231,
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AGREEMENT AND PLAN OF MERGER
dated as of the 10th day of March, 1999
by and among
THE ALLIANCE GROUP, INC.
(Parent)
and
ALLIANCE ACQUISITION III CORP.
(Newco)
and
NOBEL SYSTEMS, INC.
(Company)
and
▇▇▇ BLOOD
AND
▇▇▇▇▇ ▇▇▇▇▇▇
AND
▇▇▇ ▇▇▇▇▇▇▇
(Stockholders of the Company)
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TABLE OF CONTENTS
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. THE MERGER AND OTHER MATTERS. . . . . . . . . . . . . . . . . . . . . . . . 5
2.1 Delivery and Filing of Articles of Merger . . . . . . . . . . . . . 5
2.2 Effective Time of the Merger. . . . . . . . . . . . . . . . . . . . 5
2.3 Certificate of Incorporation, Bylaws and Board of
Directors of the Surviving Corporation. . . . . . . . . . . . . . . 5
2.4 Certain Information With Respect to the Capital Stock of
Company, Parent and Newco.. . . . . . . . . . . . . . . . . . . . . 6
2.5 Effect of Merger. . . . . . . . . . . . . . . . . . . . . . . . . . 6
3. CONVERSION OF STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4. DELIVERY OF MERGER CONSIDERATION. . . . . . . . . . . . . . . . . . . . . . 7
4.1 Effective Time. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.2 Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF COMPANY
AND STOCKHOLDERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.1 Due Organization. . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.3 Capital Stock of the Company. . . . . . . . . . . . . . . . . . . . 8
6.4 Transactions in Capital Stock . . . . . . . . . . . . . . . . . . . 9
6.5 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.6 Predecessor Status; etc.. . . . . . . . . . . . . . . . . . . . . . 9
6.7 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . 9
6.8 Liabilities and Obligations . . . . . . . . . . . . . . . . . . . . 9
6.9 Accounts and Notes Receivable . . . . . . . . . . . . . . . . . . . 10
6.10 Permits and Intangibles . . . . . . . . . . . . . . . . . . . . . . 10
6.11 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . 11
6.12 Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.13 Significant Customers; Material Contracts and Commitments . . . . . 12
6.14 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.15 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.16 Compensation; Organized Labor Matters . . . . . . . . . . . . . . . 13
6.17 Employee Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.18 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . 14
6.19 Conformity with Law; Litigation . . . . . . . . . . . . . . . . . . 15
6.20 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.21 No Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
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6.22 Absence of Changes . . . . . . . . . . . . . . . . . . . . . . . . 17
6.23 Deposit Accounts; Powers of Attorney. . . . . . . . . . . . . . . . 19
6.24 Relations with Governments. . . . . . . . . . . . . . . . . . . . . 19
6.25 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.26 Prohibited Activities . . . . . . . . . . . . . . . . . . . . . . . 19
7. ADDITIONAL REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS
OF STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.1 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.2 Preemptive Rights . . . . . . . . . . . . . . . . . . . . . . . . . 20
8. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF PARENT
AND NEWCO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.1 Due Organization. . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.3 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.4 Transactions in Capital Stock . . . . . . . . . . . . . . . . . . . 21
8.5 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.6 Liabilities and Obligations . . . . . . . . . . . . . . . . . . . . 21
8.7 Conformity with Law; Litigation . . . . . . . . . . . . . . . . . . 21
8.8 No Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.9 Parent Securities . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.10 Business; Real Property; Agreements . . . . . . . . . . . . . . . . 22
9. OTHER COVENANTS PRIOR TO CLOSING. . . . . . . . . . . . . . . . . . . . . . 22
9.1 Access and Cooperation; Due Diligence; Audits . . . . . . . . . . . 22
9.2 Conduct of Business Pending Closing . . . . . . . . . . . . . . . . 23
9.3 Prohibited Activities by the Company. . . . . . . . . . . . . . . . 23
9.4 Exclusivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.5 Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.6 Notification of Certain Matters . . . . . . . . . . . . . . . . . . 25
9.7 Amendment of Schedules. . . . . . . . . . . . . . . . . . . . . . . 25
9.8 Further Assurance . . . . . . . . . . . . . . . . . . . . . . . . . 26
10. CONDITIONS PRECEDENT TO OBLIGATIONS OF STOCKHOLDERS AND COMPANY . . . . . . 26
10.1 Representations and Warranties; Performance of
Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.2 No Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.3 Consents and Approvals. . . . . . . . . . . . . . . . . . . . . . . 26
10.4 Good Standing Certificates. . . . . . . . . . . . . . . . . . . . . 26
10.5 No Material Adverse Effect. . . . . . . . . . . . . . . . . . . . . 27
10.6 Secretary's Certificates. . . . . . . . . . . . . . . . . . . . . . 27
10.7 Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . 27
10.8 Closing of the IPO or the Private Placement . . . . . . . . . . . . 27
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11. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND NEWCO . . . . . . . . . . 27
11.1 Representations and Warranties; Performance of
Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
11.2 No Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
11.3 Secretary's Certificate . . . . . . . . . . . . . . . . . . . . . . 28
11.4 No Material Adverse Effect. . . . . . . . . . . . . . . . . . . . . 28
11.5 Stockholders' Release . . . . . . . . . . . . . . . . . . . . . . . 28
11.6 Termination of Related Party Agreements . . . . . . . . . . . . . . 28
11.7 Consents and Approvals. . . . . . . . . . . . . . . . . . . . . . . 28
11.8 Good Standing Certificates. . . . . . . . . . . . . . . . . . . . . 28
11.9 FIRPTA Certificate. . . . . . . . . . . . . . . . . . . . . . . . . 28
11.10 Closing of the IPO or Private Placement . . . . . . . . . . . . . . 28
11.11 Employment Agreement. . . . . . . . . . . . . . . . . . . . . . . . 29
11.12 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . 29
12. ADDITIONAL COVENANTS OF PARENT AND STOCKHOLDERS . . . . . . . . . . . . . . 29
12.1 Preparation and Filing of Tax Returns . . . . . . . . . . . . . . . 29
12.2 Preservation of Employee Benefit Plans. . . . . . . . . . . . . . . 29
13. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
13.1 General Indemnification by the Stockholders . . . . . . . . . . . . 30
13.2 Indemnification by Parent . . . . . . . . . . . . . . . . . . . . . 30
13.3 Third Person Claims . . . . . . . . . . . . . . . . . . . . . . . . 30
13.4 Exclusive Remedy. . . . . . . . . . . . . . . . . . . . . . . . . . 31
13.5 Limitations on Indemnification. . . . . . . . . . . . . . . . . . . 31
14. TERMINATION OF AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . 31
14.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
14.2 Liabilities in Event of Termination . . . . . . . . . . . . . . . . 32
15. NONCOMPETITION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
15.1 Prohibited Activities . . . . . . . . . . . . . . . . . . . . . . . 32
15.2 Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
15.3 Reasonable Restraint. . . . . . . . . . . . . . . . . . . . . . . . 33
15.4 Severability, Reformation . . . . . . . . . . . . . . . . . . . . . 33
15.5 Independent Covenant. . . . . . . . . . . . . . . . . . . . . . . . 34
15.6 Materiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
16. NONDISCLOSURE OF CONFIDENTIAL INFORMATION . . . . . . . . . . . . . . . . . 34
16.1 Company and Stockholders. . . . . . . . . . . . . . . . . . . . . . 34
16.2 Parent and Newco. . . . . . . . . . . . . . . . . . . . . . . . . . 35
16.3 Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
16.4 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
17. TRANSFER RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
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18. INVESTMENT REPRESENTATIONS. . . . . . . . . . . . . . . . . . . . . . . . . 36
18.1 Compliance With Law . . . . . . . . . . . . . . . . . . . . . . . . 36
18.2 Economic Risk, Sophistication . . . . . . . . . . . . . . . . . . . 37
19. REGISTRATION RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
19.1 PiggyBack Registration Rights . . . . . . . . . . . . . . . . . . . 37
19.2 Demand Registration Rights. . . . . . . . . . . . . . . . . . . . . 37
19.3 Registration Procedures . . . . . . . . . . . . . . . . . . . . . . 38
19.4 Other Registration Matters. . . . . . . . . . . . . . . . . . . . . 40
19.5 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . 41
19.6 Contribution. . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
19.7 Undertaking to File Reports and Cooperate in Rule 144
Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
20. GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
20.1 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
20.2 Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . 46
20.3 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . 46
20.4 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
20.5 Brokers and Agents. . . . . . . . . . . . . . . . . . . . . . . . . 46
20.6 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
20.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
20.8 Exercise of Rights and Remedies . . . . . . . . . . . . . . . . . . 48
20.9 Time. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
20.10 Reformation and Severability. . . . . . . . . . . . . . . . . . . . 48
20.11 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . 48
20.12 Captions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
20.13 Public Statements . . . . . . . . . . . . . . . . . . . . . . . . . 48
20.14 Amendments and Waivers. . . . . . . . . . . . . . . . . . . . . . . 48
20.15 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
20.16 338 Election. . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made as of the
10th day of March, 1999, by and among THE ALLIANCE GROUP, INC., an Oklahoma
corporation ("Parent"), ALLIANCE ACQUISITION III CORP., an Oklahoma corporation
("Newco"), NOBEL SYSTEMS, INC., an Oklahoma corporation (the "Company"), ▇▇▇
BLOOD, ▇▇▇▇▇ ▇▇▇▇▇▇ AND ▇▇▇ ▇▇▇▇▇▇▇, the only stockholders of the Company
(collectively, the "Stockholders").
RECITALS
WHEREAS, Newco is a corporation duly organized and existing
under the laws of the State of Oklahoma, having been incorporated on
March 9, 1999, solely for the purpose of completing the transaction set
forth herein, and Newco is a wholly-owned subsidiary of Parent, a
corporation organized and existing under the laws of the State of
Oklahoma; and
WHEREAS, the respective Boards of Directors of Newco and of
Company (which together are hereinafter collectively referred to as
"Constituent Corporations") deem it advisable and in the best interests
of the Constituent Corporations and their respective stockholders that
Newco merge with and into Company, as set forth in Annex I, pursuant to
this Agreement and the applicable provisions of the laws of the State of
Oklahoma ("Merger"); and
WHEREAS, this Merger is being effectuated pursuant to Section
368(a)(1)(A) of the Code; and
WHEREAS, Stockholders are the owners of 800 shares of Common
Stock, $1.00 par value, of Company ("Company Stock"), representing all
the issued and outstanding capital stock of Company outstanding on the
date of this Agreement;
WHEREAS, in the Merger the issued and outstanding shares of
Company Stock will be converted into aggregate consideration of
$710,000, comprised of $385,000 in cash - shares of Common Stock $.01
par value, of Parent ("Parent Stock") having a value at Closing of
$325,000; and assumption of all Company debts, liabilities and
obligations.
NOW, THEREFORE, in consideration of the premises and of the
mutual representations, warranties, covenants, and agreements herein
contained, the parties hereto hereby agree as follows:
1. DEFINITIONS
Unless the context otherwise requires, capitalized terms used in this
Agreement or in any schedule, or annex attached hereto and not otherwise defined
shall have the following meanings for all purposes of this Agreement.
"Adverse Effect" has the meaning set forth in Section 6.1.
"Affiliates" means a Person who directly or indirectly through one or
more intermediaries controls, is controlled by or is under common control with,
the Company.
"Agreement" has the meaning set forth in the first paragraph of this
Agreement.
"Annex" means each Annex attached hereto that represents a document
relevant to the transactions contemplated in this Agreement.
"A/R Aging Reports" has the meaning set forth in Section 6.9.
"Balance Sheet Date" has the meaning set forth in Section 6.7.
"Certificate of Merger" means the Certificate of Merger with respect to
the Merger substantially in the form attached as Annex I, with such other
changes therein as may be required by applicable state law.
"Charter Documents" means the Certificate of Incorporation, Articles of
Incorporation or other instrument pursuant to which any corporation, partnership
or other business entity that is a signatory to this Agreement was formed or
organized in accordance with applicable law.
"Closing" has the meaning set forth in Section 5.
"Closing Date" has the meaning set forth in Section 5.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the first paragraph of this
Agreement.
"Company Financial Statements" has the meaning set forth in Section 6.7.
"Company Stock" has the meaning set forth in the third recital of this
Agreement.
"Constituent Corporations" has the meaning set forth in the second
recital of this Agreement.
"Controlled Group" has the meaning set forth in Section 6.18.
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"Demand Registration" has the meaning set forth in Section 19.2.
"Documents" has the meaning set forth in Section 6.21.
"Effective Time" means the time as of which the Merger becomes
effective, which shall, in any case, occur on the Closing Date.
"Environmental Laws" has the meaning set forth in Section 6.11.
"ERISA" has the meaning set forth in Section 6.17.
"Expiration Date" means (i) except as set forth in (iii) below, the 24th
monthly anniversary of the Closing Date when used in connection with a breach of
any representation, warranty, covenant or agreement set forth in Sections 6, 7
and 8 of this Agreement, (ii) the 36th monthly anniversary of the Closing Date
when used in connection with the failure to observe the terms of Section 15 and
(iii) the date on which suit for the enforcement of any claims for Taxes, claims
under Environmental Laws, or claims under any other covenant or agreement set
forth in this Agreement and not specified in (i) or (ii) above becomes barred by
the applicable statute of limitation.
"Founding Companies" has the meaning set forth in Section 9.1(ii).
"Founding Stockholders" has the meaning set forth in Section 19.2.
"Hazardous Wastes" and "Hazardous Substances" have the meanings set
forth in Section 6.13.
"Indemnification Threshold" has the meaning set forth in Section 13.5.
"Indemnified Party" has the meaning set forth in Section 13.3.
"Indemnifying Party" has the meaning set forth in Section 13.3.
"IPO" means the Parent's initial public offering of Parent Stock.
"IRS" or "Internal Revenue Service" means the Internal Revenue Service
of the Department of the Treasury.
"Leases" means all real and personal property leased by Company and
used, useful or held for use in connection with Company's business.
"Liens" has the meaning set forth in Section 6.3.
"Merger" has the meaning set forth in the second recital of this
Agreement.
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"Newco" has the meaning set forth in the first paragraph of this
Agreement.
"Newco Stock" means the common stock, par value $.01 per share of Newco.
"OGCA" means the Oklahoma General Corporation Act.
"Other Stockholders" means the persons and entities that receive shares
of Parent Stock and/or cash upon the acquisition by Parent of assets or
businesses in which such persons and entities owned an interest on or prior to
the closing date of the IPO or Private Placement.
"Parent" has the meaning set forth in the first paragraph of this
Agreement.
"Parent Charter Documents" has the meaning set forth in Section 8.1.
"Parent Documents" has the meaning set forth in Section 8.8.
"Parent Stock" has the meaning set forth in the fourth recital of this
Agreement.
"Person" means an individual, a corporation, a partnership, an
association, a limited liability company, a joint stock company, a trust, or
other unincorporated organization.
"Private Placement" means the Parent's private placement of Parent
Stock.
"Prohibited Activities" has the meaning set forth in Paragraph 6.26.
"Qualified Plans" has the meaning set forth in Section 6.18.
"Registerable Securities" means the shares of Parent Stock registerable
pursuant to Section 19.
"Restricted Securities" has the meaning set forth in introductory
paragraph to Section 18.
"Returns" means any returns, reports or statements (including any
information returns) required to be filed for purposes of a particular Tax.
"Schedule" means each Schedule attached hereto, which shall reference
the relevant sections of this Agreement, on which parties hereto disclose
information as part of their respective representations, warranties, covenants
and agreements.
"SEC" means the United States Securities and Exchange Commission.
"December Balance Sheet" has the meaning set forth in Section 6.7.
"Stockholders" has the meaning set forth in the first paragraph of this
Agreement.
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"Subsidiaries" means, with respect to any Person, any corporation or
other organization, whether incorporated or unincorporated, of which (i) such
Person or any other Subsidiary of such Person is a general partner (excluding
partnerships, the general partnership interests of which held by such Person or
any Subsidiary of such Person do not have a majority of the voting interest in
such partnership) or (ii) at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a majority of the
Board of Directors or others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or controlled
by such Person, by any one or more of its Subsidiaries, or by such Person and
one or more of its Subsidiaries.
"Surviving Corporation" shall mean Company as the surviving party in the
Merger.
"Tax" or "Taxes" means all Federal, state, local or foreign net or gross
income, gross receipts, net proceeds, sales, use, ad valorem, value added,
franchise, bank shares, withholding, payroll, employment, excise, property,
deed, stamp, alternative or add on minimum, environmental or other taxes or
assessments, whether disputed or not, together with any interest, penalties,
additions to tax or additional amounts with respect thereto.
"Territory" has the meaning set forth in Section 15.1(i).
"Third Person" has the meaning set forth in Section 13.3.
"1933 Act" means the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder.
2. THE MERGER AND OTHER MATTERS
2.1 DELIVERY AND FILING OF ARTICLES OF MERGER. Upon payment and
delivery of all consideration due to Stockholders at Closing under this
Agreement, the Constituent Corporations will cause (i) the Certificate of Merger
to be signed, verified and filed with the Secretary of State of the State of
Oklahoma and (ii) photocopies of stamped receipt copies of such filing to be
delivered to Parent on the Closing Date.
2.2 EFFECTIVE TIME OF THE MERGER. At the Effective Time of the
Merger, Newco shall be merged with and into Company, in accordance with the
Certificate of Merger, the separate existence of Newco shall cease, and Company
shall be the surviving party in the Merger. Company is sometimes hereinafter
referred to as the Surviving Corporation.
2.3 CERTIFICATE OF INCORPORATION, BYLAWS AND BOARD OF DIRECTORS OF
THE SURVIVING CORPORATION. At the Effective Time:
(i) the Charter Documents of Newco then in effect shall be
the Charter Documents of the Surviving Corporation until
changed as provided by law;
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(ii) the Bylaws of Newco then in effect shall be the Bylaws
of the Surviving Corporation until they shall thereafter
be further amended;
(iii) ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, the only member of the Board of
Directors of Newco, shall be the only member of the
Board of Directors of the Surviving Corporation after
the Effective Time until his successor shall have been
elected and qualified; and
(iv) ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Chief Executive Officer; ▇▇▇ Blood,
President; ▇▇▇ ▇▇▇▇▇, Chief Financial Officer and
Secretary; and ▇▇▇▇ ▇▇▇▇▇▇▇, Vice President of
Operations of Newco immediately prior to the Effective
Time shall continue as the officers of the Surviving
Corporation after the Effective Time in the same
capacity or capacities, until their successors are duly
elected and qualified.
2.4 CERTAIN INFORMATION WITH RESPECT TO THE CAPITAL STOCK OF
COMPANY, PARENT AND NEWCO. The respective designations and numbers of
outstanding shares and voting rights of each class of outstanding capital stock
of Company, Parent and Newco as of the date of this Agreement are as follows:
(i) the authorized, issued and outstanding capital stock of
Company is as set forth on Schedule 2.4(i);
(ii) the authorized, issued and outstanding capital stock of
Parent is as set forth in Schedule 2.4(ii); and
(iii) the authorized capital stock of Newco consists of 1,000
shares of common stock, par value $.01, of which 1,000
shares are issued and outstanding and entitled to one
vote per share on all matters submitted to stockholders.
2.5 EFFECT OF MERGER. Company shall be the Surviving Corporation of
the Merger and shall continue in existence under the laws of the State of
Oklahoma. The Merger will have the effects set forth in the OGCA. Without
limiting the generality of the foregoing, at the Effective Time, all the
properties, rights, privileges, powers and franchises of Company and Newco will
vest in the Surviving Corporation, and all debts, liabilities and duties of
Company and Newco shall become the debts, liabilities and duties of the
Surviving Corporation.
3. CONVERSION OF STOCK
The manner of converting the shares of (i) outstanding Company Stock and
(ii) the Newco Stock issued and outstanding immediately prior to the Effective
Time into (x) shares of Parent Stock and (y) shares of common stock of the
Surviving Corporation, shall be as follows:
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As of the Effective Time:
(i) all shares of Company Stock issued and outstanding
immediately prior to the Effective Time, by virtue of
the Merger and without any action on the part of the
holders thereof, automatically shall be deemed to
represent the right to receive, in aggregate, (i) -
shares of Parent Stock and (ii) $385,000 in cash, all as
more particularly set forth in Section 4.1;
(ii) all shares of Company Stock that are held by Company as
treasury stock shall be canceled and retired and no
Parent Stock, cash or other consideration shall be
delivered or paid in exchange therefor; and
(iii) each share of Newco Stock issued and outstanding
immediately prior to the Effective Time, by virtue of
the Merger and without any action on the part of the
holder thereof, automatically shall be deemed to
represent the right to receive one fully paid and
non-assessable share of common stock of the Surviving
Corporation, which shall constitute all of the issued
and outstanding shares of common stock of the Surviving
Corporation immediately after the Effective Time.
4. DELIVERY OF MERGER CONSIDERATION
4.1 EFFECTIVE TIME. At the Effective Time, Stockholders shall, upon
surrender of their certificates representing the shares of Company Stock set
forth below, receive the number of shares of Parent Stock and cash set forth
opposite their name below:
Number of Shares Number of Shares
Name of Stockholder of Company Stock of Parent Stock Cash
--------------------- ---------------- ---------------- -----
▇▇▇ Blood 480 - $ 231,000
▇▇▇▇▇ ▇▇▇▇▇▇ 280 0 134,750
▇▇▇ ▇▇▇▇▇▇▇ 40 0 19,250
---- -------- ---------
800 - 385,000
4.2 CERTIFICATES. Stockholders shall present to Parent at the
Closing all certificates representing any and all shares of Company Stock, duly
endorsed in blank by Stockholders, or accompanied by blank stock powers, and
with all necessary transfer tax and other revenue stamps, acquired at
Stockholders' expense, affixed and canceled.
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5. CLOSING
Prior to the taking of the actions described in clauses (i) and (ii)
below (the "Closing"), the parties to this Agreement shall take all actions
necessary to prepare to (i) effect the Merger (including the filing with the
appropriate state authorities of the Certificate of Merger which shall become
effective at the Effective Time) and (ii) effect the conversion of the shares
and the delivery of the Parent Stock referred to in Sections 3 and 4; provided,
that such actions shall not include the actual completion of the Merger or the
conversion of the shares and the delivery of the Parent Stock referred to in
Sections 3 and 4, each of which actions shall only be taken upon the Closing
Date as herein provided. The Closing shall take place on May 31, 1999, or such
other date as the parties hereto may designate (the "Closing Date"), at the
offices of McAfee & ▇▇▇▇ A Professional Corporation or at such place in Oklahoma
City, Oklahoma, as the parties may mutually agree. On the Closing Date (x) the
Certificate of Merger shall be or shall have been filed with the appropriate
state authorities after payment and delivery of all consideration due to
Stockholders at Closing under this Agreement so that they shall be or, as of
10:00 a.m. Central Standard Time on the Closing Date, become effective and the
Merger shall thereby be effected and (y) all transactions contemplated by this
Agreement, including the conversion of the shares and delivery of the Parent
Stock which the Stockholders shall be entitled to receive pursuant to the Merger
shall occur and be deemed to be completed.
6. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF COMPANY AND
STOCKHOLDERS
Company and each Stockholder, jointly and severally represent, warrant,
covenant and agree (i) that all of the following representations and warranties
in this Section 6 are materially true at the date of this Agreement and, subject
to Section 9.7, shall be materially true at the Closing Date and (ii) that all
of the covenants and agreements in this Section 6 shall be materially complied
with or performed at and as of the Closing Date. For purposes of this Section
6, the term "Company" shall mean and refer to Company and all of its
Subsidiaries, if any.
6.1 DUE ORGANIZATION. Company is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
incorporation, and is duly authorized and qualified to do business and is in
good standing under the laws of each jurisdiction where such qualification is
required except (i) as set forth on Schedule 6.1 or (ii) where the failure to be
so authorized or qualified would not have an adverse effect on the business,
operations, affairs, prospects, properties, assets or condition (financial or
otherwise), of Company taken as a whole (as used herein with respect to Company,
or with respect to any other Person, an "Adverse Effect"). Schedule 6.1 sets
forth the jurisdiction in which Company is incorporated and contains a list of
all such jurisdictions in which Company is authorized or qualified to do
business. True, complete and correct copies of the Charter Documents and
Bylaws, each as amended, of Company are all attached hereto as Schedule 6.1.
The stock records of Company, as heretofore made available to Parent, are
correct and complete. To the knowledge of Company and Stockholders, there are
no minutes in the possession of Company or Stockholders which have not been made
available to
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Parent, and all of such minutes are correct and complete.
6.2 AUTHORIZATION. Company has all requisite corporate power and
authority to enter into this Agreement and to perform its obligations
hereunder. The execution and delivery by Company of this Agreement and its
consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action of Company. This Agreement has
been duly executed and delivered by Company, and approved by all the
Stockholders of Company, and is a valid and binding obligation of Company,
enforceable against Company in accordance with its terms.
6.3 CAPITAL STOCK OF THE COMPANY. The authorized capital stock of
Company is as set forth in Schedule 2.4(i). All of the issued and outstanding
shares of the capital stock of Company are owned of record by Stockholders in
the amounts set forth in Section 4.1 and further, except as set forth on
Schedule 6.3, are owned free and clear of all mortgages, liens, security
interests, pledges, voting trusts, restrictions, encumbrances and claims of
every kind (collectively, the "Liens"). All of the issued and outstanding
shares of the capital stock of Company (i) have been duly authorized and validly
issued and (ii) are fully paid and nonassessable. Further, none of such shares
was issued in violation of the preemptive rights of any past or present
stockholder.
6.4 TRANSACTIONS IN CAPITAL STOCK. Except as set forth on Schedule
6.4, Company has not acquired any Company Stock since January 1, 1995. Except
as set forth on Schedule 6.4, (i) no option, warrant, call, conversion right or
commitment of any kind exists which obligates Company to issue any of its
authorized but unissued capital stock; and (ii) Company has no obligation
(contingent or otherwise) to purchase, redeem or otherwise acquire any of its
equity securities or any interests therein or to pay any dividend or make any
distribution in respect thereof. Schedule 6.4 also includes complete and
accurate copies of all stock option or stock purchase plans, including a list of
all outstanding options, warrants or other rights to acquire shares of Company
Stock.
6.5 SUBSIDIARIES. Except as set forth in Schedule 6.5, (i) Company
has no Subsidiaries, (ii) Company does not presently own, of record or
beneficially, or control, directly or indirectly, any capital stock, securities
convertible into capital stock or any other equity interest in any Person, and
(iii) Company is not directly or indirectly, a participant in any joint venture,
partnership or other non-corporate entity.
6.6 PREDECESSOR STATUS; ETC. Set forth in Schedule 6.6 is a listing
of all names of all predecessor companies of Company, including the names of any
entities acquired by Company (by stock purchase, merger or otherwise) or owned
by Company or from whom the Company previously acquired assets in excess of
$25,000, in any case, since January 1, 1995.
6.7 FINANCIAL STATEMENTS. Attached hereto as Schedule 6.7 are
copies of the following financial statements of Company (the "Company Financial
Statements"): Company's audited Balance Sheet as of December 31, 1998 ("December
Balance Sheet"), and audited Statements of Income, Retained Earnings and Cash
Flows and any related notes thereto for the year ended
-9-
December 31, 1998 (December 31, 1998 being hereinafter referred to as the
"Balance Sheet Date"). The audited Company Financial Statements have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods indicated (except as noted thereon or
on Schedule 6.7). Except as set forth on Schedule 6.7, the Balance Sheets
referred to in this Section 6.7 present fairly the financial position of Company
as of the dates indicated thereon, and the Statements of Income, Retained
Earnings and Cash Flows referred to in this Section 6.7 present fairly the
results of operations for the periods indicated thereon in accordance with
generally accepted accounting principles. Company Financial Statements at and
for the year ended December 31, 1998 have been examined and reported on by Saxon
& Knol P.C. All parties acknowledge that final schedules will be added after
the date of execution of this Agreement.
6.8 LIABILITIES AND OBLIGATIONS. Company has delivered to Parent a
list (which is set forth on Schedule 6.8) as of the Balance Sheet Date of
(i) all liabilities of Company of any kind, character or description, whether
accrued, absolute, secured or unsecured, contingent or otherwise, that are not
reflected on the December Balance Sheet or otherwise reflected in the Company
Financial Statements at the Balance Sheet Date, and (ii) all loan agreements,
indemnity or guaranty agreements, bonds, mortgages, liens, pledges or other
security agreements. Except as set forth on Schedule 6.8, since the Balance
Sheet Date Company has not incurred any liabilities of any kind, character and
description, whether accrued, absolute, secured or unsecured, contingent or
otherwise, other than liabilities incurred in the ordinary course of business.
Company has also disclosed to Parent on Schedule 6.8, in the case of those
contingent liabilities related to pending or threatened litigation or other
liabilities which are not fixed or otherwise accrued or reserved, the following
information:
(i) a summary description of the liability together with the
following:
(x) copies of all relevant documentation relating
thereto;
(y) amounts claimed and any other action or relief
sought; and
(z) name of claimant and all other parties to the
claim, suit or proceeding;
(ii) the name of each court or agency before which such
claim, suit or proceeding is pending; and
(iii) the date such claim, suit or proceeding was instituted.
6.9 ACCOUNTS AND NOTES RECEIVABLE. Company has delivered to Parent
an accurate list (which is set forth on Schedule 6.9) of the accounts and notes
receivable of Company, as of the most practicable date, including any such
amounts which are not reflected in the December Balance Sheet, and including
receivables from and advances to employees and Stockholders. Company shall
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also provide Parent an aging of all accounts and notes receivable showing
amounts due in 30 day aging categories, and such list and such aging report (the
"A/R Aging Report") as of the most practicable date. Except to the extent
reflected on Schedule 6.9 or as disclosed by Company to Parent in a writing
accompanying the A/R Aging Report, such accounts, notes and other receivables
are collectible in the amounts shown on Schedule 6.9, and shall be collectible
in the amounts shown on the A/R Aging Report, net of reserves reflected in the
December Balance Sheet and as of the date of the A/R Aging Report, respectively.
6.10 PERMITS AND INTANGIBLES. Company holds all licenses,
franchises, permits and other governmental authorizations the absence of any of
which could have an Adverse Effect on its business, and Company has delivered to
Parent an accurate list and summary description (which is set forth on Schedule
6.10) of all such licenses, franchises, permits and other governmental
authorizations, including titles, certificates, trademarks, trade names,
patents, patent applications and copyrights owned or held by Company (including
interests in software or other technology systems, programs and intellectual
property) (it being understood and agreed that a list of all environmental
permits and other environmental approvals is set forth on Schedule 6.11). To the
knowledge of Company, the licenses, franchises, permits and other governmental
authorizations listed on Schedules 6.10 and 6.11 are valid in all respects, and
Company has not received any notice that any governmental authority intends to
cancel, terminate or not renew any such license, franchise, permit or other
governmental authorization. Company has conducted and is conducting its business
in compliance with the requirements, standards, criteria and conditions set
forth in the licenses, franchises, permits and other governmental authorizations
listed on Schedules 6.10 and 6.11 and is not in violation of any of the
foregoing except where such non-compliance or violation would not have an
Adverse Effect on Company. Except as specifically provided in Schedule 6.10, the
transactions contemplated by this Agreement will not result in a default under
or a breach or violation of, or adversely affect the rights and benefits
afforded to Company (and to the Surviving Corporation after the Effective Time
of the Merger) by, any such license, franchise, permit or government
authorization.
6.11 ENVIRONMENTAL MATTERS. Except as set forth on Schedule 6.11,
(i) Company has substantially complied with and is in compliance with all
Federal, state, local and foreign statutes (civil and criminal), laws,
ordinances, regulations, rules, notices, permits, judgments, orders and decrees
applicable to it or any of its properties, assets, operations and businesses
relating to environmental protection (collectively "Environmental Laws")
including, without limitation, Environmental Laws relating to air, water, land
and the generation, storage, use, handling, transportation, treatment or
disposal of Hazardous Wastes and Hazardous Substances including petroleum and
petroleum products (as such terms are defined in any applicable Environmental
Law); (ii) Company has obtained and substantially adhered to all necessary
permits and other approvals necessary to treat, transport, store, dispose of and
otherwise handle Hazardous Wastes and Hazardous Substances, a list of all of
which permits and approvals is set forth on Schedule 6.11, and has reported to
the appropriate authorities, to the extent required by all Environmental Laws,
all past and present sites owned and operated by Company where Hazardous Wastes
or Hazardous Substances have been treated, stored, disposed of or otherwise
handled; (iii) there have
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been no releases or threats of releases (as defined in Environmental Laws) at,
from, in or on any property owned or operated by Company except as permitted by
Environmental Laws; (iv) to the knowledge of Company, no on-site or off-site
location to which Company has transported or disposed of Hazardous Wastes and
Hazardous Substances or arranged for the transportation of Hazardous Wastes and
Hazardous Substances, which site is the subject of any Federal, state, local or
foreign enforcement action or any other investigation which could lead to any
claim against Company, Parent or Newco for any clean-up cost, remedial work,
damage to natural resources, property damage or personal injury, including, but
not limited to, any claim under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended; and (v) Company has no
contingent liability in connection with any release of any Hazardous Waste or
Hazardous Substance into the environment.
6.12 PERSONAL PROPERTY. Company has delivered to Parent an accurate
list (which is set forth on Schedule 6.12) of (i) all personal property included
(or that will be included) in "depreciable plant, property and equipment" on the
balance sheet of Company, (ii) all other personal property owned by Company with
a value in excess of $5,000 (x) as of the Balance Sheet Date and (y) acquired
since the Balance Sheet Date and (iii) all written Leases in respect of personal
property, including, in the case of each of (i), (ii) and (iii), true, complete
and correct copies of all such Leases. Except as set forth on Schedule 6.12,
(a) all personal property used by Company in its business is either owned by
Company or leased by Company pursuant to a Lease included on Schedule 6.12,
(b) all of the personal property listed on Schedule 6.12 is in good working
order and condition, ordinary wear and tear excepted and (c) all leases and
agreements included on Schedule 6.12 are in full force and effect in all
respects and to the knowledge of Company constitute valid and binding agreements
of the parties (and their successors) thereto in accordance with their
respective terms.
6.13 SIGNIFICANT CUSTOMERS; MATERIAL CONTRACTS AND COMMITMENTS.
Company has delivered to Parent an accurate list (which is set forth on Schedule
6.13) of all significant customers, or persons or entities that are sources of a
significant number of customers, it being understood and agreed that a
"significant customer," for purposes of this Section 6.13, means a customer (or
person or entity) (i) representing 5% or more of Company's annual revenues as of
the Balance Sheet Date or (ii) reasonably expected to represent 5% or more of
Company=s revenues during the twelve-month period ending December 31, 1998.
Except to the extent set forth on Schedule 6.13, none of Company's significant
customers (or persons or entities that are sources of a significant number of
customers) have canceled or substantially reduced or, to the knowledge of
Company, are currently attempting or threatening to cancel a contract or
substantially reduce utilization of the services provided by Company.
Company has listed on Schedule 6.13 all material contracts, commitments
and similar agreements to which the Company is a party or by which it or any of
its properties are bound (including, but not limited to, contracts with
significant customers, joint venture or partnership agreements, contracts with
any labor organizations, strategic alliances and options to purchase land),
other than agreements listed on Schedule 6.8, 6.12 or 6.14, (x) in existence as
of the Balance
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Sheet Date and (y) entered into since the Balance Sheet Date, and in each case
has delivered true, complete and correct copies of such agreements to Parent.
Company has complied with all commitments and obligations pertaining to it, and
is not in default under any contract or agreement listed on Schedule 6.13 and no
notice of default under any such contract or agreement has been received.
Company has also indicated on Schedule 6.13 a summary description of all plans
or projects involving the acquisition of any personal property, business or
assets requiring, in any event, the payment of more than $5,000 by Company.
6.14 REAL PROPERTY. Schedule 6.14 includes a list of all real
property owned or leased by Company (i) as of the Balance Sheet Date and
(ii) acquired since the Balance Sheet Date, and all other real property, if any,
used by Company in the conduct of its business. Company has good and insurable
title to the real property owned by it, including those reflected on Schedule
6.14, subject to no Liens except for:
(w) Liens reflected on Schedules 6.8 or 6.13 as securing
specified liabilities (with respect to which no default
exists);
(x) Liens for current taxes not yet payable and assessments
not in default;
(y) easements for utilities serving the property only; and
(z) easements, covenants and restrictions and other
exceptions to title shown of record in the office of the
County Clerks in which the properties, assets and
leasehold estates are located which do not adversely
affect in any respect the current use of the property.
Schedule 6.14 contains, without limitation, (1) true, complete and correct
copies of all title reports and title insurance policies currently in possession
of Company with respect to real property owned by Company, and (2) true,
complete and correct copies of all Leases and agreements in respect of such real
property leased by Company (which copies are attached to Schedule 6.14).
Except as set forth on Schedule 6.14, all of such Leases included on
Schedule 6.14 are in full force and effect in all respects and to the knowledge
of Company constitute valid and binding agreements of the parties (and their
successors) thereto in accordance with their respective terms.
6.15 INSURANCE. Company has delivered to Parent, as set forth on and
attached to Schedule 6.15, (i) an accurate list as of the Balance Sheet Date of
all insurance policies carried by Company, (ii) an accurate list of all
insurance loss runs on workers compensation claims received for the past three
policy years and (iii) true, complete and correct copies of all insurance
policies currently in effect. Such insurance policies evidence all of the
insurance that Company is required to carry pursuant to all of its contracts and
other agreements and pursuant to all applicable laws or that management of
Company otherwise believes is prudent and appropriate to insure against the
-13-
risks inherent in Company's business in accordance with industry practice. All
of such insurance policies are currently in full force and effect in all
respects and shall remain in full force and effect in all respects through the
Closing Date. Except as otherwise specified in Schedule 6.15, no insurance
carried by Company has been canceled by the insurer and the Company has never
been denied coverage.
6.16 COMPENSATION; ORGANIZED LABOR MATTERS. Company has delivered
to Parent an accurate list (which is set forth on Schedule 6.16) showing all
officers, directors and other key employees of Company and the rate of
compensation (and the portions thereof attributable to salary, bonus and other
compensation, respectively) of each of such persons as of (i) the Balance Sheet
Date and (ii) the date of this Agreement. Since the Balance Sheet Date, there
have been no increases in the compensation payable or any special bonuses to any
officer, director, key employee or other employee, except ordinary salary
increases implemented on a basis consistent with past practices.
Except as set forth on Schedule 6.16, (w) Company is not bound by or
subject to (and none of its respective assets or properties is bound by or
subject to) any arrangement with any labor union, (x) no employees of Company
are represented by any labor union or covered by any collective bargaining
agreement, (y) to the knowledge of Company, no campaign to establish such
representation is in progress and (z) there is no pending or, to the best of
Company's knowledge, threatened labor dispute involving Company and any group of
its employees nor has Company experienced any labor interruption over the past
three years.
6.17 EMPLOYEE PLANS. The Stockholders have delivered to Parent an
accurate list (which is set forth on Schedule 6.17) showing all employee benefit
plans of Company, including all employment agreements and other agreements or
arrangements containing "golden parachute" or other similar provisions, and
deferred compensation agreements, together with true, complete and correct
copies of such plans, agreements and any trusts related thereto, and
classifications of employees covered thereby as of the Balance Sheet Date.
Except for the employee benefit plans, if any, described on Schedule 6.17, the
Company does not sponsor, maintain or contribute to any plan program, fund or
arrangement that constitutes an "employee pension benefit plan," and Company
does not have any obligation to contribute to or accrue or pay any benefits
under any deferred compensation or retirement funding arrangement on behalf of
any employee or employees (such as, for example, and without limitation, any
individual retirement account or annuity, any "excess benefit plan" (within the
meaning of Section 3(36) of the Employee Retirement Income Security Act of 1974,
as amended "ERISA") or any non-qualified deferred compensation arrangement).
For the purposes of this Agreement, the term "employee pension benefit plan"
shall have the same meaning as is given that term in Section 3(2) of ERISA.
Company has not sponsored, maintained or contributed to any employee pension
benefit plan other than the plans set forth on Schedule 6.17, nor is the Company
required to contribute to any retirement plan pursuant to the provisions of any
collective bargaining agreement establishing the terms and conditions or
employment of any of Company's employees.
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Company is not now, nor as a result of its past activities can it
reasonably be expected to become, liable to the Pension Benefit Guaranty
Corporation (other than for premium payments) or to any multiemployer employee
pension benefit plan under the provisions of Title IV of ERISA.
All employee benefit plans listed on Schedule 6.17 and the
administration thereof are in substantial compliance with their terms and all
applicable provisions of ERISA and the regulations issued thereunder, as well as
with all other applicable Federal, state and local statutes, ordinances and
regulations.
All accrued contribution obligations of Company or any Subsidiary with
respect to any plan listed on Schedule 6.17 have either been fulfilled in their
entirety or are fully reflected on the balance sheet of Company as of the
Balance Sheet Date.
6.18 COMPLIANCE WITH ERISA. All employee benefit plans listed on
Schedule 6.17 that are intended to qualify (the "Qualified Plans") under Section
401(a) of the Code are, and have been so qualified and have been determined by
the Internal Revenue Service to be so qualified, and copies of such
determination letters are included as part of Schedule 6.17. Except as
disclosed on Schedule 6.17, all reports and other documents required to be filed
with any governmental agency or distributed to plan participants or
beneficiaries (including, but not limited to, actuarial reports, audits or
Returns) have been timely filed or distributed, and copies thereof are included
as part of Schedule 6.17. Neither Stockholders, any such plan listed in
Schedule 6.17, nor Company has engaged in any transaction prohibited under the
provisions of Section 4975 of the Code or Section 406 of ERISA. No employee
benefit plan listed on Schedule 6.17 has incurred an accumulated funding
deficiency, as defined in Section 412(a) of the Code and Section 302(1) of
ERISA; and Company has not incurred (i) any liability for excise tax or penalty
payable to the Internal Revenue Service or (ii) any liability to the Pension
Benefit Guaranty Corporation (other than for premium payments). In addition:
(v) there have been no terminations or discontinuance of
contributions to any Qualified Plan intended to qualify
under Section 401(a) of the Code without notice to and
approval by the Internal Revenue Service;
(w) no plan listed on Schedule 6.17 that is subject to the
provisions of Title IV of ERISA has been terminated;
(x) there have been no "reportable events" (as that phrase
is defined in Section 4043 of ERISA) with respect to
employee benefit plans listed in Schedule 6.17;
(y) Company has not incurred liability under Section 4062 of
ERISA; and
(z) except as set forth in Schedule 6.17, no circumstances
exist pursuant to which Company could reasonably be
expected to have any direct or indirect
-15-
liability whatsoever (including, but not limited to, any
liability to any multiemployer plan or the Pension
Benefit Guaranty Corporation under Title IV of ERISA or
to the Internal Revenue Service for any excise tax or
penalty, or being subject to any statutory Lien to
secure payment of any such liability) with respect to
any plan now or heretofore maintained or contributed to
by any entity other than Company that is, or at any time
was, a member of a "controlled group" (as defined in
Section 412(n)(6)(B) of the Code) that includes Company
("Controlled Group").
The transactions contemplated by this Agreement together with any amounts paid
or payable by Company or any member of the Controlled Group have not resulted in
and will not result in payments to "disqualified individuals" (as defined in
Section 280G(c) of the Code) of Company or any member of the Controlled Group
which, individually or in the aggregate will constitute "excess parachute
payments" (as defined in Section 280G(b) of the Code) resulting in the
imposition of the excise tax under Section 4999 of the Code or the disallowance
of deductions under Section 280G of the Code.
6.19 CONFORMITY WITH LAW; LITIGATION. Except to the extent set forth
on Schedule 6.19 or 6.11, Company is not in violation of any law or regulation
or any order of any court or Federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality having
jurisdiction over Company which would have an Adverse Effect; and except to the
extent set forth on Schedule 6.8 or 6.11, there are no claims, actions, suits or
proceedings, commenced or, to the knowledge of Company, threatened, against or
affecting Company, at law or in equity, or before or by any Federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over Company and no notice of any claim,
action, suit or proceeding, whether pending or threatened, has been received by
Company or any Stockholder. Company has conducted and is conducting its business
in substantial compliance with the requirements, standards, criteria and
conditions set forth in applicable Federal, state and local statutes,
ordinances, permits, licenses, orders, approvals, variances, rules and
regulations, including all such permits, licenses, orders and other governmental
approvals set forth on Schedules 6.10 and 6.11, and is not in violation of any
of the foregoing which might have an Adverse Effect.
-16-
6.20 TAX MATTERS.
(i) Company is currently taxed under Subchapter S of the
Code, and Company has filed all Tax Returns that it was
required to file. All such Tax Returns filed by Company
were correct and complete in all respects. All Taxes
owed by Company (whether or not shown on any Tax Return)
have been paid or reserved for on its books. Except as
set forth on Schedule 6.20, Company is not currently the
beneficiary of any extension of time within which to
file any Tax Return. Since January 1, 1995, no claim
with respect to Company has been made by an authority in
a jurisdiction where Company does not file Tax Returns
that it is or may be subject to taxation by that
jurisdiction. There is no Lien affecting any of
Company's assets that arose in connection with any
failure or alleged failure to pay any Tax.
(ii) Company has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid
or owing to any employee, independent contractor,
creditor, shareholder or other party.
(iii) Except as set forth in Schedule 6.8, Company does not
expect any authority to assess any amount of additional
Taxes for any period for which Tax Returns have been
filed. There is no dispute or claim concerning any Tax
liability of Company either claimed or raised by any
authority in writing or as to which Company has
knowledge based upon direct inquiry by any agent of such
authority. Schedule 6.20(iii) lists all Tax Returns
relating to income Tax of Company for taxable periods
ended on or after January 1, 1994, indicates those
Returns of which Company is aware that have been audited
and indicates those Returns that currently are the
subject of audit. Company has provided Parent access to
correct and complete copies of all Tax Returns,
examination reports and statements of deficiencies
assessed against or agreed to by Company for any taxable
period ended on or after January 1, 1994.
(iv) Except as set forth on Schedule 6.20(iv), Company has
not waived any statute of limitations in respect of
Taxes or agreed to any extension of time with respect to
a Tax assessment or deficiency.
(v) Company has not filed a consent under Section 341(f) of
the Code concerning collapsible corporations. Company
has not made any payments, is not obligated to make any
payments and is not a party to any agreement that under
certain circumstances could obligate it to make any
payments that will not be fully deductible under Section
280G of the Code.
(vi) Company has not received a ruling from any taxing
authority or entered into
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any agreement regarding Taxes with any taxing authority
that would, individually or in the aggregate, apply to
the Surviving Corporation after the Closing Date.
6.21 NO VIOLATIONS. Company is not in violation of its Charter
Documents. Neither Company nor, to the knowledge of the Company, any other party
thereto, is in default under any (i) Lease, instrument, agreement, license, or
permit set forth on Schedule 6.10, 6.11, 6.12, 6.13 or 6.14, or (ii) any other
agreement to which it is a party or by which its properties are bound
(collectively, the "Documents"); and, except as set forth in Schedule 6.21,
(i) the rights and benefits of Company under the Documents will not be adversely
affected by the transactions contemplated hereby and (ii) the execution of this
Agreement and the performance of the obligations hereunder and the consummation
of the transactions contemplated hereby will not result in any violation or
breach or constitute a default under, any of the terms or provisions of the
Documents or the Charter Documents. Except as set forth on Schedule 6.21, none
of the Documents requires notice to, or the consent or approval of, any
governmental agency or other third party with respect to any of the transactions
contemplated hereby in order to remain in full force and effect in all respects,
and consummation of the transactions contemplated hereby will not give rise to
any right to termination, cancellation or acceleration or loss of any right or
benefit. Except as set forth on Schedule 6.21, to the knowledge of Company none
of the Documents prohibits the use or publication by Company, Parent or Newco of
the name of any other party to such Document, and none of the Documents
prohibits or restricts Company from freely providing services to any other
customer or potential customer of Company, Parent, Newco or any other Founding
Company.
6.22 ABSENCE OF CHANGES. Since the Balance Sheet Date, except as
set forth on Schedule 6.22, there has not been:
(i) any adverse change in the financial condition, assets,
liabilities (contingent or otherwise), income or
business of Company taken as a whole;
(ii) any damage, destruction or loss (whether or not covered
by insurance) adversely affecting the properties or
business of Company;
(iii) any change in the authorized capital of Company or its
outstanding securities or any change in its ownership
interests or any grant of any options, warrants, calls,
conversion rights or commitments;
(iv) any declaration or payment of any dividend or
distribution in respect of the capital stock or any
direct or indirect redemption, purchase or other
acquisition of any of the capital stock of Company;
(v) any increase in the compensation, bonus, sales
commissions or fee arrangement payable or to become
payable by Company to any of its officers, directors,
stockholders, employees, consultants or agents, except
for
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ordinary and customary bonuses and salary increases for
employees in accordance with past practice;
(vi) any work interruptions, labor grievances or labor claims
filed, or any other similar labor event or condition of
any character, adversely affecting the business of
Company;
(vii) any sale or transfer, or any agreement to sell or
transfer, any assets, property or rights of Company to
any person, including, without limitation, Stockholders
and their Affiliates outside the ordinary course of
business of Company;
(viii) any cancellation, or agreement to cancel, any
indebtedness or other obligation owing to Company,
including without limitation any indebtedness or
obligation of any Stockholder or any Affiliate thereof
outside the ordinary course of business of Company;
(ix) any plan, agreement or arrangement granting any
preferential right to purchase or acquire any interest
in any of the assets, property or rights of Company or
requiring consent of any party to the transfer and
assignment of any such assets, property or rights;
(x) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, right
or asset outside of the ordinary course of Company's
business;
(xi) any waiver of any rights or claims of Company;
(xii) any breach, amendment or termination of any contract,
agreement, license, permit or other right to which
Company is a party;
(xiii) any transaction by Company outside the ordinary course
of its business;
(xiv) any cancellation or termination of a contract with a
customer or client prior to the scheduled termination
date; or
(xv) any other distribution of property or assets by Company
outside the ordinary course of Company's business.
6.23 DEPOSIT ACCOUNTS; POWERS OF ATTORNEY. Company has delivered to
Parent an accurate list (which is set forth on Schedule 6.23) as of the date of
the Agreement setting forth:
(i) the name of each financial institution in which Company
has accounts or
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safe deposit boxes;
(ii) the names in which the accounts or boxes are held;
(iii) the type of account and account number; and
(iv) the name of each person authorized to draw thereon or
have access thereto.
Schedule 6.23 also sets forth the name of each person, corporation, firm or
other entity holding a general or special power of attorney from Company and a
description of the terms of such power.
6.24 RELATIONS WITH GOVERNMENTS. Except for political contributions
made in a lawful manner which, in the aggregate, do not exceed $5,000 per year
for each year in which any Stockholder has been a stockholder of Company,
Company has not made, offered or agreed to offer anything of value to any
governmental official, political party or candidate for government office nor
has it otherwise taken any action which would cause Company to be in violation
of the Foreign Corrupt Practices Act of 1977, as amended, or any law of similar
effect. If political contributions made by Company have exceeded $5,000 per year
for each year in which any Stockholder has been a stockholder of Company, each
contribution shall be described on Schedule 6.24.
6.25 DISCLOSURE. This Agreement, including the Schedules and Annexes
hereto, together with all other documents and information made available to
Parent and its representatives in writing pursuant hereto, present fairly the
business and operations of Company for the time periods with respect to which
such information was requested. Company's rights under the documents delivered
pursuant hereto would not be adversely affected by, and no statement made herein
would be rendered untrue in any respect by, any other document to which Company
is a party, or to which its properties are subject, or by any other fact or
circumstance regarding Company (which fact or circumstance was, or should
reasonably, after due inquiry, have been known to Company) that is not disclosed
pursuant hereto or thereto.
6.26 PROHIBITED ACTIVITIES. Except as set forth on Schedule 6.26,
Company has not, between the Balance Sheet Date and the date of this Agreement,
taken any of the actions set forth in Section 9.3 ("Prohibited Activities").
7. ADDITIONAL REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF
STOCKHOLDERS
Each Stockholder further, severally and not jointly, represents,
warrants, covenants and agrees (i) that the representations and warranties set
forth below are true as of the date of this Agreement and, subject to Section
9.7, shall be true at the Closing Date, (ii) that all of the covenants and
agreements in this Section 7 shall be complied with or performed at and as of
the Closing Date and (iii) that by executing this Agreement each Stockholder
shall be deemed to have approved the terms of the Merger as required by the
OGCA.
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7.1 AUTHORITY. Each Stockholder has the full legal right, power and
authority to enter into this Agreement. This Agreement has been executed and
delivered by each Stockholder and constitutes a legal, valid and binding
obligation of such Stockholders enforceable in accordance with its terms.
7.2 PREEMPTIVE RIGHTS. Each Stockholder does not have, or hereby
waives, any preemptive or other right to acquire shares of Company Stock or
Parent Stock that such Stockholder has or may have had, other than rights of any
Stockholder to acquire Parent Stock pursuant to (i) this Agreement or (ii) any
option granted by Parent.
8. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF PARENT AND
NEWCO
Parent and Newco, jointly and severally, represent, warrant, covenant
and agree (i) that all of the following representations and warranties in this
Section 8 are materially true at the date of this Agreement and, subject to
Section 9.7, shall be materially true at the Closing Date and (ii) that all of
the covenants and agreements in this Section 8 shall be materially complied with
or performed at and as of the Closing Date.
8.1 DUE ORGANIZATION. Parent and Newco are each corporations duly
organized, validly existing and in good standing under the laws of the State of
Oklahoma, and are duly authorized and qualified to do business under all
applicable laws, regulations, ordinances and orders of public authorities to
carry on their respective business in the places and in the manner as now
conducted, except where the failure to be so authorized or qualified would not
have an Adverse Effect. True, complete and correct copies of the Charter
Documents and Bylaws, each as amended, of Parent and Newco (the "Parent Charter
Documents") are all attached hereto as Schedule 8.1.
8.2 AUTHORIZATION. Parent and Newco each has all requisite
corporate power and authority to enter into this Agreement and to perform its
obligations hereunder. The execution and delivery of this Agreement by Parent
and Newco and their consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action of Parent and Newco.
This Agreement has been duly executed and delivered by Parent and Newco and is a
valid and binding obligation of Parent and Newco, enforceable against each of
them in accordance with its terms.
8.3 CAPITAL STOCK. The authorized capital stock of Parent and Newco
is as set forth in Schedule 2.4(ii) and Section 2.4(iii), respectively. All of
the issued and outstanding shares of the capital stock of Parent and Newco
(i) have been duly authorized and validly issued, (ii) are fully paid and
nonassessable, (iii) are owned of record and beneficially by the persons set
forth on Schedule 2.4(ii) and Parent, respectively, and (iv) were offered,
issued, sold and delivered by Parent and Newco in compliance with all applicable
state and Federal laws concerning the offer, issuance, sale and delivery of
securities. Further, none of such shares was issued in violation of the
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preemptive rights of any past or present stockholder of Parent or Newco.
8.4 TRANSACTIONS IN CAPITAL STOCK. Except as set forth on Schedule
2.4(ii), (i) no option, warrant, call, conversion right or commitment of any
kind exists which obligates Parent or Newco to issue any of its authorized but
unissued capital stock and (ii) neither Parent nor Newco has any obligation
(contingent or otherwise) to purchase, redeem or otherwise acquire any of its
equity securities or any interests therein or to pay any dividend or make any
distribution in respect thereof. Schedule 2.4(ii) also includes complete and
accurate copies of all stock option or stock purchase plans, including a list,
accurate as of the date hereof, of all outstanding options, warrants or other
rights to acquire shares of capital stock of Parent.
8.5 SUBSIDIARIES. Newco has no Subsidiaries. Parent has no
Subsidiaries except for Newco and each of the other companies identified on
Schedule 8.5. Except as set forth in the preceding sentence, neither Parent nor
Newco presently owns, of record or beneficially, or controls, directly or
indirectly, any capital stock, securities convertible into capital stock or any
other equity interest in a Person nor is Parent or Newco, directly or
indirectly, a participant in any joint venture, partnership or other
non-corporation entity.
8.6 LIABILITIES AND OBLIGATIONS. Parent and Newco have no
liabilities, contingent or otherwise, except as set forth in or contemplated by
this Agreement or agreements similar to this Agreement with the Founding
Companies and except for fees incurred in connection with the transactions
contemplated hereby and thereby.
8.7 CONFORMITY WITH LAW; LITIGATION. Neither Parent nor Newco is in
violation of any law or regulation or any order of any court or Federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over either of them which would have a
Adverse Effect; and there are no claims, actions, suits or proceedings, pending
or, to the knowledge of Parent or Newco, threatened, against or affecting Parent
or Newco, at law or in equity, or before or by any Federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over either of them and no notice of any
claim, action, suit or proceeding, whether pending or threatened, has been
received. Parent and Newco have no operations.
8.8 NO VIOLATIONS. Neither Parent nor Newco is in violation of any
Parent Charter Document. None of Parent, Newco, or, to the knowledge of Parent
and Newco, any other party thereto, is in default under any lease, instrument,
agreement, license, or permit to which Parent or Newco is a party, or by which
Parent or Newco, or any of their respective properties, are bound (collectively,
the "Parent Documents"); and (i) the rights and benefits of Parent and Newco
under the Parent Documents will not be adversely affected by the transactions
contemplated hereby and (ii) the execution of this Agreement and the performance
of the obligations hereunder and the consummation of the transactions
contemplated hereby will not result in any violation or breach or constitute a
default under, any of the terms or provisions of the Parent Documents or the
Parent Charter Documents. Except as set forth on Schedule 8.8, none of the
Parent Documents requires
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notice to, or the consent or approval of, any governmental agency or
other third party with respect to any of the transactions contemplated hereby in
order to remain in full force and effect, and consummation of the transactions
contemplated hereby will not give rise to any right to termination, cancellation
or acceleration or loss of any right or benefit.
8.9 PARENT SECURITIES. The shares of Parent Stock deliverable to
the Stockholders pursuant to this Agreement will have been duly authorized prior
to the Closing, and upon consummation of the Merger in accordance with this
Agreement, will be validly issued, fully paid and nonassessable.
8.10 BUSINESS; REAL PROPERTY; AGREEMENTS. Parent was formed in
September 1998. Neither Parent nor Newco has conducted any business since the
date of its inception, except raising capital and in connection with this
Agreement and similar agreements with the Founding Companies. Except as
disclosed on Schedule 8.10, neither Parent nor Newco owns or has at any time
owned any real property or any personal property or is a party to any other
agreement.
9. OTHER COVENANTS PRIOR TO CLOSING
9.1 ACCESS AND COOPERATION; DUE DILIGENCE; AUDITS.
(i) Between the date of this Agreement and the Closing Date,
Company will afford to the officers and authorized
representatives of Parent access to all of Company's
sites, properties, books and records and will furnish
Parent with such additional financial and operating data
and other information as to the business and properties
of Company as Parent may from time to time reasonably
request. Company will cooperate with Parent, its
representatives, auditors and counsel in the preparation
of any documents or other material that may be required
in connection with any documents or materials required
by this Agreement. Parent and Newco will treat all
information obtained in connection with the negotiation
and performance of this Agreement as confidential in
accordance with the provisions of Section 16.
(ii) Between the date of this Agreement and the Closing,
Parent will afford to the officers and authorized
representatives of Company and Stockholders access to
all of the sites, properties, books and records of
Parent, Newco and the other companies listed on Schedule
9.1(ii) ("Founding Companies") and will furnish Company
and Stockholders with such additional financial and
operating data and other information as to the business
and properties of Parent, Newco and the Founding
Companies as Company and Stockholders may from time to
time reasonably request. Parent and Newco will
cooperate with Company and Stockholders'
representatives, auditors and counsel in the preparation
of any documents or other material which may be required
in connection with any documents or materials required
by this Agreement.
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Company and Stockholders will cause all information
obtained in connection with the negotiation and
performance of this Agreement to be treated as
confidential in accordance with the provisions of
Section 16.
9.2 CONDUCT OF BUSINESS PENDING CLOSING. Unless otherwise approved
in writing by Parent, between the date of this Agreement and the Closing Date,
Company will:
(i) carry on its business in substantially the same manner
as it has heretofore and not introduce any material new
method of management, operation or accounting;
(ii) maintain its properties and facilities, including those
held under lease, in as good working order and condition
as at present, ordinary wear and tear excepted;
(iii) perform in all material respects all of its obligations
under agreements relating to or affecting its respective
assets, properties or rights;
(iv) keep in full force and effect in all material respects
the present insurance policies or other comparable
insurance coverage;
(v) use its reasonable best efforts to maintain and preserve
its business organization intact, retain its respective
present key employees and maintain its respective
relationships with suppliers, customers and others
having business relations with it;
(vi) maintain material compliance with all material permits,
laws, rules and regulations, consent orders, and all
other orders of applicable courts, regulatory agencies
and similar governmental authorities;
(vii) maintain present debt instruments and Leases and not
enter into new or amended debt instruments or Leases;
and
(viii) maintain or reduce present salaries and commission
levels for all officers, directors, employees and agents
except for ordinary and customary bonus and salary
increases for employees in accordance with past
practices.
9.3 PROHIBITED ACTIVITIES BY THE COMPANY. Between the date of this
Agreement and the Closing Date, Company will not, without prior written consent
of Parent:
(i) make any change in its Charter Documents or Bylaws;
(ii) issue any securities, options, warrants, calls,
conversion rights or
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commitments relating to its securities of any kind other
than in connection with the exercise of options or
warrants listed in Schedule 6.4;
(iii) declare or pay any dividend, or make any distribution in
respect of Company Stock whether now or hereafter
outstanding, or purchase, redeem or otherwise acquire or
retire for value any shares of Company Stock;
(iv) enter into any contract or commitment or incur or agree
to incur any liability or make any capital expenditures,
except if it is in the normal course of business
(consistent with past practice), in connection with the
transactions contemplated by this Agreement, or involves
an amount not in excess of $5,000;
(v) create, assume or permit to exist any Lien upon any
asset or property whether now owned or hereafter
acquired, except (x) with respect to purchase money
Liens incurred in connection with the acquisition of
equipment with an aggregate cost not in excess of $5,000
as necessary or desirable for the conduct of its
business, (y) (1) Liens for Taxes either not yet due or
being contested in good faith and by appropriate
proceedings (and for which contested Taxes adequate
reserves have been established and are being maintained)
or (2) materialmen's, mechanic's, worker's, repairmen's,
employee's or other like Liens arising in the ordinary
course of business, or (3) Liens set forth on Schedule
6.8 or 6.13;
(vi) sell, assign, lease or otherwise transfer or dispose of
any property or equipment except in the normal course of
business;
(vii) negotiate for the acquisition of any business or the
start-up of any new business;
(viii) merge or consolidate or agree to merge or consolidate
with or into any other corporation;
(ix) waive any material right or claim; provided that it may
negotiate and adjust bills in the course of good faith
disputes with customers in a manner consistent with past
practice, provided, further, that such adjustments shall
not be deemed to be included in Schedule 6.9 unless
specifically listed thereon;
(x) commit a material breach or amend or terminate any
material agreement, permit, license or other right; or
(xi) enter into any other transaction outside the ordinary
course of its business or
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prohibited hereunder.
9.4 EXCLUSIVITY. Neither any Stockholder, nor Company, nor any
agent, officer, director, trustee or any representative of any of the foregoing
will, during the period commencing on the date of this Agreement and ending with
the earlier to occur of the Closing Date or the termination of this Agreement in
accordance with its terms, directly/or indirectly:
(i) solicit or initiate the submission of proposals or
offers from any person for,
(ii) participate in any discussions pertaining to, or
(iii) furnish any information to any person other than Parent
or its authorized agents relating to,
any acquisition or purchase of all or a material amount of the assets of, or any
equity interest in, Company, or merger, consolidation or business combination of
Company.
9.5 AGREEMENTS. Stockholders and Company shall terminate (i) any
stockholder agreements, voting agreements, voting trusts, options, warrants and
employment agreements between the Company and any employee listed on Schedule
6.16 and (ii) any existing agreement between Company and any Stockholder, on or
prior to the Closing Date, except as otherwise set forth on Schedule 9.5.
Copies of such termination agreements are listed on Schedule 9.5 and copies
thereof are attached thereto.
9.6 NOTIFICATION OF CERTAIN MATTERS. Stockholders and Company shall
give prompt notice to Parent of (i) the occurrence or non-occurrence of any
event the occurrence or non-occurrence of which would likely cause any
representation or warranty of Company or Stockholders contained herein to be
untrue or inaccurate in any respect at or prior to the Closing Date and (ii) any
failure of any Stockholder or Company to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by such Person hereunder
as of such date. Parent and Newco shall give prompt notice to the Company of
(i) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would likely cause any representation or warranty of
Parent or Newco contained herein to be untrue or inaccurate in any respect at or
prior to the Closing Date and (ii) any failure of Parent or Newco to comply with
or satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder as of such date. The delivery of any notice pursuant to this
Section 9.6 shall not be deemed to (i) modify the representations or warranties
hereunder of the party delivering such notice, which modification may only be
made pursuant to Section 9.7, (ii) modify the conditions set forth in Sections
10 and 11, or (iii) limit or otherwise affect the remedies available hereunder
to the party receiving such notice.
9.7 AMENDMENT OF SCHEDULES. Each party hereto agrees that, with
respect to the representations and warranties of such party contained in this
Agreement, such party shall have the continuing obligation until 11:59 p.m.
March 31, 1999 to supplement or amend promptly the
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Schedules with respect to any matter hereafter arising or discovered which, if
existing or known at the date of this Agreement, would have been required to be
set forth or described in the Schedules. Notwithstanding the foregoing
sentence, no amendment or supplement to a Schedule prepared by Company or Parent
that constitutes or reflects an event or occurrence that would have a Adverse
Effect may be made unless the parties not making the amendment or supplement
consent to such amendment or supplement. For all purposes of this Agreement,
including without limitation for purposes of determining whether the conditions
set forth in Sections 10.1 and 11.1 have been fulfilled, the Schedules shall be
deemed to be the Schedules as amended or supplemented pursuant to this Section
9.7. Except as otherwise specified in Section 16.3, no party to this Agreement
shall be liable to any other party if this Agreement shall be terminated
pursuant to the provisions of Section 14.1(iv). Neither the entry by Parent
into any other agreement, such as this Agreement, after the date hereof for the
acquisition of one or more companies nor the performance by Parent of its
obligations thereunder shall be deemed to require the amendment to or a
supplementation of any Schedule hereto.
9.8 FURTHER ASSURANCE. The parties hereto agree to execute and
deliver, or cause to be executed and delivered, such further instruments or
documents or take such other action as may be reasonably necessary or convenient
to carry out the transactions contemplated by this Agreement.
10. CONDITIONS PRECEDENT TO OBLIGATIONS OF STOCKHOLDERS AND COMPANY
The obligations of Stockholders and Company with respect to actions to
be taken on the Closing Date are subject to the satisfaction or waiver on or
prior to the Closing Date of all of the following conditions.
10.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS.
All representations and warranties of Parent and Newco contained in this
Agreement shall be true and correct as of the Closing Date with the same effect
as though such representations and warranties had been made on and as of such
date; all of the terms, covenants and conditions of this Agreement to be
complied with or performed by Parent and Newco on or before the Closing Date
shall have been duly complied with or performed; and a certificate to the
foregoing effect dated the Closing Date, and signed by the President or any Vice
President of Parent and of Newco shall have been delivered to Company.
10.2 NO LITIGATION. No action or proceeding before a court or any
other governmental agency or body shall have been instituted or threatened to
restrain or prohibit the Merger and no governmental agency or body shall have
taken any other action or made any request of Company as a result of which the
management of Company deems it inadvisable to proceed with the transactions
hereunder.
10.3 CONSENTS AND APPROVALS. All necessary consents of and filings
with any governmental authority or agency relating to the consummation of the
transactions contemplated
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herein shall have been obtained and made.
10.4 GOOD STANDING CERTIFICATES. Parent and Newco each shall have
delivered to Company a certificate, dated as of a date no later than ten days
prior to the Closing Date, duly issued by the Oklahoma Secretary of State,
showing that each of Parent and Newco is in good standing and authorized to do
business and that all state franchise and/or income tax returns and taxes for
Parent and Newco, respectively, for all periods prior to the Closing Date have
been filed and paid to the extent required.
10.5 NO MATERIAL ADVERSE EFFECT. No event or circumstance shall have
occurred with respect to Parent or Newco that would constitute a material
Adverse Effect on Stockholders or the Company.
10.6 SECRETARY'S CERTIFICATES. Company shall have received a
certificate or certificates, dated the Closing Date and signed by the Secretary
of Parent and of Newco, certifying the completeness and accuracy of the attached
copies of Parent's and Newco's respective Charter Documents (including
amendments thereto), Bylaws (including amendments thereto), and resolutions of
the boards of directors and, if required, the stockholders of Parent and Newco
approving Parent's and Newco's entering into this Agreement and the consummation
of the transactions contemplated hereby.
10.7 EMPLOYMENT AGREEMENTS. Each of the persons listed in Schedule
10.7 shall have been afforded an opportunity to enter into an employment
agreement, reasonably acceptable to both parties and substantially in the form
of Annex II.
10.8 CLOSING OF THE IPO OR THE PRIVATE PLACEMENT. Parent shall have
received at least $15,000,000 in gross proceeds from Parent's IPO or Private
Placement.
11. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND NEWCO
The obligations of Parent and Newco with respect to actions to be taken
on the Closing Date are subject to the satisfaction or waiver on or prior to the
Closing Date of all of the following conditions.
11.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. All
the representations and warranties of Stockholders and Company contained in this
Agreement shall be true and correct as of the Closing Date with the same effect
as though such representations and warranties had been made on and as of such
date; all of the terms, covenants and conditions of this Agreement to be
complied with or performed by Stockholders and Company on or before the Closing
Date shall have been duly complied with or performed; and Stockholders and
Company each shall have delivered to Parent a certificate dated the Closing Date
and signed by them to such effect.
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11.2 NO LITIGATION. No action or proceeding before a court or any
other governmental agency or body shall have been instituted or threatened to
restrain or prohibit the Merger and no governmental agency or body shall have
taken any other action or made any request of Parent as a result of which the
management of Parent deems it inadvisable to proceed with the transactions
hereunder.
11.3 SECRETARY'S CERTIFICATE. Parent shall have received a
certificate, dated the Closing Date and signed by the Secretary of the Company,
certifying the completeness and accuracy of the attached copies of Company's
Charter Documents (including amendments thereto), Bylaws (including amendments
thereto), and resolutions of the board of directors and Stockholders approving
Company's entering into this Agreement and the consummation of the transactions
contemplated hereby.
11.4 NO MATERIAL ADVERSE EFFECT. No event or circumstance shall have
occurred with respect to Company which would constitute a material Adverse
Effect on Newco or Parent, and Company shall not have suffered any material loss
or damages to any of its properties or assets, whether or not covered by
insurance, which change, loss or damage materially affects or impairs the
ability of Company to conduct its business.
11.5 STOCKHOLDERS' RELEASE. Stockholders shall have delivered to
Parent an instrument dated the Closing Date releasing Company from (i) any and
all claims of Stockholders against Company and Parent and (ii) obligations of
Company and Parent to Stockholders, except for (x) items specifically identified
on Schedules 6.8 and 6.13 as being claims of or obligations to Stockholders and
(y) obligations arising under this Agreement or the transactions contemplated
hereby.
11.6 TERMINATION OF RELATED PARTY AGREEMENTS. Except as set forth on
Schedule 11.6, all existing agreements between Company and Stockholders shall
have been canceled effective prior to or as of the Closing Date.
11.7 CONSENTS AND APPROVALS. All necessary consents of and filings
with any governmental authority or agency relating to the consummation of the
transactions contemplated herein shall have been obtained and made; and all
consents and approvals of third parties listed on Schedule 6.21 shall have been
obtained.
11.8 GOOD STANDING CERTIFICATES. The Company shall have delivered to
Parent a certificate, dated as of a date no earlier than ten days prior to the
Closing Date, duly issued by the appropriate governmental authority in Company's
state of incorporation and, unless waived by Parent, in each state in which
Company is authorized to do business, showing Company is in good standing and
authorized to do business and that all state franchise and/or income Tax returns
and Taxes for Company for all periods prior to the Closing have been filed and
paid.
11.9 FIRPTA CERTIFICATE. Each Stockholder shall have delivered to
Parent a certificate to
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the effect that he or she is not a foreign person under Section 111445-2(b) of
the Treasury regulations.
11.10 CLOSING OF THE IPO OR PRIVATE PLACEMENT. Parent shall have
received at least $15,000,000 in gross proceeds from Parent's IPO or Private
Placement.
11.11 EMPLOYMENT AGREEMENT. Each of the persons listed on Schedule
10.7 shall have executed an employment agreement, reasonably acceptable to both
parties and substantially in the form of Annex II.
11.12 FINANCIAL STATEMENTS. Company shall have provided Parent an
audited Balance Sheet as of December 31, 1998 and an audited Statement of
Income, Retained Earnings and Cash Flows for the year ended December 31, 1998.
12. ADDITIONAL COVENANTS OF PARENT AND STOCKHOLDERS
12.1 PREPARATION AND FILING OF TAX RETURNS.
(i) Company shall file or cause to be filed all Federal,
state and local income Tax Returns of Company for all
taxable periods that end on or before the Closing Date.
(ii) Parent shall file or cause to be filed all separate
Returns of, or that include, Company for all taxable
periods ending after the Closing Date.
(iii) Each party hereto shall, and shall cause its
Subsidiaries and Affiliates to, provide to each of the
other parties hereto such cooperation and information as
any of them reasonably may request in filing any Return,
amended Return or claim for refund, determining a
liability for Taxes or a right to refund of Taxes or in
conducting any audit or other proceeding in respect of
Taxes. Such cooperation and information shall include
providing copies of all relevant portions of relevant
Returns, together with relevant accompanying schedules
and work papers, relevant documents relating to rulings
or other determinations by Taxing Authorities and
relevant records concerning the ownership and Tax basis
of property, which such party may possess. Each party
shall make its employees reasonably available on a
mutually convenient basis at its cost to provide
explanation of any documents or information so provided.
12.2 PRESERVATION OF EMPLOYEE BENEFIT PLANS. Following the Closing
Date, Parent shall not terminate any health insurance, life insurance or 401(k)
plan in effect at Company until such time as Parent is able to replace such plan
with a plan that is applicable to Parent and all of its then existing
Subsidiaries; provided that Parent shall have no obligation to provide
replacement plans
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that have the same terms and provisions as the existing plans; provided,
further, that any new health insurance plan shall provide for coverage for
preexisting conditions. On the Closing Date, the employees of Company will be
the employees of the Surviving Corporation (provided that this provision is for
purposes of clarifying that the Merger, in and of itself, will not have any
impact on the employment status of any employee; and provided further that this
provision shall not in any way limit the management rights of the Surviving
Corporation or Parent to assess workforce needs and make appropriate adjustments
as necessary or desirable within its discretion subject to applicable laws and
collective bargaining agreements).
13. INDEMNIFICATION
Stockholders, Parent and Newco each make the following covenants that
are applicable to them, respectively:
13.1 GENERAL INDEMNIFICATION BY THE STOCKHOLDERS. Stockholders
covenant and agree that they, severally and not jointly in the case of
representations, warranties, covenants and agreements set forth in Section 7,
and jointly and severally in all other cases, will indemnify, defend, protect
and hold harmless Parent, Newco, Company and the Surviving Corporation at all
times, from and after the Closing Date until the Expiration Date, from and
against all claims, damages, actions, suits, proceedings, demands, assessments,
adjustments, costs and expenses (including specifically, but without limitation,
reasonable attorneys' fees and expenses of investigation) incurred by Parent,
Newco, Company or the Surviving Corporation as a result of or arising from any
breach of any representation, warranty, covenant or agreement on the part
of Stockholders or Company under this Agreement.
13.2 INDEMNIFICATION BY PARENT. Parent covenants and agrees that it
will indemnify, defend, protect and hold harmless Stockholders at all times from
and after the Closing Date until the Expiration Date, from and against all
claims, damages, actions, suits, proceedings, demands, assessments, adjustments,
costs and expenses (including specifically, but without limitation, reasonable
attorneys' fees and expenses of investigation) incurred by Stockholders as a
result of or arising from any breach of any representation, warranty, covenant
or agreement on the part of Parent or Newco under this Agreement. Further,
Parent covenants and agrees that it will indemnify each Stockholder against any
and all disclosed obligations, liabilities and debts of the Company existing as
of the time of Closing, EXCEPT for claims based in fraud, or specifically and
expressly excluded herein, BUT INCLUDING AND NOT LIMITED TO all obligations,
liabilities and debts of the Company being assumed by the successor by merger
with the Company under this Agreement, any claims under any Company warranty
related to sales of services or products, known or unknown, disclosed bank debt
or payables to Company vendors. Parent specifically agrees that as soon as
reasonably possible after Closing, it, along with the successor by Merger to the
Company, shall take any and all steps reasonably necessary to secure the
termination, release or cancellation of any guaranty agreements given by ▇▇▇
Blood on any indebtedness or financial arrangement of the Company, including,
but not limited to, giving appropriate replacement guarantees. In any event,
Parent and Company shall at all times fully indemnify and protect ▇▇▇
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Blood from any and all claims and liability under any such guaranty, from and
after Closing hereunder.
13.3 THIRD PERSON CLAIMS. Promptly after any party hereto
(hereinafter the "Indemnified Party") has received notice of or has knowledge of
any claim by a person not a party to this Agreement ("Third Person"), or the
commencement of any action or proceeding by a Third Person, the Indemnified
Party shall, as a condition precedent to a claim with respect thereto being made
against any party obligated to provide indemnification pursuant to Section 13.1
or 13.2 (hereinafter the "Indemnifying Party"), give the Indemnifying Party
written notice of such claim or the commencement of such action or proceeding.
Such notice shall state the nature and the basis of such claim and a reasonable
estimate of the amount thereof. The Indemnifying Party shall have the right to
defend and settle, at its own expense and by its own counsel, any such matter so
long as the Indemnifying Party pursues the same diligently and in good faith;
provided that the Indemnifying Party shall not settle any criminal proceeding
without the written consent of the Indemnified Party. If the Indemnifying Party
undertakes to defend or settle, it shall promptly notify the Indemnified Party
of its intention to do so, and the Indemnified Party shall cooperate with the
Indemnifying Party and its counsel in the defense thereof and in any settlement
thereof. Such cooperation shall include, but shall not be limited to,
furnishing the Indemnifying Party with any books, records or information
reasonably requested by the Indemnifying Party that are in the Indemnified
Party's possession or control. All Indemnified Parties shall use the same
counsel, which shall be the counsel selected by Indemnifying Party; provided
that if counsel to the Indemnifying Party shall have a conflict of interest that
prevents counsel for the Indemnifying Party from representing the Indemnified
Party, the Indemnified Party shall have the right to participate in such matter
through counsel of its own choosing and the Indemnifying Party shall be
responsible for the reasonable expenses of such counsel. After the Indemnifying
Party has notified the Indemnified Party of its intention to undertake to defend
or settle any such asserted liability, and for so long as the Indemnifying Party
diligently pursues such defense, the Indemnifying Party shall not be liable for
any additional legal expenses incurred by the Indemnified Party in connection
with any defense or settlement of such asserted liability, except to the extent
such participation is requested by the Indemnifying Party, in which event the
Indemnified Party shall be reimbursed by the Indemnifying Party for reasonable
additional legal expenses and out-of-pocket expenses. If the Indemnifying Party
desires to accept a final and complete settlement of any such Third Person claim
and the Indemnified Party refuses to consent to such settlement, then the
Indemnifying Party's liability under this Section 13.3 with respect to such
Third Person claim shall be limited to the amount so offered in settlement by
such Third Person. Upon agreement as to such settlement between such Third
Person and the Indemnifying Party, the Indemnifying Party shall, in exchange for
a complete release from the Indemnified Party, promptly pay to the Indemnified
Party the amount agreed to in such settlement and the Indemnified Party shall,
from that moment on, bear full responsibility for any additional costs of
defense which it subsequently incurs with respect to such claim and all
additional costs of settlement or judgment. If the Indemnifying Party does not
undertake to defend such matter to which the Indemnified Party is entitled to
indemnification hereunder or fails diligently to pursue such defense, the
Indemnified Party may undertake such defense through counsel of its choice, at
the cost and expense of the Indemnifying Party, and the Indemnified Party
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may settle such matter upon consent of the Indemnifying Party, which consent
will not be unreasonably withheld, and the Indemnifying Party shall reimburse
the Indemnified Party for the amount paid in such settlement and any other
liabilities or expenses incurred by the Indemnified Party in connection
therewith. All settlements hereunder shall effect a complete release of the
Indemnified Party, unless the Indemnified Party otherwise agrees in writing.
Anything in this Agreement to the contrary notwithstanding, any amounts owing
from an Indemnifying Party to an Indemnified Party under the provisions of this
Section 13 shall be reduced to the extent to which the Indemnified Party, or any
other claimant, actually receives any proceeds of any insurance policy that are
paid with respect to the matter or occurrence that gave rise to the ThirdPerson
claim. Submission to insurance of any insurable claim otherwise giving rise to
indemnification under this Section 13 shall be a condition precedent to seeking
indemnification under this Section.
13.4 EXCLUSIVE REMEDY. The indemnification provided for in this
Section 13 shall be the exclusive remedy in any action seeking damages or any
other form of monetary relief brought by any party to this Agreement against
another party; provided that nothing herein shall be construed to limit the
right of a party, in a proper case, to seek injunctive relief for a breach of
this Agreement.
13.5 LIMITATIONS ON INDEMNIFICATION. No person shall be entitled to
indemnification under this Section 13 if and to the extent that such person's
claim for indemnification is directly or indirectly related to a material breach
by such person of any representation, warranty, covenant or agreement set forth
in this Agreement.
Notwithstanding any other provisions in this Agreement, under no
circumstances shall the total cost, loss or liability of any Stockholder under
any indemnity provision herein ever exceed the amount of value of the cash and
stock provided to that Shareholder as of the time of Closing.
14. TERMINATION OF AGREEMENT
14.1 TERMINATION. This Agreement may be terminated at any time prior
to the Closing Date solely:
(i) by mutual consent of the boards of directors of Parent
and Company;
(ii) by Company (acting through its board of directors), on
the one hand, or by Parent (acting through its board of
directors), on the other hand, if the transactions
contemplated by this Agreement to take place at the
Closing shall not have been consummated by May 31, 1999
unless the failure of such transactions to be
consummated is due to the willful failure of the party
seeking to terminate this Agreement to perform any of
its obligations under this Agreement to the extent
required to be performed by it prior to or on the
Closing Date;
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(iii) by Stockholders or Company, on the one hand, or by
Parent, on the other hand, if a material breach or
default shall be made by the other party in the
observance or in the due and timely performance of any
of the material covenants, agreements or conditions
contained herein, and the curing of such default shall
not have been made on or before the Closing Date; or
(iv) by Company and Stockholders, on the one hand, or by
Parent, on the other hand, if either such party or
parties declines to consent to an amendment or
supplement to a Schedule proposed by the other party or
parties pursuant to Section 9.7 because such proposed
amendment constitutes or reflects an event or occurrence
that would have a material Adverse Effect on the party
or parties proposing the same.
14.2 LIABILITIES IN EVENT OF TERMINATION. Except as provided in
Section 9.7, the termination of this Agreement will in no way limit any
obligation or liability of any party based on or arising from a breach or
default by such party with respect to any of its representations, warranties,
covenants or agreements contained in this Agreement.
15. NONCOMPETITION
15.1 PROHIBITED ACTIVITIES. Each Stockholder (other than any
Stockholder subject to an employment agreement listed in Schedule 10.7, each of
which is expressly excepted from the obligations imposed by this Section 15)
will not, for a period of one year following the Closing Date, if not employed
by the Company after Closing, or if employed by the Company after Closing, for a
period of one year after the date of termination of employment if such
termination occurs within twelve months after the Closing Date for any reason
whatsoever, directly or indirectly, for himself or on behalf of or in
conjunction with any other Person:
(i) engage in sales or marketing, as an officer, director,
stockholder, owner, partner, joint venturer, or in a
managerial capacity, whether as an employee, independent
contractor, consultant or advisor, or as a sales
representative, in the sale or marketing of
telecommunication services or interconnect services, at
the retail, commercial or consumer level, within an area
which is 30 miles from Oklahoma City, as defined by the
map and milage tables of the Official State Map of the
State of Oklahoma, which territory includes Oklahoma
City, Edmond, Norman, El Reno, Choctaw, ▇▇▇▇▇▇, Newalla,
▇▇▇▇▇, Piedmont, Okarche, Arcadia and Luther (but
excludes ▇▇▇▇▇▇▇, Kingfisher, ▇▇▇▇▇▇▇ and Chickasha)
(the "Territory");
(ii) call upon any person within the Territory who is an
employee of Parent (including the Subsidiaries thereof)
in a sales representative or managerial capacity for the
purpose or with the intent of enticing such employee
away from or out of the employ of Parent (including the
Subsidiaries thereof);
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(iii) call upon any Person which is or which has been, within
one year prior to the Closing Date, a customer of Parent
(including the Subsidiaries thereof) for the purpose of
soliciting or selling products or services in direct
competition with Parent (or its Subsidiaries);
(iv) call upon any prospective acquisition candidate, on any
Stockholder's own behalf or on behalf of any competitor
of Parent (including the Subsidiaries thereof) in the
long-distance telephone or interconnect business, which
candidate, to the knowledge of such Stockholder after
due inquiry, was called upon by Parent (including the
Subsidiaries thereof) or for which, to the knowledge of
such Stockholder after due inquiry, Parent (or any
Subsidiary thereof) made an acquisition analysis, for
the purpose of acquiring such entity; or
(v) disclose existing or prospective customers of Company to
any Person for any reason or purpose whatsoever except
to the extent that the Company has in the past disclosed
such information to the public for valid business
reasons.
Notwithstanding the above, the foregoing covenants shall not be deemed
to prohibit any Stockholder from acquiring as an investment after the date of
this Agreement not more than five percent of the capital stock of a competing
business whose stock is traded on a national securities exchange or the National
Association of Securities Dealers' Automated Quotation System.
15.2 DAMAGES. Because of the difficulty of measuring economic losses
to Parent as a result of a material breach of the foregoing covenants, and
because of the immediate and irreparable damage that could be caused to Parent
for which it would have no other adequate remedy, each Stockholder agrees that
the foregoing covenants may be enforced by Parent in the event of breach by such
Stockholder, by injunction and restraining order.
15.3 REASONABLE RESTRAINT. It is agreed by the parties hereto that
the foregoing covenants in this Section 15 impose a reasonable restraint on the
Stockholders in light of the activities and business of Parent (including the
Subsidiaries thereof) on the date of the execution of this Agreement and the
reasonably foreseeable plans of Parent.
15.4 SEVERABILITY, REFORMATION. The covenants in this Section 15 are
severable and separate, and the unenforceability of any specific covenant shall
not affect the provisions of any other covenant. Moreover, in the event any
court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the intention of
the parties that such restrictions be enforced to the fullest extent the court
deems reasonable, and the Agreement shall thereupon be automatically reformed.
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15.5 INDEPENDENT COVENANT. All of the covenants in this Section 15
shall be construed as an agreement independent of any other provision in this
Agreement, and the existence of any claim or cause of action of any Stockholder
against Parent (including the Subsidiaries thereof), whether predicated on this
Agreement or otherwise, shall not constitute a defense to the enforcement by
Parent of such covenants. It is specifically agreed that the period of three
years stated at the beginning of this Section 15, during which the agreements
and covenants of each Stockholder made in this Section 15 shall be effective,
shall be computed by excluding from such computation any time during which such
Stockholder is in violation of any provision of this Section 15. The covenants
contained in Section 15 shall not be affected by any breach of any other
provision hereof by any party hereto and shall become nugatory if the
transactions contemplated by this Agreement are not consummated.
15.6 MATERIALITY. Stockholders hereby agree that the covenants set
forth in this Section 15 are a material and substantial part of the transactions
contemplated by this Agreement.
16. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
16.1 COMPANY AND STOCKHOLDERS. Company and Stockholders recognize
and acknowledge that they had in the past, currently have, and in the future may
have, access to certain confidential information of Company, the Founding
Companies and/or Parent, such as operational policies, and pricing and cost
policies that are valuable, special and unique assets of Company, the Founding
Companies and/or Parent. Company and Stockholders agree that they will not
disclose such confidential information to any Person for any purpose or reason
whatsoever, except (i) to authorized representatives of Parent; (ii) following
the Closing, such information may be disclosed by Company and Stockholders as is
required in the course of performing their duties for Parent or the Surviving
Corporation; and (iii) to counsel and other advisers; provided that such
advisers (other than counsel) agree to the confidentiality provisions of this
Section 16.1, unless (x) such information becomes known to the public generally
through no fault of Stockholders, (y) disclosure is required by law or the order
of any governmental authority under color of law; provided, that prior to
disclosing any information pursuant to this clause (y), Stockholders, if
possible, shall give immediate prior written notice thereof to Parent and
provide Parent with the opportunity to contest such disclosure, or (z) the
disclosing party reasonably believes that such disclosure is required in
connection with the defense of a lawsuit against the disclosing party. In the
event of a breach or threatened breach by any Stockholder of the provisions of
this Section 16.1, Parent shall be entitled to an injunction (without the
posting of bond or proof of actual damages) restraining such Stockholder from
disclosing, in whole or in part, such confidential information. Nothing herein
shall be construed as prohibiting Parent from pursuing any other available
remedy for such breach or threatened breach, including the recovery of damages.
In the event the transactions contemplated by this Agreement are not
consummated, (1) the above mentioned restrictions on each Stockholder's ability
to disseminate confidential information with respect to Company shall become
nugatory and (2) each Stockholder (including his representatives, advisors and
legal counsel) shall within ten business days of the Parent's request, deliver
all copies of the confidential information of Parent in his possession in any
form whatsoever (including, but not limited to, any
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reports, memoranda, or other material prepared by such Stockholder or his
representatives, advisors or legal counsel).
16.2 PARENT AND NEWCO. Parent and Newco recognize and acknowledge
that they had in the past and currently have and in the future may have, prior
to the Closing, access to certain confidential information of Company, such as
customer lists, financial information, operational policies, and pricing and
cost policies that are valuable, special and unique assets of Company. Parent
and Newco agree that, prior to the Closing, or if the transactions contemplated
by this Agreement are not consummated, they will not disclose such confidential
information to any person for any purpose or reason whatsoever, except (i) to
authorized representatives of Company; and (ii) to counsel and other advisers;
provided that such advisers (other than counsel) agree to the confidentiality
provisions of this Section 16.2, unless (x) such information becomes known to
the public generally through no fault of Parent or Newco, (y) disclosure is
required by law or the order of any governmental authority under color of law;
provided, that prior to disclosing any information pursuant to this clause (y),
Parent and Newco shall, if possible, give immediate prior written notice thereof
to Company and Stockholders and provide Company and Stockholders with the
opportunity to contest such disclosure, or (z) the disclosing party reasonably
believes that such disclosure is required in connection with the defense of a
lawsuit against the disclosing party. In the event of a breach or threatened
breach by Parent or Newco of the provisions of this Section 16.2, Company and
Stockholders shall be entitled to an injunction (without the posting of bond or
proof of actual damages) restraining Parent and Newco from disclosing, in whole
or in part, such confidential information. Nothing herein shall be construed as
prohibiting Company and Stockholders from pursuing any other available remedy
for such breach or threatened breach, including the recovery of damages. In the
event the transactions contemplated by this Agreement are not consummated,
Parent and Newco (including their representatives, advisors and legal counsel)
shall within ten business days after Company's request, deliver all copies of
the confidential information of Company in their possession in any form
whatsoever (including, but not limited to, any reports, memoranda, or other
materials prepared by Parent or Newco or their representatives, advisors or
legal counsel at the direction of Parent or Newco).
16.3 DAMAGES. Because of the difficulty of measuring economic losses
as a result of the breach of the foregoing covenants in Section 16.1 and 16.2
and because of the immediate and irreparable damage that would be caused for
which no other adequate remedy exists, the parties hereto agree that, in the
event of a breach by any of them of the foregoing covenants, the covenant may be
enforced against the other parties by injunction and restraining order.
16.4 SURVIVAL. The obligations of the parties under this Section 16
shall survive the termination of this Agreement for a period of three years from
the Closing Date or the termination of this Agreement pursuant to Section 14.
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17. TRANSFER RESTRICTIONS
Except for transfers to immediate family members who agree to be bound
by the restrictions set forth in this Section 17 (or trusts for the benefit of
Stockholders or family members, the trustees of which so agree), for a period of
one year from the consummation of the IPO (unless the IPO shall not be
consummated by May 31, 1999), except pursuant to Section 19, no Stockholder
shall sell, assign, exchange, transfer, encumber, pledge, distribute, appoint,
or otherwise dispose of any Parent Stock received by such Stockholder in the
Merger. The Parent Stock delivered to the Stockholders pursuant to Section 4 of
this Agreement will bear a legend substantially in the form set forth below and
containing such other information as Parent may deem necessary or appropriate:
EXCEPT AS OTHERWISE PERMITTED BY THE ISSUER, THIS SECURITY MAY NOT BE SOLD,
ASSIGNED, EXCHANGED, TRANSFERRED, ENCUMBERED, PLEDGED, DISTRIBUTED, APPOINTED OR
OTHERWISE DISPOSED OF, AND THE ISSUER SHALL NOT BE REQUIRED TO GIVE EFFECT TO
ANY ATTEMPTED SALE, ASSIGNMENT, EXCHANGE, TRANSFER, ENCUMBRANCE, PLEDGE,
DISTRIBUTION, APPOINTMENT OR OTHER DISPOSITION PRIOR TO THE FIRST ANNIVERSARY OF
THE CONSUMMATION OF ISSUER=S INITIAL UNDERWRITTEN PUBLIC OFFERING ("IPO"). UPON
THE WRITTEN REQUEST OF THE HOLDER OF THIS CERTIFICATE, THE ISSUER AGREES TO
REMOVE THIS RESTRICTIVE LEGEND (AND ANY STOP ORDER PLACED WITH THE TRANSFER
AGENT) AFTER THE DATE SPECIFIED ABOVE OR AFTER , IF THE IPO HAS NOT BEEN
CONSUMMATED BY THAT DATE.
18. INVESTMENT REPRESENTATIONS
Stockholders acknowledge that the Parent Stock to be delivered to
Stockholders pursuant to this Agreement (the "Restricted Securities") have not
been and will not be registered under the 1933 Act and therefore may not be
resold without compliance with the requirements of the 1933 Act and applicable
state securities laws. All of the Restricted Securities are being acquired by
Stockholders solely for their own account, for investment purposes only, and not
with a view to or in connection with a distribution thereof.
18.1 COMPLIANCE WITH LAW. Stockholders represent, warrant, covenant
and agree that none of the Restricted Securities will be offered, sold,
assigned, exchanged, transferred, encumbered, distributed, appointed or
otherwise disposed of except after full compliance with all of the applicable
provisions of the 1933 Act and the rules and regulations of the SEC thereunder
and the provisions of applicable state securities laws and regulations. All the
Restricted Securities shall bear the following legend in addition to the legend
required under Section 17 of this Agreement:
THE SHARES REPRESENTED BY THIS SECURITY HAVE NOT BEEN REGISTERED
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UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY APPLICABLE
STATE SECURITIES LAWS (COLLECTIVELY, THE "ACTS") AND MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED UNLESS AND UNTIL (A) THE SHARES REPRESENTED BY THIS
SECURITY SHALL HAVE BEEN REGISTERED UNDER THE ACTS OR (B) THE HOLDER OF THE
SHARES REPRESENTED BY THIS SECURITY PROVIDES THE ISSUER WITH (X) AN UNQUALIFIED
WRITTEN OPINION OF LEGAL COUNSEL, WHICH COUNSEL AND OPINION (IN FORM AND
SUBSTANCE) SHALL BE REASONABLY SATISFACTORY TO THE ISSUER, TO THE EFFECT THAT
THE PROPOSED DISPOSITION OF THE SHARES REPRESENTED BY THIS SECURITY MAY BE
EFFECTED WITHOUT REGISTRATION UNDER THE ACTS OR (Y) SUCH OTHER EVIDENCE AS MAY
BE REASONABLY SATISFACTORY TO THE ISSUER THAT THE PROPOSED DISPOSITION MAY BE
EFFECTED WITHOUT REGISTRATION UNDER THE ACTS.
18.2 ECONOMIC RISK, SOPHISTICATION. Stockholders are able to bear
the economic risk of an investment in the Restricted Securities and can afford
to sustain a total loss of such investment and have such knowledge and
experience in financial and business matters that they are capable of evaluating
the merits and risks of the proposed investment in Parent. Stockholders have
had an adequate opportunity to ask questions and receive answers from the
officers of Parent concerning any and all matters relating to the transactions
described herein including, without limitation, the background and experience of
the current and proposed officers and directors of Parent, the plans for the
operations of the business of Parent and any plans for additional acquisitions
and the like. Stockholders have asked any and all questions in the nature
described in the preceding sentence and all questions have been answered to
their satisfaction.
19. REGISTRATION RIGHTS
19.1 PIGGYBACK REGISTRATION RIGHTS. At any time following the date
of consummation of the IPO, whenever Parent proposes to register any Parent
Stock for its own or the account of others under the 1933 Act for a public
offering, other than (i) any shelf registration of shares to be used as
consideration for acquisitions of additional businesses by Parent and
(ii) registrations relating to employee benefit plans, Parent shall give each
Stockholder prompt written notice of its intent to do so. Upon the written
request of any Stockholder given within 15 business days after receipt of such
notice, Parent shall cause to be included in such registration all Registerable
Securities (including any shares of Parent Stock issued as a dividend or other
distribution with respect to, or in exchange for, or in replacement of such
Registerable Securities) which any Stockholder requests; provided, however, if
Parent is advised in writing in good faith by any managing underwriter of an
underwritten offering of the securities being offered pursuant to any
registration statement under this Section 19.1 that the number of shares to be
sold by Persons other than Parent is greater than the number of such shares
which can be offered without adversely affecting the offering, Parent may reduce
pro rata the number of shares offered for the accounts of such Persons (based
upon the number of shares held by such Person) to a number deemed satisfactory
by such managing underwriter.
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19.2 DEMAND REGISTRATION RIGHTS. At any time after the date of
consummation of the IPO, the holders ("Founding Stockholders") of a majority of
the shares of Parent Stock (i) representing Registerable Securities owned by
Stockholders or their permitted transferees or (ii) acquired by other
stockholders of Parent on or prior to the closing of the IPO in connection with
the acquisition of their companies by Parent pursuant to an agreement, similar
to this Agreement, which shares have not been previously registered or sold and
which shares are not entitled to be sold under Rule 144(k) (or any similar or
successor provision) promulgated under the 1933 Act, may request in writing that
Parent file a registration statement under the 1933 Act covering the
registration of the shares of Parent Stock issued to and held by the Founding
Stockholders or their permitted transferees (including any stock issued as a
dividend or other distribution with respect to, or in exchange for, or in
replacement of such Parent Stock) (a "Demand Registration"). Within ten days of
the receipt of such request, Parent shall give written notice of such request to
all other Founding Stockholders and shall, as soon as practicable but in no
event later than 45 days after notice from the Founding Stockholders requesting
such registration, file and use its best efforts to cause to become effective a
registration statement covering all such shares. Parent shall be obligated to
effect only one Demand Registration for all Founding Stockholders; provided,
however, that Parent shall not be deemed to have satisfied its obligation under
this Section 19.2 unless and until a Demand Registration covering all shares of
Parent Stock requested to be registered has been filed and becomes effective
under the 1933 Act and has remained current and effective for not less than 90
days (or such shorter period as is required to complete the distribution and
sale of all shares registered thereunder).
Notwithstanding the foregoing paragraph, following such a demand a
majority of the disinterested directors of Parent (i.e. directors who have not
demanded or elected to sell shares in any such public offering) may defer the
filing of the registration statement for a 30 day period.
If at the time of any request for a Demand Registration Parent has
formulated plans to file within 60 days after such request a registration
statement covering the sale of any of its securities in a public offering under
the 1933 Act, no registration of the Parent Stock shall be initiated under this
Section 19.2 until 90 days after the effective date of such registration
statement unless Parent is no longer proceeding diligently to secure the
effectiveness of such registration statement; provided that Parent shall provide
the Founding Stockholders the right to participate in such public offering
pursuant to, and subject to, Section 19.1.
19.3 REGISTRATION PROCEDURES. All expenses incurred in connection
with the registrations under this Section 19 (including all registration,
filing, qualification, legal, printing and accounting fees, but excluding
underwriting commissions and discounts), shall be borne by Parent. In
connection with registrations under Sections 19.1 and 19.2, Parent will, as
expeditiously as practicable:
(i) Prepare and file with the SEC a registration statement
with respect to such Parent Stock and use its best
efforts to cause such registration statement to
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become and remain effective; provided that Parent may
discontinue any registration of its securities that is
being effected pursuant to Section 19.1 at any time
prior to the effective date of the registration
statement relating thereto.
(ii) Prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to such
registration statement and the prospectus used in
connection therewith as may be necessary to keep such
registration statement effective for a period as may be
requested by the stockholders holding a majority of the
Parent Stock covered thereby not exceeding 90 days and
to comply with the provisions of the 1933 Act with
respect to the disposition of all securities covered by
such registration statement during such period in
accordance with the intended methods of disposition by
the seller or sellers thereof set forth in such
registration statement; provided, that before filing a
registration statement or prospectus relating to the
sale of Parent Stock, or any amendments or supplements
thereto, Parent will furnish to counsel to each holder
of Parent Stock covered by such registration statement
or prospectus, copies of all documents proposed to be
filed, which documents will be subject to the review of
such counsel, and Parent will give reasonable
consideration in good faith to any comments of such
counsel.
(iii) Furnish to each holder of Parent Stock covered by the
registration statement and to each underwriter, if any,
of such Parent Stock, such number of copies of a
preliminary prospectus and prospectus for delivery in
conformity with the requirements of the 1933 Act, and
such other documents, as such Person may reasonably
request, in order to facilitate the public sale or other
disposition of the Parent Stock.
(iv) Use its best efforts to register or qualify the Parent
Stock covered by such registration statement under such
other securities or blue sky laws of such jurisdictions
as each seller shall reasonably request, and do any and
all other acts and things which may be reasonably
necessary or advisable to enable such seller to
consummate the disposition of the Parent Stock owned by
such seller, in such jurisdictions, except that Parent
shall not for any such purpose be required (x) to
qualify to do business as a foreign corporation in any
jurisdiction where, but for the requirements of this
Section 19.3(iv), it is not then so qualified, or (y) to
subject itself to taxation in any such jurisdiction, or
(z) to take any action which would subject it to general
or unlimited service of process in any such jurisdiction
where it is not then so subject.
(v) Use its best efforts to cause the Parent Stock covered
by such registration
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statement to be registered with or approved by such
other governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof to
consummate the disposition of such Parent Stock.
(vi) Immediately notify each seller of Parent Stock covered
by such registration statement, at any time when a
prospectus relating thereto is required to be delivered
under the 1933 Act within the appropriate period
mentioned in Section 19.3(ii), if Parent becomes aware
that the prospectus included in such registration
statement, as then in effect, includes an untrue
statement of a material fact or omits to state any
material fact required to be stated therein or necessary
to make the statements therein not misleading in the
light of the circumstances then existing, and, at the
request of any such seller, deliver a reasonable number
of copies of an amended or supplemental prospectus as
may be necessary so that, as thereafter delivered to the
Parents of such Parent Stock, each prospectus shall not
include an untrue statement of a material fact or omit
to state a material fact required to be stated therein
or necessary to make the statements therein not
misleading in the light of the circumstances then
existing.
(vii) Otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC and make
generally available to its security holders, in each
case as soon as practicable, but not later than 45
calendar days after the close of the period covered
thereby (90 calendar days in case the period covered
corresponds to a fiscal year of the Parent), an earnings
statement of Parent which will satisfy the provisions of
Section 11 (a) of the 1933 Act.
(viii) Use its best efforts in cooperation with the
underwriters to list such Parent Stock on each
securities exchange as they may reasonably designate.
(ix) In the event the offering is an underwritten offering,
use its best efforts to obtain a "cold comfort" letter
from the independent public accountants for Parent in
customary form and covering such matters of the type
customarily covered by such letters.
(x) Execute and deliver all instruments and documents
(including in an underwritten offering an underwriting
agreement in customary form) and take such other actions
and obtain such certificates and opinions as the
stockholders holding a majority of the shares of Parent
Stock covered by the Registration Statement may
reasonably request in order to effect an underwritten
public offering of such Parent Stock.
(xi) Make available for inspection by the seller of such
Parent Stock covered by such registration statement, by
any underwriter participating in any
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disposition to be effected pursuant to such registration
statement and by any attorney, accountant or other agent
retained by any such seller or any such underwriter, all
pertinent financial and other records, pertinent
corporate documents and properties of Parent, and cause
all of Parent's officers, directors and employees to
supply all information reasonably requested by any such
seller, underwriter, attorney, accountant or agent in
connection with such registration statement.
(xii) Obtain for delivery to the underwriter or agent an
opinion or opinions from counsel for Parent in customary
form and in form and scope reasonably satisfactory to
such underwriter or agent and its counsel.
19.4 OTHER REGISTRATION MATTERS.
(i) Each stockholder holding shares of Parent Stock covered
by a registration statement referred to in this Section
19 will, upon receipt of any notice from Parent of the
happening of any event of the kind described in Section
19.3(vi), forthwith discontinue disposition of the
Parent Stock pursuant to the registration statement
covering such Parent Stock until such holder's receipt
of the copies of the supplemented or amended prospectus
contemplated by Section 19.3(vi).
(ii) If a registration pursuant to Section 19.1 or 19.2
involves an underwritten offering, each of the
Stockholders agrees, whether or not his shares of Parent
Stock are included in such registration, not to effect
any public sale or distribution, including any sale
pursuant to Rule 144 under the 1933 Act, of any Parent
Stock, or of any security convertible into or
exchangeable or exercisable for any Parent Stock (other
than as part of such underwritten offering), without the
consent of the managing underwriter, during a period
commencing eight calendar days before and ending 180
calendar days (or such lesser number as the managing
underwriter shall designate) after the effective date of
such registration.
19.5 INDEMNIFICATION.
(i) In the event of any registration of any securities of
Parent under the 1933 Act pursuant to Section 19.1 or
19.2, Parent will, and it hereby agrees to, indemnify
and hold harmless, to the extent permitted by law, each
seller of any Parent Stock covered by such registration
statement, each Affiliate of such seller and their
respective directors, officers, employees and agents or
general and limited partners (and directors, officers,
employees and agents thereof) each other Person who
participates as an underwriter in the offering or sale
of such securities and each other Person, if any, who
controls such
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seller or any such underwriter within the meaning of the
1933 Act, as follows:
(x) against any and all loss, liability, claim, damage or
expense whatsoever arising out of or based upon an
untrue statement or alleged untrue statement of a
material fact contained in any registration statement
(or any amendment or supplement thereto), including all
documents incorporated therein by reference, or the
omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make
the statements therein not misleading, or arising out of
an untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus or
prospectus (or any amendment or supplement thereto) or
the omission or alleged omission therefrom of a material
fact necessary in order to make the statements therein
not misleading;
(y) against any and all loss, liability, claim, damage and
expense whatsoever to the extent of the aggregate amount
paid in settlement of any litigation, or investigation
or proceeding by any governmental agency or body,
commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, if such
settlement is effected with the written consent of
Parent; and
(z) against any and all expense reasonably incurred by them
in connection with investigating, preparing or defending
against any litigation, or investigation or proceeding
by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue
statement or mission to the extent that any such expense
is not paid under subsection (x) or (y) above;
Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of such seller or any
such director, officer, employee, agent, general or limited
partner, investment advisor or agent, underwriter or controlling
Person and shall survive the transfer of such securities by such
seller.
(ii) Parent may require, as a condition to including any
Parent Stock in any registration statement filed in
accordance with Section 19.1 or 19.2, that Parent shall
have received an undertaking reasonably satisfactory to
it from the prospective seller of such Parent Stock or
any underwriter, to indemnify and hold harmless (in the
same manner and to the same extent as set forth in
Section 19.5(i)) Parent with respect to any statement or
alleged statement in or omission or alleged omission
from such registration statement, any preliminary, final
or summary prospectus contained therein, or any
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amendment or supplement, if such statement or alleged
statement or omission or alleged omission was made in
reliance upon and in conformity with written information
furnished to Parent by or on behalf of such seller or
underwriter specifically stating that it is for use in
the preparation of such registration statement,
preliminary, final or summary prospectus or amendment or
supplement. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on
behalf of Parent or any such director, officer or
controlling Person and shall survive the transfer of
such securities by such seller. In that event, the
obligations of the Parent and such sellers pursuant to
this Section 19.5 are to be several and not joint;
provided, however, that, with respect to each claim
pursuant to this Section 19.5, Parent shall be liable
for the full amount of such claim, and each such
seller's liability under this Section 19.5 shall be
limited to an amount equal to the net proceeds (after
deducting the underwriting discount and expenses)
received by such seller from the sale of Parent Stock
held by such seller pursuant to this Agreement.
(iii) Promptly after receipt by an indemnified party hereunder
of written notice of the commencement of any action or
proceeding involving a claim referred to in this Section
19.5, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party,
give written notice to such indemnifying party of the
commencement of such action; provided, however, that the
failure of any indemnified party to give notice as
provided herein shall not relieve the indemnifying party
of its obligations under this Section 19.5, except to
the extent (not including any such notice of an
underwriter) that the indemnifying party is materially
prejudiced by such failure to give notice. In case any
such action is brought against an indemnified party,
unless in such indemnified party's reasonable judgment a
conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim
(in which case the indemnifying party shall not be
liable for the fees and expenses of more than one firm
of counsel selected by holders of a majority of the
shares of Parent Stock included in the offering or more
than one firm of counsel for the underwriters in
connection with any one action or separate but similar
or related actions), the indemnifying party will be
entitled to participate in and to assume the defense
thereof, jointly with any other indemnifying party
similarly notified, to the extent that it may wish with
counsel reasonably satisfactory to such indemnified
party, and after notice from the indemnifying party to
such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be
liable to such indemnified party for any legal or other
expenses subsequently incurred by such indemnifying
party in connection with the defense thereof, provided
that the indemnifying party will not agree to any
settlement without the prior consent of the indemnified
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party (which consent shall not be unreasonably withheld)
unless such settlement requires no more than a monetary
payment for which the indemnifying party agrees to
indemnify the indemnified party and includes a full,
unconditional and complete release of the indemnified
party; provided, however, that the indemnified party
shall be entitled to take control of the defense of any
claim as to which, in the reasonable judgment of the
indemnifying party's counsel, representation of both the
indemnifying party and the indemnified party would be
inappropriate under the applicable standards of
professional conduct due to actual or potential
differing interests between them. In the event that the
indemnifying party does not assume the defense of a
claim pursuant to this Section 19.5(iii), the
indemnified party will have the right to defend such
claim by all appropriate proceedings, and will have
control of such defense and proceedings, and the
indemnified party shall have the right to agree to any
settlement without the prior consent of the indemnifying
party. Each indemnified party shall, and shall cause its
legal counsel to, provide reasonable cooperation to the
indemnifying party and its legal counsel in connection
with its assuming the defense of any claim, including
the furnishing of the indemnifying party with all papers
served in such proceeding. In the event that an
indemnifying party assumes the defense of an action
under this Section 19.5(iii), then such indemnifying
party shall, subject to the provisions of this Section
19.5, indemnify and hold harmless the indemnified party
from any and all losses, claims, damages or liabilities
by reason of such settlement or judgment.
(iv) Parent and each seller of Parent Stock shall provide for
the foregoing indemnity (with appropriate modifications)
in any underwriting agreement with respect to any
required registration or other qualification of
securities under any federal or state law or regulation
of any governmental authority.
19.6 CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances under which the indemnity contemplated by Section
19.5 is for any reason not available or insufficient for any reason to hold
harmless an indemnified party in respect of any losses, claims, damages or
liabilities referred to therein, the parties required to indemnify by the terms
thereof shall contribute to the aggregate losses, liabilities, claims, damages
and expenses of the nature contemplated by such indemnity agreement incurred by
Parent, any seller of Parent Stock and one or more of the underwriters, except
to the extent that contribution is not permitted under Section 11 (f) of the
1933 Act. In determining the amounts which the respective parties shall
contribute, there shall be considered the relative benefits received by each
party from the offering of the Parent Stock by taking into account the portion
of the proceeds of the offering realized by each, and the relative fault of each
party by taking into account the parties' relative knowledge and access to
information concerning the matter with respect to which the claim was asserted,
the opportunity to correct and prevent any statement or omission and any other
equitable considerations appropriate under the circumstances. Parent and each
Person selling securities agree with each other that no
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seller of Parent Stock shall be required to contribute any amount in excess of
the amount such seller would have been required to pay to an indemnified party
if the indemnity under Section 19.5(ii) were available. Parent and each such
seller agree with each other and the underwriters of the Parent Stock, if
requested by such underwriters, that it would not be equitable if the amount of
such contribution were determined by pro rata or per capita allocation (even if
the underwriters were treated as one entity for such purpose) or for the
underwriters' portion of such contribution to exceed the percentage that the
underwriting discount bears to the initial public offering price of the
Parent Stock. For purposes of this Section 19.6, each Person, if any, who
controls an underwriter within the meaning of Section 15 of the 1933 Act shall
have the same rights to contribution as such underwriter, and each director and
each officer of Parent who signed the registration statement, and each Person,
if any, who controls Parent or a seller of Parent Stock within the meaning of
Section 15 of the 1933 Act shall have the same rights to contribution as Parent
or a seller of Parent Stock, as the case may be.
19.7 UNDERTAKING TO FILE REPORTS AND COOPERATE IN RULE 144
TRANSACTIONS. After Parent completes its initial underwritten public offering
and for as long thereafter as any Stockholder shall continue to hold any
Restricted Securities, Parent shall use reasonable efforts to file, on a timely
basis, all annual, quarterly and other reports required to be filed by it under
Sections 13 and 15(d) of the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC thereunder, as amended from time to time.
20. GENERAL
20.1 COOPERATION. Company, each Stockholder, Parent and Newco shall
deliver or cause to be delivered to the other on the Closing Date and at such
other times and places as shall be reasonably agreed to, such additional
instruments as any of the others may reasonably request for the purpose of
carrying out this Agreement. Stockholders will cooperate and use their
reasonable efforts to have the present officers, directors and employees of
Company cooperate with Parent on and after the Closing Date in furnishing
information, evidence, testimony and other assistance in connection with any Tax
Return filing obligations, actions, proceedings, arrangements or disputes of any
nature with respect to matters pertaining to all periods prior to the Closing
Date.
20.2 SUCCESSORS AND ASSIGNS. This Agreement and the rights of the
parties hereunder may not be assigned (except by operation of law or as
permitted by Section 17), but if assigned by operation of law, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto, the
successors of Parent, Newco and Company, and the heirs and legal representatives
of Stockholders. Notwithstanding the foregoing, any Stockholder may assign his
shares of Parent Stock and rights thereunder, to a family or children's trust;
provided that the assignee agrees to be bound by the terms of this Agreement to
the same extent as his or its assignor.
20.3 ENTIRE AGREEMENT. This Agreement (including the Schedules and
Annexes) and the documents delivered pursuant hereto constitute the entire
agreement and understanding among Stockholders, Company, Newco and Parent and
supersede any prior agreement and understanding
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relating to the subject matter of this Agreement. This Agreement, upon execution
and delivery, constitutes a valid and binding agreement of the parties hereto
enforceable in accordance with its terms and may be modified or amended only by
a written instrument executed by Stockholders and by Company, Newco and Parent,
acting through their respective officers or representatives, duly authorized by
their respective Boards of Directors. Any disclosure made on any Schedule
delivered pursuant hereto shall be deemed to have been disclosed for purposes of
any other Schedule required hereby; provided that Company shall make a good
faith effort to cross reference disclosures, as necessary or advisable, between
related Schedules.
20.4 COUNTERPARTS. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original and all of
which together shall constitute but one and the same instrument.
20.5 BROKERS AND AGENTS. Except as disclosed on Schedule 20.5, each
party represents and warrants that it employed no broker or agent in connection
with this transaction and agrees to indemnify the other parties hereto against
all loss, cost, damage or expense arising out of claims for fees or commission
of brokers employed or alleged to have been employed by such indemnifying party.
20.6 NOTICES. All notices of communication required or permitted
hereunder shall be in writing, addressed to the party to be notified, and may be
given by (i) depositing the same in United States mail, postage prepaid and
registered or certified with return receipt requested, (ii) by telecopying the
same if receipt thereof is confirmed or (iii) by delivering the same in person
to an officer or agent of such party.
(x) If to Parent or Newco, addressed to them at:
The Alliance Group, Inc.
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▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
McAfee & ▇▇▇▇ A Professional Corporation
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(y) If to Stockholders, addressed to them at their address
set forth on Schedule
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6.3, with copies to such counsel as is set forth with
respect to each Stockholder on such Schedule 6.3;
(z) If to the Company, addressed to it at:
Nobel Systems, Inc.
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▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ Blood
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇
Two Leadership Square
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▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address or counsel as any party hereto shall specify pursuant
to this Section 20.6 from time to time.
20.7 GOVERNING LAW. This Agreement Shall be construed in accordance
with the laws of the State of Oklahoma.
20.8 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise provided
herein, no delay of or omission in the exercise of any right, power or remedy
accruing to any party as a result of any breach or default by any other party
under this Agreement shall impair any such right, power or remedy, nor shall it
be construed as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.
20.9 TIME. Time is of the essence with respect to this Agreement.
20.10 REFORMATION AND SEVERABILITY. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
practicable, be modified in such manner as to be valid, legal and enforceable
but so as to most nearly retain the intent of the parties, and if such
modification is not possible, such provision shall be severed from this
Agreement; and in either case the validity, legality and enforceability of the
remaining provisions of this Agreement shall not in any way be affected or
impaired thereby.
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20.11 REMEDIES CUMULATIVE. Except as otherwise provided in Section
13.4, no right, remedy or election given by any term of this Agreement shall be
deemed exclusive but each shall be cumulative with all other rights, remedies
and elections available at law or in equity.
20.12 CAPTIONS. The headings of this Agreement are inserted for
convenience only, shall not constitute a part of this Agreement or be used to
construe or interpret any provision hereof.
20.13 PUBLIC STATEMENTS. The parties hereto shall consult with each
other and no party shall issue any public announcement or statement with respect
to the transactions contemplated hereby without the consent of the other
parties, unless the party desiring to make such announcement or statement, after
seeking such consent from the other parties, obtains advice from legal counsel
that a public announcement or statement is required by applicable law.
20.14 AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived only with
the written consent of Parent, Newco, Company and Stockholders. Any amendment
or waiver effected in accordance with this Section 20.14 be binding upon each of
the parties hereto.
20.15 ARBITRATION. Any claim, controversy or dispute arising out of
or relating to this Agreement, except as set forth herein, shall be settled by
arbitration in Oklahoma City, Oklahoma, in accordance with the rules for
arbitration in Oklahoma City, Oklahoma, in accordance with the rules for
arbitration of the American Arbitration Association. Any arbitration shall be
undertaken pursuant to the Federal Arbitration Act, where possible, and the
decision of the arbitrators shall be final, binding, and enforceable in any
court of competent jurisdiction. In any dispute in which a party seeks in
excess of $50,000 in damages, three arbitrators shall be employed. Otherwise, a
single arbitrator shall be employed. All costs relating to the arbitration
shall be borne equally by the parties, other than their own attorneys' and
experts' fees. The parties will bear their own attorneys' and experts' fees.
The arbitrators will not award punitive, consequential or indirect damages.
Each party hereby waives the right to such damages and agrees to receive only
those actual damages directly resulting from the claim asserted. In resolving
all disputes between the parties, the arbitrators will apply the laws of the
State of Oklahoma. Except as needed for presentation in lieu of a live
appearance, depositions will not be taken. The parties will be entitled to
conduct document discovery by requesting production of documents. The
arbitrators will resolve any discovery disputes by such prehearing conferences
as may be needed. Either party may be entitled to pursue such remedies for
emergency or preliminary injunctive relief in any court of competent
jurisdiction, provided that each party agrees that it will consent to the stay
of such judicial proceedings on the merits of both this Agreement and the
related transactions pending arbitration of all underlying claims between the
parties immediately following the issuance of any such emergency or injunctive
relief.
20.16 338 ELECTION. Each of the Stockholders agree, if so directed by
Parent, to join with Parent and Newco in making an election under Section 338(h)
of the Code (and any corresponding elections under state, local, or foreign tax
law) with respect to a purchase and sale of the Company
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Stock; PROVIDED HOWEVER, that no election shall be made if, as a result of the
election, the Stockholders would incur any adverse tax or other consequences not
otherwise reimbursed by Parent or Newco to the Stockholders.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
THE ALLIANCE GROUP, INC.
BY: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------
NAME: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
TITLE: President/Chief
Executive Officer
ALLIANCE ACQUISITION III CORP.
BY: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------
NAME: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
TITLE: Chief Executive Officer
NOBEL SYSTEMS, INC.
BY: /s/ ▇▇▇▇▇▇▇ Blood
--------------------------
NAME: ▇▇▇▇▇▇▇ Blood
TITLE: President
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STOCKHOLDERS:
/s/ ▇▇▇▇▇▇▇ Blood
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▇▇▇ Blood
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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/s/ ▇▇▇ ▇▇▇▇▇▇▇
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ANNEX I
CERTIFICATE OF MERGER
MERGING
ALLIANCE ACQUISITION III CORP.
INTO
NOBEL SYSTEMS, INC.
Nobel Systems, Inc., an Oklahoma corporation, pursuant to Section 81 of
the Oklahoma General Corporation Act, DOES HEREBY CERTIFY:
FIRST. That the name of each of the constituent corporations, which are
Oklahoma corporations, is Nobel Systems, Inc. and Alliance Acquisition III Corp.
SECOND. That an agreement and plan of merger has been approved,
adopted, certified, executed and acknowledged by each of the constituent
corporations in accordance with the provisions of Section 81 of the Oklahoma
General Corporation Act.
THIRD. That the name of the surviving corporation is Nobel Systems,
Inc..
FOURTH. That the certificate of incorporation of Alliance Acquisition
III Corp. shall be the certificate of incorporation of the surviving
corporation.
FIFTH. That the executed agreement and plan of merger is on file at the
principal place of business of the surviving corporation, which is located at
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SIXTH. That a copy of the agreement and plan of merger will be
furnished by the surviving corporation, on request and without cost, to any
shareholder of any constituent corporation.
SEVENTH. This merger shall be effective at - , Central Standard
Time, on the date this Certificate is filed with the Secretary of State of
the State of Oklahoma.
IN WITNESS WHEREOF, Nobel Systems, Inc. has caused this certificate to
be signed by its President and attested by its Secretary, this ____ day of March
1999.
NOBEL SYSTEMS, INC.
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President
ATTEST:
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Secretary
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