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EXHIBIT 10.1
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of April 20, 1999 (this
"Agreement"), by and among Tyler Corporation, a Delaware corporation
("Parent"), Computer Center Software, Inc., a Delaware corporation and
wholly-owned subsidiary of Parent ("Merger Sub"), Process, Incorporated d/b/a
Computer Center Software, a Maine corporation (the "Company"), and the
stockholders of the Company named on the signature pages of this Agreement (the
"Stockholders"). Parent and Merger Sub are sometimes referred to in this
Agreement as the "Tyler Companies."
BACKGROUND
Merger Sub, on the terms and subject to the conditions of this
Agreement and in accordance with the Delaware General Corporation Law
("Delaware Law") and the Maine General Corporation Law ("Maine Law"), will
merge with and into the Company (the "Merger") and, pursuant thereto, the
issued and outstanding shares of the Company's common stock, $100 par value per
share (the "Company Stock"), will be converted into the right to receive (i)
cash and (ii) shares of Parent common stock, $0.01 par value per share (the
"Parent Common Stock").
Articles I and II will constitute a "plan of merger" for the purposes
of Delaware Law and Maine Law.
THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, and agreements set forth in this
Agreement and other good and valuable consideration, the receipt and
sufficiency of which all parties mutually acknowledge, the parties, intending
to be legally bound, agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01. The Merger. On the terms and subject to the conditions
set forth in this Agreement, and in accordance with Delaware Law and Maine Law,
at the Effective Time (as defined in Section 1.02), Merger Sub will be merged
with and into the Company. As a result of the Merger, the separate corporate
existence of Merger Sub will cease and the Company will continue as the
surviving corporation of the Merger (the "Surviving Corporation"). The Company
shall be a wholly-owned subsidiary of Parent.
SECTION 1.02. Closing; Closing Date; Effective Time. Unless this
Agreement has been terminated pursuant to Section 8.01, and subject to the
satisfaction or waiver of the conditions set forth in Article VII, the
consummation of the Merger and the closing of the transactions contemplated by
this Agreement (the "Closing") will take place at the offices of Parent, 0000
X. Xxxxxxxxxxx Xxxx, Xxxxxx, Xxxxx 00000 on April 20, 1999 or as soon as
practicable (but in any event within five business days) after the satisfaction
or waiver of the conditions as set forth in Article VII, or at such other date,
time, and place as Parent and the Company agree. The date on which the Closing
takes place is referred to as the "Closing Date." As promptly as practicable on
the Closing Date, the parties will cause the Merger to be consummated by filing
articles or a certificate of merger (together, the "Certificate of Merger")
with the Secretary of State of the State of Delaware and the Secretary of State
of the State of Maine, in such form as required by, and executed in accordance
with the relevant provisions of, Delaware Law and Maine Law, respectively (the
date and time of the last such filing, or such later date or time agreed upon
by the Parent and the Company and set forth in the Certificate of Merger, being
the "Effective Time").
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SECTION 1.03. Effect of the Merger. At the Effective Time, the effect
of the Merger will be as provided in the applicable provisions of Delaware Law
and Maine Law.
SECTION 1.04. Certificate of Incorporation; Bylaws. At the Effective
Time, the certificate of incorporation of the Company, as in effect immediately
prior to the Effective Time, will be the certificate of incorporation of the
Surviving Corporation and thereafter will continue to be its certificate of
incorporation until amended as provided in such certificate of incorporation
and pursuant to Maine Law. At the Effective Time, the bylaws of the Company, as
in effect immediately prior to the Effective Time, will be the bylaws of the
Surviving Corporation and thereafter will continue to be its bylaws until
amended as provided in such bylaws and pursuant to Maine Law.
SECTION 1.05. Directors and Officers. The directors of the Company
immediately prior to the Effective Time will be the directors of the Surviving
Corporation, each to hold office in accordance with the certificate of
incorporation and bylaws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time will be the officers of the
Surviving Corporation, each to hold office in accordance with the bylaws of the
Surviving Corporation, in each case until their respective successors are duly
elected or appointed and qualified.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01. Merger Consideration; Conversion and Cancellation of
Company Stock. At the Effective Time, by virtue of the Merger and without any
action on the part of the Tyler Companies, the Company, or their respective
stockholders:
(a) Subject to the other provisions of this Article II, each
share of Company Stock issued and outstanding immediately prior to the
Effective Time (excluding any Company Stock described in Section 2.01
(b)) will be converted into the right to receive (i) $191,176.4706
cash, and (ii) 31,796.50588 shares of Parent Common Stock (the "Tyler
Shares") ((i)-(ii) are collectively referred to herein as the "Merger
Consideration"). The aggregate cash consideration of $16,250,000 to be
paid to the Stockholders is subject to the post-closing adjustment as
set forth in Section 2.04.
Notwithstanding the foregoing, if, between the date of this
Agreement and the Effective Time, the outstanding shares of Parent
Common Stock or Company Stock have been changed into a different
number of shares or a different class by reason of any stock dividend,
subdivision, reclassification, re-capitalization, split, combination,
exchange of shares, or similar occurrence, the Merger Consideration
will be correspondingly adjusted to reflect such stock dividend,
subdivision, reclassification, re-capitalization, split, combination,
exchange of shares, or similar occurrence.
(b) Notwithstanding any provision of this Agreement to the
contrary, each share of Company Stock held in the treasury of the
Company immediately prior to the Effective Time will be canceled and
extinguished without any conversion thereof and no payment will be
made with respect thereto.
(c) All shares of Company Stock will cease to be outstanding
and will automatically be canceled and retired, and each certificate
previously evidencing Company Stock outstanding immediately prior to
the Effective Time (other than Company Stock described in Section
2.01(b)) (the "Converted Shares") will thereafter represent the right
to receive the per share portion of the Merger Consideration. The
holders of certificates previously evidencing Converted Shares will
cease to have any rights with respect to such
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Converted Shares, except as otherwise provided in this Agreement or
by applicable law. Such certificates previously evidencing Converted
Shares will be exchanged for the Merger Consideration, including
certificates evidencing whole shares of Parent Common Stock upon the
surrender of such certificates in accordance with the provisions of
Section 2.02, without interest. No fractional shares of Parent Common
Stock will be issued in connection with the Merger; instead, on each
occasion that shares of Parent Common Stock are issuable to a holder
of Converted Shares pursuant to this Section 2.01, such number of
shares will be rounded up to the nearest whole share.
SECTION 2.02. Exchange and Surrender of Certificates.
(a) At the Closing, each holder of a certificate previously
evidencing Converted Shares will surrender such certificate to Parent
and receive in exchange for such certificate (i) the right to receive
a certificate or certificates representing the Tyler Shares into which
the Converted Shares so surrendered have been converted as described
in Section 2.01, in such denominations and registered in such names as
such holder may request, and (ii) the payment referred to in Section
2.01(a). At the Closing, Parent will cause its transfer agent to issue
and deliver certificates representing the Tyler Shares to the
Stockholders to be effective as of the Effective Time. Until so
surrendered and exchanged, each certificate previously evidencing
Converted Shares will represent solely the right to receive the Merger
Consideration.
(b) All shares of Parent Common Stock issued upon the
surrender for exchange of certificates previously representing
Converted Shares in accordance with the terms of this Agreement will
be deemed to have been issued in full satisfaction of all rights
pertaining to such Converted Shares. At and after the Effective Time,
there will be no further registration of transfers on the stock
transfer books of the Surviving Corporation of Company Stock that was
outstanding immediately prior to the Effective Time. If, after the
Effective Time, certificates that previously evidenced Converted
Shares are presented to the Surviving Corporation for any reason, they
will be canceled and exchanged as provided in this Article II.
SECTION 2.03. Legend on Stock. Each certificate representing shares
of Parent Common Stock to be issued in the Merger will bear substantially the
following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR UNDER THE APPLICABLE SECURITIES LAWS OF ANY
STATE, AND MAY NOT BE SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH THE
REQUIREMENTS OF ALL SUCH LAWS.
SECTION 2.04. Post-Closing Purchase Price Adjustment.
(a) Adjustment to Purchase Price. The aggregate cash
consideration in the amount of $16,250,000 to be paid to the
Stockholders as set forth in Section 2.01(a)(i) will be reduced,
dollar for dollar, by the amount of Term Debt (as defined below) of
the Company existing as of the Closing Date. The Stockholders covenant
and agree that they will not, and will not cause the Company to, draw
down on any revolving line of credit for the Company for the purpose
of using such money to pay off any outstanding Term Debt.
(b) Adjustment Procedure. As promptly as practicable after
the Closing Date but in any event within thirty (30) days after the
Closing Date, the Surviving Corporation will prepare and deliver to
Parent and the Stockholders a schedule setting forth the amount of any
Term Debt (a "Term Debt Schedule") as of the close of business on the
Closing Date. The parties agree to
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negotiate in good faith for a period of ten (10) days to resolve any
disputes with respect to the Term Debt Schedule.
(c) Final Payment. To the extent that the Term Debt Schedule
determines that an adjustment (as calculated in accordance with
Section 2.04(a)) to the cash consideration paid by Parent should be
made, each Stockholder will pay its respective pro rata portion of
such adjustment to Parent in immediately available funds. Any such
payment must be made not later than (i) if the parties do not dispute
the Term Debt Schedule, ten (10) days after delivery of the Term Debt
Schedule, or (ii) if the parties do dispute the Term Debt Schedule,
ten (10) days after final resolution of such dispute.
(d) For purposes of this Agreement, the term "Term Debt"
shall mean all principal, interest, fees, and expenses due and payable
by the Company under that certain Term Loan Agreement with Key Bank
National Association dated as of March 27, 1997, as may be amended, as
of the Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
The Stockholders hereby severally and solely with respect to their
respective capital ownership interests represent and warrant to the Tyler
Companies as follows:
SECTION 3.01. Organization and Qualification; Stockholders. The
Company is a corporation duly organized, validly existing, and in good standing
under the laws of its state of incorporation, has all requisite power and
authority to own, lease, and operate its properties and to carry on its
business as it is now being conducted, and is duly qualified and in good
standing to do business in each jurisdiction in which the nature of the
business conducted by it or the ownership or leasing of its properties makes
such qualification necessary, other than where the failure to be so duly
qualified and in good standing would not have a Company Material Adverse
Effect. "Company Material Adverse Effect" means any change, effect, or
condition that, individually or when taken together with all other such
changes, effects, or conditions, would be materially adverse to the business,
operations, assets, financial condition, or results of operations of the
Company. The Stockholders beneficially and of record own the number of shares
of Company Stock set forth opposite their names on Schedule 3.01 of the
Disclosure Schedule attached to this Agreement and made a part of this
Agreement (the "Disclosure Schedule"), free and clear of all security
interests, liens, claims, pledges, agreements, limitations on voting rights,
and charges.
SECTION 3.02. Charter and Bylaws. The Company has furnished to Parent
true, complete, and correct copies of the certificate of incorporation and
bylaws of the Company, as amended or restated to the date of this Agreement.
The Company is not in violation of any of the provisions of its certificate of
incorporation or bylaws and such certificates and bylaws remain in full force
and effect.
SECTION 3.03. Capitalization.
(a) The authorized capital stock of the Company consists of
500 shares of Company Stock, of which 85 shares are issued and
outstanding. Except as disclosed in Schedule 3.03(c)(i) to the
Disclosure Schedule, no shares of capital stock of the Company are
reserved for any purpose. Each of the outstanding shares of capital
stock of the Company is duly authorized, validly issued, and fully
paid and nonassessable, and has not been issued in violation of (nor
are any of the authorized shares of capital stock of the Company
subject to) any preemptive or similar rights under the certificate of
incorporation or bylaws of the Company, or to the knowledge of the
Stockholders, federal or state securities laws, or any agreement to
which the Company is a party or by which it is bound.
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(b) The Company does not (i) directly or indirectly own, (ii)
have any agreement to purchase or otherwise acquire, or (iii) hold any
interest convertible into or exchangeable or exercisable for, any
equity interest in any Person.
(c) Except as set forth on Schedule 3.03(c)(i) to the
Disclosure Schedule, there are no options, warrants, or other rights,
agreements, arrangements, or commitments of any character to which the
Company is a party or by which it is bound relating to the issued or
unissued capital stock or other securities of the Company or
obligating the Company to grant, issue, or sell any shares of its
capital stock or other securities. Except as set forth in Schedule
3.03(c)(ii) to the Disclosure Schedule, there are no agreements,
arrangements, or commitments of any character (contingent or
otherwise) pursuant to which any Person is or may be entitled to
receive any payment based on the revenues or earnings, or calculated
in accordance therewith, of the Company. There are no voting trusts,
proxies, or other agreements or understandings to which the Company is
a party or by which the Company is bound with respect to the voting of
any shares of capital stock of the Company.
(d) Except as set forth in Schedule 3.03(d) to the Disclosure
Schedule, there are no obligations, contingent or otherwise, of the
Company to (i) repurchase, redeem, or otherwise acquire any shares of
the Company Stock or other capital stock or other securities of the
Company; or (ii) provide material funds to, or make any material
investment in (in the form of a loan, capital contribution, or
otherwise), or provide any guarantee with respect to the obligations
of any Person.
SECTION 3.04. Authority. The Company has all requisite corporate power
and authority to execute and deliver this Agreement and the other documents
contemplated by this Agreement (the "Ancillary Agreements") to which it is a
party, to perform its obligations hereunder and thereunder, and to consummate
the transactions contemplated hereby and thereby, subject only to the
affirmative consent of the Stockholders. Each Stockholder has the legal
capacity to execute and deliver this Agreement and the Ancillary Agreements to
which it is a party, to perform its obligations hereunder and thereunder, and
to consummate the transactions contemplated hereby and thereby. The execution
and delivery of this Agreement and the Ancillary Agreements to which the
Company is a party by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action, and no other corporate proceedings on the part of
the Company or its stockholders are necessary to authorize this Agreement or
the Ancillary Agreements to which the Company is a party or to consummate the
transactions contemplated hereby or thereby. This Agreement and the Ancillary
Agreements have been duly executed and delivered by the Company and the
Stockholders that are parties thereto and, assuming the due authorization,
execution, and delivery of this Agreement by the Tyler Companies, constitute
the legal, valid, and binding obligations of the Company and the Stockholders,
as the case may be, enforceable in accordance with their respective terms.
SECTION 3.05. No Conflict; Required Filings and Consents.
(a) Except as set forth in Schedule 3.05(a) to the Disclosure
Schedule, the execution and delivery of this Agreement and the
Ancillary Agreements by the Company and the Stockholders do not, and
the consummation of the transactions contemplated thereby will not,
(i) conflict with or violate the certificate of incorporation or
bylaws, as amended or restated to the date of this Agreement, of the
Company; (ii) to the knowledge of the Stockholders, conflict with or
violate in any material respect any federal, state, foreign, or local
law, statute, ordinance, rule, regulation, order, judgment, or decree,
including, without limitation, laws relating to employment
discrimination, fair employment practices, fair labor standards, equal
employment opportunity, individual or collective employee rights, and
occupational health and safety (collectively, "Laws") applicable to
the Stockholders or the
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Company or by which any of their respective properties is bound or
subject; or (iii) except as set forth in Schedule 3.05(c)(iii) to the
Disclosure Schedule, result in any material breach of or constitute a
material default (or an event that with notice or lapse of time or
both would become a default) under, or give to any other Person any
rights of termination, amendment, acceleration, or cancellation of, or
require payment under, or result in the creation of a lien or
encumbrance on any of the properties or assets of the Company pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise, or other instrument or obligation to which
the Company is a party or by or to which the Company or any of its
properties is bound or subject.
(b) The execution and delivery of this Agreement and the
Ancillary Agreements by the Company or the Stockholders do not, and
consummation of the transactions contemplated hereby and thereby will
not, require the Company or any Stockholder to obtain any consent,
license, permit, approval, waiver, authorization, or order of, or to
make any filing with or notification to, any governmental or
regulatory authority, domestic or foreign (collectively, "Governmental
Entities"), except the filing and recordation of the Articles of
Merger as required by Delaware Law and Maine Law.
SECTION 3.06. Permits; Compliance. The Company is in possession of all
franchises, grants, authorizations, licenses, permits, easements, variances,
exemptions, consents, certificates, approvals, and orders necessary to own,
lease, and operate its properties and to carry on its business as it is now
being conducted and currently proposed to be conducted (collectively, the
"Company Permits"), the absence of which would not cause a Company Material
Adverse Effect, and there is no action, proceeding, or investigation pending
or, to the knowledge of the Company or any Stockholder, threatened regarding
suspension or cancellation of any of the Company Permits. Except for instances
that would not have a Company Material Adverse Effect, the Company is not in
conflict with or in default or violation of (a) any Law applicable to the
Company or by or to which any of its properties is bound or to which they may
be subject or (b) any of the Company Permits. The Company has not received any
written notice with respect to possible conflicts, defaults, or violations of
Laws from any Governmental Entity.
SECTION 3.07. Financial Statements.
(a) Attached as Schedule 3.07 of the Disclosure Schedule are
true, correct, and complete copies of (i) the audited consolidated
financial statements of the Company as of and for the fiscal year
ended September 30, 1998 (the "Balance Sheet Date"), including balance
sheets and statements of income, cash flows, and changes in
stockholders' equity, as certified by the Company's independent
certified public accountants, which are attached to the Disclosure
Schedule as Schedule 3.07(a)(i); and (ii) the unaudited interim
consolidated financial statements of the Company as of and for the
period ended December 31, 1998, including a balance sheet as of such
date (the "Latest Balance Sheet") and statements of income, cash flow,
and stockholders' equity, which are attached to the Disclosure
Schedule as Schedule 3.07(a)(ii) (collectively, the "Financial
Statements"). The Financial Statements present fairly, in all material
respects, the financial position of the Company at the dates shown and
the results of operations and cash flows for the periods then ended in
accordance with generally accepted accounting principles applied on a
consistent basis.
(b) To the knowledge of the Stockholders, there is no
liability or obligation of the Company of any nature, whether
absolute, accrued, contingent, or otherwise, other than: (i) the
liabilities and obligations that are fully reflected, accrued, or
reserved against on the Company's balance sheet, for which the
reserves are appropriate and reasonable, or incurred in the ordinary
course of business consistent with past practices since the Balance
Sheet Date; (ii) the loss contingencies set forth in Schedule 3.07(b)
of the Disclosure Schedule; (iii) contractual liabilities or
obligations of a nature not required to be disclosed on a balance
sheet prepared in accordance with generally accepted accounting
principles, but
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which, if material, are disclosed in Schedule 3.07(b) of the Disclosure
Schedule; (iv) other liabilities and loss contingencies that are not
material in the aggregate to the business, operations, assets, or
condition (financial or otherwise) of the Company.
(c) The Company is not a signatory to, and is not in any
manner a guarantor, endorser, assumptor, or otherwise primary or
secondarily liable for or responsible for the payment of any notes
payable other than those set forth on Schedule 3.07(c) of the
Disclosure Schedule.
SECTION 3.08. Absence of Certain Changes or Events. Since the Balance
Sheet Date, the Company has conducted its business only in the ordinary course
and in a manner consistent with past practice, and there has not been, except
as set forth in Schedule 3.08 of the Disclosure Schedule, (a) any material
damage, destruction, or loss (whether or not covered by insurance) with respect
to any assets of the Company; (b) any change by the Company in its accounting
or tax reporting methods, principles, or practices; (c) any declaration,
setting aside, or payment of any dividends or distributions in respect of
shares of Company Stock, or any redemption, repurchase, or other acquisition by
the Company of any of the Company's securities; (d) any increase in the
benefits under, or the establishment or amendment of, any bonus, insurance,
severance, deferred compensation, pension, retirement, profit sharing, stock
option (including, without limitation, the granting of stock options, stock
appreciation rights, performance awards, or restricted stock awards), stock
purchase, or other employee benefit plan, or any increase in the compensation
payable or to become payable to directors, officers, or employees of the
Company; (e) any entry by the Company into any material commitment or
transaction not in the ordinary course of business and consistent with past
practice (other than this Agreement and the transactions contemplated by this
Agreement); (f) any increase in indebtedness for borrowed money; or (g) any
Company Material Adverse Effect.
SECTION 3.09. Absence of Litigation. Except as set forth in Schedule
3.09 to the Disclosure Schedule, there is no investigation by any Governmental
Entity nor any claim, action, suit, litigation, proceeding, or arbitration of
any kind, at law or in equity (including actions or proceedings seeking
injunctive relief), pending or, to the knowledge of any Stockholder, threatened
against the Company or any properties or rights of the Company, or relating to
this Agreement or the transactions contemplated by this Agreement, and the
Company is not subject to any continuing order of, consent decree, settlement
agreement, or other similar written agreement with, or continuing investigation
by, any Governmental Entity, or any judgment, order, writ, injunction, decree,
or award of any Governmental Entity or arbitrator, including, without
limitation, cease-and-desist or other orders. No matter disclosed on Schedule
3.09 to the Disclosure Schedule will result in a Company Material Adverse
Effect.
SECTION 3.10. Employee Benefit Plans; Labor Matters.
(a) Set forth in Schedule 3.10(a) to the Disclosure Schedule
is a complete and correct list of all "employee benefit plans" (as
defined in the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")), all plans or policies providing for "fringe
benefits" (including but not limited to vacation, paid holidays,
personal leave, employee discount, educational benefit, or similar
programs), and each other bonus, incentive, compensation, deferred
compensation, profit sharing, stock, severance, retirement, health,
life, disability, group insurance, employment, stock option, stock
purchase, stock appreciation right, supplemental unemployment, layoff,
consulting, or any other similar plan, agreement, policy, or
understanding (whether written or oral, qualified or nonqualified,
currently effective or terminated), and any trust, escrow, or other
agreement related thereto that (i) is or has been established,
maintained, or contributed to by the Company or any ERISA Affiliate
(as defined below) or with respect to which the Company or any ERISA
Affiliate has any liability, or (ii) provides benefits, or describes
policies or procedures applicable, to any officer, employee, director,
former officer, former employee, or former director of the Company or
any
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ERISA Affiliate, or any dependent thereof, regardless of whether
funded (each, an "Employee Plan," and collectively, the "Employee
Plans"). For purposes of this Agreement, "ERISA Affiliate" means the
Company and each Person or other trade or business, whether or not
incorporated, that is or has been treated as a single employer or
controlled group member with the Company pursuant to Code section 414
or ERISA section 4001.
(b) To the knowledge of the Stockholders, no written or oral
representations have been made to any employee or officer or former
employee or officer of the Company promising or guaranteeing any
coverage under any employee welfare plan for any period of time beyond
the end of the current plan year (except to the extent of coverage
required under Code section 4980B), and no Employee Plan provides
benefits to any employee of the Company or any ERISA Affiliate or any
employee's dependents after the employee terminates employment other
than as required by law. The consummation of the transactions
contemplated by this Agreement will not accelerate the time of payment
or vesting, or increase the amount of compensation (including amounts
due under Employee Plans) due to any employee, officer, former
employee, or former officer of the Company.
(c) Except as set forth on Schedule 3.10(c) to the Disclosure
Schedule, all employees of the Company are terminable at the will of
the Company, and the Company has not, nor has any present or former
director, officer, employee, or agent of the Company, made any binding
commitments of the Company, written or oral, to any present or former
director, officer, agent, or employee concerning his or her term,
condition, or benefits of employment by the Company other than as set
forth in Schedule 3.10(c) to the Disclosure Schedule.
(d) With respect to each Employee Plan, the Company has
furnished to Parent true, correct, and complete copies of (i) the plan
documents and summary plan description; (ii) the most recent
determination letter received from the Internal Revenue Service; (iii)
the annual reports required to be filed for the two most recent plan
years of each such Employee Plan; (iv) all related trust agreements,
insurance contracts; or other funding agreements that implement such
Employee Plan; and (v) all other documents, records, or other
materials related thereto requested by the Parent.
(e) The Company's 401(k) savings plan (i) is the only
employee pension benefit plan maintained by the Company or any ERISA
Affiliate or with respect to which the Company or any ERISA Affiliate
contributes or has any liability; and (ii) meets the qualification
requirements of the Code in form and operation, and such plan, and
each trust (if any) forming a part thereof, have received a favorable
determination letter from the Internal Revenue Service as to the
qualification under the Code of such plan and the tax-exempt status of
such related trust, and, to the knowledge of the Stockholders, nothing
has occurred since the date of such determination letter that could be
expected to adversely affect the qualification of such plan or the
tax-exempt status of such related trust. To the knowledge of the
Stockholders, all Employee Plans purporting to qualify for special tax
treatment under any provision of the Code, including, without
limitation, Code sections 79, 105, 106, 125, 127, 129, 132, 421, or
501(c)(9), meet the requirement of such sections in form and in
operation. All reports, returns, or filings required by any
Governmental Entity have been timely filed in accordance with all
applicable requirements.
(f) To the knowledge of the Stockholders, neither the
Company, nor any ERISA Affiliate, nor any plan fiduciary of any
Employee Plan has engaged in any transaction in violation of section
406(a) or (b) of ERISA or any "prohibited transaction" (as defined in
section 4975(c)(1) of the Code), that could subject the Company, any
ERISA Affiliate, or the Parent to any taxes, penalties, or other
liabilities resulting from such prohibited transaction. To the
knowledge of the Stockholders, no condition exists that would subject
the Company, any ERISA Affiliate, or the Parent to any excise tax,
penalty tax, or fine related to any Employee Plan.
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(g) There are no agreements that will or may provide payments
to any officer, employee, stockholder, or highly compensated
individual that will be "parachute payments" under Code section 280G
that are nondeductible to the Company or subject to tax under Code
section 4999 for which the Company or any ERISA Affiliate would have
withholding liability.
(h) There is no Employee Plan that is or was subject to Part
3 of Title I of ERISA or Title IV of ERISA; each Employee Plan has
been operated in all material respects in compliance with ERISA, the
Code, and all other applicable laws; none of the Employee Plans is or
was a "multiple employer plan" or "multiemployer plan" (as described
or defined in ERISA or the Code), nor has the Company or any ERISA
Affiliate ever contributed or been required to contribute to any such
plan; there are no material unfunded liabilities existing under any
Employee Plans; and each Employee Plan that has not been terminated
could be terminated as of the Closing Date without any material
liability to the Parent, the Company, or any ERISA Affiliate. All
contributions required to be made to the Employee Plans have been made
timely.
(i) The Company is not now nor has it ever been a party to
any collective bargaining or other labor union contract, and no
collective bargaining agreement is being negotiated by the Company.
The Company is in compliance in all material respects with all
applicable laws respecting employment, employment practices, and wages
and hours. There is no pending or, to the knowledge of the
Stockholders, threatened labor dispute, strike, or work stoppage
against the Company that may interfere with the business activities of
the Company. To the knowledge of the Stockholders, neither the Company
nor any of its representatives or employees has committed any unfair
labor practices in connection with the operation of the business of
the Company, and there is no pending or threatened charge or complaint
against the Company by the National Labor Relations Board or any
comparable Governmental Entity.
(j) Except as set forth on Schedule 3.10(j) to the Disclosure
Schedule, the Company is not a party to or bound by any severance
agreements, programs, policies, plans, or arrangements, whether or not
written. Schedule 3.10(j) to the Disclosure Schedule sets forth, and
the Company has provided to Parent true and correct copies of, (i) all
employment agreements with officers or employees of the Company; (ii)
all agreements with consultants of the Company obligating the Company
to make annual cash payments in an amount exceeding $10,000; and (iii)
all noncompetition agreements between the Company and persons or
entities employed by or engaged by the Company.
(k) The Company has not amended or taken any other action
with respect to any of the Employee Plans or any of the plans,
programs, agreements, policies, or other arrangements described in
this Section 3.10 since the Balance Sheet Date.
SECTION 3.11. Taxes.
(a) All federal, state, county, and local returns and reports
(the "Tax Returns") of or with respect to any Tax that are required to
be filed by or with respect to the Company or its business or
activities have been duly and timely filed. All items of income, gain,
loss, deduction, and credit or other items required to be included in
each such Tax Return have been included, and all information provided
in each such Tax Return is true, correct, and complete. All Taxes that
have been or are due and payable as reflected in such Tax Return have
been timely paid in full. The Company is not subject to taxation by
any jurisdiction where the Company does not file Tax Returns. All
withholding Tax requirements imposed on or with respect to the Company
have been satisfied in full in all respects. No penalty, interest, or
other charge is due with respect to the late filing of any such Tax
Return or late
10
payment of any such Tax. The Company has disclosed on its federal
income Tax Returns all positions taken that could give rise to a
substantial understatement of federal income Tax within the meaning of
Code section 6662.
(b) All Tax Returns of or with respect to the Company with
unexpired or extended statutes of limitations that have not been
audited by the applicable Governmental Entity are set forth in
Schedule 3.11(b) to the Disclosure Schedule.
(c) Except as set forth on Schedule 3.11(c) to the Disclosure
Schedule, there is not in force any extension of time with respect to
the due date for the filing of any Tax Return of or with respect to
the Company nor any waiver or agreement for any extension of time for
the assessment, collection, or payment of any Tax of or with respect
to the Company.
(d) There are no pending audits, actions, proceedings,
investigations, disputes, or claims with respect to or against the
Company for or with respect to any Taxes; no assessment, deficiency,
or adjustment has been assessed or proposed with respect to any Tax
Return of or with respect to the Company; and, to the knowledge of the
Stockholders, there is no reasonable basis on which any claim for
material Taxes can be asserted against the Company, other than those
disclosed (and to which are attached true and complete copies of all
audit or similar reports) on Schedule 3.11(d) to the Disclosure
Schedule. Schedule 3.11(d) to the Disclosure Schedule also indicates
all Tax Returns that have been audited by any taxing authority. The
Company has delivered to the Parent correct and complete copies of all
Tax Returns, examination reports, and statements of any deficiencies
assessed against or agreed to by the Company during the past five
years.
(e) The total amounts set up as liabilities for current and
deferred Taxes in the Latest Balance Sheet are sufficient to cover the
payment of all Taxes, whether or not assessed or disputed, that are or
will be (or will hereafter be found to be) due by or with respect to
the Company up to and through the Closing Date.
(f) The Company has previously delivered to Parent true and
complete copies of each written Tax allocation or sharing agreement
and a true and complete description of each unwritten Tax allocation
or sharing arrangement affecting the Company, each of which is listed
on Schedule 3.11(f) to the Disclosure Schedule. The Company is not
liable for the Taxes of any Person under federal, state, foreign, or
local law as a transferee, successor, by contract, or otherwise.
(g) Except for inchoate statutory liens for current Taxes not
yet due, no liens for Taxes exist upon the assets of the Company.
(h) The Company does not have any material contingent income
tax liabilities other than those reflected on the Company's balance
sheet and those arising in the ordinary course of business since the
date thereof, and those arising as a result of the transactions
contemplated hereby, if any.
(i) No property of the Company is held in an arrangement for
which partnership Tax Returns are being filed, and the Company does
not own any interest in any controlled foreign corporation (as defined
in section 957 of the Code), passive foreign investment company (as
defined in section 1296 of the Code), foreign trust, or other Person
the income of which is required to be included in the income of the
Company.
(j) No property of the Company is subject to a safe-harbor
lease (pursuant to section 168(f) (8) of the Internal Revenue Code of
1954 as in effect after the Economic Recovery Tax Act of 1981 and
before the Tax Reform Act of 1986) or is "tax-exempt use
11
property" (within the meaning of section 168(h) of the Code) or
"tax-exempt bond financed property" (within the meaning of section
168(g) (5) of the Code).
(k) None of the transactions contemplated by this Agreement
will result in any Tax liability or the recognition of any item of
income or gain to the Company.
(l) The Company has not made an election under section 341(f)
of the Code. The Company is not a United States real property holding
corporation within the meaning of Code section 897(c)(2) during the
applicable period specified in Code section 897(c)(1)(A)(ii).
(m) Schedule 3.11(m) to the Disclosure Schedule sets forth
the following information with respect to the Company as of the most
recent practicable date (as well as on an estimated pro forma basis as
of the Effective Time giving effect to the consummation of the
transactions contemplated by this Agreement): (i) its basis in its
assets; and (ii) the amount of any net operating loss, net capital
loss, unused investment or other credit, unused foreign tax, or excess
charitable contributions.
SECTION 3.12. Certain Business Practices. To the knowledge of the
Stockholders, neither the Company nor any director, officer, agent, or employee
of the Company acting in such capacity has (a) used any funds on behalf of the
Company for unlawful contributions, gifts, entertainment, or other unlawful
expenses relating to political activity; (b) made any unlawful payment to
foreign or domestic government officials or employees or to foreign or domestic
political parties or campaigns or violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended; or (c) made any other unlawful payment.
SECTION 3.13. Environmental Matters. Except for matters disclosed in
Schedule 3.13 to the Disclosure Schedule, (a) to the knowledge of the
Stockholders, the properties, operations, and activities of the Company comply
currently with, and have at all times complied with, in all material respects
all applicable Environmental Laws (as defined below); (b) the Company (or its
properties or operations) is not subject to any existing, pending, or, to the
knowledge of the Stockholders, threatened action, suit, claim, investigation,
inquiry, or proceeding by or before any Governmental Entity under any
Environmental Law; (c) to the knowledge of the Stockholders, there are no
physical or environmental conditions existing on any property used by the
Company or resulting from the Company's operations or activities, past or
present, at any location, that would give rise to any on-site or off-site
remedial obligations or other liabilities imposed under any Environmental Laws
or that would affect the soil, groundwater, surface water, or human health; (d)
to the knowledge of the Stockholders, there has been no exposure of any Person
or property to hazardous substances or any pollutant or contaminant, nor has
there been any release of hazardous substances or any pollutant or contaminant
into the environment, by the Company as a result of its operations; and (e) the
Company has made available to the Parent all internal and external
environmental audits and studies and all correspondence on environmental
matters in the possession of the Company relating to any of the current or
former properties or operations of the Company.
For purposes of this Agreement, the term "Environmental Laws" means
any and all Laws, statutes, ordinances, rules, regulations, or orders of any
Governmental Entity pertaining to health or the environment currently in effect
in any and all jurisdictions in which the Company owns property or conducts
business, including without limitation, the Comprehensive Environmental,
Response, Compensation, and Liability Act of 1980 ("CERCLA"), as amended; the
Resource Conservation and Recovery Act of 1976 ("RCRA"), as amended; any state
Laws implementing the foregoing federal laws; and all other environmental
conservation or protection Laws. For purposes of this Agreement, the terms
"hazardous substance" and "release" have the meanings specified in CERCLA and
RCRA, and the term "disposal" has the meaning specified in RCRA; provided,
however, that to the extent the laws of the state in which the property is
located establish a meaning for "hazardous substance,"
12
"release," or "disposal" that is broader than that specified in either CERCLA
or RCRA, such broader meaning will apply.
SECTION 3.14. Vote Required. The only vote of the holders of any class
or series of the Company's capital stock necessary to approve the Merger and
adopt this Agreement is the affirmative vote or consent of the holders of a
majority of the outstanding shares of Company Stock, which consent is given in
Section 5.07.
SECTION 3.15. Brokers; Other Transactions. Except as set forth in
Schedule 3.15 to the Disclosure Schedule, no broker, finder, or investment
banker is entitled to any brokerage, finder's, or other fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company or any Stockholder. Prior to
the date of this Agreement, the Company has delivered to Parent a complete and
correct copy of all agreements referenced in Schedule 3.15 to the Disclosure
Schedule pursuant to which any Person will be entitled to any payment relating
to the transactions contemplated by this Agreement.
SECTION 3.16. Insurance. Schedule 3.16 to the Disclosure Statement
lists all insurance policies currently in effect under which the Company is a
beneficiary or an insured. The Company has taken all actions required to ensure
that such insurance coverage will remain in effect (or will be replaced by
similar policies) with respect to the Company and its properties as to all
events occurring on or prior to the Effective Time. As of the date of this
Agreement, the Company has not received any notice that any of the policies
listed on Schedule 3.16 to the Disclosure Statement have been or will be
canceled prior to its scheduled termination date, or would not be renewed
substantially on the same terms now in effect if the insured party requested
renewal or has received notice from any of its insurance carriers that any
insurance premiums will be subject to increase in an amount materially
disproportionate to the amount of the increases with respect thereto (or with
respect to similar insurance) in prior years. The Company is not in default
under any such policy and all premiums due and payable with respect to such
coverage have been paid or accrued.
SECTION 3.17. Properties. The Company does not own any real estate.
Except for liens arising in the ordinary course of business after the date of
this Agreement and properties and assets disposed of in the ordinary course of
business after the Balance Sheet Date and except for any lien, encumbrance, or
adverse claim that individually or in the aggregate would not cause a Company
Material Adverse Effector as otherwise set forth on Schedule 3.17 to the
Disclosure Schedule, the Company has good and marketable title, free and clear
of all liens and adverse claims, to all of their respective properties and
assets, whether tangible or intangible, reflected in the Latest Balance Sheet
as being owned by the Company as of such date or purported to be owned on the
date of this Agreement. All buildings and all fixtures, equipment, and other
property and assets that are material to the business of the Company and are
held under leases by the Company are, to the knowledge of the Stockholders,
held under valid instruments enforceable by the Company in accordance with
their respective terms. The properties and equipment of the Company, including,
without limitation, its information systems, (i) have been maintained and are
in serviceable condition, reasonable wear and tear excepted, and (ii) are
adequate for the uses to which they are being put.
SECTION 3.18 Intellectual Property. Schedule 3.18 to the Disclosure
Schedule sets forth a complete and correct list of each United States patent
application, trademark (whether or not registered), trademark application,
trade name, service xxxx, copyright and other proprietary intellectual property
(including, without limitation, proprietary computer software, whether in
object or source form) (the "Intellectual Property") owned or used by the
Company. To the knowledge of the Stockholders and except as set forth on
Schedule 3.18 of the Disclosure Schedule, the Intellectual Property is valid
and enforceable, and the Company has the exclusive right to use such
Intellectual Property. To the knowledge of the Stockholders and except as set
forth on Schedule 3.18 of the Disclosure Schedule, the current use by the
Company of such Intellectual Property does not infringe
13
the rights of any other Person and no other Person is infringing the rights of
the Company in any such Intellectual Property.
SECTION 3.19. Certain Contracts; Licenses; Etc.
(a) Schedule 3.19(a) to the Disclosure Schedule lists, as of
the date of this Agreement, each agreement, contract, or commitment to
which the Company is a party or by which the Company is bound (i)
involving a lease for real property or consideration during the
previous twelve months in excess of $100,000 or that could reasonably
be expected to involve consideration in the twelve month period
following the date of this Agreement in excess of $100,000, or (ii)
that is otherwise material to the financial condition, results of
operations, or current or future business or operations of the Company
and that is not otherwise listed pursuant to this Section 3.19.
(b) Schedule 3.19(b) to the Disclosure Schedule contains a
list and description of all currently effective material permits,
licenses, and authorizations of and registrations and qualifications
with, Governmental Entities and self-regulatory organizations
presently used by the Company in the conduct of its business.
(c) Except as set forth on Schedule 3.19(c) to the Disclosure
Schedule, to the knowledge of the Stockholders, none of the items
required to be disclosed on Schedule 3.19 to the Disclosure Schedule
is terminable as the result of, or becomes accelerated by, or
otherwise requires the consent or other approval of any other Person
with respect to or as a result of, the transactions contemplated by
this Agreement; provided, however, that to the extent any such
agreement reflected on Schedule 3.19(c) to the Disclosure Schedule
requires the consent of a party thereto with respect to this Agreement
and the transactions contemplated hereby, Parent hereby waives
delivery of such consent by the Company or the Stockholders as a
condition to Closing or effectiveness of the Merger and waives any
Claims it may have with respect to the failure to obtain such consent.
The Company is in compliance under all leases, licenses, agreements,
contracts, permits, plans, and commitments by which any of its
properties or assets is bound and, to the knowledge of the
Stockholders, no event has occurred that constitutes a violation or
breach of or a default (with the passage of time or the giving of
notice or both) other than defaults which would not cause a Company
Material Adverse Effect in respect of any thereof, and, to the
knowledge of the Stockholders, each of the other parties thereto or
bound thereby has performed all the obligations required to be
performed by it to date and is not in default thereunder. No
Stockholder knows or has reason to know that any material client or
customer intends to terminate its relationship with the Company as a
result of the Merger or any of the related transactions. True and
complete copies of all items required to be disclosed on Schedule 3.19
to the Disclosure Schedule have been made available to the Parent.
SECTION 3.20. Contracts to Acquire an Interest in the Company.
Schedule 3.20 to the Disclosure Schedule sets forth a true, correct, and
complete list of all contracts, agreements, understandings, or other rights,
whether written or oral, granted by the Company to any Person pursuant to which
such Person may be entitled to receive an equity interest in the Company or any
payment with respect thereto.
Section 3.21. Employees. Schedule 3.21(a) to the Disclosure Schedule
sets forth an accurate, correct, and complete list of all employees of the
Company as of the Closing Date, including name, title or position, the present
annual compensation or wage rate, any interests in any bonus or incentive
compensation plan, and any other perquisite or form of non-cash compensation.
To the knowledge of the Stockholders, no employee of the Company is subject to
a non-competition or any other form of agreement, whether written or oral, that
would prevent such employee from continuing as an employee of Merger Sub or
Parent upon consummation of the Merger, provided that following consummation of
the Merger, Surviving Corporation continues in the same general business as now
14
conducted by the Company. Schedule 3.21(b) to the Disclosure Schedule sets
forth an accurate and complete list of all loans, debts, and other obligations
(collectively, "Employee Loans") owed by any employee of the Company to the
Company. All outstanding Employee Loans owed to the Company by any Stockholder
will be repaid to the Company at Closing.
SECTION 3.22. Securities Law Matters.
(a) Each Stockholder, by reason of his or her business and
financial experience, has the capacity to protect his or her interests
in investments in illiquid securities such as the Parent Common Stock.
Each Stockholder has carefully evaluated his or her financial
resources and investment position and the risks associated with an
investment in the Parent Common Stock and is able to bear the economic
risk of such investment. Each Stockholder has adequate means for
providing for his or her current needs and personal contingencies and
has no need for liquidity in this investment. Each Stockholder's
overall commitment to investments that are not readily marketable is
not disproportionate to his or her net worth and such Stockholder's
investment in the Parent Common Stock will not cause such overall
commitment to become excessive.
(b) Each Stockholder has reviewed the merits of an investment
in the Parent Common Stock with tax and legal counsel and an
investment advisor to the extent deemed advisable by such Stockholder.
Each Stockholder acknowledges that he or she has been given a full
opportunity to ask questions of and to receive answers from the
officers, agents, and representatives of Parent concerning the terms
and conditions of the investment and the business of Parent and to
obtain such other information as desired in order to evaluate an
investment in the Parent Common Stock. Each Stockholder further
acknowledges that he or she has relied solely upon his or her own
independent investigations, and has received no representation or
warranty from Parent or any of its affiliates, employees or agents,
except as set forth in this Agreement. Each Stockholder further
acknowledges and understands that no federal or state agency has made
any finding or determination as to the fairness of an investment in,
or any recommendation or endorsement of, the Parent Common Stock.
(c) Each Stockholder understands that the Parent Common Stock
to be issued pursuant to the Merger will constitute "restricted
securities" within the meaning of Rule 144 under the Securities Act
and may not be sold, pledged, or otherwise transferred in the absence
of an effective registration statement pertaining thereto under the
Securities Act and under any applicable state securities laws or an
exemption from the registration requirements thereof. Each Stockholder
further understands that the Parent Common Stock will also be subject
to restrictions on transfer pursuant to federal and state securities
laws and that each certificate representing the Parent Common Stock to
be issued in the Merger will bear substantially the legend set forth
in Section 2.03.
(d) Each Stockholder acknowledges and agrees that the sale of
Parent Common Stock will be solely for such Stockholder's account, and
not for the account of any other person or with a view to any resale or
distribution thereof; provided, however, that the Stockholders may,
from time to time, transfer shares of the Parent Common Stock for
estate planning purposes or as gifts to individuals, in each case in
compliance with the Securities Act and applicable state securities
laws, and Parent agrees that it shall issue to Parent's transfer agent
any opinions reasonably requested by the transfer agent to effect such
transfers. Each Stockholder understands that the Parent Common Stock
has not been registered under the Securities Act, or the securities
laws of certain states, in reliance upon specific exemptions from
registration thereunder, and agrees that the Parent Common Stock may
not be sold, offered for sale, transferred, pledged, hypothecated or
otherwise disposed of except in compliance with the Securities Act and
applicable state securities laws. Each Stockholder further understands
that Parent has no obligation and does not intend to cause the Parent
Common Stock to be registered under the Securities Act or to comply
with any
15
exemption under the Securities Act. Each Stockholder further
understands that it is not anticipated that there will be any market
for resale of the Parent Common Stock and that it may not be possible
for such Stockholder to liquidate an investment in the Parent Common
Stock on an emergency basis.
(e) Each Stockholder understands that the representations and
warranties set forth in this Section 3.22 are being provided to
determine whether Parent Common Stock may be issued to such
Stockholder pursuant to section 4(2) of the Securities Act and similar
exemptions under applicable state securities laws. Each Stockholder
will notify the Parent immediately of any change in any such
information occurring prior to the Closing.
SECTION 3.23 Year 2000 Compliance.
(a) All of the management information systems and software
utilized in the Company's business and all equipment containing
embedded microchips (the "Systems") comply in all material respects
with all of the following criteria (compliance with such criteria
referred to herein as being "Year 2000 Compliant"): (i) the Systems
must operate with dates that are less than, equal to, or greater than
2000 when the date is 1999 or less; (ii) the Systems must operate with
dates that are less than, equal to, or greater than 2000 when the date
is 2000 or greater; (iii) the Systems must operate when the date rolls
between 12/31/99 and 01/01/2000; (iv) if any System is passing a date
that contains a year less than four digits to another application or
system, it must pass enough information for the receiving system to
comply with Section 3.23(a)(i)-(iii); (v) if any System is receiving a
date that contains a year less than four digits from another
application or system, it must be able to interpret the date received
to comply with Section 3.23(a)(i)-(iii); (vi) the Systems must
recognize year 2000 as a leap year and operate accordingly; (vii) the
Systems must recognize the correct day of the week where required;
(viii) date values must sort correctly; (ix) date value calculations
must operate and provide correct results; and (x) date values stored,
calculated, imported, exported, or displayed with less than a four
digit year must be completely ambiguous.
(b) To the Stockholders' knowledge based solely upon such
inquiry to such parties or in reliance upon such parties'
representations, whether written or otherwise, each of its customers'
or suppliers' systems are Year 2000 compliant, and if not Year 2000
compliant, to the knowledge of the Stockholders, such noncompliance
would not have a Company Material Adverse Effect.
(c) None of the Systems designed by the Company contains any
"back door," "time bomb," "Trojan horse," "worm," "drop dead device,"
or "virus" (as such terms are generally known in the computer
industry) or other instructions to intentionally disable or erase the
information therein and/or data, unless such element was introduced
into the Systems, without the Company's knowledge, by any of its
suppliers' systems, and the Company and the Stockholders will not
introduce any such instructions therein.
(d) Year 2000 Readiness Disclosure. The matters set forth in
this Section 3.23 constitute both Year 2000 Readiness Disclosure and a
Year 2000 Statement within the meaning of the Year 2000 Information
and Readiness Disclosure Act.
SECTION 3.24. Information Supplied. No representation or warranty by
the Company or the Stockholders in this Agreement (including the Disclosure
Schedule) or any other agreement or document executed or to be executed by the
Company or the Stockholders in connection herewith contains any untrue
statement of material fact, or omits to state a material fact necessary in
order to make the statements contained therein, in light of the circumstances
under which such statements were made, not misleading.
16
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE TYLER COMPANIES
The Tyler Companies hereby jointly and severally represent and warrant
to the Company and the Stockholders as follows:
SECTION 4.01. Organization. Each of the Tyler Companies is a
corporation duly organized, validly existing, and in good standing under the
laws of the state of its incorporation, and is duly qualified to do business as
a foreign corporation in each jurisdiction in which the failure to be so
qualified would affect the validity or enforceability of this Agreement or
would have a Tyler Material Adverse Effect. The term "Tyler Material Adverse
Effect" means any change, effect, or condition that, individually or when taken
together with all other such changes, effects, or conditions, would be
materially adverse to the business, operations, assets, financial condition,
results of operations, or prospects of the Tyler Companies.
SECTION 4.02. Capitalization. The authorized capital stock of Parent
consists of 50,000,000 shares of Parent Common Stock and 1,000,000 shares of
preferred stock, $10 per share (the "Preferred Stock"), of which, as of
December 31, 1998, 34,489,931 shares of Parent Common Stock and no shares of
Preferred Stock were issued and outstanding. Each of the outstanding shares of
capital stock of Parent is duly authorized, validly issued, and fully paid and
nonassessable, and has not been issued in violation of any preemptive or
similar rights under the certificate of incorporation or bylaws of Parent,
federal or state securities laws, or any agreement to which Parent is a party
or by which it is bound.
SECTION 4.03. Tyler Shares. The Tyler Shares to be issued pursuant to
the Merger will, when issued and delivered at the Closing in accordance with
this Agreement, be duly authorized, validly issued, fully paid, and
nonassessable and not subject to statutory preemptive rights.
SECTION 4.04. Authority. Each of the Tyler Companies has all requisite
corporate power and authority to execute and deliver this Agreement and the
Ancillary Agreements to which it is a party, to perform its obligations
hereunder and thereunder, and to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this Agreement and the
Ancillary Agreements to which it is a party by each of the Tyler Companies and
the consummation by each of the Tyler Companies of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action and no other corporate proceedings on the part of any of the
Tyler Companies are necessary to authorize this Agreement and the Ancillary
Agreements to which it is a party or to consummate the transactions
contemplated hereby and thereby. This Agreement and the Ancillary Agreements
have been duly executed and delivered by each of the Tyler Companies that is a
party thereto and, assuming the due authorization, execution, and delivery of
this Agreement and the Ancillary Agreements by the Company and the
Stockholders, constitute the legal, valid, and binding obligations of each of
the Tyler Companies that is a party thereto, enforceable in accordance with
their respective terms.
SECTION 4.05. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement and the
Ancillary Agreements by each of the Tyler Companies that is a party
thereto do not, and the consummation of the transactions contemplated
thereby will not, (i) conflict with or violate the certificate of
incorporation or bylaws, in each case as amended or restated as of the
date of this Agreement, of any Tyler Company; (ii) to the knowledge of
the Tyler Companies, conflict with or violate any Laws applicable to
any Tyler Company or by which any of its properties is bound or
subject; or (iii) result in any breach of or constitute a default (or
an event that with notice or lapse of time or both would become a
default) under, or give to others any rights of
17
termination, amendment, accelerations or cancellation of, or result in
the creation of a lien or encumbrance on any of the properties or
assets of any Tyler Company pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise, or
other instrument or obligation to which any Tyler Company is a party or
by or to which any Tyler Company or any of its respective properties is
bound or subject.
(b) The execution and delivery of this Agreement and the
Ancillary Agreements by each of the Tyler Companies that is a party
thereto do not, and the consummation of the transactions contemplated
by this Agreement and the Ancillary Agreements will not, require any
Tyler Company to obtain any consent, license, permit, approval,
waiver, authorization, or order of, or to make any filing with or
notification to, any Governmental Entity, except for the filing and
recordation of the Certificate of Merger as required by Delaware Law
and Maine Law and otherwise as set forth on Schedule 4.05 to the
Disclosure Schedule.
SECTION 4.06. SEC Filings. Parent has provided the Company and the
Stockholders all reports, registration statements, and other filings, together
with any amendments thereto, that Parent has filed with the Securities and
Exchange Commission (the "Commission") within the previous two years
(collectively, the "SEC Filings"). As of the respective dates of their filing
with the Commission, the SEC Filings complied in all material respects with the
Securities Act of 1933, the Securities Exchange Act of 1934, and the rules and
regulations of the Commission promulgated thereunder, and did not contain any
untrue statement of material fact or omit to state a material fact required to
be stated therein or necessary to make the statements made therein, in light of
the circumstances under which they were made, not misleading.
SECTION 4.07. Absence of Certain Changes or Events. Except as
contemplated by this Agreement or as otherwise disclosed by Parent to the
Company and the Stockholders, since the date of the latest Parent Annual Report
on Form 10-K for the year ended December 31, 1998, there has not been a Parent
Material Adverse Effect.
SECTION 4.08. Brokers. No broker, finder, or investment banker is
entitled to any brokerage, finder's, or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Parent or any Affiliate of the Parent for which any
Stockholder or the Company will have any liability.
SECTION 4.09. Information Supplied. No representation or warranty by
Parent in this Agreement (including the Disclosure Schedule) or any other
agreement or document executed or to be executed by Parent in connection
herewith contains any untrue statement of material fact, or omits to state a
material fact necessary in order to make the statements contained therein, in
light of the circumstances under which such statements were made, not
misleading.
ARTICLE V
COVENANTS
SECTION 5.01. Affirmative Covenants of the Company and the
Stockholders. The Company and the Stockholders hereby covenant and agree that,
prior to the Effective Time, unless otherwise expressly contemplated by this
Agreement or as set forth on Schedule 5.01 to the Disclosure Schedule or
consented to in writing by Parent, the Company will, and the Stockholders will
use their reasonable best efforts to cause the Company, (a) to operate in the
ordinary and usual course of business and consistent with past practices and
use their best efforts to preserve the goodwill of the Company and of its
employees, customers, suppliers, Governmental Entities and others having
business dealings with the Company; (b) to maintain all insurance policies and
all Company Permits that are required for the Company to carry on its business;
(c) not to take or permit any action that would cause the conditions on the
obligations of the parties to effect the transactions contemplated by
18
this Agreement not to be fulfilled, including, without limitation, by taking or
causing to be taken any action that would cause the representations and
warranties made by the Stockholders in this Agreement not to be true and
correct in any material respect; (d) not to increase the compensation payable
to or to become payable to any stockholder, director, or officer of the
Company; (e) except as contemplated by this Agreement, not to grant any
severance or termination pay (other than pursuant to the normal severance
policy of the Company as in effect on the Latest Balance Sheet Date) to, or
enter into or amend any employment or severance agreement with, any
stockholder, director, officer, or employee of the Company; (f) not to
establish, adopt, or enter into any employee benefit plan or arrangement; (g)
not to amend in any respect, or take any other actions with respect to, any of
the Employee Plans or any of the plans, programs, agreements, policies, or
other arrangements described in Section 3.10; (h) declare or pay any dividend
on, or make any other distribution in respect of, outstanding shares of capital
stock; (i) not to redeem, purchase, or otherwise acquire any shares of its
capital stock or any securities or obligations convertible into or exchangeable
for any shares of its capital stock, or any options, warrants, or conversion or
other rights to acquire any shares of its capital stock or any such securities
or obligations; (j) effect any reorganization or re-capitalization; (k) split,
combine, or reclassify any of its capital stock or issue or authorize or
propose the issuance of any other securities in respect of, in lieu of or in
substitution for, shares of its capital stock; (l) not to issue, deliver,
award, grant, or sell, or authorize or propose the issuance, delivery, award,
grant, or sale (including the grant of any security interests, liens, claims,
pledges, limitations in voting rights, charges, or other encumbrances) of, any
shares of any class of its capital stock or other securities (including shares
held in treasury), any securities convertible into or exercisable or
exchangeable for any such shares or other securities, or any rights, warrants,
or options to acquire any such shares or other securities; (m) not to acquire
or agree to acquire, by merging or consolidating with, by purchasing an equity
interest in or a portion of the assets of, or by any other manner, any business
or any Person or division thereof, or otherwise acquire or agree to acquire any
assets of any other Person (other than the purchase of assets from suppliers or
vendors in the ordinary course of business and consistent with past practice);
(n) not to sell, lease, exchange, mortgage, pledge, transfer, or otherwise
dispose of, or agree to sell, lease, exchange, mortgage, pledge, transfer, or
otherwise dispose of, any of its material assets or any interest therein,
except for dispositions of inventories and of assets in the ordinary course of
business and consistent with past practice; (o) release any third party from
its obligations, or grant any consent, under any existing standstill provision
relating to any transaction referred to in Section 5.03 or otherwise under any
non-competition, confidentiality, or other agreement, or fail to fully enforce
any such agreement; (p) not to adopt or propose to adopt any amendments to its
articles of incorporation or bylaws or similar organizational documents; (q)
not to (i) change any of its methods of accounting in effect at the Latest
Balance Sheet Date, or make or rescind any express or deemed election relating
to taxes; (ii) settle or compromise any claim, action, suit, litigation,
proceeding, arbitration, investigation, audit, or controversy relating to
taxes; or (iii) change any of its methods of reporting income or deductions for
federal income tax purposes from those employed in the preparation of the
federal income tax returns for the taxable year ending September 30, 1999,
except, in each case, as may be required by Law or generally accepted
accounting principles; (r) incur any obligation for borrowed money or purchase
money indebtedness, whether or not evidenced by a note, bond, debenture, or
similar instrument; (s) enter into any transaction with any Affiliate of the
Company; and (t) to take all reasonable steps to cause to be fulfilled the
conditions precedent to the Tyler Companies' obligations to consummate the
transactions contemplated by this Agreement that are dependent on the actions
of the Stockholders or the Company.
SECTION 5.02 Stockholder Release. Effective as of the Closing, each
Stockholder, for himself and his heirs, executors, administrators, successors,
and assigns, hereby fully and unconditionally releases and forever discharges
and hold harmless the Company and its officers, directors, successors, and
assigns from any and all claims, demands, losses, costs, expenses (including
reasonable attorneys' fees and expenses), obligations, liabilities, and/or
damages (collectively, "Claims") of every kind and nature whatsoever, whether
or not now existing or known, relating in any way, directly or indirectly, to
the Company, that such Stockholder may now have or may hereafter claim against
the Company or any of its employees, officers, directors, successors, and
assigns, arising prior to the Closing.
19
SECTION 5.03. No-Shop Provisions. Until the earlier of the Closing
Date or March 12, 1999, the Stockholders will each comply and cause the Company
to comply with the following no-shop provisions: (a) the Company and the
Stockholders will each negotiate exclusively and in good faith with Parent with
respect to the sale of the Company; (b) neither the Company nor any Stockholder
will, directly or indirectly (through agents or otherwise), encourage or
solicit any inquiries or accept any proposals by, or engage in any discussions
or negotiations with or furnish any information to, any other Person concerning
a sale of a substantial portion of the assets or business of the Company
(whether through an asset sale, stock sale, merger or otherwise); and (c) the
Company and the Stockholders will promptly communicate to Parent the material
substance of any inquiry or proposal concerning any such transaction that may
be received by any of them.
SECTION 5.04. Access and Information. The Stockholders have caused and
will, until the Closing Date, continue to cause Parent and its representatives
to have reasonable access, upon prior notice and request and with the consent
of the Stockholders, to the Company's directors, officers, employees, agents,
assets, and properties and all relevant books, records and documents of or
relating to the business and assets of the Company during normal business hours
and will furnish to Parent such information, financial records and other
documents relating to the Company and its operations and business as Parent may
reasonably request. The Stockholders will permit Parent and its representatives
reasonable access, upon prior notice and request and with the consent of the
Stockholders, to the Company's accountants, auditors, customers, suppliers, and
Governmental Entities having dealings with the Company for consultation by
Parent and will use their respective best efforts to cause such Persons to
cooperate with Parent and its representatives in such consultation. To the
extent that Parent requests access to and the use of third parties for such
consultation, Parent will pay the costs, if any, incurred by such third
parties.
SECTION 5.05. Supplemental Disclosure. The Stockholders will promptly
supplement or amend each of the Disclosure Schedules with respect to any matter
that arises or is discovered after the date of this Agreement but prior to the
Effective Time that, if existing or known at the date of this Agreement, would
have been required to be set forth or listed in the Disclosure Schedule;
provided that, for purposes of determining the rights and obligations of the
parties under this Agreement (other than the obligations of the Stockholders
under this Section 5.05), any such supplemental or amended disclosure will not
be deemed to have been disclosed to Parent unless Parent otherwise expressly
consents in writing.
SECTION 5.06. Information for Filings. The Stockholders will furnish
Parent with all information concerning the Stockholders and the Company as is
required for inclusion in any application or filing made by Parent to any
Governmental Entity in connection with the transactions contemplated by this
Agreement.
SECTION 5.07. Consent of the Stockholders. For purposes of the state
corporation law governing the Company, this Agreement constitutes a written
consent of the all Stockholders with respect to the Merger, approving the
execution and delivery of this Agreement by the Company and the consummation of
the Merger and the other transactions contemplated by this Agreement and the
Ancillary Agreements.
SECTION 5.08. Publicity. The Tyler Companies and the Stockholders will
cooperate with each other in the development and distribution of all news
releases and other public disclosures relating to the transactions contemplated
by this Agreement. Neither the Tyler Companies, on the one hand, nor the
Company or the Stockholders, on the other hand, will issue or make, or allow to
have issued or made, any press release or public announcement concerning the
transactions contemplated by this Agreement without the advance approval in
writing of the form and substance thereof by the other parties, unless
otherwise required by applicable legal or stock exchange requirements.
20
SECTION 5.09. Transaction Costs. Each party will pay prior to the
Closing all of their respective attorneys', accountants', finders', brokers',
investment banking and other fees, costs and expenses incurred by such party in
connection with the preparation, negotiation, execution, and performance of
this Agreement or any of the transactions contemplated by this Agreement,
provided, however, that Parent will pay all costs, fees, and expenses incurred
in connection with the preparation of the Company's audited interim financial
statements prepared at the request of Parent and that the Stockholders will pay
all costs, fees, and expenses incurred by Peabody & Xxxxxx L.L.P. in connection
with this Agreement and the transactions contemplated hereby. Notwithstanding
anything in this Section 5.09 to the contrary, the Company and the
Stockholders, jointly and severally, agree (in addition to any other remedies
that the Tyler Companies may have under this Agreement) to reimburse Parent for
all of its expenses incurred in connection with this Agreement if Parent
terminates this Agreement as a result of any material breach by the Company or
the Stockholders, provided such breach is not caused by (a) the failure of any
of the Tyler Companies to fulfill any obligation under this Agreement or (b)
any representation or warranty made by the Tyler Companies shall be untrue or
misleading. Notwithstanding anything in this Section 5.09 to the contrary,
Parent agrees (in addition to any other remedies that the Company or the
Stockholders may have under this Agreement) to reimburse the Company and the
Stockholders for all of the Company's and Stockholders' expenses incurred in
connection with this Agreement if the Company and the Stockholders terminate
this Agreement as a result of any material breach by Parent, provided such
breach is not caused by (a) the failure of the Company or the Stockholders to
fulfill any obligation under this Agreement or (b) any representation or
warranty made by the Company or the Stockholders shall be untrue or misleading.
SECTION 5.10. Competition.
(a) Stockholders acknowledge and agree that this Agreement is
entered into in connection with the sale of a business and that, as
part of the consideration and as a material inducement for the
execution of this Agreement and the purchase of the business, Parent
has required that Stockholders enter into this Section 5.10.
Stockholders acknowledge and agree that Parent would not enter into
this Agreement or purchase the business absent Stockholder's covenants
contained in this Section 5.10. Stockholders also acknowledge that
Parent's acquisition of the business includes the acquisition of
special and confidential knowledge and information known to
Stockholders and their respective Affiliates regarding the business,
including information regarding operations, plans, strategies,
markets, methods of competing, customers and potential customers,
vendors and potential vendors, suppliers, intellectual property, and
other information, which knowledge and information would provide
invaluable benefits to competitors and potential competitors of Parent
and the use, loss, dilution, or impairment of which by Stockholders,
their respective Affiliates, or any other Person would materially
damage Parent and the business acquired. Stockholders also acknowledge
that the nature of the business is not confined to a specific
geography or location and that current technology and business and
communications methods enable and may enable Stockholders and their
respective Affiliates to offer products and services and conduct
business with customers and potential customers and other Persons
having business dealings with Parent related to the business without
regard to geographic location.
21
(b) Each Stockholder covenants and agrees that, for a period
beginning on the Closing Date and ending on the later of (i) the first
anniversary of (A) the termination of Stockholder's employment by the
Surviving Corporation any reason or (B) the resignation of Employee or
(ii) the fourth anniversary of the Closing Date (the "Non-Compete
Applicable Date"), without the written permission of the Tyler
Companies, he or she will not, directly or indirectly, anywhere within
the United States (the "Non-Compete Area"): (X) engage (whether as
owner, partner, investor, employee, adviser, consultant, contracting
party, or referring source, or otherwise) in any business that is in
competition with the business presently conducted by the Company, the
Tyler Companies, or their respective Affiliates at any time prior to
the Non-Compete Applicable Date, including, but not limited to,
activities with respect to software object technology development or
related fields (except that any Stockholder may beneficially own less
than 3% of the common equity of a publicly traded entity); (Y) solicit
or attempt to solicit any business or employment from any Person that
such Stockholder or any person that reported, directly or indirectly,
to such Stockholder during the term of such Stockholder's employment
while such Stockholder is or was an employee of the Tyler Companies,
called upon, solicited, or conducted business with as of prior to the
Non-Compete Applicable Date, including, but not limited to, customers,
clients, and prospective customers and clients of the Tyler Companies
and their respective Affiliates or successors; or (Z) recruit or hire,
attempt to or assist in any attempt to recruit or hire, or discuss
employment or hiring with, any Person who has ever been or is an
employee of the Company or the Tyler Companies or their respective
Affiliates or successors.
(c) Each Stockholder acknowledges that this Section 5.10 is
necessary to protect the interests of the Tyler Companies, the
Company, and their respective Affiliates and that the restrictions and
remedies contained in this Agreement are reasonable in light of the
consideration and other value such Stockholder has accepted pursuant
to this Agreement. If any provision of this Section 5.10 should be
found by any court of competent jurisdiction to be unreasonable by
reason of its being too broad as to the period of time, territory,
and/or scope, then, and in that event, such provision will
nevertheless remain valid and fully effective, but will be considered
to be amended so that the period of time, territory, and/or scope set
forth will be changed to be the maximum period of time, the largest
territory, and/or the broadest scope, as the case may be, that would
be found reasonable and enforceable by such court.
SECTION 5.11. Confidential Information. Each Stockholder acknowledges
that he or she has had access to the Company's confidential information, and
may in the future have access to information proprietary to, used by, or in the
possession of the Parent, the Company, or their respective Affiliates, or any
of their respective customers or not generally known in the industry,
including, but not limited to, records regarding sales, price and cost
information, marketing plans, trade secrets, customer names, customer lists,
sales techniques, distribution plans or procedures, and other material relating
to the Company's or the Parent's business (the "Confidential Information"), and
for itself and for each Person that is an entity that is controlled by such
Stockholder agrees never to use the Confidential Information other than for the
sole benefit of the Tyler Companies or to disclose such Confidential
Information to any Person that is not an officer or employee (except that if,
at such time, such Confidential Information is subject to a policy of Parent or
its Affiliates restricting disclosure to non-officers, the Stockholder will not
disclose such information to non-officers) of the Tyler Companies at the time
of such disclosure, without the prior written consent of Parent. Each
Stockholder further acknowledges that this covenant to maintain Confidential
Information is necessary to protect the goodwill and proprietary interests of
the Company, the Tyler Companies, and their respective Affiliates and that the
restriction against the disclosure of
22
Confidential Information and the associated remedies are reasonable in light of
the consideration and other value such Stockholder has accepted pursuant to
this Agreement. Each Stockholder agrees on request of the Tyler Companies after
the Closing Date immediately to surrender to Parent all Confidential
Information and all copies thereof and information containing Confidential
Information in such Stockholder's possession or control as well as all other
papers, documents, electronic media, or property of the Company or the Tyler
Companies, or their respective Affiliates coming into his or her possession or
control. If any provision of this Section 5.11 should be found by any court of
competent jurisdiction to be unreasonable by reason of its being too broad as
to the period of time, territory, and/or scope, then, and in that event, such
provision will nevertheless remain valid and fully effective, but will be
considered to be amended so that the period of time, territory, and/or scope
set forth will be changed to be the maximum period of time, the largest
territory, and/or the broadest scope, as the case may be, which would be found
reasonable and enforceable by such court.
SECTION 5.12. Taxable Merger. The parties intend for the Merger to
constitute a taxable transaction under Section 368(h)(10) of the Code. The
parties agree that they will report the transaction to the Internal Revenue
Service consistent with such treatment and that they will not take any actions
at or prior to Closing that would cause the transactions contemplated hereby to
fail to qualify as a taxable transaction under Section 368(h)(10). The parties
covenant and agree that all allocation of value for tax and accounting purposes
will be made in accordance with Schedule 5.12 to the Disclosure Schedule and
that no deviation will be made from the allocation scheme set forth in Schedule
5.12 to the Disclosure Schedule by the Tyler Companies or the Stockholders
without the prior written consent of the other party.
SECTION 5.13. Real Estate Leasing. Each of the parties acknowledge
that certain persons Affiliated with the Stockholders (the "Stockholder
Affiliates") are in the initial planning stages of a commercial real estate
development project with respect to certain real property (the "Property")
situated contiguous to the premises where the Company presently has its
principal place of business and operations. It is understood by the
Stockholders that the Property will be developed into high quality office space
(the "New Office Space"), which the Stockholder Affiliate will make available
for leasing to the Company and its successors. Each of the parties acknowledge
that (a) the Company and the Stockholder Affiliate have begun discussions with
respect to the leasing by the Company of not less than one-half of the New
Officer Space, which is approximately 17,000 square feet, and (b) the Company
anticipates having expansion requirements in the foreseeable future that would
be adequately addressed by occupying the New Office Space, if developed as
anticipated by the Company and the Stockholder Affiliate. The Tyler Companies
hereby agree to use commercially reasonable efforts, acting in good faith, to
continue such discussions in xxxxxxx and to negotiate with the Stockholder
Affiliate to reach an agreement to lease not less than 17,000 square feet of
the New Office Space on terms, including price, generally prevailing in
regional commercial real estate markets, but in any event on terms acceptable
to the Tyler Companies and the Stockholder Affiliate, each in their sole
discretion.
SECTION 5.14. Opinions. Parent covenants and agrees to provide all
such legal opinions as reasonably requested by its transfer agent to effect the
transfer of the Tyler Shares at or subsequent to the Closing, including in
connection with any transfers by the Stockholders contemplated in Section
3.22(d) of this Agreement, provided that such transfer is in compliance with
the Securities Act and applicable state securities laws.
SECTION 5.15. Stock Options. Within sixty (60) days after Closing,
Parent shall issue options to acquire an aggregate of 300,000 shares of Parent
Common Stock to certain key employees of the Surviving Corporation in amounts
to be determined by Parent and the Stockholders. Such options shall vest in
five equal annual installments, shall have an exercise price equal to the
closing sale price of Parent Common Stock as reported on the New York Stock
Exchange on the Closing Date, and shall otherwise be subject to Parent's stock
option plan and individual stock option agreements.
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ARTICLE VI
INDEMNIFICATION
SECTION 6.01. Indemnification of Parent. The Stockholders will jointly
and severally indemnify and hold Parent, its subsidiaries (including Merger
Sub) and their respective directors, officers, and employees (collectively, the
"Parent Parties") harmless from any and all Claims (determined without regard
to any materiality qualification contained in any representation, warranty, or
covenant giving rise to the indemnity claim hereunder) that any Parent Party
may suffer or incur arising out of the breach or any alleged breach of any of
the representations, warranties, covenants, or agreements made by the
Stockholders or the Company in this Agreement; provided, however, that (a) the
Parent Parties will not be entitled to indemnification under this Section 6.01
for Claims unless the aggregate amount of all Claims exceeds $500,000, in which
case the Parent Parties will be entitled to indemnification for amounts only in
excess of $500,000; (b) the Parent Parties will not be entitled to
indemnification under this Section 6.01 for Claims if and to the extent that
Claims aggregate more than $5,500,000; and (c) the foregoing limitations shall
not apply with respect to any Claims arising under any breach of the covenants
set forth in Section 5.09, Section 5.10 and Section 5.11.
SECTION 6.02. Indemnification of the Stockholders. Parent will
indemnify and hold the Stockholders and their heirs (collectively, the
"Stockholder Parties") harmless from any and all Claims (determined without
regard to any materiality qualification contained in any representation,
warranty, or covenant giving rise to the indemnity claim hereunder) that any
Stockholder Party may suffer or incur arising out of the breach or any alleged
breach of any of the representations, warranties, covenants, or agreements made
by the Tyler Companies in this Agreement; provided, however, that (a) the
Stockholder Parties will not be entitled to indemnification under this Section
6.02 for Claims unless the aggregate amount of all Claims exceeds $500,000, in
which case the Stockholder Parties will be entitled to indemnification for
amounts only in excess of $500,000; (b) the Stockholder Parties will not be
entitled to indemnification under this Section 6.02 for Claims if and to the
extent that Claims aggregate more than $5,500,000; and (c) the foregoing
limitations shall not apply with respect to any Claims arising under any breach
of the covenants set forth in Section 5.09.
SECTION 6.03. Notice. Any party entitled to receive indemnification
under this Article VI (the "Indemnified Party") agrees to give written notice
to the party or parties required to provide such indemnification (the
"Indemnifying Parties") upon the occurrence of any indemnifiable claim or the
assertion of any claim or the commencement of any action or proceeding in
respect of which such a claim may reasonably be expected to occur (a "Loss
Claim") within sixty (60) days of becoming aware of such Loss Claim, but the
Indemnified Party's failure to give such notice will not affect the obligations
of the Indemnifying Party under this Article VI except to the extent that the
Indemnifying Party is materially prejudiced thereby and will not affect the
Indemnifying Party's obligations or liabilities otherwise than under this
Article VI. Such written notice will set forth a reference to the event or
events forming the basis of such Loss or Loss Claim and the estimated amount
involved, unless such amount is uncertain or contingent, in which event the
Indemnified Party will give a later written notice when the amount becomes
fixed.
SECTION 6.04. Defense of Claims. The Indemnifying Party may elect to
assume and control the defense of any Loss Claim, including the employment of
counsel reasonably satisfactory to the Indemnified Party and the payment of
expenses related thereto, if (a) the Indemnifying Party provides reasonable
evidence to the Indemnified Party of its financial ability to satisfy such
indemnification obligation; (b) the Loss Claim does not seek to impose any
liability or obligation on the Indemnified Party other than for money damages;
and (c) the Loss Claim does not relate to the Indemnified Party's relationship
with its customers or employees. If such conditions are satisfied and the
Indemnifying Party elects to assume and control the defense of a Loss Claim,
then (i) the Indemnifying Party will not be liable for any settlement of such
Loss Claim effected without its consent; (ii) the Indemnifying Party may settle
such Loss Claim with the consent of the Indemnified Party, which consent shall
not be unreasonably withheld; and (iii) the Indemnified Party may employ
separate counsel and participate in the defense thereof, but the Indemnified
Party will be responsible
24
for the fees and expenses of such counsel unless the Indemnifying Party has
failed to adequately assume the defense of such Loss Claim or to employ counsel
with respect thereto. If such conditions are not satisfied, the Indemnified
Party may assume and control the defense of the Loss Claim; provided that the
Indemnified Party may not settle any such Loss Claim without the consent of the
Indemnifying Party, which consent will not be unreasonably withheld (and the
Indemnifying Party will not be liable for any Claims resulting from a
settlement effected in violation of this clause).
SECTION 6.05. Survival; Remedies. All representations and warranties
made in or pursuant to this Agreement will survive the Closing Date until the
second anniversary of the Closing Date; provided, however, that (a) the
representations and warranties contained in Section 3.01, Section 3.03, and
Section 3.04 shall survive indefinitely, (b) the representations and warranties
contained in Section 3.11 and Section 3.13 shall survive for a period equal to
all applicable statute of limitations regarding Claims made with respect to
such subject matter, (c) the covenants set forth in Section 5.10 shall continue
for the period as set forth therein, and (d) any claim for indemnity under this
Article VI shall survive the time at which it would otherwise terminate if a
claim for indemnification shall have been commenced prior to such time and such
claim or proceeding is pending and is being maintained in good faith, then such
claim shall continue until the final disposition of such claim. Each party
agrees that no other party to this Agreement will be under any duty, express or
implied, to make any investigation of any representation or warranty made by
any other party to this Agreement, and that no failure to so investigate will
be considered negligent or unreasonable. Except as otherwise set forth herein,
all remedies under this Agreement will be cumulative and not exclusive.
ARTICLE VII
CLOSING CONDITIONS
SECTION 7.01. Conditions to Obligations of the Tyler Companies. The
obligations of the Tyler Companies to effect the Merger and the other
transactions contemplated by this Agreement are subject to the satisfaction at
or prior to the Effective Time of the following conditions, any or all of which
may be waived in writing in the absolute discretion of the Parent, in whole or
in part:
(a) Each of the representations and warranties of the Company
and the Stockholders contained in this Agreement must be true and
correct in all material respects as of the Effective Time as though
made on and as of the Effective Time.
(b) The Company and the Stockholders must have performed or
complied with all agreements and covenants required by this Agreement
to be performed or complied with by them on or prior to the Effective
Time.
(c) There must be no pending or threatened litigation in any
court or any proceeding before or by any Governmental Entity against
the Stockholders, the Company, or Parent to restrain or prohibit or
obtain damages or other relief with respect to this Agreement or the
Ancillary Agreements or the consummation of the transactions
contemplated by this Agreement or the Ancillary Agreement.
(d) All contractual and governmental consents, approvals, and
notifications required must have been obtained or given.
(e) Xxxx X. Xxxx, Xx. must have entered into an employment
agreement substantially in the form of Exhibit A.
(f) The Stockholders must have delivered to Parent a closing
certificate substantially in the form of Exhibit B.
25
(g) The Company must have delivered to Parent a certificate
of the clerk of the Company substantially in the form of Exhibit C.
(h) No later than the business day prior to the Effective
Time, the Company must have received from each holder of issued and outstanding
options or warrants to purchase Company Stock and from each holder of any other
right to receive Company Stock a release, in form and substance satisfactory to
Parent, pursuant to which each option and warrant holder agrees to the
cancellation of any existing options or warrants in exchange for the issuance
of new options and warrants and pursuant to which such option or warrant holder
releases Parent from any and all liabilities which may arise under existing
stock option plans and stock option or warrant agreements.
SECTION 7.02. Conditions to Obligations of the Company and the
Stockholders. The obligations of the Company and the Stockholders to effect the
Merger and the other transactions contemplated by this Agreement are subject to
the satisfaction at or prior to the Effective Time of the following conditions,
any or all of which may be waived in writing in the absolute discretion of the
Company, in whole or in part:
(a) Each of the representations and warranties of the Tyler
Companies contained in this Agreement must be true and correct in all
material respects as of the Effective Time as though made on and as of
the Effective Time.
(b) The Tyler Companies must have performed or complied with
all agreements and covenants required by this Agreement to be
performed or complied with by them on or prior to the Effective Time.
(c) There must be no pending or threatened litigation in any
court or any proceeding before or by any Governmental Entity against
the Stockholders, the Company, or Parent to restrain or prohibit or
obtain damages or other relief with respect to this Agreement or the
Ancillary Agreements or the consummation of the transactions
contemplated by this Agreement or the Ancillary Agreement.
(d) All contractual and governmental consents, approvals, and
notifications must have been obtained or given, provided that Parent
hereby waives the delivery of any consents with respect to the items
set forth on Schedule 3.19(c) to the Disclosure Schedule.
(e) Parent must have executed and delivered the employment
agreement substantially in the form of Exhibit A.
(f) Parent must have delivered to the Company a closing
certificate substantially in the form of Exhibit D.
(g) Parent must have delivered to the Company a certificate
of the secretary of the Parent substantially in the form of Exhibit E.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Termination. This Agreement and the transactions
contemplated by this Agreement may be terminated and abandoned (a) at any time
prior to the Effective Time by mutual written consent or Parent, the Company,
and the Stockholders; or (b) by either Parent, on the one hand, or the Company
of the Stockholders, on the other hand, if a condition to performance by the
26
terminating party or parties under this Agreement has not been satisfied or
waived prior to March 31, 1999. Notwithstanding the foregoing clause (b), (i)
Parent may not terminate this Agreement if the event giving rise to its
termination right results from Parent's willful failure to perform or observe
any of its covenants or agreements set forth herein or if Parent is, at such
time, in breach of this Agreement, and (ii) the Company or the Stockholders may
not terminate this Agreement if the event giving rise to its termination right
results from the willful failure of the Company or any Stockholder to perform
or observe any of its covenants or agreements set forth in this Agreement or if
any Stockholder is, at such time, in breach of this Agreement. The right of any
party to terminate this Agreement pursuant to this Section 8.01 will remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any party, any Person controlling any such party, or any of
their respective officers, directors, representatives, or agents, whether
before or after the execution of this Agreement. Upon termination of this
Agreement pursuant to Section 8.01, this Agreement will become void, there will
be no liability on the part of the Tyler Companies, on the one hand, or the
Company or the Stockholders, on the other hand, to the other and all rights and
obligations of each party to this Agreement will cease, except that nothing in
this Agreement will relieve any party of any liability for (a) any breach of
such party's covenants or agreements contained in this Agreement, or (b) any
knowing or willful breach of such party's representations or warranties
contained in this Agreement.
SECTION 8.02. Notices. All notices that are required or may be given
pursuant to this Agreement must be in writing and delivered personally, by a
recognized courier service, by a recognized overnight delivery service, by
telecopy or by registered or certified mail, postage prepaid, to the parties at
the following addresses (or to the attention of such other person or such other
address as any party may provide to the other parties by notice in accordance
with this Section 8.02):
If to Parent:
Tyler Corporation
0000 X. Xxxxxxxxxxx Xxxx
Xxxxxx, Xxxxx 00000
Attention: Corporate Counsel
Telecopy: (000) 000-0000
If to Stockholder:
To the address opposite such Stockholder's name as
set forth on Schedule 8.02 to the Disclosure Schedule
with a copy to (or, if to the Company):
Process, Inc. d/b/a Computer Center Software
000 X.X. Xxxxx Xxx
Xxxxxxxx, Xxxxx 00000
Attention: President
Telecopy: (000) 000-0000
with a copy to:
Xxxxxxx X. Xxxxx, Esquire
Peabody & Xxxxxx LLP
00 Xxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Telecopy: (000) 000-0000
27
Any such notice or other communication will be deemed to have been given and
received on the day it is personally delivered and signed for by addressee or,
if delivered by courier or overnight delivery service or sent by telecopy or
mailed, three days after sending.
SECTION 8.03. Further Assurances. Each party agrees to execute any and
all documents and to perform such other acts as may be necessary or expedient
to further the purposes of this Agreement and the transactions contemplated by
this Agreement.
SECTION 8.04. Counterparts. This Agreement may be executed in one or
more counterparts for the convenience of the parties to this Agreement, all of
which together will constitute one and the same instrument.
SECTION 8.05. Certain Definitions. For the purposes of this Agreement,
the following terms have the meanings specified:
(a) "Affiliate" means a Person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is
under common control with, the first mentioned Person.
(b) "Claim" means all claims, demands, losses, costs,
expenses (including reasonable attorneys' fees and expenses),
obligations, liabilities, and/or damages of every kind and nature;
provided, however, that with respect to claims for indemnification,
the amount of such claims shall be reduced by (i) any net tax benefits
realized by the Tyler Companies or the Surviving Corporation as a
result of such event, and (ii) the net amount of any insurance
proceeds received by the Tyler Companies or the Surviving Corporation
as a result of such event, including, without limitation, costs and
expenses of litigation (including reasonable attorneys' and
accountants' fees).
(c) "Control" (including the terms "controlling,"
"controlled," "controlled by," and "under common control with") means
the possession, directly or indirectly, or as trustee or executor, of
the power to direct or cause the direction of the management or
policies of a Person, whether through the ownership of securities, or
as trustee or executor, by contract or credit arrangement or
otherwise.
(d) "Knowledge" or "to the knowledge of" and other phrases of
like substance are to be broadly construed (i) to include the
knowledge of the Person making the representation and (ii) to
represent that the Person making the representations has made or
caused such inquiry and investigation to be made into the matter
represented to be true as such Person in good faith believes to be
reasonable and sufficient.
(e) "Person" will be broadly construed to include to mean an
individual, corporation, partnership, association, trust,
unincorporated organization, Governmental Entity, other entity or
group (as used in Section l3(d) of the Exchange Act).
(f) "Tax" or "taxes" means any and all taxes, charges, fees,
levies, assessments, duties, or other amounts payable to any federal,
state, local, or foreign taxing government, authority, or agency,
including, without limitation, (i) income, franchise, profits, gross
receipts, minimum, alternative minimum, estimated, ad valorem, value
added, sales, use, service, real or personal property, capital stock,
license, payroll, withholding, disability, employment, social
security, workers compensation, unemployment compensation, utility,
severance, excise, stamp, windfall profits, transfer, and gains taxes;
(ii) customs, duties, imposts, charges, levies, or other similar
assessments of any kind; and (iii) interest, penalties, and additions
to tax imposed with respect thereto.
SECTION 8.06. Assignment. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement will be assigned or
delegated by any Stockholders or Parent,
28
without the prior written consent of the other parties; except that Parent may
assign its rights and obligations under this Agreement to Merger Sub. This
Agreement is not intended to confer any rights or benefits to any Person
(including, without limitation, any employees of the Company) other than the
parties to this Agreement.
SECTION 8.07. Entire Agreement. This Agreement and the related
documents contained as Exhibits and Schedules to this Agreement or expressly
contemplated by this Agreement contain the entire understanding of the parties
relating to the subject matter hereof and supersede all prior written or oral
and all contemporaneous oral agreements and understandings relating to the
subject matter hereof. This Agreement cannot be modified or amended except in
writing signed by the party against whom enforcement is sought. The Exhibits
and Schedules to this Agreement are hereby incorporated by reference into and
made a part of this Agreement for all purposes.
SECTION 8.08. Specific Performance. The parties hereby acknowledge and
agree that the failure of any party to perform its agreements and covenants
under this Agreement, including, without limitation, failure to take all
actions as are necessary on its part to the consummation of the Merger or any
violation of the covenants set forth in Sections 5.10 and 5.11, will cause
irreparable injury to the other parties for which damages, even if available,
will not be an adequate remedy. Accordingly, each party hereby consents,
notwithstanding Section 8.11, to the issuance of injunctive relief by any court
of competent jurisdiction to compel performance of such party's obligations and
to the granting by any court of the remedy of specific performance of its
obligations under this Agreement or any Ancillary Agreement.
SECTION 8.09. GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE SUBSTANTIVE LAWS OF THE STATE OF TEXAS,
WITHOUT GIVING EFFECT TO ANY CONFLICTS-OF-LAW, RULE, OR PRINCIPLE THAT MIGHT
REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
SECTION 8.10. Arbitration. Any controversy, dispute, or claim arising
under this Agreement will be finally settled by arbitration conducted in
accordance with the American Arbitration Association Rules in effect on the
date of this Agreement; provided, that with respect to any controversy,
dispute, or claim that the Board of Directors of Tyler Corporation has not
correctly determined that a Stockholder has engaged in any conduct prohibited
by Section 5.10 or 5.11, the parties will be obligated to negotiate to resolve
such matter for ninety (90) days after written notice by one party to the other
of the existence of such controversy, dispute, or claim before commencing any
arbitration with respect thereto under this Agreement. Notwithstanding any
provision of the American Arbitration Association Rules, any such arbitration
will be conducted before and decided by a three-person panel of arbitrators.
Each party will be entitled to select one individual to serve on the panel, and
the two individuals so selected will select the third individual to serve on
the panel. Any such arbitration will take place in the City of Dallas, Texas.
The arbitrators in any such arbitration will apply the laws of the State of
Texas and the United States of America. In any arbitration under this
Agreement, this Agreement will be deemed to have been made in, and shall be
governed by and construed under the laws of, the State of Texas and the United
States of America. Any decision rendered by the arbitrators will be final and
binding and judgment thereon may be entered in any court having jurisdiction or
application may be made to such court for an order of enforcement as the case
may require. The parties intend that this agreement to arbitrate be
irrevocable. If arbitration is invoked in accordance with the provisions of
this Agreement, the prevailing party in the arbitration will be entitled to
recover from the other all costs, fees, and expenses pertaining or attributable
to such arbitration, including reasonable attorneys' fees.
[remainder of page intentionally left blank]
29
IN WITNESS WHEREOF, each of the parties to this Agreement has caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
TYLER CORPORATION,
a Delaware corporation
By: /s/ Xxxx X. Xxxxxx
-----------------------------------
Name: Xxxx X. Xxxxxx
Title: President
COMPUTER CENTER SOFTWARE, INC.,
a Delaware corporation and wholly-owned
subsidiary of Tyler Corporation
By: /s/ Xxxx X. Xxxxxx
-----------------------------------
Name: Xxxx X. Xxxxxx
Title: President
PROCESS, INCORPORATED
d/b/a Computer Center Software,
a Maine corporation
By: /s/ Xxxx X. Xxxx, Xx.
-----------------------------------
Name: Xxxx X. Xxxx, Xx.
Title: President
STOCKHOLDERS
/s/ Xxxx X. Xxxx
---------------------------------------
Xxxx X. Xxxx
/s/ Xxxx X. Xxxx, Xx.
---------------------------------------
Xxxx X. Xxxx, Xx.
30
Exhibit A
FORM OF EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT
This Employment Agreement is between Tyler Corporation, a Delaware
corporat ion, or one of its subsidiaries or affiliates (Tyler Corporation and
all of its subsidiaries and affiliates are collectively referred to herein as
"Tyler," and the specific organization employing the Employee, Computer Center
Software, Inc., a Delaware corporation and wholly-owned subsidiary of Tyler
Corporation, will sometimes be referred to as the "Company"), on the one hand,
and Xxxx X. Xxxx, Xx. ("Employee"), on the other hand. This Agreement will
become effective only upon the closing (the "Closing") of the merger (the
"Merger") of Process, Incorporated, a Maine corporation, with Computer Center
Software, Inc., a Delaware corporation and wholly-owned subsidiary of Tyler
Corporation, pursuant to the Agreement and Plan of Merger dated to be effective
as of April 20, 1999 (the "Merger Agreement").
1. Duties. Subject to the terms and conditions set forth in this
Agreement, Employee will serve in the capacity of President of the Company
reporting directly to the Board of Directors of the Company, or such other
capacity or capacities as may be assigned to Employee by the Tyler Corporation
Board of Directors and which are commensurate with the education, experience,
and skills of employee. In such capacities, Employee shall have all necessary
power and authority to discharge his responsibilities, subject in each case to
the Tyler Corporation Board of Directors' supervision and control.
2. Salary. Effective upon Closing, Employee's base salary will be at
the rate of $ per year. In addition, Employee will be entitled to receive
benefits made available from time to time by the Company to its employees
generally and to employees who hold positions similar to that of Employee,
including participation in medical and dental benefit plans and programs,
disability insurance, 401-K plans, and paid vacation (collectively,
"Benefits"). In addition, Employee may be entitled to receive such other
compensation, including an annual bonus, as may be determined and awarded by
and in the discretion of the Tyler Corporation Board of Directors.
3. Term. This Agreement shall commence as of the date of the Closing
and continue until the fourth anniversary of such date.
4. Termination; Death of Employee; Disability; Illness.
(a) Termination with or without Cause. Employee and the
Company understand that Employee's employment is "at will" and can be
terminated by either Employee or the Company upon sixty (60) days'
written notice to the other, with or without cause, for any reason not
prohibited by law. If the Company terminates Employee without Cause
(as defined below), the Company will, upon such termination, pay
Employee or his heirs, executors, or permitted assigns a severance
payment equal to the salary set forth in Section 2 for the then
remaining term of this Agreement. If Employee is terminated for Cause
or if Employee voluntarily terminates employment hereunder, Employee
shall be entitled to receive his salary and all Benefits through the
date of such termination.
31
For purposes of this Agreement, "Cause" shall mean (a)
intentional and material breach of his duty of loyalty or care to the
Company, (b) gross negligence or willful misconduct in performance of
his duties during the term of his employment, (c) persistent failure
to abide by the corporate policies and procedures as set forth in the
Company's employee handbook, if any, (d) persistent failure to execute
the reasonable and lawful instructions of the Company's Board of
Directors relating to the operation of the Company's business, (e)
conviction of any felony crime, and (e) a material breach by Employee
of any of the terms of this Agreement.
(b) Termination upon Death of Employee. In addition to any
other provision relating to termination, this Agreement shall
terminate upon the Employee's death. In such event, all unpaid
compensation and all expense reimbursements due to Employee shall be
paid to Employee's estate.
(c) Disability. If Employee becomes Totally Disabled (as
defined below) during the term of this Agreement, his full salary
shall be continued for a period of ninety (90) days from the date of
the disabling injury or onset of the disabling illness as determined
in accordance with this Section 4(c) and thereafter the Employee's
employment may be terminated.
For purposes of this Agreement, the term "Total Disability"
shall mean disability as defined in any total disability insurance
policy or policies, if any, in effect with respect to the Employee. If
no such insurance policy is in effect, "Total Disability" shall mean a
medically determinable physical or mental condition which, in the
opinion of two physicians chosen by the mutual consent of the parties,
renders the Employee unable to perform substantially all of the duties
required pursuant to this Agreement. Total Disability shall be deemed
to have occurred on the date of the disabling injury or onset of the
disabling injuries, as determined by the two independent physicians.
In the event that the two independent physicians are unable to agree
as to the date of the disabling injury or onset of the disabling
illness, such date shall be the later of the two dates determined by
the physicians chosen in accordance with this Section 4(c).
32
(d) Illness. If Employee is unable to perform the services
required under this Agreement by reason of illness or physical injury
not amounting to Total Disability, the compensation otherwise payable
to Employee under this Agreement shall be continued for a period of
ninety (90) days and thereafter the Employee's employment may be
terminated.
5. Outside Activities. While employed by the Company, Employee
must devote in good faith his full time and best efforts during reasonable
business hours and may not engage in any business activity that violates
Section 7 of this Agreement without Tyler Corporation's prior written consent;
provided, however, that this Agreement does not prohibit investment in less
than 3% of the securities of any company that is traded on a national
securities exchange or the NASDAQ national market system. Notwithstanding the
foregoing, Employee may continue to engage in the activities set forth in
Schedule 1. Employee represents that, to the best of his knowledge, the
execution of this Agreement, employment by the Company, and the performance of
the duties described hereunder will not conflict with any obligations that
Employee has to any former employer or other person.
6. Confidential Information.
(a) Employee acknowledges that Tyler is continuously
developing or receiving Confidential Information (as defined below),
and that during Employee's employment Employee will receive
Confidential Information from Tyler and special training relating to
Tyler's business methodologies. Employee further acknowledges and
agrees that Employee's employment by the Company creates a
relationship of confidence and trust between Employee and Tyler that
extends to all Confidential Information that becomes known to
Employee. Accordingly, Employee will not disclose or use any
Confidential Information, except in connection with the good faith
performance of his duties as an employee, and will take reasonable
precautions against the unauthorized disclosure or use of Confidential
Information. Upon Tyler's request, Employee will execute and comply
with a third party's agreement to protect its confidential and
proprietary information. In addition, Employee will not solicit or
induce the unauthorized disclosure or use of confidential or
proprietary information for the benefit of Tyler.
33
(b) For purposes of this Agreement, "Confidential
Information" means all written, machine-reproducible, oral and visual
data, information, and material, including, without limitation,
business, financial, and technical information, computer programs,
documents, and records (including those that Employee develops in the
scope of his employment) that (a) Tyler or any of its customers or
suppliers treats as confidential or proprietary through markings or
otherwise, (b) relates to Tyler or any of its customers or suppliers
or any of its business activities, products, or services (including
software programs and techniques) and is competitively sensitive or
not generally known in the relevant trade or industry, or (c) derives
independent economic value from not being known to, and is not
generally ascertainable by proper means by, other persons who can
obtain economic value from its disclosure or use. Confidential
Information does not include any information or material that is
approved by Tyler for unrestricted public disclosure. Confidential
Information shall not include information or material that: (i) was in
the public domain prior to the date of this Agreement or subsequently
came into the public domain through no fault of Employee, (ii) was
lawfully received by Employee from a third party free of any
obligation of confidentiality, or (iii) is required to be disclosed in
a judicial or administrative proceeding or by a governmental or
regulatory authority, domestic or foreign.
7. No Competition.
(a) Employee acknowledges that, in the course and as a result
of employment with the Company, Employee will obtain special training
and knowledge and will come in contact with the Company's and Tyler's
customers and potential customers, which training, knowledge, and
contacts would provide invaluable benefits to competitors and
potential competitors of the Company and Tyler. Accordingly, and in
consideration of Tyler entering into this Agreement and in
consideration of the Merger, Employee covenants and agrees that, for a
period beginning on the date of this Agreement and ending on the later
of (i) the first anniversary of (A) the termination of Employee's
employment by the Company for any reason or (B) the resignation of
Employee or (ii) the fourth anniversary of this Agreement (the
"Non-Compete Applicable Date"), without the written permission of
Tyler, he will not, directly or indirectly, anywhere within the United
States (the "Non-Compete Area"): (A) engage (whether as owner,
partner, investor, employee, adviser, consultant, contracting party,
or referring source, or otherwise) in any business that is in
competition with the business presently conducted by the Company,
Tyler, or their respective Affiliates at any time prior to the
Non-Compete Applicable Date, including, but not limited to, activities
with respect to software object technology development or related
fields (except that Employee may beneficially own less than 3% of the
common equity of a publicly traded entity); (B) solicit or attempt to
solicit any business or employment from any Person that Employee or
any person that reported, directly or indirectly, to Employee during
the term of Employee's employment while Employee is or was an employee
of the Company or Tyler, called upon, solicited, or
34
conducted business with as of prior to the Non-Compete Applicable
Date, including, but not limited to, customers, clients, and
prospective customers and clients of Tyler and their respective
Affiliates or successors; or (C) recruit or hire, attempt to or assist
in any attempt to recruit or hire, or discuss employment or hiring
with, any Person who has ever been or is an employee of the Company or
Tyler or their respective Affiliates or successors.
(b) Employee acknowledges that this Section 7 is necessary to
protect the interests of Tyler and that the restrictions and remedies contained
in this Agreement are reasonable in light of the consideration and other value
Employee accepts pursuant to this Agreement. If any provision of this Section 7
should be found by any court of competent jurisdiction to be unreasonable by
reason of its being too broad as to the period of time, territory, and/or
scope, then, and in that event, such provision will nevertheless remain valid
and fully effective, but will be considered to be amended so that the period of
time, territory, and/or scope set forth will be changed to be the maximum
period of time, the largest territory, and/or the broadest scope, as the case
may be, that would be found reasonable and enforceable by such court.
8. Proprietary Rights.
(a) Employee will disclose to the Company all works of
authorship and inventions that Employee produces while employed by the Company,
working alone or jointly with others, including all computer programs,
documents, and records, together with all related ideas, know-how, and
techniques. These disclosures will be considered Confidential Information. All
copyrights, patent rights, and other intellectual property rights in and to
works of authorship and inventions that Employee produces while employed by the
Company, working alone or jointly with others, are intended to be and will be
owned solely by the Company, except for such rights, interests, and works that
are not assigned to the Company pursuant to Section 8(b).
(b) Employee assigns to the Company all of his rights in and
to all works of authorship and inventions that Employee produces while employed
by the Company, working alone or jointly with others, and waives all rights
therein. Employee agrees to sign, without additional compensation, all
necessary documents and otherwise assist the Company, at its expense, to
register and enforce all copyrights, patents, and other intellectual property
rights. Employee appoints the Company as his attorney-in-fact for the sole
purpose of executing all necessary documents relating to the registration or
enforcement of any copyrights, patents, and other intellectual property rights
produced while employed by the Company and assigned to the Company in
accordance with, and subject to the restrictions contained in, this Section 8.
Notwithstanding the foregoing, Employee does not assign works of authorship or
inventions which (i) Employee developed on his own time without using the
Company's equipment, facilities, supplies, or Confidential Information, or (ii)
do not relate to either (A) Tyler's business, (B) Tyler's actual or
demonstrably anticipated research or development, or (C) work done by Employee
for Tyler.
(c) Tyler can waive the rights in any work of authorship or
invention only through a written instrument signed by an officer of Tyler after
Employee has fully and completely disclosed in writing the existence and nature
of that work or authorship or invention.
9. End of Employment
35
(a) Promptly upon the expiration or termination of Employee's
employment, Employee will return to the Company all tangible forms of
Confidential Information and all equipment, records, and other physical
property in Employee's possession or under his control that was furnished to
Employee, or is owned, by Tyler.
(b) Employee authorizes Tyler to offset any liquidated
amounts payable or reimbursable to Tyler by Employee against, and to withhold
such amounts from, any amounts payable or reimbursable to Employee by Tyler,
including, without limitation, any base salary, bonus, other incentive
compensation, and expense reimbursements to the maximum extent permitted by
law.
10. GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF MAINE, EXCLUDING ANY
CONFLICTS OF LAW PROVISIONS THEREOF.
11. ARBITRATION. THE PARTIES AGREE THAT ANY CLAIMS, INCLUDING ANY
STATUTORY CLAIMS, ARISING OUT OF OR RELATING TO EMPLOYEE'S EMPLOYMENT WILL, AT
THE REQUEST OF EITHER PARTY, BE SUBJECT TO BINDING ARBITRATION CONDUCTED BY AND
IN ACCORDANCE WITH THE RULES OF AN INDEPENDENT, NATIONALLY-RECOGNIZED DISPUTE
RESOLUTION ORGANIZATION (E.G. THE AMERICAN ARBITRATION ASSOCIATION). THE
ARBITRATION PROCEEDING WILL BE CONDUCTED IN DALLAS, TEXAS. NEITHER PARTY WILL
BE LIABLE TO THE OTHER FOR PUNITIVE DAMAGES FOR ANY SUCH CLAIMS, AND EACH PARTY
HEREBY WAIVES ANY CLAIMS AGAINST THE OTHER FOR SUCH DAMAGES.
12. Specific Performance. The parties hereby acknowledge and agree
that the failure of either party to perform the agreements and covenants set
forth in Section 2, Section 4, Section 6, and Section 7 of this Agreement will
cause irreparable injury to the other party for which damages, even if
available, may not be an adequate remedy. Accordingly, each party hereby
consents, notwithstanding Section 11, to the issuance of injunctive relief by
any court of competent jurisdiction to compel performance of such party's
obligations and to the granting by any court of the remedy of specific
performance of such obligations.
13. Continuing Obligations. Employee acknowledges and agrees that the
Sections 6, 7, 8, and 9 will continue to be enforceable against Employee for
two years after his employment with the Company ends, unless otherwise
specified in such section.
14. Entire Agreement. This Agreement (and with respect to Section 7,
the Merger Agreement) constitute the entire agreement between the parties
related to the subject matter hereof and supersedes all prior or
contemporaneous discussions, promises, or agreements related to this subject
matter. This Agreement cannot be amended except in a writing signed by both
parties. If any part of this Agreement is too broad to be fully enforced, it
will be enforced to the extent permitted by law.
15. Notices. All notices and other communications hereunder shall be
in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Company or Tyler: Tyler Corporation
0000 X. Xxxxxxxxxxx Xxxx
Xxxxxx, Xxxxx 00000
Attention: Corporate Counsel
If to Employee: At the current address of Employee as shown
on the Company records
EMPLOYEE TYLER CORPORATION,
a Delaware corporation
By: /s/ Xxxx X. Xxxx, Xx. By: /s/ Xxxx X. Xxxxxx
--------------------- ------------------
Name: Xxxx X. Xxxx, Xx. Its: President
36
EXHIBIT B
CLOSING CERTIFICATE
OF THE STOCKHOLDERS OF
PROCESS, INC.
The undersigned hereby certify, pursuant to Section 7.01 of the
Agreement and Plan of Merger, dated to be effective as of April 20, 1999 (the
"Merger Agreement"), by and among Tyler Corporation, a Delaware corporation
("Parent"), Computer Center Software, Inc., a Delaware corporation and
wholly-owned subsidiary of Parent ("Merger Sub"), Process, Incorporated, a
Maine corporation (the "Company"), and the stockholders of the Company (the
"Stockholders"), that:
1. All representations and warranties of the Stockholders
contained in the Merger Agreement are true and correct in all material
respects at and as of the Closing with the same effect as though such
representations and warranties were made at and as of the Closing.
2. The Stockholders have materially performed and complied
with all the covenants and agreements and satisfied the conditions
required by the Merger Agreement to be performed, complied with, or
satisfied by it at or prior to the Closing.
All capitalized terms not otherwise defined herein have the meanings
assigned to such terms in the Merger Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Certificate to
be effective as of April 20, 1999.
STOCKHOLDERS
By: /s/ Xxxx X. Xxxx
Name: Xxxx X. Xxxx
By: /s/ Xxxx X. Xxxx, Xx.
Name: Xxxx X. Xxxx, Xx.
37
EXHIBIT C
FORM OF PROCESS, INCORPORATED CLERK'S CERTIFICATE
PROCESS, INC.
CERTIFICATE OF CLERK
The undersigned, being the duly elected and qualified Clerk of
Process, Incorporated, a Maine (the "Company"), hereby certifies on behalf of
the Company, pursuant to Section 7.01 of the Agreement and Plan of Merger,
dated to be effective as of April 20, 1999 (the "Merger Agreement"), by and
among Tyler Corporation, a Delaware corporation ("Parent"), Computer Center
Software, Inc., a Delaware corporation and wholly-owned subsidiary of Parent
("Merger Sub"), the Company, and the stockholders of the Company (the
"Stockholders"), that:
1. Attached hereto is a true, correct, and complete copy of
resolutions duly adopted by unanimous written consent of the Board of
Directors of the Company on April ____, 1999. Such resolutions are the
only resolutions relating to the Merger Agreement, and they have not
been amended, modified, or rescinded since their adoption and are
still in full force and effect as of the date of this Certificate.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Secretary on behalf of the Company to be effective as of April 20, 1999.
PROCESS, INCORPORATED,
a Maine corporation
By:
-----------------------------
Name:
---------------------------
Title: Clerk
38
EXHIBIT D
TYLER CORPORATION
CLOSING CERTIFICATE
The undersigned hereby certifies on behalf of Tyler Corporation, a
Delaware corporation ("Parent"), pursuant to Section 7.02 of the Agreement and
Plan of Merger, dated to be effective as of April 20, 1999 (the "Merger
Agreement"), by and among Parent, Computer Center Software, Inc., a Delaware
corporation and wholly-owned subsidiary of Parent ("Merger Sub"), Process,
Incorporated, a Maine corporation (the "Company"), and the stockholders of the
Company (the "Stockholders"), that:
1. All representations and warranties of Parent contained in
the Merger Agreement are true and correct in all material respects at
and as of the Closing with the same effect as though such
representations and warranties were made at and as of the Closing.
2. Parent has materially performed and complied with all the
covenants and agreements and satisfied the conditions required by the
Merger Agreement to be performed, complied with, or satisfied by it at
or prior to the Closing.
All capitalized terms not otherwise defined herein have the meanings
assigned to such terms in the Merger Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Certificate on
behalf of Parent to be effective as of April 20, 1999.
TYLER CORPORATION,
a Delaware corporation
By: /s/ Xxxx X. Xxxxxx
----------------------
Name: Xxxx X. Xxxxxx
Title: President
39
EXHIBIT E
TYLER CORPORATION
CERTIFICATE OF SECRETARY
The undersigned, being the duly elected and qualified Secretary of
Tyler Corporation, a Delaware corporation ("Parent"), hereby certifies on
behalf of Parent, pursuant to Section 7.02 of the Agreement and Plan of Merger,
dated to be effective as of March 1, 1999 (the "Merger Agreement"), by and
among Parent, Computer Center Software, Inc., a Delaware corporation and
wholly-owned subsidiary of Parent ("Merger Sub"), Process, Incorporated, a
Maine corporation (the "Company"), and the stockholders of the Company (the
"Stockholders"), that:
1. Attached hereto is a true, correct, and complete copy of
resolutions duly adopted by unanimous written consent of the Board of
Directors of Parent on February 18, 1999. Such resolutions are the
only resolutions relating to the Merger Agreement, and they have not
been amended, modified, or rescinded since their adoption and are
still in full force and effect as of the date of this Certificate.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Secretary on behalf of Parent to be effective as of April 20, 1999.
TYLER CORPORATION,
a Delaware corporation
By: /s/ Xxxxxx Xxxxx
------------------------
Name: Xxxxxx Xxxxx
Title: Secretary
