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EXHIBIT 4.2
AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
BY AND AMONG
PAREXEL INTERNATIONAL CORPORATION,
RESCON ACQUISITION CORPORATION,
RESCON, INC.,
XXXXXX XXXXX XXXX, AS TRUSTEE OF THE XXXXXX X. XXXX REVOCABLE TRUST U/D/T
DATED JUNE 29, 1994
AND
XXXXXX XXXXX XXXX
Dated as of February 28, 1997
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TABLE OF CONTENTS
PAGE
ARTICLE I....................................................................2
DEFINITIONS..................................................................2
1.01. Definitions.........................................................2
ARTICLE II...................................................................5
REORGANIZATION AND MERGER....................................................5
2.01. The Merger..........................................................5
2.02. Closing.............................................................6
2.03. Closing Balance Sheet...............................................6
2.04. Adjustment..........................................................7
2.05. Certificates for Parent Stock.......................................8
2.06. Transfer Taxes......................................................8
2.07. Books and Records...................................................8
2.08. Resignations........................................................8
2.09. No Fractional Shares................................................8
2.10. Dissenting Shares...................................................9
ARTICLE III..................................................................9
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND STOCKHOLDER................9
3.01. Corporate Existence and Power.......................................9
3.02. Corporate Authorization............................................10
3.03. Governmental Authorization; Consents...............................10
3.04. Non-Contravention..................................................10
3.05. Capitalization.....................................................10
3.06. Subsidiaries.......................................................11
3.07. Financial Statements...............................................11
3.08. Absence of Certain Changes.........................................11
3.09. Property and Equipment.............................................13
3.10. No Undisclosed Material Liabilities................................13
3.11. Litigation.........................................................13
3.12. Material Contracts.................................................13
3.13. Insurance Coverage.................................................15
3.14. Compliance with Laws; No Defaults..................................15
3.15. Finders Fees.......................................................15
3.16. Intellectual Property..............................................15
3.17. Inventories........................................................17
3.18. Receivables........................................................17
3.19. Taxes..............................................................17
3.20. Environmental Compliance...........................................19
3.21. Customers..........................................................19
3.22. Transactions with Affiliates.......................................19
3.23. Other Information..................................................19
3.24. Intercompany Arrangements..........................................19
3.25. Employees..........................................................19
3.26. Representations....................................................20
ARTICLE IV..................................................................20
ADDITIONAL REPRESENTATIONS OF STOCKHOLDER...................................20
4.01. Title to and Validity of Shares....................................20
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4.02. Authority..........................................................20
4.03. Purchase for Investment............................................20
4.04. Power to Act as Trustee or Executor................................20
ARTICLE V...................................................................21
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB............................21
5.01. Organization and Existence.........................................21
5.02. Corporate Authorization............................................21
5.03. Governmental Authorization.........................................21
5.04. Litigation.........................................................21
5.05. Reports and Financial Statements...................................21
ARTICLE VI..................................................................22
COVENANTS OF THE COMPANY AND STOCKHOLDER....................................22
6.01. Confidentiality....................................................22
6.02. Affiliate Agreements...............................................22
ARTICLE VII.................................................................23
COVENANTS OF PARENT.........................................................23
7.01. Access.............................................................23
7.02. Quarterly Report on Form 10-Q......................................23
7.03. Pension Plan.......................................................23
7.04. Affiliate Agreements...............................................23
7.05. Reorganization Status..............................................24
7.06. Business Continuity................................................24
ARTICLE VIII................................................................24
COVENANTS OF ALL PARTIES....................................................24
8.01. Best Efforts.......................................................24
8.02. Certain Filings....................................................24
8.03. Public Announcements...............................................24
8.04. Pooling............................................................24
ARTICLE IX..................................................................25
EMPLOYEE BENEFITS...........................................................25
9.01. Employee Benefits Definitions......................................25
9.02. ERISA Representations..............................................25
9.03. No Third Party Beneficiaries.......................................27
ARTICLE X...................................................................28
CONDITIONS TO CLOSING.......................................................28
10.01. Conditions to the Obligations of Each Party.......................28
10.02. Conditions to Obligations of Parent and Sub.......................28
10.03. Conditions to Obligations of the Company..........................30
ARTICLE XI..................................................................30
SURVIVAL; INDEMNIFICATION...................................................30
11.01. Survival..........................................................30
11.02. Indemnification...................................................31
11.03. Procedures........................................................31
11.04. Holdback..........................................................32
11.05. Holdback Termination..............................................32
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ARTICLE XII.................................................................33
MISCELLANEOUS...............................................................33
12.01. Notices...........................................................33
12.02. Amendments; No Waivers............................................34
12.03. Expenses..........................................................34
12.04. Successors and Assigns............................................35
12.05. Further Assurances................................................35
12.06. Governing Law.....................................................35
12.07. Counterparts; Effectiveness.......................................35
12.08. Entire Agreement..................................................36
12.09. Captions..........................................................36
12.10. Jurisdiction......................................................36
Schedules
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Schedule 2.01 List of Stockholders
Schedule 3.03 Required Consents
Schedule 3.07 Financial Statements
Schedule 3.08 Absence of Changes
Schedule 3.11 Litigation
Schedule 3.12 Material Contracts
Schedule 3.14 Permits
Schedule 3.16 Intellectual Property
Schedule 3.18 Receivables
Schedule 3.19 Taxes and Audits
Schedule 3.21 Customers
Schedule 3.25 Employees
Schedule 5.03 Governmental Authorization
Schedule 9.02 Employee Plans and Benefit Arrangements
Schedule 10.02 Key Employees
Exhibits
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Exhibit A Articles of Merger to be filed with the Secretary of State of
the Commonwealth of Massachusetts
Exhibit B Articles of Merger to be filed with the Secretary of State of
the Commonwealth of Virginia
Exhibit C Registration Rights Agreement
Exhibit D Letter Agreement between Parent and Xxxxxx Xxxxx Xxxx
Exhibit E Affiliate Agreement of the Company's Affiliates
Exhibit F The Virginia Stock Corporation Act
Exhibit G Company Counsel Opinion
Exhibit H Affiliate Agreement of Parent's Affiliates
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AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
AGREEMENT dated as of February 28, 1997 by and among PAREXEL International
Corporation, a Massachusetts corporation ("PARENT"), Rescon Acquisition
Corporation, a Massachusetts corporation ("SUB"), Rescon, Inc., a Virginia
corporation (the "COMPANY"), Xxxxxx Xxxxx Xxxx, as Trustee of the Xxxxxx X. Xxxx
Revocable Trust u/d/t dated June 29, 1994, the sole stockholder of the Company
("the TRUST") and Xxxxxx Xxxxx Xxxx ("XXXX").
W I T N E S S E T H :
WHEREAS, subject to and in accordance with the terms and conditions of
this Agreement and pursuant to the Massachusetts Articles of Merger attached
hereto as EXHIBIT A (the "MASSACHUSETTS ARTICLES OF MERGER") and the Virginia
Articles of Merger attached hereto as EXHIBIT B (the "VIRGINIA ARTICLES OF
MERGER"), the respective boards of directors of Parent, Sub and the Company, and
Parent as sole stockholder of Sub, have approved the merger of Sub with and into
the Company (the "MERGER"), whereby each issued and outstanding share of common
stock, no par value per share, of the Company (the "SHARES") will be converted
into the right to receive common stock, $.01 par value per share, of Parent as
provided herein;
WHEREAS, for federal income tax purposes, it is intended that (i) the
Merger shall qualify as a reorganization, and (ii) this Agreement (and the other
agreements entered into in connection herewith) shall qualify as a plan or
reorganization within the meaning of the regulations issued pursuant to Section
368 of the Internal Revenue Code of 1986, as amended;
WHEREAS, the Merger is intended to be treated as a "pooling of interests"
transaction for accounting purposes under generally accepted accounting
principles, and Price Waterhouse LLP has confirmed to Parent in writing that it
has reviewed to the extent it deemed necessary the terms and structure of the
Merger, that it has reviewed this Agreement, the Articles of Merger and such
other documents as it has requested as necessary for its review and that, as of
the date of this Agreement, it knows of nothing that will prohibit the Merger
from being treated as a "pooling of interests" transaction for accounting
purposes; and
WHEREAS, the parties hereto desire to set forth certain representations,
warranties and covenants made by each to the other as an inducement to the
consummation of the Merger.
NOW, THEREFORE, in reliance on the foregoing recitals and in and for the
consideration and mutual covenants set forth herein, and for other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
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ARTICLE I
DEFINITIONS
1.01. DEFINITIONS. (a) The following terms, as used herein, have the
following meanings:
"AFFILIATE" means, with respect to any Person, any Person directly
or indirectly controlling, controlled by, or under common control with such
Person.
"ANCILLARY AGREEMENTS" means the Registration Rights Agreement
attached hereto as EXHIBIT C, the Letter Agreement attached hereto as EXHIBIT D
and the Affiliate Agreement attached hereto as EXHIBIT E.
"BALANCE SHEET" means the balance sheet of the Company as of
December 31, 1996 referred to in Section 3.07.
"BALANCE SHEET DATE" means December 31, 1996.
"BASE WORKING CAPITAL " means $630,068.00.
"CLOSING BALANCE SHEET" means a balance sheet of the Company as at
the close of business on the Closing Date.
"CLOSING DATE" means the date of the Closing.
"CLOSING WORKING CAPITAL" means (i) the Working Capital of the
Company as of the close of business on the Closing Date determined in accordance
with generally accepted accounting principles and practices applied on the basis
to be used in the preparation of the Closing Balance Sheet plus (ii) the
"Company Fees" as defined in Section 10.02(h).
"COMPANY" means Rescon, Inc., a Virginia corporation.
"COMPANY COUNSEL" means the law firm of Michaels, Xxxxxxx & Xxxxxx,
P.C.
"CONVERSION RATIO" means Parent Stock divided by the total number of
Shares outstanding on the Closing Date.
"DISSENTING SHARES" means those Shares which qualify as "dissenting
shares" under The Virginia Stock Corporation Act.
"FINAL WORKING CAPITAL" means Closing Working Capital (i) as shown
in Parent's calculation delivered pursuant to Section 2.03(a) if no notice of
disagreement with respect thereto is duly delivered pursuant to Section 2.03(b)
or (ii) if such a notice of disagreement is duly delivered, (A) as agreed by the
parties pursuant to Section 2.03(c) or (B) in the absence of such
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agreement, as shown in the independent accountant's calculation delivered
pursuant to Section 2.03(c); PROVIDED that Final Working Capital shall not in
any event be less than Parent's calculation of Closing Working Capital delivered
pursuant to Section 2.03(a) nor more than Seller's calculation of Closing
Working Capital delivered pursuant to Section 2.03(b).
"HILL" means Xxxxxx Xxxxx Xxxx.
"INTELLECTUAL PROPERTY RIGHT" means any trademark, trade name, trade
dress, service xxxx, service name, logo, and corporate name, registration
thereof or application for registration therefor; invention, patent, patent
application, patent disclosure and any related continuation,
continuation-in-part, divisional, reissue, re-examination, utility, model,
certificate of invention and design patent, patent application, registration and
application for registration; mask work and registration and application for
registration thereof; computer software, data and documentation; trade secret,
know-how, and confidential business information, whether patentable or
nonpatentable and whether or not reduced to practice, know-how, manufacturing
and product processes and techniques, research and development information,
copyrightable works, financial, marketing and business data, pricing and cost
information, business and marketing plans and customer and supplier lists and
information; copyright, copyright registration, application for copyright
registration; or any other similar type of proprietary intellectual property
right, (including without limitation associated goodwill and remedies against
infringements thereof and rights of protection of an interest therein under the
laws of all jurisdictions) in each case which is owned or licensed by the
Company, Stockholder or their respective Affiliates and used or held for use by
the Company.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest, restriction or encumbrance of any kind in respect of
such asset.
"MATERIAL ADVERSE CHANGE" means a material adverse change in the
business, assets, condition (financial or otherwise), results of operations or
prospects of the Company.
"MASSACHUSETTS ARTICLES OF MERGER" means the Articles of Merger to
be filed with the Secretary of State of the Commonwealth of Massachusetts on the
Closing Date, in the form set forth in EXHIBIT A.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the
business, assets, condition (financial or otherwise), results of operations or
prospects of the Company.
"MERGER" means the merger of Sub with and into the Company.
"1934 ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"PARENT" means PAREXEL International Corporation, a Massachusetts
corporation.
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"PARENT STOCK" means the number of shares of Common Stock, $.01 par
value per share, of Parent as is determined by dividing $4,265,000 by $30.575
(the average of the last reported sale price of Parent's Common Stock on the
Nasdaq National Market on each of the ten business days up to and including the
second business day preceding the Closing Date (subject to appropriate
adjustment in the event of a stock split or reverse stock split)).
"PARENT'S COUNSEL" means the law firm of Xxxxx, Xxxxxxx & Xxxxxxxxx,
LLP, Boston, Massachusetts.
"PERSON" means an individual, corporation, partnership, association,
trust or other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement between Hill and Parent in the form set forth in EXHIBIT B.
"SHARES" means all outstanding capital stock of the Company.
"STOCKHOLDER" means Hill and the Trust, collectively.
"SUB" means Rescon Acquisition Corporation, a Massachusetts
corporation.
"SUBSIDIARY" means any entity of which securities or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are owned directly or
indirectly by the Company.
"TRUST" means the Xxxxxx X. Xxxx Revocable Trust u/d/t dated June
29, 1994.
"VIRGINIA ARTICLES OF MERGER" means the Articles of Merger to be
filed with the Secretary of State of the Commonwealth of Virginia on the Closing
Date, in the form set forth in EXHIBIT B.
"WORKING CAPITAL" means cash and cash equivalents (on hand or in
bank accounts), plus accounts receivable (net of any allowance for doubtful
accounts), minus trade payables.
(b) Each of the following terms is defined in the Section set
forth opposite such term:
TERM SECTION
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Affiliate Agreements 6.02
Benefit Arrangement 8.01
Claims 10.02
Closing 2.02
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Code Preamble
Company Affiliate 6.02
Company Securities 3.05
Damages 10.02
Dissenting Stockholder 2.10
Effective Date 2.02
Employee Plans 8.01
Environmental Laws 3.22
Environmental Liabilities 3.22
ERISA 8.01
ERISA Affiliate 8.01
Financial Statements 3.07
Holdback Shares 10.04
Indemnified Party 10.02
Indemnifying Party 10.02
Parent Group 10.02
Multiemployer Plan 8.01
Permit 3.14
Reports 5.05
Return 3.19
Returns 3.19
Surviving Corporation 2.01
Tax 3.19
Taxes 3.19
ARTICLE II
REORGANIZATION AND MERGER
2.01. THE MERGER. Subject to the terms and conditions of this Agreement,
the Massachusetts Articles of Merger and the Virginia Articles of Merger, Sub
shall be merged with and into the Company in accordance with the applicable
provisions of the laws of the Commonwealth of Massachusetts and the Commonwealth
of Virginia and with the terms and conditions of this Agreement, the
Massachusetts Articles of Merger and the Virginia Articles of Merger so that:
(a) At the Effective Date, Sub shall be merged with and into the
Company. As a result of the Merger, the separate corporate existence of Sub
shall cease and the Company shall continue as the surviving corporation
(sometimes referred to herein as the "SURVIVING CORPORATION") and shall succeed
to and assume all of the rights and obligations of the Company in accordance
with the laws of the Commonwealth of Massachusetts and the Commonwealth of
Virginia.
(b) The articles of organization and bylaws of the Company in effect
immediately prior to the Effective Date shall be the articles of organization
and bylaws,
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respectively, of the Surviving Corporation after the Effective Date
unless and until further amended as provided by law.
(c) The directors and officers of Sub immediately prior to the
Effective Date shall be the directors and officers of the Surviving Corporation
after the Effective Date. Such directors and officers shall hold their position
until the election and qualification of their respective successors or until
their tenures are otherwise terminated in accordance with the bylaws of
Surviving Corporation.
The Shares that are issued and outstanding immediately prior to the
Effective Date will, by virtue of the Merger and at the Effective Date,
automatically and without further action on the part of Stockholder, be
converted into such number of shares of Parent Stock as is equal to the number
of Shares held by Stockholder (as set forth on SCHEDULE 2.01) multiplied by the
Conversion Ratio (rounded down to the largest whole number of Parent Shares
pursuant to Section 2.07 below).
2.02. CLOSING. The closing (the "CLOSING") of the transactions contemplated
hereunder shall take place at the offices of Parent's Counsel in Boston,
Massachusetts as soon as possible after satisfaction of the conditions set forth
in Article X, but in no event later than 11:59 p.m., Boston time, on February
28, 1997, or at such other time or place as Parent and the Company may agree.
Simultaneously with the Closing, the Massachusetts Articles of Merger shall be
filed in the office of the Secretary of State of the Commonwealth of
Massachusetts and the Virginia Articles of Merger shall be filed in the office
of the Secretary of State of the Commonwealth of Virginia. The Merger shall
become effective immediately upon the date stamped by the Massachusetts
Secretary of State on the Massachusetts Articles of Merger (such date is
referred to as the "EFFECTIVE DATE"). At the Closing, Parent shall deliver to
Hill certificates for such number of shares of Parent Stock, duly endorsed by
the Parent's transfer agent and registered in the name of Hill, as is determined
in accordance with Section 2.01.
2.03. CLOSING BALANCE SHEET.
(a) As promptly as practicable after the Closing Date, but no later
than thirty (30) days after the Closing Date, Parent will cause the Closing
Balance Sheet to be prepared and will prepare a certificate based on such
Closing Balance Sheet setting forth its calculation of Closing Working Capital
and the basis therefor. As promptly as practicable, but no later than thirty
(30) days after the Closing Date, Parent will cause the Closing Balance Sheet
together with its certificate to be delivered to Hill. The Closing Balance Sheet
shall (x) fairly present the financial position of the Company as at the close
of business on the Closing Date in accordance with generally accepted accounting
principles applied on a basis consistent with those used in the preparation of
the Balance Sheet, (y) include line items substantially consistent with those in
the Balance Sheet, and (z) be prepared in accordance with accounting policies
and practices consistent with those used in the preparation of the Balance
Sheet.
(b) If Hill disagrees with Parent's calculation of Closing Working
Capital delivered pursuant to Section 2.03(a), he may, within ten (10) days
after delivery of the
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documents referred to in Section 2.03(a), deliver a notice to Parent disagreeing
with such calculation and setting forth his calculation of such amount. Any such
notice of disagreement shall specify those items or amounts as to which Hill
disagrees, and Hill shall be deemed to have agreed with all other items and
amounts contained in the Closing Balance Sheet and the calculation of Closing
Working Capital delivered pursuant to Section 2.03(a).
(c) If a notice of disagreement shall be duly delivered pursuant to
Section 2.03(b), the parties shall, during the ten (10) days following such
delivery, use their best efforts to reach agreement on the disputed items or
amounts in order to determine, as may be required, the amount of Closing Working
Capital, which amount shall not be less than the amount thereof shown in
Parent's calculations delivered pursuant to Section 2.03(a) nor more than the
amount thereof shown in Hill's calculation delivered pursuant to Section
2.03(b). If, during such period, the parties are unable to reach such agreement,
they shall promptly thereafter cause independent accountants of nationally
recognized standing reasonably satisfactory to Hill and Parent (who shall not
have any material relationship with Hill or Parent), promptly to review this
Agreement and the disputed items or amounts for the purpose of calculating
Closing Working Capital. In making such calculation, such independent
accountants shall consider only those items or amounts in the Closing Balance
Sheet or Parent's calculation of Closing Working Capital as to which Hill has
disagreed. Such independent accountants shall deliver to Hill and Parent, as
promptly as practicable, a report setting forth such calculation. Such report
shall be final and binding upon the parties hereto. The cost of such review and
report shall be borne (i) by Parent if the difference between Final Working
Capital and Closing Working Capital as set forth in Parent's calculation of
Closing Working Capital delivered pursuant to Section 2.03(a) is greater than
the difference between Final Working Capital and Closing Working Capital as set
forth in Hill's calculation of Closing Working Capital delivered pursuant to
Section 2.03(b), (ii) by Hill if the first such difference is less than the
second such difference and (iii) otherwise equally by Hill and Parent.
(d) The parties hereto agree that they will, and agree to cause their
respective independent accountants and the Company to, cooperate and assist in
the preparation of the Closing Balance Sheet and the calculation of Closing
Working Capital and in the conduct of the audits and reviews referred to in this
Section 2.03, including without limitation the making available to the extent
necessary of books, records, work papers and personnel.
2.04. ADJUSTMENT
(a) If Final Working Capital is less than Base Working Capital by more
than 10% (subject to change by mutual written agreement of Parent and Hill) (the
full amount of such difference between Final Working Capital and Base Working
Capital being hereinafter referred to as the "Working Capital Deficiency"), Hill
shall return to Parent, as an adjustment to the Purchase Price, shares of Parent
Stock having a value equal to the Working Capital Deficiency in accordance with
subsection (b) below. Any such return of shares of Parent Stock pursuant to this
Section 2.04(a) shall be made at a mutually convenient time and place (i) within
30 days after Parent's delivery of the documents referred to in Section 2.03(a)
if no notice of disagreement with respect to Closing Working Capital is duly
delivered pursuant to Section 2.03(b) or (ii) if a
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notice of disagreement with respect to Closing Working Capital is duly delivered
pursuant to Section 2.03(b) then within 10 days after the earlier of (A)
agreement between Parent and Hill pursuant to Section 2.03(c) with respect to
Closing Working Capital and (B) delivery of the calculation of Closing Working
Capital referred to in Section 2.03(c).
(b) Any payments pursuant to this Section 2.04 shall be made by delivery
to Parent of shares of Parent Stock having a value as of the Closing Date
(including any fractional shares) equal to the amount due to Parent hereunder.
The value of a share of Parent Stock as of the Closing Date shall be equal to
$30.575 (the average of the last reported sale price of Parent's common stock on
the Nasdaq National Market on each of the ten business days up to and including
the second business day preceding the Closing Date (subject to appropriate
adjustment in the event of a stock split or reverse stock split)).
2.05. CERTIFICATES FOR PARENT STOCK. Each certificate for Parent Stock
issued to Stockholder as part of the Merger shall bear the following legend:
"The securities represented hereby have not been registered
under the Securities Act of 1933, as amended, and may not be sold,
transferred or otherwise disposed of except in accordance with the
terms thereof and unless registered with the Securities and Exchange
Commission of the United States and the securities regulatory
authorities of certain states or unless an exception from such
registration is available."
2.06. TRANSFER TAXES. Stockholder shall pay any and all sales, documentary,
use, filing, transfer and other taxes payable as a result of the Merger
(including any such state taxes that may be imposed on the Company by reason of
a deemed transfer of assets).
2.07. BOOKS AND RECORDS. On the Closing Date, the Company and Stockholder
shall deliver to Parent, or its representatives, where located, all minutes
books, stock record books and corporate seals of the Company, and the original
copies of all books of account, leases, other agreements, securities, customer
lists, files and other documents, instruments and papers of any kind or nature
belonging to or relating to the Company or its business.
2.08. RESIGNATIONS. The Company will deliver to Parent the resignations of
all officers and directors of the Company from their positions with the Company
at or prior to the Closing Date, unless otherwise specified by Parent.
2.09. NO FRACTIONAL SHARES. No certificates or scrip for fractional shares
of Parent Stock will be issued, no Parent stock split or dividend shall be paid
in respect of any fractional share interest, and no such fractional shares
interest shall entitle the owner thereof to vote or to any rights of or as a
stockholder of Parent. In lieu of such fractional shares, any holder of shares
of Common Stock of the Company who would otherwise be entitled to a fraction of
a share of Parent Stock (after aggregating all fractional shares of Parent Stock
to be received by such holder) will be paid the cash value of such fraction,
which shall be equal to the fraction
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multiplied by $30.575 (the average of the last reported sale price of Parent's
Common Stock on the Nasdaq National Market on each of the ten business days up
to and including the second business day preceding the Closing Date (subject to
appropriate adjustment in the event of a stock split or reverse stock split)).
2.10. DISSENTING SHARES. Any Dissenting Shares shall not be converted into
a right to receive Parent Stock but shall be converted into the right to receive
such consideration as may be determined to be due with respect to such
Dissenting Shares pursuant to the laws of the Commonwealth of Virginia;
PROVIDED, HOWEVER, that if the status of any such shares as Dissenting Shares
shall not be perfected, or if any such shares shall lose their status as
Dissenting Shares, then, as of the later of the Effective Date or the time of
the failure to perfect, or loss of, such status, such shares shall automatically
be converted into and shall represent only the right to receive (upon the
surrender of the certificate or certificates representing such shares) Parent
Stock in accordance with Section 2.01 (and cash in lieu of fractional shares in
accordance with Section 2.09). The Company shall give Parent prompt notice of
any demand received by the Company for appraisal of Shares, and Parent shall
have the right to participate in all negotiations and proceedings with respect
to such demand. The Company and Stockholder each agrees that, except with the
prior written consent of Parent or as required under The Virginia Stock
Corporation Act, a copy of which is attached hereto as EXHIBIT F, it will not
voluntarily make any payment with respect to, or settle or offer to settle, any
such demand for appraisal. Each holder of Dissenting Shares ("DISSENTING
STOCKHOLDER") who, pursuant to the provisions of The Virginia Stock Corporation
Act, becomes entitled to payment of the value of Shares shall receive payment
therefore from the Company or, after the Closing, from Stockholder (but only
after the value therefor shall have been agreed upon or finally determined
pursuant to such provisions).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND STOCKHOLDER
The Company and Stockholder hereby jointly and severally represent and
warrant to Parent and Sub as of the date hereof that:
3.01. CORPORATE EXISTENCE AND POWER. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, and has all corporate powers and all governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted. The Company is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction in the United
States where the character of the property owned or leased by it or the nature
of its activities make such qualification necessary, except for those
jurisdictions where failure to be so qualified would not, individually or in the
aggregate, have a Material Adverse Effect. The Company has heretofore delivered
to Parent true and complete copies of the corporate charter and bylaws, and all
amendments thereto, of the Company.
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3.02. CORPORATE AUTHORIZATION. The execution, delivery and performance by
the Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby are within the Company's corporate powers and
have been duly authorized by all necessary corporate action on the part of the
Company. This Agreement constitutes a valid and binding agreement of the
Company.
3.03. GOVERNMENTAL AUTHORIZATION; CONSENTS.
(a) The execution and delivery of this Agreement by the Company and
Stockholder, and the performance by the Company and Stockholder of their
obligations under this Agreement, require no action by or in respect of, or
filing with, any governmental body, agency, official or authority or any other
Person.
(b) Except as set forth on SCHEDULE 3.03, no consent, approval,
waiver or other action by any Person under any contract, agreement, indenture,
lease, instrument or other document to which the Company is a party or by which
it is bound is required or necessary for the execution and delivery of this
Agreement by the Company and Stockholder, the performance by the Company and
Stockholder of their obligations under this Agreement or the consummation of the
transactions contemplated hereby.
3.04. NON-CONTRAVENTION. The execution and delivery of this Agreement by
the Company and Stockholder, the performance by the Company and Stockholder of
their obligations under this Agreement and the consummation of the transactions
contemplated hereby do not and will not (i) contravene or conflict with the
corporate charter or bylaws of the Company, (ii) contravene or conflict with or
constitute a violation of any provision of any law, regulation, judgment,
injunction, order or decree binding upon or applicable to the Company; (iii)
constitute a default under or give rise to any right of termination,
cancellation or acceleration of any right or obligation of the Company or to a
loss of any benefit to which the Company is entitled under any provision of any
agreement, contract or other instrument binding upon the Company or any permit
held by the Company or (iv) assuming the receipt of all required consents,
result in the creation or imposition of any Lien on any asset of the Company.
3.05. CAPITALIZATION. The authorized capital stock of the Company consists
of 500 shares of common stock, no par value. As of the date hereof, there were
outstanding 300 shares of common stock. All outstanding shares of capital stock
of the Company have been duly authorized and validly issued and are fully paid
and are owned by the Trust as shown on SCHEDULE 2.01. Except as set forth in
this Section 3.05, there are no outstanding (i) shares of capital stock, other
securities or phantom or other equity interests of the Company, (ii) securities
of the Company convertible into or exchangeable for shares of capital stock or
other securities of the Company or (iii) options or other rights to acquire from
the Company any capital stock, other securities or phantom or other equity
interests of the Company (the items in clauses (i), (ii) and (iii) being
referred to collectively as the "COMPANY SECURITIES"). There are no outstanding
obligations of the Company, actual or contingent, to issue or deliver or to
repurchase, redeem or otherwise acquire any Company Securities.
15
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3.06. SUBSIDIARIES. The Company does not have and never has had any
Subsidiaries or any ownership or equity interest in or control of (direct or
indirect) any other person.
3.07. FINANCIAL STATEMENTS. The Company has previously furnished Parent
with a true and complete copy of the balance sheets of the Company as of
December 31, 1994, 1995 and 1996 and the statements of operations, and changes
in stockholders' equity of the Company for the respective years then ended,
(collectively, the "FINANCIAL STATEMENTS"), which are attached hereto as
SCHEDULE 3.07. Each of the balance sheets included in the Financial Statements
fairly presents in all material respects the financial position of the Company
as of its date, and the other statements included in the Financial Statements
fairly present in all material respects the results of operations and
stockholders' equity, as the case may be, of the Company for the periods therein
set forth, in each case in accordance with generally accepted accounting
principles consistently applied during the periods involved.
3.08. ABSENCE OF CERTAIN CHANGES. Except as set forth in SCHEDULE 3.08,
since the Balance Sheet Date, the Company has conducted its business in the
ordinary course consistent with past practices and there has not been:
(a) any Material Adverse Change or any event, occurrence, development
or state of circumstances or facts which could reasonably be expected to result
in a Material Adverse Change;
(b) any declaration, setting aside or payment of any dividend or
other distribution with respect to any Company Securities or any repurchase,
redemption or other acquisition by the Company of any outstanding shares of
capital stock or other securities of, or other ownership interests in, the
Company;
(c) any amendment of any outstanding security of the Company;
(d) any incidence, assumption or guarantee by the Company of any
indebtedness for borrowed money other than in the ordinary course of business
and in amounts and on terms consistent with past practices;
(e) any creation or assumption by the Company of any Lien on any
asset;
(f) any making of any loan, advance or capital contributions to or
investment in any Person;
(g) any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the business or assets of the Company which,
individually or in the aggregate, has had or would reasonably be expected to
have a Material Adverse Effect;
(h) any transaction or commitment made, or any contract or agreement
entered into, by the Company relating to its assets or business (including the
acquisition or disposition of any assets) or any relinquishment by the Company
of any contract or other right, in
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either case, material to the Company, other than transactions and commitments in
the ordinary course of business consistent with past practices and those
contemplated by this Agreement;
(i) any change in any method of accounting or accounting practice by
the Company;
(j) any (i) grant of any severance or termination pay to any
director, officer or employee of the Company, (ii) entering into of any
employment, deferred compensation or other similar agreement (or any amendment
to any such existing agreement) with any director, officer or employee of the
Company, (iii) change in benefits payable under existing severance or
termination pay policies or employment agreements or (iv) change in
compensation, bonus or other benefits payable to directors, officers or
employees of the Company;
(k) any change in the business or operations or in the manner of
conducting the business or operations of the Company other than changes in
ordinary course of business;
(l) except as reflected on the Balance Sheet, any mortgage, pledge or
subjection of any properties or assets to any claim, Lien or liability, except
claims, Liens or liabilities for taxes not yet due;
(m) any write-down of the value of any inventory, or write-off of any
notes or accounts receivable or any portion thereof as uncollectible, other than
valuation reserves established for inventory and receivables;
(n) any cancellation or release of any other debts or claims, or
waivers of any rights;
(o) any sale, transfer or conveyance of any property or assets,
except in the ordinary course of business consistent with past practice;
(p) any disposition of, or lapse, or other failure to preserve the
exclusive rights of the Company to any Intellectual Property Right;
(q) any payments, loans or advances of any amount to or in respect
of, or sale, transfer or lease of any properties or assets to, or the entering
into of any agreement, arrangement or transaction with Stockholder, any of the
officers or directors of the Company, any Affiliate or associate of Stockholder,
the Company or any officer or director of the Company, or any business or entity
in which Stockholder or the Company, or any Affiliate or associate of any such
person, has any direct or material indirect interest, except for compensation to
the officers and employees of the Company other than this Agreement;
(r) any lease of real or personal property or any capital
expenditures or commitments for additions to property, plant, equipment or
capital assets; or
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(s) any agreement, whether in writing or otherwise, to take any
action described in this Section 3.08.
3.09. PROPERTY AND EQUIPMENT. The Company has good title to, or in the case
of leased property have valid leasehold interests in, all property and assets
(whether real or personal, tangible or intangible) reflected on the Balance
Sheet or acquired after the Balance Sheet Date. None of such properties or
assets is subject to any Liens, except Liens for taxes not yet due or being
contested in good faith (and for which adequate accruals or reserves have been
established on the Balance Sheet), Liens disclosed on the Balance Sheet or Liens
which do not materially detract from the value of such property or assets as now
used, or materially interfere with any present or intended use of such property
or assets.
3.10. NO UNDISCLOSED MATERIAL LIABILITIES. To the Company's or
Stockholder's knowledge, there are no liabilities of the Company of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable or
otherwise, and there is no existing condition, situation or set of circumstances
which could reasonably be expected to result in such a liability, other than:
(i) liabilities disclosed in any other Schedule hereto or provided
for in the Balance Sheet; and
(ii) liabilities incurred in the ordinary course of business
consistent with past practice since the Balance Sheet Date, which in the
aggregate are not material to the Company.
3.11. LITIGATION. Other than as disclosed on SCHEDULE 3.11, there is no
action, suit, investigation or proceeding pending against, or to the knowledge
of the Company and Stockholder threatened against or affecting, the Company or
any of its properties or the transactions contemplated hereby before any court
or arbitrator or any governmental body, agency, official or authority.
3.12. MATERIAL CONTRACTS.
(a) Except for agreements, contracts, plans, leases, arrangements or
commitments disclosed in SCHEDULE 3.12, the Company is not a party to or subject
to:
(i) any lease providing for annual rentals of $5,000 or more;
(ii) any contract for the purchase of materials, supplies, goods,
services, equipment or other assets in an amount exceeding $1,000;
(iii) any partnership, joint venture or other similar arrangement or
agreement or any license agreement under which the Company is the licensee, or
any agency, distributor, dealer, franchise, sales representative or other
similar contract or commitment;
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(iv) except for trade indebtedness incurred in the ordinary course of
business, any loan or credit agreements or any instrument evidencing or related
in any way to indebtedness incurred in the acquisition of any asset, business,
company or other entity or indebtedness for borrowed money by way of direct
loan, sale of debt securities, purchase money obligation, conditional sale,
guarantee, or otherwise, or agreement relating to the mortgaging, pledging or
otherwise placing a lien on any assets of the Company or any guaranty of
indebtedness or performance of others by the Company;
(v) any contract or other document that limits the freedom of the
Company to compete in any line of business or with any Person or in any area or
which would so limit the freedom of the Company after the Closing Date;
(vi) any guarantees;
(vii) any contract for personal services or employment (including
without limitation contracts with directors, officers, employees, agents,
consultants, advisors, salesmen, sales representatives, distributors or
dealers);
(viii) any agreement or arrangement providing for the sale of any of
the assets, properties or rights of the Company (other than in the ordinary
course of business) or for the grant of a preferential right to purchase any of
the Company's assets, properties or rights or which required the consent of any
third party to the transfer and assignment of any of its assets, properties or
rights; and
(ix) any other agreements, contracts, leases, licenses or commitments
to which the Company is a party (or under which the Company may be obligated or
which the Company or any of its rights, properties or assets may be subject or
bound) and which is material to the financial condition, results of operations,
business, property or prospects of the Company or is not made in the ordinary
course of business that is material to the Company.
(x) any contract relating to indebtedness for borrowed money or the
deferred purchase price of property (whether incurred, assumed, guaranteed or
secured by any asset), except contracts relating to indebtedness incurred in the
ordinary course of business in an amount not exceeding $1,000;
(b) Each agreement, contract, plan, lease, arrangement and commitment
disclosed in any schedule to this Agreement or required to be disclosed pursuant
to Section 3.12(a) is a valid and binding agreement of the Company and is in
full force and effect, and neither the Company, nor, to the knowledge of the
Company and Stockholder, any other party thereto is in default in any material
respect under the terms of any such agreement, contract, plan, lease,
arrangement or commitment.
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3.13. INSURANCE COVERAGE. The Company has furnished to Parent a list of,
and true and complete copies of, all insurance policies covering the assets,
business, equipment, properties, operations, employees, officers and directors
of the Company. There is no claim by the Company pending under any of such
policies as to which coverage has been questioned, denied or disputed by the
underwriters of such policies. All premiums payable under all such policies have
been paid and the Company is otherwise in full compliance with the terms and
conditions of all such policies. Such policies are of the type and in amounts
customarily carried by Persons conducting businesses similar to those of the
Company.
3.14. COMPLIANCE WITH LAWS; NO DEFAULTS.
(a) The Company is not currently in violation of, and since January
1, 1994 has not violated, any applicable provisions of any laws, statutes,
ordinances or regulations except for violations that have not had and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
(b) SCHEDULE 3.14 correctly describes each license and permit (a
"PERMIT") material to the business of the Company, together with the name of the
governmental agency or entity issuing such license or permit. Such licenses and
permits are valid and in full force in accordance with their terms and effect
and none of such licenses or permits will be terminated or impaired or become
terminable as a result of the transactions contemplated hereby.
(c) The Company is not in default under, and no condition exists
that with notice or lapse of time or both would constitute a default under, (i)
any mortgage, loan agreement, indenture or evidence of indebtedness for borrowed
money to which the Company is a party or by which the Company or any material
amount of its assets is bound or (ii) any judgment, order or injunction of any
court, arbitrator or governmental body, agency, official or authority which
defaults or potential defaults individually or in the aggregate would reasonably
be expected to have a Material Adverse Effect.
3.15. FINDERS FEES. There is no investment banker, broker, finder or other
intermediary which has been retained by or is authorized to act on behalf of
Stockholder or the Company who might be entitled to any fee or commission from
Parent, Sub, the Company or any of their respective Affiliates upon consummation
of the transactions contemplated by this Agreement.
3.16. INTELLECTUAL PROPERTY.
(a) SCHEDULE 3.16 includes a list of all Intellectual Property
Rights specifying as to each, as applicable: (i) the nature of such Intellectual
Property Right; (ii) the owner of such Intellectual Property Right; (iii) the
jurisdictions by or in which such Intellectual Property Right is recognized
without regard to registration or has been issued or registered or in which an
application for such issuance or registration has been filed, including the
respective registration or application numbers; and (iv) licenses, sublicenses
and other agreements as to which the Company or any of its Affiliates is a party
and pursuant to which any Person is authorized to use
20
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such Intellectual Property Right, including the identity of all parties thereto,
a description of the nature and subject matter thereof, the applicable royalty
and the term thereof.
(b) The Company has not during the three years preceding the date of
this Agreement been charged in writing with or been a defendant in any claim,
suit, action or proceeding relating to its business that has not been finally
terminated prior to the date hereof and that involves a claim of infringement of
any patents, trademarks, service marks or copyrights. The Company and
Stockholder have no knowledge of any other claim or infringement by the Company,
or no knowledge of any continuing infringement by any other Person of any
Intellectual Property Rights. No Intellectual Property Right is subject to any
outstanding order, judgment, decree, stipulation or agreement restricting the
use thereof by the Company or restricting the licensing thereof by the Company
to any Person. The Company has not entered into any agreement to indemnify any
other Person against any charge of infringement of any patent, trademark,
service xxxx or copyright.
(c) None of the Intellectual Property Rights of the Company, the
value of which to the Company is contingent upon maintenance of the
confidentiality thereof, has been disclosed by the Company, any employee of the
Company or Stockholder to any Person other than Persons who are parties to
confidentiality agreements with the Company.
(d) To the knowledge of the Company and Stockholder, no third party
has asserted any claim, or has any reasonable basis to assert any valid claim,
against the Company with respect to (i) the continued employment by, or
association with, the Company of any of the present officers, employees of or
consultants to the Company or (ii) the use by the Company or any of such Persons
in connection with their activities for or on behalf of the Company of any
information which the Company or any of such Persons would be prohibited from
using under any prior agreements or arrangements or any laws applicable to
unfair competition, trade secrets or proprietary information.
(e) None of the former or present employees, officers, directors,
consultants or contractors of the Company holds any right, title or interest,
directly or indirectly, in whole or in part, in or to any of the Intellectual
Property Rights which the Company is currently using or the use of which is
necessary for the business of the Company as presently conducted or as proposed
to be conducted. To the knowledge of the Company and Stockholder, no employee of
the Company is in violation of any term of any employment contract, patent
disclosure agreement or any other contract or agreement relating to the
relationship of any such employee with the Company or any other party because of
the nature of the business conducted or to be conducted by the Company. No
person has any so-called "moral rights," including any right to identification
of authorship, rights of approval of modifications or limitations on subsequent
modifications, in or to any of the Intellectual Property Rights owned by the
Company. Nothing prohibits the Company from (i) modifying, changing, altering,
adapting, revising, translating, adding to or subtracting from any of the
Intellectual Property Rights owned by the Company, (ii) doing any of the
foregoing without obligation to name the author of any of the Intellectual
Property Rights owned by the Company or to give credit to any person in
connection therewith
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or (iii) leasing, licensing, distributing or marketing any of the Intellectual
Property Rights owned by the Company without the consent of any person.
3.17. INVENTORIES. The Company has no inventories.
3.18. RECEIVABLES. Except as set forth on SCHEDULE 3.18, all accounts,
notes receivable and other receivables (other than receivables collected since
the Balance Sheet Date) reflected on the Balance Sheet are, and all accounts and
notes receivable of the Company at the Closing Date will be, valid, genuine and
fully collectible (using commercially reasonable collection efforts) within
ninety (90) days in the aggregate amount thereof, subject to normal and
customary trade discounts, less any reserves for doubtful accounts recorded on
the Balance Sheet. All accounts, notes receivable and other receivables of the
Company at the Balance Sheet Date have been included in the Balance Sheet.
3.19. TAXES.
(a) The term "TAXES" as used herein means all federal, state, local,
foreign and other net income, gross income, gross receipts, sales, use, ad
valorem, transfer, franchise, profits, license, lease, service, service use,
withholding, payroll, employment, excise, severance, stamp, occupation, premium,
property, windfall profits, customs duties, or other Taxes, fees, assessments or
other charges of any kind whatever, together with any interest and any
penalties, additions to Tax or additional amounts with respect thereto, and the
term "TAX" means any one of the foregoing taxes. The term "RETURNS" as used
herein, means all returns, declarations, reports, statements and other documents
required to be filed in respect of Taxes, and "RETURN" means any one of the
foregoing Returns. All citations to the Code, or the Treasury regulations
promulgated thereunder, shall include any amendments or any substitute or
successor provisions thereto.
(b) The Company has filed all Returns required to be filed by the due
date for such Return and has paid all Taxes owed (whether or not shown as due on
such returns), including, without limitation, all Taxes which the Company is
obligated to withhold for amounts owing to employees, creditors and third
parties. All such Returns were complete and correct in all material respects.
All Taxes with respect to which the Company has become obligated pursuant to
elections made by it in accordance with generally accepted practice have been
paid and adequate reserves have been established for all Taxes accrued but not
yet payable. No issues have been raised (and are currently pending) by any
taxing authority in connection with any of the Returns. No waivers of statutes
of limitation with respect to any of the Returns have been given by or requested
from the Company. All deficiencies asserted or assessments made as a result of
any examinations have been fully paid, or are fully reflected as a liability in
the financial statements of the Company, or are being contested and an adequate
reserve therefor has been established and is fully reflected in the financial
statements of the Company. There are no liens for Taxes (other than for current
Taxes not yet due and payable) upon the assets of the Company. All material
elections with respect to Taxes affecting the Company, as of the date hereof,
are set forth in the financial statements of the Company, or are set forth on
SCHEDULE 3.19. The Company has not agreed to make any adjustment under Section
481(a) of the Code by reason of
22
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a change in accounting method or otherwise, and the Company will not be required
to make any such adjustment as a result of the transactions set forth in this
Agreement. The Company does not have and has not had a permanent establishment
in any foreign country, as defined in any applicable Tax treaty or convention
between the United States of America and such foreign country. The Company is
not a party to any agreement, contract, arrangement or plan that has resulted or
would result, separately or in the aggregate, in (i) the payment of any "excess
parachute payments" within the meaning of Section 280G of the Code (without
regard to the exception in Sections 280G(b)(4) and 280G(b)(5) of the Code) or
(ii) any payments or other transactions that would be, in whole or in part,
nondeductible under Sections 162 or 404 of the Code. The Company is not a party
to any tax sharing or similar agreement with any Person. The Company has never
been a member of an affiliated group (within the meaning of Section 1504 of the
Code) filing a consolidated federal Return (other than a group the common parent
of which was the Company). The Company does not have any liability for Taxes of
any Person (other than the Company) under Treasury Regulation Section 1.1502-6
(or any similar provision of state, local, or foreign law), as a transferree or
successor, by contract, or otherwise.
(c) The Company has never filed a consent pursuant to Section 341(f)
of the Code, relating to collapsible corporations. The Company and its
stockholders made a valid election for the Company to be treated as an "S
corporation", as that term is defined in Section 1361(a) of the Code. The
Company has been an S corporation since April 1, 1993 through the date hereof.
Neither the Company nor Stockholder has taken any action that would result in
the termination of the S corporation status of the Company, other than pursuant
to this Agreement.
(d) Stockholder has timely filed all Returns with respect to Taxes
required to be paid by him attributable to items of income, gain, deductions,
losses and credits of the Company, and have timely paid all such Taxes (whether
or not shown on such Returns). Other than as described on SCHEDULE 3.19, there
has not been any audit of any Return filed by Stockholder with respect to, or
which may relate to, items of income, gain, deduction, loss or credit of the
Company; and no such audit of Stockholder is in progress and Stockholder has not
received notice from any Tax authority that any such audit is contemplated or
pending.
3.20. ENVIRONMENTAL COMPLIANCE.
(i) Stockholder and the Company have complied with all federal, state
and local laws (including without limitation case law, rules, regulations,
orders, judgments, decrees, permits, licenses and governmental approvals)
which are intended to protect the environment and/or human health or safety
(collectively, "ENVIRONMENTAL LAWS");
(ii) neither Stockholder nor the Company have handled, generated,
used, stored, transported or disposed of any substance or waste which is
regulated by Environmental Laws, except for reasonable amounts of ordinary
office and/or office-cleaning supplies which have been used in compliance
with Environmental Laws; and
(iii) there are no "Environmental Liabilities". For purposes of this
Agreement, "ENVIRONMENTAL LIABILITIES" are any liabilities which (y) arise
out of or in any way relate
23
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to the Company or any real estate at any time owned, used or leased by the
Company, or the Company's or Stockholder's use or ownership thereof,
whether vested or unvested, contingent or fixed, actual or potential, and
(z) arise from or relate to actions occurring (including any failure to
act) or conditions existing on or before the Closing Date.
3.21. CUSTOMERS. Except as set forth on SCHEDULE 3.21, the Company and
Stockholder have not received notice from or otherwise have knowledge that any
group of customers who are under common ownership or control and who accounted
as a group for a material percentage of the aggregate products and services
furnished by the Company during the past 18 months has stopped or intends to
stop purchasing the Company's products or services.
3.22. TRANSACTIONS WITH AFFILIATES. There are no loans, leases, royalty
agreements or other continuing transactions between the Company and Stockholder,
any Affiliate of Stockholder, or any member of Hill's family. To the knowledge
of the Company and Stockholder, none of the officers or directors of the Company
or Stockholder (a) has any material direct or indirect interest in any entity
which does business with the Company; (b) has any direct or indirect interest in
any property, asset or right which is used by the Company in the conduct of its
business; or (c) has any contractual relationship with the Company other than
such relationships which occur from being an officer, director or stockholder of
the Company.
3.23. OTHER INFORMATION. None of the documents or information delivered to
Parent in connection with the transactions contemplated by this Agreement
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained therein not misleading.
The 1997 budget and accompanying information relating to the projected future
performance of the Company delivered to Parent constitute the Company's and
Stockholder's best estimate of the information purported to be shown therein,
and the Company and Stockholder are not aware of any fact or information that
would lead him or it to believe that such projections are incorrect or
misleading in any material respect.
3.24. INTERCOMPANY ARRANGEMENTS. The Company does not own any note, bond,
debenture or other indebtedness, or is otherwise a creditor, of Stockholder or
any of his or its Affiliates. Since the Balance Sheet Date there has not been
any payment by the Company to Stockholder or any of his or its Affiliates,
charge by Stockholder or any of his or its Affiliates to the Company or other
transaction between the Company and Stockholder and any of his or its
Affiliates, except in any such case in the ordinary course of business of the
Company consistent with past practice.
3.25. EMPLOYEES. SCHEDULE 3.25 sets forth a true and complete list of (a)
the names, titles, annual salaries and other compensation of all employees of
the Company and (b) the wage rates for non-salaried employees of the Company (by
classification). None of such employees and no other employee of the Company has
indicated to the Company or Stockholder that he intends to resign, retire or
file a claim or otherwise bring an action against the Company, Parent or Sub as
a result of the transactions contemplated by this Agreement or otherwise.
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3.26. REPRESENTATIONS. The joint representations and warranties of the
Company and Stockholder contained in this Agreement, disregarding all individual
qualifications and exceptions contained therein relating to materiality or
Material Adverse Effect, are true and correct with only such exceptions as would
not in the aggregate reasonably be expected to have a Material Adverse Effect.
ARTICLE IV
ADDITIONAL REPRESENTATIONS
AND WARRANTIES OF STOCKHOLDER
Stockholder represents and warrants to, and agrees with, Parent and Sub as
follows:
4.01. TITLE TO AND VALIDITY OF SHARES. The Trust now has, and on the
Closing Date will have, good and marketable title to and unrestricted power to
vote and sell the Shares designated as owned by the Trust opposite the Trust's
name on SCHEDULE 2.01, free and clear of any Lien. All Shares owned by the Trust
have been duly authorized and validly issued and are fully paid and
non-assessable.
4.02. AUTHORITY. Stockholder has the legal power, right and authority to
enter into and perform this Agreement and each of the Ancillary Agreements, and
to perform each of his or its obligations hereunder and thereunder. The
execution, delivery and performance of this Agreement and each of the Ancillary
Agreements by Stockholder does not contravene, or constitute a default under,
any provision of applicable law or regulation or of any agreement, judgment,
injunction, order, decree or any other instrument binding upon Stockholder. This
Agreement and each of the Ancillary Agreements have been duly executed and
delivered by Stockholder and constitute valid and binding obligations of
Stockholder, enforceable in accordance with their respective terms.
4.03. PURCHASE FOR INVESTMENT. Stockholder is acquiring the shares of
Parent Stock for investment for his or its own account and not with a view to,
or for sale in connection with, any distribution thereof. Stockholder agrees
that the shares of Parent Stock acquired by Stockholder may not be sold,
transferred or otherwise disposed of unless such shares are registered with the
Securities and Exchange Commission and the securities regulatory authorities of
certain states or unless an exemption from such registration is available.
4.04. POWER TO ACT AS TRUSTEE OR EXECUTOR. If Stockholder is serving as
trustee or executor with respect to its Shares, Stockholder is the only such
trustee or executor and is duly authorized and empowered by the instruments
creating such trust or trusts or by the will of which Stockholder is acting as
executor and under applicable law to enter into this Agreement with respect to
the Shares held by Stockholder and to consummate the transactions contemplated
herein.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub jointly and severally represent and warrant to the Company
that:
5.01. ORGANIZATION AND EXISTENCE. Parent and Sub are corporations duly
incorporated, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts and have all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on their businesses as now conducted.
5.02. CORPORATE AUTHORIZATION. The execution, delivery and performance by
Parent and Sub of this Agreement and by Parent of the Registration Rights
Agreement and the consummation by Parent and Sub of the transactions
contemplated hereby and thereby are within the corporate powers of Parent and
Sub and have been duly authorized by all necessary corporate action on the part
of Parent and Sub. This Agreement constitutes a valid and binding agreement of
Parent and Sub and the Registration Rights Agreement constitutes a valid and
binding agreement of Parent.
5.03. GOVERNMENTAL AUTHORIZATION. Except as set forth on SCHEDULE 5.03, the
execution, delivery and performance by Parent and Sub of this Agreement require
no action by or in respect of, or filing with, any governmental body, agency,
official or authority.
5.04. LITIGATION. There is no action, suit, investigation or proceeding
pending against, or to the knowledge of Parent or Sub overtly threatened
against, Parent or Sub before any court or arbitrator or any governmental body,
agency or official which in any manner challenges or seeks to prevent, enjoin,
alter or materially delay the transactions contemplated hereby.
5.05. REPORTS AND FINANCIAL STATEMENTS. Parent has previously furnished to
the Company and Stockholder copies of its (i) Annual Report on Form 10-K for the
fiscal year ended June 30, 1996; (ii) 1996 Annual Report; (iii) Proxy Statement
dated October 8, 1996; (iv) Quarterly Report on Form 10-Q for the quarter ended
September 30, 1996; (v) Prospectus dated December 6, 1996; (vi) Current Report
on Form 8-K dated January 28, 1997 and (vii) Quarterly Report on Form 10-Q for
the quarter ended December 31, 1996 (collectively, the "REPORTS"). Taken
together, the reports do not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
contained therein, in light of the circumstances in which they were made, not
misleading.
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ARTICLE VI
COVENANTS OF THE COMPANY AND STOCKHOLDER
The Company and Stockholder agree that:
6.01. CONFIDENTIALITY. The Company, Stockholder and their Affiliates will
hold, and will use their best efforts to cause their respective officers,
directors, employees, accountants, counsel, consultants, advisors and agents to
hold, in confidence, unless compelled to disclose by judicial or administrative
process or by other requirements of law, all confidential documents and
information concerning Parent or Sub furnished to the Company, Stockholder or
their Affiliates in connection with the transactions contemplated by this
Agreement, and (after the Closing Date) all confidential documents and
information concerning the Company, except to the extent that such information
can be shown to have been (i) previously known on a nonconfidential basis by
Stockholder, (ii) in the public domain through no fault of Stockholder or (iii)
later lawfully acquired by Stockholder from sources other than the Company,
Parent or Sub; PROVIDED that the Company and Stockholder may disclose such
information to their respective officers, directors, employees, accountants,
counsel, consultants, advisors and agents in connection with the transactions
contemplated by this Agreement so long as such persons are informed by the
Company and Stockholder of the confidential nature of such information and are
directed by the Company and Stockholder to treat such information
confidentially. The obligation of the Company, Stockholder and their Affiliates
to hold any such information in confidence shall be satisfied if they exercise
the same care with respect to such information as they would take to preserve
the confidentiality of their own similar information. If this Agreement is
terminated, the Company, Stockholder and their Affiliates will, and will use
their best efforts to cause their respective officers, directors, employees,
accountants, counsel, consultants, advisors and agents to, destroy or deliver to
Parent, upon request, all documents and other materials, and all copies thereof,
obtained by the Company, Stockholder or their Affiliates or on their behalf from
Parent or Sub in connection with this Agreement that are subject to such
confidence.
6.02. AFFILIATE AGREEMENTS. The Company shall deliver to Parent on or prior
to the date of this Agreement a letter from Company Counsel, satisfactory in
form and substance to Parent's Counsel, which, based upon discussion with the
Company and such inquiries as such firm deems necessary, shall identify all
persons who, at the date of this Agreement, such firm believes may be deemed to
be "affiliates" of the Company as such term is used in and for the purposes of
Accounting Series Releases 130 and 135, as amended, of the Securities and
Exchange Commission, and defined in Rule 144(a)(1) of the Securities Act of
1933, as amended, and who will become the beneficial owners of shares of Parent
Stock pursuant to the transactions contemplated by this Agreement (each such
person being referred to as a "COMPANY AFFILIATE"). The Company shall deliver to
Parent on or prior to the Closing Date a letter from Company Counsel,
satisfactory in form and substance to Parent's Counsel, which shall identify all
Company Affiliates as of the Closing Date. The Company shall cause each of the
Company Affiliates to execute and deliver to Parent (i) on the date of this
Agreement and (ii) on the Closing Date, a written agreement (the "AFFILIATE
AGREEMENT") satisfactory to Parent and substantially in the form of EXHIBIT E
hereto, including provisions indicating that such Company
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Affiliate (i) has not offered to sell, sold or otherwise disposed of any Shares
in the 30 day period prior to the date hereof, (ii) will not offer to sell, sell
or otherwise dispose of any shares of Parent Stock, except pursuant to an
effective registration statement or in compliance with an available exemption
from the registration requirements of the Securities Act (for which Stockholder
shall provide Parent with an opinion of counsel satisfactory to Parent that the
securities being sold thereby may be publicly sold without registration under
the Securities Act), and (iii) will not offer to sell, sell or otherwise dispose
of any shares of Parent Stock until Parent shall have publicly released
financial results covering a period of at least 30 days of post-closing combined
operations of Parent and the Company.
ARTICLE VII
COVENANTS OF PARENT
Parent agrees that:
7.01. ACCESS. After the Closing Date, Parent agrees to give Stockholder
reasonable access to the books and records provided by the Company and
Stockholder pursuant to Section 2.07 hereof to enable Stockholder to make
required filings with, and respond to any inquiries from, state or federal tax
or other regulatory authorities.
7.02. QUARTERLY REPORT ON FORM 10-Q . Parent agrees to file in a timely
manner all reports and other documents required of Parent under the Securities
Exchange Act of 1934, including, without limitation, its Quarterly Report on
Form 10-Q for the fiscal quarter ended March 31, 1997.
7.03. PENSION PLAN. After the Closing Date, Parent agrees that it shall not
modify or amend the provisions of the Company's Defined Benefit Pension Plan
(the "Pension Plan") relating to the level of benefits provided under the
Pension Plan in the form of distribution, subject to such modifications or
amendments as may be reasonable in connection with the termination of the
Pension Plan, including but not limited to such modifications or amendments as
may be required in accordance with the terms of (i) the "IRS Determination
Letter" (as defined in Section 11.05(b) or (ii) the "PBGC Notice" (as defined in
Section 11.05(b)). Parent agrees to use reasonable efforts to obtain the IRS
Determination Letter and to complete notices and filings which are necessary to
receive a PBGC Notice (if any), promptly following the Closing Date, and in any
event shall initiate all such actions within 90 days of the Closing Date.
7.04. AFFILIATE AGREEMENTS. PARENT SHALL use its best efforts to cause each
person who, at the date of this Agreement, Parent believes may be deemed to be
"affiliates" of Parent as such term is used in and for the purposes of
Accounting Series Releases 130 and 135, as amended, of the Securities and
Exchange Commission, and defined in Rule 144(a)(1) of the Securities Act of
1933, as amended (each a "Parent Affiliate"), to execute and deliver on the
Closing Date, an Affiliate Agreement substantially in the form of EXHIBIT H
hereto.
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7.05. REORGANIZATION STATUS. Parent shall consistently treat for all United
States federal income tax purposes the Merger as a reorganization, within the
meaning of Section 368(a) of the Code.
7.06. BUSINESS CONTINUITY. PARENT SHALL EITHER CONTINUE TO CONDUCT THE
HISTORIC BUSINESS OF THE COMPANY OR SHALL CONTINUE TO USE THE HISTORIC ASSETS OF
THE COMPANY IN A BUSINESS.
ARTICLE VIII
COVENANTS OF ALL PARTIES
The parties hereto agree that:
8.01. BEST EFFORTS. Subject to the terms and conditions of this Agreement,
each party will use commercially reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary or
desirable under applicable laws and regulations to consummate the transactions
contemplated by this Agreement. Stockholder and Parent each agree, and
Stockholder, prior to the Closing, and Parent, after the Closing, agree to cause
the Company, to execute and deliver such other documents, certificates,
agreements and other writings and to take such other actions as may be necessary
or desirable in order to consummate or implement expeditiously the transactions
contemplated by this Agreement.
8.02. CERTAIN FILINGS. The Company, Hill and Parent shall cooperate with
each other (a) in determining whether any action by or in respect of, or filing
with, any governmental body, agency, official or authority is required, or any
actions, consents, approvals or waivers are required to be obtained from parties
to any material contracts, in connection with the consummation of the
transactions contemplated by this Agreement and (b) in taking such actions or
making any such filings, furnishing information required in connection therewith
and seeking timely to obtain any such actions, consents, approvals or waivers.
8.03. PUBLIC ANNOUNCEMENTS. The parties agree to consult with each other
before issuing any press release or making any public statement with respect to
this Agreement or the transactions contemplated hereby and, except as may be
required by applicable law or any listing agreement with any national securities
exchange, will not issue any such press release or make any such public
statement prior to such consultation.
8.04. POOLING. Stockholder, the Company and the Parent shall use
commercially reasonable efforts and shall cooperate fully to allow the
transactions contemplated by this Agreement to be accounted for as a "pooling of
interests" in accordance with generally accepted accounting principles which
shall be acceptable to the U.S. Securities and Exchange Commission.
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ARTICLE IX
EMPLOYEE BENEFITS
9.01. EMPLOYEE BENEFITS DEFINITIONS. The following terms, as used herein,
having the following meanings:
"BENEFIT ARRANGEMENT" means each employment, severance or other
similar contract, arrangement or policy (written or oral) and each plan or
arrangement (written or oral) providing for severance benefits, insurance
coverage (including any self-insured arrangements), workers' compensation,
disability benefits, supplemental unemployment benefits, vacation benefits,
retirement benefits or for deferred compensation, profit-sharing, bonuses, stock
options, stock appreciation rights or other forms of incentive compensation or
post-retirement insurance, compensation or benefits which (i) is not an Employee
Plan, (ii) is entered into, maintained or contributed to, as the case may be, by
the Company, Stockholder or any of their Affiliates and (iii) covers any
employee or former employee of the Company.
"EMPLOYEE PLANS" means each "employee benefit plan", as such term is
defined in Section 3(3) of ERISA, that (i) is subject to any provision of ERISA
and (ii) is maintained or contributed to by the Company or any of its ERISA
Affiliates, as the case may be.
"ERISA" means the Employment Retirement Income Security Act of
1974, as amended.
"ERISA AFFILIATE" of any entity means any other entity that,
together with such entity, would be treated as a single employer under Section
414 of the Code.
"MULTIEMPLOYER PLAN" means each Employee Plan that is a
multiemployer plan, as defined in Section 3(37) of ERISA.
"PBGC" means the Pension Benefit Guaranty Corporation established
and maintained within the United States Department of Labor pursuant to Section
4002 of ERISA.
9.02. ERISA REPRESENTATIONS. The Company and Stockholder, jointly and
severally, hereby represent and warrant to Parent that:
(a) SCHEDULE 9.02 lists each Employee Plan that covers any employee
of the Company, copies and descriptions of all of which have previously been
made available or furnished to Parent. With respect to each Employee Plan, the
Company has provided the three most recently filed Forms 5500 and an accurate
summary description of such plan. The Company has provided Parent with complete
age, salary, service and related data as of the most recent practicable date for
employees of the Company.
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(b) SCHEDULE 9.02 also includes a list of each Benefit Arrangement of
the Company, copies and descriptions of which have been made available or
furnished previously to Parent.
(c) None of the Employee Plans or other arrangements listed on
SCHEDULE 9.02 covers any non-United States employee or former employee of the
Company.
(d) No "prohibited transaction", as defined in Section 406 of ERISA
or Section 4975 of the Code, has occurred with respect to any Employee Plan.
(e) No plan or arrangement listed on Schedule 9.02 is a Multiemployer
Plan. Neither the Company nor any Subsidiary or ERISA Affiliate has ever
contributed to or had an obligation to contribute to any Multiemployer Plan.
(f) Each Employee Plan which is intended to be qualified under
Section 401(a) of the Code is so qualified and has been so qualified during the
period from its adoption to date, and each trust forming a part thereof is
exempt from tax pursuant to Section 501(a) of the Code. The Company has
furnished to Parent copies of the most recent Internal Revenue Service
determination letters with respect to each such plan. Each Employee Plan has
been maintained in compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations, including but
not limited to ERISA and the Code, which are applicable to such plan.
(g) Each Benefit Arrangement has been maintained in substantial
compliance with its terms and with the requirements prescribed by any and all
statutes, orders, rules and regulations which are applicable to such Benefit
Arrangement.
(h) With respect to the employees and former employees of the
Company, there are no employee post-retirement medical or health plans in
effect, except as required by Section 4980B of the Code.
(i) All contributions and payments accrued under each Employee Plan
and Benefit Arrangement, determined in accordance with prior funding and accrual
practices, as adjusted to include proportional accruals for the period ending on
the Closing Date, will be discharged and paid on or prior to the Closing Date.
Except as disclosed in writing to Parent prior to the date hereof, there has
been no amendment to, written interpretation of or announcement (whether or not
written) by the Company, Stockholder or any of their ERISA Affiliates relating
to, or change in employee participation or coverage under, any Employee Plan or
Benefit Arrangement that would increase materially the expense of maintaining
such Employee Plan or Benefit Arrangement above the level of the expense
incurred in respect thereof for the year ended prior to the date hereof.
(j) As of the Closing Date, the market value of assets under each
Employee Plan subject to Title IV of ERISA (a "Defined Benefit Plan"), other
than any Multiemployer Plan, equaled or exceeded the present value of benefit
liabilities thereunder as determined on a
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termination basis using the assumptions established by the PBGC as in effect on
that date. No Defined Benefit Plan (other than the Rescon, Inc. Defined Benefit
Pension Plan and any Multiemployer Plan) has been completely or partially
terminated or been the subject of a Reportable Event as to which notices would
be required to be filed with the PBGC. No proceeding by the PBGC to terminate
any Defined Benefit Plan (other than any Multiemployer Plan) has been
instituted. The Company has not incurred, and does not reasonably expect to
incur, any liability to the PBGC (other than PBGC premium payments) or any other
liability under Title IV of ERISA (including any withdrawal liability) with
respect to any Defined Benefit Plan maintained by the Company or to which the
Company has contributed for the benefit of any current or former employee of the
Company or any ERISA Affiliate.
(k) No charge, complaint, action, suit, proceeding, hearing,
investigation, claim or demand with respect to the administration or the
investment of the assets of any Employee Plan maintained by the Company or to
which the Company has contributed or the benefit of any current or former
employee of the Company (other than routine claim for benefit) is pending.
(l) Neither the Company nor any entity considered under common
control with the Company (within the meaning of subsection (b), (c), (m) or (o)
of Section 414 of the Code) has incurred any liability in connection with the
termination of a pension plan subject to Title IV of ERISA, the complete or
partial withdrawal from a Multiemployer Plan subject to Title IV of ERISA, or
the failure to make contributions due under Section 412 of the Code or premiums
due to the PBGC under Title IV of ERISA, which liability will not have been
satisfied as of the Closing Date.
(m) There is no contract, agreement, plan or arrangement covering any
employee or former employee of the Company that, individually or collectively,
could give rise to the payment of any amount that would not be deductible
pursuant to the terms of Section 280G of the Code.
(n) No tax under Section 4980B of the Code has been incurred in
respect of any Employee Plan that is a group health plan, as defined in Section
5000(b)(1) of the Code.
(o) Except as set forth on SCHEDULE 9.02, no employee of the Company
will become entitled to any bonus, retirement, severance or similar benefit or
enhanced benefit solely as a result of the transactions contemplated hereby.
9.03. NO THIRD PARTY BENEFICIARIES. No provision of this Article IX shall
create any third party beneficiary or other rights in any employee or former
employee (including any beneficiary or dependent thereof) of the Company in
respect of continued employment (or resumed employment) with the Company and no
provision of this Article IX shall create any such rights in any such Persons in
respect of any benefits that may be provided, directly or indirectly, under any
Employee Plan or Benefit Arrangement or any plan or arrangement that may be
established by Parent or any of its Affiliates. No provision of this Agreement
shall constitute a limitation on
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rights to amend, modify or terminate after the Closing Date any Employee Plan or
Benefit Arrangement.
ARTICLE X
CONDITIONS TO CLOSING
10.01. CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. The obligations of
Parent, Sub, the Company and Stockholder to consummate the Closing are subject
to the satisfaction or waiver of the following conditions:
(a) No proceeding challenging this Agreement or the transactions
contemplated hereby or seeking to prohibit, alter, prevent or materially delay
the Closing shall have been instituted by any Person before any court,
arbitrator or governmental body, agency or official and be pending.
(b) All actions by or in respect of or filings with any governmental
body, agency, official or authority required to permit the consummation of the
Closing shall have been obtained.
10.02. CONDITIONS TO OBLIGATIONS OF PARENT AND SUB. The obligation of
Parent and Sub to consummate the Closing is subject to the satisfaction or
waiver of the following further conditions:
(a)(i) the Company and Stockholder shall have performed in all
material respects all of its or his obligations hereunder required to be
performed on or prior to the Closing Date, (ii) the representations and
warranties of the Company and Stockholder contained in this Agreement at the
time of its execution and delivery and in any certificate or other writing
delivered by the Company or Hill pursuant hereto, disregarding all
qualifications and exceptions contained therein relating to materiality or
Material Adverse Effect, shall be true at and as of the Closing Date, as if made
at and as of such date with only such exceptions as would not in the aggregate
reasonably be expected to have a Material Adverse Effect and (iii) Parent shall
have received a certificate signed by (A) the President of the Company and (B)
Stockholder to the foregoing effect.
(b) No court, arbitrator or governmental body, agency or official
shall have issued any order, and there shall not be any statute, rule or
regulation, restraining the effective operation by Parent of the business of the
Company after the Closing Date, and no proceeding challenging this Agreement or
the transactions contemplated hereby or seeking to prohibit, alter, prevent or
materially delay the Closing shall have been instituted by any Person before any
court, arbitrator or governmental body, agency or official and be pending.
(c) Parent shall have received an opinion of Company Counsel, dated
the Closing Date, to the effect specified on EXHIBIT G. In rendering such
opinion, such counsel may rely upon certificates of public officers, as to
matters governed by the laws of jurisdictions other
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than the Commonwealth of Virginia or the federal laws of the United States of
America, upon opinions of counsel reasonably satisfactory to Parent, copies of
which shall be contemporaneously delivered to Parent, and as to matters of fact,
upon certificates of Stockholder and officers of the Company.
(d) Stockholder and the Company shall have executed and delivered
each of the Ancillary Agreements to be entered into by them or it at the
Closing, in each case substantially in the form attached as an exhibit to this
Agreement.
(e) Parent shall have received all other closing documents specified
in Section 2.02 of this Agreement and all other closing documents that it may
reasonably request, all in form and substance reasonably satisfactory to Parent.
(f) Price Waterhouse LLP shall have delivered to Parent its written
opinion that it has no basis for believing that the transactions contemplated by
this Agreement shall not be accounted for as a "pooling of interests" in
accordance with generally accepted accounting principles, and Parent shall have
no reason to believe that such accounting treatment will not be accepted by the
Securities and Exchange Commission.
(g) The Company shall deliver to Parent a properly executed statement
in a form reasonably requested by Parent for purposes of satisfying Parent's
obligations under Treasury Regulation sec.1.1445-2(c)(3).
(h) Parent shall have received evidence satisfactory to it of Hill's
payment of all costs and expenses incurred by the Company or Stockholder in
connection with this Agreement, other than up to an aggregate of $50,000 of
reasonable legal and accounting fees of the Company and Stockholder
(collectively referred to as the "Company Fees").
(i) Parent shall have received a written waiver of notice of issuance
from Xxxxx Xxxxxx Inc. under the provisions of that certain Underwriting
Agreement dated as of December 6, 1996 between Parent and the other parties
named therein.
(j) Parent shall have received from the Company written evidence that
(i) the execution, delivery and performance of the Agreement have been duly and
validly approved and authorized by the Company's board of directors and by the
stockholders of the Company and (ii) no stockholders of the Company have, or
might be able to perfect, dissenters' or appraisal rights in connection with the
Merger.
(k) Each of the employees of the Company listed on SCHEDULE 10.02
shall have accepted employment with State and Federal Associates, Inc., a
wholly-owned subsidiary of Parent.
(l) The Company shall have received all of the consents and waivers
set forth on SCHEDULE 3.03.
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(m) Xxxxx Xxxxxxxx (or her nominee) shall have completed an audit, to
Parent's satisfaction, of the balance sheet of the Company as of December 31,
1996 and the accompanying statements for the year then ended.
10.03. CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligation of the
Company to consummate the Closing is subject to the satisfaction of the
following further conditions:
(a)(i) Parent and Sub shall have performed in all material respects
all of their obligations hereunder required to be performed by them at or prior
to the Closing Date, (ii) the representations and warranties of Parent and Sub
contained in this Agreement at the time of its execution and delivery and in any
certificate or other writing delivered by Parent or Sub pursuant hereto shall be
true in all material respects at and as of the Closing Date, as if made at and
as of such date and (iii) the Company shall have received a certificate signed
by the Chief Financial Officer of Parent and the President of Sub to the
foregoing effect.
(b) No proceeding challenging this Agreement or the transactions
contemplated hereby or seeking to prohibit, alter, prevent or materially delay
the Closing shall have been instituted by any Person before any court,
arbitrator or governmental body, agency or official and be pending.
(c) The Company shall have received an opinion of Parent's Counsel,
dated the Closing Date, to the effect specified in Sections 5.01 through 5.04.
In rendering such opinion, such counsel may rely upon certificates of public
officers, as to matters governed by the laws of jurisdictions other than the
Commonwealth of Massachusetts or the federal laws of the United States of
America, upon opinions of counsel reasonably satisfactory to the Company, copies
of which shall be contemporaneously delivered to the Company, and as to matters
of fact, upon certificates of officers of Parent and Sub.
(d) Parent and Sub shall have executed and delivered each of the
Ancillary Agreements to be entered into by them at the Closing, in each case
substantially in the form attached as an exhibit to this Agreement.
(e) The Company and Stockholder shall have received all items
specified in Section 2.02 of this Agreement and all other closing documents that
they may reasonably request, all in form and substance reasonably satisfactory
to them.
ARTICLE XI
SURVIVAL; INDEMNIFICATION
11.01. SURVIVAL. The covenants contained in this Agreement shall survive
the Closing and continue until the date set forth in each such covenant. The
agreements, representations and warranties contained in this Agreement shall
survive the Closing until the earlier of (i) the delivery by Price Waterhouse
LLP of its report on Parent's financial statements for the fiscal year ended
June 30, 1997 or (ii) February 28, 1998.
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11.02. INDEMNIFICATION
(a) Stockholder hereby indemnifies Parent, Sub, and their respective
subsidiaries, directors, officers, agents and affiliates and, effective at the
Closing, without duplication, the Company (collectively, the "PARENT GROUP")
against and agrees to defend and hold them harmless from any and all damage,
loss, liability and expense (including without limitation reasonable expenses of
investigation and reasonable attorneys' fees and expenses in connection with any
action, suit or proceeding) ("DAMAGES") incurred or suffered by Parent, Sub or
the Company arising out of (i) any inaccuracy in or breach or alleged breach of
any agreement, representation or warranty of the Company or Stockholder
contained in or made pursuant to this Agreement or any certificate or other
writing delivered pursuant hereto or in connection herewith, (ii) any failure by
Stockholder or the Company to perform any of their obligations or covenants as
set forth in this Agreement or any certificate or other writing delivered
pursuant hereto or in connection herewith and (iii) any and all actions, suits,
litigation, arbitrations, proceedings, investigations or claims arising out of
any of the foregoing and based on facts that have occurred on or prior to the
Closing Date even though such action, suit, litigation, arbitration, proceeding,
investigation or claim may not be filed or come to light until after the Closing
Date (collectively, the "CLAIMS"); provided that Stockholder shall not be liable
under this Section 11.02(a) unless the aggregate amount of Damages with respect
to all matters referred to in this Section 11.02(a) exceeds $25,000; provided,
however, that (i) once the Damages exceed $25,000, the Parent Group shall be
entitled to indemnification for the full amount of such Damages and (ii) such
indemnity obligations shall be satisfied by Stockholder by transferring to
Parent shares of Parent's common stock owned by Stockholder having a value, as
of the Closing Date, equal to the amount of such Damages (any deficiency to be
paid by Stockholder in cash). The maximum liability of Stockholder pursuant to
this SECTION 11.02(a) shall be $1,500,000.
(b) Stockholder shall have no right of indemnification, contribution
or subrogation against the Company with respect to any indemnification by
Stockholder under this Section 10.02 if the transactions contemplated by this
Agreement are consummated.
(c) Parent hereby indemnifies Stockholder, his agents and affiliates
(the "Selling Group") against and agrees to defend and hold them harmless from
any and all Damages incurred or suffered by the Selling Group arising out of any
misrepresentation or breach of warranty, covenant or agreement made or to be
performed by Parent pursuant to this Agreement, such indemnity obligations to be
satisfied by Parent by issuing shares of its common stock having a value, as of
the Closing Date, equal to the amount of such Damages, provided, however, that
such amount shall in no event exceed $250,000.
(d) Under no circumstances shall Stockholder be required to
compensate the Parent Group with respect to any Damages incurred by the Parent
Group in excess of $1,500,000.
11.03. Procedures.The party seeking indemnification under Section 10.02
(the "INDEMNIFIED PARTY") agrees to give prompt notice to the party against whom
indemnity is sought (the "INDEMNIFYING PARTY") of the assertion of any claim, or
the commencement of any suit,
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action or proceeding in respect of which indemnity may be sought under such
Section. The Indemnifying Party may, and at the request of the Indemnified Party
shall, participate in and control the defense of any third party suit, action or
proceeding at its own expense. The Indemnifying Party shall not be liable under
Section 10.02 for any settlement effected without its consent (which may not be
unreasonably withheld or delayed) of any claim, litigation or proceeding in
respect of which indemnity may be sought hereunder.
11.04. HOLDBACK. At the Closing, Stockholder shall be deemed to have
directed Parent to withhold from delivery ten percent (10%) of the shares of
Parent Stock issued to Stockholder. The shares of Parent Stock withheld are
herein referred to as the "HOLDBACK SHARES." The Holdback Shares shall be issued
to Stockholder but held in escrow by Parent subject to the terms and conditions
hereinafter set forth. Holdback Shares shall be considered issued and
outstanding shares of capital stock of Parent and Stockholder shall be entitled
to vote such shares and receive any and all dividends or distributions payable
with respect to such shares.
11.05. HOLDBACK TERMINATION. The Holdback Shares shall be distributed to
Stockholder as follows:
(a) Promptly after the earlier to occur of (i) the delivery by Price
Waterhouse LLP of its report on Parent's financial statements for the fiscal
year ended June 30, 1997 or (ii) February 28, 1998, the Holdback Shares shall be
distributed to Stockholder, except that (A) the portion of the Holdback Shares
having a value as of the Closing Date most nearly equal to the Damages incurred
by Parent as to which a Claim shall have been previously and duly delivered to
Stockholder and (B) the portion of the Holdback Shares which constitute the
"Plan Holdback Shares" (as hereinafter defined and to the extent not included in
the Holdback Shares described in the preceding clause (A)), shall continue to be
withheld in escrow.
(b) "Plan Holdback Shares" shall be deemed to be that portion of the
Holdback Shares having a value as of the Closing Date equal to $300,000.
Promptly after the later to occur (but in no event later than the one year
anniversary of the Closing Date) of (i) the Parent's receipt of favorable
determination letters from the Internal Revenue Service (the "IRS Determination
Letter") regarding the tax qualification and the termination of the Company's
Defined Benefit Pension Plan (the "Pension Plan") and the Company's Age Weighted
Profit Sharing Plan (the "Profit Sharing Plan") or (ii) the expiration of the
period for issuance by Pension Benefit Guaranty Corp. of a "notice of
noncompliance" (the "PBGC Notice"), following Parent's completion of required
notices and filings with respect to the termination of the Pension Plan, the
Plan Holdback Shares shall be distributed to the Stockholder, except that the
portion of the Plan Holdback Shares having a value as of the Closing Date most
nearly equal to the Damages incurred by the Parent for Claims relating to the
Pension Plan or the Profit Sharing Plan as to which a Claim shall have been
previously and duly delivered to Stockholder, shall continue to be withheld in
escrow.
(c) The value of a Holdback Share as of the Closing Date shall be
equal to $30.575 (the average of the last reported sale price of Parent's Common
Stock on the Nasdaq National Market on each of the ten business days up to and
including the second business day preceding
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the Closing Date (subject to appropriate adjustment in the event of a stock
split or reverse stock split)). The amount of such Damages shall be based upon a
written certification of the Chief Executive Officer of Parent to Stockholder as
to the amount of Damages incurred, together with supporting documentation. If
Stockholder disagrees with the amount of Damages set forth in such certificate,
and if Stockholder and Parent cannot reach mutually satisfactory understanding
with regard to the amount of Damages within five (5) business days after
delivery of the certificate to Stockholder, the matter shall be promptly
submitted to binding arbitration in Boston, Massachusetts in accordance with the
rules of the American Arbitration Association. The balance of the Holdback
Shares not so withheld shall be distributed to Stockholder.
(d) The Holdback Shares not so distributed to Stockholder pursuant to
subsection 11.05(a) through 11.05(c) shall be retained by Parent in escrow until
such pending Claims are resolved; provided, however, that upon the disposition
of any such Claim prior to the disposition of all such Claims, Parent shall
distribute to Stockholder that amount of the Holdback Shares having a value as
of the Closing Date in excess of 100% of the aggregate amounts of the remaining
Damages incurred as determined above.
ARTICLE XII
MISCELLANEOUS
12.01. NOTICES. All notices and other communications which by any provision
of this Agreement are required or permitted to be given shall be given in
writing and shall be (a) mailed by first-class or express mail, postage prepaid,
(b) sent by telex, telegram, telecopy or other form of rapid transmission,
confirmed by mailing (by first class or express mail, postage prepaid) written
confirmation at substantially the same time as such rapid transmission, or (c)
personally delivered to the receiving party (which if other than an individual
shall be an officer or other responsible party of the receiving party). All such
notices and communications shall be mailed, sent or delivered as follows:
if to Parent, Sub, or the Company to:
PAREXEL International Corporation
000 Xxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxx, Xx.
Senior Vice President and Chief Financial Officer
Telecopy: (000) 000-0000
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with a copy to:
Xxxxxxx X. Xxxxxxx, Xx.
Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP
High Street Tower
000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Telecopy: (000) 000-0000
if to Stockholder to:
Xxxxxx Xxxxx Xxxx
0000 Xxxxxx Xxxx Xxxx
Xxxxxx, XX 00000
with a copy to:
Xxxxx Xxxx
Michaels, Xxxxxxx & Xxxxxx, P.C.
Suite 900
0000 Xxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
Telecopy: (000) 000-0000
Notices shall be deemed duly delivered three business days after being
sent by first class mail, postage prepaid, or one business day after being sent
via a reputable nationwide express mail service. Notices delivered via any other
means shall be deemed duly delivered upon actual receipt by the individual for
whom such notice is intended. Any notice sent to a party hereto shall be sent
simultaneously, by the same means, to such party's counsel, as set forth above.
12.02. AMENDMENTS; NO WAIVERS.
(a) Any provision of this Agreement may be amended or waived prior to
the Closing Date if, and only if, such amendment or waiver is in writing and
signed by Parent, Sub and the Company.
(b) No failure or delay by either party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
12.03. EXPENSES. All costs and expenses incurred in connection with this
Agreement shall be paid by the party incurring such cost or expense; provided,
however, that if the Closing shall occur all such costs and expenses incurred by
the Company and Stockholder, other than up
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to an aggregate of $50,000 of reasonable legal and accounting fees incurred by
the Company or Stockholder, shall be paid or reimbursed by Hill.
12.04. SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns; PROVIDED that no party may assign, delegate or otherwise
transfer any of his or its rights or obligations under this Agreement without
the consent of the other parties hereto.
12.05. FURTHER ASSURANCES. From time to time after the Closing, at the
request of Parent and without further consideration, Hill will execute and
deliver to Parent such other documents, and take such other action, at Parent's
cost and expense, as Parent may reasonably request in order to consummate more
effectively the transactions contemplated hereby.
12.06. GOVERNING LAW. This Agreement shall be construed in accordance with
and governed by the law of the Commonwealth of Massachusetts, without regard to
the conflicts of law rules of such state.
12.07. COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument. This
Agreement shall become effective when each party hereto shall have received a
counterpart hereof signed by the other parties hereto.
12.08. ENTIRE AGREEMENT. This Agreement (including the exhibits and
schedules hereto) constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior agreements,
understandings and negotiations, whether written or oral, between the parties
with respect to the subject matter hereof. No representation, inducement,
promise, understanding, condition or warranty not set forth herein has been made
or relied upon by either party hereto. Neither this Agreement nor any provision
hereof is intended to confer upon any Person other than the parties hereto any
rights or remedies hereunder.
12.09. CAPTIONS. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
12.10. JURISDICTION. Any action or proceeding seeking to enforce any
provision of, or based on any right arising out of, this Agreement may be
brought against any of the parties in the courts of the Commonwealth of
Massachusetts, and each of the parties hereby consents to the jurisdiction of
such courts (and of the appropriate appellate courts) in any such action or
proceeding and waives any obligation to venue laid therein. Process in any such
action or proceeding may be served on any party anywhere in the world, whether
within or without the Commonwealth of Massachusetts.
40
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
PAREXEL INTERNATIONAL CORPORATION
By: /s/ Xxxxxxx X. Xxxx, Xx.
---------------------------------------
Name: Xxxxxxx X. Xxxx, Xx.
-------------------------------------
Title: Senior Vice President, CFO
------------------------------------
RESCON ACQUISITION CORPORATION
By: /s/ Xxxxxxx X. Xxxx, Xx.
---------------------------------------
Name: Xxxxxxx X. Xxxx, Xx.
-------------------------------------
Title: President
------------------------------------
RESCON, INC.
By: /s/ Xxxxxx Xxxxx Xxxx
---------------------------------------
Name: Xxxxxx Xxxxx Xxxx
-------------------------------------
Title: President
------------------------------------
XXXXXX X. XXXX REVOCABLE TRUST U/D/T DATED
JUNE 29, 1994
By: /s/ Xxxxxx Xxxxx Xxxx
---------------------------------------
Name: Xxxxxx Xxxxx Xxxx
-------------------------------------
Title: Trustee
-------------------------------------
/s/ Xxxxxx Xxxxx Xxxx
-------------------------------------------
Xxxxxx Xxxxx Xxxx
