1
EXHIBIT 2.1
AGREEMENT OF MERGER
XXXXXXX RESEARCH CORPORATION,
XXXXXXX SELECT CORPORATION,
TXEN, INC.,
AND
THE SHAREHOLDERS OF
TXEN, INC.
Dated: August 27, 1997
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TABLE OF CONTENTS
TO
AGREEMENT OF MERGER
SECTION 1. EFFECTIVE DATE ..................................................1
SECTION 2. GOVERNING LAW ...................................................2
SECTION 3. CAPITALIZATION AND CERTIFICATE OF INCORPORATION .................2
SECTION 4. BYLAWS ..........................................................2
SECTION 5. MERGER CONSIDERATION, CONVERSION OF SHARES AND CAPITAL STOCK OF
THE SURVIVING CORPORATION........................................2
5.1 Contribution to Capital ...........................................2
5.2 Stock of Subsidiary; Class B Common Stock .........................2
5.3 Merger Consideration ..............................................3
5.4 Exchange of Stock Certificates ....................................3
5.5 Exchange Agents ...................................................3
5.6 Stock Options .....................................................3
5.7 Restricted Stock ..................................................5
SECTION 6. BOARD OF DIRECTORS AND OFFICERS .................................5
SECTION 7. EFFECT OF MERGER ................................................5
SECTION 8. APPROVAL OF SHAREHOLDERS ........................................6
SECTION 9. REPRESENTATIONS AND WARRANTIES OF XXXXXXX RESEARCH
CORPORATION AND SUBSIDIARY.....................................6
9.1 Organization; Standing; Corporate Power ...........................6
9.2 Authority .........................................................7
9.3 Approvals and Consents ............................................7
9.4 Validity ..........................................................7
9.5 No Breach .........................................................7
9.6 Finders ...........................................................7
9.7 Periodic Reports ..................................................7
9.8 Financial Statements ..............................................7
SECTION 10. REPRESENTATIONS AND WARRANTIES OF TXEN AND SHAREHOLDERS.........8
10.1 Organization; Standing; Corporate Power ...........................8
10.2 Authority ........................................................10
10.3 Approvals and Consents ...........................................10
10.4 Validity .........................................................10
10.5 No Breach ........................................................10
10.6 Personal Property ................................................10
10.7 Financial Statements .............................................10
10.8 No Material Change ...............................................11
10.9 Undisclosed Liabilities and Obligations ..........................11
10.10 Actions Since June 30, 1997 .....................................11
10.11 Inventory .......................................................13
10.12 Tax Matters .....................................................13
10.13 Real Property ...................................................13
10.14 Title and Condition of the Assets and Properties ................14
10.15 Proprietary Rights ..............................................15
10.16 Software and Information Systems ................................15
10.17 Contracts and Leases ............................................16
10.18 Material Commitments ............................................18
10.19 Warranties, Service Commitments, and Maintenance Agreements......18
10.20 Permits and Licenses; Compliance with Laws ......................19
10.21 Employee Benefits ...............................................19
10.22 Labor Matters ...................................................20
10.23 Employees; Wage Increases .......................................20
10.24 No Pending or Threatened Litigation and Claims ..................21
10.25 Environmental Matters ...........................................21
10.26 Customers .......................................................21
10.27 Suppliers .......................................................21
10.28 Insurance .......................................................21
10.29 Product Specifications ..........................................22
10.30 Accounts Receivable .............................................22
10.31 Disclosure ......................................................22
10.32 Accounts ........................................................22
10.33 Transactions with Related Parties ...............................22
10.34 Finders .........................................................23
10.35 Surviving Corporation's Ability to Operate the Business..........23
10.36 Capitalization ..................................................23
10.37 Subsidiaries ....................................................23
10.38 Securities Matters ..............................................23
10.39 Availability of Information .....................................24
10.40 Limited Representations and Warranties of the University.........24
10.40.1 Authority ...............................................25
10.40.2 Ownership ...............................................25
10.40.3 Enforceability ..........................................25
10.40.4 No Consent ..............................................25
10.40.5 Estoppel Provisions .....................................25
10.41 Special Representations and Warranties of Xxxxxx X. Xxxxxxxxx....25
10.41.1 Authority ...............................................25
10.41.2 Ownership ...............................................26
10.41.3 Enforceability ..........................................26
10.41.4 No Consent ..............................................26
10.41.5 Estoppel Provisions .....................................26
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SECTION 11. CONDUCT OF CONSTITUENT CORPORATION SPENDING THE
EFFECTIVE DATE.................................................26
11.1 Certificate of Incorporation and Bylaws ..........................26
11.2 Capitalization ...................................................26
11.3 Operate in Ordinary Course .......................................26
11.4 Not Sell or Encumber Purchased Assets ............................27
11.5 Preserve Business Organization ...................................27
11.6 Maintain Properties ..............................................27
11.7 Maintain Books of Account ........................................27
11.8 Comply with Law ..................................................27
11.9 Inventory ........................................................27
11.10 Maintain Insurance ..............................................27
11.11 Advise Surviving Corporation of Adverse Change ..................27
11.12 Access for NRC ..................................................27
11.13 Third-Party Consents ............................................28
11.14 Not Incur Indebtedness ..........................................28
11.15 Preserve Capital Structure ......................................28
11.16 TXEN Authorization ..............................................28
SECTION 12. CONDITIONS PRECEDENT TO OBLIGATIONS OF XXXXXXX RESEARCH
CORPORATION AND SUBSIDIARY.....................................28
12.1 Representations and Warranties True as of Closing Date............28
12.2 Compliance with Agreement ........................................28
12.3 No Litigation ....................................................29
12.4 Third-Party Consents and Approvals ...............................29
12.5 Compliance with Law ..............................................29
12.6 Material Adverse Effect ..........................................29
12.7 Opinion of Counsel for TXEN ......................................29
12.8 Employment Agreements ............................................29
12.9 Certified Resolutions ............................................29
12.10 Certificates of Fulfillment of Conditions .......................29
12.11 Shareholder Approval ............................................29
12.12 No Dissenting Shareholders ......................................29
12.13 Fairness Opinion ................................................30
12.14 University Resolution ...........................................30
SECTION 13. CONDITIONS PRECEDENT TO OBLIGATIONS OF TXEN ...................30
13.1 Representations and Warranties True on Closing Date ..............30
13.2 Compliance with Agreement ........................................30
13.3 No Litigation ....................................................30
13.4 Opinion of Counsel for Subsidiary ................................30
13.5 Certified Resolutions ............................................30
13.6 Certificates of Fulfillment of Conditions ........................30
SECTION 14. DESIGNATIONS AND AGREEMENTS REQUIRED BY LAW ...................31
SECTION 15. ACCESS ........................................................31
SECTION 16. TERMINATION ...................................................31
16.1 Circumstances of Termination .....................................31
16.2 Effect of Termination ............................................31
SECTION 17. SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND
INDEMNIFICATION................................................32
17.1 Survival .........................................................32
17.2 Definition .......................................................32
17.3 Indemnification by Shareholders ..................................32
17.4 Indemnification by Surviving Corporation and NRC .................32
17.5 Allocation of Damages ............................................32
17.6 Notice of Claim ..................................................33
17.7 Defense of Third Party Claims ....................................33
17.8 Reduction for Insurance and Tax Benefits .........................33
17.9 Deductible .......................................................33
17.10 Limitations .....................................................34
17.11 Arbitration .....................................................34
SECTION 18. CERTAIN COVENANTS OF THE PARTIES WITH RESPECT TO TAX MATTERS...34
18.1 Tax Records ......................................................34
18.2 TXEN Final Tax Return ............................................34
SECTION 19. PIGGYBACK REGISTRATION RIGHTS OF SHAREHOLDERS .................34
19.1 In General .......................................................34
19.2 Expenses, Limitations and Agreements .............................36
19.3 No Assignment of Piggyback Rights ................................36
19.4 Transfer Restriction .............................................36
19.5 Termination ......................................................36
SECTION 20. POST CLOSING COVENANTS ........................................37
SECTION 21. GENERAL PROVISIONS ............................................37
21.1 Further Assurances ...............................................37
21.2 Waiver ...........................................................37
21.3 Broker ...........................................................37
21.4 Notices ..........................................................37
21.5 Entire Agreement .................................................38
21.6 Governing Law ....................................................38
21.7 Assignment .......................................................38
21.8 Counterparts .....................................................38
21.9 Interpretation and Construction ..................................38
21.10 Shareholder Representative ......................................39
21.11 Corporate Policies, etc .........................................39
21.12 Severability ....................................................39
21.13 Knowledge .......................................................39
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EXHIBITS
EXHIBIT
A Articles of Merger
B Certificate of Merger
C Merger Consideration Allocation
D Escrow Agreement
E Schedule of Disclosures
F Opinion of Counsel for TXEN
G-1 Amendment to Xxxxxx X. Xxxxxxxxx Employment Agreement
G-2 Amendment to Xxxx X. Xxxxxx Employment Agreement
G-3 H. Grey Wood Employment Agreement
H Opinion of Counsel for Subsidiary
I Arbitration Provisions
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SCHEDULE OF DISCLOSURES
SECTION
10.1 Foreign Jurisdiction List
10.3 Required Consents and Approvals List
10.6 Personal Property List
10.7 Financial Statements
10.8 Material Change List
10.9 Liabilities and Obligations List
10.10 List of Exceptions to Actions Since June 30, 1997
10.12 Taxes List
10.13 Leased Real Property List
10.15 Proprietary Rights List
10.16 Software List
10.17 Contracts List
10.18 Material Commitments List
10.19 Product Warranty List
10.20 Permit List
10.21 Employee Benefits List
10.23 Employee List
10.24 Litigation and Claims List
10.26 Customer List
10.27 Supplier List
10.28 Insurance Policies List
10.32 Accounts List
10.33 Transactions with Related Parties List
10.36 Shareholders/Number of Shares List
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AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER, (sometimes referred to as the "Agreement" or the
"Merger"), dated as of August 27, 1997, is among XXXXXXX RESEARCH CORPORATION,
a Delaware corporation ("NRC"); NRC's wholly owned subsidiary, XXXXXXX SELECT
CORPORATION, a Delaware corporation ("Subsidiary" and sometimes referred to as
the "Surviving Corporation"); TXEN, INC., an Alabama corporation, ("TXEN") and
the holders of all of the $0.002 par value Class A common stock of TXEN listed
on the signature page to this Agreement (the "Shareholders"). Subsidiary and
TXEN shall sometimes be referred to collectively as the "Constituent
Corporations" and individually as a "Constituent Corporation." The Shareholders
execute and deliver this Agreement for the purposes of (i) joining in the
representations and warranties of TXEN, (ii) providing indemnification to NRC
and the Surviving Corporation and (iii) acknowledging receipt and acquiescence
in the disclosures of certain matters with respect to NRC and its common stock.
W I T N E S S E T H:
Each Constituent Corporation deems it advisable for the general welfare of
Constituent Corporation and its shareholders that the Constituent Corporations
merge into a single corporation pursuant to this Agreement and the applicable
laws of the States of Delaware and Alabama. Accordingly, TXEN shall be merged
with and into the Subsidiary with Subsidiary as the Surviving Corporation in
accordance with and pursuant to the provisions of Section 252 of the General
Corporation Law of the State of Delaware and Section 10-2B-11.07 of the Alabama
Business Corporation Act. The name of the Surviving Corporation shall be
"XXXXXXX SELECT CORPORATION." The Shareholders of the Constituent Corporations
have consented to this Agreement of Merger in accordance with Delaware and
Alabama law. NRC will make available to Subsidiary (as a contribution to
capital) a sufficient amount of cash and a sufficient number of restricted (and
unregistered) shares of NRC common stock, par value of $0.01 per share (the
"NRC Common Stock") to effect the Merger.
It is agreed that the terms and conditions of the Merger and the mode of
carrying it into effect shall be as follows:
SECTION 1. EFFECTIVE DATE
On August 29, 1997 (the "Closing Date"), provided the conditions to the
consummation of this Agreement have been satisfied or waived, a meeting (the
"Closing") shall take place at the office of Xxxxxxx & Xxxxxxx, L.L.C., in
Birmingham, Alabama, at which time the parties to this Agreement shall execute
and deliver (i) the Articles of Merger and Certificate of Merger attached
hereto as Exhibits "A" and "B", respectively, to comply with applicable filing
and recording requirements of the States of Alabama and Delaware and (ii) all
other documents, certificates, opinions and instruments contemplated herein.
The date of such Articles and Certificate shall be the Closing Date and the
effective date of the Merger set forth in such Articles and Certificate shall
be August 31, 1997, at 11:59 p.m., Central Daylight Saving Time (the "Effective
Date"). On the Closing Date, an executed counterpart of the Certificate of
Merger and Articles of Merger shall be personally delivered, mailed or
transmitted by facsimile for filing in the appropriate filing offices in the
States of Delaware and Alabama.
SECTION 2. GOVERNING LAW
The Surviving Corporation shall be governed by the laws of the State of
Delaware.
SECTION 3. CAPITALIZATION AND CERTIFICATE OF INCORPORATION
The number of authorized shares of the capital stock of the Surviving
Corporation shall be 1,000 shares of common stock, par value of $1.00 per
share. The Certificate of Incorporation of Subsidiary as in effect on the date
of this Agreement shall be the Certificate of Incorporation of the Surviving
Corporation from and after the Effective Date.
SECTION 4. BYLAWS
The Bylaws of Subsidiary as in effect on the date of this Agreement shall
be the Bylaws of the Surviving Corporation.
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SECTION 5. MERGER CONSIDERATION, CONVERSION OF SHARES
AND CAPITAL STOCK OF THE SURVIVING CORPORATION
5.1 CONTRIBUTION TO CAPITAL. On or prior to the Effective Date, NRC shall
transfer and deliver to Subsidiary, as a contribution to its capital, such
number of shares of NRC Common Stock and such amount of cash or other
immediately funds as shall be necessary to carry out the provisions of this
Section 5.
5.2 STOCK OF SUBSIDIARY; CLASS B COMMON STOCK. None of the capital stock
of Subsidiary issued and outstanding immediately prior to the Effective Date
shall be converted as a result of the Merger, but all of such shares of capital
stock shall remain issued and outstanding shares of capital stock of the
Surviving Corporation. On the Effective Date, each share of $0.002 par value
Class B common stock of TXEN, all of which is owned by NRC, shall be cancelled
and extinguished and none of the merger consideration set forth in Section 5.3
below shall be paid to NRC.
5.3 MERGER CONSIDERATION. The Class A common stock of TXEN (the "TXEN
Common Stock") issued and outstanding immediately prior to the Effective Date
(excluding shares held by TXEN as treasury stock, which shares shall be
cancelled and extinguished on the Effective Date) shall, upon the Effective
Date, by virtue of the Merger and without any action on the part of the holders
thereof, be exchanged for and converted into such number of shares of fully
paid and nonassessable NRC Common Stock having a value as hereinafter
determined of $26,324,706.77 and cash in the amount of $17,550,265.13 (the
"Merger Consideration"). The TXEN Common Stock so exchanged and converted is
herein sometimes referred to as the "Converted TXEN Stock." The value of the
NRC shares of Common Stock shall be determined based on the average of the
daily weighted sale price of such stock as quoted by National Association of
Securities Dealers Automated Quotation System for the ten business day period
ending five days immediately preceding the Closing. The Merger Consideration
shall be paid and allocated to each Shareholder in accordance with Exhibit "C"
attached hereto for each Shareholder and made a part hereof. The Shareholders
shall deposit into escrow a portion of the Merger Consideration identified on
Exhibit "C" for each Shareholder to be held pursuant to the Escrow Agreement
attached hereto as Exhibit "D."
5.4 EXCHANGE OF STOCK CERTIFICATES. As promptly as practicable after the
Effective Date, each holder of an outstanding certificate or certificates
theretofore representing shares of Converted TXEN Stock shall surrender the
same to an agent or agents designated by the Surviving Corporation, and shall
thereupon be entitled to receive in exchange therefor the Merger Consideration
as shown on Exhibit "C" for each Shareholder. Dividends payable after the
Effective Date to holders of record in respect of shares of NRC Common Stock
into which certificates for shares of Converted TXEN Stock shall be
exchangeable shall not be paid to holders of such certificates until their
certificates are surrendered for exchange. Until so surrendered, each
outstanding certificate which, prior to the Effective Date, represented
Converted TXEN Stock shall be deemed for all corporate purposes to evidence
ownership of the Merger Consideration into which the shares of Converted TXEN
Stock prior to the Effective Date shall have been converted.
5.5 EXCHANGE AGENTS. NRC may direct the Surviving Corporation to appoint
an NRC employee, agent or representative, including, without limitation, Xxxxx
Xxxxxxx, as the exchange agent for purposes of this Section of the Merger
Agreement. Adoption of this Agreement by the Shareholders of TXEN shall
constitute ratification of the appointment of such exchange agent at the
direction of NRC or the Surviving Corporation.
5.6 STOCK OPTIONS.
(a) At the Effective Date, each option to purchase shares of TXEN
Class A Common Stock pursuant to an option grant under the TXEN, Inc., 1996
Incentive Stock Option Plan or the TXEN, Inc., Key Employee Incentive Stock
Option Plan (the "Option Plans") which are outstanding at the Effective Date
(the "TXEN Options"), whether or not exercisable, shall be converted into and
become rights with respect to NRC Common Stock, and NRC shall assume each TXEN
Option, in accordance with the terms of the Option Plan by which it is
evidenced, except that from and after the Effective Date, (i) NRC and NRC's
Board of Directors shall be substituted for TXEN and the Committee of TXEN's
Board of Directors (including, if applicable, the entire Board of Directors of
TXEN) administering such Option Plans, (ii) each TXEN Option assumed by NRC may
be exercised solely for shares of NRC Common Stock, (iii) the number of shares
of NRC Common Stock subject to such options shall be equal to the number of
shares of TXEN Common Stock subject to each such TXEN Option immediately prior
to the Effective Date multiplied by .451677 (the "Exchange Ratio"), and (iv)
the per share exercise price under each such TXEN Option shall be adjusted by
dividing the per share exercise price under each such TXEN Option by the
Exchange Ratio and rounding up to the nearest cent. Notwithstanding the
provisions of clause (iii) of the preceding sentence, NRC shall not be
obligated to issue any fraction of a share of NRC Common Stock upon exercise of
TXEN Options, and any fraction of a share of NRC Common Stock that otherwise
would be subject to a converted TXEN Option shall represent the right to
receive a cash payment upon exercise between the market value of one share of
NRC Common Stock at the time of exercise of such option and the per share
exercise price of such option. The market value of one share of NRC Common
Stock at the time of exercise of an option shall be the closing price of such
NRC Common Stock on the Nasdaq National Market (as reported by THE WALL STREET
JOURNAL or, if not reported thereby, any other authoritative source selected by
NRC) on the last trading day preceding the date of exercise. NRC and TXEN agree
to take all necessary steps to effectuate the foregoing provisions of this
Section 5.6.
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(b) As soon as practicable after the Effective Date, NRC shall
deliver to the participants in the Option Plans an appropriate notice, setting
forth such participant's rights pursuant thereto and the grants subject to such
Option Plans shall continue in effect on the same terms and conditions (subject
to the adjustments required by Section 5.6(a) after giving effect to the
Merger). Within 90 days after the Effective Date, NRC shall file a registration
statement on Form S-8 (or any successor or other appropriate forms), with
respect to the shares of NRC Common Stock subject to such options and shall use
its reasonable efforts to maintain the effectiveness of such registration
statements (and maintain the current status of the prospectus or prospectuses
contained therein) for so long as such options remain outstanding.
(c) All contractual restrictions or limitations on transfer with
respect to TXEN Common Stock awarded under the Option Plans or any other plan,
program or contract of TXEN, to the extent that such restrictions or
limitations shall not have already lapsed (whether as a result of the Merger or
otherwise), and except as otherwise expressly provided in such plan, program,
or contract, shall remain in full force and effect with respect to shares of
NRC Common Stock into which such restricted stock is converted pursuant to
Section 5.6 of this Agreement.
(d) TXEN has an option to purchase 119,732 shares of TXEN Common
Stock from Xxxxxx X. Xxxxxxxxx and Xxxx X. Xxxxxx, which constitute the source
of the TXEN Common Stock needed to fund the Option Plans. At the Closing, such
option shall be assigned by virtue of the Merger to the Surviving Corporation
which shall thereupon have the right to purchase from Messrs. Xxxxxxxxx and
Xxxxxx the shares of NRC Common Stock into which such 119,732 shares of TXEN
Common Stock have been converted for the purpose of funding the Option Plans
with NRC Common Stock.
5.7 RESTRICTED STOCK. The NRC Common Stock to be transferred to the
Shareholders in exchange for their TXEN Common Stock will not be registered
under the Securities Act of 1933 (the "1933 Act") or the securities laws of any
state, and will therefore be restricted securities. Consequently, the NRC
Common Stock to be received by the Shareholders in the Merger will not be
transferrable unless registered under the 1933 Act or exempt from registration
thereunder and registered under securities laws of applicable states or exempt
from registration thereunder. By their signature to this Merger Agreement, each
Shareholder represents and warrants that he or she has been advised that the
NRC Common Stock will be "Restricted Securities" within the meaning of the 1933
Act and applicable state securities laws and further represents and warrants
that he or she has been advised of the resale limitations.
SECTION 6. BOARD OF DIRECTORS AND OFFICERS
On the Effective Date, the members of the Board of Directors of the
Surviving Corporation shall be Xxxxxx X. Xxxxxxxxx, Xxxxx X. Xxxxxx, Xxxxx
X. Xxxxxxx and Xxxxx X. Xxxxxx.
SECTION 7. EFFECT OF MERGER
On the Effective Date, the separate existence of TXEN shall cease and it
shall be merged with and into the Surviving Corporation. On the Effective Date,
all the rights, privileges, powers and franchises of each of the Constituent
Corporations, both of a public and private nature, all property, real,
personal, and mixed, all debts due on account, and all other things in action
and all intangible assets belonging to each of the Constituent Corporations and
all and every other interests shall be transferred to and vested in the
Surviving Corporation, without further act or deed, as effectually as they were
vested in the respective Constituent Corporations; and the title to any
property, whether vested by deed or otherwise, in either of the Constituent
Corporations shall not revert or be in any way impaired by reason of the
Merger. The Surviving Corporation shall thereafter be responsible for all
debts, liabilities, obligations, restrictions, disabilities and duties of each
of the Constituent Corporations and all said debts, liabilities, obligations,
restrictions, disabilities and duties shall thereafter attach to the Surviving
Corporation and may be enforced against it to the same extent as if they had
been incurred or contracted by it, but the liabilities of each Constituent
Corporation or of its stockholders, directors, or officers shall not be
affected, nor shall the rights of creditors of each Constituent Corporation or
of any person dealing with either Constituent Corporation or any liens upon the
property of either Constituent Corporation be impaired by the Merger and any
action or proceeding pending by or against either of the Constituent
Corporations may be carried to judgment the same as if the Merger had not taken
place, which judgment shall bind the Surviving Corporation, or the Surviving
Corporation may be proceeded against or substituted in its place. In accordance
with the provisions of this Agreement, the General Corporation Law of the State
of Delaware and the Alabama Business Corporation Act, at the Effective Date,
TXEN shall be merged with and into Subsidiary, with Subsidiary as the Surviving
Corporation, and the Surviving Corporation shall be a wholly owned subsidiary
of NRC, but shall continue its corporate existence under the laws of the State
of Delaware. The separate corporate existence of TXEN shall terminate at the
Effective Date.
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SECTION 8. APPROVAL OF SHAREHOLDERS
This Agreement, the Certificate of Merger and the Articles of Merger have
been approved by the shareholders of each Constituent Corporation as provided
by Section 228 of the General Corporation Laws of the State of Delaware and
Section 10-2B-11.03 of the Alabama Business Corporation Act. However, it shall
be a condition to the Closing of the transaction contemplated by this Agreement
that no Shareholder shall have filed dissenter's rights, an appraisal remedy or
similar proceeding seeking the fair value of his common stock in TXEN.
SECTION 9. REPRESENTATIONS AND WARRANTIES OF
XXXXXXX RESEARCH CORPORATION AND SUBSIDIARY
NRC and Subsidiary, jointly and severally, represent and warrant that:
9.1 ORGANIZATION; STANDING; CORPORATE POWER. Subsidiary and NRC are each a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Subsidiary is a wholly-owned subsidiary of NRC.
NRC and Subsidiary each have all requisite power and authority, corporate and
otherwise, to carry on and conduct their respective businesses as they are now
being conducted and to own and lease their properties and assets.
9.2 AUTHORITY. Subsidiary and NRC each has full legal right, power, and
authority to execute and deliver this Agreement and to carry out the
transactions contemplated hereby. All corporate and other acts or proceedings
required to be taken by Subsidiary and NRC to authorize the execution,
delivery, and performance of this Agreement and all transactions contemplated
hereby have been duly and properly taken.
9.3 APPROVALS AND CONSENTS. No approval, authorization, consent, order, or
action of, or filing with, any person, entity, court, administrative agency, or
other governmental authority is required for the execution and delivery by
Subsidiary and NRC of this Agreement or the documents to be delivered at
Closing or the consummation by Subsidiary and NRC of the transactions
contemplated hereby or thereby.
9.4 VALIDITY. This Agreement has been, and the documents to be delivered
by Subsidiary and NRC at Closing will be, duly executed and delivered and
constitute lawful, valid, and binding obligations of Subsidiary and NRC
enforceable in accordance with their terms, subject to bankruptcy, insolvency,
reorganization, moratorium, and other laws affecting the rights of creditors
generally and to the discretion of a court in granting equitable relief. The
approval of the shareholders of NRC is not required for the authorization or
issuance of the NRC Common Stock or for any of the other transactions
contemplated by this Agreement.
9.5 NO BREACH. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby are not prohibited by,
will not violate or conflict with any provision of, and will not constitute a
default under or a breach of (a) the charter or bylaws of Subsidiary or NRC,
(b) any contract, agreement, or other instrument to which Subsidiary or NRC is
a party, (c) any order, writ, injunction, decree, or judgment of any court or
governmental agency, or (d) any law, rule, or regulation applicable to
Subsidiary or NRC.
9.6 FINDERS. No finder or broker has acted or is acting on behalf of
Subsidiary or NRC in connection with the transactions contemplated by this
Agreement.
9.7 PERIODIC REPORTS. The information in the NRC Forms 10-Q Reports for
the first, second and third quarters of 1997, NRC's Annual Report to its
Shareholders for 1996, NRC's Proxy Statement for the 1996 Annual Shareholders
Meeting and NRC's Form 10-K for 1996 (copies of which have been furnished to
each Shareholder of TXEN) did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
10
9.8 FINANCIAL STATEMENTS. The Consolidated Balance Sheets of NRC and its
subsidiaries as of August 31, 1996, and the related Consolidated Statements of
Income, Shareholders' Equity and Cashflow for the year ended August 31, 1996,
including the Notes thereto, as included in the NRC Form 10-K Report for 1996,
have been prepared in conformity with generally accepted accounting principles
consistently applied and present fairly the consolidated financial position of
NRC and its subsidiaries as of August 31, 1996, and their consolidated results
of operations for the period then ended. The Consolidated Balance Sheets,
Statements of Income, Shareholders' Equity and Cashflows, and the Notes thereto
set forth in the NRC Quarterly 10-Q Reports for the first, second and third
quarters of fiscal year 1997 have been prepared in conformity with generally
accepted accounting principles consistently applied and present fairly the
consolidated financial position of NRC and its subsidiaries as of such
quarterly date then ended, subject to normal year-end audit adjustments and any
other adjustments described therein.
11
SECTION 10. REPRESENTATIONS AND WARRANTIES
OF TXEN AND SHAREHOLDERS
Subject to any exceptions described in the schedule of disclosures
attached as Exhibit "E" to this Agreement (the "Schedule"), and the limited
representations and warranties with respect to the Board of Directors of the
University of Alabama for the use of and on behalf of the University of
Alabama, Tuscaloosa, Alabama (the "University") set forth in Section 10.40
hereof, TXEN and each of the Shareholders, jointly and severally, represent and
warrant to NRC and Subsidiary that:
10.1 ORGANIZATION; STANDING; CORPORATE POWER. TXEN is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of Alabama. TXEN has full power and authority, and all requisite licenses,
permits, and franchises, to own, lease, and operate its properties and to carry
on its business as currently conducted. TXEN is duly licensed and qualified to
do business as a foreign corporation and is in good standing in all
jurisdictions where failure to be so licensed or qualified would have a
material adverse effect upon its business or properties. Schedule 10.1 sets
forth an accurate, correct, and complete list of all jurisdictions in which
TXEN is licensed and qualified to do business. The authorized capital stock of
TXEN consists of the following:
Par Value Shares Shares
Designation Per Share Authorized Outstanding
----------- --------- ---------- -----------
Class A Common Stock $0.002 5,000,000 4,000,500
Class B Common Stock $0.002 1,250,000 999,500
Preferred Stock $0.002 1 -0-
The shares of TXEN capital stock issued and outstanding are owned as follows:
Shareholder Number of Shares
----------- ----------------
Class A Class B
------- --------
Xxxxxx X. Xxxxxxxxx 1,820,763 -0-
Xxxxxx X. Xxxxxxxxx, Trustee of the
Xxxxxxxxx Family Charitable Unitrust,
established August 5, 1997 366,000 -0-
Xxxx X. Xxxxxx 781,255 -0-
Xxxxx X. Xxxxxx 245,000 -0-
Xxxxxx Xxxxxxx 50,000 -0-
Xxxxx X. Xxxxxxx 18,750 -0-
Xxxxxxx X. Xxxxxxx 42,500 -0-
Xxxxxxx X. Xxxxxx 22,500 -0-
Xxxxxxx X. Xxxxxx 31,266 -0-
Xxxx Xxxxxxx 7,500 -0-
Xxxxxx X. Xxxxxxxxx 2,500 -0-
Xxxxx X. Xxxxxxxx 22,500 -0-
Xxx X. Xxxxxxx 25,000 -0-
Xxxxx X. XxXxxxxxx 25,000 -0-
Xxxxxxxx X. Xxxx 11,000 -0-
Xxxx X. Xxxxxx 37,500 -0-
Xxxxx X. Xxxxx 2,000 -0-
Xxx X. Sailor 12,500 -0-
Xxxxxx X. Xxxxxxxx 46,200 -0-
Xxxxx X. Till 31,266 -0-
Xxxxxx Xxxx 7,500 -0-
Xxxxxxx X. Xxxxxxxx 25,000 -0-
Xxxxx X. Xxxxx 7,500 -0-
Xxxxxxx X. Xxxxx 37,500 -0-
H. Grey Wood 165,000 -0-
Xxxxxxx Research Corporation -0- 999,500
University 157,000 -0-
12
There are no warrants, options or other rights with respect to the capital
stock of TXEN, except with respect to an option described below to acquire
119,732 shares of Class A common stock for issuance pursuant to the Option
Plans. A list of the Optionees has been furnished NRC. TXEN has an option, a
copy of which has been furnished NRC, to purchase up to 119,732 shares of TXEN
Common Stock from Xxxxxx X. Xxxxxxxxx and Xxxx X. Xxxxxx for the purpose of
funding the Option Plans. The aggregate purchase price for the stock TXEN may
purchase from Messrs. Xxxxxxxxx and Xxxxxx is equal to the aggregate option
exercise price TXEN will receive upon exercise of options granted pursuant to
the Option Plans.
10.2 AUTHORITY. TXEN has full legal right, power, and authority to execute
and deliver this Agreement and to carry out the transactions contemplated
hereby. All corporate and other acts or proceedings required to be taken by
TXEN to authorize the execution, delivery, and performance of this Agreement
and all transactions contemplated hereby have been duly and properly taken.
10.3 APPROVALS AND CONSENTS. Except for the consents required as set forth
on Schedule 10.3, no approval, authorization, consent, order, or action of, or
filing with, any person, entity, court, administrative agency, or other
governmental authority is required for the execution and delivery by TXEN of
this Agreement or the documents to be delivered at Closing or the consummation
by TXEN of the transactions contemplated hereby or thereby.
10.4 VALIDITY. This Agreement has been, and the documents to be delivered
at Closing will be, duly executed and delivered and constitute lawful, valid,
and binding obligations of TXEN and the Shareholders enforceable in accordance
with their terms, subject to bankruptcy, insolvency, reorganization,
moratorium, and other laws affecting the rights of creditors generally and to
the discretion of a court in granting equitable relief.
10.5 NO BREACH. Subject to the receipt of all consents and approvals set
forth on Schedule 10.3, the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not result in the
creation of a lien, charge, or encumbrance on the business or properties of
TXEN and are not prohibited by, will not violate or conflict with any provision
of, and will not constitute a default under or a breach of (a) the charter or
by-laws of TXEN, (b) any contract, agreement, or other instrument to which TXEN
is a party or to which any of its assets or properties are subject, (c) any
order, writ, injunction, decree or judgment of any court or governmental
agency, or (d) any law, rule, or regulation applicable to TXEN or its business
and assets.
10.6 PERSONAL PROPERTY. Schedule 10.6 contains a materially true and
complete list of all of TXEN's tangible personal property, whether owned or
leased, including, without limitation, all of the machinery, equipment,
computer equipment, furniture, vehicles, fixtures, tools, tooling inventory,
materials handling equipment, parts and other tangible property of TXEN (the
"Personal Property"). Except as disclosed on Schedule 10.6, TXEN has, and will
on the Closing Date have, good and marketable title to all of the Personal
Property free and clear of all security interests, liens, pledges,
encumbrances, or restrictions, other than liens for personal property taxes and
assessments, both general and special, that are not yet due and payable.
10.7 FINANCIAL STATEMENTS. Set forth on Schedule 10.7 are the following
financial statements of TXEN: (i) an audited balance sheet as of June 30, 1997,
and (ii) an audited income statement for the year ended June 30, 1997. These
financial statements (i) were prepared in accordance with the books and records
of TXEN, and (ii) fairly present the financial condition and results of
operations of TXEN as of the dates and for the period indicated and fairly
present the information purported to be shown therein.
13
10.8 NO MATERIAL CHANGE. Except as set forth on Schedule 10.8, since June
30, 1997, there has not been:
(a) Any material adverse change in the financial condition, results
of operations, or prospects of TXEN or any adverse change in TXEN's
personnel, or in TXEN's relationships with suppliers, customers,
distributors, lenders, or others having a business relationship with it;
(b) Any damage, destruction, or loss, whether or not covered by
insurance, materially adversely affecting the assets or properties of TXEN
or the operations of TXEN's business; or
(c) Any labor dispute materially affecting TXEN's operations.
10.9 UNDISCLOSED LIABILITIES AND OBLIGATIONS. Except as disclosed on
Schedule 10.9, TXEN has no liabilities or obligations, whether fixed or
contingent, known or unknown, other than:
(a) Liabilities fully shown or reserved against on TXEN's balance
sheet as of June 30, 1997, or disclosed in the notes to the financial
statements;
(b) Current liabilities, not unusual in nature or amount, incurred by
TXEN in the ordinary course of business since June 30, 1997;
(c) Obligations to be performed under the leases, contracts, and
commitments identified on Schedule 10.17; and
(d) Obligations to be performed pursuant to the warranty obligations
identified on Schedule 10.19.
10.10 ACTIONS SINCE JUNE 30, 1997. Except as disclosed in Schedule 10.10
since June 30, 1997, and prior to the Effective Date TXEN has not and will not
have:
(a) Except in the usual and ordinary course of business, consistent
with past practice, incurred any indebtedness, obligations or liabilities,
or guaranteed any indebtedness;
(b) Increased the regular rate of compensation payable by TXEN to any
employee or increased such compensation to employees by bonus, percentage,
compensation service award or similar arrangement and no such increase is
required by the terms of any law or contracts;
(c) Established or agreed to establish any pension, retirement or
welfare plan for the benefit of employees;
(d) Made any single capital expenditure which exceeded $25,000 or
made aggregate capital expenditures which exceeded $50,000;
(e) Written down the value of any of its assets or properties or
written off as uncollectible any notes or accounts receivable, except for
write-downs and write-offs in the ordinary course of business of TXEN,
consistent with past practice, or revalued any of its assets or
properties;
(f) Paid, loaned or advanced any amount to, or sold, transferred or
leased any properties or assets to, or entered into any agreement or
arrangement with, NRC, Subsidiary, any Shareholder or any of the officers
or directors of NRC, Subsidiary, TXEN, or Shareholders, except for
reimbursement of ordinary and reasonable business expenses related to the
business of TXEN;
(g) Amended or terminated any material contract, agreement or license
to which TXEN is a party;
14
(h) Made any change in any method of accounting or accounting
practice;
(i) Cancelled, or failed to continue, insurance coverage;
(j) Acquired, whether by merger, purchase of stocks or purchase of
assets, all or substantially all of the business or assets of any other
business or entity, or engaged in negotiations of any sort concerning such
acquisitions;
(k) Issued any stock or other securities, or taken any action with
respect thereto, or paid any dividends, or made any other distributions to
Shareholders with respect to their stock in TXEN;
(l) Entered into any material contracts, agreements, licenses or
leases except in the ordinary course of TXEN's business, consistent with
past practice;
(m) Mortgaged, pledged, or subjected to lien or other encumbrance any
of the assets or properties of TXEN;
(n) Disposed of any assets or rights, other than the disposal of
property that is worn-out or obsolete, and other than the sale of
inventory in the ordinary course of business;
(o) Canceled or waived any rights or claims of material value;
(p) Changed any credit practices or methods of maintaining books,
accounts, or business records; or
(q) Entered into any material transactions other than in the ordinary
course of business.
10.11 INVENTORY. TXEN has no material inventory for resale and does not
carry material inventory in the ordinary course of business.
10.12 TAX MATTERS. TXEN has previously delivered to NRC true and correct
copies of the tax returns and work papers of TXEN for the 5-year period ending
June 30, 1997. Except as set forth on Schedule 10.12, TXEN has timely filed
with the appropriate governmental agencies all tax returns and tax reports
(including, without limitation, those pertaining to income taxes, excise taxes,
sales and use taxes, payroll taxes, real property taxes, tangible and
intangible personal property taxes, and franchise taxes - - collectively,
"Taxes") required to be filed by TXEN as of the Effective Date; all Tax returns
previously filed by TXEN constitute complete and accurate representations of
the Tax liabilities of TXEN for the periods covered thereunder; all Taxes,
interest, and penalties shown or claimed to be due thereon have been paid; TXEN
has no liability, contingent or otherwise, for any Taxes, interest, and
penalties except for amounts shown on the Financial Statements described in
Section 10.7 and accrued on the books and records of TXEN thereafter in the
ordinary course of business; no agreement has been made by TXEN with the
Internal Revenue Service or any state or municipal official waiving any statute
of limitation or extending the period for assessment and collection of any Tax;
TXEN is not a party to any action or proceeding by any governmental authority
for the assessment or collection of Taxes, interest, or penalties, and no
outstanding claim for assessment or collection of Taxes, interest, or penalties
has been asserted against TXEN. The Internal Revenue Service has not examined
the federal income tax returns of TXEN. There is no audit for any year pending.
No agreement has been made with the Internal Revenue Service or with any other
governmental agency for extending the period of assessment or collection of any
Tax that would involve TXEN.
10.13 REAL PROPERTY.
(a) TXEN owns no fee simple interest in real property or easement
rights. Except as disclosed on Schedule 10.13, TXEN does not lease any
real property. All real property noted on Schedule 10.13 as being leased
is referred to herein as the "Leased Real Property" and all leases
relating to the Leased Real Property are disclosed on Schedule 10.13 and
are referred to herein as the "Leases." TXEN has a good and valid
leasehold as to the Leased Real Property leased by it, free and clear of
all mortgages, security interests, title defects, pledges, liens and the
possibility of liens, charges, tenancies, restrictions and encumbrances
other than Taxes and assessments, both general and special, which are a
lien but not yet due and payable that do not, individually or in the
aggregate, materially detract from the value of the Leased Real Property
or materially impair the use and operation thereof in carrying on the
business of TXEN. There are no pending or, to the best knowledge of TXEN,
threatened proceedings in eminent domain involving the Leased Real
Property or any portion thereof, or for a sale in lieu thereof, or of any
plans for a possible widening of the streets abutting the Leased Real
Property or the imposition of any special taxes or assessments against the
Leased Real Property or any portion thereof. To the best knowledge of
TXEN, the applicable zoning (without reliance on any variance, special
permit or nonconforming use or other similar use), building,
environmental, health and safety laws and regulations permit as a matter
of right and without the incurrence by Surviving Corporation of any
obligation or liability (including the obligation to incur any costs or
expenses) the continued use of the Leased Real Property by Surviving
Corporation for the same purposes and uses as same have been heretofore
used by TXEN, including the operation of TXEN's business.
(b) Except as disclosed on Schedule 10.13, there are no outstanding
written or oral leases covering or in any way affecting, and there are no
tenants occupying or having the right to occupy, the Leased Real Property
or any part thereof, other than the Leases. To the best of TXEN's
knowledge, no person or entity has any right with respect to such Leased
Real Property (whether by option to purchase, land contract, or otherwise)
which would prevent or interfere with possession or use of the Leased Real
Property by the Surviving Corporation on and after the Effective Date.
15
(c) The Leases are in full force and effect. TXEN has heretofore
provided to NRC a complete, true, and correct copy of the Leases,
including any and all modifications or amendments thereof and any
supplements thereto. All material terms, conditions, and provisions of the
Leases to be performed by TXEN and, to the best knowledge of TXEN, by the
landlords, have been duly and timely performed and complied with. To the
best knowledge of TXEN, no event has occurred or failed to occur which
with the giving of notice, the passage of time, or both, would constitute
a default by the landlords or TXEN under any of the Leases. The landlords
have not waived, or extended the time for performance of, any obligation
of TXEN under any of the Leases. There are no security deposits or prepaid
rent (including last month's rent in advance) with respect to the Leased
Real Property.
(d) To the best knowledge of TXEN, there are no prohibitions or other
limitations, whether contained in the Leases or otherwise, on TXEN's right
to transfer the Leased Real Property in connection with this Agreement.
Except as specifically noted on Schedule 10.13, no consent, authorization,
or approval is required under the Leases in connection with the
consummation of the transactions contemplated hereby or TXEN's ability to
consummate the transactions contemplated hereby.
10.14 TITLE AND CONDITION OF THE ASSETS AND PROPERTIES. The assets and
properties currently utilized by TXEN, whether owned or leased, are in all
material respects in good operating condition and repair and are suitable for
the purposes for which they are presently being used. Such assets and
properties conform in all material respects to all applicable laws, ordinances,
and regulations, and TXEN has not received any written notice to the contrary.
TXEN is the sole and exclusive legal and equitable owner of all right, title
and interest in, and has good and marketable title to, all of its assets and
properties, tangible and intangible, except for such Personal Property that is
leased by TXEN and specifically identified as being leased on Schedule 10.6 and
except for licenses specifically identified on Schedules 10.15 or 10.16.
10.15 PROPRIETARY RIGHTS. Schedule 10.15 sets forth a list of material
inventions, trade secrets, processes, proprietary rights, product
specifications, blueprints, drawings, technical data, engineering information,
other proprietary knowledge and know-how, patents, trademarks, service marks,
trade names, copyrights, marks, symbols, logos, and all material documentation
related thereto, and all licenses and agreements in respect thereof and
applications therefor (collectively, "Proprietary Rights") used or related to
TXEN's business. The Proprietary Rights described on Schedule 10.15 include all
of the Proprietary Rights necessary for the operation of TXEN's business.
Except as set forth on Schedule 10.15, which includes a listing of contracts or
licenses pursuant to which TXEN uses the intellectual property of third
parties, with respect to the Proprietary Rights, (a) TXEN is the sole and
exclusive owner of and has the sole and exclusive right to use its Proprietary
Rights; (b) no action, suit, arbitration, or other proceeding or investigation
is pending or, to the best knowledge of TXEN, threatened which involves any
Proprietary Rights, (c) to the best knowledge of TXEN, none of the Proprietary
Rights infringes upon, conflicts with, or otherwise violates the rights of
others or is being infringed upon by others, (d) none of the Proprietary Rights
is subject to any outstanding order, decree, judgment, stipulation, or charge,
(e) there are no royalty, commission, or similar arrangements and no licenses,
sublicenses, or agreements relating to any of the Proprietary Rights, (f) TXEN
has not received any notice of interference or infringement of or by the
Proprietary Rights, (g) TXEN has not agreed to indemnify any person or entity
for or against any infringement of or by the Proprietary Rights, (h) no other
Proprietary Rights not owned by TXEN are necessary for the conduct of TXEN's
business, and (i) to the best knowledge of TXEN, no other party is operating a
business or otherwise acting in violation or infringement of, TXEN's
Proprietary Rights. Except as set forth on Schedule 10.15, TXEN has good and
marketable title to the Proprietary Rights listed on Schedule 10.15, free and
clear of all security interests, liens, pledges, encumbrances and restrictions.
Except as set forth on Schedule 10.15, all rights of TXEN in and to its
Proprietary Rights are transferable to Surviving Corporation as contemplated
herein without the consent or approval of any third party. TXEN is not subject
to any judgment, order, writ, injunction, or decree of any court, arbitrator,
or governmental agency or instrumentality, domestic or foreign, and is not
party to any agreement, which restricts or impairs the use of any Proprietary
Rights.
10.16 SOFTWARE AND INFORMATION SYSTEMS.
(a) The software described on Schedule 10.16 includes all information
systems, programs and software, other than non-exclusive commercial
software, used in or related to TXEN's business or necessary for the
operation of such business. Schedule 10.16 lists all such software and
identifies (a) software which is owned by TXEN, (b) software which is
licensed to TXEN, and (c) any other software in which TXEN has any use,
possessory, or proprietary rights and which is used in or related to its
business. Except as set forth on Schedule 10.16, TXEN has the sole and
exclusive right, title, and interest in and to all software listed on
Schedule 10.16. Except as set forth on Schedule 10.16, TXEN has good and
marketable title to the software listed, free and clear of all security
interests, liens, pledges, encumbrances and restrictions. Except as set
forth on Schedule 10.16, all of the software which is owned by TXEN,
including all related source codes and documentation, is owned solely by
TXEN and has not been disclosed to any unaffiliated entity or person. The
proprietary software owned by TXEN includes, without limitation, TXEN
FirstStepp. The proprietary software owned by TXEN is (i) owned
exclusively by TXEN, (ii) not subject to any liens, claims, security
interests or encumbrances, (iii) not subject to any outstanding licenses
or agreements, except for the non-exclusive licensing of such proprietary
software by TXEN to customers in the ordinary course of business in the
manner disclosed to Subsidiary, (iv) merchantable and fit for the purposes
for which such software is intended for use, (v) conforming in all
material respects with the specifications and documentation for such
software and (vi) without material defects or material programming errors.
(b) Schedule 10.16 incorporates by reference manuals (copies of which
have been made available to and furnished to NRC) which describe the
functions of all proprietary information systems, programs and software of
TXEN. TXEN has documentation in reasonable detail relating to all such
proprietary information systems, programs and software. Schedule 10.16
identifies each person or entity to whom TXEN has licensed or granted any
other rights to any other proprietary information systems, programs and
software. Except as disclosed on Schedule 10.16(b), no source code or
object code of TXEN is escrowed for the benefit of any third party. Except
as disclosed on Schedule 10.16(b), none of the information systems,
programs and software of TXEN infringe on any patents, trademarks,
copyrights or other rights or intellectual property rights of any third
persons. To the best knowledge of TXEN, no information systems, programs
and software used or owned by any third person or entity infringe on any
rights of TXEN in and to the information systems, programs and software of
TXEN. TXEN has taken reasonable measures necessary to maintain and protect
the information systems, programs and software of TXEN and no claims have
been asserted by any person or entity to the use of the same or
challenging or questioning the validity or effectiveness of the same, and,
to the best knowledge of TXEN, there is no valid basis to any such claim.
16
(c) Schedule 10.16 also contains a list of the current software
development and consulting activities and projects of TXEN. TXEN has
described such projects and developments to NRC. TXEN knows of no
impediments to fully developing and exploiting the information systems,
programs and software currently under development or to performing its
currently pending consulting contracts.
10.17 CONTRACTS AND LEASES. Schedule 10.17 sets forth an accurate and
complete list of each of the following verbal or written contracts, agreements
and leases ("Contracts") to which TXEN is a party:
(a) Personal and real property leases;
(b) Material licenses, including without limitation, licenses of
software, intellectual property or Proprietary Rights;
(c) Contracts for capital expenditures in excess of
$25,000;
(d) Contracts for the purchase of machinery, equipment, or fixtures
involving expenditures in excess of $25,000;
(e) Royalty agreements;
(f) Agencies;
(g) Marketing agreements, reseller agreements, original equipment
manufacturer agreements and training agreements;
(h) Contracts, arrangements, consulting agreements, bids, proposals,
software agreements, licenses, maintenance agreements, support agreements,
warranties, purchase orders, agreements, or commitments of any kind or
character which (i) relate in any material way to the business activities
of TXEN, to the information systems, programs and software of TXEN or to
TXEN's services with respect thereto or (ii) involve the expenditure by or
receipt of TXEN of more than $25,000 or involve any commitment or
obligations of TXEN for a period of over one (1) month;
(i) Instruments evidencing or related to the deferred purchase price
of property in excess of $25,000 (including trade payables);
(j) Joint venture, partnership, limited liability company or other
arrangements involving a sharing of profits;
(k) Contracts with any government or any agency or instrumentality
thereof;
(l) Contracts with respect to the discharge or removal of effluent,
wastes, or pollutants;
(m) Contracts with any dealer, agent, representative, manufacturer's
representative, distributor, or sales agent;
(n) Employee benefit, bonus or compensation agreements, collective
bargaining agreements or employment agreements or any other agreements or
arrangements with respect to employees (including, without limitation, a
list of employee accrued vacation and sick leave, severance, and other
benefits);
(o) Confidentiality or non-competition agreements; and
(p) Other agreements not entered into in the ordinary course of
business.
Except as set forth on Schedule 10.17, to the best knowledge of TXEN, TXEN has
performed and is performing all material obligations to be performed by it
under each Contract, and, to the best knowledge of TXEN, the other parties
thereto have performed and are performing all material obligations to be
performed by them. To the best knowledge of TXEN, TXEN is not in default, and
has not received any notice of default, under any Contract. No event has
occurred which, with notice or lapse of time or both, would constitute a
default by TXEN thereunder. To the best knowledge of TXEN, none of the
Contracts is subject to any impending cancellation or breach that will result
in a loss or otherwise materially adversely affect the operations of TXEN's
business. Except as disclosed on Schedule 10.17, all Contracts are assignable
to Surviving Corporation and no consents are required except as provided on
Schedule 10.3.
10.18 MATERIAL COMMITMENTS. As used in this Section 10.18, the term
"Material Commitments" means each Contract of TXEN which obligates TXEN to
sell, license, distribute, deliver or provide products or services for a
consideration in excess of $25,000 or over a period of more than one (1) month.
Schedule 10.18 sets forth a "Project List" with respect to each Material
Commitment. The Project List sets forth TXEN's production schedule or
performance schedule, and budget, with regard to each Material Commitment.
Except as described in the Project List, the performance of TXEN or any other
party involved with each Material Commitment is on schedule and within budget,
and no practical or technological problems have been encountered that might
reasonably be expected to impede completion or materially increase the cost of
TXEN's performance. Each Material Commitment was made on a basis calculated to
produce a profit under the circumstances prevailing when it was made, and TXEN
is not aware of any circumstances that might reasonably be expected to prevent
the realization of a profit. Except as set forth on the Project List, no
Material Commitment involves the development of any product or technology that,
to the best knowledge of TXEN, would infringe on the proprietary rights of any
other party.
17
10.19 WARRANTIES, SERVICE COMMITMENTS, AND MAINTENANCE AGREEMENTS.
Schedule 10.19 contains a correct and complete list of all warranties, service
commitments, and maintenance and/or support agreements, and a statement or
description of the warranties and commitments (e.g. length of warranty, claims
covered, etc.) including, without limitation, all software service and
maintenance agreements, in effect with respect to any products or services
heretofore manufactured, sold, licensed or provided by TXEN. Except as
described on Schedule 10.19, there are no express or implied warranties
outstanding with respect to products or services created, sold, licensed,
provided or otherwise distributed by TXEN. The warranty and return experience
for the three years ended June 30, 1997, is set forth on Schedule 10.19. Except
as set forth on Schedule 10.19, since June 30, 1994, no warranty or service
claim in excess of $5,000 has been made against TXEN, or is pending or, to the
best knowledge of TXEN, is threatened in connection with any product or service
manufactured, sold, licensed or provided by TXEN.
10.20 PERMITS AND LICENSES; COMPLIANCE WITH LAWS. Except as set forth on
Schedule 10.20, TXEN does not own any material permits, licenses, or other
governmental authorizations, and none are required for the operation of the
business as presently conducted. Neither the ownership of its assets by TXEN,
nor the operation of its business as presently and ordinarily conducted,
violates any applicable order, law, ordinance, code, or regulation. No
investigation is pending or, to the best knowledge of TXEN, threatened
concerning any such matter, and TXEN has not received any notice of any such
violation and no basis therefor exists.
10.21 EMPLOYEE BENEFITS. Schedule 10.21 sets forth an employee benefits
list, which identifies each agreement, plan, or arrangement for employee
benefits, including any bonus, deferred compensation, severance, disability,
sick pay, salary continuation, death benefit, vacation, stock purchase or stock
option, hospitalization or other medical, life, or other insurance,
supplemental unemployment benefit, profit-sharing, pension, or retirement plan
or arrangement maintained or contributed to by TXEN in connection with its
business (the "Benefit Plans"). Except as identified on Schedule 10.21, none of
TXEN's Benefit Plans is an "employee pension benefit plan" as defined in
Section 3(2) of ERISA. To the best of TXEN's knowledge, all of the Benefit
Plans and related trusts are in form and have been administered in compliance
with all applicable laws, including ERISA and the Code; none of the Benefit
Plans or related trusts, or any administrator or trustee thereof, or
party-in-interest or disqualified person thereto has engaged in a transaction
that could cause any of them to be liable for a civil penalty under Section 409
or 502(i) or other section of ERISA or a tax under Section 4975 or 4976 or
other section of Chapter 43 of Subtitle D of the Code; all amounts required to
be paid by TXEN to or pursuant to each of the Benefit Plans or related trusts
on or before the date of this Agreement have been paid; no employee pension
benefit plan has incurred any "accumulated funding deficiency," as defined in
Section 412 of the Code; no "reportable event" within the meaning of Title IV
of ERISA has occurred with respect to any Benefit Plan subject thereto; and,
except as described on Schedule 10.21, TXEN is not obligated to pay any
additional amounts to or pursuant to, and have not guaranteed the obligations
of, any Benefit Plan or related trust. No employees of TXEN participate in any
"multi-employer pension plan" within the meaning of the Multi-employer Pension
Plan Amendments Act of 1980, as amended, and TXEN does not have any liability
under ERISA for any complete or partial withdrawal from any such multi-employer
plan. To the best of TXEN's knowledge, no liability under Title IV of ERISA has
been incurred by TXEN or any trade or business, whether or not incorporated,
that would be aggregated with TXEN for purposes of imposition of liability
under Title IV of ERISA (an "ERISA Affiliate") that has not been satisfied in
full, and no condition exists that presents, nor will the consummation of the
transactions contemplated by this Agreement directly result in, a material risk
to TXEN or an ERISA Affiliate of incurring a liability under such Title IV.
Neither TXEN nor an ERISA Affiliate, nor any of their respective directors,
officers, employees, or fiduciaries, has committed any breach of fiduciary
responsibility imposed by ERISA or any other applicable law that would subject
TXEN to liability under ERISA or any other applicable law, contract, agreement,
or commitment. The Pension Benefit Guaranty Corporation ("PBGC") has not
instituted proceedings to terminate any Benefit Plans in which TXEN
participates, and no condition exists that presents a risk that such
proceedings will be instituted. No Benefit Plan provides benefits, including,
without limitation death or medical benefits (whether or not insured), with
respect to current or former employees beyond their retirement or other
termination of service (other than (i) coverage mandated by applicable law,
(ii) deferred compensation accrued on the books of TXEN, (iii) death benefits
or retirement benefits under any "employee pension benefit plan," as that term
is defined in Section 3(2) of ERISA, or (iv) benefits the full cost of which is
borne by the current or former employee (or his or her beneficiary)). If a
Benefit Plan is designed to satisfy the requirements of Section 125, Section
401, Section 401(k), Section 409, Section 501(c)(9), Section 4975(e)(7), and/or
Section 4980B of the Code, the Benefit Plan satisfies such section. No "leased
employee," as that term is defined in Section 414(n) of the Code, performs
services for TXEN. TXEN has heretofore delivered to NRC true and correct copies
of all of the Benefit Plans, the most recent determination letters from the
Internal Revenue Service with respect thereto, the most recent annual reports
(Form 5500 and the schedules thereto), the most recent summary plan
descriptions, and the most recent actuarial valuations.
10.22 LABOR MATTERS. TXEN is not a party to any collective bargaining
agreement relating to TXEN's employees. TXEN is in all material respects in
compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment, wages and hours,
nondiscrimination in employment, and occupational health and safety, and is not
engaged in any unfair labor practice. Except as disclosed on Schedule 10.22,
there are no pending labor grievances or sexual harassment, discrimination or
other claims as to age, sex, religion, national origin or physical or mental
disability, civil rights, or equal employment opportunity charges against TXEN
relating to or involving employees, or any settlements, consent orders, or
prior decrees of any court or governmental body requiring any continued
observance by TXEN relating to or involving employees. No complaint has been
filed or is pending or, to the best knowledge of TXEN, threatened with the
National Mediation Board or the National Labor Relations Board relating to or
involving any employee of TXEN alleging any unfair labor practices, and there
have not been any work stoppages, strikes, or other significant labor troubles
involving employees of TXEN.
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10.23 EMPLOYEES; WAGE INCREASES. Schedule 10.23 lists (i) all current
employees of TXEN, including those employees of TXEN currently on layoff,
disability or any other leave ("Employees"), including their names, addresses,
ages, current rates of compensation and (ii) all employment commitments made by
TXEN to persons other than the Employees. To the extent not set forth on
Schedule 10.17, Schedule 10.23 also lists all employment agreements with
current Employees. TXEN has not, with respect to Employees, made any wage or
salary increase other than the increases already reflected on Schedule 10.23.
10.24 NO PENDING OR THREATENED LITIGATION AND CLAIMS. Except as set forth
on Schedule 10.24, TXEN is not a party to or, to the best knowledge of TXEN,
threatened with any claim, complaint, charge, suit, action, proceeding,
hearing, arbitration, or other method of settling disputes or disagreements, or
any private or governmental investigation. TXEN is not subject to any judgment,
order, writ, injunction, stipulation, or decree of any court, arbitrator, or
governmental agency or instrumentality.
10.25 ENVIRONMENTAL MATTERS. To the best knowledge of TXEN, the TXEN
business as presently conducted by TXEN complies with all applicable laws and
regulations relating to environmental protection, health, and safety,
including, without limitation, laws and regulations relating to the generation,
transportation, handling, treatment, storage, disposal, discharge, emission,
release or threatened release of hazardous substances, solid waste, hazardous
waste, hazardous materials, asbestos containing materials, petroleum or any
fraction thereof, pollutants, irritants, contaminants, toxic substances, or any
other materials defined as such in, or regulated by, any such applicable laws
and regulations. To the best knowledge of TXEN, none of TXEN, its agents, their
affiliates, and prior owners or users of the properties listed on Schedule
10.13 have ever generated, stored, treated, transported, handled, disposed of,
released, or threatened to release, any regulated material in a manner that
could give rise to any liability on the part of the Surviving Corporation. TXEN
has complied with the reporting requirements concerning the disposal,
discharge, emission, spillage, release or threatened release of any hazardous
substance with respect to such properties. TXEN is not a "potentially
responsible party," as defined in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, or under any comparable
state or local statute, in connection with any past or present waste disposal
practices undertaken by it or on its behalf.
10.26 CUSTOMERS. Schedule 10.26 identifies all customers who purchased any
product or service manufactured, licensed, sold, or provided by TXEN since June
30, 1994. TXEN is not aware of any existing or anticipated changes in the
purchasing policies or practices of these customers, or in their financial
condition, that might reasonably be expected to have a material adverse effect
on future orders of TXEN's business.
10.27 SUPPLIERS. Schedule 10.27 is a list of all material suppliers of
materials and services to TXEN since June 30, 1994. Except as listed on
Schedule 10.27, no supplier represents TXEN's sole source of any type or types
of supplies. Except as set forth in Schedule 10.27, no supplier has materially
increased its prices as applicable to the products purchased by TXEN since June
30, 1994 and TXEN has not received notice of any such price increase. TXEN is
not aware of any existing or anticipated changes in the policies or practices
of these suppliers, or in their financial condition, that might reasonably be
expected to have a material adverse effect on the Surviving Corporation's
ability to obtain supplies from these suppliers.
10.28 INSURANCE. Schedule 10.28 identifies all of TXEN's insurance
policies and bonds (the "Insurance Policies"). The Insurance Policies are in
full force and effect; are sufficient for compliance by TXEN with all
requirements of law and of all agreements to which it is a party; and are
valid, outstanding, and enforceable policies and provide that they will remain
in full force and effect through the Effective Date.
10.29 PRODUCT SPECIFICATIONS. To the best knowledge of TXEN, all products
manufactured, developed, licensed and/or distributed by TXEN comply with the
specifications and other criteria contained in the product, sales, and
marketing literature and other documentation used by TXEN in connection with
the sale or marketing of TXEN's products and services and in any applicable
customer specifications.
10.30 ACCOUNTS RECEIVABLE. All outstanding accounts receivable and notes
receivable of TXEN are bona fide receivables, arose in the usual and ordinary
course of business, are due and valid claims against customers for goods
delivered or services performed, subject to no offsets or counterclaims, and
are fully collectable, net of the reserve for doubtful accounts shown on the
Financial Statements of TXEN described in Section 10.7.
10.31 DISCLOSURE. To the best knowledge of TXEN, no representation or
warranty by TXEN and Shareholders in this Agreement, nor any schedules or
exhibits to this Agreement nor any statement or certificate furnished or to be
furnished to NRC or Surviving Corporation pursuant to this Agreement, contains
or will contain any untrue statement of a material fact or omit or will omit to
state a material fact necessary to make the statements contained therein not
misleading. TXEN and the Shareholders do not know of any facts or conditions
relating to the TXEN business which have a reasonably likelihood of materially
adversely affecting the TXEN business.
10.32 ACCOUNTS. Schedule 10.32 sets forth the names and locations of all
banks and other institutions in which TXEN has an account or safe deposit box
and the names of all persons authorized to draw thereon or to have access
thereto. Schedule 10.32 also sets forth the balance in each checking, savings
or other deposit account of TXEN as of June 30, 1997.
10.33 TRANSACTIONS WITH RELATED PARTIES. Except as disclosed on Schedule
10.33, no Shareholder, officer, director, or employee of TXEN, or any
corporation or other entity controlled by or under common control with any of
the foregoing and no relative of any of the foregoing has:
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(a) borrowed money from or loaned money to TXEN which remains
outstanding (excluding travel advances in the ordinary course of business
and consistent with past practice);
(b) any contractual or other claim (except for compensation as
disclosed in the schedules to this Agreement) expressed or implied, of any
kind whatsoever against TXEN;
(c) any interest in any business, assets or properties of TXEN
(whether ownership, contractual or otherwise); or
(d) engaged in any other transaction with TXEN (other than employment
relationships) since the date of TXEN's incorporation, not otherwise
reflected on the Financial Statements described in Section 10.7.
10.34 FINDERS. No finder or broker has acted or is acting on behalf of
TXEN in connection with the transactions contemplated by this Agreement.
10.35 SURVIVING CORPORATION'S ABILITY TO OPERATE THE BUSINESS. Upon the
Effective Date, Surviving Corporation shall have received from TXEN all the
property, equipment, inventory, contracts, permits, intellectual property,
leasehold interests, books and records, hardware and software, and other assets
and rights necessary for Surviving Corporation to conduct TXEN's business as
the same is presently conducted by TXEN.
10.36 CAPITALIZATION. TXEN's authorized capital consists of 1 share of
Convertible Preferred Stock, par value of $.002 per share (the "Preferred
Stock"), 5,000,000 shares of Class A Common Stock of the par value of $.002 per
share (the "Class A Common Stock") and 1,250,000 shares of Class B Common Stock
of the par value of $.002 per share (the "Class B Common Stock"). The issued
and outstanding shares of TXEN Stock are held by those individuals and entities
in those amounts shown in Section 10.1. Except for options issued in connection
with the Option Plans, there is no other class of equity securities or
instruments convertible into equity securities outstanding (or options,
warrants, or other rights granting persons the right to acquire same or any
TXEN Common Stock) and TXEN has not issued any bonds, debentures, or other
evidences of indebtedness of a similar nature. From the date of the execution
of this Agreement to the Effective Date, TXEN agrees not to and the
Shareholders agree not to cause TXEN to issue, transfer, assign or sell any
additional shares of TXEN Stock or authorize, create, issue or sell any other
class of equity securities or bonds, debentures or instruments of a similar
nature, and further agree not to execute any options, warrants or other rights
to acquire TXEN stock or any additional rights. All of the shares of TXEN Stock
held by the Shareholders are free and clear of all liens, claims, pledges,
options, rights, security interests and encumbrances, except as provided in
Section 5.6(d) hereof. All outstanding shares of TXEN stock have been duly
authorized and issued and are fully paid and nonassessable. Except as described
on Schedule 10.36, there are no agreements restricting the transfer of TXEN
stock or granting any options, agreements, contracts, cause or commitments of
any character which would restrict the transfer or issuance of any TXEN stock
or which would require the issuance of TXEN stock, or which would require TXEN
to purchase or redeem any shares of TXEN stock. By executing this Agreement,
Shareholders, waive all provisions of any stockholder agreement and consent to
transactions contemplated hereby.
10.37 SUBSIDIARIES. TXEN has no subsidiaries.
10.38 SECURITIES MATTERS. The Shareholders jointly and severally represent
and warrant that they are acquiring their respective portions of NRC Common
Stock for their own accounts, to hold for investment, and with no intention of
dividing their respective parts or their participation with others, or
reselling or otherwise participating, directly or indirectly, in a distribution
of the NRC Common Stock, and that each Shareholder shall not make any sale,
transfer or other disposition of the NRC Common Stock in violation of the 1933
Act or the securities laws of any state. Each of the Shareholders have been
advised that the NRC Common Stock is not being registered under the 1933 Act on
the grounds that such transactions are exempt from registration under one or
more exemptions under the 1933 Act and also are not being registered under any
securities laws of the various states on the grounds that such transactions are
exempt from registration thereunder, and that reliance by NRC on such
exemptions is predicated, in part, on the representation from the Shareholders
set forth in this Section 10.38. The Shareholders further understand that NRC
is required to file periodic reports with the Securities and Exchange
Commission and that, following a one-year holding period, certain sales of the
NRC Common Stock may be exempt from registration under the 1933 Act by virtue
of Rule 144, provided that such sales are made in accordance with all of the
terms and conditions of Rule 144, including compliance with the required
one-year holding period. It is understood and agreed that if Rule 144 is not
available for the sales of the NRC Common Stock, the NRC Common Stock may not
be sold without registration under the 1933 Act or compliance with some other
exemption from such registration, and, except as provided in Section 19 below,
that NRC is not obligated to register the NRC Common Stock to be transferred
pursuant to this Agreement or to take any action necessary in order to make
compliance with an exemption from registration available. It is acknowledged
that all shares of NRC Common Stock shall bear a restrictive legend to the
effect that such shares have not been registered and may not be sold or
transferred except pursuant to a registration or an exemption therefrom. The
Shareholders acknowledge and agree that they have not received any public
solicitation or advertisement concerning an offer to sell or to acquire the NRC
Common Stock.
20
10.39 AVAILABILITY OF INFORMATION. TXEN and the Shareholders have received
and have had an opportunity to review copies of NRC's Form 10-K Report for the
fiscal year ended August 31, 1996, Proxy Statement for the 1997 Annual
Shareholders Meeting and Annual Report to Shareholders for the year ended
August 31, 1996, and the NRC Quarterly 10-Q Reports for the periods ended
November 30, 1996, February 28, 1997, and May 31, 1997. TXEN and the
Shareholders have had an opportunity to meet with officers of NRC to discuss
the information contained in the above-referenced documents and to receive
answers to any questions they had regarding NRC and the acquisition by
Shareholders of the NRC Common Stock. TXEN and the Shareholders acknowledge and
agree that they are not relying on any representations and warranties (oral or
written) of NRC or Surviving Corporation or their respective officers,
directors, employees and representatives, except those representations and
warranties expressly set forth in this Agreement and the matters set forth in
the Annual and Quarterly Reports described in this Section. Each individual
Shareholder for himself represents and warrants that he, individually or with
the aid of an investor representative of his choice, has the knowledge and
experience to evaluate the merits and risks of accepting the NRC Common Stock
in exchange for their TXEN Common Stock.
10.40 LIMITED REPRESENTATIONS AND WARRANTIES OF THE UNIVERSITY. The
University does not make the representations and warranties set forth in
Sections 10.1 through 10.39 above, and in lieu thereof makes the following
representations and warranties as of the Closing Date and Effective Date:
10.40.1 AUTHORITY. The University has full right, power and authority
to enter into this Agreement and to surrender the Shares owned by it in
exchange for its share of the Merger Consideration as provided in this
Agreement. The execution and performance of this Agreement by the University
has been duly authorized by its Board of Trustees.
10.40.2 OWNERSHIP. The University owns legally and beneficially the
number of Shares of stock set opposite its name in Section 10.1 hereof, free
and clear of all liens, security interests, pledges or encumbrances.
10.40.3 ENFORCEABILITY. This Agreement has been duly and validly
executed and delivered by the University and constitutes the legal, valid and
binding obligation of the University in accordance with its terms.
10.40.4 NO CONSENT. No consent of any lender, trustee, director,
security holder or any other person is required for the University to enter
into this Agreement or to consummate the transactions contemplated hereby, nor
do the governing instruments of the University or any mortgage, indenture or
other agreement, or any law, statute, ordinance, rule or regulation to which
the University is a party or by which it is bound or which affects any of its
properties, including, without limitation, the Shares, conflict with or
restrict the execution, delivery and performance of this Agreement by the
University or the consummation of the transactions contemplated hereby or
thereby.
10.40.5 ESTOPPEL PROVISIONS. As of the Closing Date and the Effective
Date, the University acknowledges that it has no title, claim, demand,
interest, action or cause of action in, to or against TXEN or any of its
officers, directors or shareholders in any capacity whatsoever. This SECTION
10.40.5 shall be construed to constitute a release by the University of any and
all of the foregoing and shall constitute a waiver of any and all of the
foregoing.
TXEN and the other Shareholders do not make the representations and
warranties contained in this Section 10.40.
10.41 SPECIAL REPRESENTATIONS AND WARRANTIES OF XXXXXX X. XXXXXXXXX.
Xxxxxx X. Xxxxxxxxx, individually and in his capacity as Trustee of the
Xxxxxxxxx Family Charitable Unitrust, established August 5, 1997 (the "Trust"),
represents and warrants as of the Closing Date and the Effective Date:
10.41.1 AUTHORITY. As Trustee, Xxxxxx X. Xxxxxxxxx has full right,
power and authority to enter into this Agreement and to surrender the Shares
owned by him as Trustee in exchange for the Trust's share of the Merger
Consideration as provided in this Agreement.
10.41.2 OWNERSHIP. Xxxxxx X. Xxxxxxxxx, in his capacity as such
Trustee, owns legally the number of Shares of stock set opposite his name in
Section 10.1 hereof free and clear of all liens, security interests, pledges or
encumbrances.
10.41.3 ENFORCEABILITY. This Agreement has been duly and validly
executed and delivered by Xxxxxx X. Xxxxxxxxx in his capacity as such Trustee
and constitutes the legal, valid and binding obligation of Xxxxxx X. Xxxxxxxxx
as Trustee in accordance with its terms.
10.41.4 NO CONSENT. No consent of any lender, trustee, security
holder or any other person is required for Xxxxxx X. Xxxxxxxxx as Trustee to
enter into this Agreement or to consummate the transactions contemplated
hereby, nor does the Trust instrument or any mortgage, indenture or other
agreement or any law, statute, ordinance, rule or regulation to which the Trust
is a party or by which it is bound or which affects any of its properties,
including, without limitation, the Shares, conflict with or restrict the
execution, delivery and performance of this Agreement by Xxxxxx X. Xxxxxxxxx as
Trustee or the consummation of the transactions contemplated hereby or thereby.
The execution and performance of this Agreement by Xxxxxx X. Xxxxxxxxx in his
capacity as Trustee does not violate any statute, rule or regulations regarding
private foundations, including, but not limited to, provisions contained in
Sections 4940-4948 of the Internal Revenue Code.
10.41.5 ESTOPPEL PROVISIONS. As of the Closing Date and the Effective
Date, Xxxxxx X. Xxxxxxxxx as Trustee acknowledges that he has no title, claim,
demand, interest, action or cause of action in, to or against TXEN or any of
its officers, directors or Shareholders in any capacity whatsoever. This
Section 10.41.5 shall be construed to constitute a release by Xxxxxx X.
Xxxxxxxxx in his capacity as Trustee of any and all of the foregoing and shall
constitute a waiver of any and all of the foregoing.
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SECTION 11. CONDUCT OF CONSTITUENT CORPORATIONS
PENDING THE EFFECTIVE DATE
Each Constituent Corporation agrees that, between the date of this
Agreement and the Effective Date:
11.1 CERTIFICATE OF INCORPORATION AND BYLAWS. No change will be made in
the Certificate of Incorporation or Bylaws of either Constituent Corporation
without the prior written consent of the other Constituent Corporation.
11.2 CAPITALIZATION. Neither Constituent Corporation will make any change
in its authorized or issued capital stock, declare or pay any dividend or other
distribution or issue, encumber, purchase or otherwise acquire any of its
capital stock.
11.3 OPERATE IN ORDINARY COURSE. TXEN shall operate its business in the
usual and ordinary manner as heretofore conducted; perform in all material
respects all its respective obligations and not materially modify, amend,
supplement, or waive any obligation under any Contract without the prior
written consent of NRC, which will not be unreasonably withheld.
11.4 NOT SELL OR ENCUMBER PURCHASED ASSETS. TXEN shall not sell or
otherwise dispose of any of its assets or properties, except for the sale of
inventory in the ordinary course of business, and not create or agree to create
any mortgage, security interest, lien, pledge, encumbrance, or restriction on
any of its assets or properties.
11.5 PRESERVE BUSINESS ORGANIZATION. TXEN shall use all reasonable efforts
to preserve intact TXEN's present business organization; to keep available the
services of the current Employees; to preserve TXEN's relationships with
suppliers, distributors, customers, and others having business relationships
with TXEN; and to refrain from changing any material policies (including,
without limitation, accounting, advertising, marketing, pricing, purchasing,
personnel, sales, or budget policies) without the prior written consent of NRC,
which will not be unreasonably withheld.
11.6 MAINTAIN PROPERTIES. TXEN shall retain and maintain all of its assets
and properties in customary repair, order, and condition, except for reasonable
wear, the disposal of worn-out or obsolete equipment, and damage due to
unavoidable casualty.
11.7 MAINTAIN BOOKS OF ACCOUNT. TXEN shall maintain TXEN's books of
account and records in the usual and ordinary manner and in accordance with
generally accepted accounting principles.
11.8 COMPLY WITH LAW. TXEN shall comply in all respects with all laws
applicable to TXEN or contest or settle in good faith, upon the advice of
counsel, any alleged failure to comply with any such laws.
11.9 INVENTORY. Consistent with past practices, TXEN shall not acquire any
inventory.
11.10 MAINTAIN INSURANCE. TXEN shall maintain the Insurance Policies in
full force and effect, with policy limits and scope of coverage not less than
is now provided.
11.11 ADVISE SURVIVING CORPORATION OF ADVERSE CHANGE. TXEN shall promptly
advise NRC of the occurrence of any material adverse change in the financial
condition or results of the operations of TXEN; the occurrence of any other
event or condition that materially and adversely affects its business; or the
imposition of any lien, pledge, or encumbrance on any of its assets or
properties.
11.12 ACCESS FOR NRC. TXEN shall provide NRC's employees, agents, and
authorized representatives with reasonable access, during business hours and
consistent with the normal operation of its business, to the locations owned or
leased by TXEN, and to the books and records of TXEN, to the extent necessary
to enable NRC to make a thorough investigation of the business, to make a
physical examination of its assets and properties, to conduct environmental
examinations (if any), and to examine TXEN's books and records. NRC's
employees, agents, and authorized representatives shall hold all such
information and materials in strict confidence, shall not use the same for any
purpose other than to evaluate this transaction and, treat all such information
in a manner consistent with NRC's policies and procedures concerning its own
confidential and proprietary information. If the transactions contemplated
hereby are not consummated for any reason, NRC shall (a) upon the request of
TXEN, return all originals, copies, and summaries of such information to TXEN
and (b) continue to treat all such information as strictly confidential in a
manner consistent with NRC's policies and procedures concerning its own
confidential and proprietary information.
22
11.13 THIRD-PARTY CONSENTS. TXEN shall use its best efforts to obtain all
required consents and approvals of third parties, if any, described on Schedule
10.3.
11.14 NOT INCUR INDEBTEDNESS. TXEN shall not incur any indebtedness, other
than indebtedness incurred in the ordinary course of business to fund working
capital arising in the ordinary course of business.
11.15 PRESERVE CAPITAL STRUCTURE. TXEN shall not acquire, merge with, or
consolidate with, or agree to acquire, merge with, or consolidate with, any
business entity, or amend their respective charter or bylaws.
11.16 TXEN AUTHORIZATION. The TXEN directors and shareholders shall
approve this Agreement of Merger and the transactions described herein in
accordance with the Alabama Business Corporation Act on or before the Closing
Date.
SECTION 12. CONDITIONS PRECEDENT TO OBLIGATIONS OF
XXXXXXX RESEARCH CORPORATION AND SUBSIDIARY
NRC's and Subsidiary's obligation to consummate this Merger shall be
subject to the fulfillment on or before the Effective Date of each of the
following conditions, unless waived, in writing:
12.1 REPRESENTATIONS AND WARRANTIES TRUE AS OF CLOSING DATE. TXEN's and
Shareholders' representations and warranties made in this Agreement and the
exhibits and schedules hereto are true in all respects on and as of the Closing
Date as though such representations and warranties were made on and as of the
Closing Date.
12.2 COMPLIANCE WITH AGREEMENT. TXEN and each Shareholder has performed
and complied in all respects with all of its or his obligations under this
Agreement that are to be performed or complied with by it or him on or before
the Closing Date, and neither TXEN nor any Shareholder is otherwise in default
in any respect under any of the provisions of this Agreement.
12.3 NO LITIGATION. No litigation, proceeding, investigation, or inquiry
is pending or threatened with respect to TXEN or which, if sustained, would
enjoin or prevent the consummation of the transactions contemplated by this
Agreement.
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12.4 THIRD-PARTY CONSENTS AND APPROVALS. TXEN has obtained all third-party
consents and approvals, if any, described on Schedule 10.3, all in form and
substance reasonably satisfactory to NRC and its counsel. At or before the
Closing, TXEN will deliver to NRC all such third-party consents or approvals.
12.5 COMPLIANCE WITH LAW. NRC has made a good faith determination, with
the assistance and advice of counsel, that the Surviving Corporation can
acquire and own the TXEN business following the Effective Date in substantial
compliance with all applicable laws, orders, ordinances, codes, and
regulations.
12.6 MATERIAL ADVERSE EFFECT. There has not occurred any event or casualty
that materially and adversely affects TXEN or its assets or properties, or
Surviving Corporation's ability to carry on TXEN's business as presently and
ordinarily conducted.
12.7 OPINION OF COUNSEL FOR TXEN. TXEN has delivered to Surviving
Corporation and NRC an opinion of counsel dated as of the Closing Date in a
form attached hereto as Exhibit "F."
12.8 EMPLOYMENT AGREEMENTS. Xxxxxx X. Xxxxxxxxx and Xxxx X. Xxxxxx shall
have entered into an Amendment of their Employment Agreements in the forms
attached hereto, respectively, as Exhibits "G-1" and "G-2." H. Grey Wood shall
have entered into an Employment Agreement with the Surviving Corporation in the
form attached hereto as Exhibit "G-3" (the "Employment Agreements").
12.9 CERTIFIED RESOLUTIONS. TXEN has delivered to NRC a copy of
resolutions adopted by TXEN's Board of Directors, certified as of the Closing
Date by the Secretary or an Assistant Secretary of TXEN, approving the
execution and delivery of this Agreement and the performance by TXEN of its
obligations under this Agreement.
12.10 CERTIFICATES OF FULFILLMENT OF CONDITIONS. TXEN shall have delivered
to NRC certificates, dated as of the Closing Date and signed by its President,
stating that the conditions set forth in this Section 12 have been fulfilled.
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12.11 SHAREHOLDER APPROVAL. TXEN's Shareholders shall have unanimously
approved the consummation of the transactions contemplated by this Agreement.
12.12 NO DISSENTING SHAREHOLDERS. Each Shareholder shall have approved
this transaction and no Shareholder shall have filed or perfected dissenter's
rights or appraisal rights.
12.13 FAIRNESS OPINION. NRC shall have received a "fairness opinion" from
The Xxxxxxxx-Xxxxxxxx Company, Inc. that the transactions contemplated by this
Agreement are fair to NRC and its shareholders from a financial point of view,
dated within 10 days of the Closing.
12.14 UNIVERSITY RESOLUTION. The University shall have delivered to NRC a
certificate dated as of the Closing Date signed by an authorized representative
of the University evidencing authority to execute, deliver and perform this
Agreement.
SECTION 13. CONDITIONS PRECEDENT TO OBLIGATIONS OF TXEN
TXEN's and Shareholders' obligation to consummate this Merger shall be
subject to fulfillment on or before the Effective Date of each of the following
conditions, unless waived in writing by TXEN:
13.1 REPRESENTATIONS AND WARRANTIES TRUE ON CLOSING DATE. Subsidiary's and
NRC's representations and warranties made in this Agreement are true in all
respects on and as of the Closing Date as though such representations and
warranties were made on and as of the Closing Date.
13.2 COMPLIANCE WITH AGREEMENT. Subsidiary and NRC have performed and
complied in all respects with all of their obligations under this Agreement
that are to be performed or complied with by them on or before the Closing
Date, and Subsidiary and NRC are not otherwise in default in any respect under
any of the provisions of this Agreement.
13.3 NO LITIGATION. No litigation, proceeding, investigation, or inquiry
is pending or threatened which, if sustained, would enjoin or prevent the
consummation of the transactions contemplated by this Agreement.
13.4 OPINION OF COUNSEL FOR SUBSIDIARY. Subsidiary has delivered to
TXEN an opinion of counsel dated as of the Closing Date in a form attached
hereto as Exhibit "H."
13.5 CERTIFIED RESOLUTIONS. Subsidiary and NRC have delivered to TXEN
copies of resolutions adopted by Subsidiary's and NRC's Board of Directors,
certified as of the Closing Date by the Secretary or an Assistant Secretary of
Subsidiary and NRC, approving the execution and delivery of this Agreement and
the performance by Subsidiary and NRC of their respective obligations under
this Agreement.
13.6 CERTIFICATES OF FULFILLMENT OF CONDITIONS. Subsidiary and NRC shall
have delivered to TXEN certificates, dated as of the Closing Date, stating that
the conditions set forth in this Section 13 have been fulfilled.
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SECTION 14. DESIGNATIONS AND AGREEMENTS REQUIRED BY LAW
As of the Effective Date, if NRC waives the condition set forth in Section
12.12, the Surviving Corporation agrees that it will promptly pay to any
dissenting Shareholder of TXEN the amount, if any, to which such Shareholder
shall be entitled under the laws of the State of Alabama.
SECTION 15. ACCESS
From the date of this Agreement to the Effective Date, each Constituent
Corporation shall provide the other with such information and permit each
other's officers and representatives such access to its properties, books and
records as the other may, from time to time, reasonably request. Each
Constituent Corporation shall inform the other of materially adverse events
occurring after the date of this Agreement. If the Merger is not consummated,
all documents received in connection with this Agreement shall be returned to
the party furnishing such documents and all information received shall be
treated as confidential.
SECTION 16. TERMINATION
16.1 CIRCUMSTANCES OF TERMINATION. This Agreement may be terminated
(notwithstanding approval by the shareholders of either party):
(a) By the mutual consent in writing of the Board of Directors
of each Constituent Corporation;
(b) By the Board of Directors of TXEN if any condition provided in
Section 13 has not been satisfied or waived on or before the Effective
Date;
(c) By the Board of Directors of NRC or Subsidiary if any condition
provided in Section 12 has not been satisfied or waived on or before the
Effective Date;
16.2 EFFECT OF TERMINATION. In the event of a termination of this
Agreement pursuant to this Section, each party shall pay the costs and expenses
incurred by it in connection with this Agreement and no party (or any of its
officers, directors and shareholders) shall be liable to any other party for
any costs, expenses, damage or loss of anticipated profits hereunder, except
for any breach by a party or parties of any representations, warranties or
covenants herein contained.
26
SECTION 17. SURVIVAL OF
REPRESENTATIONS AND WARRANTIES AND INDEMNIFICATION
17.1 SURVIVAL. The representations, warranties, and covenants made by
TXEN, Shareholders, Subsidiary and NRC in this Agreement will survive the
Closing Date and any investigation or inquiry made by either party. The
indemnifications contained in this Section 17 shall survive the Closing until
November 30, 1998. No indemnified party shall be entitled to assert any claim
for indemnification under this Section 17 with respect to the breach of any
representation, warranty or covenant contained herein after the date on which
such representation or warranty ceases to survive pursuant to this Section
17.1. If an indemnified party shall have notified the indemnifying party of a
claim for indemnification under this Section 17 prior to the date on which the
right of indemnification ceases to survive, then the indemnified party shall be
entitled to prosecute the claim to its completion and be entitled to
indemnification hereunder.
17.2 DEFINITION. As used herein, "Damages" shall mean any obligations,
losses, liabilities, security interests, liens, claims, encumbrances, charges,
damages, costs, and expenses (including, without limitation, attorneys' fees
and other costs and expenses incident to and paid by an indemnified party in
connection with the investigation, trial or settlement of any claim, suit,
action or proceedings) incurred, suffered or sustained or paid or required to
be paid by an indemnified party or reasonably expected to be incurred by an
indemnified party. Damages shall be net of any insurance proceeds received by
the indemnified party.
17.3 INDEMNIFICATION BY SHAREHOLDERS. After Closing, each Shareholder
agrees to and shall pay, defend and promptly indemnify Surviving Corporation
and NRC against, and save and hold Surviving Corporation and NRC harmless from
any and all Damages resulting from, arising out of or in connection with (a)
any breach or inaccuracy of any of the representations and warranties made by
TXEN and Shareholders in this Agreement, the exhibits and schedules hereto, and
the certificates and documents executed by them in connection herewith, (b) the
breach or non-fulfillment of any agreement or covenant made by TXEN and
Shareholders in or pursuant to this Agreement and the transactions contemplated
by this Agreement, (c) any undisclosed liabilities or obligations of TXEN
and/or (d) any liability or claim or any threatened or potential liability or
claim disclosed on Schedules 10.15 and 10.24 hereto. The liability of each
Shareholder shall be prorata based on the Merger Consideration received by such
Shareholder over the total Merger Consideration received by all Shareholders.
17.4 INDEMNIFICATION BY SURVIVING CORPORATION AND NRC. Surviving
Corporation and NRC agree to jointly and severally pay, defend and promptly
indemnify the Shareholders against and save and hold them harmless from any
Damages resulting from, arising out of or in connection with (a) any breach or
inaccuracy of any of the representations or warranties made by Subsidiary or
NRC in this Agreement or (b) the breach of any of the covenants made by
Subsidiary or NRC in this Agreement.
17.5 ALLOCATION OF DAMAGES. Any Damages under Section 17.3 may be
recovered either by Surviving Corporation or NRC, as elected by NRC, or such
Damages may be allocated to NRC and Surviving Corporation as NRC, in its sole
discretion, may determine.
17.6 NOTICE OF CLAIM. Any party seeking indemnification hereunder (the
"Indemnitee") shall promptly notify the indemnifying party (the "Indemnitor")
in writing, of any claim for recovery, specifying in reasonable detail the
nature of the Damage, and, if known, the amount, or an estimate of the amount,
of the liability arising therefrom. The Indemnitee shall provide to the
Indemnitor as promptly as practicable thereafter information and documentation
reasonably requested by the Indemnitor to support and verify the claim
asserted.
17.7 DEFENSE OF THIRD PARTY CLAIMS. If the facts pertaining to such
Damages arise out of the claim of any third party, the Indemnitor may assume
the defense thereof by written notice to Indemnitee, including the employment
of counsel or accountants at the Indemnitor's cost and expense. The Indemnitee
shall have the right to employ counsel separate from counsel employed by the
Indemnitor in any such action and to participate therein, but the fees and
expenses of such counsel employed by the Indemnitee shall be at its expenses.
The Indemnitor shall not be liable for any settlement of any such claim
effected without its prior written consent, which shall not be unreasonably
withheld; provided that if the Indemnitor does not assume the defense or the
prosecution of the claim within thirty (30) days of notice thereof, the
Indemnitee may settle such claim without the Indemnitor's consent. The
Indemnitor shall not agree to a settlement of any claim which provides for any
relief other than the payment of monetary damages without the Indemnitee's
prior written consent, which shall not be unreasonably withheld. Whether or not
the Indemnitor defends such claims, all the parties hereto shall cooperate in
the defense or prosecution thereof and shall furnish such records, information
and testimony, and attend such conferences, discovery proceedings, hearings,
trials and appeals, as may be reasonably requested in connection therewith.
27
17.8 REDUCTION FOR INSURANCE AND TAX BENEFITS. The Damages which
Indemnitor is liable to, for or on behalf of the Indemnitee pursuant to this
Section 17 shall be reduced (including, without limitation, retroactively)
through subsequent repayment as described below in this Section 17.8, by an
amount equal to any insurance proceeds and tax benefits actually recovered by
or on behalf of such Indemnitee relating to the Damages. If an Indemnitee shall
have received or shall have paid on its behalf an indemnity payment in respect
of any Damages and insurance proceeds and tax benefits in respect of such
Damages are also received by the Indemnitee, then such Indemnitee shall pay
Indemnitor the amount of such insurance proceeds and tax benefits or, if less,
the amount of such indemnity payment. The Indemnitee covenants and agrees to
use all reasonable efforts to collect all such sums as are available to it
under its existing insurance policies which would be applicable to any such
Damages. Whether or not Indemnitee receives any tax benefit shall be determined
by Ernst & Young, L.L.P.
17.9 DEDUCTIBLE. An indemnified party shall make no claim against any
indemnifying party for indemnification under this Section 17 unless and until
the aggregate amount of such claims against the indemnifying party exceeds
$200,000.00 (the "Deductible"), in which event an indemnified party may claim
indemnification for all Damages in excess of the Deductible.
17.10 LIMITATIONS. The amount of indemnification either party may be
entitled hereto shall not exceed $4,387,497.19 unless such claims are based on
pending or threatened (in writing) litigation, in which case the amount of
indemnification will not exceed $10,968,742.98. The limitations set forth
herein shall not apply in the case of fraud.
17.11 ARBITRATION. The parties agree that any claim, controversy or
dispute arising out of or relating in any way to this Agreement or the
formation, interpretation, performance, enforcement, breach, termination or
validity thereof, including the construction and scope of the agreement to
arbitrate shall be resolved in accordance with the provisions of Exhibit "I."
SECTION 18. CERTAIN COVENANTS OF THE PARTIES
WITH RESPECT TO TAX MATTERS
18.1 TAX RECORDS. TXEN will provide to NRC and Subsidiary copies of all
its Tax Returns and other Tax related matters between the date of the execution
of this Agreement and the Effective Date and will provide copies to NRC and
Subsidiary of all records and information which may be relevant to such returns
and matters and will retain such records and information. Any information
obtained pursuant to this Section shall be kept confidential by the parties
hereto.
28
18.2 TXEN FINAL TAX RETURN. The Surviving Corporation agrees that, before
filing TXEN's federal income tax return for any taxable period ending on or
before the Effective Date, including, without limitation, the information
return of TXEN for the partial tax year of TXEN ended on the Effective Date,
they will obtain Shareholder Representative's approval and consent (which
approval and consent shall not be unreasonably withheld or delayed) for all
items of income and deduction shown thereon. The Surviving Corporation will
cause the federal and state income tax returns of TXEN for the period ending
the day before the Effective Date to be filed with the Internal Revenue Service
and state authorities.
SECTION 19. PIGGYBACK REGISTRATION RIGHTS OF SHAREHOLDERS
19.1 IN GENERAL. The rights provided for in this section (the "Piggyback
Rights") shall apply to those TXEN Shareholders who receive NRC Common Stock in
exchange for their TXEN Common Stock pursuant to this Agreement. As used in
this section, the term "NRC Common Stock" shall mean the par value $0.01 per
share common stock of NRC outstanding as of the date of the execution of this
Agreement and shall not include any preferred stock or other special class of
stock that may be registered under the Securities Act of 1933 (the "Act"). If
(but without any obligation to do so) NRC proposes to register any NRC Common
Stock under the Act in connection with the public offering of such NRC Common
Stock solely for cash (other than a registration relating solely to the sale of
securities to employees of NRC pursuant to a stock option, stock purchase or
similar plan, relating to a Rule 145 transaction, relating to a merger or other
NRC acquisition, or a registration on any form which does not include
substantially the same information as would be required to be included in a
registration statement covering the sale of the NRC Common Stock owned by the
Shareholders), NRC shall, at such time, promptly give each Shareholder who owns
NRC Common Stock pursuant to an exchange for his or her TXEN Common Stock under
this Agreement written notice of such registration. Upon NRC's receipt of the
written request of each such Shareholder given within 20 days after NRC's
mailing of such notice, NRC shall, subject to the other provisions of this
section, cause to be registered under the Act all of the NRC Common Stock that
each such Shareholder has requested to be registered, provided, however, that
each such Shareholder may only request registration for those shares of NRC
Common Stock acquired in exchange for TXEN Common Stock pursuant to this
Agreement (the "Registerable Securities"). NRC shall pay all costs for
registering the Registerable Securities. When required under the terms of this
section to effect the registration of the Registerable Securities, NRC shall,
as expeditiously as reasonably possible:
(a) prepare and file with the Securities and Exchange Commission (the
"Commission") a registration statement with respect to such Registerable
Securities and use its best efforts to cause such registration statement
to become effective.
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply
with the provisions of the Act with respect to the disposition of all
securities covered by such registration statement.
(c) furnish to the Shareholders who acquired NRC Common Stock
pursuant to this Agreement such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of
the Act, and such other documents as they may reasonably request in order
to facilitate the distribution of the Registerable Securities owned by
them.
(d) use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue
Sky Laws of such jurisdictions as shall be reasonably requested by the
underwriters, provided, however, that the holders of the Registerable
Securities shall not be allowed to cause NRC to register and qualify the
Registerable Securities under any particular security or Blue Sky Law of
any particular state or jurisdiction.
(e) in the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement with terms
generally satisfactory to the managing underwriter of such offering. Each
holder of Registerable Securities participating in the underwriting shall
also enter into and perform his or her respective obligations, as
reasonably requested by the managing underwriter, under such an agreement.
It shall be a condition precedent to the obligations of NRC to register the
Registerable Securities that the holders of the Registerable Securities shall
furnish to NRC such information regarding themselves, the Registerable
Securities held by them, and the intended method of disposition of such
Registerable Securities as shall be required to effect the registration of such
Registerable Securities. Notwithstanding any of the foregoing, NRC shall have
the right, in its sole discretion, to terminate the registration of the
Registerable Securities and the registration of the other NRC Common Stock
which triggered the Piggyback Rights if, at such time, the underwriters are of
the opinion that a registration at such time would not be advisable, or if
there has been a material adverse change in the condition, business or
prospects of NRC or if, for any good and sufficient reason, NRC determines to
terminate the registration causing the existence of the Piggyback Rights.
29
19.2 EXPENSES, LIMITATIONS AND AGREEMENTS. The holders of the Registerable
Securities must bear and pay their prorata portion of any underwriting
discounts and commissions. In connection with any offering involving an
underwriting, NRC shall not be required to include any of the holders of
Registerable Securities in such underwriting unless such holders accept the
terms of the underwriting as agreed upon between NRC and the underwriters
selected by NRC, and then only in such quantity as will not, in the opinion of
the underwriters, jeopardize the success of the offering by NRC or the NRC
shareholders demanding such registration. If the total amount of Registerable
Securities that all Shareholders with Piggyback Rights under this section
request to be included in such offering exceeds (when combined with the
securities being offered by NRC or its other shareholders) the amount of
securities that the underwriters reasonably believe compatible with the success
of the offering, then NRC shall be required to include in the offering only
that number of Registerable Securities which the underwriters believe will not
jeopardize the success of the offering and the Registerable Securities so
included shall be apportioned, prorata, among the Shareholders in accordance
with their respective ownership percentages or in such other proportions as
they shall mutually agree. The definitive agreements shall contain such other
provisions as the parties may require and agree in connection with the
Piggyback Rights, to include provisions requiring the Shareholders to indemnify
NRC or any underwriter in connection with any untrue statement of material fact
or the omission to state material facts committed or omitted by the
Shareholders in connection with the offering.
19.3 NO ASSIGNMENT OF PIGGYBACK RIGHTS. The Piggyback Rights may not be
assigned by a Shareholder owning Registerable Securities to any person,
executor, personal representative, transferee or assignee of the Registerable
Securities owned by the Shareholder.
19.4 TRANSFER RESTRICTION. Each Shareholder exercising Piggyback Rights
will agree that he or she will not, to the extent requested by NRC and/or any
underwriter, sell, make any short sale of, loan, grant any option for the
purchase of or otherwise transfer or dispose of any NRC Common Stock (including
the Registerable Securities) without the prior written consent of NRC and/or
such underwriter, as the case may be, during the 180 day period following the
effective date of the Registration Statement of NRC filed under the Act. In
order to enforce the foregoing covenant, NRC may impose stop-transfer
instructions with respect to the Registerable Securities until the end of such
180 day period.
19.5 TERMINATION. These Piggyback Rights under this Section shall
terminate one year after the Effective Date and thereafter, no Shareholder
shall have any right to require registration of his or her NRC Common Stock.
SECTION 20. POST CLOSING COVENANTS
After the Closing, NRC and Subsidiary covenant as follows:
(a) Any key employee term life insurance policies owned by TXEN where TXEN
was named beneficiary insuring the Shareholders shall be distributed to the
insured.
(b) Stock options covering 30,000 shares of NRC Common Stock will be
reserved for issuance under the NRC Stock Option Plan to employees of the
Subsidiary as recommended by Xxxxxx X. Xxxxxxxxx, and as approved by the NRC
Stock Option Committee.
(c) The 401(k) Plan of TXEN shall continue to be maintained by the
Subsidiary after the Closing, provided that Subsidiary may maintain such a
separate plan under applicable provisions of the Internal Revenue Code as a
member of a controlled group of corporations and that maintenance of such
separate plan will not disqualify the 401(k) Plan maintained by NRC or the
401(k) Plan maintained by Subsidiary under the qualification provisions of the
Internal Revenue Code or ERISA. Nothing contained herein shall require NRC to
amend or terminate its qualified retirement plan in order to maintain the
separate existence of the 401(k) Plan of TXEN.
30
SECTION 21. GENERAL PROVISIONS
21.1 FURTHER ASSURANCES. At any time, and from time to time, before and
after the Effective Date, each party will execute such additional instruments
and documents and take such action as may be reasonably requested by any other
party to confirm or perfect title to any property transferred hereunder or
otherwise to carry out the intent and purposes of this Agreement.
21.2 WAIVER. Any failure on the part of any party to comply with any of
its obligations, agreements or conditions hereunder may be waived in writing by
any other party.
21.3 BROKER. Each party represents to the others that no broker or finder
has acted for it in connection with this Agreement and agrees to indemnify and
hold harmless the other parties against any fee, loss or expense arising out of
claims by brokers or finders.
21.4 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given if delivered in person or on the
second day after sent by prepaid first-class, registered or certified mail,
return receipt requested or on the next day after sent by nationally recognized
overnight delivery service, as follows:
If to Subsidiary or XXXXXXX SELECT CORPORATION
the Surviving c/o Xxxxx X. Xxxxxx
Xxxxxxx Research Corporation
0000 Xxxxxxxx Xxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
If to NRC: Xxxxx X. Xxxxxx, Chairman and
Xxxxxxx Xxxx, President
Xxxxxxx Research Corporation
0000 Xxxxxxxx Xxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
If to the Xxxxxx X. Xxxxxxxxx
Shareholders: Shareholder Representative
00 Xxxxxxxxx Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
If to TXEN prior to the Xxxxxx X. Xxxxxxxxx, President
Effective Date: TXEN, INC.
00 Xxxxxxxxx Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
31
21.5 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties and supersedes and cancels any other Agreement,
representation or communication, whether oral or written, between the parties
hereto relating to the transactions contemplated herein or the subject matter
hereof.
21.6 GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Alabama.
21.7 ASSIGNMENT. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their successors and assigns, provided,
however, that no party may assign its rights or delegate its duties under this
Agreement and no party may assign this Agreement without the written consent of
the other party, which may be withheld in the sole discretion of the other
party, provided, however, that NRC may assign and/or delegate the Subsidiary's
duties, rights and obligations hereunder and may assign the Agreement as it
relates to Subsidiary to any other wholly owned Subsidiary of NRC.
21.8 COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
21.9 INTERPRETATION AND CONSTRUCTION. Each party to this Agreement
acknowledges and agrees that it and he is sophisticated in business matters and
has been represented, at all times, by counsel of its and his own choosing.
Consequently, any rule of law or construction which would require ambiguities
in this Agreement to be resolved against the party that has drafted this
Agreement shall not be applicable and is waived.
21.10 SHAREHOLDER REPRESENTATIVE. The Shareholders hereby elect and
appoint Xxxxxx X. Xxxxxxxxx as the Shareholder Representative and vest him with
the full power and authority, as agent and attorney-in-fact for the
Shareholders, to communicate and receive all notices, to give notices, counter
notices, joint written instructions and make payments and other communications
on behalf of the Shareholders, and to make agreements, compromises, waivers and
settlements with respect to this Agreement and the Escrow Agreement executed
herewith and to resolve all disputes under this Agreement. Xxxxxx X. Xxxxxxxxx
shall serve as Shareholder Representative until NRC receives written notice
from Shareholders who held, prior to the Effective Date, more than 50% of the
outstanding TXEN Common Stock, that another Shareholder has been named as the
Shareholder Representative. The appointment of Xxxxxx X. Xxxxxxxxx as
Shareholder Representative shall be considered a durable power of attorney, a
power of attorney coupled with an interest and to the extent permitted by law
shall survive the incapacity of any Shareholder and the death of any
Shareholder and the incapacity or death of any Shareholder shall not affect the
validity of such appointment by the other Shareholders.
21.11 CORPORATE POLICIES, ETC. All corporate acts, plans, policies,
approvals and authorizations of TXEN which were valid and effective immediately
prior to the Effective Date shall be taken for all purposes as the acts, plans,
policies, approvals and authorizations of the Subsidiary and shall be as
effective and binding thereon as they were on TXEN. Without limiting the
foregoing, all welfare benefit plans, salaries of the employees of TXEN,
employment policies, and sales and other policies in effect immediately prior
to the Merger shall be continued by the Subsidiary, except to the extent such
employees become employees of NRC. This Section shall not prevent the Board of
Directors or officers of the Subsidiary from amending or termination such acts,
plans, policies, approvals and authorizations after the Effective Date. This
Section is not intended to benefit any employee of TXEN or any other third
party.
21.12 SEVERABILITY. In the event any provision contained in this Agreement
shall be deemed or rendered illegal, against public policy or unenforceable by
any court of competent jurisdiction for any reason, then such provision shall
be deemed amended to the extent consistent with law and public policy,
provided, however, that if such amendment cannot be accomplished, such
provision shall be deemed severed from this Agreement and shall not make or
render any other provision contained herein unenforceable or affect any other
provision in this Agreement in any respect whatsoever.
21.13 KNOWLEDGE. Whenever a matter is represented or warranted with
respect to the knowledge of TXEN, the knowledge of any Shareholder with regard
to such matter shall be deemed to be the knowledge of TXEN and the knowledge of
persons other than a Shareholder shall not be deemed to be the knowledge of
TXEN.
32
IN WITNESS WHEREOF, each Constituent Corporation, pursuant to authority
duly given by its Board of Directors and NRC, has caused this Agreement to be
executed on its behalf by its duly authorized officers, all in accordance with
Section 103 of the General Corporation Law of the State of Delaware and Section
10-2B-11.05 of Alabama Business Corporation Act, and the Shareholders have
hereunto set their hands and seals, all as of the day and year first above
written.
XXXXXXX RESEARCH CORPORATION, a
Delaware corporation
By: Xxxxxxx X. Xxxx
--------------------------------------
Its President
ATTEST:
Xxxxx X. Xxxxxx
----------------------
Secretary
XXXXXXX SELECT CORPORATION, a
Delaware corporation
Xxxxxxx X. Xxxx
By: --------------------------------------
Its Chief Executive Officer
ATTEST:
Xxxxx X. Xxxxxx
----------------------
Secretary
TXEN, INC., an Alabama corporation
By: Xxxxxx X. Xxxxxxxxx
--------------------------------------
ATTEST: Its President
Xxxx X. Xxxxxx
----------------------
Secretary
33
THE SHAREHOLDERS OF TXEN, INC.:
Xxxxxx X. Xxxxxxxxx
--------------------------------------
Xxxxxx X. Xxxxxxxxx
Xxxx X. Xxxxxx
--------------------------------------
Xxxx X. Xxxxxx
Xxxxx X. Xxxxxx
--------------------------------------
Xxxxx X. Xxxxxx
Xxxxxx Xxxxxxx
--------------------------------------
Xxxxxx Xxxxxxx
Xxxxx X. Xxxxxxx
--------------------------------------
Xxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxx
Xxxx Xxxxxxx
--------------------------------------
Xxxx Xxxxxxx
Xxxxxx X. Xxxxxxxxx
--------------------------------------
Xxxxxx X. Xxxxxxxxx
Xxxxx X. Xxxxxxxx
--------------------------------------
Xxxxx X. Xxxxxxxx
Xxx X. Xxxxxxx
--------------------------------------
Xxx X. Xxxxxxx
Xxxxx X. XxXxxxxxx
--------------------------------------
Xxxxx X. XxXxxxxxx
34
Xxxxxxxx X. Xxxx
--------------------------------------
Xxxxxxxx X. Xxxx
Xxxx X. Xxxxxx
--------------------------------------
Xxxx X. Xxxxxx
Xxxxx X. Xxxxx
--------------------------------------
Xxxxx X. Xxxxx
Xxx X. Sailor
--------------------------------------
Xxx X. Sailor
Xxxxxx X. Xxxxxxxx
--------------------------------------
Xxxxxx X. Xxxxxxxx
Xxxxx X. Till
--------------------------------------
Xxxxx X. Till
Xxxxxx Xxxx
--------------------------------------
Xxxxxx Xxxx
Xxxxxxx X. Xxxxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxxxx
Xxxxx X. Xxxxx
--------------------------------------
Xxxxx X. Xxxxx
Xxxxxxx X. Xxxxx
--------------------------------------
Xxxxxxx X. Xxxxx
H. Grey Wood
--------------------------------------
H. Grey Wood
Board of Trustees of the University of
Alabama, for use of and on behalf of the
University of Alabama, Tuscaloosa, Alabama
By: Xxxxxx X. Xxxxxx
--------------------------------------
Its Vice President for Financial
Affairs and Treasurer
By: Xxxx X. Xxxxxx
--------------------------------------
Its Comptroller and Associate Treasurer
Xxxxxx X. Xxxxxxxxx
----------------------------------------------
Xxxxxx X. Xxxxxxxxx, Trustee of the Xxxxxxxxx
Family Charitable Unitrust, established
August 5, 1997
