provision hereof shall in no manner affect its right at a
later time to enforce the same. No waiver by a party of any condition or of any
breach of any term, covenant, representation or warranty contained in this
Agreement shall be effective unless in writing, and no waiver in any one or more
instances shall be deemed to be a further or continuing waiver of any such
condition or breach in other instances or a waiver of any other condition or
breach of any other term, covenant, representation or warranty; provided, that
the Stockholders Representative shall have full power and authority to execute
waivers on behalf of Stockholders or any of them.
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11.5 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
11.6 Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns. No
assignment of any rights or obligations hereunder shall be made by any
Stockholder without the written consent of Purchaser and no assignment of any
rights or obligations hereunder shall be made by Purchaser to any Person without
the written consent of the Stockholders Representative.
11.7 No Third Party Beneficiaries. This Agreement is solely for the benefit
of the parties hereto and, to the extent provided herein, the Persons described
in Article X, and no provision of this Agreement shall be deemed to confer upon
other third parties any remedy, claim, liability, reimbursement, cause of action
or other right.
11.8 Publicity. At all times prior to the Closing Date, whether or not the
Closing has occurred, no disclosure, public announcement or other publicity
regarding the existence of this Agreement or its contents or the transactions
contemplated hereby shall be made by Purchaser, the Company or any Stockholder
or any of their respective Affiliates, officers, directors, managers,
stockholders, partners, members, employees, representatives or agents, without
the prior written agreement of Purchaser and the Stockholders Representative, in
any case, as to form, content, timing and manner of distribution or publication;
provided, that nothing in this Section 11.8 shall prevent any party from (a)
making any disclosure or public announcement required by Law or the rules of any
stock exchange so long as such party consults the other parties as to the form,
content, timing and manner of distribution or publication, (b) discussing this
Agreement or its contents or the transactions contemplated hereby with those
Persons whose approval, agreement or opinion, as the case may be, is required
for consummation of such particular transaction or transactions or whose
assistance is required to consummate the transactions contemplated hereby or (c)
enforcing its rights hereunder.
11.9 Further Assurances. Upon the reasonable request of Purchaser,
Stockholders shall on and after the Closing Date execute and deliver to
Purchaser such other documents, releases, assignments and other instruments as
may be required to effectuate completely the transfer and assignment to
Purchaser of, and to vest fully in Purchaser title to, the Company Shares
acquired by Purchaser, and to otherwise carry out the purposes of this
Agreement. Upon the reasonable request of Stockholders, Purchaser shall on and
after the Closing Date execute and deliver to Stockholders such other documents,
releases, assignments and other instruments as may be required to effectuate the
terms of this Agreement and to otherwise carry out the purposes of hereof.
11.10 Severability. If any provision of this Agreement shall be held
invalid, illegal or unenforceable, the validity, legality or enforceability of
the other provisions hereof shall not be affected thereby, and there shall be
deemed substituted for the provision at issue a valid, legal and enforceable
provision as similar as possible to the provision at issue that reflects the
intentions of the parties.
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11.11 Entire Understanding. This Agreement, the Purchase Agreement and the
Related Agreements set forth the entire agreement and understanding of the
parties hereto with respect to the transactions contemplated hereby and
supersede any and all prior agreements, arrangements and understandings among
the parties relating to the subject matter hereof, including, after the Closing
Date, the term sheet and letter agreement, dated January 3, 2001, between
Purchaser and TradeCast Investments and the Confidentiality Agreement, dated
June 15, 2000, between Purchaser and TradeCast Investments, which shall be
terminated as of the Closing Date.
11.12 Stockholders Representative. Each Stockholder hereby irrevocably
authorizes and appoints Xxxxx X. Xxxxxx as his true and lawful attorney and
representative (the "Stockholders Representative") with full power and authority
to take any and all actions and execute any and all documents specified in this
Agreement or any Related Agreement as being within the authority of the
Stockholders Representative. Xxxxx X. Xxxxxx hereby accepts his appointment as
the Stockholders Representative and agrees to perform all of the duties of the
Stockholders Representative hereunder. If the Stockholders Representative shall
die or become incapacitated, the Stockholders shall promptly appoint a successor
Person to act as the Stockholders Representative.
11.13 Applicable Law. This Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of Delaware without
giving effect to the principles of conflicts of law thereof.
11.14 Specific Performance. Each party to this Agreement recognizes and
affirms that in the event of breach by it of Section 5.7 money damages would be
inadequate and the other parties hereto would have no adequate remedy at law.
Accordingly, each party to this Agreement agrees that each of the other parties
hereto shall have the right, in addition to any other rights and remedies
existing under this Agreement, to enforce its rights and the obligations of
other parties under Section 5.7 not only by an action or actions for damages,
but also by an action or actions for specific performance, injunction and/or
other equitable relief in order to enforce or prevent any violations (whether
anticipatory, continuing or future) of Section 5.7. If a bond is required to be
posted in order for any party to this Agreement to secure an injunction, the
other parties hereto agree that such bond need not exceed the sum of $1,000.
11.15 Waiver of Jury Trial. EACH PARTY HERETO WAIVES THE RIGHT TO A TRIAL
BY JURY IN ANY DISPUTE IN CONNECTION WITH OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY AND AGREES TO TAKE ANY AND ALL ACTION NECESSARY
OR APPROPRIATE TO EFFECT SUCH WAIVER.
11.16 Schedules. Any information disclosed pursuant to any Schedule
attached hereto shall be deemed to be disclosed with respect to any other matter
to which it reasonably relates in all Schedules for all purposes of this
Agreement.
11.17 Disclosure. Purchaser acknowledges that it has conducted a due
diligence investigation of the Company and the Subsidiaries and have had
sufficient opportunity to make whatever investigation and ask whatever questions
of the Company and the Subsidiaries as it has deemed necessary and advisable for
the purposes of determining whether or not to enter into
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65
this Agreement and the Related Agreements. Purchaser acknowledges that neither
Stockholders nor the Company or any Subsidiary has made any representations or
warranties other than those expressly included in this Agreement and the Related
Agreements and that no representations or warranties have been made with regard
to any projections, cost estimates or other information that may have been
provided to Purchaser or its representatives during their due diligence
investigation of the Company and the Subsidiaries unless otherwise expressly
covered by the representations and warranties included in this Agreement and the
Related Agreements.
* * * *
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
AMERITRADE HOLDING CORPORATION
By: /s/ Xxxxx Xxxxxxx
------------------
Name:
Title:
TRADECAST, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------
Name:
Title:
TC MERGER SUB, INC.
By: /s/ Xxxxx Xxxxxxx
------------------
Name:
Title:
/s/ Xxxxxx X. Xxxxxxxx, Xx.
----------------------------
Xxxxxx X. Xxxxxxxx, Xx.,
individually
/s/ Xxxxx X. Xxxxxx
--------------------
Xxxxx X. Xxxxxx, individually
/s/ Xxxxxxx Xxxxx
------------------
Xxxxxxx Xxxxx, individually
Xxxxxx 2000 Trust
By: /s/ Xxxxx X. Xxxxxx
-----------------------
Name: Xxxxx X. Xxxxxx, Trustee
0000 Xxxxxx
Xxxxxxx, Xxxxx 00000
67
Earthman 2000 Trust
By: /s/ Xxxxxx X. Xxxxxxxx, Xx.,
-----------------------------
Name: Xxxxxx X. Xxxxxxxx, Xx., Trustee
0000 Xxx Xxxxx
Xxxxxxx, Xxxxx 00000
HMS 2000 Trust
By: /s/ Xxxxxxx Xxxxx
-----------------
Name: Xxxxxxx Xxxxx, Trustee
c/o TradeCast Ltd.
0000 Xxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
NS 2000 Trust
By: /s/ Xxxxxxx Xxxxx
------------------
Name: Xxxxxxx Xxxxx, Trustee
c/o TradeCast Ltd.
0000 Xxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
68
TS 2000 Trust
By: /s/ Xxxxxxx Xxxxx
------------------
Name: Xxxxxxx Xxxxx, Trustee
c/o TradeCast Ltd.
0000 Xxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Delta 2000 Trust
By: /s/ Xxxxxxx Xxxxx
------------------
Name: Xxxxxxx Xxxxx, Trustee
c/o TradeCast Ltd.
0000 Xxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Omega 2000 Trust
By: /s/ Xxxxxxx Xxxxx
------------------
Name: Xxxxxxx Xxxxx, Trustee
c/o TradeCast Ltd.
0000 Xxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
