Exhibit 2.45
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FORM OF COMPANY STOCKHOLDER AGREEMENT
This Company Stockholder Agreement ("Agreement") is made as of
______________, 1999 by and among Centerprise Advisors, Inc., a Delaware
corporation ("Centerprise"), and the members of [Holding Company], a ________
limited liability company ("Holdings"), identified on Exhibit A to this
Agreement (each a "Member" and, collectively, the "Members").
WHEREAS, pursuant to an Amended and Restated Merger Agreement dated as of
September 24, 1999 (the "Merger Agreement") by and among Centerprise, [Company]
Mergersub Inc., a Delaware corporation ("Mergersub"), and [Founding Company]
(the "Company"), Mergersub will merge with the Company, with the Company being
the surviving corporation in the merger and the stockholders of the Company will
be entitled to receive the Basic Purchase Consideration (as defined in the
Merger Agreement);
WHEREAS, Holdings is the sole owner and holder of record of all of the
outstanding shares of capital stock of the Company;
WHEREAS, as a condition to completion of the transactions contemplated by
the Merger Agreement, the Members must execute and deliver this Agreement.
NOW, THEREFORE, in consideration, of the payment of the Basic Purchase
Consideration under the Merger Agreement, the premises and mutual covenants and
agreements contained in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
ARTICLE I
REPRESENTATIONS AND WARRANTIES
OF THE MEMBERS
1.1 Several Representations and Warranties. Each Member, severally and not
jointly, hereby represents and warrants to Centerprise as of the date
hereof as follows:
1.1.1 Capitalization. Except as set forth on Schedule 4.4 to the Merger
Agreement, immediately prior to the contribution thereof by such
Member to the capital of Holdings, such Member owned beneficially
and of record, and had good and marketable title to, all of the
issued and outstanding shares of the Company Stock as set forth
opposite the name of such Member in Schedule 4.4 to the Merger
Agreement, free and clear of all Liens. Upon contribution of such
Company Stock
to the capital of Holdings, Holdings acquired, and at the
Closing as provided in the Merger Agreement, Centerprise will
acquire, good and valid title to such Company Stock, free and
clear of any Lien other than any Lien created by Centerprise.
1.1.2 Authority. Such Member has full right, capacity, power and
authority to enter into this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly
executed and delivered by such Member, and, assuming the due
authorization, execution and delivery hereof by Centerprise,
constitutes a valid and legally binding agreement of such
Member, enforceable against such Member in accordance with its
terms, except that such enforcement may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting or relating to enforcement of creditors'
rights generally and (ii) general equitable principles.
1.1.3 Non-Contravention. The execution and delivery of this Agreement
by such Member does not violate, conflict with or result in a
breach of any provision of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate
the performance required by, or result in a right of termination
or acceleration under, or result in the creation of any Lien
upon any of the properties or assets of Holdings, the Company or
any Company Subsidiary under, any of the terms, conditions or
provisions of (i) any statute, law, ordinance, rule, regulation,
judgment, decree, order, injunction, writ, permit or license of
any Governmental Authority applicable to such Member, except for
those items relating to regulating, licensing or permitting the
practice of public accountancy or (ii) other than those
licenses, franchises, permits, concessions or instruments of any
Governmental Authority, any note, bond, mortgage, indenture,
deed of trust, license, franchise, permit, concession, contract,
lease or other instrument, obligation or agreement of any kind
to which such Member is a party or by which such Member may be
bound or affected. The consummation by such Member of the
transactions contemplated hereby or by the Merger Agreement will
not result in a violation, conflict, breach, right of
termination, creation or acceleration of Liens under the of the
terms, conditions or provisions of the items described in
clauses (i) and (ii) of the immediately preceding sentence,
except for those items described above relating to regulating,
licensing or permitting the practice of public accountancy and
any filing which may be required under the HSR Act.
1.1.4 Approvals. To the Knowledge of such Member, and except with
respect to any filing which may be required by any Governmental
Authority or self-regulatory organization regulating, licensing
or permitting the practice of public accountancy, no
declaration, filing, or registration with, or notice to, or
authorization, consent or approval of, any Governmental
Authority is necessary for the execution and
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delivery of this Agreement by such Member or the consummation by
such Member of the transactions contemplated hereby or by the Merger
Agreement.
1.1.5 Litigation. There is no action, claim, suit, proceeding
(disciplinary or otherwise), arbitration or investigation pending,
or to the Knowledge of such Member, threatened against such Member
relating to (i) the transactions contemplated by this Agreement or
by the Merger Agreement, (ii) any action taken by such Member or
contemplated by such Member in connection with the consummation by
such Member of the transactions contemplated hereby or (iii) the
practice of public accountancy by such Member.
1.1.6 No Transfer. There are no outstanding subscriptions, options, calls,
contracts, commitments, undertakings, restrictions, arrangements,
rights or warrants, including any right of conversion or exchange
under any outstanding security, instrument or other agreement to
deliver or sell, or cause to be delivered or sold, shares of Company
Stock previously owned by such Member or obligating such Member to
grant, extend or enter into any such agreement or commitment or
obligating such Member to convey or transfer any Company Stock.
There are no voting trusts, proxies or other agreements or
understandings to which such Member is a party or is bound with
respect to the voting of any shares of capital stock or other equity
interests of the Company.
1.1.7 No Broker. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with
the Acquisition or the transactions contemplated by the Merger
Agreement based upon arrangements made by or on behalf of the
Company.
1.1.8 Disclosure. No representation or warranty by or on behalf of such
Member contained in this Agreement or any of the written statements
or certificates furnished at or prior to the Closing by or on behalf
of such Member to Centerprise or its representatives in connection
herewith or pursuant hereto, contains any untrue statement of a
material fact, or omits or will omit to state any material fact
required to make the statements contained herein or therein not
misleading.
1.1.9 Representations and Warranties of the Company. To such Member's
actual knowledge, the representations and warranties of the Company
set forth in Article IV of the Merger Agreement are true and
correct.
1.2 Joint and Several Representations and Warranties. The Members jointly and
severally represent and warrant to Centerprise that the authorized capital
stock of the Company consists of ______ shares of Company Stock, of which
_____ shares are issued and outstanding, all of which are validly issued
and are fully paid, nonassessable and free of preemptive rights.
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ARTICLE II
REGISTRATION RIGHTS
2.1 At any time after the second anniversary but prior to the fourth
anniversary of the Closing Date, whenever Centerprise proposes to register
any Centerprise Common Stock for its own account or the account of others
under the Securities Act for a public offering for cash other than a
registration relating to employee benefit plans or acquisitions,
Centerprise will give Holdings and the Member Representative prompt written
notice of its intent to do so. Promptly after receipt of such notice,
Holdings and the Member Representative shall provide written notice to
Centerprise of all of its members (and their respective current mailing
address) that beneficially own shares of Centerprise Common Stock.
Thereafter, upon the written request of Holdings or any of the Members
given within thirty (30) days after receipt of such notice, Centerprise
will use its best efforts to cause to be included in such registration all
of the Centerprise Common Stock which Holdings or any such Member requests,
provided that Centerprise shall have the right to reduce the number of
shares included in such registration, if Centerprise is advised in writing
in good faith by any managing underwriter of the securities being offered
pursuant to any registration statement under this Section 2.1 that the
number of shares to be sold by Persons other than Centerprise is greater
than the number of such shares which can be offered without adversely
affecting the offering; in such case, Centerprise may reduce the number of
shares offered for the accounts of such Persons to a number deemed
satisfactory by such managing underwriter. Any such reduction shall occur
first by eliminating from such registration any shares held by Persons
other than Persons holding Centerprise Common Stock directly or indirectly
immediately following the Closing and then reducing pro rata (based upon
the number of shares requested to be registered) the number of shares
offered for the account of such Person. Centerprise shall not be obligated
to register any shares of Centerprise Common Stock held by Holdings or any
such member at any time when such shares are not then transferable in
accordance with Section 3.2 hereof. Registration rights under this Section
2.1 may be transferred in whole or in part in connection with the transfer
of any shares of Centerprise Common Stock received pursuant to this
Agreement other than the transferee of the kind described in clause (x) of
Section 3.2 hereof.
2.2 Except for underwriting commissions and discounts, all expenses incurred in
connection with the registrations under this Article II (including all
registration, filing, qualification, legal, printer and accounting fees)
shall be paid by Centerprise. In connection with registrations under this
Article II, Centerprise shall
(a) use its best efforts to prepare and file with the SEC as soon as
reasonably practicable, a registration statement with respect to
the Centerprise Common Stock (and such amendments and supplements
to such registration statement and the prospectus used in
connection therewith as may be required by applicable law) and
use its best efforts to cause such registration
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to promptly become and remain effective for a period of at least
one hundred twenty (120) days (or such shorter period during
which holders shall have sold all Centerprise Common Stock which
they requested to be registered);
(b) upon the written request of a member of Holdings whose
Centerprise Common Stock is to be covered by any such
registrations, furnish to such Member a reasonable number of
copies of the prospectus covering the offering and sale by the
Member of the shares to be covered thereby;
(c) use its best efforts to register and qualify the Centerprise
Common Stock covered by such registration statement under
applicable state securities laws as the holders shall reasonably
request for the distribution for the Centerprise Common Stock;
(d) take such other actions as are reasonable and necessary to comply
with the requirements of the 1933 Act and the regulations
thereunder;
(e) advise Holdings and each of its members whose Centerprise Common
Stock is to be covered by such registration of the effectiveness
of such registration statement, advise Holdings and each such
member of the entry of any stop order suspending the
effectiveness of such registration statement or of the initiation
of any proceeding for that purpose, and, if such stop order shall
be entered, use its best efforts promptly to obtain the lifting
or removal thereof; and
(f) at any time when a prospectus relating to any Centerprise Common
Stock is required to be delivered under the 1933 Act, notify
Holdings and each Member whose Centerprise Common Stock is to be
covered by such registration, of the happening of any event as a
result of which the registration statement, the prospectus or any
document incorporated therein by reference includes an untrue
statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements
made therein not misleading and, at the request of Holdings or
such member, prepare and furnish to Holdings or such Member a
post-effective amendment or supplement to the registration
statement or the related prospectus or any document incorporated
therein by reference or file any other required document so that,
as thereafter delivered to the purchasers of such shares, such
prospectus shall not include any untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements made therein not
misleading.
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2.3 In connection with each registration pursuant to this Article II covering
an underwritten registration public offering, Centerprise and each
participating holder agree to enter into a written agreement with the
managing underwriters in such form and containing such provisions as are
customary in the securities business for such an arrangement between such
managing underwriters and companies of Centerprise's size and investment
stature, including indemnification.
2.4 In consideration of the granting to Holdings and the Members of the
registration rights under this Article II, Holdings and the Members agree,
and agree to enter into an agreement with the underwriters in connection
with an underwritten registration to the effect, that it/they will not
sell, transfer or otherwise dispose of, including, without limitation,
through put or short sale arrangements, shares of Centerprise Common Stock
in the ten (10) days prior to the effectiveness of any registration of
Centerprise Common Stock for sale to the public and for up to ninety (90)
days following the effectiveness of such registration, provided that all
directors, executive officers and holders of more than five percent (5%) of
the outstanding Centerprise Common Stock agree to the same restrictions;
and further provided that, with respect to the first public offering of
shares of the Centerprise Common Stock within three (3) years following the
IPO, Holdings and the Members shall have been afforded a meaningful
opportunity to include shares in such registration after any reduction by
reason of underwriters' written advice.
ARTICLE III
TRANSFER RESTRICTIONS
3.1 Transfer Restrictions. Except as provided in Section 3.2, for a period of
forty two (42) months from the Closing, none of Holdings nor any of the
Members shall (a) sell, assign, exchange, transfer, distribute or otherwise
dispose of, in whole or in part, (i) any shares of Centerprise Common Stock
received by Holdings in the Acquisition and/or subsequently distributed by
Holdings to the Members (the "Restricted Shares"), or (ii) any interest
(including, without limitation, an option to buy or sell) in any Restricted
Shares; or (b) engage in any transaction, whether or not with respect to
any Restricted Shares or any interest therein, the intent or effect of
which is to reduce the risk of owning the Restricted Shares (including,
without limitation, engaging in put, call, short-sale, derivative, straddle
or similar market transactions); provided, however, for a period of one (1)
year from the Closing, Holdings shall not distribute any Restricted Shares
to any Member.
3.2 Release of Restrictions. Effective eighteen (18) months following the
Closing, and every six (6) months thereafter, until all Restricted Shares
shall have been released from such restrictions, twenty percent (20%) of
the original number of Restricted Shares of Holdings and/or each Member
shall no longer be subject to the restrictions set forth in Section 3.1 and
shall no longer be deemed Restricted Shares for any purposes of this
Agreement;
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provided, that, if a Member's employment with Centerprise or its subsidiary
is terminated within 30 months of the Closing other than through death,
disability, retirement or circumstances approved by the Company's
management and reasonably approved by Centerprise's chief executive
officer, the Restricted Shares then held by such Member or held by Holdings
for such Member shall remain subject to the restrictions set forth in the
Section 3.1 until the fifth anniversary of the Closing Date.
Notwithstanding the foregoing and Section 3.1, Holdings or a Member may (x)
at any time pledge or encumber all or part of Holdings's or such Member's
Restricted Shares, as applicable, provided that the pledgee or secured
party agrees in writing to be bound by the provisions contained in Article
III, (y) at any time after the first anniversary of the Closing transfer
all or part of such Member's Restricted Shares to another Member or to an
immediate family member (or trust or other estate planning Person),
provided, that any such Member, family member or other Person agrees in
writing to be bound by the provisions contained in Article III, and (z)
transfer or cause to be transferred such Member's Restricted Shares upon
such Member's disability or death. As used in this Section 3.2, the terms
"disability" and "retirement" shall have the meaning ascribed to them in
Centerprise's Employee Incentive Compensation Plan. No attempted transfer
of any nature whatsoever that is in violation of this Section shall be
treated as effective for any purpose.
3.3 Legend. The certificates evidencing the Centerprise Common Stock delivered
to Holdings pursuant to the Merger Agreement and/or subsequently
distributed by Holdings to the Members shall bear a legend substantially in
the form set forth below and containing such other information as
Centerprise may deem necessary or appropriate:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE DISPOSITION
THEREOF ARE SUBJECT TO THE TERMS OF A COMPANY STOCKHOLDER AGREEMENT
DATED AS OF __________, 1999. A COPY OF SUCH AGREEMENT IS ON FILE AT
THE PRINCIPAL OFFICE OF THE CORPORATION AND MAY BE INSPECTED BY THE
REGISTERED OWNER OF THIS CERTIFICATE OR A DULY AUTHORIZED
REPRESENTATIVE OF SUCH OWNER UPON REQUEST DURING NORMAL BUSINESS
HOURS.
Upon request from Holdings or any Member (or a permitted transferee)
following the expiration of either all or a part of the restrictions on the
transfer of Centerprise Common Stock set forth in this Article III, Centerprise
shall immediately notify its transfer agent that the applicable shares of
Centerprise Common Stock are no longer restricted shares and shall direct the
transfer agent to reissue certificates of Centerprise Common Stock which do not
contain a restrictive legend in place of the applicable restricted shares. In
the event Holdings's or a Member's request to remove the restrictive legend
coincides with Holdings's or such Member's request to sell the Centerprise
Common Stock, Centerprise shall take such actions as are required
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by its transfer agent to allow the transfer agent to transfer the unrestricted
Centerprise Common Stock free of any restrictive legend.
ARTICLE IV
NONCOMPETITION
4.1 Prohibited Activities. Each Member agrees severally, and not jointly, that
such Member will not, for a period of three (3) years following the Closing
Date, for any reason whatsoever, directly or indirectly, for themselves or
on behalf of or in conjunction with any other Person:
(a) engage, as an officer, director, shareholder, owner, partner,
joint venturer, or in a managerial capacity, whether as an
employee, independent contractor, consultant or advisor, or as a
sales representative, in any business selling or providing
accounting, tax, consulting or other related services of a type
or nature similar to those sold or provided by the Company at or
within one year prior to the date that such Holdings or Member
commences competition within a fifty (50) mile radius of any
office location of the Company or any Company Subsidiary (the
"Territory");
(b) sell or provide any accounting, tax, consulting or other related
services of a type or nature similar to those sold or provided by
the Company to, or solicit for the purpose of selling or
providing any such services to, any Person that was a customer of
the Company or any Company Subsidiary at any time during the
preceding one-year period or that was known by the Member to have
been actively being solicited by the Company or any Company
Subsidiary to become a customer at any time during such period;
(c) call upon any Person who is, at that time, within the Territory,
an employee of Centerprise (including the subsidiaries and
affiliates thereof) for the purpose or with the intent of
enticing such employee away from or out of the employ of
Centerprise (including the subsidiaries and affiliates thereof),
or hire such Person; or
(d) enter into, or call upon or request non-public information for
the purpose of entering into, an Acquisition Transaction (as
hereinafter defined) with any Person with respect to which
Centerprise or any subsidiary or affiliate thereof has made an
offer or proposal for, or entered into discussions or
negotiations for, or evaluated with the intent of making a
proposal for, an Acquisition Transaction, within the preceding
one-year period.
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Notwithstanding the foregoing, a Member may be employed by a customer of
the Company or any other Person for the purpose of providing accounting,
tax, consulting or other related services of a type or nature similar to
those sold or provided by the Company to such customer or other Person, so
long as in connection therewith the Member does not, directly or
indirectly, provide such services to another third party for hire.
For purposes of this Agreement, an "Acquisition Transaction" means a
merger, consolidation, purchase of material assets, purchase of a material
equity interest, tender offer, recapitalization, accumulation of shares,
proxy solicitation or other business combination. Notwithstanding the
above, the foregoing covenant shall not be deemed to prohibit any Member
from (a) acquiring as an investment not more than one percent (1%) of the
capital stock of a competing business whose stock is traded on a national
securities exchange or over-the-counter so long as the Member does not
consult with or is not employed by such competitor and (b) owning equity
interests in Holdings.
4.2 Damages. Because of the difficulty of measuring economic losses to
Centerprise as a result of a breach of the foregoing covenant, and because
of the immediate and irreparable damage that could be caused to Centerprise
for which it would have no other adequate remedy, each Member agrees that
the foregoing covenant may be enforced by Centerprise in the event of
breach by such Member, by injunctions and restraining orders.
4.3 Reasonable Restraint. It is agreed by the parties hereto that the
foregoing covenants in this Article IV impose a reasonable restraint on the
Members in light of the activities and business of Centerprise (including
the subsidiaries thereof) on the date of the execution of this Agreement
and the current plans of Centerprise; but it is also the intent of
Centerprise and the Members that such covenants be construed and enforced
in accordance with the changing activities and business of Centerprise
(including the subsidiaries thereof) throughout the term of this covenant.
It is further agreed by the parties hereto that, in the event that any
Member who has entered into an employment agreement, incentive compensation
agreement or other similar agreement with Centerprise and/or any subsidiary
thereof as set forth herein shall thereafter cease to be employed
thereunder, and such Member shall enter into a business or pursue other
activities not in competition with Centerprise and/or any subsidiary
thereof, or similar activities or business in locations the operations of
which, under such circumstances, does not violate this Article IV and in
any event such new business, activities or location are not in violation of
this Article IV or of such Member's obligations under this Article IV, such
Member shall not be chargeable with a violation of this Article IV if
Centerprise and/or any subsidiary thereof shall thereafter enter the same,
similar or a competitive (i) business, (ii) course of activities or (iii)
location, as applicable.
4.4 Severability; Reformation. The covenants in this Article IV are severable
and separate, and the unenforceability of any specific covenant shall not
affect the provisions of any
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other covenant. Moreover, in the event any court of competent jurisdiction
shall determine that the scope, time or territorial restrictions set forth
are unreasonable, then it is the intention of the parties that such
restrictions be enforced to the fullest extent which the court deems
reasonable, and the Agreement shall thereby be reformed.
4.5 Independent Covenant. All of the covenants in this Article IV shall be
construed as an agreement independent of any other provision in this
Agreement, and the existence of any claim or cause of action of any Member
against Centerprise (including the subsidiaries thereof), whether
predicated on this Agreement or otherwise, shall not constitute a defense
to the enforcement by Centerprise of such covenants. It is specifically
agreed that the period of three (3) years stated at the beginning of this
Article IV, during which the agreements and covenants of each Member made
in this Article IV shall be effective, shall be computed by excluding from
such computation any time during which such Member is in violation of any
provision of this Article IV; provided, however, in all events Centerprise
shall initiate proceedings to enforce this Article IV within four (4) years
of the Closing Date. The covenants contained in this Article IV shall not
be affected by any breach of any other provision hereof by any party hereto
and shall have no effect if the transactions contemplated by this Agreement
are not consummated.
4.6 Materiality. Each of the Members hereby agree that this covenant is a
material and substantial part of this transaction.
ARTICLE V
INDEMNIFICATION
5.1 Indemnification by the Members and Holdings. Subject to Sections 5.7 and
5.8, with respect to Sections 5.1(a) through (c), the Members, and with
respect to Section 5.1(d), Holdings and any Member individually named as a
defendant in the litigation matters referred to in Section 5.1(d), in each
case jointly and severally, agree to indemnify, defend and save the
Centerprise Indemnified Parties (hereinafter defined), forever harmless
from and against, and to promptly pay to a Centerprise Indemnified Party or
reimburse a Centerprise Indemnified Party for, any and all Losses
(hereinafter defined) sustained or incurred by any Centerprise Indemnified
Party, resulting from, arising out of, in connection with or otherwise by
virtue of:
(a) any misrepresentation or breach of a representation or warranty
made in Article I herein or in any certificate, schedule,
document, exhibit or other instrument delivered hereunder by any
Member or any action, demand or claim by any third party against
or affecting any Centerprise Indemnified Party which, if
successful, would give rise to a breach of any such
representation or warranty, except that the obligation of the
Members to
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indemnify, defend and save harmless for any misrepresentation or
breach of representation or warranty made in Section 1.1 hereof
or in any certificate, schedule, document, exhibit or other
instrument delivered in respect thereof shall not be joint and
several, but such obligation shall be several only and limited to
the several Member(s) making such misrepresentation or breach;
(b) any liability under the 1933 Act, the Securities Exchange Act of
1934, as amended (the "1934 Act"), or other federal or state law
or regulation, at common law or otherwise, arising out of or
based upon any untrue statement or alleged untrue statement of a
material fact relating to the Company, contained in any
preliminary prospectus relating to the IPO, the Registration
Statements or any proxy statement or prospectus forming a part
thereof, or any amendment thereof or supplement thereto, or
arising out of or based upon any omission to state therein a
material fact relating to the Company required to be stated
therein or necessary to make the statements therein not
misleading, and not provided to Centerprise or its counsel by the
Company; provided, however, that such indemnity shall not inure
to the benefit of any Centerprise Indemnified Party to the extent
that such untrue statement (or alleged untrue statement) was made
in, or omission (or alleged omission) occurred in, any
preliminary prospectus and (i) the Company provided, in writing,
corrected information to Centerprise or its counsel for inclusion
in the final prospectus prior to distributing such prospectus,
and such information was not so included, or (ii) Centerprise did
not provide the Company and its counsel with the information
required to be provided pursuant to Section 8.2.2 of the Merger
Agreement, and such information is the basis for the untrue
statement or omission (or alleged untrue statement or omission)
giving rise to the liability under this Section 5.1(b);
(c) notwithstanding anything contained in this Agreement to the
contrary, (i) any arrangements made by or on behalf of the
Members, Holdings or the Company in connection with the
Acquisition or the transactions contemplated by this Agreement
with respect to brokerage, finders and other fees or commissions,
(ii) disallowance of any tax deduction to Centerprise or the
Company with respect to any item listed on Schedule 2.6 of the
Merger Agreement and considered in determining Net Working
Capital, (iii) any matter which is listed on Schedule 7.1.4 of
the Merger Agreement or which should be listed on Schedule 4.10
of the Merger Agreement, (iv) the Excluded Assets, the Excluded
Liabilities, and the transactions contemplated under Section
7.1.4 of the Merger Agreement, and (v) any payment with respect
to Dissenting Shares; or
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(d) notwithstanding anything in this Agreement to the contrary, any
matterwhich is listed on Schedule 4.10 of the Merger Agreement.
As used herein, the "Centerprise Indemnified Parties" shall mean
Centerprise, its Subsidiaries and Affiliates, the Founding Companies other than
the Company (the "Other Founding Companies"), and their respective officers,
directors, employees, agents, employee plans and plan fiduciaries, plan
administrators or other Person dealing with any such plans; provided, however,
that the Other Founding Companies, and each of their respective officers,
directors, employees, agents, employee plans and plan fiduciaries, plan
administrators or other Persons dealing with any such plans, shall cease to be a
"Centerprise Indemnified Party" for all purposes hereunder as of the Closing,
and thereafter such Persons shall have no further rights and remedies under this
Article V (except to the extent a Person is an officer, director, employee or
agent of Centerprise as a result of the consummation of the transactions
contemplated under the Other Agreements); provided, further that the
Subsidiaries of Centerprise shall include the Company, the Company Subsidiaries
and the other Founding Companies from and after the Closing. Accordingly, for
purposes of this Article V and subject to the limitations set forth in this
Article V, the Other Founding Companies, and each of their respective officers,
directors, employees, agents, employee plans and plan fiduciaries, plan
administrators or other Persons dealing with any such plans, shall be deemed to
be third party beneficiaries of this Agreement.
As used in this Agreement, "Losses" shall mean any and all liabilities
(whether contingent, fixed or unfixed, liquidated or unliquidated, or
otherwise), obligations, deficiencies, demands, claims, suits, actions, or
causes of action, assessments, losses, costs, expenses, interests, fines,
penalties, actual or punitive damages or costs or expenses of any and all
investigations, proceedings, judgments, orders, environmental analyses,
remediations, settlements and compromises (including reasonable fees and
expenses of the attorneys, accountants and other experts).
5.2 Indemnification by Centerprise. Centerprise agrees to indemnify, defend and
save each of the Members and their respective Affiliates, and their
Affiliates' respective officers, directors, employees and agents (each, a
"Member Indemnified Party") forever harmless from and against, and to
promptly pay to a Member Indemnified Party or reimburse a Member
Indemnified Party for, any and all Losses sustained or incurred by any
Member Indemnified Party relating to, resulting from, arising out of or
otherwise by virtue of any of the following:
(a) any misrepresentation or breach of a representation or warranty
made in the Merger Agreement or in any document or other
instrument delivered hereunder or under the Merger Agreement by
Centerprise or any action, demand or claim by any third party
against or affecting any Member Indemnified Party which, if
successful, would give rise to a breach of any such
representation or warranty;
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(b) any liability under the 1933 Act, the 1934 Act or other Federal
or state law or regulation, at common law or otherwise, arising
out of or based upon any untrue statement or alleged untrue
statement of a material fact relating to Centerprise or any of
the Other Founding Companies contained in any preliminary
prospectus relating to the IPO, the Registration Statements or
any proxy statement or prospectus forming a part thereof, or any
amendment thereof or supplement thereto, or arising out of or
based upon any omission or alleged omission to state therein a
material fact relating to Centerprise or any of the Other
Founding Companies required to be stated therein or necessary to
make the statements therein not misleading; and
(c) any liability under the 1933 Act, the 1934 Act, or other federal
or state law or regulation, at common law or otherwise, arising
out of or based upon any untrue statement or alleged untrue
statement of a material fact relating to Holdings, the Company or
the Members, contained in any preliminary prospectus relating to
the IPO, the Registration Statements or any proxy statement or
prospectus forming a part thereof, or any amendment thereof or
supplement thereto, or arising out of or based upon any omission
to state therein a material fact relating to Holdings, the
Company or the Members required to be stated therein or necessary
to make the statements therein not misleading, to the extent such
untrue statement (or alleged untrue statement) was made in, or
omission (or alleged omission) occurred in, any preliminary
prospectus and (i) Holdings, the Company or Members provided, in
writing, corrected information to Centerprise or its counsel for
inclusion in the final prospectus prior to distributing such
prospectus, and such information was not so included, or (ii)
Centerprise did not provide Holdings, the Member Representative
and their counsel with the information required to be provided
pursuant to Section 8.2.2 of the Merger Agreement, and such
information is the basis for the untrue statement or omission (or
alleged untrue statement or omission) giving rise to the
liability under this Section 5.2(c).
5.3 Indemnification Procedure for Third Party Claims.
5.3.1 In the event that subsequent to the Closing any Person entitled to
indemnification under this Agreement (an "Indemnified Party")
receives notice of the assertion of any claim, issuance of any order
or the commencement of any action or proceeding by any Person who is
not a party to this Agreement or an Affiliate of a party, including,
without limitation, any domestic or foreign court or Governmental
Authority (a "Third Party Claim"), against such Indemnified Party,
against which a party to this Agreement is required to provide
indemnification under this Agreement (an "Indemnifying Party"), the
Indemnified Party shall give written notice thereof together with a
statement of any available information regarding such
13
claim to the Indemnifying Party within thirty (30) days after
learning of such claim (or within such shorter time as may be
necessary, in the Indemnified Party's reasonable judgment, to
give the Indemnifying Party a reasonable opportunity to respond
to and defend such claim). The Indemnifying Party shall have
the right, upon written notice to the Indemnified Party (the
"Defense Notice") within ten days (10) after receipt from the
Indemnified Party of notice of such claim, to conduct at its
expense the defense against such claim in its own name, or if
necessary in the name of the Indemnified Party; provided,
however, that the Indemnified Party shall have the right to
approve the defense counsel selected by the Indemnifying Party,
which approval shall not be unreasonably withheld, and in the
event the Indemnifying Party and the Indemnified Party cannot
agree upon such counsel within ten (10) days after the Defense
Notice is provided, then the Indemnifying Party shall propose
an alternate defense counsel, who shall be subject again to the
Indemnified Party's approval.
5.3.2 In the event that the Indemnifying Party shall fail to timely
give the Defense Notice, it shall be deemed to have elected not
to conduct the defense of the subject claim, and in such event
the Indemnified Party shall have the right to conduct such
defense in good faith at the cost and expense of the
Indemnifying Party and the Indemnifying Party shall reimburse
the Indemnified Party for all costs, expenses and settlement
amounts actually paid in connection therewith; provided,
however, that under no circumstances shall the Indemnified
Party compromise or settle any Third Party Claim without the
prior written consent of the Indemnifying Party (which, in the
case of the Members, may be granted by the Member
Representative (as defined in Section 5.13)), which consent
shall not be unreasonably withheld or delayed.
5.3.3 In the event that the Indemnifying Party does elect to conduct
the defense of the subject claim, the Indemnified Party will
cooperate with and make available to the Indemnifying Party
such assistance and materials as may be reasonably requested by
it, all at the expense of the Indemnifying Party, and the
Indemnified Party shall have the right at its expense to
participate in the defense assisted by counsel of its own
choosing, provided that the Indemnified Party shall have the
right to compromise and settle the claim only with the prior
written consent of the Indemnifying Party, which consent shall
not be unreasonably withheld or delayed. Without the prior
written consent of the Indemnified Party, the Indemnifying
Party will not enter into any settlement of any Third Party
Claim or cease to defend against such claim, if pursuant to or
as a result of such settlement or cessation, (i) injunctive or
other equitable relief would be imposed against the Indemnified
Party, or (ii) such settlement or cessation would lead to
liability or create any financial or other obligation on the
part of the Indemnified Party for which the Indemnified Party
is not entitled to indemnification hereunder, or (iii) such
settlement includes a written admission of guilt. The
Indemnifying Party shall not be entitled to
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control, and the Indemnified Party shall be entitled to have sole
control over, the defense or settlement of any claim (A) to the
extent that claim seeks an order, injunction or other equitable
relief against the Indemnified Party which, if successful, could
materially interfere with the business, operations, assets,
condition (financial or otherwise) or prospects of the Indemnified
Party or (B) in a proceeding to which the Indemnifying Party is also
a party and the Indemnified Party determines in good faith that
joint representation would be inappropriate (and in each case the
cost of such defense shall constitute an amount for which the
Indemnified Party is entitled to indemnification hereunder). If an
offer is made to settle a Third Party Claim which all parties to
such Third Party Claim (including the Indemnifying Party) are
prepared to settle and which offer the Indemnifying Party is
permitted to settle under this Section 5.3.3 only upon the prior
written consent of the Indemnified Party, the Indemnifying Party
will give prompt written notice to the Indemnified Party to that
effect. If the Indemnified Party fails to consent to such firm offer
within (30) calendar days after its receipt of such notice, the
Indemnified Party may continue to contest or defend such Third Party
Claim and, in such event, the maximum liability of the Indemnifying
Party as to such Third Party Claim will not exceed the amount of
such settlement offer, plus costs and expenses paid or incurred by
the Indemnified Party through the end of such (30) day period.
5.3.4 Any judgment entered, order issued or settlement agreed upon in the
manner provided herein shall be binding upon the Indemnifying Party,
and shall conclusively be deemed to be an obligation with respect to
which the Indemnified Party is entitled to prompt indemnification
hereunder.
5.4 Direct Claims. It is the intent of the parties hereto that all direct
claims by an Indemnified Party against a party hereto not arising out of
Third Party Claims shall be subject to and benefit from the terms of this
Article V. Any claim under this Article V by an Indemnified Party for
indemnification other than indemnification against a Third Party Claim, (a
"Direct Claim") will be asserted by giving the Indemnifying Party
reasonably prompt written notice thereof, together with a statement of any
available information regarding such claim, and the Indemnifying Party will
have a period of thirty (30) calendar days within which to satisfy such
Direct Claim. If the Indemnifying Party does not so respond within such
thirty (30) calendar day period, the Indemnifying Party will be deemed to
have rejected such claim, in which event the Indemnified Party will be free
to pursue such remedies as may be available to the Indemnified Party under
this Article V.
5.5 Failure to Give Timely Notice. A failure by an Indemnified Party to give
timely, complete or accurate notice as provided in Section 5.3 or 5.4 will
not affect the rights or obligations of any party hereunder except and only
to the extent that, as a result of such failure, any party entitled to
receive such notice was deprived of its right to recover any payment under
any applicable insurance coverage, or deprived of its right to assert any
claim because of
15
expiration of the applicable statute of limitations, or was otherwise
directly and materially damaged as a result of such failure to give timely
notice.
5.6 Reduction of Loss. To the extent any Loss of an Indemnified Party is
reduced by receipt of payment (i) under insurance policies (net of any
retroactive adjustment or other reimbursement to the insurer in respect of
such payment), (ii) from third parties not affiliated with the Indemnified
Party, or (iii) the amount of any tax benefit to the Centerprise
Indemnified Parties, such payments and/or tax benefits (net of the expenses
of the recovery thereof) shall be credited against such Loss. The pendency
of such payments shall not delay or reduce the obligation of the
Indemnifying Party to make payment to the Indemnified Party in respect of
such Loss, and the Indemnified Party shall not have any obligation,
hereunder or otherwise, to pursue payment under or from any insurer or
third party in respect of such Loss. The Indemnified Party shall cooperate,
at no expense to the Indemnified Party, in any reasonable efforts of the
Indemnifying Party in pursuing such payments, including expressly
acknowledging the Indemnifying Party's right and standing to pursue such
payments, and the Indemnified Party will use its customary efforts short of
litigating with an insurer or third party to collect amounts due from such
insurer or third party. If any insurance or third party reimbursement is
obtained subsequent to payment by an Indemnifying Party in respect of a
Loss, such reimbursement (to the extent of amounts theretofore paid by the
Indemnifying Party on account of such Loss) shall be promptly paid over to
the Indemnifying Party.
5.7 Limitation on Indemnities.
5.7.1 Threshold for the Members. With respect to representations and
warranties, the Members shall not have any liability pursuant to
Section 5.1(a) hereof unless and until and only to the extent that
the aggregate amount of Losses accrued pursuant to Section 5.1(a)
exceeds 1% of aggregate Basic Purchase Consideration; provided,
however, that this threshold shall not apply to Losses arising out
of breaches of representations or warranties contained in Sections
1.1.1, 1.1.2, 1.2 and 1.1.9 as it relates to the representation and
warranty of the Company set forth in Section 4.16 of the Merger
Agreement, and the Members shall indemnify the Centerprise
Indemnified Parties for any Losses accruing thereunder in accordance
with this Article V without regard to such threshold.
5.7.2 Threshold for Centerprise. With respect to representations and
warranties, Centerprise shall not have any liability pursuant to
Section 5.2(a) hereof unless and until and only to the extent that
the aggregate amount of the Losses accrued pursuant to Section
5.2(a) exceeds 1% of aggregate Basic Purchase Consideration;
provided, however, that this threshold shall not apply to Losses
arising out of the breach of representations or warranties contained
in Section 6.2 of the Merger Agreement and Centerprise shall
indemnify the Member Indemnified Parties from
16
any Losses occurring thereunder in accordance with this Article V
without regard to such threshold.
5.7.3 Limitations on Claims Against the Members. The liability of all
Members for misrepresentations and breaches of representations and
warranties under Section 1.1(a) shall be limited to 100% of
aggregate Basic Purchase Consideration in the aggregate; provided,
however, that such liability for a Member shall be limited to three
times the aggregate Basic Purchase Consideration received, directly
or indirectly, by such Member or by Holdings on behalf of such
Member; provided further, however, that such limitations shall not
apply to Losses arising out of breaches of representations or
warranties contained in Sections 1.1.1, 1.1.2, 1.2, and 1.1.9 as it
relates to the representation and warranty and the Company set forth
in Section 4.16 of the Merger Agreement, and any Losses accruing
thereunder shall not count towards such limitations.
5.7.4 Limitation on Claims Against Centerprise. The liability of
Centerprise under Section 5.2(a) shall be limited to 100% of
aggregate Basic Purchase Consideration in the aggregate; provided,
however, that this limitation shall not apply to Losses arising out
of breaches of representations or warranties in Section 6.2 of the
Merger Agreement and any Losses accruing thereunder shall not count
towards such limitation.
5.8 Survival of Representations, Warranties and Covenants of the Members and
Holdings; Time Limits on Indemnification Obligations. Notwithstanding any
right of Centerprise to fully investigate the affairs of Holdings, the
Company, the Company Subsidiaries and the Business, and notwithstanding any
Knowledge of facts determined or determinable by Centerprise pursuant to
such investigation or right of investigation, Centerprise has the right to
rely fully upon the representations, warranties, covenants and agreements
of the Members and Holdings contained in this Agreement or in any
certificate delivered pursuant to any of the foregoing. All such
representations, warranties, covenants and agreements of the Members and
Holdings shall survive the execution and delivery of this Agreement and the
Closing; provided, however, (i) that the Members' obligations pursuant to
Section 5.1, other than those relating to covenants and agreements to be
performed by the Members after the Closing, shall expire one (1) year after
the Closing, except with respect to obligations arising under or relating
to Section 4.16 of the Merger Agreement as it relates to federal, state,
local and foreign income taxation, which shall survive until the earlier of
(A) the expiration of the applicable periods (including any extensions) of
the respective statutes of limitation applicable to the payment of the
Taxes or (B) the completion of the final audit and determinations by the
applicable taxing authority and final disposition of any deficiency
resulting therefrom; and (ii) solely to the extent that Centerprise
actually incurs liability under the 1933 Act or the 1934 Act, the
obligations under Sections 5.1(c) or (d) above shall survive until the
expiration of any applicable statute of limitations with respect to such
claims.
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5.9 Survival of Representations, Warranties and Covenants of Centerprise; Time
Limits on Indemnification Obligations. All representations, warranties,
covenants and agreements of Centerprise shall survive the execution and
delivery of the Merger Agreement and this Agreement and the Closing;
provided, however, that Centerprise's obligations under Section 5.2, other
than those relating to covenants and agreements to be performed by
Centerprise after the Closing, shall expire one year after Closing, except
that, solely to the extent that the Members actually incur liability under
the 1933 Act or the 1934 Act, the obligations under Sections 5.2(c) or (d)
above shall survive until the expiration of any applicable statute of
limitations with respect to such claims.
5.10 Defense of Claims; Control of Proceedings. Notwithstanding anything in
this Agreement to the contrary, to the extent any Loss subject to
indemnification hereunder would exceed the Indemnifying Party's indemnity
obligations under this Agreement, the Indemnified Party shall be entitled
to control the defense of such claim or management of such proceeding with
respect to such excess Loss.
5.11 Fraud; Exclusive Remedy. The limitations set forth in this Article V shall
not apply to fraud by any party. In the absence of fraud and
notwithstanding any Law to the contrary and any rights that would
otherwise be available thereunder, the indemnification provisions of this
Article V set forth the sole and exclusive remedy of the Centerprise
Indemnified Parties following the Closing against the Members and of the
Member Indemnified Parties following the Closing against Centerprise and
its affiliates with respect to any claim for relief resulting from,
arising out of or otherwise by virtue of this Agreement and the
transactions contemplated hereby.
5.12 Manner of Satisfying Indemnification Obligations. Subsequent to the
Closing, the Members may satisfy their respective obligations, if any,
under this Article V (i) by tendering to the Centerprise Indemnified
Parties cash or shares of Centerprise Common Stock that are then
transferable in accordance with Section 3.2, such shares to be valued at
the Market Price. "Market Price" shall mean the average closing (last)
price for a share of Centerprise Common Stock (as reported on the exchange
or market on which such shares are then listed or traded) for the most
recent twenty (20) days that such shares have traded ending on the date
two (2) days prior to the date tendered pursuant to clause (i) of the
preceding sentence, or, if such shares are not then listed or traded on an
exchange or other market, the fair market value of such shares as
determined by an appraiser reasonably agreed to by the parties.
5.13 Member Representative. Holdings and each Member appoints _________________
(the "Member Representative") as its agent and representative with full
power and authority to agree, contest or settle any claim or dispute
affecting any Member made under Article II of the Merger Agreement or
Article V hereunder to otherwise act on behalf of the Members in
accordance with the terms of this Agreement, including, without
limitation, to direct the amount and manner of the payment of the
aggregate Basic Purchase
18
Consideration; provided, that the Member Representative may be removed and
a successor to the Person originally serving as the Member Representative
may be designated in a writing signed by a majority-in-interest of the
Members and delivered to Centerprise in accordance with Section 6.2.
ARTICLE VI
PURCHASED AR; CASH RETENTION
6.1 Purchase of AR. On or after the second business day after the Closing, but
no later than within five (5) business days the Closing, Holdings shall
purchase from the Company all AR (the "Purchased AR") for $__________, less
any collections from date of Closing to the date of such purchase, and
Centerprise shall cause the Company to sell and assign the Purchased AR to
Holdings pursuant to sale and assignment documents acceptable to
Centerprise.
6.2 Payment of Deferred Compensation. Upon receipt by the Company of cash in
accordance with Section 6.1 above plus collection of AR from the Closing
Date to the date of purchase under Section 6.1 Centerprise shall cause the
Company to pay to the Members and certain non-shareholder officers and
associate principals of the Company accrued salary and accrued bonus
accounts equal to the amounts set forth on Schedule 6.2 next to each such
payee's name; provided, however, aggregate amount otherwise payable
pursuant to this Section 6.2 exceeds the amount received by the Company
pursuant to Section 6.1 above plus any collection of AR from the Closing
Date to the date of purchase under Section 6.1 such payment shall be
reduced to such lower amount, and the amount payable to each payee as set
forth on Schedule 6.2 shall be reduced accordingly, pro rata based on the
amounts set forth on Schedule 6.2.
6.3 Retention of Cash. Seller shall retain, for a period of at least twelve
(12) months after the Closing cash, cash equivalents or accounts receivable
in an amount equal to at least $_______.
ARTICLE VII
GENERAL PROVISIONS
7.1 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, sent by
nationally recognized overnight delivery service, mailed by registered or
certified mail (return receipt requested) or sent via facsimile to the
parties at the following addresses (or at such other address for a party as
shall be specified by notice given in accordance with this Section):
19
7.1.1 If to Centerprise to:
Centerprise Advisors, Inc.
000 Xxxx Xxxxxxxxxx Xxxxxx
00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx Xxxxxx
with a copy to:
Xxxxxx Xxxxxx & Zavis
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
7.1.2 If to the Member Representative or the Members, as applicable,
addressed to the addresses set forth on Schedule 6.1.2, with copies
to such counsel as set forth with respect to each Member on such
Schedule 6.1.2, as applicable:
7.2 Interpretation. The headings contained in this Agreement are for
convenience of reference only and shall not affect in any way the meaning
or interpretation of this Agreement. In this Agreement, unless a contrary
intention appears, (i) the words "herein," "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a whole and not to
any particular Article, Section or other subdivision and (ii) reference to
any Article or Section means such Article or Section hereof. No provision
of this Agreement shall be interpreted or construed against any party
hereto solely because such party or its legal representative drafted such
provision.
7.3 Certain Definitions. Capitalized terms used in this Agreement without
definition shall have the meaning ascribed to such terms in the Merger
Agreement.
7.4 Entire Agreement; Assignment. This Agreement (including the documents and
instruments referred to herein) (a) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both written and
oral, among the parties, or any of them, with respect to the subject matter
hereof and (b) shall not be assigned by operation of law or otherwise.
7.5 Applicable Law. This Agreement shall be governed in all respects,
including validity, interpretation and effect, by the laws of the State of
Illinois applicable to contracts executed and to be performed wholly within
such state, without giving effect to its choice of law rules.
20
7.6 Counterparts. This Agreement may be executed via facsimile or otherwise in
two or more counterparts, each of which shall be deemed to be an original,
but all of which shall constitute one and the same agreement.
7.7 Parties in Interest. This Agreement shall be binding upon and inure solely
to the benefit of each party hereto, and their respective successors,
permitted assigns, heirs, legal representatives and executors and except as
expressly set forth in herein, nothing in this Agreement, express or
implied, is intended to confer upon any other Person any rights or remedies
of any nature whatsoever under or by reason of this Agreement.
7.8 Merger Agreement. The Members agree that they will be entitled to the
benefits of, and subject to the obligations and liabilities of, Section 2.3
of the Merger Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as
of the date first written above.
CENTERPRISE ADVISORS, INC.
By:
---------------------------------------
Name:
-------------------------------------
Its:
--------------------------------------
[Holding Company]
By:
---------------------------------------
Name:
-------------------------------------
Its:
--------------------------------------
MEMBERS
21
