Exhibit 2.36
------------------------------
AMENDED AND RESTATED
MERGER AGREEMENT
by and among
CENTERPRISE ADVISORS, INC.,
RFD MERGERSUB INC.,
and
▇▇▇▇▇▇ ▇. DRIVER CO., INC.
September 24, 1999
------------------------------
TABLE OF CONTENTS
-----------------
ARTICLE I
THE MERGER..........................................................2
1.1 Merger.....................................................2
1.2 Effects of the Merger......................................2
1.3 Directors and Officers of the Surviving Corporation........2
ARTICLE II
CONSIDERATION AND MANNER OF PAYMENT.................................3
2.1 Merger Consideration.......................................3
2.1.1 Basic Purchase Consideration......................3
2.1.2 Cancellation of Company Stock.....................3
2.1.3 Dissenting Shares.................................3
2.1.4 Conversion of Mergersub Stock.....................3
2.1.5 Exchange of Certificates for Consideration........4
2.1.6 The Stockholder Representative....................4
2.1.7 Escrow Instructions...............................5
2.2 Contingent Payment.........................................5
2.2.1 Financial Statements and Contingent Payment
Report............................................5
2.2.2 Dispute Notice....................................6
2.2.3 Dispute Resolution................................6
2.2.4 Definitions.......................................6
2.2.5 Example...........................................7
ARTICLE III
THE CLOSING AND CONSUMMATION DATE...................................7
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................8
4.1 Organization and Qualification.............................8
4.2 Company Subsidiaries.......................................8
4.3 Authority; Non-Contravention; Approvals....................8
4.4 Capitalization............................................10
4.5 Year 2000.................................................10
4.6 Financial Statements......................................11
4.7 Absence of Undisclosed Liabilities........................11
4.8 Accounts and Notes Receivable.............................11
4.9 Absence of Certain Changes or Events......................11
4.10 Litigation................................................14
4.11 Compliance with Applicable Laws...........................15
4.12 Licenses..................................................15
4.13 Material Contracts........................................16
4.14 Properties................................................18
4.15 Intellectual Property.....................................20
(i)
4.16 Taxes.....................................................21
4.17 Employee Benefit Plans; ERISA.............................22
4.18 Labor Matters.............................................24
4.19 Environmental Matters.....................................24
4.20 Insurance.................................................25
4.21 Interest in Customers and Suppliers; Affiliate
Transactions..............................................25
4.22 Business Relationships....................................26
4.23 Compensation..............................................26
4.24 Bank Accounts.............................................26
4.25 Disclosure; No Misrepresentation..........................27
4.26 Title to and Transfer of Insurance Expirations............27
ARTICLE V
[RESERVED].........................................................27
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF CENTERPRISE......................27
6.1 Organization And Qualification............................27
6.2 Capitalization............................................28
6.3 No Subsidiaries...........................................28
6.4 Authority; Non-Contravention; Approvals...................29
6.5 Absence of Undisclosed Liabilities........................30
6.6 Litigation................................................30
6.7 Compliance with Applicable Laws...........................30
6.8 No Misrepresentation......................................30
ARTICLE VII
CERTAIN COVENANTS AND OTHER TERMS..................................31
7.1 Conduct of Business by the Company Prior to the
Effective Time............................................31
7.2 No-Shop...................................................33
7.3 Schedules.................................................34
7.4 Company Stockholder Meeting...............................35
ARTICLE VIII
ADDITIONAL AGREEMENTS..............................................35
8.1 Access to Information.....................................35
8.2 Registration Statements...................................36
8.3 Expenses and Fees.........................................37
8.4 Agreement to Cooperate....................................37
8.5 Public Statements.........................................38
8.6 [Reserved]................................................38
8.7 Centerprise Covenants.....................................38
8.8 Release of Guarantees.....................................38
8.9 [Reserved]................................................38
8.10 Preparation and Filing of Tax Returns.....................38
8.11 Maintenance of Insurance..................................39
(ii)
ARTICLE IX
[RESERVED].........................................................39
ARTICLE X
CLOSING CONDITIONS.................................................39
10.1 Conditions to Each Party's Obligation to Effect
the Merger................................................39
10.2 Conditions to Obligation of the Company to Effect
the Merger................................................40
10.3 Conditions to Obligation of Centerprise to Effect
the Merger................................................42
ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER..................................44
11.1 Termination...............................................44
11.2 Effect of Termination.....................................45
11.3 Amendment.................................................45
11.4 Waiver....................................................46
ARTICLE XII
[RESERVED].........................................................46
ARTICLE XIII
[RESERVED].........................................................46
ARTICLE XIV
[RESERVED].........................................................46
ARTICLE XV
GENERAL PROVISIONS.................................................46
15.1 Brokers...................................................46
15.2 Notices...................................................46
15.3 Interpretation............................................47
15.4 Certain Definitions.......................................48
15.5 Entire Agreement; Assignment..............................48
15.6 Applicable Law............................................48
15.7 Counterparts..............................................48
15.8 Parties in Interest.......................................48
(iii)
LIST OF SCHEDULES
-----------------
Schedule 2.1 Consideration
Schedule 4.2 Company Subsidiaries
Schedule 4.3.2 Required Consents
Schedule 4.4 Capitalization
Schedule 4.5 Year 2000
Schedule 4.7 Liabilities
Schedule 4.9 Certain Changes and Events
Schedule 4.10 Litigation
Schedule 4.11 Noncompliance with Applicable Laws
Schedule 4.12 Licenses and Permits
Schedule 4.13 Material Contracts
Schedule 4.14.1-1 Real Property
Schedule 4.14.1-2(a) Exceptions Regarding Owned Property
Schedule 4.14.1-2(b) Exceptions Regarding Leased Property
Schedule 4.14.2 Tangible Personal Property; Liens
Schedule 4.15 Intellectual Property
Schedule 4.16.1-1 Taxes
Schedule 4.16.1-2 Tax Audits
Schedule 4.17.1 Employee Plans
Schedule 4.17.2 Unwritten Employee Plans
(iv)
Schedule 4.18 Labor Matters
Schedule 4.19 Environmental Matters
Schedule 4.20 Insurance
Schedule 4.21 Affiliate Transactions
Schedule 4.22 Business Relationships
Schedule 4.23 Compensation
Schedule 4.24 Bank Accounts
Schedule 6.2 Centerprise's Capitalization
Schedule 6.5 Liabilities
Schedule 7.1.3 Terminated Agreements
Schedule 8.8 Stockholders' Guarantees
Schedule 15.1 Brokers
Schedule 15.2.3 Stockholders and Their Counsel
(v)
LIST OF EXHIBITS
----------------
Exhibit 2.1.7(a) Form of Escrow Agreement
Exhibit 10.2(c) Form of Opinion of Centerprise's Counsel
Exhibit 10.2(d)(i) Form of Employment Agreement - ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Exhibit 10.2(d)(ii) Form of Employment Agreement - ▇▇▇▇▇▇ ▇. ▇▇▇▇
Exhibit 10.2(d)(iii) Form of Employment Agreement - P. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Exhibit 10.2(f) Form of Stockholders Agreement
Exhibit 10.3(c) Form of Opinion of Counsel to Company and
Stockholders
Exhibit 10.3(j) Form of Stockholders' Release
Exhibit 10.3(t) Form of Company Stockholder Agreement
(vi)
DEFINED TERMS
-------------
Actions.......................................................Section 4.10.1
Acquisition.................................................Section 2.2.4(a)
Affiliate.......................................................Section 15.4
Affiliate Transactions..........................................Section 4.21
Agreement.......................................................Introduction
Aggregate Basic Purchase Consideration...........................Section 2.1
Base EBITDA.................................................Section 2.2.4(b)
Business........................................................Introduction
Centerprise.....................................................Introduction
Centerprise Common Stock.........................................Section 2.1
Centerprise Material Adverse Effect............................Section 6.4.3
Centerprise Representatives....................................Section 8.1.1
Centerprise Required Statutory Approvals.......................Section 6.4.3
Closing..........................................................Article III
Closing Date.....................................................Article III
Code............................................................Introduction
Company.........................................................Introduction
Company Material Adverse Effect................................Section 4.3.3
Company Representatives........................................Section 8.1.1
Company Stock....................................................Section 2.1
(vii)
Company Stockholder Agreement................................Section 10.3(t)
Company Subsidiaries.............................................Section 4.2
Contracts.......................................................Section 4.13
Copyrights......................................................Section 4.15
Debt........................................................Section 2.2.4(c)
DGCL.............................................................Section 1.1
Dissenting Shares..............................................Section 2.1.3
EBITDA......................................................Section 2.2.4(d)
Effective Time...................................................Section 1.1
Employee Plan..............................................Section 4.17.5(a)
Environmental and Safety Requirements...........................Section 4.19
ERISA......................................................Section 4.17.5(b)
Escrow.........................................................Section 2.1.5
Escrow Agreement...............................................Section 2.1.7
Escrow Holder..................................................Section 2.1.5
Escrowed Shares................................................Section 2.1.5
Excess Cash....................................................Section 2.1.7
Financial Statements.............................................Section 4.6
First Person...............................................Section 4.17.5(c)
Form S-1.......................................................Section 4.3.3
Form S-4.......................................................Section 4.3.3
(ix)
Founding Companies..............................................Introduction
GAAP...........................................................Section 4.6.1
general increase................................................Section 4.23
Governmental Authority.........................................Section 4.3.2
Hazardous Materials.............................................Section 4.19
HSR Act........................................................Section 4.3.3
Intellectual Property...........................................Section 4.15
Intellectual Property Licenses..................................Section 4.15
IPO.............................................................Introduction
Knowledge.......................................................Section 15.4
Latest Balance Sheet.............................................Section 4.6
Laws............................................................Section 4.11
Leased Property...............................................Section 4.14.1
Licenses........................................................Section 4.12
Liens..........................................................Section 4.3.2
Liquidated Damages Amount........................................Section 7.3
Marks...........................................................Section 4.15
Material Contracts..............................................Section 4.13
Merger..........................................................Introduction
Mergersub.......................................................Introduction
Mergersub Stock................................................Section 6.2.1
(ix)
Merger Documents.................................................Section 1.1
1933 Act.......................................................Section 4.3.3
Organizational Documents.........................................Section 4.1
Other Agreements................................................Introduction
Other Mergers...................................................Introduction
Owned Property................................................Section 4.14.1
Patents.........................................................Section 4.15
Person..........................................................Section 15.4
Plan Affiliate.............................................Section 4.17.5(c)
Purchase Multiple...........................................Section 2.2.4(f)
Real Property.................................................Section 4.14.1
Registration Statements........................................Section 4.3.3
Returns.......................................................Section 4.16.1
Schedules........................................................Section 7.3
SEC............................................................Section 4.3.3
Securities Act.................................................Section 4.3.3
Stockholders Agreement.......................................Section 10.2(f)
Surviving Corporation............................................Section 1.2
Taxes.........................................................Section 4.16.2
Trade Secrets...................................................Section 4.15
2000 EBITDA.................................................Section 2.2.4(g)
(x)
Underwriters...................................................Section 8.1.1
Warrants.......................................................Section 2.1.1
(xi)
AMENDED AND RESTATED
MERGER AGREEMENT
THIS AMENDED AND RESTATED MERGER AGREEMENT (this "Agreement") is made
as of September 24, 1999, by and among Centerprise Advisors, Inc., a Delaware
corporation ("Centerprise"), RFD Mergersub Inc., a Delaware corporation and
wholly-owned subsidiary of Centerprise ("Mergersub") and ▇▇▇▇▇▇ ▇. Driver Co.,
Inc., a Delaware corporation (the "Company").
WITNESSETH:
WHEREAS, the Company engages directly, and indirectly through the
Company Subsidiaries in the business of (i) placing, soliciting, selling and
servicing insurance coverage as a licensed insurance agent/broker and (ii)
forming, administering and/or marketing policies of insurance to bona-fide
groups and associations and forming and administering risk retention groups
and/or purchasing groups as contemplated and defined in 65 U.S.C. 3901 et seq.,
as amended (such business provided by the Company is referred to as the
"Business");
WHEREAS, the Boards of Directors of the Company, Centerprise and
Mergersub deem it advisable and in the best interests of their respective
shareholders to approve and consummate the business combination transaction
provided for herein in which Mergersub would merge with the Company, with the
Company being the surviving corporation in the merger (the "Merger");
WHEREAS, Centerprise is entering into other agreements (the "Other
Agreements") substantially similar to this Agreement with each of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
& ▇▇▇▇▇▇▇▇▇, P.C., ▇▇▇▇ Frankfort ▇▇▇▇▇ & ▇▇▇▇, P.C., The ▇▇▇▇▇▇▇ Company, Inc.,
▇▇▇▇▇▇▇ Administrators, LLC, Verasource Excess Risk Ltd., Berry, Dunn, ▇▇▇▇▇▇ &
▇▇▇▇▇▇, Chartered, ▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ PC, Self Funded Benefits, Inc. d/b/a
Insurance Design Administrators, Grace & Company, P.C., Simione, Scillia, ▇▇▇▇▇▇
& ▇▇▇▇▇▇▇ LLC and ▇▇▇▇▇▇▇ Rudzewicz & Co., P.C. (which companies together with
the Company are collectively referred to herein as the "Founding Companies"),
which agreements provide for the merger of a wholly-owned subsidiary of
Centerprise with each such Founding Company (the "Other Mergers") simultaneously
with the Merger;
WHEREAS, the Voting Agreement, dated as of March 31, 1999, among
Centerprise and the stockholders of the Company, has been terminated and is no
longer in force and effect;
WHEREAS, simultaneously with the consummation of the Merger,
Centerprise will close an initial public offering (the "IPO") of Centerprise
Common Stock (as defined in Section 2.1(a)); and
1
WHEREAS, the parties intend the acquisition of Centerprise Common Stock
pursuant to the terms hereof be tax-free under the provisions of Section 351 of
the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, for and in consideration of the premises and of the
mutual representations, warranties, covenants and agreements contained in this
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 Merger. Upon the terms and subject to the conditions set forth in
this Agreement and in reliance upon the representations and warranties set forth
herein, Mergersub shall be merged with and into the Company, the result of which
will cause the separate corporate existence of Mergersub to cease and the
Company to continue under the laws of the State of Delaware. As promptly as
possible on the Closing Date, the parties shall cause the Merger to be completed
by filing articles of merger and a certificate of merger, as applicable (the
"Merger Documents"), with the Secretary of State of the State of Delaware, as
provided in the General Corporation Law of the State of Delaware, as amended
(the "DGCL"). The Merger shall become effective (the "Effective Time") upon the
filing of the Merger Documents with the Secretary of State of Delaware or at
such later time, contemporaneously with the closing of the IPO, as agreed by
Centerprise and the Company and specified in the Merger Documents.
1.2 Effects of the Merger. At the Effective Time (a) the separate
existence of Mergersub shall cease and Mergersub shall be merged with and into
the Company, with the Company being the surviving corporation in the Merger (the
Company is sometimes referred to herein as the "Surviving Corporation"), (b) the
Certificates of Incorporation and By-laws of the Surviving Corporation shall be
amended in form and substance acceptable to Centerprise and as specified in the
Merger Documents, (c) the Merger shall have all the effects provided by
applicable law, and (d) the Company shall be a wholly-owned subsidiary of
Centerprise.
1.3 Directors and Officers of the Surviving Corporation. From and after
the Effective Time, the directors and officers of Mergersub shall be the
directors and officers of the Surviving Corporation until their successors are
duly elected and qualified.
2
ARTICLE II
CONSIDERATION AND MANNER OF PAYMENT
2.1 Merger Consideration.
2.1.1 Basic Purchase Consideration. At the Closing, by virtue
of the Merger and without any action on the part of the holders thereof, the
outstanding shares of capital stock, consisting of 1,169,222 shares of Class A
common stock, par value $.01 per share, upon exercise of warrants to purchase
123,042 shares of Class A common stock, par value $.01 per share, (the
"Warrants"), and zero (0) shares of Class B common stock, par value $.01 per
share, of the Company (collectively, the "Company Stock") shall be converted
into the right to receive (a) that number of shares of common stock, par value
$.01 per share, of Centerprise ("Centerprise Common Stock") shown on line T of
Schedule 2.1 as "Driver Shares Reserved"; provided, however, that if the initial
public offering price of the Centerprise Common Stock is below $11.90 per share,
the number of shares of Centerprise Common Stock received at Closing shall be
increased such that the value of the shares, using the actual public offering
price, equals the portion of the amount shown on line U of Schedule 2.1
representing the "Driver Shares Reserved" (the "Stock Consideration") and (b)
the amount of cash shown on line S of Schedule 2.1 (the Cash Consideration").
The sum of the Cash Consideration and the Stock Consideration is hereinafter
referred to as the "Aggregate Basic Purchase Consideration".
2.1.2 Cancellation of Company Stock. Each share of capital
stock of the Company held in treasury of the Company shall be canceled and
retired and no payment shall be made in respect thereof.
2.1.3 Dissenting Shares. Each outstanding share of capital
stock of the Company the holder of which has perfected his right to dissent
under applicable law and has not effectively withdrawn or lost such right as of
the Effective Time (the "Dissenting Shares") shall not be converted into the
right to receive Aggregate Basic Purchase Consideration, and the holder thereof
shall be entitled only to such rights as are granted by applicable law. The
Company shall give Centerprise prompt notice upon receipt by the Company of any
such written demands for payment of fair value of shares of capital stock of the
Company and any other instruments provided pursuant to applicable law. Any
payments made in respect of Dissenting Shares shall be made by the Surviving
Corporation.
2.1.4 Conversion of Mergersub Stock. At the Effective Time,
each share of Mergersub Stock issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the part
of the holder thereof, be converted into and become one validly issued, fully
paid and non-assessable share of the Surviving Corporation. Such newly issued
shares shall thereafter constitute all of the issued and outstanding capital
stock of the Surviving Corporation.
3
2.1.5 Exchange of Certificates for Consideration. At the
Closing, Centerprise shall receive the original certificates representing the
Company Stock, duly endorsed in blank by the Company's stockholders or
accompanied by blank stock powers. The shares represented by the Company stock
certificates so delivered shall be canceled. Until surrendered as contemplated
by this Section 2.1.5, each certificate representing shares of Company Stock
represents only the right to receive the Aggregate Basic Purchase Consideration,
as adjusted in accordance with this Article II. Centerprise shall (i) issue and
deliver to Imperial Bank as the Escrow Holder (the "Escrow Holder") for deposit
into escrow (the "Escrow") certificates representing the number of shares of
Centerprise Common Stock to which the Company's shareholders who are designated
Signing Stockholders in the Company Stockholder Letter attached hereto as
Exhibit 10.3(t) are entitled and (ii) issue and deliver to Escrow Holder for
deposit into a separate escrow (the "Stockholder Escrow" certificates
representing the number of shares of Centerprise Common Stock to which the
remaining shareholders are entitled as determined in accordance with Section 2.1
(collectively, the "Escrowed Shares"). The shares represented by the Company
stock certificates so delivered shall be canceled. Until surrendered as
contemplated by this Section 2.1.5, each certificate representing shares of
Company Stock represents only the right to receive the Aggregate Basic Purchase
Consideration, as adjusted in accordance with this Article II.
2.1.6 The Stockholder Representative. The Company appoints
▇▇▇▇▇▇ ▇. ▇▇▇▇ as the agent and representative of the Company's stockholders
(the "Stockholder Representative"), and, in the event of his inability or
unwillingness prior to the execution of the Escrow Agreement to act as
Stockholder Representative, a substitute Stockholder Representative shall be
similarly selected; provided, that the Stockholder Representative may be removed
and a successor to the Person originally serving as the Stockholder
Representative may be designated in a writing signed by a majority in interest
of the Company's stockholders and delivered to Centerprise in accordance with
Section 15.2. The Stockholder Representative is authorized by this Agreement, as
a specific term and condition of the Merger, to act hereunder and under the
Escrow Agreement with the powers and authority provided for herein and therein,
as representative of each of the Company's stockholders and their successors.
The Stockholder Representative shall also have full power and authority to
agree, contest or settle any claim or dispute affecting the amount and manner of
the payment of Aggregate Basic Purchase Consideration. Approval of this
Agreement and the Merger shall constitute approval on behalf of each of the
Company's stockholders and their successors of the terms and conditions of the
Escrow Agreement and ratification of the selection of the Stockholder
Representative and of his authority to act hereunder and under the Escrow
Agreement on their behalf. Any rights of the Company's stockholders to receive
any Escrowed Shares shall in no circumstances be sold, assigned or otherwise
transferred by them other than by will or pursuant to the laws of descent and
distribution. All certificates representing Escrowed Shares shall be accompanied
by separate stock powers endorsed in blank by the Stockholder Representative on
behalf of the Company's stockholders. Subject to the Escrow Agreement, holders
of Escrowed Shares shall retain their voting rights and shall be entitled to
receive dividends when, and if declared and paid with respect to the Escrowed
Shares deposited with the
4
Escrow Holder in accordance with this Section 2.1.6, but shall not otherwise be
entitled to mortgage, pledge, encumber, option, sell, assign or otherwise
transfer all or any interest in any Escrowed Shares.
2.1.7 Escrow Instructions. The parties hereto agree that this
Agreement, together with an escrow agreement the terms of which are attached
hereto as Exhibit 2.1.7 (a) (the "Escrow Agreement"), and (b) a stockholder
escrow agreement (the "Stockholder Escrow Agreement") shall constitute the
escrow instructions for the transfer of the Escrowed Shares, the right of the
Company's stockholders to receive the Contingent Payment, if any, (defined
below) and cash, to the extent $27,631,505 set forth as "Driver Debt Assumed" on
Line "N" of Schedule 2.1 which has been allocated to the payment of the
obligations of the Company set forth on Schedule 2.1.7 and as permitted by
Schedule 8.12 exceeds the amounts actually required to satisfy those obligations
(the "Excess Cash"). For purposes of the preceding sentence, such obligations
shall be deemed to be "satisfied" only upon either: (i) the delivery to
Centerprise of notice reflecting payment in full and release of such
obligations, the forms of such notice to the satisfaction of Centerprise, or
(ii) transfer to Centerprise of cash in an amount equal to the obligation
assumed by Centerprise on the Closing. The Excess Cash shall be transferred to
the Stockholder Escrow established pursuant to the Stockholder Escrow Agreement.
In the event of a conflict between any of the Stockholder Escrow Agreement, the
Escrow Agreement and the terms of this Agreement (exclusive of the applicable
escrow agreement), then the terms of this Agreement (exclusive of the applicable
escrow agreement) shall control for all purposes and under all circumstances.
2.2 Contingent Payment. The Company's stockholders shall be entitled to
receive from Centerprise a contingent payment, if any, based on the formula set
forth below (the "Contingent Payment"). The Contingent Payment, if any, shall be
calculated based upon the following formula:
Purchase Multiple x (2000 EBITDA - Base EBITDA)
The Contingent Payment, if any, shall be paid in cash, freely tradeable
Centerprise Common Stock or any combination thereof, at the sole option of the
Board of Directors of Centerprise, no later than two business days after the
earliest occurrence of one of the following events: (1) the expiration of the
Review Period without the filing of any Dispute Notice; or (2) the resolution of
the Dispute Notice; or (3) the delivery of the Arbitrator Report. If the amount
calculated under Section 2.2 is negative, the payment under such Section shall
be zero and the Company's stockholders shall have no obligation to refund to
Centerprise the amount of such negative calculation expressed as a positive
number and such negative number will not be carried forward into subsequent
periods.
2.2.1 Financial Statements and Contingent Payment Report. As
promptly as practicable, but no later than March 31, 2001, the Company shall
prepare and deliver to
5
Stockholder Representative, (i) a copy of the Company's financial statements for
the twelve month period ending December 31, 2000, and (ii) a report calculating
the Company's EBITDA for the twelve month period ending December 31, 2000 (the
"Contingent Payment Report"), together with supporting documentation with
respect thereto, for the purpose of determining the amount of the Contingent
Payment, if any.
2.2.2 Dispute Notice. Centerprise shall have 30 days from the
date on which the Financial Statements and Contingent Payment Report are
delivered to it to review such documents (the "Review Period"). Centerprise,
shall be provided with full access to the work papers of the Company and
reasonable access to the accounting personnel and/or the auditor of the Company
and its subsidiaries in connection with such review. If Centerprise shall have
any objections to the Contingent Payment Report, on or prior to the last day of
the Review Period, it will deliver a written notice to the Stockholder
Representative describing in reasonable detail its objections and the basis for
such objections (the "Dispute Notice"). The Dispute Notice shall set forth
Centerprise's position as to the disputed items on the Contingent Payment
Report. Centerprise may deliver to the Stockholder Representative at any time a
notice accepting the Contingent Payment Report without objection.
2.2.3 Dispute Resolution. The Stockholder' Representative and
Centerprise shall attempt to resolve any objections contained in the Dispute
Notice and upon such resolution will cause the Contingent Payment Report to be
revised to reflect such resolution. Such revised Contingent Payment Report (or
the Contingent Payment Report prepared by Centerprise, if the Stockholder'
Representative does not object thereto) shall constitute the final Contingent
Payment Report and shall be final and binding upon Centerprise, the Company and
the Company's stockholders. If the Stockholder' Representative and Centerprise
are unable to resolve any objection raised in the Dispute Notice within 15 days
after Centerprise has received the Dispute Notice, then a representative from
the office of a nationally recognized accounting firm selected jointly by the
Stockholder' Representative and Centerprise ( the "Arbitrator") will arbitrate
the dispute in Chicago, Illinois. The Stockholder' Representative and
Centerprise will present their respective positions with respect to any
unresolved objection identified in the Dispute Notice to the Arbitrator together
with such materials as the Arbitrator deems appropriate. The Arbitrator shall,
after the submission of the materials, submit a written decision on each
unresolved objection to the Stockholder' Representative and Centerprise and such
determination shall be final and binding on the parties hereto (the "Arbitrator
Report"). The parties agree that the cost of the Arbitrator shall be borne by
the non-prevailing party or as determined by the Arbitrator.
2.2.4 Definitions. For purpose of Section 2.2, the following
terms shall have the following meanings:
(a) "Acquisition" means each entity or portion of
such entity acquired or merged with or into the Company after the Closing.
6
(b) "Base EBITDA" shall be equal to $11,633,839.
(c) "Debt" means (a) all indebtedness for borrowed
money, whether or not evidenced by an instrument, (b) notes payable and drafts
accepted representing extensions of credit whether or not representing
obligations for borrowed money, (c) any obligation owed for all or part of the
deferred purchase price of property or services (excluding accounts payable
arising in the ordinary course of business) and (d) any guaranty of a Person
with respect to liabilities of a type described in immediately preceding clauses
(a) through (c).
(d) "EBITDA" means the sum of: (a) the net income (or
loss) of the Company excluding extraordinary items, (b) provisions for taxes
based on income, (c) total interest expense of the Company with respect to Debt,
(d) to the extent net income for the Company has been reduced thereby,
depreciation expense, and (e) to the extent net income for the Company has been
reduced thereby, amortization expense less non-cash items increasing net income,
all as determined in accordance with GAAP.
(e) "Purchase Multiple" means 6.75.
(f) "2000 EBITDA" means the Company's EBITDA for the
twelve month period ending December 31, 2000, excluding EBITDA attributable to
any Acquisition.
2.2.5 Example
2000 EBITDA $ 13,442,343
Less: Base EBITDA $ (11,633,839)
----------------
Net EBITDA $ 1,808,505
Purchase Multiple 6.75
Net Value $ 12,207,403
===============
ARTICLE III
THE CLOSING AND CONSUMMATION DATE
The consummation of the Merger and the other transactions contemplated
by this Agreement (the "Closing") shall take place at the offices of ▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇, Chicago, Illinois, contemporaneously with the closing of the
IPO, or at such other time and date as the parties hereto may mutually agree
(the "Closing Date").
ARTICLE IV
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REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Centerprise, as of March 31,
1999 and, subject to Section 7.3, as of the date on which Centerprise and the
lead Underwriter (as defined in Section 8.1.1) execute and deliver the
Underwriting Agreement related to the IPO and as of the Closing Date, as
follows:
4.1 Organization and Qualification. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Each Company Subsidiary (as defined in Section 4.2) is duly organized,
validly existing and in good standing under the laws of the state of its
organization set forth on Schedule 4.2. Each of the Company and the Company
Subsidiaries has the requisite power and authority under state and federal law
to own, lease and operate its assets and properties and to carry on the Business
as it is now being conducted, to do and/or licensed to transact and is qualified
to do business and is in good standing in each jurisdiction in which the
properties owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensure necessary. True, accurate
and complete copies of the Company's and each Company Subsidiary's
Organizational Documents, in each case as in effect on March 31, 1999, have
heretofore been delivered to Centerprise. "Organizational Documents" means (a)
the articles or certificate of incorporation and the bylaws of a corporation
(professional or otherwise), (b) the partnership agreement and any statement of
partnership of a general partnership, (c) the limited partnership agreement and
the certificate of limited partnership of any limited partnership, (d) the
operating or limited liability company agreement and certificate of formation of
any limited liability company, (e) any charter or similar document adopted and
filed in connection with the creation, formation, organization or governance (as
applicable) of any Person and (f) any amendment to any of the foregoing.
4.2 Company Subsidiaries. Schedule 4.2 sets forth the name (including
any assumed names), jurisdiction of organization and ownership of the issued and
outstanding equity interests of each Person in which the Company owns, directly
or indirectly, securities or other interests having the power to elect a
majority of such Person's board of directors or similar governing body, or
otherwise having the power to direct the business and policies of such Person
(each a "Company Subsidiary"). Except as set forth on Schedule 4.2, the Company
does not, directly or indirectly, own, of record or beneficially, or control any
capital stock, securities convertible into capital stock or any other equity
interest in any Person.
4.3 Authority; Non-Contravention; Approvals.
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4.3.1 The Company has full right, power and authority to enter
into this Agreement and, subject to the approval of the Merger and the
transactions contemplated hereby by the Company's stockholders, to consummate
the transactions contemplated hereby. The execution, delivery and performance of
this Agreement by the Company has been duly authorized by all necessary
corporate action on the part of the Company, subject to the approval of the
Merger and the transactions contemplated hereby by the Company's stockholders.
This Agreement has been duly executed and delivered by the Company, and,
assuming the due authorization, execution and delivery hereof by Centerprise,
constitutes a valid and legally binding agreement of the Company, enforceable
against the Company in accordance with its terms, except that such enforcement
may be subject to (i) bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting or relating to enforcement of creditors' rights
generally and (ii) general equitable principles.
4.3.2 The execution and delivery of this Agreement by the
Company does not violate, conflict with or result in a breach of any provision
of, or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration under, or result in the creation of any claim, lien, privilege,
mortgage, charge, hypothecation, assessment, security interest, pledge or other
encumbrance, conditional sales contract, equity charge, restriction, or adverse
claim of interest of any kind or nature whatsoever (each a "Lien" and
collectively, the "Liens"), upon the Business or any of the properties or assets
of the Company or any Company Subsidiary under, any of the terms, conditions or
provisions of (i) the Organizational Documents of the Company or any Company
Subsidiary, (ii) any statute, law, ordinance, rule, regulation, state or federal
regulatory agency bulletin, state attorney general opinion, judgment, decree,
order, injunction, writ, permit or license of any court or federal, state,
provincial, local or foreign government, or any subdivision, agency or authority
of any thereof, including any state's department of insurance ("Governmental
Authority") applicable to the Company, any Company Subsidiary, the Business, or
properties or assets of the Company or any Company Subsidiary, or (iii) any
note, bond, mortgage, indenture, deed of trust, license, franchise, permit,
concession, contract, lease or other instrument, obligation or agreement of any
kind to which the Company, or any Company Subsidiary is a party or by which the
Company, any Company Subsidiary or any of the properties or assets of the
Company or any Company Subsidiary may be bound or affected. The consummation the
Company of the transactions contemplated hereby will not result in a violation,
conflict, breach, right of termination, creation or acceleration of Liens under
the terms, conditions or provisions of the items described in clauses (i)
through (iii) of the immediately preceding sentence, subject, in the case of the
terms, conditions or provisions of the items described in clauses (ii) or (iii)
above, to obtaining (prior to the Closing Date) such consents required from
third parties set forth on Schedule 4.3.2.
4.3.3 Except for (i) the declaration of effectiveness of a
registration statement on Form S-1 (the "Form S-1") and a post-effective
amendment to the registration statement on Form
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S-4 (the "Form S-4") (Form S-1 and Form S-4 are collectively the "Registration
Statements") with the Securities and Exchange Commission (the "SEC") pursuant to
the Securities Act of 1933, as amended (the "Securities Act"or the "1933 Act"),
and filings, if required, with various state securities or "blue sky"
authorities, and (ii) any filing which may be required under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvement Act of 1976, as amended (the "HSR Act"),
no declaration, filing or registration with, or notice to, or authorization,
consent or approval of, any Governmental Authority is necessary for the
execution and delivery of this Agreement by the Company or the consummation by
the Company of the transactions contemplated hereby, other than such
declarations, filings, registrations, notices, authorizations, consents or
approvals which, if not made or obtained, as the case may be, would not,
individually or in the aggregate, have a "Company Material Adverse Effect,"
which, for purposes of this Agreement means a material adverse effect on the
operations, assets, condition (financial or other), operating results, employee
or client relations, or prospects of the Company and the Company Subsidiaries,
taken as a whole.
4.4 Capitalization.
4.4.1 The authorized capital stock of the Company consists of
10,000,000 shares of Class A Common Stock, par value $.01 per share, 10,000,000
shares of Class B Common Stock, par value $.01 per share and 5,000,000 shares of
Preferred Stock, par value $.01 per share, of which 1,046,180 shares of Class A
Common Stock, warrants to purchase 123,042 shares of Class A common stock, par
value $.01 per share, and 4,000 shares of Preferred Stock are issued and
outstanding. The authorized capital stock of each of the Company Subsidiaries,
if any, and the number of such shares issued and outstanding is completely and
accurately set forth in Schedule 4.4. All of such issued and outstanding shares
are validly issued and are fully paid, nonassessable and free of preemptive
rights. The Company owns all shares of the Company's Subsidiaries as indicated
on Schedule 4.4, in each case free and clear of all Liens, and the Company has
good and marketable title to such shares of the Company Subsidiaries. All of
such issued and outstanding shares are validly issued and are fully paid,
nonassessable and free of preemptive rights.
4.4.2 Except as set forth on Schedule 4.4, there are no
outstanding subscriptions, options, calls, contracts, commitments, undertakings,
restrictions, arrangements, rights or warrants, including any right of
conversion or exchange under any outstanding security, instrument or other
agreement to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of the capital stock of the Company or any Company Subsidiary
or obligating the Company or any Company Subsidiary to grant, extend or enter
into any such agreement or commitment or obligating the Company or any Company
Subsidiary to convey or transfer any Company Stock or Company Subsidiary stock,
as the case may be. As of the Closing Date, there will be no voting trusts,
proxies or other agreements or understandings to which the Company or any
Company Subsidiary is a party or is bound with respect to the voting of any
shares of capital stock or other equity interests of the Company or any Company
Subsidiary.
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4.5 Year 2000. Except as set forth on Schedule 4.5, to the Knowledge of
the Company, all of the computer software, computer firmware, computer hardware
(whether general or special purpose), and other similar or related items of
automated, computerized, and/or software system(s) that are used or relied on by
the Company or any Company Subsidiary in the conduct of the Business will not
malfunction, will not cease to function, will not generate incorrect data, and
will not produce incorrect results when processing, providing, and/or receiving
(i) date-related data into and between the twentieth (20th) and twenty-first
(21st) centuries and (ii) date-related data in connection with any valid date in
the twentieth (20th) and twenty-first (21st) centuries, except for any
malfunctions or generations of incorrect data or results that would not
individually or in the aggregate have a Company Material Adverse Effect. Nothing
in this Section 4.5 is intended or shall be construed as a representation or
warranty with respect to embedded systems.
4.6 Financial Statements. The Company has previously furnished to
Centerprise copies of the audited consolidated balance sheet of the Company as
of July 31 in each of the years 1997 and 1998 (the "Latest Balance Sheet"), and
the related audited consolidated statements of income, Stockholder's equity and
cash flow for each of the years in the three (3) year period ended October 31,
1998, including all notes thereto (collectively, the "Financial Statements").
Each of the Financial Statements is accurate and complete in all material
respects, is consistent with the books and records of the Company and the
Company Subsidiaries (which, in turn, are accurate and complete in all material
respects), and fairly presents in all material respects the financial condition,
assets and liabilities of the Company and the Company Subsidiaries as of its
date and the results of operations and cash flows for the periods related
thereto, in each case in accordance with generally accepted accounting
principles applied on a consistent basis ("GAAP").
4.7 Absence of Undisclosed Liabilities. Except as disclosed in Schedule
4.7, neither the Company nor any Company Subsidiary had, as of the date of the
Latest Balance Sheet, nor has it incurred since that date, any liabilities or
obligations of any nature (whether known or unknown, absolute, contingent,
accrued, direct, indirect, perfected, inchoate, unliquidated or otherwise),
except (i) to the extent clearly and accurately reflected or accrued or fully
reserved against in the Financial Statements or (ii) liabilities and obligations
which have arisen after the date of the Latest Balance Sheet in the ordinary
course of business and consistent with past custom and practices (none of which
is a liability resulting from a breach of contract, breach of warranty, tort,
infringement claim, legal violation or lawsuit).
4.8 Accounts and Notes Receivable. All of the accounts receivable of
the Company and each Company Subsidiary reflected in the Latest Balance Sheet or
arising from the date thereof until the Closing Date have arisen or will arise
in the ordinary course of the Company's Business and each Company Subsidiary's
Business, are not and will not be subject to any defense, counterclaim or
setoff, subject to insureds' rights to cancel insurance coverage, and have been
collected or are and will be collectible in the ordinary course of the Company's
Business using normal collection practices and policies employed by the Company
and each Company Subsidiary
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as of the date of this Agreement, in each case subject to any allowance for
doubtful accounts determined in accordance with the Company's past custom and
practices.
4.9 Absence of Certain Changes or Events. Except as set forth on
Schedule 4.9, since the date of the Latest Balance Sheet, each of the Company
and the Company Subsidiaries has conducted its business only in the ordinary
course consistent with past custom and practices. Except as set forth on
Schedule 4.9, since the date of the Latest Balance Sheet, there has not been
any:
(a) change in the operations, condition (financial or
otherwise), operating results, assets, liabilities, employee, or client
or policyholder relations or prospects of the Company or any Company
Subsidiary except as would not have a Company Material Adverse Effect;
(b) damage, destruction or loss of any property owned by the
Company or any Company Subsidiary, or used in the operation of the
Business, whether or not covered by insurance, having a replacement
cost or fair market value in excess of five percent (5%) of the amount
of net property, plant and equipment shown on the Latest Balance Sheet,
in the aggregate;
(c) voluntary or involuntary sale, transfer, surrender,
cancellation, abandonment, waiver, release or other disposition of any
kind by the Company or any Company Subsidiary of any right, power,
claim or debt, except the collection of accounts in the ordinary course
of business consistent with past custom and practices;
(d) strike, picketing, boycott, work stoppage, union
organizational activity, allegation, charge or complaint of employment
discrimination or other labor dispute or similar occurrence that is
reasonably expected to adversely affect the Company, a Company
Subsidiary or the Business;
(e) loan or advance by the Company or any Company Subsidiary
to any Person, other than as a result of services performed for, or
expenses properly and reasonably advanced for the benefit of, customers
in the ordinary course of business consistent with past custom and
practices;
(f) notice (formal or otherwise) of any liability, potential
liability or claimed liability relating to environmental matters;
(g) declaration, setting aside, or payment of any dividend or
other distribution in respect of the Company's capital stock or other
equity interests or any direct or indirect redemption, purchase, or
other acquisition of the Company's or any Company Subsidiary's capital
stock or other equity interests, or the payment of principal or
interest on any note, bond, debt instrument or debt to any Affiliate
(as defined in Section 15.4) of the Company
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or any Company Subsidiary, except bonuses and distributions to
employees and stockholders disclosed to Centerprise in writing that are
consistent with the Company's past custom and practices or as otherwise
contemplated by this Agreement;
(h) incurrence by the Company or any Company Subsidiary of
debts, liabilities or obligations except (i) current liabilities
incurred in connection with or for services rendered in the ordinary
course of business consistent with past custom and practices, (ii)
liabilities on account of taxes and governmental charges (but not
penalties, interest or fines in respect thereof), and (iii) obligations
or liabilities incurred by virtue of the execution of this Agreement;
(i) issuance by the Company or any Company Subsidiary of any
notes, bonds, or other debt securities or any equity securities or
securities convertible into or exchangeable for any equity securities;
(j) entry by the Company or any Company Subsidiary into, or
amendment or termination of, any material commitment, contract,
agreement, or transaction, other than in the ordinary course of
business and other than expiration of contracts in accordance with
their terms, except the Company and any Company Subsidiary may amend
any such material commitment, contract, agreement or transaction
necessary to prevent the relevant commitment, contract, agreement or
transaction from terminating due to the transactions contemplated
herein, provided that all material terms of such commitment, contract,
agreement or transaction shall remain the same;
(k) loss or threatened loss of, or any material reduction or
threatened material reduction in revenues from, any client of the
Company or any Company Subsidiary that accounted for revenues during
the last twelve months in excess of one percent (1%) of the
consolidated net revenues of the Company and the Company Subsidiaries,
or change in the relationship of the Company or any Company Subsidiary
with any client or Governmental Authority that is reasonably expected
to adversely affect the Company, any Company Subsidiary or the
Business;
(l) change in accounting principles, methods or practices
(including, without limitation, any change in depreciation or
amortization policies or rates) utilized by the Company or any Company
Subsidiary;
(m) discharge or satisfaction by the Company or any Company
Subsidiary of any material liability or encumbrance or payment by the
Company or any Company Subsidiary of any material obligation or
liability, other than current liabilities paid in the ordinary course
of its business consistent with past custom and practices;
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(n) sale, lease or other disposition by the Company or any
Company Subsidiary of any tangible assets having an aggregate
replacement cost or fair market value in excess of five percent (5%) of
the amount of net property, plant and equipment shown on the Latest
Balance Sheet) other than in the ordinary course of business, or the
sale, assignment or transfer by the Company or any Company Subsidiary
of any trademarks, service marks, trade names, corporate names,
copyright registrations, trade secrets, lists of past and present
customers, lists of potential customers, insurance policy expiration
data or rights, research sales data, analyses, sales and marketing
materials, scheduling and service methods, sales and service manuals,
or other intangible assets, or disclosure of any proprietary or
confidential information of the Company or any Company Subsidiary
relating to or used in connection with the Business to any Person other
than an employee, agent, attorney, accountant or other representative
of the Company that has agreed to maintain the confidentiality of any
such proprietary confidential information;
(o) capital expenditures or commitments therefor by the
Company or any Company Subsidiary in excess of $50,000 individually or
$100,000 in the aggregate;
(p) mortgage, pledge or other encumbrance of any asset of the
Company or any Company Subsidiary or creation of any easements, Liens
or other interests against or on any of the Real Property (as defined
in Section 4.14.1);
(q) adoption, amendment or termination of any Employee Plan
(as defined in Section 4.17.5(a)) or increase in the benefits provided
under any Employee Plan, or promise or commitment to undertake any of
the foregoing in the future; or
(r) an occurrence or event not included in clauses (a) through
(q) that has resulted or, based on information of which the Company has
Knowledge, is reasonably expected to result in a Company Material
Adverse Effect.
4.10 Litigation. Except as set forth on Schedule 4.10 (which shall
disclose the parties to, nature of and relief sought for each matter to be
disclosed on Schedule 4.10):
4.10.1 There is no suit, action, proceeding, investigation,
claim or order pending or, to the Knowledge of the Company, threatened against
the Company or any Company Subsidiary, or with respect to the Merger, or with
respect to any Employee Plan, or any fiduciary of any such plan (or pending or,
to the Knowledge of the Company, threatened against any of the officers,
directors, members, partners or employees of the Company or any Company
Subsidiary with respect to its business or proposed business activities), or to
which the Company or any Company Subsidiary is otherwise a party, or that is
reasonably expected to have a Company Material Adverse Effect, before any court,
or before any Governmental Authority (each an "Action" and collectively, the
"Actions"); nor, to the Knowledge of the Company, is there any basis for any
such Action.
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4.10.2 Neither the Company nor any Company Subsidiary is
subject to any unsatisfied or continuing judgment, order or decree of any court
or Governmental Authority. Neither the Company nor any Company Subsidiary, to
the Knowledge of the Company, is otherwise exposed, from a legal standpoint, to
any liability or disadvantage that is reasonably expected to result in a Company
Material Adverse Effect, and neither the Company nor any Company Subsidiary is a
party to any legal action to recover monies due it or for damages sustained by
it, other than collection of past due charges for services rendered or expenses
incurred by the Company.
4.10.3 Schedule 4.10 lists the insurer for each Action covered
by insurance or designates such Action, or a portion of such Action, as
uninsured and lists the individual and aggregate policy limits for the insurance
covering each insured Action and the applicable policy deductibles for each
insured Action.
4.10.4 Schedule 4.10 sets forth all material closed litigation
matters to which the Company or any Company Subsidiary was a party during the
five (5) year period preceding the Closing Date, the date such litigation was
commenced and concluded, and the nature of the resolution thereof (including
amounts paid in settlement or judgment).
4.11 Compliance with Applicable Laws. Except as set forth on Schedules
4.11 and 4.19, each of the Company, and the Company Subsidiaries and every
person acting on behalf of the Company or any Company Subsidiary has complied in
all material respects with all laws, rules, regulations, regulatory agency
bulletins, attorney general opinions, writs, injunctions, decrees, and orders
(collectively, "Laws") applicable to the Company, any Company Subsidiary and
every person acting on behalf of the Company or any Company Subsidiary in
relation to the operation of the Business, except where failure to so comply
would not have a Company Material Adverse Effect, and has not received any
notice of any alleged claim or threatened claim, violation of, citation for
non-compliance with, or liability or potential responsibility under, any such
Law which has not heretofore been cured and for which there is no remaining
liability and, to the Knowledge of the Company, no event has occurred or
circumstances exist that (with or without notice or lapse of time) is reasonably
expected to constitute or result in a violation by the Company, any Company
Subsidiary or any person acting on behalf of the Company or any Company
Subsidiary of any Law or that gives rise to any liability on the part of the
Company or any Company Subsidiary under any Law. Neither the Company nor any
Company Subsidiary has received notice of potential claims, allegations,
grievances or complaints against or pertaining to the Business, including any
consumer complaints from any state departments of insurance.
4.12 Licenses. Schedule 4.12 lists all Licenses used by the Company,
the Company Subsidiary and each Licensed Person that are material to the conduct
of the Business. "Licenses" means all notifications, licenses, permits,
franchises, certificates, approvals, exemptions, classifications, registrations,
qualifications and other similar documents and authorizations, and
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applications therefor held by the Company, each Company Subsidiary and each
Person acting on behalf of the Company or a Company Subsidiary whose activities
require Licenses ("Licensed Person") and issued or submitted to the Company, any
Company Subsidiary or any Licensed Persons by any Governmental Authority or
other Person. All such Licenses are valid, binding and in full force and effect.
Except as described on Schedule 4.12, the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby will
not adversely affect any such Licenses. To the Knowledge of the Company, the
Company and the Company Subsidiaries have taken all necessary action to maintain
such Licenses. No loss or expiration of any such License is pending or, to the
Company's Knowledge, threatened or reasonably foreseeable.
4.13 Material Contracts. Except as listed or described on Schedule 4.13
(such contracts, or those which should have been listed on Schedule 4.13, are
herein referred to as the "Material Contracts"), as of or on the date hereof,
neither the Company nor any Company Subsidiary is a party to or bound by, any
written or oral leases, agreements or other contracts or legally binding
contractual rights or contractual obligations or contractual commitments (each a
"Contract" and collectively, the "Contracts") relating to or in any way
affecting the operation or ownership of the Business that are of a type
described below and no such agreements are currently in negotiation or proposed:
(a) any consulting agreement pursuant to which the Company or
a Company Subsidiary is to receive consulting services (other than
consulting agreements that may be terminated by the Company or a
Company Subsidiary on not more than 30 days notice without penalty),
employment agreement, change-in-control agreement, or collective
bargaining arrangement with any labor union;
(b) any Contract for capital expenditures or the acquisition
or construction of fixed assets in excess of $50,000.
(c) any Contract for the purchase, maintenance or acquisition,
or the sale or furnishing, of materials, supplies, merchandise,
machinery, equipment, parts or other property or services (except if
such Contract is made in the ordinary course of business and requires
aggregate future payments of less than $25,000);
(d) any Contract, other than trade payables in the ordinary
course of business, relating to the borrowing of money, or the guaranty
of another Person's borrowing of money, including, without limitation,
any notes, mortgages, indentures and other obligations, guarantees of
performance, agreements and instruments for or relating to any lending
or borrowing, including assumed indebtedness, other than any contract
with an insurance carrier under which the Company or any Company
Subsidiary is responsible for the payment of insurance premiums whether
or not such premiums are first collected by the Company or any Company
Subsidiary;
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(e) any Contract granting any Person a Lien on all or any part
of the assets of the Company or any Company Subsidiary;
(f) any Contract for the cleanup, abatement or other actions
in connection with Hazardous Materials (as defined in Section 4.19),
the remediation of any existing environmental liabilities or relating
to the performance of any environmental audit or study;
(g) any Contract granting to any Person an option or a first
refusal, first-offer or similar preferential right to purchase or
acquire any material assets of the Company or any Company Subsidiary;
(h) any Contract with any agent, distributor or representative
which is not terminable by the Company or a Company Subsidiary upon
ninety (90) calendar days or less notice without penalty;
(i) any Contract under which the Company or any Company
Subsidiary is (A) a lessee or sublessee of any machinery, equipment,
vehicle or other tangible personal property, or (B) a lessor of any
tangible personal property owned by the Company or any Company
Subsidiary, in either case having an original purchase price or
requiring aggregate lease payments in excess of $50,000;
(j) any Contract under which the Company or any Company
Subsidiary has granted or received a license or sublicense or under
which it is obligated to pay or has the right to receive a royalty,
license fee or similar payment, in either case which provides for
payments over the life of such Contract in excess of $25,000, except
such Contracts with insurance companies whereby the Company or a
Company Subsidiary is acting as an insurance producer and has the right
to receive any commission payments;
(k) any Contract concerning an Affiliate Transaction (as
defined in Section 4.21);
(l) any Contract providing for the indemnification or holding
harmless of any officer, director, employee or other Person;
(m) any Contract (A) for purchase or sale by the Company or
any Company Subsidiary of any real property on which the Company or any
Company Subsidiary conducts any aspect of the Business, (B) granting
any options to lease or purchase all or any portion of the Real
Property, or (C) providing for labor, services or materials to the Real
Property (including, without limitation, brokerage or management
services) involving aggregate future payments of more than $25,000;
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(n) any Contract limiting, restricting or prohibiting the
Company or any Company Subsidiary from conducting business anywhere in
the United States or elsewhere in the world;
(o) any joint venture or partnership Contract;
(p) any lease, sublease or associated agreements relating to
the Leased Property (as defined in Section 4.14.1);
(q) any Contract requiring prior notice, consent or other
approval upon a change of control in the equity ownership of the
Company or any Company Subsidiary, which, if amended, modified or
terminated as a result of, relating to or in connection with a failure
to provide prior notice, or gain such consent or approval, would result
in a Company Material Adverse Effect; or
(r) any other Contract, whether or not made in the ordinary
course of business, which involves future payments by the Company or
any Company Subsidiary in excess of $25,000.
The Company has provided Centerprise with a true and complete copy of
each written Material Contract and a true and complete summary of each oral
Material Contract, in each case including all amendments or other modifications
thereto. Except as set forth on Schedule 4.13, each Material Contract is a valid
and binding obligation of, and enforceable in accordance with its terms against,
the Company or a Company Subsidiary, as applicable, and, to the Knowledge of the
Company, the other parties thereto, and is in full force and effect, subject
only to bankruptcy, reorganization, receivership and other laws affecting
creditors' rights generally and equitable principles. Except as set forth on
Schedule 4.13, the Company or one of the Company Subsidiaries, as applicable,
has performed in all material respects all obligations required to be performed
by it as of the date hereof and will have performed in all material respects all
obligations required to be performed by it as of the Closing Date under each
Material Contract and neither the Company or Company Subsidiary, as applicable,
nor, to the Knowledge of the Company, any other party to any Material Contract
is in breach or default thereunder, and, to the Knowledge of the Company, there
exists no condition which would, with or without the lapse of time or the giving
of notice, or both, constitute a breach or default thereunder. The Company has
not been notified that any party to any Material Contract intends to cancel,
terminate, not renew, or exercise an option under any Material Contract, whether
in connection with the transactions contemplated hereby or otherwise.
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4.14 Properties.
4.14.1 Schedule 4.14.1-1 is a correct and complete list, and a
brief description of, all real estate in which the Company or any of
the Company Subsidiaries has an ownership interest (the "Owned
Property") and all real property leased by the Company (the "Leased
Property"). Except as lessee of Leased Property, neither the Company
nor any Company Subsidiary is a lessee under or otherwise a party to
any lease, sublease, license, concession or other agreement, whether
written or oral, pursuant to which another Person has granted to the
Company or any Company Subsidiary the right to use or occupy all or any
portion of any real property.
The Company or one of the Company Subsidiaries has good and
marketable fee simple title to the Owned Property and, assuming good
title in the Landlord, a valid leasehold interest in the Leased
Property (the Owned Property and the Leased Property being sometimes
referred to herein as "Real Property"), in each case free and clear of
all Liens, assessments or restrictions (including, without limitation,
inchoate liens arising out of the provision of labor, services or
materials to any such real estate) other than (a) mortgages shown on
the Financial Statements as securing specified liabilities or
obligations, with respect to which no default (or event that, with
notice or lapse of time or both, would constitute a default) exists,
(b) Liens for current taxes not yet due, (c) (i) minor imperfections of
title, including utility and access easements depicted on subdivision
plats for platted lots that do not impair the intended use of the
property, if any, none of which materially impairs the current
operations of the Company or the Business, and (ii) zoning laws and
other land use restrictions or restrictive covenants that do not
materially impair the present use of the property subject thereto, and
(d) Liens, assessments, and restrictions pursuant to and by virtue of
the terms of the lease of the Leased Property. The Real Property
constitutes all real properties reflected on the Financial Statements
or used or occupied by the Company or any Company Subsidiary in
connection with the Business or otherwise.
With respect to the Owned Property, except as reflected on
Schedule 4.14.1-2(a):
(a) the Company or one of the Company Subsidiaries is in
exclusive possession thereof and no easements, licenses or rights are
necessary to conduct the Business thereon in addition to those which
exist as of the date hereof;
(b) no portion thereof is subject to any pending condemnation
proceeding or proceeding by any public or quasi-public authority
materially adverse to the Owned Property and, to the Knowledge of the
Company, there is no threatened condemnation or proceeding with respect
thereto;
19
(c) there is no violation of any covenant, condition,
restriction, easement or agreement of any Governmental Authority that
affects the Owned Property or the ownership, operation, use or
occupancy thereof;
(d) no portion of any parcel of the Owned Property is subject
to any roll-back tax, dual or exempt valuation tax and no portion of
any Owned Property is omitted from the appropriate tax rolls; and
(e) all assessments and taxes currently due and payable on
such Owned Property have been paid.
With respect to the Leased Property, except as reflected on Schedule
4.14.1-2(b):
(i) the Company and/or one of the Company
Subsidiaries is in exclusive, peaceful and undisturbed possession
thereof and, to the Knowledge of the Company, no easements, licenses or
rights are necessary to conduct the Business thereon in addition to
those which exist as of the date hereof; and
(ii) to the Knowledge of the Company, no portion
thereof is subject to any pending condemnation proceeding or proceeding
by any public or quasi-public authority materially adverse to the
Leased Property and there is no threatened condemnation or proceeding
with respect thereto.
4.14.2 The Latest Balance Sheet and/or Schedule 4.14.2 reflect all
material tangible personal property owned by the Company or any Company
Subsidiary, except as sold or otherwise disposed of or acquired in the ordinary
course of business. Except as set forth on Schedule 4.14.2, the Company or one
of the Company Subsidiaries has good and marketable title to, or a valid
leasehold interest in, or valid license of, such personal property (including,
without limitation, machinery, equipment and computers), in each case free and
clear of any Liens (other than Liens that are part of such leasehold or
license), and each such asset is in working order and has been maintained in a
commercially reasonable manner and does not contain, to the Knowledge of the
Company, any material defect. Except as set forth in Schedule 4.14.2, no
personal property (including, without limitation, software and databases
maintained on off-premises computers) used by the Company or any Company
Subsidiary in connection with the Business is held under any lease, security
agreement, conditional sales contract or other title retention or security
arrangement or is located other than on the Real Property.
4.15 Intellectual Property. The (i) patents, patent applications,
inventions and discoveries that may be patentable (collectively, the "Patents"),
(ii) registered and unregistered trademarks, trade names, company names, assumed
business names and service marks (collectively, the "Marks"), (iii) copyrights
(the "Copyrights"), and (iv) know how, trade secrets, confidential information,
software, technical information, data, process technology, plans and
20
drawings, lists of past and present customers, lists of potential customers,
insurance expiration data and rights, business plans, performance standards,
catalogues, research sales data, analyses, and programs, sales and marketing
materials, scheduling and service methods, sales and service manuals and all
other proprietary, confidential and other similar information (in whatever form
or medium) relating to or used in connection with the Business (collectively,
the "Trade Secrets"), and the business and goodwill of the Company and the
Company Subsidiaries as a going concern owned, used or licensed by the Company
or any Company Subsidiary (collectively, the "Intellectual Property") are all
those necessary to enable the Company and the Company Subsidiaries to conduct
and to continue to conduct the Business substantially as it is currently
conducted. Schedule 4.15 contains a complete and accurate list of all material
Patents, Marks and Copyrights and a brief description of all material Trade
Secrets owned, used by or directly licensed to the Company or any Company
Subsidiary, and a list of all material license agreements and arrangements with
respect to any of the Intellectual Property to which the Company or any Company
Subsidiary is a party, whether as licensee, licensor or otherwise (collectively,
the "Intellectual Property Licenses"). Except as set forth on Schedule 4.15, (i)
all of the Intellectual Property is owned, or to the Knowledge of the Company
used under a valid Intellectual Property License, by the Company or one of the
Company Subsidiaries, and is free and clear of all Liens and other adverse
claims; (ii) neither the Company nor any Company Subsidiary has received any
written notice that it is or has infringed on, misappropriated or otherwise
conflicted with, or otherwise has Knowledge that it is infringing on,
misappropriating, or otherwise conflicting with the intellectual property rights
of any third parties; (iii) there is no claim pending or, to the Knowledge of
the Company threatened against the Company or any Company Subsidiary with
respect to the alleged infringement or misappropriation by the Company or
Company Subsidiary, or a conflict with, any intellectual property rights of
others; (iv) the operation of any aspect of the Business in the manner in which
it has heretofore been operated or is presently operated does not give rise to
any such infringement or misappropriation; and (v) there is no infringement or
misappropriation of the Intellectual Property by a third party or claim, pending
or, to the Knowledge of the Company, threatened, against any third party with
respect to the alleged infringement or misappropriation of the Intellectual
Property.
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4.16 Taxes.
4.16.1 Except as set forth on Schedule 4.16.1-1, each of the
Company and the Company Subsidiaries has timely and accurately prepared and
filed or will timely and accurately prepare and file all federal, state
(including any state premium filings), local and foreign returns, declarations
and reports, information returns and statements (collectively, the "Returns")
for Taxes (as defined in Section 4.16.2) required to be filed by or with respect
to the Company or the Company Subsidiaries before the Closing Date, and has paid
or caused to be paid, or has made adequate provision or set up an adequate
accrual or reserve for the payment of, all Taxes required to be paid in respect
of the periods for which Returns are due on or prior to the Closing Date, and
will establish an adequate accrual or reserve for the payment of all Taxes
payable in respect of the period, including portions thereof, subsequent to the
last of said periods required to be so accrued or reserved, in each case in
accordance with GAAP up to and including the Closing Date. All such Returns are
or will be true and correct in all material respects. The Company has delivered
to Centerprise true and complete copies of all Returns referred to in the first
sentence of this Section 4.16.1 (including any amendments thereof) for the five
(5) most recent taxable years. Neither the Company nor any Company Subsidiary is
delinquent in the payment of any Tax, and no material deficiencies for any Tax,
assessment or governmental charge have been threatened, claimed, proposed or
assessed. No waiver or extension of time to assess any Taxes has been given or
requested. No written claim, or any other claim, by any taxing authority in any
jurisdiction where the Company or any Company Subsidiary does not file Tax
returns is pending pursuant to which the Company or Company Subsidiary, as
applicable, is or may be subject to taxation by that jurisdiction. The Company's
and the Company Subsidiaries' Returns were last audited by the Internal Revenue
Service or comparable state, local or foreign agencies on the dates set forth on
Schedule 4.16.1-2.
4.16.2 For purposes of this Agreement, the term "Taxes" shall
mean all taxes, charges, withholdings, fees, levies, penalties, additions,
interest or other assessments, including, without limitation, income, gross
receipts, excise, property, sales, employment, withholding, social security,
occupation, use, service, service use, license, payroll, franchise, transfer and
recording taxes, fees and charges, windfall profits, severance, customs, import,
export, employment or similar taxes, charges, fees, levies or other assessments,
imposed by the United States, or any state (including any state premium tax
filings), local, foreign or provincial government or subdivision or any agency
thereof, whether computed on a separate, consolidated, unitary, combined or any
other basis.
4.17 Employee Benefit Plans; ERISA.
4.17.1 Except as described in Schedule 4.17.1, neither the
Company nor any Company Subsidiary has or is reasonably expected to have any
liability (including contingent liability) whether direct or indirect (and
regardless of whether it would be derived from a current or former Plan
Affiliate as defined in Section 4.17.5(c)) with respect to any of the following
22
(whether written, unwritten or terminated): (i) any employee welfare benefit
plan, as defined in Section 3(1) of "ERISA," including, but not limited to, any
medical plan, life insurance plan, short-term or long-term disability plan or
dental plan; (ii) any "employee pension benefit plan," as defined in Section
3(2) of ERISA (as defined in Section 4.17.5(b)), including, but not limited to,
any excess benefit plan, top hat plan or deferred compensation plan or
arrangement, nonqualified retirement plan or arrangement, qualified defined
contribution or defined benefit arrangement; or (iii) any other benefit plan,
policy, program, arrangement or agreement, including, but not limited to, any
material fringe benefit plan or program, personnel policy, bonus or incentive
plan, stock option, restricted stock, stock bonus, holiday pay, vacation pay,
sick pay, bonus program, service award, moving expense, reimbursement program,
tool allowance, safety equipment allowance, deferred bonus plan, salary
reduction agreement, change-of-control agreement, employment agreement or
consulting agreement.
4.17.2 A complete copy of each written Employee Plan (as
defined in Section 4.17.5(a)) as amended to the Closing, together with audited
financial statements, if any, for the three (3) most recent plan years; a copy
of each trust agreement or other funding vehicle with respect to each such plan;
a copy of any and all determination letters, rulings or notices issued by a
Governmental Authority with respect to such plan; a copy of the Form 5500 Annual
Report for the three (3) most recent plan years; and a copy of each and any
general explanation or communication which was required to be distributed or
otherwise provided to participants in such plan and which describes all or any
relevant aspect of each plan, including summary plan descriptions and/or summary
of material modifications, have been delivered to Centerprise. A description of
each unwritten Employee Plan, including a description of eligibility,
participation, benefits, funding arrangements and assets or other relevant
aspects of the obligation, is set forth in Schedule 4.17.2.
4.17.3 Except as is not reasonably expected to give rise to
any liability (including contingent liability), whether direct or indirect, to
the Company or any Company Subsidiary, each Employee Plan (i) has been and is
operated and administered in compliance with its terms; (ii) has been and is
operated, administered, maintained and funded in compliance with the applicable
requirements of the Code in such a manner as to qualify, where appropriate and
intended, for both Federal and state purposes, for income tax exclusions,
tax-exempt status, and the allowance of deductions and credits with respect to
contributions thereto; (iii) where appropriate, has received
a favorable determination letter from the Internal Revenue Service upon which
the sponsor of the plan may currently rely; (iv) has been and currently complies
in form and in operation in all respects with all applicable requirements of
ERISA and the Code and any applicable reporting and disclosure requirements of
Federal and state laws, including but not limited to the requirement of Part 6
of subtitle B of Title I of ERISA and Section 4980B of the Code. With respect to
each Employee Plan, no Person has: (i) entered into any nonexempt "prohibited
transaction," as such terms are defined in ERISA or the Code; (ii) breached a
fiduciary obligation or (iii) any liability for any failure to act or comply in
connection with the administration or investment of the assets of such plan; and
no Employee Plan has any liability and there is no liability in connection with
23
any Employee Plan, other than a liability (i) which is expressly and adequately
reflected in the Latest Balance Sheets, (ii) which is discretionary or
terminable at will by the Company or one of the Company Subsidiaries without
incurring any such liability, or (iii) which is adequately funded under a
funding arrangement separate from the assets of the Company, any Company
Subsidiary or a Plan Affiliate (and only to the extent of such funding). Any
contribution made or accrued with respect to any Employee Plan is fully
deductible by the Company, a Company Subsidiary or a Plan Affiliate.
4.17.4 Neither the Company nor any Company Subsidiary or Plan
Affiliate has ever sponsored, maintained, contributed to or been required to
contribute to, or has any liability, whether direct or indirect, with respect to
any Employee Plan which is or has ever been (i) a "multiemployer plan" as
defined in Section 4001 of ERISA, (ii) a "multiemployer plan" within the meaning
of Section 3(37) of ERISA, (iii) a "multiple employer plan" within the meaning
of Code Section 413(c), (iv) a "multiple employer welfare arrangement" within
the meaning of Section 3(40) of ERISA, (v) subject to the funding requirements
of Section 412 of the Code or to Title IV of ERISA, or (vi) provides for
post-retirement medical, life insurance or other welfare-type benefits.
4.17.5 As used in this Agreement, the following terms shall
have the following respective meanings:
(a) the term "Employee Plan" shall mean any plan,
policy, program, arrangement or agreement described in Section
4.17.1, whether or not scheduled;
(b) the term "ERISA" shall mean the Employee
Retirement Income Security Act of 1974, as amended; and
(c) with respect to any Person ("First Person"), the
term "Plan Affiliate" shall mean any other Person with whom
the First Person constitutes or has constituted all or part of
a controlled group, or which would be treated or have been
treated with the First Person as under common control or whose
employees would be or have been treated as employed by the
First Person, under Section 414 of the Code or Section 4001(b)
of ERISA and any regulations, administrative rulings and case
law interpreting the foregoing.
4.18 Labor Matters. Except as set forth in Schedule 4.18, there is no,
and within the last three (3) years neither the Company nor any Company
Subsidiary has experienced any, strike, picketing, boycott, work stoppage or
slowdown or other similar labor dispute, union organizational activity,
allegation, charge or complaint of unfair labor practice, employment
discrimination or other matters relating to the employment of labor pending or,
to the Knowledge of the Company, threatened against the Company or any Company
Subsidiary, or which might affect the Company or any Company Subsidiary; nor, to
the Knowledge of the Company, is there any basis for any such allegation,
charge, or complaint. There is no request for representation
24
pending and, to the Knowledge of the Company, no question concerning
representation has been raised. There is no grievance pending that is reasonably
expected to result in a Company Material Adverse Effect nor any arbitration
proceeding arising out of a union agreement. To the Knowledge of the Company, no
key employee and no group of employees has announced or otherwise indicated any
plans to terminate employment with the Company or any Company Subsidiary. Each
of the Company and any Company Subsidiary has complied with all applicable laws
relating to the employment of labor, including provisions thereof relating to
wages, hours, equal opportunity, collective bargaining and the payment of social
security and other taxes. Neither the Company nor any Company Subsidiary is
liable for any arrears of wages or any taxes or penalties for failure to comply
with any such laws, ordinances or regulations.
4.19 Environmental Matters. Other than as disclosed on Schedule 4.19,
(i) each of the Company and the Company Subsidiaries is operating and has
operated its business in compliance with all applicable Environmental and Safety
Requirements (as defined later in this Section); (ii) to the actual knowledge of
the officers of the Company, without any duty to inquire (notwithstanding the
definition of "Knowledge" in Section 15.4), there are no Hazardous Materials (as
defined later in this Section) present at, on or under any real property
currently or formerly owned, leased or used by the Company or Company Subsidiary
(other than those present in office supplies and cleaning/maintenance materials)
for which the Company or a Company Subsidiary is or is reasonably expected to be
responsible, or otherwise have any liability, for response costs under any
Environmental and Safety Requirements; (iii) each of the Company and the Company
Subsidiaries has disposed of all waste materials generated by the Company or
such Company Subsidiary at any real property currently or formerly owned, leased
or used by the Company or Company Subsidiary in compliance with applicable
Environmental and Safety Requirements; and (iv) there are and have been no
facts, events, occurrences or conditions at or related to any real property
currently or formerly owned, leased or used by the Company or Company Subsidiary
that is reasonably expected to cause or give rise to liabilities or response
obligations of the Company or any Company Subsidiary under any Environmental and
Safety Requirements. The term "Environmental and Safety Requirements" means any
federal, state and local laws, statutes, regulations or other requirements
relating to the protection, preservation or conservation of the environment or
worker health and safety, all as amended or reauthorized. The term "Hazardous
Materials" means "hazardous substances," as defined by the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601
et seq., "hazardous wastes," as defined by the Resource Conservation Recovery
Act, 42 U.S.C. Section 6901 et seq., asbestos in any form or condition,
polychlorinated biphenyls and any other material, substance or waste to which
liability or standards of conduct may be imposed under any Environmental and
Safety Requirement.
4.20 Insurance. Each of the Company and the Company Subsidiaries has in
full force and effect commercially reasonable amounts of insurance (including,
but not limited to, errors and omissions insurance up to $10,000,000 per
occurrence and $10,000,000 aggregate) to protect the Company's and the Company
Subsidiaries' ownership or interest in, and operation of, its assets
25
against the types of liabilities, customarily insured against in connection with
operations similar to the Business, and all premiums due on such policies have
been paid. To the Company's Knowledge, each of the Company and the Company
Subsidiaries has complied with the provisions of all such policies and is not in
default under any of such policies. Schedule 4.20 contains a complete and
correct list of all such insurance policies. Neither the Company nor any Company
Subsidiary has received any notice of cancellation or non-renewal or intent to
cancel or non-renew or increase premiums with respect to such insurance
policies. Schedule 4.20 also contains a list of all claims or asserted claims
reported to insurers under such policies relating to the ownership or interest
in the Company's and the Company Subsidiaries' assets, or operation of the
Business, including all errors and omissions claims and similar types of claims,
actions or proceedings asserted against the Company or any Company Subsidiary
arising out of the Business at any time within the past three (3) years.
4.21 Interest in Customers and Suppliers; Affiliate Transactions.
Except as described on Schedule 4.21 and except for ownership as an investment
of not more than one percent (1%) of any class of capital stock of any
publicly-traded company, no Company's stockholder, any Affiliate of a Company's
stockholder or Affiliate of the Company or any Company Subsidiary (i) possesses,
directly or indirectly, any financial interest in, or is a director, officer,
employee or affiliate of any Person that is a client, supplier, customer,
lessor, lessee or competitor of the Company or any Company Subsidiary, (ii)
owns, directly or indirectly, in whole or in part, or has any interest in any
tangible or intangible property used in the conduct of the Business, or (iii) is
a party to an agreement or relationship, that involves the receipt by such
Person of compensation or property from the Company or any Company Subsidiary
other than through a written employment relationship or through distributions
made with respect to the Company Stock or equity interests in any Company
Subsidiary (provided such distributions have been made consistent with the
Company's or any Company Subsidiary's, as the case may be, past custom and
practices). Schedule 4.21 sets forth the parties to and the date, nature and
amount of each transaction during the last five years involving the transfer of
any cash, property or rights to or from the Company or any Company Subsidiary
from, to or for the benefit of any Affiliates (other than customary employment
relationships or distributions made with respect to the Company Stock)
("Affiliate Transactions"), and any existing commitments of the Company or any
Company Subsidiary to engage in the future in any Affiliate Transactions. Except
as disclosed, each Affiliate Transaction and each transaction with former
Affiliates of the Company or any Company Subsidiary was effected on terms
equivalent to those that would have been established in an arm's-length
transaction.
4.22 Business Relationships. Schedule 4.22 lists all clients of the
Company and each Company Subsidiary representing one percent (1%) or more of the
Company's revenues for the twelve (12) months ended December 31, 1998. Except as
set forth on Schedule 4.22, since December 31, 1998, none of such clients has
canceled or substantially reduced its business with the Company or Company
Subsidiary, as applicable, nor are any of such clients threatening to do so. To
the Knowledge of the Company, no policyholders, retail producers, licensed
agents and
26
brokers, bona-fide associations and/or groups and risk retention groups or risk
purchasing groups, or insurance carriers that accounts for one percent (1%) or
more of the Company's consolidated net revenue or supplier of the Company or any
Company Subsidiary, will cease to do business with, or substantially reduce its
business with, the Company or Company Subsidiary, as applicable, after the
consummation of the transactions contemplated hereby.
4.23 Compensation. Schedule 4.23 is a complete list setting forth the
names and current total compensation, including, without limitation, salary and
bonuses paid to employees and draws or other distributions paid to partners,
members or owners of each Person who earned from the Company or a Company
Subsidiary in 1998 total compensation in excess of $100,000. Except as set forth
in Schedule 4.23, no Person listed thereon has received any bonus or increase in
compensation and there has been no "general increase" in the compensation or
rate of compensation payable to any employees, partners, members or owners of
the Company or any Company Subsidiary since the date of the Latest Balance
Sheet, other than in the Company's and Company Subsidiaries' ordinary course of
business, consistent with past custom and practices, nor since that date has
there been any oral or written promise to employees, partners, members or owners
of any bonus or increase in compensation, other than in the Company's ordinary
course of business, consistent with past custom and practices. The term "general
increase" as used herein means any increase generally applicable to a class or
group, but does not include increases granted to individuals for merit, length
of service or change in position or responsibility made on the basis of the
custom and past practices of the Company or any Company Subsidiary. Schedule
4.23 includes the date and amount of the last bonus or similar distribution or
increase in compensation for each listed individual.
4.24 Bank Accounts. Schedule 4.24 is a true and complete list of each
bank in which the Company or any Company Subsidiary has an account or safe
deposit box, the number of each such account or box, and the names of all
Persons authorized to draw thereon or to have access thereto. Without limiting
the generality of Section 4.11 herein, the Company and each Company Subsidiary
has complied with all laws, regulations, bulletins promulgated by the California
Department of Insurance and all other state departments of insurance where
clients of the Company or a Company Subsidiary reside, and all written policies
of the California Department of Insurance and all other state departments of
insurance where clients of the Company or a Company Subsidiary reside pertaining
to the handling and maintenance of premium fund trust accounts and premiums held
by the Company and the Company Subsidiaries generally ("Premium Fund Insurance
Regulations"). The premium fund trust accounts of the Company and each Company
Subsidiary have the proper amount of funds in such accounts in accordance with
all Premium Fund Insurance Regulations, and the Company and each Company
Subsidiary have not or are not currently using such funds for their own use. The
Company and each Company Subsidiary have never been found to violate any Premium
Fund Insurance Regulations.
4.25 Disclosure; No Misrepresentation. No representation or warranty of
the Company contained in this Agreement or in any of the certification,
schedules, lists, documents, exhibits,
27
or other instruments delivered or to be delivered to Centerprise as contemplated
by any provision hereof contains any untrue statement regarding a material fact
or omits to state a material fact necessary in order to make the statements made
herein or therein not misleading. To the Knowledge of the Company, there is no
fact or circumstance that has not been disclosed to Centerprise herein that has
or is reasonably expected to have a Company Material Adverse Effect.
4.26 Title to and Transfer of Insurance Expirations. The Company or the
Company Subsidiaries have good and valid title or rights, free and clear of any
Liens, liabilities, encumbrances, obligations or other restrictions whatsoever,
to the Insurance Expirations (as hereinafter defined). For the purpose of this
Section 4.26, "Insurance Expirations" is defined as the right to service,
continue and renew, and collect all commissions and other amounts on, all
insurance policies of every type and description placed by or through the
Company or a Company Subsidiary, including all of (i) the expiration data
relating to such policies of insurance placed by or through the Company or a
Company Subsidiary, (ii) all books, records and files pertaining to all
insurance policies, including, without limitation, all computerized data records
and all other records and files regardless of the media in or on which such
data, records or files are maintains, and (iii) the customer and prospective
customer lists used by the Company or a Company Subsidiary.
ARTICLE V
[RESERVED]
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF CENTERPRISE
Centerprise represents and warrants to the Company as of March 31, 1999
and, subject to Section 7.3, as of the date on which Centerprise and the lead
Underwriter execute and deliver the Underwriting Agreement related to the IPO
and as of the Closing Date as follows:
6.1 Organization And Qualification. Each of Centerprise and Mergersub
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the requisite power and authority to own,
lease and operate its assets and properties and to carry on its business as it
is now being conducted. True, accurate and complete copies of each of
Centerprise's and Mergersub's Certificate of Incorporation and By-laws, as in
effect on the date hereof, including all amendments thereto, have heretofore
been delivered to the Company.
28
6.2 Capitalization.
6.2.1 The authorized capital stock of Centerprise consists of
20,000 shares of Centerprise Common Stock, of which 17,500 shares are
outstanding as of the date hereof. All of the issued and outstanding shares of
Centerprise Common Stock are validly issued and are fully paid, nonassessable
and free of preemptive rights. Immediately prior to the Closing Date, the
authorized capital stock of Centerprise will consist of 50,000,000 shares of
Centerprise Common Stock, of which the number of shares set forth in the Form
S-1 will be issued and outstanding, and 10,000 shares of Preferred Stock, par
value $0.01 per share, none of which will be issued and outstanding. Other than
(i) shares of Centerprise Common Stock issued pursuant to a split of the shares
outstanding as of the date of this Agreement, (ii) shares of Centerprise Common
Stock issued in accordance with the Merger and the Other Mergers, and (iii)
shares of Centerprise Common Stock that may be issued to new members of
management in lieu of shares previously issued to current members of management,
but which will not increase the number of shares of outstanding Centerprise
Common Stock, no shares of Centerprise Common Stock will be issued prior to the
consummation of the IPO. Mergersub's authorized capital stock consists solely of
100 shares of common stock, par value $.01 per share (the "Mergersub Stock"),
all of which are issued and outstanding, are owned free and clear of any Liens
by Centerprise, and are fully paid, nonassessable and free of pre-emptive
rights.
6.2.2 Except as set forth on Schedule 6.2, as of the date
hereof, there are no outstanding subscriptions, options, calls, contracts,
commitments, understandings, restrictions, arrangements, rights or warrants,
including any right of conversion or exchange under any outstanding security,
instrument or other agreement obligating Centerprise to issue, deliver or sell,
or cause to be issued, delivered or sold, additional shares of the capital stock
of Centerprise or obligating Centerprise to grant, extend or enter into any such
agreement or commitment. There are no voting trusts, proxies or other agreements
or understandings to which Centerprise is a party or is bound with respect to
the voting of any shares of capital stock of Centerprise. The shares of
Centerprise Common Stock issued to Stockholder of the Company in the Merger will
at the Closing Date be duly authorized, validly issued, fully paid and
nonassessable and free of preemptive rights and issued pursuant to a
registration statement as required by the 1933 Act or an exemption thereof.
6.3 No Subsidiaries. Except for Centerprise's ownership of 100% of the
capital stock of Professional Service Group, Inc., a Delaware corporation
("PSG") and Mergersub (and similar entities created for similar purposes with
respect to Other Agreements), Centerprise has no subsidiaries and it does not
own any capital stock of any corporation or any equity or other interest of any
nature whatsoever in any Person.
6.4 Authority; Non-Contravention; Approvals.
29
6.4.1 Each of Centerprise and Mergersub has all requisite
right, power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been approved by the Board
of Directors of Centerprise and Mergersub, and no other corporate proceedings on
the part of Centerprise or Mergersub are necessary to authorize the execution
and delivery of this Agreement or the consummation by Centerprise and Mergersub
of the transactions contemplated hereby. This Agreement has been duly executed
and delivered by Centerprise and Mergersub and, assuming the due authorization,
execution and delivery hereof by the Company and the Company's stockholders,
constitutes a valid and legally binding agreement of Centerprise and Mergersub,
enforceable against each of them in accordance with its terms, except that such
enforcement may be subject to (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting or relating to enforcement of
creditors' rights generally and (ii) general equitable principles.
6.4.2 The execution and delivery of this Agreement by
Centerprise and Mergersub does not violate, conflict with or result in a breach
of any provision of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or result in a right
of termination or acceleration under, or result in the creation of any Lien upon
any of the properties or assets of Centerprise or Mergersub under any of the
terms, conditions or provisions of (i) the Certificate of Incorporation or
By-laws of Centerprise or Mergersub, (ii) any statute, law, ordinance, rule,
regulation, judgment, decree, order, injunction, writ, permit or license of any
court or Governmental Authority applicable to Centerprise or Mergersub or any of
their respective properties or assets, or (iii) any note, bond, mortgage,
indenture, deed of trust, license, franchise, permit, concession, contract,
lease or other instrument, obligation or agreement of any kind to which
Centerprise or Mergersub is now a party or by which Centerprise, Mergersub or
any of their respective properties or assets, may be bound or affected. The
consummation by Centerprise or Mergersub of the transactions contemplated hereby
will not result in any violation, conflict, breach, right of termination or
acceleration or creation of Liens under any of the terms, conditions or
provisions of the items described in clauses (i) through (iii) of the
immediately preceding sentence, subject, in the case of the terms, conditions or
provisions of the items described in clause (ii) above, to obtaining (prior to
the Closing Date) Centerprise Required Statutory Approvals (as defined in
Section 6.4.3) and, in the case of the terms, conditions or provisions of the
items described in clause (iii) above, to obtaining (prior to the Closing Date)
consents required from commercial lenders, lessors or other third parties.
6.4.3 Except with respect to (i) the declaration of the
effectiveness of the Registration Statements by the SEC and filings, if
required, with various state securities or blue sky authorities, and (ii) any
filing which may be required under the HSR Act (the filings and approvals
referred to in clauses (i) through (iii) are collectively referred to as the
"Centerprise Required Statutory Approvals") no declaration, filing or
registration with, or notice to, or authorization, consent or approval of, any
governmental or regulatory body or authority is
necessary for the execution and delivery of this Agreement by Centerprise or
Mergersub or the
30
consummation by Centerprise or Mergersub of the transactions contemplated
hereby, other than such declarations, filings, registrations, notices,
authorizations, consents or approvals which, if not made or obtained, as the
case may be, are not reasonably expected to, in the aggregate, have a material
adverse effect on the business operations, properties, assets, condition
(financial or other), results of operations or prospects of Centerprise and its
subsidiaries, taken as a whole (a "Centerprise Material Adverse Effect").
6.5 Absence of Undisclosed Liabilities. Except as set forth on Schedule
6.5, neither Centerprise nor Mergersub has incurred any liabilities or
obligations (whether known or unknown, absolute, contingent, direct, indirect,
perfected, inchoate, unliquidated or otherwise) of any nature. Except as set
forth on Schedule 6.5, neither Centerprise nor Mergersub has engaged in any
business activities of any type or kind whatsoever, nor entered into any
agreements nor is it bound by any obligation or undertaking.
6.6 Litigation. There are no claims, suits, actions or proceedings
pending or, to the Knowledge of Centerprise, threatened against, relating to or
affecting Centerprise or Mergersub, before any court, Governmental Authority or
any arbitrator that seek to restrain or enjoin the consummation of the Merger or
the IPO or which could reasonably be expected, either alone or in the aggregate
with all such claims, actions or proceedings, to have a Centerprise Material
Adverse Effect. Centerprise is not subject to any unsatisfied or continuing
judgment, order or decree of any court or Governmental Authority. Centerprise is
not a party to any legal action to recover monies due it for damages sustained
by it.
6.7 Compliance with Applicable Laws. Each of Centerprise and Mergersub
has complied in all material respects with all Laws applicable to it, and has
not received any notice of any alleged claim or threatened claim, violation of
or liability or potential responsibility under any such Law which has not
heretofore been cured and for which there is no remaining liability and, to the
Knowledge of Centerprise, no event has occurred or circumstances exist that
(with or without notice or lapse of time) may constitute or result in a
violation by Centerprise or Mergersub of any Law or may give rise to any
liability on the part of the Centerprise or Mergersub under any Law.
6.8 No Misrepresentation. None of the representations and warranties of
Centerprise set forth in this Agreement or in any of the certificates,
schedules, lists, documents, exhibits, or other instruments delivered or to be
delivered to the Company as contemplated by any provision hereof contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained herein or therein not misleading. To the
Knowledge of Centerprise, there is no fact or circumstance that has not been
disclosed to the Company herein that has or is reasonably expected to have a
Company Material Adverse Effect.
ARTICLE VII
31
CERTAIN COVENANTS AND OTHER TERMS
7.1 Conduct of Business by the Company Prior to the Effective Time.
7.1.1 Except as otherwise contemplated by this Agreement,
after the date hereof and prior to the Closing Date or earlier termination of
this Agreement, unless Centerprise shall otherwise agree in writing, the Company
shall, and shall cause each Company Subsidiary to:
(a) in all material respects conduct its businesses
in the ordinary and usual course and consistent with past
customs and practices;
(b) not (i) amend its Organizational Documents, (ii)
split, combine or reclassify its outstanding capital stock or
(iii) (subject to the adjustment of the Company's working
capital pursuant to Section 7.1(l)) declare, set aside or pay
any dividend or distribution payable in cash, stock, property
or otherwise, except dividends or distributions which (A) are
consistent with past customs and practices, and (B) do not
result in a Company Material Adverse Effect;
(c) not issue, sell, pledge or dispose of, or agree
to issue, sell, pledge or dispose of (i) any additional shares
of, or any options, warrants or rights of any kind to acquire
any shares of, its capital stock or equity interests of any
class, (ii) any debt with voting rights or (iii) any debt or
equity securities convertible into or exchangeable for, or any
rights, warrants, calls, subscriptions, or options to acquire,
any such capital stock, debt with voting rights or convertible
securities;
(d) not (i) incur or become contingently liable with
respect to any indebtedness for borrowed money other than (A)
borrowings in the ordinary course of business in a manner
consistent with past customs and practices, (B) borrowings to
refinance existing indebtedness on commercially reasonable
terms, or (C) liability related to placing insurance with
insurance companies and collecting premiums therefor in the
ordinary course of business, (ii) redeem, purchase, acquire or
offer to purchase or acquire any shares of its capital stock
or equity interests or any options, warrants or rights to
acquire any of its capital stock or equity interests or any
security convertible into or exchangeable for its capital
stock or equity interests, (iii) sell, pledge, dispose of or
encumber any assets or businesses other than dispositions in
the ordinary course of business in a manner consistent with
past customs and practices or (iv) enter into any contract,
agreement, commitment or arrangement with respect to any of
the foregoing;
(e) use commercially reasonable efforts to (i)
preserve intact its business organizations and goodwill, (ii)
keep available the services of its present officers
32
and key employees, and (iii) preserve the goodwill and
business relationships with clients and others having business
relationships with it and not engage in any action, directly
or indirectly, with the intent to adversely impact the
transactions contemplated by this Agreement;
(f) confer on a regular and frequent basis with one
or more representatives of Centerprise to report operational
matters of materiality and the general status of ongoing
operations;
(g) not (i) increase in any manner the base
compensation of, or enter into any new bonus or incentive
agreement or arrangement with, any of its employees, partners,
members or owners, except in the ordinary course of business
in a manner consistent with past customs and practices of the
Company or any Company Subsidiary, as applicable, (ii) pay or
agree to pay any additional pension, retirement allowance or
other employee benefit under any Employee Plan to any such
Person, whether past or present, (iii) enter into any new
employment, severance, consulting, or other compensation
agreement with any of its existing employees, partners,
members or owners, (iv) amend or enter into a new Employee
Plan (except as required by Law) or amend or enter into a new
collective bargaining agreement, or (v) engage in any new
Affiliate Transaction;
(h) comply in all material respects with all
applicable Laws;
(i) not make any material investment in, directly or
indirectly, acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial equity
interest in or substantial portion of the assets of, or by any
other manner, any businesses or any Person or division thereof
or otherwise acquire or agree to acquire any assets in each
case which are material to it other than in the ordinary
course of business in a manner consistent with past customs
and practices; provided that the Company or any Company
Subsidiary may enter into discussions and/or negotiations
regarding a potential acquisition of or merger with or into
(i) Summit Risk Management & Insurance Services, (ii) MGU of
the West, (iii) Superior Access Insurance Services, Inc.
(SAI), (iv) ▇▇▇▇▇ ▇▇▇▇▇▇ & Associates, and/or (v) Innovative
Cost Management (ICM) (the entities referred to in items (i)
through (v) collectively, the "Targets"); provided further,
that the consummation of any such merger or acquisition shall
be subject to Centerprise's consent which may be withheld in
its sole and absolute discretion, and that any such
discussions and/or negotiations with any Target shall be
subject to such Target first entering into a confidentiality
agreement restricting the disclosure of the terms or existence
of the contemplated transaction, the Merger and the Other
Mergers in a form and substance reasonably satisfactory to
Centerprise;
33
(j) not sell, lease, license, encumber or otherwise
dispose of, or agree to sell, lease, license, encumber or
otherwise dispose of, any of its assets;
(k) maintain with financially responsible insurance
companies insurance on its tangible assets and its businesses
in such amounts and against such risks and losses in a manner
consistent with past customs and practices in all material
respects;
(l) except as may be permitted by Section 7.1.1(b),
maintain a level of working capital equal to thirty days' cash
operating expenses (excluding commissions), as determined
based upon the December 31, 1998 pro forma income statement;
provided, that, that Company shall be entitled to transfer to
its working capital account its litigation reserves existing
as of the Closing Date; and
(m) collect and ▇▇▇▇ receivables in the ordinary and
usual course and consistent with past custom and practices.
7.1.2 Notwithstanding the fact that such action might
otherwise be permitted pursuant to this Article, the Company shall not take, or
permit any Company Subsidiary to take, any action that would or is reasonably
likely to result in any of the representations or warranties of the Company set
forth in this Agreement being untrue or in any of the conditions to the
consummation of the transactions contemplated hereunder set forth in Article X
not being satisfied.
7.1.3 At or prior to the Closing, the Company, as applicable,
shall terminate, without any liability to the Company or the Company
Subsidiaries, all agreements relating to the voting of the Company's capital
stock, and all agreements and obligations of the Company and the Company
Subsidiaries relating to borrowed money and/or involving payments to or for the
benefit of a present or former stockholder of the Company, or an Affiliate or
family member of a present or former stockholder of the Company, including
without limitation those set forth on Schedule 7.1.3, but excluding matters
shown as excluded on Schedule 7.1.3 and (B) items approved by Centerprise in
writing.
7.2 No-Shop.
34
(a) After the date hereof and prior to the Closing Date or
earlier termination of this Agreement, the Company shall (i) not, and
the Company shall use its diligent efforts to cause the Company
Subsidiaries and any officer, director or employee of, or any attorney,
accountant, investment banker, financial advisor or other agent
retained by the Company or any Company Subsidiary not to, initiate,
solicit, negotiate, encourage, or provide non-public or confidential
information to facilitate, any proposal or offer to acquire all or any
substantial part of the business and properties of the Company or any
Company Subsidiary, or any capital stock of the Company or any Company
Subsidiary, whether by merger, purchase of assets or otherwise, whether
for cash, securities or any other consideration or combination thereof,
or enter into any joint venture or partnership or similar arrangement,
and (ii) promptly advise Centerprise of the terms of any communications
the Company may receive or become aware of relating to any bid for part
or all of the Company or any Company Subsidiary. Notwithstanding the
foregoing, if the underwriters' internal sales force presentation or
"road show" for the IPO has not started by October 15, 1999, then from
and after such date, the Company may (through its authorized agents)
conduct limited discussions with potential acquirers of the Company for
the sole purpose of assessing the potential terms and conditions of an
acquisition proposal involving the Company. Notwithstanding the
preceding sentence, the Company shall not (i) disclose any non-public
or confidential information regarding the Company to any such third
party or (ii) enter into any agreement (including a letter of intent or
term sheet) with such third party unless this Agreement has been
terminated pursuant to Article XI.
(b) The Company (i) acknowledges that a breach of any of their
covenants contained in this Section 7.2 will result in irreparable harm
to Centerprise which will not be compensable in money damages; and (ii)
agrees that such covenant shall be specifically enforceable and that
specific performance and injunctive relief shall be a remedy properly
available to the other party for a breach of such covenant.
7.3 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 the Closing promptly to
supplement or amend and deliver to the other parties all the schedules to this
Agreement (the "Schedules") to correct any matter which would constitute a
breach of any such party's representations and warranties herein; provided,
however, that no amendment or supplement to a Schedule that constitutes or
reflects a Company Material Adverse Effect or affects Schedule 4.2, Schedule 4.4
or Schedule 8.8 may be made unless Centerprise and a majority of the Founding
Companies consent to such amendment or supplement. No amendment or supplement to
a Schedule shall be made later than three (3) business days prior to the
anticipated effectiveness of the Form S-1. For all purposes of this Agreement,
including, without limitation, for purposes of determining (x) whether the
conditions set forth in Sections 10.2 and 10.3 have been fulfilled, and (y) the
rights of a party to indemnification, the Schedules hereto shall be deemed to be
the Schedules as amended or supplemented pursuant to this Section 7.3. In the
event that (i) one of the other Founding Companies seeks to amend or supplement
a Schedule
35
pursuant to Section 7.3 of one of the Other Agreements, (ii) such amendment or
supplement constitutes or reflects a Company Material Adverse Effect (as defined
in such Other Agreement) or affects Schedule 4.2, Schedule 4.4 or Schedule 8.8
of such Other Agreement, and (iii) Centerprise and a majority of the Founding
Companies consent to such amendment or supplement, but the Company does not, the
Company may terminate this Agreement at any time prior to the Closing Date. In
the event that (i) the Company seeks to amend or supplement a Schedule pursuant
to this Section 7.3, (ii) such amendment or supplement constitutes or reflects a
Company Material Adverse Effect or affects Schedule 4.2, Schedule 4.4 or
Schedule 8.8, and (iii) Centerprise and a majority of the Founding Companies do
not consent to such amendment or supplement, this Agreement shall be deemed
terminated.
No party to this Agreement shall be liable to any other party if this
Agreement shall be terminated pursuant to the provisions of this Section 7.3,
unless this Agreement is so terminated pursuant to the last sentence of the
preceding paragraph in connection with an amendment of or supplement to a
Schedule relating to a breach of a representation or warranty as of March 31,
1999 in which case the Company shall pay to Centerprise, as Centerprise's
exclusive remedy (notwithstanding anything to the contrary) and as liquidated
damages, and not as a penalty, an amount equal to $2,000,000 (the "Liquidated
Damages Amount"). The Company agrees that in the case of such termination,
Centerprise and the Founding Companies (excluding the Company) will sustain
immediate and irreparable economic harm and loss of goodwill and that actual
losses suffered by such parties will be difficult, if not impossible, to
ascertain, but the Liquidated Damages Amount set forth herein is reasonable and
has been arrived at after a good faith effort to estimate such losses. Payment
of the Liquidated Damages Amount shall be made in cash to Centerprise within
thirty (30) days of a termination pursuant to the last sentence of the preceding
paragraph in connection with an amendment of or supplement to a Schedule
relating to a breach of a representation or warranty as of the date of this
Agreement.
7.4 Company Stockholder Meeting. The Company shall take all action in
accordance with applicable Laws and its Organizational Documents necessary to
duly call, give notice of, convene and hold a meeting of its stockholders to be
held on the earliest practicable date determined in consultation with
Centerprise to consider and vote upon approval of the Merger, this Agreement and
the transactions contemplated hereby by the Company's stockholders, and the
Company's Board of Directors shall recommend approval of the Merger, this
Agreement and the transactions contemplated hereby by the Company's
stockholders. If the Merger, this Agreement and the transactions contemplated
hereby are approved by the Company's stockholders, the Company shall not call,
give notice of, convene or hold any other meeting of its stockholders to rescind
or modify such approval or to consider any other transaction.
36
ARTICLE VIII
ADDITIONAL AGREEMENTS
8.1 Access to Information.
8.1.1 The Company shall and shall cause the Company
Subsidiaries to afford to Centerprise and its accountants, counsel, financial
advisors and other representatives, including without limitation the
underwriters engaged in connection with the IPO (each an "Underwriter" and
collectively, the "Underwriters") and their counsel (collectively, the
"Centerprise Representatives"), and to the other Founding Companies and their
accountants, counsel, financial advisors and other representatives, and
Centerprise shall afford to the Company and its accountants, counsel, financial
advisors and other representatives (the "Company Representatives"), upon
reasonable notice, full access during normal business hours throughout the
period prior to the Closing Date to all of its respective properties, books,
contracts, commitments and records (including, but not limited to, financial
statements and Tax Returns) and, during such period, shall furnish promptly to
one another all due diligence information requested by the other party.
Centerprise shall hold and shall use its best efforts to cause the Centerprise
Representatives to hold, and the Company shall hold and shall use their best
efforts to cause the Company Representatives to hold, in strict confidence all
non-public information furnished to it in connection with the transactions
contemplated by this Agreement, except that each of Centerprise and the Company
may disclose any information that it is required by law or judicial or
administrative order to disclose. In addition, Centerprise will cause each of
the other Founding Companies and their members and stockholders to enter into a
provision similar to this Section 8.1 requiring each such Founding Company to
keep confidential any information obtained by such Founding Company in
connection with the transactions contemplated by this Agreement.
8.1.2 In the event that this Agreement is terminated in
accordance with its terms, each party shall promptly return to the disclosing
party all non-public written material provided pursuant to this Section 8.1 or
pursuant to the Other Agreements and shall not retain any copies, extracts or
other reproductions of such written material. In the event of such termination,
all documents, memoranda, notes and other writings prepared by Centerprise or
the Company based on the information in such material shall be destroyed (and
Centerprise and the Company shall use their respective reasonable best efforts
to cause their advisors and representatives to similarly destroy such documents,
memoranda and notes), and such destruction (and reasonable best efforts) shall
be certified in writing by an authorized officer supervising such destruction.
37
8.2 Registration Statements.
8.2.1 Centerprise has filed the Registration Statements with
the SEC and shall use all reasonable efforts to have the Registration Statements
declared effective by the SEC as promptly as practicable. Centerprise shall also
take any action required to be taken under applicable state "blue sky" or
securities laws in connection with the issuance of Centerprise Common Stock.
Centerprise and the Company shall promptly furnish to each other all
information, and take such other actions, as may reasonably be requested in
connection with making such filings. All information provided and to be provided
by Centerprise and the Company, respectively, for use in the Registration
Statements shall be true and correct in all material respects without omission
of any material fact which is required to make such information not false or
misleading as of the date thereof and in light of the circumstances under which
given or made. The Company agrees promptly to advise Centerprise if at any time
during the period in which a prospectus relating to the offering of the Merger
is required to be delivered under the Securities Act any information contained
in the prospectus concerning the Company or the Company Subsidiaries becomes
incorrect or incomplete in any material respect, and to provide the information
needed to correct such inaccuracy or remedy such incompletion.
8.2.2 Centerprise agrees that it will provide to the Company
and its counsel copies of drafts of the Registration Statements (and any
amendments thereto) containing material changes to the information therein as
they are prepared and will not (i) file with the SEC, (ii) request the
acceleration of the effectiveness of or (iii) circulate any prospectus forming a
part of, the Registration Statements (or any amendment thereto) unless the
Company and its counsel (x) have had at least two days to review the revised
information contained therein (which changes shall be highlighted by computer
generated marks indicating the additions and deletions made from the prior draft
reviewed by the Company's counsel) and (y) have not objected to the substance of
the information contained therein. Any objections posed by the Company or its
counsel shall be in writing and state with specificity the material in question,
the reason for the objection, and the Company's proposed alternative. If the
objection is founded upon a rule promulgated under the Securities Act, the
objection shall cite the rule. Notwithstanding the foregoing, during the five
(5) business days immediately preceding the date scheduled for the filing of the
Registration Statements and any amendment thereto, the Company and its counsel
shall be obligated to respond to proposed changes electronically transmitted to
them within two (2) hours from the time the proposed changes (in the case of the
initial filing of the Registration Statements, from the last circulated draft of
the Registration Statements; and, in the case of any subsequent filing of the
Registration Statements or any amendment thereof, from the most recently filed
Registration Statements or amendment thereof) are transmitted to the Company's
counsel; provided, that, Centerprise has provided to the Company or its counsel
reasonable advance notice of such proposed changes; provided, further, that such
changes are highlighted by computer generated marks indicating the additions and
deletions made from the prior draft reviewed by the Company's counsel.
38
8.2.3 Centerprise will advise each Stockholder Representative
of the effectiveness of the Registration Statements, advise each Stockholder
Representative of the entry of any stop order suspending the effectiveness of
the Registration Statements or the initiation of any proceeding for that
purpose, and, if such stop order shall be entered, use its best efforts promptly
to obtain the lifting or removal thereof. Upon the written request of the
Company, Centerprise will furnish to the Company a reasonable number of copies
of the final prospectus associated with the IPO.
8.3 Expenses and Fees. Centerprise shall pay the fees and expenses of
the independent public accountants and legal counsel to Centerprise and all
filing, printing and other reasonable, documented fees and expenses associated
with the IPO and Form S-4. The Company and its shareholders will not be liable
for any portion of the above expenses in the event the IPO is not completed.
Centerprise shall also pay the underwriting discounts and commissions payable in
connection with the sale of Centerprise Common Stock in the IPO. All other costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses.
8.4 Agreement to Cooperate. Subject to the terms and conditions herein
provided, each of the parties hereto shall use all reasonable efforts to take,
or cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement.
8.5 Public Statements. Except as may be required by law, no party
hereto nor any Affiliate of any party hereto shall issue any press release or
any written public statement with respect to this Agreement or the transactions
contemplated by this Agreement or the Other Agreements without the prior written
consent of Centerprise and the Company.
8.6 [Reserved].
8.7 Centerprise Covenants. After the date hereof and prior to the
Closing Date or earlier termination of this Agreement in accordance with its
terms, Centerprise shall comply in all material requests with all applicable
laws. Centerprise shall not take any action that would or is reasonably likely
to result in any of the representations or warranties of Centerprise set forth
in this Agreement being untrue or in any of the conditions to the consummation
of the transactions contemplated hereunder set forth in Article X not being
satisfied.
8.8 Release of Guarantees. Centerprise shall use all commercially
reasonable efforts and good faith to have the Company's stockholders released
from any and all guarantees on any indebtedness and leases that they personally
guaranteed for the benefit of the Company as set forth on Schedule 8.8, with all
such guarantees on indebtedness and leases being assumed by Centerprise, if
necessary to achieve such releases. If any guaranteed indebtedness is repaid in
full with proceeds from the IPO and the Company's stockholders' guarantees
thereafter shall have no
39
further force and effect, then Centerprise shall not be obligated to use any
efforts to obtain release of such guarantee. In the event that Centerprise
cannot obtain such releases from the lenders of any such guaranteed indebtedness
or lessors of any guaranteed leases, Centerprise agrees to indemnify, defend and
hold harmless the Company's stockholders against any and all claims made by
lenders or landlords under such guarantees.
8.9 [Reserved].
8.10 Preparation and Filing of Tax Returns.
8.10.1 The Company shall be responsible for causing the timely
filing of the final pre-Closing Returns for the Company and the Company
Subsidiaries; provided, however, that Centerprise and its advisors shall have
the right to review and approve such returns prior to filing, which approval
shall not be unreasonably withheld. Centerprise shall, and shall cause its
Affiliates to, provide to the Company such cooperation and information
reasonably requested 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. The Company shall bear all
costs of filing such returns. As of the Closing Date, the Company hereby assigns
to its stockholders the right to receive any and all refunds, if any, from the
Internal Revenue Service which have been or will be payable in connection with
the Company's filing of the final pre-Closing Returns. To the extent any refund
is received by the Company, Centerprise shall cause the Company to direct such
funds to the Stockholder Representative for the benefit of the stockholders.
8.10.2 Each of the Company and Centerprise shall comply with
the tax reporting requirements of Section 1.351-3 of the Treasury Regulations
promulgated under the Code, and shall treat the transaction as subject to the
provisions of Section 351 of the Code.
8.11 Maintenance of Insurance. The Company covenants and agrees that
all insurance policies listed, or required to be listed, on Schedule 4.20 will
be maintained in full force and effect through the Closing Date.
8.12 Payment of Indebtedness; Cancellation of Preferred Stock.
Centerprise will cause all indebtedness (including accrued and unpaid interest,
if any, and prepayment penalties) owing to Imperial Bank and The 1818 Mezzanine
Fund, L.P. and any other obligation set forth on Schedule 2.1.7(a) to be paid in
full on the Closing Date. At the Closing, Centerprise shall also directly pay,
if directed by the Company in writing, certain obligations of the Company out of
funds available after payment of the obligation set forth on Schedule 2.1.7(a)
and satisfaction of items set forth on Section 2.1.7(b). On the Closing Date,
the Company shall cause the redemption and retirement of the Preferred Stock.
40
ARTICLE IX
[RESERVED]
ARTICLE X
CLOSING CONDITIONS
10.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment at or prior to the Closing of the following conditions:
(a) the Underwriting Agreement related to the IPO shall have
been executed and the closing of the sale of Centerprise Common Stock
to the Underwriters pursuant thereto shall have occurred simultaneously
with the Closing hereunder;
(b) the closings of the transactions contemplated under each
of the Other Agreements shall have occurred simultaneously with the
Closing hereunder, unless terminated in accordance with Section 7.3 of
the applicable Other Agreement;
(c) the Registration Statements shall have become effective in
accordance with the provisions of the Securities Act, and no stop order
suspending such effectiveness shall have been issued and remain in
effect and no proceeding for that purpose shall have been instituted by
the SEC or any state regulatory authorities;
(d) no preliminary or permanent injunction or other order or
decree shall be pending or issued by any federal or state court which
seeks to prevent or prevents the consummation of the IPO, the Merger or
any of the Other Mergers shall have been issued and remain in effect;
(e) the minimum condition set forth in line X on Schedule 2.1
shall have been satisfied;
(f) no action shall have been taken, and no statute, rule or
regulation shall have been enacted, by any state or federal government
or governmental agency in the United States which would prevent the
consummation of the Merger or any of the Other Mergers or make the
consummation of the Merger or any of the Other Mergers illegal;
41
(g) all material governmental and third party waivers,
consents and approvals required for the consummation of the Merger or
any of the Other Mergers and the transactions contemplated hereby and
by the Other Agreements (including, without limitation, any consents
listed on Schedules 4.3.2 or 4.12) shall have been obtained and be in
effect;
(h) no action, suit or proceeding with respect to the Merger
has been filed or threatened by a third party and remains threatened or
remains pending before any court, Governmental Authority or regulatory
Person;
(i) this Agreement, the Merger and the transactions
contemplated hereby shall have been approved and adopted by the
Company's stockholder in the manner required by any applicable Law and
the Company's Organizational Documents and such approval shall remain
in full force and effect; and
(j) Centerprise shall have entered into one or more credit
facilities providing for aggregate commitments of not less than $75
million.
10.2 Conditions to Obligation of the Company to Effect the Merger.
Unless waived by the Company, the obligation of the Company to effect the Merger
shall be subject to the fulfillment at or prior to the Closing of the following
additional conditions:
(a) Centerprise, Mergersub and each of the Other Founding
Companies shall have performed in all material respects their
agreements contained in this Agreement and each Other Agreement
required to be performed on or prior to the Closing Date (including,
without limitation, the obligations set forth in Section 8.12) and the
representations and warranties of Centerprise contained in this
Agreement and each Other Agreement shall be true and correct in all
material respects on and as of the date made and on and as of the
Closing Date as if made at and as of such date, and the Company shall
have received a certificate of the Chief Executive Officer or President
of Centerprise to that effect;
(b) no Governmental Authority shall have promulgated or
formally proposed any statute, rule or regulation which, when taken
together with all such promulgations, would materially impair the value
to the Company's stockholders of the Merger;
(c) the Company shall have received an opinion from ▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇, dated as of the Closing Date, containing the
substantive opinions set forth in Exhibit 10.2(c), the final form of
such opinion to be in form and substance reasonably acceptable to the
Company and its stockholders;
(d) Each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇ and P. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ shall have been afforded the opportunity to enter into an
employment agreement (the "Employment Agreements") with the Company
substantially in the form attached hereto
42
as Exhibit 10.2(d)(i), with respect to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Exhibit
10.2(d)(ii) with respect to ▇▇▇▇▇▇ ▇. ▇▇▇▇, and Exhibit 10.2(d)(iii)
with respect to P. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇;
(e) Centerprise shall have delivered to the Company a
certificate, dated as of a date no later than ten days prior to the
Closing Date, duly issued by the Delaware Secretary of State, showing
that Centerprise is in good standing;
(f) each of the Company's stockholders, the partners, the
members and the stockholders of the other Founding Companies who are to
receive shares of Centerprise Common Stock pursuant to the Other
Agreements, and the other stockholders of Centerprise other than those
acquiring stock in the IPO shall have entered into an agreement (the
"Stockholder Agreement") substantially in the form attached hereto as
Exhibit 10.2(f);
(g) all conditions to the Other Mergers of the other Founding
Companies, on substantially the same terms as provided herein, shall
have been satisfied or waived by the applicable party and the Company;
(h) the Company shall have received an opinion of ▇▇▇▇▇▇
▇▇▇▇▇▇ & Zavis, dated as of the Closing Date and based upon certain
factual representations and assumptions that for federal income tax
purposes there will be no gain or loss recognized with respect to the
Centerprise Common Stock received for their Company Stock in the Merger
pursuant to Section 351 of the Code, as amended , the final form of
such opinion to be in form and substance reasonably acceptable to the
Company and its stockholders;
10.3 Conditions to Obligation of Centerprise to Effect the Merger.
Unless waived by Centerprise, the obligation of Centerprise and Mergersub to
effect the Merger shall be subject to the fulfillment at or prior to the Closing
of the additional following conditions:
(a) the Company shall have performed in all material respects
its agreements contained in this Agreement required to be performed on
or prior to the Closing Date and the representations and warranties of
the Company contained in this Agreement shall be true and correct in
all material respects on and as of the date made and on and as of the
Closing Date as if made at and as of such date, and Centerprise and the
Underwriters shall have received a Certificate of the Chief Executive
Officer or President of the Company to that effect;
(b) Reserved;
(c) Centerprise and the Underwriters shall have received an
opinion from ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel to the Company, dated
the Closing Date, in substantially the form attached hereto as Exhibit
10.3(c);
43
(d) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇ and P. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
shall have executed and delivered their respective Employment Agreement
referred to in Section 10.2(d);
(e) Centerprise and the Underwriters shall have received
"Comfort" letters in customary form from the Company's independent
public accountants, dated the effective date of the Form S-1 and the
Closing Date (or such other date reasonably acceptable to Centerprise),
with respect to certain financial statements and other financial
information included in the Form S-1 and any subsequent changes in
specified balance sheet and income statement items, including total
assets, working capital, total Stockholder' equity, total revenues and
the total and per share amounts of net income;
(f) the Company shall have delivered to Centerprise and the
Underwriters a certificate, dated as of a date no later than ten days
prior to the Closing Date, duly issued by the appropriate Governmental
Authority in the state of organization of the Company and each Company
Subsidiary and, unless waived by Centerprise, in each state in which
the Company or any Company Subsidiary is authorized to do business,
showing the Company or Company Subsidiary (as applicable) is in good
standing, authorized to do business and/or in compliance with all laws
and regulations, whichever is applicable;
(g) no Governmental Authority shall have promulgated or
formally proposed any statute, rule, regulation or bulletin, or
otherwise promulgated a policy pursuant to its authority under any
statute, which, when taken together with all such promulgations, would
materially impair the value to Centerprise of the Merger;
(h) Reserved;
(i) Reserved;
(j) the Company's stockholders shall have delivered to
Centerprise an instrument in the form attached hereto as Exhibit
10.3(j), dated the Closing Date, releasing the Company and the Company
Subsidiaries from any and all claims of such persons against the
Company and the Company Subsidiaries and obligations of the Company and
the Company Subsidiaries to such persons;
(k) Reserved;
(l) the Company shall have terminated or have caused the
termination of any voting trusts, proxies or other agreements or
understandings to which the Company is a party or is bound with respect
to any shares of capital stock or other equity interests of the
44
Company shall have provided Centerprise evidence of such termination
that is acceptable to Centerprise's counsel;
(m) to the extent the Company's and each Company Subsidiary's
contracts and agreements with insurance carriers, insurance producers,
risk retention groups and purchasing groups (as defined under 65 U.S.C.
3901 et seq.) bonafide associations and group programs (collectively
referred to as "Insurance Entities") will be terminated as a result of
this Agreement or the transactions contemplated herein, the Company and
each Company Subsidiary shall have: (i) entered into new contracts with
each of the Insurance Entities under the same material terms and
conditions as the previous contracts and agreements terminated as a
result of this Agreement or the transactions contemplated herein; or
(ii) obtained amendments or waivers of the contracts and agreement with
each of Insurance Entities such that the contracts and agreements will
not terminate as a result of this Agreement or the transactions
contemplated herein, provided that such amendments or waivers do not
modify the material terms of such contracts or agreements;
(n) the Company has provided to Centerprise certified copies
of all Licenses necessary for the Company and each Company Subsidiary
to conduct their Business, and the Company and each Company Subsidiary
has modified or amended the information given the relevant Government
Authorities in obtaining such licenses and registrations necessary to
prevent this Agreement or the transactions contemplated herein from
canceling or terminating such licenses and registrations;
(o) the Company shall have presented evidence satisfactory to
Centerprise of its compliance with the provision of Section 7.1.3
hereof;
(p) the Company shall have delivered to Centerprise a payoff
letter including a statement of per diem interest amounts and other
applicable release documents from all lenders or creditors regarding
the payment in full of indebtedness to such lenders and creditors at
Closing, in each case in form and substance satisfactory to Centerprise
(including, without limitation, applicable UCC-3 termination
statements);
(q) Reserved;
(r) Reserved;
(s) the secretary of the Company shall have delivered
certified copies of the resolutions of the board of directors and
shareholders of the Company approving execution and delivery of this
Agreement, the Merger and the other actions, agreements and documents
necessary or desirable to complete the transactions contemplated
herein; and
45
(t) all of the Company's stockholders listed on exhibit
10.3(t) shall have executed and delivered an agreement (the "Company
Stockholder Agreement") in the form of Exhibit 10.3(t) attached hereto.
(u) the Company's stockholders shall have executed the Escrow
Agreement in the form of Exhibit 2.1 attached hereto.
ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER
11.1 Termination. This Agreement may be terminated at any time prior to
the Closing Date:
(a) pursuant to Section 7.3;
(b) by the Company,
(i) if the Merger is not completed by November 15,
1999 other than on account of delay or default on the part of
the Company or any of its affiliates or associates;
(ii) if the Merger is enjoined by a final,
unappealable court order not entered at the request or with
the support of the Company or any of its affiliates or
associates;
(iii) if Centerprise (A) fails to perform in any
material respect any of its material covenants in this
Agreement and (B) does not cure such default in all material
respects within thirty (30) days after written notice of such
default is given to Centerprise; or
(c) by Centerprise,
(i) if the Merger is not completed by November 15,
1999 other than on account of delay or default on the part of
Centerprise or any of its stockholders or any of their
affiliates or associates;
(ii) if the Merger is enjoined by a final,
unappealable court order not entered at the request or with
the support of Centerprise or any of its stockholders or any
of their affiliates or associates;
46
(iii) if the Company (A) fails to perform in any
material respect any of its material covenants in this
Agreement and (B) does not cure such default in all material
respects within thirty (30) days after written notice of such
default is given to the Company by Centerprise;
(d) by mutual consent of the Company and the Board of
Directors of Centerprise.
11.2 Effect of Termination. In the event of termination of this
Agreement by either Centerprise or the Company, as provided in Section 11.1,
this Agreement shall forthwith become void and there shall be no further
obligation on the part of the Company, Centerprise, Mergersub or their
respective officers or directors (except the obligations set forth in Sections
8.1, 8.3 and 8.5, all of which shall survive the termination). Nothing in this
Section 11.2 shall relieve any party from liability for any willful breach of
this Agreement.
11.3 Amendment. This Agreement may not be amended except by action
taken by the parties' respective Boards of Directors of Centerprise and the
Company or duly authorized committees thereof and then only by an instrument in
writing signed on behalf of each of the parties hereto and in compliance with
applicable law. Centerprise covenants and agrees that it shall not amend, modify
or supplement the material terms of any Other Agreement following the Closing
without the prior written consent of at least two thirds (2/3rds) of the members
of Centerprise's Board of Directors.
11.4 Waiver. At any time prior to the Closing Date, the parties hereto
may (a) extend the time for the performance of any of the obligations or other
acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant thereto and (c) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
ARTICLE XII
[RESERVED]
ARTICLE XIII
[RESERVED]
47
ARTICLE XIV
[RESERVED]
ARTICLE XV
GENERAL PROVISIONS
15.1 Brokers. The Company represents and warrants that no broker,
finder or investment banker is entitled to any brokerage, finder's or other fee
(except for the fee described in Schedule 15.1) or commission in connection with
the Merger or the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company. Centerprise represents and
warrants that no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the Merger or
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Centerprise or its stockholders (other than underwriting
discounts and commission to be paid in connection with the IPO).
15.2 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, sent by nationally
recognized overnight delivery service, mailed by registered or certified mail
(return receipt requested) or sent via facsimile to the parties at the following
addresses (or at such other address for a party as shall be specified by notice
given in accordance with this Section):
15.2.1 If to Centerprise or Mergersub, to:
Centerprise Advisors, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ & Zavis
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
48
15.2.2 If to the Company, to:
▇▇▇▇▇▇ ▇. Driver Co., Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
15.2.3 If to the Stockholder Representative addressed to the
addresses set forth on Section 15.2.2 with copies to such counsel as is set
forth on Section 15.2.2.
15.3 Interpretation. The table of contents and headings contained in
this Agreement are for convenience of reference only and shall not affect in any
way the meaning or interpretation of this Agreement. In this Agreement, unless a
contrary intention appears, (i) the words "herein," "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision and (ii) reference to any
Article or Section means such Article or Section hereof. No provision of this
Agreement shall be interpreted or construed against any party hereto solely
because such party or its legal representative drafted such provision.
15.4 Certain Definitions. As used in this Agreement, (i) the term
"Person" shall mean any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated association, corporation, entity, firm,
association, organization or other business in any form whatsoever or government
(whether Federal, state, county, city or otherwise, including, without
limitation, any instrumentality, division, agency or department thereof) and,
(ii) the term "Affiliate" shall have the meaning given for that term in Rule 405
under the Securities Act, and shall include each past and present Affiliate of a
Person and the members of such Affiliate's immediate family or their spouses or
children and any trust the beneficiaries of which are such individuals or
relatives, and (iii) an individual will be deemed to have "Knowledge" of a
particular fact or other matter if: (a) such individual is actually aware of
such fact or matter, or (b) a prudent individual could be expected to discover
or otherwise become aware of such fact or other matter in the course of
conducting a reasonably comprehensive investigation concerning the existence of
such fact or other matter and a prudent individual would conduct such
investigation; a Person, other than an individual, will be deemed to have
"Knowledge" of a particular fact or other matter if any individual who is a
shareholder of such Person or who is otherwise serving, or who has served,
49
as a director, officer, partner, member or trustee (or any capacity) of such
Person has, or at any time had, knowledge of such fact or other matter.
15.5 Entire Agreement; Assignment. This Agreement (including the
documents and instruments referred to herein) (a) constitutes the entire
agreement and supersedes all other prior agreements and understandings, both
written and oral, among the parties, or any of them, with respect to the subject
matter hereof and (b) shall not be assigned by operation of law or otherwise,
except that Centerprise may assign this Agreement to any wholly-owned subsidiary
of Centerprise.
15.6 Applicable Law. This Agreement shall be governed in all respects,
including validity, interpretation and effect, by the laws of the State of
Illinois applicable to contracts executed and to be performed wholly within such
state, without giving effect to its choice of law rules.
15.7 Counterparts. This Agreement may be executed via facsimile or
otherwise in two or more counterparts, each of which shall be deemed to be an
original, but all of which shall constitute one and the same agreement.
15.8 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and their respective
successors, permitted assigns, heirs, legal representatives and executors and
except as expressly set forth in herein, nothing in this Agreement, express or
implied, is intended to confer upon any other Person any rights or remedies of
any nature whatsoever under or by reason of this Agreement.
* * *
[remainder of page intentionally left blank]
50
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed
as of the date first written above.
CENTERPRISE ADVISORS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Its:
-------------------------------
RFD MERGERSUB INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name:
------------------------------
Its:
-------------------------------
▇▇▇▇▇▇ ▇. DRIVER CO., INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Name:
------------------------------
Its:
-------------------------------
EXHIBIT 10.3(t)
STOCKHOLDERS OF THE COMPANY
The 1818 Mezzanine Fund, L.P., ▇▇▇▇▇ Brothers ▇▇▇▇▇▇▇▇ & Co., General Partner
▇▇▇▇▇ Capital Advisors LLC
▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ Family Trust, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇ De Briyn
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. Driver
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇ Family Trust, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ Family Trust, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇