Exhibit 99.1
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AGREEMENT AND PLAN OF MERGER
by and between
XXI MERGER CORP.
and
PROPHET 21, INC.
dated as of
November 8, 2002
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TABLE OF CONTENTS
Page
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ARTICLE I THE MERGER..............................................................................................2
Section 1.1 The Merger..................................................................................2
Section 1.2 Effective Time..............................................................................2
Section 1.3 Closing.....................................................................................2
Section 1.4 Directors and Officers of the Surviving Corporation.........................................3
Section 1.5 Subsequent Actions..........................................................................3
Section 1.6 Stockholders' Meeting.......................................................................3
ARTICLE II CONVERSION OF SECURITIES...............................................................................4
Section 2.1 Conversion of Capital Stock.................................................................4
Section 2.2 Exchange of Certificates....................................................................4
Section 2.3 Dissenting Shares...........................................................................5
Section 2.4 Company Option Plans........................................................................6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................................................6
Section 3.1 Organization; Subsidiaries..................................................................6
Section 3.2 Capitalization..............................................................................8
Section 3.3 Authorization; Validity of Agreement; Company Action........................................9
Section 3.4 Vote Required...............................................................................9
Section 3.5 No Violations; Consents and Approvals......................................................10
Section 3.6 SEC Reports and Financial Statements.......................................................10
Section 3.7 Absence of Certain Changes or Events.......................................................11
Section 3.8 No Undisclosed Liabilities.................................................................11
Section 3.9 Proxy Statement............................................................................11
Section 3.10 Employee Benefit Plans; ERISA..............................................................12
Section 3.11 Litigation.................................................................................13
Section 3.12 Environmental Matters......................................................................13
Section 3.13 Taxes......................................................................................14
Section 3.14 Labor and Employment Matters...............................................................16
Section 3.15 Compliance with Laws.......................................................................17
Section 3.16 Insurance..................................................................................18
Section 3.17 Contracts..................................................................................18
Section 3.18 Accounts Receivable........................................................................19
Section 3.19 Properties.................................................................................19
Section 3.20 Plant and Equipment........................................................................20
Section 3.21 Permits....................................................................................20
Section 3.22 Intellectual Property......................................................................21
Section 3.23 Opinion of Financial Advisor...............................................................23
Section 3.24 Antitakeover Statutes; Rights Plan.........................................................23
Section 3.25 Full Disclosure............................................................................23
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.......................................................23
Section 4.1 Organization...............................................................................23
Section 4.2 Authorization; Validity of Agreement; Necessary Action.....................................24
Section 4.3 No Violations; Consents and Approvals......................................................24
Section 4.4 Proxy Statement............................................................................25
Section 4.5 Financing..................................................................................25
Section 4.6 Purchaser's Operations.....................................................................25
ARTICLE V COVENANTS..............................................................................................25
Section 5.1 Interim Operations of the Company..........................................................25
Section 5.2 HSR Act; Foreign Antitrust Laws............................................................28
Section 5.3 Access to Information......................................................................28
Section 5.4 Consents and Approvals.....................................................................29
Section 5.5 No Solicitation............................................................................29
Section 5.6 Brokers or Finders.........................................................................30
Section 5.7 Additional Agreements......................................................................31
Section 5.8 Publicity..................................................................................31
Section 5.9 Notification of Certain Matters............................................................31
Section 5.10 Directors' and Officers' Insurance and Indemnification.....................................31
Section 5.11 State Takeover Laws........................................................................32
Section 5.12 Resignations...............................................................................32
Section 5.13 SEC Reports................................................................................32
Section 5.14 Delisting..................................................................................32
Section 5.15 Financial Statements.......................................................................32
Section 5.16 Employees..................................................................................33
Section 5.17 Comparability of Employee Benefits.........................................................33
ARTICLE VI CONDITIONS............................................................................................33
Section 6.1 Conditions to Each Party's Obligation To Effect the Merger.................................33
Section 6.2 Conditions to Obligation of the Purchaser..................................................34
Section 6.3 Conditions to Obligation of the Company....................................................35
ARTICLE VII TERMINATION..........................................................................................36
Section 7.1 Termination................................................................................36
Section 7.2 Effect of Termination......................................................................38
ARTICLE VIII MISCELLANEOUS.......................................................................................38
Section 8.1 Fees and Expenses..........................................................................38
Section 8.2 Amendment and Modification.................................................................39
Section 8.3 Nonsurvival of Representations and Warranties..............................................39
Section 8.4 Notices....................................................................................40
Section 8.5 Interpretation.............................................................................41
Section 8.6 Waivers....................................................................................41
Section 8.7 Counterparts...............................................................................41
Section 8.8 Entire Agreement; No Third Party Beneficiaries.............................................41
Section 8.9 Severability...............................................................................41
Section 8.10 Governing Law..............................................................................42
Section 8.11 Assignment.................................................................................42
Section 8.12 Headings...................................................................................42
Section 8.13 Specific Performance.......................................................................42
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INDEX OF DEFINED TERMS
Page
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Acquisition Proposal.............................................................................................30
Balance Sheet....................................................................................................12
Benefit Plans....................................................................................................12
Certificate of Merger.............................................................................................2
Certificates......................................................................................................4
Closing...........................................................................................................2
Closing Date......................................................................................................2
Code.............................................................................................................12
Company...........................................................................................................1
Company Agreements...............................................................................................10
Company Common Stock..............................................................................................1
Company Intellectual Property....................................................................................21
Company Material Adverse Effect...................................................................................8
Company Material Contracts.......................................................................................18
Company Required Approvals.......................................................................................11
Company Required Consents........................................................................................11
Company SEC Documents............................................................................................11
Confidentiality Agreement........................................................................................29
DGCL..............................................................................................................1
Dissenting Shares.................................................................................................5
Effective Time....................................................................................................2
Employment Laws..................................................................................................17
Environmental Laws...............................................................................................14
Equipment........................................................................................................20
ERISA............................................................................................................12
Exchange Act.....................................................................................................11
Expenses.........................................................................................................39
GAAP.............................................................................................................11
Governmental Entity..............................................................................................10
HSR Act..........................................................................................................10
Indemnified Party................................................................................................31
Intellectual Property............................................................................................21
Joint Venture.....................................................................................................8
License Agreements...............................................................................................22
Lien.............................................................................................................10
Merger............................................................................................................2
Merger Consideration..............................................................................................4
Option............................................................................................................6
OPTION PLANS......................................................................................................6
Paying Agent......................................................................................................4
Permits..........................................................................................................20
Preferred Stock...................................................................................................8
Proprietary Software.............................................................................................22
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Proxy Statement...................................................................................................3
Purchaser.........................................................................................................1
Purchaser Common Stock............................................................................................4
Purchaser Material Adverse Effect................................................................................24
SEC...............................................................................................................3
SEC Reports......................................................................................................32
Securities Act...................................................................................................11
Service..........................................................................................................12
Shares............................................................................................................1
Software.........................................................................................................21
Special Meeting...................................................................................................3
Subsidiary........................................................................................................7
Superior Proposal................................................................................................30
Surviving Corporation.............................................................................................2
Tax Return.......................................................................................................16
Taxes............................................................................................................16
TCEP..............................................................................................................1
TCEP Commitment Letter............................................................................................1
Termination Fee..................................................................................................39
Trade Secrets....................................................................................................21
Transactions......................................................................................................1
Trigger Event....................................................................................................39
Voting Agreement..................................................................................................1
Voting Debt.......................................................................................................8
WARN Act.........................................................................................................17
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AGREEMENT AND PLAN OF
MERGER
AGREEMENT AND PLAN OF MERGER, dated as of November 8, 2002, by and
between XXI Merger Corp., a
Delaware corporation (the "PURCHASER"), and Prophet
21, Inc., a
Delaware corporation (the "COMPANY").
WHEREAS, the Boards of Directors of the Purchaser and the Company have
approved, and deem it advisable and in the best interests of their respective
stockholders to consummate, the merger of the Purchaser and the Company upon the
terms and subject to the conditions set forth herein;
WHEREAS, also in furtherance of such acquisition, the Boards of
Directors of the Purchaser and the Company have approved this Agreement and the
Merger in accordance with the General Corporation Law of the State of
Delaware
(the "DGCL");
WHEREAS, the Board of Directors of the Company has unanimously
determined that the consideration to be paid for each share of the issued and
outstanding common stock, par value $0.01 per share, of the Company (the
"SHARES" or "COMPANY COMMON STOCK") in the Merger is fair to the holders of such
Shares and has unanimously resolved to recommend that the holders of such Shares
approve this Agreement and each of the transactions contemplated by this
Agreement, including the Merger (the "TRANSACTIONS"), upon the terms and subject
to the conditions set forth herein;
WHEREAS, concurrent with the execution of this Agreement, each of ▇▇▇▇▇
▇▇▇▇▇▇▇ Equity Partners ("TCEP") and LLR Partners, Inc. ("LLR") has entered into
an agreement with the Purchaser in which it has agreed, subject to the terms and
conditions set forth therein, to invest (or cause its affiliates or designees to
invest) up to a specified amount in the Purchaser at or prior to the Effective
Time (the "COMMITMENT LETTERS");
WHEREAS, concurrently with the execution and delivery of this Agreement
and as a condition and inducement to the willingness of the Purchaser to enter
into this Agreement, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Ph.D. and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ have entered
into a voting agreement (the "VOTING AGREEMENT") with the Purchaser pursuant to
which such stockholders have agreed, among other things, to vote for the Merger
and to grant the Purchaser an irrevocable proxy with respect to the voting of
their Shares, subject to the terms and conditions set forth in the Voting
Agreement; and
WHEREAS, the Purchaser and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 THE MERGER.
(a) Subject to the terms and conditions of this Agreement, at
the Effective Time, the Company and the Purchaser shall consummate a merger (the
"MERGER") pursuant to which (i) the Purchaser shall be merged with and into the
Company and the separate corporate existence of the Purchaser shall thereupon
cease, (ii) the Company shall be the successor or surviving corporation in the
Merger and shall continue to be governed by the laws of the State of
Delaware,
and (iii) the separate corporate existence of the Company with all its rights,
privileges, immunities, powers and franchises shall continue unaffected by the
Merger. At the Purchaser's election, subject to the consent of the Company not
to be unreasonably withheld, the Merger may alternatively be structured so that
(x) the Company is merged with and into the Purchaser or any other direct or
indirect wholly owned Subsidiary (as defined in SECTION 3.1 hereof) of the
Purchaser or (y) any direct or indirect wholly owned Subsidiary of the Purchaser
is merged with and into the Company. In the event of such an election, the
parties agree to execute an appropriate amendment to this Agreement in order to
reflect such election. The corporation surviving the Merger is sometimes
hereinafter referred to as the "SURVIVING CORPORATION." The Merger shall have
the effects set forth in the DGCL.
(b) Unless otherwise determined by the Purchaser prior to the
Effective Time, the Certificate of Incorporation of the Purchaser, as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation, except as to the name of the
Surviving Corporation (in the case of a merger where the Company is the
Surviving Corporation), until thereafter amended as provided by law and such
Certificate of Incorporation.
(c) Unless otherwise determined by the Purchaser prior to the
Effective Time, the Bylaws of the Purchaser, as in effect immediately prior to
the Effective Time, shall be the Bylaws of the Surviving Corporation, except as
to the name of the Surviving Corporation (in the case of a merger where the
Company is the Surviving Corporation), until thereafter amended as provided by
law, the Certificate of Incorporation of the Surviving Corporation and such
Bylaws.
Section 1.2 EFFECTIVE TIME. The Purchaser and the Company will cause an
appropriate Certificate of Merger (the "CERTIFICATE OF MERGER") to be executed
and filed on the date of the Closing (or on such other date as the Purchaser and
the Company may agree) with the Secretary of State of the State of
Delaware as
provided in the DGCL. The Merger shall become effective on the date on which the
Certificate of Merger has been duly filed with the Secretary of State of the
State of
Delaware or such time as is agreed upon by the parties and specified in
the Certificate of Merger, and such time is hereinafter referred to as the
"EFFECTIVE TIME."
Section 1.3 CLOSING. The closing of the Merger (the "CLOSING") will take
place at 10:00 a.m. on a date to be specified by the parties, which shall be no
later than the second business day after satisfaction or waiver of all of the
conditions set forth in Article VI hereof (the "CLOSING DATE"), at the offices
of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, unless another
date or place is agreed to in writing by the parties hereto.
Section 1.4 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The
directors of the Purchaser immediately prior to the Effective Time shall, from
and after the Effective Time, be the directors of the Surviving Corporation, and
the officers of the Company immediately prior to the Effective Time shall, from
and after the Effective Time, be the officers of the Surviving Corporation, in
each case until their respective successors shall have been duly elected or
appointed or qualified or until their earlier death, resignation or removal in
accordance with the Surviving Corporation's Certificate of Incorporation and
Bylaws.
Section 1.5 SUBSEQUENT ACTIONS. If at any time after the Effective Time
the Surviving Corporation will consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of either of the Company or the Purchaser acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with, the
Merger or otherwise to carry out this Agreement, the officers and directors of
the Surviving Corporation shall be authorized to execute and deliver, in the
name and on behalf of either the Company or the Purchaser, all such deeds, bills
of sale, instruments of conveyance, assignments and assurances and to take and
do, in the name and on behalf of each of such corporations or otherwise, all
such other actions and things as may be necessary or desirable to vest, perfect
or confirm any and all right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to carry out this
Agreement.
Section 1.6 STOCKHOLDERS' MEETING. The Company, acting through its Board
of Directors, shall, in accordance with applicable law and subject to the
provisions of SECTION 5.5 and ARTICLE VII hereof:
(a) duly call, give notice of, convene and hold a special
meeting of its stockholders (the "SPECIAL MEETING") as soon as practicable for
the purpose of voting on the approval and adoption of this Agreement and the
Merger;
(b) prepare and file with the United States Securities and
Exchange Commission (the "SEC") a preliminary proxy or information statement
relating to the Merger and this Agreement and use its best efforts to obtain and
furnish the information required to be included by the SEC in the Proxy
Statement (as hereinafter defined) and, after consultation with the Purchaser,
to respond promptly to any comments made by the SEC with respect to the
preliminary proxy or information statement and cause a definitive proxy or
information statement (the "PROXY STATEMENT") to be mailed to its stockholders;
(c) include in the Proxy Statement the recommendation of the
Board that stockholders of the Company vote in favor of the approval of the
Merger and the adoption of this Agreement; and
(d) use its best efforts to solicit from holders of Shares
proxies in favor of the Merger and shall take all other action necessary or, in
the reasonable opinion of the Purchaser, advisable to secure any approval of
stockholders required by the DGCL to effect the Merger.
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 CONVERSION OF CAPITAL STOCK. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holders of any
shares of Company Common Stock or common stock, par value $0.01 per share, of
the Purchaser (the "PURCHASER COMMON STOCK"):
(a) PURCHASER COMMON STOCK. Each issued and outstanding share of
the Purchaser Common Stock shall be converted into and become one fully paid and
nonassessable share of common stock of the Surviving Corporation.
(b) CANCELLATION OF TREASURY STOCK. All shares of Company Common
Stock that are owned by the Company or any other wholly owned Subsidiary of the
Company shall be cancelled and retired and shall cease to exist and no
consideration shall be delivered in exchange therefor.
(c) CONVERSION OF SHARES. Each issued and outstanding share of
Company Common Stock (other than shares to be cancelled in accordance with
SECTION 2.1(b) hereof and other than Dissenting Shares shall be converted into
the right to receive $16.30, payable to the holder thereof, in cash without
interest (the "MERGER CONSIDERATION"), upon surrender of the certificate
formerly representing such share of Company Common Stock in the manner provided
in SECTION 2.2 hereof. From and after the Effective Time, all such shares of
Company Common Stock shall no longer be outstanding and shall automatically be
cancelled and retired and shall cease to exist, and each holder of a certificate
representing any such shares shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration therefor upon the
surrender of such certificate in accordance with SECTION 2.2 hereof, without
interest.
Section 2.2 EXCHANGE OF CERTIFICATES.
(a) PAYING AGENT. The Purchaser shall designate a bank or trust
company, acceptable to the Company in its reasonable discretion, to act as agent
for the holders of Shares in connection with the Merger (the "PAYING AGENT") to
receive the funds to which holders of Shares shall become entitled pursuant to
SECTION 2.1(c) hereof. At the Effective Time, the Purchaser shall deposit, or
cause to be deposited, with the Paying Agent the aggregate Merger Consideration.
Such funds shall be invested by the Paying Agent as directed by the Purchaser or
the Surviving Corporation pending payment thereof by the Paying Agent to the
holders of the Shares. Earnings from such investments shall be the sole and
exclusive property of the Purchaser and the Surviving Corporation, and no part
of such earnings shall accrue to the benefit of holders of Shares.
(b) EXCHANGE PROCEDURES. As soon as reasonably practicable after
the Effective Time, the Paying Agent shall mail to each holder of record of a
certificate or certificates, which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (the "CERTIFICATES"),
whose shares were converted pursuant to SECTION 2.1 hereof into the right to
receive the Merger Consideration (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Paying
Agent and shall be in such form and have such other provisions as the Purchaser
may reasonably specify) and (ii) instructions for use in effecting the surrender
of the Certificates in exchange for payment of the Merger Consideration. Upon
surrender of a Certificate for cancellation to the Paying Agent or to such other
agent or agents as may be appointed by the Purchaser, together with such letter
of transmittal, duly executed, the holder of such Certificate shall be entitled
to receive in exchange therefor the Merger Consideration for each share of
Company Common Stock formerly represented by such Certificate and the
Certificate so surrendered shall forthwith be cancelled. If payment of the
Merger Consideration is to be made to a person other than the person in whose
name the surrendered Certificate is registered, it shall be a condition of
payment that the Certificate so surrendered shall be properly endorsed or shall
be otherwise in proper form for transfer and that the person requesting such
payment shall have paid any transfer and other taxes required by reason of the
payment of the Merger Consideration to a person other than the registered holder
of the Certificate surrendered or shall have established to the satisfaction of
the Surviving Corporation that such tax either has been paid or is not
applicable. Until surrendered as contemplated by this SECTION 2.2, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive the Merger Consideration in cash as contemplated by
this SECTION 2.2, without interest thereon.
(c) TRANSFER BOOKS; NO FURTHER OWNERSHIP RIGHTS IN COMPANY
COMMON STOCK. At the Effective Time, the stock transfer books of the Company
shall be closed and thereafter there shall be no further registration of
transfers of Shares on the records of the Company. From and after the Effective
Time, the holders of Certificates evidencing ownership of Shares outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such Shares, except as otherwise provided for herein or by applicable
law. If, after the Effective Time, Certificates are presented to the Surviving
Corporation for any reason, they shall be cancelled and exchanged as provided in
this ARTICLE II.
(d) TERMINATION OF FUND; NO LIABILITY. At any time following six
months after the Effective Time, the Surviving Corporation shall be entitled to
require the Paying Agent to deliver to it any funds (including any interest
received with respect thereto) which had been made available to the Paying Agent
and which have not been disbursed to holders of Certificates. Any holder of
shares who has not theretofore received any applicable amounts of Merger
Consideration to which such holder is entitled under this ARTICLE II shall look
only to the Surviving Corporation for payment of claims with respect thereto and
only as a general creditor thereof. Notwithstanding the foregoing, neither the
Surviving Corporation nor the Paying Agent shall be liable to any holder of a
Certificate for Merger Consideration delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law.
Section 2.3 DISSENTING SHARES.
(a) Notwithstanding anything in this Agreement to the contrary,
Shares outstanding immediately prior to the Effective Time and held by a holder
who has not voted in favor of the Merger or consented thereto in writing and who
has complied with all of the relevant provisions of Section 262 of the DGCL
("DISSENTING SHARES") shall not be converted into a right to receive the Merger
Consideration, unless such holder fails to perfect or withdraws or
otherwise loses his or her right to appraisal. A holder of Dissenting Shares
shall be entitled to receive payment of the appraised value of such Shares held
by him or her in accordance with the provisions of Section 262 of the DGCL,
unless, after the Effective Time, such holder fails to perfect or withdraws or
loses his or her right to appraisal, in which case such Shares shall be
converted into and represent only the right to receive the Merger Consideration,
without interest thereon, upon surrender of the Certificate or Certificates
representing such Shares pursuant to SECTION 2.2.
(b) The Company shall give the Purchaser (i) prompt notice of
any written demands for appraisal of any Shares, attempted withdrawals of such
demands and any other instruments served pursuant to the DGCL and received by
the Company relating to rights of appraisal and (ii) the opportunity to, prior
to the Closing, participate in, and on and after the Closing, direct, all
negotiations and proceedings with respect to demands for appraisal under the
DGCL. Except with the prior written consent of the Purchaser, the Company shall
not voluntarily make any payment with respect to any demands for appraisal or
settle or offer to settle any such demands for appraisal.
Section 2.4 COMPANY OPTION PLANS. The Purchaser and the Company shall
take all actions necessary to provide that, effective as of the Effective Time,
(i) each outstanding stock option, stock equivalent right or right to acquire
Shares (an "Option") granted under the Company's 1993 Stock Plan (the "Option
Plans") which has an exercise price less than the Merger Consideration, shall be
cancelled and (ii) in consideration of such cancellation, the Purchaser shall,
or shall cause the Surviving Corporation to, pay to such holders of Options an
amount in respect thereof equal to the product of (A) the excess, if any, of the
Merger Consideration over the exercise price of each such Option and (B) the
number of Shares subject thereto (such payment, if any, to be net of applicable
withholding and excise taxes). As of the Effective Time, the Option Plans shall
terminate and all rights under any provision of any other plan, program or
arrangement providing for the issuance or grant of any other interest in respect
of the capital stock of the Company or any of its Subsidiaries shall be
cancelled. The Company shall take all action necessary to ensure that, after the
Effective Time, no person shall have any right under the Option Plans or any
other plan, program or arrangement with respect to equity securities of the
Company, the Surviving Corporation or any Subsidiary thereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchaser as follows:
Section 3.1 ORGANIZATION; SUBSIDIARIES.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware, has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as now being conducted and is duly qualified or
licensed to do business and in good standing in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except where the failure
to be so
qualified, licensed or in good standing would not, individually or in the
aggregate, have a Company Material Adverse Effect.
(b) SCHEDULE 3.1(b) hereto sets forth the name, jurisdiction of
organization and capitalization of each of the Company's Subsidiaries and Joint
Ventures (as defined below), including a brief description of the business
conducted by each such entity and the interest of the Company and its
Subsidiaries therein. Other than as set forth on SCHEDULE 3.1(b), the Company
does not own, directly or indirectly, any capital stock or other equity
securities of any corporation or have any direct or indirect equity or ownership
interest in any business other than publicly traded securities constituting less
than five percent of the outstanding equity of the issuing entity. All the
outstanding shares of capital stock of each of the Company's Subsidiaries are
owned directly or indirectly by the Company free and clear of all liens, options
or encumbrances of any kind, and are validly issued, fully paid and
nonassessable, and there are no outstanding options, rights or agreements of any
kind relating to the issuance, sale or transfer of any capital stock or other
equity securities of any such Subsidiary to any person except the Company. The
Company has heretofore delivered to the Purchaser complete and correct copies of
the certificate of incorporation and bylaws (or similar organizational
documents) of each of the Company's Subsidiaries, as currently in effect.
(c) Each of the Company's Subsidiaries and, to the Company's
knowledge, each of its Joint Ventures is a corporation, partnership or other
entity duly organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation or organization, has all requisite
corporate or other power and authority to own, lease and operate its properties
and to carry on its business as now being conducted and is duly qualified or
licensed to do business and in good standing in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except where the failure
to be so qualified, licensed or in good standing would not, individually or in
the aggregate, have a Company Material Adverse Effect. The term "SUBSIDIARY" of
a person shall mean any corporation or other entity (including partnerships and
other business associations and joint ventures) in which such person directly or
indirectly owns at least a majority of the voting power represented by the
outstanding capital stock or other voting securities or interests having voting
power under ordinary circumstances to elect a majority of the directors or
similar members of the governing body, or otherwise to direct the management and
policies, of such corporation or entity. The term "JOINT VENTURE" of a person
shall mean any corporation or other entity (including partnerships and other
business associations and joint ventures) in which such person directly or
indirectly owns an equity interest that is less than a majority of any class of
the outstanding voting securities or equity of any such entity, other than
equity interests held for passive investment purposes that are less than 5% of
any class of the outstanding voting securities or equity of any such entity. The
term "COMPANY MATERIAL ADVERSE EFFECT" shall mean, with respect to the Company,
a material adverse effect on the financial condition, business, assets or
results of operations of the Company and its Subsidiaries, taken as a whole;
PROVIDED, HOWEVER, that a "Company Material Adverse Effect" shall not include
(i) any adverse change, effect or circumstance arising out of or resulting from
actions contemplated by the parties in connection with this Agreement or that is
attributable to the announcement or performance of this Agreement or the
transactions contemplated by this Agreement (including without limitation a loss
of customers or employees), (ii) changes, effects and circumstances that are the
result of factors generally affecting the industry or specific
markets in which the Company and its Subsidiaries compete, or that are the
result of factors affecting the Company's customers or the industries or markets
in which the Company's customers operate (other than any such change having a
materially disproportionate effect on the Company relative to other industry
participants), (iii) any change in the trading price or trading volume of the
Company's common stock (but not any change or effect underlying such change in
trading price or trading volume to the extent such change or effect would
otherwise constitute a Company Material Adverse Effect), (iv) any failure by the
Company to meet any published revenue or earnings projections (but not any
change underlying such failure to the extent such change would otherwise
constitute a Company Material Adverse Effect), (v) any change, effect or
circumstance resulting from any action taken or announced, or any action not
taken, at the request or with the consent of the Purchaser or (vi) any event of
the type described in SECTION 7.1(d)(iv) hereof that would not qualify as a
grounds for termination by the Board of Directors of the Purchaser under
SECTION 7.1(d)(iv) hereof.
Section 3.2 CAPITALIZATION. (a) The authorized capital stock of the
Company consists of 10,000,000 shares of Company Common Stock and 1,500,000
shares of preferred stock, par value $0.01 per share (the "PREFERRED Stock"). As
of the date hereof, (i) 3,902,338 shares of Company Common Stock are issued and
outstanding, (ii) 599,990 shares of Company Common Stock are issued and held in
the treasury of the Company, (iii) 1,200,000 shares of Company Common Stock are
reserved for issuance upon exercise of outstanding Options and (iv) holders of
vested Options have the right to acquire 585,319 shares of Company Common Stock.
As of the date hereof, there are no shares of Preferred Stock issued and
outstanding. Schedule 3.2(c) sets forth a true and complete list of all
outstanding Options, identifying the holders thereof, the number of shares
subject thereto and the exercise prices per share thereunder. All the
outstanding shares of the Company's capital stock are, and all shares of Company
Common Stock which may be issued pursuant to the exercise of outstanding Options
will be, when issued in accordance with the terms thereof, duly authorized,
validly issued, fully paid and non-assessable. There are no bonds, debentures,
notes or other indebtedness having general voting rights (or convertible into
securities having such rights) ("VOTING DEBT") of the Company or any of its
Subsidiaries issued and outstanding. Except as set forth above and except for
the transactions contemplated by this Agreement, as of the date hereof, (i)
there are no shares of capital stock of the Company authorized, issued or
outstanding and (ii) there are no existing options, warrants, calls, pre-emptive
rights, subscriptions or other rights, agreements, arrangements or commitments
of any character, relating to the issued or unissued capital stock of the
Company or any of its Subsidiaries, obligating the Company or any of its
Subsidiaries to issue, transfer or sell or cause to be issued, transferred or
sold any shares of capital stock or Voting Debt of, or other equity interest in,
the Company or any of its Subsidiaries or securities convertible into or
exchangeable for such shares or equity interests or obligations of the Company
or any of its Subsidiaries to grant, extend or enter into any such option,
warrant, call, subscription or other right, agreement, arrangement or
commitment. Except as contemplated by this Agreement, there are no outstanding
contractual obligations of the Company or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any Shares, or the capital stock of the Company or
any Subsidiary or affiliate of the Company or to provide funds to make any
investment (in the form of a loan, capital contribution or otherwise) in any
Subsidiary or any other entity.
(b) There are no voting trusts or other agreements or
understandings to which the Company or any of its Subsidiaries is a party with
respect to the voting of the capital stock of the Company or any of its
Subsidiaries.
(c) Following the Effective Time, no holder of Options will have
any right to receive shares of common stock of the Surviving Corporation upon
exercise of the Options.
(d) SCHEDULE 3.2(d) hereto sets forth a true and complete
statement of the borrowing limit under all loan agreements (including
indentures) of the Company and its Subsidiaries existing on the date hereof and
a true and complete statement of the total indebtedness of the Company and its
Subsidiaries outstanding on the date hereof under such agreements. Except as set
forth on SCHEDULE 3.2(d), no indebtedness of the Company or any of its
Subsidiaries contains any restriction upon (i) the prepayment of indebtedness of
the Company or any of its Subsidiaries, (ii) the incurrence of indebtedness by
the Company or any of its Subsidiaries or (iii) the ability of the Company of
any of its Subsidiaries to grant any lien on the properties or assets of the
Company or any of its Subsidiaries.
Section 3.3 AUTHORIZATION; VALIDITY OF AGREEMENT; COMPANY ACTION.
(a) The Company has full corporate power and authority to execute and deliver
this Agreement and, subject to obtaining any necessary approval of its
stockholders for the Merger, to consummate the transactions contemplated hereby.
The execution, delivery and performance by the Company of this Agreement, and
the consummation by it of the transactions contemplated hereby, have been duly
authorized by its Board of Directors and no other corporate action on the part
of the Company is necessary to authorize the execution and delivery by the
Company of this Agreement and the consummation by it of the transactions
contemplated hereby (other than, with respect to the Merger, obtaining any
approval of its stockholders as contemplated by SECTION 1.6 hereof). This
Agreement has been duly executed and delivered by the Company and, assuming due
and valid authorization, execution and delivery thereof by the Purchaser,
constitutes a valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except that (i) such enforcement may
be subject to applicable bankruptcy, insolvency or other similar laws, now or
hereafter in effect, affecting creditors' rights generally and (ii) the remedy
of specific performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
(b) The Board of Directors of the Company, at a meeting duly
called and held, has unanimously (i) determined that each of the Agreement and
the Merger are fair to and in the best interests of the stockholders of the
Company; (ii) duly and validly approved and taken all corporate action required
to be taken by the Board of Directors for the consummation of the Transactions;
and (iii) resolved to recommend that the stockholders of the Company approve and
adopt this Agreement and the Merger, and none of the aforesaid actions by the
Board of Directors of the Company has been amended, rescinded or modified.
Section 3.4 VOTE REQUIRED. The affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock is the only vote of
the holders of any class or series of the Company's capital stock necessary to
approve the Merger.
Section 3.5 NO VIOLATIONS; CONSENTS AND APPROVALS.
(a) Neither the execution, delivery or performance of this
Agreement by the Company nor the consummation by the Company of the transactions
contemplated hereby nor compliance by the Company with any of the provisions
hereof will (i) conflict with or result in any breach of any provision of the
certificate of incorporation or bylaws or similar organizational documents of
the Company or any of its Subsidiaries or Joint Ventures, (ii) subject to
obtaining the Company Required Approvals and the approval of the stockholders of
the Company, require any filing by the Company with, or permit, authorization,
consent or approval as to the Company of, any court, arbitral tribunal,
administrative agency or commission or other governmental or other regulatory
authority or agency (a "GOVERNMENTAL ENTITY"), (iii) subject to obtaining the
Company Required Consents, result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, amendment, cancellation or acceleration or result in
the creation of any lien, mortgage, security interest, charge, claim or
encumbrance of any kind (collectively, a "LIEN") upon any of the properties or
assets of the Company or its Subsidiaries) under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, lease, license, permit,
franchise, concession, contract, agreement or other instrument or obligation to
which the Company or any of its Subsidiaries or Joint Ventures is a party or by
which any of them or any of their properties or assets may be bound (the
"COMPANY AGREEMENTS") or (iv) subject to obtaining the Company Required
Approvals, violate any order, writ, injunction, judgment, decree, statute, law,
rule, regulation, ordinance, permit or license applicable to the Company, any of
its Subsidiaries or Joint Ventures or any of their properties or assets,
excluding from the foregoing clauses (ii), (iii) and (iv) violations, breaches,
defaults, Liens and failures to obtain filings, permits, authorizations,
consents and approvals, which would not, individually or in the aggregate, have
a Company Material Adverse Effect.
(b) No declaration, filing, permit, consent, registration or
notice to or authorization or approval of any Governmental Entity is necessary
for the execution, delivery or performance of this Agreement by the Company, the
consummation by the Company of the transactions contemplated hereby or
compliance by the Company with any of the provisions hereof, except for
declarations, filings, permits, consents, registrations, notices, authorizations
and approvals as may be required under, and other applicable requirements of,
the Exchange Act, the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended (the "HSR ACT"), foreign antitrust or competition laws or regulations,
state securities or blue sky laws and the DGCL (the "COMPANY REQUIRED
APPROVALS"). There are no third party consents required to be obtained under the
Company Agreements to consummate the Transactions, except for third party
consents set forth on SCHEDULE 3.5 hereto (the "COMPANY REQUIRED Consents").
Section 3.6 SEC REPORTS AND FINANCIAL STATEMENTS. The Company has filed
with the SEC, and has heretofore made available to the Purchaser true and
complete copies of, all forms, reports, schedules, statements and other
documents required to be filed by it since July 1, 1999 under the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT") or the Securities Act of
1933, as amended (the "SECURITIES ACT") (as such documents have been amended
since the time of their filing, collectively, the "COMPANY SEC DOCUMENTS"). As
of their respective dates or, if amended, as of the date of the last such
amendment, the Company SEC Documents, including, without limitation, any
financial statements or schedules included therein (a) did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading and (b) complied as to form in all material respects with the
applicable requirements of the Exchange Act and the Securities Act, as the case
may be, and the applicable rules and regulations of the SEC thereunder. None of
the Subsidiaries is required to file any forms, reports or other documents with
the SEC. The financial statements of the Company (including the related notes
thereto) included in the Company SEC Documents have been prepared from and are
in accordance with, the books and records of the Company and its consolidated
Subsidiaries, comply in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and fairly
present in accordance with GAAP the consolidated financial position and the
consolidated results of operations and cash flows (and changes in financial
position, if any) of the Company and its consolidated Subsidiaries as at the
dates thereof and for the periods presented therein (subject, in the case of
unaudited statements, to normal year-end audit adjustments which were not and
are not expected to be, individually or in the aggregate, material in amount).
Section 3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
the Company SEC Documents filed prior to the date hereof or as set forth on
SCHEDULE 3.7 hereto, since June 30, 2002, (i) the Company and its Subsidiaries
and, to the Company's knowledge, its Joint Ventures have conducted their
respective businesses, in all material respects, only in the ordinary and usual
course, (ii) there has not occurred any events or changes (including the
incurrence of any liabilities of any nature, whether or not accrued, contingent
or otherwise) that have had or would be reasonably likely to have, individually
or in the aggregate, a Company Material Adverse Effect, and (iii) neither the
Company nor any of its Subsidiaries nor, to the Company's knowledge, any of its
Joint Ventures has taken any action that would have been prohibited under
SECTION 5.1 hereof if such section applied to the period between June 30, 2002
and the date of this Agreement.
Section 3.8 NO UNDISCLOSED LIABILITIES. Except (i) as disclosed in the
Company SEC Documents filed prior to the date hereof, (ii) as disclosed on
SCHEDULE 3.8 hereto and (iii) for liabilities and obligations incurred in the
ordinary course of business and consistent with past practice, since June 30,
2002, neither the Company nor any of its Subsidiaries nor, to the Company's
knowledge, any of its Joint Ventures has incurred any liabilities or obligations
of any nature, whether or not accrued, contingent or otherwise, that have had,
or would be reasonably likely to have, a Company Material Adverse Effect or
would be required by GAAP to be reflected on a consolidated balance sheet of the
Company and its Subsidiaries (including the notes thereto). The reserves
reflected in the Company's consolidated balance sheet as of June 30, 2002
included in the 2002 Form 10-K (the "BALANCE SHEET") are adequate, appropriate
and reasonable and have been calculated in a manner consistent with GAAP.
Section 3.9 PROXY STATEMENT. The Proxy Statement (or any amendment
thereof or supplement thereto), if any, will not, at the date mailed to the
Company's stockholders and at the time of the Special Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading.
Notwithstanding the foregoing, the Company makes no representation or warranty
with respect to statements made in any of the foregoing documents based on
information supplied by the Purchaser in writing for inclusion therein. The
Proxy Statement will comply in all material respects with the provisions of the
applicable federal securities laws and the rules and regulations thereunder.
Section 3.10 EMPLOYEE BENEFIT PLANS; ERISA.
(a) SCHEDULE 3.10 hereto lists all material employee benefit
plans, funds, programs (including but not limited to welfare benefit programs),
arrangements, contracts or agreements (including employment agreements and
severance agreements) of any type (including, but not limited to, an "employee
benefit plan" or "plan" as defined in section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), maintained or contributed to
or required to be contributed to by the Company or any of its Subsidiaries or
with respect to which the Company or any of its Subsidiaries has or may have a
liability ("BENEFIT PLANS"). Except as required by applicable law, the Company
has no formal plan or commitment, whether legally binding or not, to create any
additional Benefit Plan or modify or change any existing Benefit Plan.
(b) With respect to each Benefit Plan: (i) if intended to
qualify under section 401(a) of the Internal Revenue Code of 1986, as amended,
(the "CODE"), such plan has been determined by the United States Internal
Revenue Service (the "SERVICE") to be so qualified, and its trust has been
determined to be exempt from taxation under section 501(a) of the Code (and to
the Company's knowledge, no circumstances exist that are reasonably expected to
result in the revocation of any such determinations); (ii) to the Company's
knowledge, such plan has been administered in all material respects in
accordance with its terms and applicable law; (iii) to the Company's knowledge,
no breaches of fiduciary duty have occurred which might reasonably be expected
to give rise to liability on the part of the Company or any of its Subsidiaries;
(iv) no disputes are pending, or, to the knowledge of the Company or any of its
Subsidiaries, threatened (other than routine claims for benefits) that might
reasonably be expected to give rise to liability on the part of the Company; (v)
to the Company's knowledge, no prohibited transaction (within the meaning of
Section 406 of ERISA) has occurred that might reasonably be expected to give
rise to liability on the part of the Company or any of its Subsidiaries; (vi)
all material payments required by any Benefit Plan or by law (including, without
limitation, all contributions or insurance premiums) with respect to all periods
through the date of the Effective Time shall have been made prior to the
Effective Time or accrued by the Company in accordance with GAAP on its
financial statements; and (vii) no Benefit Plan is currently under audit or
investigation by the IRS, U.S. Department of Labor, or any other government
authority.
(c) Neither the Company nor any of its Subsidiaries maintains or
has maintained or contributed to or been required to contribute to within the
last six years, any employee benefit plan that is subject to Title IV of ERISA
or section 412 of the Code.
(d) No Benefit Plan provides medical, death or similar benefits
(whether or not insured) for employees or former employees of the Company or any
of its Subsidiaries for periods extending beyond their termination of service,
other than (i) coverage mandated by
applicable law, (ii) death benefits under any "pension plan," or (iii) benefits
the full cost of which is borne by the current or former employee (or his or her
beneficiary).
(e) Except as set forth on SCHEDULE 3.10, the announcement or
consummation of the transactions contemplated by this Agreement, either alone or
in connection with a related event, will not entitle any individual to severance
pay, unemployment compensation or any other payment or accelerate the time of
payment or vesting, or increase the amount, of compensation or benefits due to
any individual.
(f) With respect to each Benefit Plan, the Company has
heretofore delivered or made available to the Purchaser true and complete copies
of (i) a copy of each Benefit Plan and any amendments thereto; (ii) a copy of
the two most recent annual reports and actuarial reports, if required under
ERISA; (iii) a copy of the most recent Summary Plan Description; (iv) a copy of
any trust or other funding agreement applicable to such plans and the latest
financial statements thereof; and (v) the most recent determination letter from
the Service with respect to each plan intended to qualify under Section 401 of
the Code.
(g) No Benefit Plan is a "multiemployer pension plan," as
defined in section 3(37) of ERISA.
(h) Except as set forth on SCHEDULE 3.10, neither the Company
nor any Subsidiary has any unfunded liabilities pursuant to any "employee
pension benefit plan" that is not intended to be qualified under Section 401(a)
of the Code.
Section 3.11 LITIGATION. Except as disclosed in the Company SEC Documents
filed prior to the date of this Agreement or as set forth on SCHEDULE 3.11,
there is no litigation, arbitration, suit, claim, action, proceeding,
investigation or review by or before any Governmental Entity pending or, to the
Company's knowledge, threatened against or affecting the Company or any of its
Subsidiaries or, to the Company's knowledge, any of its Joint Ventures (i)
which, if adversely decided, individually or in the aggregate, would be
reasonably likely to have a Company Material Adverse Effect or (ii) which
questions or challenges the validity of this Agreement or any action to be taken
by the Company or any of its Subsidiaries pursuant to this Agreement or in
connection with the Transactions, and there is not known to the Company any
reasonable basis for any such suit, claim, action, proceeding or investigation.
Except as set forth in SCHEDULE 3.11 hereto, neither the Company nor any of its
Subsidiaries nor, to the Company's knowledge, any of its Joint Ventures is
subject to any judgments, awards, decrees, injunctions, rules or orders of any
Governmental Entity applicable to the Company or any of its Subsidiaries or
Joint Ventures. As to any litigation, arbitrations, suits, claims, actions,
proceedings, investigations and reviews disclosed in the Company SEC Documents
filed prior to the date of this Agreement, since June 30, 2002, there have not
been any significant developments with respect thereto.
Section 3.12 ENVIRONMENTAL MATTERS.
(a) Except as set forth with specificity in the Company SEC
Documents filed prior to the date hereof or on SCHEDULE 3.12 hereto:
(i) The Company and each of its Subsidiaries and, to the
Company's knowledge, each of its Joint Ventures, are and have been in
compliance with all Environmental Laws, except where the failure to
comply would not, individually or in the aggregate, have a Company
Material Adverse Effect.
(ii) Neither the Company nor any of its Subsidiaries nor,
to the Company's knowledge, any of its Joint Ventures has received any
notice, report or other information alleging that any of them is in
violation in any material respect of any Environmental Laws or, to the
Company's knowledge, has any material liabilities relating to
environmental site investigation or cleanup, corrective action, or
damages or injuries to persons, property or natural resources, arising
under Environmental Laws.
(iii) Neither the Company nor any of its Subsidiaries nor,
to the Company's knowledge, any of its Joint Ventures has manufactured,
treated, stored, disposed of, arranged for or permitted the disposal
of, transported, handled or released any substance, noise, odor or
radiation so as to give rise to material liabilities under
Environmental Laws; to the Company's knowledge, with respect to
properties and facilities owned, leased, operated or used by the
Company, any of its Subsidiaries or any of its Joint Ventures, there
are not present and there have not been released any hazardous
substances, pollutants, contaminants or wastes, where such presence or
release would give rise to material liabilities under Environmental
Laws.
(b) As used in this Agreement, "ENVIRONMENTAL LAWS" shall mean
all federal, state, local and foreign statutes, regulations, ordinances and
other provisions having the force or effect of law, all judicial and
administrative orders and determinations, all contractual obligations and all
common law concerning pollution or protection of the environment and the
exposure of persons or natural resources to hazardous substances, pollutants,
contaminants, wastes, noise, odor or radiation.
Section 3.13 TAXES. Except as set forth on SCHEDULE 3.13 hereto:
(a) Except where such failure would not, individually or in the
aggregate, have a Company Material Adverse Effect, the Company and each of its
Subsidiaries have (i) duly filed (or there has been filed on their behalf or
appropriate extensions have been obtained) with the appropriate Governmental
Entities all Tax Returns (as hereinafter defined) required to be filed by them
on or prior to the date hereof, and such Tax Returns are true, correct and
complete, (ii) duly paid in full or made provision in accordance with GAAP (or
there has been paid or provision has been made on their behalf) for the payment
of all Taxes (as hereinafter defined) for all periods ending through the date
hereof, and will do so through the Effective Time and (iii) complied with all
applicable laws, rules and regulations relating to the payment and withholding
of Taxes (including, without limitation, withholding of Taxes pursuant to
Sections 1441 and 1442 of the Code or similar provisions under any foreign laws)
and have, within the time and the manner prescribed by law, withheld from
employee wages and paid over to the proper Governmental Entities all amounts
required to be so withheld and paid over under applicable laws.
(b) There are no liens for Taxes upon any property or assets of
the Company or any Subsidiary thereof, except for liens for Taxes not yet due
and liens for Taxes identified in SCHEDULE 3.13 the assessment of which is being
contested in good faith.
(c) Neither the Company nor any of its Subsidiaries has made
any change in accounting methods, received a ruling from any taxing authority or
signed an agreement likely to have a Company Material Adverse Effect.
(d) No federal, state, local or foreign audits or other
administrative proceedings or court proceedings are presently pending with
regard to any Taxes or Tax Returns of the Company or its Subsidiaries and
neither the Company nor any of its Subsidiaries has received a written notice of
any pending audits or proceedings.
(e) The federal income Tax Returns of the Company and its
Subsidiaries have been audited by the Service (or the applicable statutes of
limitation for the assessment of federal income Taxes for such periods have
expired) for all periods through and including June 30, 1998, and no
deficiencies were asserted as a result of such examinations which have not been
resolved and fully paid. None of the Company, its Subsidiaries, nor any
respective directors or officers, or employees responsible for Tax matters, of
the Company or any of its Subsidiaries expects any Governmental Entity to assess
any additional Taxes with respect to the Company or any of its Subsidiaries for
any period since such time.
(f) There are no outstanding requests, agreements, consents or
waivers to extend the statutory period of limitations applicable to the
assessment of any Taxes or deficiencies against the Company or any of its
Subsidiaries, and no power of attorney granted by either the Company or any of
its Subsidiaries with respect to any Taxes is currently in force.
(g) Neither the Company nor any of its Subsidiaries is a party
to or bound by any agreement providing for the indemnity, allocation or sharing
of Taxes.
(h) Neither the Company nor any of its Subsidiaries has, with
regard to any assets or property held, acquired or to be acquired by any of
them, filed a consent to the application of Section 341(f) of the Code, or
agreed to have Section 341(f)(2) of the Code apply to any disposition of a
subsection (f) asset (as such term is defined in Section 341(f)(4) of the Code)
owned by the Company or any of its Subsidiaries.
(i) Neither the Company nor any of its Subsidiaries has made any
payments, is obligated to make any payments, or is a party to any agreement or
arrangement (whether oral or in writing) that under any circumstances could
obligate it to make any payments that will not be deductible under Section 280G
of the Code or limited by Section 162(m) of the Code.
(j) Neither the Company nor any of its Subsidiaries is, or has
been, a United States real property holding corporation within the meaning of
Section 897(c)(2) of the Code during the applicable period specified in
Section 897(c)(1)(4)(ii) of the Code.
(k) The Company has disclosed on its Tax Returns all positions
taken therein that could give rise to a substantial understatement of federal
income Tax within the meaning of Section 6662 of the Code.
(l) Neither the Company nor any of its Subsidiaries is required
to include in income any adjustment pursuant to Section 481 of the Code by
reason of any voluntary change in accounting method (nor has any Governmental
Entity proposed in writing any such adjustment or change of accounting method).
(m) All intercompany agreements between the Company and any of
it Subsidiaries have been entered into on the basis of arm's-length terms. In
addition, no Governmental Entity has asserted or, to the Company's knowledge,
threatened to assert a claim against the Company under or as a result of
Section 482 of the Code or any similar provision of state, local or foreign law.
(n) Neither the Company nor any of its Subsidiaries has
constituted either a "distributing corporation" or a "controlled corporation"
(within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of
stock qualifying for tax-free treatment under Section 355 of the Code.
(o) Except for the group of which the Company and its
Subsidiaries are now currently members, neither the Company nor any of its
Subsidiaries has ever been a member of an affiliated group of corporations
within the meaning of Section 1504 of the Code, or any similar affiliated,
consolidated, combined, unitary, or similar group for Tax purposes under state,
local, or foreign law, or has any liability for Taxes of any person (other than
the Company and its Subsidiaries) under Section 1.1502-6 of the Treasury
regulations or any similar provision of state, local, or foreign law as a
transferee or successor, by contract or otherwise.
(p) "TAXES" shall mean any and all taxes, charges, fees, levies
or other assessments, including, without limitation, income, gross receipts,
excise, real or personal property, sales, withholding, social security,
occupation, use, service, service use, license, net worth, payroll, franchise,
transfer and recording taxes, fees and charges, imposed by the Service or any
taxing authority (whether domestic or foreign including, without limitation, any
state, county, local or foreign government or any subdivision or taxing agency
thereof (including a United States possession)), whether computed on a separate,
consolidated, unitary, combined or any other basis; and such term shall include
any interest whether paid or received, fines, penalties or additional amounts
attributable to, or imposed upon, or with respect to, any such taxes, charges,
fees, levies or other assessments. "TAX RETURN" shall mean any report, return,
document, declaration or other information or filing required to be supplied to
any taxing authority or jurisdiction (foreign or domestic) with respect to
Taxes, including, without limitation, filings with respect to withholding of
Taxes, information returns, any documents with respect to or accompanying
payments of estimated Taxes, or with respect to or accompanying requests for the
extension of time in which to file any such report, return, document,
declaration or other information.
Section 3.14 LABOR AND EMPLOYMENT MATTERS.
(a) Except as set forth in SCHEDULE 3.14 hereto, since July 1,
1999, neither the Company nor any of its Subsidiaries has been a party to any
collective bargaining agreement or other labor agreement with any union or labor
organization and there has not been any activity or proceeding of any labor
organization or employee group to organize any such employees.
Except as set forth in SCHEDULE 3.14, (i) the Company and its Subsidiaries are
in material compliance with all applicable Employment Laws; (ii) there are no
unfair labor practice charges or complaints against the Company or any of its
Subsidiaries pending before the National Labor Relations Board; (iii) there are
no labor strikes, slowdowns or stoppages actually pending or, to the Company's
knowledge, threatened, against or affecting the Company or any of its
Subsidiaries; (iv) there are no representation claims or petitions pending
before the National Labor Relations Board and there are no questions concerning
representation with respect to the employees of the Company or its Subsidiaries;
and (v) there are no grievance or pending arbitration proceedings against the
Company or any of its Subsidiaries that arose out of or under any collective
bargaining agreement.
(b) Except as set forth in SCHEDULE 3.14, neither the Company
nor any of its Subsidiaries has effectuated (i) a "plant closing" (as defined in
the Worker Adjustment and Retraining Notification Act (the "WARN ACT"))
affecting any site of employment or one or more facilities or operating units
within any site of employment or facility of the Company or any of its
Subsidiaries or (ii) a "mass layoff" (as defined in the WARN Act), nor has the
Company or any of its Subsidiaries been affected by any transaction or engaged
in layoffs or employment terminations sufficient in number to trigger
application of any similar state, local or foreign law or regulation that could
result in a material liability of the Company and its Subsidiaries, taken as a
whole. None of the employees of the Company or any of its Subsidiaries has
suffered an "employment loss" (as defined in the WARN Act) during the six month
period prior to the date of this Agreement.
(c) Except as set forth in SCHEDULE 3.14(c), (i) there are no
employment contracts or severance agreements with any employees of the Company
or any of its Subsidiaries, (ii) there are no written personnel policies, rules
or procedures applicable to employees of the Company or any of its subsidiaries,
(iii) the Company and its Subsidiaries are, and have at all times been, in
material compliance with all applicable laws respecting employment and
employment practices, terms and conditions of employment, wages, hours of work
and occupational safety and health ("EMPLOYMENT LAWS"), and are not engaged in
any unfair labor practices as defined in the National Labor Relations Act or
other applicable law, ordinance or regulation; (iv) to the Company's knowledge,
no charges with respect to or relating to the Company or any of its Subsidiaries
are pending before the Equal Employment Opportunity Commission or any other
agency responsible for the prevention of unlawful employment practices; (v) to
the Company's knowledge, no federal, state, local or foreign agency responsible
for the enforcement of labor or employment laws intends to conduct an
investigation with respect to or relating to the Company and the Subsidiaries
and no such investigation is in progress; and (vi) to the Company's knowledge,
there are no complaints, controversies, lawsuits or other proceedings pending or
threatened that allege breach of any express or implied contract of employment,
violation of any law or regulation governing employment, discriminatory hiring
or termination of employees or tortious conduct in connection with the
employment relationship.
Section 3.15 COMPLIANCE WITH LAWS. Other than with respect to
Environmental Laws (which are addressed in SECTION 3.12) and Employment Laws
(which are addressed in SECTION 3.14), the Company and its Subsidiaries and, to
the Company's knowledge, its Joint Ventures have complied in all material
respects with all laws and governmental regulations and orders known by the
Company to relate to any of the property owned, leased or used by them, or to be
applicable to their business. No notice, charge, claim, action or assertion has
been received by the Company or any of its Subsidiaries or, to the Company's
knowledge, any of its Joint Ventures alleging any violation of such laws,
regulations and orders, except for such violations which would not have, or be
reasonably likely to have, a Company Material Adverse Effect.
Section 3.16 INSURANCE. SCHEDULE 3.16 hereto contains accurate and
complete descriptions of all policies of insurance (including premiums, policy
limits, deductibles, type of coverage, dates of coverage and similar
information) providing coverage in favor of the Company, its Subsidiaries or any
of their respective properties and assets. As of the date hereof, the Company
and each of its Subsidiaries are, and continually since 1999 have been, insured
by insurers, reasonably believed by the Company to be of recognized financial
responsibility and solvency, against such losses and risks and in such amounts
as are customary in the businesses in which they are engaged. All such policies
are in full force and effect, all premiums with respect thereto covering all
periods up to and including the Closing Date have been paid and no notice of
cancellation or termination has been received by the Company or any of its
Subsidiaries with respect to any such policy. The Company and each of its
Subsidiaries has complied in all material respects with the provisions of such
policies, such policies are sufficient for compliance with all requirements of
law and of all Company Agreements and, to the Company's knowledge, will remain
in full force and effect through the respective dates set forth on SCHEDULE 3.16
without the payment of additional premiums and will not in any way be adversely
affected by, or terminate or lapse by reason of, the Merger. SCHEDULE 3.16 also
identifies all risks as to which the Company or any of its Subsidiaries is self
insured. Neither the Company nor any of its Subsidiaries has been refused any
insurance with respect to its assets or operations, nor has its coverage been
limited, by any insurance carrier to which it has applied for any such insurance
or with which it has carried insurance during the last three years.
Section 3.17 CONTRACTS. SCHEDULE 3.17 hereto sets forth a true and
complete list, as of the date hereof, of (i) each material agreement and
contract to which the Company or any of its Subsidiaries is a party, (ii) all
non-competition agreements or any other agreements or obligations which purport
to limit in any material respect the manner in which, or the localities in
which, the business of the Company or its Subsidiaries may be conducted, (iii)
all agreements, arrangements or understandings with any affiliate that would be
required to be disclosed under Item 404 of Regulation S-K under the Securities
Act, and (iv) all contracts or other agreements which would prohibit or
materially delay the consummation of the Merger or any of the Transactions (all
contracts of the type described in clauses (i) - (iv) being referred to herein
as "COMPANY MATERIAL CONTRACTS"). Each Company Material Contract is valid and
binding on the Company (or, to the extent a Subsidiary of the Company is a
party, such Subsidiary) and is in full force and effect, and the Company or such
Subsidiary has performed all obligations required to be performed by it to date
under each Company Material Contract. Neither the Company nor any of its
Subsidiaries knows of, or has received notice of, any violation or default under
(nor, to the Company's knowledge, does there exist any condition which with the
passage of time or the giving of notice or both would result in such a violation
or default under) any Company Material Contract by either the Company or any of
its Subsidiaries, as the case may be, or any other party to a Company Material
Contract. Originals or true, correct and complete copies of all Company Material
Contracts (or descriptions if the Company Material Contract is not written) have
been provided or made available to the Purchaser. Neither the Company nor any of
its Subsidiaries has any power of attorney outstanding or any obligations or
liabilities (whether absolute,
accrued, contingent or otherwise), as guarantor, surety, co-signer, endorser,
co-maker, indemnitor or otherwise in respect of the obligations of any person,
corporation, partnership, joint venture, association, organization or other
entity.
Section 3.18 ACCOUNTS RECEIVABLE. All accounts receivable of the Company
and its consolidated Subsidiaries, whether reflected in the Balance Sheet or
otherwise, represent sales actually made in the ordinary course of business, and
are, to the Company's knowledge, collectible net of any reserves shown on the
Balance Sheet.
Section 3.19 PROPERTIES.
(a) The Company and each of its Subsidiaries and, to the
Company's knowledge, each of its Joint Ventures has good, valid and marketable
title to all of the properties and assets which it purports to own (real,
personal and mixed, tangible and intangible), including, without limitation, all
of the properties and assets reflected in the Balance Sheet (except for personal
property and for inventory together having an aggregate book value not in excess
of $150,000 sold since the date of the Balance Sheet in the ordinary course of
business and consistent with past practice), and all of the material properties
and assets purchased by the Company and each of its Subsidiaries since the date
of the Balance Sheet, which subsequently acquired properties and assets (other
than inventory and short term investments) are listed in SCHEDULE 3.19(a)
hereto. All of the properties and assets reflected in the Balance Sheet and/or
reflected in SCHEDULE 3.19(a) are adequate for the uses to which they are being
put. To the Company's knowledge, none of such properties and assets are in need
of maintenance or repairs except for ordinary, routine maintenance and repairs
which are not material in nature or cost. All properties and assets reflected in
the Balance Sheet have a fair market or realizable value at least equal to the
value thereof as reflected therein, and all such properties and assets are free
and clear of all Liens of any nature whatsoever including, without limitation,
leases, chattel mortgages, conditional sales contracts, collateral security
arrangements and other title or interest retention arrangements, and are not, in
the case of real property, subject to any rights of way, building use
restrictions, exceptions, variances, reservations or limitations of any nature
whatsoever except, with respect to all such properties and assets, (i) Liens
shown on the Balance Sheet as securing specified liabilities or obligations and
Liens incurred in connection with the purchase of property and/or assets, if
such purchase was effected after the date of the Balance Sheet, with respect to
which no default exists; (ii) Liens and minor imperfections of title, if any,
none of which are substantial in amount, materially detract from the value or
impair the use of the property subject thereto, or impair the operations of the
Company or any of its Subsidiaries and which have arisen only in the ordinary
course of business and consistent with past practice; and (iii) Liens for
current Taxes not yet due.
(b) A list and description of all real property owned or leased
to or by the Company or any of its Subsidiaries or, to the Company's knowledge,
any of its Joint Ventures or in which any of them has an interest is set forth
in SCHEDULE 3.19(b) hereto.
(c) SCHEDULE 3.19(c) hereto contains an accurate and complete
description of the terms of all leases pursuant to which the Company or any of
its Subsidiaries or, to the Company's knowledge, any of its Joint Ventures
leases real or personal property. All such leases are valid, binding and
enforceable in accordance with their terms, and are in full force and effect.
There are no existing defaults by the Company or any of its Subsidiaries or, to
the Company's knowledge, any of its Joint Ventures thereunder and, to the
Company's knowledge, no event of default has occurred which (whether with or
without notice, lapse of time or the happening or occurrence of any other event)
would constitute a default thereunder on the part of the Company or any of its
Subsidiaries or Joint Ventures. The Company has no knowledge of any default of
claimed or purported or alleged default or state of facts which with notice or
lapse of time or both would constitute a default on the part of any other party
under any lease referred to in SCHEDULE 3.19(c).
(d) The properties and assets presently owned, leased or
licensed by the Company and its Subsidiaries and, to the Company's knowledge,
its Joint Ventures include all properties and assets necessary to permit the
Company and its Subsidiaries and, to the Company's knowledge, its Joint Ventures
to conduct their businesses in all material respects in the same manner as their
businesses have been conducted prior to the date hereof.
Section 3.20 PLANT AND EQUIPMENT. The Company and its Subsidiaries and,
to the Company's knowledge, its Joint Ventures have such ownership of or such
rights by license, lease or other agreement to all equipment used or necessary
to conduct their respective businesses as currently conducted (the "EQUIPMENT")
with only such exceptions as individually or in the aggregate would not have a
Company Material Adverse Effect. The plants, structures and Equipment of the
Company and each of its Subsidiaries and, to the Company's knowledge, each of
its Joint Ventures are, to the Company's knowledge, structurally sound with no
known defects and are in good operating condition and repair and adequate for
the uses to which they are being put. None of such plants, structures or
Equipment is, to the Company's knowledge, in need of maintenance or repairs
except for ordinary, routine maintenance and repairs that are not material in
nature or cost.
Section 3.21 PERMITS. SCHEDULE 3.21 hereto sets forth a complete and
accurate list of all permits, licenses, certificates, approvals, notices,
easements, rights-of-way, qualifications and authorizations issued or granted by
Governmental Entities (collectively, the "PERMITS"), except for Environmental
Permits (which are the subject of SECTION 3.12 hereof), held by the Company or
any of its Subsidiaries or, to the Company's knowledge, any of its Joint
Ventures. The Permits set forth on SCHEDULE 3.21 are all the Permits necessary
to carry on the business of the Company and its Subsidiaries and, to the
Company's knowledge, its Joint Ventures as presently conducted and at each
location where such business is being conducted. Except as set forth in the
Company SEC Documents, (i) all such Permits are in full force and effect and are
validly held by the Company or a Subsidiary of the Company or, to the knowledge
of the Company, a Joint Venture, (ii) neither the Company nor any of its
Subsidiaries nor, to the knowledge of the Company, any of its Joint Ventures has
engaged in any activity which would cause or permit revocation or suspension of
any such Permit, and no action or proceeding looking to or contemplating the
revocation or suspension of any such Permit is pending or, to the Company's
knowledge, threatened, (iii) there are no existing defaults or events of default
or event or state of facts which with notice or lapse of time or both would
constitute a default by the Company or any of its Subsidiaries or, to the
Company's knowledge, any of its Joint Ventures under any such Permit, (iv) the
Company has no knowledge of any claimed or purported or alleged defaults or
state of facts which with notice or lapse of time or both would constitute a
default on the part of any other party in the performance of any obligation to
be performed or paid by any other party
under any Permit, (v) none of such Permits will be subject to suspension,
modification, revocation or nonrenewal as a result of the execution and delivery
of this Agreement or the consummation of the Transactions, and (vi) neither the
Company nor any of its Subsidiaries nor, to the Company's knowledge, any of its
Joint Ventures has received any written warning, notice, notice of violation or
probable violation, statement of deficiencies, notice of revocation, or other
written communication from or on behalf of any Governmental Entity that remains
unresolved or which has resulted in any restriction on the permissible
operations of the Company or any of its Subsidiaries or Joint Ventures, alleging
(A) any violation of any such Permit or of any law, rule or regulation or (B)
that the Company or any of its Subsidiaries or Joint Ventures requires any
Permit for the operation of their respective business, as such businesses are
currently conducted, that is not currently held by it.
Section 3.22 INTELLECTUAL PROPERTY.
(a) As used herein, the term "INTELLECTUAL PROPERTY" means all
United States and foreign trademarks, service marks, trade names, Internet
domain names, designs, logos, slogans and general intangibles of like nature,
together with goodwill, registrations and applications relating to the
foregoing; patents, mask works, copyrights (including registrations and
applications for any of the foregoing); computer programs, including any and all
software implementations of algorithms, models and methodologies whether in
source code or object code form, databases and compilations, including any and
all data and collections of data, all documentation, including user manuals and
training materials, related to any of the foregoing and the content and
information contained on any Web site (collectively, "SOFTWARE"); confidential
information, technology, know-how, inventions, processes, formulae, algorithms,
models and methodologies (such confidential items, collectively "TRADE SECRETS")
and any licenses to use any of the foregoing. As used herein, the term "COMPANY
INTELLECTUAL PROPERTY" means all Intellectual Property owned by the Company or
its Subsidiaries or held for use or used in the business of the Company or its
Subsidiaries as conducted as of the date hereof, or as presently contemplated to
be conducted and any licenses to use any of the foregoing.
(b) SCHEDULE 3.22(b) hereto sets forth, for all Company
Intellectual Property owned by the Company or any of its Subsidiaries, a
complete and accurate list, of all U.S. and foreign: (i) patents and patent
applications; (ii) trademark and service ▇▇▇▇ registrations (including Internet
domain name registrations), trademark and service ▇▇▇▇ applications and material
unregistered trademarks and service marks; and (iii) copyright registrations and
copyright applications and material unregistered copyrights.
(c) SCHEDULE 3.22(c) hereto lists all contracts for material
Software which is licensed, leased or otherwise used by the Company or any of
its Subsidiaries (excluding off-the-shelf Software licensed under an agreement
with a maximum payment obligation of less than $5,000), and all material
Software which is owned by the Company or any of its Subsidiaries ("PROPRIETARY
SOFTWARE"), and identifies which Software is owned, licensed, leased, or
otherwise used, as the case may be.
(d) SCHEDULE 3.22(d) hereto sets forth a complete and accurate
list of all agreements granting or obtaining any right to use or practice any
rights under any material Company Intellectual Property, to which the Company or
any of its Subsidiaries is a party or
otherwise bound, as licensee or licensor thereunder, including, without
limitation, license agreements, settlement agreements, indemnity agreements and
covenants not to ▇▇▇ (collectively, the "LICENSE AGREEMENTS").
(e) Except as would not have a Company Material Adverse Effect:
(i) the Company or its Subsidiaries own or have the right
to use all Company Intellectual Property, free and clear of all Liens;
(ii) to the knowledge of the Company, any Company
Intellectual Property owned or used by the Company or its Subsidiaries
has been duly maintained, is valid and subsisting and in full force and
effect, and has not been cancelled, expired or abandoned;
(iii) the Company has not received written notice from any
third party regarding any actual or potential infringement or
misappropriation by the Company or any of its Subsidiaries of any
Intellectual Property of such third party, and the Company has no
knowledge of any basis for such a claim against the Company or any of
its Subsidiaries;
(iv) the Company has not received written notice from any
third party regarding any assertion or claim challenging the validity
of any Company Intellectual Property owned or used by the Company or
any of its Subsidiaries and the Company has no knowledge of any basis
for such a claim;
(v) neither the Company nor any of its Subsidiaries have
licensed or sublicensed its rights in any Company Intellectual
Property, or received or been granted any such rights, other than
pursuant to the License Agreements;
(vi) to the knowledge of the Company, no third party is
misappropriating, infringing, diluting or violating any Company
Intellectual Property owned by the Company or any of its Subsidiaries;
(vii) the License Agreements are valid and binding
obligations of the Company or of its Subsidiaries, enforceable in
accordance with their terms, and there exists no event or condition
known to the Company which will result in a violation or breach of, or
constitute a default by the Company or of its Subsidiaries or, to the
knowledge of the Company, the other party thereto, under any such
License Agreement;
(viii) the Company and each of its Subsidiaries has taken
reasonable measures to protect the confidentiality of Trade Secrets
included in the Company Intellectual Property, including requiring
third parties having access thereto to execute written nondisclosure
agreements. No material Trade Secret included in the Company
Intellectual Property has been disclosed or authorized to be disclosed
to any third party other than pursuant to a written nondisclosure
agreement that adequately protects the Company and the applicable
Subsidiaries' proprietary interests in and to such Trade Secrets;
(ix) the consummation of the transactions contemplated
hereby will not result in the loss or impairment of the Purchaser's or
the Surviving Corporation's rights to own, use, or to bring any action
for the infringement of, any of the Company Intellectual Property, nor
will such consummation require the consent of any third party in
respect of any Company Intellectual Property; and
(x) all Proprietary Software set forth in
SCHEDULE 3.23(c) hereto, was either developed (a) by employees of the
Company or its Subsidiaries within the scope of their employment, or
(b) by independent contractors who have assigned all of their rights to
the Company or any of its Subsidiaries pursuant to written agreement.
Section 3.23 OPINION OF FINANCIAL ADVISOR. The Company has received an
opinion from U.S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇ to the effect that the consideration to
be received by the stockholders of the Company pursuant to the Merger is fair to
such stockholders from a financial point of view, a copy of which opinion has
been, or promptly upon receipt thereof will be, provided to the Purchaser. The
Company has been authorized by U.S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇ to permit the
inclusion of such opinion in its entirety in the Proxy Statement.
Section 3.24 ANTITAKEOVER STATUTES; RIGHTS PLAN. Each of the Company and
the Company's Board of Directors has taken all action, if any, required to be
taken by it in order to exempt this Agreement and the Transactions contemplated
hereby from, and this Agreement and the Transactions contemplated hereby are
exempt from, the restrictions on "business combinations" (as defined in
Section 203 of the DGCL) set forth in Section 203 of the DGCL, and no other
state takeover statute is applicable to the Transactions. The Company is not a
party to or subject to any "poison pill," stockholder rights plan, rights
agreement or similar agreement, instrument or plan.
Section 3.25 FULL DISCLOSURE. No representation or warranty in this
Agreement (including the schedules hereto) and no statement contained in any
document or certificate contemplated by this Agreement contains or will contain
any untrue statement of material fact or omits or will omit to state any
material fact necessary, in light of the circumstances under which it was made,
in order to make the statements herein or therein not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Company as follows:
Section 4.1 ORGANIZATION. The Purchaser is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of
Delaware, has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now being conducted and
is duly qualified or licensed to do business and in good standing in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification or licensing necessary,
except where the failure to be so duly qualified or licensed and in good
standing would not, individually or in the aggregate, have a Purchaser Material
Adverse Effect. The term "PURCHASER MATERIAL ADVERSE EFFECT" shall mean
any material adverse affect on the ability of the Purchaser to consummate the
Merger. The Purchaser has heretofore made available to the Company a complete
and correct copy of the certificate of incorporation and bylaws, each as amended
to date, of the Purchaser.
Section 4.2 AUTHORIZATION; VALIDITY OF AGREEMENT; NECESSARY ACTION. The
Purchaser has full corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution,
delivery and performance by the Purchaser of this Agreement, and the
consummation by it of the transactions contemplated hereby, have been duly
authorized by all necessary corporate action on the part of the Purchaser and no
other corporate or other action on the part of the Purchaser is necessary to
authorize the execution and delivery by the Purchaser of this Agreement and the
consummation by it of the transactions contemplated hereby. This Agreement has
been duly executed and delivered by the Purchaser, and, assuming due and valid
authorization, execution and delivery thereof by the Company, constitutes a
valid and binding obligation of the Purchaser enforceable against it in
accordance with its terms, except that (i) such enforcement may be subject to
applicable bankruptcy, insolvency or other similar laws, now or hereafter in
effect, affecting creditors' rights generally and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
Section 4.3 NO VIOLATIONS; CONSENTS AND APPROVALS.
(a) Neither the execution, delivery or performance of this
Agreement by the Purchaser nor the consummation by the Purchaser of the
transactions contemplated hereby nor compliance by the Purchaser with any of the
provisions hereof will (i) conflict with or result in any breach of any
provision of the certificate of incorporation or bylaws of the Purchaser, (ii)
subject to obtaining the Company Required Approvals, require any filing with, or
permit, authorization, consent or approval of, any Governmental Entity, (iii)
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration or result in the creation of any Lien) under, any
of the terms, conditions or provisions of any note, bond, mortgage, indenture,
lease, license, permit, franchise, concession, contract, agreement or other
instrument or obligation to which the Purchaser is a party or by which it or any
of its properties or assets may be bound or (iv) violate any order, writ,
injunction, judgment, decree, statute, law, rule, regulation, ordinance, permit
or license applicable to the Purchaser or any of its properties or assets,
excluding from the foregoing clauses (ii), (iii) and (iv) violations, breaches,
defaults, Liens and failures to obtain filings, permits, authorizations,
consents and approvals which would not, individually or in the aggregate, have a
Purchaser Material Adverse Effect.
(b) No declaration, filing, permit, consent, registration or
notice to or authorization or approval of any Governmental Entity is necessary
for the execution, delivery or performance of this Agreement by the Purchaser,
the consummation by it of the transactions contemplated hereby or compliance by
them with any of the provisions hereof, except for declarations, filings,
permits, consents, registrations, notices, authorizations and approvals as may
be required under, and other applicable requirements of, the Exchange Act, the
HSR Act, foreign antitrust or completion laws or regulations, state securities
or blue sky laws and the DGCL.
Section 4.4 PROXY STATEMENT. None of the written information supplied by
the Purchaser for inclusion or incorporation by reference in the Proxy Statement
will, at the date mailed to the Company's stockholders and at the time of the
Special Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading.
Section 4.5 FINANCING. The obligations to fund the commitments under the
Commitment Letters are not subject to any condition other than as set forth in
the Commitment Letters. The Purchaser is not aware of any fact or occurrence
existing on the date of this Agreement that makes any of the assumptions or
statements set forth in the Commitment Letters inaccurate or that causes the
Commitment Letters to be ineffective or that precludes the satisfaction of the
conditions set forth in the Commitment Letters. The Commitment Letters have been
duly executed by all parties thereto and are in full force and effect as of the
date hereof. All commitment and other fees required to be paid under the
Commitment Letters on or prior to the date hereof have been paid. The aggregate
amount of financing committed pursuant to the Commitment Letters is sufficient
to fund all amounts required to be paid in connection with the consummation of
the Transactions.
Section 4.6 PURCHASER'S OPERATIONS. The Purchaser was formed solely for
the purpose of engaging in the transactions contemplated hereby and has not
engaged in any business activities or conducted any operations other than in
connection with the transactions contemplated hereby.
ARTICLE V
COVENANTS
Section 5.1 INTERIM OPERATIONS OF THE COMPANY. The Company covenants and
agrees that, except (i) as expressly contemplated by this Agreement or (ii) as
agreed in writing by the Purchaser, after the date hereof and prior to the
Effective Time:
(a) the business of the Company and each of its Subsidiaries
shall be conducted only in the ordinary and usual course and, to the extent
consistent therewith, each of the Company and its Subsidiaries shall use its
best efforts to preserve its business organization intact and maintain its
existing relations with customers, suppliers, employees, creditors, business
partners and others having business dealings with them;
(b) the Company shall not, and shall not permit any of its
Subsidiaries to: (i) amend its certificate of incorporation or bylaws or similar
organizational documents; (ii) declare, set aside or pay any dividend or other
distribution payable in cash, stock or property with respect to its capital
stock, except that a wholly owned Subsidiary of the Company may declare and pay
a dividend or make advances to its parent or the Company; (iii) issue, sell,
transfer, pledge, dispose of or encumber any shares of, or securities
convertible into or exchangeable for, or options, warrants, calls, commitments
or rights of any kind to acquire any shares of, capital stock of any class or
Voting Debt of the Company or any of its Subsidiaries, other than shares of
Company Common Stock reserved for issuances pursuant to the exercise of Options
outstanding
on the date hereof; (iv) split, combine or reclassify the outstanding Company
Common Stock or any outstanding capital stock of any of the Subsidiaries of the
Company; or (v) redeem, purchase or otherwise acquire directly or indirectly any
of its capital stock or any instrument or security which consists of or includes
a right to acquire such shares;
(c) the Company shall not, and shall not permit any of its
Subsidiaries to, transfer, lease, license, sell, mortgage, pledge, dispose of,
or encumber any assets other than in the ordinary and usual course of business
and consistent with past practice, provided that such transactions, other than
sales of inventory, do not exceed $50,000 per transaction and $250,000 in the
aggregate;
(d) the Company shall not, and shall not permit any of its
Subsidiaries to, acquire or publicly propose to acquire or agree to acquire (i)
by merging or consolidating with, or by purchasing an equity interest in or a
substantial portion of the assets of, or by any other manner, any business or
any corporation, partnership, joint venture, association or other business
organization or division thereof or (ii) any assets having a cost in excess of
$50,000 individually or $500,000 in the aggregate;
(e) except in substantial accordance with the historical
practice of the Company with respect to persons that are not executive officers
or directors of the Company or any of its Subsidiaries, the Company shall not,
and shall not permit any of its Subsidiaries to: (i) grant any increase in the
non-equity-based compensation payable or to become payable by the Company or any
of its Subsidiaries to any of its directors, executive officers or employees or
(A) enter into or adopt any new or (B) amend or otherwise increase, or
accelerate the payment or vesting of any benefit or amount payable or to become
payable under, any bonus, non-equity-based incentive compensation, deferred
compensation, severance, profit sharing, insurance, pension, retirement or other
non-equity-based employee benefit plan, or other contract, agreement,
commitment, arrangement, plan, trust fund or policy maintained or contributed to
or entered into by the Company or any of its Subsidiaries; or (ii) enter into
any employment (other than "at will") or severance agreement with or, except in
accordance with the written policies of the Company existing on the date hereof,
grant any severance or termination pay to any officer, director or employee of
the Company or any of its Subsidiaries;
(f) the Company shall not, and shall not permit any of its
Subsidiaries to: grant any increase in the equity-based compensation payable or
to become payable by the Company or any of its Subsidiaries to any of its
directors, executive officers or employees or (i) enter into or adopt any new or
(ii) amend or otherwise increase, or accelerate the payment or vesting of any
benefit or amount payable or to become payable under, any equity-based incentive
compensation, stock option, stock purchase or other equity-based employee
benefit plan, or other equity-based contract, agreement, commitment,
arrangement, plan, trust fund or policy maintained or contributed to or entered
into by the Company or any of its Subsidiaries;
(g) the Company shall not, and shall not permit any of its
Subsidiaries to, (i) enter into new contracts, modify, amend, terminate, renew
or fail to use reasonable business efforts to renew any contract or agreement to
which the Company or any of its Subsidiaries is a party, which is material to
the Company and its Subsidiaries taken as a whole and provided that the term of
any new contract or any contract modification, amendment or renewal does not
exceed twelve months, and, PROVIDED FURTHER, that no loans or advances shall be
made or extended to any customer in connection with any such contract,
modification, amendment or renewal, or waive, release or assign any material
rights or claims therein or (ii) enter into, modify, amend, or renew any
contract or agreement if the dollar value of such new contract or agreement, or
existing contract or agreement as so amended, modified, or renewed, is or would
be in excess of $50,000 (not to exceed $500,000 in the aggregate) or have an
initial term (or a renewal or extension term) greater than twelve months;
(h) the Company shall, and shall cause each of its Subsidiaries
to, maintain with insurance companies reasonably believed by the Company to be
financially responsible insurance in such amounts and against such risks and
losses as are customary for companies engaged in the business of the Company and
its Subsidiaries;
(i) the Company shall not, and shall not permit any of its
Subsidiaries to: (i) incur or assume any long-term debt or incur or assume any
short-term indebtedness; (ii) assume, guarantee, endorse or otherwise become
liable or responsible (whether directly, contingently or otherwise) for the
obligations of any other person; (iii) make any loans, advances or capital
contributions to, or investments in, any other person (other than to wholly
owned Subsidiaries of the Company consistent with past practice); or (iv) make
any new capital expenditure or expenditures which exceed the amounts budgeted
therefor in the 2003 capital expenditure budget for the Company, a copy of which
has been provided to the Purchaser;
(j) the Company shall not, and shall not permit any of its
Subsidiaries to, change any of the accounting principles used by it except as
required by law, rule, regulation or GAAP;
(k) the Company shall not, and shall not permit any of its
Subsidiaries to, make any material Tax election other than in the ordinary
course of business and consistent with past practice, change any material Tax
election already made, adopt any material accounting method relating to Taxes,
change any material accounting method relating to Taxes unless required by GAAP,
settle or compromise any Tax liability in excess of $50,000 arising from or in
connection with any single issue or consent to any waiver of the statute of
limitations for any such tax liability;
(l) the Company shall not, and shall not permit any of its
Subsidiaries to, pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction of any such
claims, liabilities or obligations (i) in the ordinary course of business and
consistent with past practice, properly reflected or reserved against in the
consolidated financial statements (or the notes thereto) as of and for the
fiscal year ended June 30, 2002 of the Company and its consolidated Subsidiaries
or (ii) incurred since June 30, 2002 in the ordinary course of business and
consistent with past practice; PROVIDED, HOWEVER, that notwithstanding the
foregoing, the Company shall be entitled to pay on a timely basis all
reasonable, documented fees and expenses related to this Agreement and the
transactions contemplated hereby;
(m) the Company shall not, and shall not permit any of its
Subsidiaries to adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring,
recapitalization or other reorganization of the Company or any of its
Subsidiaries (other than the Merger);
(n) the Company shall not, and shall not permit any of its
Subsidiaries to, amend, renew, terminate or cause to be extended any lease,
agreement or arrangement relating to any of its leased properties or enter into
any lease, agreement or arrangement with respect to any real property;
(o) the Company shall, and shall cause each of its Subsidiaries
to, use reasonable best efforts to maintain in effect all existing Permits that
are material to the operations of the Company or any of its Subsidiaries;
(p) subject to the other restrictions set forth in this
SECTION 5.1, the Company shall not, and shall not permit any of its Subsidiaries
to, enter into any agreement or arrangement with any of their respective
affiliates other than such agreements and arrangements as are entered into in
the usual, ordinary and regular course of business and which have been
negotiated on an arms-length basis and are no less favorable to the Company or
its Subsidiaries than the Company or such Subsidiary would have obtained from an
unaffiliated third party, and PROVIDED THAT the Company shall have scheduled
such items pursuant to SCHEDULE 3.7 or, if after the date of this Agreement, the
Company shall have notified the Purchaser in writing prior to entering into any
such affiliate transaction;
(q) the Company shall not, and shall not permit any of its
Subsidiaries to, take, or agree to commit to take, any action that (i) would to
the Company's knowledge make any representation or warranty of the Company
contained herein inaccurate in any respect at, or as of any time prior to, the
Effective Time, (ii) would result in any of the conditions to the consummation
of the Merger set forth in ARTICLE VI not being satisfied or (iii) would
materially impair the ability of the Company or the Purchaser to consummate the
Merger in accordance with the terms hereof or materially delay such
consummation; and
(r) the Company shall not, and shall not permit any of its
Subsidiaries to, enter into an agreement, contract, commitment or arrangement to
do any of the foregoing, or to authorize, recommend, propose or announce an
intention to do any of the foregoing.
Section 5.2 HSR ACT; FOREIGN ANTITRUST LAWS. The Company and the
Purchaser shall, if required, take all reasonable actions necessary to file as
soon as practicable following the date hereof notifications under the HSR Act
and any foreign antitrust or competition law or regulation and to respond as
promptly as practicable to any inquiries received from the Federal Trade
Commission or the Antitrust Division of the Department of Justice or any foreign
Governmental Entity for additional information or documentation and to respond
as promptly as practicable to all inquiries and requests received from any State
Attorney General or any other Governmental Entity in connection with antitrust
or competition matters.
Section 5.3 ACCESS TO INFORMATION. Upon reasonable notice, the Company
shall (and shall cause each of its Subsidiaries to afford to the officers,
employees, accountants, counsel, investment bankers, lenders, consultants,
financial advisors and other representatives of the Purchaser, access, during
normal business hours during the period prior to the Effective Time, to
all its offices, properties, facilities, key personnel, sales representatives,
customers, officers, directors, independent accountants, counsel, books,
contracts, commitments and records and such financial and operating data as such
representatives of the Purchaser may reasonably request, and, during such
period, the Company shall (and shall cause each of its Subsidiaries to) furnish
or make available promptly to the Purchaser (i) a copy of each report, schedule,
registration statement and other document filed or received by it during such
period pursuant to the requirements of federal securities laws, (ii) all other
information concerning its business, properties and personnel as the Purchaser
may reasonably request and (iii) copies of all Environmental Reports received by
the Company as soon as practicable after the receipt thereof. After the
Effective Time, the Company shall provide the Purchaser and such persons as the
Purchaser shall designate with all such information, at such time, as the
Purchaser shall request. Unless otherwise required by law and until the
Effective Time, and except as contemplated by SECTION 5.5 hereof, the Purchaser
will hold any such information which is nonpublic in confidence in accordance
with the provisions of the Confidentiality Agreement, dated, June 7, 2002,
between the Company and TCEP (the "CONFIDENTIALITY AGREEMENT").
Section 5.4 CONSENTS AND APPROVALS. Each of the Company and the
Purchaser will take all reasonable actions necessary to comply promptly with all
legal requirements which may be imposed on it with respect to this Agreement and
the transactions contemplated hereby (which actions shall include, without
limitation, furnishing all information determined by their respective counsel to
be required under the HSR Act and any foreign antitrust or competition law or
regulation and in connection with approvals of or filings with any other
Governmental Entity) and will promptly cooperate with and furnish information to
each other in connection with any such requirements imposed upon any of them or
any of their Subsidiaries in connection with this Agreement and the transactions
contemplated hereby. Each of the Company and the Purchaser will, and will cause
its Subsidiaries to, take all reasonable actions determined by their respective
counsel to be necessary to obtain (and will cooperate with each other in
obtaining) any consent, authorization, order or approval of, or any exemption
by, any Governmental Entity or other public or private third party required to
be obtained or made by the Purchaser, the Company or any of their Subsidiaries
in connection with the Merger or the taking of any action contemplated thereby
or by this Agreement.
Section 5.5 NO SOLICITATION. Neither the Company nor any of its
Subsidiaries or affiliates shall (and the Company shall use its best efforts to
cause its and each of its Subsidiaries' officers, directors, employees,
representatives and agents, including, but not limited to, investment bankers,
attorneys and accountants, not to), directly or indirectly, encourage, solicit,
participate in or initiate discussions or negotiations with, provide any
information to, or enter into any agreement with, any corporation, partnership,
person or other entity or group (other than the Purchaser, any of its affiliates
or representatives) concerning any merger, business combination, tender offer,
exchange offer, sale of assets, sale of shares of capital stock or debt
securities or similar transactions involving the Company or any Subsidiary,
division or operating or principal business unit of the Company (an "ACQUISITION
PROPOSAL"). The Company further agrees that it will immediately cease any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing. Notwithstanding the foregoing,
prior to the time of the Special Meeting, the Company may, directly or
indirectly, provide access and furnish information concerning its business,
properties or assets to any corporation, partnership, person or other entity or
group pursuant to appropriate confidentiality
agreements, and may negotiate and participate in discussions and negotiations
with such entity or group if (x) such entity or group has submitted an
unsolicited bona fide written proposal to the Board of Directors of the Company
relating to any such transaction, (y) the Board of Directors of the Company
determines in good faith, after consultation with its independent financial
advisor, that such proposal is financially superior to the Merger and fully
financed or reasonably capable of being financed, and (z) the Board of Directors
of the Company determines in good faith, after consultation with independent
legal counsel, that the failure to provide such information or access or to
engage in such discussions or negotiations would reasonably be likely to violate
their fiduciary duties to the Company's stockholders under applicable law. A
proposal meeting all of the criteria in the preceding sentence is referred to
herein as a "SUPERIOR PROPOSAL." Nothing contained in this SECTION 5.5 shall
prohibit the Company or its Board of Directors from taking and disclosing to the
Company's stockholders a position with respect to a tender offer by a third
party pursuant to Rules l4d-9 and l4e-2(a) promulgated under the Exchange Act.
The Company will immediately notify the Purchaser of any Acquisition Proposal,
or if an inquiry is made, will keep the Purchaser fully apprised of all
developments with respect to any Acquisition Proposal, will immediately provide
to the Purchaser copies of any written materials received by the Company in
connection with any Acquisition Proposal, discussion, negotiation or inquiry and
the identity of the party making any Acquisition Proposal or inquiry or engaging
in such discussion or negotiation. The Company will promptly provide to the
Purchaser any non-public information concerning the Company provided to any
other party which was not previously provided to the Purchaser. The Company
agrees not to release any third party from, or waive any provisions of, any
confidentiality or standstill agreement to which the Company is a party.
Notwithstanding anything to the contrary contained in this Agreement, except in
connection with the valid termination of this Agreement pursuant to
SECTION 7.1(c)(i) hereof, neither the Board of Directors of the Company nor any
committee thereof shall (i) withdraw, or modify or change in a manner adverse to
the Purchaser, or propose to withdraw, or propose to modify or change in a
manner adverse to the Purchaser, the approval or recommendation by such Board of
Directors or any such committee of this Agreement or the Merger, (ii) approve or
recommend, or propose to approve or recommend, any Acquisition Proposal or
(iii) enter into any agreement with respect to any Acquisition Proposal.
Section 5.6 BROKERS OR FINDERS. The Company represents, as to itself,
its Subsidiaries and its affiliates, that no agent, broker, investment banker,
financial advisor or other firm or person is or will be entitled to any brokers'
or finder's fee or any other commission or similar fee in connection with any of
the transactions contemplated by this Agreement except U.S. Bancorp ▇▇▇▇▇
▇▇▇▇▇▇▇, whose fees and expenses will be paid by the Company in accordance with
the Company's agreement with such firm (a copy of which has been delivered by
the Company to the Purchaser prior to the date of this Agreement). The Purchaser
represents, as to itself, and its affiliates, that no agent, broker, investment
banker, financial advisor or other firm or person is or will be entitled to any
brokers' or finder's fee or any other commission or similar fee in connection
with any of the transactions contemplated by this Agreement. Each of the
Purchaser and the Company agrees to indemnify and hold the other harmless from
and against any and all claims, liabilities or obligations with respect to any
other fees, commissions or expenses asserted by any person on the basis of any
act or statement alleged to have been made by such party or its affiliates.
Section 5.7 ADDITIONAL AGREEMENTS. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to 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, or
to remove any injunctions or other impediments or delays, legal or otherwise, to
consummate and make effective the Merger and the other transactions contemplated
by this Agreement. In case at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of this Agreement,
the proper officers and directors of the Company and the Purchaser shall use all
reasonable efforts to take, or cause to be taken, all such necessary actions.
Section 5.8 PUBLICITY. The initial press release with respect to the
execution of this Agreement shall be a joint press release acceptable to the
Purchaser and the Company. Thereafter, so long as this Agreement is in effect,
neither the Company, the Purchaser nor any of their respective affiliates shall
issue or cause the publication of any press release or other announcement with
respect to the Merger, this Agreement or the other transactions contemplated
hereby without the prior consultation of the other party, except as may be
required by law or by any listing agreement with a national securities exchange.
Section 5.9 NOTIFICATION OF CERTAIN MATTERS. The Company shall give
prompt notice to the Purchaser, and the Purchaser shall give prompt notice to
the Company, of (i) the occurrence or non-occurrence of any event the occurrence
or non-occurrence of which would cause any representation or warranty contained
in this Agreement to be untrue or inaccurate in any material respect at or prior
to the Effective Time and (ii) any material failure of the Company or the
Purchaser, as the case may be, to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by it hereunder; PROVIDED,
HOWEVER, that the delivery of any notice pursuant to this SECTION 5.9 shall not
limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
Section 5.10 DIRECTORS' AND OFFICERS' INSURANCE AND INDEMNIFICATION.
(a) For six years after the Effective Time, the Surviving
Corporation shall indemnify, defend and hold harmless to the fullest extent
permitted under
Delaware law the present and former officers and directors of
the Company (each an "INDEMNIFIED PARTY") against all losses, claims, damages,
liabilities, fees and expenses (including reasonable fees and disbursements of
counsel and judgments, fines, losses, claims, liabilities and amounts paid in
settlement (provided that any such settlement is effected with the written
consent of the Purchaser or the Surviving Corporation)) in connection with any
claim, suit, action, proceeding or investigation that is, in whole or in part,
based on or arising out of the fact that such person is or was a director,
officer, employee or agent of the Company, or a trustee or fiduciary of any plan
for the benefit of employees of the Company, and arising out of actions or
omissions occurring at or prior to the Effective Time, including the
transactions contemplated by this Agreement; PROVIDED, that in the event any
claim or claims are asserted or made within such six year period, all rights to
indemnification in respect of any such claim or claims shall continue until
final disposition of any and all such claims. Without limiting the foregoing, in
the event any such Indemnified Party is or becomes involved in any capacity in
any action, proceeding or investigation in connection with any matter, including
the transactions contemplated by this Agreement, occurring prior to, and
including, the Effective Time, the Surviving Corporation will
pay as incurred such Indemnified Party's legal and other expenses (including the
cost of any investigation and preparation) incurred in connection therewith;
PROVIDED, HOWEVER, that the Surviving Corporation shall not have any obligation
to pay such legal or other expenses under this SECTION 5.10(a) to an Indemnified
Party with respect to any matter caused by or resulting from the fraud or
willful misconduct of that Indemnified Party.
(b) For six years after the Effective Time, the Surviving
Corporation shall maintain in effect, if available, directors' and officers'
liability insurance covering those persons who are currently covered by the
Company's directors' and officers' liability insurance policy (a copy of which
has been made available to the Purchaser) to the extent that it provides
coverage for events occurring on or prior to the Effective Time, on terms that
are no less favorable to the terms now applicable to them under the Company's
current policies; PROVIDED, HOWEVER, that in no event shall the Surviving
Corporation be required to expend more than 150% of the annual premium currently
paid by the Company for such coverage; and PROVIDED, FURTHER, that, if the
premium for such coverage exceeds such amount, the Surviving Corporation shall
purchase a policy with the greatest coverage available for such annual premium.
(c) This SECTION 5.10 shall survive the consummation of the
Merger at the Effective Time, and shall be binding on all successors and assigns
of the Surviving Corporation.
Section 5.11 STATE TAKEOVER LAWS. If Section 203 of the DGCL or any other
state takeover statute becomes or is deemed to become applicable to the Company
or the Merger, the Company shall take all action necessary to render such
statute inapplicable to all of the foregoing.
Section 5.12 RESIGNATIONS. At or prior to the Effective Time, the Company
shall obtain the resignations as of the Effective Time of each director of the
Company and, if so requested by the Purchaser, of any officer of the Company and
any director or officer of any of Subsidiary of the Company.
Section 5.13 SEC REPORTS. From the date of this Agreement until the
earlier of the termination of this Agreement pursuant to ARTICLE VII or the
Effective Time, the Company shall file on a timely basis all forms, reports,
schedules, statements and other documents ("SEC REPORTS") required to be filed
by it with the SEC under the Exchange Act, the Securities Act and the published
rules and regulations of the SEC under either of the foregoing applicable to
such SEC Reports, which SEC Reports shall comply in all material respects with
the requirements of the Exchange Act, the Securities Act and the published rules
and regulations of the SEC thereunder, each as applicable to such SEC Reports.
Section 5.14 DELISTING. Each of the parties hereto agrees to cooperate
with the other party in taking, or causing to be taken, all actions necessary
(i) to delist the Shares from the National Association of Securities Dealers,
Inc. Automated Quotation/National Market System and (ii) to terminate the
registration of the Shares under the Exchange Act; PROVIDED THAT such delisting
and termination shall not be effective until after the Effective Time of the
Merger.
Section 5.15 FINANCIAL STATEMENTS. During the period prior to the
Effective Time, the Company shall provide to the Purchaser consolidated monthly
financial statements no later than
the tenth business day following the end of each calendar month following the
date of this Agreement. Further, the Company shall provide, and shall cause its
Subsidiaries to provide, all reasonable cooperation in connection with the
arrangement of the financing of the Merger including, without limitation, (a)
promptly providing to the Purchaser's and the Purchaser's financing sources all
material financial information in their possession with respect to the Company
and the Transactions as reasonably requested by the Purchaser or the Purchaser's
financing sources, including, but not limited to, information and projections
prepared by the Company relating to the Company and the Transactions, (b) making
the Company's senior officers reasonably available to the Purchaser's financing
sources in connection with such financing to reasonably participate in due
diligence sessions and to reasonably participate in presentations related to the
financing and (c) reasonably assisting in the preparation of one or more
appropriate offering documents and assisting the Purchaser's and the Purchaser's
financing sources in preparing other appropriate marketing materials, in each
case to be used in connection with the financing.
Section 5.16 EMPLOYEES. The Company shall use its best commercially
practicable efforts to (i) retain, and cause its Subsidiaries to retain, all
employees of the Company and its Subsidiaries and (ii) encourage the individuals
listed on SCHEDULE 6.2(g) to enter into the arrangements referred to in
SECTION 6.2(g).
Section 5.17 COMPARABILITY OF EMPLOYEE BENEFITS. After the Effective
Time, the Surviving Corporation shall provide to individuals who are employees
of the Company and its Subsidiaries at the Effective Time and whose employment
will continue following the Effective Time, employee benefits that will, in the
aggregate, be comparable to those provided by the Company and its Subsidiaries
to their employees. Notwithstanding the foregoing, nothing contained herein
shall otherwise limit the Surviving Corporation's or any of its Subsidiaries'
right to amend, modify or terminate any Benefit Plan or to terminate employment
of any employee after the Effective Time.
ARTICLE VI
CONDITIONS
Section 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The obligations of the parties to effect the Merger shall be subject to the
satisfaction on or prior to the Effective Time of each of the following
conditions:
(a) STOCKHOLDER APPROVAL. This Agreement and the Merger shall
have been approved and adopted by the requisite vote of the holders of Company
Common Stock.
(b) STATUTES; CONSENTS. No suit, action or proceeding shall be
threatened or pending, and no statute, rule, order, decree or regulation shall
have been enacted or promulgated, by any Governmental Entity of competent
jurisdiction which seeks to prohibit or prohibits the consummation of the Merger
or seeks to impose or imposes any material limitation or restriction on the
ownership or operation of the business of the Surviving Corporation, and all
foreign or domestic governmental consents, orders and approvals required for the
consummation of the Merger and the transactions contemplated hereby shall have
been obtained and shall be in effect
at the Effective Time and shall not materially limit or restrict ownership or
the operation of the business of the Surviving Corporation.
(c) INJUNCTIONS. There shall be no order or injunction of a
foreign or United States federal or state court or other governmental authority
of competent jurisdiction in effect precluding, restraining, enjoining or
prohibiting consummation of the Merger or otherwise materially limiting or
restricting ownership or the operation of the business of the Surviving
Corporation.
(d) TERMINATION. This Agreement shall not have been terminated
in accordance with its terms.
(e) HSR ACT. Any waiting period applicable to the consummation
of the Merger under the HSR Act shall have expired or been terminated.
Section 6.2 CONDITIONS TO OBLIGATION OF THE PURCHASER. The obligation of
the Purchaser to effect the Merger shall be subject to the satisfaction on or
prior to the Effective Time, of each of the following additional conditions,
unless waived by the Purchaser in writing prior to the Effective Time:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company set forth herein shall be true and correct as of the
date of this Agreement and as of the Effective Time except for (i) changes
specifically contemplated by this Agreement and (ii) those representations and
warranties that address matters only as of a particular date (which shall remain
true and correct as of such date) and in each case except where the failure of
such representation and warranty to be so true and correct would not have a
Company Material Adverse Effect (other than representations and warranties that
are already so qualified or that are qualified as to the prevention or delay of
the consummation of any of the Transactions and the representations and
warranties set forth in SECTION 3.2 and SECTION 3.24, which in each such case
shall be true and correct in all material respects).
(b) COVENANTS AND AGREEMENTS. The Company shall have, in all
material respects, performed all obligations and complied with all agreements
and covenants required to be performed by it or complied with by it under this
Agreement at or prior to the Effective Time.
(c) CONSENTS. the Purchaser shall have received evidence, in
form and substance reasonably satisfactory to it, that all licenses, permits,
consents, approvals, authorizations, qualifications and orders of Governmental
Entities and other third parties necessary for the consummation of the
Transactions have been obtained, all on terms and conditions reasonably
satisfactory to the Purchaser.
(d) DISSENTERS. The holders of not more than 10% of the
outstanding Shares shall have demanded appraisal of their Shares in accordance
with the DGCL.
(e) OFFICERS' CERTIFICATE. At the Closing, the Company shall
deliver an Officers' Certificate, duly executed by the Company's Chief Executive
Officer and Chief Financial Officer and dated as of the Closing Date, stating
that the conditions to Closing set forth in SECTIONS 6.2(a) and (b) above have
been satisfied.
(f) CERTIFIED COPIES. At the Closing, the Company shall deliver
certified copies of (i) the resolutions duly adopted by the Company's Board of
Directors authorizing the execution, delivery and performance of this Agreement
and the Transactions, (ii) the resolutions duly adopted by the Company's
stockholders approving this Agreement and the Transactions and (iii) the
certificate of incorporation and the bylaws of the Company as then in effect
immediately prior to the Effective Time.
(g) EMPLOYMENT ARRANGEMENTS. Each of the individuals listed on
SCHEDULE 6.2(g) shall have entered into employment, non-solicitation and/or
equity arrangements with the Company in form and substance reasonably acceptable
to the Purchaser.
(h) NO INDEBTEDNESS OR LIENS. Immediately prior to the Closing,
none of the Company nor any of its Subsidiaries shall have any funded
indebtedness or Liens.
(i) AMENDED AND RESTATED REAL ESTATE LEASE. The Company,
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall have entered into an amended and
restated lease agreement for the property located at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ in form substantially the same as that attached hereto as
EXHIBIT A.
(j) NON-COMPETITION AGREEMENT. The Company and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
shall have entered into a non-competition agreement in form and substance
reasonably acceptable to the Purchaser.
Section 6.3 CONDITIONS TO OBLIGATION OF THE COMPANY. The obligation of
the Company to effect the Merger shall be subject to the satisfaction, on or
prior to the Effective Time, of each of the following additional conditions,
unless waived by the Company in writing prior to the Effective Time:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Purchaser set forth herein shall be true and correct as of the
date of this Agreement and as of the Effective Time except for (i) changes
specifically contemplated by this Agreement and (ii) those representations and
warranties that address matters only as of a particular date (which shall remain
true and correct as of such date) and in each case except where failure of such
representation and warranty to be so true and correct would not reasonably be
expected to have a Purchaser Material Adverse Effect (other than representations
and warranties that are already so qualified as to the prevention or delay of
the consummation of any of the Transactions, which in each such case shall be
true and correct in all material respects).
(b) COVENANTS AND AGREEMENTS. The Purchaser shall have, in all
material respects, performed all obligations and complied with all agreements
and covenants required to be performed by it or complied with by it under this
Agreement at or prior to the Effective Time.
(c) OFFICERS' CERTIFICATE. At the Closing, the Purchaser shall
deliver an Officers' Certificate, duly executed by the Purchaser's Chief
Executive Officer and Chief Financial Officer and dated as of the Closing Date,
stating that the conditions to Closing set forth in SECTIONS 6.3(a) and (b)
above have been satisfied.
(d) CERTIFIED COPIES. At the Closing, the Purchaser shall
deliver certified copies of (i) the resolutions duly adopted by the Purchaser's
Board of Directors authorizing the execution, delivery and performance of this
Agreement and the Transactions, (ii) the resolutions duly adopted by the
Purchaser's stockholders approving this Agreement and the Transactions and (iii)
the certificate of incorporation and the Bylaws of the Purchaser as then in
effect immediately prior to the Effective Time.
ARTICLE VII
TERMINATION
Section 7.1 TERMINATION. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated and the Merger contemplated
herein may be abandoned at any time prior to the Effective Time, whether before
or after stockholder approval thereof:
(a) By the mutual consent of the Board of Directors of the
Purchaser and the Board of Directors of the Company.
(b) By either of the Board of Directors of the Company or the
Board of Directors of the Purchaser if any Governmental Entity shall have issued
an order, decree or ruling or taken any other action (which order, decree,
ruling or other action the parties hereto shall use their reasonable efforts to
lift), in each case, permanently restraining, enjoining or otherwise prohibiting
the transactions contemplated by this Agreement and such order, decree, ruling
or other action shall have become final and non-appealable; PROVIDED, HOWEVER,
that the right to terminate this Agreement pursuant to this SECTION 7.1(b) shall
not be available to any party whose failure to fulfill any obligation under this
Agreement has been the primary cause of, or resulted in, the issuance of such
order, decree or ruling, or the taking of such action.
(c) By the Board of Directors of the Company:
(i) if, prior to the Effective Time, the Board of
Directors of the Company shall have withdrawn, or modified or changed
in a manner adverse to the Purchaser, its approval or recommendation of
this Agreement or the Merger in order to approve and permit the Company
to execute a definitive agreement providing for a Superior Proposal;
provided that (A) at least five (5) business days prior to terminating
this Agreement pursuant to this SECTION 7.1(c)(i) the Company has
provided the Purchaser with written notice advising the Purchaser that
the Board of Directors of the Company has received a Superior Proposal
that it intends to accept, specifying the material terms and conditions
of such Superior Proposal and identifying the person making such
Superior Proposal and (B) the Company shall have caused its financial
and legal advisors to negotiate in good faith with the Purchaser to
make such adjustments in the terms and conditions of this Agreement as
would enable the Company to proceed with the transactions contemplated
herein on such adjusted terms; and FURTHER PROVIDED THAT simultaneously
with any termination of this Agreement pursuant to this
SECTION 7.1(c)(i), the Company shall pay to the Purchaser the
Termination Fee (as defined in SECTION 8.1(b) hereof); or
(ii) if there has been a breach of any representation,
warranty, covenant or agreement on the part of the Purchaser set forth
in this Agreement such that any of the conditions set forth in SECTION
6.1 or SECTION 6.3 would not be satisfied and such breach is not cured
within thirty days after the Company's written notification to the
Purchaser of the occurrence of such breach and is incapable of being
cured prior to March 31, 2003.
(d) By the Board of Directors of the Purchaser:
(i) if prior to the Effective Time, the Board of
Directors of the Company shall have withdrawn, or modified or changed
in a manner adverse to the Purchaser, its approval or recommendation of
this Agreement or the Merger or shall have recommended an Acquisition
Proposal or offer, or shall have executed an agreement in principle (or
similar agreement) or definitive agreement providing for a tender offer
or exchange offer for any shares of capital stock of the Company, or a
merger, consolidation or other business combination with a person or
entity other than the Purchaser or its affiliates (or the Board of
Directors of the Company resolves to do any of the foregoing);
(ii) if it shall have been publicly disclosed or the
Purchaser shall have otherwise learned that any person, entity or
"group" (as defined in Section 13(d)(3) of the Exchange Act), other
than the Purchaser or its affiliates or any group of which any of them
is a member, shall have acquired beneficial ownership (determined
pursuant to Rule 13d-3 promulgated under the Exchange Act) of more than
14.9% of any class or series of capital stock of the Company (including
the Shares) (or any person beneficially owning in excess of 14.9% of
any class or series of capital stock of the Company (including the
Shares) on the date of the Agreement shall increase such person's
beneficial ownership by 1% or more in excess of such beneficial
ownership as reported in an SEC filing publicly filed prior to the date
of this Agreement), through the acquisition of stock, the formation of
a group or otherwise, or shall have been granted an option, right or
warrant, conditional or otherwise, to acquire beneficial ownership of
more than 14.9% of any class or series of capital stock of the Company
(including the Shares) or any person or group shall have entered into a
definitive agreement or agreement in principle with the Company with
respect to a merger, consolidation or other business combination with
the Company;
(iii) if there shall have occurred any events or changes
which have had or which are reasonably anticipated to have or
constitute, individually or in the aggregate, a Company Material
Adverse Effect;
(iv) if there shall have occurred (A) any general
suspension of trading in, or limitation on prices for, securities on
the New York Stock Exchange for a period in excess of three hours
(excluding suspensions or limitations resulting solely from physical
damage or interference with such exchanges not related to market
conditions) and such event is reasonably anticipated to result in a
Company Material Adverse Effect, (B) a general declaration of a banking
moratorium or any suspension of payments in respect of banks in the
United States (whether or not mandatory), (C) a commencement of a war,
armed hostilities or other international or national calamity directly
or indirectly
involving the United States and such event is reasonably anticipated to
result in a Company Material Adverse Effect, (D) any limitation or
proposed limitation (whether or not mandatory) by any foreign or United
States governmental authority or agency that has a material adverse
effect generally on the extension of credit by banks or other financial
institutions and which is reasonably anticipated to have a material
adverse effect on the ability of the Purchaser to obtain any financing
relating to the transactions contemplated by this Agreement, (E) any
change in general financial, bank or capital market conditions which
has a material adverse effect on the ability of financial institutions
in the United States to extend credit or syndicate loans and which is
reasonably anticipated to have a material adverse effect on the ability
of the Purchaser to obtain any financing relating to the transactions
contemplated by this Agreement or (F) any decline in either the Dow
▇▇▇▇▇ Industrial Average or the Standard & Poor's Index of 500
Industrial Companies by an amount in excess of 15% measured from the
close of business on the date of this Agreement and such event is
reasonably anticipated to result in a Company Material Adverse Effect;
or
(v) if there has been a breach of any representation,
warranty, covenant or agreement on the part of the Company set forth in
this Agreement such that any of the conditions set forth in SECTION 6.1
or SECTION 6.2 would not be satisfied and such breach is not cured
within thirty days after the Purchaser's written notification to the
Company of the occurrence of such breach and is incapable of being
cured prior to March 31, 2003.
Section 7.2 EFFECT OF TERMINATION. In the event of the termination of
this Agreement as provided in SECTION 7.1 hereof, written notice thereof shall
forthwith be given to the other party or parties specifying the provision hereof
pursuant to which such termination is made, and this Agreement shall forthwith
become null and void, except for the third sentence of SECTION 5.3 and all of
ARTICLE VIII, each of which shall survive such termination, and there shall be
no liability on the part of the Purchaser or the Company except (a) for fraud or
for willful material breach of this Agreement and (b) as set forth in this
SECTION 7.2 and SECTION 8.1.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 FEES AND EXPENSES.
(a) Except as contemplated by this Agreement, including
Sections 8.1(b) and 8.1(c) hereof, all costs and expenses incurred in connection
with this Agreement and the consummation of the transactions contemplated hereby
shall be paid by the party incurring such expenses.
(b) If (i) the Board of Directors of the Company shall terminate
this Agreement pursuant to SECTION 7.1(c)(i) hereof, (ii) the Board of Directors
of the Purchaser shall terminate this Agreement pursuant to SECTION 7.1(d)(i),
(iii) both (A) the Board of Directors of the Purchaser shall terminate this
Agreement pursuant to SECTION 7.1(d)(ii) hereof and (B) at the time of such
termination or prior to the Special Meeting there shall have been an Acquisition
Proposal with respect to the Company (whether or not such offer shall have been
rejected or shall have been withdrawn prior to the time of such termination or
of the Special Meeting), or (iv) both (A) the Board of Directors of the
Purchaser shall terminate this Agreement pursuant to SECTION 7.1(d)(ii) hereof
and (B) within 12 months after termination of this Agreement the Company shall
have entered into an agreement with respect to, or consummated, an Acquisition
Proposal, then in any such case as described in clause (i), (ii), (iii) or (iv)
(each such case of termination being referred to as a "TRIGGER EVENT"), the
Company shall pay to the Purchaser (simultaneously with such termination of this
Agreement in the case of a Trigger Event of the type described in clause (i),
not later than one business day after such termination of this Agreement in the
case of a Trigger Event of the type described in clause (ii) or (iii), or not
later than one business day after entering into an agreement with respect to, or
consummating, an Acquisition Proposal, in the case of a Trigger Event of the
type described in clause (iv)) an amount equal to $3,000,000 (the "TERMINATION
FEE").
(c) Upon the termination of this Agreement due to the occurrence
of a Trigger Event, the Company agrees that, in addition to the payment of the
Termination Fee provided for in SECTION 8.1(b) hereof, it shall at the time of
payment of the Termination Fee as required by SECTION 8.1(b) hereof, reimburse
the Purchaser for up to $375,000 of actual, documented and reasonable
out-of-pocket expenses incurred, or to be incurred by the Purchaser and its
affiliates (including the fees and expenses of legal counsel, accountants,
financial advisors, other consultants, financial printers and financing sources)
("EXPENSES") in connection with the Merger and the consummation of the
transactions contemplated by this Agreement.
(d) the Purchaser and the Company agree that the agreements
contained in SECTION 8.1(b) and (c) are an integral part of the transactions
contemplated by this Agreement and constitute liquidated damages and not a
penalty. If the Company fails to promptly pay any amounts due under such
SECTION 8.1(b) and (c), it shall pay the costs and expenses (including legal
fees and expenses) in connection with any action, including the filing of any
lawsuit or other legal action, taken to collect payment, together with interest
on any unpaid amounts, at the prime rate as published in the WALL STREET
JOURNAL, from the date such amount was required to be paid.
Section 8.2 AMENDMENT AND MODIFICATION. Subject to applicable law, this
Agreement may be amended, modified and supplemented in any and all respects,
whether before or after any vote of the stockholders of the Company contemplated
hereby, by written agreement of the parties hereto, by action taken by their
respective Boards of Directors, at any time prior to the Closing Date with
respect to any of the terms contained herein; PROVIDED, HOWEVER, that after the
approval of this Agreement by the stockholders of the Company, no such
amendment, modification or supplement shall reduce or change the Merger
Consideration.
Section 8.3 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement or in any schedule, instrument
or other document delivered pursuant to this Agreement shall survive the
Effective Time. This SECTION 8.3 shall not limit any covenant or agreement of
the parties hereto which by its terms contemplates performance after the
Effective Time.
Section 8.4 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by an overnight courier service, such as
Federal Express, to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to the Purchaser, to:
XXI Merger Corp.
c/o ▇▇▇▇▇ ▇▇▇▇▇▇▇ Equity Partners
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
LLR Partners Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
and a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, P.C.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
(b) if to the Company, to:
Prophet 21, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇ & Bockius, LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. Chairman
Section 8.5 INTERPRETATION. When a reference is made in this Agreement
to Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. Whenever the words "include", "includes" or "including" are
used in this Agreement they shall be deemed to be followed by the words "without
limitation". The phrase "made available" in this Agreement shall mean that the
information referred to has been made available if requested by the party to
whom such information is to be made available. As used in this Agreement, the
term "affiliate(s)" shall have the meaning set forth in Rule l2b-2 of the
Exchange Act. The term "knowledge" means, with respect to the Company, actual
knowledge of the persons named on SCHEDULE 8.5 hereto or such knowledge that
such persons should have had in the performance of their duties.
Section 8.6 WAIVERS. Except as otherwise provided in this Agreement, any
failure of any of the parties to comply with any obligation, covenant, agreement
or condition herein may be waived by the party or parties entitled to the
benefits thereof only by a written instrument signed by the party granting such
waiver, but such waiver or failure to insist upon strict compliance with such
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
Section 8.7 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
Section 8.8 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This Agreement
(including the documents and the instruments referred to herein): (a)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, and (b) except as provided in SECTION 5.10 hereof, is not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder.
Section 8.9 SEVERABILITY. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void, unenforceable or against its regulatory policy,
the remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
Section 8.10 GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of
Delaware without giving
effect to the principles of conflicts of law thereof.
Section 8.11 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that the Purchaser may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to the
Purchaser or to any direct or indirect wholly owned Subsidiary of the Purchaser.
Subject to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective successors
and assigns.
Section 8.12 HEADINGS. The Article, Section and paragraph headings
herein are for convenience of reference only, do not constitute part of this
Agreement and shall not be deemed to limit or otherwise affect any of the
provisions hereof.
Section 8.13 SPECIFIC PERFORMANCE. Each of the parties hereto
acknowledges and agrees that in the event of any breach of this Agreement, each
non-breaching party would be irreparably and immediately harmed and could not be
made whole by monetary damages. It is accordingly agreed that the parties hereto
(a) will waive, in any action for specific performance, the defense of adequacy
of a remedy at law and (b) shall be entitled, in addition to any other remedy to
which they may be entitled at law or in equity, to compel specific performance
of this Agreement in any action instituted in a court of competent jurisdiction.
*****
IN WITNESS WHEREOF, the Purchaser and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
XXI MERGER CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title:
PROPHET 21, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, PH.D.
--------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Ph.D.
Title: Chairman of the Board
EXHIBIT A
AMENDED AND RESTATED LEASE AGREEMENT
THIS AMENDED AND RESTATED LEASE AGREEMENT ("Lease") is made as of the
_____ day of November, 2002, by and between ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
both individuals having an address of ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter collectively referred to as "Landlord") and
Prophet 21 New Jersey, Inc., a New Jersey corporation (the "Tenant," formerly
known as Prophet 21, Inc.), having an address of ▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
STATEMENT OF FACTS
A. Landlord is the owner of all those lands and premises situated in the
Borough of Yardley, Bucks County, Pennsylvania, commonly known as ▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, Pennsylvania, consisting of ten (10)
acres, more or less (the "Real Estate") more particularly described on the metes
and bounds legal description which is attached hereto, made a part hereof, and
labeled Exhibit "A", and a certain building and other structures situate thereon
(collectively, the "Improvements").
B. The Real Estate and the Improvements shall hereinafter be collectively
be referred to as the "Leased Premises".
C. Landlord and Tenant were parties to a certain Lease Agreement, dated
August 21, 1987, a certain Amended Lease dated February 29, 1988, as amended
March 10, 1990, a certain Lease Agreement dated July 1, 1993, and a certain
Lease Agreement dated July 1, 1998 (collectively, the "Prior Agreements").
D. Landlord desires to lease the Leased Premises to Tenant, and Tenant
desires to lease the Leased Premises, upon the terms and conditions hereinafter
set forth.
NOW THEREFORE, in consideration of the rents and the mutual covenants and
conditions hereinafter set forth, Landlord and Tenant, intending to be legally
bound, hereby agree as follows:
1. TERMINATION OF PRIOR AGREEMENTS. The Prior Agreements are hereby
terminated, rendered null and void, and of no further force or effect, and the
Landlord and Tenant shall have no further liability to each other with respect
thereto.
2. PREMISES. Landlord hereby demises and leases to Tenant and Tenant
hereby hires and rents, subject to the terms and conditions hereof, from
Landlord, the Leased Premises together with all rights, privileges, tenements,
hereditaments, easements and appurtenances belonging or appertaining thereto, to
have and hold unto Tenant, subject to the covenants and conditions contained
herein which Landlord and Tenant respectively agree to keep and perform.
3. TERM. The initial term of this Lease shall be for a period of five (5)
years, commencing as of the date hereof (the "Commencement Date") and
terminating on the last day of the calendar month that is five (5) years after
the Commencement Date. Landlord hereby grants to Tenant one (1) option to extend
the term of this Lease on the same terms, conditions
and provisions as contained in this Lease, except as otherwise provided herein,
for a period of two (2) years after the expiration of the initial term (the
"Extension Period"), which Extension Period shall commence immediately upon the
expiration of the initial term. In order to exercise its option to renew this
Lease for the Extension Period Tenant shall give Landlord notice of such
exercise at least six (6) months prior to the expiration of the initial term.
4. POSSESSION.
4.1 Tenant shall be entitled to continued possession of the Leased
Premises to be used and occupied for any lawful purpose (including, but not
limited to, activities incident to the Tenant's business of selling computer
systems) as of the Commencement Date, and shall surrender possession of the
Leased Premises at the expiration of the Lease Term as herein provided. Tenant
agrees to give up quiet and peaceable possession of the Leased Premises, in the
condition in which it is required to be kept under this Lease, at the end of the
term, without further notice from Landlord.
4.2 Tenant, its employees, agents and invitees, shall comply with
all reasonable rules and regulations adopted by Landlord that do not materially
interfere with Tenant's use of the Leased Premises, as permitted under this
Lease. Landlord upon submitting prior written notice to Tenant may from time to
time adopt reasonable changes or additions to such rules and regulations,
provided that, such changes and additions do not conflict with Tenant's current
use of the Leased Premises. All such rules and regulations shall be applied by
Landlord in a nondiscriminatory manner to all tenants and invitees. Any such
rules and/or regulations shall go into effect thirty (30) days after receipt
thereof in writing by Tenant.
4.3 Tenant shall use the Leased Premises only for office, warehouse
and shipping operations in connection with its business as a seller of computer
systems and, subject to Landlord's consent, which shall not be unreasonably
withheld or delayed, Tenant may use the Leased Premises for any lawful purpose
reasonably related to the activities of the business.
5. BASE RENT.
5.1 Base rent for the period commencing on the Commencement Date
and ending June 30, 2003 shall be computed at the rate of Four Hundred Eighty
Nine Thousand Six Hundred and 00/100 Dollars ($489,600.00) per year and shall be
payable in consecutive, successive, and equal monthly installments of Forty
Thousand Eight Hundred and 00/100 Dollars (40,800.00) each. If the Commencement
Date shall be a day other than the first day of a calendar month, then Tenant
shall pay, upon the Commencement Date, an amount equal to the applicable monthly
installment of rent multiplied by a fraction the numerator of which shall be the
number of days remaining in the month, including and after the Commencement
Date, and the denominator of which shall be the number of days in the month.
5.2 The annual base rent shall be increased on each July 1st of the
Term (including the Extension Period) by an annual amount of Fourteen Thousand
Four Hundred and 00/100 Dollars ($14,400.00) above the annual base rent in
effect for the previous year of the initial term or Extension Period, if
applicable, payable in monthly increases of One Thousand Two Hundred and 00/100
Dollars ($1,200.00).
2
5.3 All payments of annual base rent shall be paid on the
first (lst) day of each month in advance in equal, consecutive, and successive
installments at the address of Landlord set forth herein or such other place as
Landlord may designate by written notice to Tenant.
6. ADDITIONAL RENT. Tenant shall pay as rent in addition to the annual
base rent herein reserved any and all sums which may become due by reason of the
obligations imposed on the Tenant under the terms of this Lease. Base rent and
additional rent are herein together referred to as "Rent".
7. PAYMENT BY TENANT. Tenant shall pay, without demand, the rent and all
other charges herein reserved as rent on the days and times and at the place
that the same are made payable, without fail, and if Landlord shall at any time
or times accept said rent or rent charges after the same shall have become due
and payable, such acceptance shall not excuse delay upon subsequent occasions,
or constitute or be construed as a waiver of any of Landlord's rights. Upon and
during the continuance of an Event of Default (as hereinafter defined), any
charge or payment herein reserved, included or agreed to be treated or collected
as rent and/or any other charges or taxes, expenses, or costs herein agreed to
be paid by Tenant may be proceeded for and recovered by Landlord by distraint or
other process in the same manner as rent due and in arrears, provided however,
that Tenant has received notice of default, and Tenant has failed to cure such
default within the applicable cure period provided for in this Lease.
8. OBLIGATIONS OF LANDLORD. Landlord, at its sole cost, shall be
responsible only for the following matters and expenses with respect to the
Leased Premises during the Lease Term:
(a) provide fuel oil sufficient to operate the fuel oil fired
heating system of the Leased Premises for the periods commencing on October 1
and terminating on May 31;
(b) major repair and replacement, if necessary, of the roof deck,
foundation, structural and load-bearing portion of the building, sidewalks and
parking areas within the Leased Premises;
(c) replace, if necessary, major components of the plumbing system,
electrical system, the utility lines and connections to the Leased Premises, and
the sprinkler mains, if any;
(d) repair and replace, if necessary, the major parts of the HVAC
system;
(e) provide reasonably prompt and efficient snow removal for the
parking areas of the Leased Premises, and provide cindering of the entrance
drive of the Leased Premises, as necessary;
(f) pay for the cost of municipal water and sanitary sewage
disposal for the Leased Premises; and
(g) perform landscape maintenance as needed in Landlord's
reasonable judgment.
3
9. SERVICES, TAXES AND COSTS TO BE PAID FOR BY TENANT. Tenant shall be
responsible for the following with respect to the Leased Premises during the
Lease Term, and for all costs, expenses, interest and penalty charges associated
therewith:
(a) All real estate taxes, county, township, school, general
assessments, and Tenant's share of special assessments as provided below,
(hereinafter, "REAL ESTATE TAXES") assessed or levied against the Leased
Premises, based on the per diem rate for the year. The amount owed by Tenant
shall be paid to Landlord within thirty (30) days after the date on which
Landlord has supplied Tenant with a ▇▇▇▇ for each tax, assessment and charge,
but no more than ten (10) days prior to the date Landlord is required to pay
said Real Estate Taxes. Any special assessments levied against the Leased
Premises shall be deemed to relate to public improvements having a useful life
of twenty (20) years. As Tenant's share of such special assessments, Tenant
shall pay to Landlord each year during the Term and any Extension Period an
amount equal to one-twentieth (1/20) of any such special assessment.
(b) All personal property taxes, or other governmental assessments
or taxes, assessed on account of Tenant's personal property or on account of any
equipment located in, or affixed to, the Leased Premises.
(c) Janitorial services within the interior of the Leased Premises
including, but not limited to, the walls, floors, ceilings, carpets, windows and
closets, and for the removal from the Leased Premises of garbage and any other
refuse or solid waste including the cost of maintaining a dumpster or other
similar receptacle, including acquiring and maintaining any receptacles, bins or
containers to facilitate recycling.
(d) Except as specifically set forth herein as an obligation of
Landlord, all electric utility costs and costs relating to the maintenance and
operation of the electrical system of the Leased Premises, including all charges
for electricity used in connection with cooling and heating of the Leased
Premises.
(e) Except as specifically set forth herein as an obligation of
Landlord, all general maintenance and upkeep of the Leased Premises, including
the repair of the electrical, heating, sanitary, air conditioning and plumbing
systems and equipment, appliances, minor roof repairs, maintenance of sidewalks
and the parking areas of the Leased Premises. All maintenance and repairs by
Tenant shall be made in a first class, workmanlike manner by personnel or
contractors previously approved by Landlord, whose approval shall not be
unreasonably withheld or delayed. Tenant shall require its personnel and
contractors to comply with all building standards, code standards, and other
reasonable requirements of Landlord
(f) Making such alterations and improvements as Tenant shall
undertake and as shall be approved by Landlord pursuant to Paragraph 17 hereof.
(g) Compliance with all statutes, ordinances, rules, orders,
regulations and requirements of the federal, state and municipal government and
any and all of their departments or bureaus relating to Tenant's operations on
the Leased Premises.
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Neither Landlord nor Tenant shall cause liens of any kind (whether for
materials, wages, labor or services) to be placed against the Leased Premises.
If any such liens are filed, against the Leased Premises, the responsible party
shall, within thirty (30) days after notice of filing thereof, cause the same to
be discharged of record by payment, deposit or bond.
10. RIGHT TO CONTEST. Tenant shall have the right to contest, by legal
proceeding, or by such other manner as Tenant shall reasonably deem suitable,
the validity or amount of any sum which Tenant is obligated to pay under
PARAGRAPH 9 herein, provided that such contest shall be free of any expense to
Landlord. Landlord agrees to cooperate in any such contest and execute all
documents reasonably required in connection therewith.
11. CONDITION OF LEASED PREMISES AND REPAIRS.
11.1 Tenant has examined the Leased Premises and accepts the Leased
Premises in its present condition; provided, however, that Tenant shall, during
the Term of this Lease, have the right to report to Landlord any latent defects
which are in need of repair based upon the obligation of Landlord to do work to
the structural and exterior elements of the Leased Premises as set forth in
PARAGRAPH 8.
11.2 Except as specifically set forth herein as an obligation of
Landlord, Tenant shall take good care of the Leased Premises and the fixtures
and appurtenances thereto, and shall take necessary action to ensure that the
Leased Premises shall suffer no waste or injury. Tenant shall further make all
minor repairs to the Leased Premises, keeping the Leased Premises generally in
good repair, order and condition, reasonable wear and tear excepted, and , at
the end of the Lease Term, Tenant shall vacate and surrender the same to
Landlord broom clean, free of debris, and in good order and condition,
reasonable wear and tear excepted. In addition, at the end of the Lease Term,
Tenant shall deliver to Landlord all keys and entry devices to the Leased
Premises.
11.3 If any repairs and replacements are necessitated by the
negligence of Tenant, Tenant shall promptly reimburse Landlord for the repair
and replacement costs incurred, subject to any insurance proceeds received by
Landlord. Landlord shall use its best efforts to incur only reasonable costs in
connection with any repair or replacement to the Leased Premises for which
Tenant is obligated to reimburse Landlord. Landlord shall not be liable for any
injury to or interference with Tenant's business arising from the performance of
any repairs, maintenance or improvements in or to the Leased Premises or to any
appurtenances or equipment therein; provided however, that Landlord shall
perform all such work with due diligence and in a manner so as to minimize
interference with Tenant's business.
11.4 Tenant shall not use any machinery or equipment at the Leased
Premises which produces excessive noise, vibration, odors or fumes without the
written consent of the Landlord, which consent shall not be unreasonably
withheld or delayed. Landlord hereby acknowledges that such machinery and
equipment at the Leased Premises as of the Commencement Date as operated as of
the Commencement Date do not produce excessive noise, vibrations, odors or
fumes.
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11.5 Tenant shall not do or permit to be done any act, or bring or
permit to be brought any material onto the Leased Premises, which shall be
deemed to be a fire hazard by any federal, state, or local law, statute,
ordinance or regulation, other than fuel oil. Landlord hereby acknowledges that
such materials and the operation of the current business on the Leased Premises
as of the Commencement Date as operated as of the Commencement Date do not, to
Landlord's knowledge, constitute a fire hazard by any federal, state, or local
law, statute, ordinance or regulation, other than fuel oil.
12. COMPLIANCE WITH LAWS. To the extent applicable to Tenant's use of and
business operations on the Premises, Tenant shall comply with: (i) all statutes,
ordinances, rules, orders, regulations and requirements of the federal, state
and local government and of any and all of their departments and bureaus having
jurisdiction of the Leased Premises, for the correction, prevention and
abatement of nuisances, violations or other grievances, in, upon or connected
with the Leased Premises during the Lease Term, (ii) with all rules, orders, and
regulations of the Board of Fire Underwriters, or any other similar body, for
the prevention of fires, at Tenant's own cost and expense. To the extent
applicable generally to the Leased Premises or the ownership thereof, Landlord
shall comply or cause the Leased Premises to comply with the foregoing. Landlord
represents that to its best knowledge, there are no notices of outstanding
violations applicable to the Leased Premises.
13. ENVIRONMENTAL. "Environmental Laws" means all federal, state and local
statutes, regulations, ordinances and other provisions having the force or
effect of law, all judicial and administrative orders and determinations, all
contractual obligations and all common law concerning pollution or protection of
the environment and the exposure of persons or natural resources to hazardous
substances, pollutants, contaminants, wastes, noise, odor or radiation.
"Hazardous Materials" means:
(a) any material or substance: (i) which is defined or becomes
defined as a "hazardous substance," "hazardous waste," "infectious waste,"
"chemical mixture or substance," or "air pollutant" under Environmental Laws;
(ii) containing petroleum, crude oil or any fraction thereof which is liquid at
standard conditions of temperature and pressure; (iii) containing
polychlorinated biphenyls (PCBs); (iv) containing asbestos; or (v) which is
radioactive; or
(b) any other pollutant or contaminant or hazardous, toxic,
flammable or dangerous chemical, waste, material or substance, as all such terms
are used in their broadest sense, and defined, regulated or to become regulated
by Environmental Laws, or which cause a nuisance upon or waste to the Leased
Premises.
"Handle," "handled," or "handling" shall mean any installation,
handling, generation, storage, treatment, use, disposal, discharge, release,
manufacture, refinement, presence, migration, emission, abatement, removal,
transportation, or any other activity of any type in connection with or
involving Hazardous Materials.
No Hazardous Materials shall be handled, upon, about, above or
beneath the Leased Premises or any portion thereof by or on behalf of Tenant,
its subtenants or its assignees, or their respective contractors, clients,
officers, directors, employees, agents, or invitees except
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by express written permission and consent of the Landlord. Any such Hazardous
Materials so handled shall be known as Tenant's Hazardous Materials.
Notwithstanding the foregoing, normal quantities of those Hazardous Materials
customarily used in the conduct of general administrative and executive office
activities (e.g., copier fluids and cleaning supplies) may be used and stored on
the Leased Premises without Landlord's prior written consent, but only in
compliance in all material respects with all applicable Environmental Laws as
defined herein.
Notwithstanding the obligation of Tenant to indemnify Landlord
pursuant to this Lease, Tenant shall, at its sole cost and expense, promptly
take all actions required by any federal, state or local governmental agency or
political subdivision, which requirements arise from the Tenant's handling of
Tenant's Hazardous Materials upon, about, above or beneath the Leased Premises.
Such actions shall include, but not be limited to, the preparation of any
feasibility studies or reports and the performance of any cleanup, remedial,
removal or restoration work. Tenant shall take all actions necessary to restore,
in all material respects, the Leased Premises to the condition existing prior to
the introduction of Tenant's Hazardous Materials, notwithstanding any less
stringent standards or remediation allowable under applicable Environmental
Laws. Tenant shall nevertheless obtain Landlord's written approval prior to
undertaking any actions required by this paragraph, which approval shall not be
unreasonably withheld or delayed so long as such actions would not potentially
have a material adverse effect on the Leased Premises.
Notwithstanding anything contained herein to the contrary, Tenant
shall indemnify, defend, and hold Landlord harmless from and against any and all
suits, actions, damages, liabilities, and expenses, including reasonable
attorneys fees, arising out of the Tenant's handling of Tenant's Hazardous
Materials.
Notwithstanding anything contained herein to the contrary, Landlord
shall indemnify, defend, and hold Tenant harmless from and against any and all
suits, actions, damages, liabilities, and expenses, including reasonable
attorneys fees, arising out of the handling of any Hazardous Materials upon,
about, above or beneath the Leased Premises or any portion thereof prior to the
date of this Lease, or not handled by or on behalf of Tenant, its subtenants or
its assignees, or their respective contractors, clients, officers, directors,
employees, agents, or invitees.
14. INSURANCE OBLIGATIONS.
14.1 Tenant shall insure, at its own expense, all of its own
equipment and other personal property situate on the Leased Premises and shall
also carry commercial general liability coverage for Tenant and Landlord in a
policy amount of at least Two Million Dollars ($2,000,000.00) [SUBJECT TO BROKER
REVIEW], and with umbrella liability coverage in an amount of at least Five
Million Dollars ($5,000,000.00) [SUBJECT TO BROKER REVIEW], with deductibles
which are reasonable and consistent with commercial practice in similar
circumstances. A certificate of insurance stating the coverages obtained by
Tenant shall be provided to Landlord within thirty (30) days of the date of this
Lease, and thereafter on each yearly anniversary date of the date of this Lease.
The certificate will indicate that coverages are provided by a reputable and
responsible insurance company licensed to do business in the Commonwealth of
7
Pennsylvania. The certificate will stipulate that the insurer will give Landlord
at least thirty (30) days advance written notice of any impending cancellation
or imposition of a major change in such policy.
14.2 Tenant shall obtain fire and extended coverage insurance on all
leasehold improvements on the Leased Premises, including, but not limited to,
all of Tenant's equipment, trade fixtures, appliances, furniture, furnishings
and personal property in or about the Leased Premises. Such insurance shall
include an all-risk legal liability endorsement to cover property damage for
which Tenant is responsible.
14.3 Notwithstanding anything to the contrary provided elsewhere in
this Lease, Landlord and Tenant each hereby release the other, and their
respective officers, directors, employees and agents from liability or
responsibility (to the other or anyone claiming through or under them by way of
subrogation or otherwise) for any loss or damage to the property of the other
party, even if such loss or damage shall have been caused by the fault or
negligence of the other party, or anyone for whom such party may be responsible.
Landlord and Tenant each agree that any insurance policy covering the Leased
Premises will include such a clause or endorsement.
14.4 Landlord hereby agrees to carry such fire and casualty
insurance on the buildings located on the Leased Premises in such amounts and
coverage as Landlord has historically carried with respect to the Leased
Premises, which policy amounts, limits, deductibles and coverage are described
on Exhibit ___ to this Lease. Landlord shall obtain such coverage from the
insurance carrier described on Exhibit ____. Subject to Tenant's consent, which
shall not be unreasonably withheld or delayed, Landlord may elect to obtain such
insurance coverage from a different carrier. Tenant shall reimburse Landlord for
the cost of such insurance within ten (10) days following receipt of Landlord's
▇▇▇▇ therefor (the "Insurance Charge"). Landlord, upon request, shall furnish
Tenant a certificate of such Landlord's fire and casualty insurance.
Notwithstanding the foregoing, Landlord may carry insurance coverage in excess
of that described on Exhibit ___, provided that Landlord bears the additional
expense incurred thereby.
15. LIABILITY AND INDEMNIFICATION.
15.1 During the Lease Term, Landlord, including Landlord's officers,
directors, employees, servants, invitees, licensees and agents, shall not be
liable for any injury or damage to person or property occurring by reason of any
existing or future condition or latent defect in the Leased Premises including,
but not limited to, any mechanical or electrical equipment wiring or
appurtenances being out of repair, any damage or impairment of parking
facilities, curbs, walks or lawns, injury or damage resulting from falling
plaster, steam, gas, electricity, water, rain or snow which may leak from any
part of the Improvements or from pipes, appliances or plumbing work of the same,
or from the outside or subsurface or from any other place, or by dampness or any
other cause of whatever nature, or by fire, explosion, collapse or broken glass,
or bursting, leaking or running of any basin, tank, tub, wastepipe, gutter, or
downspout, nor shall Landlord, or its agents, be liable for any such damage
caused by other tenants, if any, or persons in the Improvements, or caused by
vandalism or malicious mischief; provided, however, that
8
nothing herein shall relieve Landlord from liability caused by Landlord's
negligence or willful misconduct.
15.2 Landlord hereby indemnifies and holds Tenant harmless from and
against any and all claims, demands, liabilities and expenses, including
attorneys' fees, arising from actions or from any act permitted, or any omission
to act, in or about the Leased Premises by Landlord or its agents, employees,
contractors, or invitees, or from any breach or default by Landlord of this
Lease, except to the extent caused by Tenant's negligence or willful misconduct.
In the event any action or proceeding shall be brought against Tenant by reason
of any such claim, Landlord shall defend the same at Landlord's expense by
counsel reasonably satisfactory to Tenant.
15.3 Tenant hereby indemnifies and holds Landlord harmless from and
against any and all claims, demands, liabilities and expenses, including
attorneys' fees, arising from actions or from any act permitted, or any omission
to act, in or about the Leased Premises by Tenant or its agents, employees,
contractors, or invitees, or from any breach or default by Tenant of this Lease,
except to the extent caused by Landlord's negligence or willful misconduct. In
the event any action or proceeding shall be brought against Landlord by reason
of any such claim, Tenant shall defend the same at Landlord's expense by counsel
reasonably satisfactory to Landlord.
16. ASSIGNMENT AND SUBLETTING. Tenant shall not assign this Lease or
sublet the Leased Premises, or any interest herein or therein, or allow others
to use or occupy the Leased Premises without obtaining the prior written consent
of Landlord, which consent shall not be unreasonably withheld or delayed. For
purposes of clarity, a change of control or ownership of Tenant shall not be
deemed an assignment hereunder.
17. ALTERATIONS AND IMPROVEMENTS. Tenant shall make no alterations,
additions or improvements to the Leased Premises without the written consent of
Landlord, which consent shall not be unreasonably withheld or delayed; provided,
however, that Tenant shall be permitted to make interior nonstructural
alterations, additions, and improvements costing less than $200,000.00 without
Landlord's prior consent.
17.1 All such work shall be carried on at Tenant's cost, and in a
first class, workmanlike manner in accordance with building standards and other
reasonable requirements of Landlord and in compliance with all governmental
orders, regulations and permits. Such work shall be performed by responsible
contractors, approved by Landlord who will, prior to commencement of work,
submit satisfactory proof of insurance coverage naming Landlord as an additional
insured and file with the Prothonotary of Bucks County a waiver of liens with
respect to all labor and materials to be furnished in connection with such work
by the contractor and its subcontractors and materialmen.
17.2 Following completion of such alterations, additions or
improvements (hereinafter "TENANT'S Improvements") by Tenant, Tenant shall have
ownership of such Improvements, and thus, the right to depreciate such
Improvements.
9
17.3 Tenant, with the prior written consent of Landlord (which
consent shall not be unreasonably withheld or delayed), may remove any
alterations, additions, trade fixtures, improvements, appliances or equipment
installed by Tenant which can be removed without damage to or leaving incomplete
the Leased Premises. Landlord may direct Tenant at the end of the Lease Term or
upon the earlier termination of this Lease, and whether or not Tenant is in
default hereunder, to remove all alterations, additions, improvements, trade
fixtures, appliances or other personal property brought into or placed about the
Leased Premises by Tenant or constructed or installed therein by Tenant
(including but not limited to, partitions, cabinets, shelving, drapes, shades,
furniture, wiring and plumbing) during the term of this Lease as may be
specified in writing by Landlord, and Tenant shall, at its expense, immediately
effect such removal and shall repair all damage incidental thereto.
18. DAMAGE TO THE LEASED PREMISES. If the Leased Premises shall be
partially damaged or rendered untenantable by fire or other causes, unless
caused by the uninsured intentional or willful misconduct of Tenant, or Tenant's
servants, employees, agents or licensees, the Leased Premises so damaged or
rendered untenantable shall be repaired promptly and within a reasonable time,
by and at the expense of Landlord and the rent from the time of such damage or
untenantability until such repairs shall be completed shall ▇▇▇▇▇ in proportion
to the part of the Leased Premises which is not reasonably useable by Tenant; in
such event, any rent paid in advance shall be apportioned and refunded. If such
partial damage or untenantability is due to the uninsured intentional or willful
misconduct of Tenant, or Tenant's servants, employees, agents or licensees, the
Leased Premises so damaged shall be repaired promptly and within a reasonable
time by Landlord, but there shall be no apportionment or abatement of rent. In
the event of the Leased Premises being so badly damaged that it cannot be
repaired within ninety (90) days from the date of such damage, then the Lease
Term hereby created shall, at the option of either the Landlord or the Tenant
cease thirty (30) days after written notice from either party to the other
party, and Tenant shall surrender the Leased Premises and all of Tenant's
interest therein to Landlord, and shall be liable for rent only to the time of
the surrender, and Landlord may reenter and repossess the Leased Premises.
19. INSPECTION OF LEASED PREMISES; SHOWING LEASE PREMISES. Landlord and
its agents shall have the right to enter into and upon the Leased Premises, or
any part thereof, at all reasonable hours and with reasonable advance written
notice of at least twenty-four (24) hours, except that such notice shall not be
required in the event of an emergency, for the purpose of examining the same, or
making repairs or alterations therein. Landlord and its agents may show the
Leased Premises to persons wishing to hire or purchase the same at reasonable
hours and upon reasonable prior written notice to Tenant of at least twenty-four
(24) hours.
20. INTERRUPTION OF SERVICES. This Lease shall not be affected and there
will be no diminution or abatement of rent or other payments and no constructive
eviction shall be claimed or allowed because of the interruption or curtailment
of any services or utilities in or to the Leased Premises from causes beyond
Landlord's control nor, except if caused by Landlord's negligence or willful
misconduct, for any inconvenience arising from repairs in or about the Leased
Premises or from improvements made to the same.
21. CONDEMNATION. If the whole of the Leased Premises shall be acquired or
condemned by eminent domain for any public or quasi-public use, then, in that
event, the Lease Term shall
10
cease and terminate from the date that title vested in such proceeding. Tenant
shall have no claim against Landlord for the value of the unexpired Lease Term.
No part of any condemnation award shall belong to Tenant. Tenant expressly
waives any right or claim to any part thereof and assigns to Landlord any such
right or claim to which Tenant might become entitled (except as set forth in
subparagraphs 21.3 and 21.4 hereof) and the rent shall ▇▇▇▇▇ in proportion to
the square footage taken or condemned.
21.1 If any part, but not the whole, of the Leased Premises shall be
so taken or conveyed, and in the event that such partial taking or conveyance
shall render the Leased Premises unsuitable for the business of Tenant, then the
Lease Term shall terminate as of the date on which possession of the Leased
Premises is required to be surrendered to the condemning authority, all rent and
other charges shall be paid up to that date, and Tenant shall have no claim
against Landlord for the value of any unexpired Lease Term, but shall have
claims as set forth in subparagraphs 21.3 and 21.4 hereof. In the event of a
partial taking, partial condemnation, or conveyance supported by a power of
eminent domain which is not extensive enough to render the Leased Premises
unsuitable for the business of Tenant, then Landlord shall promptly restore the
Leased Premises to the extent of condemnation proceeds available for such
purpose to a condition comparable to its condition at the time of such
condemnation, less the portion lost in the taking, and Tenant shall promptly
make all necessary repairs, restorations and alterations of Tenant's fixtures,
equipment and furnishings and shall promptly re-enter the Leased Premises and
commence doing business in accordance with the provisions of this Lease and this
Lease shall continue in full force and effect.
In the case of a partial condemnation, rent shall ▇▇▇▇▇ only to the
extent that the annual fair market rental value of the Leased Premises has been
diminished. The fair market value shall be determined by the agreement of two
licensed real estate appraisers -- one selected by the Landlord and one selected
by the Tenant. If they cannot agree, then they shall jointly select a third
licensed real estate appraiser whose decision shall be binding on the parties,
except that Landlord reserves the right to declare that a complete condemnation
has taken place and in which case the Lease Term shall cease and terminate.
21.2 For purposes of determining the amount of funds available for
restoration of the Leased Premises from the condemnation award, said amount
shall be deemed to be that part of the award which remains after payment of
Landlord's reasonable expenses incurred in recovering same and any amounts due
to any mortgagee of Landlord, and which represents a portion of the total sum so
available (excluding any award or other compensation for land) which is
equitably allocable to the Leased Premises.
21.3 Although all damages in the event of any condemnation shall
belong to Landlord and any mortgagee of Landlord, Tenant shall have the right,
to the extent that same shall not diminish Landlord's or such mortgagee's award,
to claim and recover from the condemning authority, but not from Landlord or
such mortgagee, such compensation as may be separately awarded or recoverable by
Tenant in Tenant's own right for, or on account of, and limited solely to, any
cost to which Tenant might be put in removing Tenant's merchandise, furniture,
fixtures, leasehold improvements and equipment.
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21.4 Tenant waives all claims against Landlord by reason of the
complete or partial taking of the Leased Premises and hereby relinquishes and
assigns unto Landlord any rights and damages to which Tenant might otherwise be
entitled for condemnation of the leasehold estate created by this Lease;
provided, however, that Tenant shall nevertheless be entitled to make any claims
which Tenant may have against the condemning authority for relocation damages,
damages for tenant improvements and any other payments lawfully due tenants as
such, without diminution of the sums due Landlord.
22. NO OBSTRUCTIONS. Tenant shall not obstruct the entrance drive,
sidewalks, parking areas, or loading areas, nor allow the stairs within the
Leased Premises, or the internal halls to be obstructed or encumbered in any
manner.
23. SIGNS. No signs, advertising, notices or other lettering shall be
exhibited, inscribed, painted or affixed by Tenant on any part of the outside of
the Improvements or anywhere on the Real Estate, without the prior written
consent of Landlord, which consent shall not be unreasonably withheld or
delayed, and where required by law without proper license and permission by
municipal and governmental agencies regulating the same. However, Landlord
hereby consents to Tenant's placing and maintaining an appropriate sign next to
the entrance drive of the Leased Premises during the Lease Term, subject to
compliance with applicable governmental regulations.
24. NON-DISTURBANCE AND ATTORNMENT.
24.1 Upon written request of Landlord, or any mortgagee or
beneficiary of Landlord, Tenant will, in writing, subordinate this Lease and
Tenant's rights hereunder to the interest of any ground lessor of the land upon
which the Leased Premises is situated and to the lien of any mortgage or deed of
trust now or hereafter given on the Leased Premises and to all advances made or
hereafter to be made upon the security there of; provided, however, that the
ground lessor or mortgagee or trustee named in said mortgage or trust deed shall
agree that Tenant's peaceable possession of the Leased Premises or its rights
under this Lease will not be disturbed on account thereof.
24.2 In the event any proceedings are brought for foreclosure, or in
the event of the exercise of the power of sale under any mortgage or deeds of
trust, upon any such foreclosure or sale Tenant agrees to recognize such
beneficiary or purchaser as the Landlord under this Lease, provided Tenant's
rights under this Lease continue unabated.
24.3 Landlord represents and warrants that, as of the Commencement
Date, except for this Lease, the Real Estate and the Improvements are not
subject to any lease, ground lease, license or other occupancy agreement or
mortgage, deed of trust or other interest securing debt.
25. INTENTIONALLY OMITTED
26. COLLECTION OF DELINQUENT RENT. In the event that it shall become
necessary for Landlord to engage the services of an attorney or collection
agency to collect delinquent rent from Tenant, Tenant shall pay all reasonable
costs associated therein, including but not limited to
12
attorneys fees, or collection agency fees, together with all court costs and
disbursements. Tenant shall pay, as additional rent, all reasonable attorneys
fees and other expenses incurred by Landlord in enforcing any of the other
obligations under this Lease.
27. DEFAULT PROVISIONS.
27.1 EVENTS OF DEFAULT. Any of the following events shall be an
"Event of Default" by Tenant under this Lease:
(a) If default shall be made in the due and punctual payment of any
rent or additional rent payable under this Lease when and if the same shall
become due and payable, and such default shall continue for a period of (10)
days after receipt of written notice from Landlord (except that such notice need
not be given in more than two (2) instances in any twelve (12) month period); or
(b) If any default shall be made by Tenant in the performance of,
or compliance with, any of the covenants, agreements, terms or provisions
contained in this Lease, other than those referred to in the foregoing
subparagraph (a), and such default shall continue for a period of thirty (30)
days after written notice thereof from Landlord to Tenant, or if such default is
of a nature which cannot be cured within thirty (30) days, if Tenant fails to
commence to cure such default within thirty (30) days after written notice
thereof from Landlord to Tenant, and thereafter fails to diligently cure such
default; or
(c) If the Leased Premises shall be deserted or vacated by Tenant
for a period of more than sixty (60) days prior to the expiration of the Lease
Term; or
(d) If a voluntary or involuntary petition in bankruptcy shall be
filed by or against Tenant, or if Tenant shall be adjudicated a bankrupt or
insolvent, or shall make an assignment for the benefit of creditors, or shall
file any petition of answer seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under the
present or any future federal or state insolvency act, all of which is not
either dismissed or terminated within sixty (60) days.
27.2 REMEDIES. Following the occurrence and during the continuance
of an Event of Default, Landlord may at any time thereafter, exercise one or
more of the following remedies:
(a) Landlord may, by written notice to Tenant, accelerate the whole
or any part of the Rent and other charges, payments, costs and expenses herein
agreed to be paid by Tenant for the entire unexpired balance of the Term. Such
amount if so accelerated shall, in addition to any Rent already due and payable,
be deemed due and payable as if, by the terms and provisions of this Lease, such
accelerated Rent and other charges, payments, costs and expenses were on that
date payable in advance.
(b) Landlord may reenter the Leased Premises and remove all persons
and all or any property therefrom, either by summary dispossess proceedings or
by any suitable action or proceeding at law, or by force or otherwise, without
being liable to indictment, prosecution or
13
damages therefor, and repossess and enjoy the Leased Premises, together with all
other installations of Tenant. Upon recovering possession of the Leased Premises
by reason of or based upon or arising out of a default on the part of Tenant,
Landlord may, at Landlord's option, either terminate this Lease or make such
alterations and repairs as may be reasonably necessary in order to relet the
Leased Premises; and relet the Leased Premises or any part or parts thereof,
either in Landlord's name or otherwise, for a term or terms which may at
Landlord's option be less than or exceed the period which would otherwise have
constituted the balance of the Term and at such rent or rents and upon such
other terms and conditions as in Landlord's reasonable discretion may seem
advisable and to such person or persons as may in Landlord's reasonable
discretion seem best. Upon each such reletting all rents received by Landlord
from such reletting shall be applied: first, to the payment of any amounts other
than Rent due hereunder from Tenant to Landlord; second, to the payment of any
costs and expenses of obtaining possession of and reletting the Leased Premises,
including brokerage fees and reasonable attorney's fees and all costs of such
alterations and repairs; third, to the payment of Rent due and unpaid hereunder;
and the residue, if any, shall be held by Landlord and applied in payment of
future Rent as it may become due and payable hereunder. If such rentals received
from such reletting during any month shall be less than that to be paid during
that month by Tenant hereunder, Tenant shall pay any such deficiency to
Landlord. Such deficiency shall be calculated and paid monthly. No such reentry
or taking possession of the Leased Premises or the making of alterations and/or
improvements thereto or the reletting thereof shall be construed as an election
on the part of Landlord to terminate this Lease unless written notice of such
election be given to Tenant. Notwithstanding any such reletting without
termination, Landlord may at any time thereafter elect to terminate this Lease
for such previous default. Tenant, for Tenant and Tenant's successors and
assigns, hereby irrevocably constitutes and appoints Landlord as Tenant's and
Tenant's successors' and assigns' agent to collect the rents due and to become
due under all subleases of the Leased Premises or any parts thereof without in
any way affecting Tenant's obligation to pay any unpaid balance of Rent due or
to become due hereunder.
(c) Landlord may terminate this Lease and the Term hereby created
without any right on the part of Tenant to waive the forfeiture by payment of
any sum due or by other performance of any condition, term or covenant broken;
whereupon Landlord shall be entitled to recover, in addition to any and all sums
and damages for violation of Tenant's obligations hereunder in existence at the
time of such termination, damages with respect to the unexpired portion of the
Term in an amount equal to the amount of the Rent reserved for the balance of
the Term, as well as all other charges, payments, costs and expenses herein
agreed to be paid by Tenant for such period, all discounted at the rate of six
percent (6%) per annum to their then present worth, less the fair rental value
of the Premises for the balance of the Term, also discounted at the rate of six
percent (6%) per annum to its then present worth, all of which amount shall be
immediately due and payable from Tenant to Landlord.
(d) In the event of a breach or threatened breach by Tenant of any
of the covenants or provisions hereof, Landlord shall have the right of
injunction and the right to invoke any remedy allowed at law or in equity as if
reentry, summary proceedings and other remedies were not herein provided for.
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(e) No right or remedy herein conferred upon or reserved to
Landlord is intended to be exclusive of any other right or remedy herein or by
law provided but each shall be cumulative and in addition to every other night
or remedy given herein or now or hereafter existing at law or in equity or by
statute, subject however, to legal and equitable principles limiting the
exercise of duplicative remedies.
(f) Tenant expressly waives the right to three (3) months' notice
and/or fifteen (15) or thirty (30) days' notice required under certain
circumstances by the Landlord and Tenant Act of 1951, and Tenant hereby agrees
that five (5) days' notice shall be sufficient in either or any such case.
(g) For the purpose of calculating the "accelerated Rent" payable
under SECTION 27.2(a) and the "Rent reserved for the balance of the Term" for
the purposes of SECTION 27.2(c), the amount payable by Tenant for Taxes and the
Insurance Charge for the balance of the Term shall be equal to the sum of the
highest amount paid or payable by Tenant in any calendar year for Taxes and the
Insurance Charge multiplied by the number of calendar years (including any
fractional calendar year) remaining in the Term.
27.3 CONFESSION OF JUDGMENT. THE FOLLOWING PARAGRAPH SETS FORTH A
WARRANT OF AUTHORITY FOR ANY ATTORNEY TO CONFESS JUDGMENT AGAINST TENANT. IN
GRANTING THIS WARRANT OF ATTORNEY TO CONFESS JUDGMENT AGAINST TENANT, TENANT
HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY AND UNCONDITIONALLY WAIVES ANY
AND ALL RIGHTS TENANT HAS OR MAY HAVE TO PRIOR NOTICE AND AN OPPORTUNITY FOR
HEARING UNDER THE RESPECTIVE CONSTITUTIONS AND LAWS OF THE UNITED STATES AND THE
COMMONWEALTH OF PENNSYLVANIA.
AT ANY TIME FOLLOWING THE OCCURRENCE AND DURING THE
CONTINUANCE OF AN EVENT OF DEFAULT BY TENANT UNDER THIS LEASE OR WHEN THIS LEASE
SHALL BE TERMINATED OR CANCELED BY REASON OF THE BREACH OF ANY PROVISION HEREOF,
EITHER DURING THE ORIGINAL TERM OR ANY RENEWAL THEREOF, AND ALSO AS SOON AS THE
TERM HEREBY CREATED OR ANY RENEWAL THEREOF SHALL HAVE EXPIRED, IT SHALL BE
LAWFUL FOR ANY ATTORNEY AS ATTORNEY FOR TENANT TO ENTER INTO ANY COURT OF
COMPETENT JURISDICTION A CONFESSION OF JUDGMENT IN EJECTMENT, BY COMPLAINT IN
CONFESSION OR ANY OTHER MEANS AUTHORIZED BY APPLICABLE STATUTE OR RULE OF
PROCEDURE, AGAINST TENANT AND ALL PERSONS CLAIMING UNDER TENANT FOR THE RECOVERY
BY LANDLORD OF POSSESSION OF THE PREMISES, FOR WHICH THIS LEASE OR A TRUE AND
CORRECT COPY THEREOF SHALL BE HIS SUFFICIENT WARRANT, WHEREUPON, IF LANDLORD SO
DESIRES, A WRIT OF POSSESSION MAY ISSUE FORTHWITH, WITHOUT ANY PRIOR WRIT OR
PROCEEDINGS WHATSOEVER, AND PROVIDED THAT IF FOR ANY REASON AFTER SUCH ACTION
SHALL HAVE BEEN COMMENCED THE SAME SHALL BE TERMINATED AND POSSESSION REMAIN IN
OR BE RESTORED TO TENANT, LANDLORD SHALL HAVE THE RIGHT UPON AND DURING THE
CONTINUANCE OF ANY SUBSEQUENT EVENT DEFAULT OR EVENTS OF DEFAULT, OR UPON THE
TERMINATION OR CANCELLATION OF THIS LEASE AS
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HEREINBEFORE SET FORTH, TO BRING ONE OR MORE ACTION OR ACTIONS AS HEREINBEFORE
SET FORTH TO ENTER A CONFESSION OF JUDGMENT IN EJECTMENT AGAINST TENANT, AS SET
FORTH ABOVE, TO RECOVER POSSESSION AS AFORESAID.
27.4 ATTORNEYS' FEES. In the event of any default by Tenant of any
of its obligations under this Lease, Tenant shall immediately pay to Landlord,
upon demand, an amount equal to all reasonable attorney's fees and court costs
incurred by Landlord in enforcing its rights and remedies under this Lease,
whether or not an administrative and/or judicial action is commenced by Landlord
against Tenant by reason of such default.
27.5 CURING TENANT'S DEFAULTS. If Tenant shall be in default of any
of its obligations under this Lease, Landlord may (but shall not be obligated to
do so), in addition to any other rights it may have in law or equity or under
this Lease, cure such default on behalf of Tenant, and Tenant shall reimburse
Landlord upon demand for any reasonable sums paid or costs incurred by Landlord
in curing such default, together with interest from the respective dates of
Landlord's making of the payments and incurring of the costs, on all sums
advanced by Landlord as aforesaid, which sums and costs together with interest
thereon shall be deemed Additional Rent payable under this Lease.
27.6 WAIVER OF BREACH. The waiver by Landlord or Tenant of any
breach of any term, covenant or conditions contained in this Lease, shall not be
deemed to be a waiver of any subsequent breach of the same or any other term,
covenant or condition contained in this Lease.
28. LANDLORD'S DEFAULT.
28.1 Landlord shall be in default of this Lease if it fails to perform
any provision of this Lease that it is obligated to perform and if the failure
to perform is not cured within thirty (30) days after written notice of the
default has been given by Tenant to Landlord. If such a default cannot
reasonably be cured within thirty (30) days, Landlord shall not be in default of
this Lease if Landlord commences to cure the default within such thirty (30) day
period and diligently and in good faith continues to cure the default until
completion, provided the same is capable of being cured by Landlord.
28.2 If Landlord shall have failed to cure a default by Landlord
after expiration of the applicable time, if any, for cure of a particular
default, Tenant may, at its election, but without obligation therefor (a) seek
specific performance of any obligation of Landlord, or seek to enjoin any breach
hereof, after which Tenant shall retain, and may exercise and enforce, any and
all rights which Tenant may have against Landlord as a result of such default,
and/or (b) exercise any other remedy given hereunder or now or hereafter
existing at law or in equity or by statute, and/or (c) cure the default and ▇▇▇
Landlord for the expense reasonably incurred thereby and deduct from Rent
thereafter payable the amount of any final unappealable judgment obtained by
Tenant against Landlord in such suit.
29. NOTICES. All notices required under this Lease shall be in writing and
shall be sent by United States certified mail, return receipt requested, postage
pre-paid, or hand delivered, to the
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addresses of Landlord or Tenant, as the case may be, set forth in the preamble
to this Lease, or to such other address as such party may in writing designate.
Notices shall be deemed to have been given and received one (1) business day
following deposit with Federal Express or other reputable overnight courier
service and three (3) days following deposit in the United States Mail if sent
by certified mail.
30. SECURITY DEPOSIT. As security for the performance by Tenant of all the
terms and conditions to be performed by Tenant hereunder, Tenant has heretofore
deposited with Landlord the sum of Twenty Thousand Dollars ($20,000.00), which
sum shall be returned to Tenant upon the expiration of the Lease Term or earlier
termination of this Lease, provided Tenant has fully completed such performance.
In the event of the sale or transfer of the Leased Premises, Landlord shall have
the right to transfer the security deposit to its successor for the benefit of
Tenant, and upon such transfer, Tenant acknowledges and agrees that Landlord
shall be released by Tenant from all liability for the return of said security
deposit.
31. HOLDING OVER BY TENANT. If Tenant shall remain in possession of the
Leased Premises after the expiration of the Lease Term, without having executed
a new or renewal lease, such holding over shall not constitute a renewal or
extension of this Lease and Landlord shall, at its option, be entitled to all
remedies available at law against a tenant holding over, or may elect to treat
the holding over as a tenancy from month-to-month, subject to all terms and
conditions of this Lease, except as to duration, but this shall not preclude
Landlord from increasing the monthly base rent amount during the holdover
period. Tenant shall be deemed to remain in possession until it shall vacate and
surrender the Leased Premises to the Landlord as described in paragraphs 11.2
and 17.3.
32. REMEDIES CUMULATIVE. All of the remedies hereinbefore given to
Landlord and all rights and remedies given by law and/or in equity shall be
cumulative and concurrent. No determination of this Lease or the taking or
recovering of the Leased Premises shall deprive Landlord of any of its remedies
or actions against Tenant for rent due at the time or which, under the terms
hereof, would in the future become due as if there has been no determination, or
for any and all sums due at the time or which, under the terms hereof, would in
the future become due as if there has been no determination, nor shall the
bringing of any action for rent or breach of covenant, or the resort to any
other remedy herein; provided for the recovery of rent be construed as a waiver
of the right to obtain possession of the Leased Premises.
33. QUIET POSSESSION. Landlord covenants that Tenant, on paying the said
rent, and performing the covenants aforesaid, shall and may peacefully and
quietly have, hold and enjoy the said Leased Premises during the Lease Term,
without hindrance or interruption by Landlord or any other person or persons
lawfully claiming through, by, or under Landlord.
34. INTEGRATION AND GOVERNING LAW. This Lease constitutes the entire
agreement between the parties hereto and there are no understandings, promises,
representations or warranties, oral or written, relating to the subject matter
of this Lease, which exist or bind any of the parties hereto, their respective
heirs, executors, administrators, successors or assigns, except as set forth
herein. No amendment, change or addition to this Lease shall be binding upon
Landlord or Tenant unless reduced to writing and signed by both parties. It is
mutually understood and agreed that this Lease shall be interpreted in
accordance with the, laws of the
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Commonwealth of Pennsylvania and that no presumption shall be deemed to exist in
favor or against either party hereto as a result of the preparation or
negotiation of the same.
35. BINDING EFFECT; SEVERABILITY. The covenants and agreements herein
contained are binding on the parties hereto and upon their respective
successors, heirs, executors, administrators and assigns. If any of the
provisions of this Lease are determined by a court of competent jurisdiction to
be illegal or unenforceable, the remaining provisions of this Lease shall
continue to be effective.
36. NO WAIVER OF ENFORCEMENT. Landlord shall have the right all times to
enforce the covenants and provisions of this Lease in strict accordance with the
terms hereof, notwithstanding any conduct or custom on the part of Landlord in
refraining from so doing at any time or times; and, further, that the failure of
Landlord at any time or times to enforce its rights under said covenants and
provisions strictly in accordance with the same shall not be construed as having
created a custom in any way or manner contrary to the specific terms, provisions
and covenants of this Lease or as having in any way or manner modified the same.
37. FORCE MAJEURE. In the event that Landlord or Tenant shall be delayed,
hindered in or prevented from the performance of any act required hereunder by
reason of acts of God, strikes, blackouts, labor troubles, inability to procure
materials, failure of power, restrictive governmental laws or regulations,
riots, insurrection, the act, failure to act or default of the other party, war
or other reason beyond their control, then performance of such act shall be
excused for the period of the delay and the period for the performance of any
such act shall be extended for a period equivalent to the period of such delay,
but in no event shall this clause postpone, delay or excuse payment of Rent by
Tenant to Landlord or taxes to the proper governmental authority.
38. RECORDING. This Lease shall not be recorded in any public office, but
upon the request of either party hereto, the other party shall join in the
execution of a memorandum or short form of this Lease for the purpose of
recording. The memorandum or short form of this Lease shall comply with the laws
of the Commonwealth of Pennsylvania and shall describe the parties, the Leased
Premises and the Lease Term and shall incorporate this Lease by reference.
39. HEADINGS; CONSTRUCTION. Captions of the paragraphs or parts of this
Lease are for convenience only, and shall not be considered or referred to in
resolving questions of interpretation or construction. The language in all parts
of this Lease shall in all cases be construed as a whole and in accordance with
its fair meaning, and shall not be construed strictly for or against Landlord or
Tenant.
40. COUNTERPARTS. The Lease may be executed in counterparts, each of which
shall be deemed an original, all of which shall be deemed one and the same
document.
41. SUCCESSORS. All rights and liabilities herein given to or imposed upon
the respective parties hereto shall bind and inure to the several respective
heirs, successors, administrators, executors and assigns of the parties, except
that no rights shall inure to the benefit of any assignee or subtenant of Tenant
unless the assignment or sublease was approved by Landlord in writing as
provided in Paragraph 16 hereof. Landlord, at any time and from time to time,
may transfer its interest in the Leased Premises and, in the event of such
transfer, Landlord and its
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successors and assigns (other than the transferee of Landlord's interest in the
Premises) shall be released from any and all liability thereafter accruing
hereunder.
IN WITNESS WHEREOF, the parties have hereunto set their hands and
seals as of the day and year first above mentioned.
Witnesses: LANDLORD:
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TENANT:
Prophet 21 New Jersey, Inc.
a New Jersey business corporation
(Corporate Seal)
Attest: BY:
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