EXHIBIT 2.12
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AGREEMENT AND PLAN OF ORGANIZATION
dated as of March 11, 1998
by and among
VACATION PROPERTIES INTERNATIONAL, INC.
XXXXX ACQUISITION CORP. and
MANAGEMENT ACQUISITION CORP.
(each a subsidiary of Vacation Properties International, Inc.)
XXXXX-XXXXXXX ENTERPRISES, INC.
THE MANAGEMENT COMPANY
and
the STOCKHOLDERS named herein
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TABLE OF CONTENTS
Page
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AGREEMENT AND PLAN OF ORGANIZATION.............................................1
1. THE MERGER.................................................................3
1.1 Delivery and Filing of Articles of Merger..............................3
1.2 Effective Time of the Merger...........................................3
1.3 Certificate of Incorporation, Bylaws and Board of Directors of
Surviving Corporations..................... ..........................4
1.4 Certain Information With Respect to the Capital Stock of the
COMPANIES, VPI and NEWCOS.................... ........................5
1.5 Effect of Mergers......................................................5
2. CONVERSION OF STOCK........................................................6
2.1 Manner of Conversion...................................................7
3. DELIVERY OF MERGER CONSIDERATION...........................................8
3.1 Delivery of VPI Stock and Cash.........................................8
3.2 Delivery of COMPANY Stock..............................................8
3.3 Balance Sheet Test.....................................................8
4. CLOSING....................................................................9
5. REPRESENTATIONS AND WARRANTIES OF COMPANIES AND STOCKHOLDERS..............10
(A) Representations and Warranties of COMPANIES and STOCKHOLDERS..........10
5.1 Due Organization...................................................11
5.2 Authority..........................................................12
5.3 Capital Stock of the COMPANIES.....................................12
5.4 Transactions in Capital Stock......................................13
5.5 No Bonus Shares....................................................13
5.6 Subsidiaries.......................................................13
5.7 Predecessor Status; etc............................................14
5.8 Spin-off by the COMPANIES..........................................14
5.9 Financial Statements...............................................14
5.10 Liabilities and Obligations.......................................15
5.11 Accounts and Notes Receivable.....................................16
5.12 Permits and Intangibles...........................................16
5.13 Environmental Matters.............................................17
5.14 Personal Property.................................................18
5.15 Significant Customers.............................................19
5.16 Material Contracts and Commitments................................20
5.17 Real Property.....................................................20
5.18 Insurance.........................................................21
5.19 Compensation; Employment Agreements; Organized Labor Matters......22
5.20 Employee Plans....................................................23
5.21 Compliance with ERISA.............................................24
5.22 Conformity with Law; Litigation...................................26
5.23 Taxes.............................................................26
5.24 No Violations.....................................................29
5.25 Government Contracts..............................................30
5.26 Absence of Changes................................................30
5.27 Deposit Accounts; Powers of Attorney..............................32
5.28 Validity of Obligations...........................................32
5.29 Relations with Governments........................................33
5.30 Disclosure........................................................33
5.31 Prohibited Activities.............................................34
(B) Representations and Warranties of STOCKHOLDERS........................34
5.32 Authority; Ownership..............................................34
5.33 Preemptive Rights.................................................35
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5.34 No Intention to Dispose of VPI Stock..............................35
6. REPRESENTATIONS OF VPI AND NEWCOS.........................................35
6.1 Due Organization......................................................36
6.2 Authorization.........................................................36
6.3 Capital Stock of VPI and NEWCOS.......................................36
6.4 Transactions in Capital Stock.........................................36
6.5 Subsidiaries..........................................................37
6.6 Financial Statements..................................................38
6.7 Liabilities and Obligations...........................................38
6.8 Conformity with Law; Litigation.......................................38
6.9 No Violations.........................................................39
6.10 Validity of Obligations..............................................39
6.11 VPI Stock............................................................40
6.12 No Side Agreements...................................................40
6.13 Business; Real Property; Material Agreements.........................40
6.14 Taxes................................................................41
6.15 Completion of Due Diligence..........................................43
6.16 Disclosure..........................................................43
6.17 Tax Treatment........................................................44
7. COVENANTS PRIOR TO CLOSING................................................44
7.1 Access and Cooperation; Due Diligence.................................44
7.2 Conduct of Business Pending Closing...................................45
7.3 Prohibited Activities.................................................46
7.4 No Shop...............................................................48
7.5 Notice to Bargaining Agents...........................................49
7.6 Agreements............................................................49
7.7 Notification of Certain Matters.......................................49
7.8 Amendment of Schedules................................................50
7.9 Cooperation in Preparation of Registration Statement..................52
7.10 Final Financial Statements...........................................53
7.11 Further Assurances...................................................54
7.12 Authorized Capital...................................................54
7.13 Best Efforts to Consummate Transaction...............................54
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF STOCKHOLDERS AND COMPANIES.........55
8.1 Representations and Warranties........................................55
8.2 Performance of Obligations............................................55
8.3 No Litigation.........................................................55
8.4 Opinion of Counsel....................................................56
8.5 Registration Statement................................................56
8.6 Consents and Approvals................................................56
8.7 Good Standing Certificates............................................56
8.8 No Material Adverse Change............................................56
8.9 Closing of IPO........................................................57
8.10 Secretary's Certificate..............................................57
8.11 Employment Agreements................................................57
8.12 Directors and Officers Insurance.....................................57
8.13 Stock Options........................................................57
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF VPI AND NEWCOS.....................58
9.1 Representations and Warranties........................................58
9.2 Performance of Obligations............................................58
9.3 No Litigation.........................................................59
9.4 Secretary's Certificate...............................................59
9.5 No Material Adverse Effect............................................59
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9.6 STOCKHOLDERS' Release.................................................59
9.7 Termination of Related Party Agreements...............................60
9.8 Opinion of Counsel....................................................60
9.9 Consents and Approvals................................................60
9.10 Good Standing Certificates...........................................60
9.11 Registration Statement...............................................60
9.12 Employment Agreements................................................61
9.13 Closing of IPO.......................................................61
9.14 FIRPTA Certificate...................................................61
9.15 Insurance............................................................61
9.16 Lockup Agreement.....................................................61
9.17 Letter of Representation.............................................61
9.18 Termination of Defined Benefit Plans.................................62
10. COVENANTS OF VPI AND THE STOCKHOLDERS AFTER CLOSING......................62
10.1 Release From Guarantees; Repayment of Certain Obligations............62
10.2 Preservation of Tax and Accounting Treatment.........................62
10.3 Preparation and Filing of Tax Returns................................63
10.4 Appointment of Directors.............................................64
10.5 Preservation of Employee Benefit Plans...............................64
10.6 Maintenance of Books.................................................65
10.7 Securities Covenants.................................................65
11. INDEMNIFICATION..........................................................65
11.1 General Indemnification by the STOCKHOLDERS..........................65
11.2 Indemnification by VPI...............................................66
11.3 Third Person Claims..................................................67
11.4 Exclusive Remedy.....................................................69
11.5 Limitations on Indemnification.......................................70
12. TERMINATION OF AGREEMENT.................................................71
12.1 Termination..........................................................71
12.2 Liabilities in Event of Termination..................................72
13. NONCOMPETITION...........................................................73
13.1 Prohibited Activities................................................73
13.2 Damages..............................................................75
13.3 Reasonable Restraint.................................................75
13.4 Severability; Reformation............................................76
13.5 Independent Covenant.................................................76
13.6 Materiality..........................................................76
13.7 Limitation...........................................................76
14. NONDISCLOSURE OF CONFIDENTIAL INFORMATION................................77
14.1 STOCKHOLDERS.........................................................77
14.2 VPI AND NEWCOS.......................................................78
14.3 Damages..............................................................79
14.4 Survival.............................................................79
14.5 Return of Data Submitted.............................................80
15. TRANSFER RESTRICTIONS....................................................80
15.1 Transfer Restrictions................................................80
15.2 Certain Transfers....................................................80
16. SECURITIES LAW REPRESENTATIONS...........................................81
16.1 Compliance with Law..................................................81
16.2 Economic Risk; Sophistication........................................82
17. REGISTRATION RIGHTS......................................................82
17.1 Piggyback Registration Rights........................................82
17.2 Demand Registration Rights...........................................84
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17.3 Registration Procedures..............................................85
17.4 Underwriting Agreement...............................................85
17.5 Availability of Rule 144.............................................86
17.6 Registration Rights Indemnification..................................86
18. GENERAL..................................................................91
18.1 Press Releases.......................................................91
18.2 Cooperation..........................................................92
18.3 Successors and Assigns; Third Party Beneficiaries....................92
18.4 Entire Agreement.....................................................92
18.5 Counterparts.........................................................93
18.6 Brokers and Agents...................................................93
18.7 Expenses.............................................................93
18.8 Notices..............................................................94
18.9 Governing Law........................................................95
18.10 Exercise of Rights and Remedies.....................................95
18.11 Time................................................................96
18.12 Reformation and Severability........................................96
18.13 Remedies Cumulative.................................................96
18.14 Captions............................................................96
18.15 Amendments and Waivers..............................................96
18.16 Incorporation by Reference..........................................96
18.17 Defined Terms.......................................................97
ANNEX I FORM OF ARTICLES OF MERGER
ANNEX II CERTIFICATE OF INCORPORATION AND BYLAWS OF VPI AND NEWCOS
ANNEX III CONSIDERATION TO BE PAID TO STOCKHOLDERS
ANNEX IV STOCKHOLDERS AND STOCK OWNERSHIP OF THE COMPANIES
ANNEX V STOCKHOLDERS AND STOCK OWNERSHIP OF VPI
ANNEX VI - A FORM OF CORPORATE OPINION OF COUNSEL TO VPI
ANNEX VI - B FORM OF TAX OPINION OF COUNSEL TO VPI
ANNEX VII FORM OF OPINION OF COUNSEL TO COMPANIES AND STOCKHOLDERS
ANNEX VIII FORM OF EMPLOYMENT AGREEMENT
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AGREEMENT AND PLAN OF ORGANIZATION
THIS AGREEMENT AND PLAN OF ORGANIZATION (the "Agreement") is made as of
March 11, 1998, by and among VACATION PROPERTIES INTERNATIONAL, INC., a Delaware
corporation ("VPI"), XXXXX ACQUISITION CORP., a Delaware corporation, MANAGEMENT
ACQUISITION CORP., a Delaware corporation (individually, a "NEWCO" and
collectively, the "NEWCOS"), XXXXX-XXXXXXX ENTERPRISES, INC., a Georgia
corporation, and THE MANAGEMENT COMPANY, a Georgia corporation (each, a
"COMPANY" and collectively, the "COMPANIES"), and Xxxx X. Xxxxx, Xxx X. Xxxxxxx,
Xxx Xxxxxxx Xxxxxx and Xxxxxx Xxxxx (the "STOCKHOLDERS").
WHEREAS, each NEWCO is a corporation duly organized and existing under the
laws of the State of Delaware, each having been incorporated on March 4, 1998,
solely for the purpose of completing the transactions set forth herein, and each
NEWCO is a wholly-owned subsidiary of VPI;
WHEREAS, the respective Boards of Directors of each NEWCO and each COMPANY
(which together are hereinafter collectively referred to as the "Constituent
Corporations") deem it advisable and in the best interests of the Constituent
Corporations and their respective stockholders that (i) XXXXX ACQUISITION CORP.
merge with and into XXXXX-XXXXXXX ENTERPRISES, INC. and (ii) MANAGEMENT
ACQUISITION CORP. merge with and into THE MANAGEMENT COMPANY, pursuant to this
Agreement and the applicable provisions of the laws of the State of Delaware and
the State in which each of the COMPANIES is incorporated;
WHEREAS, VPI is entering into other separate agreements substantially
similar to this Agreement (the "Other Agreements"), each of which is entitled
"Agreement and
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Plan of Organization," with each of B&B On The Beach, Inc., a North Carolina
corporation, Xxxxxxxx & Xxxxxxxx Realty & Development, Inc., a North Carolina
corporation, Coastal Resorts Realty L.L.C., a Delaware limited liability
company, Coastal Resorts Management, Inc., a Delaware corporation, Collection of
Fine Properties, Inc., a Colorado corporation, Ten Mile Holdings, Ltd., a
Colorado corporation, First Resort Software, Inc., a Colorado corporation, Hotel
Corporation of the Pacific, Inc., a Hawaii corporation, Houston and X'Xxxxx
Company, a Colorado corporation, Jupiter Property Management at Park City, Inc.,
a Utah corporation, Maui Condominium & Home Realty, Inc., a Hawaii corporation,
The Maury People, Inc., a Massachusetts corporation, Xxxxx Acquisition, Inc., a
Florida corporation, Realty Consultants, Inc., a Florida corporation, Resort
Property Management, Inc., a Utah corporation, Telluride Resort Accommodations,
Inc., a Colorado corporation, and Whistler Chalets Limited, a British Columbia
corporation, and their respective stockholders in order to acquire additional
businesses (the COMPANIES, together with each of the entities with which VPI has
entered into the Other Agreements, are collectively referred to herein as the
"Founding Companies");
WHEREAS, this Agreement, the Other Agreements and the IPO of VPI Stock
constitute the "VPI Plan of Organization;"
WHEREAS, the STOCKHOLDERS and the Boards of Directors and the stockholders
of VPI, each of the Other Founding Companies and each of the subsidiaries of VPI
that are parties to the Other Agreements intend to consummate the VPI Plan of
Organization as an integrated plan pursuant to which the STOCKHOLDERS and the
stockholders of the Other Founding Companies shall transfer the capital stock of
the Founding Companies to VPI or a subsidiary of VPI, and the STOCKHOLDERS and
the public will
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acquire the stock of VPI as an exchange pursuant to which gain is not recognized
under Section 351(a) of the Code; and
WHEREAS, in consideration of the agreements of the Other Founding Companies
pursuant to the Other Agreements, the Boards of Directors of the COMPANIES have
approved this Agreement as part of the VPI Plan of Organization in order to
transfer the capital stock of the COMPANIES to VPI;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants herein
contained, the parties hereto hereby agree as follows:
1. THE MERGER
1.1 DELIVERY AND FILING OF ARTICLES OF MERGER. The Constituent Corporations
will cause the Articles of Merger to be signed, verified and filed with the
Secretary of State of the State of Delaware and the Secretary of State of the
State in which each of the COMPANIES is incorporated and will deliver stamped
receipt copies of each such filing to VPI on or before the Closing Date.
1.2 EFFECTIVE TIME OF THE MERGER. At the Effective Time of the Mergers, (i)
XXXXX ACQUISITION CORP. shall be merged with and into XXXXX-XXXXXXX ENTERPRISES,
INC. and (ii) MANAGEMENT ACQUISITION CORP. shall be merged with and into THE
MANAGEMENT COMPANY, each in accordance with the Articles of Merger, the separate
existence of each NEWCO shall cease and each COMPANY shall be the surviving
party in the Mergers (each COMPANY is sometimes hereinafter referred to as the
"Surviving Corporation" and collectively the COMPANIES are sometimes hereinafter
referred to as the "Surviving Corporations" ). Each Merger will be effected in a
single transaction.
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1.3 CERTIFICATE OF INCORPORATION, BYLAWS AND BOARD OF DIRECTORS OF
SURVIVING CORPORATIONS. At the Effective Time of each Merger:
(i) the Certificate of Incorporation then in effect of each COMPANY
shall be the Certificate of Incorporation of the Surviving Corporation in
such Merger until changed as provided by law;
(ii) the Bylaws of each NEWCO then in effect shall become the Bylaws
of the Surviving Corporation in such Merger; and subsequent to the
Effective Time of such Merger, such Bylaws shall be the Bylaws of the
Surviving Corporation in such Merger until they shall thereafter be duly
amended;
(iii) the Board of Directors of each Surviving Corporation shall
consist of the persons who are, immediately prior to the Effective Time of
the Merger, on the Board of Directors of the COMPANY merging into such
Surviving Corporation, provided that the Chief Executive Officer of VPI
shall be elected as a director of each Surviving Corporation effective as
of the Effective Time of each Merger; the Board of Directors of each
Surviving Corporation shall hold office subject to the provisions of the
laws of the state in which the Surviving Corporation is located and of the
Certificate of Incorporation and Bylaws of the Surviving Corporation; and
(iv) the officers of each COMPANY immediately prior to the Effective
Time of each Merger shall continue as the officers of the Surviving
Corporation into which such COMPANY is merged in the same capacity or
capacities, and effective upon the Effective Time of each Merger the person
designated by VPI to be appointed as such officer shall be appointed as a
vice president of each Surviving Corporation and the person designated by
VPI to be appointed as such officer shall be appointed as an Assistant
Secretary of each
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Surviving Corporation, each of such officers to serve, subject to the
provisions of the Certificate of Incorporation and Bylaws of the Surviving
Corporation, until his or her successor is duly elected and qualified.
1.4 CERTAIN INFORMATION WITH RESPECT TO THE CAPITAL STOCK OF THE COMPANIES,
VPI AND NEWCOS. The respective designations and numbers of outstanding shares
and voting rights of each class of outstanding capital stock of the COMPANIES,
VPI and NEWCOS as of the date of this Agreement are as follows:
(i) as of the date of this Agreement, the authorized and outstanding
capital stock of the COMPANIES is as set forth on Schedule 1.4 hereto;
(ii) immediately prior to the Closing Date, the authorized capital
stock of VPI will consist of 50,000,000 shares of VPI Stock, of which the
number of issued and outstanding shares will be as set forth in the
Registration Statement, and 10,000,000 shares of preferred stock, $.01 par
value, of which no shares will be issued and outstanding; and
(iii) as of the date of this Agreement, the authorized capital stock
of each NEWCO consists of 1000 shares of NEWCO stock, of which ten (10)
shares are issued and outstanding.
1.5 EFFECT OF MERGERS. At the Effective Time of the Mergers, the effect of
the Mergers shall be as provided in the applicable provisions of the General
Corporation Law of the State of Delaware (the "Delaware GCL") and the laws of
the State in which each COMPANY is incorporated. Except as herein specifically
set forth, the identity, existence, purposes, powers, objects, franchises,
privileges, rights and immunities of each COMPANY shall continue unaffected and
unimpaired by the Mergers and the corporate franchises, existence and rights of
each NEWCO shall be merged with and into the respective COMPANIES, and the
COMPANIES, as the Surviving Corporations, shall be fully vested therewith. At
the Effective Time of the Mergers, the separate existence of each NEWCO shall
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cease and, in accordance with the terms of this Agreement, the Surviving
Corporations shall possess all of the rights, privileges, immunities and
franchises, of a public, as well as of a private, nature, and all property,
real, personal and mixed, and all debts due on whatever account, including
subscriptions to shares, and all Taxes, including those due and owing and those
accrued, and all other choses in action, and all and every other interest of or
belonging to or due to each NEWCO and each COMPANY shall be taken and deemed to
be transferred to, and vested in, the respective Surviving Corporations without
further act or deed; and all property, rights and privileges, powers and
franchises and all and every other interest shall be thereafter as effectively
the property of the respective Surviving Corporations as they were of each NEWCO
and each COMPANY; and the title to any real estate, or interest therein, whether
by deed or otherwise, under the laws of the states of incorporation vested in
each respective NEWCO and COMPANY, shall not revert or be in any way impaired by
reason of the Mergers. Except as otherwise provided herein, each Surviving
Corporation shall thenceforth be responsible and liable for all of the
liabilities and obligations of the respective NEWCO and COMPANY and any claim
existing, or action or proceeding pending, by or against a NEWCO or COMPANY may
be prosecuted as if the Merger involving such NEWCO or COMPANY had not taken
place, or the respective Surviving Corporation may be substituted in their
place. Neither the rights of creditors nor any liens upon the property of a
NEWCO or COMPANY shall be impaired by the Merger involving such NEWCO or
COMPANY, and all debts, liabilities and duties of such NEWCO and COMPANY shall
attach to the respective Surviving Corporation, and may be enforced against such
Surviving Corporation to the same extent as if said debts, liabilities and
duties had been incurred or contracted by such Surviving Corporation.
2. CONVERSION OF STOCK
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2.1 MANNER OF CONVERSION. The manner of converting the shares of (i)
outstanding capital stock of each COMPANY (collectively "COMPANY Stock") and
(ii) NEWCO Stock, issued and outstanding immediately prior to the Effective Time
of the Mergers, respectively, into shares of (x) VPI Stock and (y) common stock
of the Surviving Corporations, respectively, shall be as follows:
As of the Effective Time of the Merger:
(i) all of the shares of COMPANY Stock of each COMPANY issued and
outstanding immediately prior to the Effective Time of each respective
Merger, by virtue of such Merger and without any action on the part of the
holder thereof, automatically shall be deemed to represent (l) the right to
receive the number of fully paid and nonassessable shares of VPI Stock set
forth on Annex III hereto with respect to such holder and (2) the right to
receive the amount of cash, subject to adjustment pursuant to Section 3.3
hereof, set forth on Annex III hereto with respect to such holder;
(ii) all shares of COMPANY Stock that are held by each COMPANY as
treasury stock shall be canceled and retired and no shares of VPI Stock or
other consideration shall be delivered or paid in exchange therefor; and
(iii) each share of NEWCO Stock of each NEWCO issued and outstanding
immediately prior to the Effective Time of each respective Merger, shall,
by virtue of such Merger and without any action on the part of VPI,
automatically be converted into one fully paid and nonassessable share of
common stock of the Surviving Corporation involved in such Merger which
shall constitute all of the issued and outstanding shares of common stock
of such Surviving Corporation immediately after the Effective Time of such
Merger.
All VPI Stock received by the STOCKHOLDERS pursuant to this Agreement
shall, except for restrictions on resale or transfer described in Sections 15
and 16 hereof, have the same rights as all of
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the other shares of outstanding VPI Stock by reason of the provisions of the
Certificate of Incorporation of VPI or as otherwise provided by the Delaware
GCL. All voting rights of such VPI Stock received by the STOCKHOLDERS shall be
fully exercisable by the STOCKHOLDERS and the STOCKHOLDERS shall not be deprived
nor restricted in exercising those rights. At the Effective Time of the Mergers,
VPI shall have no class of capital stock (including preferred stock) issued and
outstanding other than the VPI Stock.
3. DELIVERY OF MERGER CONSIDERATION
3.1 DELIVERY OF VPI STOCK AND CASH. At the Effective Time of the Mergers
and on the Closing Date the STOCKHOLDERS, who are the holders of all outstanding
certificates representing shares of COMPANY Stock, shall, upon surrender of such
certificates, receive the respective number of shares of VPI Stock and the
amount of cash (subject to adjustment pursuant to Section 3.3) set forth on
Annex III hereto, said cash to be payable by certified check or wire transfer.
3.2 DELIVERY OF COMPANY STOCK. The STOCKHOLDERS shall deliver to VPI at the
Pre-Closing (subject to Section 4) the certificates representing COMPANY Stock,
duly endorsed in blank by the STOCKHOLDERS, or accompanied by blank stock
powers, and with all necessary transfer tax and other revenue stamps, acquired
at the STOCKHOLDERS' expense, affixed and canceled. The STOCKHOLDERS agree
promptly to cure any deficiencies with respect to the endorsement of the stock
certificates or other documents of conveyance with respect to such COMPANY Stock
or with respect to the stock powers accompanying any COMPANY Stock.
3.3 BALANCE SHEET TEST. As of the Closing Date, each COMPANY shall have (i)
positive net worth (excluding all customer deposits and similar escrow-type
accounts); (ii) positive net working capital (defined as current assets minus
current liabilities, excluding all customer deposits and similar
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escrow-type accounts); and (iii) all customer deposit accounts and other similar
escrow-type accounts fully funded in cash or cash equivalents. To the extent
that any condition set forth in clauses (i) through (iii) is not met, the cash
portion of the consideration to be paid to the STOCKHOLDERS pursuant to this
Section 3 shall be reduced by the amount required to cure any such failure.
Indebtedness each COMPANY in excess of the amount set forth on Annex III that
was incurred in connection with the acquisition of such COMPANY by the
STOCKHOLDERS, or the acquisition of nonoperating assets by such COMPANY or the
STOCKHOLDERS, shall result in a corresponding dollar-for-dollar reduction in the
cash portion of the consideration paid to the STOCKHOLDERS pursuant to this
Section 3. If necessary, a post-Closing adjustment shall be made to effect the
intent of this Section 3.3.
4. CLOSING
At or prior to the Pricing, the parties shall take all actions necessary to
prepare to (i) effect the Mergers (including, if permitted by applicable state
law, the filing with the appropriate state authorities of the Articles of
Merger, which shall become effective at the Effective Time of the Mergers) and
(ii) effect the conversion and delivery of shares referred to in Section 3
hereof; provided, however, that such actions shall not include the actual
completion of the Mergers or the conversion and delivery of the shares and
certified check(s) or wire transfer(s) referred to in Section 3 hereof, each of
which actions shall only be taken upon the Closing Date as herein provided. In
the event that there is no Closing Date and this Agreement terminates, VPI and
the NEWCOS hereby covenant and agree to do all things required by Delaware law
and all things which counsel for the COMPANIES advise VPI and/or the NEWCOS are
required by applicable laws of the State in which the COMPANIES are incorporated
in order to rescind the effects, if any, of the filing of the Articles of Merger
as described in
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this Section and to pay all related costs of the COMPANIES directly associated
with such rescission. The taking of the actions described in clauses (i) and
(ii) above (the "Pre-Closing") shall take place on the pre-closing date (the
"Pre-Closing Date") at the offices of Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.,
0000 Xxx Xxxxxxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000. On the Closing Date (x)
the Articles of Merger shall have been filed with the appropriate state
authorities so that they shall be or, as of 8:00 a.m. New York City time on the
Closing Date, shall become effective and the Mergers shall thereby be effected,
(y) all transactions contemplated by this Agreement, including the conversion
and delivery of shares, the delivery of a certified check or checks or wire
transfer(s) in an amount equal to the cash portion of the consideration which
the STOCKHOLDERS shall be entitled to receive pursuant to the Mergers referred
to in Section 3 hereof shall occur and (z) the closing with respect to the IPO
shall be completed. The taking of the actions described in the preceding clauses
(x), (y) and (z) shall constitute the closing of the transactions hereunder (the
"Closing"), and the date on which the actions described in the preceding clauses
(x), (y) and (z) occur shall be referred to as the "Closing Date." Except as
provided in Sections 8 and 9 hereof with respect to actions to be taken on the
Closing Date, during the period from the Pre-Closing Date to the Closing Date
this Agreement may only be terminated by a party if the underwriting agreement
in respect of the IPO is terminated pursuant to the terms of such agreement.
This Agreement shall in any event terminate if the Closing Date has not occurred
within 15 business days of the Pre-Closing Date. Time is of the essence.
5. REPRESENTATIONS AND WARRANTIES OF COMPANIES AND STOCKHOLDERS
(A) REPRESENTATIONS AND WARRANTIES OF COMPANIES AND STOCKHOLDERS.
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Each of the COMPANIES and the STOCKHOLDERS jointly and severally represents
and warrants that all of the following representations and warranties in this
Section 5(A) are true at the date of this Agreement and, subject to Section 7.8
hereof, shall be true at the time of Pre-Closing and the Closing Date. Each of
the COMPANIES and the STOCKHOLDERS agrees that such representations and
warranties shall survive the Closing Date for a period of two years (the last
day of such period being the "Expiration Date"), except that (i) the warranties
and representations set forth in Section 5.23 hereof shall survive until such
time as the limitations period has run for all Tax periods ended on or prior to
the Closing Date, which shall be deemed to be the Expiration Date for Section
5.23 and (ii) solely for purposes of determining whether a claim for
indemnification under Section 11.1(iii) hereof has been made on a timely basis,
and solely to the extent that in connection with the IPO, VPI actually incurs
liability under the 1933 Act, the 1934 Act or any other federal or state
securities laws as a result of a breach of a representation or warranty by the
COMPANIES or the STOCKHOLDERS, the representations and warranties set forth
herein shall survive until the expiration of any applicable limitations period,
which shall be deemed to be the Expiration Date for such purposes. For purposes
of this Section 5, the term "COMPANY" shall mean and refer to the COMPANY and
all of its Subsidiaries, if any.
5.1 DUE ORGANIZATION. Each COMPANY is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation,
and such COMPANY is duly authorized and qualified to do business under all
applicable laws, regulations, ordinances and orders of public authorities to
carry on its business in the places and in the manner as now conducted except
(i) as set forth on Schedule 5.1 or (ii) where the failure to be so authorized
or qualified would not have a material adverse effect on the business,
operations, affairs, properties, assets, condition (financial or otherwise) or,
to the knowledge of such COMPANY or the STOCKHOLDERS,
11
prospects of such COMPANY taken as a whole (as used herein with respect to such
COMPANY, or with respect to any other person, a "Material Adverse Effect").
Schedule 5.1 sets forth the jurisdiction in which each COMPANY is incorporated
and contains a list of all such jurisdictions in which each COMPANY is
authorized or qualified to do business. True, complete and correct copies of the
Certificate of Incorporation and Bylaws, each as amended, of each COMPANY (the
"Charter Documents") are all attached hereto as Schedule 5.1. The stock records
of each COMPANY, as heretofore made available to VPI, are correct and complete
in all material respects. There are no minutes in the possession of each COMPANY
or the STOCKHOLDERS which have not been made available to VPI, and all of such
minutes are correct and complete in all material respects. Except as set forth
on Schedule 5.1, the most recent minutes of each COMPANY, which are dated no
earlier than ten business days prior to the date hereof, affirm and ratify all
prior acts of such COMPANY, and of its officers and directors on behalf of such
COMPANY.
5.2 AUTHORITY. Each COMPANY has the full legal right, power and authority
to enter into and perform this Agreement and the Merger.
5.3 CAPITAL STOCK OF THE COMPANIES. The authorized capital stock of each
COMPANY is as set forth on Schedule 1.4. All of the issued and outstanding
shares of the capital stock of each COMPANY are owned by the STOCKHOLDERS in the
amounts set forth in Annex IV and further, except as set forth on Schedule 5.3,
are owned free and clear of all liens, security interests, pledges, charges,
voting trusts, restrictions, encumbrances and claims of every kind. All of the
issued and outstanding shares of the capital stock of each COMPANY have been
duly authorized and validly issued, are fully paid and nonassessable, are owned
of record and beneficially by the STOCKHOLDERS and further, such shares were
offered, issued, sold and delivered by such COMPANY in compliance with all
applicable state and federal laws concerning the issuance of
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securities. Further, none of such shares were issued in violation of the
preemptive rights of any past or present stockholder of the COMPANY.
5.4 TRANSACTIONS IN CAPITAL STOCK. Except as set forth on Schedule 5.4,
each COMPANY has not acquired any COMPANY Stock since January l, 1995. Except as
set forth on Schedule 5.4, (i) no option, warrant, call, conversion right or
commitment of any kind exists which obligates any of the COMPANIES to issue any
of its capital stock; (ii) neither COMPANY has any obligation (contingent or
otherwise) to purchase, redeem or otherwise acquire any of its equity securities
or any interests therein or to pay any dividend or make any distribution in
respect thereof; and (iii) neither the voting stock structure of each COMPANY
nor the relative ownership of shares among any of its respective stockholders
has been altered or changed in contemplation of the Mergers and/or the VPI Plan
of Organization. Schedule 5.4 also includes complete and accurate copies of all
stock option or stock purchase plans, including a list of all outstanding
options, warrants or other rights to acquire shares of each COMPANY's stock and
the material terms of such outstanding options, warrants or other rights.
5.5 NO BONUS SHARES. Except as set forth on Schedule 5.5, none of the
shares of COMPANY Stock was issued pursuant to awards, grants or bonuses.
5.6 SUBSIDIARIES. Schedule 5.6 attached hereto lists the name of each
COMPANY's subsidiaries, whether a corporation, limited liability company or
other business entity (each, a "Subsidiary"), and sets forth the number and
class of the authorized capital stock of each Subsidiary and the number of
shares or interests of each Subsidiary which are issued and outstanding, all of
which shares (except as set forth on Schedule 5.6) are owned by the COMPANIES as
set forth on Schedule 5.6, free and clear of all liens, security interests,
pledges, voting trusts, equities, restrictions, encumbrances and claims of every
kind. Except as set forth on Schedule 5.6, each COMPANY does
13
not presently own, of record or beneficially, or control, directly or
indirectly, any capital stock, securities convertible into capital stock or any
other equity interest in any corporation, association or business entity nor is
any COMPANY, directly or indirectly, a participant in any joint venture,
partnership or other non-corporate entity.
5.7 PREDECESSOR STATUS; ETC. Set forth on Schedule 5.7 is a listing of all
names of all predecessor companies of each COMPANY, including the names of any
entities acquired by each COMPANY (by stock purchase, merger or otherwise) or
owned by each COMPANY or from whom the COMPANIES previously acquired material
assets. Except as disclosed on Schedule 5.7, neither COMPANY has been a
subsidiary or division of another corporation or a part of an acquisition which
was later rescinded.
5.8 SPIN-OFF BY THE COMPANIES. Except as set forth on Schedule 5.8, there
has not been any sale, spin-off or split-up of material assets of any of the
COMPANIES since January 1, 1995.
5.9 FINANCIAL STATEMENTS. Attached hereto as Schedule 5.9 are copies of the
following financial statements (the "COMPANY Financial Statements") each of the
COMPANIES: the COMPANY's audited (i) Balance Sheets, if any, as of December 31,
1997 and 1996; (ii) Statements of Operations, if any, for each of the years in
the two-year period ended December 31, 1997 (December 31, 1997 being hereinafter
referred to as the "Balance Sheet Date"); (iii) Statements of Changes in
Stockholders' Equity, if any, for each of the years in the two-year period ended
on the Balance Sheet Date; and (iv) Statements of Cash Flows, if any, for each
of the years in the two-year period ended on the Balance Sheet Date. Except as
set forth on Schedule 5.9, such Financial Statements have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods indicated (except as noted thereon or on Schedule
5.9). Except as set forth on Schedule 5.9, such Balance Sheets as of December
31, 1997 and 1996 present fairly the financial
14
position of such COMPANY as of the dates indicated thereon, and such Statements
of Operations, Statements of Changes in Stockholders' Equity and Statements of
Cash Flows present fairly the results of operations for the periods indicated
thereon.
5.10 LIABILITIES AND OBLIGATIONS. Each of COMPANIES has delivered to VPI an
accurate list (which is set forth on Schedule 5.10) as of the Balance Sheet Date
of (i) all liabilities of such COMPANY which are not reflected in the COMPANY
Financial Statements at the Balance Sheet Date, (ii) any material liabilities of
such COMPANY (including all liabilities in excess of $10,000) and (iii) all loan
agreements, indemnity or guaranty agreements, bonds, mortgages, liens, pledges
or other security agreements, together with true, correct and complete copies of
such documents. Except as set forth on Schedule 5.10, since the Balance Sheet
Date neither COMPANY has incurred any material liabilities of any kind,
character and description, whether accrued, absolute, secured or unsecured,
contingent or otherwise, other than liabilities incurred in the ordinary course
of business. Each of the COMPANIES has also delivered to VPI on Schedule 5.10,
in the case of those contingent liabilities related to pending or, to the
knowledge of the COMPANIES, threatened litigation, or other liabilities which
are not fixed or are being contested, the following information:
(i) a summary description of the liability together with the following:
(a) copies of all relevant documentation relating thereto;
(b) amounts claimed and any other action or relief sought; and
(c) name of claimant and all other parties to the claim, suit or
proceeding;
(ii) the name of each court or agency before which such claim, suit or
proceeding is pending;
(iii) the date such claim, suit or proceeding was instituted; and
15
(iv) a good faith and reasonable estimate of the maximum amount, if any,
which is likely to become payable with respect to each such liability. If no
estimate is provided, the estimate shall for purposes of this Agreement be
deemed to be zero.
5.11 ACCOUNTS AND NOTES RECEIVABLE. Each of the COMPANIES has delivered to
VPI an accurate list (which is set forth on Schedule 5.11) of the accounts and
notes receivable of such COMPANY, as of the Balance Sheet Date, including any
such amounts which are not reflected in the balance sheet as of the Balance
Sheet Date, and including receivables from and advances to employees and the
STOCKHOLDERS. Each of the COMPANIES shall also provide to VPI (x) an accurate
list of all receivables obtained subsequent to the Balance Sheet Date up to the
Pre-Closing Date and (y) an aging of all accounts and notes receivable showing
amounts due in 30 day aging categories (the "A/R Aging Reports"). Except to the
extent reflected on Schedule 5.11 or as disclosed by the COMPANIES to VPI in a
writing accompanying the A/R Aging Reports, the accounts, notes and other
receivables shown on Schedule 5.11 and on the A/R Aging Reports are and shall be
collectible in the amounts shown, net of reserves reflected in the balance sheet
as of the Balance Sheet Date with respect to accounts receivable as of the
Balance Sheet Date, and net of reserves reflected in the books and records of
each COMPANY (consistent with the methods used for the balance sheet) with
respect to accounts receivable of such COMPANY after the Balance Sheet Date.
5.12 PERMITS AND INTANGIBLES. Each of the COMPANIES holds all licenses,
franchises, permits and other governmental authorizations that are necessary for
the operation of the business of such COMPANY as now conducted, and such COMPANY
has delivered to VPI an accurate list and summary description (which is set
forth on Schedule 5.12) of all such licenses, franchises, permits and other
governmental authorizations, including permits, titles, licenses, franchises,
certificates, trademarks, trade names, patents, patent applications and
copyrights owned or held by such
16
COMPANY (including interests in software or other technology systems, programs
and intellectual property) (it being understood and agreed that a list of all
environmental permits and other environmental approvals is set forth on Schedule
5.13). The licenses, franchises, permits and other governmental authorizations
listed on Schedules 5.12 and 5.13 are valid, and such COMPANY has not received
any notice that any governmental authority intends to cancel, terminate or not
renew any such license, franchise, permit or other governmental authorization.
Each of the COMPANIES has conducted and is conducting its business in compliance
with the requirements, standards, criteria and conditions set forth in the
licenses, franchises, permits and other governmental authorizations listed on
Schedules 5.12 and 5.13 and is not in violation of any of the foregoing, except
for inadvertent, immaterial noncompliance with such requirements, standards,
criteria and conditions (provided that any such noncompliance shall be deemed a
breach of this Section 5.12 for purposes of Section 11 hereof). Except as
specifically provided on Schedule 5.12, the transactions contemplated by this
Agreement will not result in a default under or a breach or violation of, or
adversely affect the rights and benefits afforded to the COMPANY by, any such
licenses, franchises, permits or government authorizations.
5.13 ENVIRONMENTAL MATTERS. Except as set forth on Schedule 5.13, (i) each
of the COMPANIES has complied with and is in compliance with all federal, state,
local and foreign statutes (civil and criminal), laws, ordinances, regulations,
rules, notices, permits, judgments, orders and decrees applicable to any of them
or any of their respective properties, assets, operations and businesses
relating to environmental protection (collectively "Environmental Laws")
including, without limitation, Environmental Laws relating to air, water, land
and the generation, storage, use, handling, transportation, treatment or
disposal of Hazardous Wastes and Hazardous Substances including petroleum and
petroleum products (as such terms are defined in any applicable Environmental
Law);
17
(ii) each COMPANY has obtained and adhered to all permits and other approvals
necessary to treat, transport, store, dispose of and otherwise handle Hazardous
Wastes and Hazardous Substances, a list of all of which permits and approvals is
set forth on Schedule 5.13, and has reported to the appropriate authorities, to
the extent required by all Environmental Laws, all past and present sites owned
and operated by each COMPANY where Hazardous Wastes or Hazardous Substances have
been treated, stored, disposed of or otherwise handled; (iii) there have been no
releases or threats of releases (as defined in Environmental Laws) at, from, in
or on any property owned or operated by such COMPANY except as permitted by
Environmental Laws; (iv) such COMPANY knows of no on-site or off-site location
to which such COMPANY has transported or disposed of Hazardous Wastes and
Hazardous Substances or arranged for the transportation of Hazardous Wastes and
Hazardous Substances, which site is the subject of any federal, state, local or
foreign enforcement action or any other investigation which could lead to any
claim against any of the COMPANIES, VPI or the NEWCOS for any clean-up cost,
remedial work, damage to natural resources, property damage or personal injury,
including, but not limited to, any claim under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended; and (v) such
COMPANY has no contingent liability in connection with any release of any
Hazardous Waste or Hazardous Substance into the environment.
5.14 PERSONAL PROPERTY. Each COMPANY has delivered to VPI an accurate list
(which is set forth on Schedule 5.14) of (x) all personal property included in
"depreciable plant, property and equipment" on the balance sheet of such COMPANY
as of the Balance Sheet Date or that will be included on any balance sheet of
such COMPANY prepared after the Balance Sheet Date, (y) all other personal
property (except cash and cash equivalents) owned by such COMPANY with a value
in excess of $10,000 (i) as of the Balance Sheet Date and (ii) acquired since
the Balance Sheet Date and
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(z) all leases and agreements in respect of personal property used in the
operation of such COMPANY's business as now conducted, including, true, complete
and correct copies of all such leases and agreements. The COMPANIES shall
indicate on Schedule 5.14 those assets listed thereon that are currently owned,
or that were formerly owned, by STOCKHOLDERS, relatives of STOCKHOLDERS, or
Affiliates of such COMPANY. Except as set forth on Schedule 5.14, (i) all
personal property used by each COMPANY in its business is either owned by such
COMPANY or leased by such COMPANY pursuant to a lease included on Schedule 5.14,
(ii) all of the personal property listed on Schedule 5.14 is in good working
order and condition, ordinary wear and tear excepted and (iii) all leases and
agreements included on Schedule 5.14 are in full force and effect and, assuming
due execution and delivery thereof by the parties thereto other than such
COMPANY, the STOCKHOLDERS and their respective Affiliates, constitute valid and
binding agreements of such COMPANY, the STOCKHOLDERS and, to the knowledge of
such COMPANY or the STOCKHOLDERS, the other parties (and their successors)
thereto in accordance with their respective terms.
5.15 SIGNIFICANT CUSTOMERS. Each COMPANY has delivered to VPI an accurate
list (which is set forth on Schedule 5.15) of (i) all significant customers, it
being understood and agreed that a "significant customer," for purposes of this
Section 5.15, means a customer (or person or entity) representing 5% or more of
such COMPANY's annual revenues as of the Balance Sheet Date. Except to the
extent set forth on Schedule 5.15, none of any COMPANY's significant customers
(or persons or entities that are sources of a significant number of customers)
have canceled or substantially reduced or, to the knowledge of any COMPANY, are
currently attempting or threatening to cancel a contract or substantially reduce
utilization of the services provided by such COMPANY.
19
5.16 MATERIAL CONTRACTS AND COMMITMENTS. Each COMPANY has listed on
Schedule 5.16 all material contracts, commitments and similar agreements to
which such COMPANY currently is a party or by which it or any of its properties
are bound (including, but not limited to, contracts with significant customers,
joint venture or partnership agreements, contracts with any labor organizations,
strategic alliances and options to purchase land), other than contracts,
commitments and agreements otherwise listed on Schedules 5.10, 5.14 or 5.17, (a)
in existence as of the Balance Sheet Date and (b) entered into since the Balance
Sheet Date, and in each case has delivered true, complete and correct copies of
such agreements to VPI. Each COMPANY has complied with all material commitments
and obligations pertaining to it, and is not in default under any contracts or
agreements listed on Schedule 5.16 and no notice of default under any such
contract or agreement has been received. Each COMPANY has also indicated on
Schedule 5.16 a summary description of all pending plans or projects involving
the opening of new operations, expansion of existing operations, and the
acquisition of any personal property, business or assets requiring, in any
event, the payment of more than $25,000 by such COMPANY.
5.17 REAL PROPERTY. Schedule 5.17 includes a list of all real property
owned or leased by each COMPANY (i) as of the Balance Sheet Date and (ii)
acquired or leased since the Balance Sheet Date, and all other real property, if
any, used by each COMPANY in the conduct of its business. Each COMPANY has good
and insurable title to the real property owned by it, including those reflected
on Schedule 5.14, subject to no mortgage, pledge, lien, conditional sales
agreement, encumbrance or charge, except for:
(i) liens reflected on Schedules 5.10 or 5.17 as securing specified
liabilities (with respect to which no default exists);
(ii) liens for current Taxes not yet payable and assessments not in
default;
20
(iii) easements for utilities serving the property only; and
(iv) easements, covenants and restrictions and other exceptions to
title shown of record in the office of the County Clerks in which the
properties, assets and leasehold estates are located which do not adversely
affect the current use of the property.
Schedule 5.17 contains, without limitation, true, complete and correct
copies of all title reports and title insurance policies currently in possession
of each COMPANY with respect to real property owned by such COMPANY.
Each COMPANY has also delivered to VPI an accurate list of real property
leased by such COMPANY as lessee (which list is set forth on Schedule 5.17),
together with true, complete and correct copies of all leases and agreements in
respect of such real property leased by such COMPANY as lessee (which copies are
attached to Schedule 5.17), and an indication as to which such properties, if
any, are currently owned, or were formerly owned, by the STOCKHOLDERS or
business or personal affiliates of such COMPANY or the STOCKHOLDERS. Except as
set forth on Schedule 5.17, all of such leases included on Schedule 5.17 are in
full force and effect and, assuming due execution and delivery thereof by the
parties thereto other than such COMPANY, the STOCKHOLDERS and their respective
affiliates, constitute valid and binding agreements of such COMPANY, the
STOCKHOLDERS and, to the knowledge of such COMPANY or the STOCKHOLDERS, the
other parties (and their successors) thereto in accordance with their respective
terms.
5.18 INSURANCE. Each COMPANY has delivered to VPI, as set forth on and
attached to Schedule 5.18, (i) an accurate list as of the Balance Sheet Date of
all insurance policies carried by such COMPANY, (ii) an accurate list of all
insurance loss runs and workers compensation claims received for the past three
(3) policy years and (iii) true, complete and correct copies of all insurance
policies currently in effect. Such insurance policies evidence all of the
insurance that such COMPANY is
21
required to carry pursuant to all of its contracts and other agreements and
pursuant to all applicable laws. All of such insurance policies are currently in
full force and effect and shall remain in full force and effect through the
Closing Date. No insurance carried by such COMPANY has ever been canceled by the
insurer and such COMPANY has never been unable to obtain insurance coverage for
its assets and operations.
5.19 COMPENSATION; EMPLOYMENT AGREEMENTS; ORGANIZED LABOR MATTERS. Each
COMPANY has delivered to VPI an accurate list (which is set forth on Schedule
5.19) showing all officers, directors and key employees of such COMPANY, listing
all employment agreements with such officers, directors and key employees and
the rate of compensation (and the portions thereof attributable to salary, bonus
and other compensation, respectively) of each of such persons (i) as of the
Balance Sheet Date and (ii) as of the date hereof. Each COMPANY has provided to
VPI true, complete and correct copies of any employment agreements for persons
listed on Schedule 5.19. Except as set forth on Schedule 5.19, since the Balance
Sheet Date, there have been no increases in the compensation payable or any
special bonuses to any officer, director, key employee or other employee, except
ordinary salary increases implemented on a basis consistent with past practices.
Except as set forth on Schedule 5.19, (i) neither COMPANY is bound by or
subject to (and none of their respective assets or properties is bound by or
subject to) any arrangement with any labor union, (ii) no employees of any
COMPANY are represented by any labor union or covered by any collective
bargaining agreement, (iii) to the best of each COMPANY's knowledge, no campaign
to establish such representation is in progress and (iv) there is no pending or,
to the best of each COMPANY's knowledge, threatened labor dispute involving any
COMPANY and any group of its employees nor has any COMPANY experienced any labor
interruptions over the past three years. Each COMPANY believes its relationship
with employees to be good.
22
Each COMPANY (i) is in compliance with all applicable federal, state and
local laws, rules and regulations (domestic or foreign) respecting employment,
employment practices, labor, terms and conditions of employment and wages and
hours, except for inadvertent, immaterial noncompliance with such laws, rules,
and regulations (provided that any such noncompliance shall be deemed a breach
of this Section 5.19 for purposes of Section 11 hereof); (ii) is not liable for
any arrears of wages or any taxes or any penalty for failure to comply with any
of the foregoing; (iii) is not liable for any payment to any trust or other fund
or to any governmental or administrative authority, with respect to unemployment
compensation benefits, social security or other employment-related benefits; and
(iv) has provided employees with the benefits to which they are entitled
pursuant to the terms of all COMPANY benefit plans.
5.20 EMPLOYEE PLANS. Each COMPANY has delivered to VPI an accurate schedule
(Schedule 5.20) showing all employee benefit plans currently sponsored or
maintained or contributed to by, or which cover the current or former employees
or directors of such COMPANY, all employment agreements and other agreements or
arrangements containing "golden parachute" or other similar provisions, and all
deferred compensation agreements, together with true, complete and correct
copies of such plans, agreements and any trusts related thereto, and
classifications of employees covered thereby as of the Balance Sheet Date.
Except for the employee benefit plans, if any, described on Schedule 5.20,
neither COMPANY sponsors, maintains or contributes to any plan program, fund or
arrangement that constitutes an "employee pension benefit plan" (within the
meaning of Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) nor has any COMPANY any obligation to contribute to or
accrue or pay any benefits under any deferred compensation or retirement funding
arrangement on behalf of any employee or employees (such as, for example, and
without limitation, any individual retirement account or annuity, any "excess
benefit plan"
23
(within the meaning of Section 3(36) of ERISA) or any non-qualified deferred
compensation arrangement). Neither COMPANY has sponsored, maintained or
contributed to any employee pension benefit plan other than the plans,
agreements, arrangements and trusts set forth on Schedule 5.20, nor is any
COMPANY required to contribute to any retirement plan pursuant to the provisions
of any collective bargaining agreement establishing the terms and conditions or
employment of any of such COMPANY's employees.
All accrued contribution obligations of each COMPANY with respect to any
plan listed on Schedule 5.20 have either been fulfilled in their entirety or are
fully reflected on the balance sheet of such COMPANY as of the Balance Sheet
Date.
5.21 COMPLIANCE WITH ERISA. All such plans, agreements, arrangements and
trusts of each COMPANY that are currently maintained or contributed to by such
COMPANY or cover employees or former employees of such COMPANY listed on
Schedule 5.20 that are intended to qualify under Section 401(a) of the Code (the
"Qualified Plans") are, and have been so qualified and have been determined by
the Internal Revenue Service to be so qualified, and copies of such
determination letters are included as part of Schedule 5.21 hereof. All employee
benefit plans, agreements, arrangements and trusts listed on Schedule 5.20 and
the administration thereof are in substantial compliance with their terms and
all applicable provisions of ERISA and the regulations issued thereunder, as
well as with all other applicable federal, state and local statutes, ordinances
and regulations. Except as disclosed on Schedule 5.21, all reports and other
documents required to be filed with any governmental agency or distributed to
plan participants or beneficiaries (including, but not limited to, actuarial
reports, audit reports, Forms 5500, summary plan descriptions or Tax Returns)
have been timely filed or distributed, and copies thereof for the three most
recent plan years are included as part of Schedule 5.21 hereof. No plan listed
on Schedule 5.20, nor any COMPANY,
24
nor any STOCKHOLDER with respect to any such plan or any COMPANY, has engaged in
any transaction prohibited under the provisions of Section 4975 of the Code or
Section 406 of ERISA. No such plan listed on Schedule 5.20 has incurred an
accumulated funding deficiency, as defined in Section 412(a) of the Code and
Section 302(1) of ERISA; and each COMPANY has not incurred any liability for
excise tax or penalty due to the Internal Revenue Service nor any liability to
the Pension Benefit Guaranty Corporation. The COMPANIES and STOCKHOLDERS further
represent that:
(i) there have been no terminations, partial terminations or
discontinuance of contributions to any such Qualified Plan intended to
qualify under Section 401(a) of the Code without notice to and approval by
the Internal Revenue Service;
(ii) no such plan listed on Schedule 5.20 subject to the provisions of
Title IV of ERISA has been terminated except in accordance with applicable
laws and regulations or as may be required pursuant to Section 9.18 hereof;
(iii) there have been no "reportable events" (as that phrase is
defined in Section 4043 of ERISA) with respect to any such plan listed on
Schedule 5.20;
(iv) each COMPANY has not incurred liability under Section 4062 of
ERISA;
(v) each COMPANY is not now, and cannot as a result of its past
activities become, liable to the Pensions Benefit Guaranty Corporation or
to any multi-employer pension benefit plan under the provisions of Title IV
of ERISA; and
(vi) no circumstances exist pursuant to which any COMPANY has or could
have any direct or indirect liability whatsoever (including, but not
limited to, any liability to the Internal Revenue Service for any excise
tax or penalty, or being subject to any Statutory Lien to secure payment of
any liability) with respect to any plan now or heretofore maintained or
contributed to by any entity other than a COMPANY that is, or at any time
was, a member of a
25
"controlled group" (as defined in Section 412(n)(6)(B) of the Code) that
includes such COMPANY.
5.22 CONFORMITY WITH LAW; LITIGATION. Except to the extent set forth on
Schedules 5.22 or 5.13, neither COMPANY is in violation of any law or regulation
or of any order of any court or federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality having
jurisdiction over such COMPANY, except for inadvertent, immaterial noncompliance
with any such law, regulation or order (provided that any such noncompliance
shall be deemed a breach of this Section 5.22 for purposes of Section 11
hereof); and except to the extent set forth on Schedules 5.10 or 5.13, there are
no claims, actions, suits or proceedings, commenced or, to the knowledge of the
COMPANIES, threatened, against or affecting any of the COMPANIES, at law or in
equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality having
jurisdiction over such COMPANY and no notice of any claim, action, suit or
proceeding, whether pending or threatened, has been received. Each COMPANY has
conducted and is conducting its business in compliance with the requirements,
standards, criteria and conditions set forth in applicable federal, state and
local statutes, ordinances, orders, approvals, variances, rules and regulations,
and is not in violation of any of the foregoing.
5.23 TAXES.
(a) Each COMPANY has timely filed all requisite federal, state, local
and other Tax returns, reports, declarations or Tax return filing extension
requests ("Tax Returns") for all fiscal periods ended on or before the Balance
Sheet Date. All such Tax Returns have set forth all material items required to
be set forth therein and were prepared in compliance with applicable laws and
were true, correct and complete in all material respects. No material fact or
information has become known
26
to the COMPANIES or their respective officers or employees responsible for
maintaining the financial records of the such COMPANY subsequent to the filing
of such Tax Returns to the contrary of any information contained therein. Except
as set forth on Schedule 5.23, there are no examinations in progress (and the
COMPANIES and their respective employees are not aware of any proposed
examinations) or claims against any COMPANY (including liens against the
COMPANY's assets) for federal, state, local and other Taxes (including penalties
and interest) for any period or periods prior to and including the Balance Sheet
Date and no notice of any claim for Taxes, whether pending or threatened, has
been received. Except as set forth on Schedule 5.23, neither any COMPANY nor the
STOCKHOLDERS have entered into an agreement or waiver or have been requested to
enter into an agreement or waiver extending any statute of limitations regarding
Taxes.
(b) All Taxes, including interest and penalties (whether or not shown
on any Tax Return) owed by any COMPANY, any member of an affiliated or
consolidated group which includes or included any of the COMPANIES, or with
respect to any payment made or deemed made by any COMPANY, required to be paid
by the date hereof, have been paid. All amounts required to be deposited,
withheld or collected under applicable federal, state, local or other Tax laws
and regulations by any COMPANY for Taxes have been so deposited, withheld or
collected, and such deposit, withholding or collection has either been paid to
the respective governmental agencies or set aside and secured in accounts for
such purpose or secured and reserved against and entered on the COMPANY
Financial Statements (and, if applicable, any Financial Statements delivered
pursuant to Section 7.10 hereof).
(c) The amounts, if any, shown as accruals for Taxes on the COMPANY
Financial Statements (and, if applicable, any Financial Statements delivered
pursuant to Section 7.10 hereof)
27
are sufficient for the payment of all Taxes of the kinds indicated (including
penalties and interest) for all fiscal periods ended on or before that date.
(d) Except as set forth on Schedule 5.23, neither COMPANY has been
included in or joined in the filing of any consolidated or combined Tax Return
(other than as a common parent). Neither COMPANY is a party to or bound by or
obligated under any Tax sharing, Tax benefit or similar agreement with any
person or entity.
(e) Except as set forth on Schedule 5.23, neither COMPANY has (i)
assumed or is liable for any Taxes of any other person or entity, including any
predecessor corporation or partnership, as a result of any purchase of assets or
other business acquisition transaction (other than a merger in which any COMPANY
or such person or entity was the surviving corporation or a consolidation) or
(ii) indemnified any other person or entity or otherwise agreed to pay on behalf
of any other person or entity any Taxes arising from or which may be asserted on
the basis of any Tax treatment adopted with respect to all or any aspect of such
business acquisition transaction.
(f) Copies of (i) the federal, state and local income tax returns and
franchise tax returns of each COMPANY for its last three (3) fiscal years or
such shorter period of time as such COMPANY shall have existed, (ii) any Tax
examinations commenced or closed or outstanding during their three (3) most
recent fiscal years, and (iii) currently outstanding extensions of statutory
limitations, are attached hereto as Schedule 5.23.
(g) Each COMPANY has a taxable year ended on the date set forth as
such on Schedule 5.23.
(h) Except as disclosed on Schedule 5.23, each COMPANY's methods of
accounting have not changed in the past five years. No adjustment to taxable
income by reason of a
28
change of accounting method is required in respect of any period for which the
statute of limitations has not expired.
(i) Neither COMPANY is an investment company as defined in Section
351(e)(1) of the Code.
(j) All statutory or regulatory material elections with respect to
Taxes affecting any COMPANY as of the date hereof are disclosed on Schedule
5.23. After the date hereof, no statutory or regulatory election with respect to
Taxes will be made without the written consent of VPI.
(k) Neither COMPANY has filed a consent with the Internal Revenue
Service pursuant to section 341(f) of the Code or agreed to have section
341(f)(2) of the Code apply to any disposition of any subsection (f) asset (as
defined in section 341(f) of the Code) owned by such COMPANY.
5.24 NO VIOLATIONS. Neither COMPANY is in violation of any Charter
Document. Neither COMPANY or, to the knowledge of either COMPANY, any other
party thereto, is in default under any lease, instrument, agreement, license or
permit set forth on Schedules 5.12, 5.13, 5.14, 5.15, 5.16 or 5.17, or any other
material agreement to which it is a party or by which its properties are bound
(the "Material Documents"); and, except as set forth on Schedule 5.24, (a) the
rights and benefits of each COMPANY under the Material Documents will not be
adversely affected by the transactions contemplated hereby and (b) the execution
of this Agreement and the performance of the obligations hereunder and the
consummation of the transactions contemplated hereby will not result in any
violation or breach or constitute a default under, any of the terms or
provisions of the Material Documents or the Charter Documents. Except as set
forth on Schedule 5.24, none of the Material Documents requires notice to, or
the consent or approval of, any governmental agency or other third
29
party with respect to any of the transactions contemplated hereby in order to
remain in full force and effect, and consummation of the transactions
contemplated hereby will not give rise to any right to termination, cancellation
or acceleration or loss of any right or benefit. Except as set forth on Schedule
5.24, none of the Material Documents prohibits the use or publication by any
COMPANY, VPI or any NEWCO of the name of any other party to such Material
Document, and none of the Material Documents prohibits or restricts either
COMPANY from freely providing services to any other customer or potential
customer of such COMPANY, VPI, the NEWCOS or any Other Founding Company.
5.25 GOVERNMENT CONTRACTS. Except as set forth on Schedule 5.25, neither
COMPANY is now a party to any governmental contract subject to price
redetermination or renegotiation.
5.26 ABSENCE OF CHANGES. Since the Balance Sheet Date, except as set forth
on Schedule 5.26, there has not been:
(i) any material adverse change in the financial condition, assets,
liabilities (contingent or otherwise), income or business of any COMPANY;
(ii) any damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting the properties or business of any
COMPANY;
(iii) any change in the authorized capital of any COMPANY or its
outstanding securities or any change in its ownership interests or any
grant of any options, warrants, calls, conversion rights or commitments;
(iv) any declaration or payment of any dividend or distribution in
respect of the capital stock (except for dividends or distributions of cash
that do not cause the COMPANIES to fail to meet the financial requirements,
as of the Closing Date, set forth
30
in the first sentence of Section 3.3) or any direct or indirect redemption,
purchase or other acquisition of any of the capital stock of any COMPANY;
(v) any increase in the compensation, bonus, sales commissions or fee
arrangement payable or to become payable by any COMPANY to any of its
officers, directors, STOCKHOLDERS, employees, consultants or agents, except
for ordinary and customary bonuses and salary increases for employees in
accordance with past practice;
(vi) any work interruptions, labor grievances or claims filed, or any
event or condition of any character, materially adversely affecting the
business of any COMPANY;
(vii) any sale or transfer, or any agreement to sell or transfer, any
material assets, property or rights of any COMPANY to any person (other
than VPI), including, without limitation, the STOCKHOLDERS and their
respective affiliates;
(viii) any cancellation of, or agreement to cancel, any indebtedness
or other obligation owing to any COMPANY, including without limitation any
indebtedness or obligation of the STOCKHOLDERS or any affiliate thereof,
except for inadvertent, immaterial cancellations of or agreements to cancel
any such indebtedness or obligation (provided that any such cancellation or
agreement to cancel shall be deemed a breach of this Section 5.26 for
purposes of Section 11 hereof);
(ix) any plan, agreement or arrangement granting (other than to VPI)
any preferential rights to purchase or acquire any interest in any of the
assets, property or rights of any COMPANY or requiring consent of any party
to the transfer and assignment of any such assets, property or rights;
31
(x) any purchase or acquisition of, or agreement, plan or arrangement
to purchase or acquire, any property, rights or assets outside of the
ordinary course of any COMPANY's business;
(xi) any waiver of any material rights or claims of any COMPANY;
(xii) any material breach, amendment or termination of any contract,
agreement, license, permit or other right to which any COMPANY is a party;
(xiii) any transaction by any COMPANY outside the ordinary course of
its business; (xiv) any cancellation or termination of a material contract
with a customer or client prior to the scheduled termination date; or
(xv) any other distribution of property or assets by any COMPANY.
5.27 DEPOSIT ACCOUNTS; POWERS OF ATTORNEY. Each of the COMPANIES has
delivered to VPI an accurate schedule (which is set forth on Schedule 5.27) as
of the date of the Agreement of:
(i) the name of each financial institution in which the COMPANY has
accounts or safe deposit boxes;
(ii) the names in which the accounts or boxes are held;
(iii) the type of account and account number; and
(iv) the name of each person authorized to draw thereon or have access
thereto.
Schedule 5.27 also sets forth a complete list of the names of each person,
corporation, firm or other entity holding a general or special power of attorney
from each COMPANY and a description of the terms of such power.
5.28 VALIDITY OF OBLIGATIONS. The execution and delivery of this Agreement
by each of the COMPANIES and the performance of the transactions contemplated
herein have been duly
32
and validly authorized by the Board of Directors of each of the COMPANIES and
this Agreement has been duly and validly authorized by all necessary corporate
action and is a legal, valid and binding obligation of each COMPANY, enforceable
against such COMPANY in accordance with its terms except as may be limited by
(i) bankruptcy, insolvency or other similar laws of general application relating
to or affecting the enforcement of creditors' rights generally or (ii) the
discretionary power of a court exercising equity jurisdiction. The individual
signing this Agreement on behalf of each COMPANY has each legal power, authority
and capacity to bind such COMPANY to the terms of this Agreement.
5.29 RELATIONS WITH GOVERNMENTS. Neither COMPANY has made, offered or
agreed to offer anything of value to any governmental official, political party
or candidate for government office in violation of applicable law nor has it
otherwise taken any action which would cause any COMPANY to be in violation of
the Foreign Corrupt Practices Act of 1977, as amended, or any law of similar
effect.
5.30 DISCLOSURE.
(a) This Agreement, including the schedules hereto, together with the
completed Directors and Officers Questionnaires and Registration Statement
Questionnaires attached hereto as Schedule 5.30 and all other documents and
information made available to VPI and its representatives in writing pursuant
hereto or thereto, present fairly the business and operations of each COMPANY
for the time periods with respect to which such information was requested. Each
COMPANY's rights under the documents delivered pursuant to this Agreement would
not be materially adversely affected by, and no statement made in this Agreement
would be rendered untrue in any material respect by, (i) any other document to
which any COMPANY is a party, or to which their respective properties are
subject, or (ii) any other fact or circumstance regarding any COMPANY (which
fact or circumstance was, or should reasonably, after due inquiry, have been
known to any COMPANY) that is not disclosed pursuant to this Agreement or to
such delivered documents.
33
(b) Each of the COMPANIES and the STOCKHOLDERS acknowledge and agree
(i) that there exists no firm commitment, binding agreement, or promise or other
assurance of any kind, whether express or implied, oral or written, that a
Registration Statement will become effective or that the IPO pursuant thereto
will occur at a particular price or within a particular range of prices or occur
at all; and (ii) that neither VPI or any of its officers, directors, agents or
representatives nor any Underwriter shall have any liability to any COMPANY, the
STOCKHOLDERS or any other person affiliated or associated with any COMPANY for
any failure of the Registration Statement to become effective, the IPO to occur
at a particular price or within a particular range of prices or to occur at all.
5.31 PROHIBITED ACTIVITIES. Except as set forth on Schedule 5.31,
neither COMPANY has, between the Balance Sheet Date and the date hereof, taken
any of the actions set forth in Section 7.3 (Prohibited Activities).
(B) REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS
Each STOCKHOLDER severally represents and warrants that the representations
and warranties set forth below are true as of the date of this Agreement and,
subject to Section 7.8 hereof, shall be true at the time of Pre-Closing and on
the Closing Date, and that the representations and warranties set forth in
Sections 5.32, 5.33 and 5.34 shall survive until the second anniversary of the
Closing Date, which shall be the Expiration Date for purposes of those Sections.
5.32 AUTHORITY; OWNERSHIP. Such STOCKHOLDER has the full legal right, power
and authority to enter into this Agreement. Such STOCKHOLDER owns beneficially
and of record all of the shares of the COMPANY Stock identified on Annex IV as
being owned by such STOCKHOLDER, and, except as set forth on Schedule 5.3, such
COMPANY Stock is owned free and clear of all liens, encumbrances and claims of
every kind.
34
5.33 PREEMPTIVE RIGHTS. Such STOCKHOLDER does not have, or hereby waives,
any preemptive or other right to acquire shares of COMPANY Stock or VPI Stock
that such STOCKHOLDER has or may have had on the date hereof other than rights
of the STOCKHOLDER to acquire VPI Stock pursuant to any option granted by VPI.
5.34 NO INTENTION TO DISPOSE OF VPI STOCK. The STOCKHOLDERS do not have any
present plan, intention, commitment, binding agreement, or arrangement to
dispose of any shares of VPI Stock received as described in Section 3.1 in a
manner that would cause the Merger to violate the control requirement set forth
in Code section 368(c).
6. REPRESENTATIONS OF VPI AND NEWCOS
VPI and the NEWCOS jointly and severally represent and warrant that all of
the following representations and warranties in this Section 6 are true at the
date of this Agreement and, subject to Section 7.8 hereof, shall be true at the
time of Pre-Closing and the Closing Date, and that such representations and
warranties shall survive the Closing Date for a period of two years (the last
day of such period being the "Expiration Date"), except that (i) the warranties
and representations set forth in Section 6.14 hereof shall survive until such
time as the limitations period has run for all Tax periods ended on or prior to
the Closing Date, which shall be deemed to be the Expiration Date for Section
6.14, (ii) the warranties and representations set forth in Section 6.17 hereof
shall survive until April 15, 2002, or until such later date as the limitations
period on the assessment of additional tax relating to the taxable year in which
the transactions contemplated herein occur may be extended from time to time, so
long as VPI has been notified of such extension and has consented to such
extension (which consent shall not be unreasonably withheld) and (iii) solely
for purposes of determining whether a claim for indemnification under Section
11.2(iv) hereof has been made on a
35
timely basis, and solely to the extent that in connection with the IPO, the
STOCKHOLDERS or the COMPANIES actually incur liability under the 1933 Act, the
1934 Act, or any other federal or state securities laws, the representations and
warranties set forth herein shall survive until the expiration of any applicable
limitations period, which shall be deemed to be the Expiration Date for such
purposes.
6.1 DUE ORGANIZATION. VPI and the NEWCOS are each corporations duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and are duly authorized and qualified to do business under all
applicable laws, regulations, ordinances and orders of public authorities to
carry on their respective businesses in the places and in the manner as now
conducted except where the failure to be so authorized or qualified would not
have a Material Adverse Effect. True, complete and correct copies of the
Certificate of Incorporation and Bylaws, each as amended, of VPI and the NEWCOS
(the "VPI Charter Documents") are all attached hereto as Annex II. The VPI
Charter Documents provide for indemnification of officers and directors to the
full extent permitted by the General Corporation Law of Delaware.
6.2 AUTHORIZATION. (i) The respective representatives of VPI and the NEWCOS
executing this Agreement have the authority to enter into and bind VPI and the
NEWCOS to the terms of this Agreement and (ii) VPI and the NEWCOS have the full
legal right, power and authority to enter into and perform this Agreement and
the Mergers, and all required approvals of the shareholders and board of
directors of VPI and the NEWCOS, respectively, have been obtained.
6.3 CAPITAL STOCK OF VPI AND NEWCOS. Immediately prior to the Closing Date,
the authorized capital stock of VPI and the NEWCOS is as set forth in Sections
1.4(ii) and (iii), respectively. All of the issued and outstanding shares of the
capital stock of each NEWCO are owned by VPI and all of the issued and
outstanding shares of the capital stock of VPI are owned by the persons set
forth on Annex V hereof, and further are owned, in each case, free and clear of
all liens,
36
security interests, pledges, charges, voting trusts, restrictions, encumbrances
and claims of every kind. Upon consummation of the IPO, the number of
outstanding shares of VPI will be as set forth in the Registration Statement.
All of the issued and outstanding shares of the capital stock of VPI and each
NEWCO have been duly authorized and validly issued, are fully paid and
nonassessable, are owned of record and beneficially by VPI and the persons set
forth on Annex V, respectively, and further, such shares were offered, issued,
sold and delivered by VPI and the NEWCOS in compliance with all applicable state
and federal laws concerning the issuance of securities. Further, none of such
shares was issued in violation of the preemptive rights of any past or present
stockholder of VPI or the NEWCOS.
6.4 TRANSACTIONS IN CAPITAL STOCK. Except for the Other Agreements and
except as set forth on Schedule 6.4, (i) no option, warrant, call, conversion
right or commitment of any kind exists which obligates VPI or the NEWCOS to
issue any of their respective authorized but unissued capital stock; and (ii)
neither VPI nor the NEWCOS has any obligation (contingent or otherwise) to
purchase, redeem or otherwise acquire any of its equity securities or any
interests therein or to pay any dividend or make any distribution in respect
thereof. Schedule 6.4 also includes complete and accurate copies of all stock
option or stock purchase plans, including a list, accurate as of the date
hereof, of all outstanding options, warrants or other rights to acquire shares
of the stock of VPI.
6.5 SUBSIDIARIES. The NEWCOS have no subsidiaries. VPI has no subsidiaries
except for the NEWCOS and each of the companies identified as "NEWCO" in each of
the Other Agreements. Except as set forth in the preceding sentence, neither VPI
nor any NEWCO presently owns, of record or beneficially, or controls, directly
or indirectly, any capital stock, securities convertible into capital stock or
any other equity interest in any corporation, association or business entity nor
is VPI or any
37
NEWCO, directly or indirectly, a participant in any joint venture, partnership
or other non-corporate entity.
6.6 FINANCIAL STATEMENTS. Attached hereto as Schedule 6.6 are copies of the
following financial statements (the "VPI Financial Statements") of VPI, which
reflect the results of its operations from inception: VPI's audited Balance
Sheet as of December 31, 1997 and Statements of Income, Cash Flows and Retained
Earnings for the period from inception through December 31, 1997. Such VPI
Financial Statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
indicated (except as noted thereon or on Schedule 6.6). Except as set forth on
Schedule 6.6, such Balance Sheets as of December 31, 1997 present fairly the
financial position of VPI as of such date, and such Statements of Income, Cash
Flows and Retained Earnings present fairly the results of operations for the
period indicated.
6.7 LIABILITIES AND OBLIGATIONS. Except as set forth on Schedule 6.7, VPI
and the NEWCOS have no material liabilities, contingent or otherwise, except as
set forth in or contemplated by this Agreement and the Other Agreements and
except for fees and expenses incurred in connection with the transactions
contemplated hereby and thereby.
6.8 CONFORMITY WITH LAW; LITIGATION. Except to the extent set forth on
Schedule 6.8, neither VPI nor any NEWCO is in violation of any law or
regulation, or of any order of any court or federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality
having jurisdiction over either of them; and except to the extent set forth on
Schedule 6.8, there are no material claims, actions, suits or proceedings,
pending or, to the knowledge of VPI or the NEWCOS, threatened, against or
affecting VPI or the NEWCOS, at law or in equity, or before or by any federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality having jurisdiction over either of them and no notice
of any claim, action, suit or
38
proceeding, whether pending or threatened, has been received. VPI and the NEWCOS
have conducted and are conducting their respective businesses in compliance with
the requirements, standards, criteria and conditions set forth in applicable
federal, state and local statutes, ordinances, permits, licenses, orders,
approvals, variances, rules and regulations and are not in violation of any of
the foregoing.
6.9 NO VIOLATIONS. Neither VPI nor any NEWCO is in violation of any VPI
Charter Document. None of VPI, the NEWCOS, or, to the knowledge of VPI and the
NEWCOS, any other party thereto, is in default under any lease, instrument,
agreement, license or permit to which VPI or any NEWCO is a party, or by which
VPI or any NEWCO, or any of their respective properties, are bound
(collectively, the "VPI Documents"); and (a) the rights and benefits of VPI and
the NEWCOS under the VPI Documents will not be adversely affected by the
transactions contemplated hereby and (b) the execution of this Agreement and the
performance of the obligations hereunder and the consummation of the
transactions contemplated hereby will not result in any violation or breach or
constitute a default under, any of the terms or provisions of the VPI Documents
or the VPI Charter Documents. Except as set forth on Schedule 6.9, none of the
VPI Documents requires notice to, or the consent or approval of, any
governmental agency or other third party with respect to any of the transactions
contemplated hereby in order to remain in full force and effect and consummation
of the transactions contemplated hereby will not give rise to any right to
termination, cancellation or acceleration or loss of any right or benefit.
6.10 VALIDITY OF OBLIGATIONS. The execution and delivery of this Agreement
by VPI and the NEWCOS and the performance of the transactions contemplated
herein have been duly and validly authorized by the respective Boards of
Directors of VPI and the NEWCOS and this Agreement has been duly and validly
authorized by all necessary corporate action and is a legal, valid and binding
39
obligation of VPI and the NEWCOS, enforceable against each of VPI and the NEWCOS
in accordance with its terms except as limited by bankruptcy, insolvency or
other similar laws of general application relating to or affecting the
enforcement of creditors' rights generally, and the individuals signing this
Agreement on behalf of VPI and the NEWCOS have the legal power, authority and
capacity to bind such parties.
6.11 VPI STOCK. At the time of issuance thereof, the VPI Stock to be
delivered to the STOCKHOLDERS pursuant to this Agreement will constitute valid
and legally issued shares of VPI, fully paid and nonassessable, and with the
exception of restrictions upon resale set forth in Sections 15 and 16 hereof,
will be identical in all material and substantive respects to the VPI Stock
issued and outstanding as of the date hereof and the VPI Stock to be issued
pursuant to the Other Agreements by reason of the provisions of the Delaware
GCL. The shares of VPI Stock to be issued to the STOCKHOLDERS pursuant to this
Agreement will not be registered under the 1933 Act, except as provided in
Section 17 hereof.
6.12 NO SIDE AGREEMENTS. Neither VPI nor any NEWCO has entered or will
enter into any agreement with any of the Founding Companies or any of the
stockholders of the Founding Companies or VPI other than the Other Agreements
and the agreements specifically contemplated by each of the Other Agreements,
including the employment agreements referred to therein, and none of VPI, the
NEWCOS, their equity owners or affiliates have received any cash compensation or
payments in connection with this transaction except for reimbursement of
out-of-pocket expenses which are necessary or appropriate to this transaction.
6.13 BUSINESS; REAL PROPERTY; MATERIAL AGREEMENTS. Neither VPI nor any
NEWCO has conducted any operations or business since inception other than
activities related to the VPI Plan of Organization. Neither VPI nor any NEWCO
owns or has at any time owned any real property or any
40
material personal property or is a party to any other agreement, except as
listed on Schedule 6.13 and except that VPI is a party to the Other Agreements
and the agreements contemplated thereby and to such agreements as will be filed
as Exhibits to the Registration Statement.
6.14 TAXES.
(a) VPI and the NEWCOS have timely filed all requisite federal, state,
local and other Tax Returns for all fiscal periods ended on or before the date
hereof. All such Tax Returns have set forth all material items required to be
set forth therein and were prepared in compliance with applicable laws and were
true, correct and complete in all material respects. No material fact or
information has become known to VPI or the NEWCOS or their officers or employees
responsible for maintaining the financial records of VPI and the NEWCOS
subsequent to the filing of such Tax Returns to the contrary of any information
contained therein. Except as set forth on Schedule 6.14, there are no
examinations in progress (and VPI and the NEWCOS and their employees are not
aware of any proposed examinations) or claims against VPI or the NEWCOS
(including liens against assets of VPI or the NEWCOS) for federal, state, local
and other Taxes (including penalties and interest) for any period or periods
prior to and including the date hereof and no notice of any claim for Taxes,
whether pending or threatened, has been received. Except as set forth on
Schedule 6.14, neither VPI nor the NEWCOS has entered into an agreement or
waiver or have been requested to enter into an agreement or waiver extending any
statute of limitations regarding Taxes.
(b) All Taxes, including interest and penalties (whether or not shown
on any Tax Return) owed by VPI and the NEWCOS, any member of an affiliated or
consolidated group which includes or included VPI or the NEWCOS, or with respect
to any payment made or deemed made by VPI or the NEWCOS, required to be paid by
the date hereof, have been paid.
41
All amounts required to be deposited, withheld or collected under applicable
federal, state, local or other Tax laws and regulations by VPI and the NEWCOS
for Taxes have been so deposited, withheld or collected, and such deposit,
withholding or collection has either been paid to the respective governmental
agencies or set aside and secured in accounts for such purpose or secured and
reserved against and entered on the financial statements.
(c) The amounts, if any, shown as accruals for Taxes on the VPI
Financial Statements are sufficient for the payment of all Taxes of the kinds
indicated (including penalties and interest) for all fiscal periods ended on or
before that date.
(d) Except as set forth on Schedule 6.14, neither VPI nor the NEWCOS
has been included in or joined in the filing of any consolidated or combined Tax
Return (other than as a common parent). Neither VPI nor the NEWCOS is a party to
or bound by or obligated under any Tax sharing, Tax benefit or similar agreement
with any person or entity.
(e) Except as set forth on Schedule 6.14, neither VPI nor the NEWCOS
(i) has assumed or is liable for any Taxes of any other person or entity,
including any predecessor corporation or partnership, as a result of any
purchase of assets or other business acquisition transaction (other than a
merger in which VPI or the NEWCOS or such person or entity was the surviving
corporation or a consolidation) and (ii) has indemnified any other person or
entity or otherwise agreed to pay on behalf of any other person or entity any
Taxes arising from or which may be asserted on the basis of any Tax treatment
adopted with respect to all or any aspect of such business acquisition
transaction.
(f) Copies of (i) the federal, state and local income tax returns and
franchise tax returns of VPI and the NEWCOS for their last three (3) fiscal
years or such shorter period of time as VPI or the NEWCOS shall have existed,
(ii) any Tax examinations commenced or closed
42
or outstanding during their three (3) most recent fiscal years, and (iii)
currently outstanding extensions of statutory limitations, are attached hereto
as Schedule 6.14.
(g) VPI and the NEWCOS have a taxable year ended on the date set forth
as such on Schedule 6.14.
(h) Except as disclosed on Schedule 6.14, neither VPI's nor NEWCOS'
methods of accounting have changed in the past five years. No adjustment to
taxable income by reason of a change of accounting method is required in respect
of any period for which the statute of limitations has not expired.
(i) Neither VPI nor the NEWCOS is an investment company as defined in
Section 351(e)(1) of the Code.
(j) All statutory or regulatory material elections with respect to
Taxes affecting VPI and the NEWCOS as of the date hereof are disclosed on
Schedule 6.14.
(k) Neither VPI nor the NEWCOS has filed a consent with the Internal
Revenue Service pursuant to section 341(f) of the Code or has agreed to have
section 341(f)(2) of the Code apply to any disposition of any subsection (f)
asset (as defined in section 341(f) of the Code) owned by VPI or the NEWCOS.
6.15 COMPLETION OF DUE DILIGENCE. VPI has substantially completed its due
diligence of the COMPANIES as of the date hereof, except for any additional
investigation that may be needed as a result of a notice pursuant to Section 7.7
or an amendment pursuant to Section 7.8.
6.16 DISCLOSURE. This Agreement (which includes the Schedules and Annexes
attached hereto) and the Registration Statement do not contain any untrue
statement of a material fact by VPI or NEWCO, and do not omit to state any
material fact necessary in order to make the
43
statements made herein or therein, in light of the circumstances under which
they are made, not misleading.
6.17 TAX TREATMENT. The receipt by the STOCKHOLDERS of the shares of VPI
Stock pursuant to Section 3 hereof will qualify as an exchange pursuant to which
gain is not recognized under Section 351(a) of the Code, provided that the
representations of the STOCKHOLDERS set forth in the letter of representations
(referenced in the tax opinion letter to be delivered pursuant to Section 8.4
hereof) are true and correct in all material respects.
7. COVENANTS PRIOR TO CLOSING
7.1 ACCESS AND COOPERATION; DUE DILIGENCE. (a) Between the date of this
Agreement and the Closing Date, each COMPANY will afford to the officers and
authorized representatives of VPI and the Other Founding Companies (including
the Underwriters and their counsel) access to all of such COMPANY's sites,
properties, books and records and will furnish VPI with such additional
financial and operating data and other information as to the business and
properties of such COMPANY as VPI or the Other Founding Companies may from time
to time reasonably request. Each COMPANY will reasonably cooperate with VPI and
the Other Founding Companies and their respective representatives, including
VPI's auditors and counsel, in the preparation of any documents or other
material (including the Registration Statement) which may be required in
connection with any documents or materials required by this Agreement. VPI, the
NEWCOS, the STOCKHOLDERS and the COMPANIES shall treat all information obtained
in connection with the negotiation and performance of this Agreement or the due
diligence investigations conducted with respect to the Other Founding Companies
as confidential in accordance with the provisions of Section 14 hereof. In
addition, VPI will cause each of the Other Founding Companies to enter into a
provision similar to this
44
Section 7.1 requiring each such Other Founding Company, its stockholders,
directors, officers, representatives, employees and agents to keep confidential
any information regarding the COMPANY obtained by such Other Founding Company.
(b) Between the date of this Agreement and the Closing Date, VPI will
afford to the officers and authorized representatives of each COMPANY access to
all of VPI's and the NEWCOS' sites, properties, books and records and all due
diligence, agreements, documents and information of or concerning the Founding
Companies and will furnish each COMPANY with such additional financial and
operating data and other information as to the business and properties of VPI
and the NEWCOS as each COMPANY may from time to time reasonably request. VPI and
the NEWCOS will cooperate with each COMPANY, its representatives, auditors and
counsel in the preparation of any documents or other material which may be
required in connection with any documents or materials required by this
Agreement. VPI will provide complete access to its operations and key officers
and employees to each COMPANY, its representatives and advisors on a continuing
basis through the Closing Date. Each COMPANY will cause all information obtained
in connection with the negotiation and performance of this Agreement to be
treated as confidential in accordance with the provisions of Section 14 hereof.
7.2 CONDUCT OF BUSINESS PENDING CLOSING. Between the date of this Agreement
and the Closing Date, each COMPANY shall, except (x) as set forth on Schedule
7.2, (y) as requested by VPI or (z) as consented to by VPI (which consent shall
not be unreasonably withheld):
(i) carry on its business in substantially the same manner as it has
heretofore and not introduce any new method of management, operation or
accounting;
(ii) maintain its properties and facilities, including those held
under leases, in at least as good working order and condition as at
present, ordinary wear and tear excepted;
45
(iii) perform in all material respects its obligations under debt and
lease instruments and other agreements relating to or affecting its assets,
properties, equipment or rights;
(iv) keep in full force and effect present insurance policies or other
comparable insurance coverage;
(v) maintain and preserve its business organization intact, and use
its best efforts to retain its present employees and relationships and
present agreements with suppliers, customers and others having business
relations with such COMPANY;
(vi) maintain compliance with all permits, laws, rules and
regulations, consent orders, and all other orders of applicable courts,
regulatory agencies and similar governmental authorities, except for
inadvertent, immaterial noncompliance with any such permit, law, rule,
regulation or order (provided that any such noncompliance shall be deemed a
breach of this Section 7.2 for purposes of Section 11 hereof);
(vii) maintain present debt and lease instruments and not enter into
new or amended debt or lease instruments, other than in the ordinary course
of business; and
(viii) maintain or reduce present salaries and commission levels for
all officers, directors, employees and agents except for regularly
scheduled raises to non-officers consistent with past practices.
7.3 PROHIBITED ACTIVITIES. Except as disclosed on Schedule 7.3, between the
date hereof and the Closing Date, neither COMPANY shall, without the prior
written consent of VPI or unless requested by VPI:
(i) make any change in its Charter Documents;
46
(ii) issue any securities, options, warrants, calls, conversion rights
or commitments relating to its securities of any kind other than in
connection with the exercise of options or warrants listed on Schedule 5.4;
(iii) declare or pay any dividend, or make any distribution in respect
of its stock whether now or hereafter outstanding (except for dividends or
distributions of cash that do not cause the COMPANIES to fail to meet the
financial requirements, as of the Closing Date, set forth in the first
sentence of Section 3.3), or purchase, redeem or otherwise acquire or
retire for value any shares of its stock;
(iv) enter into any contract or commitment or incur or agree to incur
any liability or make any capital expenditures, except if it is in the
normal course of business (consistent with past practice) or involves an
amount not in excess of $10,000;
(v) create, assume or permit to exist any mortgage, pledge or other
lien or encumbrance upon any assets or properties whether now owned or
hereafter acquired, except: (1) with respect to purchase money liens
incurred in connection with the acquisition of equipment with an aggregate
cost not in excess of $10,000 necessary or desirable for the conduct of the
businesses of such COMPANY; (2)(A) liens for Taxes either not yet due or
payable or being contested in good faith and by appropriate proceedings
(and for which contested Taxes adequate reserves have been established and
are being maintained) or (B) materialmen's, mechanics', workers',
repairmen's, employees' or other like liens arising in the ordinary course
of business (the liens set forth in clause (2) being referred to herein as
"Statutory Liens"), or (3) liens set forth on Schedules 5.10 and/or 5.17
hereto;
(vi) sell, assign, lease or otherwise transfer or dispose of any
property or equipment except in the normal course of business;
47
(vii) negotiate for the acquisition of any business or the start-up of
any new business;
(viii) merge or consolidate or agree to merge or consolidate with or
into any other corporation;
(ix) waive any material rights or claims of such COMPANY, provided
that such COMPANY may negotiate and adjust bills in the course of good
faith disputes with customers in a manner consistent with past practice,
provided, further, that such adjustments shall not be deemed to be included
on Schedule 5.11 unless specifically listed thereon;
(x) commit a material breach or amend or terminate any material
agreement, permit, license or other right of such COMPANY;
(xi) enter into any other transaction outside the ordinary course of
its business or prohibited hereunder;
(xii) effect any change in the capital structure of the COMPANIES,
including, but not limited to, the issuance of any option, warrant, call,
conversion right or commitment of any kind with respect to the COMPANIES'
capital stock or the purchase or other reacquisition of any outstanding
shares for treasury stock; or
(xiii) make expenditures outside the normal course of business.
7.4 NO SHOP. None of the STOCKHOLDERS, the COMPANIES, or any agent,
officer, director, trustee or any representative of any of the foregoing will,
during the period commencing on the date of this Agreement and ending with the
earlier to occur of the Closing Date or the termination of this Agreement in
accordance with its terms, directly or indirectly:
(i) solicit or initiate the submission of proposals or offers from any
person or entity for,
48
(ii) participate in any discussions pertaining to, or
(iii) furnish any information to any person or entity other than VPI
or its authorized agents relating to
any acquisition or purchase of all or a material amount of the assets of, or any
equity interest in, any COMPANY or a merger, consolidation or business
combination of any COMPANY.
7.5 NOTICE TO BARGAINING AGENTS. Prior to the Pre-Closing Date, each
COMPANY shall satisfy any requirement for notice of the transactions
contemplated by this Agreement under applicable collective bargaining
agreements, and shall provide VPI on Schedule 7.5 with proof that any required
notice has been sent.
7.6 AGREEMENTS. The STOCKHOLDERS and each COMPANY shall terminate, on or
prior to the Closing Date, (i) any stockholders agreements, voting agreements,
voting trusts, options, warrants and employment agreements between such COMPANY
and any employee listed on Schedule 8.11 hereto and (ii) any existing agreement
between each COMPANY and any STOCKHOLDER not reflecting fair market terms,
except such existing agreements as are set forth on Schedule 9.7. Such
termination agreements are listed on Schedule 7.6 and copies thereof are
attached hereto.
7.7 NOTIFICATION OF CERTAIN MATTERS. The STOCKHOLDERS and each COMPANY
shall give prompt notice to VPI of (i) the occurrence or non-occurrence of any
event the occurrence or non-occurrence of which would be likely to cause any
representation or warranty of any COMPANY or any STOCKHOLDERS contained herein
to be untrue or inaccurate in any material respect at or prior to the
Pre-Closing and (ii) any material failure of any STOCKHOLDER or any COMPANY to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by such person hereunder. VPI and the NEWCOS shall give prompt
notice to the COMPANIES of (i) the occurrence or non-occurrence of any event the
occurrence or non-occurrence of which would be likely
49
to cause any representation or warranty of VPI or the NEWCOS contained herein to
be untrue or inaccurate in any material respect at or prior to the Pre-Closing
and (ii) any material failure of VPI or the NEWCOS to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder. The delivery of any notice pursuant to this Section 7.7 that is not
accompanied by a proposed amendment or supplement to a schedule pursuant to
Section 7.8 shall not be deemed to (i) modify the representations or warranties
hereunder of the party delivering such notice, which modification may only be
made pursuant to Section 7.8, (ii) modify the conditions set forth in Sections 8
and 9, or (iii) limit or otherwise affect the remedies available hereunder to
the party receiving such notice.
7.8 AMENDMENT OF SCHEDULES. Each party hereto agrees that, with respect to
the representations and warranties of such party contained in this Agreement,
such party shall have the continuing obligation until the Pre-Closing Date to
supplement or amend promptly the Schedules hereto with respect to any matter
hereafter arising which, if existing at the date of this Agreement, would have
been required to be set forth or described in the Schedules, provided, however,
that supplements and amendments to Schedules 5.10, 5.11, 5.14, 5.15, 5,16 and
5.19 shall only have to be delivered at the Pre-Closing Date, unless such
Schedule is to be amended to reflect an event occurring other than in the
ordinary course of business. Notwithstanding the foregoing sentence, no
amendment or supplement to a Schedule prepared by any COMPANY that constitutes
or reflects an event or occurrence that would have a Material Adverse Effect may
be made unless VPI and a majority of the Founding Companies other than the
COMPANIES consent to such amendment or supplement; and provided further, that no
amendment or supplement to a schedule prepared by VPI or the NEWCOS that
constitutes or reflects an event or occurrence that would have a Material
Adverse Effect may be made unless a majority of the Founding Companies consent
to such amendment or supplement. For all
50
purposes of this Agreement, including without limitation for purposes of
determining whether the conditions set forth in Sections 8.1 and 9.1 have been
fulfilled, the Schedules hereto shall be deemed to be the schedules as amended
or supplemented pursuant to this Section 7.8. In the event that one of the Other
Founding Companies seeks to amend or supplement a schedule pursuant to Section
7.8 of one of the Other Agreements, and such amendment or supplement constitutes
or reflects an event or occurrence that would have a Material Adverse Effect on
such Other Founding Company, VPI shall give the COMPANIES notice promptly after
it has knowledge thereof. If VPI and a majority of the Founding Companies
consent to such amendment or supplement, but the COMPANIES do not give their
consent, the COMPANIES collectively may terminate this Agreement pursuant to
Section 12.l(iv) hereof. In the event that the COMPANIES seek to amend or
supplement a Schedule pursuant to this Section 7.8, and VPI and a majority of
the Other Founding Companies do not consent to such amendment or supplement,
this Agreement shall be deemed terminated by mutual consent as set forth in
Section 12.1(i) hereof. In the event that VPI or any NEWCO seeks to amend or
supplement a Schedule pursuant to this Section 7.8 and a majority of the
Founding Companies do not consent to such amendment or supplement, this
Agreement shall be deemed terminated by mutual consent as set forth in Section
12.1(i) hereof. No party to this Agreement shall be liable to any other party if
this Agreement shall be terminated pursuant to the provisions of this Section
7.8. No amendment of or supplement to a Schedule shall be made later than 24
hours prior to the anticipated effectiveness of the Registration Statement. For
purposes of this Section 7.8, consent to an amendment or supplement to a
schedule pursuant to Section 7.8 of this Agreement or one of the Other
Agreements shall have been deemed given by VPI or any Founding Company if no
response is received within 24 hours following receipt of notice of such
amendment or supplement (or sooner if required by the circumstances under which
such consent is requested and so requested in the notice). The
51
provisions of this Section 7.8 shall be contained in the Other Agreements
executed in connection with the VPI Plan of Organization.
7.9 COOPERATION IN PREPARATION OF REGISTRATION STATEMENT. Each COMPANY and
the STOCKHOLDERS shall furnish or cause to be furnished to VPI and the
Underwriters all of the information concerning such COMPANY and the STOCKHOLDERS
required for inclusion in, and will cooperate with VPI and the Underwriters in
the preparation of, the Registration Statement and the prospectus included
therein (including audited and unaudited financial statements, prepared in
accordance with generally accepted accounting principles, in form suitable for
inclusion in the Registration Statement). Each COMPANY and the STOCKHOLDERS
agree promptly to advise VPI if, at any time during the period in which a
prospectus relating to the offering is required to be delivered under the 1933
Act, any information contained in the prospectus concerning any COMPANY or the
STOCKHOLDERS becomes incorrect or incomplete in any material respect, and to
provide the information needed to correct such inaccuracy. VPI will give the
COMPANIES and the STOCKHOLDERS an opportunity and a reasonable amount of time to
review and comment on a substantially final draft of the Registration Statement
prior to filing, and with respect to all amendments thereto, VPI will give the
COMPANIES and STOCKHOLDERS an opportunity to review and comment on those
portions of such amendments that relate to the COMPANIES. Insofar as the
information contained in the Registration Statement relates solely to the
COMPANIES or the STOCKHOLDERS, as of the effective date of the Registration
Statement each COMPANY represents and warrants as to such information with
respect to itself, and each STOCKHOLDER represents and warrants, as to such
information with respect to the COMPANIES and himself or herself, that the
Registration Statement will not include an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light
52
of the circumstances in which they were made, not misleading and that the
STOCKHOLDERS and the COMPANIES have had the opportunity to review and approve
such information. If, prior to the 25th day after the date of the final
prospectus of VPI utilized in connection with the IPO, the COMPANIES or the
STOCKHOLDERS become aware of any fact or circumstance which would change (or, if
after the Closing Date, would have changed) a representation or warranty of the
COMPANIES or the STOCKHOLDERS in this Agreement or would affect any document
delivered pursuant hereto in any material respect, the COMPANIES and the
STOCKHOLDERS shall immediately give notice of such fact or circumstance to VPI.
However, subject to the provisions of Section 7.8, such notification shall not
relieve either the COMPANIES or the STOCKHOLDERS of their respective obligations
under this Agreement, and, subject to the provisions of Section 7.8, at the sole
option of VPI, the truth and accuracy of any and all warranties and
representations of the COMPANIES, or on behalf of the COMPANIES and of
STOCKHOLDERS at the date of this Agreement and on the Pre-Closing Date and on
the Closing Date, contained in this Agreement (including the Schedules and
Annexes hereto) shall be a precondition to the consummation of this transaction.
7.10 FINAL FINANCIAL STATEMENTS. Each COMPANY shall provide prior to the
Closing Date, and VPI shall have had sufficient time to review the unaudited
consolidated balance sheets of the COMPANIES as of the end of all fiscal
quarters following the Balance Sheet Date, and the unaudited consolidated
statement of income, cash flows and retained earnings of the COMPANIES for all
fiscal quarters ended after the Balance Sheet Date, disclosing no material
adverse change in the financial condition of the COMPANIES or the results of its
operations from the financial statements as of the Balance Sheet Date. For the
fiscal quarter ending March 31, 1998, such financial statements shall be
delivered to VPI on or before April 21, 1998, unless the Closing Date shall have
occurred on or before April 21, 1998. Except as set forth on Schedule 7.10, such
financial statements shall have
53
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods indicated (except as noted
therein). Except as noted in such financial statements, all of such financial
statements will present fairly the results of operations of the COMPANIES for
the periods indicated thereon and shall be for such dates and time periods as
required by Regulation S-X under the 1933 Act and the 1934 Act.
7.11 FURTHER ASSURANCES. The parties hereto agree to execute and deliver,
or cause to be executed and delivered, such further instruments or documents or
take such other action as may be reasonably necessary or convenient to carry out
the transactions contemplated hereby.
7.12 AUTHORIZED CAPITAL. VPI shall maintain its authorized capital stock as
set forth in the Registration Statement filed with the SEC except for such
changes in authorized capital stock as are made to respond to comments made by
the SEC or requirements of any exchange or automated trading system for which
application is made to register the VPI Stock.
7.13 BEST EFFORTS TO CONSUMMATE TRANSACTION. VPI agrees to use its
commercially reasonable best efforts to effectuate the acquisition of the
businesses of the Founding Companies pursuant to the Other Agreements, and the
IPO. Between the date hereof and the Closing Date, VPI agrees that it will take
no action except such actions which are in furtherance of the business of VPI as
described in the Registration Statement. In connection with the closings of the
transactions under the Other Agreements, VPI agrees that it will not waive any
closing condition under any Other Agreement that would result in a Material
Adverse Effect to VPI.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF STOCKHOLDERS AND COMPANIES
54
The obligations of STOCKHOLDERS and the COMPANIES with respect to actions
to be taken on the Pre-Closing Date are subject to the satisfaction or waiver on
or prior to the Pre-Closing Date of all of the following conditions. The
obligations of the STOCKHOLDERS and the COMPANIES with respect to actions to be
taken on the Closing Date are subject to the satisfaction or waiver on or prior
to the Closing Date of the conditions set forth in Sections 8.2, 8.3, 8.8 and
8.9. From and after the Pre-Closing Date or, with respect to the conditions set
forth in Sections 8.2, 8.3, 8.8 and 8.9, from and after the Closing Date, all
conditions not satisfied shall be deemed to have been waived, except that no
such waiver shall be deemed to affect the survival of the representations and
warranties of VPI and the NEWCOS contained in Section 6 hereof:
8.1 REPRESENTATIONS AND WARRANTIES. All representations and warranties of
VPI and the NEWCOS contained in Section 6 shall be true and correct in all
material respects as of the Pre-Closing Date as though such representations and
warranties had been made as of that time; and a certificate to the foregoing
effect dated the Pre-Closing Date and signed by the President or any Vice
President of VPI shall have been delivered to the STOCKHOLDERS.
8.2 PERFORMANCE OF OBLIGATIONS. All of the terms, covenants and conditions
of this Agreement to be complied with and performed by VPI and the NEWCOS on or
before the Pre-Closing Date and the Closing Date shall have been duly complied
with and performed in all material respects; and certificates to the foregoing
effect dated the Pre-Closing Date and the Closing Date and signed by the
President or any Vice President of VPI shall have been delivered to the
STOCKHOLDERS.
8.3 NO LITIGATION. No action or proceeding before a court or any other
governmental agency or body shall have been instituted or threatened to restrain
or prohibit the Mergers or the IPO and no governmental agency or body shall have
taken any other action or made any request of the
55
COMPANIES as a result of which the management of the COMPANIES deems it
inadvisable to proceed with the transactions hereunder.
8.4 OPINION OF COUNSEL. The COMPANIES and the Underwriters shall have
received a corporate opinion letter and a tax opinion letter from counsel for
VPI, dated the Pre-Closing Date, in the forms annexed hereto as Annex VI.
8.5 REGISTRATION STATEMENT. The Registration Statement shall have been
declared effective by the SEC and the Underwriters shall have agreed to acquire
on a firm commitment basis, subject to the conditions set forth in the
underwriting agreement, on terms such that the aggregate value of the cash and
the number of shares of VPI Stock to be received by the STOCKHOLDERS is not less
than the Minimum Value set forth on Annex III.
8.6 CONSENTS AND APPROVALS. All necessary consents of and filings with any
governmental authority or agency relating to the consummation of the transaction
contemplated herein shall have been obtained and made, and all consents and
approvals of third parties listed on Schedule 6.9 shall have been obtained.
8.7 GOOD STANDING CERTIFICATES. VPI and the NEWCOS each shall have
delivered to the COMPANIES a certificate, dated as of a date no later than ten
days prior to the Pre-Closing Date, duly issued by the Delaware Secretary of
State and in each state in which VPI or the NEWCOS are authorized to do
business, showing that each of VPI and the NEWCOS is in good standing and
authorized to do business and that all state franchise and/or income tax returns
and taxes for VPI and the NEWCOS, respectively, for all periods prior to the
Pre-Closing Date have been filed and paid.
8.8 NO MATERIAL ADVERSE CHANGE. No event or circumstance shall have
occurred with respect to VPI or the NEWCOS which would constitute a Material
Adverse Effect, and VPI and/or the NEWCOS shall not have suffered any material
loss or damages to any of its properties or assets,
56
whether or not covered by insurance, which change, loss or damage materially
affects or impairs the ability of VPI and/or the NEWCOS to conduct their
respective businesses.
8.9 CLOSING OF IPO. The closing of the sale of the VPI Stock to the
Underwriters in the IPO and the acquisitions of at least eight of the Other
Founding Companies with aggregate earnings before taxes of at least $8 million
for the 12-month period ended December 31, 1997, pursuant to the Other
Agreements shall have occurred simultaneously with the Closing Date hereunder.
8.10 SECRETARY'S CERTIFICATE. The COMPANIES shall have received a
certificate or certificates, dated the Pre-Closing Date and signed by the
secretary of VPI and each NEWCO, certifying the truth and correctness of
attached copies of VPI's and the NEWCOS' respective Certificates of
Incorporation (including amendments thereto), Bylaws (including amendments
thereto), and resolutions of the boards of directors and, if required, the
stockholders of VPI and the NEWCOS approving VPI's and the NEWCOS' entering into
this Agreement and the consummation of the transactions contemplated hereby.
Such certificate or certificates also shall be addressed to the Underwriters and
copies thereof shall be delivered to the Underwriters.
8.11 EMPLOYMENT AGREEMENTS. Each of the persons listed on Schedule 8.11
shall have been afforded the opportunity to enter into an employment agreement
substantially in the form of Annex VIII hereto.
8.12 DIRECTORS AND OFFICERS INSURANCE. VPI shall have obtained Directors
and Officers liability insurance in amounts that are customary and commercially
reasonable.
8.13 STOCK OPTIONS. VPI shall have established a stock option plan pursuant
to which 6% of the outstanding shares of VPI will be made available for issuance
by the Founding Companies to their employees on a pro rata basis based upon the
respective consideration amounts paid by VPI under this Agreement and the Other
Agreements. The exercise price of all
57
options granted under such stock option plan as of the Closing Date will be the
price per share of VPI Stock in the IPO, and all such options shall vest in four
equal installments commencing on the first anniversary of the Closing Date and
on each of the three anniversaries thereafter. The terms set forth in the
preceding sentence and all other terms of the options shall be no less favorable
than the options made available to the Other Founding Companies.
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF VPI AND NEWCOS
The obligations of VPI and the NEWCOS with respect to actions to be taken
on the Pre-Closing Date are subject to the satisfaction or waiver on or prior to
the Pre-Closing Date of all of the following conditions. The obligations of VPI
and the NEWCOS with respect to actions to be taken on the Closing Date are
subject to the satisfaction or waiver on or prior to the Closing Date of the
conditions set forth in Sections 9.2, 9.3, 9.5 and 9.13. From and after the
Pre-Closing Date or, with respect to the conditions set forth in Sections 9.2,
9.3, 9.5 and 9.13, from and after the Closing Date, all conditions not satisfied
shall be deemed to have been waived, except that no such waiver shall be deemed
to affect the survival of the representations and warranties of the COMPANY
contained in Section 5 hereof.
9.1 REPRESENTATIONS AND WARRANTIES. All representations and warranties of
the STOCKHOLDERS and the COMPANIES contained in this Agreement shall be true and
correct in all material respects as of the Pre-Closing Date with the same effect
as though such representations and warranties had been made on and as of such
date; and the STOCKHOLDERS shall have delivered to VPI certificates dated the
Pre-Closing Date and signed by them to such effect.
9.2 PERFORMANCE OF OBLIGATIONS. All of the terms, covenants and conditions
of this Agreement to be complied with or performed by the STOCKHOLDERS and the
COMPANIES on or
58
before the Pre-Closing Date or the Closing Date, as the case may be, shall have
been duly performed or complied with in all material respects; and the
STOCKHOLDERS shall have delivered to VPI certificates dated the Pre-Closing Date
and the Closing Date, respectively, and signed by them to such effect.
9.3 NO LITIGATION. No action or proceeding before a court or any other
governmental agency or body shall have been instituted or threatened to restrain
or prohibit the Merger or the IPO and no governmental agency or body shall have
taken any other action or made any request of VPI as a result of which the
management of VPI deems it inadvisable to proceed with the transactions
hereunder.
9.4 SECRETARY'S CERTIFICATES. VPI shall have received certificates, dated
the Pre-Closing Date and signed by the secretary or an assistant secretary of
each COMPANY, certifying the truth and correctness of attached copies of each
COMPANY's Charter Documents and resolutions of the board of directors and the
STOCKHOLDERS approving each COMPANY's entering into this Agreement and the
consummation of the transactions contemplated hereby. Such certificate also
shall be addressed to the Underwriters and a copy thereof shall be delivered to
the Underwriters.
9.5 NO MATERIAL ADVERSE EFFECT. No event or circumstance shall have
occurred with respect to any COMPANY which would constitute a Material Adverse
Effect, and neither COMPANY shall have suffered any material loss or damages to
any of its properties or assets, whether or not covered by insurance, which
change, loss or damage materially affects or impairs the ability of any COMPANY
to conduct its business.
9.6 STOCKHOLDERS' RELEASE. The STOCKHOLDERS shall have delivered to VPI an
instrument dated the Pre-Closing Date releasing the COMPANIES and VPI from (i)
any and all claims of the STOCKHOLDERS against the COMPANIES and VPI and (ii)
obligations of the
59
COMPANIES and VPI to the STOCKHOLDERS, except for (x) items specifically
identified on Schedules 5.10, 5.11 and 5.16 as being claims of or obligations to
the STOCKHOLDERS, (y) continuing obligations to the STOCKHOLDERS relating to
their employment by the COMPANIES and (z) obligations arising under this
Agreement or the transactions contemplated hereby.
9.7 TERMINATION OF RELATED PARTY AGREEMENTS. Except as set forth on
Schedule 9.7, all existing agreements between any of the COMPANIES and the
STOCKHOLDERS not reflecting fair market terms shall have been canceled effective
prior to or as of the Closing Date.
9.8 OPINION OF COUNSEL. VPI shall have received an opinion from Counsel to
the COMPANIES and the STOCKHOLDERS, dated the Pre-Closing Date, substantially in
the form annexed hereto as Annex VII, and the Underwriters shall have received a
copy of the same opinion addressed to them.
9.9 CONSENTS AND APPROVALS. All necessary consents of and filings with any
governmental authority or agency relating to the consummation of the
transactions contemplated herein shall have been obtained and made and all
consents and approvals of third parties listed on Schedule 5.24 shall have been
obtained.
9.10 GOOD STANDING CERTIFICATES. The COMPANIES shall have delivered to VPI
certificates, dated as of a date no earlier than ten days prior to the
Pre-Closing Date, duly issued by the appropriate governmental authority in each
COMPANY's state of incorporation and, unless waived by VPI, in each state in
which each COMPANY is authorized to do business, showing each COMPANY is in good
standing and authorized to do business and that all state franchise and/or
income tax returns and taxes for each COMPANY for all periods prior to the
Pre-Closing have been filed and paid.
9.11 REGISTRATION STATEMENT. The Registration Statement shall have been
declared effective by the SEC.
60
9.12 EMPLOYMENT AGREEMENTS. Each of the persons listed on Schedule 8.11
shall have entered into an employment agreement substantially in the form of
Annex VIII hereto.
9.13 CLOSING OF IPO. The closing of the sale of the VPI Stock to the
Underwriters in the IPO and the acquisitions of at least eight of the Other
Founding Companies with aggregate earnings before taxes of at least $8 million
for the 12-month period ended December 31, 1997, pursuant to the Other
Agreements shall have occurred simultaneously with the Closing Date hereunder.
9.14 FIRPTA CERTIFICATE. Each STOCKHOLDER shall have delivered to VPI a
certificate to the effect that he or she is not a foreign person pursuant to
Section 1.1445-2(b) of the Treasury regulations.
9.15 INSURANCE. VPI shall have been named as an additional insured on all
insurance policies of each COMPANY, and certificates of insurance to that effect
shall have been delivered to VPI. VPI shall reimburse the COMPANIES for the
incremental cost of having VPI so named as an additional insured.
9.16 LOCKUP AGREEMENT. Each of the COMPANIES and the STOCKHOLDERS shall
have signed an agreement with the Underwriters, in form and substance identical
to agreements signed by the Other Founding Companies and the Founding
Stockholders in connection with the Other Agreements, by which the STOCKHOLDERS
covenant to hold all of the VPI Stock acquired hereunder for a period of at
least 180 days after the Closing Date except for transfers to immediate family
members, and trusts for the benefit of STOCKHOLDERS and/or immediate family
members, who agree to be bound by such restrictions on transfer.
9.17 LETTER OF REPRESENTATION. Each of the STOCKHOLDERS shall have
delivered the letter of representations referenced in the tax opinion letter to
be delivered pursuant to Section 8.4 hereof.
61
9.18 TERMINATION OF DEFINED BENEFIT PLANS. Each COMPANY shall have
terminated any qualified "defined benefit plan" (as defined in Section 3(35) of
ERISA) in accordance with applicable laws and regulations.
10. COVENANTS OF VPI AND THE STOCKHOLDERS AFTER CLOSING
10.1 RELEASE FROM GUARANTEES; REPAYMENT OF CERTAIN OBLIGATIONS. VPI shall
use its best efforts to have the STOCKHOLDERS released, contemporaneously with
the Closing Date, from any and all guarantees on any indebtedness that they
personally guaranteed and from any and all pledges of assets that they pledged
to secure such indebtedness for the benefit of the COMPANIES, with all such
guarantees on indebtedness being assumed by VPI. In the event that VPI cannot
obtain such releases from the lenders of any such guaranteed indebtedness on the
Closing Date, VPI shall repay all indebtedness of the COMPANIES relating to such
personal guarantees within 60 days after the Closing Date. VPI shall indemnify
and hold harmless the STOCKHOLDERS from the payment of any guaranties on any
indebtedness or contractual obligations that the STOCKHOLDERS had incurred prior
to the Pre-Closing Date provided that such indebtedness or obligations are
related to the business of the COMPANIES as being conducted at the Pre-Closing
Date.
10.2 PRESERVATION OF TAX AND ACCOUNTING TREATMENT. Except as contemplated
by this Agreement or the Registration Statement, after the Closing Date, VPI
shall not and shall not permit any of its subsidiaries to undertake any act that
would jeopardize the status of the transaction contemplated hereby as an
exchange pursuant to which gain is not recognized under Section 351(a) of the
Code, including:
(a) the retirement or reacquisition, directly or indirectly, of all or
part of the VPI Stock issued in connection with the transactions
contemplated hereby; or
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(b) the entering into of financial arrangements for the benefit of the
STOCKHOLDERS.
10.3 PREPARATION AND FILING OF TAX RETURNS.
(i) The COMPANIES shall, if possible, file or cause to be filed all
separate Tax Returns of any Acquired Party for all taxable periods that end on
or before the Closing Date. All such Tax Returns shall have set forth all
material items required to be set forth therein and shall have been prepared in
compliance with applicable laws and shall be true, correct and complete in all
material respects. Each STOCKHOLDER shall pay or cause to be paid all Tax
liabilities (in excess of all amounts already paid with respect thereto or
properly accrued or reserved with respect thereto on the COMPANY Financial
Statements and books and records) required to be shown by such Tax Returns to be
due.
(ii) VPI shall file or cause to be filed all consolidated Tax Returns of,
or that include, any Acquired Party for all taxable periods ending after the
Closing Date. VPI shall pay or cause to be paid all Tax liabilities (in excess
of amounts already paid with respect thereto or properly accrued or reserved
with respect thereto on the VPI Financial Statements and books and records)
required to be shown by such Tax Returns to be due.
(iii) Each party hereto shall, and shall cause its subsidiaries and
component members of a controlled group of corporations including the COMPANIES,
as defined in Section 1563 of the Code, to, provide to each of the other parties
hereto such cooperation and information as any of them reasonably may request in
filing any Tax Return, amended Tax Return or claim for refund, determining a
liability for Taxes or a right to refund of Taxes or in conducting any audit or
other proceeding in respect of Taxes. Such cooperation and information shall
include providing copies of all relevant portions of relevant Tax Returns,
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together with relevant accompanying schedules and relevant work papers, relevant
documents relating to rulings or other determinations by taxing authorities and
relevant records concerning the ownership and Tax basis of property, which such
party may possess. Each party shall make its employees reasonably available on a
mutually convenient basis at its cost to provide explanation of any documents or
information so provided. Subject to the preceding sentence, each party required
to file Tax Returns pursuant to this Agreement shall bear all costs of filing
such Tax Returns.
(iv) Each of the COMPANIES, the NEWCOS, VPI and each STOCKHOLDER shall
comply with the tax reporting requirements of Section 1.351-3 of the Treasury
Regulations promulgated under the Code, and treat the transaction as an exchange
pursuant to which gain is not recognized under Section 351(a) of the Code.
10.4 APPOINTMENT OF DIRECTORS. The STOCKHOLDERS hereby designate [NAME] to
serve as a director of VPI effective as of the Closing Date. Representatives of
the Founding Companies shall constitute a majority of the directors of VPI
immediately following the Closing Date.
10.5 PRESERVATION OF EMPLOYEE BENEFIT PLANS. Following the Closing Date,
VPI shall not terminate any health insurance, life insurance or 401(k) plan in
effect at any COMPANY until such time as VPI is able to replace such plan with a
plan that is applicable to VPI and all of its then existing subsidiaries. VPI
shall have no obligation to provide replacement plans that have the same terms
and provisions as the existing plans, except as may be required by ERISA or
other applicable law; provided, however, that any new health insurance plan
shall provide for coverage for preexisting conditions for employees of each
COMPANY who were covered by such COMPANY's health insurance plan immediately
prior to the Closing Date or as otherwise required by law.
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10.6 MAINTENANCE OF BOOKS. VPI will cause each COMPANY (a) to maintain the
books and records of such COMPANY existing prior to the Pre-Closing Date for a
period of six years after the Pre-Closing Date and (b) to make such books and
records available to the STOCKHOLDERS for any reasonable purpose.
10.7 SECURITIES COVENANTS. VPI shall meet the current public information
requirements of Rule 144, promulgated by the SEC, for the two-year period
following the Closing Date. In addition, unless otherwise advised by counsel,
VPI agrees that it will promptly remove the restricted stock legend from the VPI
Stock received by the STOCKHOLDERS pursuant to this Agreement when the
restrictions against transfer under applicable securities laws have lapsed.
11. INDEMNIFICATION
The STOCKHOLDERS, VPI and the NEWCOS each make the following covenants that
are applicable to them, respectively:
11.1 GENERAL INDEMNIFICATION BY THE STOCKHOLDERS. The STOCKHOLDERS covenant
and agree that they, jointly and severally, will indemnify, defend, protect and
hold harmless VPI, the NEWCOS and each COMPANY (as the Surviving Corporations)
at all times, from and after the date of this Agreement until the Expiration
Date, from and against all losses, claims, damages, actions, suits, proceedings,
demands, assessments, adjustments, costs and expenses (including specifically,
but without limitation, reasonable attorneys' fees and expenses of
investigation) incurred by VPI, the NEWCOS and each COMPANY (as the Surviving
Corporations) as a result of or arising from (i) any breach of the
representations and warranties of the STOCKHOLDERS or each COMPANY set forth
herein or on the Schedules or certificates delivered in connection herewith,
(ii) any breach of any agreement on the part of the STOCKHOLDERS or the
COMPANIES under this
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Agreement, (iii) any liability under the 1933 Act, the 1934 Act or other federal
or state law or regulation, at common law or otherwise, arising out of or based
upon any untrue statement or alleged untrue statement of a material fact
relating solely to any COMPANY or the STOCKHOLDERS, and provided to VPI or its
counsel by the COMPANIES or the STOCKHOLDERS, contained in the Registration
Statement or any prospectus forming a part thereof, or any amendment thereof or
supplement thereto, or arising out of or based upon any omission or alleged
omission to state therein a material fact relating solely to the COMPANIES or
the STOCKHOLDERS required to be stated therein or necessary to make the
statements therein not misleading, or (iv) the matters described on Schedule
11.1(iv) (relating to specifically identified matters such as ongoing claims
and/or litigation), which Schedule shall be prepared by VPI, provided, however,
(A) that in the case of any indemnity arising pursuant to clause (iii) such
indemnity shall not inure to the benefit of VPI, the NEWCOS, the COMPANIES or
the Surviving Corporations to the extent that such untrue statement (or alleged
untrue statement) was made in, or omission (or alleged omission) occurred in,
any preliminary prospectus and the STOCKHOLDERS provided, in writing, corrected
information to VPI counsel and to VPI for inclusion in the final prospectus, and
such information was not so included or properly delivered, and (B) that no
STOCKHOLDER shall be liable for any indemnification obligation pursuant to this
Section 11.1 to the extent attributable to a breach of any representation,
warranty or agreement made herein individually by any other STOCKHOLDER.
11.2 INDEMNIFICATION BY VPI. VPI covenants and agrees that it will
indemnify, defend, protect and hold harmless the STOCKHOLDERS at all times from
and after the date of this Agreement until the Expiration Date, from and against
all losses, claims, damages, actions, suits, proceedings, demands, assessments,
adjustments, costs and expenses (including specifically, but without limitation,
reasonable attorneys' fees and expenses of investigation) incurred by the
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STOCKHOLDERS as a result of or arising from (i) any breach by VPI or the NEWCOS
of their representations and warranties set forth herein or on the Schedules or
certificates attached hereto, (ii) any breach of any agreement on the part of
VPI or the NEWCOS under this Agreement, (iii) any liabilities which the
STOCKHOLDERS may incur due to VPI's or the NEWCOS' failure to be responsible for
the liabilities and obligations of the COMPANIES as provided in Section 1 hereof
(except to the extent that VPI or the NEWCOS have claims against the
STOCKHOLDERS under Section 11.1 hereof by reason of such liabilities); (iv) any
liability under the 1933 Act, the 1934 Act or other federal or state law or
regulation, at common law or otherwise, arising out of or based upon any untrue
statement or alleged untrue statement of a material fact relating to VPI, the
NEWCOS or any of the Other Founding Companies contained in any preliminary
prospectus, the Registration Statement or any prospectus forming a part thereof,
or any amendment thereof or supplement thereto, or arising out of or based upon
any omission or alleged omission to state therein a material fact relating to
VPI or the NEWCOS or any of the Other Founding Companies required to be stated
therein or necessary to make the statements therein not misleading, or (v) the
matters described on Schedule 11.2(v) (relating to specifically identified
matters including the release of the guarantees pursuant to Section 10.1
hereof).
11.3 THIRD PERSON CLAIMS. Promptly after any party hereto (hereinafter the
"Indemnified Party") has received notice of or has knowledge of any claim by a
person not a party to this Agreement ("Third Person"), or the commencement of
any action or proceeding by a Third Person, the Indemnified Party shall, as a
condition precedent to a claim with respect thereto being made against any party
obligated to provide indemnification pursuant to Section 11.1 or 11.2 hereof
(hereinafter the "Indemnifying Party"), give the Indemnifying Party written
notice of such claim or the commencement of such action or proceeding. Such
notice shall state the nature and the basis of such claim and a
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reasonable estimate of the amount thereof. The Indemnifying Party shall have the
right to defend and settle (subject to the consent of the Indemnified Party, as
hereinafter provided), at its own expense and by its own counsel, any such
matter so long as the Indemnifying Party pursues the same in good faith and
diligently, provided that the Indemnifying Party shall not settle any criminal
proceeding without the written consent of the Indemnified Party. If the
Indemnifying Party undertakes to defend or settle, it shall promptly notify the
Indemnified Party of its intention to do so, and the Indemnified Party shall
cooperate with the Indemnifying Party and its counsel in the defense thereof and
in any settlement thereof. Such cooperation shall include, but shall not be
limited to, furnishing the Indemnifying Party with any books, records or
information reasonably requested by the Indemnifying Party that are in the
Indemnified Party's possession or control. All Indemnified Parties shall use the
same counsel, which shall be the counsel selected by the Indemnifying Party,
provided that if counsel to the Indemnifying Party shall have a conflict of
interest that prevents counsel for the Indemnifying Party from representing the
Indemnified Party, the Indemnified Party shall have the right to participate in
such matter through counsel of its own choosing and the Indemnifying Party will
reimburse the Indemnified Party for the reasonable expenses of its counsel.
Further, absent a conflict, the Indemnified Party may select counsel and have
such counsel participate in such matter at the sole cost of the Indemnified
Party. After the Indemnifying Party has notified the Indemnified Party of its
intention to undertake to defend or settle any such asserted liability, and for
so long as the Indemnifying Party diligently pursues such defense, the
Indemnifying Party shall not be liable for any additional legal expenses
incurred by the Indemnified Party in connection with any defense or settlement
of such asserted liability, except (i) as set forth in the preceding sentence
and (ii) to the extent such participation is requested in writing by the
Indemnifying Party, in which event the Indemnified Party shall be reimbursed by
the Indemnifying Party for reasonable additional legal expenses and
out-of-
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pocket expenses. If the Indemnifying Party desires to accept a final and
complete settlement of any such Third Person claim in which no admission of
wrongdoing is required of the Indemnified Party and the Indemnified Party
refuses to consent to such settlement, then the Indemnifying Party's liability
under this Section with respect to such Third Person claim shall be limited to
the amount so offered in settlement by said Third Person. If the Indemnifying
Party does not undertake to defend such matter to which the Indemnified Party is
entitled to indemnification hereunder, or fails diligently to pursue such
defense, the Indemnified Party may undertake such defense through counsel of its
choice, at the cost and expense of the Indemnifying Party, and the Indemnifying
Party shall reimburse the Indemnified Party for the amount paid in such
settlement and any other liabilities or expenses incurred by the Indemnified
Party in connection therewith, provided, however, that under no circumstances
shall the Indemnified Party settle any Third Person claim without the written
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld, conditioned or delayed. All settlements hereunder shall effect a
complete release of the Indemnified Party, unless the Indemnified Party
otherwise agrees in writing. The parties hereto will make appropriate
adjustments for insurance proceeds in determining the amount of any
indemnification obligation under this Section.
11.4 EXCLUSIVE REMEDY. The indemnification provided for in this Section 11
shall (except as prohibited by ERISA) be the exclusive remedy in any action
seeking damages or any other form of monetary relief brought by any party to
this Agreement against another party relating to this Agreement or the
preparation of the Registration Statement and the IPO, provided, however, that
nothing herein shall be construed to limit the right of a party, in a proper
case, to seek injunctive relief for a breach of this Agreement. The obligations
set forth herein are contingent upon similar obligations being incorporated in
all of the Other Agreements.
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11.5 LIMITATIONS ON INDEMNIFICATION. VPI, the NEWCOS, the Surviving
Corporations and the other persons or entities indemnified pursuant to Section
11.1 shall not assert any claim for indemnification hereunder against the
STOCKHOLDERS until such time as, and solely to the extent that, the aggregate of
all claims which such persons may have against the STOCKHOLDERS shall exceed
2.0% of the sum of (i) the cash paid to the STOCKHOLDERS and (ii) the value of
the VPI Stock delivered to the STOCKHOLDERS (the "Indemnification Threshold"),
provided, however, that VPI, the NEWCOS, the Surviving Corporations and the
other persons or entities indemnified pursuant to Section 11.1 may assert and
shall be indemnified for any claim under Section 11.l(iv) at any time,
regardless of whether the aggregate of all claims which such persons may have
against the STOCKHOLDERS exceeds the Indemnification Threshold, it being
understood that the amount of any such claim under Section 11.1(iv) shall not be
counted towards the Indemnification Threshold. The STOCKHOLDERS shall not assert
any claim for indemnification hereunder against VPI or the NEWCOS until such
time as, and solely to the extent that, the aggregate of all claims which the
STOCKHOLDERS may have against VPI and the NEWCOS shall exceed $50,000, provided,
however, that the STOCKHOLDERS and the other persons or entities indemnified
pursuant to Section 11.2 may assert and shall be indemnified for any claim under
Section 11.2(v) at any time, regardless of whether the aggregate of all claims
which such persons may have against any of VPI and the NEWCOS exceeds $50,000,
it being understood that the amount of any such claim under Section 11.2(v)
shall not be counted towards such $50,000 amount. No person shall be entitled to
indemnification under this Section 11 if and to the extent that: (a) such
person's claim for indemnification is directly or indirectly related to a breach
by such person of any representation, warranty, covenant or other agreement set
forth in this Agreement; or (b) such person receives a tax benefit as a result
of the claim or loss for which indemnification is sought (i.e., the amount of
such
70
claim or loss for which indemnification is provided hereunder shall be reduced
by the amount of such tax benefit).
Notwithstanding any other term of this Agreement (except the proviso to
this sentence), no STOCKHOLDER shall be liable under this Section 11 for an
amount which exceeds the amount of proceeds received by such STOCKHOLDER in
connection with the Merger, provided that a STOCKHOLDER's indemnification
obligations pursuant to Section 11.1(iv) shall not be limited. Indemnity
obligations hereunder may be satisfied through the payment of cash or the
delivery of VPI Stock, or a combination thereof, at the STOCKHOLDER's election.
For purposes of calculating the value of the VPI Stock received or delivered by
a STOCKHOLDER (for purposes of determining the Indemnification Threshold, the
limitation on indemnity set forth in the second preceding sentence and the
amount of any indemnity paid), VPI Stock shall be valued at its initial public
offering price as set forth in the Registration Statement. Any indemnification
payment made by the STOCKHOLDERS pursuant to this Section 11 shall be deemed to
be a reduction in the consideration received by the STOCKHOLDERS pursuant to
Section 3.
12. TERMINATION OF AGREEMENT
12.1 TERMINATION. This Agreement may be terminated by written notice from
the party asserting termination to the other parties at any time prior to the
Closing Date solely:
(i) by mutual consent of the boards of directors of VPI and the COMPANIES;
(ii) by the STOCKHOLDERS or the COMPANIES (acting through its board of
directors), on the one hand, or by VPI (acting through its board of directors),
on the other hand, if the transactions contemplated by this Agreement to take
place at the Closing shall not have been consummated by June 30, 1998, unless
the failure of such transactions to be consummated is due to the
71
willful failure of the party seeking to terminate this Agreement to perform any
of its obligations under this Agreement to the extent required to be performed
by it prior to or on the Closing Date;
(iii) by the STOCKHOLDERS or the COMPANIES, on the one hand, or by VPI, on
the other hand, if a breach or default shall be made by the other party in the
observance or in the due and timely performance of any of the covenants,
agreements or conditions contained herein (including but not limited to the
condition that the aggregate value of the cash and the number of shares of VPI
Stock to be received by the STOCKHOLDERS is not less than the Minimum Value set
forth on Annex III), which breach or default has a Material Adverse Effect, and
the curing of such default shall not have been made on or before the Closing
Date;
(iv) pursuant to Section 7.8 hereof; or
(v) pursuant to Section 4 hereof.
12.2 LIABILITIES IN EVENT OF TERMINATION. Except as provided in Section 7.8
hereof, the termination of this Agreement will in no way limit any obligation or
liability of any party based on or arising from a breach or default by such
party with respect to any of its representations, warranties, covenants or
agreements contained in this Agreement including, but not limited to, legal and
audit costs and out of pocket expenses relating to the transactions contemplated
hereby. No party hereto shall be liable to any other party if the Agreement is
terminated under Sections 12.1(i), (ii) (except as set forth therein), (iv) or
(v), provided, however (and notwithstanding anything in Section 18.7 to the
contrary), that VPI shall reimburse the COMPANY for the reasonable documented
fees and expenses of its attorneys and accountants incurred in connection with
the transactions contemplated by this Agreement in the event that this Agreement
is terminated by the COMPANY or the STOCKHOLDERS pursuant to Section 12.1(iii);
and further provided, however (and notwithstanding anything in Section 18.7 to
the contrary), that the COMPANY and
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the STOCKHOLDERS shall reimburse VPI for the reasonable documented fees and
expenses of its attorneys and accountants incurred in connection with the
transactions contemplated by this Agreement in the event that this Agreement is
terminated by VPI pursuant to Section 12.1(iii).
13. NONCOMPETITION
13.1 PROHIBITED ACTIVITIES. Provided that VPI shall have complied with and
performed all of its obligations hereunder in all material respects and the
STOCKHOLDERS shall have received payment in full of the consideration described
in Section 3, each of the STOCKHOLDERS shall not, during the Noncompetition
Period, for any reason whatsoever, directly or indirectly, for themselves or on
behalf of or in conjunction with any other person, persons, company,
partnership, corporation or business of whatever nature:
(i) engage, as an officer, director, shareholder, owner, partner,
joint venturer, or in a managerial capacity, whether as an employee,
independent contractor, consultant or advisor, or as a sales
representative, in any noncommercial property management, rental or sales
business or hotel management business in direct competition with VPI or any
of its subsidiaries, within 100 miles of the locations in which VPI or the
COMPANIES, or any of their subsidiaries, conduct a noncommercial property
management, rental or sales business or hotel management business (the
"Territory");
(ii) call upon any person who is, at that time, within the Territory,
an employee of VPI (including the subsidiaries thereof) in a sales
representative or managerial capacity for the purpose or with the intent of
enticing such employee away from or out of the employ of VPI (including the
subsidiaries thereof), provided that each STOCKHOLDER shall be permitted to
call upon and hire any member of his or her immediate family;
73
(iii) call upon any person or entity which is at that time, or which
has been, within one (l) year prior to that time, a customer of VPI
(including the subsidiaries thereof), of any COMPANY or of any of the Other
Founding Companies within the Territory for the purpose of providing
noncommercial property management, rental or sales services or hotel
management services to property owners and/or renters in direct competition
with VPI within the Territory;
(iv) call upon any prospective acquisition candidate, on any
STOCKHOLDER's own behalf or on behalf of any competitor in the
noncommercial property management, rental or sales business or hotel
management business, which candidate, to the actual knowledge of such
STOCKHOLDER after due inquiry, was called upon by VPI (including the
subsidiaries thereof) or for which, to the actual knowledge of such
STOCKHOLDER after due inquiry, VPI (or any subsidiary thereof) made an
acquisition analysis, for the purpose of acquiring such entity, unless VPI
(or any subsidiary thereof) has expressly declined to pursue such
acquisition candidate or at least one (1) year has elapsed since VPI (or
any subsidiary thereof) has taken any action with respect to pursuing such
acquisition candidate; or
(v) disclose customers, whether in existence or proposed, of the
COMPANY to any person, firm, partnership, corporation or business for any
reason or purpose whatsoever except to the extent that such COMPANY has in
the past disclosed such information to the types of persons to whom
disclosure is then presently contemplated for valid business reasons.
Notwithstanding the above, the foregoing covenant shall not be deemed to
prohibit any STOCKHOLDER from (a) acquiring as an investment not more than two
percent (2%) of the capital stock of a competing business whose stock is traded
on a national securities exchange or over-the-counter or (b) owning
noncommercial property if such property is managed by the COMPANY.
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13.2 DAMAGES. Because of the difficulty of measuring economic losses to VPI
as a result of a breach of the foregoing covenant, and because of the immediate
and irreparable damage that could be caused to VPI for which it would have no
other adequate remedy, each STOCKHOLDER agrees that the foregoing covenant may
be enforced by VPI in the event of breach by such STOCKHOLDER, by injunctions
and restraining orders.
13.3 REASONABLE RESTRAINT. It is agreed by the parties hereto that the
foregoing covenants in this Section 13 impose a reasonable restraint on the
STOCKHOLDERS in light of the activities and business of VPI (including the
subsidiaries thereof) on the date of the execution of this Agreement and the
current plans of VPI (including VPI's subsidiaries); but it is also the intent
of VPI and the STOCKHOLDERS that such covenants be construed and enforced in
accordance with the changing locations of VPI (including VPI's other
subsidiaries) from the date hereof through the Noncompetition Period. For
example, if, during the Noncompetition Period, VPI (including VPI's other
subsidiaries) establishes new locations for its current activities or business
in addition to the locations currently established therefor, then the
STOCKHOLDERS will be precluded from soliciting customers or employees from such
new location and from directly competing within 100 miles of such new
location(s) through the term of the Noncompetition Period.
It is further agreed by the parties hereto that, in the event that any
STOCKHOLDER shall enter into a business or pursue other activities not in
competition with VPI (including VPI's other subsidiaries), or similar
activities, or business in locations the operation of which, under such
circumstances, does not violate clause (i) of Section 13.1, and in any event
such new business, activities or location are not in violation of this Section
13 or of such STOCKHOLDER's obligations under this Section 13, if any, such
STOCKHOLDER shall not be chargeable with a
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violation of this Section 13 if VPI (including VPI's subsidiaries) shall
thereafter enter the same, similar or a competitive (i) business, (ii) course of
activities, or (iii) location, as applicable.
13.4 SEVERABILITY; REFORMATION. The covenants in this Section 13 are
severable and separate, and the unenforceability of any specific covenant shall
not affect the provisions of any other covenant. Moreover, in the event any
court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the intention of
the parties that such restrictions be enforced to the fullest extent which the
court deems reasonable, and the Agreement shall thereby be reformed.
13.5 INDEPENDENT COVENANT. Subject to the introductory clause of Section
13.1, all of the covenants in this Section 13 shall be construed as an agreement
independent of any other provision in this Agreement, and the existence of any
claim or cause of action of any STOCKHOLDER against VPI (including the
subsidiaries thereof), whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by VPI of such covenants. It is
specifically agreed that the Noncompetition Period, during which the agreements
and covenants of each STOCKHOLDER made in this Section 13 shall be effective,
shall be computed by excluding from such computation any time during which a
court of competent jurisdiction or other arbitrator or mediator has determined
that such STOCKHOLDER is in violation of any provision of this Section 13. The
covenants contained in Section 13 shall have no effect if the transactions
contemplated by this Agreement are not consummated.
13.6 MATERIALITY. Each of the COMPANIES and the STOCKHOLDERS hereby agree
that the covenants in this Section 13 are a material and substantial part of
this transaction.
13.7 LIMITATION. In the event that any STOCKHOLDER who is employed by VPI
or any COMPANY pursuant to an employment agreement is terminated without cause
(as defined in such
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employment agreement), notwithstanding the definition of "Noncompetition Period"
in Section 18.17, the provisions of this Section 13 shall not be valid or
enforceable by VPI if such STOCKHOLDER waives the STOCKHOLDER's right to receive
severance compensation under such employment agreement. In the event such
employment agreement is terminated as a result of a material breach by the
COMPANY of the employment agreement, the provisions of this Section 13 likewise
shall not be valid or enforceable.
14. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
14.1 STOCKHOLDERS. The STOCKHOLDERS recognize and acknowledge that they had
in the past, currently have, and in the future may possibly have, access to
certain confidential information of the COMPANIES, the Other Founding Companies,
and/or VPI, such as operational policies, and pricing and cost policies that are
valuable, special and unique assets of the COMPANIES', the Other Founding
Companies' and/or VPI's respective businesses. The STOCKHOLDERS agree that they
shall not use, except in connection with the transactions contemplated hereby,
or disclose such confidential information to any person, firm, corporation,
association or other entity for any purpose or reason whatsoever, except
disclosures (a) to authorized representatives of VPI, (b) following the Closing,
by the STOCKHOLDERS as is required in the course of performing their duties for
VPI or the Surviving Corporation and (c) to counsel and other advisors, provided
that such advisors (other than counsel) agree to the confidentiality provisions
of this Section 14.1, unless (i) such information is or becomes known to the
public generally or to businesses operating in the noncommercial property
management, rental or sales industry through no fault of the STOCKHOLDERS, (ii)
disclosure is required by law or the order of any governmental authority under
color of law, provided, however, that prior to disclosing any information
pursuant to this clause (ii), the
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STOCKHOLDERS shall, if possible, give two days' prior written notice thereof to
VPI and provide VPI with the opportunity within such two-day period to contest
such disclosure, or (iii) the disclosing party reasonably believes that such
disclosure is required in connection with the defense of a lawsuit against the
disclosing party. In the event of a breach or threatened breach by any of the
STOCKHOLDERS of the provisions of this Section, VPI shall be entitled to an
injunction restraining such STOCKHOLDERS from disclosing, in whole or in part,
such confidential information. Nothing herein shall be construed as prohibiting
VPI from pursuing any other available remedy for such breach or threatened
breach, including the recovery of damages. In the event the transactions
contemplated by this Agreement are not consummated, STOCKHOLDERS shall have none
of the above-mentioned restrictions on their ability to disseminate confidential
information with respect to the COMPANY.
14.2 VPI AND NEWCOS. VPI and the NEWCOS recognize and acknowledge that they
had in the past and currently have access to certain confidential information of
the COMPANIES, such as operational policies, and pricing and cost policies that
are valuable, special and unique assets of the COMPANIES' businesses. VPI and
the NEWCOS agree that, prior to the Closing, or if the transactions contemplated
by this Agreement are not consummated, they will not use, except in connection
with the transactions contemplated hereby, or disclose such confidential
information to any person, firm, corporation, association or other entity for
any purpose or reason whatsoever, except disclosures (a) to authorized
representatives of the COMPANIES, (b) to counsel and other advisors; provided,
however, that such advisors (other than counsel) agree to the confidentiality
provisions of this Section 14.2 and (c) to the Other Founding Companies and
their representatives pursuant to Section 7.1(a), unless (i) such information
becomes known to the public generally through no fault of VPI or any NEWCO, (ii)
disclosure is required by law or the order of any governmental authority under
color of law; provided, however, that prior to disclosing any information
pursuant to this clause
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(ii), VPI and the NEWCOS shall, unless otherwise required by law or such order,
give two days' prior written notice thereof to the COMPANIES and the
STOCKHOLDERS and provide the COMPANIES and the STOCKHOLDERS with the opportunity
within such two-day period to contest such disclosure, or (iii) the disclosing
party reasonably believes that such disclosure is required in connection with
the defense of a lawsuit against the disclosing party. VPI will disclose
confidential information relating to the COMPANIES to the Other Founding
Companies only if such companies have agreed, in advance, to treat such
information as confidential. In the event of a breach or threatened breach by
VPI or the NEWCOS of the provisions of this Section, the COMPANIES and the
STOCKHOLDERS shall be entitled to an injunction restraining VPI and the NEWCOS
from disclosing, in whole or in part, such confidential information. Nothing
herein shall be construed as prohibiting the COMPANIES and the STOCKHOLDERS from
pursuing any other available remedy for as such breach or threatened breach,
including the recovery of damages.
14.3 DAMAGES. Because of the difficulty of measuring economic losses as a
result of the breach of the foregoing covenants in Section 14.1 and 14.2, and
because of the immediate and irreparable damage that would be caused for which
they would have no other adequate remedy, the parties hereto agree that, in the
event of a breach by any of them of the foregoing covenants, the covenant may be
enforced against the other parties by injunctions and restraining orders.
14.4 SURVIVAL. The obligations of the parties under this Article 14 shall
survive the termination of this Agreement for a period of three years from (a)
the Closing Date if the transactions contemplated hereby are consummated or (b)
the date hereof if the transactions contemplated hereby are not consummated.
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14.5 RETURN OF DATA SUBMITTED. Upon termination of this Agreement for any
reason, VPI will cause the return to the COMPANIES of all data, and all copies
thereof, submitted to VPI or its agents pursuant to this Agreement.
15. TRANSFER RESTRICTIONS
15.1 TRANSFER RESTRICTIONS. Except for transfers to immediate family
members who agree to be bound by the restrictions set forth in this Section 15.1
(or trusts for the benefit of the STOCKHOLDERS or family members, the trustees
of which so agree), for a period of one year after the Closing Date, except
pursuant to Section 17 hereof, none of the STOCKHOLDERS shall sell, assign,
exchange, transfer, distribute or otherwise dispose of any shares of VPI Stock
received by the STOCKHOLDERS pursuant to Section 3.1. The certificates
evidencing the VPI Stock delivered to the STOCKHOLDERS pursuant to Section 3 of
this Agreement shall bear a legend substantially in the form set forth below and
containing such other information as VPI may deem necessary or appropriate:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, ASSIGNED, EXCHANGED,
TRANSFERRED, DISTRIBUTED, APPOINTED OR OTHERWISE DISPOSED OF, AND THE ISSUER
SHALL NOT BE REQUIRED TO GIVE EFFECT TO ANY ATTEMPTED SALE, ASSIGNMENT,
EXCHANGE, TRANSFER, DISTRIBUTION, APPOINTMENT OR OTHER DISPOSITION PRIOR TO
[first anniversary of Closing Date]. UPON THE WRITTEN REQUEST OF THE HOLDER OF
THIS CERTIFICATE, THE ISSUER AGREES TO REMOVE THIS RESTRICTIVE LEGEND (AND ANY
STOP ORDER PLACED WITH THE TRANSFER AGENT) AFTER THE DATE SPECIFIED ABOVE.
15.2 CERTAIN TRANSFERS. Except for transfers to family members who agree to
be bound by the restrictions set forth in Section 15.1 (or trusts for the
benefit of the STOCKHOLDERS or family members, the trustees of which so agree)
and except pursuant to Section 17 hereof, regardless of whether transfers of
such shares are restricted pursuant to the terms of this Agreement, during the
two-year period commencing on the Closing Date, the STOCKHOLDERS shall not sell,
assign, exchange,
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transfer, distribute or otherwise dispose of, in any transaction or series of
transactions involving more than 5,000 shares (a "Future Sale"), any shares of
VPI Stock received by the STOCKHOLDERS pursuant to Section 3.1 except in
accordance with this Section 15.2. If any STOCKHOLDER desires to make a Future
Sale, the STOCKHOLDER shall first provide written notice thereof to VPI. VPI
shall have three (3) days after receipt of such notice by VPI in which to
arrange for a private sale of such shares through one or more of the
Underwriters, and such STOCKHOLDER may not make the Future Sale except pursuant
to such arrangements; provided, however, that the terms of such sale (including
commissions) are at least as favorable as the terms the STOCKHOLDER would have
received in the absence of this Section 15.2. If VPI has not successfully
arranged for a private sale of such shares through one or more the Underwriters
within such three (3) day period, the restrictions of this Section 15.2 shall
not apply to such Future Sale. Any subsequent Future Sales by such STOCKHOLDER
must be made in accordance with this Section 15.2. The terms of this Section
15.2 shall not apply to pledges of shares of VPI Stock.
16. SECURITIES LAW REPRESENTATIONS
The STOCKHOLDERS acknowledge that the shares of VPI Stock to be delivered
to the STOCKHOLDERS pursuant to this Agreement have not been registered under
the 1933 Act and therefore may not be resold without compliance with the 1933
Act. The VPI Stock to be acquired by such STOCKHOLDERS pursuant to this
Agreement is being acquired solely for their own respective accounts, for
investment purposes only, and with no present intention of distributing, selling
or otherwise disposing of it in connection with a distribution.
16.1 COMPLIANCE WITH LAW. The STOCKHOLDERS covenant, warrant and represent
that none of the shares of VPI Stock issued to such STOCKHOLDERS will be
offered, sold, assigned,
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pledged, hypothecated, transferred or otherwise disposed of except after full
compliance with all of the applicable provisions of the 1933 Act, the rules and
regulations of the SEC and applicable state securities laws. All of the VPI
Stock shall bear the following legend in addition to the legend required under
Section 15 of this Agreement:
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 (THE "ACT") AND MAY ONLY BE SOLD OR OTHERWISE TRANSFERRED IF THE HOLDER
HEREOF COMPLIES WITH THE ACT AND OTHER APPLICABLE SECURITIES LAWS.
16.2 ECONOMIC RISK; SOPHISTICATION. Each of the STOCKHOLDERS is able to
bear the economic risk of an investment in the VPI Stock acquired pursuant to
this Agreement and can afford to sustain a total loss of such investment and has
such knowledge and experience in financial and business matters that he or she
is capable of evaluating the merits and risks of the proposed investment in the
VPI Stock. The STOCKHOLDERS have had an adequate opportunity to ask questions
and receive answers from the officers of VPI concerning any and all matters
relating to the transactions described herein including, without limitation, the
background and experience of the current and proposed officers and directors of
VPI, the plans for the operations of the business of VPI, the business,
operations and financial condition of the Founding Companies other than the
COMPANIES, and any plans for additional acquisitions and the like. The
STOCKHOLDERS have asked any and all questions in the nature described in the
preceding sentence and all questions have been answered to their satisfaction.
17. REGISTRATION RIGHTS
17.1 PIGGYBACK REGISTRATION RIGHTS. At any time following the Closing Date,
whenever VPI proposes to register any VPI Stock for its own or others' account
under the 1933 Act, other than
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(i) any shelf registration of shares to be used as consideration for
acquisitions of additional businesses by VPI and (ii) registrations relating to
employee benefit plans, VPI shall give each of the STOCKHOLDERS prompt written
notice of its intent to do so. Upon the written request of any of the
STOCKHOLDERS given within 30 days after receipt of such notice, VPI shall cause
to be included in such registration all of the VPI Stock issued to such
STOCKHOLDER pursuant to this Agreement which any such STOCKHOLDER requests,
provided that VPI shall have the right to reduce the number of shares included
in such registration to the extent that inclusion of such shares could, in the
reasonable opinion of tax counsel to VPI or its independent auditors, jeopardize
the status of the transactions contemplated hereby and by the Registration
Statement as an exchange pursuant to which gain is not recognized under Section
351(a) of the Code. In addition, if VPI is advised in writing in good faith by
any managing underwriter of an underwritten offering of the securities being
offered pursuant to any registration statement under this Section 17.1 that the
number of shares to be sold by persons other than VPI is greater than the number
of such shares which can be offered without adversely affecting the offering,
VPI may reduce pro rata the number of shares offered for the accounts of such
persons (based upon the number of shares desired to be sold by such person) to a
number deemed satisfactory by such managing underwriter, provided, however, that
for each such offering made by VPI after the IPO, such reduction shall be made
first by reducing the number of shares to be sold by persons other than VPI, the
STOCKHOLDERS and the stockholders of the Other Founding Companies who receive
shares of VPI Stock pursuant to the Other Agreements (collectively, the
STOCKHOLDERS and the stockholders of the other Founding Companies who receive
shares of VPI Stock pursuant to the Other Agreements being referred to herein as
the "Founding Stockholders"), and thereafter, if a further reduction is
required, by reducing the number of shares to be sold by the
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Founding Stockholders on a pro rata basis based on the number of shares proposed
to be registered by each of the Founding Stockholders.
17.2 DEMAND REGISTRATION RIGHTS. At any time after the date two years after
the Closing Date, the holders of a majority of the shares of VPI Stock issued to
the Founding Stockholders pursuant to this Agreement and the Other Agreements
which have not been previously registered or sold and which are not entitled to
be sold under Rule 144(k) (or any similar or successor provision) promulgated
under the 1933 Act may request in writing (the "Demand Registration Request")
that VPI file a registration statement under the 1933 Act covering the
registration of up to all of the shares of VPI Stock issued to the STOCKHOLDERS
pursuant to this Agreement and the Other Agreements then held by such Founding
Stockholders (a "Demand Registration"). Within ten (10) days of the receipt of
the Demand Registration Request, VPI shall give written notice of such request
to all other Founding Stockholders and shall, as soon as practicable but in no
event later than 45 days after the Demand Registration Request, file and use its
best efforts to cause to become effective a registration statement covering all
shares requested to be registered pursuant to this Section 17.2. VPI shall be
obligated to effect only one Demand Registration for all Founding Stockholders.
Notwithstanding the foregoing paragraph, following the Demand Registration
Request a majority of VPI's disinterested directors (i.e., directors who have
not demanded or elected to sell shares in any such public offering) may defer
the filing of the registration statement for a 60-day period if such deferral is
deemed by such directors to be in the best interests of VPI.
If immediately prior to the Demand Registration Request VPI has fixed plans
to file within 60 days after receipt of the Demand Registration Request a
registration statement covering the sale of any of its securities in a public
offering under the 1933 Act, no registration of the Founding Stockholders' VPI
Stock shall be initiated under this Section 17.2 until 90 days after the
effective date of such
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registration unless VPI is no longer proceeding diligently to effect such
registration (in which case the delay contemplated by this sentence would not be
applicable); provided that VPI shall provide the Founding Stockholders the right
to participate in such public offering pursuant to, and subject to, Section 17.1
hereof.
17.3 REGISTRATION PROCEDURES. All expenses incurred in connection with the
registrations under this Article 17 (including all registration, filing,
qualification, legal, printer and accounting fees, but excluding underwriting
commissions and discounts), shall be borne by VPI. In connection with
registrations under Sections 17.1 and 17.2, VPI shall (i) use its best efforts
to prepare and file with the SEC as soon as reasonably practicable, a
registration statement with respect to the VPI Stock and use its best efforts to
cause such registration to promptly become and remain effective for a period of
at least 45 days (or such shorter period during which the Founding Stockholders
shall have sold all VPI Stock which they requested to be registered); (ii) use
its best efforts to register and qualify the VPI Stock covered by such
registration statement under applicable state securities laws as the holders
shall reasonably request for the distribution for the VPI Stock; and (iii) take
such other actions as are reasonable and necessary to comply with the
requirements of the 1933 Act and the regulations thereunder to enable the
Founding Stockholders to sell their shares pursuant thereto.
17.4 UNDERWRITING AGREEMENT. In connection with each registration pursuant
to Sections 17.1 and 17.2 covering an underwritten registered public offering,
VPI and each participating holder agree to enter into a written agreement with
the managing underwriters in such form and containing such provisions (including
indemnification provisions) as are customary in the securities business for such
an arrangement between such managing underwriters and companies of VPI's size
and investment stature.
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17.5 AVAILABILITY OF RULE 144. VPI shall not be obligated to register
shares of VPI Stock held by any STOCKHOLDER at any time when the resale
provisions of Rule 144(k) (or any similar or successor provision) promulgated
under the 1933 Act are available to such STOCKHOLDER with respect to such
STOCKHOLDER's VPI Stock.
17.6 REGISTRATION RIGHTS INDEMNIFICATION.
(a) Indemnification by VPI. In the event any shares of VPI Stock received
by the STOCKHOLDERS pursuant to this Agreement (the "Registrable Securities")
are included in a registration statement under this Section 17, to the extent
permitted by law, VPI will, and hereby does, indemnify and hold harmless each
seller of any Registrable Securities covered by such registration statement, its
directors, officers, agents, attorneys, each other Person who participates as an
underwriter in the offering or sale of such securities and each other Person, if
any, who controls such seller or any such underwriter within the meaning of the
1933 Act, against any losses, claims, damages or liabilities, joint or several,
to which such seller or any such director or officer or underwriter or
controlling Person may become subject under the 1933 Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which such securities were
registered under the 1933 Act, any preliminary prospectus, final prospectus or
summary prospectus contained therein, or any amendment or supplement thereto, or
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
VPI will reimburse such seller and each such director, officer, underwriter and
controlling Person for any expenses (including but not limited to reasonable
attorneys' fees) reasonably incurred by them in connection with investigating
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or defending any such loss, claim, liability, action or proceeding; provided
that VPI shall not be liable in any such case to the extent that any such loss,
claim, damage, liability (or action or proceeding in respect thereof) or expense
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in such registration statement, any such
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with written information furnished
to VPI by such seller expressly for use in the preparation thereof, and provided
further that VPI shall not be liable to any Person who participates as an
underwriter in the offering or sale of Registrable Securities or any other
Person, if any, who controls such underwriter within the meaning of the 1933
Act, in any such case to the extent that any such loss, claim, damage, liability
(or action or proceeding in respect thereof) or expense arises out of such
Person's failure to send or give a copy of the final prospectus, as the same may
be then supplemented or amended, to the Person asserting an untrue statement or
alleged untrue statement or omission or alleged omission at or prior to the
written confirmation of the sale of Registrable Securities to such Person if
such statement or omission was corrected in such final prospectus. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such seller or any such director, officer, underwriter
or controlling Person and shall survive the transfer of such securities by such
seller.
(b) Indemnification by Sellers. If any Registrable Securities are included
in any registration statement filed pursuant to this Section 17, each
prospective seller of such securities shall indemnify and hold harmless (in the
same manner and to the same extent as set forth in subdivision (a) of this
Section 17.6) each underwriter, each Person who controls such underwriter within
the meaning of the 1933 Act, VPI, each director of VPI, each officer of VPI,
VPI's agents and attorneys and each other Person, if any, who controls VPI
within the meaning of the 1933
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Act, with respect to any statement or alleged statement in or omission or
alleged omission from such registration statement, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, if such statement or alleged statement or omission or
alleged omission was made in reliance upon and in strict conformity with written
information furnished to VPI by such seller expressly for use in the preparation
of such registration statement, preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement; provided that such prospective
seller shall not be liable to any Person who participates as an underwriter in
the offering or sale of Registrable Securities or any other Person, if any, who
controls such underwriter within the meaning of the 1933 Act, in any such case
to the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of such Person's failure to
send or give a copy of the final prospectus, as the same may be then
supplemented or amended, to the Person asserting an untrue statement or alleged
untrue statement or omission or alleged omission at or prior to the written
confirmation of the sale of Registrable Securities to such Person if such
statement or omission was corrected in such final prospectus. Such indemnity
shall remain in full force and effect, regardless of any investigation made by
or on behalf of any underwriter, VPI or any such director, officer or
controlling Person and shall survive the transfer of such securities by such
seller. In no event shall the liability of any selling holder of Registrable
Securities under this Section 17.6(b) be greater in amount than the dollar
amount of the proceeds received by such holder upon the sale of the Registrable
Securities giving rise to such indemnification obligation.
(c) Notices of Claims, etc. Promptly after receipt by an indemnified party
of notice of the commencement of any action or proceeding involving a claim
referred to in the preceding subdivisions of this Section 17.6, such indemnified
party will, if a claim in respect thereof is to be
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made against an indemnifying party, give written notice to the latter of the
commencement of such action; provided that the failure of any indemnified party
to give notice as provided herein shall not relieve the indemnifying party of
its obligations under the preceding subdivisions of this Section 17.6, except to
the extent that the indemnifying party is actually materially prejudiced by such
failure to give notice. In case any such action is brought against an
indemnified party, unless in such indemnified party's reasonable judgment a
conflict of interest between such indemnified and indemnifying parties may exist
in respect of such claim, the indemnifying party shall be entitled to
participate in and to assume the defense thereof, jointly with any other
indemnifying party similarly notified to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a release from all liability
in respect to such claim or litigation.
(d) Other Indemnification. Indemnification similar to that specified in the
preceding subdivisions of this Section 17.6 (with appropriate modifications)
shall be given by VPI and each seller of Registrable Securities with respect to
any required registration or other qualification of securities under any federal
or state law or regulation of any governmental authority other than the 1933
Act.
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(e) Indemnification Payments. The indemnification required by this Section
17.6 shall be made by periodic payments of the amount thereof during the course
of the investigation or defense, as and when bills are received or expense,
loss, damage or liability is incurred.
(f) Contribution. If the indemnification provided for in this Section 17.6
from the indemnifying party is unavailable to an indemnified party hereunder in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such loss, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and indemnified parties in connection with the actions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of such indemnifying party
and indemnified parties shall be determined by reference to, among other things,
whether any action in question, including any untrue statement of material fact
or omission or alleged omission to state a material fact, has been made by, or
relates to information supplied by, such indemnifying party or indemnified
parties, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such action. The amount paid or payable by a
party as a result of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include, subject to the limitations set
forth in Section 17.6(c) hereof, any legal or other fees or expenses reasonably
incurred by such party in connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 17.6(f) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately
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preceding paragraph. Notwithstanding the provisions of this Section 17.6(f), no
underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Registrable Securities underwritten by it
and distributed to the public were offered to the public exceeds the amount of
any damages which such underwriter has otherwise been required to pay by reason
on such untrue or alleged untrue statement or omission or alleged omission, and
no selling holder shall be required to contribute any amount in excess of the
amount by which the total price at which the Registrable Securities of such
selling holder were offered to the public exceeds the amount of any damages
which such selling holder has otherwise been required to pay by reason of such
untrue statement or omission. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 0000 Xxx) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
If indemnification is available under this Section 17.6, the indemnifying
parties shall indemnify each indemnified party to the full extent provided in
Section 17.6(a) through Section 17.6(e) hereof without regard to the relative
fault of said indemnifying party or indemnified party or any other equitable
consideration provided for in this Section 17.6(f).
18. GENERAL
18.1 PRESS RELEASES. The parties hereto acknowledge that public disclosure
of this Agreement and/or any information regarding the transactions contemplated
hereby or the Other Agreements may adversely affect the ability of the parties
hereto and to the Other Agreements to consummate the transactions contemplated
hereby and by the Other Agreements. VPI, each COMPANY, and the STOCKHOLDERS
hereby agree that they shall not issue any press release or otherwise make any
public announcement (including communications with trade publications and other
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media), or disclose information to any third party (except those agents or
representatives of a party directly involved in the transactions contemplated
hereby and except as required by law) concerning VPI, the Founding Companies or
the transactions contemplated hereby or by the Other Agreements without the
prior approval of VPI, the COMPANIES and the STOCKHOLDERS.
18.2 COOPERATION. The COMPANIES, the STOCKHOLDERS, VPI and the NEWCOS shall
each deliver or cause to be delivered to the other on the Closing Date, and at
such other times and places as shall be reasonably agreed to, such additional
instruments as the other may reasonably request for the purpose of carrying out
this Agreement. Each COMPANY shall cooperate and use its reasonable efforts to
have the present officers, directors and the employees of each COMPANY cooperate
with VPI on and after the Closing Date in furnishing information, evidence,
testimony and other assistance in connection with any tax return filing
obligations, actions, proceedings, arrangements or disputes of any nature with
respect to matters pertaining to all periods prior to the Closing Date.
18.3 SUCCESSORS AND ASSIGNS; THIRD PARTY BENEFICIARIES. This Agreement and
the rights of the parties hereunder may not be assigned (except by operation of
law) and shall be binding upon and shall inure to the benefit of the parties
hereto, the successors of VPI, and the heirs and legal representatives of the
STOCKHOLDERS. Nothing in this Agreement shall be deemed to create any right with
respect to any person or entity not a party to or property not subject to this
Agreement.
18.4 ENTIRE AGREEMENT. This Agreement (including the schedules, exhibits
and annexes attached hereto) and the documents delivered pursuant hereto
constitute the entire agreement and understanding among the STOCKHOLDERS, the
COMPANIES, the NEWCOS and VPI and supersede any prior agreement and
understanding relating to the subject matter of this Agreement, including but
not limited to any letter of intent entered into by any of the parties hereto.
This
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Agreement, upon execution, constitutes a valid and binding agreement of the
parties hereto enforceable in accordance with its terms and may be modified or
amended only by a written instrument executed by the STOCKHOLDERS, the
COMPANIES, the NEWCOS and VPI, acting through their respective officers or
trustees, duly authorized by their respective Boards of Directors.
18.5 COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
18.6 BROKERS AND AGENTS. Except as disclosed on Schedule 18.6, each party
represents and warrants that it employed no broker or agent in connection with
this transaction and agrees to indemnify the other parties hereto against all
loss, cost, damages or expense arising out of claims for fees or commission of
brokers employed or alleged to have been employed by such indemnifying party.
18.7 EXPENSES. Whether or not the transactions herein contemplated shall be
consummated, VPI will pay the fees, expenses and disbursements of VPI and its
agents, representatives, accountants and counsel incurred in connection with the
subject matter of this Agreement and any amendments thereto, including all costs
and expenses incurred in the performance and compliance with all conditions to
be performed by VPI under this Agreement, including the fees and expenses of
Xxxxxx Xxxxxxxx, LLP (including such fees and expenses in connection with the
audit of the COMPANIES' financial statements), Akin, Gump, Strauss, Xxxxx &
Xxxx, L.L.P., and any other person or entity retained by VPI, and the costs of
preparing the Registration Statement. The STOCKHOLDERS shall pay the fees,
expenses and disbursements of the STOCKHOLDERS, the COMPANIES and their
respective agents, representatives, accountants and counsel incurred in
connection with the subject matter of this Agreement and any amendments thereto,
including all costs and expenses incurred in the performance and compliance with
all conditions to be performed by the
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COMPANIES and the STOCKHOLDERS under this Agreement, including the fees and
expenses of accountants and legal counsel to the COMPANIES and the STOCKHOLDERS.
Notwithstanding the foregoing, if the transactions contemplated by this
Agreement are consummated, VPI shall reimburse the STOCKHOLDERS for such
reasonable fees, expenses and disbursements upon the closing of the IPO up to
$50,000. In addition, each STOCKHOLDER shall pay all sales, use, transfer, real
property transfer, recording, gains, stock transfer and other similar taxes and
fees ("Transfer Taxes") imposed in connection with the Mergers, other than
Transfer Taxes, if any, imposed by the State of Delaware. Each STOCKHOLDER shall
file all necessary documentation and Tax Returns with respect to such Transfer
Taxes. In addition, each STOCKHOLDER acknowledges that he or she, and not the
COMPANIES or VPI, shall pay all taxes due upon receipt of the consideration
payable pursuant to Section 3 hereof, and shall assume all tax risks and
liabilities of such STOCKHOLDER in connection with the transactions contemplated
hereby; provided, however, that the foregoing shall not in any way prejudice the
ability of the STOCKHOLDERS and the COMPANIES to rely upon the opinions
contained in the tax opinion letter referenced in Annex VI.
18.8 NOTICES. All notices of communication required or permitted hereunder
shall be in writing and may be given (i) by depositing the same in United States
mail, addressed to the party to be notified, postage prepaid and registered or
certified with return receipt requested, (ii) by delivering the same in person
to an officer or agent of such party or (iii) by facsimile transmission when
confirmation of receipt is received from the party being notified by the party
sending such notice.
(a) If to VPI, or the NEWCOS, addressed to them at:
Vacation Properties International, Inc.
c/o Capstone Partners, LLC
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile no.: (000) 000-0000
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Attention: Xxxxxxx X. Xxxxxx
with copies to:
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
0000 Xxx Xxxxxxxxx Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Facsimile no.: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxxxx
(b) If to the STOCKHOLDERS, addressed to them at their respective addresses
set forth on Annex IV, with copies to such counsel as is set forth with
respect to each STOCKHOLDER on such Annex IV;
(c) If to the COMPANIES, addressed to them at:
Xxxxx-Xxxxxxx Enterprises, Inc.
000 Xxxxx Xxxxxxxxx
Xx. Xxxxxx Xxxxxx, Xxxxxxx 00000
Facsimile no.: (000) 000-0000
Attention: Xxxx Xxxxx
and marked "Personal and Confidential"
or to such other address or counsel as any party hereto shall specify pursuant
to this Section 18.8 from time to time.
18.9 GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Delaware.
18.10 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise provided herein,
no delay of or omission in the exercise of any right, power or remedy accruing
to any party as a result of any breach or default by any other party under this
Agreement shall impair any such right, power or remedy, nor shall it be
construed as a waiver of or acquiescence in any such breach or default, or of
any
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similar breach or default occurring later; nor shall any waiver of any single
breach or default be deemed a waiver of any other breach or default occurring
before or after that waiver.
18.11 TIME. Time is of the essence with respect to this Agreement.
18.12 REFORMATION AND SEVERABILITY. In case any provision of this Agreement
shall be held by any court of competent jurisdiction to be invalid, illegal or
unenforceable, it shall, to the extent possible, be modified in such manner as
to be valid, legal and enforceable but so as to most nearly retain the intent of
the parties, and if such modification is not possible, such provision shall be
severed from this Agreement, and in either case the validity, legality and
enforceability of the remaining provisions of this Agreement shall not in any
way be affected or impaired thereby.
18.13 REMEDIES CUMULATIVE. Except to the extent specifically set forth
herein, no right, remedy or election given by any term of this Agreement shall
be deemed exclusive but each shall be cumulative with all other rights, remedies
and elections available at law or in equity.
18.14 CAPTIONS. The headings of this Agreement are inserted for convenience
only, shall not constitute a part of this Agreement or be used to construe or
interpret any provision hereof.
18.15 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended and
the observance of any term of this Agreement may be waived only with the written
consent of VPI, the NEWCOS, the COMPANIES and STOCKHOLDERS (as defined in the
introductory paragraph of this Agreement) who will hold or who hold at least 50%
of the VPI Stock issued or to be issued to the STOCKHOLDERS upon consummation of
the Mergers. Any amendment or waiver effected in accordance with this Section
18.15 shall be binding upon each of the parties hereto, any other person
receiving VPI Stock in connection with the Mergers and each future holder of
such VPI Stock.
18.16 INCORPORATION BY REFERENCE. To the extent that an item is disclosed
in a particular Schedule or a subsection of a particular Schedule and such item
is readily apparent on its face as being
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applicable to another Schedule or another subsection of the same Schedule, such
item shall be deemed incorporated by reference in such Schedule or such other
subsection under the same Schedule.
18.17 DEFINED TERMS. Unless the context otherwise requires, capitalized
terms used in this Agreement or in any Schedule attached hereto and not
otherwise defined shall have the following meanings for all purposes of this
Agreement:
"1933 Act" means the Securities Act of 1933, as amended.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
"Acquired Party" means any COMPANY, any Subsidiary and any member of a
Relevant Group.
"Acquisition Companies" shall mean the NEWCOS and each of the other
Delaware companies wholly-owned by VPI prior to the Closing Date.
"Affiliates" shall mean, with respect to a corporation, any other person or
entity that, directly or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with such corporation,
and shall mean, with respect to an individual, any parent, spouse or child of
such individual.
"Agreement" has the meaning set forth in the first paragraph hereof.
"A/R Aging Reports" has the meaning set forth in Section 5.11.
"Articles of Merger" shall mean those Articles or Certificates of Merger
with respect to the Merger substantially in the forms attached as Annex I hereto
or with such other changes therein as may be required by applicable state laws.
"Balance Sheet Date" has the meaning set forth in Section 5.9.
"Charter Documents" has the meaning set forth in Section 5.1.
"Closing" has the meaning set forth in Section 4.
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"Closing Date" has the meaning set forth in Section 4.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"COMPANY" or "COMPANIES" has the meaning set forth in the first paragraph
of this Agreement.
"COMPANY Financial Statements" has the meaning set forth in Section 5.9.
"COMPANY Stock" has the meaning set forth in Section 2.1.
"Constituent Corporations" has the meaning set forth in the second recital
of this Agreement.
"Delaware GCL" has the meaning set forth in Section 1.5.
"Demand Registration" has the meaning set forth in Section 17.2.
"Effective Time of the Mergers" shall mean the time as of which the Mergers
becomes effective, which is contemplated to occur on the Closing Date.
"Environmental Laws" has the meaning set forth in Section 5.13.
"ERISA" has the meaning set forth in Section 5.20.
"Expiration Date" has the meaning set forth in Section 5(A).
"Founding Companies" has the meaning set forth in the third recital of this
Agreement.
"Founding Stockholders" has the meaning set forth in Section 17.1.
"Future Sale" has the meaning set forth in Section 15.2.
"Indemnification Threshold" has the meaning set forth in Section 11.5.
"Indemnified Party" has the meaning set forth in Section 11.3.
"Indemnifying Party" has the meaning set forth in Section 11.3.
"IPO" means the initial public offering of VPI Stock pursuant to the
Registration Statement.
"Material Adverse Effect" has the meaning set forth in Section 5.1.
"Material Documents" has the meaning set forth in Section 5.24.
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"Mergers" means the mergers of (i) XXXXX ACQUSITION CORP. with and into
XXXXX-XXXXXXX ENTERPRISES, INC. and (ii) MANAGEMENT ACQUSITION CORP. with and
into THE MANAGEMENT COMPANY, pursuant to this Agreement and the applicable
provisions of the laws of the State of Delaware and other applicable state laws.
"NEWCO" or "NEWCOS" has the meaning set forth in the first paragraph of
this Agreement.
"NEWCO Stock" means the common stock, par value $.01 per share, of each
respective NEWCO.
"Noncompetition Period" means the longest of the following periods: (i)
three (3) years following the Closing Date; or (ii) (A) two (2) years following
the date of termination of any employment agreement entered into between VPI
and/or any COMPANY and the STOCKHOLDER subject to the Noncompetition Period or
(B) in the case of a termination without cause under such employment agreement
of the STOCKHOLDER subject to the Noncompetition Period, one (1) year following
the termination of such employment agreement.
"Other Agreements" has the meaning set forth in the third recital of this
Agreement.
"Other Founding Companies" means all of the Founding Companies other than
the COMPANIES.
"Person" means any natural person, corporation, business trust,
association, company, partnership, limited liability company, joint venture or
any other entity, government, agency or political subdivision.
"Pre-Closing" has the meaning set forth in Section 4.
"Pre-Closing Date" has the meaning set forth in Section 4.
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"Pricing" means the date of determination by VPI and the Underwriters of
the public offering price of the shares of VPI Stock in the IPO; the parties
hereto contemplate that the Pricing shall take place on the Pre-Closing Date.
"Qualified Plans" has the meaning set forth in Section 5.21.
"Registrable Securities" has the meaning set forth in Section 17.6.
"Registration Statement" means that certain registration statement on Form
S-1 covering the shares of VPI Stock to be issued in the IPO.
"Relevant Group" means the COMPANIES and any affiliated, combined,
consolidated, unitary or similar group of which the COMPANIES is or was a
member.
"Restricted Common Stock" means the common stock of VPI, par value $0.01
per share, having the restricted voting rights and such other rights,
preferences, restrictions and limitations as are set forth in the Certificate of
Incorporation, as amended, of VPI on the Closing Date.
"Schedule" means each Schedule attached hereto, which shall reference the
relevant sections of this Agreement, on which parties hereto disclose
information as part of their respective representations, warranties and
covenants.
"SEC" means the United States Securities and Exchange Commission.
"Statutory Liens" has the meaning set forth in Section 7.3.
"stock" and "capital stock" and "shares" mean, when used with respect to a
limited liability company unless the context otherwise requires, the membership
interests of such limited liability company, and otherwise have their respective
ordinary meanings.
"STOCKHOLDERS" has the meaning set forth in the first paragraph of this
Agreement.
"stockholders" means, when used with respect to a corporation, the owners
of the capital stock of such corporation and means, when used with respect to a
limited liability company unless
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the context otherwise requires, the owners of the membership interests of such
limited liability company.
"Subsidiary" has the meaning set forth in Section 5.6.
"Surviving Corporations" shall mean each of the COMPANIES as the surviving
parties in the Mergers.
"Tax" or "Taxes" means all federal, state, local or foreign net or gross
income, gross receipts, net proceeds, sales, use, ad valorem, value added,
franchise, bank shares, withholding, payroll, employment, excise, property,
deed, stamp, alternative or add on minimum, environmental or other taxes,
assessments, duties, fees, levies or other governmental charges of any nature
whatever, whether disputed or not, together with any interest, penalties,
additions to tax or additional amounts with respect thereto.
"Tax Returns" has the meaning set forth in Section 5.23.
"Territory" has the meaning set forth in Section 13.1.
"Third Person" has the meaning set forth in Section 11.3.
"Transfer Taxes" has the meaning set forth in Section 18.7.
"VPI" has the meaning set forth in the first paragraph of this Agreement.
"VPI Charter Documents" has the meaning set forth in Section 6.1.
"VPI Financial Statements" has the meaning set forth in Section 6.6.
"VPI Plan of Organization" has the meaning set forth in the fourth recital
of this Agreement.
"VPI Stock" means the common stock, par value $.01 per share, of VPI.
"Underwriters" means the prospective underwriters in the IPO, as identified
in the Registration Statement.
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[THE NEXT PAGE IS THE SIGNATURE PAGE]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
VACATION PROPERTIES INTERNATIONAL, INC.
XXXXX ACQUISITION CORP.
MANAGEMENT ACQUISITION CORP.
By:
--------------------------------
Xxxxxxx Xxxxxx
Vice President
XXXXX-XXXXXXX ENTERPRISES, INC.
THE MANAGEMENT COMPANY
By:/s/ Xxxx X. Xxxxx
----------------------------------
Name: Xxxx X. Xxxxx
--------------------------
Title: Chairman
--------------------------
STOCKHOLDERS:
/s/ Xxxx X. Xxxxx
-------------------------------------
Xxxx X. Xxxxx
/s/ Xxx X. Xxxxxxx
-------------------------------------
Xxx X. Xxxxxxx
/s/ Xxx Xxxxxxx Xxxxxx
-------------------------------------
Xxx Xxxxxxx Xxxxxx
/s/ Xxxxxx Xxxxx
-------------------------------------
Xxxxxx Xxxxx
